John Lewis Of Hungerford PLC 20 February 2006 John Lewis of Hungerford plc Final results - year ending 31 August 2005 2005 HIGHLIGHTS . Sales increase 20.6% to £4,351,312 (2004 - £3,608,597). . Operating loss £3,016 (2004 profit - £28,675). . Net cash inflows from operating activities £236,326 (2004 - £15,003). . Cash balances at 31 August 2005 £390,214 (2004 - £373,676). . Board strengthened with the appointment of new Executive Director in January 2006. COMPANY PROFILE John Lewis of Hungerford plc ("the Company") designs, manufactures, and retails kitchens, furniture, bathrooms and wall panelling direct to the public from its own showrooms and Company managed concessions throughout the United Kingdom. In addition the Company operates a United Kingdom direct mail order business, under the name of Just Doors for replacement kitchen cabinet doors. Manufacturing and administration is carried out from a purpose built factory at Wantage, Oxfordshire constructed in 1998. The Company's core product line is the "Artisan(R)" range of kitchens and furniture. In recent years the Company has expanded its line of branded products to include the retro style Creme de la Creme kitchen. For more information about the Company and its products visit our web sites: www.john-lewis.co.uk www.justdoors.co.uk CHAIRMAN'S STATEMENT The financial results for the year under review are disappointing. Despite sales growth of more than 20% the Company reported a small operating loss. However the Company's products remain in the forefront of design. In September 2004, the Company's 'Creme de la Creme' kitchen won a BIDA (British Interior Design Association) award for outstanding design and best product at the DECOREX 2004 exhibition in London. The Company continues to develop its portfolio of brands offering quality products at affordable prices, which customers really want to have in their homes. Sales for the year ended 31 August 2005 increased by 20.6% to £4,351,312 compared to £3,608,597 for the previous year. Losses before tax for the same period were £24,756 compared to a profit of £22,016 for the previous year. Gross margins declined to 57.4% from 62.8% in the prior year. This reflects a higher proportion of sales made at discounted prices in the present competitive retail environment. The loss for the financial year after taxation amounted to £17,629 (2004 - £10,519 profit). Net cash inflows before financing were £33,757 (2004 - £546,214 outflows). Basic losses per share were 0.01p (2004 - earnings 0.01p). No dividend is proposed for the year. The Company currently trades from 7 showrooms and 3 concession sites. As indicated above the financial results for the year have been disappointing. Unit sales of kitchens increased by approximately 2% whereas furniture unit sales were broadly flat (both compared to the prior year). Sales by the mail order division 'Just Doors' increased 3% in a highly competitive market. Sales of 'Just Doors' continue to be disappointing as a result of intense competition in the replacement kitchen door market. The results for the period were significantly improved by an exceptionally successful summer 2005 promotion. In the month of August 2005 invoiced sales amounted to £628,715 representing 14.4% of the annual sales. This demonstrates how promotionally focused the Company's markets have become. Direct Selling costs (including sales discounts) increased 32% over the prior year representing 31.0% of sales. In addition to a substantial increase in promotional discounts, this cost increase reflects full year operating costs of the Fulham Road showroom opened during the prior year. Marketing and related costs increased 8.4% over the prior year representing 16.8% of sales. Production costs (excluding raw materials) increased 10.5% over the prior year. Administration and Financial costs were broadly flat compared to the prior year. During the period under review the Company continued to maintain a cash generative business model with Net Cash Inflows from Operating Activities amounting to £236,326 (2004 - £15,003). Cash balances at 31 August 2005 totalled £390,214 (2004 - £373,676). The Company has standby overdraft facilities of £250,000. Capital expenditures (net) in the current year totalled £194,594 (2004 - £423,930) and consisted mainly of the costs of opening one new showroom (formerly a concession) and refitting a further showroom. On the basis of the results for the year no dividend is being proposed. During September and October 2005 the Company experienced a severe downturn in orders which negatively impacted the financial performance and cash position of the Company. Results since, however, have been encouraging, resulting in a strong order book. Nevertheless due to the poor start the results for the first half of the year are likely to show a significant trading loss and the outcome for the full year remains challenging. In January 2006, Malcolm Hepworth joined the Board of the Company as a Director and under the terms of a consultancy arrangement assumed certain executive responsibilities in relation to the Company's business. This change will allow myself as Chairman to focus on new product development and marketing, so essential to our Company's future. Malcolm comes to the Company with a wealth of retail experience which will be of immense value in the present tough trading climate. John L. Lewis Chairman 20 February 2006 Profit and Loss Account for the year ended 31 August 2005 2005 2004 £ £ Turnover 4,351,312 3,608,597 Cost of sales (1,853,980) (1,341,659) ----------- ----------- Gross profit 2,497,332 2,266,938 Distribution costs (727,537) (600,998) Administrative expenses (1,772,811) (1,637,265) ----------- ----------- Operating (loss) / profit (3,016) 28,675 Interest receivable and similar income 1,881 14,498 Interest payable and similar charges (23,621) (21,157) ----------- ----------- (Loss) / profit on ordinary activities before taxation (24,756) 22,016 Tax on (loss) / profit on ordinary 7,127 (11,497) activities ----------- ----------- (Loss) / profit for the financial year (17,629) 10,519 Dividends - - ----------- ----------- Retained (loss) / profit for the financial (17,629) 10,519 year ======= ======= (Loss) / earnings per share Basic (0.01)p 0.01p Fully diluted (0.01)p 0.01p The profit and loss account has been prepared on the basis that all operations are continuing operations. Balance Sheet as at 31 August 2005 2005 2004 £ £ £ £ Fixed assets Intangible assets 29,712 34,077 Tangible assets 1,907,949 1,941,590 --------- --------- 1,937,661 1,975,667 Current assets Stocks 356,064 490,987 Debtors 74,281 86,243 Cash at bank and in hand 390,214 373,676 --------- --------- 820,559 950,906 Creditors: amounts falling (750,584) (871,866) due within one year --------- --------- Net current assets 69,975 79,040 --------- --------- Total assets less 2,007,636 2,054,707 current liabilities Creditors: amounts falling (327,159) (344,028) due after more than one year Provisions for liabilities (57,993) (70,566) and charges --------- --------- Total net assets 1,622,484 1,640,113 ======= ======= Capital and reserves Called up share capital 148,745 148,745 Share premium account 824,771 824,771 Other reserves 1,421 1,421 Profit and loss account 647,547 665,176 --------- --------- Shareholders' funds 1,622,484 1,640,113 - all equity interests ======= ======= The financial statements were approved by the Board on 20 February 2006. John L. Lewis Richard D. Worthington F.C.A. Director Director Cash Flow Statement for the year ended 31 August 2005 2005 2004 £ £ £ £ Net cash inflow from 236,326 15,003 operating activities Returns on investments and servicing of finance Interest received 1,881 14,498 Interest paid (23,621) (21,157) -------- -------- Net cash outflow from (21,740) (6,659) returns on investments and servicing of finance Corporation tax 13,765 (70,128) Capital expenditure Payments to acquire - (17,590) intangible fixed assets Payments to acquire (22,772) (414,942) tangible fixed assets Receipts from sales 6,178 8,602 of tangible fixed assets --------- --------- Net cash outflow from (194,594) (423,930) capital expenditure Equity dividends paid - (60,500) --------- --------- Net cash inflow / (outflow) 33,757 (546,214) before financing Financing Repayment of Loan (17,219) (17,681) -------- -------- Net cash (outflow) from (17,219) (17,681) financing --------- --------- Increase / (decrease) in 16,538 (563,895) cash ======= ======= 1. Preliminary Results The preliminary results have been extracted from the Company's audited accounts which have been approved and signed by the directors and auditors, but have not yet been delivered to the Registrar of Companies. The audited accounts have been prepared under the historical cost convention using the accounting policies set out in the Company's 2005 statutory financial statements. 2. Reconciliation of Movement in Shareholders' funds 2005 2004 £ £ (Loss) / profit for the financial (17,629) 10,519 year Dividends - - ---------- ---------- Net (reduction from) / addition to (17,629) 10,519 shareholders' funds Opening shareholders' funds 1,640,113 1,629,594 ----------- ----------- Closing shareholders' funds 1,622,484 1,640,113 ======== ======= 3. (Loss) / earnings per Share Earnings per ordinary share is calculated as follows: 2005 2004 Basic (Loss) / profit attributable to £(17,629) £10,519 ordinary shareholders Weighted average number of ordinary 148,745,519 148,745,519 shares in issue (Loss) / earnings per ordinary share (0.01)p 0.01p ========== ========== Fully diluted (Loss) / profit attributable to £(17,629) £10,519 ordinary shareholders Weighted average number of ordinary 148,745,519 148,745,519 shares in issue (Loss) / earnings per ordinary share (0.01)p 0.01p =========== =========== Weighted average number of ordinary 148,745,519 148,745,519 shares in issue - basic calculation Number of shares deemed to have been - - issued for no consideration in respect of share options ------------ ------------ - fully diluted calculation 148,745,519 148,745,519 ============ ============ 4. 2005 Report and Accounts Copies of the 2005 report and accounts will be sent to shareholders in due course. Further copies will be available from the Company's nominated adviser, Smith & Williamson Corporate Finance Limited, 25 Moorgate, London, EC2R 6AY, free of charge, for one month from the date of this announcement. 5. Copy of Announcement A copy of this announcement will be available from the nominated adviser, Smith & Williamson Corporate Finance Limited, No 25 Moorgate, London, EC2R 6AY, for one month from the date of this announcement. -ends- This information is provided by RNS The company news service from the London Stock Exchange