TIDMJLH
RNS Number : 0912P
John Lewis Of Hungerford PLC
24 May 2018
JOHN LEWIS OF HUNGERFORD PLC
("John Lewis of Hungerford" or the "Company")
Interim Results for the Six Months Ended 28 February 2018
Overview
The first half year has witnessed a change in the retail
environment and the home improvement sector. Our first quarter
results exceeded expectations, due to an extended building schedule
last Autumn. This was followed by a weakening of the sector
resulting from the inclement weather during the protracted winter
and a worsening of the general retail environment.
The general retail environment in the UK has shown considerable
softening since the start of the calendar year and has seen several
major retailers going into administration, with many others seeing
declining like-for-like (LFL) sales.
Against the backdrop of challenging market conditions it is
therefore pleasing to be able to report continued growth in our own
business with LFL sales growth of 13.5% over the previous year due
to the result of a strong first quarter offset slightly due to a
weak second quarter, resulting from the weather and retail
conditions noted above. However, improved trading in recent months
has seen sales holding at prior year levels, in spite of a
continued weak trading environment.
Financial Review
Turnover for the first half year was ahead of the previous year
at GBP4.0m (2017: GBP3.5m), with a comparable estate. As stated,
the first quarter delivered the additional income with LFL sales
increase of 34%, a large element being due to the extended building
schedule into the Autumn. The second quarter delivered an adverse
result of -5% LFL on the previous year. However, our forward order
book at the end of the period was comparable with the previous year
at GBP1.5m (2017: GBP1.5m).
The improved sales performance has led to a reduced operating
loss for the first six months of GBP65k (2017: GBP123k operating
loss). The full benefit of the sales increase is not reflected in
the reduced operating loss, due to investments made by the Board, a
significant element being in one-off costs relating to improvements
being made in the reporting infrastructure of the business.
A summary of the financial results show:
2018 2017 Movement
---------------------- -------- -------- ---------
GBP'000 GBP'000 GBP'000
Total Turnover 4,001 3,569 432 12.1%
Cost of Sales (2,018) (1,790) (228) 12.7%
Gross Margin 1,983 1,779 204 11.5%
Overheads/Other (2,048) (1,902) (146) 7.7%
Loss from Operations (65) (123) 58 47.1%
======== ======== =========
The results for the 6 months ended 28 February 2017 include
GBP45,000 of sales from two closed showrooms, Harrogate and
Tunbridge Wells.
Key performance indicators for the first half year, on a like
for like basis, are summarised below:
GBP'000 6mths ended 6mths ended % Change
28 Feb 28 Feb
2018 2017
------------------------- ------------ ------------ ---------
Turnover 4,001 3,524 13.5%
------------------------- ------------ ------------ ---------
Gross margin % 49.6% 49.8% (0.4%)
------------------------- ------------ ------------ ---------
Number of kitchens sold 150 126 19%
------------------------- ------------ ------------ ---------
Average Sale Value 25.0 25.7 (3%)
------------------------- ------------ ------------ ---------
Number of bedrooms sold 55 25 120%
------------------------- ------------ ------------ ---------
Average Sale Value 4.6 5.0 (8%)
------------------------- ------------ ------------ ---------
Operational Review
The ongoing project to reduce the margin impact of errors has
been a significant management focus. We continue to appraise all
aspects of our Supply Chain to ensure we are able to build on the
savings generated in FY17. The development of our systems
infrastructure has been a key part of our objective to improve the
efficacy of our management information.
Work on improving the brand positioning continues and we have
made good progress in refining our brand messages in a consistent,
professional and inspiring manner. The response to our new Kitchens
Brochure has been overwhelmingly positive with the case studies
offering real solutions, in real homes, created by our talented
team of designers.
The development of the website to reflect the capability of the
business to provide unique and personally tailored solutions for
our customers is now in progress. Additionally, with the Bedroom
business gaining further traction, we are keen to explore improved
ways to showcase our wardrobes online. We continue to ensure that
we learn from the latest technologies available to us in order to
future proof the investment we will be making in this area.
We have continued to invest in our estate by installing improved
Lay-on and Pure displays into our Blackheath and Cobham showrooms.
We remain committed to ensuring that our showrooms are able to
reflect our stunning product proposition to enhance the customer
experience in-store. The inspiration provided by our displays is
critical to retaining a competitive edge in the market place.
The Board have worked hard to ensure that selective investments
in people deliver an ROI within a fixed period to avoid increasing
the fixed cost base long term without proven success. The small
increase in headcount has been for front line staff, employed to
enhance the customer experience in key areas within sales and
manufacturing. The ongoing evaluation for their effectiveness
remains paramount, so that we build the business in a sustainable
and controlled manner.
Cash Flow
Cash at bank and in hand at the end of the period was GBP561k
(2017: GBP594k) this includes customer deposits and advance
payments of GBP478k (2017: GBP617k). Our bank loans at the end of
the period were GBP654k (2017: GBP745k) repayable over 10 years.
Our overdraft facility of GBP250k remained unused at the end of the
period.
Current Trading
We believe the best measure of current trading to be the
aggregate of our dispatched sales and the forward order book, being
committed orders for which deposits have been taken. At the end of
the period the aggregate of these stood at GBP4.6m (2017: GBP4.5m).
This metric differs from our statutory revenue recognition policy,
which is to recognise sales only at the point orders are
dispatched.
In the months immediately following the reporting period, some
momentum was lost due to the inclement weather conditions.
Following a slow start to the remaining four months of our 10 month
year, sales have since improved, and by the end of June the sales
for the 4 month period should be in line with prior year, which
would result in the full year showing a strong LFL sales growth on
the prior year. Future orders against which a first stage deposit
has been taken have also recovered and currently stand at GBP2.0m
(2017: GBP1.5m).
Following the change in financial year end to June, the next
reporting period will cover the 10 months to 30 June 2018 and will
therefore exclude our traditionally strongest summer months. As a
consequence of this, the Board expect to report a loss for the 10
month period to 30 June 2018 albeit a continued improvement on the
comparable period in the previous year. The Board intend to provide
additional voluntary disclosures with the final results to enable
shareholders to compare trading on a comparable period.
Our business remains sensitive to the prevailing market
conditions within the retail and home improvement sectors and as
such, the Board continues to monitor the situation closely and will
provide a further update to shareholders in due course.
Kiran Noonan Gary O'Brien
Chief Executive Officer Non-Executive Chairman
24 May 2018 24 May 2018
Enquiries:
John Lewis of Hungerford plc 01235 774300
Gary O'Brien, Chairman
Smith & Williamson Corporate Finance Limited
0117 376
Martyn Fraser 2213
0207 131
Katy Birkin 4000
INCOME STATEMENT
FOR THE SIX MONTHSED 28
FEBRUARY 2018
Audited
Year
Unaudited 6 ended
months ended
28 February 28 February 31 August
2018 2017 2017
GBP'000 GBP'000 GBP'000
Revenue 4,001 3,569 8,315
Cost of sales (2,018) (1,790) (4,110)
Gross profit 1,983 1,779 4,205
Selling and distribution
costs (298) (208) (475)
Administration expenses:
Other (1,750) (1,694) (3,582)
------------ ------------ ----------
Total (1,750) (1,694) (3,582)
(Loss)/Profit from
operations (65) (123) 148
Finance expenses (19) (21) (41)
(Loss)/Profit before
tax (84) (144) 107
Taxation - (1)
(Loss)/Profit after
taxation (84) (144) 106
============ ============ ==========
(Loss)/Profit per
share
Basic (0.04)p (0.08)p 0.06p
Fully diluted (0.04)p (0.08)p 0.06p
STATEMENT OF COMPREHENSIVE
INCOME
FOR THE SIX MONTHSED 28
FEBRUARY 2018
Audited
Year
Unaudited 6 ended
months ended
28 February 28 February 31 August
2018 2017 2017
GBP'000 GBP'000 GBP'000
Profit / (Loss) for
the period (84) (144) 106
Total Comprehensive
Income (84) (144) 106
============ ============ ==========
BALANCE SHEET
AS AT 28 FEBRUARY
2018
Restated
Unaudited Unaudited Audited
28 February 28 February 31 August
2018 2017 2017
GBP'000 GBP'000 GBP'000
Non-Current Assets
Intangible assets 51 67 59
Tangible assets 2,350 2,462 2,376
Trade and other receivables 57 57 57
----------
2,458 2,586 2,492
------------ ------------ ----------
Current assets
Inventories 228 185 178
Trade and other receivables 224 411 397
Cash and cash equivalents 561 594 1,503
------------ ------------ ----------
1,013 1,190 2,078
Current liabilities (1,334) (1,722) (2,297)
Net current liabilities (321) (532) (219)
Total assets less
current
liabilities 2,137 2,054 2,273
Non-current liabilities (568) (651) (620)
Provisions for liabilities
and charges (101) (101) (101)
Net Assets 1,468 1,302 1,552
============ ============ ==========
Equity
Share capital 187 187 187
Other reserves 1 1 1
Share premium account 1,188 1,188 1,188
Retained Earnings 92 (74) 176
Total Equity 1,468 1,302 1,552
============ ============ ==========
STATEMENT OF CHANGES IN
EQUITY
FOR THE SIX MONTHSED 28
FEBRUARY 2018
Share Share Other Retained
Capital Premium Reserves Earnings Total
----------------------------- -------- -------- ------------ ------------ ----------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 August 2016
(Audited) 187 1,188 1 70 1,446
Loss for the period - - - (144) (144)
----------------------------- -------- -------- ------------ ------------ ----------
At 28 February 2017
(Unaudited) 187 1,188 1 (74) 1,302
Profit for the period - - - 250 250
----------------------------- -------- -------- ------------ ------------ ----------
At 31 August 2017(Audited) 187 1,188 1 176 1,552
Loss for the period - - - (84) (84)
At 28 February 2018
(Unaudited) 187 1,188 1 92 1,468
============================= ======== ======== ============ ============ ==========
STATEMENT OF CASH
FLOWS
FOR THE SIX MONTHSED 28
FEBRUARY 2018
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
28 February 28 February 31 August
2018 2017 2017
GBP'000 GBP'000 GBP'000
(Loss)/Profit from
operations (65) (123) 148
Depreciation, impairment
and amortisation 126 130 261
(Increase) / Decrease
in inventories (50) 27 34
(Increase) / Decrease
in receivables 173 (49) (17)
Increase / (Decrease)
in payables (963) (339) 229
(Profit) / Loss on disposal
of property plant and equipment (8) 93 121
Increase / (Decrease)
in provisions - (123) (123)
Net cash from operating
activities (787) (384) 653
Cash flows from financing
activities (71) (61) (122)
Cash flows from investing
activies (84) (68) (136)
Net decrease in cash and
cash equivalents (942) (513) 395
------------ ------------ ----------
Net cash and cash equivalents
at the start of the period 1,503 1,107 1,107
Net cash and cash equivalents
at the end of the period 561 594 1,503
============ ============ ==========
NOTES
1. This interim financial statement has been prepared on the
basis of accounting policies adopted by the Company and set out in
the annual report and accounts for the year ended 31 August 2017.
The Company does not anticipate any change in these accounting
policies for the period ended 30 June 2018. As permitted, this
interim report has been prepared in accordance with the AIM Rules
and not in accordance with IAS 34 "Interim financial reporting".
The principal risks and uncertainties facing the Company are
disclosed in the Company's financial statements for the year ended
31 August 2017, available from www.john-lewis.co.uk and remain
unchanged.
2. Basic and fully diluted loss per ordinary share is calculated as follows:
6 months 6 months Year
ended ended ended
28 February 28 February 31 August
2018 2017 2017
Profit / (loss) attributable
to ordinary shareholders (GBP'000) (84) (144) 106
Weighted average number
of shares in issue 186,745,519 186,745,519 186,745,519
Dilution due to
share options - -
------------ ------------ ------------
Shares used to calculate diluted
earnings per share 186,745,519 186,745,519 186,745,519
Basic earnings per
ordinary share (pence) (0.04)p (0.08)p 0.06p
Diluted earnings per
ordinary share (pence) (0.04)p (0.08)p 0.06p
At 28th February 2018 the basic and diluted loss per share is
the same, as the vesting of share option awards would reduce the
loss per share and is, therefore, anti-dilutive.
3. Copies of the 2018 interim accounts will be available to
shareholders on the Company's website www.john-lewis.co.uk
4. The 28 February 2017 comparatives have been restated to
reflect the adjustments made to the 31 August 2016 balance sheet,
as disclosed in Note 5 to the 31 August 2017 financial
statements.
This announcement is inside information for the purposes of
Article 7 of Regulation 596/2014.
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END
IR BLGDUXGDBGIX
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