RNS Number:2591J
Ottakar's PLC
27 March 2003
FOR IMMEDIATE RELEASE 27 March 2003
Ottakar's plc
Audited Preliminary Results
For the 53 weeks ended 1 February 2003
Ottakar's plc, one of the UK's leading specialist book retailers announces its
audited preliminary results for the 53 weeks to 1 February 2003.
"Record Results"
2003 2002
53 weeks 52 weeks
Group Turnover #114.8m #98.0m UP 17%
Gross Margin 41.6% 39.7%
Operating Profit #5.6m #4.6m UP 22%
Profit before Tax #5.1m #4.0m UP 28%
Basic EPS 16.41p 12.88p UP 27%
Final Dividend 2.55p 2.0p UP 28%
Year end stores 93 78
Year end trading space (sq ft) 380,400 312,000 UP 22%
* Sharp rise in gross margin due to improved supply chain efficiencies
* James Thin acquisition in line with expectations
* Strong Christmas sales from Constantine and Woodall's What Not to Wear, Schott's Original Miscellany and Michael
Palin's Sahara.
* Satisfactory start to new financial year - sales up 17.4% (1% like for like) for the seven weeks to 22 March 2003,
despite the understandable focus on military action in Iraq.
Commenting on prospects for the current year, Philip Dunne, Chairman, said:
"Ottakar's enjoyed a record year in 2002 with strong organic growth being complemented by the James Thin acquisition.
The outlook for 2003 also looks encouraging, subject to the impact of events in Iraq. Further progress will be driven by
the launch of the fifth Harry Potter novel, coupled with our continued store opening programme and additional supply
chain efficiencies."
For further information, contact:
Ottakar's:
James Heneage, Managing Director 01722 428500
Edward Knighton, Finance Director 07714 458566
Buchanan Communications:
Charles Ryland/Nicola Cronk 020 7466 5000
Chairman's Statement
I am delighted to report the record results of Ottakar's for the 53 week period
to 1 February 2003. This represents the third year running in which the Company
has generated earnings per share growth in excess of 25%.
Ottakar's is one of the UK's leading specialist book retailers trading from a
portfolio of 93 prime sited stores in towns and cities across England, Scotland
and Wales. Ottakar's stores provide depth of range and high levels of service to
a broad customer base.
Results
During the year under review, the Group demonstrated a strong trading
performance. Sales increased by 17.1% to #114.8m (2002: #98.0m) and pre-tax
profits increased by 27.5% to #5.1m (2002: #4.0m). Diluted earnings per share
increased by 3.48p to 16.18p (2002: 12.70 p).
Further operational improvements were implemented during 2002 with a particular
concentration on margin. I am particularly pleased to report that gross margins
increased from 39.7% to 41.6% during the year. This was achieved by increased
buying from direct suppliers, the introduction of new technology, reduced
shrinkage and measures to minimise obsolete stock. In addition, 0.3% of the
increase relates to the benefit of stock acquired from the administrators of
James Thin Limited at less than our normal cost. This stock was sold during the
period under review.
Ottakar's core stores traded well throughout the period with like-for-like sales
increasing over the comparable 52 week period by 3.2% to #87.3m (2002: #84.5m).
We were pleased to note that ING's December 2002 research note on the accuracy
and credibility of 52 quoted retailers' like for like sales calculations placed
Ottakar's top, as we exclude all stores which have been extended, relocated or
refurbished in either comparative period from the like for like estate. New and
refurbished stores and those opened during the 52 weeks to 26 January 2002
contributed 13.8% to sales growth during the period. Performance from the seven
new stores in Abergavenny, Ayr, Greenwich, Hexham, Market Harborough, Ormskirk
and Tenterden was encouraging. The eight stores acquired from the administrators
to James Thin Limited in April 2002 contributed 7.2% of the total sales
increase.
The Launchpad concept was started in 1999 both as a stand alone store in the
Meadowhall shopping centre and as an extension to the childrens departments of
our major stores. We have decided not to roll out the stand alone store concept
and therefore have incurred a one-off charge of #300,000 in closing the
Meadowhall store, of which #120,000 is a cash item. Launchpad areas continue to
provide a key element of entertainment within our Lifestyle stores.
Trading period
These results are for a 53 week trading period to 1 February 2003. We estimate
that the 53rd week contributed #1.9m to turnover and #33,000 to profit before
tax.
Dividend
Due to the continuing improvement in profitability, the consequent strengthening
in the balance sheet and our confidence in the future, the directors are
recommending a 28% increase in the final dividend to 2.55 pence per share (2002:
2.0 pence per share). This makes a total dividend of 4.0 pence per share for the
53 weeks to 1 February 2003 (2002: 3.2 pence per share), an increase of 25% for
the year as a whole. Subject to shareholders' approval, the final dividend will
be paid on 16 May 2003 to shareholders on the register at 18 April 2003.
New Stores
During the 53 weeks to 1 February 2003, we opened seven stores adding 21,600
square feet of net retail space. Four existing stores were refurbished with no
change in retail space, and one store was relocated and extended by 3,000 square
feet to include a coffee shop. In addition we acquired eight stores from the
administrators of James Thin totalling 43,800 square feet. New net retail space
for the period was, therefore, 68,400 square feet (2002: 13,000 square feet). At
the period end, total selling space was 380,400 square feet (2002: 312,000
square feet), of which 14,400 square feet opened in the 27 weeks to 1 February
2003.
Ottakar's traded from 93 stores at the year end, of which 28 stores covering
184,000 square feet are in our Lifestyle format including a coffee shop, some
48% of our total selling space. At the previous year end the group had 21
Lifestyle stores trading from 146,500 square feet.
James Thin acquisition
As stated above, we acquired eight stores (of which three were freehold sites)
in April from the administrators of James Thin for #1.6m. This acquisition has
been successfully integrated into the group with all stores rebranded as
Ottakar's. Costs of #320,000 incurred in integrating this acquisition have been
included in selling and distribution costs. We have refurbished five of the
eight stores (Aviemore, Edinburgh George Street, Fareham, Weston-super-Mare,
Woking) and will relocate Dumfries and Inverness in 2003. Dundee will relocate
in 2004. Meanwhile we sold the Aviemore (on a sale and leaseback basis) and
Inverness freehold sites in October 2002 and March 2003 respectively and we are
actively seeking to dispose of the remaining freehold in Dumfries.
Coffee Concessions
Our long standing arrangements with Costa Coffee have proved mutually beneficial
and Costa now operate concessions in 26 of our 28 stores with coffee shops.
Indeed Ottakar's is Costa's largest in-store concession partner in the UK. We
are pleased to announce today that all current five year agreements with Costa
have been extended to seven years and that all future agreements with Costa will
be on a seven year term.
Current Trading and Prospects
Ottakar's enjoyed a record year in 2002 with strong organic growth being
complemented by the James Thin acquisition. The outlook for 2003 also looks
encouraging, subject to the impact of events in Iraq. Further progress will be
driven by the launch of the fifth Harry Potter novel, coupled with our continued
store opening programme and additional supply chain efficiencies.
I am pleased to report that total sales for the 7 weeks to 22 March 2003 were up
17.4% on 2002 - a like-for-like increase of 1%. Since the year end we have
refurbished our Aviemore, East Grinstead and Basildon stores and relocated in
Truro and Inverness to new lifestyle stores. A total opening programme of around
40,000 square feet is expected this year, to include the opening of a new
lifestyle store in Guildford.
Since the year end the group has won three awards at the British Book Awards
2002 - for our innovations in buying systems and internal information microsites
and most significantly, as inaugural winner of the "Bookselling Company of the
Year" award. Accordingly on behalf of the Board I would especially like to thank
our staff for their continuing commitment to the business. It is our staff who
are responsible for delivering our distinctive customer service in our stores -
to them we owe thanks for achieving the record results and for winning these
awards.
Philip Dunne, Chairman
26 March 2003
Consolidated Profit and Loss Account
Note Acquisition Total 52 weeks to
53 weeks to 1 53 weeks to 1 53 weeks to 1 26 January 2002
February 2003 February 2003 February 2003 Audited
Audited Audited Audited #000
#000 #000 #000
Turnover 107,796 7,043 114,839 98,049
Cost of sales (63,046) (4,064) (67,110) (59,152)
Gross profit 44,750 2,979 47,729 38,897
Selling and distribution costs (33,949) (2,672) (36,621) (29,881)
Administration expenses (5,483) - (5,483) (4,400)
Operating profit 5,318 307 5,625 4,616
Loss on disposal of fixed assets - (53)
Profit before interest and taxation 5,625 4,563
Other interest receivable and - 2
similar income
Interest payable and similar (525) (562)
charges
Profit on ordinary activities 5,100 4,003
before taxation
Taxation on profit on ordinary 9 (1,822) (1,417)
activities
Profit for the financial period 3,278 2,586
Equity dividends paid and proposed 2 (800) (640)
Retained profits for the period for 2,478 1,946
equity shareholders
Earnings per share: 3
Basic earnings per share 16.41p 12.88p
Diluted earnings per share 16.18p 12.70p
All of the results presented above derive from continuing business activities.
Consolidated Statement of Total Recognised Gains and Losses
Note 53 weeks to 52 weeks to
1 February 26 January
2003 2002
#000 #000
Profit for the financial period 3,278 2,586
Prior period adjustment (364)
Total gains and losses recognised since last annual report 2,222
Consolidated Balance Sheet
Note
1 February 2003 26 January
Audited 2002
#000 Audited
#000
Fixed assets
Intangible assets 752 801
Tangible assets 22,000 17,968
Investments 8 350 350
23,102 19,119
Current assets
Stocks 20,505 16,307
Debtors 4,031 3,099
Cash at bank and in hand 6 210 680
24,746 20,086
Creditors:
Amounts falling due within one year (21,833) (15,709)
Net current assets 2,913 4,377
Total assets less current liabilities 26,015 23,496
Creditors:
Amounts falling due after more than one year (7,455) (7,515)
Provisions for liabilities and charges (764) (713)
Net assets 17,796 15,268
Capital and reserves
Called up share capital 1,012 1,009
Share premium account 6,128 6,081
Capital redemption reserve 512 512
Profit and loss account 10,144 7,666
Equity shareholders' funds 7 17,796 15,268
Consolidated Cash Flow Statement
Note 53 weeks to 52 weeks to
1 February 26 January
2003 2002
Audited Audited
#000 #000
Net cash inflow from operating activities 4 9,174 5,931
Returns on investments and servicing of finance
Interest received - 2
Interest paid (525) (562)
Net cash outflow from returns on investments and servicing of (525) (560)
finance
Taxation (1,638) (1,085)
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (7,006) (3,070)
Payments to acquire investments - (350)
Receipts from sales of tangible fixed assets 204 -
Net cash outflow from capital expenditure and financial (6,802) (3,420)
investment
Acquisitions and disposals
Acquisition of business (1,587) (55)
Net cash outflow from acquisitions and disposals (1,587) (55)
Equity dividends paid (688) (544)
Net cash (outflow)/inflow before financing (2,066) 267
Financing
Gross proceeds from issue of share capital 50 43
Net cash inflow from financing 50 43
(Decrease)/Increase in cash 5 (2,016) 310
Notes to financial information
1. Basis of preparation
The financial information set out above has been prepared on a 53 week basis (2002: 52 week basis). It does not
constitute the Group's statutory accounts for the 53 weeks ended 1 February 2003 or 52 weeks ended 26 January 2002, but
is derived from those statements. Statutory accounts for 2002 have been delivered to the Registrar of Companies and
those for 2003 will be delivered following the Company's Annual General Meeting.
The Auditors have reported on the accounts for the 52 weeks to 26 January 2002 and 53 weeks to 1 February 2003. Their
reports were unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985.
2. Dividends
53 weeks to 52 weeks to
1 February 26 January
2003 2002
#000 #000
Equity
Interim paid 1.45p per share (2002: 1.20p) 290 242
Final proposed 2.55p per share (2002: 2.00p) 510 398
800 640
A final dividend of 2.55 pence per share (2002: 2.00p) has been declared. The final dividend will be paid on 16 May
2003 to shareholders on the register as at 18 April 2003.
3. Earnings per share
Basic earnings per share of 16.41 pence (2002: 12.88 pence) are based on earnings of #3,278,000 (2002: #2,586,000) and
on 19.982 million ordinary shares (2002: 20.073 million) being the weighted average number of ordinary shares in issue
throughout the period. Diluted earnings per share of 16.18 pence (2002: 12.70 pence) are based on adjusted earnings of
#3,278,000 (2002: #2,586,000) and on a weighted average of 20.258 million (2002: 20.358 million) ordinary shares.
4. Reconciliation of operating profit to net cash inflow from operating activities
53 weeks to 52 weeks to
1 February 26 January
2003 2002
#000 #000
Operating profit 5,625 4,616
Impairment of tangible fixed assets 571 -
Depreciation of tangible fixed assets 3,242 2,741
Amortisation of positive goodwill 49 47
Release of negative goodwill (308) -
Increase in stocks (3,346) (1,615)
Increase in debtors (932) (301)
Increase in creditors 4,273 518
Decrease in provisions - (75)
Net cash inflow from operating activities 9,174 5,931
5. Reconciliation of cash flows to net debt
53 weeks to 52 weeks to
1 February 26 January
2003 2002
#'000 #'000
(Decrease)/Increase in cash in the period (2,016) 310
Change in debt from cash flows (2,016) 310
Net debt brought forward (6,320) (6,630)
Net debt carried forward (8,336) (6,320)
6. Analysis of net debt
At 26 January 2002 Cash At 1 February 2003
#000 Flows #000
#000
Cash at bank and in hand 680 (470) 210
Bank Overdraft - (1,546) (1,546)
Long term loan (7,000) - (7,000)
Total (6,320) (2,016) (8,336)
7. Reconciliation of movements in shareholders' funds
Group
53 weeks to 1 52 weeks to 26
February 2003 January 2002
#000 #000
Profit for the financial period 3,278 2,586
Dividends (800) (640)
Retained profit for the period 2,478 1,946
Net proceeds from the issue of shares 50 43
2,528 1,989
Equity shareholders' funds at the beginning of 15,268 13,279
the period
Equity shareholders' funds at the end of the 17,796 15,268
period
8. Investments
At 1 February 2003 At 26 January 2002
#000 #000
Loan to Employee Benefit Trust 350 350
The employee benefit trust, funded by a loan from the Company acquired 260,000 shares for a total nominal value of
#13,000. The shares will be held in trust until such time as they may be transferred to participants of the Ottakar's
Approved and Second Unapproved share schemes.
9. Taxation on profit on ordinary activities
Analysis of charge in the period 53 weeks to 52 weeks to
1 February 26 January
2003 2002
#000 #000
UK corporation tax
Current tax on income for the period at 30% (2002: 30%) 1,728 1,305
Adjustments in respect of prior periods 43 91
Total current tax 1,771 1,396
Deferred tax
Origination / reversal of timing differences 51 21
Tax on profit on ordinary activities 1,822 1,417
Factors affecting the tax charge for the current period
The current tax charge for the period is higher (2002: higher) than the standard
rate of corporation tax in the United Kingdom (30%, 2002: 30%). The differences
are explained below.
53 weeks to 52 weeks to
1 February 26 January
2003 2002
Current tax reconciliation
Profit on ordinary activities before tax 5,100 4,003
Current tax rate at 30% 1,530 1,201
Effects of:
Depreciation for period in excess of capital allowances 328 190
Other items treated differently for tax purposes (primarily the
treatment of amortisation of goodwill and lease premia) (130) (86)
Adjustments to tax charge on respect of prior periods 43 91
Total current tax charge (see above) 1,771 1,396
10. Acquisition of business
During the period under review, 8 stores were acquired from the administrators of James Thin Limited. Certain assets
were acquired at below fair value, giving rise to negative goodwill. These assets were subsequently disposed of using
the period under review and so the negative goodwill of #308,000 has been released to profit in accordance with
Financial Reporting Standard 10. Costs of #320,000 incurred in integrating this acquisition have been included in
selling and distribution costs.
Details of the negative goodwill are outlined below.
Cost Adjustments Fair Value
#000 #000 #000
Freehold property 989 54 1,043
Stock 503 349 852
1,492 403 1,895
Negative goodwill (308)
1,587
Represented by: Gross cash consideration 1,587
The fair value adjustments were:
Freehold property
One of the acquired properties was subsequently resold. The adjustment revalues the property at sales value so as to
record the subsequent disposal at nil gain/nil loss.
Stock
Stock has been adjusted to value it at the lower of replacement cost and net realisable value.
11. Copies of this announcement
Copies of this announcement are available from the Company Secretary,
Ottakar's plc, St Johns House, 72 St Johns Road, London, SW11 1PT.
Copies of the Annual Report and Accounts will be distributed to shareholders
and delivered to the Registrar of Companies in due course.
12. Annual General Meeting
The Annual General Meeting will be held at the offices of Teather & Greenwood,
Beaufort House, 15 St.Botolph Street, London EC3A 7QR at 11:00am on 13 May 2003.
This information is provided by RNS
The company news service from the London Stock Exchange
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