Final Results

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 July 2020				1,267,734	1,674,316	2,942,050		558,765
Cash Flows				(130,588)	(239,363)	(369,951)		742,847
New leases				-	165,089	165,089		-
Net debt as at 30 June 2021				1,137,146	1,600,042	2,737,188		1,301,612
Cash Flows				(21,385)	198,631	177,246		171,159
Net debt as at 30 June 2022				1,115,761	1,798,673	2,914,434		1,472,771

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 sustainablyhigher demand, confident that our operating modelcan accommodatethe 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 on finance leases						12,444		12,444
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 recognised on losses/revaluations in prior year								-		42,549
								-		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 in the UK of 19%								2,576		15,301
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.
	7	PROVISIONS

													Warranty provision		Dilapidations provision					Total
															£					£
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 .
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 price				B / Fwd 1 July  2021					Number granted		Number forfeited			Number  exercised			C / Fwd 30 June 2022
Option Plan 25 March 2019 Vesting date is variable but no less then 2 years				1 pence					17,112,673			-		3,529,768			-			13,582,905

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.

 

END

 

 

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