25th Jun 2007 07:03
Majestic Wine PLC25 June 2007 FOR IMMEDIATE RELEASE 25 June 2007 Majestic Wine PLC PRELIMINARY RESULTS Majestic Wine PLC ("Majestic"), the UK's largest wine warehouse chain, todayannounces its preliminary results for the 53 weeks ended 2 April 2007. Highlights • Profit before tax increased by 14.1% to £16.2m (2006: £14.2m). • Total sales up 11.0% to £191.2m (2006: £172.2m). Like for like UK sales up 4.9%. • A good start to the financial year, with like for like UK sales up 4.9% in the first eleven weeks to 18 June. • Final dividend of 6.2p net per share, bringing the total dividend to 8.5p net per share, an increase of 21.4% on 2006. • Average bottle of wine purchased at Majestic is now £5.75 (2006: £5.59). Average spend per transaction has risen to £123 (2006: £118). • Continuing significant growth in internet sales, orders over the web were up 35% on last year, now representing 7.2% of UK retail sales. • Good progress made in increasing the rate of the store-opening programme with eight new stores opened during the financial year and three re-sites. Since the year end an additional store opened in Sonning, giving 136 stores in the UK. Commenting on the results Tim How, Chief Executive of Majestic, said: "We are encouraged by our ability to attract new customers and see a continuingtrend towards purchasing higher quality wines. We believe that prospects for thefuture growth of Majestic are good." For further information, please contact:Tim HowMajestic Wine PLC Tel: 01923 298200 Tim Thompson / Nicola Cronk/ Susanna Gale Tel: 020 7466 5000Buchanan Communications Majestic Wine PLC's nominated adviser is Teather & Greenwood. Contact Tom HulmeTel: 020 7426 9000. High resolution images are available for the media to download free of chargefrom www.vismedia.co.uk Chairman's Statement I am very pleased to announce that the Group has achieved its fourteenthconsecutive year of profit growth. Profit before tax increased by 14.1% to £16.2m and total Group sales were up11.0% to £191.2m with like for like UK sales growing 4.9%. Dividend We are recommending for approval by shareholders at the Annual General Meeting afinal dividend of 6.2 pence net per share payable on 10 August 2007 toshareholders on the register on 13 July 2007. This brings the total dividend to8.5 pence net per share, an increase of 21.4% on 2006, in line with ourprogressive dividend policy. Share Buy-back Programme In our interim statement we announced our intention to commence an open marketprogramme to buy back Ordinary Shares up to a maximum value of £20m. To date wehave made purchases of 1.66m Ordinary Shares for an aggregate consideration of£5.4m. The Board intends to continue the programme to the same maximum, butonly on the basis that any buy-backs are enhancing to shareholder value. Wewill therefore be seeking to renew the existing authority for the Company topurchase up to 10% of its issued share capital at the forthcoming Annual GeneralMeeting. People We know that outstanding customer service is at the heart of Majestic'scontinuing success. This service is built from the professionalism andexpertise of the people in Majestic, in both the stores and the support areas. Iwould like to thank all of our team for creating these excellent results. Current Trading We have had a good start to the new financial year, with UK like for like salesgrowth in the first eleven weeks, from 3 April to 18 June 2007, at 4.9% Simon BurkeChairman25 June 2007 Review of Operations We have seen a good increase in our customer base. The number of customers, whohave made purchases in the last twelve months, is up by 7% to over 400,000. Theaverage bottle price of still wine purchased at Majestic has increased to £5.75from £5.59 and the average spend per transaction has risen to £123 from £118last year. Sales growth was particularly strong in wines from Bordeaux, Loire, Spain, NewZealand, Chile and Argentina. Sales of Champagne and rose wine also continuedto show very good growth. Sales of fine wine (still wine priced at £20 and above) grew well increasing 25%and now accounting for 3.6% of UK retail sales. Currently 28 stores havededicated fine wine sales areas and by Christmas we expect to have extended thisto 40. We continue to operate a combination of long term promotions backed up byshorter run deep cut offers and this strategy has again proven very successful.Each campaign is supported by customer communication and during the year, fourfull price lists and three promotional leaflets were mailed. We recognise theimportance of regular contact with our customers and already this year we havemailed an additional leaflet to support our May Champagne offer. Customer Service We differentiate our business from the competition in a variety of ways. Ateach of our stores we hold a wide range of stock in depth and customers canalways taste a selection of wines at our in-store tasting counters. We havededicated customer car parking on site at all our stores (except four stores incentral London) and we offer a carry-to-car service. We operate free deliveryseven days a week arranged at a time to suit. However the most importantdifferentiator is the quality of the customer service provided by our staff. We recruit motivated people, primarily at graduate level, who have an interestin learning about wine and customer service. We place great emphasis onemployee development and have designed a comprehensive internal trainingprogramme, which is recognised as being one of the best in the wine industry. All our retail staff take the Wine and Spirit Education Trust's (WSET) AdvancedCertificate after about six months in the Company. We encourage them to furthertheir wine knowledge and 140 either hold or are studying for the WSET Diploma in2007. We were delighted that five of our team received WSET "Awards ofExcellence" in February 2007 for outstanding papers in their AdvancedCertificate and Diploma examinations. Particular congratulations go to ClaireDawson, one of our store managers, who won the highest accolade - the Vintner'sCup, awarded annually to the top graduate who achieved the highest aggregatemark in the two-year Diploma exam. New Stores We are pleased with the progress made in increasing the rate of ourstore-opening programme. We opened in eight new locations during the financialyear in East Molesey, Bicester, Cheam, Leamington Spa, Lincoln, Huddersfield,Dulwich and Colchester. In addition, we have re-sited our stores in Cardiff,Tunbridge Wells and Sheffield. Since the year end we have opened in Sonning, giving us 136 stores in the UK.In addition we have re-sited our units in Chester and St. Albans and relocatedfrom Acocks Green to Shirley in Birmingham. We also have a number of otherlocations in advanced stages of negotiation, including sites in Aberdeen,Brentford Lock, Hereford, Macclesfield and Sevenoaks. We now own 30 freeholdsites. Ecommerce The number of orders placed over our website, www.majestic.co.uk, continues toshow significant growth increasing by 35% in the year and now representing 7.2%of UK retail sales. We have successfully increased our database of emailaddresses for customers and we now have more than 150,000, up by 50%. Later in 2007 we will be launching a new website on a more flexible and secureplatform designed to support future growth. The new site will improve thecustomer experience with better search and navigation options, as well asfeaturing more content to emphasise our wine expertise. We will also be able toachieve greater levels of personalisation and targeted marketing. Corporate Sales The year has seen another successful period with sales to corporate customersnow representing 26% of UK sales. We have increased our regional sales team tofourteen and see considerable opportunities for further sales growth. Theirresponsibility is to source new restaurant, hotel and business accounts with allsubsequent logistics handled by the nearest Majestic store. Additionally in London we have a sales team of ten. They operate from adedicated depot and office near King's Cross and sell to larger corporatecustomers in the City and West End. Wine and Beer World We have experienced challenging trading conditions in our French business as themarket continues to suffer from a decline in day-trip traffic. Like for likesales, on a same currency basis, declined 5.2% on last year. However in thesecond half, sales declined by only 1.8% and since the financial year end wehave seen a modest sales increase. The business generated profit before tax of£1.8m compared with £1.9m last year. The pre-ordering of wines before travellingto France for collection from our stores continues to grow in importance.Customers may order via our website, www.wineandbeer.co.uk, or over thetelephone and together these account for 34% of sales. Future Prospects We are encouraged by our ability to attract new customers and see a continuingtrend towards purchasing higher quality wines. We believe that prospects forthe future growth of Majestic are good. Tim HowChief Executive25 June 2007 Group Income StatementFor the year ended 2 April 2007 53 weeks to 52 weeks to 02.04.07 27.03.06 Note £000 £000 Revenue 191,193 172,195Cost of sales (150,879) (135,925) Gross profit 40,314 36,270Distribution costs (14,945) (13,834)Administrative costs (10,218) (8,827)Other operating income 534 469 Operating profit 15,685 14,078Finance revenue 474 155Finance costs (1) (74) Profit before taxation 16,158 14,159UK income tax 5 (4,675) (3,885)Overseas income tax 5 (578) (644) Profit for the year attributable to equity shareholders of the parent 10,905 9,630company Earnings per shareBasic 6 16.8p 15.0pDiluted 6 16.6p 14.7p Total dividend per share for the year 8.5p 7.0p Group and Company Balance SheetsAs at 2 April 2007 Group Company 02.04.07 27.03.06 02.04.07 27.03.06 £000 £000 £000 £000Non current assetsGoodwill and intangible fixed assets 6,426 6,708 - -Property, plant and equipment 36,723 33,732 - -Prepaid operating lease costs 1,251 1,203 - -Deferred tax asset 1,271 2,125 - -Investments in subsidiaries - - 12,021 12,021 45,671 43,768 12,021 12,021Current assetsInventories 30,335 28,698 - -Trade and other receivables 6,731 6,116 21,386 8,896Financial instruments at fair value 69 129 - -Cash and cash equivalents 4,484 5,916 - - 41,619 40,859 21,386 8,896Non current assets held for sale 588 - - -Total assets 87,878 84,627 33,407 20,917 Current liabilities:Trade and other payables (33,648) (33,725) - -Provisions (318) (229) - -Deferred lease inducements (95) (93) - -Financial instruments at fair value (4) (49) - -Current tax liabilities (1,321) (770) - - (35,386) (34,866) - -Non current liabilities Trade and other payables - - (2,000) (2,000)Provisions (60) (57) - -Deferred lease inducements (703) (728) - -Deferred tax liabilities (404) (331) - -Total liabilities (36,553) (35,982) (2,000) (2,000)Net assets 51,325 48,645 31,407 18,917 Shareholders' equityCalled up share capital 4,803 4,864 4,803 4,864Share premium account 9,518 8,371 9,518 8,371Capital reserve - own shares (120) (391) - -Capital redemption reserve 125 - 125 -Currency translation reserve (119) 107 - -Retained earnings 37,118 35,694 16,961 5,682Equity shareholders' funds 51,325 48,645 31,407 18,917 Group and Company Cash Flow StatementsFor the year ended 2 April 2007 Group Company 53 weeks 52 weeks 53 weeks 52 weeks 02.04.07 27.03.06 02.04.07 27.03.06 £000 £000 £000 £000 Cash flows from operating activities:Profit for the year 10,905 9,630 - -Income tax expense 5,253 4,529 - -Net finance revenue (473) (81) - -Amortisation and depreciation 2,733 2,519 - -Profit on disposal of non current assets (410) (133) - -Increase in inventories (1,637) (791) - -Increase in trade and other receivables (615) (2,230) (12,236) (1,310)Decrease in trade and other payables (67) (8) - -Decrease in deferred income (23) (63) - -Change in fair value of derivative instruments 15 (93) - -Increase in provisions 92 64 - -Share based payments 577 483 - -Cash generated/(utilised) by operations 16,350 13,826 (12,236) (1,310) UK income tax paid (2,595) (3,948) - -Overseas income tax paid (618) (699) - -Net cash generated/(utilised) by operating activities 13,137 9,179 (12,236) (1,310) Cash flows from investing activitiesInterest received 464 170 - -Dividends received - - 21,278 3,787UK income tax paid (78) (34) - -Overseas income tax paid (18) (16) - -Purchase of non current assets (8,109) (8,971) - -Receipts from sales of non current assets 1,560 54 - -Receipts from sales of non current assets held for sale 697 465 - -Net cash (utilised)/generated by investing activities (5,484) (8,332) 21,728 3,787 Cash inflow before financing 7,653 847 9,042 2,477 Cash flows from financing activitiesInterest paid (1) (74) - -Issue of Ordinary Share capital 1,211 877 1,211 877Receipt for exercise of share options satisfied by QUEST - 199 - 199Receipt for shares issued to ESOT - - - 232Shares re-purchased (5,445) - (5,445) -Equity dividends paid (4,808) (3,785) (4,808) (3,785)Net cash used by financing activities (9,043) (2,783) (9,042) (2,477)Net decrease in cash and cash equivalents (1,390) (1,936) - -Cash and cash equivalents at beginning of year 5,916 7,840 - -Effect of foreign exchange differences (42) 12 - -Cash and cash equivalents at end of year 4,484 5,916 - - Group and Company Statement of Changes in EquityFor the year ended 2 April 2007 Capital Reserve Own Total Share 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 £000GroupAt 28 March 2005 as previously stated 4,776 6,750 (407) - - 28,213 39,332Prior year effect of adoption of IFRS - - - - - 1,268 1,268At 28 March 2005 as restated 4,776 6,750 (407) - - 29,481 40,600Share issue 64 813 - - - - 877ESOT share issue 7 225 (116) - - (116) -QUEST share issue 17 583 - - - (600) -Options satisfied from QUEST - - - - - 199 199Transfer to shareholders' funds -employee costs expected to be satisfied in shares - - - - - 483 483Shares vesting under deferred bonus - - 132 - - (132) -schemeProfit for the year - - - - - 9,630 9,630Currency translation differences on foreign currency net investments - - - - 107 - 107Tax credit on employee share options - - - - - 534 534Total income and expense for the year - - - - 107 10,164 10,271Equity dividends paid - - - - - (3,785) (3,785)At 27 March 2006 4,864 8,371 (391) - 107 35,694 48,645Share issue 64 1,147 - - - - 1,211Shares vesting under deferred bonus - - 271 - - (271) -schemeTransfer to shareholders' funds -employee costs expected to be satisfied in shares - - - - - 577 577Profit for the year - - - - - 10,905 10,905Currency translation differences on foreign currency net investments - - - - (226) - (226)Tax credit on employee share options - - - - - 466 466Total income and expense for the year - - - - (226) 11,371 11,145Purchase and cancellation of share (125) - - 125 - (5,445) (5,445)capitalEquity dividends paid - - - - - (4,808) (4,808) At 2 April 2007 4,803 9,518 (120) 125 (119) 37,118 51,325CompanyAt 28 March 2005 4,776 6,750 - - - 6,081 17,607Share issue 64 813 - - - - 877ESOT share issue 7 225 - - - - 232QUEST share issue 17 583 - - - (600) -Options satisfied from QUEST - - - - - 199 199Profit for the year - - - - - 3,787 3,787Total income and expense for the year - - - - - 3,787 3,787Equity dividends paid - - - - - (3,785) (3,785)At 27 March 2006 4,864 8,371 - - - 5,682 18,917Share issue 64 1,147 - - - - 1,211Profit for the year - - - - - 21,532 21,532Total income and expense for the year - - - - - 21,532 21,532 Purchase and cancellation of share (125) - - 125 - (5,445) (5,445)capitalEquity dividends paid - - - - - (4,808) (4,808)At 2 April 2007 4,803 9,518 - 125 - 16,961 31,407 Notes to the Financial Statements 1. General information Majestic Wine PLC is a public limited company ("Company") incorporated in theUnited Kingdom under the Companies Act 1985 (registration number 2281640).The Company is domiciled in the United Kingdom and its registered address isMajestic House, Otterspool Way, Watford, WD25 8WW. The Company's OrdinaryShares are traded on the Alternative Investment Market ("AIM"). The Group's principal activity is the retailing of wines, beers and spirits.The Company's principal activity is to act as a holding company for itssubsidiaries. 2. Basis of preparation The preliminary results for the year ended 2 April 2007 have been prepared inaccordance with International Financial Reporting Standards ("IFRS") as adoptedby the EU and are in line with the accounting policies set out in the interimfinancial statements for the 26 weeks to 25 September 2006. The financial information in the preliminary statement of results does notconstitute statutory accounts within the meaning of Section 240 of the CompaniesAct 1985 (the "Act"). The financial information for the year ended 27 March 2006has been extracted from the statutory accounts on which an unqualified auditopinion has been issued. Statutory accounts for the year ended 2 April 2007 willbe delivered to the Registrar of Companies following the Company's AnnualGeneral Meeting. The financial statements, and this preliminary statement, of Majestic Wine PLCfor the year ended 2 April 2007 were authorised for issue by the Board ofDirectors on 25 June 2007 and the balance sheet was signed on behalf of theBoard by Simon Burke. The statutory accounts have been delivered to the Registrar of Companies inrespect of the year ended 27 March 2006 and the Auditors of the Company made areport thereon under Section 235 of the Act. That report was an unqualifiedreport and did not contain a statement under Section 237(2) or (3) of the Act. An explanation of the transition from UK GAAP to IFRS is included in note 7 tothis statement. 3. Dividend A final dividend of 6.2 pence net on each Ordinary Share will bepayable on 10 August 2007 to shareholders on the register on 13 July 2007. 4. Segment reporting The Group's primary segmental reporting format is geographical, based on theGroup's management and internal reporting structure. Secondary information isreported by a single business segment, retailing. Segment results, assets and liabilities include items directly attributable to asegment as well as those that can be allocated on a reasonable basis.Unallocated items are taxation related assets and liabilities. Inter-segmenttransactions are conducted on an arm's length basis in a manner similar totransactions with third parties. Segment results include transfers betweenbusiness segments. Those transfers are eliminated on consolidation. Segmentcapital expenditure is the total cost incurred during the year to acquiresegment assets that are expected to be used for more than one period includingitems held for resale and prepaid operating lease costs. Geographical segmentsSegment analysis 2007 Retailing Retailing UK France Unallocated Group £000 £000 £000 £000 Segment revenue 178,512 12,681 - 191,193 Segment result 13,971 1,714 - 15,685Finance revenue 414 60 - 474Finance costs (1) - - (1) Profit before tax 14,384 1,774 - 16,158Income tax expense (4,675) (578) - (5,253) Profit for the year 9,709 1,196 - 10,905 Segment assets 76,577 10,030 1,271 87,878 Segment liabilities (33,561) (2,588) (404) (36,553) Other segment items:Purchase of non current assets 8,088 21 - 8,109Depreciation and amortisation 2,588 145 - 2,733Share based payments 577 - - 577 Segment analysis 2006 Retailing Retailing UK France Unallocated Group £000 £000 £000 £000 Segment revenue 158,982 13,213 - 172,195 Segment result 12,242 1,836 - 14,078Finance revenue 108 47 - 155Finance costs (74) - - (74) Profit before tax 12,276 1,883 - 14,159Income tax expense (3,885) (644) - (4,529) Profit for the year 8,391 1,239 - 9,630 Segment assets 72,200 10,302 2,125 84,627 Segment liabilities (32,967) (2,684) (331) (35,982) Other segment items:Purchase of non current assets 8,945 26 - 8,971Depreciation and amortisation 2,360 159 - 2,519Share based payments 483 - - 483 5. Taxation a) Taxation charge 53 weeks to 52 weeks to 02.04.07 27.03.06 £000 £000 Current income tax expense:UK income tax 4,570 3,908Adjustment in respect of the previous year (792) (393)Overseas income tax on subsidiary undertaking 578 644 Total current income tax expense 4,356 4,159 UK deferred tax expense:Origination and reversal of temporary differences 26 (42)Adjustment in respect of prior years 871 412 Total deferred tax expense 897 370 Total income tax expense charged in the income statement 5,253 4,529 b) Taxation reconciliation 53 weeks to 52 weeks to 02.04.07 27.03.06 £000 £000 Profit before tax 16,158 14,159Taxation at the standard UK corporation tax rate of 30% (2006: 30%) 4,847 4,248Adjustments in respect of prior years 79 19Overseas income tax at higher rates 59 63Non-deductible expenses 289 199Income not taxable (21) - Total income tax expense charged in the income statement 5,253 4,529 Effective tax rate 32.5% 32.0% c) Tax on items credited to equity 53 weeks to 52 weeks to 02.04.07 27.03.06 £000 £000 Current tax credit on share based payments (496) (484)Deferred tax charge/(credit) on share based payments 30 (50) Total tax on items credited to equity (466) (534) d) Deferred tax Accelerated Short-term Total tax temporary Share-based deferred Deferred tax depreciation differences payments tax assets liabilities Total £000 £000 £000 £000 £000 £000 At 28 March 2005 (138) 449 2,134 2,445 (331) 2,114(Charged)/credited to the incomestatement (14) 25 (381) (370) - (370)Credited/(charged) to equity - 98 (48) 50 - 50 At 27 March 2006 (152) 572 1,705 2,125 (331) 1,794Charged to the income statement (33) (13) (778) (824) (73) (897)Credited/(charged) to equity - 31 (61) (30) - (30) At 2 April 2007 (185) 590 866 1,271 (404) 867 The deferred tax liabilities relate solely to held-over capital gains arising onthe disposal of freehold properties. e) Factors that may affect future tax charges The Group's overseas tax rate is higher than that in the UK as profits earned byLes Celliers de Calais S.A.S. in France are taxed at a rate of 32.6% (2006:34.3%). No deferred tax is recognised on the unremitted earnings of overseassubsidiaries as the Group has no liability to additional taxation should suchamounts be remitted due to the availability of double taxation relief. Thetemporary difference unrecognised at the year end amounted to £541,000 (2006:£539,000). 6. Earnings per share The calculations of earnings per Ordinary Share are based upon profits aftertaxation of £10,905,000 (2006: £9,630,000). The number of Ordinary Shares used in the diluted earnings per share iscalculated as follows:- 2007 2006 Basic weighted average number of shares 64,771,571 64,210,980Dilutive potential Ordinary Shares:Employee share options 830,790 1,166,275 65,602,361 65,377,255 Reconciliation of earnings per Ordinary Share to diluted earnings per OrdinaryShare: 2007 2006 Earnings per Ordinary Share 16.8p 15.0pDilutive effect of employee share options (0.2)p (0.3)p Diluted earnings per Ordinary Share 16.6p 14.7p 7. Reporting under International Financial Reporting Standards These preliminary results are the first to be prepared under IFRS. Thecomparative figures have been prepared on the same basis and have therefore beenrestated from those previously prepared under UK GAAP. The commentary belowdetails the key changes that have arisen due to the transition to reportingunder IFRS. The Group's date of transition is 29 March 2005, which is thebeginning of the comparative period for the 2005/2006 financial year. Thereforethe opening balance sheet for IFRS purposes is that reported at 28 March 2005 asamended for changes due to IFRS. To explain the impact of the transition, reconciliations are included below thatshow the changes made to the statements previously reported under UK GAAP. Thefollowing reconciliations are included: 1. Reconciliation of Group balance sheet at 28 March 2005 from UK GAAP toIFRS, 2. Reconciliation of Group balance sheet at 27 March 2006 from UK GAAP toIFRS, and 3. Reconciliation of Group income statement for the 52 weeks ended 27March 2006 from UK GAAP to IFRS. The transition from UK GAAP to IFRS does not effect the cash flows generated bythe Group. The IFRS cash flow statement is presented in a different format thanthat required under UK GAAP. The reconciling items between the UK GAAP formatand the IFRS format have no net impact on the cash flows generated andaccordingly reconciliations have not been presented. The transition from UK GAAP to IFRS does not effect the figures previouslyreported by the Company and accordingly reconciliations have not been presented. First time adoption The Group has applied the provisions of IFRS 1 - First Time Adoption ofInternational Financial Reporting Standards which, generally, requires that IFRSaccounting policies be applied retrospectively in determining the openingbalance sheet at the date of transition. IFRS 1 contains both mandatory andoptional exemptions to the principle of retrospective application. Where theGroup has made use of an exemption it is noted below. Descriptions of the reconciling items between UK GAAP and IFRS are listed below.The amounts of the reconciling items are detailed in tables set out beneatheach of the reconciliations. Share-based payments The Group operates a number of executive and employee share schemes. For allgrants of share options and awards the fair value at the date of grant iscalculated using an appropriate pricing model and the corresponding expense isrecognised over the vesting period. The Group has elected to take advantage ofthe transitional provisions of IFRS 2 and has applied the fair value model toall grants of equity instruments after 7 November 2002 that had not vested as at28 March 2005. In addition the Group has applied the provisions of IFRS 2 to the Group's seniormanagement bonus scheme. The scheme includes the issue of matching loyaltyshares to participants after a two year deferral period. Previously under UKGAAP the cost of issuing these shares was borne in the period in which theinitial bonus was earned; under IFRS the cost is spread over the bonus year andthe deferral period. Goodwill and business combinations The Group has taken the exemption not to apply IFRS 3 retrospectively tobusiness combinations occurring prior to the date of transition to IFRS.Goodwill arising on the acquisition of subsidiaries prior to 31 December 1997was written off immediately against reserves and this has not been reinstated.Goodwill arising on the acquisition of the French subsidiary in October 2001,Les Celliers de Calais S.A.S., has been retained at its carrying value as at 28March 2005. The Group under the provisions of IAS 36 only recognisesimpairment. This results in the reversal of the goodwill amortisationpreviously charged to the income statement in the 52 weeks to 27 March 2006. Assets held for sale As at 28 March 2005 the Group owned three residential flats above freeholdproperties in Roehampton and Bromley with a net book value of £350,000 which metthe criteria of assets held for sale under IFRS 5. These have beenreclassified to a separate line within total assets on the Group balance sheet. Intangible assets On transition the Group following the provisions of IAS 36 has reclassifiedseparately identifiable computer software assets from tangible assets tointangible assets. Prepaid operating lease costs The Group incurs costs in acquiring property leases. The Group previouslytreated these costs as additions to tangible fixed assets, however under IAS 17they are more correctly described as prepaid operating lease expenses.Accordingly on transition these expenses are reclassified from tangible fixedassets to prepaid lease costs. The expenses are amortised over the lives of theoperating leases on which they were incurred. Lease inducements The Group under UK GAAP recognised rent free periods over the period to thecommencement of market rent and premiums paid, over the period to the firstmarket rent review. According to provisions in SIC15 lease incentives arespread over the full term of the lease. As at the date of transition, deferredincome reflecting the amount of lease inducements to be taken to the incomestatement in future periods has been recognised on the balance sheet. Cumulative translation differences Under IAS 21, exchange differences arising on consolidation of overseassubsidiaries are required to be recognised as a separate equity reserve. TheGroup has utilised the exemption available in IFRS 1 whereby cumulativetranslation differences are deemed to be zero at the date of transition to IFRS. Previously under UK GAAP purchases covered by forward currency contracts weretranslated at their contract rate when initially recognised. This is notpermitted under IAS 21 as items must be converted at the spot rate on the dateof transaction with any impact of the forward currency contract being accountedfor under IAS 39 - see derivative financial instruments section below. As aresult an adjustment has been made to reverse the effects of using the contractrate. Employee benefits The Group in accordance with IAS 19 has recognised untaken holiday payentitlements as at the date of transition to IFRS. Derivative financial instruments The Group makes use of forward currency contracts in order to mitigate exposuresto movements in exchange rates that arise from its dealings with foreignsuppliers. The Group applied hedge accounting under UK GAAP but has decidednot to under IFRS. The Group has applied the provisions of IAS 39 and hasre-measured the derivative at fair value at each balance sheet date taking anygain or loss to the income statement. Deferred taxation IAS 12 takes a balance sheet approach to deferred tax whereby deferred tax isrecognised in the balance sheet by applying the appropriate tax rate to thetemporary differences arising between the carrying value of assets andliabilities and their tax base. The Group, on transition to IFRS, has recognised a deferred tax asset arising onthe difference between share price and exercise price of unexercised employeeshare options. These were previously credited to the income statement in theyear that the market value adjustment arising on exercised share options wasclaimed from the relevant tax authorities. In addition the Group has recogniseddeferred tax liabilities arising on held-over capital gains previously reportedby way of note to the financial statements. Reconciliation of Group balance sheet at 28 March 2005 from UK GAAP to IFRS UK GAAP Effect of IFRS As at transition As at 28.03.05 to IFRS 28.03.05 £000 £000 £000Non current assetsGoodwill and intangible fixed assets 6,135 576 6,711Property, plant and equipment 29,347 (2,082) 27,265Prepaid operating lease costs - 1,156 1,156Deferred tax asset 40 2,405 2,445 35,522 2,055 37,577Current assetsInventories 27,798 109 27,907Trade and other receivables 3,886 - 3,886Financial instruments at fair value - 18 18Cash and cash equivalents 7,840 - 7,840 39,524 127 39,651Non current assets held for sale - 350 350Total assets 75,046 2,532 77,578 Current liabilitiesTrade and other payables (33,625) (93) (33,718)Provisions (297) 96 (201)Deferred lease inducements - (90) (90)Financial instruments at fair value - (31) (31)Current tax liabilities (1,792) - (1,792) (35,714) (118) (35,832)Non current liabilitiesProvisions - (21) (21)Deferred lease inducements - (794) (794)Deferred tax liabilities - (331) (331)Total liabilities (35,714) (1,264) (36,978) Net assets 39,332 1,268 40,600 Shareholders' equityCalled up share capital 4,776 - 4,776Share premium account 6,750 - 6,750Capital reserve - own shares (407) - (407)Currency translation reserve - - -Retained earnings 28,213 1,268 29,481Equity shareholders' funds 39,332 1,268 40,600 Reconciliation of Group balance sheet at 28 March 2005 from UK GAAP to IFRS Non current Non assets Non Share- current Current held for Current current holders' assets assets sale liabilities liabilities funds £000 £000 £000 £000 £000 £000Conversion effects comprise: IAS38 - reclassification of software from tangible to intangible fixed assets 576 - - - - - IAS38 - reclassification of software from tangible to intangible fixed assets (576) - - - - - IAS17 - reclassification of prepaid operating lease costs from tangible fixed assets 1,156 - - - - - IAS17 - reclassification of prepaid operating lease costs from tangible fixed assets (1,156) - - - - - SIC15 - lease inducements now spread over full lease term - - - (90) (794) (884) IFRS5 - reclassification of residential flats as assets held for sale (350) - 350 - - - IAS19 - recognition of employee benefits: untaken holiday accrual - - - (123) - (123) IAS39 - recognition of fair value of derivative instruments - 18 - (31) - (13) IAS21 - reversal of hedge accounting - 109 - 38 - 147 IFRS2 - re-phasing of senior managers bonus costs - - - 67 - 67 IAS1 - reclassification of provisions to non current liabilities - - - 21 (21) - IFRS2 - recognition of share based payment reserve - - - - - 694 IFRS2 - recognition of share based payment reserve - - - - - (694) IAS12 - recognition of deferred tax asset for share based payments 2,147 - - - - 2,147 IAS12 - recognition of deferred tax liabilities for roll over relief - - - - (331) (331) IAS12 - tax effects of conversion 258 - - - - 258 Net movement 2,055 127 350 (118) (1,146) 1,268 Reconciliation of Group balance sheet at 27 March 2006 from UK GAAP to IFRS UK GAAP Effect of IFRS As at transition As at 27.03.06 to IFRS 27.03.06 £000 £000 £000Non current assetsGoodwill and intangible fixed assets 5,765 943 6,708Property, plant and equipment 35,420 (1,688) 33,732Prepaid operating lease costs - 1,203 1,203Deferred tax asset - 2,125 2,125 41,185 2,583 43,768Current assetsInventories 28,722 (24) 28,698Trade and other receivables 6,116 - 6,116Financial instruments at fair value - 129 129Cash and cash equivalents 5,916 - 5,916 40,754 105 40,859Non current assets held for sale - - - Total assets 81,939 2,688 84,627 Current liabilitiesTrade and other payables (33,615) (110) (33,725)Provisions (383) 154 (229)Deferred lease inducements - (93) (93)Financial instruments at fair value - (49) (49)Current tax liabilities (770) - (770) (34,768) (98) (34,866)Non current liabilitiesProvisions - (57) (57)Deferred lease inducements - (728) (728)Deferred tax liabilities (12) (319) (331)Total liabilities (34,780) (1,202) (35,982) Net assets 47,159 1,486 48,645 Shareholders' equityCalled up share capital 4,864 - 4,864Share premium account 8,371 - 8,371Capital reserve - own shares (391) - (391)Currency translation reserve - 107 107Retained earnings 34,315 1,379 35,694 Equity shareholders' funds 47,159 1,486 48,645 Reconciliation of Group balance sheet at 27 March 2006 from UK GAAP to IFRS Non current Non assets Non Share- current Current held for Current current holders' assets assets sale liabilities liabilities funds £000 £000 £000 £000 £000 £000Conversion effects comprise: IAS38 - reclassification of software from tangible to intangible fixed assets 485 - - - - - IAS38 - reclassification of software from tangible to intangible fixed assets (485) - - - - - IAS38 - goodwill no longer amortised annually 370 - - - - 370 IAS17 - reclassification of prepaid operating lease costs from tangible fixed assets 1,203 - - - - - IAS17 - reclassification of prepaid operating lease costs from tangible fixed assets (1,203) - - - - - SIC15 - lease inducements now spread over full lease term - - - (93) (728) (821) IAS19 - recognition of employee benefits: untaken holiday accrual - - - (119) - (119) IAS39 - recognition of fair value of derivative instruments - 129 - (49) - 80 IAS21 - reversal of hedge accounting - (24) - 9 - (15) IFRS2 - re-phasing of senior managers bonus costs - - - 97 - 97 IAS1 - reclassification of provisions to non current liabilities - - - 57 (57) - IAS21 - recognition of exchange difference arising on retranslation of goodwill 88 - - - - 88 IAS21 - recognition of exchange difference on translation of subsidiary - - - - - 19 IAS21 - recognition of exchange difference on translation of subsidiary - - - - - (19) IFRS2 - recognition of share based payment reserve - - - - - 869 IFRS2 - recognition of share based payment reserve - - - - - (869) IAS12 - recognition of deferred tax asset for share based payments 1,839 - - - - 1,839 IAS12 - recognition of deferred tax liabilities for roll over relief - - - - (319) (319) IAS12 - tax effects of conversion 286 - - - - 286 Net movement 2,583 105 - (98) (1,104) 1,486 Reconciliation of income statement for the 52 weeks ended 27 March 2006 from UKGAAP to IFRS UK GAAP IFRS 52 weeks Effect of 52 weeks ended transition ended 27.03.06 to IFRS 27.03.06 £000 £000 £000 Revenue 172,195 - 172,195Cost of sales (135,689) (236) (135,925) Gross profit 36,506 (236) 36,270Distribution costs (13,889) 55 (13,834)Administrative costs (8,959) 132 (8,827)Other operating income 469 - 469 Operating profit 14,127 (49) 14,078Finance revenue 155 - 155Finance costs (74) - (74) Profit before taxation 14,208 (49) 14,159 UK income tax (3,083) (802) (3,885)Overseas income tax (644) - (644) Profit for the year attributable to equity shareholders of the parent company 10,481 (851) 9,630 Earnings per shareBasic 16.3p (1.3)p 15.0pDiluted 16.0p (1.3)p 14.7p Basic £000 EPS (p)Conversion effects comprise: IFRS2 - employee option and bonus schemes (417) (0.6) SIC15 - lease inducements now spread over full lease term 63 0.1 IAS19 - employee benefits untaken holiday pay accrual 4 - IAS38 - goodwill no longer amortised annually 370 0.6 IAS39 - recognition of fair value of derivative instruments 93 0.1 IAS21 - reversal of hedge accounting (162) (0.3) Profit before taxation (49) (0.1) IAS12 - taxation effects of share based payments under IFRS2 (830) (1.3) IAS12 - taxation effect of conversion 28 0.1 Profit for the year (851) (1.3) This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Naked Wine