TIDMJLH

RNS Number : 9589H

John Lewis Of Hungerford PLC

30 March 2020

30 March 2020

John Lewis of Hungerford plc

(the "Company")

Half-year Report

John Lewis of Hungerford Plc (AIM: JLH), the specialist manufacturer and retailer of kitchens, bedrooms and freestanding furniture, is pleased to announce its interim results for the six months ended 31 December 2019.

Overview

Sales for the 6 months to 31 December 2019 were GBP3,345k and the loss before tax was GBP398k. In the equivalent period to 31 December 2018, sales were GBP3,666k and the loss before tax was GBP327k.

The first half of the year to 31 December 2019 was characterised by uncertainties around Brexit and the General Election, and we experienced reduced footfall in our stores. However, footfall in stores in the New Year rebounded very strongly, and design quoted activity during January was double the level of the previous year, with February following a similar pattern.

Furthermore, during the first half, we identified and actioned annualised cost savings of GBP450k, with GBP270k of that saving in the current financial year, mostly benefiting the second half. Given the strong design quoted activity during January and February, together with the effect of the cost savings, the Board were cautiously confident of a profitable second half, which had been expected to offset the first half loss.

This positive start to the New Year has however been severely disrupted due to the COVID-19 outbreak, which led initially to a substantial drop in footfall and now to the temporary closure of our entire showroom estate and factory. This hiatus in activity across the business will undoubtedly affect our results for the year ending 30 June 2020. The Company has today released a statement regarding the impact of COVID-19 upon the business.

Operational Update

Operating margin has been sustained through expected improvements in our production facility following our investment in the spray booths and ovens in 2019. Improved productivity, combined with more proficient procurement have led to additional savings

In addition to serving our residential customer base, our new business drive to partner with professionals in our sector, has led to strong working relationships with architects, interior designers and high end developers, which continues to add value.

Improvements in our marketing programme, primarily our online presence via our website and social media channels, has helped the business to be as prepared as it can be for the current challenge with high street footfall. With additional video content now available, we are trialling remote design consultations for our customers.

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 brings over the coming period.

Current Trading and Outlook

Having delivered products required for essential services to be available in our customer homes during this period, we have now ceased production for 3 weeks and furloughed many employees, pending further updates from the UK Government. The safety of our employees, our fitting teams, our customers and our suppliers must be a priority in these extraordinary times.

With the nation still in a state of flux and the next few months still unpredictable, it is not possible to assess the financial implications of COVID-19 on our business and on recovering the loss from the first half year. However, with the quoted business at the highest level seen within the Company's history, we are confident that once normality resumes within the country and the economy, the business is poised to move forward once again.

Kiran Noonan

Acting Chairman and Chief Executive Officer

30 March 2020

Enquiries:

 
 John Lewis of Hungerford plc 
  Kiran Noonan - Chief Executive Officer    01235 774300 
 Cenkos Securities plc 
  Katy Birkin/Russell Cook                  0207 397 8900 
 
 
 INCOME STATEMENT 
 FOR THE SIX MONTHSED 31 DECEMBER 
  2019 
 
                                                                  Audited 
                                     Unaudited 6 months        Year ended 
                                            ended 
                                  31 December   31 December       30 June 
                                         2019          2018          2019 
                                                   Restated      Restated 
                                      GBP'000       GBP'000       GBP'000 
 
 Revenue                                3,345         3,666         8,306 
 
 Cost of sales                        (1,768)       (1,973)       (4,374) 
 
 Gross profit                           1,577         1,693         3,932 
 
 Selling and distribution 
  costs                                 (266)         (253)         (498) 
 
 Administration expenses: 
 
 Other                                (1,631)       (1,691)       (3,491) 
                                 ------------  ------------  ------------ 
 Total                                (1,631)       (1,691)       (3,491) 
 
 (Loss)/profit from operations          (320)         (251)          (57) 
 
 Finance expenses                        (78)          (76)         (162) 
 
 (Loss)/profit before tax               (398)         (327)         (219) 
 
 Taxation                                                            (69) 
 
 (Loss)/profit after taxation           (398)         (327)         (288) 
                                 ============  ============  ============ 
 
 (Loss)/profit per share 
 Basic                                (0.21)p       (0.18)p       (0.10)p 
 Fully diluted                        (0.21)p       (0.18)p       (0.10)p 
 
 
 
 STATEMENT OF COMPREHENSIVE INCOME 
 FOR THE SIX MONTHSED 31 DECEMBER 
  2019 
 
 
                                       Unaudited               Audited 
                                     6 months ended         Year ended 
                               31 December   31 December       30 June 
                                      2019          2018          2019 
                                   GBP'000       GBP'000       GBP'000 
 
 (Loss)/Profit for the 
  period                             (398)         (327)         (288) 
 
 Total Comprehensive Income          (398)         (327)         (288) 
                              ============  ============  ============ 
 
 
 BALANCE SHEET 
 AS AT 31 December 2019 
                                        Unaudited                Audited 
                                      6 months ended          Year ended 
                                31 December   31 December        30 June 
                                       2019          2018           2019 
                                                 Restated       Restated 
                                    GBP'000       GBP'000        GBP'000 
 Non-Current Assets 
 Intangible assets                      166           179            179 
 Tangible assets                      4,491         4,287          4,058 
 Deferred tax asset                       -            69              - 
 Trade and other receivables             43            43             43 
                                                           ------------- 
                                      4,700         4,578          4,280 
                               ------------  ------------  ------------- 
 
 Current assets 
 Inventories                            144           194            144 
 Trade and other receivables            374           661            737 
 Cash and cash equivalents            (114)           479            287 
                               ------------  ------------  ------------- 
                                        404         1,334          1,168 
 
 
 Current liabilities                (1,606)       (2,406)        (2,042) 
 
 Net current liabilities            (1,202)       (1,072)          (874) 
 
 Total assets less current 
 liabilities                          3,498         3,506          3,406 
 
 
 Non-current liabilities              (437)         (462)          (479) 
 Lease liabilities                  (1,835)       (2,164)        (2,002) 
 Provisions for liabilities 
 and charges                          (112)         (100)          (105) 
 
 Net Assets                           1,114           780            820 
                               ============  ============  ============= 
 
 
 Equity 
 Share capital                          187           187            187 
 Other reserves                           1             1              1 
 Share premium account                1,188         1,188          1,188 
 Revaluation reserve                    692             -              - 
 Retained earnings                    (954)         (596)          (556) 
 
 Total Equity                         1,114           780            820 
                               ============  ============  ============= 
 
 
 STATEMENT OF CHANGES IN EQUITY 
 FOR THE SIX MONTHSED 31 DECEMBER 
  2019 
 
                                Share     Share      Other      Reval   Retained 
                              Capital   Premium   Reserves   Reserves   Earnings     Total 
---------------------------  --------  --------  ---------  ---------  ---------  -------- 
 
                              GBP'000   GBP'000    GBP'000    GBP'000    GBP'000   GBP'000 
 
 At 30 June 2018 (Audited) 
  Restated                        187     1,188          1          -      (269)     1,107 
 Loss for the period                -         -          -          -      (327)     (327) 
 At 31 December 2018 
  (Unaudited) 
  Restated                        187     1,188          1          -      (596)       780 
 Profit for the period              -         -          -          -         40        40 
 At 30 June 2019 (Audited) 
  Restated                        187     1,188          1          -      (556)       820 
 Loss for the period                -         -          -          -      (398)     (398) 
 Revaluation of Freeholds           -         -          -        692          -       692 
 At 31 December 2019 
  (Unaudited)                     187     1,188          1        692      (954)     1,114 
 
 
 STATEMENT OF CASH FLOWS 
 FOR THE SIX MONTHS ENDED 31 December 
  2019 
 
 
                                                                              Audited 
                                                 Unaudited 6 months 
                                                        ended              Year ended 
                                              31 December   31 December       30 June 
                                                     2019          2018          2019 
                                                               Restated      Restated 
                                                  GBP'000       GBP'000       GBP'000 
 
 (Loss)/Profit from operations                      (320)         (251)          (57) 
 
 Depreciation, impairment and amortisation            288           280           574 
 Share based payments                                   -             -             1 
 (Increase)/decrease in inventories                     -          (25)            25 
 (Increase)/decrease in receivables                   363         (131)         (206) 
 Increase/(decrease) in payables                    (585)           681           135 
 (Profit)/loss on disposal of property 
  plant and equipment                                 (1)             -            10 
 Increase/(decrease) in provisions                      7             -             4 
 
 Net cash from operating activities                 (248)           554           486 
 
 Cash flows from financing activities               (140)         (127)         (176) 
 
 Cash flows from investing activities                (13)         (634)         (709) 
 
 
 Net decrease in cash and cash equivalents          (401)         (207)         (399) 
                                             ------------  ------------  ------------ 
 Net cash and cash equivalents at 
  the start of the period                             287           686           686 
 Net cash and cash equivalents at 
  the end of the period                             (114)           479           287 
                                             ============  ============  ============ 
 
 
 
 NOTES: 
 
 1. These interim financial statements have been prepared on the basis 
  of accounting policies adopted by the Company and set out in the 
  annual report and accounts for the period ended 30 June 2019. The 
  only accounting policy changes the Company anticipates are outlined 
  in paragraphs a) & b) below, otherwise all other accounting policies 
  should remain unchanged for the year ending 30 June 2020. As permitted, 
  these interim financial statements have been prepared in accordance 
  with the AIM Rules and not in accordance with IAS 34 "Interim financial 
  reporting". The principal risks and uncertainties facing the Company 
  are disclosed in the Company's financial statements for the period 
  ended 30 June 2019, combined with a separate announcement made today 
  in relation to the impact of COVID-19, available from www.john-lewis.co.uk 
 
   a)     IFRS 16 - Impact of adoption 

The Company has applied IFRS 16 issued in January 2016 with an initial application date of 1 July 2019. The Company has applied IFRS 16 using the full retrospective approach applying IFRS 16 at the initial application date as if the standard had already been effective at the commencement date of the Company's existing lease contracts. As a result, the comparative information in these interim financial statements has been restated. The nature and effects of the key changes to the Company's accounting policies resulting from the adoption of IFRS 16 are summarised below.

Under IFRS 16, the Company assesses whether a contract is or contains a lease based on the definition of a lease as explained in the accounting policy.

The Company previously classified leases as operating or finance leases based on its assessment of whether the lease transferred significantly all the risks and rewards incidental to ownership of the underlying asset to the Company. Under IFRS 16, the Company recognises in the Balance Sheet right-of-use assets and lease liabilities for most leases.

The Company has elected to apply the recognition exemptions for lease contracts that do not contain a purchase option and have a lease term of 12 months or less and/or are for underlying assets with a low value.

For leases not covered by these recognition exemptions, the Company recognised right-of-use assets and lease liabilities on adoption of IFRS 16.

After implementing IFRS 16, the Company has seen the following impact in the period to 31 December 2019:

- Current and non-current assets increased in total due to the recognition of right of use assets: GBP1,597,387

- Current and non-current liabilities increased in total due to the recognition of lease liabilities: GBP1,834,830

- Operating expenses reduced due to the reversal of lease costs by: GBP226,208

- Depreciation expense increased by: GBP160,713

- Finance expense increased by: GBP6,228

- Reserves brought forward reduced by: GBP243,670

A total reduction in the loss for the Company for the period to 31 December 2019 of GBP6,228.

A total reduction in Net Assets for the Company as at 31 December 2019 of GBP237,442.

Impact on the Balance Sheet as at 31 December 2019:

 
                          6 Months to 31 December 
                                    2019 
                      Original   IFRS 16   As Reported 
                                  Impact 
 
 Total Assets            3,507     1,597         5,104 
 Total Liabilities     (2,155)   (1,835)       (3,990) 
 Net Assets              1,352     (237)         1,114 
                     =========  ========  ============ 
 
 Reserves                2,068         -         2,068 
 Retained Earnings       (717)     (237)         (954) 
 Total Equity            1,352     (237)         1,114 
                     =========  ========  ============ 
 

Impact on the Cashflow Statement as at 31 December 2019

 
                                                     6 months 
                                                        to 31 
                                                     December 
                                                         2019 
 
 Reduction in net cash out flow from 
  Operating Activities                                     59 
 Increase in net cash outflow from financing 
 activities                                              (59) 
 Net impact on net decrease in net cash & 
  cash equivalents                                          - 
                                                   ========== 
 
   b)    Impact of Revaluation Reserve 

The Company has chosen to change the model for the valuation of the Land & Buildings asset class from the cost model to the revaluation model. Following an independent third party valuation of the Company's two freehold properties, this has resulted in an increase in their carrying value of GBP692,477 which has been charged to the newly created revaluation reserve.

 
 2. Basic and fully diluted loss per ordinary share is calculated 
  as follows: 
 
                                                   6 months      6 months          Year 
                                                      ended         ended         ended 
                                                31 December   31 December       30 June 
                                                       2019          2018          2019 
 
 Profit / (loss) attributable to ordinary 
  shareholders (GBP'000)                              (398)         (328)         (289) 
 Weighted average number 
  of shares in issue                            186,745,519   186,745,519   186,745,519 
 Shares used to calculate diluted earnings 
  per share                                     186,745,519   186,745,519   186,745,519 
 
 Basic earnings per ordinary 
  share (pence)                                     (0.21)p       (0.18)p       (0.15)p 
 Diluted earnings per ordinary 
  share (pence)                                     (0.21)p       (0.18)p       (0.15)p 
 
 At 31 December 2019 the basic and diluted loss per share is the same, 
  as the vesting of share option awards would reduce the loss per share 
  and is, therefore, anti-dilutive. 
 
 3. Copies of the 2020 interim accounts will be available to shareholders 
  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

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