REG - John Lewis Of Hunger - Final Results
13/12/2022 07:00
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RNS Number : 4571J John Lewis Of Hungerford PLC 13 December 2022
The information contained within this announcement is deemed by the Group to
constitute inside information as stipulated under the Regulation 11 of the
Market Abuse (Amendment) (EU Exit) Regulations 2019/310 ("MAR"). With the
publication of this announcement via a Regulatory Information Service, this
inside information is now considered to be in the public domain.
13 December 2022
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 2022.
Chief Executive's Business Review
We are pleased to report that John Lewis of Hungerford achieved sales for the
year ended 30 June 2022 of £10.3 million (2021: £7.9 million), an increase
of 30.9 per cent. The Company celebrated its 50th Anniversary in the Summer
of 2022, and in this milestone year, has achieved sales in excess of £10
million for the first time. Profit Before Tax and non-recurring costs* was
£166k (2021: Profit Before Tax £80k). Underlying EBITDA* (pre IFRS 16) was
£500k (2021: EBITDA £424k).
Sales of £10.3 million do not fully reflect the strength of the trading
performance of the Company throughout the reported year. The orders secured by
our 12 stores were £12.3 million (FY21: £9.3 million). The final quarter
of the year was impacted by disruption from Covid-19 within the factory in
Wantage, with the highest level of interruption to production throughout the
pandemic and a total of 81-man days lost. This included periods where sections
of the factory had to close completely. Without this disruption, a still
higher proportion of the £12.3 million orders would have been completed
before 30 June 2022, and recognised as sales in the year, with the Gross
Margin on these sales flowing through to profit. However, this disruption
to the final quarter of FY22 has impacted positively the start of our new
financial year to 30 June 2023, with a significantly stronger order book
secured, of £5.3 million compared to £3.2 million at the same point last
year.
Gross Margin for the year declined by -1.2% points in the year to 45.9%. The
Company experienced some extreme increases in raw material prices in the year,
with some increases more than 100%. The Company took action to pass these
cost increases on, by raising the retail prices. However, there is a time lag
between quoted business and completing the delivered sale and installation,
which on average is 2-3 months later, whereby the impact of the price
increases will not fully be seen in the year we report today. We are now
seeing welcome signs of some level of stabilisation for raw material prices.
The year finished with a positive gross cash position of £1,473k. The
Company has total loans of £1,116k, largely secured on its freehold
properties. Net cash, excluding IFRS 16 lease liabilities, was therefore
£357k (2021: net cash £165k). The Company was grateful for the
Government support during the pandemic years FY20/FY21, which allowed for
delayed phasing of VAT and PAYE payments. All of the agreed deferred
payments were made promptly during the year ended 30 June 2022 and the Company
is fully up to date, with no further outstanding deferred payments.
The Company owns the freeholds of its factory in Wantage, and its showroom in
Hungerford. These freeholds have been revalued as at 30 June 2022, with the
total valuation increased by £584k to £2,431k. The revaluation is
reflected in the Accounts to 30 June 2022 as a movement in the revaluation
reserve. The Company's Net Assets as at 30 June 2022 were £1.4 million
(2021: £0.8 million).
The costs have been commensurate with the business reporting £10.3 million of
turnover, combined with deposits secured against a further £2 million of
sales. The Board are confident that developing the infrastructure throughout
the FY22 year has secured a strong foundation for continued growth over the
forthcoming period, in a structurally improved operating model, which was able
to secure £12.3 million of orders within FY22.
* PBT before one-off, non-recurring costs of £166k /EBITDA of £500k is after
adjusting for £152k of one-off non-recurring costs which occurred in the year
to June 2022, and which are not expected to be repeated going forward. These
non-recurring costs are related to project and one-off restructuring costs.
Reported PBT for the year ended 30 June 2022 was £14k.
Marketing
The Company has continued to develop its digital capabilities, working with
expert partners in the field. Fueled by compelling new photography from our
successfully completed projects, the business has created a convincing
portfolio to demonstrate its credentials to our discerning customer.
The substantial increase in orders secured has demonstrated the success of
being selective in the choices of our marketing channels. From data driven
digital campaigns to enhancing our presence in the social media arena, with an
emphasis on Instagram, the Company continues to work closely with our PR
advisory team, to secure the right traffic to our website, to convert into
successful client relationships. With a focused approach on enhancing the
customer journey through our website, we are seeing improvements in the level
of appointments coming into the business.
The marketing of our 50th Birthday commenced in the Summer of 2022 and has
seen the launch of our new Brochure, which has been extremely well received.
It is a ground-breaking piece of work, providing both inspiration and learning
for our customer, to support our dialogue during the sale. This has helped our
customers to appreciate the difference in the unique customer experience
offered by the John Lewis of Hungerford team. Our 50th Birthday in the summer
coincided with the Jubilee celebrations for Her Late Majesty Queen Elizabeth
II. We were given the opportunity to feature in the widely distributed
official publication for the Platinum Jubilee, celebrating the Best of British
Manufacturing. We were delighted have been invited to be a part of this highly
respected publication and have seen benefits from the high value clientele it
has attracted into the Company.
Ensuring we have been able to continue our work with professional
intermediaries remains core to our success in attracting larger, multi-room
projects. Whole-home renovations with a considerably higher spend are a more
frequent occurrence, as our customers look to furnish their home with one,
high-end, luxury cabinet maker. Working closely with their architect,
developer or interior designer, has given the Company the opportunity to
partner with some exciting new professionals in the home renovation space.
The finance proposition available to our customers through Novuna (formerly
Hitachi) Consumer Finance has provided our customer with options to spread the
cost of their new Kitchen. This has attracted new customers to the Company,
now able to afford to buy their dream kitchen.
The impact of these initiatives has led to a record number of kitchens being
sold in the year, with a shift towards more traditional options in cabinetry
choices, reflecting a return to classic styles, which truly stand the test of
time. Customers continue to use the versatile cabinetry options available
through our bedrooms business to adapt their needs around the home.
Operations
The acquisition of our new storage facility on the Grove Business Park in
Wantage has been integral to facilitating the growth we report today. With the
increased throughput in our production facility, it has been vital to work
with our highly committed and effective workforce to improve the operating
model and make efficiency gains, as we plan for continued growth.
A review to introduce shift working and additional resource has been
undertaken, to allow the Board to support the business in developing the right
model, to ensure we continue to deliver a product with a consistently high
standard of finish, for which our Brand is recognised. Challenges in the
supply chain have led to the ongoing management of delayed product, mostly
managed by procuring our white goods months ahead of any planned delivery
schedule. As a result, we have been able to continually offer a competitive
lead time, which has stood us in good stead over the period and continues to
do so.
Raw materials have seen significant price increases, some in excess of 100%;
as mentioned, we are now seeing signs of some stabilisation in this area,
however this has undoubtedly impacted our margin for the year.
Work on our MRP system continues, to allow the business the visibility on
improved capacity planning and also all key margin drivers within our supply
chain. This work has commenced, with the system improvements due to be live
later in our current year.
With increased demand, small improvements will produce incremental gains in
our margin, with our new Production Manager working hard to lead the team in
this regard.
To ensure our people are able to work as effectively as possible, we continue
to put the welfare of our employees at the heart of our business. The
introduction of a We Care Policy, which provides exceptional health benefits
and support, together with more general advice on wellbeing and mental health
services, ensures that our people feel looked after, during these stressful
and turbulent economic times.
Trading Outlook
As stated earlier, we entered the new financial year with a robust order book,
inclusive of the deferred orders from FY22. As a result, the level of orders
confirmed in the first 23 weeks are ahead of the prior year. Dispatched
sales, forward committed orders and future orders against which a first stage
deposit has been taken, stood at £8.6 million (2021: £7.4 million). New
business has remained consistent and with improvements driven by the digital
marketing strategy, the quality of quoted business is strong and we remain
confident of our ability to continue to convert at a high level moving
forward.
Each carefully considered building block in our FY23 plan has been evaluated
for its impact on our profits for this current year, as we continue to
strengthen our capacity and our infrastructure to respond to sustainably
higher demand, confident that our operating model can accommodate the growth
we anticipate over the coming period. Our business has proved its resilience
over the last 2 years and given the inherent expertise within the Company, we
are well positioned to maintain our trend of market share gains.
Whilst we believe that the demand is in line with our plans for growth in
FY23, the uncertainty in the financial markets has created a degree of
hesitancy for customers to complete on their orders. The Board continues to
track the economic indicators, together with the supply chain challenges and
the ongoing impact on pricing. There are a range of plans prepared to respond
appropriately to changing market conditions, based on whether the Board
considers the external changes to be for the short or long term.
The unprecedented growth experienced in the year that we are reporting today,
is a milestone for the Company in its 50th Birthday year. It has been both
demanding and exciting, for our teams across the business. We thank them for
their hard work and resilience, to ensure that we have been able to capitalise
on this demand to the benefit of all of our stakeholders, as we continue to
build a Company with increased capacity and capability over the coming period.
On behalf of the Board, I would like to thank our Employees, our Shareholders
and our Supplier Partners, for their ongoing support and counsel throughout
the period.
As we move through FY23, we continue to celebrate 50 years of John Lewis of
Hungerford, with confidence that the Company can achieve sustained
profitability.
Kiran Noonan
Chief Executive Officer
12 December 2022
Enquiries:
John Lewis of Hungerford plc 01235 774300
Kiran Noonan - Chief Executive Officer / Acting Chairman
Allenby Capital Limited (Nominated Adviser and Broker) 020 3328 5656
David Worlidge / Nick Naylor / George Payne (Corporate Finance)
Matt Butlin (Sales and Corporate Broking)
Income Statement for the year ended 30 June 2022
2022 2021
Notes £ £
Revenue 10,325,129 7,877,130
Cost of sales (5,580,045) (4,165,462)
Gross profit 4,745,084 3,711,668
Selling and distribution costs (545,813) (408,863)
Administrative expenses (3,968,667) (3,160,325)
Other operating income 2,520 165,012
Total (3,966,147) (2,995,313)
Profit from operations 2 233,124 307,492
Finance income 59 297
Finance expenses (219,624) (227,255)
Profit before tax 13,559 80,534
Tax Credit 3 - 124,549
Profit for the year 13,559 205,083
Earnings per share 4
Basic 0.01p 0.11p
Fully diluted 0.01p 0.10p
Statement of Financial Position as at 30 June 2022
30 June 30 June
2022 2021
Notes £ £
Non-current assets
Intangible assets 148,147 140,470
Property, plant and equipment 5 3,125,339 2,629,053
Right of use assets 1,579,524 1,372,434
Trade and other receivables 31,500 31,500
4,884,510 4,173,457
Current assets
Inventories 251,580 193,133
Trade and other receivables 1,864,437 868,878
Deferred tax asset 82,000 82,000
Cash and cash equivalents 1,472,771 1,301,612
3,670,788 2,445,623
Total assets 8,555,298 6,619,080
Current liabilities
Trade and other payables (2,429,751) (2,052,345)
Customer deposits (1,734,596) (944,000)
Lease liabilities (279,798) (264,168)
Provisions 7 (23,423) (29,998)
(4,467,568) (3,290,511)
Non-current liabilities
Borrowings 6 (1,115,761) (1,137,146)
Lease liabilities (1,518,875) (1,335,874)
Provisions 7 (52,632) (52,632)
(2,687,268) (2,525,652)
Total liabilities (7,154,836) (5,816,163)
Net assets 1,400,462 802,917
Equity
Share Capital 193,945 193,945
Share Premium 1,222,433 1,222,433
Other Reserves 1,421 1,421
Revaluation reserve 1,102,343 518,357
Retained Earnings (1,119,680) (1,133,239)
Total equity 1,400,462 802,917
Statement of Changes in Equity for the year ended 30 June 2022
Share Share Other Revaluation Retained
Capital Premium Reserves Reserve Earnings Total
£ £ £ £ £ £
At 30 June 2020 186,745 1,188,021 1,421 560,906 (1,342,373) 594,720
Profit for the year - - - - 205,083 205,083
Share issue 7,200 34,412 - - - 41,612
Revaluation of freeholds - - - - - -
Deferred tax on Revaluation of freeholds - - - (42,549) - (42,549)
Share based payments - - - - 4,051 4,051
At 30 June 2021 193,945 1,222,433 1,421 518,357 (1,133,239) 802,917
Profit for the year - - - - 13,559 13,559
Share issue - - - - - -
Revaluation of freeholds - - - 583,986 - 583,986
Deferred tax on Revaluation of freeholds - - - - - -
Share based payments - - - - - -
At 30 June 2022 193,945 1,222,433 1,421 1,102,343 (1,119,680) 1,400,462
Statement of Cash Flows for the year ended 30 June 2022
2022 2021
£ £
Cash flows from operating activities
Profit from operations after tax 233,124 432,041
Amortisation of intangible assets 33,104 32,970
Depreciation and impairment of property, plant and equipment 174,338 188,403
Depreciation of right of use assets 258,731 256,990
Share based payments - 4,051
Loss on disposal of property, plant and equipment 2,160 3,237
(Increase) in inventories (58,447) (40,603)
(Increase) in receivables (995,559) (315,102)
Increase in payables 377,406 598,114
Increase in Customer Deposits 790,596 362,942
(Decrease) in provisions (6,575) (34,423)
Cash generated from operations 808,878 1,488,620
Tax (Credit) on Operations - (124,549)
Net cash from operating activities 808,878 1,364,071
Cash flows from investing activities
Purchase of intangible assets (40,781) (16,250)
Purchase of property, plant and equipment (92,407) (27,317)
Net proceeds from sale of property, plant and equipment - (2,487)
Interest received 59 297
Net cash used in investing activities (133,129) (45,757)
Cash flows from financing activities
Interest paid (126,769) (125,970)
Allotment of shares - 41,608
Repayment of borrowings - finance leases (21,385) (18,887)
Repayment of borrowings - bank loans - (111,701)
Repayment of IFRS 16 lease liabilities (356,436) (360,517)
Net cash used in financing activities (504,590) (575,467)
Net increase in cash and cash equivalents 171,159 742,847
Net cash and cash equivalents at the start of the period 1,301,612 558,765
Net cash and cash equivalents at the end of the year 1,472,771 1,301,612
Net cash and cash equivalents comprise:
Cash at bank and in hand 1,472,771 1,301,612
Bank overdrafts - -
1,472,771 1,301,612
The table below sets out an analysis of net debt and the movements in net debt
for each of the periods presented.
Reconciliation of Net debt
Liabilities from financing activities Other assets
Borrowings Lease liabilities Sub-total Cash balances
Net debt as at 1,267,734 1,674,316 2,942,050 558,765
1 July 2020
Cash Flows (130,588) (239,363) (369,951) 742,847
New leases - 165,089 165,089 -
Net debt as at 1,137,146 1,600,042 2,737,188 1,301,612
30 June 2021
Cash Flows (21,385) 198,631 177,246 171,159
Net debt as at 1,115,761 1,798,673 2,914,434 1,472,771
30 June 2022
Notes to the Financial Statements
1. General information
While the financial information included in this preliminary announcement has
been prepared in accordance with International Financial Reporting Standards
(IFRSs), this announcement does not itself contain sufficient information to
comply with IFRSs. The Group will publish full financial statements that
comply with IFRSs which will shortly be available on its website and are to be
posted to shareholders shortly.
The financial information set out in the announcement does not constitute the
Company's statutory accounts for the years ended 30 June 2022 or 2021. The
financial information for the year ended 30 June 2021 is derived from the
statutory accounts for that year, which were prepared under IFRSs, and which
have been delivered to the Registrar of Companies. The auditor's report on
those accounts was unqualified and did not contain a statement under either
Section 498(2) or Section 498(3) of the Companies Act 2006 and did not include
references to any matters to which the auditors drew attention by way of
emphasis.
The financial information for the year ended 30 June 2022 is derived from the
audited statutory accounts for the year ended 30 June 2022 on which the
auditors have given an unqualified report, that did not contain a statement
under section 498(2) or 498(3) of the Companies Act 2006. The statutory
accounts will be delivered to the Registrar of Companies following the
Company's annual general meeting.
Going concern
The financial statements are prepared on a going concern basis, which the
directors believe to be appropriate for the following reasons:
The results show that the Company made a profit before tax and one-off,
non-recurring expenditure, of £166k and a reported profit of £14k (2021:
profit before tax of £80k) and had net current liabilities of £895k (2021:
£844k) as at 30 June 2022. The one-off non-recurring costs were related to
project and restructuring costs.
The year finished with a positive gross cash position of £1,473k. The Company
has total loans of £1,116k, largely secured on its freehold properties. Net
cash, excluding IFRS 16 lease liabilities, was therefore £357k (2021: net
cash £165k). Customer deposits are £790k higher than last year, reflecting
the strength of the order book at year end.
The Company owns the Freeholds of its factory in Wantage, and also its
showroom in Hungerford. These Freeholds have been revalued as at June 2022,
with the total valuation increased by £584k to £2,431k. The revaluation is
reflected in the Accounts to 30 June 2022 as a movement in the revaluation
reserve. The Company's closing Net Assets were £1.4 million (2021: £0.8
million).
The Directors have had preliminary contact with lenders to re-finance the
loan, based on our return to profitability, asset backing and stronger cash
generation. It is the intention of the Directors to refinance the loan within
the new financial year to 30 June 2023.
The Trading Outlook within the Chief Executive's Business review shows that we
entered the new financial year with a robust order book, inclusive of the
deferred orders from FY22. As a result, the level of orders confirmed in the
first 21 weeks are ahead of the prior year. Dispatched sales, forward
committed orders and future orders against which a first stage deposit has
been taken, stood at £8.6 million (2021: £7.4 million). New business has
remained consistent and with improvements driven by the digital marketing
strategy, the quality of quoted business is strong and we remain confident of
our ability to continue to convert at a high level moving forward.
Each carefully considered building block in our FY23 plan has been evaluated
for its impact on our profits for this current year, as we continue to
strengthen our capacity and our infrastructure to respond to sustainably
higher demand, confident that our operating model can accommodate the growth
we anticipate over the coming period.
Cash flows have been prepared for a period of at least twelve months from the
date of signing these financial statements. For additional prudence, the
Directors have modelled a severe, but plausible, sensitivity up to a 15%
reduction in sales against this plan and for a period of twelve months from
the date of signing, to be assured that the Company can withstand any economic
instability and the insecurity around energy markets arising from the current
war in Ukraine.
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. The Directors have considered
all of the factors noted above, including the strength in the Company's
current trading and forward order book, together with the high levels of
quoted business moving forwards and are confident that the Company has
adequate resources to continue to meet all liabilities, as and when they fall
due, for the foreseeable future and, at least for the period of twelve months
from the date of approval of these financial statements.
2 PROFIT FROM OPERATIONS
2022 2021
£ £
Profit from operations is stated after charging:
Auditors remuneration - Company audit 26,900 26,900
Auditors remuneration - taxation services 3,600 3,600
Amortisation of intangible fixed assets 33,104 32,970
Depreciation of owned property plant and equipment 161,895 175,959
Depreciation of plant and equipment held 12,444 12,444
on finance leases
Depreciation of Right of Use Assets 258,731 256,990
Government Grant - CJRS
- Direct Factory Labour - (20,571)
- Other Salaries - (62,564)
Other Operating Income - 'Government Grant for Retail Businesses' - (165,012)
Profit / (Loss) on disposal of property, plant and equipment (2,160) 3,237
Operating lease rentals
- Plant and machinery 11,894 11,610
Cost of inventories recognised as an expense 3,706,358 2,806,385
3 TAX ON PROFIT FROM OPERATIONS
2022 2021
£ £
Current period taxation
UK Corporation tax charge for the period - -
Total current tax - -
Origination and reversal of temporary timing differences - -
Current year deferred tax asset recognised / (not recognised) - -
Reversal of previously recognised Deferred Tax asset - 82,000
Deferred tax credit on losses - -
Adjustment in respect of previous years Research and Development tax credit - -
Changes in tax rates being 6% impact on the deferred tax asset/liabilities - 42,549
recognised on losses/revaluations in prior year
- 124,549
The tax assessed for the period differs from the standard rate of corporation
tax in the UK. The differences are explained below:
2022 2021
£ £
Profit on ordinary activities before tax 13,559 80,534
Profit on ordinary activities multiplied by standard rate of corporation tax 2,576 15,301
in the UK of 19%
Effect of:
Expenses not deductible for tax purposes - -
Depreciation on assets not qualifying for tax allowances - 2,197
Other permanent differences (2,576) 32,992
Adjustment in respect of previous years Research and Development tax credit - -
Prior year adjustment on IFRS16 adoption - -
Effect of change in local corporation tax rate - (104,867)
Deferred tax asset not recognised - (27,623)
Deferred tax credit on losses - -
Change of tax rate for DT Asset on Revaluation reserve recognised in OCI - (42,549)
Total tax credit / (charge) in income statement - 124,549
The main rate of corporation tax will rise from 19% to 25% from 1 April 2023.
On this basis deferred tax is provided at the future rate of 25%.
4 EARNINGS PER SHARE
2022 2021
Earnings per ordinary share is calculated as
follows:
Basic
Profit attributable to ordinary shareholders (£) 13,559 205,083
Weighted average number of ordinary
shares in issue 193,945,190 189,388,807
Earnings per ordinary share 0.01 p 0.11 p
Fully diluted
Profit attributable to ordinary shareholders (£) 13,559 205,083
Weighted average number of ordinary
shares in issue 193,945,190 189,388,807
Weighted average number of ordinary
shares under option 17,478,866 17,478,866
Earnings per ordinary share 0.01 p 0.10 p
Basic earnings per share amounts are calculated by dividing the profit 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 profit 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.
5 PROPERTY, PLANT AND EQUIPMENT
Freehold land and buildings Showroom display & shop fittings Plant & machinery and loose tools Office fixtures, fittings & IT equipment Total
Cost or Revaluation £ £ £ £ £
At 1 July 2020 2,685,886 2,236,772 563,899 307,266 5,793,823
Additions - 8,644 703 17,970 27,317
Disposals - (4,147) (33,974) (1,104) (39,225)
Utilise Oxford Dilapidations (3,423) - - - (3,423)
Revaluation - - - - -
At 30 June 2021 2,682,463 2,241,269 530,628 324,132 5,778,492
Additions - 35,507 17,873 39,027 92,407
Disposals - (8,005) (2,916) - (10,921)
Utilise Oxford Dilapidations (2,679) - - - (2,679)
Revaluation 834,888 - - - 834,888
At 30 June 2022 3,514,672 2,268,771 545,585 363,159 6,692,187
Depreciation and impairment
At 1 July 2020 789,682 1,639,632 327,942 245,692 3,002,948
Charge for the
year 23,273 97,239 46,529 20,506 187,547
Revaluation - - - - -
Disposals (2,567) (472) (36,913) (1,104) (41,056)
At 30 June 2021 810,388 1,736,399 337,558 265,094 3,149,439
Charge for the
year 23,273 83,266 43,031 24,769 174,339
Revaluation 250,902 - - - 250,902
Disposals (1,342) (6,055) (435) - (7,832)
At 30 June 2022 1,083,221 1,813,610 380,154 289,863 3,566,848
-
Net book value
At 30 June 2022 2,431,451 455,161 165,431 73,296 3,125,339
At 30 June 2021 1,872,075 504,870 193,070 59,038 2,629,053
The freehold land element of freehold land and buildings which
was not depreciated was £503,624 (2021 - £503,624). The net book value
of items held under finance leases was £81,068 (30 June 2021: £93,512). The
depreciation charge for items held under finance leases is shown in note 4 of
the financial statements.
Land and buildings classified as property, plant and equipment were valued as
at 30 June 2022 using the market approach carried out by external independent
qualified valuers.
The valuation techniques are consistent with the principles in IFRS 13 and the
fair value measurement of each property has been classified as Level 2 in the
fair value hierarchy. There were no changes to the valuation techniques during
the period. The fair value measurement is based on the above items' highest
and best use, which does not differ from their actual use. Had the revalued
properties been measured on a historical cost basis, their net book value
would have been 2022: £1,165,527 (2021: £1,190,549). The revaluation surplus
(gross of tax) amounted to £1,276,463 (2021: £692,477).
6 BORROWINGS
2022 2021
£ £
Loans 1,079,000 1,079,000
Finance lease liabilities 36,761 58,146
1,115,761 1,137,146
Presented in the balance sheet as:
Lease liabilities - current 279,798 264,168
Borrowings - current - -
Borrowings - non-current 1,115,761 1,137,146
1,395,559 1,401,314
(a) Bank & other borrowings
Analysis of bank loan repayments:
In one year or less - -
In more than one year but not
more than two years - -
In more than two years but not
more than five years - -
In more than five years 1,079,000 1,079,000
1,079,000 1,079,000
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.
2022 2021
£ £
(b) Finance lease liabilities
Gross finance lease liabilities -
minimum lease payments:
In one year or less 23,883 21,385
Between one and five years 12,878 36,761
More than five years - -
36,761 58,146
Future finance charges on finance lease liabilities (2,966) (8,065)
Present value of finance lease liabilities 33,795 50,081
Future finance charges on finance lease liabilities are analysed as follows:
2022 2021
£ £
In one year or less (2,601) (5,099)
Between one and five years (365) (2,966)
(2,966) (8,065)
Finance lease liabilities are effectively secured as the rights to the leased
asset revert to the lessor in the event of default.
PROVISIONS
7
7
PROVISIONS
Warranty Dilapidations provision Total
provision
£ £
At 1 July 2020 57,575 59,478 117,053
Arising during the year - - -
Utilised during the year (31,000) (3,423) (34,423)
At 30 June 2021 26,575 56,055 82,630
Arising during the period 5,000 - 5,000
Utilised during the period (11,575) - (11,575)
At 30 June 2022 20,000 56,055 76,055
2022 2021
£ £
Current 23,423 29,998
Non-Current 52,632 52,632
76,055 82,630
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.
8 SHARE BASED PAYMENTS
2022 2021
£ £
Share based payments expense - 4,051
The charge relates entirely to equity-settled share based payment
transactions.
On 25 March 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 (http://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 Ordinary Share) Percentage of the Award which vests
> £0.03 9.375%
> £0.04 9.375%
> £0.05 9.375%
> £0.06 9.375%
> £0.07 9.375%
> £0.08 9.375%
> £0.09 9.375%
> £0.10 9.375%
If the AIM listed share price has reached £0.03 or higher
Profit before Tax (in any 12-month statutory accounting period) Percentage of the Award which vests
> £200k 5.00%
> £400k 5.00%
> £500k 5.00%
> £600k 5.00%
> £700k 5.00%
Assumptions used in the valuation of share option awards during the year were
as follows:
Award date Share price at date of award / exercise price (pence) Expected volatility Risk free rate Expected dividends Option life in years IFRS2 fair value per share option (pence)
25 March 2019 0.6 / 1.0 50% 1.02% - 10 0.125 - 0.229
Share and share option awards outstanding
The share options awarded during the year under the Option Plan were as
follows:
Scheme and date of award Exercise B / Fwd Number granted Number Number C / Fwd
price
1 July
forfeited
exercised
30 June
2021
2022
Option Plan 1 pence 17,112,673 - 3,529,768 - 13,582,905
25 March 2019
Vesting date is variable but no less then 2 years
9 RELATED PARTY TRANSACTIONS
Ultimate Controlling Party
Shareholders with a substantial interest in the Company are outlined on over
3% of the current share capital are outlined on page 12 of the financial
statements.
Transactions
During the year the Company entered into transactions, in the ordinary course
of business, with other related parties. The transactions with Directors of
the Company are disclosed in notes 5 and 24 of the financial statements.
Transactions with key management personnel (comprising the Directors and key
members of management) are disclosed below:
Transaction with Directors
On 30 December 2021 Alan Charlton purchased 2,500,000 shares on the open
market.
Compensation of key management personnel (including Directors)
2022 2021
£ £
Short term employee benefits 202,236 167,350
Share-based payments - 4,051
202,236 171,401
10 PUBLICATION OF ACCOUNTS AND ANNUAL GENERAL MEETING
The Annual Report and Accounts for the year ended 30 June 2022 will be sent to
shareholders shortly and will be made available on the Company's website.
The Annual General Meeting of the Company will take place at the offices of
John Lewis of Hungerford plc, Grove Business Park, Downsview Road, Wantage,
Oxfordshire OX12 9FA at 2.00pm on Wednesday 18 January 2023.
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