20 Dec 2010 07:00
John Lewis of Hungerford plc
Final results - year ended 31 August 2010
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 2010.
CHAIRMAN'S STATEMENT
Against a challenging economic backdrop I am delighted to be able to report upon a year of significant progress for the business.
Highlights included the opening of a new showroom and the launch of the new Artisan Installation Service which, coupled with strong organic sales growth from our existing showrooms contributed to a 31% growth in sales and return to underlying profitability. Investment in our store network continued after the year end with the opening of another showroom taking our estate to twelve stores. Important operational changes during the year included further investment in the software used in designing our kitchens enabling us to produce better illustrations and design detail for our customers. New product ranges introduced into the business in the last quarter of the previous year have been installed in to all our showrooms. In the factory, investment in new machinery has improved both efficiencies in production and quality.
The first of our new showrooms opened in Blackheath, south east London during August 2010, and because of this, did not contribute sales to the year under review. The second opened during November 2010 in Beaconsfield, Buckinghamshire and, although after the year end for reporting purposes, was an important focus of management effort during the year. The investment in new stores, through additional funding secured from Barclays, demonstrates our confidence in the business and represents a return to our five year growth strategy. Whilst both sites have only been open for a relatively short period we are pleased with initial trading at each.
The Artisan Installation Service was launched during November 2009 and enables us to provide a one stop shop to our customers for the purchase and installation of their kitchens. Our objective was for this service to break even after 12 months of operating and it is encouraging to record that it more than achieved this.
The year ended 31st August 2010 saw the business return to profitability and it is particularly pleasing that the operational changes introduced over the past few years are now beginning to be reflected in the results. The profit before taxation, share based payments and interest was £31,612 compared to a loss of £331,734 in 2009. The return to profitability was primarily driven by an increase in our core product sales which increased by 17% to £4,778,026 versus £4,084,694 in the comparable period last year. The installation service added further sales of £577,102 giving total sales of £5,355,128 for the year.
The charge in respect of share based payments for the year amounted to £154,336 (2009-£152,855). Your Board considers that the arbitrary nature of this accounting methodology means that this resulting charge has little meaningful relevance to the reported financial results.
The overall gross profit margin of the business in the 12 months to 31st August 2010 was 53% compared to 56.9% in 2009. However, the gross margin of our core product business remained stable during the period with the reduction in average gross margin reflecting growth in installation sales, which is inherently lower gross margin.
Net cash inflows from operating activities were £10,516 (2009-£70,558 outflow) and at the balance sheet date, cash at bank stood at £818,015 (2009-£784,455).
Capital expenditure in the period was £252,605 (2009-£57,273) reflecting investments made in the factory, software, updating our existing showrooms and one new showroom.
On the back of the stronger trading results there are plans to continue with the ongoing refurbishment of existing showrooms, together with the introduction of new ranges. Additional investment is also planned for the addition of a mezzanine floor in the factory to increase storage capacity during peak trading periods. We will continue to consider further showroom openings in line with our growth strategy, although no further openings are currently planned.
Our sales and the future order book look healthy with customer interest in our brand remaining strong. The advance order book as of 31st August 2010 was 10% ahead of last year. However the imminent VAT increase and its possible influence on bringing sales forward into this calendar year is not yet known and the Executive team will remain vigilant for any sign of further economic downturn.
Your Board believes we have a strong platform with plans in place to build the sales and build on the return to profitability this year. However, despite this we remain cautious in our outlook for the immediate future until any effect of the VAT increase is understood and a sustained recovery in consumer confidence and economic climate is experienced.
Key to the Company's performance is our small team of dedicated employees. I would like to express my thanks to all the Company's management and staff for their hard work and commitment which has contributed significantly to the Company's progress.
Malcolm R. Hepworth
Non Executive Chairman
Contacts: | ||
Malcolm Hepworth | John Lewis of Hungerford | 01235 774300 |
Nick Reeve | Smith & Williamson Corporate Finance Limited | 0117 376 2213 |
Profit and Loss Account for the year ended 31 August 2010
2010 | 2009 | ||||
£ | £ | ||||
Turnover | 5,355,128 | 4,084,694 | |||
Cost of sales | (2,516,380) | (1,761,635) | |||
Gross profit | 2,838,748 | 2,323,059 | |||
Selling and distribution costs | (474,575) | (483,428) | |||
Administrative expenses | |||||
Share based payments | (154,336) | (152,855) | |||
Other | (2,332,561) | (2,171,365) | |||
Total | (2,486,897) | (2,324,220) | |||
Operating profit/(loss) before share based payments | 31,612 | (331,734) | |||
Operating loss | (122,724) | (484,589) | |||
Interest receivable and similar income | 3,507 | 11,589 | |||
Interest payable and similar charges | (7,708) | (20,752) | |||
Loss on ordinary activities before taxation | (126,925) | (493,752) | |||
Tax on loss on ordinary activities | (16,047) | 52,898 | |||
Retained loss for the financial year | (142,972) | (440,854) | |||
Loss per share | |||||
Basic | (0.08)p | (0.24)p | |||
Fully diluted | (0.08)p | (0.24)p | |||
The profit and loss account has been prepared on the basis that all operations are continuing operations.
There are no recognised gains and losses other than those passing through the profit and loss account.
Balance Sheet as at 31 August 2010
2010 | 2009 | ||||
£ | £ | ||||
Fixed assets | |||||
Intangible assets | 7,872 | 12,238 | |||
Tangible assets | 1,799,057 | 1,717,646 | |||
1,806,929 | 1,729,884 | ||||
Current assets | |||||
Stocks | 688,461 | 596,034 | |||
Debtors | 272,853 | 334,043 | |||
Cash at bank and in hand | 818,015 | 784,455 | |||
1,779,329 | 1,714,532 | ||||
Creditors: amounts falling due within one year | (1,252,937) | (1,382,687) | |||
Net current assets | 526,392 | 331,845 | |||
Total assets less current liabilities | 2,333,321 | 2,061,729 | |||
Creditors: amounts falling due after more than one year | (477,515) | (233,334) | |||
Provisions for liabilities and charges | (16,047) | - | |||
Net assets | 1,839,759 | 1,828,395 | |||
Capital and reserves | |||||
Called up share capital | 186,745 | 186,745 | |||
Share premium account | 1,188,021 | 1,188,021 | |||
Share based payment reserve | - | 323,025 | |||
Other reserves | 1,421 | 1,421 | |||
Profit and loss account | 463,572 | 129,183 | |||
Shareholders' funds - all equity interests | 1,839,759 | 1,828,395 | |||
Cash Flow Statement for the year ended 31 August 2010
2010 | 2009 | ||||||||
£ | £ | £ | £ | ||||||
Net cash inflow/(outflow) from operating activities | 10,516 | (70,558) | |||||||
Returns on investments and servicing of finance | |||||||||
Interest and similar income received | 3,507 | 11,589 | |||||||
Interest paid | (13,311) | (20,752) | |||||||
Net cash outflow from returns on investments and servicing of finance | (9,804) | (9,163) | |||||||
Corporation tax refunded | 48,034 | - | |||||||
Capital expenditure | |||||||||
Receipts from disposals of tangible fixed assets | 3,350 | - | |||||||
Payments to acquire tangible fixed assets | (252,605) | (57,273) | |||||||
Net cash outflow from capital expenditure | (249,255) | (57,273) | |||||||
Equity dividends paid | - | - | |||||||
Net cash outflow before financing | (200,509) | (136,994) | |||||||
Financing | |||||||||
New bank loans advanced | 500,000 | - | |||||||
Repayment of bank loans | (265,931) | (20,660) | |||||||
Net cash inflow/(outflow) from financing | 234,069 | (20,660) | |||||||
Increase/(decrease) in cash | 33,560 | (157,654) | |||||||
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 2010 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 2009 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. The accounting policies used are consistent with those used in the previous year.
3. Loss per share
Basic and diluted
The calculation of loss per share is based on a loss of £142,972 (2009: £440,854) and a weighted average number of ordinary shares in issue of 186,745,519 ordinary shares (2009: 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 2010 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 Annual General Meeting will be held on Monday 31 January 2011 at 4.00 pm at the Cygnet Suite, The Three Swans, The High Street, Hungerford, Berkshire, RG17 0EF.