21st Apr 2005 14:59
Lewis(John) PLC21 April 2005 John Lewis plc Preliminary Results for the Year to 29 January 2005 Statement by the Chairman, Sir Stuart Hampson The Partnership marked its 75th anniversary in fine style. Gross sales of £5.3billion were 6% ahead of 2003/04 and trading profit, before exceptional items,increased by 7% to £242m. Our two divisions made almost exactly equalcontributions to that total, a clear confirmation that in a shifting retailenvironment John Lewis and Waitrose remain two of the UK's strongest retailbrands. Profit before Partnership bonus and taxation rose to £215m: an increaseof 24%, achieved in 52 weeks against last year's 53. The rate of distribution of Partnership Bonus was increased to 14% of Partners'pay (compared with 12% last year), at a total cost of £106m (last year £87m).This, together with an £81m charge for our final salary pension scheme, meantthat our 63,000 Partners shared a total of £187m from the Partnership'ssuccessful trading. £70m has been retained for reinvestment in the business(last year £62m). John Lewis Sales for the John Lewis division totalled £2.4bn - 1% ahead of the 53 weekfigure last year. In the first half year we faced softer comparisons as 2003sales were affected by both the Iraq war and the impact of the Congestion Chargein Central London. The slow pace of the second half was a concern for allretailers, but our pre-Christmas sales compared favourably with our competitors,and we also achieved strong Clearance trading. The completion of the Peter Jones refurbishment in June proved a high point forthe John Lewis division, and its appeal as a shopping destination is seen insales running substantially ahead of last year. Noteworthy increases also camefrom Cribbs Causeway, Cheadle, Solihull, Edinburgh and Glasgow. Robert Sayle hasstarted its three year 'decamp' to temporary space before moving to a new storein Cambridge's new Grand Arcade shopping scheme in 2007. The strength and reputation of the John Lewis brand underpins our ability tooperate successfully as a multi-channel retailer. Our e-commerce operation, JohnLewis Direct, recorded a year-on-year sales increase of 75%, bringing it up toour original target of matching a medium-sized department store, with every signof substantial further growth to come. We have begun to see encouraging results from the new focus in our John Lewisbuying teams, and our own-brand business is gaining in authority and appeal. Weachieved a further improvement in gross margin during 2004, and positivecustomer response to new ranges gives encouragement for the year ahead. The John Lewis division has tackled a number of reorganisation projects inrecent years, and the benefits of a leaner cost structure are beginning to showthrough in greater operating efficiency and productivity gains. Our manufacturing companies continued to face a difficult market for textiles.While reorganisation has secured significant cost savings, sales growth hasproved more difficult. We have therefore written down the value of our assets atStead McAlpin and JH Birtwistle by a further £7m. Properties no longer required by Peter Jones were sold, yielding a profit of£8m. Excluding property and other exceptional items, the John Lewis divisionproduced a 9% improvement in trading profit to £121m. Looking ahead, we have a strong pipeline of new shops, with firm proposalsannounced for Cardiff, Leicester, Portsmouth and Sprucefield (Northern Ireland)and our involvement as a key participant in the proposed redevelopment ofCrawley. Waitrose As we celebrated the 100th anniversary of the first Waitrose shop, attention wasfocused on the conversion and integration of the 19 shops acquired fromMorrison's, following their purchase of Safeway. Sales growth was acceleratedmarkedly by these new shops, which represent a 20% increase in our sellingspace. We also opened a further four new shops (Newbury, Sanderstead, Wandsworthand Kensington High Street), relocated our Newmarket branch and completed fourmajor extensions. In the week before Christmas Waitrose took £100m for the first time in itshistory, and the year's total sales reached just short of £3bn - a 10% advance(+3% like-for-like). The distinctiveness of Waitrose continues to be underlinedby the strengthening of our own brand ranges. In four of the former Safewaybranches we have had the space to extend our non-food offer by introducing 1,600new lines, the majority of which were sourced with the help of John Lewisbuyers. We have been well supported by our suppliers throughout this expansion,showing innovation and commitment to Waitrose's quality position within themarket. The benefits of scale have enabled us to invest in lower prices tocombat intense competition in Known Value Items, while further improving ourgross margin. Good control of branch operating costs and welcome productivity gains havecarried through to net margin, but they have been balanced by the inevitable,heavy burden of pre-opening expenses totalling some £6m for the year, a £4mincrease on 2003/04. Property profits, from the sale and leaseback of the Brinklow distributioncentre and sale of the Henley cinema, amounted to £13m. The growth of Waitrose's business means that it now takes a larger share ofcorporate costs and pensions, and this adjustment has meant that a 10% tradingprofit increase before these costs led to just a 5% increase after them, to£121m. Capital expenditure Capital spending in 2004/05 reached a record £539m. The lion's share, £440m,went to Waitrose, reflecting the £333m spent on acquiring and converting theSafeway shops and new openings in the period. £77m was spent in John Lewis and£22m on corporate assets. Ocado Ocado has continued to make major progress in combining a high reputation forreliability with the quality of Waitrose products and expansion is under way inthe West Midlands and the North West. The Partnership's accounting share ofOcado's losses (including £0.9m (£0.8m) of interest) reduced to £14m comparedwith £16m last year. Employment and Pensions The average number of Partners employed during the year was 61,100, and thetotal at the end of the year was 63,100 (4,000 more than a year earlier; withthe split 56% Waitrose, 43% John Lewis and 1% for corporate departments). We arenow the only large retail employer to continue to offer a non-contributory finalsalary pension scheme, and comparisons of our results with others need to takeaccount of the costs of our pension scheme and the benefits it brings toPartners. The charge for pensions rose to £81m, a 13% increase on the previousyear. In the Autumn we received the Scheme Actuary's report following a triennialreview of its finances. His recommendation, which was accepted by the Board, isthat we can continue with an acceptable level of funding by retaining ourcontribution at 10% of the total pay bill. The year ahead Looking ahead, it is clear that our two divisions are currently facing verydifferent trading conditions. Waitrose continues to power ahead, with sales in the first 11 weeks 19% ahead oflast year, and showing a 5% lead on a like-for-like basis. During 2005 we areset to benefit from growing sales at our newly opened branches and we also lookforward to openings at Droitwich, Hersham and Lichfield, along with relocationsat Wallingford and West Ealing. The non-food sector has so far proved more challenging, with John Lewis sales 2%behind last year, reflecting a similar position to that of our competitors.Despite this, we are seeing a good response to new products in our assortmentand to the quality and value of our own brand ranges. Our focus on improving theefficiency of our operations also continues. After several years with no newdepartment stores we are looking forward to the opening of John Lewis Traffordin May, which will help consolidate our presence in the North West. Our Partners have done a magnificent job in moving profits ahead so well thisyear and in accomplishing so much change in our business. That achievement isreflected in the Bonus which we all share. I am confident that 2005 will be ayear of further progress. Sir Stuart Hampson, Chairman Annual Report and Accounts The Consolidated Profit and Loss Account, Consolidated Balance Sheet andConsolidated Cash Flow Statement are extracted from the John Lewis plc Reportand Accounts. The auditors have made a report on the statutory accounts undersection 235 of the Companies Act 1985 which does not contain a statement undersections 237(2) or (3) of the Companies Act and is unqualified. The statutoryaccounts will be filed with the Registrar of Companies in due course. Terence Neville, Secretary JOHN LEWIS plc Consolidated profit and loss account for the year to 29 January 2005 2004/05 2004/05 2004/05 2003/04* 2003/04* 2003/04* Before Before exceptional Exceptional exceptional Exceptional items items Year items items Year £m £m £m £m £m £m---------------- ------- -------- ------- ------- ------- -------Gross sales 5,333.6 - 5,333.6 5,046.8 - 5,046.8Adjustment forsale or returnsales (89.2) - (89.2) (76.9) - (76.9)Value addedtax (486.9) - (486.9) (470.4) - (470.4)---------------- ------- -------- ------- ------- ------- -------Turnover 4,757.5 - 4,757.5 4,499.5 - 4,499.5Cost of sales (3,162.0) - (3,162.0) (3,047.3) - (3,047.3)---------------- ------- -------- ------- ------- ------- -------Gross Profit 1,595.5 - 1,595.5 1,452.2 - 1,452.2Operatingexpenses (1,273.0) (10.1) (1,283.1) (1,155.2) (12.8) (1,168.0) Pension costs (80.6) - (80.6) (71.4) - (71.4)---------------- ------- -------- ------- ------- ------- -------Trading profit 241.9 (10.1) 231.8 225.6 (12.8) 212.8Share ofoperating lossof associate (13.2) - (13.2) (15.2) - (15.2)---------------- ------- -------- ------- ------- ------- -------Totaloperatingprofit 228.7 (10.1) 218.6 210.4 (12.8) 197.6Exceptionalgain ondisposal ofaccount cardoperation - 5.4 5.4 - 4.3 4.3Exceptionalgain onpropertydisposals - 21.2 21.2 - - -Net interestpayable (29.9) - (29.9) (31.1) 2.7 (28.4)---------------- ------- -------- ------- ------- ------- -------Profit beforePartnershipbonus andtaxation 198.8 16.5 215.3 179.3 (5.8) 173.5Partnershipbonus (105.8) - (105.8) (87.3) - (87.3)---------------- ------- -------- ------- ------- ------- -------Profit onordinaryactivitiesbeforetaxation 93.0 16.5 109.5 92.0 (5.8) 86.2Tax on profiton ordinaryactivities (40.6) 1.4 (39.2) (37.0) 12.5 (24.5)---------------- ------- -------- ------- ------- ------- -------Profit for theperiod 52.4 17.9 70.3 55.0 6.7 61.7Dividends -including nonequityinterests (0.2) - (0.2) (0.2) - (0.2)---------------- ------- -------- ------- ------- ------- -------Profitretained 52.2 17.9 70.1 54.8 6.7 61.5---------------- ------- -------- ------- ------- ------- ------- * 53 week year There is no material difference between reported profits and profits on ahistorical cost basis for the company or the group. The group has no recognised gains and losses other than the profit above, andtherefore no separate statement of recognised gains and losses has beenpresented. --------------------------------------- John Lewis plc Consolidated balance sheet As at 29 January 2005 --------------------------------------- ---------- ---------- 2005 2004 £m £m ----------------------- ---------- ----------Fixed assetsGoodwill - 0.2Tangible assets 2,335.9 1,972.6Investment in associate 13.1 18.6----------------------- ---------- ---------- 2,349.0 1,991.4Current assetsStocks 340.0 329.2Debtors 123.1 87.4Short term deposits 115.0 314.0Cash at bank and in hand 79.4 66.3----------------------- ---------- ---------- 657.5 796.9CreditorsAmounts falling due within one year (667.5) (589.3)----------------------- ---------- ----------Net current (liabilities)/assets (10.0) 207.6----------------------- ---------- ----------Total assets less current 2,339.0 2,199.0liabilitiesCreditorsAmounts falling due after more than (530.0) (500.0)one yearProvisions for liabilities and (197.5) (157.6)charges ---------- ---------------------------------Net assets 1,611.5 1,541.4----------------------- ---------- ---------- Capital and reserves----------------------- ---------- ----------Called up share capital 6.8 6.8- equity 2.2 2.2- non equity----------------------- ---------- ----------Total share capital 9.0 9.0 Share premium account 1.1 1.4Revaluation reserve 228.9 235.6Other reserves 1.4 1.4Profit and loss account 1,371.1 1,294.0----------------------- ---------- ----------Total shareholders' funds (including 1,611.5 1,541.4non equity interests) ---------- --------------------------------- John Lewis plc Consolidated cash flow statement For the year ended 29 January 2005 2005 2004 £m £m -------------------------- -------- --------Net cash inflow from operating 348.5 251.0activities -------- ----------------------------------Returns on investments and servicing offinanceInterest received 8.5 23.8Exceptional interest income - 1.4Interest paid (20.8) (64.3)Preference dividends paid (0.2) (0.2)-------------------------- -------- --------Net cash outflow from returns oninvestments and servicing of (12.5) (39.3)finance -------- ----------------------------------Taxation (29.3) (26.3)Exceptional tax refund - 10.3-------------------------- -------- --------Capital expenditure and financialinvestmentPurchases of tangible fixed assets (531.0) (209.9)Proceeds of sales of tangible fixed 2.3 4.9assetsProceeds of sale on exceptional property 48.5 -disposals -------- ----------------------------------Net cash outflow from capitalexpenditure and financial (480.2) (205.0)investment -------- ----------------------------------Acquisitions and disposalsNet proceeds of disposal of account card 3.3 257.8operationInvestment in associate (8.6) --------------------------- -------- --------Equity dividends paid (0.1) (0.3)-------------------------- -------- --------Net cash inflow/(outflow) before liquidresources and (178.9) 248.2financing -------- ----------------------------------Management of liquid resourcesIncrease/(decrease) in short term 199.0 (304.5)deposits -------- ----------------------------------FinancingIncrease in borrowings 30.0 --------------------------- -------- --------Net cash inflow from financing 30.0 --------------------------- -------- --------Increase(decrease)/ in cash in the year 50.1 (56.3)-------------------------- -------- -------- John Lewis plc Notes to the Financial Statements 1. Divisional analysis of gross sales and trading profit Gross sales Trading profit -------- ---------- --------------------------------- -------- -------- ------ -------- -------- ------ Before Exceptional Before Exceptional Exceptional Items Exceptional Items Items (note 2) Items (note 2) 2005 2004 2005 2005 2005 2004 2004 2004 £m £m £m £m £m £m £m £m -------- ------ ------ -------- -------- ------ -------- -------- ------John 2,378.4 2,355.5 121.2 (10.3) 110.9 111.0 (12.4) 98.6LewisWaitrose 2,955.2 2,691.3 120.7 0.2 120.9 114.6 (0.4) 114.2-------- ------ ------ -------- -------- ------ -------- -------- ------ 5,333.6 5,046.8 241.9 (10.1) 231.8 225.6 (12.8) 212.8 -------- ------ ------ -------- -------- ------ -------- -------- ------ 2. Exceptional items 2005 2004 £m £m ---------------------------------- ------- -------Operating expensesAsset impairments (6.2) (2.5)Asset write offs (1.3) -Reorganisation costs (2.6) (10.3)Gain on disposal of account card operaion 5.4 4.3Gain on property disposals 21.2 -Interest on corporation tax refund - 2.7Corporation tax refund - 10.3The effect of exceptional itemsCurrent tax (0.4) 0.7Deferred tax 1.8 1.5---------------------------------- ------- ------- 17.9 6.7 ---------------------------------- ------- ------- 3. Reconciliation of movements in shareholders' funds 2005 2004 £m £m ---------------------------------- ------- -------Profit for the financial year 70.3 61.7Dividends (0.2) (0.2)---------------------------------- ------- -------Net addition to shareholders' funds 70.1 61.5Opening shareholders' funds 1,541.4 1,479.9---------------------------------- ------- -------Closing shareholders' funds 1,611.5 1,541.4---------------------------------- ------- ------- 4. Reconciliation of trading profit to net cash inflow from operating activities 2005 2004 £m £m ---------------------------------- ------- -------Trading profit 231.8 212.8Depreciation charged 144.8 126.8Amortisation of goodwill 0.2 2.4(Increase)/decrease in debtors (27.7) 31.0Increase/(decrease) in creditors 78.2 (43.6)Movement in provisions 19.3 3.1(Increase)/decrease in stocks (10.8) (13.9)Partnership bonus paid for previous year (87.3) (67.6)---------------------------------- ------- -------Net cash inflow from operating activities 348.5 251.0---------------------------------- ------- ------- Included in net cash inflow from operating activities are cash outflows of £4.3m(£9.6m)in respect of exceptional reorganisation costs. 5. Analysis of changes in net debt 2004 Cash 2005 flows £m £m £m ---------------------------- ------- ------- -------Cash balances 66.3 13.1 79.4Overdrafts (76.9) 37.0 (39.9)---------------------------- ------- ------- ------- (10.6) 50.1 39.5 Debt due after one year (500.0) (30.0) (530.0)Short term (loans)/deposits 314.0 (199.0) 115.0---------------------------- ------- ------- -------Net debt (196.6) (178.9) (375.5)---------------------------- ------- ------- ------- For further information: John Lewis PartnershipHelen Dickinson, Head of Press & PR Tel: 020 7592 6274Helen Megaw, Corporate Press Manager Tel: 020 7592 6223 Hogarth PartnershipJames Longield/ Georgina Briscoe Tel: 020 7357 9477 Notes To Editors The John Lewis Partnership (www.johnlewispartnership.co.uk) is one of the UK'stop ten retail businesses with 26 John Lewis department stores and over 166Waitrose supermarkets. It is also the country's largest example of workerco-ownership with all 63,000 staff being Partners in the business. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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