ALY.L Regulatory News (ALY)

17 Sep 2007 07:00

Ashley (Laura) Hldgs PLC16 September 2007 16 September 2007 LAURA ASHLEY HOLDINGS plc ("the Company") Laura Ashley today announces results for the 26 weeks to 28 July 2007 that showcontinued strong profit growth, increased sales and improved margins, togetherwith the payment of an interim dividend. Highlights • Total Group sales up 6.9% to £113.9m (2006: £106.5m). • UK retail sales have increased 9.3% to £89.2m (LFL -7.1%). • Margin rate continues to improve with a 2 percentage point increase. • Profit before taxation up 113% to £6.4m (2006: £3.0m). * • Interim dividend of 0.5 pence per share (10% of nominal value) will be paid on 12 October 2007 (2006: 0.5 pence per share). • Continued strong cash position and an ungeared balance sheet. • UK selling space up 8% to 672,000 sq. ft. with 13 new stores opened. • 2007 winner of the Homes and Gardens 'Retailer of the Year Award'. Commenting on the results, K P Khoo, Chairman, said: "I am delighted with the strong results for the first half of this financialyear. The improved profitability is a result of our successful store realignmentprogramme, improved product offering and continued focus on operationalefficiency. Despite the challenging economic conditions, we have confidence inthe outlook for the Company." Enquiries:Laura Ashley Holdings plc 020 7404 5959 (17 September)David Cook, Finance Director 020 7880 5100 (thereafter) Brunswick 020 7404 5959Tom BuchananJames Olley * This amount includes an exceptional gain of £2.4m (2006: nil) CHAIRMAN'S STATEMENT Overview For the 26 weeks to 28 July 2007, we are pleased to report an increase in profitbefore taxation of 113% to £6.4m, compared to £3.0m in 2006. The profit for thefirst half of this financial year includes a large pension credit which hasoccurred as a result of a transfer value exercise that completed on 16 July2007. Excluding exceptional gains, profit before taxation for the 26 weeks to 28July 2007 increased by 33% to £4.0m (2006: £3.0m). Total group sales were up by £7.4m (6.9%) to £113.9m, compared to £106.5m in theprevious year. Total UK retail sales increased in all categories exceptFurniture, which was flat on last year. For the 26 weeks ended 28 July 2007,total UK store sales were up 9.3% to £89.2m (LFL -7.1%). Total sales growth hasprimarily been driven by our store realignment programme, which, in the shortterm, has impaired LFL sales. This is largely due to the effects ofcannibalisation of existing stores by new stores. We believe a more accuratesales LFL would be -3.9%; a figure that is in line with the broader retailmarket. Gross margins have also increased by 2 percentage points in the firsthalf of this financial year, as a result of our ongoing focus on better productand better sourcing. Operating expenses have risen by 5.6% to £46.9m (2006:£44.4m) primarily as a result of new store openings over the last 12 months,which have resulted in higher UK store property and employment costs. The Board has approved an interim dividend of 0.5 pence per share (10% ofnominal value) that will be paid on 12 October 2007. Product The UK business is split into four main categories. The relative split of UKsales is as follows: Home Accessories 29%, Furniture 27%, Decorating 25% andFashion 19%. 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. For the 26 weeks ended 28 July 2007, sales of Home Accessories were up 8.7% (LFL-7.0%). This improvement in sales was principally driven by increasing thenumber of size options available in our successful bedspread ranges, such asMia, together with more competitive pricing of our bed linen ranges. Ourmirrored products and gift products have also sold well, in particular roomfragrances as well as storage and mirrored jewellery boxes. Our lighting areashave been successful, particularly with non-electric chandeliers and carryingover the Isadore print to various lighting products. We have also benefited fromimproved gross margins driven by our distinctive products, which need lesspromotion. Furniture The Furniture product category includes upholstered furniture, beds and cabinetfurniture. In common with many retailers in the UK, we have experienced tough tradingconditions that have adversely impacted the Furniture category. The effect ofrising interest rates, inflation, and a general reduction in consumer confidencehas affected sales of big-ticket furniture items. For the 26 weeks ended 28 July2007, Furniture sales were flat (LFL -12.2%). Promotional activity and grossmargins have remained at similar levels to last year. Despite the difficult trading conditions, sales have benefited from theexpansion of some of our existing products such as the Devon range of furniture.We continue to work on product differentiation and innovation: new ranges suchas Bramley and the Collinton chair have been extremely successful and serve todifferentiate Laura Ashley from other high street retailers. Decorating This category includes curtains, fabric, paint, decorative accessories and wallcoverings. During the 26 weeks ended 28 July 2007, Decorating sales were up10.1% (LFL -1.7%). Our range of statement print wallpapers, many sourced from our unique archive,has continued to perform extremely well. Made-to-measure silk curtains such asthe recently introduced Blenheim design, have proved to be very popular. Ourroomset "By The Sea" theme has sold well and been extensively covered inconsumer publications. Changes in product mix and sourcing arrangements have resulted in improvedmargin rates to the extent that LFL margin for the 26 weeks ended 28 July 2007was up 1.6%. Fashion For the 26 weeks ended 28 July 2007, UK retail Fashion sales increased by 4.2%(LFL -6.4%), driven by new store openings and the full year effect of storesconverted from Home only product to mixed product. Compared to the same periodlast year, LFL sales increased by 45% as Fashion emerged from a period ofconsolidation. In the first half of the current financial year, another strong season ondresses was experienced. Woven linen dresses, both plain and printed were aparticular success. In addition, the knitted dress category continues to grow.Improvements to fabric, fit and styling have resulted in higher sales oftrousers. On knitwear, cardigans performed strongly, particularly stylesdesigned to be worn with dresses. Tighter control over stock levels, reduced markdown levels and improved intakemargin have resulted in a significant improvement in gross margin rates UK Operations Retail Stores At 28 July 2007, the property portfolio in the UK comprised 196 stores, up from178 one year ago. In the 26 weeks ended 28 July 2007, total selling space hasincreased by 8% to 672,000 square feet. We have three main store types: mixedproduct stores (101), Home stores (65) and Home concession stores (30). We havecontinued to build on our strategy of identifying more cost effective locationsand have opened 13 new stores in the first half, totalling 60,000 square feet ofselling space. As part of the process of realigning our stores, 6 stores wereclosed (12,000 square feet) during the first half. For the remainder of the current financial year and next year, we intend tocontinue our store development programme at a similar rate, subject to ournormal property selection criteria. Mail Order and E-Commerce Our Mail Order and E-Commerce channels remain a vital part of our multi-channelretail strategy, representing 12% of total UK retail sales. For the 26 weeksended 28 July 2007, total Mail Order and E-commerce sales were up 3.1% on lastyear. Within this figure and reflecting the trend we have seen over the last 3years, Mail Order sales were down 12.0% and E-Commerce sales were up 36.8%.Margin rates are in line with last year. Increasingly, our website is an important 'first step' for customers before theycome in to store. As well as being a valuable retail channel, it is a powerfulonline catalogue for customers wishing to browse both Fashion and Home productsthat are later bought in store. At 28 July 2007, we had 443,000 registeredE-Commerce customers (2006: 383,000). International Operations Franchising There are currently 206 franchised stores in 28 countries worldwide. Franchisingactivities outside of the UK continue to be an important part of the LauraAshley brand. In the 26 weeks ended 28 July 2007, Franchise revenues decreasedby £0.2m to £9.6m, mainly due to reduced sales in the Far East. Licensing In the 26 weeks ended 28 July 2007, Licensing income decreased by £0.2m to£1.9m. This represents the loss of one North American licensee. However, in thefirst half of the current financial year, revenues have increased from newlicensees signed up over the last 12 months. Pensions As part of our ongoing efforts to reduce pension risk, the Company conducted atransfer value exercise that entailed making offers of incentive paymentstotalling £2.3m during the first half of the current financial year, to deferredmembers of the Laura Ashley pension scheme to take a reduced transfer value toan alternative pension scheme of their choice. The effect of this exercise was adeficit reduction of £4.6m and a net benefit to the Company of £2.3m, which isincluded in the profit and loss account for the 26 weeks ended 28 July 2007. Inaddition, the Company contributed £1.3m (2006: £0.4m) into the pension fund. Dividend An interim dividend in respect of the financial year ended 27 January 2007 of0.5 pence per ordinary share (10% of nominal value) was paid on 16 February2007. On 1 June 2007, shareholders approved the payment of a final dividend of 0.5pence per share (10% of nominal value), taking the total dividend for that yearto 1 pence per share (20% of nominal value), representing a 100% increase yearon year. This dividend was paid on 5 June 2007. On 16 September 2007, the Board approved the payment of an interim dividend of0.5 pence per share (10% of nominal value). This interim dividend will be paidon 12 October 2007 to holders of ordinary shares on the register at the close ofbusiness on 28 September 2007. Current trading In the 32 weeks to 8 September 2007, total UK retail sales were up 4.5%. LFLperformance (-8.3%) reflects the continued cannibalisation effect of our newstore opening programme, as discussed above, and challenging UK retailconditions. All our product offerings remain resilient and we continue toincrease total selling space through our store realignment programme. Trading conditions on the high street, this year, have been difficult and we arenot immune. We are, however, committed to continue our focus on storerealignment, improved product offering and increased operational efficiency. Webelieve this focus will lead to further growth in profitability in the secondhalf of the current financial year. K P KhooChairman RESPONSIBILITY STATEMENT We confirm that to the best of our knowledge: a) The condensed set of financial statements has been prepared in accordance with IAS 34; b) The interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and c) The interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of material related party transactions and changes therein). By order of the Board David CookFinance Director Condensed Group Income StatementFor the 26 weeks ended 28 July 2007 26 weeks to 26 weeks to 52 weeks to 28 July 2007 29 July 2006 27 January 2007 (unaudited) (unaudited) (audited) £m £m £m------------------------------------------------------------------------------Revenue 113.9 106.5 225.0Cost of sales (61.5) (59.8) (123.1)-------------------- ------------- ------------- ---------------Gross profit 52.4 46.7 101.9Operating expenses (46.9) (44.4) (90.7)-------------------- ------------- ------------- ---------------Profit from operations 5.5 2.3 11.2Share of operatingprofit of associate 0.4 0.4 0.4Finance income 0.5 0.5 0.9Finance costs - (0.2) (0.3)-------------------- ------------- ------------- ---------------Profit before taxation 6.4 3.0 12.2Taxation (2.2) (1.1) (4.2)-------------------- ------------- ------------- ---------------Profit for the period 4.2 1.9 8.0-------------------- ------------- ------------- ---------------Earnings per share -basic and diluted 0.57p 0.26p 1.08p-------------------- ------------- ------------- --------------- The Group's results shown above are derived entirely from continuing operations. Condensed Group Balance SheetAs at 28 July 2007 At 28 July 2007 At 29 July 2006 At 27 January 2007 (unaudited) (unaudited) (audited) £m £m £m------------------------------------------------------------------------------Non-current assets Property,plant andequipment 31.2 28.2 29.0Deferred taxasset 1.9 3.9 3.7Investment inassociate 3.3 3.4 3.3Investment inquoted shares 1.1 0.7 0.6 ---------- ---------- ---------- 37.5 36.2 36.6 ---------- ---------- ----------Current assets Inventories 36.3 40.6 37.7Trade andotherreceivables 21.0 21.4 20.8Cash and cashequivalents 21.3 18.5 31.7 ---------- ---------- ---------- 78.6 80.5 90.2------------------------------------------------------------------------------Total assets 116.1 116.7 126.8------------------------------------------------------------------------------ Current liabilities Current taxliabilities 0.4 2.2 2.5Obligationsunder financeleases - 0.4 0.2Trade andother payables 52.0 44.5 50.0 ---------- ---------- ---------- 52.4 47.1 52.7 ---------- ---------- ----------Non-current liabilities Retirementbenefitliabilities 6.4 13.3 12.3Provisions andotherliabilities 0.1 0.3 0.1 ---------- ---------- ---------- 6.5 13.6 12.4------------------------------------------------------------------------------Total liabilities 58.9 60.7 65.1------------------------------------------------------------------------------Net assets 57.2 56.0 61.7------------------------------------------------------------------------------ EquityShare capital 37.3 37.3 37.3Share premium 86.4 86.4 86.4Own shares (0.8) (0.8) (0.8)Retainedearnings (65.7) (66.9) (61.2)------------------------------------------------------------------------------Total equity 57.2 56.0 61.7------------------------------------------------------------------------------ Condensed Group Statement of Changes in Shareholders' EquityFor the 26 weeks ended 28 July 2007 Share Share Own Retained Total Capital Premium Shares Earnings Equity £m £m £m £m £m------------------------------------------------------------------------------Balance as at28 January 2006 37.3 86.4 (0.8) (63.9) 59.0 Profit for the6 months ended29 July 2006 - - - 1.9 1.9Exchangedifferences ontranslation ofinvestments - - - (0.2) (0.2)Dividends paid - - - (3.7) (3.7)Purchase ofown shares - - - (1.0) (1.0)------------------------------------------------------------------------------Balance as at29 July 2006 37.3 86.4 (0.8) (66.9) 56.0 Profit for the6 months ended27 January 2007 - - - 6.1 6.1Exchangedifferences ontranslation ofinvestments - - - (0.4) (0.4)------------------------------------------------------------------------------Balance as at27 January 2007 37.3 86.4 (0.8) (61.2) 61.7 Profit for the6 months ended28 July 2007 - - - 4.2 4.2Exchangedifferences ontranslation ofinvestments - - - (0.2) (0.2)Dividends paid - - - (7.4) (7.4)Purchase ofown shares - - - (1.1) (1.1)------------------------------------------------------------------------------Balance as at28 July 2007 37.3 86.4 (0.8) (65.7) 57.2------------------------------------------------------------------------------ Condensed Group Cash Flow StatementFor the 26 weeks ended 28 July 2007 26 weeks to 26 weeks to 52 weeks to 28 July 2007 29 July 2006 27 January 2007 (unaudited) (unaudited) (audited) £m £m £m-------------------------------------------------------------------------------Operating activities Cash generated from operations 5.2 4.1 23.5Corporation tax paid (2.4) (0.7) (3.5)Dividends paid (7.4) (3.7) (3.7)Finance income 0.5 0.5 0.9Finance costs - (0.2) (0.3) -------- -------- --------- (4.1) - 16.9 -------- -------- ---------Investing activities Purchase of property, plantand equipment (4.5) (2.0) (5.6)Sale of property, plant andequipment 0.1 - 0.2Purchase of investment (0.7) (0.6) (0.7)Net cash received fromassociate 0.1 0.1 0.1 -------- -------- --------- (5.0) (2.5) (6.0) -------- -------- ---------Financing activities Purchase of own shares (1.1) (1.0) (1.0)Payment of finance leaseobligations (0.2) (0.1) (0.3) -------- -------- --------- (1.3) (1.1) (1.3)-------------------------------------------------------------------------------Net (decrease)/increase incash and cash equivalents (10.4) (3.6) 9.6------------------------------------------------------------------------------- Reconciliation of Net Cash Flow to Movement in Net FundsFor the 26 weeks ended 28 July 2007 26 weeks to 26 weeks to 52 weeks to 28 July 2007 29 July 2006 27 January 2007 (unaudited) (unaudited) (audited) £m £m £m------------------------------------------------------------------------------Net (decrease)/increasein cash and cash equivalents (10.4) (3.6) 9.6Cash inflow fromchanges in leases 0.2 0.1 0.3------------------------------------------------------------------------------Change in net cashduring the period (10.2) (3.5) 9.9Net funds at thebeginning of the period 31.5 21.6 21.6------------------------------------------------------------------------------Net funds at the endof the period 21.3 18.1 31.5------------------------------------------------------------------------------ Notes 1. Basis of preparation This condensed set of financial statements has been prepared in accordance withthe requirements of IAS 34 'Interim Financial Reporting' as adopted by theEuropean Union ('EU'). As required by the Disclosure and Transparency Rules of the UK's FinancialServices Authority, the condensed set of financial statements has been preparedby applying the accounting policies and presentation that were applied in thepreparation of the Company's published consolidated financial statements for thefinancial year ended 27 January 2007, which were prepared in accordance withInternational Financial Reporting Standards as adopted by the EU. These half-year condensed financial statements are unaudited and do notconstitute statutory accounts within the meaning of Section 240 of the CompaniesAct 1985. 2. Dividends During the 26 weeks ended 28 July 2007, the Company paid a total dividend inrelation to the financial year ended 27 January 2007 of 1.0p per ordinary share. 3. Segmental analysis 26 weeeks to 26 weeks to 52 weeks to 28 July 2007 29 July 2006 27 January 2007 Total Total Total (unaudited) (unaudited) (audited) £m £m £m-------------------------------------------------------------------------- Revenue Retail 101.6 93.6 199.7Non-retail 12.3 12.9 25.3 -------------------------------------------------------------------------- 113.9 106.5 225.0-------------------------------------------------------------------------- Profit before taxation Branch contribution:Retail 13.4 9.0 24.3 Non-retail 4.7 4.4 7.6 -------------------------------------------------------------------------- 18.1 13.4 31.9 Indirect overhead costs (12.6) (11.1) (20.7) -------------------------------------------------------------------------- Profit from operations 5.5 2.3 11.2 Share of operatingprofit of associate 0.4 0.4 0.4 Finance income 0.5 0.5 0.9Finance costs - (0.2) (0.3)--------------------------------------------------------------------------- Profit before taxation 6.4 3.0 12.2--------------------------------------------------------------------------- Retail revenue reflects sales through Laura Ashley's managed stores, Mail Orderand E-Commerce. Non-retail revenue includes Licensing, Franchising and Manufacturing. Branch contribution is stated after deducting direct operating expenses, buying, marketing and administrative costs. 4. Principal exchange rates 26 weeks to 26 weeks to 52 weeks to 28 July 2007 29 July 2006 27 January 2007 Average Period end Average Period end Average Period end-----------------------------------------------------------------------------US Dollar 1.98 2.03 1.80 1.87 1.86 1.96Euro 1.48 1.49 1.45 1.46 1.47 1.52Japanese Yen 239 241 208 214 217 238----------------------------------------------------------------------------- 5. Taxation Taxation has been calculated by applying the forecast full year effective rateof tax in the individual fiscal territories to the results for this period. 6. Earnings per share 26 weeks to 26 weeks to 52 weeks to 28 July 2007 29 July 2006 27 January 2007 (unaudited) (unaudited) (audited)-----------------------------------------------------------------------------Basic and diluted 4.2 1.9 8.0earnings attributable to ordinary shareholders(£m) Weighted average number of 738,501 742,570 741,202ordinary shares - basic and diluted ('000) Earnings per share 0.57p 0.26p 1.08p----------------------------------------------------------------------------- Basic and diluted earnings per share is calculated by dividing the earningsattributable to ordinary shareholders by the weighted average number of ordinary shares during the period. 7. Reconciliation of operating profit to net cash inflow from operating activities 26 weeks to 26 weeks to 52 weeks to 28 July 29 July 27 January 2007 2006 2007 (unaudited) (unaudited) (audited) £m £m £m-------------------------------------------------------------------------------Operating profit 5.5 2.3 11.2Unrealised investment loss 0.2 - -Depreciation charge 2.3 2.8 5.6Profit on sale of property, plant andequipment (0.1) - (0.1)Change in inventories 1.4 (5.6) (2.7)Change in receivables (0.2) 1.3 1.9Change in payables 2.0 3.2 8.7Change in provisions and otherliabilities (5.9) 0.1 (1.1)-------------------------------------------------------------------------------Net cash inflow from operatingactivities 5.2 4.1 23.5------------------------------------------------------------------------------- 8. Related party transactions The related party transactions that have occurred in the 26 weeks ended 28 July2007 are not materially different in size or nature to those reported in theCompany's Annual Report for the year ended 27 January 2007. This information is provided by RNS The company news service from the London Stock Exchange