Interim Results

10th Nov 2008 07:00



FOR IMMEDIATE RELEASE

10 November 2008

INTERIM RESULTS

'Increase in sales to private customers, share of UK wine market maintained'

'Decline in corporate sales, particularly Champagne'

Majestic Wine PLC ("Majestic"), the UK's largest wine warehouse chain, today announces its interim results for the 26 weeks ended 29 September 2008. 

Highlights

Total sales up 3.4% to £94.1m (2007:£91.0m). UK sales grew by 4.7% to £88.8m with like for like sales declining 2.1%, a result that maintains our share of the UK wine market. Like for like sales for the five weeks from 30 September to 3 November 2008 were down 4.7%.

Profit before tax declined by 25.5% to £5.6m (2007:£7.5m).

Average bottle of still wine purchased at Majestic is now £6.19 (2007: £5.85). Average spend per transaction has increased to £135 (2007: £128).

Sales of fine wine continued to increase. Sales of wine priced at £20 and above increased by 10.7% on last year. There will be dedicated fine wine display areas in 53 stores by Christmas.

Sales to private customers up 2.9% in the period, decline in sales to business customers of 1.6%. Champagne sales declined by 6.4% on last year, particularly from business customers.

The value of orders placed via our website increased by 11.5% on last year.

During the period we opened two new stores in Hereford and Leatherhead and re-sited our stores in Kingston and Worcester. Since the end of the period we opened in Summertown in north Oxford and have re-sited our existing store in south Oxford. We will be opening in Finchley before Christmas bringing the total number of stores in the UK to 148.

Commenting on the results Steve Lewis, Chief Executive, said:

"I am pleased that we have maintained our UK wine market share in such challenging conditions. I am confident that Majestic with its robust business model and highly differentiated customer proposition can maintain its market position going forward."

High resolution images are available for the media to download free of charge from www.fovea.tv or call 

020 7089 2627

For further information, please contact:

Steve Lewis	Tel: 01923 298200
Majestic Wine PLC
Tim Thompson / Jennie Spivey	Tel: 020 7466 5000
Buchanan Communications

Majestic Wine PLC's nominated adviser is Teathers, a division of Straumur-Burdaras Investment Bank hf of Berkeley Square House, Third Floor, Berkeley Square, London W1J 6BU

Chairman's Statement

During the six months ended 29 September 2008 we experienced challenging trading conditions arising from the increasingly uncertain economic climate. Against this backdrop profit before tax was £5.6m a decline of 25.5% and total sales were up 3.4% to £94.1m.

UK Sales

 

Total UK sales grew 4.7% to £88.8m with like for like sales declining 2.1%, a result that maintains our share of the UK wine market.

Sales of still wine continued to show good growth, up 4.9%. Consumers took advantage of attractive pricing from the New World and we saw strong growth in wines from Argentina, Chile and New Zealand. Sales of Spanish wine also grew well on the back of a successful promotion we ran in September. The average bottle price of still wine purchased at Majestic is now £6.19, up from £5.85 last year. The average spend per transaction has increased to £135 from £128. 

Sales of fine wine continued to grow with sales of still wine priced at £20 and above increasing by 10.7% on last year. We will have dedicated fine wine display areas in 53 stores by Christmas.

Sales of Champagne declined 6.4% on last year. It was particularly noticeable that business customers reduced purchases of Champagne.

Sales to private customers were up 2.9% in the period, however we have seen a decline in sales to business customers through the store network of 1.6%. These customers are predominately small owner operated restaurant, gastro pub and hotel businesses and many have seen their turnover slow in the current economic conditions.

 

During the period we have raised the frequency of communication to our customers, using the full price list to cover the key promotional periods augmented by flyers supporting shorter term offers.

Our Christmas price list was mailed to customers on 28 October and features over 60 new products. This Christmas we will focus on wines from Chile, New Zealand and Bordeaux and will have our largest range to date of exclusive parcels of claret.

We are excited by our new in-store initiative - "Introduction to Wine". This is a short two hour informal introduction to wine held in our stores and delivered by our enthusiastic and knowledgeable store managers. Customers that have an interest in learning about wine from grape to glass can sign up for the next event in store. Initial customer feedback has been extremely favourable.

Ecommerce

The value of orders placed via our website has increased 11.5% on last year. We have recently trialled web exclusive offers which have proved effective in driving web traffic.

  

New Stores

During the period we opened two new stores in Hereford and Leatherhead and we re-sited our stores in Kingston and Worcester. Since the end of the period we have opened in Summertown in north Oxford and have re-sited our existing store in south Oxford. We will be opening in Finchley before Christmas bringing the total number of stores in the UK to 148. In 2009, we plan to open new stores in Southend and Edinburgh and re-site one of our stores in Glasgow. We have several more locations under negotiation.

France

Like for like sales in our stores in France declined 24.6% on a same currency basis. Profit before interest and tax for the period declined 53.7% to £414,000. From the beginning of autumn 2007 we have seen a marked decrease in sales due to the appreciation of the Euro against Sterling coupled with the increase in the cost of fuel. We have increased our marketing activity and have ensured we have compelling promotional offers for Christmas.

Dividend

We are maintaining our interim dividend at 2.8p net per share. The dividend will be paid on 9 January 2009 to shareholders on the register at the close of business on 12 December 2008.

Future Prospects

Like for like UK sales for the five weeks from 30 September to 3 November 2008 were down 4.7%.

The business is very well prepared for the key Christmas trading period which we expect to be challenging.

Simon Burke

Chairman

10 November 2008

  Group Income Statement

For the 26 weeks ended 29 September 2008

		26 weeks	26 weeks	52 weeks
		ended	ended	ended
		29.09.08	01.10.07	31.03.08
	Note	£000	£000	£000
Revenue		94,117	91,005	197,026
Cost of sales		(74,567)	(71,380)	(155,018)
Gross profit		19,550	19,625	42,008
Distribution costs		(8,872)	(7,747)	(16,336)
Administrative costs		(5,260)	(4,786)	(10,044)
Other operating income		282	241	535
Operating profit		5,700	7,333	16,163
Profit on disposal of property		-	74	341
Profit before finance revenue and taxation		5,700	7,407	16,504
Finance revenue		1	141	259
Finance costs		(85)	(6)	(61)
Profit before taxation		5,616	7,542	16,702
UK income tax	4	(1,556)	(2,154)	(4,977)
Overseas income tax	4	(147)	(290)	(471)
Profit for the period		3,913	5,098	11,254
Earnings per share
Basic	5	6.4p	8.0p	17.9p
Diluted	5	6.3p	7.9p	17.7p
Dividend per share	6	2.8p	2.8p	9.8p

 

Group Balance Sheet

As at 29 September 2008

	As at	As at	As at
	29.09.08	01.10.07	31.03.08
	£000	£000	£000
Non current assets
Goodwill and intangible assets	7,800	6,808	7,790
Property, plant and equipment	44,889	36,982	42,759
Prepaid operating lease costs	1,626	1,460	1,528
Deferred tax assets	351	952	452
	54,666	46,202	52,529
Current assets
Inventories	35,165	33,951	34,601
Trade and other receivables	8,835	9,303	6,973
Financial instruments at fair value	288	486	307
Cash and cash equivalents	747	1,141	2,626
	45,035	44,881	44,507
Non current assets held for sale	-	1,351	-
Total assets	99,701	92,434	97,036
Current liabilities
Trade and other payables	(38,362)	(40,022)	(41,176)
Bank overdraft	(9,931)	(1,214)	(2,735)
Provisions	(145)	(112)	(213)
Deferred lease inducements	(83)	(116)	(94)
Financial instruments at fair value	(90)	-	(10)
Current tax liabilities	(1,386)	(2,119)	(2,195)
	(49,997)	(43,583)	(46,423)
Non current liabilities
Provisions	-	(65)	(19)
Deferred lease inducements	(783)	(709)	(749)
Deferred tax liabilities	(426)	(377)	(426)
Total liabilities	(51,206)	(44,734)	(47,617)
Net assets	48,495	47,700	49,419
Shareholders' equity
Called up share capital	4,609	4,717	4,628
Share premium account	10,518	9,852	10,359
Capital reserve - own shares	(105)	(107)	(105)
Capital redemption reserve	363	226	333
Currency translation reserve	1,208	122	1,217
Retained earnings	31,902	32,890	32,987
Equity shareholders' funds	48,495	47,700	49,419

  Group Cash Flow Statement

For the 26 weeks ended 29 September 2008

	26 weeks	26 weeks	52 weeks
	ended	ended	ended
	29.09.08	01.10.07	31.03.08
	£000	£000	£000
Cash flows from operating activities:
Profit for the period	3,913	5,098	11,254
Adjustments to reconcile profit for the period to cash generated by operations:
Income tax expense	1,703	2,444	5,448
Net finance costs/(revenue)	84	(135)	(198)
Amortisation and depreciation	1,442	1,345	2,762
Loss/(profit) on disposal of non current assets	2	(96)	(351)
Increase in inventories	(564)	(3,616)	(4,266)
Increase in trade and other receivables	(1,861)	(2,572)	(242)
(Decrease)/increase in trade and other payables	(2,917)	6,362	7,514
Increase in deferred lease inducements	23	27	45
Change in fair value of derivative instruments	99	(421)	(232)
Decrease in provisions	(87)	(201)	(146)
Share based payments	167	233	498
Cash generated by operations	2,004	8,468	22,086
UK income tax paid	(2,215)	(1,330)	(3,622)
Overseas income tax paid	(198)	(169)	(449)
Net cash (utilised)/generated by operating activities	(409)	6,969	18,015
Cash flows from investing activities
Interest received	1	147	265
UK income tax paid	(28)	(62)	(91)
Overseas income tax paid	(14)	(10)	(41)
Purchase of non current assets	(3,680)	(3,250)	(10,622)
Receipts from sales of non current assets	34	28	58
Receipts from sales of non current assets held for sale	-	526	2,190
Net cash utilised by investing activities	(3,687)	(2,621)	(8,241)
Cash (outflow)/inflow before financing	(4,096)	4,348	9,774
Cash flows from financing activities
Interest paid	(31)	-	(53)
Issue of Ordinary Share capital	170	149	674
Shares re-purchased	(828)	(5,168)	(9,496)
Equity dividends paid	(4,293)	(3,961)	(5,702)
Net cash used by financing activities	(4,982)	(8,980)	(14,577)
Net decrease in cash and cash equivalents	(9,078)	(4,632)	(4,803)
Cash and cash equivalents at beginning of period	(109)	4,484	4,484
Effect of foreign exchange differences	3	75	210
Cash and cash equivalents at end of period	(9,184)	(73)	(109)
Reconciliation of cash and cash equivalents
Cash and cash equivalents per Group balance sheet	747	1,141	2,626
Bank overdraft per Group balance sheet	(9,931)	(1,214)	(2,735)
Cash and cash equivalents per Group cash flow	(9,184)	(73)	(109)

  

Statement of Changes in Equity

For the 26 weeks ended 29 September 2008

			Capital
			Reserve				Total
		Share	Own Shares	Capital	Currency		Share-
	Share	Premium	Held in	Redemption	Translation	Retained	holders'
	Capital	Account	ESOT	Reserve	Reserve	Earnings	Funds
	£000	£000	£000	£000	£000	£000	£000
At 2 April 2007	4,803	9,518	(120)	125	(119)	37,118	51,325
Currency translation differences
on foreign currency net investments	-	-	-	-	241	-	241
Tax debit on employee share options	-	-	-	-	-	(217)	(217)
Total income and expense for the period
recognised directly in equity	-	-	-	-	241	(217)	24
Profit for the period	-	-	-	-	-	5,098	5,098
Total income and expense for the period	-	-	-	-	241	4,881	5,122
Share issue	11	138	-	-	-	-	149
ESOT share issue	4	196	(100)	-	-	(100)	-
Shares vesting under deferred bonus scheme	-	-	113	-	-	(113)	-
Transfer to shareholders' funds - employee costs
expected to be satisfied in shares	-	-	-	-	-	233	233
Purchase and cancellation of share capital	(101)	-	-	101	-	(5,168)	(5,168)
Equity dividends paid	-	-	-	-	-	(3,961)	(3,961)
At 2 October 2007	4,717	9,852	(107)	226	122	32,890	47,700
Currency translation differences
on foreign currency net investments	-	-	-	-	1,095	-	1,095
Tax debit on employee share options	-	-	-	-	-	(253)	(253)
Total income and expense for the period
recognised directly in equity	-	-	-	-	1,095	(253)	842
Profit for the period	-	-	-	-	-	6,156	6,156
Total income and expense for the period	-	-	-	-	1,095	5,903	6,998
Share issue	18	507	-	-	-	-	525
Shares vesting under deferred bonus scheme	-	-	2	-	-	(2)	-
Transfer to shareholders' funds - employee costs
expected to be satisfied in shares	-	-	-	-	-	265	265
Purchase and cancellation of share capital	(107)	-	-	107	-	(4,328)	(4,328)
Equity dividends paid	-	-	-	-	-	(1,741)	(1,741)
At 31 March 2008	4,628	10,359	(105)	333	1,217	32,987	49,419
Currency translation differences
on foreign currency net investments	-	-	-	-	(9)	-	(9)
Tax debit on employee share options	-	-	-	-	-	(44)	(44)
Total income and expense for the period
recognised directly in equity	-	-	-	-	(9)	(44)	(53)
Profit for the period	-	-	-	-	-	3,913	3,913
Total income and expense for the period	-	-	-	-	(9)	3,869	3,860
Share issue	11	159	-	-	-	-	170
Transfer to shareholders' funds - employee costs
expected to be satisfied in shares	-	-	-	-	-	167	167
Purchase and cancellation of share capital	(30)	-	-	30	-	(828)	(828)
Equity dividends paid	-	-	-	-	-	(4,293)	(4,293)
At 29 September 2008	4,609	10,518	(105)	363	1,208	31,902	48,495

  Notes to the Group Interim Financial Statements

1. General Information

Majestic Wine PLC is a public limited company ("Company") incorporated in the United Kingdom under the Companies Act 1985 (registration number 2281640). The Company is domiciled in the United Kingdom and its registered address is Majestic House, Otterspool Way, Watford, WD25 8WW. The Company's Ordinary Shares are traded on the Alternative Investment Market ("AIM"). Copies of the Interim Report are being sent to shareholders. Further copies of the Interim Report and Annual Report and Accounts may be obtained from the address above.

The Group's principal activity is the retailing of wines, beers and spirits.

2. Basis of preparationThe interim financial statements of the Group for the 26 weeks ended 29 September 2008, which are unaudited, have been prepared in accordance with the accounting policies set out in the annual report and accounts for the 52 weeks ended 31 March 2008, except as follows:-

The Group has early adopted the revision to IAS 23 Borrowing Costs during the period. Adoption of this revised standard has resulted in the capitalisation of borrowing costs which relate to qualifying assets. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. In accordance with the transitional provisions in the standard, the Group has adopted this as a prospective change. No changes have been made to borrowing costs incurred prior to 1 April 2008. In the six months to 29 September 2008 borrowing costs of £48,000 have been capitalised.

The financial information contained in the interim report does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The financial information for the full preceding year is based on the statutory accounts for the 52 weeks ended 31 March 2008. Those accounts, upon which the auditors, Ernst & Young LLP, issued an unqualified audit opinion, have been delivered to the Registrar of Companies.

As permitted, this interim report has been prepared in accordance with UK listing rules and not in accordance with IAS 34 "Interim Financial Reporting" - therefore it is not fully in compliance with IFRS.

The interim financial statements are presented in sterling and all values are rounded to the nearest thousand pounds (£000) except when otherwise indicated.

3. Segment reporting

The Group's primary segmental reporting format is geographical, based on the Group's management and internal reporting structure. Secondary information is reported by a single business segment, retailing.

	26 weeks	26 weeks	52 weeks
	ended	ended	ended
	29.09.08	01.10.07	31.03.08
	£000	£000	£000
Revenue
Retailing - UK	88,772	84,783	185,283
Retailing - France	5,345	6,222	11,743
Total revenue	94,117	91,005	197,026
Segment result
Retailing - UK	5,286	6,513	15,098
Retailing - France	414	894	1,406
Finance revenue less finance costs	(84)	135	198
Profit before tax	5,616	7,542	16,702

4. Taxation

Taxation for the 26 weeks to 29 September 2008 has been calculated by applying the estimated tax rate for the current financial year ending 30 March 2009. 

5. Earnings per share

Basic earnings per share is calculated on profit for the period attributable to equity shareholders of £3,913,000 (2007: £5,098,000) apportioned over the weighted average number of Ordinary Shares that were in issue for the period: 61,527,904 (2007: 63,590,078). The calculation of diluted earnings per share is in accordance with IAS 33 - Earnings Per Share. The weighted average number of Ordinary Shares in issue has been adjusted to take account of the effect of all dilutive potential Ordinary Shares. The number of shares used in the calculation was 61,690,751 (2007: 64,354,584).

6. Dividend

A dividend of 7.0p net per share was paid to shareholders on 15 August 2008. An interim dividend of 2.8p per share will be paid on 9 January 2009 to shareholders on the register at the close of business on 12 December 2008.

ENDIR FKOKQOBDDKDK

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