Majestic Wine 2010/11 Results

Majestic Wine 2010/11 Results

Overview > > Total Group sales up 10.3% to 257.3m (2010: 233.2m) > > Like for like ex vat sales up 5.3% > > Profit before tax up 26.6% to 20.3m (2010: 16.0m) > > 9.7p final dividend giving a total dividend of 13.0p, up 26.2% on last year > > Like for like sales ex vat sales for 10 weeks from 29 March to 6 June up 4.4% 1

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Key Performance Indicators > > Like for like sales up 5.3% excluding vat > > Like for like transactions up 9.9% > > Like for like average sale 126, down 2.5% > > 8% increase in active customers to 511,000 (2010: 472,000, 2009: 418,000) > > UK store sales to private customers up 7.4% > > UK store sales to business customers up 8.6% 3

UK Wine Market Year to end March 2011 Wine Market 2011 2010 Still wine value growth +1.6% +7.2% Volume growth -2.9% +5.0% Still wine average bottle price 4.60 4.43 Source: Nielsen Majestic 2011 2010 Still wine value growth +10.7% +11.8% Volume growth + 4.9% + 7.6% Still wine average bottle price 6.94 6.56 Still wine market share 3.4% 3.1% Total wine market share 3.6% 3.4% 4

Sales Trends Year to end March 2011 > > Increased share of still wine sales from New Zealand, Argentina, Spain and Italy > > Sparkling wine sales rise 14%, Champagne sales up 4% Product Mix 2011 Still Wine 68.8% Champagne 14.1% Sparkling 5.8% Beer 6.1% Spirits 1.8% Other 3.4% Still Wine % Split 2011 Majestic Market France 34.4% 14% New Zealand 19.6% 6% Spain 10.4% 8% Chile 8.5% 9% Italy 8.3% 14% Australia 7.9% 22% South Africa 4.4% 8% Argentina 3.8% 1% USA 1.5% 14% 5

Sales 52 weeks ending 28.03.11 29.03.10 Change 000 s 000 s % UK retail store sales 208,494 193,993 7.5 Sales to large corporates* 25,723 19,547 31.6 Total Majestic UK sales 234,217 213,540 9.7 Lay & Wheeler 14,153 12,414 14.0 Wine & Beer World 8,931 7,266 22.9** Total Sales 257,301 233,220 10.3 UK retail sales growth Net new store space 4,250 2.2 Like for like sales growth of 5.3% 10,251 5.3 14,501 7.5 * Sales through King s Cross and Head Office. ** On a like currency and like stores basis sales 23.6.%. 6

Gross Margin 52 weeks ending 28.03.11 29.03.10 Change 000 s 000 s % Total sales 257,301 233,220 10.3 Cost of sales (202,103) (183,528) 10.1 Gross margin 55,198 49,692 11.1 Gross margin % 21.5 21.3 Gross margin % 2010 21.3 Improved labour cost absorption 0.4 Increase in product margin 0.1 Currency contract mark to market (0.2) Increase in large corporate sales (0.1) Gross margin % 2011 21.5 7

Operating Costs 52 weeks ending 28.03.11 29.03.10 Change 000 s 000 s % Store occupancy costs 12,422 12,323 0.8 Fleet costs 2,908 2,779 4.6 Store depreciation 2,635 2,275 15.8 Depot wages 1,083 1,006 7.7 Other distribution costs 1,808 1,782 1.5 Total distribution costs 20,856 20,165 3.4 Marketing costs 3,158 3,020 4.6 Staff costs 7,622 6,368 19.7 Other administrative costs 3,694 4,450 (17.0) Total administrative costs 14,474 13,838 4.6 8

Profit, EPS & Dividend 52 weeks ending 28.03.11 29.03.10 Change 000 s 000 s % Profit for the financial year 20,271 16,011 26.6 Tax charge (6,041) (4,731) Profit after tax 14,230 11,280 26.2 Tax Rate % 29.8 29.5 Diluted EPS 22.6p 18.3p 23.5 Dividend per share 13.0p 10.3p 26.2 Dividend cover (times) 1.7 1.8 9

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Cash Flow 52 weeks ending 28.03.11 29.03.10 Change 000 s 000 s 000 s Profit before tax 20,271 16,011 4,260 Depreciation / amortisation 4,271 3,934 337 Working capital movement (3,611) (764) (2,847) Tax paid (5,314) (4,137) (1,177) Net capital expenditure (8,124) (6,150) (1,974) Term loan (700) (700) - Net returned to shareholders (4,763) (5,992) 1,229 Other 1,296 1,532 (236) Total cash flow 3,326 3,734 (408) 11

Lay & Wheeler Sales & Profit 52 weeks ending 28.03.11 29.03.10 000 s 000 s Sales 22,422 13,432 Less : net en primeur deferral (8,269) (1,018) Sales statutory basis 14,153 12,414 Profit before interest 2,266 21 Less : net en primeur deferral (1,565) 2 Profit statutory basis 701 23 Add back amortisation 225 225 Profit pre-amortisation 926 248 12

Lay & Wheeler En Primeur 52 weeks ending 28.03.11 29.03.10 000 s 000 s En Primeur purchases 11,404 4,700 En Primeur deferred income (13,845) (5,576) Net En Primeur balance (2,441) (876) Opening En Primeur balance (876) (878) Movement in En Primeur (1,565) 2 Closing En Primeur balance (2,441) (876) 13

New Store Roll-Out 12 new locations (2010: 6; 2009: 4) Redhill Bracknell Newmarket Windsor Canterbury Yeovil Totnes Cardiff Bay Isle of Wight Ashbourne Cobham Chiswick Re-site of our Ipswich store 2 openings since the year end Evesham Weston-Super-Mare To give 165 stores in the UK > > Expect at least 12 new openings in 2011/12 > > CACI research concluded and total estate target revised upwards to 330 stores 14

New Store Chiswick 15

Ecommerce > > Sales from orders placed online up 9.6% to 21.1m representing 10.2% of UK retail sales (2010: 10%) > > Transactions increase of 9.4%, average spend of 142 (2010: 139) > > 233,000 customer email addresses > > 2,000 customer reviews > > Introduction of staff generated content on store home pages > > Store staff now engage customers on Twitter > > Introduction of intelligent product recommendations and cross sells > > Increased investment in social media marketing 16

E-commerce 17

Majestic Commercial > > Total sales to businesses up 17% and now represent 24% of UK sales (2010: 22%) > > Team of 34 Business Development Managers selling business to business (2010: 25) > > Sales to these managed accounts up 22.3% to 21.5m (2010: 17.6m) > > London team focus on sales to large corporates as well as contract caterers and restaurants > > Regional team target restaurants, bars and gastropubs with a minimum spend of 12k p.a. > > Average spend of managed accounts of 19k p.a. > > Improved professionalism, range and team have reduced the loss rate of accounts to 6% (2010: 17%) 18

Majestic Commercial 19

Fine Wine > > Sales growth of 23.7% to 12.4m representing 6.0% of UK retail sales (2010: 5.1%) > > Average bottle price of 23.83 (2010: 23.50) > > Fine wine now installed in 65% of Majestic stores, including all new stores > > Progressive roll out over the next 24 months 20

Fine Wine 21

Majestic Wine Events > > Series of events run by our own staff in our stores designed to engage and delight our customers > > The Wine Course over 1,500 courses run in 2010/11 with 12,000 customers attending. Awarded Customer Service Initiative of the Year by Retail Week Awards 2011 > > Wine Evenings over 250 events held with 12,500 customers attending > > Wine Walks new for 2011 with a target of over 600 events > > All are free to attend and showcase the expertise of our staff and the quality of our wines > > In total 20,000 customers attended a Majestic event in 2010/11 22

Majestic Wine Events 23

Lay & Wheeler > > Total sales of 22.4m (2010: 13.3m) > > Management level profit of 2.3m (2010: 21k) > > However statutory profit before tax of 701k (2010: 23k) following en primeur adjustment > > Fine Wine Plan marketed to Majestic customers from May 2011 > > Highly promising 2010 Bordeaux campaign underway 24

Lay & Wheeler 25

Majestic in France > > Profit before interest and tax of 1,042k (2010: 416k) > > Like for like sales increase of 23.6% > > Like for like transactions up 15%; average spend of 209 (2010: 201) > > Pre-orders now represent 43% of sales; average spend of a pre-order is 524 > > Average bottle price of 4.06 (2010: 3.70) > > Like for like sales from 29 March to 6 June up 11.1% 26

Majestic in France 27

Majestic People > > Increased investment in both graduate trainees and delivery drivers due to growth in lfl sales > > Strengthened teams at Head Office in Buying, Ecommerce, Property and Recruitment > > All retail staff take the Wine and Spirit Education Trust (WSET) Advanced Certificate > > 126 staff either hold or are studying for the WSET Diploma > > 10 staff awarded WSET Awards of Excellence Scholarships > > Share options issued to staff down to store manager level > > Payment of 2010/11 profit related bonus to all employees 28

WSET Scholarship Winners 29

Majestic Awards 2010/11 Decanter Retailer Awards 2010 Wine Merchant of the Year Decanter Reader Awards Best Large Wine Merchant IWC Merchant of the Year Awards 2010 IWC Merchant of the Year High Street Chain of the Year OLN Drinks Retailing Awards 2011 High Street Chain of the Year Retail Week Awards 2011 Customer Service Initiative of the Year for The Wine Course Speciality Retailer of the Year 30

Majestic Awards 31