Majestic Wine PLC MJW Interim Results

  Majestic Wine PLC (MJW) - Interim Results

RNS Number : 3779R
Majestic Wine PLC
19 November 2012






For Immediate Release 19 November 2012

                               INTERIM RESULTS



                 'Profit increase of 3.9%, dividend up 5.3%'

                                      



Majestic Wine PLC ("Majestic"), the UK's largest wine specialist, today
announces its interim results for the

26 weeks ended 1 October 2012.

    Highlights

· Profit before tax increased by 3.9% to £9.2m (2011: £8.8m).

· Diluted earnings per share up 6.1% to 10.4p (2011: 9.8p)

· Interim dividend increased 5.3% to 4.0p per share (2011: 3.8p).

· Managed reduction in wholesale trade, with sales down by £7.2m to £3.2m
(2011: £10.4m).

· Sales excluding wholesale activities up by 4.6% to £122.7m (2011:
£117.3m)

· Total sales down 1.4% to £126.0m (2011: £127.8m).

· Like for like sales in UK retail stores up 0.6%.

· Increase in active customers, up 11.2% to 594,000.

· Online sales increased 14.0% on last year and now represent 9.8% of UK
retail sales.

· Nine new stores opened in period and two since end of September bring
total number of stores to 189.

· Lay & Wheeler, our fine wine specialist, recorded profit before interest
and tax of £506k (2011: £292k).

· Majestic Wine Calais recorded profit before interest and tax of £817k
(2011: £658k).

· In the six weeks from 2 October to 12 November 2012, like for like sales
in our UK stores up 1.2%.



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



"These results, achieved in a challenging economic environment and the wettest
summer on record, display the resilience of the Majestic business. I am
pleased that so many new customers are choosing to shop with Majestic."





For further information, please contact:

Majestic Wine PLC
Steve Lewis, CEO   Tel: 01923 298200

Nigel Alldritt, FD
Buchanan
Tim Thompson       Tel: 020 7466 5000
Gabriella Clinkard

Clare Akhurst


Investec
Patrick Robb       Tel: 020 7597 5970





Chairman's Statement

I am pleased to report that Group  profit before tax for the six month  period 
ended 1 October 2012 was £9.2m, an increase  of 3.9% on the first half of  the 
previous financial year. This result is encouraging as it has been  delivered 
in an economic environment  that remains difficult and  was compounded by  the 
adverse effect of an extremely wet summer season.



We decided to reduce our involvement in the wholesale drinks market and  focus 
towards on-trade customers resulting in  sales through this channel  declining 
by £7.2m to  £3.2m. As a  consequence Group revenues  were £1.8m lower  than 
last year,  at  £126.0m.  Group  revenues,  excluding  wholesale  activities, 
increased by 4.6% to £122.7m.



Majestic Wine



Sales through the store  network grew by  4.7% to £108.7m  with like for  like 
sales  up  0.6%.  During  the   Summer  sales  were  adversely  affected   by 
unseasonable weather that resulted  in the cancellation of  a large number  of 
outdoor events.  We  have  seen  a substantial  increase  in  the  number  of 
customers on our  database who have  purchased in the  last twelve months,  up 
11.2% to 594,000. The average spend  per transaction at our stores has  risen 
to £126 from  £125 and the  average bottle  price of still  wine purchased  at 
Majestic is now £7.46 up from £7.13 last year.



Commercial

Total sales  to business  customers  declined by  £5.4m  to £23.6m  after  the 
reduction of £7.2m in the wholesale channel. Sales to businesses now represent
20.5% of total UK sales.



We have a regional sales team of 25 people whose role is to secure restaurant,
gastro pub and  hotel business with  all subsequent logistics  handled by  the 
nearest Majestic store.  Additionally in London  we have a  sales team of  12 
based in a dedicated office  and depot near King's  Cross that sell to  larger 
businesses in the City and West End. We have seen sales growth of 17.0%  from 
these managed accounts. We see considerable potential for further growth from
this channel, leveraging our  nationwide presence, excellent in-store  service 
and flexible delivery arrangements.



Ecommerce

We have seen strong growth in online sales, up 14.0% on the same period last
year and they now represent 9.8% of total UK retail sales. At the beginning
of the period we launched our mobile optimised version of the website allowing
customers using devices with smaller screens to more easily view and navigate
the site. Additionally, in June 2012, we reduced the minimum online purchase
to six bottles mirroring the change that we made in our retail stores in
September 2009. We are pleased with the response to these initiatives and
over the period we have seen a 19.9% increase in the number of orders placed
online.



New Stores

We have  opened stores  in  nine new  locations  during the  period  including 
Falmouth, our first store in Cornwall. Since the end of the period we  opened 
a further two new stores, bringing the  total number to 189. We are  pleased 
by the initial  sales recorded in  all these  stores and continue  to see  the 
potential to expand the UK store portfolio to 330 locations.



Lay & Wheeler

Lay & Wheeler is our fine wine specialist with particular expertise in the
fields of en primeur sales, cellarage and broking of customer reserves.
Profit before interest and tax for the period was £506k up from £292k in the
first half of last year as we reported the balance of sales from the record
Bordeaux 2009 vintage which were sold in the summer of 2010 and delivered in
this half year. The principal activity during the half has been the selling
of en primeur wines from the Bordeaux 2011 vintage. The quality of the
vintage was reasonable, however demand from consumers was low following two
exceptional vintages. Sales from the 2011 vintage will be reported in the
2015 financial year.



Majestic Wine Calais

The business caters  to UK  consumers wishing to  take advantage  of the  much 
lower rate of alcohol duty  in France. We are  pleased to report that  profit 
before interest and tax for the period was £817k up from £658k in the previous
first half. During the half we have  taken an opportunity to close our  store 
in Cherbourg and consolidate  the business down to  our two stores located  in 
Calais and  Coquelles.  The contribution  made  by the  Cherbourg  store  was 
marginal as its trade relied solely on customers using ferries which run  much 
reduced timetables over the winter months.



Dividend

The Board is pleased to declare an increase of 5.3% in the interim dividend to
4.0p per share. The dividend will be  paid on 4 January 2013 to  shareholders 
on the register at the close of business on 7 December 2012.



Future Prospects

In the first six weeks of the second  half from 2 October to 12 November  2012 
like for like sales through our UK stores were up 1.2%.



We recognise that  the environment  in which we  operate is  likely to  remain 
challenging. We are most encouraged by the number of new customers  attracted 
to Majestic and we are well prepared for the very important Christmas  trading 
period. 











Phil Wrigley

Chairman

19 November 2012

Group Income Statement

For the 26 weeks ended 1 October 2012



                                              26 weeks  26 weeks 53 weeks
                                                 ended     ended     ended
                                              01.10.12  26.09.11  02.04.12
                                         Note     £000      £000      £000
Revenue                                     3 125,965  127,772  280,304
Cost of sales                                 (96,977) (100,518) (218,636)
Gross profit                                   28,988   27,254   61,668
Distribution costs                            (11,998)  (11,239)  (23,063)
Administrative costs                           (8,165)   (7,484)  (15,993)
Other operating income                            397      423      809
Profit before finance costs and taxation        9,222    8,954   23,421
Finance revenue                                     7       10       25
Finance costs                                     (69)     (151)     (245)
Profit before taxation                      3   9,160     8,813   23,201
UK income tax                               4  (2,176)   (2,321)   (6,025)
Overseas income tax                         4    (273)     (220)     (458)
Profit for the period                           6,711    6,272   16,718
Earnings per share
Basic                                       5    10.5p     10.0p     26.5p
Diluted                                     5    10.4p      9.8p     26.1p
Dividend per share                          6     4.0p      3.8p     15.6p




 
 

Group Statement of Comprehensive Income

For the 26 weeks ended 1 October 2012



                                                   26 weeks 26 weeks 53 weeks
                                                      ended    ended     ended
                                                   01.10.12 26.09.11  02.04.12
                                                       £000     £000      £000
Profit for the period                                6,711   6,272   16,718
Other comprehensive income:
Currency translation differences on foreign
currency net investments                              (176)     (49)    (240)
Other comprehensive income for the period, net of
tax                                                   (176)     (49)    (240)
Total comprehensive income for the period            6,535   6,223   16,478



Group Statement of Changes in Equity

For the 26 weeks ended 1 October 2012



                              Capital
                              Reserve                                    Total
                        Share     Own    Capital    Currency            Share-
                               Shares
                Share Premium Held in Redemption Translation Retained holders'
              Capital Account    ESOT    Reserve     Reserve Earnings    Funds
                 £000    £000    £000       £000        £000     £000     £000
At 28 March     4,686  12,842   (236)        363       2,383   44,822   64,860
2011
Profit for          -       -       -          -           -    6,272    6,272
the period
Other
comprehensive
income:
 Foreign          -       -       -          -        (49)        -     (49)
exchange
differences
Total               -       -       -          -        (49)    6,272    6,223
comprehensive
income for
the period
Share issue        60   1,708       -          -           -        -    1,768
ESOT share         11     660   (339)          -           -    (332)        -
issue
Shares              -       -       3          -           -      (3)        -
vesting under
deferred
bonus scheme
Transfer to
shareholders'
funds -
employee
costs
 expected         -       -       -          -           -      392      392
to be
satisfied in
shares
Tax credit on       -       -       -          -           -      247      247
employee
share options
Equity              -       -       -          -           -  (6,047)  (6,047)
dividends
paid
At 26           4,757  15,210   (572)        363       2,334   45,351   67,443
September
2011
Profit for          -       -       -          -           -   10,446   10,446
the period
Other
comprehensive
income:
 Foreign          -       -       -          -       (191)        -    (191)
exchange
differences
Total               -       -       -          -       (191)   10,446   10,255
comprehensive
income for
the period
Share issue         7     193       -          -           -        -      200
Transfer to
shareholders'
funds -
employee
costs
 expected         -       -       -          -           -      854      854
to be
satisfied in
shares
Tax credit on       -       -       -          -           -      114      114
employee
share options
Equity              -       -       -          -           -  (2,401)  (2,401)
dividends
paid
At 2 April      4,764  15,403   (572)        363       2,143   54,364   76,465
2012
Profit for          -       -       -          -           -    6,711    6,711
the period
Other
comprehensive
income:
 Foreign          -       -       -          -       (176)        -    (176)
exchange
differences
Total               -       -       -          -       (176)    6,711    6,535
comprehensive
income for
the period
Share issue        89   2,198       -          -           -        -    2,287
ESOT share          8     413   (233)          -           -    (188)        -
issue
Shares              -       -     288          -           -    (288)        -
vesting under
deferred
bonus scheme
Transfer to
shareholders'
funds -
employee
costs
 expected         -       -       -          -           -      474      474
to be
satisfied in
shares
Tax credit on       -       -       -          -           -      280      280
employee
share options
Equity              -       -       -          -           -  (7,574)  (7,574)
dividends
paid
At 1 October    4,861  18,014   (517)        363       1,967   53,779   78,467
2012



Group Balance Sheet

As at 1 October 2012





                                       As at    As at    As at
                                    01.10.12 26.09.11 02.04.12
                                        £000     £000     £000
Non current assets
Goodwill and intangible assets        8,266   8,610   8,357
Property, plant and equipment        63,503  58,988  60,775
En primeur purchases                  1,399   4,756   5,006
Prepaid operating lease costs         2,134   1,975   2,036
Deferred tax assets                   1,285   1,729   1,855
                                     76,587  76,058  78,029
Current assets
Inventories                          50,056  49,893  51,456
Trade and other receivables           8,887   6,383   6,855
En primeur purchases                  6,557   9,262   4,155
Financial instruments at fair value       7      29      11
Cash and cash equivalents             4,349   5,098   2,953
                                     69,856  70,665  65,430
Total assets                        146,443 146,723 143,459
Current liabilities
Trade and other payables            (46,184) (50,940) (47,347)
En primeur deferred income           (7,978) (11,325)  (5,266)
Bank overdraft                       (7,260)  (5,972)  (1,822)
Provisions                             (433)    (484)    (723)
Deferred lease inducements             (194)    (143)    (188)
Financial instruments at fair value    (105)    (315)    (452)
Current tax liabilities              (1,767)  (2,076)  (3,019)
                                    (63,921) (71,255) (58,817)
Non current liabilities
En primeur deferred income           (1,617)  (5,640)  (5,913)
Provisions                             (109)    (165)    (156)
Deferred lease inducements           (1,292)  (1,023)  (1,044)
Deferred tax liabilities             (1,037)  (1,197)  (1,064)
Total liabilities                   (67,976) (79,280) (66,994)
Net assets                           78,467  67,443  76,465
Shareholders' equity
Called up share capital               4,861   4,757   4,764
Share premium account                18,014  15,210  15,403
Capital reserve - own shares           (517)    (572)    (572)
Capital redemption reserve              363     363     363
Currency translation reserve          1,967   2,334   2,143
Retained earnings                    53,779  45,351  54,364
Equity shareholders' funds           78,467  67,443  76,465



Group Cash Flow Statement

For the 26 weeks ended 1 October 2012



                                                    26 weeks 26 weeks 53 weeks
                                                       ended    ended    ended
                                                    01.10.12 26.09.11 02.04.12
                                               Note     £000     £000     £000
Cash flows from operating activities
Cash generated by operations                      8   9,549  13,877  25,416
UK income tax paid                                   (2,642)  (3,035)  (5,994)
Overseas income tax paid                               (231)   (428)   (611)
Net cash generated by operating activities            6,676  10,414  18,811
Cash flows from investing activities
Interest received                                         7      10      25
UK income tax paid                                      (5)      (4)      (6)
Purchase of non current assets                       (5,279)  (6,882) (10,964)
Receipts from sales of non current assets                18      39      77
Net cash utilised by investing activities            (5,259)  (6,837) (10,868)
Cash inflow before financing                          1,417   3,577   7,943
Cash flows from financing activities
Interest paid                                          (103)    (177)    (277)
Issue of Ordinary Share capital                       2,287   1,768   1,968
Term loan repayment                                        -  (5,600)  (5,600)
Equity dividends paid                                (7,574)  (6,047)  (8,448)
Net cash used by financing activities                (5,390) (10,056) (12,357)
Net decrease in cash and cash equivalents            (3,973)  (6,479) (4,414)
Cash and cash equivalents at beginning of
period                                                1,131    5,627    5,627
Effect of foreign exchange differences                  (69)     (22)     (82)
Cash and cash equivalents at end of period           (2,911)    (874)   1,131
Reconciliation of cash and cash equivalents
Cash and cash equivalents per Group balance
sheet                                                 4,349   5,098   2,953
Bank overdraft per Group balance sheet               (7,260)  (5,972)  (1,822)
Cash and cash equivalents at end of period           (2,911)    (874)   1,131

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 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"). 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 preparation
The interim financial statements of the Group for the 26 weeks ended 1 October
2012, which are unaudited, have been prepared in accordance with the
accounting policies set out in the annual report and accounts for the 53 weeks
ended 2 April 2012.

The Board is currently of the opinion that the Group's forecasts and
projections, taking account of reasonably possible changes in trading
performance, show that the Group is able to operate within its current
uncommitted borrowing facilities. The Board is satisfied that the Group has
adequate financial resources to continue to operate for the foreseeable future
and is financially sound. For this reason, the going concern basis is
considered appropriate for the preparation of financial statements.



The financial information contained in the interim report does not constitute
statutory accounts as defined in Section 434 of the Companies Act 2006. The
financial information for the full preceding year is based on the statutory
accounts for the 53 weeks ended 2 April 2012. The report of the auditors,
Ernst & Young LLP, on those financial statements was unqualified, did not
contain an emphasis of matter paragraph and did not contain any statement
under Section 498(2) or (3) of the Companies Act 2006. These accounts 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 operations are 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 Wine Calais operated 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 businesses
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 utilised 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 at 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.



                                                    26 weeks 26 weeks 53 weeks
                                                       ended    Ended    ended
                                                    01.10.12 26.09.11 02.04.12
                                                        £000     £000     £000
Third party revenue
Majestic Wine Warehouses                             115,185  116,950  252,964
Lay & Wheeler                                          5,098    9,216   15,205
Majestic Wine Calais                                   4,098    4,726    9,469
Total operating segment revenue                      124,381  130,892  277,638
Movement in en primeur sales deferred to future        1,584  (3,120)    2,666
periods (see note 7)
Total reported revenue                               125,965  127,772  280,304
Segment result
Majestic Wine Warehouses                               7,899    8,004   20,189
Lay & Wheeler                                            127      798    1,435
Majestic Wine Calais                                     817      658    1,374
Total operating segment results                        8,843    9,460   22,998
Movement in en primeur profit deferred to future         379    (506)      423
periods (see note 7)
Total reported operating result                        9,222    8,954   23,421
Finance revenue less finance costs                      (62)    (141)    (220)
Profit before tax                                      9,160    8,813   23,201
Inter-segment sales eliminated from revenue:
Majestic Wine Warehouses                                   -        -      252
Lay & Wheeler                                            253        2      246
                                                         253        2      498
Segment assets
Majestic Wine Warehouses                             118,882  110,620  115,060
Lay & Wheeler                                         21,923   30,093   22,495
Majestic Wine Calais                                   6,687    6,665    6,452
Unallocated                                            1,285    1,729    1,855
Eliminated                                           (2,334)  (2,384)  (2,403)
Total group assets                                   146,443  146,723  143,459





4. Taxation

Taxation for the 26 weeks to 1 October 2012 has been calculated by applying
the estimated tax rate for the financial year ending 2 April 2012 adjusted for
the reduction in the rate of corporation tax to 24% from 26%, except that
deferred tax assets relating to share based payments have been recalculated to
reflect the change in the number of options outstanding and movement in the
share price.



5. Earnings per share

Basic earnings per share is calculated on profit for the period attributable
to equity shareholders of £6,711,000 (2011: £6,272,000) apportioned over the
weighted average number of Ordinary Shares that were in issue for the period:
63,986,446 (2011: 62,753,091). 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 64,841,838 (2011: 63,979,104).



6. Dividend

A dividend of 11.8p net per share was paid to shareholders on 17 August 2012.
An interim dividend of 4.0p per share will be paid on 4 January 2013 to
shareholders on the register at the close of business on 7 December 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 trade receivables and receipts from
customers treated as deferred income until the wines are delivered.



a) Analysis of en primeur balances

                                                    01.10.12 26.09.11 02.04.12
                                                        £000     £000     £000
En primeur purchases included in non current
assets                                                 1,399    4,756    5,006
En primeur purchases included in current assets        6,557    9,262    4,155
Total en primeur purchases                             7,956   14,018    9,161
En primeur deferred income included in current
liabilities                                          (7,978) (11,325)  (5,266)
En primeur deferred income included in non current
liabilities                                          (1,617)  (5,640)  (5,913)
Total en primeur deferred income                     (9,595) (16,965) (11,179)
Net en primeur balance                               (1,639)  (2,947)  (2,018)



b) Movement in en primeur balances

                                               26 weeks 26 weeks 53 weeks
                                                  ended    ended    ended
                                               01.10.12 26.09.11 02.04.12
                                                   £000     £000     £000
Net en primeur balance at beginning of period   (2,018)  (2,441)  (2,441)
Movement in en primeur balance                      379    (506)      423
Net en primeur balance at end of period         (1,639)  (2,947)  (2,018)



8. Note to the cash flow statement



Reconciliation of profit to cash generated by operations

                                                    26 weeks 26 weeks 53 weeks
                                                       ended    ended    ended
                                                    01.10.12 26.09.11 02.04.12
                                                        £000     £000     £000
Cash flows from operating activities:
Profit                                                6,711   6,272  16,718
Adjustments to reconcile profit for the year to
cash generated by operations:
Income tax expense                                     2,449    2,541    6,483
Net finance expense                                       62      141      220
Amortisation, impairment and depreciation              2,394    2,186    4,526
Loss/(profit) on disposal of non current assets           25      (7)     (29)
Decrease/(increase) in inventories                     1,400  (3,331)  (4,894)
(Increase)/decrease in trade and other receivables   (2,032)      732      260
(Decrease)/increase in trade and other payables      (1,129)    3,644       57
Movement in en primeur balances                        (379)      506    (423)
Increase in deferred lease inducements                   254        9       75
Change in value of derivative instruments              (343)      797      952
(Decrease)/increase in provisions                      (337)      (5)      225
Share based payments                                     474      392    1,246
Cash generated by operations                          9,549   13,877   25,416



9. Reconciliation of net cash flow to movement in net debt



                                           01.10.12 26.09.11 02.04.12
                                               £000     £000     £000
Net decrease in cash and cash equivalents   (3,973)  (6,479)  (4,414)
Term loan repayment                               -    5,600    5,600
Amortisation of arrangement fees                  -     (24)     (24)
Effect of foreign exchange differences         (69)     (22)     (82)
Movement in net debt                        (4,042)    (925)    1,080
Net funds at beginning of period              1,131       51       51
Total net (debt)/funds                      (2,911)    (874)    1,131













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END


IR BKADQABDDNDD -0- Nov/19/2012 07:00 GMT