Final Results
May 08 2003 - 3:02AM
UK Regulatory
RNS Number:8341K
Ashley (Laura) Hldgs PLC
08 May 2003
8 May 2003
LAURA ASHLEY HOLDINGS plc
("the Company")
Results for the 52 weeks to 25 January 2003
Summary
* Loss before tax and exceptional items #4.9m (2002: profit before tax
and exceptional items #9.3m)
* Group sales up 5.5% to #292.0m (2002: #276.8m)
* 1 for 4 rights issue (net proceeds: #8.2m) announced to fund closure
of stores in Continental Europe and Group working capital. Exit from
loss-making operations in Continental Europe underway
* UK Home Furnishings total sales up 17%, like-for-like sales up 9%
* UK Fashion total sales down 1%, like-for-like sales flat
* Mail Order sales up 31%
* UK selling space increased by 3%, with 18 new stores opened in the
year
Commenting on the results, KC Ng, Chief Executive Officer, said:
"This has been a very challenging year for Laura Ashley. While we have seen some
progress in the UK, particularly with another excellent performance from Home
Furnishings, overall the result is disappointing, primarily due to a serious
decline in Continental Europe. However, our strategy to resolve this problem is
in place and we are now in a position to see the real benefits of our
multi-channel approach in the UK coming through in our performance. I would
like to thank the staff for their continued efforts and dedication and to
express my sincere appreciation to all our shareholders for their continued
support."
Enquiries:
Laura Ashley Holdings plc 020 7404 5959 (8 May)
David Cook, Chief Financial Officer 020 7880 5100 (thereafter)
Diana Bourne, Head of Public Relations
Brunswick 020 7404 5959
Tom Buchanan
Katya Reynier
Deborah Spencer
Overview
The year ended 25 January 2003 has been another challenging trading period for
the Company, reflecting in part the continuing global economic downturn and
uncertainty that remained throughout the year, particularly in Continental
Europe. During the year, the Company has taken action to mitigate the losses in
Continental Europe and announced in January that it would close a majority of
its stores in the region. In order to fund the closure of these stores and to
improve working capital, the Company has undertaken a successful 1 for 4 rights
issue. The Board firmly believes that this action will place the Company on a
firmer foundation for future trading.
For the 52 weeks ended 25 January 2003, Laura Ashley recorded a 5.5% increase in
total Group turnover to #292.0 million (2002: #276.8 million). Overall retail
like-for-like sales for the period were up 3% (UK +6%, Continental Europe -9%).
In line with our announcement of 13 March 2003, the Group recorded a loss before
tax and exceptional items of #4.9 million (2002: profit before tax and
exceptional items #9.3 million). In addition, this year, we have a further #9.2
million of charges relating to the closure of 46 of our Continental European
stores bringing losses before tax to #14.1 million.
The reported loss was in part due to increased costs arising from previously
announced investments in the future of the business, in areas such as systems,
distribution, customer services and the growth in UK store numbers. A full
review of costs has been undertaken and reductions in a number of areas are
expected this year.
Home Furnishings
This was another strong year of growth for Home Furnishings with total sales up
14% (UK +17%, Continental Europe -6%) and like-for-like sales up 7% (UK+9%,
Continental Europe -6%). The division now accounts for 67% of total retail
sales. New stand alone Home Furnishings stores continue to be profitable and we
have seen particular growth in cabinet furniture, lighting and accessory
products.
Overall, Group margins have fallen. Much of this decrease in margin is caused by
previously announced Home Furnishings factors, such as the clearance of
furniture in the first half, increased promotional activity and the continued
change in product mix towards furniture. Home Furnishings continues to benefit
from the expansion of our multi-channel retailing approach, particularly Mail
Order and Internet and will continue to be a focus for future opportunities.
Fashion
Total retail sales were down 4% (UK -1%, Continental Europe -15%). Like-for-like
sales were down 2% (UK 0%, Continental Europe -14%). Clearly the trading
position in Continental Europe has impacted the Group as a whole. This situation
worsened after the year end on news of our store closure plans. In the UK, we
are encouraged to note an improvement in sales over the first quarter of the
current financial year.
Continental Europe
As previously reported, over the first half in Continental Europe there was a
steep decline in Fashion sales as a result of which the Company undertook a
strategic review to determine the best way of addressing the problems in that
region. As part of this review, the Company announced in November 2002 that it
was to close five stores in France and six in Germany. In our trading update for
the 23 week period ended 4 January 2003, we reported that trading in our
operations in Continental Europe had worsened. Following the disappointing
Christmas trading period, the Company announced on 23 January that it intended
to close a further 35 stores across Continental Europe, including all the stores
in Germany.
We are currently in discussions with several parties to reach franchise
agreements for our stores in Continental Europe. We will make any further
announcements about the progress of these talks as soon as is appropriate. The
Company is committed to maintaining a presence in Continental Europe through its
franchising and licensing activities.
Mail Order
Mail Order is a central feature of our multi-channel approach to retailing, in
which our fashion catalogues not only drive sales directly, but also encourage
customers to visit our stores. During the year, the Mail Order business
continued to grow, with sales up 31% on the same period last year. We have seen
a successful re-launch of the Fashion Mail Order business and further expansion
in Home Furnishings. The active customer database grew by over 25%. Further
growth is anticipated during the current year, as the investment phase in
growing critical mass in this business continues.
E-Commerce
In its first full year of trading, e-commerce has become an established part of
our multi-channel business, with 68,000 registered users. Demand was
particularly strong in the second half and we are confident of further strong
growth in the coming year.
Store Portfolio
Over the last year, we have opened 18 new, mainly Home Furnishings stores in the
UK. With the closure of six stores in the same period, the overall selling space
has increased by 3%. As previously reported, we have continued to open new, edge
of town Home Furnishings stores, the most recent being Weybridge, Norwich and
Rugby which were opened after the year end. We now have a total of 31 such
stores and they are performing well.
Our current strategy for Continental Europe means that we will retain 19 stores,
which will operate as part of our own portfolio. However, if the current
discussions with potential franchise partners in Continental Europe are
successful, the stores that we plan to keep open, plus some of the stores
currently scheduled to close will be operated as Laura Ashley franchise stores.
Franchising and Licensing
We have continued to develop our franchising activities with the recent launch
of four new franchise stores in Japan, including stand alone stores in Ooizumi
and Motomachi and a concession within a department store in Riyadh, Saudi
Arabia. In North America, the number of franchise stores had reduced to three at
the end of April 2003.
Overall licensing revenue was lower than last year due to the soft US market.
However for the next financial year, we anticipate some recovery and are in
current negotiations with three prospective licensees. In addition, our
manufacturing company, Texplan Manufacturing Limited, has performed to
expectations and has successfully negotiated a new contract with Homebase for
the supply of a new range of Laura Ashley paint, which is now produced in-house
by Texplan.
Dividend
In light of the difficulties faced during the year and Laura Ashley's current
financial result, it is not possible to pay a dividend this year.
Current trading
Trading in the 14 weeks to 3 May 2003 shows total retail sales flat on last year
(UK +6%, Continental Europe -33%). Total like-for-like sales are down 1% (UK
+3%, Continental Europe -27%). These figures demonstrate the impact of
Continental European trading on total Group sales. As mentioned above, we are
actively working towards a resolution to our problems in these territories.
Consolidated Profit and Loss Account
For the financial year ended 25 January 2003
Total Total
2003 2002
Notes #m #m
___________________________________________________ ______ _____________ _____________
Turnover 1 292.0 276.8
Cost of sales (174.3) (155.1)
___________________________________________________ ______ _____________ _____________
Gross profit 117.7 121.7
___________________________________________________ ______ _____________ _____________
Operating expenses 2 (122.2) (113.2)
___________________________________________________ ______ _____________ _____________
Operating (loss)/profit (4.5) 8.5
Share of operating profit of associate 0.9 1.1
Losses on termination of operations (9.2) -
___________________________________________________ ______ _____________ _____________
(Loss)/profit on ordinary activities before interest (12.8) 9.6
Interest receivable 0.2 0.5
Interest payable (1.5) (0.8)
___________________________________________________ ______ _____________ _____________
(Loss)/profit on ordinary activities before taxation (14.1) 9.3
Taxation on (loss)/profit on ordinary activities 3 (1.4) (1.2)
___________________________________________________ ______ _____________ _____________
(Loss)/profit for the financial year (15.5) 8.1
============================================ ===== =========== ===========
(Loss)/earnings per share - basic and diluted 4 (2.62)p 1.37p
============================================ ===== =========== ===========
The Group's current year results shown above are derived entirely from continuing
operations.
No note of historical cost profits and losses is given as the results above are on an
unmodified historical cost basis.
Statement of Total Recognised Gains and Losses
For the financial year ended 25 January 2003
2003 2002
#m #m
___________________________________________________ ______ _____________ _____________
(Loss)/profit on ordinary activities after taxation (15.5) 8.1
Exchange differences arising on translation of net
investments
in overseas subsidiary undertakings (0.5) (0.5)
___________________________________________________ ______ _____________ _____________
Total recognised (losses)/gains for the financial year (16.0) 7.6
============================================ ===== =========== ===========
Balance Sheets
As at 25 January 2003
Group Company
_____________________ _____________________
2003 2002 2003 2002
Notes #m #m #m #m
________________________________________ _____ ___________ _________ ___________ _________
Fixed assets
Tangible fixed assets 40.1 38.3 2.7 2.8
Investment in associated undertaking 3.3 3.1 0.8 0.8
Investment in subsidiary undertakings - - 98.5 98.5
Own shares 0.8 0.8 0.8 0.8
Total investments 4.1 3.9 100.1 100.1
________________________________________ _____ ___________ _________ ___________ _________
44.2 42.2 102.8 102.9
________________________________________ _____ ___________ _________ ___________ _________
Current assets
Stocks 47.0 51.7 - -
Debtors
Amounts falling due within one year 26.7 26.7 3.7 3.8
Amounts falling due after more than one - - 12.2 12.2
year
Total debtors 26.7 26.7 15.9 16.0
Short-term deposits and cash 11.8 7.0 3.4 2.7
________________________________________ _____ ___________ _________ ___________ _________
85.5 85.4 19.3 18.7
________________________________________ _____ ___________ _________ ___________ _________
Creditors: amounts falling due within one
year
Trade and other creditors 62.0 53.9 2.1 2.1
________________________________________ _____ ___________ _________ ___________ _________
Net current assets 23.5 31.5 17.2 16.6
________________________________________ _____ ___________ _________ ___________ _________
Total assets less current liabilities 67.7 73.7 120.0 119.5
________________________________________ _____ ___________ _________ ___________ _________
Creditors: amounts falling due after more than
one year
Trade and other creditors 8.4 3.1 - -
________________________________________ _____ ___________ _________ ___________ _________
8.4 3.1 - -
________________________________________ _____ ___________ _________ ___________ _________
Provisions for liabilities and charges 6 6.8 2.1 0.2 0.2
________________________________________ _____ ___________ _________ ___________ _________
Net assets 52.5 68.5 119.8 119.3
================================== ==== ========= ======== ========= ========
Capital and reserves
Share capital 29.8 29.8 29.8 29.8
Share premium account 85.7 85.7 85.7 85.7
Profit and loss account (63.0) (47.0) 4.3 3.8
________________________________________ _____ ___________ _________ ___________ _________
Equity shareholders' funds 7 52.5 68.5 119.8 119.3
================================== ==== ========= ======== ========= ========
Consolidated Cash Flow Statement
For the financial year ended 25 January 2003
2003 2002
Notes #m #m
_________________________________________________________ _____ ____________ __________
Net cash inflow from operating activities 8 8.7 3.5
Dividend received from associated undertaking 0.2 0.2
Returns on investments and servicing of finance
Interest received 0.4 0.4
Interest paid (1.0) (0.6)
Interest element of finance lease rental payments (0.4) (0.2)
_________________________________________________________ _____ ___________ __________
Net cash outflow for returns on investments and the servicing (1.0) (0.4)
of finance
_________________________________________________________ _____ ___________ __________
Net tax paid (2.0) (0.2)
================================================== ===== ========== =========
Capital expenditure and financial investment
Acquisition of tangible fixed assets (15.1) (14.4)
Disposal of tangible fixed assets 0.1 0.2
_________________________________________________________ _____ ___________ __________
Net cash outflow for capital expenditure and financial (15.0) (14.2)
investment
================================================== ===== ========== =========
Net cash outflow before financing (9.1) (11.1)
================================================== ===== ========== =========
Financing
Loans taken out 14.1 2.5
Capital element of finance lease rental payments (0.5) (0.5)
_________________________________________________________ _____ ___________ __________
Net cash inflow from financing 13.6 2.0
================================================== ===== ========= =========
Net increase/(decrease) in cash 4.5 (9.1)
================================================== ===== ========== =========
Reconciliation of Net Cash Flow to Movement in Net (Debt)/Funds
2003 2002
#m #m
_________________________________________________________ _____ ___________ __________
Net increase/(decrease) in cash 4.5 (9.1)
Cash inflow from changes in financing (13.6) (2.0)
_________________________________________________________ _____ ___________ __________
Change in net funds resulting from cash flows (9.1) (11.1)
Other non-cash items:
New finance leases - (2.8)
Translation differences 0.3 (0.3)
_________________________________________________________ _____ ___________ __________
Change in net funds during the period (8.8) (14.2)
Net funds at the beginning of the period 0.3 14.5
________________________________________________________ _____ ___________ __________
Net(debt)/funds at the end of the period (8.5) 0.3
================================================== ===== ========== =========
1 Segmental Analysis
Total Net Total Net
assets assets
2003 2003 2002 2002
#m #m #m #m
________________________________________________ _________ _______ ________ _________
Turnover
Retail 254.7 37.6 241.2 54.0
Non-retail 37.3 14.9 35.6 14.5
________________________________________________ _________ ________ ________ _________
292.0 52.5 276.8 68.5
========================================= ======= ====== ======= ========
(Loss)/profit before taxation
Branch contribution
Retail 16.5 26.8
Non-retail 10.3 12.1
________________________________________________ _________ ________ ________ _________
26.8 38.9
Indirect overhead costs (31.3) (30.4)
________________________________________________ _________ ________ ________ _________
Operating (loss)/profit (4.5) 8.5
Share of profit of associate 0.9 1.1
Losses on termination of operations (9.2) -
Net interest payable (1.3) (0.3)
________________________________________________ _________ ________ ________ _________
(Loss)/profit on ordinary activities before taxation (14.1) 9.3
========================================== ======== ======= ======= ========
Retail turnover reflects sales through Laura Ashley managed stores, Mail Order
and Internet.
Non-retail includes Licensing, Franchising and Manufacturing.
Retail branch contribution reflects turnover and contribution through Laura
Ashley managed stores, Mail Order and Internet,
by geographical origin. Branch contribution is stated after deducting direct
operating expenses but before exceptional items,
buying, marketing and administrative costs.
Total External Total Intersegment External
Intersegment
1 Segmental Analysis sales sales sales sales sales sales
continued 2003 2003 2003 2002 2002 2002
#m #m #m #m #m #m
____________________________________ _______ ____________ __________ __________ ____________ ___________
Analysis by geographical segment
Turnover by origin
UK & Ireland 292.6 38.4 254.2 280.1 44.3 235.8
Continental Europe 35.9 - 35.9 39.1 - 39.1
Other 1.9 - 1.9 1.9 - 1.9
____________________________________ _______ ____________ __________ __________ ____________ ___________
330.4 38.4 292.0 321.1 44.3 276.8
=============================== ======= ========== ========= ======== ========== ==========
(Loss)/ Profit
profit
before before
taxation Net assets taxation Net assets
2003 2003 2002 2002
#m #m #m #m
____________________________________ _______ ____________ __________ __________ ____________ ___________
(Loss)/profit before taxation and net
assets
UK & Ireland 0.1 61.7 11.4 62.0
Continental Europe (15.1) (13.0) (3.2) 3.2
Other 0.9 3.8 1.1 3.3
____________________________________ _______ ____________ __________ __________ ____________ ___________
(14.1) 52.5 9.3 68.5
=============================== ======= ========== ========= ======== ========== ==========
External External
sales sales
2003 2002
#m #m
____________________________________ _______ ____________ __________ __________ ____________ ___________
Geographical analysis of turnover by
destination
UK & Ireland 223.2 204.9
North America 5.4 5.3
Continental Europe 35.9 39.1
Other 27.5 27.5
____________________________________ _______ ____________ __________ __________ ____________ ___________
292.0 276.8
=============================== ======= ========== ========= ======== ========== ==========
North America turnover reflects sales made as part of a franchise arrangement
following the disposal of the North American business on 2 July 1999.
Retained European
operations closures Total
2003 2003 2003
#m #m #m
_____________________________________ __________ ___________ ___________ __________ ____________ ______________
Analysis of continuing operations
Turnover 271.4 20.6 292.0
Cost of sales (162.0) (12.3) (174.3)
_____________________________________ __________ ___________ ___________ __________ ____________ ______________
Gross profit 109.4 8.3 117.7
Total operating expenses (108.5) (13.7) (122.2)
_____________________________________ __________ ___________ ___________ __________ ____________ ______________
Operating profit/(loss) 0.9 (5.4) (4.5)
Share of operating profit of 0.9 - 0.9
associate
Losses on termination of operations - (9.2) (9.2)
Net interest payable (1.3) - (1.3)
_____________________________________ __________ ___________ ___________ __________ ____________ ______________
Profit/(loss) on ordinary activities before 0.5 (14.6) (14.1)
taxation
=============================== ======== ========= ========= ========= ========== ============
A strategic decision was made during the year to close 46 European stores. As
the closures do not have a material effect on the nature and focus of the Group
operations and not all of the closures have been completed within three months
of the start of the current financial year, they do not represent a discontinued
operation.
A provision has been made in respect of the closure costs (see
note 6).
Total Total
2 Operating expenses 2003 2002
#m #m
Distribution costs (89.6) (83.5)
Administrative expenses (32.6) (29.7)
___________________________________________________________ _________ _________ ________ ________
Operating expenses (122.2) (113.2)
__________________________________________________________ _________ _________ ________ ________
3 Taxation 2003 2002
#m #m
UK corporation tax
Current year 0.7 2.8
Prior years 0.2 (2.5)
__________________________________________________________ _________ _________ ________ ________
0.9 0.3
Relief for overseas tax (0.2) (0.2)
___________________________________________________________ _________ _________ ________ ________
0.7 0.1
Overseas tax 0.3 0.5
Tax charge on associated undertaking 0.4 0.4
__________________________________________________________ __________ __________ ________ ________
Total current tax 1.4 1.0
Deferred tax charge - 0.2
___________________________________________________________ _________ _________ ________ ________
Taxation on (loss)/profit on ordinary activities 1.4 1.2
==================================================== ========= ========= ======= =======
4 (Loss)/earnings per share
2003 2002
Basic and diluted (loss)/earnings attributable to ordinary (15.5) 8.1
shareholders (#m)
__________________________________________________________ __________ __________ ________ ________
Weighted average number of ordinary shares ('000) - basic and 594,340 594,340
diluted
_________________________________________________________ __________ __________ ________ ________
(Loss)/earnings per share (2.62)p 1.37p
=================================================== ======== ======== ======= =======
5 Principal exchange rates
2003 2002
Average Period Average Period
end end
___________________________________________________________ ___________ __________ _________ __________
US Dollar 1.51 1.63 1.44 1.41
Euro 1.58 1.51 1.61 1.63
Japanese Yen 188 192 176 190
___________________________________________________________________ ___________ __________ _________ __________
6 Provision for liabilities and charges
Pensions Deferred tax Total
Restructuring
#m #m #m #m
______________________________________________ ____________ ___________ ____________ ____________
At 26 January 2002 1.1 0.8 0.2 2.1
Utilisation (0.3) (0.6) - (0.9)
Charge to profit and loss account 9.2 0.3 - 9.5
Transfer to fixed assets (3.9) - - (3.9)
______________________________________________ ____________ ___________ ____________ ____________
At 25 January 2003 6.1 0.5 0.2 6.8
========================================= ========== ========== ========== ==========
Restructuring provisions
Rationalisation of administrative functions * 0.2
Rationalisation of store portfolio * 0.3
Provision for termination of European operations ** 5.6
______________________________________________ ____________ ___________ ____________ ____________
6.1
========================================= ========== ========== ========== ==========
* Onerous lease provisions which are being utilised over the length of the lease
period.
** Onerous lease, redundancy costs and stock write-off provisions which will be
utilised during the current financial period.
Deferred tax
The deferred tax liability represents a provision for capital allowances in
excess of depreciation relating to the Company.
7 Reconciliation of movements in shareholders' funds
2003 2002
#m #m
(Loss)/profit for the financial year (15.5) 8.1
Other recognised losses (net) (0.5) (0.5)
___________________________________________________ ____________ ___________ ____________ _______
Net (decrease)/addition to shareholders' funds (16.0) 7.6
Opening equity shareholders' funds 68.5 60.9
___________________________________________________ ____________ ___________ ____________ _______
Closing equity shareholders' funds 52.5 68.5
============================================ ========== ========== ========== ======
8 Reconciliation of operating (loss)/profit to net cash inflow from operating activities
2003 2002
#m #m
Operating (loss)/profit (4.5) 8.5
___________________________________________________ ____________ ___________ ____________ _______
Depreciation charge 8.4 6.3
Impairment release of fixed assets - (0.1)
(Profit)/loss on sale of fixed assets (0.1) 0.3
Decrease/(increase) in stocks 5.0 (7.2)
Increase in debtors (0.1) (2.0)
Increase in creditors 0.5 0.2
Movement on provisions (0.1) (0.8)
Net cash outflow in respect of restructuring (0.4) (1.7)
___________________________________________________ ____________ ___________ ____________ _______
Net cash inflow from operating activities 8.7 3.5
============================================ ========== ========== ========== ======
NOTE
The above financial information does not constitute statutory accounts as
defined by section 240 of the Companies Act 1985. It is an extract from the 2003
financial statements which have not yet been filed with the Registrar of
Companies. The Auditors' Report, dated 07 May 2003, on the financial statements
for the year ended 25 January 2003, which received an unqualified opinion does
not contain a statement under section 237(2) or (3) of the Companies Act 1985.
The comparative information is an extract from the statutory accounts for the
financial year ended 26 January 2002. Those accounts, on which the Auditors
issued an unqualified opinion, which does not contain a statement under either
section 237(2) or (3) of the Companies Act 1985, have been filed with the
Registrar of Companies.
A copy of the full accounts will be sent to shareholders on the Register of
Members as at 07 May 2003 or can be obtained from the Secretary, Laura Ashley
Holdings plc, 27 Bagleys Lane, Fulham, SW6 2QA.
ANNUAL GENERAL MEETING
The Company's AGM will be held on Monday, 16 June 2003 at 2:00pm at the
Ballroom, Claridge's Hotel, Brook Street, London, W1A 2JQ
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SSDSFASDSEFI