RNS Number:9298R
Dobbies Garden Centres PLC
09 April 2008
9 April 2008
Dobbies Garden Centres plc
Preliminary Results for the Year Ending 31 October 2007
Highlights
* Sales �83.5m Up 21.4%
* Like for like sales Up 1.4% (1)
* Adjusted EBITDA �13.1m Up 19.3% (2) (3) (4)
* Profit before interest and tax �6.2m Down 21.4% (2)
* Adjusted profit before interest and tax �8.9m Up 12.8% (2) (3)
* Pre-tax profit �3.8m Down 11.7% (2)
* Adjusted pre-tax profit �5.2m Down 4.8% (2) (3)
* EPS 22.3p Down 24.7% (2)
* Adjusted EPS 40.0p Up 7.2% (2) (3)
(1) Like for like sales represents growth against the previous year, excluding
new stores, redevelopments and extensions.
(2) 2006 Results have been restated for the adoption of IFRS. Further detail is
provided in note 5.
(3) Adjusted to exclude exceptional items of (2007 �2.7m loss, 2006 �Nil) and
when relevant, movements in fair value of financial instruments of (2007
�1.4m, 2006 �1.1m loss).
(4) Adjusted EBITDA is profit for the year before exceptional items (2007 �2.7m
loss, 2006 nil), taxation (2007 �1.6m, 2006 �1.4m), finance costs (2007
�3.8m, 2006 �2.5m), gain in fair value of financial instruments (2007 �1.4m,
2006 �1.1m loss) and depreciation and amortisation (2007 �4.1m, 2006 �3.1m).
Highlights:
* A new shareholder structure following the successful offer by Tesco to acquire
more than 50% of the equity (Tesco owns 65% Dobbies Garden Centres)
* New 53,000 sq.ft. store opened in Dunfermline in April 2007.
* New 98,000 sq.ft. store opened in Chesterfield in October 2007. This
development incorporates a garden centre of 48,000 sq.ft. and a number of
associated retail concessions within the remainder of the space.
* New 55,000 sq.ft. Garden World at Southport, opened in March 2008.
* Acquired Sandyholm Garden Centre in April 2008.
Other:
The Board has resolved to alter the year end reporting date to 28 February of
each year. For the current year we will report the 6 months to 30 April 2008,
12 months to 31 October 2008 and then 16 months to 28 February 2009.
Commenting on the results, Chief Executive, James Barnes said: "Dobbies has had
an encouraging year despite some difficult trading conditions, and we're looking
forward to working in partnership with Tesco to expand this great business. The
performance of our established stores continues to improve, with sales and
operating margins ahead of last year helped by improving gross margins and good
cost controls. However, this year's financial results are distorted by
exceptional items and accounting standard changes."
Sales in the four months from November 2007 to February 2008 have increased by
13.4% in total by comparison with last year, and have increased by 3.1% on a
like for like basis. In 2007, the Company benefited from a particularly warm
March and April with exceptionally strong sales, but a particularly wet Summer
in 2007 resulted in weaker sales. Headline sales during the months ahead are
likely to continue to show significant growth as a result of new store openings
whereas like for like sales performance may reflect these unusual comparatives.
The Company will provide an updated trading statement at the AGM on 21 May.
Enquiries:
James Barnes, Chief Executive Ben Woodford/Emma Kent Sandy Fraser
Sharon Brown, Finance Director /Antonia Coad Brewin Dolphin Limited (Nomad)
Dobbies Garden Centres plc Bell Pottinger Corporate & Financial Tel: 0131 529 0310
Tel: 0131 663 6778 Tel: 020 7861 3232
Darren Shirley
Shore Capital (Joint Broker)
Tel: 0151 600 3702
Chairman's Statement
I'm delighted to be writing for the first time as Chairman of Dobbies and I'm
very much looking forward to helping the Company on to new successes as it faces
one of the most exciting and challenging periods in its 142-year history. I've
been extraordinarily impressed with the dedication and professionalism shown by
everyone from the gardening and plant experts to their colleagues in the stores,
restaurants and head office - indeed everyone who works so hard to make Dobbies
the success story that it is today.
This has been a year of significant transformation for Dobbies, including Tesco
acquiring a majority shareholding, the worst summer weather in living memory
with its considerable impact on sales, and a substantial expansion of our retail
space. I'd like to thank every one of our colleagues for their tremendous effort
and achievements despite the many distractions that 2007 had to offer. I'd also
like to thank my predecessor Alex Hammond-Chambers for his 13 years of wise and
successful stewardship of this excellent company.
The year in review
This year's achievements are detailed in the reviews from James Barnes and
Sharon Brown that follow this statement, but in summary what looked last spring
like becoming a vintage year for Dobbies in terms of sales was undermined in
June and July by the summer washout. At the half year in April, like-for-like
(1) sales were showing double-digit growth on 2006, but by the end of the year
the figure had fallen back to just 1.4%.
Thankfully, new space helped us show an overall upturn in sales of more than
20%. On the earnings side, profits before interest, tax and exceptional items
were healthy at �8.9 million, a 12.8% rise on the previous year. Pre-tax
profits were �3.8 million, affected by the �3.1 million charge for corporate
transaction fees, offset by a capital gain on the sale of a non-trading store
and the movement on the fair value of financial instruments. Earnings per share
was also affected by these exceptional items and, even excluding these, by the
change in tax rate on deferred items (2007 EPS before exceptional items and fair
value movements 40.0p, 2006 37.3p). Basic EPS for 2007 is 22.3p (2006 29.6p).
The way ahead
In my few short months as Chairman I have already learned that Dobbies is a
forward-looking Company whose ambition and values I share. These qualities will
remain at the heart of the business through the exciting times that lie ahead.
Dobbies will retain its brand, its independent spirit, its Scottish home and the
expertise it has built up over many years, but with a new, strong majority
shareholder it will be able to grow in a way that would previously have been
beyond its means.
One of our core objectives is to complement our existing product ranges with
affordable environmental solutions to help the rapidly-growing section of our
customers who are concerned to do more for the environment, but who are not
always sure what to do or where to buy the right equipment.
Gardening and care for the environment have always gone hand-in-hand, and as a
farmer's daughter I have always had a keen interest in green issues. This is why
I'm particularly looking forward to seeing the introduction of new, affordable
green solutions ranging from simple wormeries to hi-tech equipment like advanced
irrigation systems and renewable energy technology. I hope and believe we are on
the verge of a revolution in green consumption in which more
environment-friendly products become a realistic alternative for millions of
consumers and not just the privileged few. Dobbies is perfectly positioned to be
in the vanguard of this movement, and here as elsewhere, Tesco and Dobbies have
much to learn and benefit from each other in the years ahead.
It's no secret that at a time when many households are feeling the pinch from
rising energy bills, fuel charges and high interest rates, retailers will have
to compete harder than ever to succeed. The garden centre sector is no
exception, and we remain cautious with regard to consumer economics in 2008. But
we continue to plan for growth in ranges, services and retail floorspace, not
least through our excellent new store in Southport, which opened on 15 March
2008. Our active development of local sourcing and our superb food halls are
just two examples of ventures that customers can expect to see more of in the
years to come.
Indeed, prospects for the years beyond 2008 give me cause for great optimism.
Gardening and outdoor living have been rapidly-growing sectors of the UK economy
for years and this trend is set to continue as UK demographics change. Not only
that, the importance of the garden is increasing to many families as a space for
gathering, playing or learning. And as I have said already, rising awareness of
issues such as climate change and the importance of recycling will offer new
business opportunities which, with strong support from our new major
shareholder, we are uniquely well-positioned to take.
Dividend policy
Finally, a word on our change in dividend policy. As we announced in October,
the board is recommending that no dividend is paid for 2007. Given Dobbies'
ambitious expansion plans, we believe that cash generated from operations is
better used to fund future growth than for distribution to Shareholders.
Annual General Meeting
The Annual General Meeting will be held at the Company's Head Office at
Melville, Lasswade (just outside Edinburgh) on 21 May 2008 at 10am. As always,
we urge Shareholders to join us.
Lucy Neville-Rolfe, CMG
Chairman
(1) Like for like sales represents growth against previous year, excluding new
stores, redevelopments and extensions.
Chief Executive's Review
2007 was a year of significant change for your Company, and was characterised by
a number of key events.
* The corporate activity leading to a change in control, with Tesco Holdings
acquiring 65% of Dobbies' equity
* One of the worst summer trading periods in our recent history
* Major changes in personnel
* Our biggest capital expenditure in the Company's history, and the opening
of 150,000 square feet of additional retail space.
I was keen to highlight these events from the start because they have each in
their own way had an impact on our figures this year, and taken together give an
overall context to results.
Our results this year, when compared to previously published accounts and
performance ratios, are distorted by a number of exceptional items and
accounting standard changes that make comparisons with previously published
accounts and performance ratios difficult to comprehend! Our profits before
interest, tax and these exceptional items are �8.9 million, up 12.8% on the
previous year. Pre-tax profits at �3.8 million are �0.5 million less than last
year, but affected by a �3.1 million charge for corporate transaction fees, a
�0.4 million gain on a property sale, and a �1.4 million favourable movement in
the fair value of our interest rate swap. Other changes required by
International Financial Reporting Standards (IFRS) are detailed in note 33.
The corporate activity experienced by the Company was the culmination of 18
months of speculation and interest from a number of parties. Although such
activity is inevitably distracting for the business, the final outcome was
undoubtedly the best result for our Shareholders, our customers and our staff.
It marks another milestone in Dobbies' long history and a step change towards
the Company's long term ambition of building Dobbies into a national brand.
Sales
The trading pattern for 2007 was one of the most extraordinary we have
experienced. At our half year (April 2007) we reported like for like sales up
10.9% and profits before interest and tax of �4.2 million, up 46.5% on last
year. Nearly all of this profit increase was removed over the following six
months.
Although it would not be normal for us to use weather as an explanation of poor
performance since it is such a natural part of our business cycle, the climate
this summer was obviously a key factor, with June and July being the wettest
since records began.
Total sales rose 21.4% from �68.7 million to �83.5 million. The vast majority
of this increase came from new business, with like for like sales increasing by
1.4%.
The weather had an overriding effect on divisional sales performance this year.
Outdoor living (furniture) was an obvious casualty of the wet summer, as was the
whole gardening division, with sales down by 12% and 1% respectively.
Although sales of plants declined by 3%, there was a 22% increase for fruit and
vegetables as the whole "grow your own" trend moved forward.
Indoor living (gifts and homeware) sales (+8.1%) were boosted by the full year
effect of our new craft range. The introduction of magazines boosted sales
within the book department, whilst new ranges and better price points in toys
and health & beauty saw an outperformance of sales in these categories.
Investment in space and new product ranges resulted in a significant increase in
food and cook shop where sales increased by 9.9%.
Pets and aquatics outperformed on the back of better ranges and continued good
operational management.
Restaurants continued to outperform garden centres for the fifth consecutive
year, and remain a key footfall driver and major profit centre.
Notwithstanding the reduction in pre-tax profits within the overall Group, the
performance of our established stores continued to improve, with sales and
operating margins in those stores ahead of the previous year, driven in part by
improving gross margins and in part by good cost controls.
The growth of our Food sales and our on-line business (both of which achieve
lower than average gross margin) has meant that the gross margin mix has changed
in 2007, and although reported margins are flat at 50.4%, this belies an
improvement in underlying buying margins in excess of 1%.
Staff
The last 12 months have seen some significant changes in our personnel. First
and foremost, the retiral in June of Johnny Trotter, who as Operations Director
had served on Dobbies' main Board since 1988, and who had been a huge
contributor and support to the business at all levels. I would like to thank
Johnny myself for all the support he has given me over the past 18 years, and
for his commitment and dedication in developing the Company.
This year has been a challenge for all our staff. Undoubtedly there was a deal
of uncertainty created by the corporate activity that existed from the New Year
onwards, and when combined with such difficult trading conditions, made for a
challenging environment.
I would like to congratulate all of our staff for the great resilience and
loyalty they have shown to the business throughout this period, and the effort
and energy that everyone has put into their daily roles that have allowed us to
achieve what we have.
Developments
As stated earlier, this was a year of significant capital spend, some �29.0
million in total taking our fixed assets (property, plant, equipment and
goodwill) to �135.7 million. Of this, some �6.2 million is future investment in
land and projects that as yet are not income-generating.
With the exception of one long leasehold site, all of our trading sites are
freehold, which gives us significant flexibility with regard to site
redevelopment, debt finance and over time the release of property profits as
evidenced by the �0.4 million disposal profits this year.
Once again, our new developments have brought further innovation to the retail
formula and improved the retail offer for our customers.
During the year we opened two new stores. A 53,000 sq.ft. store at Dunfermline,
just off Junction 3 of the M90, and a 98,000 sq.ft. store at Chesterfield, just
off Junction 30 of the M1.
Both these stores have some unique new characteristics, and in my view maintain
our business as a leader within the horticultural retail industry.
At Dunfermline we have developed two new features to underwrite our
horticultural credibility and increase footfall.
First, a garden house - a newly designed area of the store to give additional
space and emphasis to Core Gardening - and secondly, a new style of plant
information centre that incorporates a wide range of plant advice and
environmental information combined with interactive ways of imparting it.
At Chesterfield we have developed a new concept of destination garden leisure
shopping in the form of a 'shopping centre' branded Dobbies, and with the garden
centre at 48,000 sq.ft. forming an anchor to the development, and with
additional 50,000 sq.ft. of retail space off a central mall, designed to broaden
the offer and hence the catchment and destination status of the site. Dobbies
Foodhall and Cafe have taken space in the mall as separate entities.
We have kept our replacement capital expenditure and minor project spend at
�2.75 million to within our depreciation charge of �4.0 million and we continue
to fulfil our policy of maintaining the existing estate.
In the coming year we look forward to the new store at Southport that once again
capitalises on the lessons from last year. In particular, we believe that new
restaurant formats both at Southport and at Melville will be important in
continuing our growth and status in this area.
Our pipeline of potential new developments continues to grow.
Outlook
Although we remain particularly cautious with regard to consumer economics in
2008, we remain very optimistic beyond.
At a macro level UK demographics and the long term growth in house building
remain a key driver for our business.
We believe environmental consciousness will continue to be a key driver behind
consumer choice and behaviour. That this will have an impact on the home, and
particularly the status of the garden within it, not just as the room outside,
but as a green space; a larder; a sanctuary.
Not only will this reinforce the trends already seen in wildlife gardening, "
grow your own" etc., but if Dobbies can position itself at the leading edge of
an environmental offer that complements some of the existing garden ranges, that
could be a powerful combination, reinforcing our brand values and increasing
sales per square foot.
At the same time we feel confident that, given our relationship with our major
shareholder, we can extract synergies across a broad front that will make our
business more competitive and more profitable. Along with the knowledge and
skills that we can pull down from Tesco, we will be able to offer our customers
more product, more services and better prices.
Undoubtedly, all the above will help us secure our ambitions and our strategy to
position Dobbies as the leading gardens and homes retailer in the UK.
James Barnes
Chief Executive
Finance Director's Review
Results
In the year to 31 October 2007 total turnover increased by 21.4% to �83.5
million (2006: �68.8 million). This included a full year of sales from our
stores in Cirencester, Reading and Milton Keynes which opened during 2006, part
year of sales from new stores at Dunfermline (opened April 2007) and
Chesterfield (opened October 2007), combined with like for like growth of 1.4%.
Our gross margin was maintained at 50.4%, despite being negatively affected by
the increased mix of lower margin sales from food and via the internet. In real
terms, excluding this mix effect, garden centre margins increased by 1%.
Profit before interest, tax and exceptional items increased by 12.8% to �8.9
million. On the same basis, adjusted EBITDA increased by 19.3%. Finance costs
for the year increased from �2.5 million (2006) to �3.8 million (2007), largely
reflecting our increased borrowing levels.
We recorded a net cost of �2.7 million relating to exceptional items. Full
details of these are contained in note 4, but they included �3.1 million of
costs relating to the corporate transaction, partly offset by a �0.4 million
gain on the sale of our non-trading store at Helensburgh. There were no
equivalent exceptional items in 2006.
We also recorded a gain of �1.4 million relating to the movement in the fair
value of our interest rate swap, compared to a loss of �1.1 million last year.
This accounting treatment is required under IAS39.
The effective tax rate for 2007 is 41.0% (2006: 31.5%), reflecting the corporate
fees not being deductible for tax purposes, partly offset by the change in tax
rate on deferred items.
Cash Flow / Balance Sheet
During the year we generated �11.0 million of cash from operations, excluding
corporate items of �1.9 million, rental prepayments of �2.6 million and deferred
income of �1.8 million. Our capital expenditure for the year was �29.0 million,
the majority of which related to new stores, with the balance being expenditure
on minor developments and replacement capital expenditure. At the year end our
property, plant, equipment and goodwill totalled �135.7 million. Our year end
net debt (borrowings less cash and cash equivalents) was therefore �88.3
million.
On 30th October 2007 we entered into a new funding agreement with Tesco plc,
under which Tesco has agreed to provide a 10 year facility of �110 million.
Amounts advanced under the facility will bear interest at a rate of 0.6% above
LIBOR in respect of the first �20 million of debt drawn down, and LIBOR plus
0.85% in respect of amounts drawn under the facility in excess of �20 million.
We have an interest rate swap in place which fixes the interest rate payable on
�30 million of our debt at 4.78% (plus margin) until 2016.
Given our plans to grow the number of stores from which we operate, the Board
declared on 31 October that cash generated from operations would be used to fund
this growth, and hence no dividend is being recommended at this time.
International Financial Reporting Standards (IFRS)
The results for year ending 31 October 2007 are the first we have adopted under
IFRS. Under the first time adoption procedures set out in IFRS 1, the Group is
required to establish its accounting policies as at 1 November 2006 and apply
these retrospectively in the determination of prior period comparatives from 1
November 2005.
The significant impacts of IFRS on the results for the year to 31 October 2007
are as follows:
IAS 12 Income Tax: Under IAS 12, a deferred tax liability has been recognised on
the business combinations prior to 1 November 2005. This liability reflects the
difference between the book value of the assets acquired and their tax base.
Acquisitions made since 1 November 2005 will also carry a goodwill valuation
equal and opposite in amount. The deferred tax liability recognised on 1
November 2005 was �2,790,000 and this was increased by a further �21,000 on
acquisitions in the year to 31 October 2006. A further deferred tax liability of
�1,107,000 has been recognised in respect of capital gains rolled over on
disposals prior to 1 November 2005.
Also under IAS 12, a deferred tax asset in relation to unexercised share options
has been recognised at both 1 November 2005 and revised at 31 October 2006. The
amount recognised at 1 November 2005 was �136,000 and at 31 October 2006 was
�750,000 with the asset being reversed during year to 31 October 2007 as a
result of all share options being either exercised or lapsed.
IAS 39, Financial Instruments - recognition and measurement: Under IAS 39, the
fair value of derivative financial instruments has been recognised on the
balance sheets with the movement in fair values being recorded through the
income statement resulting in a gain in 2007 of �1,367,000 (2006: charge
�1,095,000). Further details are disclosed in the notes to the financial
statements.
IFRS 2 Share-based Payments: Under IFRS 2, the cost of the Group's share based
payment schemes in the year, pre-tax, was �242,000 (2006: �64,000). Details of
these costs are further explained in the notes to the financial statements.
IFRS 3, Business Combinations: Under IFRS 3, goodwill amortisation has not been
charged in the year and has been restated for the comparative year, 2006.
Change of Year End
The Board has resolved to alter the year end reporting date to 28 February of
each year. For the current year we will report the 6 months to 30 April 2008,
12 months to 31 October 2008 and then 16 months to 28 February 2009.
Sharon Brown
Finance Director
CONSOLIDATED INCOME STATEMENT
Year ended 31 October 2007
2007 2007 2007 2006
Before Exceptional After
exceptional items exceptional
items (note 4) items
�'000 �'000 �'000 �'000
Continuing operations
REVENUE 83,540 - 83,540 68,787
Cost of sales (41,425) - (41,425) (34,104)
Gross profit 42,115 - 42,115 34,683
Operating costs (32,483) - (32,483) (25,959)
Administrative expenses (2,681) (3,128) (5,809) (2,409)
Other operating income 1,982 420 2,402 1,607
PROFIT BEFORE INTEREST AND TAX 8,933 (2,708) 6,225 7,922
Finance costs (3,781) - (3,781) (2,512)
Movement in fair value of financial
instruments 1,367 - 1,367 (1,095)
PROFIT BEFORE TAXATION 6,519 (2,708) 3,811 4,315
Taxation (1,508) (56) (1,564) (1,361)
PROFIT FOR YEAR 5,011 (2,764) 2,247 2,954
EARNINGS PER SHARE
Basic Earnings per Share 49.7p (27.4)p 22.3p 29.6p
Diluted Earnings per Share 49.7p (27.4)p 22.3p 29.1p
All Group operations relate to continuing operations.
There were no exceptional items in 2006.
STATEMENT OF TOTAL RECOGNISED INCOME & EXPENSE
Year ended 31 October 2007
Group Group Company Company
2007 2006 2007 2006
�'000 �'000 �'000 �'000
Profit for the year 2,247 2,954 2,222 2,931
Actuarial gain/(loss) relating to pension 564 (32) 564 (32)
scheme
Tax on items taken directly to equity:
Share based payments 408 595 408 595
Retirement benefit obligations (145) 24 (145) 24
Changes in tax rate 174 - 174 -
Total recognised income and expense for the
year 3,248 3,541 3,223 3,518
BALANCE SHEETS
31 October 2007
Group Group Company Company
2007 2006 2007 2006
�'000 �'000 �'000 �'000
NON-CURRENT ASSETS
Investments - - 357 357
Goodwill 2,344 2,344 2,415 2,415
Other intangible assets 407 347 407 347
Property, plant and equipment 133,376 108,329 133,225 108,170
Investment properties 786 - 786 -
Prepaid rent 2,600 - 2,600 -
Derivative financial instruments 724 - 724 -
140,237 111,020 140,514 111,289
CURRENT ASSETS
Inventories 13,554 11,055 13,519 11,019
Trade and other receivables 2,501 1,445 2,453 1,445
Current tax assets 867 180 873 186
Cash and cash equivalents 1,428 676 1,076 372
18,350 13,356 17,921 13,022
Assets held for sale - 462 - 462
TOTAL ASSETS 158,587 124,838 158,435 124,773
CURRENT LIABILITIES
Trade and other payables (15,803) (12,523) (15,741) (12,523)
Borrowings (4,118) (4,834) (4,462) (5,178)
Derivative financial instruments (56) - (56) -
(19,977) (17,357) (20,259) (17,701)
NET CURRENT LIABILITIES (1,627) (3,539) (2,338) (4,217)
NON-CURRENT LIABILITIES
Borrowings (85,600) (60,803) (85,783) (60,986)
Retirement benefit obligations (593) (1,077) (593) (1,077)
Deferred tax liabilities (7,428) (5,905) (7,423) (5,900)
Deferred rental income (1,800) - (1,800) -
Derivative financial instruments - (699) - (699)
(95,421) (68,484) (95,599) (68,662)
TOTAL LIABILITIES (115,398) (85,841) (115,858) (86,363)
NET ASSETS 43,189 38,997 42,577 38,410
EQUITY
Share capital 1,037 999 1,037 999
Share premium account 22,826 21,415 22,826 21,415
Retained earnings 19,326 16,583 18,714 15,996
TOTAL EQUITY 43,189 38,997 42,577 38,410
CASH FLOW STATEMENTS
Year ended 31 October 2007
Group Group Company Company
2007 2006 2007 2006
�'000 �'000 �'000 �'000
Cash generated from operations before corporate
transactions, rental prepayment and deferred
income 11,047 12,526 11,011 12,514
Corporate transactions (1,850) - (1,850) -
Rental prepayment (2,600) - (2,600) -
Deferred income 1,800 - 1,800 -
Cash generated from operations after corporate
transactions, rental prepayment and deferred
income 8,397 12,526 8,361 12,514
Interest paid (4,088) (2,625) (4,106) (2,643)
Income taxes paid (316) (926) (310) (917)
Net cash inflow from operating activities 3,993 8,975 3,945 8,954
Investing activities
Proceeds on disposal of property, plant and
equipment 910 - 910 -
Purchase of property, plant and equipment (28,959) (22,922) (28,959) (22,916)
Acquisition of subsidiary - (2,598) - (2,598)
Net cash used in investing activities (28,049) (25,520) (28,049) (25,514)
Financing activities
Dividends paid (722) (1,004) (722) (1,004)
Repayment of loan notes (6) (29) (6) (29)
Repayments of borrowings under finance leases (12) (3) (12) (3)
Proceeds on issue of shares 1,449 100 1,449 100
New borrowings 24,797 20,919 24,797 20,919
Decrease in bank overdrafts (698) (3,281) (698) (3,281)
Net cash from financing activities 24,808 16,702 24,808 16,702
Net increase in cash and cash equivalents 752 157 704 142
Cash and cash equivalents at beginning of year 676 519 372 230
Cash and cash equivalents at end of year 1,428 676 1,076 372
The consolidated statement of cash flows previously prepared in accordance with
FRS1 "Cash flow statements" presented substantially the same information as that
required under IFRS. Under IFRS, however, there are certain differences from UK
GAAP with regard to the classification of items within the cash flow statement
and with regard to the definition of cash and cash equivalents. The bank
overdraft was included in cash and cash equivalents under UK GAAP, but not IFRS.
Under UK GAAP, cash flows were presented separately for operating activities,
dividends received from joint ventures and associates, returns on investments
and servicing of finance, taxation, capital expenditure and financial
investment, acquisitions and disposals, equity dividends paid, management of
liquid resources and financing. Under IFRS, only three categories of cash flow
activity are reported: operating activities, investing activities and financing
activities.
The accompanying notes are an integral part of these cash flow statements.
Notes:
1. The calculation of earnings per share is based on the profit after tax for
the financial period divided by 10,076,671 ordinary shares (2006:
9,972,413), being the weighted average numbers of ordinary shares in issue
during the year. Diluted earnings per share is calculated after taking
account of dilutive share options of nil (2006 - 163,685), giving rise to a
diluted weighted average number of ordinary shares of 10,076,671 (2006 -
10,136,098).
Adjusted earnings per share for 2007 is calculated after adjusting profit
after tax for corporate transactions (�2.7m), the fair value gain on
derivatives (�1.4m) and the tax thereon (�0.4m credit).
Adjusted earnings per share for 2006 is calculated after adjusting profit
after tax for the loss on the fair value of derivatives (�1.1m) and the tax
thereon (�0.3m credit).
2. Notes to the Cash Flow Statement.
Group Group Company Company
2007 2006 2007 2006
�'000 �'000 �'000 �'000
Profit for the year before corporate transactions,
interest and tax 9,353 7,922 9,338 7,914
Adjustments for:
Depreciation of property, plant and equipment 3,966 2,893 3,958 2,882
Amortisation of intangible assets 205 232 205 232
Retirement benefit scheme expense 72 33 72 33
Share based payments expense 242 64 242 64
Gain on disposal of property, plant and equipment (420) - (420) -
Operating cash flows before movements in working
capital 13,418 11,144 13,395 11,125
Increase in inventories (2,499) (1,304) (2,500) (1,307)
(Increase)/decrease in receivables (544) 488 (496) 491
Increase in payables 672 2,198 612 2,205
Cash generated from operations before corporate
transactions, rental prepayment and deferred income 11,047 12,526 11,011 12,514
Corporate transactions (1,850) - (1,850) -
Rental prepayment (2,600) - (2,600) -
Deferred income 1,800 - 1,800 -
Cash generated from operations after corporate
transactions, rental prepayment and deferred income 8,397 12,526 8,361 12,514
Cash and cash equivalents (which are presented as a single class of assets on
the face of the balance sheet) comprise cash at bank and in hand.
The corporate transaction payment of �1.85 million relates to the Group
corporate transaction explained in note 4.
The rental prepayment of �2.6 million relates to a prepayment made by Dobbies in
respect of rental payments at the Southport site.
The deferred income of �1.8 million relates to a prepayment made to Dobbies in
respect of rental income at the Melville, Edinburgh site.
3. Group Reconciliation of Movements in Equity
Share Share Retained
Capital Premium Earnings Total
�'000 �'000 �'000 �'000
For the year ended 31 October 2007
At 1 November 2006 999 21,415 16,583 38,997
Profit for the year - - 2,247 2,247
Actuarial gain - - 564 564
New share capital subscribed 38 - - 38
Share premium arising on share issues - 1,411 - 1,411
Employee share schemes - - 217 217
Tax on items taken directly to equity - - 437 437
Dividends - - (722) (722)
At 31 October 2007 1,037 22,826 19,326 43,189
For the year ended 31 October 2006
At 1 November 2005 996 21,318 13,966 36,280
Profit for the year - - 2,954 2,954
Actuarial loss - - (32) (32)
New share capital subscribed 3 - - 3
Share premium arising on share issues - 97 - 97
Employee share schemes - - 80 80
Tax on items taken directly to equity - - 619 619
Dividends - - (1,004) (1,004)
At 31 October 2006 999 21,415 16,583 38,997
4. Exceptional Items
This year's accounts include the following exceptional items:
The Group experienced corporate activity, as detailed in the Chairman's,
Chief Executive's and Finance Director's reports, during the year which
resulted in costs of �3,128,000. In addition to legal and advisory fees,
this exceptional item included �215,000 for the cost of early vesting of
LTIP awards for the Executive Directors.
The Group disposed of a non-trading store in Helensburgh during the year
which generated a net gain after costs of �420,000.
5. Explanation of Transition to IFRS
This is the first year that the Group has presented its financial
statements under IFRS. The following disclosures are required in the year
of transition. The last financial statements under UK GAAP were for the
year ended 31 October 2006 and the date of transition to IFRS was 1
November 2005.
Differences between IFRS and UK GAAP
IAS 12, Income Tax: under UK GAAP reporting, deferred tax is recognised in
respect of all timing differences that have originated but not reversed by
the balance sheet date and which could give rise to an obligation to pay
more or less taxation in the future. Deferred tax under IAS 12 is
recognised in respect of all temporary differences at the balance sheet
date between the tax base of assets and liabilities and their carrying
value for reporting purposes.
IAS 38, Intangible Assets: under IAS 38 computer software has been
re-classified as an intangible asset.
IAS 39, Financial Instruments: Recognition and Measurement: under IAS 39
all derivatives should be accounted for on the balance sheet at fair value
irrespective of whether they are designated as part of a hedging
relationship. Changes in fair value are recognised in the income statement.
The adjustments relate to interest rate swaps and forward foreign exchange
contracts entered into by the Group, which were not designated as hedges.
IFRS 2, Share Based Payments: all transactions within the scope of IFRS 2
are measured based on the fair value of the option or award at grant date
and expensed to the Income Statement over the vesting period of the
scheme.
IFRS 3, Business Combinations: under UK GAAP the Group amortised goodwill
on an annual basis. Under IFRS 3 goodwill is not amortised, but is subject
to an annual impairment review.
IFRS 5, Non-current Assets Held for Sale: under IFRS 5, a non-current asset
is classified as being held for sale if its carrying amount will be
recovered principally through a sale transaction rather than through
continuing use. The reclassification relates to land and buildings disposed
of in August 2007.
The reconciliation of equity and profit below, together with the
explanations of the changes, are provided to facilitate the understanding
of changes arising from the adoption of IFRS.
5. Explanation of Transition to IFRS (Continued)
Reconciliation of Profit for the Year Ended 31 October 2006
UK GAAP in
IFRS format
�'000 IAS 12 IFRS 3 IAS 39 IFRS 2 IFRS
�'000 �'000 �'000 �'000 �'000
Continuing operations
REVENUE 68,787 - - - - 68,787
Cost of sales (34,104) - - - - (34,104)
Gross profit 34,683 - - - - 34,683
Operating costs (26,027) - 68 - - (25,959)
Administrative expenses (2,364) - - - (45) (2,409)
Other operating income 1,607 - - - - 1,607
PROFIT BEFORE INTEREST AND
TAXATION 7,899 - 68 - (45) 7,922
Finance costs (2,512) - - - - (2,512)
Movement in fair value of
financial instruments - - - (1,095) - (1,095)
PROFIT BEFORE TAXATION 5,387 - 68 (1,095) (45) 4,315
Taxation (1,679) 318 - - - (1,361)
PROFIT FOR THE YEAR 3,708 318 68 (1,095) (45) 2,954
Reconciliation of Equity at 31 October 2006
IAS 12 IFRS 3/ IAS IAS 39 Equity under IFRS
38
�'000 �'000 �'000 �'000 �'000
Equity under UK GAAP 42,565 (2,937) 68 (699) 38,997
6. The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 October 2007 or 2006, but is
derived from those accounts. Statutory accounts for 2006 have been
delivered to the Registrar of Companies and those for 2007 will be
delivered following the Company's Annual General Meeting. The auditors
have reported on those accounts; their reports were unqualified and did not
contain statements under s237(2) or (3) Companies Act 1985.
7. 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 21 May 2008.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR DGGGDNRVGRZM
Dobbies Garden Centres (LSE:DGC)
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