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    John Lewis Of Hunger - Final Results

    Picture of John Lewis of Hungerford logoJohn Lewis of Hungerford
    18/03/2021 07:00
    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 £5.55 million (2019: £8.31 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 £886k (2019: restated loss before tax of £220k).

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 £1.079 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 £559k (2019: £538k).

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 £3.33 million (2020: £3.35 million), suppressed in part due to delays arising from the additional November lockdown. The loss before tax is £213k (2020: restated loss before tax £398k)

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 £275k of costs in the year ended 30 June 2020, with an annualised benefit of around £450k. 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.

 


    12monthsto
    June2020    		12monthsto
    June2019
    £000£000
    TotalSales 5,5538,306
    Costofsales 3,0044,374
    Grossmargin 2,5493,932
    GrossMargin% 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 £3.33 million (2020: £3.35 million), due in part to the additional November lockdown and a loss before tax of £213k (2020: restated loss before tax £398k). 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 £6.2 million (2020: £5.7 million). Future orders against which a first stage deposit has been taken stood at £2.1 million (2020: £0.7 million), of which £1.5 million is currently scheduled for completion by the June 2021 year end (2020: £0.5 million). Therefore, the total of all despatched sales and forward orders is £8.3 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
    20202019
    Notes££
    Revenue5,552,5648,305,948
    Cost of sales(3,003,810)(4,374,380)
    Gross profit2,548,7543,931,568
    Selling and distribution costs(413,375)(498,435)
    Administrative expenses(3,080,877)(3,491,059)
    Other operating income210,000-
    Total(2,870,877)(3,491,059)
    Loss from operations(735,498)(57,926)
    Finance income336246
    Finance expenses(150,654)(162,345)
    Loss before tax(885,816)(220,025)
    Tax Credit/(charge)394,592(68,531)
    Loss for the year(791,224)(288,556)
    Loss per share4
    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
    20202019
    Notes££
    Loss for the year(791,224)(288,556)
    Revaluation of freehold land and buildings6692,477-
    Deferred tax on revaluation of freehold land and buildings13(131,571)-
    Total Comprehensive Income(230,318)(288,556)
    

 


    Statement of financial position as at 30 June 2020Restated
    30 June30 June
    20202019
    Notes££
    Non-current assets
    Intangible assets5157,190179,292
    Property, plant and equipment62,790,8752,299,873
    Right of use assets71,444,4761,758,101
    Trade and other receivables1042,75042,750
    4,435,2914,280,016
    Current assets
    Inventories9152,530144,022
    Trade and other receivables10542,526736,593
    Cash and cash equivalents558,765287,187
    1,253,8211,167,802
    Total assets5,689,1125,447,818
    Current liabilities
    Trade and other payables11(1,454,231)(1,550,346)
    Customer deposits(581,058)(369,252)
    Lease liabilities8(242,253)(327,452)
    Provisions14(60,998)-
    Borrowings12(111,701)(122,289)
    (2,450,241)(2,369,339)
    Non-current liabilities
    Borrowings12(1,156,033)(479,034)
    Lease liabilities8(1,432,063)(1,674,319)
    Provisions14(56,055)(105,053)
    (2,644,151)(2,258,406)
    Total liabilities(5,094,392)(4,627,745)
    Net assets594,720820,073
    Equity
    Share Capital186,745186,745
    Share Premium1,188,0211,188,021
    Other Reserves1,4211,421
    Revaluation reserve13560,906-
    Retained Earnings(1,342,373)(556,114)
    Total equity594,720820,073
    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 NoonanStephen Huggett
    DirectorDirector
    

 

 

 

 

Statement of Changes in Equity for the year ended 30 June 2020

 

 

 


    ShareShareOtherRevaluationRetained
    CapitalPremiumReservesReserveEarningsTotal
    

 


    ££££££
    At30June2018 186,7451,188,0211,421-(16,589)1,359,598
    applicationof
    IFRS16 -    		---(252,285)(252,285)
    At01July2018
    -restated 186,745    		1,188,0211,421-(268,874)1,107,313
    year ----(288,556)(288,556)
    Sharebased
    payments -    		---1,3161,316
    At30June2019 186,7451,188,0211,421-(556,114)820,073
    Lossforthe
    year -    		---(791,224)(791,224)
    Revaluationof
    freeholds -
    Deferredtaxon    		--692,477-692,477
    Revaluationof
    freeholds -    		--(131,571)-(131,571)
    Sharebased
    payments -    		---4,9654,965
    At30June
    2020 186,745    		1,188,0211,421560,906(1,342,373)594,720
    

 


    Statement of Cash Flows for the year ended 30 June 2020
    Restated
    20202019
    ££
    Cash flows from operating activities
    Loss from operations after tax(640,906)(126,457)
    Amortisation of intangible assets32,83922,336
    Depreciation and impairment of property, plant and equipment219,769233,759
    Depreciation of right of use assets313,625318,327
    Share based payments4,9651,316
    (Profit)/loss on disposal of property, plant and equipment(1,237)9,738
    (Increase)/decrease in inventories(8,508)25,514
    Decrease/(increase) in receivables157,088(206,392)
    (Decrease)/increase in payables(96,114)9,378
    Increase in Customer Deposits211,80675,224
    Increase in provisions12,0004,000
    Cash generated from operations205,327366,743
    Tax (Credit) / Charge on Operations(94,592)68,531
    Net cash from operating activities110,735435,274
    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 equipment10,4809,845
    Interest received336246
    Net cash used in investing activities(27,459)(331,340)
    Cash flows from financing activities
    Interest paid(150,654)(162,345)
    Increase in borrowings1,079,000100,876
    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 activities188,302(502,469)
    Net increase/(decrease) in cash and cash equivalents271,578(398,535)
    Net cash and cash equivalents at the start of the period287,187685,722
    Net cash and cash equivalents at the end of the year558,765287,187
    Net cash and cash equivalents comprise:
    Cash at bank and in hand558,765287,187
    Bank overdrafts--
    558,765287,187
    

 

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 activitiesOther assets
    BorrowingsLease liabilitiesSub-totalCash balances
    Net debt as at
     1 July 2018    		614,5041,950,9682,565,472685,722
    Cash Flows(13,181)(326,943)(340,124)(398,535)
    New leases-377,746377,746-
    Net debt as at
     30 June 2019    		601,3232,001,7712,603,094287,187
    Cash Flows666,411(327,455)338,956271,578
    New leases----
    Net debt as at
     30 June 2020    		1,267,7341,674,3162,942,050558,765
    

 

 


    NotestothefinancialStatements
    

 


    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 £791,224 and at 30 June 2020 had cash reserves of £558,765, net current liabilities of £1,196,420 and net assets of £594,720. 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.ACCOUNTINGPOLICIES
    

 


    Basisof preparation
    John Lewis of Hungerford plc is a public limited company listed on the London AIM market andincorporated and domiciled in England and Wales. The Company's financial statements are preparedunder 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 tocompaniesreportingunderIFRS.TheCompany'sfinancialstatementsarepresentedinSterlingand
    roundedtowholepounds.
    

 


    Goingconcern
    The financial statements are prepared on a going concern basis,which the directors believe to beappropriateforthefollowingreasons:
    The strength of the current order book, as discussed in the Trading Outlook within the Chief ExecutivesBusiness Review and with the current lockdown due to allow the re-opening of non-essential retail on 12April2021,willallowtheCompanytomaintaintheongoingconversionofquotedbusinessintocommittedorders,furthersupportedbythesustainedconsumerinterestinthehomeimprovementsector.
    

 


    The results show that the Company made a loss after tax during the year of £791k (2019: restatedlossafter tax of £289k) and had net current liabilities of £1,196k (2019: £1,202k) as at 30 June 2020, as thepandemic had a significant impact on the Company's performance particularly during its seasonallyimportant, final quarter.The Company own the Freehold of its Head Office and Factory in Wantage and it's Hungerford Showroom,whichwasrevaluedinFebruaryofthisfinancialyear,andhasaNetBookValueof£1,896k asat 30June2020. The total Net Assets at 30 June 2020 were £595k. The Company operates a made-to-order,negative working capital model and therefore to minimise disruption to the Company's cash flows it hastaken a number of measures since the start of the Covid-19 pandemic.The Company has refinanced torelease additional working capital combined with measures taken to ensure an ongoing focus on cashpreservation. The Company has undertaken a series of cost-cutting measures, and successfully agreedpreferentialtermsfromlandlordsandsuppliers.Inaddition,theCompanyhasbeenutilisingthegovernment support available during the pandemic, including VAT payment holidays, PAYE deferral,localbusiness grants,business rates reliefand theJobRetentionScheme.
    Despite the losses made during the year and subsequent to the year end, as stated, in the Trading Outlookwithin the Chief Executive's Business review, the Company's forward orders against which a first stagedeposithasbeentaken,togetherwith the significantincreasein quotedbusinesscomparedto thecorresponding period in the prior year, leads the Directors to believe that there is now sustained levels ofconsumerinterestinhomeimprovements, and thisis expectedtocontinue.
    The Directors have prepared cash flow forecasts for the Company for a period of at least 12 months fromthe date of signing of these financial statements. These forecasts include a number of assumptions inrelationtothetimingofcashflows,levelofcustomerorderintake;grossprofitmargins;andachievementofcostsavings inlinewiththeCompany's strategic plans.
    The Directors have also prepared severe, but plausible, downside sensitivity scenarios, which cover thesame period as our cash flow forecasts for a period of at least 12 months from the date of signing. Thesedownside scenarios include specific consideration of a range of impacts that could arise from a continuedimpact of the coronavirus pandemic. These scenarios include lockdown continuing beyond the expecteddate that the showrooms are scheduled to re-open on 12 April 2021; reduced customer spending; andfurther lockdowns beyond 12 April 2021 of up to 12 weeks.As part of this analysis, mitigating actionswithintheCompany'scontrolshouldthesesevere,butplausible,scenariosoccur,havealso beenconsidered. These mitigating actions included reducing discretionary spend across the Company andothermeasurestoprotectcashbalances.TheforecastcashflowsforthisscenarioallowfortheabilityandtheintentionoftheDirectors toimplement mitigatingactions shouldtheyneedto.
    As the Company operates a made-to-order, negative working capital model, it is reliant on the cash flowsfrom customer deposits and completion of sales to be able to meet its liabilities as they fall due. Thesecashflows have been adversely impacted by the pandemic. The timing of these cash receipts is a keyconsideration in the cash flow forecasts and sensitivity scenarios that have been reviewed. The Directorshave considered all of the factors noted above, including the Company's forward orders and quotedbusiness; the support of its landlords and suppliers; plus, the government support available. Taking thesefactors into account, balanced with the inherent uncertainty associated with forecasting the impact of theCovid-19 pandemic, the Directors are confident that the Company has adequate resources to continue tomeet all liabilities, as and when they fall due, for the foreseeable future and, at least for the period oftwelvemonthsfromthedateofapprovalofthesefinancialstatements.
    Whilst the current pandemic has resulted in there being delays in the timings of cash receipts, theDirectors are further encouraged by the early effects of the vaccination programme and remain positiveregarding the prospects for the Company.However, we recognise that these circumstances represent amaterial uncertainty which may cast significant doubt over the Company's ability to continue as a goingconcern.
    Notwithstanding the above, the Directors believe that with the current Government Road Map suggestingthat all restrictions are due to be lifted by June 2021, there is reasonable evidence to conclude that afurther period of extended lockdown or disruption is unlikely. Accordingly, the financial statements arepreparedon a goingconcern basis.
    


    3TAX ON (LOSS) / PROFIT FROM OPERATIONS
    20202019
    ££
    Current period taxation
    UK Corporation tax charge for the period--
    Research and development tax credit--
    Total current tax--
    Origination and reversal of temporary timing differences229,88633,665
    Current year deferred tax asset not recognised(229,886)(33,665)
    Reversal of previously recognised Deferred Tax asset-(68,531)
    Deferred tax credit on losses131,571-
    Adjustment in respect of previous years Research and Development tax credit(36,979)-
    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:
    20202019
    ££
    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 purposes1,4254,715
    Depreciation on assets not qualifying for tax allowances4,4984,658
    Other permanent differences(7,547)(11,446)
    Adjustment in respect of previous years Research and Development tax credit(36,979)-
    Prior year adjustment on IFRS16 adoption(47,934)-
    Effect of change in local corporation tax rate(12,023)11,850
    Deferred tax asset not recognised229,88633,665
    Deferred tax credit on losses131,571-
    Reversal of previously recognised deferred tax asset-(68,531)
    Total tax credit / (charge) in income statement94,592(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 £250,000 per annum.
    

 

 

 

 

 

 

 


    4EARNINGS PER SHARE
    Restated
    20202019
    Loss per ordinary share is calculated as
    follows:
    Basic
    Loss attributable to ordinary shareholders (£)(791,224)(288,555)
    Weighted average number of ordinary
    shares in issue186,745,519186,745,519
    Loss per ordinary share(0.42)p(0.15)p
    Fully diluted
    Loss attributable to ordinary shareholders (£)(791,224)(288,555)
    Weighted average number of ordinary
    shares in issue186,745,519186,745,519
    Weighted average number of ordinary
    shares under option4,369,9616,553,983
    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.
    

 

 


    5INTANGIBLE NON-CURRENT ASSETS
    Development
    SoftwareTrademarksCostsTotal
    ££££
    Cost
    At 1 July 201860,26057,154115,988233,402
    Additions93,000-52,183145,183
    At 30 June 2019153,26057,154168,171378,585
    Additions-3,3877,35010,737
    At 30 June 2020153,26060,541175,521389,322
    Amortisation
    At 1 July 201850,76256,56969,626176,957
    Charge for the year5,39112816,81722,336
    At 30 June 201956,15356,69786,443199,293
    Charge for the year10,26635422,21932,839
    At 30 June 202066,41957,051108,662232,132
    Net book value
    At 30 June 202086,8413,49066,859157,190
    At 30 June 201997,10745781,728179,292
    Disclosures relating to the impairment review of assets can be seen under the accounting policies note 1.1.
    

 

 


    6PROPERTY, PLANT AND EQUIPMENT
    Freehold land and buildingsShowroom display & shop fittingsPlant & machinery and loose toolsOffice fixtures, fittings & IT equipmentTotal
    Cost or Revaluation£££££
    At 1 July 20181,754,7522,274,822425,790256,1554,711,519
    Additions-21,075138,07437,099196,248
    Disposals-(82,668)(3,000)-(85,668)
    Re-classification(25,332)25,332---
    At 30 June 20191,729,4202,238,561560,864293,2544,822,099
    Additions-10,4903,03514,01227,537
    Disposals-(12,279)--(12,279)
    Revaluation956,466---956,466
    At 30 June 20202,685,8862,236,772563,899307,2665,793,823
    Depreciation and impairment
    At 1 July 2018489,1351,424,847239,634200,9362,354,552
    Charge for the
    year24,030148,42541,63017,679231,764
    Disposals-(64,685)(1,400)-(66,085)
    Reclassification(18,207)18,207---
    Dilapidations Amortisation1,995---1,995
    At 30 June 2019496,9531,526,794279,864218,6152,522,226
    Charge for the
    year23,273115,87448,07827,077214,302
    Revaluation263,989---263,989
    Disposals-(3,036)--(3,036)
    Dilapidations Amortisation5,467---5,467
    At 30 June 2020789,6821,639,632327,942245,6923,002,948
    Net book value
    At 30 June 20201,896,204597,140235,95761,5742,790,875
    At 1 July 20191,232,467711,767281,00074,6392,299,873
    The freehold land element of freehold land and buildings which was not depreciated was £503,624 (2019 - £503,624). The net book value of items held under finance leases was £105,956 (30 June 2019: £186,601). The depreciation charge for items held under finance leases is shown in note 5.
    


    7RIGHT OF USE ASSETS
    Right of Use
    propertyTotal
    ££
    Cost
    At 1 July 20183,859,1203,859,120
    Additions377,747377,747
    At 30 June 20194,236,8674,236,867
    Additions--
    At 30 June 20204,236,8674,236,867
    Depreciation
    At 1 July 20182,160,4392,160,439
    Charge for the year318,327318,327
    At 30 June 20192,478,7662,478,766
    Charge for the period313,625313,625
    At 30 June 20202,792,3912,792,391
    Net book value
    At 30 June 20201,444,4761,444,476
    At 30 June 20191,758,1011,758,101
    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.
    20202019
    Amounts recognised in profit and loss
    ££
    Depreciation expense on right-of-use assets313,625318,327
    Interest expense on lease liabilities113,388124,015
    

 


    8LEASE LIABILITIES
    20202019
    ££
    Total lease liabilities1,674,3162,001,771
    Maturity analysis
    to 1 year242,253327,452
    1 to 2 years228,480242,253
    2 to 3 years204,381228,480
    3 to 4 years182,054204,381
    4 - 5 years187,357182,054
    > 5 years629,791817,151
    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.
    9INVENTORIES
    20202019
    ££
    Raw materials and consumables116,980132,761
    Work in progress35,55011,261
    152,530144,022
    Raw materials & consumables stated net of a provision for obsolete stock of £8,882 (2019: £8,882)
    10TRADE AND OTHER RECEIVABLES
    20202019
    Current assets:££
    Trade receivables79,495280,907
    Other receivables218,53315,228
    Prepayments and accrued income244,498440,458
    542,526736,593
    Non-current assets:
    Other receivables42,75042,750
    Non-current other receivables relate to lease deposits totalling £42,750 (2019: £42,750) 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 £12,778 (2019: £17,161). The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
    


    Aging of Trade Receivables20202019
    ££
    0-30 Days45,757400,327
    30-60 Days2,000(124,892)
    60-90 Days-(24,321)
    90 Days +31,73829,793
    Total79,495280,907
    Financial Assets at amortised cost comprise of Trade & Other receivables.
    11TRADE PAYABLES AND OTHER PAYABLES
    20202019
    ££
    Trade payables526,052552,011
    Other taxes and social security costs453,986325,174
    Other payables8,05510,769
    Accruals and deferred income466,138662,392
    1,454,2311,550,346
    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.
    12BORROWINGS
    20202019
    ££
    Loans1,190,701491,807
    Finance lease liabilities77,033109,516
    1,267,734601,323
    Presented in the balance sheet as:
    Lease liabilities - current242,253327,452
    Borrowings - current111,701122,289
    Borrowings - non-current1,156,033479,034
    1,509,987928,775
    (a) Bank & other borrowings
    Analysis of bank loan repayments:
    In one year or less111,70192,383
    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 years1,079,00044,975
    1,190,701491,807
    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 £0, (2019: £132,971) 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 £111,701, (2019: £123,148) 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 £0, (2019: £40,432) 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 £0, (2019 £195,256) denominated in Sterling.
    20202019
    ££
    (b) Finance lease liabilities
    Gross finance lease liabilities- minimum lease payments:
    In one year or less26,48442,909
    Between one and five years66,21277,247
    More than five years-15,449
    92,696135,605
    Future finance charges on finance lease liabilities(15,663)(26,089)
    Present value of finance lease liabilities77,033109,516
    Future finance charges on finance lease liabilities are analysed as follows:
    20202019
    ££
    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.
    

 

 

 

 

 

 

 


    13DEFERRED TAX ASSETS / LIABILITIES
    Deferred
    taxation
    ££
    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 losses131,571
    Prior year adjustment on IFRS16 adoption(47,934)
    Profit and loss account charge/(credit)(229,886)
    Deferred tax asset not recognised229,886
    Balance at 30 June 2020-
    The provision for deferred taxation consists of the following amounts:
    20202019
    ££
    Capital allowances in excess of depreciation115,358122,523
    Tax losses carried forward(395,655)(230,629)
    Research and development accelerated deductions4,4015,910
    Short term timing differences(56,186)-
    Transfer to non-current receivables-68,531
    Deferred tax on revaluation of freehold property in Other Comprehensive Income(131,571)-
    Deferred tax recognised on losses131,571-
    Deferred tax asset not recognised332,08233,665
    --
    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.
    

 

 

 

 

 

 

 

 


    14PROVISIONS
    Warranty
     provision    		Dilapidations provisionTotal
    ££
    At 1 July 201841,57559,478101,053
    Arising during the year4,000-4,000
    Utilised during the year---
    At 30 June 201945,57559,478105,053
    Arising during the period48,782-48,782
    Utilised during the period(36,782)-(36,782)
    At 30 June 202057,57559,478117,053
    20202019
    ££
    Current60,998-
    Non-Current56,055105,053
    117,053105,053
    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 £5 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.
    15POST 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 £48,600. 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
     Shares    		Interest in ordinary shares upon AdmissionPercentage of Issued share capital
    Kiran Noonan500,000500,0000.26%
    Alan Charlton5,000,0009,423,1784.86%
    Stephen Huggett1,500,0001,500,0000.77%
    

 


    16POSTING 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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