RNS Number:1529Q
Ottakar's PLC
25 September 2003
25 September 2003
Ottakar's plc
Interim Results
for the 26 weeks ended 2 August 2003
Ottakar's plc ('Ottakar's) one of the UK's leading specialist book retailers,
announces interim results for the 26 weeks to 2 August 2003.
Highlights
* Sales increased by 37% to #57.5m (2002: #41.9m).
* Acquisition of 24 Hammicks stores in April 2003 increases group square
footage by 30%.
* 8.7% like-for-like sales growth for the first half, (5.9% excluding
Harry Potter V).
* Gross margin increased by 1.3% to 41.6% (2002: 40.3%).
* As expected, a loss before tax of #2.9m (2002: #2.3m).
* Interim dividend increased by 38% to 2.00p (2002: 1.45p) per share.
* New net retail space of 121,000 sq. ft. (2002: 54,000 sq.ft). Total
selling space now 501,000 sq.ft (2002: 366,000 sq. ft.).
* 3.5% like-for-like sales growth for seven weeks since period end.
* 117 stores at the period end, 4 further stores to open prior to year
end in time for the important Christmas trading period.
* Strong first half titles included "Harry Potter and the Order of the
Phoenix" and the BBC's "The Big Read" promotion.
* Strong Christmas titles include David Beckham My Side, Robert Harris
Pompeii, and What Not to Wear Part 2.
Commenting on prospects, Philip Dunne, Chairman, said:
"The acquisition of 24 Hammicks stores in the first half has had a significant
positive effect on the group's trading prospects. The first half improvement in
both sales and gross margin is encouraging. Since the period end business has
continued to grow steadily with3.5% like-for-like sales growth for the seven
weeks to 20 September 2003.
The company is well positioned to take advantage of the crucial Christmas
trading period."
For further information, contact:
Ottakar's plc
James Heneage, Managing Director 01722 428504
Edward Knighton, Finance Director 07714 458566
Buchanan Communications
Charles Ryland/Nicola Cronk 020 7466 5000
Chairman's Statement
I am pleased to report the interim results of Ottakar's plc for the period to 2
August 2003. The group has made further good progress during the period.
Ottakar's is one of the UK's leading specialist book retailers trading from a
portfolio of 117 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
Sales increased during this interim period by 37% to #57.5m (2002: #41.9m). Like
for like sales growth was 8.7%, which we regard as encouraging.
Sales were boosted in the first half by the prolonged success of the BBC's "The
Big Read" promotion (which will reach its climax in October) and by the launch
of the fifth volume in the Harry Potter series. We sold over 80,000 copies of "
Harry Potter and the Order of the Phoenix" on the launch day of 21 June alone
and have sold 137,000 copies to date. We regard this as a notable performance
when set against other specialist book retailers. Like for like sales growth
excluding Harry Potter V was 5.9%.
As reported previously and due to the seasonality of the business, the Group's
profits are made in the second half of the year. The loss before tax for the
period was #2.9m (2002: loss before tax of #2.3m), reflecting the increased
number of early growth stores. This result is in line with market expectations.
Gross margin was increased to 41.6% (2002: 40.3%). This significant and
continued increase reflects improvements in buying practices and increased
retrospective discounts from suppliers. It was achieved despite the acquisition
of Hammicks lower margin stores and the dilutive effect of the fifth Harry
Potter book.
Administration expenses remained at 6.2% of turnover (2002: 6.2%), and included
#0.4m of one off costs relating to the integration of the 24 Hammicks bookshops
acquired.
Hammicks Acquisition
During April Ottakar's acquired twenty four general stores from Hammicks
Bookshops Limited totalling 116,000 square feet. The total cost of the
acquisition including expenses was #3.6m, representing a #0.09m discount to book
value, after provisional fair value adjustments of #2.6m. The acquisition was
financed by a #6.0m additional term loan from Bank of Scotland. Seventeen of the
stores have already been rebranded as Ottakar's and the remainder will follow
during the second half. Four of the former Hammicks stores include coffee shops
and we will look over time to extend and relocate several of these stores as
part of our siting strategy to dominate the towns in which we operate.
We are pleased with the early progress of this acquisition, and results are
broadly in line with our targets, with sales up 4 % in the 21 weeks of our
ownership. We have incurred #0.4m of expected rationalization costs in
integrating this acquisition, with a further #0.2m to come in the second half.
Placing
In May, in order to satisfy institutional demand for our shares, we placed
995,980 shares with new and existing shareholders raising #2.3m net of expenses.
Capital Expenditure
Capital expenditure in the first half totalled #3.5m (2002: #2.7m). This
excludes the #3.6m of net assets acquired as part of the Hammicks bookshops
acquisition. Our borrowings have increased to #19.3m at 2 August 2003 (2002:
#16.1m), including #13m of long-term bank loans. This seasonal peak was in line
with our expectations.
The EPOS implementation continued in the first half with the roll-out of new
tills and sales software to all Ottakar's stores. Development of a new
replenishment ordering process and testing of stock management systems will
continue in the second half.
Taxation
We have provided for an estimated tax rate at the year-end of 35.3% (2002:
33.4%).
Dividend
In line with the continued improved performance of Ottakar's, the Board has
declared an increased interim dividend of 2.00 pence (2002: 1.45 pence) per
ordinary share, a 38% increase.
New Stores
In addition to the Hammicks stores, during the period under review we relocated
stores in Truro, Inverness, East Kilbride and Dumfries. We incurred a charge of
#420,000 in closing East Kilbride (of which #300,000 was a cash cost), which has
been charged against selling and distribution costs in the first half. Three of
the new stores contain coffee shops, taking our stores providing coffee to 34,
covering 48% of our selling space. In addition we refurbished our store in
Clapham Junction, extending it by 1,200 square feet, and refurbished our stores
in Aviemore, East Grinstead and Basildon. In the second half we will open new
stores in Cheltenham, Guildford, Coventry and Oban, totalling 28,400 square
feet. New stores opened in 2002 are trading satisfactorily.
New net retail space for the period was 121,000 square feet (2002: 54,000 square
feet). Our period end total selling space was 501,000 square feet (2002:
366,000 square feet).
We planned a total opening programme for 2003/4 of 149,000
square feet, of which 116,000 square feet relates to the Hammicks acquisition.
Current Trading and Prospects
The first half improvement in both sales and gross margins is satisfactory.
Since the period end business has continued steadily with 3.5% like-for-like
sales growth for the seven weeks to 20 September 2003.
We believe that the company is well positioned to take advantage of the crucial
Christmas trading period and I look forward to reporting further progress at the
year end.
Philip Dunne, Chairman
25 September 2003
Consolidated Group Profit and Loss Account
26 weeks to 26 weeks to 26 weeks to 26 weeks to 53 weeks to
2 August 2 August 2 August 27 July 1 February
2003 2003 2003 2002 2003
Existing
Operations Acquisition Total Audited
Unaudited Unaudited Unaudited Unaudited
Note #000 #000 #000 #000 #000
Turnover 50,894 6,613 57,507 41,936 114,839
Cost of sales (29,467) (4,130) (33,597) (25,027) (67,110)
Gross profit 21,427 2,483 23,910 16,909 47,729
Selling and distribution costs (20,678) (2,201) (22,879) (16,198) (36,621)
Administration expenses (3,174) (417) (3,591) (2,610) (5,483)
Operating (loss) / profit (2,425) (135) (2,560) (1,899) 5,625
Profit / (loss) on disposal of 33 - 33 (237) -
fixed assets
(Loss) / profit before interest (2,392) (135) (2,527) (2,136) 5,625
and taxation
Interest payable (421) (193) (525)
(Loss) / profit on ordinary (2,948) (2,329) 5,100
activities before taxation
Taxation 2 1,040 778 (1,822)
(Loss) / profit for the (1,908) (1,551) 3,278
financial period
Equity dividends paid and 3 (420) (290) (800)
proposed
Retained (loss) / profit for the (2,328) (1,841) 2,478
period for equity shareholders
Earnings per share:
Basic (loss) / earnings per share 4 (9.33)p (7.77)p 16.41p
Diluted (loss) / earnings per (9.33)p (7.77)p 16.18p
share
All the results above derive from continuing business activities.
There were no other recognised gains or losses other than those stated above and
therefore no statement of recognised gains or losses has been prepared.
Consolidated Balance Sheet
2 August 27 July 1 February
2003 2002 2003
Unaudited Unaudited Audited
#000 #000 #000
Fixed assets
Intangible assets 639 872 752
Tangible assets 26,547 19,949 22,000
Investments 350 350 350
27,536 21,171 23,102
Current assets
Stocks 24,208 16,390 20,505
Debtors 4,200 3,745 4,031
Cash at bank and in hand 249 108 210
28,657 20,243 24,746
Creditors: Amounts falling due within one year (25,176) (19,831) (21,833)
Net current assets 3,481 412 2,913
Total assets less current liabilities 31,017 21,583 26,015
Creditors: Amounts falling due after more than one year (12,485) (7,404) (7,455)
Provision for liabilities and charges (764) (705) (764)
Net assets 17,768 13,474 17,796
Capital and reserves
Called up share capital 1,064 1,012 1,012
Other reserves 8,888 6,637 6,640
Profit and loss account 7,816 5,825 10,144
Equity shareholders' funds 17,768 13,474 17,796
Reconciliation of movements in shareholders' funds
26 weeks to 26 weeks to 53 weeks to
2 August 27 July 1 February
2003 2002 2003
Unaudited Unaudited Audited
#000 #000 #000
(Loss) / profit for the financial period (1,908) (1,551) 3,278
Dividends (420) (290) (800)
Net proceeds from the issue of shares 2,300 47 50
(28) (1,794) 2,528
Equity shareholders' funds at the beginning of the period 17,796 15,268 15,268
Equity shareholders' funds at the end of the period 17,768 13,474 17,796
Consolidated Group Cash Flow Statement Note
26 weeks to 26 weeks to 53 weeks to
2 August 27 July 1 February
2003 2002 2003
Unaudited Unaudited Audited
#000 #000 #000
Net cash (outflow) / inflow from operating activities 7 (3,704) (4,353) 9,174
Returns on investments and servicing of finance
Interest paid (421) (193) (525)
Net cash outflow from returns on investments and servicing of (421) (193) (525)
finance
Taxation (1,000) (588) (1,638)
Capital expenditure and financial investments
Payments to acquire tangible fixed assets (3,522) (2,737) (7,006)
Receipts from sales of tangible fixed assets 33 - 204
Net cash outflow from capital expenditure and financial (3,489) (2,737) (6,802)
investments
Acquisitions and disposals
Acquisition of business (3,550) (1,587) (1,587)
Net overdraft acquired with the business (601) - -
Net cash outflow from acquisitions and disposals (4,151) (1,587) (1,587)
Equity dividends paid (510) (398) (688)
Net cash outflow before financing (13,275) (9,856) (2,066)
Financing
New term loan 6,000 - -
Gross proceeds from issue of share capital 2,300 47 50
Net cash inflow from financing 8,300 47 50
Decrease in cash (4,975) (9,809) (2,016)
Notes to financial information
1. Basis of preparation
The Board approved the interim report on 25 September 2003. The financial
information for the 26 weeks to 2 August 2003 and the 26 weeks to 27 July 2002
has not been audited. The financial information for the 53 weeks to 2 February
2003 has been drawn from the audited financial statements for that period.
The financial information contained in the interim report does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985.
Statutory accounts for the 53 weeks to 2 February 2003 incorporating an
unqualified audit report have been filed with the Registrar of Companies.
The financial information contained in this interim report has been prepared on
the basis of the accounting policies set out in the Group's statutory accounts
for the 53 weeks to 2 February 2003.
The Hammicks acquisition contributed #6.6m turnover and an operating loss of
#135,000.
2. Taxation
Corporation Tax for the 26 weeks to 2 August 2003 has been provided for at the
estimated effective annual rate of 35.3%. (2002: 33.4%).
3. Dividends
26 weeks to 26 weeks to 53 weeks to
2 August 27 July 1 February
2003 2002 2003
Unaudited Unaudited Audited
#000 #000 #000
Dividends: Ordinary shares of 5p each 420 290 800
An interim net dividend of 2.00 pence per share (2002: 1.45 pence) has been
declared. The interim dividend will be paid on 31 October 2003 to shareholders
on the register at 3 October 2003.
4. Earnings per share
Basic loss per share of (9.33) pence (27 July 2002: (7.77) pence, 1 February
2003: 16.41 pence) is based on losses of #1.908m (27 July 2002: losses of
#1.551m, 1 February 2003: earnings of: #3.278m) and on 20.443 million ordinary
shares (27 July 2002: 19.971 million, 1 February 2003: 19.982 million) being the
average number of ordinary shares in issue throughout the period. Diluted
earnings per share for the 53 weeks to 1 February 2003 are based on profits of
#3.278m and on a weighted average of 20.258 million ordinary shares.
For the 26 weeks to 2 August 2003 and the 26 weeks to 27 July 2002 the options
are anti-dilutive because they decrease the loss per share.
5. Reconciliation of cash flows to net debt
26 weeks to 26 weeks to 53 weeks to
2 August 27 July 1 February
2003 2002 2003
#000 #000 #000
Decrease in cash in period (4,975) (9,809) (2,016)
Increase in term (6,000) - -
loans in period
Movement in net debt (10,975) (9,809) (2,016)
Net debt at beginning of period (8,336) (6,320) (6,320)
Net debt at end of period (19,311) (16,129) (8,336)
6. Analysis of net debt
Cash at Overdraft Net (decrease)/ Debt due Debt due Net debt
bank
and in hand increase within one after one year
year
#000 #000 #000 #000 #000 #000
At 26 January 2002 680 - - (7,000) (6,320)
Net cash flow (572) (9,237) (9,809) - - (9,809)
At 27 July 2002 108 (9,237) - (7,000) (16,129)
Net cash flow 102 7,691 7,793 - - 7,793
At 1 February 2003 210 (1,546) - (7,000) (8,336)
Net cash flow 39 (5,014) (4,975) (1,000) (5,000) (10,975)
At 2 August 2003 249 (6,560) (1,000) (12,000) (19,311)
7. Reconciliation of operating loss to net cash flow from operating activities
26 weeks to 26 weeks to 53 weeks to
2 August 27 July 1 February
2003 2002 2003
Unaudited Unaudited Audited
#000 #000 #000
Operating (loss) / profit (2,560) (1,899) 5,625
Impairment of tangible fixed assets 300 - 571
Depreciation of tangible fixed assets 1,769 1,748 3,242
Amortisation of positive goodwill 23 24 49
Release of negative goodwill - (240) (308)
Decrease / (increase) in stocks 1,571 420 (3,346)
Decrease / (increase) in debtors 711 (646) (932)
(Decrease) / increase in creditors (5,518) (3,760) 4,273
Net cash (outflow) / inflow from operating activities (3,704) (4,353) 9,174
END
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