TIDMJLH

RNS Number : 5221X

John Lewis Of Hungerford PLC

19 December 2019

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 2019.

Chairman's Statement

The last twelve months have seen the Company operating within an unprecedented retail landscape. Although the economy is not technically in recession, the current uncertainty within the economy, mainly resulting from Brexit and structural issues facing retail in the high street, has made it more difficult for retail than the recessions in 1990 and 2008. We have seen significant store closures: 2,868 stores have closed in the first half of 2019, and numerous financial restructurings during this period - with some of the High Street's best-known brands being affected. We have seen this within our own sector of kitchen retail with several companies reporting challenging conditions.

Economic conditions are continuing to be difficult and the calling of the General Election, resulting from Parliament's failure to reach any conclusion on Brexit, has further deteriorated the retailing environment.

Against this background, and in this uncertain economic environment our focus has been, and will continue to be, on improving our performance and preserving cash. We have therefore been applying stringent controls on costs and as a result have driven cGBP275k of costs out of the business in the current financial year. This should provide savings of GBP450k in a full financial year - some 5.8% of the Companies total cost base. This is with the objective of preserving cash even with a significantly reduced sales base - detailed further in the CEO Report.

We have previously reported on the work we had undertaken to improve the operations within all aspects of the business and also the repositioning of the brand through our marketing activities and marketing collateral which has been a key factor in managing the performance of the business in this difficult trading environment.

We have also discussed the strategic objectives of the business to build the business not only through organic growth following our actions but to add to the store portfolio to give the business an improved critical mass. However, the last couple of years have seen significant uncertainty within the economy and this has hindered the growth of the business. As such we have had to put our growth objectives on hold while we manage costs and cash, by not spending on the capital cost of adding new stores.

We remain focused on delivering our strategic plan, which will see the Company grow the estate and our portfolio of services at a point that we consider appropriate. The Company has improved efficiencies and particularly we have been building a team and a workforce that are ready to take advantage as soon as the economy starts showing signs of recovery.

The primary factors in our loss for the year are both a change in mix towards our lower margin offerings i.e. bedrooms and, inflationary price increases throughout our supply chain, which we have been unable to pass fully onto our customers. This is discussed further in the CEO Report. Our team have worked hard to ensure that efficiencies are realised across the business, to retain high levels of productivity. We are pleased with the efforts from the staff around the business and thank them for their commitment to the future success of the Company.

The longer term forecast for the industry remains positive and we hope that once the Brexit issue is resolved, that consumer confidence will return and the economy will recover in due course. I have full confidence in my colleagues around the business who are ready for the challenges and opportunities, which lay ahead.

Gary O'Brien

Non-Executive Chairman

Chief Executive's Business Review

Overview

As detailed in the Chairman's Statement, the last year has been a challenging one in many areas of the retail sector. We achieved a turnover of GBP8.3m for the FY2019, compared to the unaudited comparison for 12 months to 30 June 18 of GBP8.9m. The FY2018 was affected by our year-end change from 31 August to 30 June so on a like for like basis, removing the benefit of two year-end peaks in FY2018, the prior year comparative turnover was GBP8.5m. Our turnover achieved in FY2019 was therefore just below the prior year adjusted turnover.

Following a profitable second half year of GBP127k, the Company reports a reduced operating loss for the full year of GBP191k, reduced from the GBP318k loss reported in our Interims for the 6 months ended 31 December 2018.

The results reflect mixed fortunes within the business, with the majority of the estate outperforming the rest with record-breaking results however with several showrooms underperforming, although only one store failing to make a net contribution. Ensuring that all of our showrooms make a positive net contribution is vital to our success. Footfall has been variable throughout the year and across the sites - with our London showrooms continuing to lead the others in this regard. We have been reviewing our lease commitments to ensure we remain flexible in our approach to retaining better performing stores and reviewing underperforming stores, primarily due to changes in local economic factors, coupled with the movement of hubs to out of town locations in some of our territories. New showrooms have been evaluated, however, given the unpredictable nature of the current retail trading environment, any growth of the estate has been delayed at this time. We continue to consider new territories and opportunities as they arise.

As the market tightens, we have focused our attention on adding value to our customer proposition. We are in discussions with an external provider to add a potential finance offering to our portfolio, which will provide the opportunity to broaden our appeal and assist our customers in purchasing from John Lewis of Hungerford in this challenging economy. Our marketing strategy continues to be ever crucial to the reach of the brand and the promotion of our expertise in delivering excellence across our service offering including our customer journey and final installation. With our new website launching last December and our ongoing SEO commitment, we have seen improvements in both the quantity and quality of our web enquiries, increasing by 200% which has been critical given an average of 10% reduction in footfall across our locations. Our focus remains firmly on conversion and this has been an ongoing area of investment, both in marketing tools to aid the customer interaction, with the launch of our new brochure, together with our CRM investment, which is now able to personalise the e-marketing for customers engaging with the business. Supported by our social media, the website has drawn interest from across the sector, from both professionals and the end consumer.

Developing our partnerships within the professional sector has contributed to our performance throughout the year. Key relationships, which have affected our social media presence, include our focus on collaborations with high profile influencers including 2LG Studio, which has led to interest from highly talented interior designers, developers and architects. Through sharing these projects and our portfolio of stunning kitchen and bedroom installations, we have successfully secured numerous projects and a high level of recommendations. Working with like-minded professionals across the industry has given us the opportunity to build sustained relationships with highly influential trade partners, looking for a high quality provider to support their businesses on a regular basis. All of them are ambassadors for the Company and they continue to work in partnership with our design team.

Balancing our customer needs for a bespoke product and our business needs for simplicity in production planning, remain essential to our productivity. The administrative work involved in processing our orders remains complex and an area of focus for our continuous improvement team.

Ongoing investment in our people to prioritise the customer experience with the business remains our key focus, protecting our most distinguishing factor - our highly talented design team. We have invested in their project management skills and capabilities, to ensure that this USP can be retained, leading to high levels of recommendations. Recruiting and retaining high performing individuals in this sector continues to be challenging, although we have noted an improvement in our ability to attract high performing individuals.

Our most significant investment this year, has been in our manufacturing facility, through the installation of new spray booths. This has significantly improved our ability to produce high quality product, with a superb finish, improving our efficiency during the peak months of the year. Our skilled Artisans within our production team continue to work diligently to ensure our error rate across the business continues to improve. It is now in line with industry levels at 1.5%, reduced significantly since the 3% recorded in 2016.

The volume of units sold has seen a small reduction in Kitchens, at 290 (3 year average is 300), and the number of Bedrooms has seen a significant increase at 119 (3 year average 80) with the category now accounting for 7% of overall sales. The level of repeat business from existing JLH customers where we are able to fulfil a 'whole home solution' is now 50% of the category. However, the margins on Bedroom cabinetry are much lower than on Kitchens and we are evaluating our proposition to determine the most viable way forward for our Bedroom collection, and the business.

 
 
                           12 months       10 months 
                        to June 2019    to June 2018 
    ----------------  --------------  -------------- 
                              GBP000          GBP000 
 Total Sales                   8,306           6,715 
 Cost of Sales                 4,374           3,465 
 Gross Margin                  3,932           3,250 
====================  ==============  ============== 
 Gross Margin %                47.3%           48.4% 
 

The actions taken over the second half year, which included a necessary price increase, demonstrated an improved margin to 47.3% from the 46.2% detailed in the Interims. Although we are pleased to see movement in a positive direction, the impact of our growing Bedrooms category over the last three years has adversely impacted the margin.

Additional margin dilution from price increases across all bought-in items, including white goods and worktops, presents a challenge that the business is addressing, and how the business might mitigate this margin impact by focusing on increasing kitchen volumes through the supply chain, whilst reducing our cost base.

Input prices have also increased, which have been offset against a corresponding price increase for our customers.

 
 Product Margin 
                       12 months       10 months 
                    to June 2019    to June 2018 
----------------  --------------  -------------- 
                          GBP000          GBP000 
 Total Sales               7,266           5,847 
 Cost of Sales             3,520           2,760 
 Gross Margin              3,746           3,087 
================  ==============  ============== 
 Gross Margin %            51.6%           52.8% 
 

The product margin movement is directly attributable to the increased Bedrooms component within our mix this last year. Margins on kitchens have remained consistent with the prior period. The additional costs attributed to the manufacture of bedrooms are approximately 20% higher.

 
 Installations 
                       12 months       10 months 
                    to June 2019    to June 2018 
----------------  --------------  -------------- 
                          GBP000          GBP000 
 Total Sales               1,040             868 
 Cost of Sales               854             705 
 Gross Margin                186             163 
================  ==============  ============== 
 Gross Margin %            17.9%           18.8% 
 

Our installation offering has been maintained at 96% of all orders being installed by our Artisan Installation Service. Our professional fitting teams have offered an exemplary service to our customers, for which we thank them.

With the shortage of good trade professionals, it has been vital to our fitter retention, to ensure we are competitive and that we are paying market rate for trade professionals. This has necessitated a price increase from the new financial year, which we have passed directly on to customers.

Cash Flow

At 30 June 2019 the Company had a closing bank balance of GBP287k including GBP220k on long term deposit. The Company has an overdraft facility of GBP250k. Liquidity headroom at 30 June 2019 was therefore GBP537k.

Closing Comments

The year to 30 June 2019 has served to remind us that market fluctuations can undermine consumer confidence to a degree where discretionary spend on home renovations can be adversely affected. Although the latest IBIS reports suggest market growth over this new financial trading period, we continue to monitor the political and retail climates. Brexit and the General Election have created uncertainty and consumers have delayed high value spend.

Within this challenging environment, we have taken steps to remove cGBP275k of costs in this current year, with an annualised benefit of GBP450k. Within the business, we continue to pursue additional areas to ensure that we minimise costs and maximise agility during this challenging time. This review has unfortunately resulted in a reduction of headcount within the business, together with the imminent closure of our Oxford showroom, with potential further headcount reductions in other showrooms. Our focus has also been on working with our trading partners to secure the most effective procurement and ensure that the business is operating with maximum efficiency.

In addition, a project team within the business is working to further reduce waste as the improvement of productivity across the Company remains a primary objective for this year. We continue to promote a lean structure, as we balance our resources in line with business needs and performance. High quality marketing and customer communications remains core to our ability to attract new business and partners for the brand. We have been working hard on new creative innovations, which will continue to keep the brand fresh and relevant this year, as we look to ensure we are always distinctly different to our competitors.

It has undoubtedly been a year of change, determination and challenge. We thank our dedicated team for their ongoing commitment to the business as we continue to work hard to ensure the business is ready for profitable growth once the market begins to stabilise.

Current Trading and Outlook

For the new financial year, despatched sales and forward orders (which we normally consider to be the best measure of current trading) for the first 24 weeks of trading stood at GBP3.8m (2018: GBP4.6m). Future orders against which a first stage deposit has been taken stood at GBP1.6m (2018: GBP1.5m). Overall design quotation activity within the business is 10% up on the previous year which points to an underlying latent demand but with decisions being delayed by customers as a result of the political climate. The Company expects conversions to improve once we have clarity around Brexit. Whilst the impact on consumer demand continues, we are reacting, as mentioned above, by reducing costs in the business and increasing flexibility to respond to changing demand. The Board continue to monitor the situation closely and work to improve efficiency and agility in the business to ensure the Company is well set to benefit from any improvement in consumer confidence.

With our new marketing initiatives launching for the winter period, and the potential introduction of finance for our customers later in the year, we are confident that our efforts to ensure that the business can achieve sustained profits will be realised, once there is more clarity around Brexit after the General Election.

Kiran Noonan

Chief Executive Officer

Enquiries:

John Lewis of Hungerford plc 01235 774300

Gary O'Brien - Non-Executive Chairman

Kiran Noonan - Chief Executive Officer

Cenkos Securities plc 0207 397 8900

Azhic Basirov

Katy Birkin

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

 
 Income Statement for the year ended 
  30 June 2019 
 
                                                              10 months 
                                                                  to 30 
                                                                   June 
                                                     2019          2018 
 
                                      Notes           GBP           GBP 
 
 Revenue                                        8,305,948     6,714,917 
 
 Cost of 
  sales                                       (4,374,380)   (3,465,252) 
                                             ------------  ------------ 
 
 Gross profit                                   3,931,568     3,249,665 
 
 Selling and distribution 
  costs                                         (498,435)     (442,951) 
 
 Administrative 
  expenses                                    (3,623,689)   (3,155,462) 
 
 
 
 Loss from operations                 4         (190,556)     (348,748) 
 
 
 Finance income                                       246           258 
 
 Finance expenses                                (38,330)      (25,348) 
                                             ------------  ------------ 
 
 Loss before 
  tax                                           (228,640)     (373,838) 
 
 
 Tax on Loss 
  from operations                     5          (68,531)       181,137 
                                             ------------  ------------ 
 
 
 Loss for the 
  year                                          (297,171)     (192,701) 
                                             ============  ============ 
 
 Loss per share                       6 
 Basic                                            (0.16)p       (0.10)p 
 Fully diluted                                    (0.16)p       (0.10)p 
 
 
 Statement of Financial Position 
  as at 30 June 2019 
                                                  30 June       30 June 
                                                     2019          2018 
 
                                      Notes           GBP           GBP 
 
 Non-current assets 
 Intangible assets                                179,292        56,445 
 Property, plant and equipment                  2,299,873     2,356,967 
 Deferred tax asset                                     -        68,531 
 Trade and other receivables                       42,750        42,750 
                                             ------------  ------------ 
                                                2,521,915     2,524,693 
 Current assets 
 Inventories                                      144,022       169,536 
 Trade and other receivables                      736,593       530,201 
 Cash and cash equivalents                        287,187       685,722 
                                             ------------  ------------ 
                                                1,167,802     1,385,459 
 
 Total assets                                   3,689,717     3,910,152 
                                             ------------  ------------ 
 
 Current liabilities 
 Trade and other payables                     (1,919,598)   (1,834,997) 
 Borrowings                                     (122,289)     (106,946) 
                                             ------------  ------------ 
                                              (2,041,887)   (1,941,943) 
 
 Non-current liabilities 
 Borrowings                           7         (479,034)     (507,558) 
 Provisions                           8         (105,053)     (101,053) 
                                             ------------  ------------ 
                                                (584,087)     (608,611) 
 
 Total liabilities                            (2,625,974)   (2,550,554) 
                                             ------------  ------------ 
 
 Net assets                                     1,063,743     1,359,598 
                                             ============  ============ 
 
 Equity 
 Share Capital                                    186,745       186,745 
 Share Premium                                  1,188,021     1,188,021 
 Other Reserves                                     1,421         1,421 
 Retained Earnings                              (312,444)      (16,589) 
                                             ------------  ------------ 
 
 
 Total equity                                   1,063,743     1,359,598 
                                             ============  ============ 
 
 
 Statement of Cash Flows for the year ended 30 
  June 2019 
 
                                                           10 months 
                                                          to 30 June 
                                                  2019          2018 
 
                                                   GBP           GBP 
 Cash flows from 
  operating activities 
 Loss from operations                        (190,556)     (348,748) 
 Amortisation of 
  intangible assets                             22,336        11,728 
 Depreciation and 
  impairment of property, 
  plant and equipment                          233,759       210,928 
 Share based payments                            1,316             - 
 Loss on disposal 
  of property, plant 
  and equipment                                  9,738        30,723 
 Decrease in inventories                        25,514         8,301 
 (Increase) in receivables                   (206,392)      (31,445) 
 Increase/(decrease) 
  in payables                                   84,601     (351,593) 
 Increase/(decrease) 
  in provisions                                  4,000             - 
                                          ------------  ------------ 
 Cash generated from 
  operations                                  (15,684)     (470,106) 
 Net cash from operating 
  activities                                  (15,684)     (470,106) 
                                          ------------  ------------ 
 
 Cash flows from 
  investing activities 
 Purchase of intangible 
  assets                                     (145,183)       (9,660) 
 Purchase of property, 
  plant and equipment                        (196,248)     (279,229) 
 Net proceeds from 
  sale of property, 
  plant and equipment                            9,845        56,905 
 Interest received                                 246           258 
 Net cash used in 
  investing activities                       (331,340)     (231,726) 
                                          ------------  ------------ 
 
 Cash flows from 
  financing activities 
 Interest 
 paid                                         (38,330)      (25,348) 
 Increase in borrowings                        100,876             - 
 Repayment of borrowings 
  - finance leases                            (27,981)      (16,295) 
 Repayment of borrowings 
  - bank loans                                (86,076)      (73,605) 
 Net cash used in 
  financing activities                        (51,511)     (115,248) 
                                          ------------  ------------ 
 
 
 Net increase/(decrease) 
  in cash and cash 
  equivalents                                (398,535)     (817,080) 
                                          ------------  ------------ 
 Net cash and cash 
  equivalents at the 
  start of the period                          685,722     1,502,802 
 Net cash and cash 
  equivalents at the 
  end of the year                              287,187       685,722 
                                          ============  ============ 
 
 
 Net cash and cash 
  equivalents comprise: 
 Cash at bank and 
  in hand                                      287,187       685,722 
 Bank overdrafts                                     -             - 
                                               287,187       685,722 
                                          ============  ============ 
 

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 period ended 30 June 2019 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 period ended 30 June 2018 have been delivered to the Registrar of Companies with an unqualified audit report.

2. Basis of preparation

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.

3. Going concern

Given that the Company has incurred losses over the last two periods and has net current liabilities of GBP874,085 (2018: GBP556,484) the Directors have given consideration to the Company's going concern status. After reviewing the Company's operating budgets, investment plans and financing arrangements (both current and potential), the Directors consider that the Company has, at the date of this report, sufficient financing available for the estimated requirements for the foreseeable future. Accordingly, the Directors are satisfied that it is appropriate to adopt the going concern basis in preparing the annual report and financial statements.

 
 4. (Loss) / Profit from 
  Operations 
                                                           10 months 
                                                          to 30 June 
                                                  2019          2018 
 
                                                   GBP           GBP 
 
 
 Loss from operations is stated 
  after charging: 
 
 Auditors remuneration - Company 
  audit                                         26,000        25,000 
 Amortisation of intangible 
  fixed assets                                  22,336        11,728 
 Depreciation of owned property 
  plant and equipment                          215,716       202,928 
 Depreciation of plant and equipment 
  held 
  on finance leases                             18,043         8,000 
 Loss on disposal of property, 
  plant and equipment                            9,738        30,723 
 Operating lease 
  rentals 
 - Plant and machinery                           9,503        15,968 
 - Other 
 assets                                        455,152       387,991 
 Cost of inventories recognised 
  as an expense                              3,608,473     2,806,020 
 
 
 
 
 5. Tax On (Loss) / Profit from 
  Operations 
                                                     2019        2018 
 
                                                      GBP         GBP 
 
 Current period taxation 
 
 UK Corporation tax charge for the 
  period                                                -           - 
 Research and development tax credit                    -      94,258 
                                               ----------  ---------- 
 
 Total current 
 tax                                                    -      94,258 
 Origination and reversal of temporary 
  timing differences                               33,665      86,879 
 Current year deferred tax asset 
  not recognised                                 (33,665)           - 
 Reversal of previously recognised 
  Deferred tax asset                             (68,531) 
 
                                                 (68,531)     181,137 
                                               ==========  ========== 
 
 The tax assessed for the period differs from the standard 
  rate of corporation tax in the UK. The differences are 
  explained below: 
 
                                                     2019        2018 
 
                                                      GBP         GBP 
 Loss on ordinary activities 
  before tax                                    (228,640)   (373,838) 
                                               ----------  ---------- 
 
 Loss on ordinary activities multiplied 
  by standard rate of corporation 
  tax in the UK of 19%                           (43,442)    (71,029) 
 Effect of: 
 Expenses not deductible for tax 
  purposes                                          4,715       2,378 
 Depreciation on assets not qualifying 
  for tax allowances                                4,658      10,563 
 Other permanent differences                     (11,446)     (3,428) 
 Adjustment in respect of prior 
  years                                                 -    (10,296) 
 Research and development tax credit                    -    (94,258) 
 Deferred tax adjustments in respect 
  of prior years                                        -    (23,130) 
 Effect of change in local corporation 
  tax rate                                         11,850       8,063 
 Current year deferred tax asset 
  not recognised                                   33,665           - 
 Reversal of previously recognised 
  Deferred tax asset                               68,531           - 
 
 Total tax charge/(credit) in income 
  statement                                        68,531   (181,137) 
                                               ==========  ========== 
 
 

In the prior year, a deferred tax asset of GBP68,531 was recognised in respect of accumulated tax losses amounting to GBP1,143,232 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, however at this time, the Directors believe that it is prudent for the deferred tax asset of GBP68,351 to be derecognised, resulting in a deferred tax charge of GBP68,531. This has no effect on the underlying performance of the business or our cash position.

 
 6. Earnings / (loss) 
  Per Share 
 
                                                                                           10 months 
                                                                                          to 30 June 
                                                                        2019                    2018 
 
 Loss per ordinary share 
  is calculated as 
 follows: 
 
 Basic 
 Loss attributable to ordinary 
  shareholders (GBP)                                               (297,171)               (192,701) 
 Weighted average number 
  of ordinary 
 shares in issue                                                 186,745,519             186,745,519 
 Loss per ordinary 
  share                                                              (0.16)p                 (0.10)p 
                                                                  ----------          -------------- 
 
 Fully diluted 
 Loss attributable to ordinary 
  shareholders (GBP)                                               (297,171)               (192,701) 
 Weighted average number 
  of ordinary 
 shares in issue                                                 186,745,519             186,745,519 
 Weighted average number 
  of ordinary 
 shares under 
  option                                                           6,553,983                       - 
 Loss per ordinary 
  share                                                              (0.16)p                 (0.10)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. 
 7. Borrowings 
 
                                                                        2019                2018 
                                                                         GBP                 GBP 
 
 Bank loans                                                          491,807             577,883 
 Finance lease 
  liabilities                                                        109,516              36,621 
                                                                  ----------          ---------- 
                                                                     601,323             614,504 
                                                                  ==========          ========== 
 
 Presented in the balance 
  sheet as: 
 Borrowings - 
  current                                                            122,289             106,946 
 Borrowings - non-current                                            479,034             507,558 
                                                                  ----------          ---------- 
                                                                     601,323             614,504 
                                                                  ==========          ========== 
 
 (a) Bank borrowings 
 Analysis of bank loan 
  repayments: 
 In one year 
  or less                                                             92,383              85,046 
 In more than one year 
  but not 
 more than two 
  years                                                               95,054              81,156 
 In more than two years 
  but not 
 more than five 
  years                                                              259,395             263,017 
 In more than five 
  years                                                               44,975             148,664 
                                                                     491,807             577,883 
                                                                  ==========          ========== 
 
 The Bank loans are secured by a legal charge over the 
  Company's freehold properties at Park Street, Hungerford, 
  Berkshire and Grove Technology Park, Downsview Road, 
  Wantage, Oxfordshire. 
 
                                                                        2019                2018 
                                                                         GBP                 GBP 
 (b) Finance lease liabilities 
 Gross nance lease liabilities- 
  minimum lease payments: 
 In one year 
  or less                                                             42,909              21,900 
 Between one and five 
  years                                                               77,247              16,425 
 More than five years                                                 15,449                   - 
                                                                     135,605              38,325 
                                                                  ----------          ---------- 
 Future finance charges on finance 
  lease liabilities                                                 (26,089)             (1,704) 
 Present value of finance 
  lease liabilities                                                  109,516              36,621 
                                                                  ==========          ========== 
 
 Future finance charges on finance lease liabilities 
  are analysed as follows: 
                                                                        2019                2018 
                                                                         GBP                 GBP 
 In one year or less                                                (10,426)             (1,372) 
 Between one and five 
  years                                                             (15,663)               (332) 
                                                                    (26,089)             (1,704) 
                                                                  ==========          ========== 
 Finance lease liabilities are effectively secured as 
  the rights to the leased asset revert to the lessor 
  in the event of default. 
 
 
 
 8. Provisions 
 
                              Warranty       Dilapidations 
                               provision         provision         Total 
                                                       GBP           GBP 
 At 1 September 
  2017                             41,575           59,478       101,053 
 Arising during 
  the year                         37,958                -      37,958 
 Utilised during 
  the year                       (37,958)                -    (37,958) 
 
 At 30 June 2018                   41,575           59,478       101,053 
                             ------------  ---------------  ------------ 
 Arising during 
  the period                        4,000                -       4,000 
 Utilised during 
  the period                            -                -           - 
 
 At 30 June 2019                   45,575           59,478       105,053 
                             ============  ===============  ============ 
 
                                                      2019          2018 
                                                       GBP           GBP 
 Non-Current                                       105,053       101,053 
                                                   105,053       101,053 
                                           ===============  ============ 
 
 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 record 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 
  and based on this, review independent professional 
  advice as to the costs of exiting a site. 
 

9. Dividends

The Directors do not recommend payment of a dividend.

 
 10. Share Based Payments 
 
                                                                   2019                       2018 
 
                                                                    GBP                        GBP 
 Share based payments 
  expense                                                         1,316                          - 
                                                            -----------  -----------  ------------ 
 
 The charge relates entirely to equity-settled share 
  based payment transactions. 
 
   During the year ended 30 June 2019 the Company granted 
   options over 26,215,931 ordinary shares of 0.1 pence 
   each in the Company ("Ordinary Shares") at an exercise 
   price of 1 pence per Ordinary Share to all employees 
   and Directors of the Company under the Company's Unapproved 
   and EMI Share Option Plan ("Option Plan"). 
 
   Performance conditions apply to the vesting of options 
   under the Option Plan that are linked to the Company's 
   future profit and share price performance. In addition, 
   the Option Plan includes a hurdle criteria which stipulates 
   that no Ordinary Shares under the share price performance 
   criteria will vest until the share price of an Ordinary 
   Share reaches 3 pence. 
 
   The Option Plan was approved by shareholders at the 
   2018 Annual General Meeting and the principal terms 
   of the Option Plan were summarised in Appendix 1 to 
   the 2018 Notice of AGM available on the Company's website 
   www.john-lewis.co.uk. 
 
 The Option Plan was approved by shareholders at the 
  Company's Annual General Meeting on 11 December 2018. 
  The Company has calculated charges for the share option 
  awards using Monte Carlo and Binomial models. Volatility 
  and risk free rates have been calculated for each share 
  option award based on expected volatility over the vesting 
  period and current risk free rates at the time of each 
  award. Volatility assumptions are based on historic 
  volatility for the Company's share price over 4 years. 
  Assumptions for future profitability have been based 
  on management estimates. 
 The performance conditions attached to the share options 
  are as follows: 
 
                AIM listed share price (per                         Percentage of the Award 
                      Ordinary Share)                                     which vests 
                                                            -------------------------------------- 
                         > GBP0.03                                          9.375% 
                         > GBP0.04                                          9.375% 
                         > GBP0.05                                          9.375% 
                         > GBP0.06                                          9.375% 
                         > GBP0.07                                          9.375% 
                         > GBP0.08                                          9.375% 
                         > GBP0.09                                          9.375% 
                         > GBP0.10                                          9.375% 
----------------------------------------------------------  -------------------------------------- 
 
 If the AIM listed share price has reached GBP0.03 or 
  higher 
-------------------------------------------------------------------------------------------------- 
            Profit before Tax (in any 12-month                      Percentage of the Award 
                statutory accounting period)                              which vests 
----------------------------------------------------------  -------------------------------------- 
                         > GBP200k                                           5.00% 
                         > GBP400k                                           5.00% 
                         > GBP500k                                           5.00% 
                         > GBP600k                                           5.00% 
                         > GBP700k                                           5.00% 
----------------------------------------------------------  -------------------------------------- 
 
 Assumptions used in the valuation of share option awards 
  during the year were as follows: 
 
                         Share 
                         price 
                       at date                                                               IFRS2 
                      of award                                                          fair value 
                    / exercise                        Risk                    Option     per share 
    Award                price       Expected         free     Expected      life in        option 
     date              (pence)     volatility         rate    dividends        years       (pence) 
 
 25 March             0.6                                                      2.6 -         0.125 
  2019               / 1.0                50%        1.02%            -          6.9       - 0.229 
 
 Share and share option awards outstanding 
 As at 30 June 2019 all prior year share and share option 
  awards had vested or lapsed. The share options awarded 
  during the year under the Option Plan were as follows: 
       Scheme         Exercise        Vesting       Number       Number       Number   Outstanding 
     and date            price           date      awarded       lapsed    exercised         at 30 
     of award                                                                            June 2019 
               ---------------  -------------  -----------  -----------  ----------- 
 
 Option                              Variable 
  Plan                                 but no 
  25 March                          less than 
  2019              1 pence           2 years   26,215,931            -            -    26,215,931 
--------------  --------------  -------------  -----------  -----------  -----------  ------------ 
 
 The weighted average remaining contractual life of outstanding 
  share options is 9.5 years. The number of exercisable 
  share options at 30 June 2019 was nil. 
 
 

11. Posting of Accounts

Copies of the statutory accounts for the financial period ended 30 June 2019 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.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

FR FFAFEUFUSEDE

(END) Dow Jones Newswires

December 19, 2019 07:43 ET (12:43 GMT)

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