13th Sep 2007 07:15
Lewis(John) PLC13 September 2007 John Lewis plcInterim report 2007 This confirms the unaudited results released to the Stock Exchange on 13September 2007 Statement by the Chairman, Charlie Mayfield Profit rises 51 per cent to £147m Excellent profit growth in both divisions I am pleased to report that the tremendous momentum the Partnership achievedlast year has been carried through into the current year with a market-beatingperformance in our first half-year results. In a tougher retail environment thebusiness has shown resilience, with both Waitrose and John Lewis achievingstrong sales growth, gaining market share and increasing operating profit. Theseexcellent results have, once again, been achieved by Partners. Our ownership ofthe business is vital to the motivation we feel to serve customers withdedication and flair. The Partnership's sales were £3.17bn for the first six months of this year, anincrease of 6.7 per cent, or £198.3m, on the prior year. This was converted intoa 43.5 per cent, or £48.5m, increase in operating profit to £160.0m. Profitbefore tax increased by 50.9 per cent to £146.7m - an outstanding result,particularly in light of some of the challenges we faced. It is encouraging that both divisions delivered substantial increases indivisional profit, which is struck before corporate and pension costs. Waitroseachieved an impressive 29.7 per cent, or £32.0m, uplift in profit to £139.8m(underlying growth, before property disposals and one off items, was 18.7 percent, or £21.3m). The nature of John Lewis's trading means that itsprofitability is significantly higher in the second half of the year, with thebenefit of peak Christmas trading. It is therefore particularly pleasing to seethat the John Lewis division generated a divisional profit of £97.3m for thehalf year, an increase of 23.3 per cent, or £18.4m (underlying growth of 17.8per cent, or £15.8m). The growth in profit stems mainly from a combination of improved margins,efficiency initiatives and tight control of operating and central costs. Waitrose Waitrose has delivered sales and profit uplifts in a period when the industrystruggled with the wettest June/July period on record, competing against bothfine weather and the World Cup last summer. Underlying growth continued with sales reaching £1.92bn, an overall increase of7.1 per cent, and like-for-like food sales up by 3.2 per cent for the half year.Like-for-like growth of 4.5 per cent in the first quarter slowed to 2.0 per centin the second quarter when the effects of poor weather were felt across thesector. Sales growth in the period was underpinned by the six stores acquired in late2006 at Eastbourne, Formby, Hexham, Lymington, Parkstone and Southampton, and bythe new branch at Ampthill. We have also achieved further expansion this year,with an acquisition at Harborne and the opening of a new store in Cheadle Hulme,and bolstered our online offering with the relaunch of Waitrose.com. We stretched our leading position in the organics market with a market share ofalmost 18 per cent, relative to our overall food market share of 4 per cent. Thebusiness has seen strong growth in local and regional food, as well as Fairtradeproducts, with sales up by 80 per cent and 72 per cent respectively. We have built on our industry-leading service, increasing the number of trainedspecialist Partners in meat, fish, wines and cheese to over 800. In addition, weare improving the efficiency of shopping for customers with the completion ofthe roll-out of a new checkout system in November this year. Our brand proposition is based on the quality of our product range and customerservice, but we have also invested £20m in price cuts to enhance thecompetitiveness of our offer and improve price perception. Overall gross marginsmoved ahead against a year ago, as we began to reap the benefits of scale fromour larger size and much better stock control. We also improved our control of operating costs, with significant dilution ofbranch servicing and maintenance costs. Overall, underlying margins for thedivision improved by 69 basis points against 2006-07. As a result, underlying profit for the first half year improved by 18.7 percent, or £21.3m, on 2006-07 and after inclusion of one-off items and £8.5m fromproperty profits, the divisional profit was £139.8m, an increase of 29.7 percent or £32.0m. Capital expenditure has reduced from £116.5m to £94.0m, or 19.3 per cent,because of the large number of branches acquired from competitors last year. John Lewis Sales through our department stores and direct channels during the first halfyear were £1.24bn - an increase of 6.1 per cent, or £71.5m, on last year (6.4per cent on a like-for-like basis). Year-on-year sales growth across our storescontinued to be strong, with four of our shops achieving increases in excess of8 per cent (Aberdeen, Glasgow, Solihull, and Trafford). Online sales at JohnLewis Direct continue to grow ahead of the market, with a sales increase on lastyear of 42.0 per cent. John Lewis increased its divisional profit by 23.3 per cent, or £18.4m, to£97.3m; the underlying profit growth was £15.8m, or 17.8 per cent. A key driverof this performance was an improvement in merchandise gross margin which wasfacilitated by growth in our own-brand assortment, favourable exchange rates andbetter supplier sourcing. All directorates contributed to this growth, with furniture, textiles andlighting leading the way. Furniture made a particularly strong contribution,reflecting a stronger assortment, and over 70 per cent of the range is availablefor delivery within seven days. Beds/bedrooms, living/dining and upholsteredfurniture have all seen very significant uplifts in sales for the half year.Many other Home assortments have also seen impressive growth, including handmadecarpets, linens, lighting, soft furnishings and fitted kitchens. The fashion directorates have also delivered healthy increases. Sales in women'sseparates and dresses moved ahead well, mainly due to demand for occasionwearand tops. Men's casualwear has also performed particularly well, in both brandedranges and our own brand. Babywear, with strong sales of basic lines, and toys,which benefited from character toys such as Spider-Man 3 and Dr Who, alsoperformed well. Sales in Electronics and Home Technology continue to show strong growth in acompetitive market. Computers, gaming and imaging saw robust increases, due tothe continued popularity of digital camera equipment and laptops, including thehighly popular entry price point models. Sales of large electricals also movedahead well in the half year. Flat-panel television volumes were buoyant, despitedemanding comparatives from last year which included the World Cup; although wesaw higher than expected price deflation of around 35 per cent. We continue to invest in our supply chain which performed well, particularlygiven the growth in volume of both furniture and electrical items. Stockturn,availability and stock quality continue to improve, as has the efficiency of oursupply chain. Underlying central and marketing costs were contained with increases below therate of inflation. Operational cash flow improved by nearly 30 per cent, helpingto fund a significant increase in capital expenditure, from £28.9m to £81.0m,which reflects our investment in new shops, the refurbishment of Oxford Streetand our supply chain. Last week, we announced the sale of Stead McAlpin, our textile and dyeingbusiness, and JH Birtwistle, our textile weaving subsidiary, to Apex Textiles.Despite significant capital investment and restructuring, the two businesseshave suffered declining sales and have been unprofitable over recent years. Thesale of these businesses will have a small cash impact and is expected to giverise to an accounting charge in the region of £9-10m. The decision to sell thecompanies to a buyer who has considerable experience in textile manufacturingwas seen as providing the best opportunity for ongoing employment for thePartners working in these businesses while enabling the Partnership to withdrawfrom this manufacturing sector. Corporate and shared services costs; Greenbee investment Corporate and shared services costs have been held at last year's level. Our new operation Greenbee continues to build its customer base and expand itsoffer. The uplift in cost relates mainly to our investment in this businessduring the first half of the year. Pensions £51.5m was paid during the half year to maintain our non-contributory finalsalary defined benefit scheme, an increase of £4.6m, or 9.8 per cent, on lastyear. Ocado The number of weekly deliveries made by Ocado continues to rise and the businessis growing at an annual rate of around 30 per cent, which is helping to reduceits losses. In March 2007 there was a further funding round which was well subscribed. Thevaluation placed on the business at that time resulted in a notional profit of£8.0m on the Partnership's shareholding, partly offset by our share of Ocado'slosses of £5.1m, including £0.9m from last year. Neither of these elementsaffects the Partnership's own cash flows or distribution of profits. Outlook for the second half At the end of week 6 (to 8 September), Partnership sales were up 5 per cent onlast year. Waitrose has advanced by 7 per cent (+4 per cent on a like-for-likebasis). In John Lewis the start to the second half of the year has been moresubdued. The sales increase of 2 per cent reflects both the improved weather inthe first half of August and a strong performance in August last year. Waitrose has robust plans to expand its customer base by moving into new areasand consolidating its position with new branches in Windsor, Rickmansworth andChristchurch due to open before Christmas. The deeply rooted relationships between Waitrose and our supplier base means weare well placed to build on our strong track record for product innovation. Weare continuing to build our local and regional range, as well as investing inproduct quality across thousands of lines. Our leadership in customer service is widely recognised. However, we intend toraise the bar, by increasing the number of trained specialist staff in Waitroseby 200 to the 1,000 mark and investing £1.5m on a major training project toimprove the customer experience in our shops. Our credentials as the foodlovers' supermarket will be enhanced with an expansion of our in-branch tastingprogrammes, including recipe demonstrations. The John Lewis division looks forward to the completion of the Oxford Streetrefurbishment, with the opening of our new Food Hall in October and, inNovember, the relocation of Robert Sayle to our brand new store in Cambridge,which is the first shop of the 12 new openings already announced up to 2014. Recently we re-launched the John Lewis Direct website, johnlewis.com. Buildingon our strong e-commerce business, we have created an even more compellingretail experience that represents the breadth of the John Lewis assortment. ByChristmas over 30,000 lines will be available for national delivery through JohnLewis Direct. The outlook in the market is more challenging than has been experienced for sometime and we expect a tougher trading environment in the coming months. However,consumer spending is continuing to hold up well against a backdrop of the recentturmoil in financial markets, higher interest rates and a more subdued housingmarket. We are confident that our product ranges will inspire customers and thatour Partners will continue to set us apart from the competition, enabling bothour businesses to achieve further growth. Charlie MayfieldChairman12 September 2007 John Lewis plcInterim Results for the Half Year to 28 July 2007 Consolidated income statement for the half year ended 28 July 2007--------------------- --------- --------- ----------- Half year Half year Year to to 28 July to 29 July 27 January 2007 2006 2007 Restated* £m £m £m--------------------- --------- --------- -----------Gross sales 3,167.3 2,969.0 6,376.2--------------------- --------- --------- ----------- Revenue 2,835.8 2,655.1 5,698.4Cost of sales (1,881.2) (1,798.6) (3,794.1)--------------------- --------- --------- -----------Gross profit 954.6 856.5 1,904.3Other operating income 19.9 21.3 36.6--------------------- --------- --------- -----------Operating expenses beforepension costs (772.9) (723.5) (1,501.5)Pension costs (41.6) (42.8) (85.1)--------------------- --------- --------- -----------Total operating expenses (814.5) (766.3) (1,586.6)--------------------- --------- --------- -----------Operating profit 160.0 111.5 354.3Finance costs (19.8) (22.0) (42.7)Finance income 3.6 3.6 7.7--------------------- --------- --------- -----------Share of post tax operatingloss of associate (5.1) (13.9) (18.0)Exceptional gain on dilutionof interest in associate 8.0 18.0 18.0--------------------- --------- --------- -----------Net gain in respect ofassociate 2.9 4.1 ---------------------- --------- --------- -----------Profit before Partnershipbonus and tax 146.7 97.2 319.3Partnership bonus - - (155.2)--------------------- --------- --------- -----------Profit before tax 146.7 97.2 164.1Taxation (37.4) (31.1) (55.6)--------------------- --------- --------- -----------Profit for the period 109.3 66.1 108.5--------------------- --------- --------- ----------- * Prior year results have been restated in respect of deferred tax, as detailedin note 2. Consolidated statement of recognised income and expensesfor the half year ended 28 July 2007--------------------- --------- --------- ----------- Half year Half year Year to to 28 July to 29 July 27 January 2007 2006 2007 Restated* £m £m £m--------------------- --------- --------- -----------Actuarial gains/(losses) ondefined benefit pensionschemes 26.7 48.8 42.2Movement of deferred tax onpension scheme (0.7) (14.6) (12.7)Net gain/(loss) on cashflowhedges 0.2 - (0.2)--------------------- --------- --------- -----------Net gains/(losses) notrecognised in the incomestatement 26.2 34.2 29.3Profit for the period 109.3 66.1 108.5--------------------- --------- --------- -----------Total recognised income andexpense for the period 135.5 100.3 137.8--------------------- --------- --------- ----------- * Prior year results have been restated in respect of deferred tax, as detailedin note 2. Consolidated balance sheet for the half year ended 28 July 2007 --------------------- --------- --------- ----------- 28 July 29 July 27 January 2007 2006 2007 Restated* £m £m £m--------------------- --------- --------- -----------Non-current assetsIntangible assets 64.1 58.2 61.3Property, plant and equipment 2,951.4 2,739.5 2,869.2Trade and other receivables 19.4 19.1 19.7Investment in associate 2.9 4.1 ---------------------- --------- --------- ----------- 3,037.8 2,820.9 2,950.2--------------------- --------- --------- -----------Current assetsInventories 318.7 314.9 349.6Trade and other receivables 115.2 117.4 134.5Derivative financial instruments 0.1 1.3 1.5Cash and cash equivalents 110.5 142.5 248.0--------------------- --------- --------- ----------- 544.5 576.1 733.6--------------------- --------- --------- -----------Total assets 3,582.3 3,397.0 3,683.8--------------------- --------- --------- -----------Current liabilitiesBorrowings and overdrafts (109.5) (58.6) (151.9)Trade and other payables (607.8) (549.1) (763.7)Current tax payable (43.1) (22.6) (18.9)Finance lease liabilities (1.9) (0.6) (1.3)Provisions (50.6) (39.1) (52.2)Derivative financial instruments (1.9) - (1.1)--------------------- --------- --------- ----------- (814.8) (670.0) (989.1)--------------------- --------- --------- -----------Non-current liabilitiesBorrowings (401.1) (504.2) (403.8)Trade and other payables (26.5) (27.0) (37.0)Finance lease liabilities (29.4) (31.3) (30.3)Provisions (96.6) (88.9) (90.8)Deferred tax liabilities (32.3) (39.9) (41.7)Retirement benefit obligations (396.0) (423.0) (441.0)--------------------- --------- --------- ----------- (981.9) (1,114.3) (1,044.6)--------------------- --------- --------- -----------Total liabilities (1,796.7) (1,784.3) (2,033.7)--------------------- --------- --------- -----------Net assets 1,785.6 1,612.7 1,650.1--------------------- --------- --------- ----------- EquityShare capital 6.7 6.7 6.7Share premium 0.6 0.9 0.6Other reserves 1.4 1.4 1.2Retained earnings 1,776.9 1,603.7 1,641.6--------------------- --------- --------- -----------Total equity 1,785.6 1,612.7 1,650.1--------------------- --------- --------- ----------- * Prior year results have been restated in respect of deferred tax, as detailedin note 2. Consolidated cash flow statement for the half year ended 28 July 2007--------------------- --------- --------- ----------- Half year Half year Year to to 28 July to 29 July 27 January 2007 2006 2007 £m £m £m--------------------- --------- --------- -----------Cash flows from operations 252.6 230.0 587.9Taxation paid (23.3) (28.6) (53.1)Partnership bonus paid (155.2) (120.3) (120.3)Finance costs paid (4.8) (4.5) (11.1)--------------------- --------- --------- -----------Net cash generated fromoperating activities 69.3 76.6 403.4--------------------- --------- --------- -----------Cash flows from investingactivitiesPurchase of property, plantand equipment (170.0) (143.3) (364.4)Purchase of intangible assets (10.4) (11.6) (23.7)Proceeds from sale ofproperty, plant and equipment 16.3 0.5 26.4Finance income received 5.7 4.5 7.9--------------------- --------- --------- -----------Net cash used in investingactivities (158.4) (149.9) (353.8)--------------------- --------- --------- -----------Cash flows from financingactivitiesFinance costs in respect ofbonds (19.1) (24.2) (34.8)Payment of capital element offinance leases (0.3) (0.8) (1.1)Premium paid on options (0.2) - -Payments to equityshareholders - (0.2) -Payments to preferenceshareholders (0.1) (0.1) (0.1)Cash outflow from borrowings (36.3) (50.0) (50.0)--------------------- --------- --------- -----------Net cash used in financingactivities (56.0) (75.3) (86.0)--------------------- --------- --------- -----------Increase/(decrease) in netcash and cash equivalents (145.1) (148.6) (36.4)Net cash and cash equivalentsat beginning of period 196.1 232.5 232.5--------------------- --------- --------- -----------Cash and cash equivalents atend of period 51.0 83.9 196.1--------------------- --------- --------- -----------Cash and cash equivalentscomprise:Cash 69.9 78.6 77.6Short term deposits 40.6 63.9 170.4Bank overdraft (59.5) (58.6) (51.9)--------------------- --------- --------- ----------- 51.0 83.9 196.1--------------------- --------- --------- ----------- Notes to the financial statements 1 Basis of preparation These interim financial statements were approved by the Board on 12 September2007. They are unaudited, and do not comprise statutory accounts within themeaning of Section 240 of the Companies Act 1985. The results for the half year to 28 July 2007 have been prepared using thediscrete period approach, considering the half year as an accounting period inisolation. The tax charge is based on the effective rate estimated for the fullyear, which has been applied to the profits in the first half year. The group's published financial statements for the year ended 27 January 2007have been reported on by the group's auditors and filed with the Registrar ofCompanies. The report of the auditors was unqualified and did not contain anystatement under Section 237 of the Companies Act 1985. This condensed consolidated half yearly financial information for the half yearended 28 July 2007 has been prepared in accordance with the Disclosure andTransparency Rules of the Financial Services Authority and with IAS 34, InterimFinancial Reporting, as adopted by the European Union. The half yearly condensedconsolidated financial report should be read in conjunction with the annualfinancial statements for the year ended 27 January 2007, which have beenprepared in accordance with International Financial Reporting Standards asadopted by the European Union. 2 Accounting policies The group's results for the half year to 28 July 2007 have been prepared on abasis consistent with the group's accounting policies published in the financialstatements for the year ended 27 January 2007. These accounting policies reflectInternational Financial Reporting Standards (IFRS) and interpretations that areexpected to be applicable to the group for its 2007/08 financial statements. Itis possible that there will be changes to these standards and interpretationsbefore the end of the group's 2007/08 financial year, which might requireadjustments to this information before it is included in the 2008 Report &Accounts. Change in accounting policy for deferred tax Deferred tax is an accounting entry based on the differences between thecarrying value of an asset in the accounts and its tax value ("tax base"), andis in principle intended to reflect the future tax consequences of recovery ofthe carrying amount. In accordance with advice from our auditors as to what wasconsidered best practice, for the financial statements for the half year ended29 July 2006, the group determined the deferred tax on buildings on the basisthat the expected manner of recovery was primarily through use. In the financialstatements for the year ended 27 January 2007, in light of evolvinginterpretations of IAS 12 by the auditing profession, we were advised that this"single use" basis was no longer considered appropriate and, accordingly, thegroup revisited the expected manner of recovery and adopted a basis whereby therecovery of the depreciable amount through use, followed by the recovery of theresidual value through disposal was used. Accordingly, the group changed its accounting policy to apply this "dualrecovery" basis for the determination of deferred tax on buildings, which hasbeen effected retrospectively. This change in accounting policy has no impact on the cash flow statement nor onprofit before tax, which is the income statement line after Partnership bonus,for the half year ended 29 July 2006 and the year ended 27 January 2007. For thegroup, this change has increased taxation in the income statement by £1.0m forthe half year ended 29 July 2006 and £1.6m for the year ended 27 January 2007.The change in accounting policy reduces non-current deferred tax liabilities by£104.9m at 29 July 2006. 3 Segmental reporting The Partnership is organised in three business segments. John Lewis Retail, JohnLewis Other, principally manufacturing, and Waitrose.------------------ -------- -------- -------- ------- ------ John John John Lewis Lewis Lewis Retail Other Total Waitrose Group £m £m £m £m £m------------------ -------- -------- -------- ------- ------28 July 2007Total sales 1,237.6 16.5 1,254.1 1,922.6 3,176.7Inter-segment sales - (9.4) (9.4) - (9.4)------------------ -------- -------- -------- ------- ------Gross sales 1,237.6 7.1 1,244.7 1,922.6 3,167.3Adjustment for sale orreturn sales (54.4) - (54.4) - (54.4)Value added tax (173.4) (0.9) (174.3) (102.8) (277.1)------------------ -------- -------- -------- ------- ------Revenue 1,009.8 6.2 1,016.0 1,819.8 2,835.8------------------ -------- -------- -------- ------- ------Divisional profit 96.7 0.6 97.3 139.8 237.1Corporate and other (19.1) - (19.1) (16.4) (35.5)costsPension costs (23.9) (0.6) (24.5) (17.1) (41.6)------------------ -------- -------- -------- ------- ------Operating profit 53.7 - 53.7 106.3 160.0------------------ -------- -------- -------- ------- ------ 29 July 2006Total sales 1,166.1 18.0 1,184.1 1,795.1 2,979.2Inter-segment sales - (10.2) (10.2) - (10.2)------------------ -------- -------- -------- ------- ------Gross sales 1,166.1 7.8 1,173.9 1,795.1 2,969.0Adjustment for sale orreturn sales (51.7) - (51.7) - (51.7)Value added tax (163.9) (0.9) (164.8) (97.4) (262.2)------------------ -------- -------- -------- ------- ------Revenue 950.5 6.9 957.4 1,697.7 2,655.1------------------ -------- -------- -------- ------- ------Divisional profit 78.3 0.6 78.9 107.8 186.7Corporate and other (17.2) - (17.2) (15.2) (32.4)costsPension costs (24.9) (0.6) (25.5) (17.3) (42.8)------------------ -------- -------- -------- ------- ------Operating profit 36.2 - 36.2 75.3 111.5------------------ -------- -------- -------- ------- ------ 27 January 2007Total sales 2,663.1 36.4 2,699.5 3,698.5 6,398.0Inter-segment sales - (21.8) (21.8) - (21.8)------------------ -------- -------- -------- ------- ------Gross sales 2,663.1 14.6 2,677.7 3,698.5 6,376.2Adjustment for sale orreturn sales (100.7) - (100.7) - (100.7)Value added tax (374.1) (1.8) (375.9) (201.2) (577.1)------------------ -------- -------- -------- ------- ------Revenue 2,188.3 12.8 2,201.1 3,497.3 5,698.4------------------ -------- -------- -------- ------- ------Divisional profit 262.1 1.4 263.5 243.7 507.2Corporate and other (35.6) - (35.6) (32.2) (67.8)costsPension costs (49.3) (1.2) (50.5) (34.6) (85.1)------------------ -------- -------- -------- ------- ------Operating profit 177.2 0.2 177.4 176.9 354.3------------------ -------- -------- -------- ------- ------ 4 Capital expenditure----------------------- -------- ----------- Property, Plant and Intangible Equipment Assets----------------------- -------- -----------Net book values at 27 January 2,869.2 61.32007Additions 174.4 11.0Disposals (9.0) -Depreciation and amortisation (83.2) (8.2)----------------------- -------- -----------Net book values at 28 July 2007 2,951.4 64.1----------------------- -------- ----------- Property, plant and equipment additions include £65.6m in respect of storedevelopment in John Lewis and £74.6m in Waitrose. Disposals relate primarily tothe sale of premises adjacent to the Waitrose branch in Salisbury. Intangible assets additions primarily relate to internally developed IT systems. 5 Investment in associate In March 2007, Ocado issued new shares to investors outside the Partnership. Asa consequence the Partnership's holding in Ocado reduced, which as in the prioryear has given rise to a credit on dilution of interest in the income statementof £8.0m (2006: £18.0m). In accordance with accounting rules, losses are only consolidated to the extentthat the investment in an associate is reduced to zero. Consequently as at 27January 2007, the Partnership deferred £0.9m of the total losses in Ocado.Following the £8.0m credit arising on dilution of interest in the half year to28 July 2007, the Partnership has recognised both its share of the losses inOcado for the half year to 28 July 2007 of £4.2m and the £0.9m of losses thatwere deferred as at last year end. 6 Reconciliation of profit before tax to cash generated from operations--------------------- --------- --------- ------------ Half year to Half year to Year to 28 July 2007 29 July 2006 27 January 2007 £m £m £m--------------------- --------- --------- ------------Profit before tax 146.7 97.2 164.1Amortisation of intangibleassets 8.2 7.0 14.6Depreciation 83.2 77.6 165.2Net finance costs 16.2 18.4 35.0Net gain in respect ofassociate (2.9) (4.1) -Partnership bonus provision - - 155.2(Profit)/loss on disposal ofproperty, plant and equipment (7.3) 0.2 (8.6)(Increase)/decrease ininventories 30.9 10.1 (25.3)(Increase)/decrease inreceivables 17.5 3.5 (12.7)Increase/(decrease) inpayables (25.8) 20.5 74.4Increase/(decrease) inretirement benefit obligations (18.3) (7.2) 4.2Increase/(decrease) inprovisions 4.2 6.8 21.8--------------------- --------- --------- ------------Cash generated from operations 252.6 230.0 587.9--------------------- --------- --------- ------------ 7 Reconciliation of changes in equity---------------- ------ -------- ------ ------- ------- ------- Share Share Capital Hedging Retained Total capital premium reserve reserve earnings equity £m £m £m £m £m £m---------------- ------ -------- ------ ------- ------- ------- Balance at 28January 2006 6.7 0.9 1.4 - 1,503.6 1,512.6Profit for theyear - - - - 108.5 108.5Transfers - (0.3) - - 0.3 -Actuarial gains - - - - 42.2 42.2Tax on itemsrecognised inequity - - - - (12.7) (12.7)Net loss oncash flowhedges - - - (0.2) - (0.2)Dividends - - - - (0.3) (0.3)---------------- ------ -------- ------ ------- ------- -------Balance at 27January 2007 6.7 0.6 1.4 (0.2) 1,641.6 1,650.1---------------- ------ -------- ------ ------- ------- -------Profit for theperiod - - - - 109.3 109.3Actuarial gains - - - - 26.7 26.7Tax on itemsrecognised inequity - - - - (0.7) (0.7)Net gain oncash flowhedges - - - 0.2 - 0.2---------------- ------ -------- ------ ------- ------- -------Balance at 28July 2007 6.7 0.6 1.4 - 1,776.9 1,785.6---------------- ------ -------- ------ ------- ------- ------- 8 Reconciliation of net cash flow to net debt----------------------- ----------- --------- ----------- Half year to Half year to Year to 28 July 2007 29 July 2006 27 January 2007 £m £m £m----------------------- ----------- --------- -----------Net increase/(decrease) incash in the period (15.3) (1.6) 4.1Cash (inflow)/outflow fromdebt and lease financing 50.0 50.0 50.0Cash (inflow)/outflow fromliquid resources (129.8) (147.0) (40.5)----------------------- ----------- --------- -----------Movement in debt for theperiod (95.1) (98.6) 13.6Opening net debt (307.7) (323.9) (323.9)Non cash movements 2.7 2.2 2.6----------------------- ----------- --------- -----------Closing net debt (400.1) (420.3) (307.7)----------------------- ----------- --------- ----------- 9 Capital commitments At 28 July 2007 contracts had been entered into for future capital expenditureof £49.1m (2006: £86.1m). 10 Disposal of manufacturing businesses On 31 August 2007, John Lewis plc exchanged contracts to sell Stead McAlpin &Company Ltd and JH Birtwistle & Company Ltd. This sale is expected to completeby 14 September 2007 and will give rise to a pre-tax loss on disposal in theregion of £9-10m, which will be reflected in the full year results. 11 Related party transaction During the period John Lewis plc entered into transactions with other groupcompanies in respect of the supply of goods for resale and associated services£8.2m (2006: £8.5), purchase of goods for resale £7.1m (2006: £7.1), the supplyof IT and related services £11.2m (2005: £10.0m), and the hire of vehicles £3.9m(2006: £3.6m). In addition, John Lewis plc settled other transaction on behalf of groupcompanies for administrative convenience, such as payroll and suppliersettlement. All such transactions were charged at cost to the relevant groupcompany. It is not practical to quantify theses non trading recharges. During the period the group entered into transactions with its associatedcompany, Ocado Limited, for the supply of goods totalling £26.2m (2006: £27.0m)and the provision of distribution and other services totalling £0.4m (2006:£0.4m). Included within trade and other receivables is a balance of £2.9m (2006:£4.2m) due from Ocado Limited in respect of these transaction. Included withintrade and other payables is a balance of £2.9m (2006: £1.9m) due to Ocado inconnection with the supply of goods. Statement of directors' responsibilities The directors confirm that this condensed set of financial statements has beenprepared in accordance with IAS 34 as adopted by the European Union, and thatthe interim management report herein includes a fair review of the informationrequired by the Disclosure and Transparency Rules (DTR) of the FinancialServices Authority, paragraphs DTR 4.2.7 and DTR 4.2.8. For and by Order of the Board Charlie Mayfield, Chairman Marisa Cassoni, Finance Director 12 September 2007 Enquiries John Lewis Partnership Susan Donovan, Director of Communications 020 7592 6292 Citigate Dewe RogersonSimon Rigby / George Cazenove / Nicola Smith 020 7638 9571 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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