RNS Number:3113R
Dobbies Garden Centres PLC
12 February 2002
DOBBIES GARDEN CENTRES PLC
Preliminary Results for the Year ended 31 October 2001
Highlights
* Turnover at £30.5 million up 29%
* Like-for-like sales up 15.5%
* Profit before tax £2.9 million up 11.9%
* Final dividend of 4.45p making a total of 6.65p up 10%
* Earnings per share increased marginally from 25.00p to 25.03p
* Acquisition of Cross Lanes Farm brings the total number of garden
centres to 16
Commenting on the results, James Barnes, Chief Executive, said:
"The continuing popularity of gardening combined with Dobbies growing
portfolio of larger destination stores allows us to be optimistic about
our prospects in the coming years.
"In the immediate future and in addition to planned improvements at
other centres, we anticipate a successful Spring launch at Preston, our
biggest redevelopment to date."
Enquiries:
Dobbies Garden Centres PLC
James Barnes, Chief Executive Tel: 0131 663 6778
Sharon Brown, Finance Director Tel: 0131 663 6778
Bell Pottinger Financial
Jonathon Brill/Caroline Sturdy Tel: 020 7861 3232
CHAIRMAN'S STATEMENT
Five years' Progress as a Public Company
This is my fifth statement to you as shareholders of Dobbies Garden Centres as a
public limited company. The past year has seen the continuation of the progress
that we have made during these last five years in building a modern and
excellent garden centre retailing company.
In the first quarter of 1997 Dobbies Garden Centres achieved a listing on AIM at
which time its investment in garden centres amounted to c. £5m, which in turn
were generating sales of c. £5m. I am pleased to be able to report to you that
the sales for the year just ended amounted to £30.5m, an increase of 29% on the
previous year and c. 500% on five years ago. We have achieved this for a number
of different reasons, probably the most important of which has been our
investment in new properties and fixed assets, which amounted to £45m at the end
of the year - £25m of which was established in the last two years. It takes time
before new facilities generate the sales and profits we expect of them, which in
turn restrains the underlying short-term return from these assets. Over the
longer term we aim to achieve at least a pound of sales for every pound we have
invested in a centre. Our profits before tax rose 11.9% to £2.9m; our earnings
per share rose marginally from 25.00p to 25.03p per share - affected as it was
by having a much larger number of average shares outstanding, as a result of the
share issues in April 2000 and September 2001.
I emphasise the record of our physical development over the past five years
because we have chosen to make it the central theme of our annual report this
year. We are focused on developing a garden centre company with a portfolio of
garden centres that seek to be large, efficient, customer-friendly and which
offer a wide range of garden and home merchandise. While we do not preclude
operating from leased centres, we prefer to own them outright because it gives
us immeasurably greater flexibility to manage them well and because it helps
build a store of value for shareholders on a long term basis. Given our
preference for owning our centres and given the considerable investment incurred
in establishing a new, large garden centre, it makes sense for us to finance
part of that investment through, what is in effect, a mortgage; our Board policy
is to borrow up to 50% of the investment in garden centres that we own.
Owning our own centres, however, requires considerable capital investment.
During the last year for instance, we spent £13m on investment in our centres
and in acquiring a new centre at Atherstone. Four of our sixteen garden centres
are budgeted to secure sales in excess of £3m this year and another three of
them should pass the £3m mark next year. These numbers demonstrate our success
in focusing on the development of large garden centres and on our policy of
developing a portfolio of fewer but larger garden centres - as opposed to many
smaller ones.
Dividend and AGM
The Board of Directors is recommending to shareholders a final dividend of 4.45p
per share which, if approved at the AGM, will be paid on 30th April 2002. 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, 16th April 2002. I
do urge as many shareholders as possible to attend.
James Barnes, our Chief Executive Officer, will be making a short presentation
covering the year's results and future prospects.
Alternative Investment Market (AIM) Listing
I would like to reiterate what I said in my statement last year concerning our
AIM listing, given the Capital Gains Tax benefit that accrues to long-term
individual shareholders; indeed we understand that the capital gains tax 'taper
relief' will be available to shareholders of two rather than four years duration
after the current tax year. It is our intention to remain listed on the AIM for
the foreseeable future.
Corporate responsibility
There is a growing requirement for companies to operate in a socially and
environmentally responsible manner. More and more laws and regulations are
coming into effect to force companies to do so. While it is a pity to have to
enact laws and regulations to make companies operate responsibly (it should
happen anyway and without the need for rules and regulations), we take our
responsibilities most seriously. We have continued to develop our environmental
policy; we try to look after our employees so that they both benefit from, and
enjoy working for, the Company; we are always conscious of our obligations to
other stakeholders with interests in our operations; and of course we are
acutely conscious of our need to look after our customers very well. We believe
that if we can achieve excellence in these areas, we will achieve the best and
most sustainable profits growth for our shareholders over the long-term.
Thanks
I would like to take the opportunity to thank James Barnes, Johnny Trotter,
Sharon Brown and all employees of Dobbies who have worked diligently and
resourcefully to produce another year of excellent progress. I would also like
to thank my three non-executive director colleagues, David Barnes, David
Stevenson and William Thomson for their considerable contribution to the
direction of the Company, its policies and its performance.
Prospects
The continuing development of our portfolio of properties, to which I referred
above, and the continuing focus on better merchandising and an extended range of
products should help us achieve further growth of sales and profits in the
coming year. However we will also continue to invest in new properties, in
developing our management team (including further training for all employees)
and of course in operational systems. In that latter respect we plan to install
an integrated EPOS system company-wide during the next two years. Initially, of
course, there will be added costs emanating from such a major investment but in
the long-term it will allow us to manage our business even better than we are
doing at present. That in turn should enhance sales and profits over the
longer-term.
Alex Hammond-Chambers
Chairman
CHIEF EXECUTIVE'S REVIEW
I am pleased to report that this has been a particularly exciting year for
Dobbies. With new acquisitions and major refurbishments, our sales for the year
have increased by 29%, with like-for-like sales up 15.5%, a very satisfactory
result given the adverse conditions in the first half of the year. Our market
share has grown and we have expanded the Dobbies brand into new UK regions.
Our pre-tax profits rose 11.9% to £2.9m and our earnings per share increased
slightly to 25.03p, held back by a 16% increase in average shares in issue and
the costs associated with redeveloping two of our major stores.
Our sales per store rose this year from £1.5m to £2.0m and we anticipate this
trend to continue in the years ahead. Turning to sales per sq ft, an important
measure of our success, I am also pleased
to report an increase of 22%. As stated last year our restaurant operations have
continued to expand and improve. Catering now accounts for 12% of sales and
remains a crucial part of the garden centre experience.
Investment and acquisitions
Although it is our intention to operate smaller garden centres on a regional
basis, these results point to the success of a strategy that positions us as a
developer and operator of large destination garden centres.
As part of this strategy, in September we acquired Cross Lanes Farm Garden
Centre, just off the A5 at Atherstone. Financed with part shares (£2.0m) and
part cash (£2.3m), this £4.3m purchase has a sales area of 80,000 sq ft and is
set within a 50 acre country setting which offers great potential for further
recreational development.
Atherstone is the largest centre within the Group and will allow us to extend
and develop our concept of destination retail leisure still further, although
the financial benefits will not accrue until 2003/04. Of the sixteen major
centres we now operate, six have superstore status with two, Preston and
Atherstone, scheduled for redevelopment this year.
Quality of build, good design and an attractive retail environment are all key
components in the Dobbies offering, and our experience and ability to build
successful new stores now stands us in good stead for the future.
Our capital spend on store redevelopments and refurbishments has increased in
recent years from £3.9m in 1999 to £8.8m in the year under review. Although this
may affect our short term return on fixed assets, the resulting quality asset
base allows us to achieve a higher like-for-like sales growth and delivers
higher sales per sq ft.
As most of our stores are freehold, we have the flexibility to expand as and
when we want. It also allows us to participate in underlying asset value growth
and gives us the option of selling land surplus to requirements. Our assets are
carried at cost and, should a revaluation take place, it is the Directors' view
that a surplus would materialise. As evidence of this, in December we concluded
a deal with Tesco plc to sell our leasehold centre in Perth for £2.5m whilst
relocating to a larger adjacent site.
Staff development
Dobbies now employs over 850 people and, to echo the words of our chairman, I
would like to pay tribute to their dedication and hard work, especially during
the difficult periods of store refits and redevelopments. At such times,
effective communication is crucial, and we continue to encourage feedback and
suggestions from all of our staff members. To further their development, and to
ensure they are able to continue making a valuable contribution to the business,
expenditure on training rose by almost 50% over the year. The recruitment of
quality personnel is vital and we continue to identify and recruit the best.
Quality products
For our customers, the quality, range and value of our products remain Dobbies
hallmarks, and whilst we always look for new opportunities, our key focus will
be to improve and expand our existing product range. Importantly, this is
matched by an ever-improving merchandising strategy. Plants continue to remain
the core of our product range with sales increasing by 22% this year.
Outlook
The continuing popularity of gardening combined with Dobbies growing portfolio
of larger destination stores allows us to be optimistic about our prospects in
the coming years.
In the immediate future and in addition to planned improvements at other
centres, we anticipate a successful Spring launch at Preston, our biggest
redevelopment to date.
James Barnes
Chief Executive
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Year ended 31 October Year ended 31 October
2001 2000
£'000 £'000
Turnover: Continuing operations 30,256 23,591
Acquisitions 194 -
--------------------- ---------------------
Total 30,450 23,591
Cost of sales (16,377) (12,667)
--------------------- ---------------------
Gross profit 14,073 10,924
Administrative and selling expenses (11,010) (8,279)
Other operating income 651 542
--------------------- ---------------------
OPERATING PROFIT : continuing
operations 3,714 3,187
Interest payable and similar charges (790) (575)
--------------------- ---------------------
PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION 2,924 2,612
Tax on profit on ordinary activities (643) (651)
--------------------- ---------------------
PROFIT ON ORDINARY ACTIVITIES
AFTER TAXATION FOR THE FINANCIAL
YEAR 2,281 1,961
Dividends (636) (549)
--------------------- ---------------------
RETAINED PROFIT 1,645 1,412
============ ============
There are no recognised gains or losses for the financial year other than as stated above.
EARNINGS PER SHARE
Basic 25.03p 25.00p
============ ============
Diluted 24.39p 24.28p
============ ============
CONSOLIDATED BALANCE SHEET
As at As at
31 October 2001 31 October 2000
£'000 £'000
FIXED ASSETS
Intangible assets 767 640
Tangible assets 44,512 32,318
--------------------- ---------------------
45,279 32,958
--------------------- ---------------------
CURRENT ASSETS
Stocks 6,939 4,916
Debtors 715 483
Cash at bank and in hand 281 230
--------------------- ---------------------
7,935 5,629
CREDITORS: amounts falling due
within one year (20,082) (8,907)
--------------------- ---------------------
NET CURRENT LIABILITIES (12,147) (3,278)
--------------------- ---------------------
TOTAL ASSETS LESS CURRENT
LIABILITIES 33,132 29,680
CREDITORS: amounts falling due after
more than one year (4,960) (5,117)
PROVISIONS FOR LIABILITIES AND
CHARGES (102) (102)
--------------------- ---------------------
28,070 24,461
============ ============
EQUITY CAPITAL AND RESERVES
Called up share capital 955 907
Share premium account 20,625 18,709
Profit and loss account 6,490 4,845
--------------------- ---------------------
EQUITY SHAREHOLDERS' FUNDS 28,070 24,461
============ ============
CONSOLIDATED CASH FLOW STATEMENT
Year Year Year Year
ended 31 October ended 31 October ended 31 October ended 31
October
2001 2001 2000
2000
£'000 £'000 £'000 £'000
Net cash inflow from operating
activities 3,131 3,030
Returns on investments and servicing
of finance (808) (531)
Taxation (602) (668)
Capital expenditure and financial
investment (8,707) (4,024)
Acquisitions and disposals (4,355) (8,319)
------------- --------------
Net cash outflow from investing
activities (13,062) (12,343)
Dividends paid (577) (426)
--------------- -------------
Net cash outflow before financing (11,918) (10,938)
Financing 2,233 12,029
--------------- --------------
(Decrease)/increase in cash in the year (9,685) 1,091
========= ========
Reconciliation of net cash flow to
movement in net debt/funds
(Decrease)/increase in cash in the year (9,685) 1,091
Cash (inflow)/outflow from debt and
hire purchase 112 (4,887)
Hire purchase and finance leases
acquired with subsidiary - (45)
Additional term loan arrangement fee 20 -
Loan notes issued in the year (381) -
--------------- --------------
Movement in net debt in the year (9,934) (3,841)
Opening net debt (8,856) (5,015)
--------------- ---------------
Closing net debt (18,790) (8,856)
========= ========
Notes
1. The calculation of earnings per share is based on the profit after tax of
£2,281,000 (2000: £1,961,000) and on 9,111,667 ordinary shares being the
weighted average number of ordinary shares during the year ended 31 October
2001 (2000: 7,844,924).
2. 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 2000 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 31 October
2001 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 Company's AGM.
3. The directors propose a final dividend of 4.45p per ordinary share, to be
paid on 30 April 2002 to shareholders on the register at the close of
business on 2 April 2002.
4. 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 16 April 2002.
This information is provided by RNS
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