ALY.L Regulatory News (ALY)

28 Mar 2007 07:02

Ashley (Laura) Hldgs PLC28 March 2007 28th March, 2007 LAURA ASHLEY HOLDINGS plc ("the Company") Laura Ashley today announces results for the 52 weeks to 27 January 2007 thatshow the strongest profit for the last 10 years and a full year dividend thathas increased 100% year on year. Highlights • Total Group sales up 6.6% to £225.0m (2006: £211.1m) • UK retail sales have increased 10.3% to £174.6m (LFL +8.2%) • Margin rate continues to improve with a 2 percentage point increase this year • Profit before tax up 100% to £12.2m (2006: £6.1m). This amount includes non-recurring items: loss £0.5m (2006: profit £0.3m). • Final dividend proposed of 0.5 pence per share (10% of nominal value), making the total dividend 1 pence per share for the year (20% of nominal value) (2006: 0.5 pence per share) • Strong cash generation and an ungeared balance sheet • 2007 winner of the Homes and Gardens 'Retailer of the Year Award' Commenting on the results, Lillian Tan, Chief Executive Officer, said: "We are very pleased with this strong set of results, which demonstrates thesuccess of the measures we have put in place over several years. We willcontinue to focus on improving upon this success and maximising the greatpotential of the brand through increasing efficiency, higher productivity andimproving margins. During the year, we opened 20 new stores in the UK and Ireland and are planninga similar number this year, subject to our normal property selection criteria. Laura Ashley offers distinctive and inspiring product design and the strongperformance is testament to the individuality and quality of our offer, foundedon our unique heritage. It is from this strong position we look forward to the future with fullconfidence." Enquiries:Laura Ashley Holdings plc 020 7404 5959 (28 March)David Cook, Finance Director 020 7880 5100 (thereafter)Brunswick 020 7404 5959Tom BuchananJames Olley Overview The strong financial results for the year ended 27 January 2007 represent thesuccess of the measures we have put in place over several years, with profitsdouble that of 2006 and the highest for the last 10 years. For the 52 weeks to27 January 2007, we are pleased to report an increase in profit before tax of100% to £12.2m, compared to £6.1m in 2006. Total group sales were up by £13.9m (6.6%) to £225.0m, compared to the previousyear of £211.1m. Margin rate continues to improve, with a 2 percentage pointincrease this year. The improved total retail sales position was primarily dueto increased UK sales in all categories. For the year ended 27 January 2007,total UK store sales were up 10.3% to £174.6m (LFL +8.2%). As sales have grown,we have also increased margins as a result of our ongoing focus on bettersourcing and reduced promotional activity. In line with increased turnover,operating expenses have increased by 6.5% to £90.7m (2006: £85.2m). The Board has recommended a final dividend of 0.5 pence per share (10% ofnominal value). This follows the announcement on 18 January 2007 of the firstinterim dividend since 1997 of 0.5 pence per share (10% of nominal value),taking the total dividend for the year to 1 pence per share (20% of nominalvalue), double that of 2006. Product The UK business is split into four main categories. The relative split of UKsales is as follows: Home Accessories 30%, Furniture 29%, Decorating 23% andFashion 18%. Home Accessories The Home Accessories product category includes lighting, gift, bed linen, rugs,throws and cushions, and epitomises Laura Ashley's focus on distinctive,inspirational and quality product offerings. Sales of Home Accessories were up 15.2% (LFL +8.2%). This increase in sales waslargely driven by the growth in our gift product, in particular room fragranceas well as storage and mirrored jewellery boxes. Glass and acrylic lightingproducts and embellished silk bedspreads have also been very popular ascustomers seek easy ways to transform room decorations. Margin improvement in this category has been driven by both a higher intakemargin as well as lower markdowns on all Home Accessories. Furniture The Furniture product category includes upholstered furniture, beds and cabinetfurniture. During the year, we reduced the reliance on promotion-led activity. This hasimpacted the level of growth in this category but has also served to improve themargin rate. A mixed consumer environment has also affected sales of big-ticketfurniture items. During the year ended 27 January 2007, Furniture sales were up3.0% (LFL -1.9%). We have enjoyed particular success from the expansion of some of our existingranges such as the Gatsby, Garrat and Clifton ranges. We continue to work onproduct differentiation and innovation and have launched new ranges, Devon andBalmoral, in the Furniture category to ensure that Laura Ashley continues torepresent both a design leader and point of difference on the high street. Decorating This category includes curtains, fabric, paint, decorative accessories and wallcoverings. During the year ended 27 January 2007, Decorating sales were up 11.9%(LFL +7.8%) reflecting the growing trend for customers to update rooms on aregular basis in line with changing fashions. Sales in this category have benefited from our unique heritage and archive. Inparticular, the statement print wallpapers, which we have produced for sometime, are leading the recent trend revival and represent excellent value in thismarket. Both the Kimono and Summer Palace prints have performed stronglythroughout the year. Decorative accessories, such as tiebacks, have alsocontinued to sell well. We have seen margin rate growth due to reduced discounts being offered on ourmade to measure curtains and higher intake margins on our ready-made curtainssince sourcing was moved overseas. Fashion For the year ended 27 January 2007, UK retail Fashion sales increased by 25.9% (LFL +26.4%), driven by increasing stock densities and reflecting a turnaround from the previous year where like-for-like sales were down by 25% during a period of consolidation as we sought to improve the product offering. This increase has not been at the expense of margin rate, which has been maintained over the period. Dresses were amongst our strongest sellers, with a particular bias towardsnatural fabrics such as linens and cotton and, in many cases, taking inspirationfrom our archive such as our 1950s inspired dresses and printed wrap dresses.Jumpers and jersey wear also performed well. UK Operations Retail Stores During the year, significant changes were made to the UK store portfolio both interms of identifying more cost effective locations and the conversion of storesfrom home only to mixed product. This has resulted in the opening of 11 newmixed product stores, 9 new Home stores and the addition of 114,000 sq. ft. ofselling space. We identified larger-sized Home stores where an allocation offashion space (typically 1,000 sq. ft) would result in a net increase in totalsales density driven by customer demand for improved Fashion ranges. As aresult, 6 Home stores were converted to mixed product stores. At 27 January 2007, the property portfolio in the UK comprised 189 stores. Wehave three main store types: 94 mixed product stores (selling all productcategories), 61 Home stores (selling the full range of Home products) and 34Home concession stores. As part of the process of realigning our propertyportfolio, 11 stores (18,000 sq. ft.) were closed during the year. We intend to continue our store development programme at a similar rate to lastyear, subject to our normal property selection criteria. Mail Order and E-Commerce Our Mail Order and E-Commerce channels are a vital part of our multi-channelretail strategy, representing 12% of total UK retail sales. Total Mail Order andE-commerce sales were up 0.8% on last year. Within this figure, Mail Order saleswere down 7.3% and E-Commerce sales were up 22.5%. This reflects the generalmarket trend towards E-Commerce at the expense of more traditional direct saleschannels. Sustained investment in our multi-channel approach affords us greateropportunities to communicate with our customers. We continue to enhance thefunctionality of our web site: www.lauraashley.com. We now have 416,000registered E-Commerce customers (2006: 328,000). Our catalogue remains animportant marketing tool for the brand, as many customers are choosing itemsfrom the catalogue before coming in to stores or going online to make theirpurchases. International Operations Franchising There are currently 197 franchised stores in 28 countries worldwide. Franchisingcontinues to be an important part of the Laura Ashley brand and we are makinggood progress on the review of our franchise operations. In the year ended 27 January 2007, Franchise revenues decreased by 14.0% to£19.0m. As we indicated at the interim results, this was largely due to theclosure of our Middle East franchise operation and reduced sales in the FarEast. There were, however, some improving trends in the second half. Licensing In the year ended 27 January 2007, Licensing income increased by 23.1% to £4.8mdue mainly to an increase in revenues from North America driven by strong salesin bed linen and eyewear. Dividend On 18 January 2007, the Board announced the payment of the first interimdividend since 1997 of 0.5 pence per share (10% of nominal value). In light ofthe strong profit performance the Board now recommends the payment of a finaldividend of 0.5 pence per share (10% of nominal value), taking the totaldividend for the year to 1 pence per share (20% of nominal value), representinga 100% increase year on year. This dividend will be paid, subject to shareholderapproval, on 5 June 2007 to all shareholders on the register at the close ofbusiness on 11 May 2007. The Board will continue to review dividend payments onthe basis of annual profitability. Current trading For the 8 weeks to 24 March 2007, total retail sales increased by 8.4%. For thesame period, like-for-like sales were down 4.8% as a result of a reduction inpromotion led activity at the start of the current financial year, but thestrong improvement in margins was maintained. We will continue to focus on maximising the great potential of the brand throughincreasing efficiency, higher productivity and improving margins. Top linegrowth is being driven through our store opening programme and strong productranges across all categories and we have full confidence in the outlook for theCompany. Group Income Statement For the financial year ended 27 January 2007 2007 2006 Note £m £m________________________________________________________________________________Revenue 225.0 211.1Cost of sales (123.1) (120.5)________________________________________________________________________________Gross profit 101.9 90.6Operating expenses (90.7) (85.2)________________________________________________________________________________Profit from operations 11.2 5.4Share of profit of associate 0.4 0.3Finance income 0.9 0.7Finance costs (0.3) (0.3)________________________________________________________________________________Profit before taxation 12.2 6.1Taxation (4.2) (1.9)________________________________________________________________________________Profit for the financial year 8.0 4.2________________________________________________________________________________Earnings per share - basic and diluted 1 1.08p 0.56p Group Balance Sheet As at 27 January 2007 2007 2006 £m £m_________________________________________________________________________Non-current assets _________ _________Property, plant and equipment 29.0 29.1Deferred tax asset 3.7 3.9Investment in associate 3.3 3.4Investment in quoted shares 0.6 - _________ _________ 36.6 36.4Current assets _________ _________Inventories 37.7 35.0Trade and other receivables 20.8 22.7Cash and cash equivalents 31.7 22.1 _________ _________ 90.2 79.8_________________________________________________________________________Total assets 126.8 116.2_________________________________________________________________________ Current liabilitiesCurrent tax liabilities 2.5 1.9Obligation under finance lease 0.2 0.3Trade and other payables 50.0 41.3_________________________________________________________________________ 52.7 43.5_________________________________________________________________________ Non-current liabilities _________ _________Obligation under finance lease - 0.2Retirement benefit liabilities 12.3 13.3Provisions and other liabilities 0.1 0.2 _________ _________ 12.4 13.7_________________________________________________________________________Total liabilities 65.1 57.2__________________________________________________________________________________________________________________________________________________Net assets 61.7 59.0_________________________________________________________________________ EquityShare capital 37.3 37.3Share premium 86.4 86.4Own shares (0.8) (0.8)Retained earnings (61.2) (63.9)_________________________________________________________________________Total equity 61.7 59.0_________________________________________________________________________ Group Statement of Changes in Shareholders' Equity For the financial year ended 27 January 2007 Share Share Own Retained Total Capital Premium Shares Earnings Equity £m £m £m £m £m________________________________________________________________________________Balance as at 29 January 2005 37.3 86.4 (0.8) (68.0) 54.9 Profit for the financial yearended 28 January 2006 - - - 4.2 4.2Exchange differences ontranslation of investments - - - (0.1) (0.1)________________________________________________________________________________Balance as at 28 January 2006 37.3 86.4 (0.8) (63.9) 59.0 Profit for the financial yearended 27 January 2007 - - - 8.0 8.0Dividends paid - - - (3.7) (3.7)Exchange differences ontranslation of investments - - - (0.6) (0.6)Purchase of own shares - - - (1.0) (1.0)________________________________________________________________________________Balance as at 27 January 2007 37.3 86.4 (0.8) (61.2) 61.7________________________________________________________________________________ Group Cash Flow Statement For the financial year ended 27 January 2007 2007 2006 Notes £m £m______________________________________________________________________________Operating activities ________ ________Cash generated from operations 2 23.5 16.0Corporation tax paid (3.5) (1.8)Dividends paid (3.7) -Finance income 0.9 0.7Finance cost (0.3) (0.4) ________ ________ 16.9 14.5Investing activities ________ ________Purchase of property, plant and equipment (5.6) (3.3)Sale of property, plant and equipment 0.2 0.5Purchase of investment (0.7) -Net cash received from associate 0.1 0.1 ________ ________ (6.0) (2.7)Financing activities ________ ________Loan repaid - (5.5)Repurchase of own shares (1.0) -Payment of finance lease obligations (0.3) (0.3) ________ ________ (1.3) (5.8)______________________________________________________________________________Net increase in cash and cash equivalents 3 9.6 6.0______________________________________________________________________________ Reconciliation of Net Cash Flow to Movement in Net Funds For the financial year ended 27 January 2007 2007 2006 £m £m______________________________________________________________________________Net increase in cash and cash equivalents 9.6 6.0Cash inflow from changes in loans and leases 0.3 5.8______________________________________________________________________________Change in net funds resulting from cash flows 9.9 11.8Net funds at the beginning of the financial year 21.6 9.8______________________________________________________________________________Net funds at the end of the financial year 3 31.5 21.6______________________________________________________________________________ 1 Earnings per share Basic earnings per share is calculated by dividing the earnings attributable toordinary shareholders by the weighted average number of ordinary shares in issueduring the year. 2007 2006 Basic and diluted earnings attributable to 8.0 4.2ordinary shareholders (£m) __________________________Weighted average number of ordinary shares 741,202 743,547('000) - basic and diluted __________________________ Earnings per share 1.08p 0.56p __________________________ 2 Reconciliation of profit from operations to net cash inflow from operating activities 2007 2006 £m £m________________________________________________________________________________Profit from operations 11.2 5.4Depreciation charge 5.6 6.1Profit on sale of property, plant and equipment (0.1) (0.3)Increase in inventories (2.7) (0.1)Decrease in receivables 1.9 0.4Increase in payables 8.7 4.5Movement on provisions (1.1) -________________________________________________________________________________Net cash inflow from operating activities 23.5 16.0________________________________________________________________________________ 3 Analysis of net funds At 29 Jan Cash flow At 27 Jan 2006 2007 £m £m £m________________________________________________________________________________Cash and cash equivalents 22.1 9.6 31.7Obligations under finance leases (0.5) 0.3 (0.2)________________________________________________________________________________Net funds 21.6 9.9 31.5________________________________________________________________________________ This information is provided by RNS The company news service from the London Stock Exchange