Final Results

RNS Number : 1970U

John Lewis Of Hungerford PLC

19 December 2011

 



JOHN LEWIS OF HUNGERFORD PLC

FINAL RESULTS - YEAR ENDED 31 AUGUST 2011

John Lewis of Hungerford plc ("John Lewis of Hungerford" or the "Company") the specialist kitchen manufacturer and retailer today announces its final results for the year ended 31 August 2011.

CHAIRMAN'S STATEMENT

In my last interim statement I reported on the positive momentum building within the business and I am pleased to report that this was maintained  in the second  half year.  Our  strategy of complementing organic growth with selective investment in new stores contributed to a strong sales performance and we have been able to reinvest the resultant profits back into the business as we face into an increasingly uncertain economic outlook.

A highlight during the period was the performance of our two new stores, Beaconsfield and Blackheath, both of which exceeded our expectations and ended the year  ahead of budget.  The performance of these stores validates the careful approach we adopt in appraising new opportunities and, in light of this, the Board decided to continue our growth strategy through opening a new store in  Cirencester on 1 October 2011.  This brings our  number of stores to 13.  The recent openings  have enabled  us to refine our 'roll out' model such that we are able to quickly capitalise on new opportunities and move from appraisal to store opening in a quick and cost effective manner. New store openings have an important role in delivering our strategic objective to increase utilisation of our manufacturing facility.  However, whilst  we continue to consider  new opportunities no additional store openings are currently planned.

Other key developments in the period included the purchase of the freehold of our  Hungerford store for  £150,000, funded through  a new facility from our bankers, Barclays. Although  this will not have a significant impact on annual operating costs, the acquisition enabled us to secure continued tenancy, on favourable terms, at one of our flagship stores.

Financial performance

The profit before taxation, share based payments and interest was £219,000 compared to a profit of £8,000 in 2010. This was driven  by a strong sales performance, which increased by 16% to £6,224,000 (2010-£5,355,000). This includes the contribution from new store openings, of which one opened at the end of the previous year and one during the year under review.  Excluding the impact of these, the like-for-like sales growth in the year was 0.1%.  The overall gross profit margin of the business was consistent at 53.6% compared to 53.0% in 2010.

The charge in respect of share based payments for the year amounted to £55,000 (2010-£154,000).  Your Board continues to believe the arbitrary nature of this accounting methodology means that this resulting charge has little meaningful relevance to the reported financial results.

In consultation with our auditors we have changed our accounting policy this year relating to showroom display units and appliances.  Such items are now capitalised as fixed assets, which has had the impact of reducing operating profits by the depreciation charge of £25,000 compared to the previous policy of treating them as stock.  Last years results have been similarly restated, which  has reduced previously reported operating profits by £23,000.  The Board believe the new policy represents a prudent approach to accounting for the items.

Net cash inflow  from operating activities was £355,000 (2010-£131,000 inflow) and at the balance sheet date, cash at bank stood at £809,000 (2010-£818,000).

Capital expenditure in the period was £501,000 (2010-£436,000) principally comprising the acquisition of the Hungerford freehold, installation of a new mezzanine  floor in the Wantage factory, the development of  the Beaconsfield store and general improvements to  the store estate.

Current trading

The current year started strongly with year-on-year sales growth during the first quarter. However, the length of our sales cycle means this performance was driven by customer purchasing decisions taken a number of months ago. Consequently, it is not necessarily reflective of current sentiment and we are undoubtedly seeing signs of a further erosion in customer confidence, which translates into a weaker forward order book.  It is too early to determine whether this is a temporary reduction but we are closely monitoring the situation and are ready  to take decisive action should  it become necessary.

Outlook

Your Board is  pleased  with  the progress  the company has made in  recent years, which has been achieved against a difficult economic backdrop. However, the overall economic situation remains very fragile and, like many businesses, we are heavily dependent upon the prevailing level of consumer confidence. Current trading indicates this is continuing to erode and so we must remain vigilant to the threat that this presents.

We are cautious about the prospects for the current year and, in particular, the impact on our business  should the UK  economy re-enter  recession. In light of this we are maintaining tight control over overhead expenditure while recognising the need to continue to invest in the business if we are to deliver  long-term  shareholder  growth.  The winter sale has always been a key trading period for our business but the outturn in  the current year will be equally influenced by the extent to which  delayed or  deferred customer orders return later in the year.  It is  simply too soon to state with any certainty whether this is likely to be the case.

I would again like to pay testament to  the support of our employees  who have been instrumental in delivering the positive developments over the past  few years.  As  the Company moves towards  its 40th anniversary it is their commitment to making quality British made kitchens and furniture that remains at the heart of our business.

Malcolm R. Hepworth

Non Executive Chairman

16 December 2011

Enquiries:
Malcolm Hepworth, Chairman		John Lewis of Hungerford plc	01235 774300
Nick Reeve, Martyn Fraser	Smith & Williamson Corporate Finance Limited		0117 376 2213

Profit and Loss Account for the year ended 31 August 2011

			2011 £		2010 As restated £
Turnover			6,224,331		5,355,128
Cost of sales			(2,888,346)		(2,516,380)
Gross profit			3,335,985		2,838,748
Selling and distribution costs			(396,693)		(474,575)
Administrative expenses
Share based payments			(54,527)		(154,336)
Other			(2,720,109)		(2,355,903)
Total			(2,774,636)		(2,510,239)
Operating profit/(loss) before share based payments			219,183		8,270
Operating profit/(loss)			164,656		(146,066)
Interest receivable and similar income			3,786		3,507
Interest payable and similar charges			(32,535)		(7,708)
Profit/(loss) on ordinary activities before taxation			135,907		(150,267)
Tax on profit/(loss) on ordinary activities			15,358		(16,047)
Retained Profit/(loss) for the financial year			151,265		(166,314)
Earnings per share
Basic			0.08p		(0.09)p
Fully diluted			0.08p		(0.09)p

The profit and loss account has been prepared on the basis that all operations are continuing operations.

Balance Sheet as at 31 August 2011

			2011	2010   As restated
			£		£
Fixed assets
Intangible assets			32,722		7,872
Tangible assets			2,463,006		2,255,760
			2,495,728		2,263,632
Current assets
Stocks			219,364		165,331
Debtors			299,834		272,853
Cash at bank and in hand			809,247		818,015
			1,328,445		1,256,199
Creditors: amounts falling due within one year		(1,241,682)		(1,252,937)
Net current assets			86,763		3,262
Total assets less current liabilities			2,582,491		2,266,894
Creditors: amounts falling due after more than one year			(591,715)		(477,515)
Provisions for liabilities and charges			(10,213)		(16,047)
Net assets			1,980,563		1,773,332
Capital and reserves
Called up share capital			186,745		186,745
Share premium account			1,188,021		1,188,021
Other reserves			1,421		1,421
Profit and loss account			604,376		397,145
Shareholders' funds - all equity interests			1,980,563		1,773,332

Cash Flow Statement for the year ended 31 August 2011

			2011				2010 As restated
			£		£		£		£
Net cash inflow from operating activities				355,154					131,354
Returns on investments and servicing of finance
Interest and similar income received			3,786				3,507
Interest paid			(32,535)				(7,708)
Net cash outflow from returns on investments and servicing of finance					(28,749)				(4,201)
Corporation tax refunded					9,524				48,034
Capital expenditure
Payments to acquire intangible fixed assets			(28,808)			-
Receipts from disposals of tangible fixed assets			27,788			60,486
Payments to acquire tangible fixed assets			(472,449)			(436,182)
Net cash outflow from capital expenditure					(473,469)				(375,696)
Equity dividends paid					-				-
Net cash outflow before financing				(137,540)					(200,509)
Financing
New bank loans advanced			153,375				500,000
Repayment of bank loans		(24,603)					(265,931)
Net cash inflow from financing					128,772				234,069
(Decrease)/increase in cash					(8,768)				33,560

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 2011 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 2010 have been delivered to the Registrar of Companies with an unqualified audit.

2. Basis of preparation

The Company's statutory accounts have been prepared under the historical cost convention and in accordance with applicable accounting standards.  During the year the Company changed its accounting policy relating to internally manufactured showroom display units.  The effect of this change in accounting policy is to reduce profit after tax by £25,641 (2010: £23,342) and to reduce net assets as at 31 August 2011 by £80,152.

3. Loss per share

Basic and diluted

The calculation of profit/(loss) per share is based on a profit of £151,265 (2010: £(166,214) as restated) and a weighted average number of ordinary shares in issue of 186,745,519 ordinary shares (2010: 186,745,519).

4. Dividends

The Directors do not recommend payment of a dividend.

5. Posting of Accounts

Copies of the statutory accounts for the financial year ended 31 August 2011 will be posted shortly to shareholders with the notice of the Annual General Meeting.  An electronic copy will be available, at the same time, on the Company's web site www.john-lewis.co.uk.

6. Annual General Meeting

The next Annual General Meeting of the Company will take place at the Company's offices at Grove Technology Park, Downsview Road, Wantage, Oxon, OX12 9FA at 4.00 pm on Monday 23 January 2012.

 

END

 

 

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