John Lewis of Hungerford plc : Final Results 2013

John Lewis of Hungerford plc ("John Lewis of Hungerford" or the "Company") the specialist kitchen manufacturer and retailer today announces its final results for the year ended 31 August 2013.

I am pleased to present our results covering the twelve months to 31 August 2013.
This has been an important year for John Lewis of Hungerford and we are delighted with the progress we have made, both in commercial and financial performance terms. The return to profitability is particularly pleasing and supports our belief that 2012 was a temporary setback caused by factors outside our control.
The most notable commercial achievement was the development and launch of our new bedroom furniture range, in late June 2013. The bedroom furniture offering follows our established kitchen model with manufacture taking place in our Wantage factory followed by installation in our customer's homes by our own installation business. Not only does this move into a new furniture market open up fresh sales potential for us, it also demonstrates our commitment to secure increased economies of scale from our Wantage factory and Artisan installations business.
We are pleased with both consumer and media reaction to the launch of our bedroom range, which is being introduced in a controlled manner across our business. The Board sees the bedroom category as a significant determinant of future sales growth therefore we are ensuring we proceed at a pace which allows for a rewarding customer experience, resulting in positive word of mouth recommendations for our products and services, rather than merely meeting volume demand.
Other key achievements in the period include the refit of the Hungerford showroom, the home of our brand, and our showcase Fulham showroom completed shortly after the year end. This now includes a whole
floor devoted to bedrooms in addition to new kitchen displays and two new kitchen ranges. The new
kitchen ranges are both contemporary in design, manufactured in Wantage and created to widen our consumer appeal. Once the demand for these products has been established we intend to roll these two new ranges into other locations in due course.

The operating profit before taxation, share based payments and interest during the period under review was
£196,000 (2012: loss of £88,000), a result the Board consider satisfactory in a difficult and challenging economic background.
The financial performance was underpinned by a 17% increase in sales to £6,557,000 (2012: £5,626,000). It is particularly pleasing that this was achieved whilst improving overall gross margin to 52.7% (2012:
52.3%) reflecting, in part, operational improvements within our Artisan installations business.

The increase in kitchen sales reflects a higher volume of higher value kitchens.

The Artisan installations business continues to trade strongly with an improvement in gross margin to
29.1% (2012: 23.7%)

We ended the year with cash at bank and in hand of £1,122,000 (2012: £980,000) reflecting the positive working capital generated through customer deposits and advance payments. The net cash inflow from operating activities was £488,000 (2012: £364,000).
Capital expenditure, including capitalised development costs, of £325,000 was in line with budgeted amounts and principally arose from investment in our showroom estate and installation of a dedicated new showroom in Wantage.

The Board is not recommending payment of a dividend.

An important consideration for the business as it grows is the strength of the leadership team and I am delighted to welcome Kiran Noonan and Damian Walters to the Board. Both were already members of the senior management team and they have made a significant contribution to the results reported here.

A focus of the senior management team during the year has been creation of a new three year strategic plan in order to drive long term value creation for our shareholders. As part of this the Board reviewed and challenged its current strategy concluding that the core objective of increasing our retail footprint to drive greater efficiencies from our Wantage factory remains sound.
As a consequence of this process the Board has set an aspirational target of growing turnover to £10 million per annum and achieve a 5% operating profit by the end of FY 2016. The key driver of this will be through development of a more diverse range of products and services appealing to a wider customer base from an expanded store network. To this end we are currently in the process of actively seeking to secure two new showrooms in London and the South East.
Our commitment to investing in new showrooms has underpinned much of the sales growth in the business and new footage is seen as key to delivering our future plans.
However, we continue to apply a rigorous approach in evaluating potential new stores and there is no guarantee sufficient high quality sites will be identified to achieve the £10 million target. Nevertheless it is reflective of the Board's confidence that the steps taken to strengthen the business in recent years have created a robust and scalable platform.

We continue to experience good levels of customer enquiries and orders.
At the end of October 2013 we reported that orders and dispatched sales for Q1 of the current financial year were approximately 13% over the corresponding figure in 2012. This trend has continued into the second quarter and after the first 15 weeks of the financial year our current sales and forward order book stood at
£3,096,000, an increase of 11% over the comparable period last year.
We are encouraged by the current level of enquires which supports our view there is a positive momentum behind the business. However, we would again reinforce our belief that it is difficult to extrapolate meaningful short term forecasts given the high value discretionary expenditure nature of our business and the relatively long sales cycle involved.

The financial performance reported here is testament to the progress made in recent years in strengthening the business. However, we are not complacent and continue to monitor customer sentiment very carefully for indications of a repeat of the downturn in 2012.
Nevertheless our own performance indicators combined with an improving economic climate lead us to believe that we now need to continue to invest in the business if we are to deliver long term shareholder growth. Our new strategic plan presents the cornerstone of this and we look forward to the future with confidence.
I would again like to thank our loyal team of dedicated and talented employees for their hard work during this challenging yet rewarding year.

Enquiries:
Malcolm Hepworth, Chairman
John Lewis of Hungerford plc 01235 774300
Mark Lord Smith & Williamson Corporate Finance Limited 0117 376 2213

Cost of sales (3,103,122)(2,682,560)

Selling and distribution costs (420,306) (382,929)

Share based payments - (2,900) Other (2,838,437)(2,648,467)

Operating profit / (loss) before share
based payments 195,616 (88,432)

Interest receivable and
similar income 5,021 2,695
Interest payable and
similar charges (32,656)(34,634)

Tax on profit / (loss) on
ordinary activities (23,136)17,453

Basic 0.08p (0.06)p
Fully diluted 0.08p (0.06)p
The profit and loss account has been prepared on the basis that all operations are continuing operations.

Cash at bank and in hand 1,122,252 979,544
1,608,330 1,408,721

Called up share capital 186,745 186,745
Share premium account 1,188,021 1,188,021
Other reserves 1,421 1,421
Profit and loss account 646,303 501,458

Interest and similar income received 5,021 2,695
Interest paid (32,656)(34,634)

Payments to acquire
intangible fixed assets (60,462) (27,998)
Receipts from disposals
of tangible fixed assets 45,275 23,853
Payments to acquire
tangible fixed assets (264,625)(122,727)

Notes
1. Statutory Accounts
The financial information does not constitute statutory accounts as defined in section 435 of the Companies Act 2006, but has been extracted from the statutory accounts for the year ended 31 August 2013 on which an unqualified audit report has been issued and which will be delivered to the Registrar following their adoption at the Annual General Meeting.
The statutory accounts for the financial year ended 31 August 2012 have been delivered to the Registrar of
Companies with an unqualified audit.
2. Basis of preparation
The Company's statutory accounts have been prepared under the historical cost convention and in accordance with applicable accounting standards.
3. Loss per share
Basic and diluted
The calculation of profit/(loss) per share is based on a profit of £144,845 (2012: £105,818 loss) and a weighted average number of ordinary shares in issue of 186,745,519 ordinary shares (2011: 186,745,519).
4. Dividends
The Directors do not recommend payment of a dividend.
5. Posting of Accounts
Copies of the statutory accounts for the financial year ended 31 August 2013 will be posted shortly to shareholders with the notice of the Annual General Meeting. An electronic copy will be available on the Company's web site www.john-lewis.co.uk.
6. Annual General Meeting
The next Annual General Meeting of the Company will be held at the John Lewis of Hungerford Fulham
Showroom, 156-158 Wandsworth Bridge Road, London SW6 2UH at 4.00 p.m. on 27 January 2014

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