Final Results

22 August 2019

LAURA ASHLEY HOLDINGS plc

("the Group")

Laura Ashley Holdings plc announces its full final results for the 52 weeks to 30 June 2019.

Summary

·; Loss before tax and exceptional items of £9.8m (2018: Profit of £5.6m).

·; Statutory loss before tax of £14.3m (2018: Profit of £0.1m).

·; Total Group sales of £232.5m (2018: £257.2m).

·; Total like-for-like retail sales down 3.5%.

·; Fashion like-for-like retail sales up 9.2%.

·; Online revenue of £51.2m (2018: £59.7m).

·; The Board is not recommending payment of a dividend.

Commenting on the results, Andrew Khoo, Chairman, said:

"The last twelve months have proved to be a difficult trading period for the Group and indeed for the retail sector as a whole.

The primary causes for the year-on-year drop in profit have been the performance of Home Furnishing and that of our website following a re-platforming exercise which took place in November 2018.

We have focussed on the reasons why Home Furnishings have underperformed and have taken necessary steps to mitigate this, including adding new contemporary product to our ranges. We have taken active steps to listen to our customers and now believe that we are on an appropriate recovery path. We continue to invest in our website and are working with our online service providers to ensure that it is optimised to deliver an enhanced customer experience and to achieve the desired growth.

We are pleased with the continued resurgence of our fashion business, achieving like-for-like growth of 9.2%. This is the result of the improved design of our ranges.

As the group expands its international reach, we are delighted to announce that we have recently signed a master licensing agreement with IMG to market and develop the brand in China. This partnership will give us greater access to customers and increase the distribution of our products in the market. We will also be focussing on the Australian market with the first store anticipated to open in Melbourne in 2020.

We are also delighted with the progress of our growing licensed hospitality business. There are now nine Laura Ashley licensed tearooms and two Laura Ashley licensed hotels. The pipeline of new licenses is very healthy as we enter a new financial period. We are especially pleased with the customer response to this initiative.

During the last twelve months the Group disposed of its property in Singapore and its Hotel property in Elstree. This has enabled us to eliminate all long term debt and put us on a stronger financial footing for the years ahead.

As we look to expand our international licensing and hospitality business and optimise UK retail, we are confident in our business strategy which is to create a total lifestyle experience.

Enquiries:

Overview

For the 52 weeks to 30 June 2019, total Group sales were £232.5m (2018: £257.2m). Like-for-like sales fell by 3.5% over the same period. e-Commerce sales were £51.2m (2018: £59.7m). Like-for-like e-Commerce sales fell by 14.2%.

The Group recorded a loss before taxation, excluding exceptional items, of £9.8m (2018: Profit of £5.6m). An exceptional charge of £4.5m was recorded in the year of which £1.3m relates to the write off of an investment in a Japanese associate company.

Statutory loss before tax was £14.3m (2018: Profit of £0.1m).

Operating expenses of £91.1m were recorded for the year (2018: £91.7m). The reduction is largely attributed to the net reduction of store property costs but is offset by national living wage increases.

Cash Flow and Balance Sheet

As at 30 June 2019, there was no bank borrowing and net cash was £0.8m. Inventory of £46.7m was in line with requirements. Additionally, we have a new 3 year debt facility in place with Wells Fargo Capital Finance (UK) Limited.

Dividend

No interim dividend was paid during the year and the Board is not recommending payment of a final dividend. No dividend was paid during the year ended June 2018.

UK Retail

As at 30 June 2019, the property portfolio in the UK comprised 155 stores (June 2018: 160). The portfolio is as follows: 105 Mixed Product stores, 47 Home stores, 1 concession store, 1 Gifts & Accessories store and 1 Clearance outlet. During the reporting period, six stores were closed and one opened, reducing total selling space by 3.6% to 639,000 square feet.

Over the coming year, we will open two new stores and close five to seven stores as we continue to optimise the store portfolio.

Total UK retail sales of £222.9m were recorded during the 52 week period to 30 June 2019 (2018: £236m). UK retail sales were affected by the six closures and considerable market uncertainty.

Total e-Commerce sales of £51.2m were recorded during the 52 week period to 30 June 2019 (2018: £59.7m). On a like-for-like basis, online sales fell by 14.2% following a re-platforming of our website.

Product

The UK business is split into four main categories. For the period ended 30 June 2019, the relative split of UK sales was as follows: Home Accessories 35%, Furniture 28%, Decorating 18% and Fashion 19%.

Home Accessories

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

Home Accessories sales for the year to 30 June 2019 fell by 0.8% over the same period last year with like-for-like sales up by 1.1%. Our best performing products in this category were lighting, seasonal gifting and bedlinen. We have seen consistent like-for-like growth in this category over recent years and expect that this will continue as we grow and enhance the product ranges.

Furniture

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

Furniture sales for the year to 30 June 2019 decreased by 10.1% over the same period last year with like-for-like sales down by 9.0%. As our most expensive product category, we believe that there has been some impact from weak consumer confidence, particularly at higher price points. We remain confident in the quality of our furniture ranges. We will add more contemporary styles to this category over the coming months.

Decorating

This category includes fabric, curtains, wallpaper, paint and decorative accessories.

Decorating sales for the period to 30 June 2019 fell by 15.0% with like-for-like sales down 13.7%. This product category has had a difficult year and we have undertaken a thorough review of the entire range. We are introducing new styles and designs which will add modernity but retain the Laura Ashley handwriting. Decorating is central to our brand and our intention is to broaden its customer base and accordingly strengthen the underlying business.

Fashion

This category includes adult fashion, selected girls wear, fashion accessories and perfumery.

Fashion sales for the period to 30 June 2019 increased by 4.2% over the same period last year with like-for-like sales up by 9.2%. This performance is built on a very strong performance in 2018 and we are pleased with the continuity. We are confident that this level of growth can be maintained in what is an extremely competitive product category.

Hotels and Tea Rooms

Following our recent focus on hospitality, there are now nine licensed Laura Ashley Tea rooms and two licensed Laura Ashley Hotels. We are delighted with the progress of this concept and are optimistic that this growth will continue into the year ahead and will become a key part of total Group revenue. Currently all licenses are with UK partners. However, we are working to expand hospitality to an international audience and good progress, in that regard, has been made.

International Operations

Contributing 3.2% of total Group revenue, our international Franchise and Licensing channels are an important and strategic part of our business. As at 30 June 2019, there were 80 franchised stores (213 as at 30 June 2018) in 25 territories worldwide.

Franchise and Licensing revenue of £7.4m was recorded during the period to 30 June 2019 (2018: £18.0m). The primary reason for the year on year shortfall is the loss of business in Japan from September 2018, following the termination of our partnership with Aeon. We have subsequently signed a Master Licensing partnership agreement with the Itochu Corporation for the marketing and development of the Brand in Japan.

We are also pleased to announce that we have signed an exclusive Master License agreement with IMG to develop and market the Brand in China. This is an exciting opportunity for the Group and we look forward to a successful partnership with IMG.

We now have master license agreements with partners in place for Japan, USA and China and are very optimistic that, this strategy will deliver market penetration and sustained growth over the years to come.

Sale of Properties

During the year to June 2019, the group disposed of two properties. Our offices in Singapore were sold for SGD$54.5m and our hotel, Laura Ashley The Manor in Elstree was sold for £6.0m. These transactions have enabled the group to pay down all long term debt. The Board believed that it was an appropriate time to sell these properties and that it would put the Group on a sounder financial footing going forward.

Current Trading and Outlook

Trading for the seven weeks to 17 August 2019 is performing in line with management expectations.

Laura Ashley's Brand is built on beautifully designed, high quality products. We remain resolutely confident in the underlying strength of this much loved Brand, in its relevance for today and in our strategies to both maintain and develop it.

Acknowledgements

I wish to convey my thanks and appreciation to the staff, management and my fellow Board members for their hard work, dedication and commitment.

For their continued support and loyalty to the Group, I would like to thank our customers, shareholders and suppliers.

The Group's results shown are derived entirely from continuing operations.

The statement of financial position shows £0.8m of cash and cash equivalents and no longer has any short-term borrowings. Therefore, the above reconciliation shows the net increase in funds during the financial year.

Notes

1 Basis of Preparation

Consolidated financial statements and accounting policies

The preliminary announcement for the year ended 30 June 2019 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 as stated in the accounting policies. Details of the accounting policies applied are those set out in Laura Ashley Holdings Plc's Annual Report 2019.

The annual financial information presented in the announcement for the period ended 30 June 2019 is based on and is consistent with the financial statements of Laura Ashley Holdings Plc and its subsidiaries ("the Group") for the period ended 30 June 2019. The audit of the financial statements for the year ended 30 June 2019 is not yet complete however, an unqualified opinion is expected. These accounts will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's annual general meeting.

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 30 June 2018 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 30 June 2019 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 September 2019 to those shareholders who have elected to receive a copy in printed form.

2) (Losses) per Share

Earnings per share is calculated by dividing the profit/(loss) for the financial year by the weighted average number of ordinary shares during the year (excluding treasury shares of 18,272,500).

5 Prior period adjustment

Prior year comparatives have been restated whereby £1.3m of other reserve movements shown in Other Comprehensive Income for the year ended 30 June 2018 should have been adjusted against the opening balance of retained earnings on 1 July 2017, with a corresponding increase in Property, Plant and Equipment at 1 July 2017.

The restatement arose following an enquiry by the Financial Reporting Council as a result of which the Group concluded that, in accordance with IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors", the adjustment to fixed assets, which arose as a result of a discrepancy between the fixed asset register and the underlying accounting records should have been accounted for by way of a prior year adjustment.