Full-year results from the Human Screen

Having never bought wine by the mixed-case, the Human Screen is at a bit of a loss to understand the attraction of Majestic, but it’s been successful for a long time.

Highlights

• Adjusted operating profit up 12%
• Adjusted return on tangible assets: 14%
• Adjusted net profit of ''17m compared to net cash flow of ''19 (''8m after net capital expenditure)
• Net cash flat at ''679,000 (Net debt of ''53m after approximate capitalised operating lease commitments of ''54m, 28% of tangible assets)
• Per-share dividend up 20%

The Human Screen comments:

Having never bought wine by the mixed-case, the Human Screen is at a bit of a loss to understand the attraction of Majestic, but it’s been successful for a long time. The company, which is also a fine wine broker and owns three wine supermarkets in France serving British day trippers, earns over 90% of its revenues and almost 90% of operating profit from its retail warehouses, which also supply trade buyers, in the UK.

According to the company, the attraction is good wine at a low cost achieved through its buying expertise and sold in bulk by highly trained staff.

The Human Screen thinks Majestic is a stalwart and, at the current price it’s also worth considering for income, it hasn’t cut the dividend since its first payment in 1997 and currently yields 3.8%.

But on an unlevered post-tax earnings yield of 6%, the share price recognises Majestic’s quality, and there’s probably more value available elsewhere at this time.

More on MJW

LON:MJW

HS+ (worth watching for improvement in fundamentals/price)