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Majestic Wine PLC (MJW)

  Print      Mail a friend       Annual reports

Monday 18 June, 2012

Majestic Wine PLC

Preliminary Results

RNS Number : 5118F
Majestic Wine PLC
18 June 2012
 



 

 

For Immediate Release

18 June 2012

 

 

Majestic Wine PLC

 

 

PRELIMINARY RESULTS

 

 

"Good progress towards strategic objectives"

 

 

 

Majestic Wine PLC ("Majestic"), the UK's largest wine specialist with 181 stores, today announces its preliminary results for the 53 weeks ended 2 April 2012.

 

HIGHLIGHTS

 

·     Group profit before tax increased by 14.5% to £23.2m (2011: £20.3m).

·     Total sales up 8.9% to £280.3m (2011: £257.3m).

·     Like for like sales in UK retail stores up 2.6%.

·     Final dividend of 11.8p net per share, bringing the total dividend for the year to 15.6p, an increase of 20.0% on last year (2011: 13.0p)

·     Lay & Wheeler: Profit before interest and tax at £1.9m (2011: £0.7m).

·     Majestic in France: Profit before interest and tax at £1.4m (2011: £1.0m).

 

 

Key Metrics

·     A further significant increase in the number of customers who have made purchases in the last twelve months, up 11.1% to 568,000.

·     Average spend per transaction up £2 to £128

·     Strong growth in transaction numbers, up 8.3% to 2.2m.

·     Average bottle of still wine purchased at Majestic is now £7.34 (2011: £6.94).

·     Online sales increased 7.8% on last year and now represent 10.0% of UK retail sales.

·     Majestic Commercial: Sales to business customers grew 6.9% on last year and now represent 24.0% of total UK sales.

·     Sales of fine wine (priced at £20 per bottle and above) increased by 18.5% on last year, representing 6.2% of UK store sales.



 

Stores

·     Record sixteen openings in the financial year. Evesham, Weston-Super-Mare, Fleet, Livingston, Hale, Dundee, Worthing, Bury St Edmunds, Clitheroe, Ripon, Braintree, Chesterfield, Wirral, Broadstairs, Wakefield and in Berwick upon Tweed.

·     Since the year end, we have opened in Northallerton, Esher and Queensferry Road in Edinburgh, giving us 181 stores in the UK.

·     We are confident of being able to expand Majestic to 330 locations.

 

 

Current Trading

·     In the ten weeks from 3 April to 11 June 2012, UK like for like sales up 0.6%.

 

 

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

 

"Majestic has a clearly differentiated operating model, with a focus on delivering exceptional customer service that has proved resilient in a challenging economic environment."

 

 

 

For further information, please contact:

Majestic Wine PLC


Steve Lewis, CEO

Nigel Alldritt, FD

Tel: 01923 298200



Buchanan


Tim Thompson / Nicola Cronk / Gabriella Clinkard

Tel: 020 7466 5000

High resolution images are available for the media, please contact Buchanan on 0207 466 5000.



Chairman's Statement

 

I am able to report that Majestic has delivered another excellent set of results.  Profit before tax for the 53 weeks ended 2 April 2012 grew 14.5% to £23.2m.  Total Group sales were up 8.9% to £280.3m with like for like UK sales increasing 2.6%.

 

This year the Group has made good progress towards its strategic objectives.  We have increased the rate of new store openings, expanded the business to business sales team and recently launched a mobile internet platform.

 

Dividend

The Board is recommending a final dividend of 11.8p per share.  This brings the total dividend to 15.6p per share, an increase of 20% on last year.

 

People

I continue to be impressed by the commitment and enthusiasm demonstrated by the people who work at Majestic. I would like to thank all of them for their efforts over the past year without which we would not have achieved these strong results.

 

It is their shared culture and values that make Majestic the company it is. I am delighted that the readers of Decanter magazine acknowledged this by voting Majestic their "Best National Wine Merchant".  It is also pleasing that at the International Wine Challenge in 2011 we were awarded "High Street Chain of the Year".

 

Current trading

We expect to make further good progress by continuing to invest in the development of internal talent, in the roll-out of the store portfolio and in customer facing technologies.

 

Whilst we recognise that the trading environment is likely to continue to be difficult we are well placed to deal with the challenges and opportunities ahead.  In the first ten weeks of the new financial year, from 3 April to 11 June 2012, we have achieved UK like for like sales growth of 0.6%.

 

 

 

 

 

Phil Wrigley

Chairman

18 June 2012

Review of Operations

 

It gives me great pleasure to report that we have achieved a 14.5% increase in profit before tax to £23.2m. Total Group sales for the year at £280.3m were £23.0m higher than last year.

 

Majestic Wine

We saw growth in sales on last year of 8.0%, up to £253.0m with like for like sales growing 2.6%.

 

We have seen a further significant increase in the number of customers who have made purchases in the last twelve months to 568,000, up 11.1% on last year.  This was reflected with strong growth in the number of transactions up 8.3% on last year to 2.2m whilst average spend per transaction increased by £2 to £128. The average bottle price of still wine purchased at Majestic is £7.34, up from £6.94 last year. 

 

Product

Majestic has a product range of real depth and diversity.  We are seen as the retailer of choice for the most innovative producers in our industry.  We have an experienced team of buyers who work hard to source interesting wine at the very best prices.  The range gives us an undoubted competitive advantage and helps to position us as the most creative wine specialist of scale in the UK.

 

We have seen particularly strong growth in sales of still wine from Argentina, Italy and Spain.  Our customers have eclectic tastes and like to explore wines from all over the world with New Zealand, South Africa, Chile, Portugal and the Loire all performing well.  Sales of sparkling wine also grew strongly.

 

Fine Wine

We have seen an increase of 18.5% in sales of wine priced at £20 per bottle and above and these now represent 6.2% of UK store sales.  Our staff have many opportunities to taste fine wine and this, coupled with their extensive product knowledge, gives them confidence to sell these complex wines.  Although the cornerstone of the range is represented by Bordeaux and Burgundy we have also seen significant sales of fine wines from the New World.

 

Customer Service

It is the excellent customer service delivered with great energy by our team of charming and articulate individuals that places Majestic aside from its competition.

 

We are now one of the UK's leading graduate employers recruiting over 200 new staff members each year.  The standard of applicants has never been higher as we are widely regarded as the best place to start a career in the UK wine industry.  All new retail staff undertake a series of training courses designed and delivered in-house that focus on customer service, management skills and product knowledge.

 

We work closely with the Wine and Spirit Education Trust (WSET) to develop our staff's product knowledge.  Every Trainee Manager is expected to take the WSET Level 3 Award in Wines and Spirits within their first year with Majestic.  We encourage the most able of our staff to further their knowledge by studying for the WSET Diploma over a two year period. 

 

We were delighted in January 2012 to have been recognised as the "WSET Educator of the Year", testament to the quality of the training we deliver and the investment we continue to make in developing our staff.



 

Customer Engagement

We have regular conversations with our customers and know that many of them want to further their understanding and enjoyment of wine.  We address this requirement by organising events in our stores which are free to attend.  These enable us to showcase our range and the impressive product knowledge of our staff. We can do this on a scale that our competitors would find difficult to replicate and over 37,000 customers attended an event in the past year.

 

At the beginning of last year we conducted extensive research into wine consumers who are not customers of Majestic.  The research clearly indicated that there was considerable scope to increase awareness of the Majestic brand.  In order to determine whether mainstream advertising would broaden Majestic's reach and penetration we conducted a test in the London media region featuring how our staff contribute to our brand values.  The results were encouraging and a national multi-media test campaign was launched in May 2012. At the time of writing this report the results from the second test are not yet available.

 

ECommerce

Online sales were up 7.8% on last year representing 10.0% of total UK retail sales. The average transaction value rose 1.4% to £144 and we processed 190,000 orders, up from 175,000 last year.

 

We recognise that the web is an environment which is continually changing with customer expectations that are rapidly evolving.  We are constantly innovating to enhance our customer's experience and bring the Majestic in-store values online.  During the year we have changed our menu structure allowing faster navigation, improved our product pages with better descriptions and enabled social sharing by customers.  We have also overhauled our system for customer, staff and press reviews and have been rewarded with an eightfold increase in the number of reviews to 16,000.

 

We have given all our stores their own Twitter handle and Facebook page which enables them to bring their own personalities online.  Retail staff can publish items specific to their store, such as the wines that are available to taste that day or the timing of the next customer event.  We are pleased that our activities in social media were awarded the accolade of "Innovation in Multichannel Marketing" at the Econsultancy Innovation Awards 2012.

 

Since the year end we have launched our mobile optimised version of the website.  This allows customers who are using devices with smaller screens to more easily view and navigate the site.  The initial customer response has been very positive and we have already noted an improved conversion of visitor traffic to sales. 

 

Commercial

Majestic is particularly well suited to meet the needs of business customers.  We hold extensive stocks at each of our locations with the ability to offer credit facilities and arrange deliveries seven days per week. Sales to business customers increased 6.9% on last year and now represent 24.0% of total UK sales.

 

The sales managed by our commercial sales team have grown very strongly and are up 26.5% on last year.  The commercial team sources and builds relationships with restaurants, hotels and gastro pubs with all subsequent logistics handled by the nearest Majestic store and our depot in King's Cross.

 

We see good prospects for further rapid growth of our sales to on-trade customers.  We have built an excellent team of sales professionals and have given them the tools, bespoke product and marketing support to be able to attract and retain customers.  We were delighted to have been recognised as "Best Newcomer" at the Sommelier Wine Awards in May 2011.



 

New stores

We have made good progress in the expansion of our store portfolio with a record sixteen openings in the financial year.  We opened in Evesham, Weston-Super-Mare, Fleet, Livingston, Hale, Dundee, Worthing, Bury St Edmunds, Clitheroe, Ripon, Braintree, Chesterfield, Wirral, Broadstairs, Wakefield and in Berwick upon Tweed.  We are encouraged with the initial sales at all these stores.

 

Since the year end we have opened in Northallerton, Esher and Queensferry Road in Edinburgh.  We currently trade from 181 stores in the UK and are confident of being able to expand Majestic to 330 locations.

 

Lay & Wheeler

Lay & Wheeler is our fine wine merchant and has particular expertise in en primeur sales, cellarage and broking of customer reserves. Profit before interest and tax for the year was £1.9m up from £0.7m in the previous year.  The improvement in profit partly arises from recognising £0.6m from the record Bordeaux 2009 vintage, which has been released and delivered to customers earlier than we previously indicated.

 

During the year we sold en primeur wines from the excellent Bordeaux 2010 vintage.  Although this campaign was successful, sales were lower than that recorded for the exceptional Bordeaux 2009 vintage sold in the prior year.  We were also pleased with sales from our en primeur campaigns in Burgundy and Rhône in the second half of the year.  Sales and profits earned from selling these vintages have been deferred until the wines are delivered to customers over the next two financial years.

 

We are currently selling wines from the Bordeaux 2011 vintage.  The wines whilst good are not on a par with the previous two vintages and early indications are that sales will be much lower.

 

Majestic in France

We operate from three stores in northern France, two in Calais and one in Cherbourg, selling to UK consumers wishing to take advantage of the much lower rate of alcohol duty in France.  The business is very well suited to those customers who are organising events. We guarantee that customers will save a minimum of £2 per bottle on the prices that we retail through our UK stores. This is augmented by discounts for large orders. We encourage customers to pre-order either on-line or over the telephone and together these account for 39% of sales.

 

We have had a successful year where we have managed our product mix to improve gross margin whilst maintaining our price promise. Profit before interest and tax was up 31.9% to £1.4m, with sales growing 4.1% on a constant currency basis.

 

Future Prospects

Majestic has a clearly differentiated operating model, with a focus on delivering exceptional customer service that has proved resilient in a challenging economic environment. We believe that the prospects for the future growth of Majestic are good.

 

 

 

 

 

Steve Lewis

Chief Executive

18 June 2012



Financial Review

 

Trading

Total Group sales were £280.3m an increase of 8.9% on the previous year (2011: £257.3m) with profit before tax growing £2.9m to £23.2m (2011: £20.3m).  The Group's profit before tax as a percentage of sales was up to 8.3% from 7.9% last year as we increased the gross margin and continued to exercise strong cost control.

 

Taxation

The effective rate of corporation tax in 2012 was 27.9% (2011: 29.8%) compared with the main rate at 26.0%.  Majestic has certain items of expenditure mostly relating to share based payments that are non-deductible for tax purposes.  In addition, the Group has an excess of depreciation over capital allowances as certain assets are non-qualifying.  The Group also recalculated deferred tax balances to be in line with the new lower corporation tax rate of 24.0% which takes effect from April 2012.

 

Earnings per share

Basic earnings per share for the year at 26.5p were 15.2% higher than the previous year (2011: 23.0p).  Diluted earnings per share for the year at 26.1p were 15.5% higher than the previous year (2011: 22.6p).  The growth in earnings per share is greater than the increase in pre tax profit due to the reduction in the rate of corporation tax.

 

Dividend

The Board is proposing a final dividend for 2012 of 11.8 pence per share.  Together with the interim dividend of 3.8p paid to shareholders on 6 January 2012, this would make a total dividend for the financial year of 15.6 pence per share, an increase of 20.0% over the prior year.  The total dividend is 1.67 times covered by profit after tax (2011: 1.74 times).  

 

Subject to shareholders' approval at the Annual General Meeting on 9 August 2012, the final dividend will be payable on 17 August 2012 to shareholders on the register on 20 July 2012.

 

Lay & Wheeler

This business earns a significant proportion of its revenues from the en primeur market for fine wines, predominately those from Bordeaux and Burgundy.  During the year Lay & Wheeler sold through wines from the Bordeaux 2010 vintage.  Although the sales generated from this campaign were very good they were less than the previous year's record Bordeaux 2009 vintage.  Consequently profit before interest and tax, after including profit from en primeur sales as orders are received from customers, was £1.4m compared with £2.3m in the previous year.

 

The timing of the reporting of en primeur revenues for statutory purposes is not as the orders are received but when the wine is delivered to customers which may be up to two years later. In the financial year the deferral of revenues to future accounting periods decreased by £2.7m to a cumulative £11.2m, whilst deferred profit reduced by £0.4m to £2.0m.  The sales and profits that have been deferred will be reported in the 2013 and 2014 financial years.

 

On a statutory basis profit before interest and tax was £1.9m compared with £0.7m recorded last year.  

 

Cash flow and net debt

Group cash flows from operating activities were £25.4m, up from £22.5m in the previous year.

 

The increase in the number of new store openings from twelve to sixteen resulted in a higher level of capital expenditure, up £2.8m to £11.0m.

 

The Group has continued to raise the level of the dividend with £8.4m paid to shareholders compared with £6.7m in the previous year. 

 

Other significant cash outflows in the year included tax payments of £6.6m (2011: £5.3m) and repayment of the term loan of £5.6m (2011: £0.7m).

 

The Group received £2.0m in cash from employees on the exercise of share options up from £1.9m last year.     

 

The Group had net funds of £1.1m at 2 April 2012 compared with £51k at the end of the previous financial year.

 

Liquidity and funding

The Group maintains liquidity by arranging facilities to finance its seasonal working capital requirements and new store opening programme.  The amount available under these uncommitted facilities varies through the year from £5.0m to £15.0m matching the Group's funding requirements. They are reviewed annually and have no expiry date.  At 2 April 2012 the Group had undrawn short term borrowing facilities of £3.2m.

 

In the previous financial year the Group had a term loan facility which was £5.6m as at 28 March 2011.  The Group repaid the loan in June 2011 as there is no current requirement for core funding beyond the short term working capital facilities. 

 

Financial Position

The Group stands on a robust financial platform and is strongly cash generative, enabling the funding of new store openings from its own resources.

 

 

 

 

 

 

Nigel Alldritt

Finance Director

18 June 2012



Group Income Statement

For the year ended 2 April 2012


 



53 weeks to

52 weeks to



02.04.12

28.03.11


Note

£000

£000





Revenue


280,304

257,301

Cost of sales


(218,636)

(202,103)

Gross profit


61,668

55,198

Distribution costs


(23,063)

(20,856)

Administrative costs


(15,993)

(14,474)

Other operating income


809

798

Profit before finance costs and taxation


23,421

20,666

Finance revenue


25

24

Finance costs


(245)

(419)

Profit before taxation


23,201

20,271





UK income tax

4

(6,025)

(5,682)

Overseas income tax

4

(458)

(359)

Profit for the year


16,718

14,230





Earnings per share




Basic

5

26.5p

23.0p

Diluted

5

26.1p

22.6p





Total dividend per share for the year

6

15.6p

13.0p

 

 

Group Statement of Comprehensive Income

For the year ended 2 April 2012

                                                                                                                                                                                                  



53 weeks to

52 weeks to



02.04.11

28.03.11



£000

£000

Profit for the year


16,718  

14,230 





Other comprehensive income:




Currency translation differences on foreign currency net investments


(240)

(96) 

Other comprehensive income for the year, net of tax


(240)

(96) 

Total comprehensive income for the year


16,478

14.134 



Group Statement of Changes in Equity

For the year ended 2 April 2012

 




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 29 March 2010

4,611

10,547

(7)

363

2,479

35,655

53,648

Profit for the year

-

-

-

-

-

14,230

14,230

Other comprehensive income:








   Foreign exchange differences

-

-

-

-

(96)

-

(96)

Total comprehensive income for the year

-

-

-

-

(96)

14,230

14,134

Share issue

63

1,840

-

-

-

-

1,903

ESOT share issue

12

455

(229)

-

-

(238)

-

 Transfer to shareholders' funds - employee costs expected to be satisfied in shares

 

-

 

-

 

-

 

-

 

-

 

914

 

914

Tax credit on employee share options

-

-

-

-

-

927

927

Equity dividends paid

-

-

-

-

-

(6,666)

(6,666)

At 28 March 2011

4,686

12,842

(236)

363

2,383

44,822

64,860

Profit for the year

-

-

-

-

-

16,718

16,718

Other comprehensive income:








   Foreign exchange differences

-

-

-

-

(240)

-

(240)

Total comprehensive income for the year

-

-

-

-

(240)

16,718

16,478

Share issue

67

1,901

-

-

-

-

1,968

ESOT share issue

11

660

(339)

-

-

(332)

-

Shares vesting under deferred bonus scheme

-

-

3

-

-

(3)

-

 Transfer to shareholders' funds - employee costs expected to be satisfied in shares

 

-

 

-

 

-

 

-

 

-

 

1,246

 

1,246

Tax credit on employee share options

-

-

-

-

-

361

361

Equity dividends paid

-

-

-

-

-

(8,448)

(8,448)

At 2 April 2012

4,764

15,403

(572)

363

2,143

54,364

76,465



Group Balance Sheet

As at 2 April 2012


 


02.04.12

28.03.11


£000

£000

Non current assets



Goodwill and intangible assets

8,357

8,708

Property, plant and equipment

60,775

54,270

En primeur purchases

5,006

7,784

Prepaid operating lease costs

2,036

1,958

Deferred tax assets

1,855

1,850


78,029

74,570

Current assets



Inventories

51,456

46,562

Trade and other receivables

6,855

7,115

En primeur purchases

4,155

3,620

Financial instruments at fair value

11

512

Cash and cash equivalents

2,953

5,817


65,430

63,626

Total assets

143,459

138,196




Current liabilities:



Trade and other payables

(47,347)

(47,346)

En primeur deferred income

(5,266)

(4,461)

Term loan

-

(676)

Bank overdraft

(1,822)

(190)

Provisions

(723)

(434)

Deferred lease inducements

(188)

(149)

Financial instruments at fair value

(452)

(1)

Current tax liabilities

(3,019)

(3,341)


(58,817)

(56,598)

Non current liabilities



Term Loan

-

(4,900)

En primeur deferred income

(5,913)

(9,384)

Provisions

(156)

(220)

Deferred lease inducements

(1,044)

(1,008)

Deferred tax liabilities

(1,064)

(1,226)

Total liabilities

(66,994)

(73,336)

Net assets

76,465

64,860




Shareholders' equity



Called up share capital

4,764

4,686

Share premium account

15,403

12,842

Capital reserve - own shares

(572)

(236)

Capital redemption reserve

363

363

Currency translation reserve

2,143

2,383

Retained earnings

54,364

44,822

Equity shareholders' funds

76,465

64,860

 



 

Group Cash Flow Statement

For the year ended 2 April 2012

 

 



53 weeks

52 weeks



02.04.12

28.03.11


Notes

£000

£000





Cash flows from operating activities




Cash generated by operations

8a

25,416

22,548

UK income tax paid


(5,994)

(5,213)

Overseas income tax (paid)/received


(611)

(101)

Net cash generated by operating activities


18,811

17,234





Cash flows from investing activities




Interest received


25

24

UK income tax paid


(6)

(3)

Purchase of non current assets


(10,964)

(8,157)

Receipts from sales of non current assets


77

33

Net cash utilised by investing activities


(10,868)

(8,103)





Cash inflow before financing


7,943

9,131





Cash flows from financing activities




Interest paid


(277)

(342)

Issue of Ordinary Share capital


1,968

1,903

Term loan repayment


(5,600)

(700)

Equity dividends paid


(8,448)

(6,666)

Net cash used by financing activities


(12,357)

(5,805)

Net (decrease)/increase in cash and cash equivalents


(4,414)

3,326

Cash and cash equivalents at beginning of year


5,627

2,321

Effect of foreign exchange differences


(82)

(20)

Cash and cash equivalents at end of year

8b

1,131

5,627

 



 

 

Notes to the Financial Statements

 

1.    General information

 

Majestic Wine PLC is a public limited company ("Company") incorporated in the United Kingdom under the Companies Act 2006 (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").

 

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

 

2.    Basis of preparation

The preliminary results for the year ended 2 April 2012 have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU and are in line with the accounting policies set out in the financial statements for the year ended 28 March 2011.  The financial year represents the 53 weeks to 2 April 2012 and the prior financial year, 52 weeks to 28 March 2011.  The Group has not adopted any new financial reporting standards as the new and revised standards issued by the IASB have no impact on the financial position or performance of the Group and do not result in a requirement for further disclosures.

 

The financial information in the preliminary statement of results does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006.  The financial information for the year ended 2 April 2012 has been extracted from the statutory accounts on which an unqualified audit opinion has been issued. Statutory accounts for the year ended 2 April 2012 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

 

The financial statements, and this preliminary statement, of Majestic Wine PLC for the year ended 2 April 2012 were authorised for issue by the Board of Directors on 18 June 2012 and the balance sheet was signed on behalf of the Board by Phil Wrigley.

 

The statutory accounts have been delivered to the Registrar of Companies in respect of the year ended 28 March 2011 and the Auditors of the Company made a report thereon under Section 495 of the Companies Act 2006. That report was an unqualified report and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006.

 

3.       Segment reporting

 

          For management purposes, the Group is organised into three distinct business units each operating in a separate segment of the overall wine market.  Majestic Wine Warehouses is a UK based wine retailer, Lay & Wheeler is a specialist in the fine wine market and Majestic in France operates retail units in northern France servicing the UK cross-channel market.

No operating segments have been aggregated to form the above reportable segments.  Management monitors the operating results of the business separately for the purpose of making decisions about resource allocation and performance assessment.  Segment performance is evaluated on both sales growth and profit before interest.



 

             In the information provided to the chief operating decision maker, the underlying performance of the Lay & Wheeler operating segment is evaluated and measured based on revenue and profit being recognised on orders, cash receipts and payments from en primeur campaigns.  Management reviews the business on this alternative basis as resources in generating these sales are expensed as incurred.  This differs from the revenue recognition policy required under IAS 18 where revenue is recognised on delivery which may be up to two years later.  As a result a reconciling item is presented between the total operating segments revenue and results and the IFRS statutory measure.

 

             Financing (including finance costs and finance revenue) and income taxes are managed on a group basis and are not allocated to operating segments.  Inter-segment transactions are conducted on an arm's length basis in a manner similar to transactions with third parties.

 

The following tables present revenue and profit and certain asset and liability information regarding the Group's operating segments for the years ended 2 April 2012 and 28 March 2011.  All activities are continuing.

 

Segment analysis 2012








Majestic Wine

Lay &

Majestic





Warehouses

Wheeler

In France

Unallocated

Eliminated

Group


£000

£000

£000

£000

£000

£000

Third party revenue

252,964

15,205

9,469

-

-

277,638

Inter-segment revenue

252

246

-

-

(498)

-

Segment revenue

253,216

15,451

9,469

-

(498)

277,638

Movement in en primeur sales deferred to future periods

 

-

 

2,666

 

-

 

-

 

-

 

2,666

Reported third party revenue

253,216

18,117

9,469

-

(498)

280,304

Segment result

20,189

1,435

1,374

-

-

22,998

Movement in en primeur profit deferred to future periods

 

-

 

423

 

-

 

-

 

-

 

423

Reported operating result

20,189

1,858

1,374

-

-

23,421

Finance revenue

-

-

-

25

-

25

Finance costs

-

-

-

(245)

-

(245)

Profit/(loss) before tax

20,189

1,858

1,374

(220)

-

23,201

Income tax expense

-

-

-

(6,483)

-

(6,483)

Profit/(loss) for the year

20,189

1,858

1,374

(6,703)

-

16,718

Segment assets

115,060

22,495

6,452

1,855

(2,403)

143,459

Segment liabilities

(71,361)

(14,792)

(2,138)

(4,083)

25,380

(66,994)

Other segment items:







Purchase of non current assets

10,897

26

41

-

-

10,964

Depreciation, amortisation and impairment

4,017

423

86

-

-

4,526

Share based payments

1,240

6

-

-

-

1,246

 



 

Segment analysis 2011








Majestic Wine

Lay &

Majestic





Warehouses

Wheeler

In France

Unallocated

Eliminated

Group


£000

£000

£000

£000

£000

£000

Third party revenue

234,217

22,422

8,931

-

-

265,570

Inter-segment revenue

-

1,067

-

-

(1,067)

-

Segment revenue

234,217

23,489

8,931

-

(1,067)

265,570

Movement in rn primeur sales deferred to future periods

 

-

 

(8,269)

 

-

 

-

 

-

 

(8,269)

Reported third party revenue

234,217

15,220

8,931

-

(1,067)

257,301

Segment result

18,923

2,266

1,042

-

-

22,231

Movement in en primeur profit deferred to future periods

 

-

 

(1,565)

 

-

 

-

 

-

 

(1,565)

Reported operating result

18,923

701

1,042

-

-

20,666

Finance revenue

-

-

-

24

-

24

Finance costs

-

-

-

(419)

-

(419)

Profit/(loss) before tax

18,923

701

1,042

(395)

-

20,271

Income tax expense

-

-

-

(6,041)

-

(6,041)

Profit/(loss) for the year

18,923

701

1,042

(6,436)

-

14,230

Segment assets

108,198

24,133

6,290

1,850

(2,275)

138,196

Segment liabilities

(74,186)

(18,141)

(1,903)

(4,567)

25,461

(73,336)

Other segment items:







Purchase of non current assets

8,131

23

3

-

-

8,157

Depreciation, amortisation and impairment

3,738

434

99

-

-

4,271

Share based payments

914

-

-

-

-

914

 

The segment assets and liabilities that are not allocated represent deferred and current tax balances.  The segment assets and liabilities that are eliminated represent parent and subsidiary intercompany receivables and payables.



 

4.         Taxation

a) Taxation charge

 

 


53 weeks to

52 weeks to


02.04.12

28.03.11


£000

£000

Current income tax expense:



UK income tax

6,307

6,112

Overseas income tax on subsidiary undertaking

458

359

Adjustment in respect of previous year

(40)

(13)

Total current income tax expense

6,725

6,458




UK deferred tax expense:



Origination and reversal of temporary differences

(250)

(385)

Adjustment in respect of prior years

15

-

Change in tax rate on prior year balances

(7)

(32)

Total deferred tax credit

(242)

(417)

Total income tax expense charged in the income statement

6,483

6,041




 

b) Taxation reconciliation

 


53 weeks to

52 weeks to


02.04.12

28.03.11


£000

£000

Profit before tax

23,201

20,271

Taxation at the standard UK corporation tax rate of 26% (2011: 28%)

6,032

5,676

Adjustments in respect of prior years

(25)

(13)

Overseas income tax at higher rates

106

59

Non-deductible expenses

390

345

Income not taxable

(18)

(6)

Change in tax rate on current year deferred tax

-

12

Change in tax rate on prior year balances

(2)

(32)

Total income tax expense charged in the income statement

6,483

6,041




Effective tax rate

27.9%

29.8%

 

c) Tax on items credited to equity

 


53 weeks to

52 weeks to


02.04.12

28.03.11


£000

£000




Current tax credit on share based payments

(436)

(261)

Deferred tax debit/(credit) on share based payments

83

(681)

Change in tax rate on prior year balances

(8)

15

Total tax on items credited to equity

(361)

(927)

 



d) Deferred tax

 


Accelerated tax depreciation

Short-term temporary differences

Share- based payments

Total

deferred

tax assets

Deferred tax liabilities

 

 

Total


£000

£000

£000

£000

£000

£000








At 29 March 2010

(221)

(73)

261

(33)

(426)

(459)

Credited to the income statement

145

103

138

386

31

417

Credited to equity

-

92

574

666

-

666

At 28 March 2011

(76)

122

973

1,019

(395)

624

Credited to the income statement

113

92

7

212

30

242

Credited/(debited) to equity

-

67

(142)

(75)

-

(75)

At 2 April 2012

37

281

838

1,156

(365)

791

The deferred tax liabilities above relate solely to held-over capital gains arising on the disposal of freehold properties.

 

Disclosed in the Group Balance Sheet:




2012

2011


£000

£000

Deferred tax assets

1,855

1,850

Deferred tax liabilities

(1,064)

(1,226)


791

624

 

e) Factors that may affect future tax charges

 

The Group's overseas tax rate is higher than that in the UK as profits earned by Les Celliers de Calais S.A.S. in France are taxed at a rate of 34.3% (2011: 34.3%).

 

No deferred tax is recognised on the unremitted earnings of overseas subsidiaries as following the enactment of the Finance Act 2009 the Group considers that it would have no liability to additional taxation should such amounts be remitted.

 

The Chancellor announced in the budget on 23 March 2011 that the main rate for the financial year beginning 1 April 2011 would drop by two percent to 26%, to be followed by three further one percent cuts to reach 23% by the financial year beginning April 2014. On 21 March 2012 the Chancellor announced in the 2012 budget that the main rate for the financial year beginning 1 April 2012 would drop by an extra one percent to 24% and confirmed that this is to be followed by two further one percent cuts to 22 percent by the financial year beginning 1 April 2014.  The latter two cuts have not been substantively enacted at the balance sheet date and are therefore not reflected in the financial statements.



 

5.       Earnings per share

 

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of Ordinary Shares in issue during the year, excluding 151,395 (2011: 79,529) held by the Employee Share Ownership Trust, which are treated as cancelled.

 

For diluted earnings per share, the weighted average number of Ordinary Shares in issue is adjusted to assume conversion of all potential dilutive Ordinary Shares.  These represent share options granted to employees where the exercise price is less than the average market price of the Company's Ordinary Shares during the year.  Share options granted over 580,630 (2011: 448,782) Ordinary Shares have not been included in the dilutive earnings per share calculation because they are anti dilutive at the period end.

 

Underlying earnings per share is calculated by excluding the effect of last year's impairment of goodwill.  This alternative measure of earnings per share is presented to reflect the Group's underlying trading performance.

 


2012

2011

Weighted average number of shares

63,042,626

61,839,910

Dilutive potential Ordinary Shares:



Employee share options

1,095,110

1,188,754

Total number of shares for calculating diluted earnings per share

64,137,736

63,028,664

 


53 weeks to

52 weeks to


02.04.12

28.03.11


£000

£000

Profit for the financial year attributable to equity shareholders of the parent

16,718

14,230

 


2012

2011

Basic earnings

26.5p

23.0p

Dilutive earnings

26.1p

22.6p

 

6.       Dividend

 A final dividend of 11.8 pence net on each Ordinary Share will be payable on 17 August 2012 to shareholders on the register on 20 July 2012.



 

7.       En Primeur

 

En primeur refers to the process of purchasing wines early before they are bottled and released onto the market.  This method of purchasing gives the consumer the opportunity to secure wines that may be in limited quantity and very difficult to acquire after release.  Receipts and payments for these wines may be up to two years before the wines are delivered to customers. Payments to suppliers are treated as receivables and receipts from customers as deferred income until the wines are delivered.

 

a) Analysis of en primeur balances

 



02.04.12

28.03.11



£000

£000

En primeur purchases included in non current assets


5,006

7,784

En primeur purchases included in current assets


4,155

3,620

Total en primeur purchases


9,161

11,404





En primeur deferred income included in current liabilities


(5,266)

(4,461)

En primeur deferred income included in non current liabilities


(5,913)

(9,384)

Total en primeur deferred income


(11,179)

(13,845)





Net en primeur balance


(2,018)

(2,441)

 

b) Movement in en primeur balances

 



53 weeks to

52 weeks to



02.04.12

28.03.11



£000

£000

Net en primeur balance at beginning of period


(2,441)

(876)

Movement in en primeur balance


423

(1,565)

Net en primeur balance at end of period


(2,018)

(2,441)



8.       Notes to the Group cash flow statement

 

a)    Reconciliation of profit to cash generated by operations


53 weeks to

52 weeks to


02.04.12

28.03.11


£000

£000

Cash flows from operating activities



Profit for the year

16,718

14,230

Adjustments to reconcile profit for the year to cash

    generated by operations:



Income tax expense

6,483

6,041

Net finance cost

220

395

Amortisation and depreciation

4,526

4,271

(Profit)/loss on disposal on non current assets

(29)

16

Increase in inventories

(4,894)

(8,051)

Decrease/(increase) in trade and other receivables

260

(221)

Increase in trade and other payables

57

3,096

Movement in en primeur balances

(423)

1,565

Increase in deferred lease inducements

75

304

Change in the fair value of derivative instruments

952

(283)

Increase in provisions

225

271

Share based payments

1,246

914

Cash generated by operations

25,416

22,548

 

b)    Cash and cash equivalents

For the purposes of the Group cash flow statement cash and cash equivalents comprise the following:


02.04.12

28.03.11


£000

£000

Cash and cash equivalents per Group balance sheet

2,953

5,817

Bank overdraft per Group balance sheet

(1,822)

(190)

Cash and cash equivalents per cash flow statement

1,131

5,627

 

c)     Analysis of net debt


02.04.12

28.03.11


£000

£000

Total cash and cash equivalents

1,131

5,627

Term loan included in current liabilities

-

(676)

Term loan included in non current liabilities

-

(4,900)

Total net debt

1,131

51

 

d)    Reconciliation of net cash flow to movement in net debt


02.04.12

28.03.11


£000

£000

Net increase in cash and cash equivalents

(4,414)

3,326

Term loan repayment

5,600

700

Amortisation of arrangement fees

(24)

(29)

Effect of foreign exchange differences

(82)

(20)

Movement in net debt

1,080

3,977

Net debt at beginning of year

51

(3,926)

Net debt at end of year

1,131

51

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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