REG - John Lewis Of Hunger - Half-year Report <Origin Href="QuoteRef">JLH.L</Origin>

John Lewis of HungerfordAnnouncement

05/05/2017 07:06

RNS Number : 2570E
John Lewis Of Hungerford PLC
05 May 2017
JOHN LEWIS OF HUNGERFORD PLC
("John Lewis of Hungerford" or the "Company")
Interim Results for the Six Months Ended 28 February 2017
Overview
This statement covers the first trading period since the changes in the management and Board structure reported last year.
The improved performance reflects actions taken on cost reduction and renewed focus on improving the customer experience. Implementing these changes against a backdrop of significant management change inevitably creates challenges and was only possible through the strength and commitment of our people, whom remain our most vital asset for the business going forward. We remain committed to returning the business to sustainable profitability and these results are an important milestone in this.
Financial Review
Turnover for the first half year was in line with the previous year at 3.6m (2016: 3.6m), but from an estate comprising two less showrooms. Adjusting for the closures of Harrogate and Tunbridge Wells during the previous year, the comparable like for like (LFL) sales show a growth of 3%. We are pleased with this sales performance which comes against a mixed economic picture, with the strong confidence levels immediately following the Brexit vote, replaced by weakening consumer spend in the early months of 2017.
The improved sales performance combined with the cost reduction activities contributed to a substantially reduced loss in what is traditionally our weaker trading period. The loss before tax for the first six months of 144k (2016: 430k) includes a non-recurring charge of 15k, including an under accrual of showroom closure costs in the last financial year.
A summary of the financial results show:

2017

2016

Movement

'000

'000

%






Turnover: 





 Total Turnover
3,569

3,613


 Closed Stores
45

202


 Comparable Stores (LFL)
3,524

3,411

3%






Cost of Sales
(1,790)

(1,795)

0%






Gross Margin
1,779

1,818

(2)%






Overheads/Other
(1,887)

(2,188)

(14)%






Non-recurring Costs
(15)

(38)

(59)%






Operating Loss (before finance costs)
(123)

(408)

(70)%
Key performance indicators for the first half year, on a like for like basis, are summarised below:

6mths ended
28 Feb 2017
6mths ended
29 Feb 2016
Movement
%
Turnover '000
3,524
3,411
+3%
Gross margin%
50%
50%
-
Number of kitchens sold
126
136
(7)%
Average Sale Value
25.7k
23.1k
+11%
Number of bedrooms sold
25
25
-
Average Sale Value
5k
4.6k
+7%
Store Investment
The first half year has seen further investment into the showroom portfolio, as the simplicity of our lay-on range continues to grow with renewed appeal. We have installed new displays in our Fulham and Cobham showrooms, together with the further roll out of the contemporary Pure into our Hungerford showroom. It is critical in a competitive retailing environment that the showroom offering remains fresh and inspiring.
The Fitted Wardrobe Collection by John Lewis of Hungerford, was launched in April in our Winchester Showroom and has been very warmly received. We are looking to further showcase this category in several stores, to boost the visibility of the Bedrooms business.
Operational Review
During the first half year we have undertaken a review of the internal processes within the business, which has highlighted several areas which require priority attention. This again relies on the commitment of our staff to embrace and enforce change. Examples of some of the actions being undertaken include: updating the systems operating within the Company, in order to simplify the process between sales and manufacturing. This will assist us in our drive to further improve our customer satisfaction levels from an already high 96%. It will also lead to improved visibility of product costings and range profitability.
In addition, the newly restructured finance department is implementing new reporting processes to provide the Board with greater insight to drive decision making. This will greatly assist the Board to continue to establish opportunities to improve our internal processes, as we embark upon our next programme of growth.
In conclusion, efforts across the business have been redoubled to ensure that the customer experience is paramount in all aspects of our product delivery. From the early engagement with the business, through to a successful conclusion which builds significant referrals, the focus is exclusively on ensuring that the Company delivers on the ambition of our customers to design exceptional and unique home solutions.
Strategic Review
In addition to the operational review, we have commenced work on the previously announced more fundamental review of our strategic positioning. This work has already highlighted areas where we can improve some of the basic customer engagement processes, from the initial marketing, through to an enriched customer experience. Work remains underway and we hope to be in a position to report the conclusions to shareholders by the end of the financial year.
Cash Flow
Cash at bank and in hand at the end of the period was 594k (2016: 494k), which includes customer depositsand advance payments. Our bank loans at the end of the period were 745k (2016: 835k) repayable over 10 years. Our overdraft facility of 250,000 remained unused throughout the period. 
Current Trading
We believe the best measure of current trading to be the aggregate of our dispatched sales and the forward order book, being committed orders for which deposits have been taken. At the end of the period the aggregate of these stood at 4.5m (2016: 4.5m). This differs from our statutory revenue recognition policy, which is to recognise sales only at the point orders are dispatched.
The second half year is traditionally our stronger trading period and we remain cautiously optimistic that we will achieve sales results broadly in line with the previous year, with a reduced cost and store base. This should return the business to a modest level of profitability for the full year. However, our business remains sensitive to the prevailing market conditions and as such, uncertainty around the election and the Brexit negotiations could still affect consumer confidence. The Board continues to monitor the situation closely and will provide a further update to shareholders in due course.
Board Changes
The Board would like to take this opportunity to acknowledge the great contribution John Lewis has made to the Company over the last 45 years. John steps down from the Board after a long and notable career serving the business which he founded back in 1972. The staff and the management team would like to thank John for his many years of devoted service and dedication to the business. He has guided the business through years of success and many challenges and always remained steadfast in his support of the team at the helm. His creative talents are many and have helped to build a strong and universally loved brand, which customers and employees alike, have always enjoyed being a part of. We all wish him well and thank him most sincerely.
The Directors expect to announce further Board appointments in due course and will update shareholders at the appropriate time.
Kiran Noonan
Chief Executive Officer
Gary O'Brien
Non-Executive Chairman
Enquiries:



John Lewis of Hungerford plc
01235 774300
Gary O'Brien, Chairman



Smith & Williamson Corporate Finance Limited

Martyn Fraser
0117 376 2213
Katy Birkin
0207 131 4000
INCOME STATEMENT








FOR THE SIX MONTHS ENDED 28 FEBRUARY 2017






















Audited








Year



Unaudited 6 months ended


ended



28 February
29 February

31 August



2017

2016


2016












'000

'000


'000


Note







Revenue


 3,569 


3,613 



8,180 









Cost of sales


(1,790)

(1,795)


(4,114)









Gross profit


1,779 

1,818 


4,066 









Selling and distribution costs


(208)

(258)


(478)









Administration expenses:

















 Share based payments


 -

 -


 -
 Other


(1,679)

(1,930)


(3,770)
Other non recurring items








Restructuring Costs

(15)

(38)


(201)
Total


(1,694)

(1,930)


(3,971)









Loss before share based payments

(123)

(408)


(383)









Loss from operations


(123)

(408)


(383)









Finance expenses


(21)

(22)


(33)









Loss before tax


(144)

(430)


(416)









Taxation


 -

 -


16 









Loss after taxation


(144)

(430)


(400)









Loss per share








Basic


(0.08)p

(0.23)p


(0.21)p
Fully diluted


(0.08)p

(0.23)p


(0.21)p
STATEMENT OF COMPREHENSIVE INCOME 





FOR THE SIX MONTHS ENDED 28 FEBRUARY 2017













Audited








Year



Unaudited 6 months ended


ended



28 February
29 February

31 August



2017

2016


2016












'000

'000


'000









Loss for the period


(144)

(430)


(400)









Total Comprehensive Income


(144)

(430)


(400)
BALANCE SHEET








AS AT 28 FEBRUARY 2017




















Unaudited

Unaudited

Audited



28 February
29 February

31 August



2017 

2016


2016












'000

'000


'000
Non-Current Assets








Intangible assets


67 

86 


75 
Tangible assets


2,443 

2,782 


2,590 
Trade and other receivables


57 

57 


57 



2,567 

2,925 


2,722 









Current assets








Inventories


185 

195 


212 
Trade and other receivables


411 

362 


362 
Cash and cash equivalents


594 

496 


1,107 



1,190 

1,053 


1,681 


















Current liabilities


(1,722)

(1,718)


(2,182)









Net current liabilities


(532)

(665)


(501)









Total assets less current








liabilities


2,035 

2,260 


2,221 


















Non-current liabilities


(651)

(746)


(693)









Provisions for liabilities








and charges


 -

(16)


 -









Net Assets


1,384 

1,498 


1,528 


















Equity








Share capital


187 

187 


187 
Other reserves


1 

1 


1 
Share premium account


1,188 

1,188 


1,188 
Retained Earnings


8 

122 


152 









Total Equity


1,384 

1,498 


1,528 
STATEMENT OF CHANGES IN EQUITY






FOR THE SIX MONTHS ENDED 28 FEBRUARY 2017















Share
Share
Other

Retained




Capital
Premium
Reserves

Earnings


Total










'000
'000
'000

'000


'000









At 31 August 2015 (Audited)
187 
1,188 
1 

552 


1,928 
Loss for the period
 -
 -
 -

(430)


(430)
At 28 February 2016 (Unaudited)
187 
1,188 
1 

122 


1,498 
Profit for the period
 -
 -
 -

30 


30 
Share based payments
 -
 -
 -

 -


 -
At 31 August 2016 (Audited)
187 
1,188 
1 

152 


1,528 
Loss for the period
 -
 -
 -

(144)


(144)
Share based payments
 -
 -
 -

 -


 -
At 29 February 2017 (Unaudited)
187 
1,188 
1 

8 


1,384 
STATEMENT OF CASH FLOWS







FOR THE SIX MONTHS ENDED 28 FEBRUARY 2017

















Unaudited

Unaudited

Audited



6 months

6 months


Year



ended

ended


ended



28 February
29 February

31 August



2017

2016


2016












'000

'000


'000









Loss from operations


(123)

(408)


(383)









Depreciation, impairment and amortisation
130 

131 


342 
Share based payments


 -

 -


 -
(Increase) / Decrease in inventories

27 

(5)


(22)
(Increase) / Decrease in receivables

(49)

(55)


(55)
Increase / (Decrease) in payables

(339)

(176)


144 
(Profit) / loss on disposal of property plant and equipment
93 

1


2 
Increase / (Decrease) in provisions

(123)

 -


123 









Net cash from operating activities

(384)

(512)


151 









Cash flows from financing activities

(61)

(74)


(118)









Cash flows from investing activities

(68)

(124)


(132)


















Net decrease in cash and cash equivalents
(513)

(710)


(99)
Net cash and cash equivalents at the start of the period
1,107 

1,206 


1,206 
Net cash and cash equivalents at the end of the period
594 

496 


1,107 
NOTES:



















1.This interim financial statement has been prepared on the basis of accounting policies adopted by the Company and set out in the annual report and accounts for the year ended 31 August 2016. The Company does not anticipate any change in these accounting policies for the year ended 31 August 2017. As permitted, this interim report has been prepared in accordance with the AIM Rules and not in accordance with IAS 34 "Interim financial reporting".










2.Basic and fully diluted loss per ordinary share is calculated as follows: 















6 months

6 months

Year




ended

ended


ended




28 February
29 February

31 August



2017

2016


2016











Profit / (loss) attributable to ordinary shareholders ('000)
(144)

(430)


(400)

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)
(0.08)p

(0.23)p


(0.21)p

Diluted earnings per ordinary share (pence)
(0.08)p

(0.23)p


(0.21)p











At 28th February 2017 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 2017 interim accounts will be available to shareholders on the Company's website www.john-lewis.co.uk
This announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

This information is provided by RNS
The company news service from the London Stock Exchange
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