TIDMJLH
RNS Number : 5181A
John Lewis Of Hungerford PLC
23 December 2014
JOHN LEWIS OF HUNGERFORD PLC
FINAL RESULTS - YEAR ENDED 31 AUGUST 2014
John Lewis of Hungerford plc ("John Lewis of Hungerford" or the
"Company") the specialist kitchen manufacturer and retailer
announces its final results for the year ended 31 August 2014.
CHAIRMAN'S STATEMENT
For the second year in succession the business has achieved a
double digit sales increase driven by a strong underlying trading
performance coupled with contributions from the new Chiswick
showroom, which opened on 17th May, and our new bedroom range. This
has contributed to a modest profit from operations which, as
previously notified, is reduced from that reported last year
reflecting investments made in support of our 3 year strategic
plan.
Operational Review
Whilst it is encouraging that our sales have grown by almost a
third in two years, this increase in sales has presented a number
of operational issues, which we are addressing. To meet these
challenges we have invested in our operational infrastructure by
increasing our technical and customer service functions to support
the planned growth of the business and these are included in the
costs for the year under review. Though they present a sizeable
investment for the business, your Board believe all these roles
will provide financial benefit to the business in the medium term
and allow us to continue to serve our customers well.
Other key achievements in the period include the opening of our
Cobham showroom on 2nd August 2014 and the launch of two new
kitchen ranges which are currently being rolled out to more
showrooms as funds allow. These new products have been well
received by both customers and the media alike. Further, we were
very pleased that one of these new kitchens, the Pure range was an
award winner in the best luxury kitchen category at this year's
House Beautiful awards.
Financial Review
The profit for the year before taxation and share based payments
amounted to GBP103k (2013: GBP168k).
Overall, sales grew by 13% to GBP7,416k (2013: GBP6,557k). Like
for like sales from a comparable showroom estate increased by 6%,
reflecting a higher volume of higher value kitchens.
A slightly lower gross margin for the year at 52.4% (2013:
52.7%) was attributable to the installations business which
although growing revenue by 15% to GBP963k (2013: GBP835k) achieved
a lower gross profit of 27.5% (2013: 29.1%). Product margins were
flat at 56.1%.
Products 2014 2013
-------------- ------- -------
GBP000 GBP000
======= =======
Turnover 6,453 5,722
======= =======
Cost of sales (2,832) (2,511)
-------------- ------- -------
Gross margin 3,621 3,211
============== ======= =======
Product sales include GBP236k relating to our new bedroom
range.
Installations 2014 2013
-------------- ------ ------
GBP000 GBP000
====== ======
Turnover 963 835
====== ======
Cost of sales (698) (592)
-------------- ------ ------
Gross margin 265 243
============== ====== ======
Installation sales include GBP54k relating to our new bedroom
range.
Cash flow
We ended the year with cash at bank and in hand of GBP1,490k
(2013: GBP1,122k) reflecting the positive working capital generated
through customer deposits and advance payments. The net cash inflow
from operating activities was GBP763k (2013: GBP488k).
Bank loans, which are secured by a charge over the company's
freehold property, increased to GBP817k (2013: GBP558k). These
funds were used to refurbish and fit the two new showrooms that
were opened during the year. The Company also had un-drawn
committed borrowing facilities at the year end of GBP250k (2013:
GBP250k).
Capital expenditure, including capitalised development costs, of
GBP676k was in line with budgeted amounts and principally arose
from investment in two new showrooms and new machinery for the
workshop.
Dividends
The Board is not recommending payment of a dividend.
Progress against 3 year strategic plan
As previously announced the Board has adopted an aspirational
target of growing turnover to GBP10 million per annum and achieving
a 5% operating profit by the end of FY 2016. The Board remain
committed to this target which we believe is the best way to create
sustainable shareholder value.
This year has been an important step in putting in place the
infrastructure to support this target, the ambition of which can be
seen in the context of our three year track record, summarised
below.
2012 2013 2014
--------------------------- ------ ------ ------
GBP000 GBP000 GBP000
====== ====== ======
Turnover 5,626 6,557 7,416
====== ====== ======
Profit from operations (1) (86) 196 137
====== ====== ======
Profit from operations % - 3.0 1.8
--------------------------- ------ ------ ------
(1) Stated before share-based payments expense. Earlier years
relates to operating profit before share-based payments.
Restructuring Proposals
On 1 September 2014 we announced the cancellation of a general
meeting to consider changing the Company name. The cancellation was
necessary to provide a window in which to seek the formal consent
of our landlords to changes from the accompanying corporate
restructuring. Whilst we saw no reason why such consent would be
withheld, in the event it had, the Board became aware late in the
process that it may have had an adverse taxation implication. In
any event we have now delayed plans to start providing outsourced
installation service on behalf of third party kitchen sellers until
such time as we are satisfied that the core business is in a
position to sustain sales growth combined with the service
infrastructure to support it.
Current Trading
At the end of October 2014 we reported that orders and
dispatched sales for Q1 of the current financial year were GBP2.0
million (2013 GBP1.7 million).
Such a sustained growth rate is encouraging and supports the
strategy your Board has adopted. However, as a relatively small
business unexpected operating challenges can have a
disproportionate impact on our short term financial performance
with sales in Q2 adversely impacted by a number of staff changes in
our showrooms. In particular, the unrelated resignations of two of
our most experienced designers, both of whom have decided to pursue
alternative careers away from kitchen design. The quality of our
designers is critical to our business and it inevitability takes
time to bring suitable replacements into the business and a lead
time before they generate sales.
After the first 15 weeks of the financial year our current sales
and order book stood at GBP3.1 million which is flat on the
comparable period last year. Our new stores continue to trade in
line with expectations with the slowdown in growth attributable
almost entirely to reduced activity in stores affected by the
aforementioned staffing changes. Addressing this is our immediate
priority and we have taken a number of actions to mitigate the
impact although it is too early to say whether we will be able to
recover the lost sales in the remainder of this financial year. A
further update will be provided to shareholders in due course.
Outlook
New showrooms and product development along with the
recruitment, training and retention of talented sales people has
underpinned most of the sales growth within the business.
Our new showrooms continue to trade in line with expectations
and we are satisfied with the performance of all our new product
introductions. Therefore our immediate priority is to recruit and
train talented salespeople in key locations across our store
portfolio. Your Board believe that once these people are in place
we will be able to return to the growth experienced in the last two
years. We are also focussing attention on delivering a tangible
benefit to the business from our recent investment in the
operational infrastructure.
I would like again to record my appreciation for the efforts of
all of our employees without whom we would not be able to offer the
customer experience that is associated with our brand.
Malcolm R. Hepworth
Non Executive Chairman
Enquiries:
Malcolm Hepworth
Non Executive Chairman John Lewis of Hungerford plc 01235 774300
Karen Stanley
Finance Director
Smith & Williamson Corporate
Martyn Fraser Finance Limited 0117 376 2213
Income Statement for the year ended 31 August 2014
2014 2013
GBP GBP
Revenue 7,416,441 6,557,481
Cost of sales (3,530,279) (3,103,122)
------------- -------------
Gross profit 3,886,162 3,454,359
Selling and distribution
costs (498,668) (420,306)
Administrative expenses
Share based payments
(43,139) -
Other (3,250,184) (2,838,437)
------------- -------------
Total (3,293,323) (2,838,437)
---------------------------- ------------ ------------- ----- -------------
Profit from operations
before share
based payments 137,310 195,616
---------------------------- ------------ ------------- ----- -------------
Profit from operations 94,171 195,616
Finance income 2,464 5,021
Finance expenses (36,895) (32,656)
------------- -------------
Profit before tax 59,740 167,981
Tax expense (15,377) (23,136)
------------- -------------
Profit for the year 44,363 144,845
============= =============
Earnings per share
Basic 0.02p 0.08p
Fully diluted 0.02p 0.08p
Balance Sheet as at 31 August 2014
2014 2013
GBP GBP
Non -current assets
Intangible assets 108,874 126,628
Property, plant and equipment 2,689,988 2,341,515
Trade and other receivables 57,075 40,575
----------- -----------
2,855,937 2,508,718
Current assets
Inventories 183,111 192,320
Trade and other receivables 294,152 253,183
Cash and cash equivalents 1,489,714 1,122,252
----------- -----------
1,966,977 1,567,755
Total assets 4,822,914 4,076,473
----------- -----------
Current liabilities
Current tax payable - -
Trade and other payables (1,864,637) (1,482,425)
Borrowings (39,948) (40,938)
----------- -----------
(1,904,585) (1,523,363)
Net-current liabilities
Borrowings (777,064) (514,724)
Deferred tax liabilities (31,273) (15,896)
----------- -----------
(808,337) (530,620)
Total liabilities (2,712,922) (2,053,983)
----------- -----------
Net assets 2,109,992 2,022,490
=========== ===========
Equity
Share Capital 186,745 186,745
Share Premium 1,188,021 1,188,021
Other Reserves 1,421 1,421
Retained Earnings 733,805 646,303
----------- -----------
Total Equity 2,109,992 2,022,490
=========== ===========
Statement of Changes in Equity for the year ended 31 August
2014
Share Share Other Retained
Capital Premium Reserves Earnings Total
GBP GBP GBP GBP GBP
--------------------- -------- --------- --------- --------- ---------
At 01 September 2012 186,745 1,188,021 1,421 501,458 1,877,645
======== ========= ========= ========= =========
Profit for the year - - - 144,845 144,845
--------------------- -------- --------- --------- --------- ---------
At 31 August 2013 186,745 1,188,021 1,421 646,303 2,022,490
======== ========= ========= ========= =========
Profit for the year - - - 44,363 44,363
======== ========= ========= ========= =========
Share based payments - - - 43,139 43,139
--------------------- -------- --------- --------- --------- ---------
As 31 August 2014 186,745 1,188,021 1,421 733,805 2,109,992
===================== ======== ========= ========= ========= =========
The total comprehensive income for the year is GBP44,363 (2013:
GBP144,845).
Statement of Cash Flows for the year ended 31 August 2014
2014 2013
GBP GBP
Cash flow from operating activities
Profit from operation 94171 195,616
Amortisation of intangible assets 17,754 14,932
Depreciation of property, plant and equipment 269,856 192,253
Share based payments 43,139 -
(Profit)/loss on disposal of property,
plant and equipment 4,035 (2,992)
Decrease/(increase) in Inventories 9,210 (25,306)
Increase in receivables (57,469) (38,835)
Increase in payables 382,272 152,054
--------- ---------
Cash generated from operations 762,968 487,722
Net taxation paid - -
--------- ---------
Net cash from operating activities 762,968 487,722
--------- ---------
Cash flows from investing activities
Purchase of intangible assets - (60,462)
Purchase of property, plant and equipment (676,069) (264,625)
Net proceeds from sale of property, plant
and equipment 53,674 45,275
Interest received 2,464 5,021
--------- ---------
Net cash used in investing activities (619,931) (274,791)
--------- ---------
Cash flows from financing activities
Interest paid (36,895) (32,656)
Increase in borrowings 300,000 -
Repayment of borrowings (38,680) (37,567)
--------- ---------
Net cash used in financing activities 224,425 (70,223)
--------- ---------
Net increase/(decrease) in cash and cash
equivalents 367,462 142,708
--------- ---------
Net cash and cash equivalents at the start
of the year 1,122,252 979,544
Net cash and cash equivalents at the end
of the year 1,489,714 1,122,252
========= =========
Net cash and cash equivalents
Cash at bank and in hand 1,489,714 1,122,252
Bank overdraft - -
--------- ---------
1,489,714 1,122,252
--------- ---------
Notes
1. Statutory Accounts
The financial information does not constitute statutory accounts
as defined in section 435 of the Companies Act 2006, but has been
extracted from the statutory accounts for the year ended 31 August
2014 on which an unqualified audit report has been issued and which
will be delivered to the Registrar following their adoption at the
Annual General Meeting.
The statutory accounts for the financial year ended 31 August
2013 have been delivered to the Registrar of Companies with an
unqualified audit report.
2. Basis of preparation
The Company's statutory accounts have been prepared under the
historical cost convention and in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European
Union and those parts of the Companies Act 2006 applicable to
companies reporting under IFRS.
3. Going concern
The Directors, after reviewing the Company's operating budgets,
investments plans and financing arrangements, consider that the
Company has, at the date of preparing its statutory accounts,
sufficient financing available for the estimated requirements for
the foreseeable future. Accordingly, the Directors are satisfied
that it is appropriate to adopt the going concern basis in
preparing the financial information.
4. Earnings/(loss) per share
Basic
The calculation of basic Earnings/(loss) per share is based on a
profit of GBP44,363 (2013: 144,845) and a weighted average number
of ordinary shares in issue of 186,745,519 (2013: 186,745,519).
Diluted
The calculation of fully diluted Earnings/(loss) per share is
based on a profit of GBP44,363 (2013: 144,845) and a weighted
average number of ordinary shares in issue and under option of
203,008,741 (2013: 186,745,519).
5. Share based payments
2014 2013
GBP000 GBP000
====== ======
Share based payments expense 43,139 -
====== ======
During the year ended 31 August 2014 the Company provided three
types of share-based incentive arrangements:
Type of arrangement Vesting period Vesting conditions
Individual share option
agreements 3 years Three years service
============== =====================
Employee Share Incentive
Plan 2 years Two years service
============== =====================
Long Term Incentive Plan 2.64 years Performance targets
relating to revenues
and pre-tax profit
for the year to 31
August 2016
============== =====================
The Company established the Employee Share Incentive Plan on 25
June 2010 and the Long Term Incentive Plan Plan on 29 April 2014.
The Company has calculated charges for the share option awards
using a Black-Scholes model. Volatility and risk free rates have
been calculated for each share option award based on expected
volatility over the vesting period and current risk free rates at
the time of each award. Volatility assumptions are based on
historic volatility for the Company's share price in the three
years prior to the award.
The share based payments charge for the year by scheme was as
follows:
2014 2013
GBP000 GBP000
====== ======
Individual option agreements - -
Employee Share Incentive Plan - -
Long Term Incentive Plan 43,139 -
------ ------
Total 43,139 -
====== ======
The charge related entirely to equity-settled share based
payment transactions.
6. Dividends
The Directors do not recommend payment of a dividend.
7. Posting of Accounts
Copies of the statutory accounts for the financial year ended 31
August 2014 will be posted shortly to shareholders with the notice
of the Annual General Meeting. An electronic copy will be available
on the Company's web site www.john-lewis.co.uk.
8. Annual General Meeting
The next Annual General Meeting of the Company will be held at
the Donnington Grove Hotel, Grove Road, Newbury, RG14 2LA at 4.00
p.m. on 2nd February 2015.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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