John Lewis Of Hungerford PLC Financing and Operations Update (5960R)
June 30 2020 - 11:44AM
UK Regulatory
TIDMJLH
RNS Number : 5960R
John Lewis Of Hungerford PLC
30 June 2020
30 June 2020
John Lewis of Hungerford plc
(the "Company")
Financing and Operations Update
John Lewis of Hungerford Plc (AIM: JLH), the specialist
manufacturer and retailer of kitchens, bedrooms and freestanding
furniture, announces the following update on financing and
operations.
Financing
The Board have been determined to ensure a degree of resilience
around the finance structure of the business and to that end, as
detailed in the COVID-19 Statement announced on 30 March 2020, the
Company had recently completed a formal independent revaluation of
its freehold properties. This resulted in an increased valuation of
GBP1.9m (compared with a balance sheet net book value of GBP1.2
million). The Company stated that it was in advanced discussions
with a new liquidity provider in relation to increasing its net
facilities against the freehold.
The Board announces that it has entered into a new financing
facility with Devon & Cornwall Securities Limited for GBP1.079
million, which will be drawn down immediately. The interest only
facility has an interest rate of approximately 10 per cent per
annum, payable monthly on drawn down funds, together with a
facility fee of 2 per cent payable on completion. In case of
default, an additional 7.75% interest would be payable under the
loan. The new loan will replace the Company's existing loan
(GBP408k) and overdraft facility (GBP250k) with immediate effect.
Normal day to day banking will continue with the Company's existing
bankers. The Board believes this provides sufficient liquidity
required by the business as it continues to operate within a
trading environment, which is slowly showing signs of recovery.
In addition to the wider comprehensive cost reductions
implemented since mid-2019, the Company continues to implement
further cost-cutting measures with a stringent focus on cash
management and along with the suspension of all but essential
capital expenditure, during this challenging period. The Directors
have also agreed to a 20% reduction in salary or fees for a period
of three months with effect from 1 May 2020. The Company also
negotiated preferential terms and support from certain landlords
and suppliers.
The Company utilised the various Government initiatives
including furloughing 70% of the total workforce for the initial
lockdown period. 30% of the workforce continued to be furloughed
throughout April and May, until the retail showrooms re-opened
fully in line with government guidance, in mid June. A small
proportion of staff remain furloughed at this time through the Job
Retention Scheme. The Company has been able to access the Business
Support Grants and the Business Rates Relief, together with the
deferral of VAT payments to HMRC. It did however prove extremely
challenging, in line with other retailers, to access any Government
funds under the CBILS scheme, due to the strict qualification
criteria required.
Operations
As detailed in our COVID-19 Statement announced on 30 March
2020, the Company's showrooms, being non-essential retail, closed
following the Prime Minister's announcement on 23 March 2020.
Improvements in the Company's marketing programme including virtual
showroom tours and online design consultations, led to a good
number of customers placing deposits for new kitchens and bedrooms,
working with a reduced design team, during this period.
The Company has completed all necessary risk assessments to
ensure the showrooms are COVID Secure in accordance with Public
Health England advice, ahead of re-opening the estate in mid June
'by appointment only'. Customers continue to engage, combining both
online and face-to-face design consultations, as the Company sees
an uptick in demand following the lockdown. The Board continues to
work closely with all its partners to ensure the safety of its
employees, customers and suppliers. Any action needed to improve
our ability to protect the health, safety and wellbeing of our
people, both at work and at home, continues to be paramount as we
move forward during this period.
The Company's factory resumed production after the initial
lockdown period. It continues to operate now at normal lead times.
We have taken steps to ensure appropriate safety considerations and
risk assessments are in place to protect the health and safety of
our workforce. Key actions taken include social distancing markers
around the factory, one-way walkways, staggered breaks and
increased security around deliveries on site complying to hand
sanitisation.
COVID-19 Impact and Current Trading
COVID-19 and related Government restrictions affecting the
Company's operations will have a significant impact on the final
results for the year ended 30 June 2020. The timing of the lockdown
in particular, reduced the Company's ability to trade during its
seasonal peak in the final quarter. Although we have been able to
resume with deliveries and installations to some customers since
restrictions enabling trades on site were lifted, many of our
customers have been subject to building delays combined with health
concerns around shielding or self-isolation. The final results for
the year ended 30 June 2020 will therefore bear the impact of a
significantly reduced final quarter. The Company will provide a
further pre-close trading update in due course.
With some orders having been delayed and new business also
having been secured during the lockdown and since the re-opening of
the showrooms, the Company has a good platform for the business for
the new financial year and currently, the first quarter is tracking
ahead of the previous year.
The manufacturing of orders, which had been paused at the
beginning of the lockdown, has now fully resumed and orders are
being fulfilled in accordance with customer installation timings
and individual safety needs. The Company is operating at normal
lead-time levels moving forward.
Further announcements will be made, as appropriate.
Enquiries:
John Lewis of Hungerford plc
Kiran Noonan - Acting Chairman / Managing
Director 01235 774300
Cenkos Securities plc
Katy Birkin/Russell Cook 0207 397 8900
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No. 596/2014 until the release of this
announcement.
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END
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