14 Dec 2012 07:00
JOHN LEWIS OF HUNGERFORD PLC
FINAL RESULTS - YEAR ENDED 31 AUGUST 2012
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 2012.
CHAIRMAN'S STATEMENT
Businesses such as ours that operate in high value discretionary spend markets are inherently dependent upon the prevailing level of consumer confidence. Unfortunately this can often be influenced by short term factors which can create challenges in managing the resultant trading volatility against the need to make longer term investments to secure future growth opportunities.
The impact of this was profoundly demonstrated during the year under review, which encompassed our 40th anniversary. We entered the year on the back of two years of solid growth and with a sense of momentum building within the business. This continued during the first quarter where a strong performance from our new stores helped to deliver further year-on-year sales growth.
However, over the winter period we experienced a significant and immediate reduction in trading to levels of less than half that experienced in the previous year. Although market conditions quickly stabilised the impact of our subdued trading during this period serves to distort our overall result for the year and has led to our first reported operating loss (before share based payments) for three years.
Whilst we cannot be certain the cause of the reduction we believe it was the result of an acute decline in consumer confidence rather than factors specific to our business. Certainly that would be consistent with anecdotal feedback from customers who deferred purchases at the time.
It is testament to the strength of our management team that we immediately identified the change in customer behaviour and were able to react quickly to minimise the impact on our business. The changes implemented at that time helped contribute to a strong performance in the second half year culminating in an operating profit (before share based payments) for the six months of £136,000.
Whilst it is extremely disappointing that this event came on the back of our much improved recent trading, ultimately there is little we can do to prevent such extreme events save to remain vigilant to changes in customer purchasing patterns and where necessary act quickly to realign our business model to accommodate them.
Financial performance
The loss before taxation, share based payments and interest for the full year was £88,000 compared to a profit of £219,000 in 2011. Overall sales declined by 9.6% year-on-year to £5,626,000 (2011-£6,224,000) reflecting both the aforementioned poor trading over winter and the knock-on impact of delayed orders. The challenging competitive trading environment contributed to a reduction in the overall gross profit margin to 52.3% from 53.6% in preceding year.
The charge in respect of share based payments for the year amounted to £2,900 (2011-£55,000). 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.
Net cash inflow from operating activities was £364,000 (2011-£355,000 inflow) contributing to an increase in cash during the period of £170,000 (2011-£9,000 outflow). At the balance sheet date, cash at bank, including customer deposits, stood at £980,000.
The Board is not recommending payment of a dividend.
Current trading
The current year has started strongly with sales for the first quarter consistent with the previous year, which in itself was a strong trading period. The best measure we have of customer sentiment is our future order book and I am pleased to report this is in line with our expectations. We are therefore cautiously optimistic that we will be able to maintain the good start to the current year over the winter period.
Board changes
Charlotte Hill-Baldwin stood down as a director with effect from 1st September 2012 and I would like to thank her for the contribution she made to the Board during her tenure as a director.
Outlook
Your Board continues to be vigilant in the light of the continuing weak economic conditions and the impact this has on consumer confidence. Although current trading is positive the experience of last year demonstrates how quickly this can change due to factors that we have little or no ability to influence. We anticipate this uncertainty will remain as a feature of our business for the foreseeable future as the UK economy slowly returns to growth. At the same time we believe our long-term strategy of seeking to grow our retail footprint to drive greater efficiencies from our factory in Wantage remains sound. Recent store openings have been a notable success with each of Beaconsfield, Blackheath and Cirencester delivering a strong performance during the past year. Nevertheless in view of the initial investment required in opening a new store we do not consider it would be prudent to seek to further expand our store portfolio at this time.
In conclusion it is disappointing that these results are distorted by the impact of a short term decline in trading. Nevertheless this should not detract from the major steps forward the business has taken in recent years and I remain confident these will allow it to prosper in the coming years.
I would again like to thank our loyal team of dedicated and talented employees for their efforts during a challenging year.
Malcolm R. Hepworth
Non Executive Chairman
13 December 2012
Enquiries: | ||
Malcolm Hepworth, Chairman | John Lewis of Hungerford plc | 01235 774300 |
Martyn Fraser | Smith & Williamson Corporate Finance Limited | 0117 376 2213 |
Profit and Loss Account for the year ended 31 August 2012
2012 £ | 2011 £ | ||||
Turnover | 5,625,524 | 6,224,331 | |||
Cost of sales | (2,682,560) | (2,888,346) | |||
Gross profit | 2,942,964 | 3,335,985 | |||
Selling and distribution costs | (382,929) | (396,693) | |||
Administrative expenses | |||||
Share based payments | (2,900) | (54,527) | |||
Other | (2,648,467) | (2,720,109) | |||
Total | (2,651,367) | (2,774,636) | |||
Operating profit/(loss) before share based payments | (88,432) | 219,183 | |||
Operating profit/(loss) | (91,332) | 164,656 | |||
Interest receivable and similar income | 2,695 | 3,786 | |||
Interest payable and similar charges | (34,634) | (32,535) | |||
Profit/(loss) on ordinary activities before taxation | (123,271) | 135,907 | |||
Tax on profit/(loss) on ordinary activities | 17,453 | 15,358 | |||
Retained Profit/(loss) for the financial year | (105,818) | 151,265 | |||
Earnings per share | |||||
Basic | (0.06)p | 0.08p | |||
Fully diluted | (0.06)p | 0.08p | |||
The profit and loss account has been prepared on the basis that all operations are continuing operations.
Balance Sheet as at 31 August 2012
2012 | 2011 | ||||
£ | £ | ||||
Fixed assets | |||||
Intangible assets | 54,023 | 32,722 | |||
Tangible assets | 2,338,501 | 2,463,006 | |||
2,392,524 | 2,495,728 | ||||
Current assets | |||||
Stocks | 167,014 | 219,364 | |||
Debtors | 262,163 | 299,834 | |||
Cash at bank and in hand | 979,544 | 809,247 | |||
1,408,721 | 1,328,445 | ||||
Creditors: amounts falling due within one year | (1,369,232) | (1,241,682) | |||
Net current assets | 39,489 | 86,763 | |||
Total assets less current liabilities | 2,432,013 | 2,582,491 | |||
Creditors: amounts falling due after more than one year | (554,368) | (591,715) | |||
Provisions for liabilities and charges | - | (10,213) | |||
Net assets | 1,877,645 | 1,980,563 | |||
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 | 501,458 | 604,376 | |||
Shareholders' funds - all equity interests | 1,877,645 | 1,980,563 | |||
Cash Flow Statement for the year ended 31 August 2012
2012 | 2011 | ||||||||
£ | £ | £ | £ | ||||||
Net cash inflow from operating activities
| 364,276 | 355,154 | |||||||
Returns on investments and servicing of finance | |||||||||
Interest and similar income received | 2,695 | 3,786 | |||||||
Interest paid | (34,634) | (32,535) | |||||||
Net cash outflow from returns on investments and servicing of finance | (31,939) | (28,749) | |||||||
Corporation tax refunded | - | 9,524 | |||||||
Capital expenditure | |||||||||
Payments to acquire intangible fixed assets | (27,998) | (28,808) | |||||||
Receipts from disposals of tangible fixed assets | 23,853 | 27,788 | |||||||
Payments to acquire tangible fixed assets | (122,727) | (472,449) | |||||||
Net cash outflow from capital expenditure | (126,872) | (473,469) | |||||||
Equity dividends paid | - | - | |||||||
Net cash inflow/(outflow) before financing | 205,465 | (137,540) | |||||||
Financing | |||||||||
New bank loans advanced | - | 153,375 | |||||||
Repayment of bank loans | (35,168) | (24,603) | |||||||
Net cash inflow/(outflow) from financing | (35,168) | 128,772 | |||||||
Increase/(decrease) in cash | 170,297 | (8,768) | |||||||
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 2012 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 2011 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 loss of £105,818 (2011: £151,265 profit) 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 2012 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 be held at the Donnington Grove Country Club, Grove Road, Newbury RG14 2LA at 4.00 p.m. on Monday 21st January 2013