ALY.L Regulatory News (ALY)

RNS Number : 5877J

Ashley (Laura) Hldgs PLC

01 April 2010

 

1st April 2010   LAURA ASHLEY HOLDINGS plc

("the Company")

Laura Ashley today announces results for the 52 weeks to 30 January 2010 showing continued revenue growth despite a difficult economic environment.

 

Summary

·; Total Group sales up 3.0% to £268.4m for 52 weeks (2009: £260.5m for 53 weeks)

·; Total UK retail sales* up 3.6% to £243.6m, like-for-like sales up 3.5%

·; Profit before taxation and including exceptional gains up 7.8% to £11.0m (2009: £10.2m). This includes a £6.0m negative currency impact due to the weakness of Sterling.

·; Exceptional gain of £0.9m (2009: £0.6m)

·; Gross margin declined by 1.8 percentage points as a result of the weakness of Sterling and planned promotional activity

·; Strong Balance Sheet with £17.4m net cash at the year end (2009: £7.9m) and a clean-stock position

·; Final dividend proposed of 0.75 pence per share making the total dividend of 1.0 pence per share for the year (2009: 1.25 pence per share)

·; All product categories showing positive like-for-like sales growth:

o Furniture sales up 18.2%, like-for-like sales up 13.8%

o Home Accessories sales up 5.5%, like-for-like sales up 1.6%

o Decorating sales up 9.5%, like-for like-sales up 6.2%

o Fashion sales up 12.9%, like-for-like sales up 9.8%

 

Commenting on the results, Tan Sri Dr. K P Khoo, Chairman, said:

"This has been another year of continued revenue growth for Laura Ashley despite a difficult market. I am encouraged to see the strong like-for-like growth across all categories, particularly Furniture, and to see the important role that E-commerce continues to play in driving growth. 2009 witnessed a period of consolidation in the marketplace following the uncertainties of 2008. Customer confidence is returning but is tempered with a degree of caution. Laura Ashley is confident that its strong balance sheet, strong brand and distinctive product offering will provide a platform for continued growth in 2010."

 

*Includes stores, E-Commerce and Mail Order

 

 

1

Enquiries:

Brunswick	020 7404 5959
Tom Buchanan / James Olley Laura Ashley Holdings plc	0207 8805100
Lillian Tan CEO
Seán Anglim CFO

Overview

 

For the 52 weeks to 30 January 2010, profit before tax was up 7.8% to £11.0 million (2009: £10.2 million). Excluding gains from exceptional items, profit was up 5.2% to £10.1 million (2009: £9.6 million). Profit from continuing operations was up 10.9% to £11.2million (2009: £10.1million). This excludes our share of loss from our associate company arising from an impairment charge in that associate company.

 

Total Group sales increased by £7.9 million (3.0%) to £268.4 million (52 weeks) compared to the previous year of £260.5 million (53 weeks). The improved total sales position was primarily due to the increase in UK store sales and Internet sales. For the year ended 30 January 2010, total UK store sales were up 3.1% to £213.5 million (LFL +3.0%) whilst Internet sales grew by 30.0% to £22.1 million. An additional 16,000 selling square feet (1.8%) was added to the UK portfolio.

 

Gross margin declined by 1.8 percentage points against last year mainly due to the weakness of Sterling and planned promotional activity. Operating expenses have decreased by 3.2% to £104.3 million (2009: £107.8 million) due to our successful cost-control measures.

 

The Board has recommended a final dividend of 0.75 pence per share. When taken with the interim dividend of 0.25 pence per share (paid on 12 November 2009), the total dividend for the year will be 1.0 pence per share (20% of nominal value) (2009: 1.25 pence per share (25% of nominal value))

 

Product

The UK business is split into four main categories. For the financial year ended 30 January 2010, the relative split of UK sales is as follows: Furniture 30%, Home Accessories 28%, Decorating 22% and Fashion 20%.

 

Furniture

The Furniture product category includes beds, upholstered furniture, mirrors and cabinet furniture.

 

In spite of challenging economic conditions, total Furniture sales increased 18.2% (LFL +13.8%) for the year ended 30 January 2010. Upholstered furniture and cabinet furniture sales grew at the same rate. We were encouraged by the strong performance of Furniture through the E-Commerce channel, which saw growth of 36% year-on-year helped by the addition of our online bespoke service.

 

The growth in furniture was driven by the success of range expansions, updates and re-colourations of our best sellers, planned promotional activity and improved stock management. New product additions to our popular ranges continue to drive us forward, as has the introduction of more innovative products.

 

Home Accessories

The Home Accessories product category includes lighting, gifts, bed linen, rugs, throws, cushions, and children's accessories.

 

During the year ended 30 January 2010, sales of Home Accessories increased by 5.5% (LFL +1.6%).

 

We continue to innovate in this category. Our fragrance ranges have proven to be very popular, as have our updated children's ranges. Our expanded Christmas offer performed strongly in the season. We have built on our signature lighting offer with new distinctive pieces. New bed linen and cushion designs have also driven positive sales momentum.

 

Decorating

This category includes curtains, fabric, paint, decorative accessories and wall coverings.

 

During the year ended 30 January 2010, Decorating sales were up 9.5% (LFL +6.2%).

 

Previous investment in a new wallpaper printing machine has enabled continued success in this category as we react quickly to changing trends and can restock mid-season. Re-colourations of best sellers, shorter lead-times and distinctive statement wallpapers continue to drive this category.

 

Our new online Made to Measure curtains offer has also been particularly popular.

 

Fashion

For the year ended 30 January 2010, UK retail fashion sales increased by 12.9% (LFL +9.8%) in what continued to be a highly competitive consumer environment. During the year, nine stores were converted from Home to Mixed Product stores giving an additional 14,000 square feet to fashion trading.

 

Our fashion product offering continues to be successful. Our proven best selling shapes and colours have continued to sell well. New ranges and products, such as the cape and the all-in-one trouser suit, were in high demand from our customers.

 

The accessories range has been very popular, particularly scarves and jewellery, as has our nightwear range.

 

UK Retail

As at 30 January 2010, the property portfolio in the UK comprised 231 stores (2009: 228). We have four main store types: 137 Mixed Product stores (selling all product categories), 62 Home stores (selling Home products only), 28 Home concession stores and 4 Clearance outlets. Nine Home stores were converted to Mixed Product stores. A further 21 stores, 9% of the UK portfolio, underwent space-flexing to optimise profitability and give a more relevant and popular product offering.

 

During the year ended 30 January 2010, we opened 6 new stores and closed 3 stores. As a result, total selling space increased by 1.8% to 886,000 square feet.

 

We introduced our first branded Laura Ashley Gift & Accessory store. Located at Liverpool Street train station, we have had extremely positive customer feedback to this model. We will continue to review its performance with a view to adding such stores to the portfolio as suitable locations arise.

 

We remain committed to our store realignment programme in 2010 and, as previously, it will continue to be subject to our rigorous property selection criteria. The realignment will focus on the acquisition of smaller, new concept stores and optimising space in our existing portfolio to drive additional density.

 

Our E-Commerce and Mail Order channels remain a vital part of our multi-channel retail strategy, representing 12% of total UK retail sales. Total E-commerce and Mail Order sales were up 7% on last year. Within this figure and reflecting the trend we have seen over recent years, E-Commerce sales were up 30.0%, more than compensating for an ongoing market decline in Mail Order sales. The online offer has been greatly enhanced with the addition during the year of the Made to Measure curtains and Made to Order upholstery categories.

 

International Operations

Our international franchising operations continue to be an important part of the Laura Ashley business and, as at 30 January 2010, there were 230 (2009: 223) franchised stores in 26 (2009: 25) countries worldwide. This includes 6 stores in China and 3 stores in Dubai, with a view to opening additional stores elsewhere in the Gulf states.

 

Franchise revenues fell by 5.6% to £19.4 million as most partners have continued to be affected by the global economic downturn.

 

Licensing income increased 1.0% to £3.1m. Licenses were awarded during 2009 for new categories, which included wooden flooring, fireplaces and shutters.

 

Dividend

The Board has recommended a final dividend of 0.75 pence per share. When taken with the interim dividend of 0.25 pence per share paid on 12 November 2009, this takes the total dividend for the year to 1.0 pence per share (2009: 1.25 pence per share). This dividend will be proposed at the AGM on 7 June 2010 and subject to shareholder approval, will be paid on 4 August 2010 to all shareholders on the register at the close of business on 2 July 2010

 

The Board will continue to review dividend payments on the basis of annual profitability, the economic climate and the needs of the business.

 

Current trading

For the 8 weeks to 27 March 2010, total UK retail sales increased by 5.6%. For the same period, like-for-like UK retail sales improved by 4.6% due to targeted promotional activity.

 

2009 witnessed a period of consolidation in the marketplace following the uncertainties of 2008. Customer confidence is returning but is tempered with a degree of caution. Laura Ashley is confident that its strong balance sheet, strong brand and distinctive product offering will provide a platform for continued growth in 2010.

 

Store portfolio realignment in the UK is ongoing as we aim to try new concept stores in strategic locations. We will continue to develop our online business and forge new partnerships with franchisees and licensees worldwide.

 

  

Group Statement of Comprehensive Income
for the financial year ended 30 January 2010
			2010		2009
	Note		£m		£m
Revenue			268.4		260.5
Cost of sales			(151.4)		(142.2)
Gross profit			117.0		118.3
Operating expenses			(104.3)		(107.8)
Profit from operations			12.7		10.5
Share of operating loss of associate			(1.1)		(0.5)
Dividend received			-		0.1
Finance income			0.1		0.2
Finance costs			(0.7)		(0.1)
Profit before taxation			11.0		10.2
Taxation			(5.2)		(3.1)
Profit for the financial year *			5.8		7.1
Other comprehensive income:
Exchange differences on translation of investments			(0.2)		1.7
Unrealised investment gain/(loss)			0.5		(2.7)
Other comprehensive income/(expense) for the year net of tax			0.3		(1.0)
Total comprehensive income for the year			6.1		6.1
* Earnings per share - basic and diluted - calculated based	2		0.80p		0.97p
on profit for the financial year
The Group's results shown above are derived entirely from continuing operations.

  

 

Group Balance Sheet
As at 30 January 2010
		2010		2009
		£m		£m
Non-current assets
Property, plant and equipment		36.3		39.4
Deferred tax asset		1.9		1.8
Investment in associate		3.2		4.7
Investment in quoted shares		2.0		1.5
		43.4		47.4
Current assets
Inventories		48.8		53.1
Trade and other receivables		22.4		20.3
Cash and cash equivalents		17.4		7.9
		88.6		81.3
Total assets		132.0		128.7
Current liabilities
Current tax liabilities		5.0		0.5
Trade and other payables		68.1		69.0
		73.1		69.5
Non-current liabilities
Retirement benefit liabilities		6.9		6.5
Deferred tax liabilities		0.7		0.4
Provisions and other liabilities		0.5		0.3
		8.1		7.2
Total liabilities		81.2		76.7
Net assets		50.8		52.0
Equity
Share capital		37.3		37.3
Share premium		86.4		86.4
Own shares		(0.8)		(0.8)
Retained earnings		(72.1)		(70.9)
Total equity		50.8		52.0

 

 

 

 

Group Statement of Changes in Shareholders' Equity
As at 30 January 2010
		Share		Share		Own		Retained		Total
		Capital		Premium		Shares		Earnings		Equity
		£m		£m		£m		£m		£m
Balance as at 26 January 2008		37.3		86.4		(0.8)		(61.0)		61.9
Profit for the financial year ended 31 January 2009		-		-		-		7.1		7.1
Dividends paid		-		-		-		(14.6)		(14.6)
Purchase of own shares		-		-		-		(1.4)		(1.4)
Other comprehensive expense		-		-		-		(1.0)		(1.0)
Balance as at 31 January 2009		37.3		86.4		(0.8)		(70.9)		52.0
Profit for the financial year ended 30 January 2010		-		-		-		5.8		5.8
Dividends paid		-		-		-		(7.3)		(7.3)
Other comprehensive income		-		-		-		0.3		0.3
Balance as at 30 January 2010		37.3		86.4		(0.8)		(72.1)		50.8

 

  

Group Statement of Cash Flow
As at 30 January 2010
		2010		2009
	Notes	£m		£m
Operating activities
Cash generated from operations	3	20.3		7.7
Corporation tax paid		(0.5)		(2.4)
Dividends paid		(7.3)		(14.6)
Dividends received		-		0.1
Finance income		0.1		0.2
Finance cost		(0.7)		(0.1)
		11.9		(9.1)
Investing activities
Purchase of property, plant and equipment		(2.4)		(9.0)
Sale of property, plant and equipment		-		0.2
Purchase of investment		-		(2.1)
Net cash received from associate		-		0.1
		(2.4)		(10.8)
Financing activities
Repurchase of own shares		-		(1.4)
		-		(1.4)
Net increase/(decrease) in cash and cash equivalents	4	9.5		(21.3)
Reconciliation of Net Cash Flow to Movement in Net Funds
For the financial year ended 30 January 2010
		2010		2009
	Note	£m		£m
Net increase/(decrease) in cash and cash equivalents / Change in net funds resulting from cash flows		9.5		(21.3)
Net funds at the beginning of the financial year		7.9		29.2
Net funds at the end of the financial year	4	17.4		7.9

 

 

1 Basis of Preparation

 

Consolidated financial statements and accounting policies

 

The preliminary announcement for the year ended 30 January 2010 has been prepared in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS), collectively 'IFRSs', as adopted by the European Union (EU).

 

These consolidated financial statements have been prepared using the historical cost convention, modified for certain items carried at fair value, as stated in the accounting policies. Details of the accounting policies applied are those set out in Laura Ashley Holdings Plc's Annual Report 2010.

 

The annual financial information presented in this announcement for the year ended 30 January 2010 is based on, and is consistent with, that in the Group's audited financial statements for the year ended 30 January 2010, and those financial statements will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The auditor's report on those financial statements is unqualified and does not contain any statement under Section 498(2) or (3) of the Companies Act 2006.

 

In the current financial year, the Group has adopted IAS 1 'Presentation of Financial Statements' (revised 2007) and IFRS 8 'Operating Segments'.

 

The adoption of the revised IAS 1 affects the presentation of owner changes in equity and of comprehensive income. It does not change the recognition, measurement or disclosure of specific transactions and other events required by IFRS. This implementation has had no material impact on the results or net assets of the Group.

 

IFRS 8 replaces IAS 14 ' Segmental Reporting'. The new standard uses a 'management approach', under which segment information is presented on the same basis as that used for internal reporting purpose. Its implementation has had no material impact on the results or net assets of the Group though the Group's identifiable segments have now included retail stores, retail E-Commerce and Mail Order and non-retail channels.

 

 

Statutory Accounts

 

Information in this preliminary announcement does not constitute statutory accounts of Laura Ashley Holdings Plc and its subsidiaries ('the Group') within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 January 2009 have been filed with the Registrar of Companies. The auditor's report on these accounts was unqualified and did not contain any statement under Section 237(2) or (3) of the Companies Act 1985.

 

The Group's Annual Report for the year ended 30 January 2010 will be made available in due course and can be viewed and downloaded from the Group's website at www.lauraashley.com. The Annual Report will be circulated in printed form to shareholders in early May 2010.

 

 

2 Earnings per Share
Earnings per share is calculated by dividing the profit for the financial year by the weighted average number of ordinary shares during the year (excluding treasury shares).
			2010	2009
Profit for the financial year (£m)			5.8	7.1
Weighted average number of ordinary shares ('000) - basic and diluted			727,763	729,408
Earnings per share			0.80p	0.97p
Normalised earnings per share (excluding prior year corporation and deferred taxes)			0.98p	0.95p
3 Reconciliation of Profit from Operations to Net Cash Inflow from Operating Activities
			2010	2009
			£m	£m
Profit from operations			12.7	10.5
Depreciation charge			5.3	5.5
Profit on sale of property, plant and equipment			-	(0.2)
Exchange movement on property, plant and equipment			0.2	(0.5)
Decrease/ (increase) in inventories			4.3	(13.6)
(Increase)/decrease in receivables			(2.1)	6.4
Decrease in payables			(0.9)	(0.3)
Movement in provisions			0.8	(0.1)
Net cash inflow from operating activities			20.3	7.7
4 Analysis of Net Funds
		At 31 Jan	Cash	At 30 Jan
		2009	Flow	2010
		£m	£m	£m
Cash and cash equivalents		7.9	9.5	17.4

 

 

 

5 Segmental Analysis
				Retail
		Retail		E-Commerce		Total		Total
		Stores		& Mail Order		Retail		Non-retail		Total
2010		£m		£m		£m		£m		£m
Revenue		215.3		30.1		245.4		23.0		268.4
Contribution		16.0		7.6		23.6		7.5		31.1
Share of loss of associate						-		(1.1)		(1.1)
Indirect overhead costs						(18.4)		-		(18.4)
Finance income						0.1		-		0.1
Finance costs						(0.6)		(0.1)		(0.7)
Profit before taxation						4.7		6.3		11.0
Total assets						56.8		75.2		132.0
Total liabilities						20.6		60.6		81.2
Net assets						36.2		14.6		50.8
Capital expenditure						2.3		0.1		2.4
Depreciation						5.2		0.1		5.3
				Retail
		Retail		E-Commerce		Total		Total
		Stores		& Mail Order		Retail		Non-retail		Total
2009		£m		£m		£m		£m		£m
Revenue		208.2		28.1		236.3		24.2		260.5
Contribution		17.8		4.2		22.0		8.6		30.6
Share of loss of associate						-		(0.5)		(0.5)
Indirect overhead costs						(20.1)		-		(20.1)
Dividend received						-		0.1		0.1
Finance income						0.2		-		0.2
Finance costs						(0.1)		-		(0.1)
Profit before taxation						2.0		8.2		10.2
Total assets						74.0		54.7		128.7
Total liabilities						41.5		35.2		76.7
Net assets						32.5		19.5		52.0
Capital expenditure						8.8		0.2		9.0
Depreciation						5.4		0.1		5.5

 

 

The reported segments are consistent with the Group's internal reporting for performance measurement and resources allocation. The Group does not allocate indirect overhead cost and split assets or liabilities into business segments.

 

Retail revenue reflects sales through Laura Ashley's managed stores, Mail Order and E-Commerce. Non-retail revenue includes Licensing, Franchising and Manufacturing.

 

Contribution is stated after deducting direct operating expenses, buying, marketing and administrative costs.

 

		Non-current assets						Revenue
		2010		2009				2010		2009
		£m		£m				£m		£m
Destination
UK & Ireland		39.8		42.3				244.1		235.7
Continental Europe		0.4		0.4				6.4		6.4
Other		3.2		4.7				17.9		18.4
		43.4		47.4				268.4		260.5

 

 

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