Final Results

RNS Number : 8076V

John Lewis Of Hungerford PLC

18 December 2013

 



JOHN LEWIS OF HUNGERFORD PLC

FINAL RESULTS - YEAR ENDED 31 AUGUST 2013

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 2013.

CHAIRMAN'S STATEMENT

I am pleased to present our results covering the twelve months to 31 August 2013.

This has been an important year for John Lewis of Hungerford and we are delighted with the progress we have made, both in commercial and financial performance terms.  The return to profitability is particularly pleasing and supports our belief that 2012 was a temporary setback caused by factors outside our control.

The most notable commercial achievement was the development and launch of our new bedroom furniture range, in late June 2013.  The bedroom furniture offering follows our established kitchen model with manufacture taking place in our Wantage factory followed by installation in our customer's homes by our own installation business.  Not only does this move into a new furniture market open up fresh sales potential for us, it also demonstrates our commitment to secure increased economies of scale from our Wantage factory and Artisan installations business.

We are pleased with both consumer and media reaction to the launch of our bedroom range, which is being introduced in a controlled manner across our business.  The Board sees the bedroom category as a significant determinant of future sales growth therefore we are ensuring we proceed at a pace which allows for a rewarding customer experience, resulting in positive word of mouth recommendations for our products and services, rather than merely meeting volume demand.

Other key achievements in the period include the refit of the Hungerford showroom, the home of our brand, and our showcase Fulham showroom completed shortly after the year end.  This now includes a whole floor devoted to bedrooms in addition to new kitchen displays and two new kitchen ranges. The new kitchen ranges are both contemporary in design, manufactured in Wantage and created to widen our consumer appeal.  Once the demand for these products has been established we intend to roll these two new ranges into other locations in due course.

Financial performance

The operating profit before taxation, share based payments and interest during the period under review was £196,000 (2012: loss of £88,000), a result the Board consider satisfactory in a difficult and challenging economic background.

The financial performance was underpinned by a 17% increase in sales to £6,557,000 (2012: £5,626,000).  It is particularly pleasing that this was achieved whilst improving overall gross margin to 52.7% (2012: 52.3%) reflecting, in part, operational improvements within our Artisan installations business.

Products	2013		2012
	£000		£000
Turnover	5,722		4,882
Cost of sales	(2,511)		(2,115)
Gross margin	3,211		2,767

The increase in kitchen sales reflects a higher volume of higher value kitchens.

Installations	2013		2012
	£000		£000
Turnover	835		744
Cost of sales	(592)		(568)
Gross margin	243		176

The Artisan installations business continues to trade strongly with an improvement in gross margin to 29.1% (2012: 23.7%)

Cash flow

We ended the year with cash at bank and in hand of £1,122,000 (2012: £980,000) reflecting the positive working capital generated through customer deposits and advance payments.  The net cash inflow from operating activities was £488,000 (2012: £364,000).

Capital expenditure, including capitalised development costs, of £325,000 was in line with budgeted amounts and principally arose from investment in our showroom estate and installation of a dedicated new showroom in Wantage.

Dividends

The Board is not recommending payment of a dividend.

Board changes

An important consideration for the business as it grows is the strength of the leadership team and I am delighted to welcome Kiran Noonan and Damian Walters to the Board.  Both were already members of the senior management team and they have made a significant contribution to the results reported here.

Strategic Plan and Store Opening Programme

A focus of the senior management team during the year has been creation of a new three year strategic plan in order to drive long term value creation for our shareholders.  As part of this the Board reviewed and challenged its current strategy concluding that the core objective of increasing our retail footprint to drive greater efficiencies from our Wantage factory remains sound.

As a consequence of this process the Board has set an aspirational target of growing turnover to £10 million per annum and achieve a 5% operating profit by the end of FY 2016.  The key driver of this will be through development of a more diverse range of products and services appealing to a wider customer base from an expanded store network.  To this end we are currently in the process of actively seeking to secure two new showrooms in London and the South East.

Our commitment to investing in new showrooms has underpinned much of the sales growth in the business and new footage is seen as key to delivering our future plans.

However, we continue to apply a rigorous approach in evaluating potential new stores and there is no guarantee sufficient high quality sites will be identified to achieve the £10 million target.  Nevertheless it is reflective of the Board's confidence that the steps taken to strengthen the business in recent years have created a robust and scalable platform.

Current Trading

We continue to experience good levels of customer enquiries and orders.

At the end of October 2013 we reported that orders and dispatched sales for Q1 of the current financial year were approximately 13% over the corresponding figure in 2012.  This trend has continued into the second quarter and after the first 15 weeks of the financial year our current sales and forward order book stood at £3,096,000, an increase of 11% over the comparable period last year.

We are encouraged by the current level of enquires which supports our view there is a positive momentum behind the business.  However, we would again reinforce our belief that it is difficult to extrapolate meaningful short term forecasts given the high value discretionary expenditure nature of our business and the relatively long sales cycle involved.

Outlook

The financial performance reported here is testament to the progress made in recent years in strengthening the business.  However, we are not complacent and continue to monitor customer sentiment very carefully for indications of a repeat of the downturn in 2012.

Nevertheless our own performance indicators combined with an improving economic climate lead us to believe that we now need to continue to invest in the business if we are to deliver long term shareholder growth.  Our new strategic plan presents the cornerstone of this and we look forward to the future with confidence.

I would again like to thank our loyal team of dedicated and talented employees for their hard work during this challenging yet rewarding year.

Malcolm R. Hepworth

Non Executive Chairman

17 December 2013

Enquiries:
Malcolm Hepworth, Chairman	John Lewis of Hungerford plc	01235 774300
Mark Lord	Smith & Williamson Corporate Finance Limited	0117 376 2213

Profit and Loss Account for the year ended 31 August 2013
						2013		2012
						£		£
Turnover						6,557,481		5,625,524
Cost of sales						(3,103,122)		(2,682,560)
Gross profit						3,454,359		2,942,964
Selling and distribution costs						(420,306)		(382,929)
Administrative expenses
Share based payments						-		(2,900)
Other						(2,838,437)		(2,648,467)
Total						(2,838,437)		(2,651,367)
Operating profit / (loss)  before share
based payments						195,616		(88,432)
Operating profit / (loss)						195,616		(91,332)
Interest receivable and
similar income						5,021		2,695
Interest payable and
similar charges						(32,656)		(34,634)
Profit / (loss) on ordinary
activities before taxation						167,981		(123,271)
Tax on profit / (loss) on
ordinary activities						(23,136)		17,453
Retained profit / (loss) for
the financial year						144,845		(105,818)
Earnings per share
Basic						0.08p		(0.06)p
Fully diluted						0.08p		(0.06)p
The profit and loss account has been prepared on the basis that all operations are
continuing operations.

Balance Sheet as at 31 August 2013
						2013		2012
						£		£
Fixed assets
Intangible assets						104,591		54,023
Tangible assets						2,363,552		2,338,501
						2,468,143		2,392,524
Current assets
Stocks						192,320		167,014
Debtors						293,758		262,163
Cash at bank and in hand						1,122,252		979,544
						1,608,330		1,408,721
Creditors: amounts falling due within one year						(1,523,363)		(1,369,232)
Net current assets						84,967		39,489
Total assets less
current liabilities						2,553,110		2,432,013
Creditors: amounts falling due after more than one year						(514,724)		(554,368)
Provisions for liabilities and charges						(15,896)		-
Net assets						2,022,490		1,877,645
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						646,303		501,458
Shareholders' funds
- all equity interests						2,022,490		1,877,645

Cash Flow Statement for the year ended 31 August 2013
					2013		2012
					£	£	£	£
Net cash inflow
from operating activities						487,722		364,276
Returns on investments and
servicing of finance
Interest and similar income received					5,021		2,695
Interest paid					(32,656)		(34,634)
Net cash outflow from
returns on investments and
servicing of finance						(27,635)		(31,939)
Corporation tax						-		-
Capital expenditure
Payments to acquire
intangible fixed assets					(60,462)		(27,998)
Receipts from disposals
of tangible fixed assets					45,275		23,853
Payments to acquire
tangible fixed assets					(264,625)		(122,727)
Net cash outflow from
capital expenditure						(279,812)		(126,872)
Equity dividends paid						-		-
Net cash inflow
before financing						180,275		205,465
Financing
Repayment of bank loans					(37,567)		(35,168)
Net cash outflow
from financing						(37,567)		(35,168)
Increase / (decrease) in cash						142,708		170,297

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 2013 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 2012 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.

3. Loss per share

Basic and diluted

The calculation of profit/(loss) per share is based on a profit of £144,845 (2012: £105,818 loss) and a weighted average number of ordinary shares in issue of 186,745,519 ordinary shares (2011: 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 2013 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.

6. Annual General Meeting

The next Annual General Meeting of the Company will be held at the John Lewis of Hungerford Fulham Showroom, 156-158 Wandsworth Bridge Road, London SW6 2UH at 4.00 p.m. on 27 January 2014

 

END

 

 

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