TIDMJLH
RNS Number : 6349S
John Lewis Of Hungerford PLC
18 March 2021
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse (Amendment) (EU EXIT) Regulations 2019/310.
18 March 2021
JOHN LEWIS OF HUNGERFORD PLC
FINAL RESULTS
John Lewis of Hungerford plc ("John Lewis of Hungerford" or the
"Company"), the specialist kitchen manufacturer and retailer,
announces its final results for the year ended 30 June 2020.
Chief Executive's Business Review
Due to the COVID-19 pandemic, the Company was not able to
announce and post its annual audited report and accounts for the
financial year ended 30 June 2020 (the "Annual Report") to
shareholders by 31 December 2020. The Company therefore applied to
AIM Regulation, pursuant to the guidance provided by AIM
Regulation, for an additional period of up to three months to
publish the Annual Report which was granted. I am now pleased to be
able to report the results for the year ended 30 June 2020,
together with an update on trading since that date. The unaudited
interim results for the six months ended 31 December 2020 will be
released shortly after this announcement.
Prior year comparatives are restated for the impact of the
adoption of IFRS16: Leases. The impact is fully disclosed in Note 2
to the financial statements.
Overview
As reported within our Finance and Operations Update released on
30 June 2020, the timing of the initial lockdown period of 12 weeks
from 23 March 2020 restricted the Company's ability to trade during
its seasonal peak in the final quarter, which has had a significant
impact on the final results for the year ended 30 June 2020, with
the resulting revenues for the year of GBP5.55 million (2019:
GBP8.31 million). The Company recognises revenues at the point of
delivery of orders to customers, and, therefore, the financial
performance in the second half of the financial year was
particularly adversely affected. The restrictions on trades
operating in peoples' homes, combined with customers who were
shielding or self-isolating, severely restricted customer
deliveries for much of the final quarter of the financial year. The
underlying loss before tax for the year was GBP886k (2019: restated
loss before tax of GBP220k).
Since re-opening our showrooms on 15 June 2020, we have seen
record breaking levels of customers engaging with the business
through both our digital channels and face-to- face during the
periods when the showrooms have been open. The aggregate value of
first design quotations provided to customers ("quoted business")
in the period since our re-opening through to February 2021 is
double the figure for the comparable period in the previous
financial year. We are pleased with the progress to date and can
see latent demand, arising from the earlier lockdowns and from
customers with delayed projects, now moving forward.
With FCA approval granted, we are now offering finance
facilities to our customers, which has been well received. We look
forward to assessing the benefit that this new service offering
brings over the coming period.
The new financing facility with Devon & Cornwall Securities
Limited for GBP1.079 million, announced on 30 June 2020, supported
the working capital requirements of the business with operating
costs as we emerged from the earlier lockdown. Liquidity (cash and
unutilised overdraft) as at 30 June 2020 was GBP559k (2019:
GBP538k).
The first six months of our new financial year for the year
ending 30 June 2021 have seen a broadly comparable sales
performance with the year ended 30 June 2020. The unaudited results
for the six months ended 31 December 2020 show sales of GBP3.33
million (2020: GBP3.35 million), suppressed in part due to delays
arising from the additional November lockdown. The loss before tax
is GBP213k (2020: restated loss before tax GBP398k)
Marketing
The switch to digital advertising has been a strategic shift for
the business over the last two years. Developing our website and
our social media following, combined with using influencers to
support our brand strategy and positioning, has been instrumental
in generating the increase in online traffic we have seen, and this
has continued into the new financial year. With a more
sophisticated PPC and SEO strategy, combined with our enhanced
website offering, we have been able to attract online visitors at a
time that we could no longer rely on footfall. Our website and
social media channels became a very critical way for customers to
engage with the business. Despite the complete closure of the
showrooms for the final quarter of the year, we still achieved
committed orders at a rate of around 30% of the prior year levels
during this difficult period.
During the subsequent lockdowns, we have successfully switched
our design teams back online, with virtual consultations working
well through popular video conferencing systems such as Zoom and MS
Teams, as seen during the November and the new year 2021 lockdowns.
Our online tools and services, including Virtual Showroom Tours and
Product Demonstration Videos, have aided the customer decision
making in this high value spend on the home. Having created an
effective and seamless virtual proposition to provide either a
blended, or fully virtual experience, for customers who may find
themselves unable to visit showrooms, we are confident that our
customers will experience an immersive and engaging virtual
experience.
Operations
Within this challenging environment, we took steps to remove
approximately GBP275k of costs in the year ended 30 June 2020, with
an annualised benefit of around GBP450k. As a result of the recent
uplift in quoted business, selected re-investments will be made
within the business. However, we continue to pursue additional cost
savings to ensure that we optimise the cost base for the business
and maximise agility during this challenging time. Operating
margins for the year ended 30 June 2020 were broadly in line with
the prior year, achieved through improvements in our production
facility following our investment in the spray booths and ovens in
2019. Improved productivity, combined with more proficient
procurement, has led to additional cost savings.
Our commitment to building our professional relationships with
architects, developers and interior designers continues to gather
pace.
Our modern Shaker and handless Pure ranges continue to dominate
our sales, although we have seen a sustained interest in our
traditional framed kitchens, representing 18% of our sales during
the year to 30 June 2020.
12 months to 12 months
June 2020 to
June 2019
--------------------- ----------
GBP000 GBP000
Total Sales 5,553 8,306
Cost of sales 3,004 4,374
--------------------- ----------
Gross margin 2,549 3,932
===================== ==========
Gross Margin % 45.9% 47.3%
The movement in the gross margin is a result of the fixed labour
costs incurred when running our production facility during the
period that the showrooms remained closed. The Board took the
decision to complete production of all committed orders, even where
customers were self-isolating or shielding, or were unable to take
delivery or resume building works, until after the year end.
Financials
Given the strong design quoted activity during January and
February 2020, together with the effect of the cost saving measures
already implemented, the Board had previously been cautiously
confident of a profitable second half, which was expected to
approximately offset the first half loss.
However, since the national lockdown began in March 2020, the
Company's immediate focus switched to cash preservation. As soon as
it became clear that the final quarter disruption would have an
adverse impact on our cash reserves, the Company explored all
available options to mitigate the revenue loss by implementing
cost-cutting measures immediately. We sought to agree preferential
terms from our landlords and suppliers, and we thank them for their
support during this difficult period. We continue to look to our
strategic partners for their ongoing support with preferential
payment terms until our showrooms reopen and we can see more
certainty moving forwards.
In addition, the Company utilised UK Government support
measures, including VAT payment holidays and PAYE deferral, the
local business grants, business rates relief and the Coronavirus
Job Retention Scheme. This support helped the business to reduce
monthly cash operating costs throughout the earlier lockdown.
The Board met regularly to ensure support for the executive team
and provided valuable guidance for the many challenges we
encountered, and assisted in making critical decisions, which were
needed to secure the financial resilience of the Company. The
Directors continue to meet as often as is required to support the
executive team.
Covid-19 Response
As soon as the Government advised retail outlet closures in
March 2020, we suspended all manufacturing activities for the
initial three-week lockdown and our installation teams completed
essential works only, before pausing operations completely. All
delivery services were also deferred with the health and safety of
our teams being of vital importance.
With nearly 70% of the workforce furloughed initially, the
business continued to support our teams on full pay initially and
then at 80% until the teams returned to work. The Board also took a
20% reduction in pay for three months. Any colleagues who suffered
Covid-19 symptoms were paid full sick pay until they recovered, or
until their self-isolation ended. Supporting our teams has been
central to our policies throughout the period, with our Employee
Assistance Programme also providing a Health & Wellbeing
Helpline, for those who found the experience of lockdown stressful.
Contact was maintained throughout the lockdown period with the
teams to ensure they were fully informed of progress being made
within the business.
Reopening our sites was carefully managed to ensure that both
the showrooms and the factory teams were COVID-Safe. Additional
safety measures including strict social distancing and hygiene
measures have been taken, with customers returning to the showrooms
in June 2020, on an 'appointment only basis'. This helped restore
customer confidence in visiting our showrooms, with the design team
now able to fully interact with a customer on a one-to-one
basis.
With customer deliveries fully resumed and the manufacturing
facility operating at normal lead times with effect from May 2020,
our performance to date in the new financial year has been ahead of
our expectations. Customers continue to prioritise works in their
homes, ahead of any future lockdowns or restrictions being imposed
on trades operating in peoples' homes.
The Board continues to work closely with all of its partners to
ensure the safety of its employees, customers and suppliers. Any
action needed to improve our ability to protect the health, safety
and wellbeing of our people, both at work and at home, continues to
be paramount as we move forward during this period.
Trading Outlook
The first six months of our new financial year for the year
ended 30 June 2021 have seen a broadly comparable sales performance
with the year ended 30 June 2020. The unaudited results for the six
months ended 31 December 2020 show sales of GBP3.33 million (2020:
GBP3.35 million), due in part to the additional November lockdown
and a loss before tax of GBP213k (2020: restated loss before tax
GBP398k). The impact of the November lockdown has deferred sales
into the second half of our current financial year, as supported by
the high level of deposits taken to date, as detailed below.
Our despatched sales and forward orders (which we normally
consider to be the best measure of current trading) for the first
35 weeks of trading of the current financial year stood at GBP6.2
million (2020: GBP5.7 million). Future orders against which a first
stage deposit has been taken stood at GBP2.1 million (2020: GBP0.7
million), of which GBP1.5 million is currently scheduled for
completion by the June 2021 year end (2020: GBP0.5 million).
Therefore, the total of all despatched sales and forward orders is
GBP8.3 million, which is 30% ahead of the corresponding period in
the previous year, which was prior to the first lockdown beginning
on 23 March 2020. Quotation activity within the business continues
to be substantially up on the previous year which reflects a now,
sustained consumer interest in home improvements.
The Government's road map out of lockdown currently states that
our showrooms can re-open on 12 April 2021. Although this remains
uncertain whilst the government assess the steps taken to start to
reopen society. Whilst conscious of the inherent uncertainties, we
remain cautiously optimistic for an improved performance over
recent years, however, we are prepared for further disruption from
the pandemic, including further building delays for the trades
people, caused by a backlog of projects arising from the succession
of lockdowns, that could impact our results and cashflows in the
current year. The work done to move the business online in the
event of extensions to local lockdowns, however, should support
customers to continue their buying journey with our design team and
reduce the adverse impact on our order book.
The year under review has been one of the most challenging in
the history of the Company. The dedication and loyalty of our
employees to come together during this period of significant
disruption has been inspiring. They have continued to work hard to
serve our customers to fulfil their ambitions for their homes and
we thank them most sincerely for their efforts and their
determination to see the business through these difficult times. We
also thank our shareholders for their continued support and assure
them of our commitment to return the business to profitability.
Kiran Noonan
Chief Executive Officer
17 March 2021
Enquiries:
John Lewis of Hungerford plc 01235 774300
Kiran Noonan - Chief Executive Officer
Allenby Capital Limited (Nominated Adviser and Broker) 020 3328
5656
David Worlidge/Nick Naylor
Income Statement for the year ended 30 June 2020
Restated
2020 2019
Notes GBP GBP
Revenue 5,552,564 8,305,948
Cost of sales (3,003,810) (4,374,380)
------------- ------------
Gross profit 2,548,754 3,931,568
Selling and distribution
costs (413,375) (498,435)
Administrative expenses (3,080,877) (3,491,059)
Other operating income 210,000 -
------------- ------------
Total (2,870,877) (3,491,059)
Loss from operations (735,498) (57,926)
Finance income 336 246
Finance expenses (150,654) (162,345)
------------- ------------
Loss before tax (885,816) (220,025)
Tax Credit/(charge) 3 94,592 (68,531)
------------- ------------
Loss for the year (791,224) (288,556)
============= ============
Loss per share 4
Basic (0.42)p (0.15)p
Fully diluted (0.42)p (0.15)p
Statement of Comprehensive Income for the year ended
30 June 2020
Restated
2020 2019
Notes GBP GBP
Loss for the
year (791,224) (288,556)
---------- ----------
Revaluation of freehold
land and buildings 6 692,477 -
Deferred tax on revaluation
of freehold land and
buildings 13 (131,571) -
Total Comprehensive Income (230,318) (288,556)
========== ==========
Statement of financial position as at 30 June
2020 Restated
30 June 30 June
2020 2019
Notes GBP GBP
Non-current assets
Intangible assets 5 157,190 179,292
Property, plant and
equipment 6 2,790,875 2,299,873
Right of use assets 7 1,444,476 1,758,101
Trade and other receivables 10 42,750 42,750
---------------- -------------
4,435,291 4,280,016
Current assets
Inventories 9 152,530 144,022
Trade and other receivables 10 542,526 736,593
Cash and cash equivalents 558,765 287,187
---------------- -------------
1,253,821 1,167,802
Total assets 5,689,112 5,447,818
---------------- -------------
Current liabilities
Trade and other payables 11 (1,454,231) (1,550,346)
Customer deposits (581,058) (369,252)
Lease liabilities 8 (242,253) (327,452)
Provisions 14 (60,998) -
Borrowings 12 (111,701) (122,289)
---------------- -------------
(2,450,241) (2,369,339)
Non-current liabilities
Borrowings 12 (1,156,033) (479,034)
Lease liabilities 8 (1,432,063) (1,674,319)
Provisions 14 (56,055) (105,053)
---------------- -------------
(2,644,151) (2,258,406)
Total liabilities (5,094,392) (4,627,745)
---------------- -------------
Net assets 594,720 820,073
================ =============
Equity
Share Capital 186,745 186,745
Share Premium 1,188,021 1,188,021
Other Reserves 1,421 1,421
Revaluation reserve 13 560,906 -
Retained Earnings (1,342,373) (556,114)
---------------- -------------
Total equity 594,720 820,073
================ =============
The financial statements were approved by the Board of Directors
and authorised for issue on
17 March 2021 and were signed on its behalf by:
Kiran Noonan Stephen Huggett
Director Director
Statement of Changes in Equity for the year ended 30 June
2020
Share Share Other Revaluation Retained
Capital Premium Reserves Reserve Earnings Total
GBP GBP GBP GBP GBP GBP
-------------------- ------------- ------------ -------------- --------------- -----------
At 30 June 2018
186,745 1,188,021 1,421 - (16,589) 1,359,598
application of
IFRS 16 - - - - (252,285) (252,285)
-------------------- ------------- ------------ -------------- --------------- -----------
At 01 July 2018
- restated 186,745 1,188,021 1,421 - (268,874) 1,107,313
year - - - - (288,556) (288,556)
Share based
payments - - - - 1,316 1,316
-------------------- ------------- ------------ -------------- --------------- -----------
At 30 June 2019
186,745 1,188,021 1,421 - (556,114) 820,073
Loss for the
year - - - - (791,224) (791,224)
Revaluation of
freeholds -
Deferred tax on - - 692,477 - 692,477
Revaluation of
freeholds - - - (131,571) - (131,571)
Share based
payments - - - - 4,965 4,965
-------------------- ------------- ------------ -------------- --------------- -----------
At 30 June
2020 186,745 1,188,021 1,421 560,906 (1,342,373) 594,720
-------------------- ------------- ------------ -------------- --------------- -----------
Statement of Cash Flows for the year ended 30 June
2020
Restated
2020 2019
GBP GBP
Cash flows from operating activities
Loss from operations
after tax (640,906) (126,457)
Amortisation
of intangible
assets 32,839 22,336
Depreciation
and impairment
of property,
plant and equipment 219,769 233,759
Depreciation
of right of use
assets 313,625 318,327
Share based payments 4,965 1,316
(Profit)/loss
on disposal of
property, plant
and equipment (1,237) 9,738
(Increase)/decrease
in inventories (8,508) 25,514
Decrease/(increase)
in receivables 157,088 (206,392)
(Decrease)/increase
in payables (96,114) 9,378
Increase in Customer
Deposits 211,806 75,224
Increase in provisions 12,000 4,000
---------- ----------
Cash generated from operations 205,327 366,743
Tax (Credit)
/ Charge on Operations (94,592) 68,531
Net cash from operating activities 110,735 435,274
---------- ----------
Cash flows from investing activities
Purchase of intangible
assets (10,737) (145,183)
Purchase of property,
plant and equipment (27,538) (196,248)
Net proceeds
from sale of
property, plant
and equipment 10,480 9,845
Interest received 336 246
Net cash used
in investing
activities (27,459) (331,340)
---------- ----------
Cash flows from financing activities
Interest
paid (150,654) (162,345)
Increase in borrowings 1,079,000 100,876
Repayment of borrowings - finance
leases (32,483) (27,981)
Repayment of borrowings - bank loans (380,106) (86,076)
Repayment of IFRS 16 lease liabilities (327,455) (326,943)
Net cash used in financing activities 188,302 (502,469)
---------- ----------
Net increase/(decrease)
in cash and cash
equivalents 271,578 (398,535)
---------- ----------
Net cash and
cash equivalents
at the start
of the period 287,187 685,722
Net cash and
cash equivalents
at the end of
the year 558,765 287,187
========== ==========
Net cash and
cash equivalents
comprise:
Cash at bank
and in hand 558,765 287,187
Bank overdrafts - -
558,765 287,187
========== ==========
The table below sets out an analysis of net debt and the
movements in net debt for each of the periods presented.
Net debt reconciliation
Liabilities from financing Other
activities assets
Lease
Borrowings liabilities Sub-total Cash balances
Net debt as at
1 July 2018 614,504 1,950,968 2,565,472 685,722
Cash
Flows (13,181) (326,943) (340,124) (398,535)
New leases - 377,746 377,746 -
Net debt as at
30 June 2019 601,323 2,001,771 2,603,094 287,187
----------- ------------- ---------- --------------
Cash
Flows 666,411 (327,455) 338,956 271,578
New leases - - - -
Net debt as at
30 June 2020 1,267,734 1,674,316 2,942,050 558,765
=========== ============= ========== ==============
Notes to the financial Statements
1. STATUTORY ACCOUNTS
The financial information set out above does not constitute
statutory accounts for the years ended 30 June 2020
or 2019 within the meaning of sections 435(1) and (2)
of the Companies Act 2006 or contain sufficient information
to comply with the disclosure requirements of International
Financial Reporting Standards.
The Financial Statements for the year ended 30 June
2019, upon which the Company's auditors have given a
report which was unqualified and did not include reference
to any matters to which the auditors drew attention
by way of emphasis without qualifying their report and
did not contain any statement under section 498(2) or
(3) of the Companies Act 2006, have been delivered to
the Registrar of Companies.
The Financial Statements for the year ended 30 June
2020, upon which the Company's auditors have given a
report which was unqualified and included reference
to the material uncertainty related to going concern
[and did not contain any statement under section 498(2)
or (3) of the Companies Act 2006]:
"Material uncertainty related to going concern"
We draw attention to the going concern accounting policy
in note 1.1 to the financial statements which indicates
that the ability of the Company to continue as a going
concern is subject to material uncertainty.
The Company recorded a loss for the year ended 30 June
2020 of GBP791,224 and at 30 June 2020 had cash reserves
of GBP558,765, net current liabilities of GBP1,196,420
and net assets of GBP594,720. The Company's revenues
and timing of the associated cash flows have been adversely
affected by the Covid-19 pandemic and lockdown restrictions.
As the Company operates a made-to-order, negative working
capital model, it is reliant on the cash flows from
customer deposits and completion of sales to be able
to meet its
liabilities as they fall due.
These events or conditions, along with other matters
set out in note 1.1, indicate that a material uncertainty
exists that may cast significant doubt on the Company's
ability to continue as a going concern. Our opinion
is not modified in respect of this matter.
The financial statements do not include adjustments
that would be necessary if the Company was unable to
continue as a going concern. Our opinion is not modified
in respect of this matter."
The Financial Statements for the year ended 30 June
2020 will be delivered to the Registrar of Companies
in due course.
2. ACCOUNTING POLICIES
Basis of preparation
John Lewis of Hungerford plc is a public limited company
listed on the London AIM market and incorporated and
domiciled in England and Wales. The Company's financial
statements are prepared under the historical cost convention
and in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union and
with those parts of the Companies Act 2006 applicable
to companies reporting under IFRS. The Company's financial
statements are presented in Sterling and
rounded to whole pounds.
Going concern
The financial statements are prepared on a going concern
basis, which the directors believe to be appropriate
for the following reasons:
The strength of the current order book, as discussed
in the Trading Outlook within the Chief Executives Business
Review and with the current lockdown due to allow the
re-opening of non-essential retail on 12 April 2021,
will allow the Company to maintain the ongoing conversion
of quoted business into committed orders, further supported
by the sustained consumer interest in the home improvement
sector.
The results show that the Company made a loss after
tax during the year of GBP791k (2019: restated loss
after tax of GBP289k) and had net current liabilities
of GBP1,196k (2019: GBP1,202k) as at 30 June 2020, as
the pandemic had a significant impact on the Company's
performance particularly during its seasonally important,
final quarter. The Company own the Freehold of its Head
Office and Factory in Wantage and it's Hungerford Showroom,
which was revalued in February of this financial year,
and has a Net Book Value of GBP1,896k as at 30 June
2020. The total Net Assets at 30 June 2020 were GBP595k.
The Company operates a made-to-order, negative working
capital model and therefore to minimise disruption to
the Company's cash flows it has taken a number of measures
since the start of the Covid-19 pandemic. The Company
has refinanced to release additional working capital
combined with measures taken to ensure an ongoing focus
on cash preservation. The Company has undertaken a series
of cost-cutting measures, and successfully agreed preferential
terms from landlords and suppliers. In addition, the
Company has been utilising the government support available
during the pandemic, including VAT payment holidays,
PAYE deferral, local business grants, business rates
relief and the Job Retention Scheme.
Despite the losses made during the year and subsequent
to the year end, as stated, in the Trading Outlook within
the Chief Executive's Business review, the Company's
forward orders against which a first stage deposit has
been taken, together with the significant increase in
quoted business compared to the corresponding period
in the prior year, leads the Directors to believe that
there is now sustained levels of consumer interest in
home improvements, and this is expected to continue.
The Directors have prepared cash flow forecasts for
the Company for a period of at least 12 months from
the date of signing of these financial statements. These
forecasts include a number of assumptions in relation
to the timing of cash flows, level of customer order
intake; gross profit margins; and achievement of cost
savings in line with the Company's strategic plans.
The Directors have also prepared severe, but plausible,
downside sensitivity scenarios, which cover the same
period as our cash flow forecasts for a period of at
least 12 months from the date of signing. These downside
scenarios include specific consideration of a range
of impacts that could arise from a continued impact
of the coronavirus pandemic. These scenarios include
lockdown continuing beyond the expected date that the
showrooms are scheduled to re-open on 12 April 2021;
reduced customer spending; and further lockdowns beyond
12 April 2021 of up to 12 weeks. As part of this analysis,
mitigating actions within the Company's control should
these severe, but plausible, scenarios occur, have also
been considered. These mitigating actions included reducing
discretionary spend across the Company and other measures
to protect cash balances. The forecast cash flows for
this scenario allow for the ability and the intention
of the Directors to implement mitigating actions should
they need to.
As the Company operates a made-to-order, negative working
capital model, it is reliant on the cash flows from
customer deposits and completion of sales to be able
to meet its liabilities as they fall due. These cashflows
have been adversely impacted by the pandemic. The timing
of these cash receipts is a key consideration in the
cash flow forecasts and sensitivity scenarios that have
been reviewed. The Directors have considered all of
the factors noted above, including the Company's forward
orders and quoted business; the support of its landlords
and suppliers; plus, the government support available.
Taking these factors into account, balanced with the
inherent uncertainty associated with forecasting the
impact of the Covid-19 pandemic, the Directors are confident
that the Company has adequate resources to continue
to meet all liabilities, as and when they fall due,
for the foreseeable future and, at least for the period
of twelve months from the date of approval of these
financial statements.
Whilst the current pandemic has resulted in there being
delays in the timings of cash receipts, the Directors
are further encouraged by the early effects of the vaccination
programme and remain positive regarding the prospects
for the Company. However, we recognise that these circumstances
represent a material uncertainty which may cast significant
doubt over the Company's ability to continue as a going
concern.
Notwithstanding the above, the Directors believe that
with the current Government Road Map suggesting that
all restrictions are due to be lifted by June 2021,
there is reasonable evidence to conclude that a further
period of extended lockdown or disruption is unlikely.
Accordingly, the financial statements are prepared on
a going concern basis.
3 TAX ON (LOSS) / PROFIT FROM OPERATIONS
2020 2019
GBP GBP
Current period taxation
UK Corporation tax charge for the
period - -
Research and development tax credit - -
---------- ----------
Total current
tax - -
Origination and reversal of temporary
timing differences 229,886 33,665
Current year deferred tax asset not
recognised (229,886) (33,665)
Reversal of previously recognised
Deferred Tax asset - (68,531)
Deferred tax credit on losses 131,571 -
Adjustment in respect of previous (36,979) -
years Research and Development tax
credit
94,592 (68,531)
========== ==========
The tax assessed for the period differs from the standard
rate of corporation tax in the UK. The differences are
explained below:
2020 2019
GBP GBP
Loss on ordinary activities before
tax (885,816) (228,640)
---------- ----------
Loss on ordinary activities multiplied
by standard rate of corporation tax
in the UK of
19% (168,305) (43,442)
Effect of:
Expenses not deductible for tax purposes 1,425 4,715
Depreciation on assets not qualifying
for tax allowances 4,498 4,658
Other permanent differences (7,547) (11,446)
Adjustment in respect of previous (36,979) -
years Research and Development tax
credit
Prior year adjustment on IFRS16 adoption (47,934) -
Effect of change in local corporation
tax rate (12,023) 11,850
Deferred tax asset not recognised 229,886 33,665
Deferred tax credit on losses 131,571 -
Reversal of previously recognised
deferred tax asset - (68,531)
Total tax credit / (charge) in income
statement 94,592 (68,531)
========== ==========
On 3rd March 2021, the Chancellor of the Exchequer announced
an increase in rate of Corporation tax to 25% to take
effect from 1st April 2023 for companies whose profits
are greater than GBP250,000 per annum.
4 EARNINGS PER SHARE
Restated
2020 2019
Loss per ordinary share is
calculated as
follows:
Basic
Loss attributable to ordinary
shareholders (GBP) (791,224) (288,555)
Weighted average number of
ordinary
shares in issue 186,745,519 186,745,519
Loss per ordinary share (0.42)p (0.15)p
------------- -------------
Fully diluted
Loss attributable to ordinary
shareholders (GBP) (791,224) (288,555)
Weighted average number of
ordinary
shares in issue 186,745,519 186,745,519
Weighted average number of
ordinary
shares under option 4,369,961 6,553,983
Loss per ordinary share (0.42)p (0.15)p
============= =============
Basic earnings per share amounts are calculated by dividing
loss for the year attributable to ordinary equity holders
of the Company by the weighted average number of Ordinary
shares outstanding during the year.
Diluted earnings per share is calculated by dividing
the loss attributable to ordinary equity holders of
the Company by the weighted average number of Ordinary
shares outstanding during the year plus the weighted
average number of Ordinary shares that would have been
issued on the conversion of all dilutive potential Ordinary
shares into Ordinary shares. The potential Ordinary
shares relating to outstanding share options were anti-dilutive
because the Company reported a loss from continuing
operations for the year, and therefore were excluded
from the diluted earnings per share calculation.
5 INTANGIBLE NON-CURRENT ASSETS
Development
Software Trademarks Costs Total
GBP GBP GBP GBP
Cost
At 1 July 2018 60,260 57,154 115,988 233,402
Additions 93,000 - 52,183 145,183
At 30 June
2019 153,260 57,154 168,171 378,585
--------- ----------- ------------ --------
Additions - 3,387 7,350 10,737
At 30 June 2020 153,260 60,541 175,521 389,322
--------- ----------- ------------ --------
Amortisation
At 1 July 2018 50,762 56,569 69,626 176,957
Charge for the
year 5,391 128 16,817 22,336
--------- ----------- ------------ --------
At 30 June
2019 56,153 56,697 86,443 199,293
--------- ----------- ------------ --------
Charge for the
year 10,266 354 22,219 32,839
At 30 June 2020 66,419 57,051 108,662 232,132
--------- ----------- ------------ --------
Net book value
At 30 June 2020 86,841 3,490 66,859 157,190
========= =========== ============ ========
At 30 June
2019 97,107 457 81,728 179,292
========= =========== ============ ========
Disclosures relating to the impairment review
of assets can be seen under the accounting policies
note 1.1.
6 PROPERTY, PLANT AND EQUIPMENT
Office
Showroom fixtures,
Freehold display Plant & machinery fittings
land and & shop and loose & IT
buildings fittings tools equipment Total
Cost or Revaluation GBP GBP GBP GBP GBP
At 1 July 2018 1,754,752 2,274,822 425,790 256,155 4,711,519
Additions - 21,075 138,074 37,099 196,248
Disposals - (82,668) (3,000) - (85,668)
Re-classification (25,332) 25,332 - - -
At 30 June 2019 1,729,420 2,238,561 560,864 293,254 4,822,099
----------- ---------- ------------------ ----------- ----------
Additions - 10,490 3,035 14,012 27,537
Disposals - (12,279) - - (12,279)
Revaluation 956,466 - - - 956,466
At 30 June 2020 2,685,886 2,236,772 563,899 307,266 5,793,823
----------- ---------- ------------------ ----------- ----------
Depreciation and impairment
At 1 July 2018 489,135 1,424,847 239,634 200,936 2,354,552
Charge for
the
year 24,030 148,425 41,630 17,679 231,764
Disposals - (64,685) (1,400) - (66,085)
Reclassification (18,207) 18,207 - - -
Dilapidations
Amortisation 1,995 - - - 1,995
At 30 June 2019 496,953 1,526,794 279,864 218,615 2,522,226
----------- ---------- ------------------ ----------- ----------
Charge for
the
year 23,273 115,874 48,078 27,077 214,302
Revaluation 263,989 - - - 263,989
Disposals - (3,036) - - (3,036)
Dilapidations
Amortisation 5,467 - - - 5,467
At 30 June 2020 789,682 1,639,632 327,942 245,692 3,002,948
----------- ---------- ------------------ ----------- ----------
Net book
value
At 30 June 2020 1,896,204 597,140 235,957 61,574 2,790,875
=========== ========== ================== =========== ==========
At 1 July 2019 1,232,467 711,767 281,000 74,639 2,299,873
=========== ========== ================== =========== ==========
The freehold land element of freehold land and buildings
which was not depreciated was GBP503,624 (2019 - GBP503,624).
The net book value of items held under finance leases was
GBP105,956 (30 June 2019: GBP186,601). The depreciation
charge for items held under finance leases is shown in note
5.
7 RIGHT OF USE ASSETS
Right
of Use
property Total
GBP GBP
Cost
At 1 July 2018 3,859,120 3,859,120
Additions 377,747 377,747
At 30 June
2019 4,236,867 4,236,867
----------- ----------
Additions - -
At 30 June 2020 4,236,867 4,236,867
----------- ----------
Depreciation
At 1 July 2018 2,160,439 2,160,439
Charge for the
year 318,327 318,327
----------- ----------
At 30 June
2019 2,478,766 2,478,766
----------- ----------
Charge for the
period 313,625 313,625
At 30 June 2020 2,792,391 2,792,391
----------- ----------
Net book value
At 30 June 2020 1,444,476 1,444,476
=========== ==========
At 30 June
2019 1,758,101 1,758,101
=========== ==========
The Company's portfolio of leases consists of 11 leases
over showroom premises. Leases generally have an initial
term of 15 years, with an option to extend for an additional
period of 10 years. Rents payable are generally reviewed
at five year intervals.
2020 2019
Amounts recognised in profit
and loss
GBP GBP
Depreciation expense on right-of-use
assets 313,625 318,327
Interest expense on lease liabilities 113,388 124,015
8 LEASE LIABILITIES
2020 2019
GBP GBP
Total lease liabilities 1,674,316 2,001,771
Maturity analysis
------------ ------------
to 1 year 242,253 327,452
1 to 2
years 228,480 242,253
2 to 3
years 204,381 228,480
3 to 4
years 182,054 204,381
4 - 5 years 187,357 182,054
> 5 years 629,791 817,151
The average lease term remaining is 6 years. For the
year ended 30 June 2020, the average effective borrowing
rate was 6.13% which is management's best estimate of
the incremental rate of borrowings. Interest rates are
fixed at the contract date. All leases are on a fixed
repayment basis and no arrangements have been entered
into for contingent rental payments. All lease obligations
are denominated in Sterling
The Company's obligations under leases are secured by
the lessors' rights over the leased assets.
9 INVENTORIES
2020 2019
GBP GBP
Raw materials and consumables 116,980 132,761
Work in progress 35,550 11,261
152,530 144,022
============ ============
Raw materials & consumables stated net of a provision
for obsolete stock of GBP8,882 (2019: GBP8,882)
10 TRADE AND OTHER RECEIVABLES
2020 2019
Current assets: GBP GBP
Trade receivables 79,495 280,907
Other receivables 218,533 15,228
Prepayments and accrued income 244,498 440,458
------------ ------------
542,526 736,593
============ ============
Non-current assets:
Other receivables 42,750 42,750
============ ============
Non-current other receivables relate to lease deposits
totalling GBP42,750 (2019: GBP42,750) which are recoverable
after more than one year. These have not been discounted
as the impact is not material to the financial statements
Trade receivables are stated net of provisions for doubtful
debts of GBP12,778 (2019: GBP17,161). The Directors consider
that the carrying amount of trade and other receivables
approximates to their fair value.
Aging of Trade Receivables 2020 2019
GBP GBP
0-30 Days 45,757 400,327
30-60 Days 2,000 (124,892)
60-90 Days - (24,321)
90 Days + 31,738 29,793
Total 79,495 280,907
============ ===========
Financial Assets at amortised cost comprise of Trade
& Other receivables.
11 TRADE PAYABLES AND OTHER PAYABLES
2020 2019
GBP GBP
Trade payables 526,052 552,011
Other taxes and social security
costs 453,986 325,174
Other payables 8,055 10,769
Accruals and deferred income 466,138 662,392
-----------
1,454,231 1,550,346
============ ===========
Trade Payables are settled on average End of Month following
delivery or c45 days.
Financial Liabilities at amortised cost comprise of trade
payables, other payables and accruals.
12 BORROWINGS
2020 2019
GBP GBP
Loans 1,190,701 491,807
Finance lease liabilities 77,033 109,516
------------ -----------
1,267,734 601,323
============ ===========
Presented in the balance sheet
as:
Lease liabilities - current 242,253 327,452
Borrowings - current 111,701 122,289
Borrowings - non-current 1,156,033 479,034
------------ -----------
1,509,987 928,775
============ ===========
(a) Bank & other borrowings
Analysis of bank loan repayments:
In one year or less 111,701 92,383
In more than one year but
not
more than two years - 95,054
In more than two years but
not
more than five years - 259,395
In more than five years 1,079,000 44,975
1,190,701 491,807
============ ===========
The loan is secured by a legal charge over the Company's
freehold properties at Park Street, Hungerford, Berkshire
and Grove Business Park, Downsview Road, Wantage, Oxfordshire.
The interest only loan facility has an interest rate
of 10.55% above base rate with a minimum rate of 10.8%
per annum, payable monthly on drawn down funds. In case
of default, an additional 7.2% interest would be payable
under the loan.
In the previous year the company held four bank loans
secured by a legal charge over the Company's freehold
properties at Park Street, Hungerford, Berkshire and
Grove Business Park, Downsview Road, Wantage, Oxfordshire.
The first bank loan was repayable over 15 years from
4 February 2010 and carried interest at a floating annual
rate of 4.55% over Bank of England base rate. The first
loan had a value of GBP0, (2019: GBP132,971) denominated
in Sterling.
The second loan was repayable over 15 years from 22
March 2010 and carried interest at a fixed rate of 7.55%
per annum for a period of 10 years and thereafter at
a floating rate linked to the Bank of England base rate.
The second loan has a value of GBP111,701, (2019: GBP123,148)
denominated in Sterling.
The third loan was repayable over 10 years from 24 August
2011 and carried interest at a floating annual rate
of 4.8% over Bank of England base rate. The third loan
had a value of GBP0, (2019: GBP40,432) denominated in
Sterling.
The fourth loan was repayable by 31 May 2022 by monthly
installments and carried interest at a floating annual
rate of 4.35% over Bank of England base rate. The fourth
loan had a value of GBP0, (2019 GBP195,256) denominated
in Sterling.
2020 2019
GBP GBP
(b) Finance lease liabilities
Gross nance lease liabilities-
minimum lease payments:
In one year or
less 26,484 42,909
Between one and five
years 66,212 77,247
More than five years - 15,449
92,696 135,605
----------- ----------
Future finance charges on finance
lease liabilities (15,663) (26,089)
Present value of finance lease
liabilities 77,033 109,516
=========== ==========
Future finance charges on finance lease liabilities
are analysed as follows:
2020 2019
GBP GBP
In one year or less (7,597) (10,426)
Between one and five
years (8,066) (15,663)
(15,663) (26,089)
=========== ==========
Finance lease liabilities are effectively secured as
the rights to the leased asset revert to the lessor
in the event of default.
13 DEFERRED TAX ASSETS / LIABILITIES
Deferred
taxation
GBP GBP
Balance at 1 July
2019 -
Accelerated capital
allowances (7,165)
Tax losses carried
forward (165,026)
Research and development accelerated deductions (1,509)
Short term timing
differences (8,252)
Deferred tax on revaluation
of freehold property
in Other Comprehensive
Income (131,571)
Deferred tax recognised on losses 131,571
Prior year adjustment on IFRS16 adoption (47,934)
Profit and loss account charge/(credit) (229,886)
----------
Deferred tax asset not recognised 229,886
Balance at 30 June
2020 -
==========
The provision for deferred taxation consists of the following
amounts:
2020 2019
GBP GBP
Capital allowances in excess of depreciation 115,358 122,523
Tax losses carried
forward (395,655) (230,629)
Research and development accelerated
deductions 4,401 5,910
Short term timing
differences (56,186) -
Transfer to non-current receivables - 68,531
Deferred tax on revaluation (131,571) -
of freehold property
in Other Comprehensive
Income
Deferred tax recognised on losses 131,571 -
Deferred tax asset not recognised 332,082 33,665
- -
========== ==========
The remaining deferred tax asset has not been recognised
as while the Directors continue to believe that the availability
of tax losses will in due course reduce the Company's tax
liability in future accounting periods, given the current
uncertainty in relation to the ongoing restrictions related
to the pandemic, the Board have not recognised a deferred
tax asset in this reporting period.
14 PROVISIONS
Warranty Dilapidations Total
provision provision
GBP GBP
At 1 July
2018 41,575 59,478 101,053
Arising during the year 4,000 - 4,000
Utilised during the year - - -
At 30 June
2019 45,575 59,478 105,053
----------- -------------- ------ -------------
Arising during the period 48,782 - 48,782
Utilised during the period (36,782) - (36,782)
At 30 June
2020 57,575 59,478 117,053
=========== ============== ====== =============
2020 2019
GBP GBP
Current 60,998 -
Non-Current 56,055 105,053
117,053 105,053
============== =============
Warranty provision
The Company makes provision for potential future warranty
claims on kitchens & bedrooms sold. This provision is
reviewed and adjusted annually based on the levels of
turnover achieved and the claims recorded in the same
period.
Dilapidations provision
The Company makes such provision for dilapidations relating
to its leasehold showroom estate as it considers necessary
based on the length of the remaining term for each showroom
& the future plans for each showroom. Based on this,
experience of exiting previous showrooms and industry
averages, Management have estimated that a provision
of GBP5 per square foot will give a reasonable estimate
of any futures costs. On exit from a showroom, once the
costs have been finalised and the showroom exited, the
provision would be released.
15 POST BALANCE SHEET EVENTS
Share Issue and subscription
The company issued 7,200,000 of ordinary shares of 0.1p
each in the Company at a subscription prices of 0.675
pence per share generating a total consideration of
GBP48,600. The proceeds of the issue will be used for
Working Capital purposes.
The subscription shares being issued to the Directors
of the Company and their resulting interests are set
out below:
Total Interest Percentage
Shares in ordinary of Issued
shares share
upon capital
Admission
Kiran Noonan 500,000 500,000 0.26%
Alan Charlton 5,000,000 9,423,178 4.86%
Stephen Huggett 1,500,000 1,500,000 0.77%
16 POSTING OF ACCOUNTS
Copies of the statutory accounts for the financial period ended
30 June 2020 will be posted shortly to shareholders with the notice
of the Annual General Meeting. An electronic copy will be available
on the Company's website www.john-lewis.co.uk.
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