Laura Ashley Annual Rpt 2013

7/22/2019 Laura Ashley Annual Rpt 2013

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ANNUAL REPORT 2013

LAU

RA ASHL

EY

60h

anniversary

tO

ver60yearsofinspir

atio

n


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Gold AwardBEST OF BRITISH WINNER,

THE HUDSON SOFA

Follow us on Twitter Become a fan on Facebook Visit our Blog

LAURAASHLEY.COM

Laura Ashley is proud to have received a number of coveted awards during 2012 including Website

of the Year Award for Best Housing & Interiors Website and the Best of British House Beautiful Award

for the Hudson Sofa. The company was also included in the following awards:

Homes & Gardens Fabric Awards 2012 Special mention for Best Fabric Under 30 for Bacall Plain

Fabric and nominated for Best Wallpaper Under 40 for Beside the Sea.

Junior Magazine Design Awards 2012 Highly commended for Best Interiors Collection for the

Treasure Island Collection.


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LAURA ASHLEY HOLDINGS PLC Annual Report2013 1

2 Corporate Information

3 Summary

5 Chairmans Statement

14 Operating and Financial Review

17 Directors Report

24 Report on Corporate Governance

28 Directors Remuneration Report

32 Independent Auditors Report

33 Group Statement of Comprehensive Income34 Balance Sheets

35 Statements of Changes in Shareholders Equity

36 Statements of Cash Flows

36 Reconciliation of Net Cash Flow to Movement in Net Funds

37 Accounting Policies

41 Notes to the Financial Statements

58 Group Financial Record

59 Notice of 2013 Annual General Meeting

62 Store Locations in UK, Republic of Ireland and France

65 Shareholders Information

Contents


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Annual Report2013 LAURA ASHLEY HOLDINGS PLC22

Corporate Information

Board of Directors

Tan Sri Dr Khoo Kay Peng * Chairman

Mr David Walton Masters * Deputy Chairman

Mr Ng Kwan Cheong Chief Executive Officer

Ms Sally Kealey

Dato Ahmad Johari bin Abdul Razak

Ms Kwa Kim Li*

Mr Wong Nyen Faat

*Member of Remuneration Committee

Member of Nomination CommitteeMember of Audit Committee

Company Secretary

Mr Kai Xiang Teo

Chief Financial Officer &Joint Chief Operating

OfficerMr Sen Anglim

Joint Chief OperatingOfficer

Mr Nick Kaloyirou

Registered Office

27 Bagleys Lane

Fulham

London SW6 2QA

Tel 020 7880 5100

Registered Number

1012631

Country of Incorporation

England and Wales

Stockbrokers

Cantor Fitzgerald Europe

1 America Square

17 CrosswallLondon EC3N 2LS

Principal Banker

The Royal Bank of Scotland PLC

15 Bishopsgate

London EC2P 2AP

AuditorChantrey VellacottDFK LLP

Chartered Accountants and

Statutory Auditor

Russell Square House

10 -12 Russell Square

London WC1B 5LF

Registrar andTransfer Office

Computershare Investor

Services PLCThe Pavilions

Bridgwater Road

Bristol BS99 6ZZ

Tel 0870 707 1110

Websitewww.lauraashley.com


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Total Group sales up 4.5% to 298.8m

(2012: 285.9m), total UK retail sales up 3.1% to263.0m (2012: 255.0m)

Like-for-like sales up 2.0% with positive like-for-like

growth across most categories

Profit before taxation (including exceptional items)

up 9.2% to 20.1m (2012: 18.4m)

EPS of 2.02p up 12.8% (2012: 1.79p)

Strong Balance Sheet with 34.6m cash at the yearend (2012: 35.0m)

Final dividend proposed of 1.0p per share making

a total dividend of 2.0p per share for the year

(2012: Total dividend 2.0p per share)

E-commerce, Franchising, Licensing and Wholesale

growth of 17% taking non-store revenue to 26.7%

of total (2012: 23.8%)

E-Commerce sales growth of 19.6%

International Franchise business growth of 13.3%

Summary


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FURNITURE

HOME ACCESSORIES

DECORATING

FASHION

GIRLSWEAR


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Chairmans Statement

Total Group sales

increased by12.9 million (4.5%)to 298.8 millioncompared to theprevious year of285.9 million. Salesgrowth was recordedacross UK stores,E-Commerce,

Franchising andLicensing.

Overview

For the 52 weeks to 26 January 2013,profit before taxation and

exceptional items was up 6.9% to

20.1 million (2012: 18.8 million).

Profit before taxation including

exceptional items was up 9.2% to

20.1 million (2012: 18.4 million).

Total Group sales increased by

12.9 million (4.5%) to 298.8 million

compared to the previous year of

285.9 million. Sales growth was

recorded across UK stores,E-Commerce, Franchising and

Licensing. Total Internet sales grew

by 19.6% to 42.2 million. Retail

space was reduced by 4,000 square

feet (0.5%), but the UK portfolio

increased by 1 store, from 211 to 212.

Gross margin rate fell by 1.9% year

on year reflecting selected re-pricing

and increased promotional activity.

Operating expenses reduced by

0.9% to 106.7 million (2012:

107.7 million).

Cash Flow and

Balance SheetCash generated from operations in

the year was 22.4 million (2012:

24.4 million). A net decrease in cash

balances over the year of 0.4 million

was recorded with the Group holding

34.6 million in cash as at the year

end (2012: 35.0 million). Dividend

payments of 14.5 million remained

flat year on year.

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 30 October 2012, this takes

the total dividend for the year to

2.0 pence per share (2012: Total

dividend of 2.0 pence per share).

This dividend will be proposed at

the AGM on 14 June 2013 and,

subject to shareholders approval,

will be paid on 12 July 2013 to all

shareholders on the Register at the

close of business on 28 June 2013.

The ex-dividend date will be on

26 June 2013.

The Board will continue to review

dividend payments on the basis of

annual profitability, the economic

climate and the needs of the business.


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FURNITURE


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Chairmans Statementcontinued

UK Retail: StoresAs at 26 January 2013, the property

portfolio in the UK comprised 212

stores (2012: 211). We have five store

types: 135 Mixed Product stores

(selling all product categories),

50 Home stores (selling Home

products only), 23 Home concession

stores, 3 Gifts & Accessories stores

and 1 Clearance outlet.

During the year ended 26 January2013, we opened 6 new stores and

closed 5 stores. As a result, total

selling space fell by 0.5% to

802,000 square feet. The store

openings/closures are part of an

ongoing store portfolio realignment

programme, which is focussed on

optimising profitability.

UK Retail: E-commerce

Our E-Commerce channel remains a

key part of our multi-channel retailstrategy, contributing 16.0% of total

UK retail sales (14.1% of total Group

sales). This has increased from 13.8%

of total UK Retail sales last year

(12.3% of total Group sales). Total

E-Commerce and Mail Order sales

were up 16.4% on last year. Within

this figure and reflecting the trend

we have seen over recent years,

E-Commerce sales were up 19.6%,

more than compensating for an

ongoing market decline in MailOrder sales. Laura Ashley now

delivers its full product range to

France, Germany, Austria, Italy and

Switzerland, in addition to the UK.

A mobile site, offering the complete

range of our products, was added to

the digital platform during the year.

This combined with the introduction

of a Click and Collect service and

continued functional enhancement,

have helped the E-Commerce

business continue the growth of

recent years.

E-Commerce sales were

up 19.6%.


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HOME ACCESSORIES


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Product

The UK business is split into fourmain categories. For the

financial year ended 26 January 2013,

the relative split of UK sales is as

follows: Furniture 30%, Home

Accessories 28%, Decorating 23%

and Fashion 19%.

Over 40% of our home furnishings

sales are from products

manufactured in the UK.

FurnitureThe Furniture product category

includes beds, upholstered furniture,

mirrors and cabinet furniture.

Total Furniture sales increased by

0.5% (LFL +1.4%) for the year ended

26 January 2013.

We are pleased to have achieved

good like-for-like growth in our most

price sensitive category. Our success

is based on the rich and diverse

range of shapes and fabrics in our

upholstery ranges. Classic, versatile,

well-proportioned wooden furniture

ranges underpin this core category

for us.

Home AccessoriesThe Home Accessories product

category includes lighting, gifts,

bed linen, rugs, throws, cushions,

and childrens accessories.

During the year ended 26 January

2013, sales of Home Accessories

increased by 7.6% (LFL +8.5%).

The growth in this category is based

on a balanced and comprehensive

lighting collection, which features a

unique custom made shade

proposition and our increasingly

popular printed bed linen.

Additionally, our accessory rangeshave become more relevant for

gifting, therefore allowing us to take

more advantage of key holiday and

seasonal events.

DecoratingThis category includes curtains,

blinds, fabric, paint, decorative

accessories and wall coverings.


2013, Decorating sales were up by

0.7% (LFL +1.6%).

Our entire Home range stems from

decorating, our signature category.It remains both the inspiration and

building block for all we do. The

breadth of offer, distinctive design

direction and co-ordinated approach

continues to differentiate us from the

rest of the high street.

FashionFor the year ended 26 January 2013,

UK retail fashion sales decreased by

5.6% (LFL -4.8%).

Despite a disappointing second half

performance in Fashion, we are

taking measures to enhance and

improve the entire offering. We are

talking to our customers and feel

confident that, in an increasingly

competitive category, our design

and quality are moving in the

right direction.

During Autumn 2012, the signature

Laura Ashley fragrance Number 1was relaunched. Last sold during the

1990s, the relaunch was an immediate

success. A small range of associated

products is being developed and

will be available to customers later

this year.

Our entire Home rangestems from decorating,our signature category.It remains both theinspiration and buildingblock for all we do.



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DECORATING


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International Operations

Our international Franchisingoperations continue to be an

important part of the Laura Ashley

business and, as at 26 January 2013,

there were 266 (2012: 245) Franchised

stores in 28 (2012: 29) countries

worldwide. They now include 4 stores

in Russia. Work continues to engage

franchise partners in China, India,

South America and South Africa.

Since the year closed, we have

signed agreements with Franchise

partners in Poland, Armenia andthe Baltic states.

Franchise revenues grew by 13.3% to

27.1 million.

Licensing income increased by 17.2%

to 4.2m. Licenses were awarded

during 2012 for new categories,

which included conservatory furniture

and shower enclosures.

Hotel

The hotel has now been refurbishedand will be officially launched as a

Laura Ashley boutique hotel in a

matter of months. A showcase for

Laura Ashley, its product, design

service and brand, the hotel is

expected to become an important

revenue and profit stream for the

Group in the years to come. Franchise revenuesgrew by 13.3% to27.1 million. As at

26 January 2013, therewere 266 (2012: 245)Franchised stores in 28(2012: 29) countriesworldwide.



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FASHION


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Current Trading and

OutlookI am pleased that we have

maintained the progress of recent

years and delivered another strong

set of results. Continued like-for-like

growth across retail, bolstered by

strong performances from both our

online and international businesses,

have helped to deliver 9.2% growth

in profit before tax. We are confident

that, despite an extremely

competitive retail sector and a

challenging consumer environment,both our business and brand are able

to continue the steady and robust

progress of recent years. As we

continue to expand both globally

and online, we believe that our

quality product ranges, based on

sixty years of innovative design and a

rich brand heritage, underpin the

foundations of our future growth.

In the first two months of the current

financial year, we have achieved

like-for-like sales growth of 2.7%.

This is an encouraging start to the

year and we are confident that this

progress can be maintained.

Acknowledgements

The success of the Group is due inno small part to the hard work and

commitment of the staff,

management and my fellow board

members. For this I wish to convey

my thanks and appreciation.

For their continued support and

loyalty to the Group, I would like to

thank our customers, suppliers and

shareholders.

Tan Sri Dr Khoo Kay Peng

Chairman

As we continue toexpand both globallyand online, we believethat our quality productranges, based on sixtyyears of innovativedesign and a rich brandheritage, underpin thefoundations of ourfuture growth.


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Operating and Financial Review

Business Overview

Laura Ashley is an international andmulti-channel retailer of furniture,

home accessories, decorating and

fashion products. The Group has 212

UK based stores and 266 franchised

stores located in 28 countries. The

Group also has a number of licensing

agreements for products including

carpets, shutters, towels and tiles.

A hotel in the UK was acquired in the

latter part of 2011 to showcase and

further expand the Laura Ashley

brand. A more detailed overview ofthe Groups operations is provided

in the Chairmans Statement on

pages 5 to 13.

Economic environment2012 has been a period of

continuing economic turbulence in

the marketplace with consumers

continuing to feel the effects of

reduced disposable income.

Key Performance IndicatorsThe Group measures performance

against clear targets and key

performance indicators that are

measurable, comparable and can be

acted on to increase sales efficiency

and future growth.

UK Store Sales

Laura Ashley has 212 stores as at

26 January 2013 compared to 211 as

at the end of the last financial year.Total UK store sales increased by

0.6% to 216.9 million for the year

ended 26 January 2013.

The performance of each store is

reviewed and monitored on a

monthly basis. Store performance is

also measured on a like-for-like basis.

Like-for-like sales are a good

indicator of organic sales growth.

Laura Ashley defines like-for-like

stores as those that have traded forat least one full financial year and

have not benefited from significant

capital expenditure or increases in

square footage. Sales from these

stores for the current year are thencompared with the same period in

the previous year to calculate like-for-

like sales performance.

Like-for-like store sales for the year

ended 26 January 2013 were down

0.1% compared to an increase of

2.5% in the previous year.

Store selling space

Year ended

January

Annual

Change%2013 2012

Store numbers 212 211 0.5%

Square feet ('000) 802 806 -0.5%

Store selling space is defined as the

trading floor area of a store,

excluding stockroom, administration

and other non-trading areas. UK

store space decreased by 4,000

square feet in the year ended

26 January 2013. 6 stores wereopened and 5 stores were closed

during the year as part of our

ongoing store realignment

programme.

Gross marginThe gross margin rate measures, in

percentage terms, the total gross

margin, which represents total

revenue less cost of sales, over total

revenue.

Gross margin rates fell by 1.9%

year on year as a result of selective

re-pricing and increased

promotional activity.

Direct Business

With the growth in smart phone and

tablet ownership in recent years,

consumers have demonstrated an

increasing trend towards purchasing

via online and mobile channels.

Our E-Commerce and Mail Order

channels remain a vital part of our

multi-channel retail strategy. At

15.5% of total UK retail sales, totalE-Commerce and Mail Order sales

were up 16.4% on last year. Within

this figure, and reflecting the trend

we have seen over recent years,

E-Commerce sales were up 19.6%,

more than compensating for the

decline in Mail Order sales.


2013, a smart phone web site was

launched to complement our digital

portfolio, which also includes freeapplications for customers to

download on the iPhone, iPad and

Android platforms.

Laura Ashley has 1,809,964 registered

E-Commerce customers (2012:

1,529,256). Our website and various

catalogues remain important

marketing tools for the brand.

Franchising

Our international Franchisingoperations have become an

increasingly important part of the

Laura Ashley business.

As at 26 January 2013, there

were 266 (2012: 245) Franchised

stores in 28 (2012: 29) countries

worldwide. During the year, Franchise

revenues have increased by 13.3% to

27.1 million (2012: 23.9 million) due

to ongoing Franchise growth.

Licensing

In the year ended 26 January 2013,

Licensing income of 4.2 million

(2012: 3.5million) was up 17.2% on

the previous year. During 2012,

licenses were awarded for two new

product categories - shower

enclosures and conservatory

furniture.


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Financial Summary

2013m

2012m

Revenue 298.8 285.9

Gross Profit 126.0 126.0

Operating expenses 106.7 107.7

Profit from operations 19.3 18.3

Profit before taxation 20.1 18.4

Earnings per share 2.02p 1.79p

Capital expenditure 2.9 8.9

Retirement benefit

liabilities 6.6 6.7Cash and cashequivalents 34.6 35.0

Results

Revenue for the financial year ended

26 January 2013 was up 4.5% to

298.8 million. Total gross profit for

the financial year was 126.0 million.

Profit before taxation is the preferred

and principal indicator of profitabilityfor the Group. Profit before taxation

for the financial year ended

26 January 2013 was 20.1 million

compared to profit before taxation

of 18.4 million in the previous year.

There were no exceptional items

reported in the year (2012:

exceptional cost of 0.4 million)

Revenue and OperatingResultsTotal retail sales including Mail

Order, E-Commerce and Hotel were

266.4 million. UK retail store sales

densities were 317 per square foot

compared to 308 per square foot

for the previous financial year.

Non-retail sales amounted to

32.4 million and were 14.5% above

the previous financial year primarily

due to ongoing Franchising and

Licensing growth.

Total store revenue for the UK, Ireland

and France operations amounted to218.9 million, an increase of 0.5%

over the previous year. Like-for-like

store sales were in line with the

previous year. Total Mail Order and

E-Commerce sales of 46.2 million

were up on last year by 16.4%.

Operating expenses were

approximately in line with last year at

106.7 million (2012: 107.7 million).

Store Portfolio

Changes to the Groups store portfolio during the financial year were as follows:

Number of Stores

UK and

IrelandContinental

Europe Total

January 2012 211 6 217

Opened 6 6

Closed (5) (5)

January 2013 212 6 218

Net Square Footage (000)

UK and

Ireland

Continental

Europe Total

January 2012 806 16 822

Opened 9 9

Closed (13) (13)

January 2013 802 16 818

Profit Before Taxation 5 Year Summary

millions

2012/2013

2008/2009

2010/2011

2009/2010

2011/2012

25100 20155

FinancialYears


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Operating and Financial Reviewcontinued

Taxation

The taxation charge for the yearcomprises UK taxation on current

and prior years' taxable profits.

The effective tax rate for the current

and previous 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 Groups overall

deferred tax asset due to the

reduction in the UK tax rate.

Net Assets

Net assets of the Group as at

26 January 2013 amounted to

62.9 million, an increase of

2.5 million compared to the net

assets for the previous year.

Our Balance Sheet is strong with

34.6 million cash at year-end

(2012: 35.0 million) and a clean

inventory position.

Cash and Banking

The Groups net cash flow during the

year is shown below:

2013

m

2012m

Operating activities 2.5 5.4

Investing activities (2.9) (8.9)

Net cash outflow (0.4) (3.5)

The Groups cash balances decreased

during the year as follows:

2013

m

2012m

Opening net funds 35.0 38.5

Total cash outflow (0.4) (3.5)

Closing net funds 34.6 35.0

During the financial year ended

26 January 2013, the Company paiddividends amounting to 14.5 million

to shareholders. Total capital

expenditure for the financial year

ended 26 January 2013 was 2.9 million,

which was lower than the previous

year of 8.9 million. This included

refurbishment of the hotel, acquired

in the latter part of 2011, and

investment in new information

technology to improve operating

efficiencies across the business.

We have a strong capital base with

sufficient cash and cash equivalents

and no borrowings. With a positive

start to 2013, we are optimistic that

the Group will continue to generate

cash inflow from operating activities

in the foreseeable future. Subject to

thorough review, surplus cash will be

invested in the business for its long

term future and that of its shareholders.

TreasuryThe Groups treasury strategy is

controlled through a Treasury

Committee, chaired by the Chief

Executive Officer. The committee

meets regularly throughout the year.

The Treasury function arranges

funding for the Group and all

operating units. The Committee's

objectives are to review and control

cash flow, control interest costs and

minimise foreign exchange exposure.

Trends and factors affectingthe Group

All product categories, except Fashion,

registered positive like-for-like sales

growth. Sales densities increased to

317 per square foot from 308 per

square foot in the previous year for

the UK retail stores.

E-Commerce performed well,

recording a 19.6% overall growth.This growth pattern reflects a

continuing shift in the shopping

habits of consumers.

Franchise revenues also showed

respectable growth of 13.3%.

Laura Ashley Japan Co., Limited,

added a share of associate operating

profit of 1.4 million (2012: profit of

0.8 million).

During the year, as a percentage to

revenue, operating expenses

decreased to 35.7% from 37.7% in the

previous year. As part of the store

realignment programme, 5 stores were

closed and 6 stores were opened as

the Group continues with its aim to

optimise its property portfolio.

The Board has proposed a final

dividend of 1.0 pence per share,

subject to shareholders approval.

Details of the Group's policy on risks

can be found in the 'Principal risks

and uncertainties' section of the

Directors' Report on page 22.

Outlook for Laura Ashley

Details of current trading

performance and outlook for the

Group are provided in the Chairmans

Statement on page 13.

Contractual and otherarrangements

Significant contractual and other

arrangements entered into by the

Group are disclosed in notes 26

and 27.


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Directors Report

The Directors present their Annual

Report and audited financial

statements for the financial year

ended 26 January 2013.

Principal activities

The principal activities of the Group

continue to be the design, sourcing,

distribution and sale of clothing,

accessories and home furnishings.

Operating companies are situated in

the United Kingdom, Ireland and

France. Since November 2011, the

Group is also operating a hotel.

Results for the FinancialYear and Business Review

The Groups results are shown in the

Group Statement of Comprehensive

Income on page 33. A full review of

the Groups business and operations

is included within the Chairmans

Statement, page 5, and the Operating

and Financial Review, page 14. The

Directors Report includes key issues

of the business and its environment,employee and social and community

issues. The principal risks and

uncertainties facing the Group are

included on pages 21 and 22. The

Directors confirm that they have

reviewed the proposed budgets and

forecasts for at least 12 months from

the date of signing the annual

financial statements for the financial

year ended 26 January 2013.

The profit before taxation for thefinancial year ended 26 January 2013

was 20.1 million (2012: 18.4 million).

Dividends

The Company paid an interim

dividend for the financial year ended

26 January 2013 of 1.0 pence per

ordinary share (20% of nominal value)

to shareholders on 30 October 2012.

The Board recommends a final

dividend for the financial year ended

26 January 2013 of 1.0 pence per

share (20% of nominal value) to be

paid on 12 July 2013, to all

shareholders on the register at the

close of business on 28 June 2013,

subject to shareholders approval on

14 June 2013 (2012: 1.0 pence per

ordinary share). The ex-dividend date

will be on 26 June 2013.

Capital structure

Details of the ordinary shares of the

Company, authorised and issued, are

shown in note 23. The Company has

only one class of ordinary shares of

5 pence per share which carries noright to fixed income. Each holder of

ordinary shares is entitled to receive

the Companys Annual Report and

audited financial statements, to

attend and speak or appoint proxies

and to exercise voting rights at the

general meetings of the Company.

The Companys Articles of

Association do not have any specific

restrictions on the transfer of shares,

restrictions on voting rights nor arethere limitations on the holding of

such shares. The Directors are not

aware of any agreements between

holders of the Companys shares that

may result in restrictions on the

transfer of securities or on voting

rights. Shareholders with significant

interests are disclosed on page 20.

No person has any special rights of

control over the Companys share

capital and all issued shares arefully paid.

Under its Articles of Association,

the Company has authority to allot

ordinary shares up to an aggregate

nominal value of 12,309,583.57

representing 33% of the issued share

capital as at 27 March 2013.

The appointment and replacement

of Directors and powers of the

Directors are governed by theCompanys Articles of Association,

the UK Corporate Governance Code,

the Companies Act 2006 and related

legislation. The powers of Directors

are described in the main Board

terms of reference, copies of which

are available on request, and in the

Report on Corporate Governance on

pages 24 to 27.

Future developments

The Chairmans Statement includes

developments intended for the

Group in the foreseeable future.

Board of DirectorsThe names of the Directors of the

Company are shown on page 2.

In accordance with the Companys

Articles of Association, Tan Sri Dr

Khoo Kay Peng and Mr Ng Kwan

Cheong will offer themselves for

re-election as Directors of the

Company at the Annual General

Meeting ("AGM"). In addition to

requirements of the Companys

Articles of Association, Mr WaltonMasters will offer himself for

re-election at the AGM in

accordance with the UK Corporate

Governance Code.

Mr Andrew Khoo and Mr Leonard

Sebastian retired as Non-Executive

Directors on 11 June 2012.

Details of the Directors are asfollows:

Tan Sri Dr Khoo Kay Peng,74,

Non-Executive Chairman, joined the

Board in February 1999. He is the

Chairman and Chief Executive of the

MUI Group, which is a diversified

group with business interests in the

Asia Pacific region, the United States

of America and the United Kingdom.

He is also the Chairman of Corus

Hotels Limited, UK and Pan

Malaysian Industries Berhad,

Malaysia. Tan Sri Dr Khoo is a

Director of SCMP Group Limited

(South China Morning Post) and the


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Bank of East Asia Limited in Hong

Kong. Previously, Tan Sri Dr Khoo hadserved as the Chairman of the

Malaysian Tourist Development

Corporation (a Government Agency),

the Vice Chairman of Malayan

Banking Berhad (Maybank) and as a

Trustee of the National Welfare

Foundation, Malaysia. Tan Sri

Dr Khoo is a trustee of the Regent

University, Virginia, USA, and a board

member of Northwest University,

Seattle, USA. He also serves as a

Council Member of the Malaysian-British Business Council, the

Malaysia-China Business Council and

the Asia Business Council. Tan Sri

Dr Khoo is Chairman of the

Nomination Committee and the

Remuneration Committee.

Mr David Walton Masters,69,

Non-Executive Deputy Chairman of

the Company, joined the Board in

March 1998. He is Chairman of the

Audit Committee and a member ofthe Remuneration Committee.

Mr Walton Masters was formerly a

Managing Partner at stock brokers

Phillips & Drew, in charge of the

International Department; Chief

Executive of County NatWest

Securities; Managing Director of

Morning Star Investment

Management Limited; Executive

Deputy Chairman of Corus Hotels

Limited; Executive Chairman of City

of London Group plc and previouslya Director of other quoted and

unquoted companies. He is currently

a Non-Executive Director of Perenco

International Ltd.

Mr Ng Kwan Cheong,64, was

appointed as Chief Executive Officer

and Executive Director on 5 January

2012. He was formerly the Chief

Executive Officer of the Company

from 1999 to 2003 and a Non-

Executive Director of the Board from26 March 2008. Mr Ng is currently on

the Boards of Laura Ashley Inc., Laura

Ashley (North America) Inc., Regent

Corporation Inc. and Corus HotelsLimited. He was also the former

President of Laura Ashley Inc. and

Regent Corporation Inc., and

the former Managing Director of

Metrojaya Berhad, the retailing arm

of the MUI Group.

Ms Sally Kealey,54, joined the Board

as a Non-Executive Director on

28 October 2004. She is a member of

the Audit Committee and the

Nomination Committee. Ms Kealeypreviously served as an executive of

Laura Ashley Limited for a period of

13 years until 1996 and held the post

of Home Furnishings Design Director.

During her time with the Company,

she worked very closely with the late

Laura Ashley.

Dato Ahmad Johari bin Abdul Razak,

58, a lawyer, was appointed to the

Board as a Non-Executive Director

on 7 September 2011. He is currentlya senior partner of the law firm

Messrs Shearn Delamore & Co. in

Malaysia. He sits on the board of

several public listed companies in

Malaysia namely Ancom Berhad,

Daiman Development Berhad,

Deutsche Bank (Malaysia) Berhad,

Hong Leong Industries Berhad and

British American Tobacco (Malaysia)

Berhad. He is currently the Adjunct

Professor of Law of Universiti

Teknologi MARA Law Faculty,Malaysia. He is a Barrister-at-Law

called to Lincolns Inn in 1976 and

was admitted as an advocate and

solicitor of the High Court of Malaya

in 1977.

Ms Kwa Kim Li,56, a lawyer, was

appointed to the Board as a Non-

Executive Director on 7 September

2011. She is a member of the

Nomination Committee and the

Remuneration Committee. She isthe managing partner of Lee & Lee,

Advocates & Solicitors, one of

Singapores oldest and well-

established law firms founded in1955. Her legal practice spans 30

years covering areas such as real

estate, family practice, banking,

trusts, estate planning, probates and

cross-border transactions. She sits on

the Board of Sentosa Development

Corporation, National University

Health System, Singapore Chinese

Girls School and the Lee Kuan Yew

School of Public Policy. She is the

legal advisor to the Real Estate

Developers Association inSingapore. She graduated with a

Bachelor of Law degree from the

University of Singapore. She was

called to the Singapore Bar as an

advocate and solicitor in 1980.

Mr Wong Nyen Faat,55, was

appointed to the Board as a Non-

Executive Director on 9 January 2012.

He is a member of the Audit

Committee. He is currently the Chief

Operating Officer of the MUI Groupbased in Malaysia and a Director of

Metrojaya Berhad, the Malaysian

retailing arm of the MUI Group. He is

also a Director of various Malaysia-

listed companies namely Pan

Malaysia Corporation Berhad, Pan

Malaysia Capital Berhad, and Pan

Malaysia Holdings Berhad. He was

the Executive Director of Hong

Kong-listed Morning Star Resources

Limited between 2006 and 2009 and

was the General Manager ofOperations of Malaysia-listed Ecofirst

Consolidated Berhad between 2004

and 2006. He holds a Bachelors

degree in Science with Education

(First Class Honours) from University

of Malaya and a Masters degree in

Business Management from the

Asian Institute of Management.

Directors interestsSave as disclosed in note 29 to the

financial statements and theExecutive Directors service contracts,

none of the Directors has, or has had

Directors Reportcontinued


21/68


during the financial year, a material

interest in any contract ofsignificance relating to the business

of the Company or its subsidiaries.

The table on page 31, which shows

the Directors interests in the shares

of the Company, forms part of

this Report.

Directors indemnity

The Group maintains Directors and

Officers liability insurance which

gives appropriate cover against any

legal action that may be broughtagainst them.

Employees

At Laura Ashley we value and

respect our employees and

endeavour to engage their talent

and ability fully. We want to be a

good employer and aim to provide

equality of opportunity, personal

development and training and to

reward people fairly.

We work to achieve high standards in

employment practices and have a

comprehensive suite of employee

policies and procedures. These

policies include procedures covering

grievance resolution, bullying and

harassment, diversity and equal

opportunities.

Corporate SocialResponsibility

Laura Ashley has relationships with

many stakeholders. We take these

responsibilities seriously and aim to

have policies in place, which balance

the expectations of our customers,

shareholders, employees and the

communities in which we operate.

Health & SafetyThe health and safety of our

employees and those who enter our

premises, is protected by managedsystems in all our places of work. The

health and wellbeing of our staff is

supported by providing a range of

health services to employees

throughout the Company. LauraAshleys objectives are to manage its

business in a safe manner and to

take suitable measures to ensure that

its activities do not harm our

employees or customers. Laura

Ashley operates a Health and Safety

Policy and all areas are risk assessed

and audited to ensure adherence to

Policies. During 2012, we continued

our programme of annual reviews

and updating of assessments to

ensure continued compliance. Theintroduction of an online reporting

and data gathering system has

greatly improved the efficiency and

detail of incidents and the use of this

data and analysis will provide a

significant contribution towards the

reduction of incidents throughout the

business.

EnvironmentLaura Ashley has a responsibility to

manage the impact of its business onthe environment. Key areas of focus

continue to be: energy use and

emissions from stores, warehouses,

distribution centres and offices; fuel

emissions from the transportation of

products to either stores or

customers homes; and waste

created in stores, warehouses,

distribution centres and offices.

Ethics

The Group remains committed to thepractice of Ethical Supply Chains.

The principles of Ethical Supply

Chains are, accordingly, reflected in

our relationships with suppliers and

are embodied in the Supplier

Manuals. In particular, the areas

covered include Employee Rights,

Environmental Issues, Working

Conditions, Dormitory Conditions,

Access and Home Workers in line

with International Labour

Organisation (ILO) guidelines. TheGroup continues to monitor

developments within these areas and

76 of our suppliers were audited in

2012 to ensure continued compliance

with our Policies.

Anti-bribery policyThe Groups anti-bribery policy has

been revised in line with recent

legislation. The Group adopts a zero

tolerance approach towards bribery.

Charitable and politicaldonations and social andcommunity issues

The Group has had for a number of

years a policy of supporting selected

local and national charities through

direct financial gifts and donation

of inventory. For the financial year

ended 26 January 2013, the Group

provided approximately 204,000

(2012: 172,000) in charitable

donations. The Group does not make

any contributions for political

purposes.

During the year, the Group

supported Fashion Targets Breast

Cancer campaign, Oxfam,

Breakthrough Breast Cancer

awareness, Brainwave, Marie Curie,

NewLife, Macmillan, Fairtrade

Foundation and various other local

and national charities.

FTSE4GoodThe Group remains included in the

FTSE4Good UK benchmark index for

socially responsible investment.

ReportingThe Group produces a Corporate

Social Responsibility Report annually.


22/68


Auditor

A resolution proposing there-appointment of Chantrey Vellacott

DFK LLP as auditor to the Company

and to authorise the Directors to

determine the audit fee will be put to

the 2013 AGM.

Disclosure of information toauditor

In the case of each of the Directors

who were Directors at the date this

report was approved:

so far as each of the Directors is

aware, there is no relevant audit

information (as defined in the

Companies Act 2006) of which the

Companys auditor is unaware; and

each of the Directors has taken all

the steps that he or she ought to

have taken as a Director, in order

to make himself or herself aware

of any relevant audit information

and to establish that the

Companys auditor is aware of

that information.

Significant interests

The Directors are not aware of anyother interest amounting to 3% or

more of the issued share capital of

the Company other than those listed

below, as disclosed to the Company

pursuant to the Disclosure and

Transparency Rules.

Number of Percentage of

As at 27 March 2013 Ordinary Shares Issued Share Capital**

MUI Asia Limited 255,938,185 35.17%

Bonham Industries Limited* 187,845,822 25.81%Ruffer Investment Management 39,509,166 5.57%

Aeon Co. Limited 35,220,606 4.84%

GAM London Limited 31,269,816 4.30%

* KKP Holdings Sdn. Bhd., Soo Lay Holdings Sdn. Bhd. and Tan Sri Dr Khoo Kay Peng are each

interested in these shares.

** Excluding 18,272,500 treasury shares



23/68


PRINCIPAL RISKS AND MITIGATING ACTIVITIES

Issue Risk Mitigating activities

Retail StrategyFailure of the Home and Fashion

business to meet sales and margin

targets, to maintain or increase

market share through the store

realignment programme and product

innovation, particularly in the current

unsettled climate.

Adverse effect on financial results.

Loss of market share and customer

loyalty.

New and innovative product offering,

exploiting areas of strength of the

Brand to ensure products meet the

expectations of our customers.

Review promotional strategies to

drive trade.

Continuous product sourcing review

to remain competitively priced.

Continuous review of store locations.

Continue to enhance the customer

experience.

PeopleFailure to attract, develop and retain

talent with the correct skills and

capability for further development as

part of our succession policy.

Inability of the team to perform

duties efficiently, develop and

execute business plans due to lack

of experience and the right skills.

Competitive disadvantage.

Continue to train actively new team

members.

Competitive incentive packages.

Maintain employee communication.

E-CommerceFailure to deliver sales growth online

by failing to meet customer

expectations or website failure.


Loss of market share and customer

loyalty.

Continue to invest in the Companys

digital platform to meet consumers'

needs.

Focus on improved order fulfilment

and customer service.

Franchise & BrandingFailure to grow our international

business successfully through

Franchise and Licensing operations,

partnerships or wholly-owned

businesses.


Damage to the Brand.

Continue to grow the Brand

internationally by looking for

appropriate partners in new territories.

Forge strong relationships with key

partners and Licensees.

FinanceFailure to maintain cost efficient

funding and react to changes in

foreign currency exchange

fluctuations.

Adverse effect on financial results. Stringent cash flow management

including daily cash monitoring.

Active negotiation with suppliers to

reduce impact of foreign

exchange vagaries.

Foreign exchange hedging as required.

Information TechnologyFailure of central computer servers

that manage points of sale, contact

centre or website.

Inability of staff or customers to

place and process orders, leading

to loss of revenue and consumer

confidence.

Regular upgrade and constant checks

of existing software and hardware.

Invoke full disaster recovery plan with

priorities set for each application.


24/68


Principal risks and

uncertaintiesThe Board is informed at every

meeting of the principal risks and

uncertainties of activities across the

Group which could have a material

impact on the Groups long and short

term performance and action plans to

mitigate these risks. The Groups risk

assessment process is designed to

identify, manage and mitigate

business risks. The key principal risks

and the actions taken to mitigate

these risks and uncertainties identifiedby the Group are set out on page 21.

The Board considers that the risks

set out on page 21 are the most

significant risks in achieving the

Groups business goals. The risks

listed do not comprise all those

associated with the Group and are

not set out in any order of priority.

There could be additional risks and

uncertainties which are not presently

known to management or currently

deemed to be less material, which

may also have an adverse effect on

the business. The Groups risk

management policies and

procedures are also discussed in the

Report on Corporate Governance.

Risk management

The Management Committee

monitors the internal risk

management function across the

Group and advises on all relevant risk

issues. There is regular

communication with internal

departments and external advisory

bodies and regulators. It also has

access to external support, where

required, in order to ensure that

standards are maintained and issues

raised are discussed and, where

necessary, implemented. The Groups

policies on financial instruments and

the risks pertaining to thoseinstruments are set out in the

accounting policies on page 38 and

note 20 to the financial statements.

Business continuity

The Business Continuity Plan iscontinuously updated and

implemented throughout the Group.

A regular audit of the plan is

undertaken to ensure that

management teams are kept

informed of any changes that will

have an impact on their respective

areas of operations.

Communications

The Company places a great deal

of importance on communication

with its shareholders. The Company

publishes a concise financial

statement for its half year results

and a full report for its full year

results. Both reports are mailed to

shareholders and are accessible

via the Companys website at

www.lauraashley.com. Shareholders

also have direct access to the

Company via its free shareholder

information telephone service (see

page 65).

All shareholders have the opportunity

to ask questions and make

suggestions at the Companys AGM.

Going concern

The Board is of the opinion that the

Group will have sufficient funding to

meet its working capital needs. The

Group has positive bank balances and

has plans to address any possibleuncertainties in the current economic

environment which may impact the

going concern assumption.

The Groups business activities,

together with the factors likely to

affect its future development,

performance and financial position,

are also set out in the Operating and

Financial Review. The financial

position of the Group, its cash flow

and its liquidity position arecontained in the Notes to the

Financial Statements. These include

the Groups objectives, policies and

processes for managing its capital, its

financial risk management objectives,details of financial instruments and

exposures to credit risk, interest rate

risk, foreign currency risk and

liquidity risk.

The Group has adequate financial

resources to meet the obligations of

its commitments to customers and

suppliers across different geographic

areas and industries. As a

consequence, the Directors are

confident that the Group is wellplaced to manage its business risks

successfully despite the current

challenging economic outlook.

Since the Company and the Group

have adequate resources to continue

in operational existence for the

foreseeable future, the Directors

consider it appropriate to prepare

the financial statements on a going

concern basis.

Supplier payment policy

The Groups policy on payment

practices is as follows:

(1) terms of payment will be

negotiated with suppliers when

opening an account with them;

(2) each supplier will be made fully

aware of such terms;

(3) for major contracts, payment

terms will be agreed on anindividual transaction basis; and

(4) the Group will comply with

payment terms for existing and

new accounts when it is satisfied

that the supplier has provided

goods or services in accordance

with the agreed terms.

Copies of the Groups standard

payment terms, incorporated into its

standard trading terms and

conditions, may be obtained from

the Registered Office during normal

working hours.



25/68


The Groups trade payables days

figure at 26 January 2013 (based onthe ratio of the aggregate of the

amounts owed to suppliers at such

date to the aggregate of the

amounts invoiced by suppliers during

the financial year) was equivalent to

34 days (2012: 33 days). The

Company had no trade payables at

26 January 2013 (2012: nil).

Statement of Directorsresponsibilities

The Directors are responsible forpreparing the Annual Report and the

Financial Statements in accordance

with applicable law and regulations.

Company law requires the Directors

to prepare financial statements for

each financial year. Under the law, the

Directors have elected to prepare the

Group Financial Statements in

accordance with International

Financial Reporting Standards (IFRSs)

as adopted by the European Union.Under company law, the Directors

must not approve the Financial

Statements unless they are satisfied

that they give a true and fair view of

the state of affairs of the Company

and of the Group as at the end of the

financial year, and of the profit or loss,

total comprehensive income and cash

flows of the Group for that period. In

preparing these Financial Statements

the Directors are required to:

select suitable accounting policies

and then apply them consistently;

make judgements and accounting

estimates that are reasonable and

prudent;

state whether IFRSs as adopted by

the European Union have been

followed, subject to any material

departures disclosed and

explained in the Group and Parent

Company Financial Statements

respectively; and

prepare the Financial Statements

on the going concern basis unlessit is inappropriate to presume that

the Company will continue in

business.

The Directors are responsible for

keeping proper accounting records

that are sufficient to show and

explain the Company's and the

Groups transactions and disclose

with reasonable accuracy at any time

the financial position of the Company

and the Group and to enable themto ensure that the Financial

Statements comply with the

Companies Act 2006. They are also

responsible for safeguarding the

assets of the Company and of the

Group and for taking reasonable

steps to prevent and detect fraud

and other irregularities.

The Directors are responsible for the

maintenance and integrity of the

corporate and financial informationincluded on the Companys website.

The Directors are aware that

legislation in the United Kingdom

governing the preparation and

dissemination of financial statements

may differ from legislation in other

jurisdictions.

The Directors will be advised by the

Company Secretary of any new

requirements and provisions as they

come into force. The Directorsbelieve that compliance with

regulatory requirements will

complement their overall duty to

ensure the success of the Company

in meeting its objectives.

Directors responsibility

statement pursuant to DTR4Each of the Directors confirms to the

best of their knowledge that:

(a) The Group and Company financial

statements in this Report have

been prepared in accordance with

IFRSs as adopted by the European

Union, give a true and fair view of

the assets, liabilities, financial

position and profit or loss of the

Company and the Group taken as

a whole; and

(b) the contents of this Report

include a fair review of the

development and performance of

the business and the position of

the Company and the Group

taken as a whole, together with a

description of the principalrisks

and uncertainties that they

face; and

(c) that the value of land and

buildings, as reflected in the

accounts, are not significantly

different to their current

market value.

Annual General Meeting

You will find enclosed a Form of

Proxy for use by each shareholder at

the AGM. Whether or not you intend

to be present at the meeting, you are

requested to complete and sign theForm of Proxy in accordance with the

instructions thereon, and to return it

as soon as possible but, in any event,

so as to arrive at the Companys

Registrars by 12.15 pm on 12 June

2013. The completion and return of a

Form of Proxy will not preclude you

from attending the AGM and voting

in person should you so wish.

By Order of the Board

Kai Xiang TeoCompany Secretary

27 March 2013


26/68


Report on Corporate Governance

Compliance

The Board endorses the UKCorporate Governance Code (the

Code). During the financial year

ended 26 January 2013, the Group

has complied with the provisions set

out in the Code, except to the extent

disclosed below.

The Board

The Board comprises the Chairman,

Deputy Chairman, four Non-Executive

Directors and one Executive Director

who is the Chief Executive Officer of

the Group.

The Board has five scheduled

meetings a year, but meets more

frequently when business requires,

and has full and timely access to all

relevant information to enable it to

carry out its duties.

The Board is responsible for the

overall performance of the Group,

which includes the broad strategic

direction, development and control of

the Group. The policies and strategies

of the Group are formulated by the

Board. More detailed considerations

to do with the running of the day-to-

day business of the Group are

delegated to the Management

Committee under the leadership of

the Chief Executive Officer. The Board

governs the Management Committee

by regularly monitoring theimplementation of strategy and policy

decisions to ensure that the operation

of the Group is at all times in line with

the Groups objectives.

The Board has regular contact with

the Company Secretary for his

services and advice. The Company

Secretary is responsible for advising

the Board on corporate governance

matters and ensuring that Board

procedures are followed and thatapplicable rules and regulations are

complied with. The Board decides on

the appointment and removal of the

Company Secretary. The Board also

has access to professional advicewithin the Group and externally. The

Group purchases appropriate

insurance cover in respect of legal

action against its Directors.

The Chairmans main function is to

manage the Board so that the Group

is run in the best interests of its

stakeholders. It is also the Chairmans

responsibility to ensure the Boards

integrity and effectiveness.

Non-Executive Directors /Board independence

The Group is fortunate in having the

services of its Non-Executive

Directors who provide an important

contribution to the strategic

development of the Group.

The Non-Executive Directors have

access to the Chairman if they wish

to discuss specific issues regarding

the performance of the ExecutiveDirector. Where required, meetings

between Non-Executive Directors

without the presence of the

Chairman or the Executive Director

can easily be convened.

Under the provisions of the Code

on small companies, the Group must

have at least two Independent

Non-Executive Directors on the

Board. The Board is of the view

that Mr David Walton Masters,

Ms Sally Kealey, Dato Ahmad

Johari Razak and Ms Kwa Kim Li are

Independent Non-Executive

Directors and, accordingly, are able

to provide an independent view on

matters discussed and decisions

taken at Board level. The Board is of

the opinion that Mr David Walton

Masters judgement as an

Independent Non-Executive Director

is not affected notwithstanding the

fact that he has served the Board for

more than ten years since his first

election. He will retire in accordance

with provision B.7.1 of the Code and

will seek re-election as a Director atthe annual general meeting

("AGM"). The Board also recognises

Mr David Walton Masters as the

Senior Independent Non-Executive

Director.

As part of a subscription exercise

that was undertaken in May 1998, a

Continuing Relationship Agreement

was entered into between the Group,

MUI Asia Limited (a 100% subsidiary

of Malayan United Industries Berhad)and Malayan United Industries

Berhad (the MUI Group). The

Agreement gives the MUI Group the

right to appoint Directors to the

Board. The MUI Group is currently

entitled to appoint three Directors

and their replacements. Tan Sri Dr

Khoo Kay Peng and Mr Wong Nyen

Faat are the current MUI appointed

Directors.

Directors electionsAny new Director appointed during

the financial year is required, under

the provisions of the Companys

Articles of Association (the

"Articles"), to retire and seek

election by shareholders at the next

AGM. The Articles also require that

one-third of the Directors retire by

rotation each year and seek

re-election at the AGM. The

Directors required to retire will be

those in office longest since theirprevious re-election and this will

usually mean that each Director

retires at least once in every three

years, although there is no absolute

requirement to this effect. In order to

fully comply with the Code, it is the

Groups policy that every Director

should submit themselves for

re-election at least once in every

three years, wherever possible.


27/68


The Directors who will be seeking

re-election at the AGM this year have

had their performance appraised by

the Chairman of the Company, who

believes that these persons have

contributed effectively to the Board

and are committed to the best

interests of the Company. The

performance evaluation of the

Chairman was led by the Senior

Independent Non-Executive Director

taking into account views of all

Directors.

Board performanceevaluation


2013, the Board undertook an

evaluation of its own performance

and its individual Directors including

the Chairman.

The results of the evaluation were

satisfactory. It was concluded that the

Board and its Committees with the

right mix of knowledge and skills,

operated effectively with a sound

corporate governance and risk

management framework. The Board

communicated well and gave useful

feedback to the senior management

of the Group who, in turn, provided

timely information of the right length

and quality to the Board. The Board

members also agreed that the Board

and Committee meetings were of

the appropriate length to enable

thorough consideration of issues.

Board Committees

The Board has delegated specific

responsibilities to the Audit,

Nomination and Remuneration

Committees. The Board considers

that all the members of eachCommittee have the appropriate

experience and none of them has

interests which conflict with their

positions on the Committees. All

Board Committees have their own

terms of reference, which are

available from the Company

Secretary upon request.

Nomination Committee

The Nomination Committee, the

membership and quorum of which

is a majority of Non-Executive

Directors, meets as required to

decide and give recommendations to

the Board on all matters relating to

the selection, number, appointment

and removal of Executive and

Non-Executive Directors to the

Board. The recommendations of the

Nomination Committee are then put

to the full Board, which considers

them before any appointment is

made. External search consultanciesor open advertising have not been

used in the appointment of Directors.

The members of the Nomination

Directors attendance

The attendance of Directors from 28 March 2012 to 26 March 2013 is set out below:

Audit Remuneration NominationBoard Meetings Committee Meetings Committee Meetings Committee Meetings

Number of Number of Number of Number of Number of Number of Number of Number ofMeetings Meetings Meetings Meetings Meetings Meetings Meetings Meetings

Convened Attended Convened Attended Convened Attended Convened Attended

Tan Sri Dr

Khoo Kay Peng 5 5 2 2 2 2

Mr David Walton

Masters 5 5 4 4 2 2

Mr Ng Kwan Cheong 5 5 4 4

Ms Sally Kealey 5 4 3 3 1 1 2 2

Mr Andrew Khoo* 2 1 1 1

Mr Leonard Sebastian* 2 1 1 1 1 1

Dato Ahmad Johari bin 5 5 Abdul Razak

Ms Kwa Kim Li 5 5 1 1 1 1

Mr Wong Nyen Faat 5 5 3 3 * retired on 11 June 2012


28/68


Committee during the financial year

were Tan Sri Dr Khoo Kay Peng(Chairman), Ms Sally Kealey and

Ms Kwa Kim Li.

Remuneration Committee

The Remuneration Committee

meets at least once a year and is

responsible for advising on the

remuneration policy for Directors

only. The Remuneration Committee

considers any remuneration package

before it is offered to a potential

appointee. It does not set or monitorthe level or structure of remuneration

for members of senior management.

Members of the Remuneration


were Tan Sri Dr Khoo Kay Peng

(Chairman), Mr David Walton Masters

and Ms Kwa Kim Li. In compliance

with the Code, there are at least two

Independent Non-Executive

Directors on the Committee and they

are Mr David Walton Masters andMs Kwa Kim Li.

Details of the level and composition

of the Directors remuneration are

disclosed in the Directors

Remuneration Report on pages 28

to 31.

Audit Committee

The Audit Committee has five

scheduled meetings a year. The

Chief Executive Officer, Joint ChiefOperating Officers, Chief Financial

Officer, Internal Audit Manager and

the Companys external auditor

attend the meetings of the

Committee at the invitation of the

Committees Chairman.

The members of the Audit


were Mr David Walton Masters

(Chairman), Ms Sally Kealey, and

Mr Wong Nyen Faat.

In compliance with the Code, Mr

David Walton Masters and Ms Sally

Kealey are Independent Non-

Executive Directors. At least onemember of the Audit Committee has

recent and relevant financial

experience.

The Audit Committee undertakes

a number of duties to ensure the

satisfactory discharge of its

responsibilities. It is the duty of

the Committee to ensure that the

integrity of the financial statements

of the Company is duly monitored.

This involves the review of allfinancial statements relating to the

Companys performance. It assists

the Board in ascertaining that the

Groups financial systems provide

accurate information on its financial

performance and that its published

financial statements represent a true

and fair reflection of this position.

The Committee is also responsible

for regularly reviewing the

effectiveness of the Groups internalcontrols. The Committee has regular

dialogues with the Internal Audit

Manager and is involved in the

assessment and implementation of

any internal audit plan.

The Committee has the primary

responsibility for making a

recommendation to the Board on

the appointment, re-appointment

and removal of the external auditor.

In making the recommendation onthe re-appointment of the external

auditor, the Audit Committee will

assess cost effectiveness,

independence and objectivity of

the external auditor. The Board will

include a resolution in the next AGM

proposing the re-appointment of the

external auditor and authorising the

Board to determine the audit fee.

The Committee meets regularly with

the external auditor for the purposeof discussing matters relating to the

financial reporting and internal

controls of the Group. It also assists

the Board in ensuring that

appropriate accounting policies,internal controls and compliance

procedures are in place.

During the period ended 26 January

2013, the Group's external auditor

has provided advice to the Group,

including tax advice. The fees paid

for these services were 19,450. The

use of external auditors for non-audit

work was carefully evaluated by the

Audit Committee. The Audit

Committee has a duty to ensure thatthe provision of non-audit services

does not impair the external auditors

independence and objectivity. The

Group will disclose such services to

the Audit Committee detailing the

nature of the work, estimated costs,

project timeline, department

involved and also assurance from the

Ethics Partner of the external auditor

that relevant ethical issues are

considered.

The Audit Committee Chairman

reports verbally to the Board on the

main issues of any Audit Committee

meeting held immediately prior to

the relevant Board meeting. The

finalised Audit Committee meeting

minutes are circulated to Board

members for their information.

Internal Control

The Board acknowledges that it is

responsible for the Groups systemof internal control and for reviewing

its effectiveness. Such a system is

designed to manage rather than

eliminate the risk of failure to achieve

business objectives and can only

provide reasonable and not absolute

assurance against material

misstatement or loss.

The Board confirms that it has carried

out a review of the effectiveness of

the Group's system of internalcontrol covering financial,

operational, compliance and

other controls.

Report on Corporate Governancecontinued


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The Board monitors the headline

issues of health and safety,environment, ethics and risk

management.

The Directors have sought to

establish clear operating procedures,

lines of responsibility and delegated

authority. In particular, procedures

exist for:

monthly financial reporting, within

an annual budgeting and annual

forecasting process; maintaining day-to-day financial

control of operations within a

framework of defined financial

policies and procedures on key

business activities;

business wide risk management

policy and standards;

procedures for planning,

approving and monitoring major

projects; and

regular performance monitoring,

with remedial action taken where

necessary.

In addition, the Board also takes the

necessary steps to ensure that

reviews are carried out on the various

systems of internal control that are

currently in place throughout the

Group. The Group has a

whistle-blowing policy in place, which

has been communicated to all Group

employees. This policy enables

employees to raise any concerns that

they have, in confidence, on methods

of financial reporting or on other

matters.

At regular intervals, both the Board

and the Audit Committee consider

a risk management update report

which gives an assessment on

whether the internal control elements

for risk management have been

met. The Board believes that the

information provided in such

updates is in accordance with the

Turnbull Guidance.Necessary actions are taken to

remedy significant failings or

weaknesses arising from internal

control reviews.

Relations with shareholders

The Company continues to maintain

good communications with

shareholders. The Laura Ashley

website provides up-to-date

information on the Group. The

Company despatches the Notice ofAGM at least 21 days before the

meeting.

The Board considers the AGM to be

an opportunity to meet and

communicate with investors, giving

shareholders the opportunity to raise

with the Board any issues or concerns

they may have. The Chairmen of the

Audit, Nomination and Remuneration

Committees will be available at the

AGM to answer any queries raised.In accordance with the provisions of

the Code, the Company will provide

an indication at the AGM of the level

of proxies lodged on each resolution.

Registered shareholders have direct

access to the Company and receive a

copy of the Annual Report, which

contains the full financial statements

of the Company. At the Companys

AGM, shareholders are given the

opportunity to express their views

and ask questions pertaining to the

Company and its businesses.


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Directors Remuneration Report

Remuneration Committee

The remuneration of each Director isdetermined by the Remuneration

Committee. The membership of the

committee comprises entirely

Non-Executive Directors. The current

members of the Remuneration

Committee are Tan Sri Dr Khoo Kay

Peng, Mr David Walton Masters and

Ms Kwa Kim Li.

Policy on remuneration ofDirectors

The Remuneration Committee sets

the overall policy on remuneration

and other terms of employment of

Directors. It does not set or monitor

the level or structure of remuneration

for members of senior management.

The Remuneration Committee aims

to ensure that the remuneration

packages offered are competitive

and designed to attract, retain and

motivate Directors of the right

calibre. When determining the

remuneration policy and

arrangements for the Directors, they

consider the pay and employment

conditions elsewhere in the Group.

Remuneration for Non-Executive

Directors consists of fees for their

services in connection with Board

and Committee meetings. These fees

are to be determined by the

Committee without the involvement

of the Non-Executive Directorsconcerned. Non-Executive Directors

do not participate in any Group

pension or share option schemes.

The Remuneration Committee takes

account of remuneration and

benefits information in the

marketplace when assessing pay and

benefits of the Directors within the

Group.

The main components

The main remunerationcomponents are:

(i) Basic salary or feesBasic salary or fees for each Director

is determined by the Remuneration

Committee, taking into account the

performance of the individual and

information from independent

sources on the rates of salary for

similar posts.

(ii) Annual bonusThe Company did not consider it

appropriate to have a formal bonus

scheme in place for the financial year

on which it is reporting.

(iii) Share optionsNo options were granted to any

Directors during the financial year.

Expiry date

Tan Sri Dr Khoo Kay Peng January 2014

Mr David Walton Masters May 2013

Ms Sally Kealey October 2014

Dato Ahmad Johari bin Abdul Razak September 2013

Ms Kwa Kim Li September 2013

Mr Wong Nyen Faat January 2014

All Directors are subject to retirement by rotation.

Company policy on

contracts of serviceThe sole Executive Director of the

Company does not have a notice

period in excess of 12 months under

the terms of his service contract.

His service contract contains no

provisions for pre-determined

compensation on termination, which

exceeds one years salary and

benefits in kind. Non-Executive

Directors do not have service

contracts with the Company, but

have letters of appointment for aperiod of two to three years.


31/68


Company policy on external

appointmentsThe Company recognises that its

Directors are likely to be invited to

become Non-Executive Directors of

other companies and that exposure

to such non-executive duties can

broaden their experience and

knowledge, which will benefit the

Group. Executive and Non-Executive

Directors are therefore, subject to

approval of the Companys Board,

allowed to accept non-executive

appointments, as long as these arenot with competing companies and

are not likely to lead to conflicts of

interest. Executive and

Non-Executive Directors are allowed

to retain the fees paid.

Company pensions policy

regarding ExecutiveDirectors

The Chief Executive Officer is the

sole Executive Director of the

Company, who received pension

benefits as disclosed on page 31.

Taxable benefits

The Executive Director is entitled to

a range of taxable benefits, which

include the provision of a company

car (or a cash alternative), housing

allowance and private medical

insurance.

Performance graph

The following graph shows the

Companys performance, measured

by total shareholder return,

compared with the performance of

the FTSE General Retail Index for the

period March 2008 to January 2013.

2008 2009 2010 2011 2012 2013

5.00

10.00

15.00

20.00

25.00

30.00

35.00

FTSE ALL SHARE GEN RETAILERS - PRICE INDEXASHLEY(LAURA) HOLDINGS

Share price performance since Mar 08

Share

price

rebas

ed

(p)


32/68


Audited information

Details of the Directors shareholdinginterests and remuneration for the

financial year ended 26 January 2013

disclosed on pages 30 to 31 have

been audited by the Groups

external auditor.

Salary 2013 2012

and Fees Benefits Housing Total Total

000 000 000 000 000

Executive DirectorsMr Ng Kwan Cheong 185 29 36 250 18

Former Director 281

Sub-total 185 29 36 250 299

Non-Executive DirectorsTan Sri Dr Khoo Kay Peng 200 200 200

Mr David Walton Masters 50 50 50

Ms Sally Kealey 20 20 20

*Mr Andrew Khoo 7 7

20*Mr Leonard Sebastian 7 7 20

Mr Ng Kwan Cheong 18

Dato Ahmad Johari bin Abdul Razak 20 20 8

Ms Kwa Kim Li 20 20 8

Mr Wong Nyen Faat 20 20 1

Sub-total 344 344 345Total 529 29 36 594 644Each Director, except Andrew Khoo and Mr Leonard Sebastian, was a member of the Board for the whole year.

*Mr Andrew Khoo and Mr Leonard Sebastian retired on 11 June 2012.

Directors emoluments

The figures below representemoluments earned by Directors

during the relevant financial year and

relate to the period of each Directors

membership of the Board. Such

emoluments are normally paid in the

same financial year except for bonus

payments which relate to theprevious financial year. Benefits

incorporate all benefits assessable

to tax arising from employment by

the Company.

Directors Remuneration Report continued


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Directors pension benefits

The Executive Director earned apension benefit in a scheme

sponsored by the Company during

the financial year ended 26 January

2013. The Company contributed a

sum equal to 10% of his basic salary

to his nominated private pension

scheme.

For the financial year ended

26 January 2013, the total pension

benefits relating to Mr Ng Kwan

Cheong amounted to 18,500(2012: 1,542).

Directors shareholdings

The interests of the Directors in the

shares of the Company are shown

below:

All interests in share capital were

held as beneficial interests. Mr NgKwan Cheong, Mr Andrew Khoo,

Mr Leonard Sebastian, Dato Ahmad

Johari bin Abdul Razak, Ms Kwa Kim

Li and Mr Wong Nyen Faat did not

have any interest in the issued share

capital of the Company at any time

during the financial year.

Directors share options

No Director had any options over

shares in the capital of the Company

at any time during the financial year.

Resolution

A resolution to shareholders to

approve the Directors Remuneration

Report will be put forward at the

annual general meeting.

On behalf of the Board,

David Walton Masters

Deputy Chairman

27 March 2013

26 January 28 January

2013 2012

Tan Sri Dr Khoo Kay Peng 187,845,822* 187,845,822*

Mr David Walton Masters 1,000,000^ 1,406,250Ms Sally Kealey 775 775

* Bonham Industries Limited, KKP Holdings Sdn. Bhd. and Soo Lay Holdings Sdn. Bhd.are each interested in these shares.^Mr David Walton Masters sold 406,250 of the Companys ordinary shares on 18 April 2012.

There were no changes in Directors Shareholdings between the financial year end and27 March 2013


34/68


Independent Auditors Reportto the members of Laura Ashley Holdings plc

We have audited the group and parent

company financial statements (the

financial statements) of Laura Ashley

Holdings plc for the year ended

26 January 2013 which comprise the

Group Statement of Comprehensive

Income, Group and Parent Company

Balance Sheets, the Group and Parent

Company Statements of Changes in

Shareholders Equity, the Group and

Parent Company Statements of Cash

Flows and the related notes. The

financial reporting framework that has

been applied in their preparation is

applicable law and InternationalFinancial Reporting Standards (IFRS) as

adopted by the European Union and

as regards the parent company

financial statements, as applied in

accordance with the provisions of the

Companies Act 2006.

This report is made solely to the

Companys members, as a body, in

accordance with Chapter 3 Part 16 of

the Companies Act 2006. Our audit

work has been undertaken so that we

might state to the Companys members

those matters we are required to stateto them in an auditors report and for no

other purpose. To the fullest extent

permitted by law, we do not accept or

assume responsibility to anyone other

than the Company and the Companys

members as a body, for our audit work,

for this report, or for the opinions we

have formed.

Respective responsibilitiesof Directors and AuditorAs explained more fully in the Statement

of Directors Responsibilities, theDirectors are responsible for the

preparation of the Group financial

statements and for being satisfied that

they give a true and fair view. Our

responsibility is to audit and express an

opinion on the Group financial

statements in accordance with

applicable law and International

Standards on Auditing (UK and Ireland).

Those standards require us to comply

with the Auditing Practices Boards

Ethical Standards for Auditors.

Scope of the audit of thefinancial statementsAn audit involves obtaining evidence

about the amounts and disclosures in

the financial statements sufficient to

give reasonable assurance that the

financial statements are free from

material misstatement, whether caused

by fraud or error. This includes an

assessment of: whether the accounting

policies are appropriate to the Groups

and parent Companys circumstances

and have been consistently applied and

adequately disclosed; the

reasonableness of significant

accounting estimates made by the

Directors; and the overall presentation

of the financial statements.

In addition, we read all the financial andnon-financial information in the Annual

Report to identify material

inconsistencies with the audited financial

statements. If we become aware of any

apparent material misstatements or

inconsistencies, we will consider the

implications for our report.

Opinion on financialstatementsIn our opinion:

the financial statements give a true

and fair view of the state of theGroups and of the Companys affairs

as at 26 January 2013 and of the

Groups profit for the year then

ended;

the Group financial statements have

been properly prepared in

accordance with IFRS as adopted by

the European Union;

the parent company financial

Laura Ashley Annual Rpt 2013

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