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.
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END
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