RNS Number:3107H
Dobbies Garden Centres PLC
11 February 2003
DOBBIES GARDEN CENTRES PLC
PRELIMINARY RESULTS FOR THE YEAR ENDING 31 OCTOBER 2002
Highlights
* Sales up 26% to #38.4m
* Like-for-like sales up 7.8%
* Gross margin up from 46.2% to 47.2%
* Operating profit #4.6m, 12.1% of sales, 25% increase
* Pre-tax profit up 106% to #6.0m (after property profit of #2.4m)
* Adjusted pre-tax profit up 25% to #3.7m (excluding property profit)
* Adjusted EPS up 21% to 26.3p (excluding property profit)
Commenting on the results, James Barnes, Chief Executive, said:
"We are pleased to report another year of growth in terms of sales and profits.
This was a year of significant advancement in terms of store developments with a
total capital spend of #9.3m. This is the highest since Dobbies began trading in
1865. We now believe we have a definitive formula for new garden centre
developments."
Enquiries:
Dobbies Garden Centres plc Tel: 0131 663 6778
James Barnes
Sharon Brown
Bell Pottinger Financial Ltd Tel: 020 7861 3232
Jonathon Brill
Caroline Sturdy
Zoe Sanders
CHAIRMAN'S STATEMENT
2002, Another year of progress
The bare but excellent facts for the year's results are that our sales rose 26%
to #38.4 million, our profits before tax - and before the exceptional gain on
the sale of our leasehold at Perth - rose 25% to #3.7 million and our adjusted
earnings per share were 21% higher at 26.34p. These and other statistics, which
add substance to the information about the year's performance, are outlined in
James Barnes' report which follows this statement. Suffice it to say that your
Directors believe it to be a good performance, particularly so because it was
achieved in one of the wettest summers on record.
On the basis of these results, the Directors are recommending a final dividend
of 4.9p per ordinary share - payable, if approved by shareholders, on 30 April
2003; when combined with the interim dividend, paid on 31 October 2002, the
total for the year amounts to 7.3p, 10% higher than the 6.65p paid for last
year.
Building a modern garden centre management team
Each year there are a number of individual developments which contribute to that
year's progress. The redevelopments at Shrewsbury and Milngavie (Glasgow) during
2001, those at Preston and at Perth during 2002, together with a full year's
sales from Atherstone (acquired in September 2001), and good like-for-like sales
increases at existing stores accounted for much of this year's progress.
But such progress is not possible unless accompanied by the development of a
management team that can cope with more and much larger garden centres, more
customers and a higher level of sales - each year. Managing a business in
today's highly competitive and over-regulated environment - especially a smaller
business such as Dobbies - is a difficult task. I believe we have the people to
do it.
Building a team of people who work well together, who trust each other and who
share a common goal is a long-term process. During the last five years we have
gradually established what we believe to be a good team, possessing the right
skills in the required areas. We have developed individuals' skills and
responsibilities through training programmes (an important aspect of developing
a good management team) and we have recruited young but experienced people who
have a chance to develop their careers with Dobbies. Most importantly, we have
developed our management capacity ahead of immediate needs so that we are able
to manage today's and tomorrow's growth. As the business continues to expand, as
we intend it to, so we will continue to develop the team, its capacity and its
capabilities.
Shareholders will be familiar with our three executive directors - James Barnes,
our CEO, Johnny Trotter, our Operations Director and Sharon Brown, our Finance
Director. Working with them on the Management Board are David McQueen who is
responsible for our buying, Richard Watson for our marketing, Joy Mackenzie for
our employee development and our most recent member, Stuart Wright who has taken
over responsibility for our property development. This team of seven and their
colleagues who work directly with them, are responsible for the overall
management of the Company.
And then there are the seventeen garden centre managers, each an important and
responsible person, each with their colleagues striving to serve our customers
well and thereby contributing to the success of the Company. It is the
collective hard work and commitment of all of Dobbies' 966 employees that is
above all else responsible for our success.
And finally it is important to emphasise that concomitant with their commitment
to Dobbies is our commitment to them. We aim to make their work with us
enjoyable and rewarding and to offer each individual a worthwhile career with
the Company. On behalf of shareholders I would like to thank them for their
diligence, without which we would not have achieved the progress we have as a
public company, during which time our sales and profits have risen six-fold.
Annual General Meeting
The Annual General Meeting will be held at the Company's offices at the Melville
Garden Centre (just outside Edinburgh) at 12 noon on Tuesday 15 April 2003. I do
urge as many shareholders as possible to attend because it will give you the
chance to ask questions about the business and meet the Directors. James Barnes
will be making a short presentation at the meeting covering the year's results
and future prospects.
Prospects
There is a good deal of uncertainty about the prospects for the economy during
2003 and particularly about house prices and consumer expenditure; certainly the
international economic environment is not very encouraging. In the course of any
economic cycle there are bound to be years that are less strong than others.
However the long-term demographics for the garden centre business remain strong
and on the evidence to date we see no particular reason to be other than
optimistic.
Furthermore the continuing attention we give to improving everything that we do
- whether it be through investment in bricks and mortar or in people - means
that we aim to improve our sales and profits from our existing facilities every
year. As I mentioned last year, we are in the process of making an investment of
circa #1 million in an Electronic Point of Sale (EPOS) system, which should
allow us to manage our business even better. In the shorter term there will be
some extra costs but in the longer term it should produce material benefits in
terms of customer satisfaction, management efficiency, sales and profits.
Notwithstanding this, and any unforeseen event apart, we are confident of
further progress in the performance of your Company again this year.
Alex Hammond-Chambers
Chairman
CHIEF EXECUTIVE'S REVIEW
This may have been a year of consolidation in terms of new sites but it was also
one of significant advancement in terms of store developments with a total
capital spend of #9.3 million. This is the highest since Dobbies began trading
in 1865.
These newly developed stores along with the investment put into our existing
centres saw sales grow by 26% to #38.4m with like-for-like sales growing by 7.8%
and pre-tax profits of #3.7 million, an increase of 25%.
Product
This year was marked by two very distinctive halves. The first half (November to
April) was buoyed by excellent weather and rising consumer spend; the second
(May to October) by a falling trend of consumer spend and poor weather. This
affected the product sales mix with plant sales falling as a percentage of the
total. Continuing improvements in product range and in our merchandising
abilities assisted the performance of our non-core products.
Premises
There were three major projects during the year: the completion of our
redevelopment at Preston; the sale of our existing store at Perth and the
construction of a larger new one on an adjacent site; and the commencement of
our extensive refurbishment programme at Atherstone, which will be one of the
largest garden centres in the United Kingdom.
In all, these projects represent the culmination of a number of initiatives and
bring together the best aspects of our developments to date, and successfully
demonstrate our ability to develop both large and "small" scale stores within
the destination leisure category. Our store at Atherstone will have a total
covered space of over 85,000 square feet and with associated attractions occupy
some 54 acres. Our garden centre at Perth utilises some 6 acres of ground with a
covered heated space of approximately 30,000 square feet. There will of course
be continued innovation and evolution but we now believe we have a definitive
formula for our twin track strategy of new garden centre developments.
We are conscious that if we are to succeed in the garden centre market we have
to go beyond simply creating a store for the supply of garden products: we have
to inspire, we have to entertain and we have to educate. These elements are not
just reflected in the ambience of our sites, in the architecture and design of
our buildings, but in the products we sell, our merchandising techniques and
importantly our people.
People
As part of our process of building our senior management team we have recruited
this year in two key areas of property and merchandising. This should assist us
both in finding new opportunities and in delivering higher sales per square foot
throughout our store portfolio.
We were in occupation of, and continued to trade from, all of our redevelopment
sites this year and I would like to reiterate the thanks of our Chairman to all
of our staff for their effort and commitment during the year and particularly
those garden centre staff involved in our capital projects.
Whilst we continue to develop our management team we must also look to the
development of the "tools" with which they work, and I am pleased to report that
this year saw the launch of our computerised stock control system. This is now
being rolled out and should be complete by this year end. While the costs of
this system will be borne up front, it is an essential part of our
infrastructure for developing a business with more and more outlets and, we
believe, significant benefits will accrue in the long run.
We have raised our customer service standards in all our stores and will
continue to move this on in the current year. Our spend on internal staff
development programmes has again exceeded that of last year.
Outlook
As indicated earlier, the year under review was marked by an excellent first
half and a poor second. This trend may be reversed in the current year but
notwithstanding the vagaries of our climate, we will accrue the benefit of a
full year's trading from our new centres at Preston and Perth and part year of
our redeveloped store at Atherstone. Our portfolio of potential new developments
is being widened and we remain confident of our longer term potential.
James Barnes
Chief Executive
DOBBIES GARDEN CENTRES PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Year ended 31 October 2002
2002 2001
Restated*
#'000 #'000
Turnover: Continuing operations 38,361 30,450
Cost of sales (20,256) (16,377)
------------- -------------
Gross profit 18,105 14,073
Administrative expenses (14,239) (11,010)
Other operating income 780 651
------------- -------------
OPERATING PROFIT: Continuing operations 4,646 3,714
Profit on sale of tangible fixed assets 2,357 -
------------- -------------
PROFIT ON ORDINARY ACTIVITIES BEFORE INTEREST 7,003 3,714
Interest payable and similar charges (991) (790)
------------- -------------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 6,012 2,924
Tax on profit on ordinary activities (1,097) (939)
------------- -------------
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 4,915 1,985
Equity dividends paid and proposed (725) (636)
------------- -------------
RETAINED PROFIT FOR THE YEAR TRANSFERRED TO RESERVES 4,190 1,349
======= =======
EARNINGS PER SHARE
Basic earnings per share 50.60p 21.78p
Adjustment for profit on sale of assets (24.26p) -
Adjusted basic earnings per Share 26.34p 21.78p
======= =======
Diluted earnings per share 50.20p 21.22p
Adjustment for profit on sale of assets (24.26p) -
Adjusted diluted earnings per share 25.94p 21.22p
======= =======
* The Consolidated Profit and Loss Account for the year ended 31 October 2001
has been restated for the adoption of FRS 19 (as detailed in note 3).
DOBBIES GARDEN CENTRES PLC
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Year ended 31 October 2002
2002 2001
Restated*
#'000 #'000
Profit for the financial year 4,915 1,985
------------- -------------
TOTAL RECOGNISED GAINS AND LOSSES
RELATING TO THE YEAR 4,915 1,985
Prior period adjustment (note 3) (621) -
------------- -------------
TOTAL GAINS AND LOSSES RECOGNISED SINCE
LAST ANNUAL REPORT 4,294 1,985
------------- -------------
* The Consolidated Statement of Total Recognised Gains and Losses for the year
ended 31 October 2001 has been restated for the adoption of FRS 19 (as detailed
in note 3).
DOBBIES GARDEN CENTRES PLC
CONSOLIDATED BALANCE SHEET
Year ended 31 October 2002
2002 2001
Restated*
#'000 #'000
FIXED ASSETS
Intangible assets 725 767
Tangible assets 52,255 44,512
------------- -------------
52,980 45,279
------------- -------------
CURRENT ASSETS
Stocks 7,136 6,939
Debtors 925 715
Cash at bank and in hand 411 281
------------- -------------
8,472 7,935
CREDITORS: amounts falling due within one year (16,667) (20,082)
------------- -------------
NET CURRENT LIABILITIES (8,195) (12,147)
------------- -------------
TOTAL ASSETS LESS CURRENT LIABILITIES 44,785 33,132
CREDITORS: amounts falling due after more than one year (11,941) (4,960)
PROVISIONS FOR LIABILITIES AND CHARGES (893) (723)
------------- -------------
31,951 27,449
======= =======
CAPITAL AND RESERVES
Called up share capital 981 955
Share premium account 20,911 20,625
Profit and loss account 10,059 5,869
------------- -------------
EQUITY SHAREHOLDERS' FUNDS
31,951 27,449
======= =======
* The Consolidated Balance Sheet at 31 October 2001 has been restated for the
adoption of FRS 19 (as detailed in note 3).
DOBBIES GARDEN CENTRES PLC
CONSOLIDATED CASH FLOW STATEMENT
Year ended 31 October 2002
2002 2002 2001 2001
#'000 #'000 #'000 #'000
Net cash inflow from operating activities 6,059 3,131
Returns on investments and servicing of finance (1,040) (808)
Taxation (776) (602)
Capital expenditure and financial investment (6,762) (8,707)
Acquisitions and disposals - (4,355)
---------- ----------
Net cash outflow from investing activities (6,762) (13,062)
Equity dividends paid (671) (577)
---------- ----------
Net cash outflow before financing (3,190) (11,918)
Financing 7,111 2,233
---------- ----------
Increase/(decrease) in cash in the year 3,921 (9,685)
====== ======
Reconciliation of net cash flow to movement in net debt
Increase/(decrease) in cash in the year 3,921 (9,685)
Cash (inflow)/outflow from (increase)/decrease in debt and hire (6,799) 112
purchase
---------- ----------
Change in net debt resulting from cashflows (2,878) (9,573)
Additional term loan arrangement fee - 20
Loan notes issued in the year - (381)
---------- ----------
Movement in net debt in the year (2,878) (9,934)
Net debt at 1 November 2001 (18,790) (8,856)
---------- ----------
Net debt at 31 October 2002 (21,668) (18,790)
====== ======
Notes:
1. The calculation of earnings per share is based on the profit after tax for
the financial period divided by 9,714,196 ordinary shares, being the weighted
average numbers of ordinary shares in issue during the year. The diluted
earnings per share is based on the profit after tax for the financial period
divided by 9,796,401 ordinary shares, being the number of potential ordinary
shares calculated in accordance with FRS14. The comparatives have been restated
in respect of FRS19 per note 3.
2. The Directors proposed a final dividend of 4.9p per share, to be paid on 30
April 2003 to shareholders on the register at the close of business on 4 April
2003.
3. Deferred taxation is now stated on a full liability basis in accordance with
FRS19 and comparative financial information has been restated as necessary. The
impact of adopting FRS19 was to increase the tax charge for the year to 31
October 2002 by #170,000 and the year ended 31 October 2001 by #296,000.
Deferred taxation has not been provided on any potential profit on the sale of
properties as any gain will be rolled-over.
4. Reconciliation of operating profit to operating cash flow
2002 2001
#'000 #'000
Operating profit 4,646 3,714
Depreciation charges 1,425 918
Goodwill amortisation 42 44
Profit on sale of tangible fixed assets - (61)
Increase in stocks (197) (1,596)
Increase in debtors (210) (232)
Increase in creditors 353 344
---------- ----------
Net cash inflow from operating activities 6,059 3,131
====== ======
5. Reconciliation of Movements in Shareholders' Funds
Group Company
2002 2001 2002 2001
#'000 #'000 #'000 #'000
Profit for the financial year 4,915 1,985 4,876 1,960
Dividends (725) (636) (725) (636)
New share capital subscribed 26 48 26 48
Share premium arising (net) 286 1,916 286 1,916
-------- -------- -------- --------
Net additions to shareholders' funds 4,502 3,313 4,463 3,288
-------- -------- -------- --------
Shareholders' funds at 1 November as previously reported 27,449 24,461 27,136 24,173
Prior period adjustment (see note 3) - (325) - (325)
-------- -------- -------- --------
Shareholders' funds at 1 November as adjusted 27,449 24,136 27,136 23,848
-------- -------- -------- --------
Closing shareholders' funds 31,951 27,449 31,599 27,136
===== ===== ===== =====
6. Analysis of Net Debt
At At
1 November 31 October
2001 Cashflow 2002
#'000 #'000 #'000
Cash at bank and in hand 281 130 411
Bank overdraft (13,611) 3,791 (9,820)
---------- ---------- ----------
(13,330) 3,921 (9,409)
---------- ---------- ----------
Debt due after one year (4,960) (6,981) (11,941)
Debt due within one year (494) 182 (312)
Hire purchase (6) - (6)
---------- ---------- ----------
(5,460) (6,799) (12,259)
---------- ---------- ----------
Total (18,790) (2,878) (21,668)
====== ====== ======
7. The financial information set out above does not constitute statutory
accounts as defined in section 240 of the Companies Act 1985. The audited
accounts for the year ended 31 October 2001 have been filed with the Registrar
of Companies. The auditors reported on these accounts: their report was
unqualified and did not contain a statement under Section 237 (2) or (3)
Companies Act 1985. The statutory accounts for the year ended 31 October 2002
will be finalised on the basis of the financial information presented by the
Directors in this Preliminary Announcement and will be delivered to the
Registrar of Companies following the Companies AGM.
8. This preliminary announcement is not being posted to shareholders, but a full
Annual Report will be despatched to shareholders shortly. The Annual General
Meeting will be held on 15 April 2003.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR URORROORUAUR
