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RNS
Majestic Wine PLC  -  WINE   

Interim Results

Released 07:00 16-Nov-2015

RNS Number : 7592F
Majestic Wine PLC
16 November 2015
 

For Immediate Release                                                                                                                                 16 November 2015

  

Majestic Wine PLC

("Majestic" or the "Company")

 

Interim Results

 

Majestic reports encouraging first half results and launches three year transformation plan

 

Majestic Wine PLC, the UK's largest wine specialist, today announces its unaudited interim results for the 26 weeks ended 28 September 2015.

 

Summary:

•  Underlying H1 trading encouraging at Majestic Wine whilst strong growth continued at Naked Wines

•  Thorough strategic review now completed, challenging medium term target announced today along with key new initiatives and updated short term cost guidance

•  New management structure and team in place and working well

 

Results:

 

 

26 weeks to

Sep 28 2015

£m

26 weeks to

Sep 29 2014

£m

% YoY2

% YoY Exc. Naked Wines3

Sales

181.6

133.8

+36%

+6%

Adjusted EBIT1

9.5

8.4

+12%

+6%

Movement in En Primeur

-0.1

0.2

 

 

Finance charges

-0.9

-0.1

 

 

Adjusted PBT

8.4

8.5

-1%

 

Profit before Tax

4.3

8.5

-50%

 

Basic EPS

2.7p

9.8p

-72%

 

Dividend per Share

Nil

4.2p

-100%

 

Net Debt

(25.2)

(4.8)

 

 

 

1.        Adjusted EBIT is reconciled to Adjusted PBT in note 3 to the interim financial statements.  As well as the exceptional items and non-cash charges relating to the acquisition of Naked Wines it excludes net finance costs and the movement in en primeur profit which is also explained in note 3

2.        % YoY comparator at constant FX translation rates, see Additional Note 2

3.        Trend excluding any contribution from Naked Wines on constant currency basis, see Additional Note 2

 

Financial Highlights:

 

Unless noted, Sales and Adjusted EBIT trends are shown on a constant currency basis as shown in Additional Note 2

•  Group sales (+36%) and adjusted EBIT (+12%) are strongly ahead reflecting the Naked Wines acquisition at the start of this financial year

•  Underlying revenue (i.e. Total Group excluding Naked Wines) is +6% (Retail Like for Like ("LFL")* +2.3%, Commercial sales +8%, Lay & Wheeler +23% excluding movement in En Primeur sales)

 

* Retail LFL includes sales through stores in the UK and Calais to non-commercial customers and including ecommerce orders. Calais sales are translated at constant currency.

•  Underlying adjusted EBIT (i.e. Total Group excluding Naked Wines) up +6%, with a flat adjusted EBIT margin reflecting growth in the cost base due to legacy cost investments and spend on ongoing strategic initiatives of £0.8m in the half, lower than previously indicated

•  Strong sales growth at Naked Wines +35% (comparing the full 6 months to 30 September year on year). Adjusted EBIT of £0.9m (£0.6m reported in the period of ownership) reflects better than planned performance from existing customers and the decision to delay spend on customer acquisition into H2

•  Despite growing sales at L&W, we did not achieve the targets set at the end of FY15, consequently we reviewed the goodwill associated with the business and recognised impairment of £2.6m

•  Group Adjusted PBT, which excludes accounting charges relating to the Naked Wines acquisition, impairment of subsidiary,  one-off gains on disposal of property and one-off acquisition and termination costs, was lower by 1% due to the interest costs on the new banking facility

•  Reported PBT (-50%) reduced as a result of non-cash charges relating to the Naked Wines acquisition, interest costs and exceptional items

•  Basic EPS declined by 72%, a steeper decline than reported PBT, due to reported tax rate impacted by a high number of disallowable non-cash expenses

•  Closing net debt of £25m (vs net funds of £11m as of 30 March 2015) reflects the borrowing to fund the acquisition of Naked Wines and the cashflow performance in the period

 

 

Three year transformation plan highlights:

•  Announcing today a new strategy to deliver sustainable, volume led earnings growth and improved return on capital

•  Targeting over £500m sales by 2019. Key performance indicators to demonstrate progress are also published today

•  Good progress made on structure, team and key initiatives

•  Key elements of the plan include:

•  Absolute focus on disciplined investment to generate returns on investment - measured as annual recurring EBIT generated as a % of investment outlay - above our target of 25%

•  Change of emphasis from opening new stores to new customer recruitment to drive higher returns from the current level of investment spend

•  Total UK store target reduced from 330 to 230, currently 211

•  Reviewing the existing store network for opportunities to unlock value

•  Reinvigorating sales growth in mature Majestic Retail stores with a new and  simplified pricing policy (including no minimum purchase) and improved customer experience in store and on-line

•  Continuing to expand the fast growing and successful Majestic B2B business by winning additional accounts

•  Continuing to expand the fast growing and successful Naked Wines businesses in the UK, USA and Australia

 

 

Guidance:

•  Majestic underlying costs have grown above the rate of inflation due to legacy of store opening programme. Total growth c. £4.5m in FY16

•  Previous guidance on costs of strategic initiatives (£3m in H1 2016) now changed to 

£4m operating costs in full year FY16

£8m embedded thereafter, reflecting annualised impact of costs associated with additional staff, new IT team and leadership team as well as store maintenance and marketing innovation expenses

•  Capex reduced to around £6m per year, but lower than this in FY16

•   Interest costs on debt are expected to be £2m in FY16 as previously indicated. Expected exceptional costs in H2 of £0.5m plus a further £5m of non-cash acquisition related accounting charges.

•  Guidance issued at the time of the acquisition for progressively reinstating the dividend whilst deleveraging the balance sheet remain unchanged

 

Phil Wrigley, Majestic's Chairman, commented: 

 

"We now have a first class team and a compelling strategy to create a real step change in the value of the business for our shareholders. The team has completed a thorough 'root and branch' review of the business, identified the key steps to be taken and the measures that will demonstrate our progress over the coming years. Alongside all this activity the new team has traded the business effectively."

 

Rowan Gormley, Majestic's CEO, commented: 

 

"Six months in to my new job it is clear to me that we have a solid core business at Majestic, and two great growth engines in Naked and our Commercial business. We have a clear plan, which will require investment and take 3 years to complete, but will also deliver a better business that can create sustained growth in shareholder value. Fortunately, the Board acted decisively and quickly when it became clear that a change of direction was required, so our core competitive strengths are intact and provide a sound foundation to work from. As a result, profit for the current year is expected to be impacted by the increased investment derived from our successful test period after which we expect to see sustainable growth as the anticipated returns from our initiatives are realised."

 

-------------------------------------------------------------------------------------------------------------------------------------------------

 

Majestic Wine PLC will host an analyst briefing on Monday 16 November 2015 at 10.00am at the offices of Buchanan, 107 Cheapside, London, EC2V 6DN. To attend please contact Buchanan.

 

An audio webcast will be available on:

 

http://vm.buchanan.uk.com/2015/majestic161115/registration.htm

 

For further information, please contact:

 

Majestic Wine PLC

Tel: 01923 298200

Rowan Gormley, CEO

James Crawford, CFO

 

Buchanan

Tel: 020 7466 5000

Charles Ryland

Gabriella Clinkard 

Robbie Ceiriog-Hughes

majesticwine@buchanan.uk.com

Investec

Tel: 020 7597 5970

Garry Levin

Carlton Nelson

David Flin

 

 

 

 

 

About Majestic Wine PLC:

 

Majestic Wine PLC is the UK's largest wine specialist with 213 stores across the UK and France and over 700,000 active customers. In April 2015 Majestic Wine acquired Naked Wines, the online crowd funded wine retailer, and appointed Rowan Gormley, founder and CEO of Naked Wines to CEO of the enlarged Group. 

 

In June 2015 Rowan Gormley launched a strategic review and a number of new initiatives designed to reposition the Group as the go-to destination for wine, while maintaining the growth trajectory of Majestic's Commercial business and Naked Wines. Key to this strategy is to ensure all customers get the service and inspiration they are looking for when purchasing their wine, which other retailers can't provide.

 

Chairman's Statement

Phil Wrigley

 

This has been an important and busy six months as we embark on an exciting transformation of Majestic. We acquired Naked Wines in April 2015 which brought key digital retailing skills and exposure to international markets to compliment Majestic's UK based store retail footprint. We have taken key steps in the process of restoring Majestic to sustainable growth, and we now have a new team to lead this transformation.

 

1.    Trading

Underlying trading in the first half was solid. Retail sales are up 2.3% on a like for like basis, our Commercial division has grown by 8% and the new Naked Wines business now contributes 24% of the Group's revenues. While Lay & Wheeler grew in the period it was below our expectations resulting in a significant impairment charge in the half.

 

2.    The acquisition of Naked Wines

During the course of 2014, it became clear to the Board that new store openings were reaching saturation and we needed to look online and internationally for new opportunities for growth, and a greater breadth of skills on the management team to deliver this ambition. The acquisition of Naked Wines allowed us to do all three.

 

Naked is an online crowd-funding platform for independent winemakers that enable wine drinkers to buy exclusive wines, at preferential prices, in exchange for supporting winemakers. Launched in 2008 in the UK it has expanded to the very exciting US and Australian markets and currently has 269,000 "mature" angels that have been customers for four months or more. 

 

I am pleased to report that Naked's results in the first half demonstrate that the reasons for the acquisition were sound. In addition to delivering 35% sales growth, Naked achieved profitability six months ahead of plan.

 

3.    The transformation

The Board is committed to restoring Majestic to sustained growth, to create a step change in shareholder value.  To achieve this we have begun a three year project to transform the Group. The key elements are:

•  A new management team, lead by Rowan Gormley, the founder of Naked Wines, and including John Colley, Luke Jecks and James Crawford, who head up our retail, Naked and finance teams respectively

•  A strengthened non-executive board with the addition of Anita Balchandani, who as Head of Retail at OC&C brings great insight and perspective, and Greg Hodder, CEO of Charles Tyrwhitt, who brings a wealth of experience in multi-channel retailing. Justin Apthorp will retire from his role as Executive Director and Buying Director after 13 years of leading the buying team and will remain on the board as a Non-Executive Director.

•  We have split the Group into 4 divisions - Retail (which includes our Calais business), Naked Wines, Commercial (our B2B business) and Lay and Wheeler

•  A significant change in strategy, away from opening new branches (we have cut the new store opening programme from 16 stores a year to two or three) towards customer acquisition and retention to drive higher returns

 

 

This transformation will take time and require significant investment, so we expect profits to fall before they grow again. However, we are certain that it is the right thing to do for shareholders, customers, staff and suppliers.

 

As previously announced, the Board is not proposing to pay an interim dividend as we use cashflows to invest in the business and reduce the debt incurred with the purchase of Naked Wines.  Our intention remains to restore the dividend progressively by the 2018 financial year.

 

 

 

CEO's Business Review

Rowan Gormley

 

 

1.    Results

I am pleased to report that both sales and adjusted profit before interest and tax have grown in the first half 6%, before the impact of the acquisition of Naked Wines

 

Cash flow derived from the core Majestic business was very strong, with the Majestic operations (Retail and Commercial combined) generating £13m more cash this year compared to H1 FY15, driven by reduced store openings, reductions in working capital and the sale of a freehold property.

 

This is a pleasing performance in a market characterised by falling like for like sales, with all the distractions of a major transaction and reorganisation, and is a tribute to our brilliant people around the world. 

 

2.    Segment commentary

a.    Our core retail business grew sales by 5% to £112m, with like for like sales growing at 2.3%, the number of new customers advancing by 7% and conversion from new to repeat custom continuing to improve.  This strong performance only translated into a 4% increase in profits, as costs increased ahead of inflation, a legacy of the store opening programme.  I am especially pleased that we saw positive growth even in mature stores, which have been suffering negative like for likes for some time, reflecting the initial strategic actions put in place.  I said in June that we planned to make shopping at Majestic simpler, easier and more fun - and we are already seeing signs of progress on all 3 fronts

 

b.    Naked Wines grew sales at 35% to £45m for the full 6 months to 30 September 2015 and achieved profit 6 months ahead of plan with increased profitability coming from both the increase in number of Angels and improved profitability of each Angel, offset by smaller increases in costs. This is a really pleasing performance, and reflects the power of Naked's unique business model and the entrepreneurial culture.

 

c.     Our specialist Commercial team grew sales by 8%, which is a slower rate of growth than previous years reflecting a slightly slower build of new accounts during the half versus the prior year. We are confident that this division can resume historic growth rates and are investing in supply chain, IT and new business development to make this happen

 

d.    Lay and Wheeler, our specialist fine wine business, grew 3rd party sales (excluding any En Primeur timing adjustments) by 23% due to a slightly stronger En Primeur vintage, but barely turned a profit. As previously noted, the carrying value of the business was sensitive to the performance this year and as we missed our goals for the business this resulted in us taking a £2.6m impairment charge in the period.

 

3.    Strategic Context

Six months into my new role, and after a thorough strategic review, my view of our business is:

•  We have a solid platform for growth. Our core retail business is sound, and we have two strong growth engines in Naked and Commercial

•  However, there are two issues in our core business that have to be addressed to restore profitable growth

Until this half, LFL sales in our mature stores have been declining each year

Turnover of store managers, who are the backbone of our retail business, is unacceptably high at 23% per year and needs to be improved

 

4.    Our 3 year plan

Our goal is to deliver sustained growth in shareholder value, in a way that is right for shareholders, customers, staff and suppliers. Our ambition is to grow sales to over £500m by 2019.

 

This is a transformation from growth through opening new stores to growth through increasing customer recruitment and loyalty.

 

To deliver this transformation we will need to deliver four things really well:

•  Best in class customer experience and competitive position

•  An environment that attracts and retains great people

•  A supply chain and IT platforms to deliver the availability and agility we need to compete in a multi-channel world

•  Disciplined and transparent capital allocation, targeting a minimum 25% return, across the four businesses and three countries we operate in

 

Once we have achieved all of this consistently across the group, we will be able to accelerate growth wherever we can get the highest returns on our capital

 

There is a lot to do, and we are getting started with an excellent team in place, possessing the skills and experience to deliver the plan.

 

5.    Organisational changes

To ensure that each business gets the focus and the resource that they need, we have segmented the Group into four units for reporting purposes:

•  Retail, which includes 211 UK stores and our 2 store Calais operation

•  Naked Wines

•  Commercial, our specialist B2B business

•  And Lay and Wheeler, our fine wine business

 

We have strengthened the management team with the addition of: 

•  John Colley, MD of Majestic Wine who joins us with over 20 years of experience in senior retail positions, and brings a wealth of knowledge in customer engagement and people development which fits exactly with our strategy

•  Luke Jecks, MD of Naked Wines who has 18 years' experience in wine direct marketing in Australia, the UK and Europe

•  James Crawford, CFO, who comes to us from Naked Wines and, previously,  Diageo where he held several senior finance, strategy and business development roles in the UK and North America.

 

To ensure we can track and report progress against our plans, we have identified new KPIs. We are announcing the metrics that will be reported every six months for our biggest business segments, Majestic Retail and Naked Wines, plus the date by which we expect to impact the key metrics in Retail.

                 

Segment

KPI

Current level

Significant improvement by:

Majestic

Customer retention

45%

H2 FY17

Retail

Product availability

67%

H2 FY18

 

Store manager retention

77%

H1 FY18

 

Wine quality

TBC

H2 FY18

 

Proportion of 5-star service ratings

85%

H1 FY17

Naked

Number of Mature Angels

269k

 

Wines

Net Growth in Mature Angels

+29k

 

 

Retention rate of Mature Angels

66%

 

 

Growth investment in Mature Angels

£1.2m

 

 

Return on Investment in New Mature Angels

112%

 

Note: Wine quality at Majestic Retail will be measured in future by customer ratings. No current data is available.

 

6.    Outlook and progress so far

The new team has acted quickly and we are seeing the results in positive trading.

•  Following successful testing, we have removed our long standing six bottle minimum purchase requirement

•  We have simplified our pricing proposition, to offer good value to all and excellent value to people buying  6 bottles or more

•  The product range has been rationalised and enriched - we have removed a number of duplicated products and created space for more variety and excitement

•  To improve retention of great people, we have restructured the bonus arrangements in store to reward high performers, invested heavily in training and set up 20 "Jedi" test stores, where managers are given more authority to be entrepreneurial and creative

•  The stores are increasingly becoming cleaner, simpler and easier to shop

•  Finally, we have recruited an in-house IT team and started the process of migrating Majestic onto the Naked Wines IT platform enabling superior customer insight

 

We are excited and confident about the future, but I must emphasise that these plans will take time and require investment which means that we expect profits to fall before they return to growth from a low point in FY16.  We anticipate that our strong cash flow will enable us to invest as needed while continuing to deleverage and restoring the dividend in full by 2018.

 

 

Rowan Gormley

Chief Executive

 

 

Unaudited Group Income Statement

For the 26 weeks ended 28 September 2015

 

 

 

26 weeks

26 weeks

52 weeks 

 

 

ended

ended

ended

 

 

28.09.15

29.09.14

30.03.15

 

Note

£000

£000

£000

Revenue

3

181,608

133,770 

284,495 

Cost of sales

 

(134,476)

(103,186)

(219,947)

Gross profit

 

47,132

30,584 

64,548 

Distribution costs

 

(21,097)

(14,009)

(28,337)

Administrative costs

 

(26,007)

(8,424)

(18,506)

Other operating income

 

380

411 

836 

Gain on disposal of property

 

4,801

-

-

Profit before finance costs and taxation

 

5,209

8,562 

18,541 

Finance costs

 

(944)

(66)

(119)

Profit before taxation

3

4,265

8,496 

18,422 

UK income tax

5

(1,973)

(1,808)

(4,477)

Overseas income tax

5

(487)

(244)

(466)

Profit for the period

 

1,805

6,444 

13,479 

 

 

 

 

 

Earnings per share

 

 

 

 

Basic

6

2.7p

9.8p

20.5p

Diluted

6

2.6p

9.7p

20.4p

 

 

 

 

 

Dividend per share

7

0.0p

4.2p

4.2p

 

 

 

 

 

Non-GAAP measures: Adjusted profit before tax

 

 

 

 

Profit before taxation

 

4,265

8,496

18,422

Adjusted, per Note 4, for:

 

 

 

 

Non-cash charges relating to acquisition of Naked Wines:

 

 

 

 

-   Amortisation of acquired intangibles

 

1,940

-

-

-   Acquisition related Share Based Payment charges

 

3,449

-

-

Exceptional Items

 

 

 

 

-   Impairment of subsidiary

 

2,606

-

-

-   Gain on disposal of property

 

(4,801)

-

-

-   Termination payments

 

431

-

695

-   Acquisition costs

 

500

-

1,767

 

 

 

 

 

Adjusted profit before taxation

 

8,390

8,496

20,884

 

 

 

 

 

Adjusted Earnings per share

 

 

 

 

Basic

6

9.4p

9.8p

24.1p

Diluted

6

9.0p

9.7p

23.9p

 

 

 

 

 

 

 

 

 

 

 

                                                                                                                                                                                                                              

Unaudited Group Statement of Comprehensive Income

For the 26 weeks ended 28 September 2015

                                                                                                                                                                                                  

 

 

26 weeks

26 weeks

52 weeks 

 

 

ended

ended

ended

 

 

28.09.15

29.09.14

30.03.15

 

 

£000

£000

£000

Profit for the period

 

1,805

6,444

13,479 

 

 

 

 

 

Other comprehensive losses:

 

 

 

 

Currency translation differences on foreign currency net investments

 

(111)

(286)

(583) 

Other comprehensive losses for the period, net of tax

 

(111)

(286)

(583) 

Total comprehensive income for the period

 

1,694

6,158

12,896 

 

Unaudited Group Statement of Changes in Equity

For the 26 weeks ended 28 September 2015

 

 

 

 

Capital

 

 

 

 

 

 

 

Reserve

 

 

 

Total

 

Called up

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 31 March 2014

4,922

19,907

(230)

363

2,088

68,980

96,030

Profit for the period

-

-

-

-

-

6,444

6,444

Other comprehensive income:

 

 

 

 

 

 

 

   Foreign exchange differences

-

-

-

-

(286)

-

(286)

Total comprehensive income for the period

-

-

-

-

(286)

6,444

6,158

Share issue

1

16

-

-

-

-

17

Shares vesting under deferred

   bonus scheme

 

-

 

-

 

213

 

-

 

-

 

(213)

 

-

Transfer to shareholders' funds - employee 

 

 

 

 

 

 

 

   costs expected to be satisfied in shares

-

-

-

-

-

250

250

Tax debit on employee share options

-

-

-

-

-

(22)

(22)

Equity dividends paid

-

-

-

-

-

(7,744)

(7,744)

At 29 September 2014

4,923

19,923

(17)

363

1,802

67,695

94,689

Profit for the period

-

-

-

-

-

7,035

7,035

Other comprehensive income:

 

 

 

 

 

 

 

   Foreign exchange differences

-

-

-

-

(297)

-

(297)

Total comprehensive income for the period

-

-

-

-

(297)

7035

6,738

Share issue

1

47

-

-

-

-

48

Transfer to shareholders' funds - employee

 

 

 

 

 

 

 

   costs expected to be satisfied in shares

-

-

-

-

-

(119)

(119)

Tax credit on employee share options

-

-

-

-

-

(33)

(33)

Equity dividends paid

-

-

-

-

-

(2,757)

(2,757)

At 30 March 2015

4,924

19,970

(17)

363

1,505

71,821

98,566

Profit for the period

-

-

-

-

-

1,805

1,805

Other comprehensive income:

 

 

 

 

 

 

 

   Foreign exchange differences

-

-

-

-

(111)

-

(111)

Total comprehensive income for the period

-

-

-

-

(111)

1,805

1,694

Share issue

11

354

-

-

-

-

365

Shares issued on acquisition of subsidiary

370

-

-

-

-

(289)

81

Transfer to shareholders' funds - employee

 

 

 

 

 

 

 

   costs expected to be satisfied in shares

-

-

-

-

-

3,567

3,567

Tax debit on employee share options

-

-

-

-

-

87

87

At 28 September 2015

5,305

20,324

(17)

363

1,394

76,991

104,360

 

Unaudited Group Balance Sheet

As at 28 September 2015

 

 

As at

As at

As at

 

28.09.15

29.09.14

30.03.15

 

£000

£000

£000

Non current assets

 

 

 

Goodwill and intangible assets

60,698

8,989

9,002 

Property, plant and equipment

71,464

72,921

72,632 

En primeur purchases

1,021

510

526 

Prepaid operating lease costs

2,232

2,216

2,182 

Deferred tax assets

864

518

581 

 

136,279

85,154

84,923 

Current assets

 

 

 

Inventories

72,280

57,288

54,237 

Trade and other receivables

11,274

10,174

8,723 

En primeur purchases

2,143

2,522

1,792 

Financial instruments at fair value

463

-

41 

Cash and cash equivalents

19,053

4,207

10,967 

 

105,213

74,191

75,760 

Total assets

241,492

159,345

160,683 

 

 

 

 

Current liabilities

 

 

 

Trade and other payables

(77,645)

(45,715)

(52,731)

En primeur deferred income

(2,732)

(3,042)

(2,320)

Bank overdraft

-

(9,047)

-

Provisions

(172)

(307)

(190)

Deferred lease inducements

(323)

(409)

(425)

Financial instruments at fair value

(64)

(480)

(552)

Current tax liabilities

(2,669)

(1,673)

(1,985)

 

(83,605)

(60,673)

(58,203)

Non current liabilities

 

 

 

En primeur deferred income

(1,167)

(594)

(610)

Bank loan

(39,253)

-

-

Customer bond finance

(4,992)

-

-

Provisions

-

(61)

-

Deferred lease inducements

(2,729)

(2,579)

(2,588)

Deferred tax liabilities

(5,386)

(749)

(716)

Total liabilities

(137,132)

(64,656)

(62,117)

 

 

 

 

Net assets

104,360

94,689

98,566 

 

 

 

 

Shareholders' equity

 

 

 

Called up share capital

5,305

4,923

4,924 

Share premium account

20,324

19,923

19,970 

Capital reserve - own shares held in ESOT

(17)

(17)

(17)

Capital redemption reserve

363

363

363 

Currency translation reserve

1,394

1,802

1,505 

Retained earnings

76,991

67,695

71,821 

Equity shareholders' funds

104,360

94,689

98,566 

 

 

Unaudited Group Cash Flow Statement

For the 26 weeks ended 28 September 2015

 

 

26 weeks

26 weeks

52 weeks

 

ended

ended

ended

 

28.09.15

29.09.14

30.03.15

 

Note

£000

£000

£000

Cash flows from operating activities

 

 

 

 

Cash generated by operations

4,179

8,471

32,913

UK income tax paid

(2,124)

(2,538)

(5,024)

Overseas income tax paid

 

(179)

(172)

(394)

Net cash generated by operating activities

 

1,876

5,761

27,495

 

 

 

 

Cash flows from investing activities

 

 

 

Interest received

30

9

28

Purchase of non current assets

(2,580)

(4,449)

(8,431)

Acquisition of subsidiary

(36,081)

-

-

Receipts from sales of non current assets

5,766

7

922

Net cash used by investing activities

 

(32,865)

(4,433)

(7,481)

 

 

 

 

 

Cash (outflow)/inflow before financing

 

(30,989)

1,328

20,014

 

 

 

 

Cash flows from financing activities

 

 

 

Interest paid

(381)

(90)

(143)

Issue of Ordinary Share capital

446

17

65

New bank loan raised

50,000

-

-

Loan arrangement fees paid

(844)

-

-

Repayment of borrowings

(10,005)

-

-

Equity dividends paid

 

-

(7,744)

(10,501)

Net cash generated/(used) by financing activities

 

39,216

(7,817)

(10,579)

Net increase/(decrease) in cash and cash equivalents

 

8,227

(6,489)

9,435

Cash and cash equivalents at beginning of period

10,967

1,779

1,779

Effect of foreign exchange differences

 

(141)

(130)

(247)

Cash and cash equivalents at end of period

 

19,053

(4,840)

10,967

Reconciliation of cash and cash equivalents

 

 

 

 

Cash and cash equivalents per Group balance sheet

19,053

4,207

10,967

Bank overdraft per Group balance sheet

 

-

(9,047)

-

Cash and cash equivalents at end of period

 

19,053

(4,840)

10,967

 

Notes to the Unaudited 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 02281640).    The Company is domiciled in the United Kingdom and its registered address is Majestic House, The Belfry, Colonial Way, Watford, England, WD24 4WH.  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 Financial Statements 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 28 September 2015, which are unaudited, have been prepared in accordance with the accounting policies set out in the annual report and financial statements  for the 52 weeks ended 30 March 2015.

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 committed 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 period is based on the statutory accounts for the 52 weeks ended 30 March 2015.  The report of the auditor, Deloitte 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 financial statements 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

Following the acquisition of Naked Wines and the change of Group management, the operating business segments used for internal monitoring and reporting of performance have changed.  The Group's operations are now organised into four distinct business units each operating in a separate segment of the overall wine market.  Majestic Wine Retail is a customer based wine retailer, Majestic Wine Commercial is a B2B wine retailer, Lay & Wheeler is a specialist in the fine wine market and Naked Wines is a customer funded international on-line wine retailer.

 

The Majestic Wine Retail business includes the retail arm of the UK Majestic stores and the Majestic Wine Calais stores in France ("Calais"), previously reported as a separate business segment.  The Calais business is the same as the UK retail business, albeit geographically discreet.  The Retail business is managed internally as one business segment.

 

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.

 

Central costs relating to management of the Group, net finance costs and income taxes are managed at a Group level 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.

 

Segmental results for prior periods has been represented to reflect the current operating structure.

 

 

Retail

Commercial

Naked

L&W

Eliminations

Unallocated

Group

Segment analysis

26 weeks ended 28.09.15

£000

£000

£000

£000

£000

£000

£000

Third party revenue

111,763

23,146

42,197

5,472

-

-

182,578

Inter-segment revenue

-

-

-

35

(35)

-

-

Segment revenue

111,763

23,146

42,197

5,507

(35)

-

182,578

Movement in en primeur sales

-

-

-

(970)

-

-

(970)

Reported third party revenue

111,763

23,146

42,197

4,537

(35)

-

181,608

 

 

 

 

 

 

 

 

Segment result (see note below)

7,477

2,267

608

150

-

(1,045)

9,457

Movement in en primeur profit

-

-

-

(123)

-

-

(123)

Net finance costs

-

-

-

-

-

(944)

(944)

Adjusted profit before taxation

7,477

2,267

608

27

-

(1,989)

8,390

Adjustments for:

 

 

 

 

 

 

 

Non-cash charges relating to acquisition of Naked Wines:

 

 

 

 

 

Amortisation of acquired intangibles

 

 

 

 

 

(1,940)

(1,940)

Acquisition related Share Based Payment charges

 

 

 

 

(3,449)

(3,449)

Exceptional Items

 

 

 

 

 

 

 

Impairment of subsidiary

 

 

 

 

 

(2,606)

(2,606)

Gain on disposal of property

 

 

 

 

 

4,801

4,801

Termination payments

 

 

 

 

 

(431)

(431)

Acquisition costs

 

 

 

 

 

(500)

(500)

Profit before tax

 

 

 

 

 

 

4,265

 

Note - Segment result is equivalent to adjusted earnings before interest and tax (EBIT)

 

 

 

 

 

 

 

 

 

 

Geographical analysis

 

 

UK

Rest of Europe

US

Australia

Group

Reported third party revenue

 

 

157,200

4,048

15,650

4,710

181,608

Non current assets

 

 

134,904

94

380

37

135,415

 

 

3.  Segment reporting (continued)

 

 

Retail

Commercial

Naked

L&W

Eliminations

Unallocated

Group

Segment analysis Represented

26 weeks ended 29.09.14

£000

£000

£000

£000

£000

£000

£000

Third party revenue

107,331

21,511

-

4,440

-

-

133,282

Inter-segment revenue

-

-

-

113

(113)

-

-

Segment revenue

107,331

21,511

-

4,553

(113)

-

133,282

Movement in en primeur sales

-

-

-

488

-

-

488

Reported third party revenue

107,331

21,511

-

5,041

(113)

-

133,770

 

 

 

 

 

 

 

 

Segment result

7,254

1,936

-

(23)

-

(755)

8,412

Movement in en primeur profit

-

-

-

150

-

-

150

Net finance costs

-

-

-

-

-

(66)

(66)

Adjusted profit before taxation

7,254

1,936

-

127

-

(821)

8,496

Adjustments for:

 

 

 

 

 

 

 

Non-cash charges relating to acquisition of Naked Wines:

 

 

 

 

 

Amortisation of acquired intangibles

 

 

 

 

 

 

-

Acquisition related Share Based Payment charges

 

 

 

 

-

Exceptional Items

 

 

 

 

 

 

 

Impairment of subsidiary

 

 

 

 

 

 

-

Gain on disposal of property

 

 

 

 

 

 

-

Termination payments

 

 

 

 

 

 

-

Acquisition costs

 

 

 

 

 

 

-

Profit before taxation

 

 

 

 

 

 

8,496

 

 

 

 

 

 

 

 

Geographical analysis

 

 

UK

Rest of Europe

US

Australia

Group

Reported third party revenue

 

 

129,816

3,954

-

-

133,770

Non current assets

 

 

84,580

56

-

-

84,636

 

 

3.  Segment reporting (continued)

 

Retail

Commercial

Naked

L&W

Eliminations

Unallocated

Group

Segment analysis Represented

52 weeks ended 30.03.15

£000

£000

£000

£000

£000

£000

£000

Third party revenue

231,377

42,229

-

9,694

-

-

283,300

Inter-segment revenue

-

-

-

894

(894)

-

-

Segment revenue

231,377

42,229

-

10,588

(894)

-

283,300

Movement in en primeur sales

-

-

-

1,195

-

-

1,195

Reported third party revenue

231,377

42,229

-

11,783

(894)

-

284,495

 

 

 

 

 

 

 

 

Segment result

18,520

3,734

-

(209)

-

(1,184)

20,861

Movement in en primeur profit

-

-

-

142

-

-

142

Net finance costs

-

-

-

-

-

(119)

(119)

Adjusted profit before taxation

18,520

3,734

-

(67)

-

(1,303)

20,884

Adjustments for:

 

 

 

 

 

 

 

Non-cash charges relating to acquisition of Naked Wines:

 

 

 

 

Amortisation of acquired intangibles

 

 

 

 

 

 

-

Acquisition related Share Based Payment charges

 

 

 

-

Exceptional Items

 

 

 

 

 

 

 

Impairment of subsidiary

 

 

 

 

 

 

-

Gain on disposal of property

 

 

 

 

 

 

-

Termination payments

 

 

 

 

 

(695)

(695)

Acquisition costs

 

 

 

 

 

(1,767)

(1,767)

Profit before tax

 

 

 

 

 

 

18,422

 

 

 

 

 

 

 

 

Geographical analysis

 

 

UK

Rest of Europe

US

Australia

Group

Reported third party revenue

 

 

276,845

7,650

-

-

284,495

Non current assets

 

 

84,271

71

-

-

84,342

 

4. Exceptional items

In order to better report business performance, the Group uses measures that are not required under IFRS.  In addition to adjusting for non-cash charges relating to the Naked Wines acquisition we have also identified certain income and expenses which are excluded from the adjusted results because they are individually important to understanding the financial performance of the Group.  If included, these items would distort understanding of the results and comparability between periods.  These items are separately identified in the table of Non-GAAP measure below the Group Income Statement.

 

5.   Taxation

Taxation for the 26 weeks to 28 September 2015 has been calculated by applying the same methodology as applied for the financial period ending 30 March 2015 adjusted for the reduction in the rate of corporation tax to 20% from 21%.

 

 

6.   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 period, excluding 4,920,863 contingently  returnable shares issued as a result of the acquisition of Naked Wines International Limited and 3,934 (2014: 53,969) 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 contingently returnable shares and share options granted to employees where the exercise price is less than the average market price of the Company's Ordinary Shares during the period. 

 

Adjusted earnings per share is calculated by excluding the exceptional items discussed in note 4 and itemised below.  This alternative measure of earnings per share is presented so that users of the financial statements can better understand the Group's trading performance.

 

 

28.09.15

29.09.14

30.03.15

Weighted average number of shares

65,712,774

65,604,842

65,623,774

Dilutive potential Ordinary Shares:

 

 

 

Employee share options and contingently returnable shares

3,400,019

502,571

560,322

Total number of shares for calculating diluted earnings per share

69,112,793

66,107,413

66,184,096

 

 

 

26 weeks to

26 weeks to

52 weeks to

 

28.09.15

29.09.14

30.03.15

 

£000

£000

£000

Profit for the period attributable to equity shareholders of the parent

Add:

Non-cash charges relating to acquisition of Naked Wines:

Amortisation of acquired intangibles

Acquisition related Share Based Payment charges

Exceptional Items

Impairment of subsidiary

Gain on disposal of property

Termination payments

Acquisition costs

 

1,805

 

 

1,552

3,234

 

2,606

(3,841)

345

500

 

6,444

 

 

-

-

 

-

-

-

-

 

13,479

 

 

-

-

 

-

-

549

1,767

Adjusted profit after tax

6,201

6,444

15,795

 

 

 

28.09.15

29.09.14

30.03.15

Basic earnings

2.7p

9.8p

20.5p

Dilutive earnings

 

Adjusted basic earnings

Adjusted diluted earnings

2.6p

 

9.4p

9.0p

9.7p

 

9.8p

9.7p

20.4p

 

24.1p

23.9p

 

 

 

7.   Dividend

No dividends were paid in the period (2014: 11.8p net per share).  As announced on April 10th 2015 no interim dividend will be paid (2014: 4.2p per share).

 

8.   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

 

 

28.09.15

29.09.14

30.03.15

 

 

£000

£000

£000

En primeur purchases included in non current assets

 

1,021

510

526

En primeur purchases included in current assets

 

2,143

2,522

1,792

Total en primeur purchases

 

3,164

3,032

2,318

 

 

 

 

 

En primeur deferred income included in current liabilities

 

(2,732)

(3,042)

(2,320)

En primeur deferred income included in non current liabilities

 

(1,167)

(594)

(610)

Total en primeur deferred income

 

(3,899)

(3,636)

(2,930)

 

 

 

 

 

Net en primeur balance

 

(735)

(604)

(612)

 

b) Movement in en primeur balances

 

 

26 weeks

26 weeks

52 weeks

 

 

ended

ended

ended

 

 

28.09.15

29.09.14

30.03.15

 

 

£000

£000

£000

Net en primeur balance at beginning of period

 

(612)

(754)

(754)

Movement in en primeur balance

 

(123)

150

142

Net en primeur balance at end of period

 

(735)

(604)

(612)

 

 

9.   Notes to the cash flow statement

 

Reconciliation of profit to cash generated by operations

 

 

26 weeks

26 weeks

52 weeks

 

 

ended

ended

ended

 

 

28.09.15

29.09.14

30.03.15

 

 

£000

£000

£000

Cash flows from operating activities:

 

 

 

 

Profit

 

1,805

6,444

13,479

Adjustments to reconcile profit for the year to cash generated by operations:

 

 

 

 

Income tax expense

 

2,460

2,052

4,943

Net finance expense

 

944

66

119

Amortisation, impairment and depreciation

 

7,760

3,013

6,292

(Profit)/loss on disposal of non current assets

 

(4,737)

80

(2)

(Increase)/decrease in inventories

 

(275)

(2,527)

524

Increase in trade and other receivables

 

(1,043)

(2,229)

(756)

(Decrease)/increase in trade and other payables

 

(5,536)

1,220

8,195

Movement in en primeur balances

 

123

(150)

(142)

Increase in deferred lease inducements

 

39

1

26

Change in value of derivative instruments

 

(910)

319

350

Decrease in provisions

 

(18)

(68)

(246)

Share based payments

 

3,567

250

131

Cash generated by operations

 

4,179

8,471

32,913

 

 

Reconciliation of net cash flow to movement in net (debt)/funds

 

 

 

28.09.15

29.09.14

30.03.15

 

 

£000

£000

£000

Net increase/(decrease) in cash and cash equivalents

 

8,227

(6,489)

9,435

Effect of foreign exchange differences

 

(141)

(130)

(247)

New bank loan raised

 

(50,000)

-

-

Arrangement fees paid

 

844

-

-

Amortisation of arrangement fees

 

(97)

-

-

Bond finance arising on acquisition

 

(4,997)

-

-

Repayment of borrowings

 

10,005

-

-

Movement in net debt

 

(36,159)

(6,619)

9,188

Net funds at beginning of period

 

10,967

1,779

1,779

Total net (debt)/funds

 

(25,192)

(4,840)

10,967

 

Reconciliation of net (debt)/funds

 

 

28.09.15

29.09.14

30.03.15

 

 

£000

£000

£000

Total cash & cash equivalents

 

19,053

4,207

10,967

Amount included in current liabilities

 

-

(9,047)

-

Amount included in non current liabilities

 

(44,245)

-

-

Cash and cash equivalents per cash flow statements

 

(25,192)

(4,840)

10,967

 

 

 

 

10. Acquisition of subsidiary

On 10th April 2015 the Group acquired the entire issued share capital of Naked Wines International Limited for consideration of up to £70m payable in a combination of cash and shares, thereby obtaining control of this business and its subsidiaries collectively known as Naked Wines.

 

The net assets and results of the acquired businesses are included in the consolidated financial statements of the Group from the date of acquisition.  IFRS 3 Business Combinations has been applied and the goodwill arising has been capitalised and is subject to annual impairment testing.

 

The goodwill arising on the business combination has been allocated to the single group of cash generating units as this is the lowest level within the Group that goodwill is monitored internally.  Goodwill arising on the acquisition is mainly attributable to the following factors that do not meet the criteria for recognition as a separate asset at the date of acquisition:

·    the ability of the Naked Wines business to continue to grow the business by attracting new customers at a rate in excess of attrition of the existing customer base;

·    the value of the assembled workforce; and

·    opportunities to improve greater operating efficiency as the business scales.

 

None of the goodwill is expected to be deductible for income tax purposes.

 

The fair values currently established for the acquisition are provisional and will be reviewed based on additional information up to one year from the date of acquisition.  The Directors do not believe that any net adjustments resulting from such a review would have a material effect on the Group.

 

The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are as set out in the table below:

 

 

 

£000

Intangible assets

   - Customer contracts and relationships

   - Brand

   - Internally developed software

   - Deferred taxation

 

Property plant and equipment

 

Inventories

 

Cash and cash equivalents

 

Trade and other receivables

 

Trade and other payables

 

Non current financial liabilities

 

Corporation tax liability

 

 

 

Net identifiable liabilities acquired

 

 

 

Goodwill arising on acquisition

 

 

 

Total consideration

 

 

Satisfied by:

Cash

 

 

 

 

10. Acquisition of subsidiary (Continued)

 

Acquisition costs of £2,267,000 arose as a result of the transaction.  These have been recognised in the group income statement as follows:

 

52 weeks to 30.03.15

26 weeks to 28.09.15

Total acquisition costs

 

The acquired businesses have contributed £42,197,000 to Group revenues and £37,000 to Group profit in the period since acquisition. If the acquisition had been completed on the first day of the financial period, Group revenues for the period would have been £183,456,000 and Group profits attributable to equity holders of the parent company would have been £1,335,000.

 

In addition to the initial cash payment made at the time of the acquisition a further amount of up to £20 million in Majestic PLC's Ordinary Share capital (based on the closing price at 2 April 2015) has been issued to management in the form of contingently returnable shares and share options.  These shares will vest subject to the achievement of certain performance criteria over a maximum period of four years.  As continuing employment is a requirement for the final vesting of these shares IFRS 2 Share Based Payments has been applied to this element of the consideration and the amounts are being recorded in the Group Income Statement over the next four years.

 

 

 

 

 Additional Unaudited Information

 

1.  Segment reporting

Reconciliation of prior period reported sales to the represented business segments as per note 3.

 

Majestic

Calais

Retail

Commercial

Segment analysis

26 weeks ended 29.09.14

£000

£000

£000

£000

Third party revenue as originally reported

124,888

3,954

-

-

Allocate Majestic between Retail and Commercial

(124,888)

-

103,377

21,511

Re-allocate Calais to Retail

-

(3,954)

3,954

 

Third party revenue restated

-

-

107,331

21,511

 

 

 

 

 

Segment analysis

52 weeks ended 30.03.15

£000

£000

£000

£000

Third party revenue as originally reported

265,956

7,650

-

-

Allocate Majestic between Retail and Commercial

(265,956)

-

223,727

42,229

Re-allocate Calais to Retail

-

(7,650)

7,650

-

Third party revenue restated

-

-

231,377

42,229

 

 

 

 

 

A more detailed analysis of the underlying year on year segmental results is shown below. These numbers exclude adjustments for En Primeur and use a constant rate of foreign exchange. The Naked Wines numbers are based on a full 6 months in each period.

 

26 weeks

26 weeks

 

 

ended

ended

 

Proforma Information

28.09.15

29.09.14

Year on year

 

£000

£000

%

 

 

 

 

Retail

 

 

 

UK sales

107,715

103,376

4%

France sales

4,048

3,532

15%

Total sales

111,763

106,908

5%

Gross profit

26,812

25,111

7%

Distribution costs

(12,697)

(12,173)

4%

Administrative costs

(6,638)

(5,765)

15%

Adjusted EBIT

7,477

7,174

4%

 

 

 

 

Commercial

 

 

 

Total sales

23,146

21,511

8%

Gross profit

4,298

3,813

13%

Distribution costs

(1,494)

(1,386)

8%

Administrative costs

(537)

(490)

10%

Adjusted EBIT

2,267

1,936

17%

 

 

 

 

Lay & Wheeler

 

 

 

Total sales (excluding movement in en primeur)

5,472

4,440

23%

Gross profit

1,508

1,368

10%

Distribution costs

(435)

(422)

3%

Administrative costs

(923)

(969)

(5%)

Adjusted EBIT

150

(23)

 

 

 

 

 

Unallocated adjusted EBIT

(1,045)

(755)

38%

 

 

 

 

 

 

 

 

Total Group (excluding Naked Wines)

 

 

 

Total sales

140,381

132,860

6%

Gross profit

32,618

30,292

8%

Distribution costs

(14,625)

(13,981)

5%

Administrative costs

(9,143)

(7,967)

15%

Adjusted EBIT

8,851

8,332

6%

Adjusted EBIT margin

6%

6%

-

 

 

 

 

 

6 months

6 months

 

 

ended

ended

 

 

30.09.15

30.09.14

Year on year

 

£000

£000

%

Naked Wines

 

 

 

UK sales

22,884

20,562

11%

US sales

16,868

9,112

85%

Australia sales

4,968

3,411

46%

Total sales

44,720

33,085

35%

Gross profit

16,886

10,567

60%

Distribution costs

(7,996)

(6,164)

30%

Administrative costs

(7,941)

(6,326)

26%

Adjusted EBIT

949

(1,923)

 

 

2. Cashflow analysis

The table below shows the cash movements of the group disaggregated into certain combinations of the reported segments

·     Naked Wines

·     Other (combination of Plc and L&W)

·     Majestic (combination of Retail and Commercial)

 

This has been done to highlight the cashflow characteristics of the combined Retail and Commercial business, as referenced in the CEO's Business Review.

 

 

FY16

 

FY15

YoY

 

Group

Naked

Other/Plc

Majestic

 

Majestic

Majestic

 

£m

£m

£m

£m

 

£m

£m

Operating Cashflows

227

(7,261)

(4,330)

11,818

 

4,640

7,178

Adjusted operating profit

9,334

608

(1,018)

9,744

 

8,434

1,310

Movement in working capital

(7,438)

(7,590)

(1,004)

1,156

 

(2,220)

3,376

Depreciation & amortisation

3,214

114

169

2,931

 

2,836

95

Purchase of fixed assets

(2,580)

(390)

(174)

(2,013)

 

(4,410)

2,397

Tax paid

(2,303)

 

(2,303)

 

 

 

 

 

 

 

 

 

 

 

 

Exceptional Cashflows

4,835

 

(801)

5,636

 

 

5,636

Cash impact of exceptional costs

(931)

 

(805)

(126)

 

 

(126)

Disposal of fixed assets

5,766

 

4

5,762

 

 

5,762

 

 

 

 

 

 

 

 

Financing Cashflows

3,165

(5)

3,170

 

 

 

 

Net interest paid

(351)

 

(351)

 

 

 

 

Issue Share cap

446

 

446

 

 

 

 

Acquisition of subsid

(36,081)

 

(36,081)

 

 

 

 

Net new loans

39,151

(5)

39,156

 

 

 

 

 

 

 

 

 

 

 

 

Total Cashflow

8,227

(7,266)

(1,961)

17,454

 

4,640

12,814

 

3.  Acquisition related non-cash charges

Included within the adjustments to profit before tax are a number of charges relating to the acquisition of Naked Wines that will recur over the coming years.  The table below shows the estimated level of this charge for each financial year. These estimates are subject to change for reasons including, but not limited to:

·     The expected life of intangible assets and / or the results of impairment testing

·     The rate that  employees holding share options leave the business

·     The likelihood of certain performance criteria relating to Naked Wines being achieved, and the timing of their achievement

 

52 weeks ended

28.03.16

03.04.17

02.04.18

01.04.19

30.03.20

29.03.21

28.03.22

27.03.23

 

£m

£m

£m

£m

£m

£m

£m

£m

Amortisation of acquired intangibles

4

4

4

4

4

4

1

1

Acquisition related SBP charges

7

7

3

1

 

 

 

 

Total

11

11

7

5

4

4

1

1

 

4.  Taxation reconciliation

 

 

26 weeks ended

28.09.15

 

£000

Profit before tax

4,265

Taxation at the standard UK corporation tax rate of 20%

853

Adjustment is respect of prior periods

(85)

Overseas income tax at higher rates

210

Non-deductible expenses

Impairment of subsidiary

521

 

Acquisition costs

100

 

Share Based Payments

536

 

Depreciation on exempt assets

313

 

Other

12

Total income tax expense charged in the income statement

2,460

Effective tax rate

57.7%

 

5.  Acquisition of subsidiary

Reconciliation of headline cost of acquisition to the cash consideration in note 10.

 

£000

Cash consideration per note 10

21,732

Contingently returnable shares and share options issued

19,758

Funding of pre-acquisition liabilities

6,208

Loans settled on acquisition

22,868

Total cost of acquisition

70,566

 

Analysis of cost of acquisition of subsidiary per cashflow statement

 

£000

Cash consideration per note 10

21,732

Loans acquired with subsidiary

22,868

Cash acquired with subsidiary

(8,519)

Acquisition of subsidiary per cashflow statement

36,081

 


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