29 Mar 2012 07:00
("the Company")
Laura Ashley Holdings plc announces a resilient set of results for the 52 weeks to 28 January 2012 and is encouraged by the positive trend in trading since the start of 2012.
Summary
·; Total Group sales up 0.3% to £285.9m (2011: £285.0m), total UK retail sales down 0.6% to £255.0m
·; Like-for-like sales up 3.3% with positive like-for-like growth across most categories
·; Gross margin rate maintained
·; Profit before taxation, excluding exceptional items, down 2.6% to £18.8m (2011: £19.3m)
·; Adjusted EPS of 1.84p (2011: 1.99p)
·; Strong Balance Sheet with £35.0m cash at the year end (2011: £38.5m) and a clean inventory position
·; Final dividend proposed of 1.0 pence per share making the total dividend of 2.0 pence per share for the year (2011: Total dividend 1.5 pence per share)
·; Non-store revenue growth of 6% taking non-store revenue to 24% of total
·; Expansion of E-Commerce into four international markets
·; Further expansion of the brand marketing strategy includes the acquisition of a boutique hotel which will showcase our products and design service
Commenting on the results, Tan Sri Dr. K P Khoo, Chairman, said:
"In what continues to be a very competitive consumer environment, I am pleased that we have maintained the progress of recent years and delivered a resilient set of results, maintaining gross margin and seeing continued like-for-like sales growth across the retail business.
A strong performance in the first half of the year was followed by a more challenging Autumn; we did however see a return to stronger trading towards the end of 2011 with a positive trend in like-for-like sales growth.
For the first 8 weeks of the current financial year to 24 March 2012, like-for-like sales growth is 10.9%.
Laura Ashley's success stems from its high-quality product offering and distinctive style which is based on the brand's rich design heritage and contemporary interpretations. As we expand internationally, we are proud that over 40% of our sales is derived from products manufactured in the UK."
Enquiries:
| |
| Laura Ashley Holdings plc Seán Anglim COO Ho Kien Mun CFO |
020 7880 5100 |
Media Enquiries Brunswick Anita Scott James Olley |
020 7404 5959 |
Corporate Broker Seymour Pierce Richard Redmayne Guy Peters
| 020 7107 8097
|
Overview
For the 52 weeks to 28 January 2012, profit before taxation and exceptional items was down 2.6% to £18.8 million (2011: £19.3 million). Profit before taxation including exceptional items was down 23.7% to £18.4 million (2011: £24.1million).
Total Group sales increased by £0.9 million (0.3%) to £285.9 million compared to the previous year of £285.0 million. Improved sales were recorded across the Internet, French Retail Stores and the Franchise business while UK stores fell by 1.5% reflecting the net reduction in retail space. For the year ended 28 January 2012, total Internet sales grew by 10.4% to £35.3 million. Retail space was reduced by 27,000 square feet (3.2%), as the UK portfolio was reduced by 6 stores, from 217 to 211.
In spite of greater supplier costs due to the increases in commodity costs, gross margin rates were maintained at last year's levels. Operating expenses increased by 2.0% to £107.7 million (2011: £105.6 million).
Cash Flow and Balance Sheet
Cash generated from operations in the year was £24.4 million (2011: £29.1 million). The net decrease in cash balances over the year was £3.5 million with the Group holding £35.0 million in cash as at the year end (2011: £38.5 million). The acquisition of a small hotel for brand marketing development cost £5.8m. Dividend payments in the year increased by £5.4m.
Dividend
The Board has recommended a final dividend of 1.0 pence per share. When taken with the interim dividend of 1.0 pence per share paid on 10 November 2011, this takes the total dividend for the year to 2.0 pence per share (2011: Total dividend of 1.5 pence per share). This dividend will be proposed at the AGM on 11 June 2012 and, subject to shareholders' approval, will be paid on 11 July 2012 to all shareholders on the Register at the close of business on 15 June 2012. The ex-dividend date will be on 13 June 2012.
The Board will continue to review dividend payments on the basis of annual profitability, the economic climate and the needs of the business.
UK Retail
As at 28 January 2012, the property portfolio in the UK comprised 211 stores (2011: 217). We have five store types: 134 Mixed Product stores (selling all product categories), 54 Home stores (selling Home products only), 21 Home concession stores, 1 Gifts & Accessories store and 1 Clearance outlet.
During the year ended 28 January 2012, we opened 1 new store and closed 7 stores. As a result, total selling space fell by 3.2% to 806,000 square feet. The store closures are part of the ongoing store portfolio realignment programme, which is focussed on optimising profitability. The realignment will also focus on the acquisition of smaller, new concept stores and optimising space in our existing portfolio to drive additional density.
Our E-Commerce channel remains a key part of our multi-channel retail strategy, contributing 13.8% of total UK retail sales (12.3% of total Group sales). This has increased from 12.5% of total UK Retail sales last year (11.2% of total Group sales). Total E-Commerce and Mail Order sales were up 4.9% on last year. Within this figure and reflecting the trend we have seen over recent years, E-Commerce sales were up 10.4%, more than compensating for an ongoing market decline in Mail Order sales. Laura Ashley now delivers its full product range to Germany, Austria, Italy and Switzerland, in addition to the UK. Considerable functional enhancement was added to the website during 2011 giving the customer greater ease of navigation and showcasing the entire range of bespoke upholstery products.
Product
The UK business is split into four main categories. For the financial year ended 28 January 2012, the relative split of UK sales is as follows: Furniture 30%, Home Accessories 27%, Decorating 23% and Fashion 20%.
Over 40% of our home furnishings ranges are manufactured in the UK.
Furniture
The Furniture product category includes beds, upholstered furniture, mirrors and cabinet furniture.
Total Furniture sales increased 0.9% (LFL +4.1%) for the year ended 28 January 2012
The continued success of the furniture offer is based on both classic shapes and the introduction of more contemporary pieces. The bed category has expanded successfully during the last year as we now offer a comprehensive range at very competitive lead times. Mirrors continue to be a signature product within the range.
Home Accessories
The Home Accessories product category includes lighting, gifts, bed linen, rugs, throws, cushions, and children's accessories.
During the year ended 28 January 2012, sales of Home Accessories decreased by 3.9% (LFL -0.2%).
In an increasingly competitive category, we managed to perform significantly better than the market during the past year. We have added new products to the range including tea, coffee, hot chocolate and biscuits, all of which outperformed our expectations. We also grew our Christmas offer to very positive customer response. Our inspirational lighting, bed linen and soft furnishings continue to be key components in our coordinated lifestyle offer.
Decorating
This category includes curtains, blinds, fabric, paint, decorative accessories and wall coverings.
During the year ended 28 January 2012, Decorating sales were up 1.6% (LFL +4.7%).
Distinctive, contemporary prints and traditional floral designs in both fabric and wallpaper combined to give us a very strong performance in the category during the past year. Our ability to both respond to and set trends gives us a significant market advantage. Our diverse mix of designs, treatments and finishes has enabled us to continue to grow our curtains and blinds business - all made to bespoke requirements in the UK.
Fashion
For the year ended 28 January 2012, UK retail fashion sales increased by 2.7% (LFL +5.6%).
In addition to building on the success of previous designs and shapes, we continue to embrace fashions trends whilst ensuring that the Laura Ashley handwriting is maintained and enhanced.
A new range of perfumery and associated products has been developed and was launched during Autumn 2011 to favourable customer response. Comprising three signature fragrances, this has added to our growing fashion accessory category.
International Operations
Our international franchising operations continue to be an important part of the Laura Ashley business and, as at 28 January 2012, there were 245 (2011: 240) franchised stores in 29 (2011: 29) countries worldwide. They now include 2 stores in Moscow which were opened during the last six months. Work continues to engage franchise partners in China, India and South America.
Franchise revenues grew by 4.3% to £23.9 million.
Licensing income increased by 13.0% to £3.5m. Licenses were awarded during 2011 for new categories, which include sewing machines, bathroom accessories, bathroom furniture, sleepwear, lingerie and limited edition T-shirt ranges.
Hotel
The Company purchased a hotel in Hertfordshire in November 2011 at a cost of £5.8m. This is a further step in the expansion of our brand marketing strategy. The boutique hotel will be refurbished as a brand showcase for our products and design service.
Current Trading and Outlook
We are encouraged by the like-for-like sales growth of 10.9% for the first 8 weeks of the current financial year to 24 March 2012.
| Group Statement of Comprehensive Income |
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For the financial year ended 28 January 2012 |
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2012 | 2011 |
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Note | £m | £m |
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| Revenue | 285.9 | 285.0 |
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Cost of sales | (159.9) | (159.6) |
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Gross profit | 126.0 | 125.4 |
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Operating expenses | (107.7) | (105.6) |
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Profit from operations | 18.3 | 19.8 |
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Share of operating profit of associate | 0.8 | 0.5 |
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Finance income | 0.2 | - |
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Finance costs | (0.5) | (1.0) |
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Profit before taxation and exceptional items | 18.8 | 19.3 |
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Exceptional items | (0.4) | 4.8 |
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Profit before taxation | 18.4 | 24.1 |
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Taxation | 6 | (5.4) | (4.8) |
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Profit for the financial year * | 13.0 | 19.3 |
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Other comprehensive income: |
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Exchange differences on translation of investments | 0.7 | 0.2 |
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Other reserve movements | 0.5 | - |
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Unrealised investment gains | 1.0 | 0.3 |
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Other comprehensive income for the year net of taxation | 2.2 | 0.5 |
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Total comprehensive income for the year | 15.2 | 19.8 |
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* Earnings per share - basic and diluted - calculated based on profit for the financial year | 2 | 1.79p | 2.65p |
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Adjusted earnings per share (excluding exceptional items) | 2 | 1.84p | 1.99p |
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The Group's results shown above are derived entirely from continuing operations. | ||||||||
| Group Balance Sheet | ||||
As at 28 January 2012 | ||||
2012 | 2011 | |||
£m | £m | |||
Non-current assets | ||||
Property, plant and equipment | 27.3 | 23.7 | ||
Deferred tax asset | 1.7 | 2.0 | ||
Investment in associate | 5.2 | 4.1 | ||
Investment in quoted shares | 3.3 | 2.3 | ||
37.5 | 32.1 | |||
Current assets | ||||
Inventories | 53.1 | 48.7 | ||
Trade and other receivables | 21.8 | 21.7 | ||
Cash and cash equivalents | 35.0 | 38.5 | ||
109.9 | 108.9 | |||
Total assets | 147.4 | 141.0 | ||
| Current liabilities | ||||
Current tax liabilities | 2.2 | 1.6 | ||
Trade and other payables | 77.6 | 71.8 | ||
79.8 | 73.4 | |||
Non-current liabilities | ||||
Retirement benefit liabilities | 6.7 | 7.2 | ||
Deferred tax liabilities | 0.4 | 0.6 | ||
Provisions and other liabilities | 0.1 | 0.1 | ||
7.2 | 7.9 | |||
Total liabilities | 87.0 | 81.3 | ||
Net assets | 60.4 | 59.7 | ||
Equity | ||||
Share capital | 37.3 | 37.3 | ||
Share premium | 86.4 | 86.4 | ||
Own shares | (0.8) | (0.8) | ||
Retained earnings | (62.5) | (63.2) | ||
Total equity | 60.4 | 59.7 |
| Group Statement of Changes in Shareholders' Equity | ||||||||||
As at 28 January 2012 | ||||||||||
Share | Share | Own | Retained | Total | ||||||
Capital | Premium | Shares | Earnings | Equity | ||||||
£m | £m | £m | £m | £m | ||||||
Balance as at 30 January 2010 | 37.3 | 86.4 | (0.8) | (73.9) | 49.0 | |||||
Profit for the financial year | - | - | - | 19.3 | 19.3 | |||||
Dividends paid | - | - | - | (9.1) | (9.1) | |||||
Other comprehensive income | - | - | - | 0.5 | 0.5 | |||||
Balance as at 29 January 2011 | 37.3 | 86.4 | (0.8) | (63.2) | 59.7 | |||||
Profit for the financial year | - | - | - | 13.0 | 13.0 | |||||
Dividends paid | - | - | - | (14.5) | (14.5) | |||||
Other comprehensive income | - | - | - | 2.2 | 2.2 | |||||
Balance as at 28 January 2012 | 37.3 | 86.4 | (0.8) | (62.5) | 60.4 | |||||
Group Statement of Cash Flow | ||||
For the financial year ended 28 January 2012 | ||||
2012 | 2011 | |||
Notes | £m | £m | ||
Operating activities | ||||
Cash generated from operations | 3 | 24.4 | 29.1 | |
Corporation tax paid | (4.2) | (8.4) | ||
Dividends paid | (14.5) | (9.1) | ||
Finance income | 0.2 | - | ||
Finance costs | (0.5) | (1.0) | ||
5.4 | 10.6 | |||
Investing activities | ||||
Purchase of property, plant and equipment | (8.9) | (1.6) | ||
Sale of property, plant and equipment | - | 12.1 | ||
(8.9) | 10.5 | |||
Net (decrease)/increase in cash and cash equivalents | 4 | (3.5) | 21.1 | |
Reconciliation of Net Cash Flow to Movement in Net Funds | ||||
For the financial year ended 28 January 2012 | ||||
2012 | 2011 | |||
Note | £m | £m | ||
Net (decrease)/increase in cash and cash equivalents | (3.5) | 21.1 | ||
Net funds at the beginning of the financial year | 38.5 | 17.4 | ||
Net funds at the end of the financial year | 4 | 35.0 | 38.5 | |
1 Basis of Preparation
Consolidated financial statements and accounting policies
The preliminary announcement for the year ended 28 January 2012 has been prepared in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as adopted by the European Union.
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 2012.
The annual financial information presented in this announcement for the year ended 28 January 2012 is based on, and is consistent with, that in the audited financial statements of Laura Ashley Holdings plc and its subsidiaries ('the Group') for the year ended 29 January 2011, 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.
IAS 24 (revised) 'Related Party Disclosures' was issued in November 2009. It was adopted by the Group from 1 January 2011. It amends the definition of a related party and reduces disclosure requirements for entities that are related only because they are controlled, jointly controlled or significantly influenced by the same entity.
IAS 19 (revised) 'Employee Benefits' became effective on 1 January 1999. It prescribes the accounting and disclosures for employee benefits. The revised standard will apply to accounting periods beginning on or after 1 January 2013, with earlier adoption permitted. It is required to be implemented by the Group for the year ended 25 January 2014.
Statutory Accounts
Information in this preliminary announcement does not constitute statutory accounts of the Group within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 29 January 2011 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 498 of the Companies Act 2006.
The Group's Annual Report for the year ended 28 January 2012 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 2012.
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 of 18,272,500). | ||||
2012 | 2011 | |||
Profit for the financial year (£m) | 13.0 | 19.3 | ||
Exceptional (losses)/gains (£m) | (0.4) | 4.8 | ||
Weighted average number of ordinary shares ('000) - basic and diluted | 727,763 | 727,763 | ||
Earnings per share | 1.79p | 2.65p | ||
Adjusted earnings per share (excluding exceptional items) | 1.84p | 1.99p | ||
3 Reconciliation of Profit from Operations to Net Cash Inflow from Operating Activities | ||||
2012 | 2011 | |||
£m | £m | |||
Profit from operations | 18.3 | 19.8 | ||
Exceptional (losses)/gains | (0.4) | 4.8 | ||
Depreciation charge | 5.1 | 5.4 | ||
Loss/(profit) on disposal of property, plant and equipment | 0.1 | (4.0) | ||
Exchange movement on property, plant and equipment | 0.1 | 0.1 | ||
Increase in inventories | (4.4) | (0.7) | ||
Increase in receivables | (0.1) | (0.5) | ||
Increase in payables | 5.7 | 3.7 | ||
Movement in provisions | - | 0.5 | ||
Net cash inflow from operating activities | 24.4 | 29.1 | ||
4 Analysis of Net Funds | ||||
At 29 Jan | Cash | At 28 Jan | ||
2011 | Flow | 2012 | ||
£m | £m | £m | ||
Cash and cash equivalents | 38.5 | (3.5) | 35.0 | |
| 5 Segmental Analysis | |||||||||
---------------------Retail---------------- | |||||||||
E-Commerce | Total | Total | |||||||
Stores | & Mail Order | Hotel | Retail | Non-Retail | Total | ||||
2012 | £m | £m | £m | £m | £m | £m | |||
Revenue | 217.8 | 39.6 | 0.3 | 257.7 | 28.2 | 285.9 | |||
Contribution | 17.6 | 9.0 | 0.1 | 26.7 | 10.7 | 37.4 | |||
Share of profit of associate | - | 0.8 | 0.8 | ||||||
Indirect overhead costs | (19.5) | - | (19.5) | ||||||
Finance income | 0.2 | - | 0.2 | ||||||
Finance costs | (0.5) | - | (0.5) | ||||||
Profit before taxation | 6.9 | 11.5 | 18.4 | ||||||
---------------------Retail---------------- | |||||||||
E-Commerce | Total | Total | |||||||
Stores | & Mail Order | Hotel | Retail | Non-Retail | Total | ||||
2011 | £m | £m | £m | £m | £m | ||||
Revenue | 220.7 | 37.8 | - | 258.5 | 26.5 | 285.0 | |||
Contribution | 22.0 | 9.8 | - | 31.8 | 11.8 | 43.6 | |||
Share of profit of associate | - | 0.5 | 0.5 | ||||||
Indirect overhead costs | (19.0) | - | (19.0) | ||||||
Finance costs | (1.0) | - | (1.0) | ||||||
Profit before taxation | 11.8 | 12.3 | 24.1 | ||||||
The reported segments are consistent with the Group's internal reporting for performance measurement and resources allocation. The Group does not allocate indirect overhead costs between its retail and non-retail segments. As significant elements of the indirect overhead costs arise from the retail segment, it is decided that the entire indirect costs are allocated to this segment.
Retail revenue reflects sales through Laura Ashley's Managed Stores, Mail Order, E-Commerce and Hotel. 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 | |||||||||
2012 | 2011 | 2012 | 2011 | |||||||
£m | £m | £m | £m | |||||||
| Destination | ||||||||||
UK & Ireland | 32.1 | 27.7 | 257.7 | 258.5 | ||||||
Continental Europe | 0.2 | 0.3 | 5.8 | 6.1 | ||||||
Other | 5.2 | 4.1 | 22.4 | 20.4 | ||||||
37.5 | 32.1 | 285.9 | 285.0 | |||||||
6 Taxation
The taxation charge for the year comprises UK taxation on current and prior years' taxable profits.
The effective tax rate for the year is higher than the rate of UK Corporation tax primarily due to excess of depreciation over capital allowances and the decrease in the value of the Group's overall deferred tax asset due to the reduction in the UK tax rate.
In the previous year, the effective tax rate was lower than the rate of UK Corporation tax mainly due to the utilisation of capital losses, the resolution of a prior year tax matter with HM Revenue and Customs and the tax effect of prior year adjustments.