0. cover [91484] 4/5/05 22:51 page 2 - laura ashley …...laura ashley holdings plcannual report and...

A N N U A L R E P O R T 2 0 0 5

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Laura Ashley Holdings plc Annual Report and Accounts 2005

Directors & Advisors

Tan Sri Dr Khoo Kay Peng*+Non-Executive Chairman

David Ralph Walton Masters*±Non-Executive Deputy Chairman

Lillian Tan Lian TeeChief Executive Officer

Sally Cheong Siew Mooi ±+Non-Executive Director

Motoya Okada*±Non-Executive Director

Roger Bambrough ±+Non-Executive Director

Sally Kealey*+Non-Executive Director

Andrew KhooNon-Executive Director

Yoichi KimuraAlternate Director

David R. Cook ACASecretary

Registered office27 Bagleys LaneFulhamLondon SW6 2QA

Registered number1012631

StockbrokersNumis Securities LimitedCheapside House138 CheapsideLondon EC2V 6LH

Principal bankersBumiputra-Commerce Bank Berhad14 Cavendish SquareLondon W1G 9HA

AuditorsChantrey Vellacott DFKChartered Accountants andRegistered AuditorsRussell Square House10-12 Russell SquareLondon WC1B 5LF

Registrars and transfer officeComputershare Investor Services PLCPO Box 82The PavilionsBridgwater RoadBristol BS99 7NH

* Member of Remuneration Committee + Member of Nomination Committee ± Member of Audit Committee

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Contents


2

Summary 3

Chairman’s Statement 5

Chief Executive Officer’s Statement 6

Operating and Financial Review 12

Directors’ Report 14

Remuneration Report 24

Independent Auditors’ Report 28

Accounting Policies 30

Consolidated Profit and Loss Account 33

Statement of Total Recognised Gains and Losses 33

Balance Sheets 34

Consolidated Cash Flow Statement 35

Reconciliation of Net Cash Flow to

Movement in Net Funds 35

Notes to the Accounts 36

Group Financial Record 51

Shareholders’ Information 52

Notice of 2005 Annual General Meeting 53

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■ Profit before tax and exceptional items

up 55.0% to £4.8m (2004: £3.1m)

■ Total Group sales (excluding Continental

Europe) down 11.4% to £237.5m

■ Total UK sales down 15.4%, like-for-like

sales down 10.2%, adjusted LFL* down 8.5%

■ Gross margin rate improvements and

cost savings across the business

■ Planned realignment of UK store portfolio

continues with 22 stores closed in the year

and 6 new stores opened (total UK stores

at 29 January 2005: 184)

*The previous year ended 31 January 2004 was a 53 weekaccounting period.The adjusted LFL percentage quoted above isbased on an adjusted 52 week period to enable comparisonwith the 52 week accounting period ended 29 January 2005.

Summary

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5

Chairman’s Statement

The Company has achieved an improved performance for

the financial year ended 29 January 2005 against a backdrop

of continuing competitiveness in the UK retail markets. I

am pleased that the closure and franchise of the majority of

our retail operations in Continental Europe (which was

completed in January 2004) has helped to improve the

profitability of the Company. It is expected that our

continued focus on greater efficiency and increased

productivity will further improve the Company’s

performance in the current financial year.

For the 52 weeks ended 29 January 2005, Laura Ashley

recorded a profit before tax and exceptional items of £4.8

million, up 55% on the result for the previous year of £3.1

million. Total sales decreased by £44.6 million down 16%

to £238.9 million due mainly to reduced UK Fashion sales

and the closure and franchise of our stores in Continental

Europe. The Board does not recommend that a dividend

be paid this year.

As a strategy for the current year, the Company will

continue to maintain and develop the quality of its product

offering, whilst also working towards further cost saving in

the supply chain. The process will be monitored regularly

to ensure that resources within the Company are utilised

effectively. Management will also continue to focus on the

improvement of margins.

The Company will seek further improvements in UK retail

operations and will remain focussed on its important

international franchising and licensing operations. I believe

that the strength of the Company is its position as the

original lifestyle brand and during the current year, the

Company will explore opportunities to build on this brand

strength.

In the financial year ended 29 January 2005, there were a

number of Board changes. Mr Nick Ashley, Mr John

Thornton, Ms Ainum Mohd-Saaid and Ms Rebecca

Navarednam stepped down from the Board. I would like to

record the Board’s sincere appreciation for all their efforts

and contribution throughout their tenure.

On behalf of the Board I am pleased to welcome Mr Roger

Bambrough, Ms Sally Kealey and Mr Andrew Khoo as new

non-Executive Directors of the Board.

I would like to welcome Ms Lillian Tan to her new role as

CEO of the Company. Her knowledge and experience will

be of great value to the Company.

The Board would once again like to express its deepest

appreciation and gratitude to Laura Ashley’s management,

staff, shareholders and customers for their continued

support and loyalty.

Tan Sri Dr Khoo Kay Peng Chairman

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Chief Executive Officer’s Statement

Overview

For the 52 weeks to 29 January 2005, we are pleased to

report a profit before tax and exceptional items of £4.8

million, up 55.0% compared to the profit in the previous

year of £3.1 million. Included within the reported £4.8

million profit is £1.0 million of property profit (2004: £1.0

million).

Total Group sales, excluding Continental Europe, for the

year ended 29 January 2005 were down £30.7 million

(11.4%) to £237.5 million. The closure and franchise of

our operations in Continental Europe reduced the number

of directly operated stores to two (both in Paris) and

reduced sales by £13.9 million (90.8%) to £1.4 million.

For the year ended 29 January 2005, total UK store sales

were down 15.4% to £181.5 million (LFL -10.2%). UK

Fashion sales were down 37.6% on 20% less selling space

(LFL -30.3%). UK Home sales were down 4.4% on similar

selling space (LFL -0.8%). It should be noted that the

figures quoted above are based on the year ended 31

January 2004 being a 53-week accounting period.

Adjustment to a 52 week comparable basis would change

the sales comparisons with last year as follows: total UK

retail sales down 13.2% (LFL -8.5%), UK Fashion sales

down 35.0% (LFL -29.0%) and total UK Home sales down

2.5% (LFL +1.1%). We have been successful in driving a

margin rate improvement of over two percentage points

across the business.

The focus of the business continues to be one of maintaining

a strong global lifestyle brand, driving substantial franchising

and licensing revenues worldwide. Our focus in the UK

remains multi-channel retailing through stores, Mail Order,

E-Commerce and our Design Service.

Overall costs have reduced by 12.0% to £96.2 million.

Included within this number, the rationalisation of our

Continental European operations resulted in an overhead

reduction of £6.9 million. The balance of the saving was

due to changes in the UK store portfolio and other UK

overhead savings. We will continue to focus on driving

greater efficiencies in all areas of the business, particularly

on all aspects of the supply chain.

UK retail markets continue to be competitive, as evidenced

by our current trading performance. However, the actions

taken to reduce costs, improve margin rate, increase

productivity and realign our store portfolio have put the

business in a stronger position to compete in our chosen

markets.

Product

Traditionally, the UK business has been split between

Home Furnishings and Fashion. In future more emphasis

will be placed on all of the various product categories

within the business. This decision reflects a truer picture

of our business where, for example, Furniture and Home

Accessories individually account for more turnover than

the Fashion category. During the year ended 29 January

2005, sales of our Fashion category declined as a percentage

of our total UK sales from 30% to 22%. This trend, in the

UK, is expected to continue in the current year as we

position the Fashion category as a niche brand aligned with

our other categories. In addition, Fashion remains a vital

part of our global franchise offer.

Decorating

The Decorating product category includes made-to-

measure curtains, fabric, paint and wall coverings. This

category represents approximately 21% of total UK retail

sales. Capitalising on the trend for decorative wallpapers

we have seen improved demand in this area. Furthermore

to improve customer co-ordination we have rolled out a

new integrated display technique in store to complement

our fabric range.

6

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8

Chief Executive Officer’s Statementcontinued

Home Accessories

The Home Accessories product category includes lighting,

gifts, bed linen, rugs, throws and cushions. This category

represents approximately 25% of total UK retail sales. We

have seen continued growth in bedspreads, which

accounted for a quarter of bed linen sales in

Autumn/Winter 2004. Children’s rooms experienced a

successful year with improved sales and margin growth on

the previous year. There has been continued success in the

sales of more fashionable glass lighting pieces. The launch

of our new toiletries range has also surpassed our

expectations.

Furniture

The Furniture product category includes upholstered

furniture, beds and cabinet furniture. This category

represents approximately 32% of total UK retail sales.

There has been continued innovation and success in our

furniture ranges. The best example of this has been the

development of the Venetian style mirrored furniture

ranges.

Fashion

This category represents approximately 22% of total UK

retail sales. Last year we announced our intention to

reposition our Fashion offering as a niche clothing brand.

This change of direction was well received by the press

and franchisees, but the response from our existing UK

customers was mixed. As we continue to reduce our

Fashion footage we expect further reductions in our UK

Fashion sales. As a consequence, we expect Fashion to

represent closer to 14% of our total UK sales mix by

January 2006. Fashion remains an important part of the

Laura Ashley product offering, not only because it still

represents a key element of our lifestyle brand, but also

because it still represents approximately 70% of our

overseas franchised sales.

UK Operations

Retail Stores

At the year ended 29 January 2005, the portfolio in the UK

comprised 184 stores. We have three main store types:

85 mixed product stores (selling all product categories),

45 Home stores (selling the full range of Home products)

and 54 Home concession stores.

During the year, significant changes were made to the UK

store portfolio, to drive efficiency by identifying more cost

effective locations and to focus on our changing product

category mix. This has resulted in the opening of five new

Home stores and one mixed product store. Additionally,

eight mixed product stores have been converted to Home

stores.

As part of the process of realigning our property portfolio,

22 stores were closed during the year. It is our aim to add

up to 100,000 square feet of selling space over the next two

years including opening approximately 15 new stores over

the next 12 months. Home stores tend to generate much

higher rates of return on sales compared to our other store

types. We believe that there are further opportunities to

grow the number of these stores over the next few years.

Mail Order and E-Commerce

Sales through our Mail Order and E-Commerce channels

now represent 11% of our total UK retail business (2004:

10%) and are a vital part of our multi-channel retail

strategy. Total Mail Order and E-Commerce sales were

£23.6 million, down 5.2% on last year (down 3.2% on an

adjusted 52 week basis). This was in part caused by the

decision to withdraw from Mail Order Fashion to focus on

Home Furnishings. In November 2004, we were pleased

to receive the ECMOD (European Catalogue Mail Order

Days) award in recognition of sales growth and quality of

our Home catalogues for the second year running. Fashion

product continues to be sold via our website:

www.lauraashley.com.

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9

Growth in E-Commerce sales continues at 19.6%, in

addition to driving sales through our stores. We now have

240,000 registered E-Commerce customers (2004:

150,000) and we continue to invest in the development of

this important distribution channel.

Manufacturing

In October 2004, we announced a proposal to consolidate

manufacturing operations in one purpose built modernised

and efficient site at Newtown, Powys. This consolidation

plan is progressing well and is close to completion.

International Operations

Franchising

In the year ended 29 January 2005, franchise sales

increased by 13.8% to £26.0 million driven both by new

and existing franchise partners. The gross retail sales of our

franchise partners would be at least £75 million,

demonstrating the strength of Laura Ashley as a global

brand. Fashion represents approximately 70% of total

franchise sales. There are currently 200 franchised stores in

28 countries worldwide. During 2005 we will see the first

Laura Ashley store open in mainland China.

Licensing

In the year ended 29 January 2005, Licensing income

increased by 15.9% to £4.2 million. We have seen

increasing revenues from North America and from specific

licensees in Asia and Europe. We have signed deals in new

product categories such as childrenswear and continue to

develop further Licensing opportunities globally.

Continental Europe

Our exit from our loss-making retail operations in

Continental Europe was completed at the end of January

2004. In the two years to January 2004, we closed 45 stores

and secured franchise agreements for a further 17 stores

across Continental Europe. We have retained two directly

operated stores in Paris.

Current trading

Like-for-like trading in the 10 weeks to 19 April 2005

shows UK retail sales down 13.9% on last year,

predominantly due to our decision to realign the Fashion

offering.

Our focus for 2005 will continue to be margin

improvement and cost management rather than top line

sales growth. Retail conditions in the UK remain difficult.

Our challenge is to enhance further the product offering in

this increasingly competitive market place.

Lillian Tan Lian Tee Chief Executive Officer

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11

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Financial Summary2005 2004

£m £m

Turnover 238.9 283.5Profit on ordinary activitiesbefore taxation 4.8 3.1Earnings per share 0.47p 0.28pStock 34.9 41.8Provisions 0.2 1.1Capital expenditure 3.8 2.4Net funds 9.8 6.8

Results

The profit before tax for the 52 weeks to 29 January 2005

was £4.8 million compared to a profit before tax of £3.1

million for the 53 weeks to 31 January 2004. Included

within the reported £4.8 million profit is £1.0 million

profit relating to the disposal of leasehold property

interests (2004: £1.0 million). Total sales excluding

Continental Europe for the year ended 29 January 2005

were down 11.4% to £237.5 million. Total gross profit for

the Group was £11.6 million lower than the previous

financial year. Operating expenses were also lower by

£13.1million.

Store Portfolio

Changes to the Group’s store portfolio during the year

were as follows:

Number of storesUK Continental Total

Europe

January 2004 200 3 203

Opened 6 - 6

Closed (22) (1) (23)

January 2005 184 2 186

Net square footage (‘000s)UK Continental Total

Europe

January 2004 575 6 581

Opened 20 - 20

Space reduction (5) - (5)

Closed (58) (2) (60)

January 2005 532 4 536

Turnover and Operating Results

Turnover for the Group totalled £238.9 million, compared

to £283.5 million in the previous financial year. Total retail

sales including Mail Order and E-Commerce were £206.5

million. UK retail store sales were £339 per square foot

compared to £374 per square foot for the 53 weeks to 31

January 2004. Non-retail sales amounted to £32.4 million

and were higher than the previous year by 12.5%, mainly

due to increased sales to franchise partners, particularly in

Continental Europe.

Total retail turnover for the UK and Ireland operations

amounted to £205.1 million, a decrease of 14.3% over the

previous year. Store turnover totalled £181.5 million, a

decrease of 15.4%. Like-for-like store sales decreased by

10.2% (a decrease of 8.5% after adjusting the previous year

from 53 to 52 weeks). Mail Order and E-Commerce sales

were below the previous year by 5.2%.

The rationalisation of stores in Continental Europe is now

complete. The remaining two stores in Paris generated a

turnover of £1.4 million. For the year ended 31 January

2004, when owned stores in Continental Europe reduced

from 56 stores to three stores, turnover was £15.3 million.

As shown in note 2 to the financial statements, operating

expenses amounted to £96.2 million, £13.1 million or 12%

below the previous year. Operating expenses represented

40% of total Group sales compared to 39% the previous

year.

Taxation

The taxation charge for the year comprises UK taxation

on current year taxable profits, adjustments in respect of

certain prior year tax liabilities and relief for overseas taxes

paid. In addition, the charge includes overseas taxes on the

profits of dual resident subsidiary companies and the

Group’s share of the taxation charge on the profit of the

associated company, Laura Ashley Japan Co. Ltd.

Operating and Financial Review

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Net Assets

Net assets of the Group at 29 January 2005 amounted to

£64.3 million, an increase of £3.4 million compared to the

previous year. Provisions for liabilities and charges

reduced by £0.9 million to £0.2 million, mainly as a result

of the utilisation of the European restructuring provision.

Included within debtors are deferred legal fees of £1.8

million and royalties due of £0.7 million, where

recoverability is contingent upon the successful outcome

of ongoing arbitration. The Board is reasonably certain of

recovering at least this amount upon conclusion of the

arbitration process.

Cash and Banking

Net cash flow before financing and investments, is shown

below:

2005 2004£m £m

Cash inflow from operating activities 7.2 10.6Net capital expenditure (2.2) (0.7)Taxation, interest and dividends (1.0) (1.4)Cash balances disposed of withsubsidiaries - (1.5)Net cash inflow 4.0 7.0

The Group’s cash balances increased during the year as

follows:2005 2004

£m £m

Opening net funds/(debt) 6.8 (8.5)Total cash inflow as above 4.0 7.0Issue of ordinary share capital - 9.0Expenses of share issue - (0.8)Exchange differences - 0.1New finance leases (1.0) -Closing net funds 9.8 6.8

Treasury

The Group’s treasury strategy is controlled through a

Treasury Committee that meets regularly and is chaired

by the Chief Executive Officer. The Treasury function

arranges funding for the Group and provides a cash

balance service to all operating units. The overall objective

is to control interest costs and minimise foreign exchange

exposure. All surplus cash is invested within the banking

syndicate to achieve maximum interest income.

International Financial Reporting Standards

International Financial Reporting Standards (IFRS)

become mandatory for the consolidated financial

statements reported by all EU listed companies in respect

of accounting periods commencing on or after 1 January

2005. A programme has commenced to assess the areas of

greatest impact for the Group and work is underway to

ensure compliance with IFRS for the 2006 financial year,

as well as restatement of the 2005 comparatives. The

initial assessment has identified that changes to the

presentation of the Accounts and changes in accounting

for deferred tax are likely to have the greatest relevance for

the Group.

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14


The Directors present their Annual Report and the

audited financial statements for the 52 weeks ended

29 January 2005.

Principal activities

The principal activities of the Group are the design,

manufacture, sourcing, distribution and sale of clothing,

accessories and home furnishings. Operating companies

are situated in the United Kingdom, Ireland and

Continental Europe.

Results for the year

The Group’s results are shown in the Profit and Loss

Account on page 33. A full review of the Group’s

operations is included within the Chief Executive

Officer’s Statement and the Operating and Financial

Review. The profit for the year before tax and exceptional

items was £4.8 million (2004: profit for the year before tax

and exceptional items of £3.1 million).

Dividend

No dividend will be paid. (2004: nil pence per share).

Future developments

The Chief Executive Officer’s Statement details the

proposed developments intended for the Group in the

foreseeable future.

Directors

The names of the Directors of the Company are shown

on the inside front cover. Mr Roger Bambrough, Ms Sally

Kealey and Mr Andrew Khoo were appointed non-

Executive Directors on 15 July 2004, 28 October 2004 and

27 April 2005 respectively. Mr John Thornton resigned as

non-Executive Director on 22 September 2004. Ms

Rebecca Navarednam resigned as Joint Chief Executive

Officer on 1 January 2005 and Ms Ainum Mohd-Saaid

resigned as Joint Chief Executive Officer with effect on

1 February 2005. On 5 January 2005, Ms Lillian Tan was

appointed Joint Chief Executive Officer, and she was

subsequently appointed as Chief Executive Officer on

1 February 2005. Mr Nick Ashley decided not to seek

re-election as a non-Executive Director at the Annual

General Meeting (AGM) in 2004. There were no other

changes to the Board during the financial year.

In accordance with the Company’s Articles of Association,

Mr Roger Bambrough, Ms Sally Kealey and Mr Andrew

Khoo will be offering themselves for re-election at the

forthcoming AGM.

In accordance with the Company’s Articles of Association,

Tan Sri Dr Khoo Kay Peng and Ms Sally Cheong will

retire by rotation and, being eligible, are offering

themselves for re-election at the AGM. Details of letters

of appointment, upon which the services of non-

Executive Directors are based, are set out on page 24.

Details of the Directors are as follows:

Tan Sri Dr Khoo Kay Peng, 66, 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, the United States of America (“USA”) and the

United Kingdom (“UK”). He is also the Chairman of

Corus Hotels plc, UK and Morning Star Resources

Limited, Hong Kong. Tan Sri Dr Khoo is a director of

SCMP Group Limited (South China Morning Post) and

The Bank of East Asia Limited in Hong Kong. Previously,

Tan Sri Dr Khoo had served as the Chairman of the

Malaysian Tourist Development Corporation (a

Government Agency), the Vice Chairman of Malayan

Banking Berhad (Maybank) and a Trustee of the National

Welfare Foundation. He is currently a Trustee of the

Malaysian Humanitarian Foundation and Regent

University, Virginia, USA. Tan Sri Dr Khoo is also a board

member of Northwest University, Seattle, USA, as well 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 and Remuneration Committees.

Directors’ Report

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Mr David Ralph Walton Masters, 61, non-Executive

Deputy Chairman of the Company, joined the Board in

March 1998. He was appointed Executive Deputy

Chairman of Corus Hotels plc (formerly known as Corus

& Regal Hotels plc) on 1 April 1999 and resigned his

position in April 2002. He is the Executive Chairman of

HCM Asset Management Limited and a director of

InvestSelect plc. Mr Walton Masters was formerly a

Managing Partner at Phillips & Drew, in charge of the

International Department, Chief Executive of County

NatWest Securities, Executive Chairman of Coast

Securities and Managing Director of Morning Star

Investment Management Limited. Mr Walton Masters is

Chairman of the Audit Committee and a member of the

Remuneration Committee.

Ms Sally Cheong Siew Mooi, 52, non-Executive

Director, joined as a non-Executive Director in September

1999 and is a law graduate of the University of Malaya.

She was called to the Malaysian Bar in 1978. After a brief

period of law practice, she joined the banking sector and

was Company Secretary of Pacific Bank Berhad and

subsequently, Legal Adviser of Development &

Commercial Bank Berhad (now RHB Bank). During the

period 1988 to 1997 she published nine books on

Malaysian companies listed on the Kuala Lumpur Stock

Exchange. Ms Cheong is a member of the Audit

Committee and the Nomination Committee.

Mr Motoya Okada, 53, non-Executive Director, joined

the Board in June 1998, having previously been an

alternate Director to his father, Mr Takuya Okada, since

August 1992. Mr Okada has been President of Aeon Co.

Limited (formerly Jusco Co. Limited), the Japanese

retailer, since 1997 and has held a number of positions

with Aeon since joining that Company in 1979. He is also

Chairman of Laura Ashley Japan Co. Ltd. Mr Okada is a

member of the Audit and Remuneration Committees.

Ms Lillian Tan Lian Tee, 51, was appointed as a non-

Executive Director on 21 April 2004. Prior to this

appointment, she was an alternate Director to Ms Sally

Cheong since July 2001. Ms Tan holds a Masters Degree

in Business Administration from the University of

Western Sydney, Australia. She is a Fellow of the

Chartered Insurance Institute (UK) and also a Fellow of

the Malaysian Insurance Institute. She served the

insurance industry from 1977 to 2000 and was the Chief

Executive Officer of MUI Continental Insurance Berhad

before joining as Managing Director of the Management

Services Division in the MUI Group in 2000. From 2002

to 2004 she was the Managing Director and Chief

Executive Officer of Metrojaya Berhad, one of the most

successful retailers in Malaysia. She was appointed Joint

Chief Executive Officer on 5 January 2005 prior to being

appointed Chief Executive Officer of Laura Ashley

Holdings plc on 1 February 2005. She also sits on the

boards of Laura Ashley Japan Co. Ltd, London Vista

Hotels Limited (UK), Morning Star Resources Limited,

Hong Kong and several other Malaysian companies.

Mr Roger Bambrough, 68, a chartered accountant,

joined the Company as a non-Executive Director on 15

July 2004. He is currently a non-Executive Director of

Corus Hotels plc. He previously held a number of

directorships within the Blue Circle and YTL Groups,

both in Malaysia. His earlier career was with Peat

Marwick Mitchell (now KPMG) and he has served in a

number of senior finance and audit positions in the UK,

including as the Financial Controller of Blue Circle

Overseas and Group Controller of Audit and Business

Services in the Blue Circle Group. Mr Bambrough was

previously an advisor to the Overseas Development

Administration, the aid agency of the Foreign &

Commonwealth Office and he has also been a director of

the Commonwealth Partnership for Technology

Management. Mr Bambrough has played an active role in

forging relationships between Malaysia and the United

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Kingdom through his participation in The British

Malaysian Society. He is a member of the Audit

Committee and the Nomination Committee.

Ms Sally Kealey, 46, joined the Company as a non-

Executive Director on 28 October 2004. Ms Kealey

previously served as an executive of Laura Ashley Limited

for a period of 13 years until 1996 and has held the post of

Home Furnishings Design Director. During her time

with the Company, she worked very closely with the late

Laura Ashley. Ms Kealey is a member of the Nomination

Committee and the Remuneration Committee.

Mr Andrew Khoo, 32, was appointed non-Executive

Director of the Company on 27 April 2005. Mr Khoo,

who holds an MBA from Seattle Pacific University, is a

law graduate from Cambridge University and a Barrister-

at-Law called to Lincoln’s Inn in 2002. He was previously

the general manager of County Hotel Epping Forest, and

later worked in Corus Hotels Ltd as special assistant to the

Chief Executive Officer. In 2003, Mr Khoo was Director

of Corporate Affairs in Laura Ashley Holdings plc.

Mr Khoo is currently President and Chief Executive

Officer of Cambridge Alliance Developments Ltd in

Canada, a property development company primarily

engaged in the acquisition, development, construction and

sale of residential and commercial property. Mr Khoo is

currently on the board of directors of Laura Ashley

(North America) Inc., Network Foods International

Limited in Singapore, Network Foods Limited and

Morningstar Holdings Limited, both in Australia.

Directors’ interests

Save as disclosed in Note 29 to the Accounts and

Executive Directors’ service contracts, none of the

Directors has, or has had during the financial year, a

material interest in any contract of significance relating to

the business of the Company or its subsidiaries.

The table on page 27, which shows the Directors’

interests in the shares of the Company, forms part of this

Report.

Employees

The Group believes in the policy of equal opportunities.

Recruitment and promotion are undertaken on the basis

of merit regardless of gender, race, age, marital status,

sexual orientation, religion, nationality, colour or

disability. If an employee becomes disabled during the

course of their employment, adjustments are made where

possible to enable such employee to carry on working

despite their disability.

The Group is committed towards encouraging learning

and development of employees at all levels. As such,

wherever possible, the Group attempts to assist employees

in achieving nationally recognised qualifications. Every

effort is made to offer satisfying career progression for all

those demonstrating the skills and capabilities required.

It is Group policy that there should be effective

communication with all employees.

Charitable and political donations

The Group made donations amounting to the sum of

£6,180 for charitable purposes in the United Kingdom

during the year (2004: £30,000). No contributions were

made for political purposes.

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Directors’ Reportcontinued

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Significant interests

Except as specified below, the Directors are not aware of

any interest amounting to 3% or more of the nominal

value of the issued share capital of the Company.

As at 27 April 2005Percentage

Number of of issuedOrdinary shares share capital

MUI Asia Limited 255,938,185 34.31%

Bonham Industries Limited* 181,445,822 24.32%

GAM London Limited 47,532,570 6.37%

Aeon Co. Ltd 35,220,606 4.72%

* KKP Holdings Sdn. Bhd., Soo Lay Holdings Sdn. Bhd. and

Tan Sri Dr Khoo Kay Peng are each interested in these shares.

Auditors

A resolution proposing the reappointment of Chantrey

Vellacott DFK (or their successors in business) as Auditors

to the Company and to authorise the Directors to

determine their remuneration will be put to the AGM.

Report on Corporate Governance

Compliance

The Board endorses The Combined Code - Principles of

Good Governance and Code of Best Practice (the ‘Code’).

During the financial year the Company has complied with

the provisions set out in the Code, except to the extent

disclosed below.

The Board

The Board is composed of the Chairman, six non-

Executive Directors and one Executive Director, who is

the Chief Executive Officer of the Company. The

Company is fortunate in having the services of its non-

Executive Directors, who make up over two-thirds of the

Board and who provide an important contribution to the

strategic development of the Group.

The Board recognises Mr David Walton Masters as the

senior Director of the Board, to whom concerns can be

conveyed.

The Board meets regularly, at least six times a year, but

more frequently when business requires, and has full and

timely access to all relevant information to enable it to

carry out its duties. The Chairman encourages full

attendance at Board and committee meetings.

A formal schedule of matters specifically reserved for the

Board is in place and is incorporated into the Company’s

Manual on Corporate Governance, together with details

of the procedures that Directors may follow for taking

independent professional advice, at the Company’s

expense, if necessary. The Board considers matters

relating to the making of broad strategic and policy

decisions. Policies and strategies are devised for the areas

of operations, finance, ethics, environment, health and

safety. More detailed considerations to do with the

running of the day-to-day business of the Company is

delegated to the management team under the leadership

of the Chief Executive Officer. The Board governs the

management team by regularly monitoring the

implementation of strategy and policy decisions to ensure

that the running of the Company is at all times in line

with Company objectives.

The Board has regular contact with the Company

Secretary for his services and advice. The Secretary is

charged with ensuring that Board procedures are followed

and that applicable rules and regulations are complied

with. The appointment and removal of the Secretary is a

matter reserved for the Board. The Board also has access

to professional advice within the Company and externally.

This advice is sought via the Secretary. No advice has

been sought for the financial year under review.

The Chairman’s main function is to manage the Board to

ensure that the Company is run in the best interests of its

shareholders. It is also the Chairman’s responsibility to

ensure the Board’s integrity and effectiveness.

17


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18



Directors’ AttendanceAudit Committee Remuneration Nominations

Board Meetings Meetings Committee Meetings Committee MeetingsNo. of No. of No. of No. of No. of No. of No. of No. of

Meetings Meetings Meetings Meetings Meetings Meetings Meetings MeetingsPossible Attended Possible Attended Possible Attended Possible Attended

Tan Sri Dr Khoo Kay Peng 10 10 - - 4 4 0 0Mr David Walton Masters 10 9 5 5 4 4 - -Mr Motoya Okada/Mr Yoichi Kimura (Alternate) 10 2 5 2 4 1 - -Ms Lillian Tan 10 10 - - - - - -Ms Sally Cheong 10 7 5 4 - - - -Mr Roger Bambrough 7 7 2 2 - - 0 0Ms Sally Kealey 4 4 - - - - 0 0Ms Ainum Mohd-Saaid 10 9 - - - - - -Ms Rebecca Navarednam(1) 8 8 - - - - - -Mr John Thornton(2) 5 1 - - 2 0 0 0Mr Nick Ashley(3) 2 2 2 1 - - 0 0

(1) Ms Navarednam resigned on 1 January 2005.(2) Mr Thornton resigned on 22 September 2004.(3) Mr Ashley retired on 17 June 2004.

Board Independence

As the Company is deemed to be a smaller company

under the provisions of the Combined Code, the

applicable requirement is that there are at least two

independent non-Executive Directors on the Board. The

Board is of the view that Mr David Walton Masters, Mr

Roger Bambrough and Ms Sally Kealey are independent

Directors in character and judgement and accordingly are

able to provide an independent view on matters discussed

and decisions taken at Board level.

Mr Motoya Okada is a representative of Aeon Co.

Limited, a major shareholder in the Company.

As part of a subscription exercise that was undertaken in

May 1998, a Continuing Relationship Agreement was

entered into between Laura Ashley Holdings, MUI Asia

Limited 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, Ms Sally Cheong and

Mr Andrew Khoo are the Directors appointed in

fulfilment of this right.

Directors’ elections

Any new Director appointed during the year is required,

under the provisions of the Company’s Articles of

Association 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 their previous re-election

and this will usually mean that each Director retires at

least every three years, although there is no absolute

requirement to this effect. In order to fully comply with

the Code, it is the Company’s policy that every Director

should submit themselves for re-election at least every

three years.

The Directors who will be seeking re-election at the

AGM this year have been 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.

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Evaluation

During the course of the year, the Chairman carried out

periodic informal evaluations on the Directors. The

Company is in the process of finalising a formal review

procedure to assess the Board’s performance in order to

ensure its effectiveness and to identify potential areas for

improvement.

Board Committees

The Board has delegated specific responsibilities to the

Audit, Nomination and Remuneration Committees. The

Board considers that all the members of each Committee

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 being reviewed and are expected to be

published on the Company’s website upon completion of

the reviews.

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

ultimately made to the full board, which considers them

before any appointment is made.

The members of the Nomination Committee during the

year were Mr John Thornton (Chairman), Tan Sri Dr

Khoo Kay Peng, Mr Nick Ashley, Mr Roger Bambrough

and Ms Sally Kealey. The appointments of Mr

Bambrough and Ms Kealey to the Board were not made

with the Committee’s recommendations by virtue of the

fact that the Committee was unable to function upon the

retirement and resignation of Mr Ashley and Mr

Thornton respectively. As such, the appointments of both

Directors were considered by the full Board at the

recommendation of the Chairman. In selecting potential

candidates, the Chairman considered the qualifications,

experience and skills of each candidate before

recommending them to the Board. The Committee is

now able to function again following the appointments of

Mr Bambrough and Ms Kealey as members. Following

the resignation of Mr Thornton, Tan Sri Dr Khoo Kay

Peng was appointed as chairman of the Committee. Ms

Sally Cheong was appointed as a member of the

Committee on 27 April 2005.

Audit Committee

The Audit Committee meets at least three times a year

with both the Group internal auditor and the external

auditors present as required.

The members of the Audit Committee during the year

were Mr David Walton Masters (Chairman), Mr Motoya

Okada, Ms Sally Cheong, Mr Nick Ashley and Mr Roger

Bambrough. Mr Bambrough was appointed as a

replacement to Mr Ashley who retired at the last AGM

held on 17 June 2004.

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

financial statements of the Company is duly monitored

which involves the review of all financial statements

which relate to the Company’s performance. It assists the

Board in ascertaining that the Group’s financial systems

provide accurate information on its financial position 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

Company’s internal controls. A whistle-blowing policy

was approved and implemented during the course of the

year and has been communicated to all Company

employees. The Committee has regular dialogues with the

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Head of Internal Audit and is involved in the assessment

and implementation of any internal audit plan. The

Committee meets with external auditors for the purpose

of discussing matters relating to financial reporting and

internal controls of the Company. It also assists the Board

in ensuring that appropriate accounting policies, internal

controls and compliance procedures are in place and in

assessing the cost effectiveness, independence and

objectiveness of the auditors.

The Audit Committee Chairman reports verbally on the

main conclusions 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.

Remuneration Committee

The Remuneration Committee meets at least once a year

and is responsible for advising on remuneration policy for

Directors. The Remuneration Committee considers any

remuneration package before it is offered to a potential

appointee. Members of the Remuneration Committee

during the year were Mr John Thornton (Chairman), Tan

Sri Dr Khoo Kay Peng, Mr David Walton Masters and Mr

Motoya Okada. Mr Thornton resigned from the

Committee on 22 September 2004. Ms Sally Kealey was

appointed as a member of the Committee on 27 April 2005.

Tan Sri Dr Khoo Kay Peng is chairman of this Committee.

Executive Directors abstain from any discussions or

voting at full Board Meeting on Remuneration

Committee recommendations where the

recommendations have a direct bearing on their own

remuneration package. The details of each Director’s

individual package are fixed by the Committee in line

with the policy adapted by the full Board.

Details of the level and composition of the Directors’

remuneration are disclosed in the Remuneration Report

on pages 24 to 27.

Executive Committee

The Executive Committee was established as a

Committee of the Board under the chairmanship of Tan

Sri Dr Khoo Kay Peng. The Committee has its terms of

reference and meets informally on a regular basis. The

Committee considers issues surrounding the trading

performance of the Company, the financial position of the

Company, including its current cash flow position and

future requirements, licensing, franchising and product

development, matters affecting the operation of various

departments and specific issues and initiatives as requested

by the Board or as the Committee deems necessary.

The current members of the Committee are Tan Sri Dr

Khoo Kay Peng, Ms Lillian Tan, Mr Mike Kingsbury

(Chief Operating Officer) and Mr David Cook.

Relations with shareholders

The Company seeks to maintain good communications

with shareholders. The Laura Ashley website provides up-

to-date information on the Group. The Company

endeavours to despatch the notice of AGM at least 20

working days before the meeting.

The Board considers the AGM to be an opportunity to

meet and communicate with private 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. All 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 Company’s AGM,

shareholders are given the opportunity to express their

views and ask questions pertaining to the Company and

its businesses.

20



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Internal Control

The Board is responsible for maintaining a sound system

of internal control to safeguard shareholders’ investment

and the Company’s assets. The Company audits and

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

between 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

■ 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 Company. 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 are in accordance with the Guidance for Directors

on Internal Control (Turnbull).

Health & Safety

The Group policies with regard to health & safety

continue to be monitored and updated to meet the

changing business needs and new legislation as it is

introduced.

The Accident Monitoring Systems introduced last year

have proved an effective tool in managing this area and a

reduction in accident numbers has been achieved this year.

Environment

The continued emphasis on environmental concerns

throughout the Company was enforced during the year

with the updating of the Group’s Environmental Policy.

All divisions are being encouraged to adopt

Environmental Management Systems.

The maintenance of ISO 14001 has been suspended this

year due to the relocation of a manufacturing process.

Once the new management and teams are fully compliant

the system will be re-introduced into the workplace.

Ethics

The Company is committed to the practice of Ethical

Supply Chains. The principles of Ethical Supply Chains

are accordingly reflected in our relationships with

suppliers and are embodied in our 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. Work

in this area is on-going and the Company continues to

take steps to ensure that developments within these areas

are closely monitored and implemented where necessary.

FTSE4Good

The Group remains included in the FTSE 4 Good UK

benchmark index for socially responsible investment. We

have also responded to various ethical investment

companies during the year.

Risk Management

The internal risk management function has day-to-day

links across the Group and advises on all relevant issues

with contacts to internal departments and outside

regulatory and advisory bodies.

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The department has access to external support where

required, in order to ensure that standards are maintained

and any issues raised are discussed and, where necessary,

implemented.

Business Continuity

The Business Continuity Plan is continuing to be updated

and implemented throughout the Group. Regular

auditing of the plans on a site-by-site basis is undertaken

to enable management teams to be kept up to date and

aware of changes that will impact on their area of

operation.

Communications

The Company places a great deal of importance on

communication with its shareholders. The full Report and

Accounts are available to shareholders on request and to

other parties who have an interest in the Group’s

performance. Shareholders also have direct access to the

Company via its free shareholder information telephone

service.

All shareholders have the opportunity to put questions at

the Company’s AGM.

Going Concern

The Board is of the opinion that the Group will have

sufficient funding to meet its working capital needs. As a

result, the Directors consider it appropriate to prepare the

financial statements on a going concern basis.

Creditor Payment Policy

The Group’s policy on payment practices is as follows:

(1) terms of payment will be agreed 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

an individual transaction basis; and

(4) to comply with payment terms agreed for existing and

new accounts when the Group is satisfied that the

supplier has provided goods or services in accordance

with the agreed terms. Copies of the Group’s standard

payment terms, incorporated into its standard trading

terms and conditions, may be obtained from the

Registered Office during normal working hours.

The Group’s trade creditor days figure at 29 January 2005

(based on the ratio of the aggregate of the amounts owed

to trade creditors at such date to the aggregate of the

amounts invoiced by suppliers during the financial year)

was equivalent to 31 days (2004: 33 days).

Directors’ Responsibilities

The Directors are required by company law to prepare

financial statements for each financial year which 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 recognised gains or losses and cash

flows of the Group for that period.

The Directors confirm that suitable accounting policies

have been used and applied consistently and that

reasonable and prudent judgments and estimates have

been made in the preparation of the financial statements

for the 52 weeks ended 29 January 2005.

The Directors also confirm that applicable accounting

standards have been followed.

The Directors are responsible for keeping proper

accounting records which disclose with reasonable

accuracy at any time the financial position of the

Company and to enable them to ensure that the financial

statements comply with the Companies Act 1985. 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.

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Authority to allot shares

The Companies Act 1985 (the ‘Act’) provides that the

directors of a company may not allot shares unless

empowered to do so by the shareholders. The Board is

proposing the adoption of Resolution 9 as special business

in the Notice of the 2005 Annual General Meeting set out

on pages 53 to 55, so as to give the Directors

unconditional authority to allot ordinary shares up to an

aggregate nominal value of £12,309,583.57, representing

33% of the issued share capital at 27 April 2005. The

Directors have no present intention to issue any such

ordinary shares.

The Act also provides that, unless shareholders otherwise

consent, new shares allotted for cash must be offered to

shareholders in proportion to their existing holdings.

Resolution 10, to be proposed as special business,

authorises the Directors to allot equity securities for cash

otherwise than on a pro rata basis up to an aggregate

nominal value of £3,730,176.84, equal to 10% of the

nominal value of the issued share capital of the Company

at 27 April 2005. Resolution 10 also authorises the

Directors, in the case of rights issues, open offers or

otherwise to ordinary shareholders, to allot shares where

necessary other than strictly in accordance with the pre-

emptive provisions set out in the Act - for example, where

shareholders are resident in foreign jurisdictions which

prohibit the shares being offered to them.

Similar resolutions to those described above were passed

at the last AGM. If these Resolutions are adopted the

powers conferred by them will continue until the

conclusion of the next AGM or 15 months from the date

of passing the Resolutions, whichever is the earlier.

Authority to purchase own shares

The Notice of the Annual General Meeting 2005 also

includes Resolution 11 to be proposed as special business,

authorising the Directors to make market purchases of the

ordinary shares in the Company, up to a maximum of

15% of the issued share capital of the Company as at

27 April 2005 in accordance with Section 166 of the Act.

This power will only be exercised if and when, in the

light of market conditions prevailing at the time, the

Directors are of the belief that such purchases would

increase earnings per share and would be for the benefit

of the shareholders in general. The Company has no

present intention to purchase its own shares.

Pursuant to the Act, the Company has the choice of either

cancelling repurchased shares or holding them as treasury

shares (or both). Shares held in treasury may be

subsequently sold for cash, but all rights attaching to them

including voting rights and the right to receive dividends

are suspended while they are held in treasury.

If this Resolution is adopted, the powers conferred by it

will continue until the conclusion of the next AGM or

15 months from the date of passing the Resolution,

whichever is the earlier.

Action to be taken

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 the Form 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 Company Registrars

by 2.00 p.m on 14 June 2005. 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

David R Cook ACA Secretary

27 April 2005

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Remuneration Committee

The remuneration of all Directors is determined by the

Remuneration Committee. The membership of the

Committee is comprised entirely of non-Executive

Directors. The current members of the Remuneration

Committee are Tan Sri Dr Khoo Kay Peng, Mr David

Walton Masters, Mr Motoya Okada and Ms Sally Kealey.

Policy on Remuneration of Directors

The Remuneration Committee sets the overall policy on

remuneration and other terms of employment of

Directors. 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.

Remuneration for non-Executive Directors consists of

fees for their services in connection with Board and

Committee meetings. These fees are agreed by the Board

without the involvement of the non-Executives Directors

concerned. Non-Executive Directors do not participate in

any Group pension or share option schemes.

The Remuneration Committee takes account of

remuneration surveys and benefit information in the

marketplace when assessing pay and benefits within the

Group.

The main components

The main remuneration components are:

(i) Basic salary or fees

Basic 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 bonus

The Company did not consider it appropriate to have a

bonus scheme in place for the financial year on which it is

reporting.

(iii) Share options

No options were granted to any Directors during the

financial year.

Company policy on contracts of service

No Executive Director of the Company has a notice

period in excess of 12 months under the terms of his

service contract. There are no Executive Directors’ service

contracts containing provisions for pre-determined

compensation on termination which exceeds one year’s

salary and benefits in kind. Non-Executive Directors do

not have service contracts with the Company, but the

current non-Executive Directors generally have letters of

appointment for either a period of two years or three

years.

Expiry date

Tan Sri Dr Khoo Kay Peng February 2008

Ms Sally Cheong September 2006

Mr David Walton Masters May 2007

Mr Motoya Okada June 2007

Mr Roger Bambrough July 2006

Ms Sally Kealey October 2006

Mr Andrew Khoo April 2008

All the Directors are subject to retirement by rotation.

Company policy on external appointments

The 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 experience and knowledge, which will

benefit the Group. Executive Directors are, therefore,

subject to approval of the Company’s Board, allowed to

accept non-executive appointments, as long as these are

not with competing companies and are not likely to lead

to conflicts of interest. Executive Directors are allowed to

retain the fees paid.

24


Remuneration Report

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25


Company pensions policy regarding Executive

Directors

Executive Directors were previously offered membership

of the Laura Ashley Retirement Benefits Scheme

(‘LARBS’). LARBS is a funded, Inland Revenue approved,

final salary, occupational pension scheme.

Currently, Executive Directors of the Company receive

pension contributions which are paid into private pension

schemes nominated by the Executive Directors. No

Directors are members of LARBS.

Taxable benefits

Executive Directors are entitled to a range of taxable

benefits which include the provision of a company car and

payment of its operating expenses (or a cash alternative),

housing allowance and private medical insurance schemes.

The Group provides all employees, including Directors,

with a discount on merchandise sold through Laura

Ashley retail outlets.

Performance Graph

The following graph shows the Company’s performance, measured by total shareholder return, compared with the

performance of the FTSE General Retail Index for the period 1 February 1999 to 29 January 2005.

The Remuneration Committee has selected the above index, as it is most relevant for a company of Laura Ashley’s

size and sector.

2. Front contd [91484] 4/5/05 21:33 Page 25

Audit

The details of the Directors’ shareholding interests and remuneration in the financial year ended 29 January 2005 as

disclosed on pages 26 and 27 have been audited by the Group’s external auditors.

Directors’ emoluments

The figures below represent emoluments earned as Directors during the relevant financial year and relate to the period

of each Director’s membership of the Board. Such emoluments are normally paid in the same financial year. Benefits

incorporate all benefits assessable to tax arising from employment by the Company.

Payments to DefinedBenefit and Defined

ContributionPension Schemes

Salary Benefits Bonus Other 2005 2004 2005 2004& Fees Total Total

£000 £000 £000 £000 £000 £000 £000 £000

Executive DirectorsMs Ainum Mohd-Saaid 125 24 - 48(1) 197 121 - -Ms Rebecca Navarednam 115 30 - - 145 90 - -Ms Lillian Tan(2) 10 1 - 3(1) 14 - - -Former Director - - - - - 106 - 29Sub-total 250 55 - 51 356 317 - -

Non-executive DirectorsTan Sri Dr Khoo Kay Peng 100 - - - 100 100 - -Mr David Walton Masters 30 - - - 30 30 - -Ms Sally Cheong 10 - - - 10 10 - -Ms Lillian Tan(3) 9 - - - 9 10Mr Motoya Okada 30 - - - 30 30 - -Mr Roger Bambrough 5 - - - 5 - - -Mr John Thornton 20 - - - 20 30Mr Nick Ashley 12 - - - 12 30Mr Yoichi Kimura (alternate) - - - - - - - -Ms Sally Kealey 3 - - - 3 - - -Sub-total 219 - - - 219 240 - -Total current year 469 55 - 51(1) 575 557 - 29Total prior year 486 20 - 51(1) 557 500 - -Notes

(1) This represents a housing allowance.

(2) With effect from 5 January 2005 Ms Lillian Tan was appointed Joint Chief Executive Officer and it was agreed that she would

receive £137,000 per annum plus benefits.

(3) Ms Lillian Tan was appointed non-Executive Director on 21 April 2004, previously being an alternate Director to Ms Sally

Cheong. Ms Tan was appointed as Joint Chief Executive Officer on 5 January 2005 and subsequently became Chief Executive

Officer on 1 February 2005.

Remuneration Reportcontinued

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27


Each Director was a member of the Board for the whole year, with the exception of the following:

Mr Nick Ashley who retired on 17 June 2004 and Mr John Thornton and Ms Rebecca Navarednam who resigned from

the Board on 22 September 2004 and 1 January 2005 respectively. Mr Roger Bambrough and Ms Sally Kealey joined the

Board on 15 July 2004 and 28 October 2004 respectively.

Directors’ shareholdings

The interests of the Directors and their families in the shares of the Company are shown below:

29 January 2005 31 January 2004

Tan Sri Dr Khoo Kay Peng 181,445,822* 181,445,822*Mr David Walton Masters 1,718,750 1,718,750Ms Sally Cheong 250,000 250,000Ms Lillian Tan 100,000 100,000Ms Sally Kealey 775 775

*Bonham Industries Limited, KKP Holdings Sdn. Bhd. and Soo Lay Holdings Sdn. Bhd. are each interested in these shares.

All interests in share capital were held as beneficial interests. Mr Motoya Okada, Mr Yoichi Kimura (alternate Director),

Ms Ainum Mohd-Saaid and Mr Roger Bambrough did not have any interests in the issued share capital of the Company

at any time during the financial year.

Directors’ share options

Ordinary shares under Option

No Director had any options over shares in the capital of the Company at any time during the financial year.

Further information regarding share options is given in Note 31 to the Accounts.

The middle market price of an ordinary share at 29 January 2005 was 11.75 pence and the range during the financial year

was 9.75 pence to 21.50 pence.

The Company’s Register of Directors’ Interests, which is open to inspection at the Registered Office, contains full

details of Directors’ share interests.

Resolution

A resolution to shareholders to approve the Report of the Remuneration Committee will be put forward at the Annual

General Meeting.

On behalf of the Board,

David Ralph Walton Masters Deputy Chairman

27 April 2005

2. Front contd [91484] 4/5/05 21:33 Page 27

We have audited the financial statements of Laura Ashley

Holdings plc for the period ended 29 January 2005 which

comprise the Consolidated Profit and Loss Account, the

Company and Consolidated Balance Sheet, the Group

Cash Flow Statement, the Group Statement of Total

Recognised Gains and Losses and the related Notes on

pages 30 to 50. These financial statements have been

prepared under the accounting policies set out on pages

30 to 32. We have also audited the disclosures required by

Part 3 of Schedule 7A to the Companies Act 1985

contained in the Directors’ Remuneration Report (“the

auditable part”).

This report is made solely to the Company’s members, as

a body, in accordance with Section 235 of the Companies

Act 1985. Our audit work has been undertaken so that we

might state to the Company’s members those matters we

are required to state to 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 Company’s members as a

body, for our audit work, for this report, or for the

opinions we have formed.

Respective responsibilities of

directors and auditors

The Directors’ responsibilities for preparing the Annual

Report, including the Directors’ Remuneration Report

and the financial statements in accordance with applicable

law and United Kingdom Accounting Standards are set

out in the Statement of Directors’ Responsibilities.

Our responsibility is to audit the financial statements and

the auditable part of the Directors’ Remuneration Report

in accordance with relevant legal and regulatory

requirements and United Kingdom Auditing Standards

issued by the Auditing Practices Board.

We report to you our opinion as to whether the financial

statements give a true and fair view and whether the

financial statements and the auditable part of the

Directors’ Remuneration Report have been properly

prepared in accordance with the Companies Act 1985. We

also report to you if, in our opinion, the Directors’ Report

is not consistent with the financial statements, if the

Group has not kept proper accounting records, if we have

not received all the information and explanations we

require for our audit, or if information specified by law

regarding Directors’ remuneration and transactions with

the Company and other members of the Group is not

disclosed.

We review whether the Report on Corporate Governance

Compliance reflects the Group’s compliance with the

nine provisions of the 2003 FRC Combined Code

specified for our review by the Listing Rules of the

Financial Services Authority, and we report if it does not.

We are not required to consider whether the Board’s

statements on internal control cover all risks and controls,

or form an opinion on the effectiveness of the Group’s

corporate governance procedures or its risk and control

procedures.

We read other information contained in the Annual

Report and consider whether it is consistent with the

audited financial statements. This other information

comprises only the Chairman’s Statement, the Chief

Executive Officer’s Statement, the Operating and

Financial Review, the Directors’ Report, the Report on

Corporate Governance Compliance and the unaudited

part of the Directors’ Remuneration Report. We consider

the implications for our report if we become aware of any

apparent misstatements or material inconsistencies with

the financial statements. Our responsibilities do not

extend to any other information.

Independent Auditors’ ReportTo the Shareholders of Laura Ashley Holdings plc

28


2. Front contd [91484] 4/5/05 21:33 Page 28

Basis of audit opinion

We conducted our audit in accordance with United

Kingdom Auditing Standards issued by the Auditing

Practices Board. An audit includes examination, on a test

basis, of evidence relevant to the amounts and disclosures

in the financial statements and the auditable part of the

Directors’ Remuneration Report. It also includes an

assessment of the significant estimates and judgements

made by the Directors in the preparation of the financial

statements, and of whether the accounting policies are

appropriate to the Group’s circumstances, consistently

applied and adequately disclosed.

We planned and performed our audit so as to obtain all

the information and explanations which we considered

necessary in order to provide us with sufficient evidence

to give reasonable assurance that the financial statements

and the auditable part of the Directors’ Remuneration

Report are free from material misstatement, whether

caused by fraud or other irregularity or error. In forming

our opinion we also evaluated the overall adequacy of the

presentation of information in the financial statements.

Opinion

In our opinion the financial statements give a true and fair

view of the state of affairs of the Company and of the

Group as at 29 January 2005 and of the profit of the

Group for the period then ended and the financial

statements and the auditable part of the Directors’

Remuneration Report have been properly prepared in

accordance with the Companies Act 1985.

Chantrey Vellacott DFK

Chartered Accountants and Registered Auditors

London

27 April 2005

29


2. Front contd [91484] 4/5/05 21:33 Page 29

Basis of accounting and consolidation of the

financial statements

These financial statements have been prepared under the

historical cost convention and in accordance with

applicable accounting standards in the United Kingdom.

The financial statements of Laura Ashley Holdings plc

include the results of Laura Ashley Holdings plc (the

‘Company’), its subsidiary and associated undertakings to

29 January 2005 and its comparatives for the period ended

31 January 2004. The results of any subsidiaries acquired

or disposed of during the year, if any, are included in the

Group profit and loss account from the effective date of

acquisition to the date of disposal.

Change in accounting policies and

presentation of financial information

The Company has adopted Urgent Issues Task Force

Abstract 38 ‘Accounting for ESOP Trusts’ during the

period which requires that an entity’s own shares held in

an ESOP trust be deducted in arriving at shareholders’

funds. Its implementation has led to a prior year

adjustment of a £0.8 million reduction in previously

reported reserves at both 31 January 2004 and 25 January

2003. As a result, there was no impact on the reported

profit for the year ended 31 January 2004 and the Profit

and Loss Account and Statement of Recognised Gains and

Losses have therefore not been restated.

Associated undertakings

Associated undertakings are those undertakings, other

than subsidiaries, in which the Group holds a long-term

participating interest and exerts significant influence. The

Group’s share of the profits less losses of its associated

undertaking is shown in the consolidated profit and loss

account. The investment in its associated undertakings is

stated at the Group’s share of net assets less provisions.

Since the accounting policies of the associated

undertaking do not necessarily conform in all respects to

those of the Group, adjustments are made on

consolidation where the amounts involved are material to

the Group.

Turnover

Turnover, which excludes value added taxes, represents

the amounts receivable from customers for goods

supplied and royalties and other similar income.

Royalty income is accounted for on an accruals basis to

the extent that the expectation of such income can be

reasonably quantified.

Financial instruments

In relation to the disclosures made in note 17, short-term

debtors and creditors are not treated as financial

instruments.

The Group does not hold or issue derivative financial

instruments for trading purposes.

The principal derivative instruments used by the Group

are forward exchange contracts, although occasionally

swaps may also be used. The Group does not enter into

speculative derivative contracts. Forward exchange

contracts are used for hedging purposes to minimise the

underlying exposure of the Group in accordance with the

Group’s risk management policies.

The costs and benefits arising from arrangements to

mitigate the effect of exchange rate fluctuations on the

results are dealt with in the profit and loss account in the

year in which the related exposure arises.

Currency translation

Transactions denominated in foreign currencies are

recorded at the rates entered into on the date of

transaction unless forward contracts have been taken out,

in which case the rate specified by the contract is used.

30


Accounting Policies

2. Front contd [91484] 4/5/05 21:33 Page 30

Profit and loss accounts of subsidiary companies operating

outside the United Kingdom are translated into sterling

using average rates of exchange for the period. The net

assets of such companies are translated into sterling at the

rates of exchange prevailing at the balance sheet date.

Exchange differences that relate to the translation of net

assets of overseas companies and to foreign currency

borrowings to the extent that these provide a balance

sheet hedge, together with any tax thereon, are taken

directly to reserves.

Monetary assets and liabilities denominated in foreign

currencies are translated at the rates of exchange

prevailing at the balance sheet date.

All transactional exchange differences are taken to the

profit and loss account.

Leased assets

Assets held under finance leases are capitalised and

depreciated in the same manner as owned assets.

Resulting lease obligations are included in other creditors

and the interest element of rental obligations is charged to

the profit and loss account.

Rentals payable under operating leases are charged to the

profit and loss account as incurred over the lease term.

Provisions

Provisions are recognised when the Group has a present

obligation (legal or constructive) as a result of a past event;

it is probable that a transfer of economic benefits will be

required to settle the obligation; and a reliable estimate

can be made of the amount of obligation. Unless these

conditions are met, no provision is recognised.

Fixed assets

Depreciation of property, plant, equipment and vehicles is

calculated at rates estimated to write off the cost of the

relevant assets, less any estimated residual value, by equal

amounts over their expected useful lives. The principal

lives used are:

Freehold buildings andlong leasehold property 50 yearsShort leasehold property Period of leaseLeasehold improvements Period of leasePlant and machinery 10 yearsVehicles 5 yearsFixtures, fittings and equipment:Computer systems 5 yearsShop fixtures and fittings 5 yearsOther equipment, fixtures and fittings 5 to 10 years

Key money on properties, which is paid in certain

European countries, is written down by 25% over 10

years, to its estimated recoverable amount.

Software development costs are capitalised as computer

system expenditure.

Payments on account and assets under

construction

In the course of capital projects where costs are incurred

for payments on account and assets under construction or

installation of equipment, they are not subject to

depreciation until they are reclassified after their

completion.

Reverse premiums

Reverse premiums received on the inception of lease

agreements are released to the profit and loss account over

the primary period of the lease.

Intangible assets

Expenditure on intellectual property rights is written off

in the year in which it is incurred.

Investment in Group undertakings

Investment in Group undertakings is stated at cost less

provision for any impairment in value.

31


2. Front contd [91484] 4/5/05 21:33 Page 31

Stocks and work in progress

Stock is valued at the lower of average cost and net

realisable value.

The cost of Group manufactured products includes all

overheads based on a normal level of activity. Net

realisable value is the price at which stocks can be sold in

the normal course of business after allowing for the costs

of realisation and, where appropriate, the cost of

conversion from their existing state to a finished state.

Deferred taxation

Full provision is made for deferred taxation on all timing

differences which have arisen but have not reversed at the

balance sheet date, except as follows:

No provision is made for taxation liabilities which would

arise on the distribution of profits retained by overseas

subsidiaries, as there is no intention that such profits will

be remitted in the foreseeable future.

Deferred tax is not recognised on timing differences

arising when non-monetary assets are revalued unless

there is a binding agreement to sell such an asset or the

gain or loss expected to arise has been recognised.

Pensions

The Group operates various pension schemes for its

permanent employees. For the UK defined benefit

scheme, an independent actuary completes a valuation

every three years, and in accordance with their

recommendations, contributions are paid to the trustees

of the scheme so as to secure the benefits as set out in the

rules. The cost of these and any variations from regular

cost arising from actuarial variations are charged or

credited to the profit and loss account on a systematic

basis over the estimated remaining service lives of the

employees.

32


Accounting Policiescontinued

2. Front contd [91484] 4/5/05 21:33 Page 32

2005 2004 Notes £m £m

Turnover 1 238.9 283.5 Cost of sales (137.9) (170.9)Gross profit 101.0 112.6 Operating expenses 2 (96.2) (109.3)Operating profit 3 4.8 3.3Share of operating profit of associate 12 0.4 0.6 Profit on ordinary activities before interest 5.2 3.9Interest receivable 6 0.2 0.2 Interest payable 6 (0.6) (1.0)Profit on ordinary activities before taxation 4.8 3.1Taxation on profit on ordinary activities 7 (1.3) (1.1)Profit for the financial year 3.5 2.0Earnings per share - basic and diluted 9 0.47p 0.28p

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

Statement of Total Recognised Gains and Losses

For the financial year ended 29 January 20052005 2004

£m £m

Profit on ordinary activities after taxation 3.5 2.0Exchange differences arising on translation of net investmentsin overseas subsidiary undertakings (0.1) (0.5)Prior year adjustment relating to the period ended 25 January 2003 and before - (0.5)Total recognised gains for the financial year 3.4 1.0

33


Consolidated Profit and Loss Account

For the financial year ended 29 January 2005

3. Accounts [91484] 4/5/05 21:33 Page 33

Group CompanyRestated Restated

2005 2004 2005 2004 Notes £m £m £m £m

Fixed assetsTangible fixed assets 11 31.9 33.9 3.5 2.7 Investment in associated undertaking 12 3.5 3.4 0.8 0.8 Investment in subsidiary undertakings 13 - - 98.5 98.5 Total investments 3.5 3.4 99.3 99.3

35.4 37.3 102.8 102.0 Current assetsStocks 14 34.9 41.8 - - Debtors 15 23.1 20.8 9.6 15.9 Short-term deposits and cash 16.1 15.1 8.4 8.3

74.1 77.7 18.0 24.2 Creditors: amounts falling due within one yearTrade and other creditors 16 39.9 47.4 2.9 1.9 Net current assets 34.2 30.3 15.1 22.3 Total assets less current liabilities 69.6 67.6 117.9 124.3 Creditors: amounts falling due after more than one yearTrade and other creditors 16 5.1 5.6 0.5 - Provisions for liabilities and charges 18 0.2 1.1 0.3 0.2 Net assets 64.3 60.9 117.1 124.1 Capital and reservesShare capital 20 37.3 37.3 37.3 37.3 Share premium account 21 86.4 86.4 86.4 86.4Own shares 31 (0.8) (0.8) (0.8) (0.8)Profit and loss account 22 (58.6) (62.0) (5.8) 1.2Equity shareholders’ funds 19 64.3 60.9 117.1 124.1

The financial statements on pages 30 to 50 were approved by the Board on 27 April 2005 and signed on its behalf by:

David Ralph Walton Masters Deputy Chairman Lillian Tan Lian Tee Chief Executive Officer

34


Balance Sheets

As at 29 January 2005

3. Accounts [91484] 4/5/05 21:33 Page 34

2005 2004Notes £m £m

Net cash inflow from operating activities 23 7.2 10.6Dividend received from associated undertaking 12 0.1 0.2 Returns on investments and servicing of financeInterest received 0.2 0.1 Interest paid (0.4) (0.7)Interest element of finance lease rental payments (0.1) (0.3)Net cash outflow for returns on investments and the servicing of finance (0.3) (0.9)Net tax paid (0.8) (0.7)Capital expenditure and financial investmentAcquisition of tangible fixed assets (3.8) (2.4)Disposal of tangible fixed assets 1.6 1.7 Net cash outflow for capital expenditure and financial investment (2.2) (0.7)Acquisitions and disposalsCash balances disposed of with subsidiaries - (1.5)Net cash outflow for acquisitions and disposals - (1.5)Net cash inflow before financing 4.0 7.0FinancingIssue of ordinary share capital - 9.0Expenses of share issue - (0.8)Loans repaid (1.8) (9.4) Capital element of finance lease rental payments (1.2) (2.6)Net cash outflow from financing (3.0) (3.8) Net increase in cash 1.0 3.2

Reconciliation of Net Cash Flow to Movement in Net Funds2005 2004

Notes £m £m

Net increase in cash 1.0 3.2 Cash inflow from changes in loans and leases 3.0 12.0Change in net funds resulting from cash flows 4.0 15.2Other non-cash items:New finance leases (1.0) -Translation differences - 0.1 Change in net funds during the period 3.0 15.3Net funds/(debt) at the beginning of the period 6.8 (8.5) Net funds at the end of the period 24 9.8 6.8

35


Consolidated Cash Flow Statement

For the financial year ended 29 January 2005

3. Accounts [91484] 4/5/05 21:33 Page 35

1 Segmental analysisTurnover Net assets Turnover Net assets

2005 2005 2004 2004£m £m £m £m

Retail 206.5 47.4 254.7 45.2Non-retail 32.4 16.9 28.8 15.7

238.9 64.3 283.5 60.9

Profit before taxationBranch contributionRetail 18.5 20.2Non-retail 9.1 8.7

27.6 28.9Indirect overhead costs (22.8) (25.6)Operating profit 4.8 3.3

Share of profit of associate 0.4 0.6Net interest payable (0.4) (0.8)Profit on ordinary activities before taxation 4.8 3.1

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. Branchcontribution is stated after deducting direct operating expenses but before exceptional items, buying, marketing and administrativecosts.

2005 2004£m £m

Turnover by destinationUK & Ireland 207.2 241.6North America - 0.3Continental Europe 8.0 18.8Other 23.7 22.8

238.9 283.5

2 Operating expenses2005 2004

£m £m

Distribution costs (76.1) (88.0)Administrative expenses (20.1) (21.3)Operating expenses (96.2) (109.3)

Notes to the Accountscontinued

36


Notes to the Accounts

4. Notes [91484] 4/5/05 21:34 Page 36

3 Operating profit is stated after charging/(crediting):2005 2004

£m £m

Depreciation on tangible fixed assets (note 11) 6.3 7.3Exchange gains (0.7) (0.6)Profit on disposal of fixed assets (1.0) (1.0)Operating lease and hire charges 25.1 22.9Auditors’ remuneration 0.3 0.3

4 Employees2005 2004

Number Number

Average number of employees of the Group on a full-time equivalent basis:Manufacturing 214 226Retail 1,745 2,074Administrative 438 518Distribution 130 143

2,527 2,961

£m £m

Staff costs for the financial year:Wages and salaries 42.3 49.2Social security costs 3.3 4.3Other pension costs 0.3 0.4

45.9 53.9

5 Directors’ remuneration2005 2004£000 £000

Aggregate emoluments 575 557Company pension contributions for defined benefit scheme - 5Company pension contributions for defined contribution scheme - 24

At 29 January 2005 and 31 January 2004, no retirement benefits were accruing to any Directors under either defined benefit ordefined contribution pension schemes.

During the year ended 29 January 2005 and the year ended 31 January 2004, there were no options exercised by the Directors oramounts received under long-term incentive schemes.

The information required by the Companies Act 1985 and the Listing Rules of the Financial Services Authority is contained in theRemuneration Report on pages 24 to 27.

Directors’ interests

The interests of the Directors (including alternates) and their immediate families in the shares and share options of the Company aredisclosed on pages 26 and 27.

37


4. Notes [91484] 4/5/05 21:34 Page 37

6 Net interest payable2005 2004

£m £m

Bank loans, overdrafts and other loans 0.5 0.7Finance leases and hire purchase contracts 0.1 0.3

0.6 1.0Less interest receivable (0.2) (0.2)

0.4 0.8

7 Taxation2005 2004

£m £m

UK corporation taxCurrent year 2.2 1.6Prior years (1.1) (0.3)

1.1 1.3Relief for overseas tax (0.1) (0.3)

1.0 1.0Overseas tax 0.1 -Tax charge in associated undertaking 0.2 0.3Total current tax 1.3 1.3Deferred tax credit - (0.2)Taxation on profit on ordinary activities 1.3 1.1

Tax reconciliation:2005 2004

£m £m

Profit before taxation 4.8 3.1Tax at 30% (2004: 30%) 1.4 0.9Adjustments to tax in respect of previous periods (1.1) (0.2)Rate adjustments relating to overseas profits 0.1 0.1Expenses not deductible for tax purposes 1.0 0.3Exceptionals - 1.5Losses brought forward - (0.9)Timing differences (0.1) (1.8)Unrelieved losses - 1.2Depreciation in excess of capital allowances - 0.2Current tax charge for the year 1.3 1.3

8 Laura Ashley Holdings plc – profit and loss accountIn accordance with Section 230 of the Companies Act 1985, the Company has not presented its own profit and loss account.TheCompany’s loss for the financial year was £7.0 million (2004: loss of £3.1 million).

9 Earnings per share – basic and dilutedBasic and diluted earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weightedaverage number of ordinary shares during the year.

2005 2004

Basic and diluted earnings attributable to ordinary shareholders (£m) 3.5 2.0Weighted average number of ordinary shares (‘000) – basic and diluted 743,547 702,525

Earnings per share – basic and diluted 0.47p 0.28p


38


4. Notes [91484] 4/5/05 21:34 Page 38

10 Principal exchange rates2005 2004

Average Period end Average Period end

US Dollar 1.83 1.88 1.65 1.82Euro 1.47 1.45 1.44 1.47Japanese Yen 198 195 190 193

11 Tangible fixed assetsGroup Paid on

Plant, Fixtures, account Land and buildings machinery fittings and and under

Freehold Short leases and vehicles equipment construction Total £m £m £m £m £m £m

CostAt 1 February 2004 21.6 11.9 10.2 48.6 - 92.3Additions 0.1 1.6 - 2.6 0.7 5.0Disposals (0.1) (1.5) (1.9) (2.2) - (5.7)Reclassifications - - - (0.1) 0.1 -At 29 January 2005 21.6 12.0 8.3 48.9 0.8 91.6DepreciationAt 1 February 2004 8.1 4.3 9.7 36.3 - 58.4Charge for the year 0.3 1.0 0.2 4.8 - 6.3Disposals - (1.0) (1.9) (2.1) - (5.0)At 29 January 2005 8.4 4.3 8.0 39.0 - 59.7Net Book ValueAt 29 January 2005 13.2 7.7 0.3 9.9 0.8 31.9At 31 January 2004 13.5 7.6 0.5 12.3 - 33.9

The net book value of tangible fixed assets includes an amount of £1.8 million (2004: £2.3 million) in respect of assets held underfinance leases and hire purchase contracts.The depreciation of these assets in the year amounted to £1.4 million (2004: £1.3million).

Company Paid on Plant, Fixtures, account

Land and buildings machinery fittings and and under Freehold Short leases and vehicles equipment construction Total

£m £m £m £m £m £m

CostAt 1 February 2004 2.9 - - - - 2.9Additions - - - 1.0 - 1.0Disposals (0.1) - - - - (0.1)At 29 January 2005 2.8 - - 1.0 - 3.8DepreciationAt 1 February 2004 0.2 - - - - 0.2Charge for the year - - - 0.1 - 0.1Disposals - - - - - -At 29 January 2005 0.2 - - 0.1 0.3Net Book ValueAt 29 January 2005 2.6 - - 0.9 - 3.5At 31 January 2004 2.7 - - - - 2.7

The net book value of tangible fixed assets includes an amount of £0.9 million (2004: £nil) in respect of assets held under

finance leases and hire purchase contracts.The depreciation of these assets in the year amounted to £0.1 million (2004: £nil).

39


4. Notes [91484] 4/5/05 21:34 Page 39

12 Associated undertaking2005 2004

£m £m

Japan – Laura Ashley Japan Co., Ltd.Share of profit before taxation 0.4 0.6Investment in associated undertaking:Opening balance at 1 February 2004 3.4 3.3Dividend received (0.1) (0.2)Share of profit after taxation 0.2 0.3Closing balance at 29 January 2005 3.5 3.4

The Company’s investment in Laura Ashley Japan Co., Ltd. is valued at the cost of acquisition of £0.8million (2004: £0.8 million).

13 Company investment in subsidiary undertakingsCost Provision Investment£m £m £m

At 29 January 2005 and at 31 January 2004 146.6 (48.1) 98.5

See note 31 for details of subsidiary undertakings.

14 Stocks2005 2004

£m £m

Raw materials and consumables 2.8 2.1Work in progress 0.8 1.4Finished goods and goods for resale 31.3 38.3

34.9 41.8

The Company holds no stock or work in progress.

15 DebtorsGroup Company

2005 2004 2005 2004 £m £m £m £m

Amounts falling due within one year:Trade debtors 7.4 6.2 - -Amounts owed by subsidiary undertakings - - 9.6 15.9Amounts owed by associated undertaking (note 29) 4.1 4.3 - -Other debtors 2.8 2.7 - -Prepayments and accrued income 8.8 7.6 - -

23.1 20.8 9.6 15.9


40


4. Notes [91484] 4/5/05 21:34 Page 40

16 Trade and other creditorsGroup Company

2005 2004 2005 2004 £m £m £m £m

Amounts falling due within one year:Bank loans and overdrafts 0.9 1.7 - -Finance leases 0.3 1.0 0.3 -Trade creditors 16.2 19.2 - -Amounts owed to subsidiary undertakings - - 2.5 1.8Corporation tax 2.0 1.5 - -Social security and other taxes 3.3 4.4 - -Other creditors 10.0 11.6 - -Accruals and deferred income 7.2 8.0 0.1 0.1

39.9 47.4 2.9 1.9

Amounts falling due after more than one year:Bank loans 4.6 5.6 - -Finance leases 0.5 - 0.5 -

5.1 5.6 0.5 -

Obligations under bank loans:Amounts repayable between one and two years– floating rate 0.7 0.9 - -Amounts repayable between two and five years– floating rate 2.2 2.2 - -Amounts repayable after five years– floating rate 1.7 2.5 - -

4.6 5.6 - -

The floating rate borrowings comprise bank borrowings bearing interest rates based upon NatWest Base Rate.

The bank loans are all secured over various fixed assets owned by the Group.

Obligations under finance leases:

Amounts repayable between one and two years– fixed rate (5.5%) 0.3 - 0.3 -Amounts repayable between two and five years– fixed rate (5.5%) 0.2 - 0.2 -

0.5 - 0.5 -

41


4. Notes [91484] 4/5/05 21:34 Page 41

17 Financial instrumentsThe Group’s policies as regards derivatives and financial instruments are set out in the accounting policies on page 30 and asdiscussed in the Operating and Financial Review on pages 12 and 13.

(a) Interest rate risk

Financial liabilities

Financial liabilities consist of long-term finance leases and loans. See note 16 for the maturity profile and rates of interest of theseitems.

Financial assets

The Group holds no fixed rate financial assets (2004: £nil).

Floating rate assets of £13.1 million comprise Sterling cash balances on short term deposit (2004: £8.0 million).

The remaining cash balances do not attract interest.

(b) Currency profile

The main functional currencies of the Group are Sterling and the Euro.The following analysis of net monetary assets and liabilitiesshows the Group’s currency exposures after the effects of forward contracts used to manage currency exposure.

The amounts represent the transactional exposures that give rise to net currency gains and losses recognised in the profit and lossaccount (see note 3). Such exposures comprise the monetary assets and liabilities of the Group that are not denominated in thefunctional currencies of the operating unit involved.

Net foreign currency monetary assets/(liabilities) Net foreign currency monetary assets/(liabilities)2005 2005 2005 2004 2004 2004

£m £m £m £m £m £m US$ Euro Other US$ Euro Other

Functional currencyof Group operationsSterling (0.7) (1.0) - 2.9 (1.1) 0.8Euro - - - - - -Total (0.7) (1.0) - 2.9 (1.1) 0.8

(c) Liquidity

Financial liabilities consist of long-term finance leases and loans. See note 16 for the maturity profile of these items.

The Group also has the following undrawn committed bank borrowing facilities available to it:2005 2004

£m £m

Expiring within one year - 3.0Expiring after one year but within two years 3.0 -Expiring after two years - -

3.0 3.0

(d) Fair values of financial instruments

There is no material difference between the book value and the fair value of the Group’s financial instruments.

(e) Hedges

As explained in the accounting policies on pages 30 and 31, the costs and benefits arising from arrangements to mitigate the effectof exchange rate fluctuations on the Group’s results are dealt with in the the profit and loss account in the year in which the relatedexposure arises.


42


4. Notes [91484] 4/5/05 21:34 Page 42

18 Provisions for liabilities and chargesRestructuring Pensions Deferred tax Total

£m £m £m £m

At 1 February 2004 1.0 0.1 - 1.1Utilisation (0.7) (0.1) - (0.8)Release to profit and loss account (0.1) - - (0.1)At 29 January 2005 0.2 - - 0.2

Restructuring provisions

Rationalisation of store portfolio * 0.20.2

* Onerous lease provisions which are being utilised over the length of the lease period.

Deferred tax

The deferred tax liability in the Company is £0.3 million (2004: £0.2 million) which represents a provision for capital allowances inexcess of depreciation.

The net deferred tax asset not recognised in the financial statements recoverable against future taxable profits is as follows:Group Company

2005 2004 2005 2004 £m £m £m £m

Amounts not recognised:Excess of depreciation over capital allowances - 0.1 - -Losses not recognised 1.5 3.4 - -Net deferred tax asset not recognised 1.5 3.5 - -

19 Reconciliation of movements in shareholders’ funds2005 2004

£m £m

Profit for the financial year 3.5 2.0Other recognised losses (net) (0.1) (0.5)New share capital subscribed, after issue costs of £0.8 million - 8.2Net addition to shareholders’ funds 3.4 9.7Opening equity shareholders’ funds as originally stated 60.9 52.0Prior year adjustment - (0.8)Opening equity shareholders’ funds 60.9 51.2Closing equity shareholders’ funds 64.3 60.9

20 Share capital2005 2004

£m £m

Ordinary shares of 5p eachAuthorised 1,000,000,000 (2004: 1,000,000,000) 50.0 50.0Issued and fully paid 746,035,368 (2004: 746,035,368) 37.3 37.3

21 Share premium2005 2004

£m £m

Opening balance 86.4 85.7Premium on shares issued during the year, after issue costs of £0.8 million. - 0.7Closing balance 86.4 86.4

43


4. Notes [91484] 4/5/05 21:34 Page 43

22 Profit and loss accountGroup Company

£m £m

At 1 February 2004 (62.0) 1.2Profit/(loss) retained for the financial year 3.5 (7.0)Exchange differences arising on translation of net investments (0.1) -At 29 January 2005 (58.6) (5.8)

23 Reconciliation of operating profit to net cash inflow from operating activities2005 2004

£m £m

Operating profit 4.8 3.3Depreciation charge 6.3 7.3Cash element of losses on termination - 1.5Profit on sale of fixed assets (1.0) (1.0)Decrease in stocks 6.9 3.9(Increase)/decrease in debtors (2.2) 5.5Decrease in creditors (6.7) (4.7)Movement on provisions (0.8) (5.0)Net cash outflow in respect of restructuring (0.1) (0.2)Net cash inflow from operating activities 7.2 10.6

24 Analysis of net fundsAt 1 Feb Cash flow Other non At 29 Jan

2004 cash changes 2005£m £m £m £m

Cash 15.1 1.0 - 16.1Debt due within one year (1.7) 0.8 - (0.9)Debt due after more than one year (5.6) 1.0 - (4.6)

7.8 2.8 - 10.6Finance lease obligations (1.0) 1.2 (1.0) (0.8)Net funds 6.8 4.0 (1.0) 9.8

25 Contingent liabilities

1. The Company has guaranteed the bank overdrafts and loans of certain subsidiary undertakings. At 29 January 2005, thepotential liability in respect of these guarantees was £23.0 million (2004: £24.5m).

2. The Company has guaranteed the loan repayments of a loan agreement entered into by Laura Ashley Limited.The maximumamount of this liability is £5.4 million (2004: £6.1m).

3. Under the terms of the sale agreements entered into during the year ended 31 January 2004 for the disposal of certain formersubsidiary undertakings, the Company has a potential liability of £0.9 million in relation to warranty and tax claims (2004:£0.9million).


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4. Notes [91484] 4/5/05 21:34 Page 44

26 Future commitments1. The Group has commitments for contracts for capital expenditure, not provided for in the accounts of £0.4 million (2004:

£0.6m).

2. The Group had outstanding forward transactions to hedge foreign currencies as follows:In currency Sterling equivalents

2005 2004 2005 2004

Group

Maturing within one year:

– to hedge future currency operating payments in US Dollars - US$8.2m - £4.8m

27 Leases2005 2004

Land and Land and buildings Other buildings Other

£m £m £m £m

Annual commitment under operating leases expiring as follows:Within one year 3.1 0.5 3.7 -Within two to five years 3.5 1.1 3.2 1.5After five years 11.4 - 14.3 -

18.0 1.6 21.2 1.5

Some shop premises acquired under operating leases are subject to rental charges based on a combination of a flat rental chargeplus a percentage of turnover achieved by that store.The above figures are based on the flat rental charge only.

Obligations under finance leases are disclosed in note 16.

28 Group pension arrangementsThe Laura Ashley Retirement Benefits Scheme provides benefits to the employees of the Company.The Scheme has appointedexternal administrators and fund managers, and its assets are held independently of the Company’s finances.The Scheme is fundedpartly by contributions from members and partly by contributions from the Company at rates advised by professionally qualifiedactuaries.The latest actuarial valuation was carried out on 1 September 2002 using the Projected Unit method.The significantassumptions were that salaries would increase on average by 4.55% per annum, that the net return on investments would be 6.65%per annum before retirement (4.65% per annum after retirement) and that pension increases linked to inflation would be at 2.55%per annum.

At 1 September 2002 the market value of the assets of the Scheme was £22.6 million which was sufficient to cover 107% of thebenefits that had accrued to members, after allowing for expected future increases in earnings.This represented a surplus of £1.4million.The valuation also recommended that the employer’s contribution rate increased to 16.9% of Scheme Salaries. It wasconfirmed that payment of contributions in accordance with the recommended rates was in excess of what was required to complywith the statutory requirement to maintain the Scheme’s MFR funding level in excess of 100% until 31 August 2005.

During the year, the employee contribution rate was 3% of Scheme Salary (2004: 3%) and the employer contribution rate was15.9% (2004: 15.9%).The total pension cost of the company was £0.3 million (2004: £0.3 million). A provision of £0.1m whichrepresented the excess of the accumulated pension cost over the amount funded was utilised during the period.

Further details of the Directors’ pension arrangements are provided on pages 24 to 27.

In November 2000 the Accounting Standards Board issued FRS 17 “Retirement Benefits” replacing SSAP24 “Accounting for PensionCosts”. FRS17 is fully effective for periods beginning on or after 1 January 2005, though certain disclosures are required in thetransitional period, for periods ending on or after 22 June 2003.These further disclosures, which are up to date to 29 January 2005for the purpose of FRS 17, are included below.

The pension cost that would have been charged to operating profit under FRS 17 for the year amounts to £0.8m (2004: £1.2m).

45


4. Notes [91484] 4/5/05 21:34 Page 45

28 Group pension arrangementscontinued

The last full valuation of the Scheme, as at 1 September 2002, was updated to 29 January 2005 by a qualified independentactuary.The main assumptions used by the actuary were:

At 29 January 2005 At 31 January 2004(per annum) (per annum)

Rate of increase in salaries 5.0% 5.0%Rate of increase of LPI linked pensions in payment 3.0% 3.0%Discount rate 5.3% 5.6%Inflation assumption 3.0% 3.0%

The assumptions used by the actuary are best estimates chosen from a range of possible actuarial assumptions, which, due to thetimescale covered, may not be borne out in practice.

The fair value of the Scheme’s assets, which are not intended to be realised in the short term and may be subject to significantchange before they are realised, and the present value of the Scheme’s liabilities, which are derived from cash flow projections overlong periods and thus inherently uncertain, were:

Long-term rate of Long-term rate ofreturn expected at Fair value at return expected at Fair value at

29 January 2005 29 January 2005 31 January 2004 31 January 2004(per annum) £m (per annum) £m

Equities 7.6% 21.2 7.9% 19.4Fixed interest 5.1% 6.5 5.4% 6.1Insured Annuities 5.3% 1.8 5.6% 1.8Cash and other 4.8% 0.2 4.0% 0.2Total market value of assets 29.7 27.5Present value of liabilities 43.9 39.8Deficit in the Scheme (14.2) (12.3)Related deferred tax asset 4.3 3.7Net pension liability (9.9) (8.6)

2005Movement in Deficit during the year £m

Deficit in Scheme at the beginning of the year (12.3)Movement in year :Current service cost (0.5)Employer contributions 0.4Other finance income (0.3)Actuarial loss (1.5)Deficit in Scheme at the end of the year (14.2)


46


4. Notes [91484] 4/5/05 21:34 Page 46

28 Group pension arrangementscontinued

It should be noted that the Scheme is closed to new entrants and so the use of the Projected Unit valuation method required by FRS17 means that the current service cost is likely to increase as members approach retirement.

2005 2004The analysis of reserves in respect of the net pension liability is as follows: £m £m

Profit and loss reserve reported (58.6) (62.0)Add back SSAP 24 provision - 0.1Profit and loss reserve excluding FRS 17 liability (58.6) (61.9)Deduct FRS 17 liability (9.9) (8.6)Profit and loss reserve including FRS 17 liability (68.5) (70.5)Analysis of the amount that would have been charged to operating profitCurrent service cost 0.5 0.6Other finance charges 0.3 0.6Total operating charge 0.8 1.2Analysis of the amount that would have been credited to other finance incomeExpected return on Scheme assets 1.9 1.5Interest on Scheme liabilities (2.2) (2.1)Net return (0.3) (0.6)Analysis of amount that would have been recognised in the statement of total recognised gains and lossesActual return less expected return 0.6 2.8Experience gains 0.6 0.5Changes in assumptions (2.7) -Recognised actuarial (loss)/gain (1.5) 3.3History of experience gains and lossesDifference between actual and expected return on Scheme assets amount 0.6 2.8

% of Scheme assets 2% 10%Experience gains on plan liabilities amount 0.6 0.5

% of Scheme liabilities 1% 1%Total amount recognised in statement of total recognised gains and losses amount (1.5) 3.3

% of Scheme liabilities (3)% 8%

47


4. Notes [91484] 4/5/05 21:34 Page 47

29 Related party transactionsRoyalty Amounts

Sales to income from owed byrelated related related

party party party£m £m £m

At 29 January 2005Laura Ashley Japan Co., Ltd. 13.2 1.7 4.1Laura Ashley, Inc. - - 1.1Revman Industries, Inc. - 0.8 0.3At 31 January 2004Laura Ashley Japan Co., Ltd. 13.3 2.0 4.3Laura Ashley, Inc. 0.2 0.1 0.9Revman Industries, Inc. - 0.6 0.3

Laura Ashley Japan Co., Ltd. is an associated undertaking (note 30). Revman Industries, Inc. was a subsidiary of Aeon Co., Ltd.(formerly known as Jusco Co., Ltd.). Mr M Okada, a Director of the Company, is also a Director of Aeon Co., Ltd.. Laura Ashley, Inc. isowned by Laura Ashley (North America) Inc., whose major shareholders are Regent Carolina Corporation (69%), (an associatedcompany of Malayan United Industries Berhad) and Bonham Industries Limited (20%), (an investment company controlled by Tan SriDr Khoo, a Director of the Company).

Laura Ashley Limited is currently subletting office space to Corus Hotels plc (formerly Corus & Regal Hotels plc). Under the terms ofthe agreement Laura Ashley Limited will receive £0.1 million per annum until the next rent review. Corus Hotels plc is owned byLondon Vista Hotel Limited, a wholly owned subsidiary of Malayan United Industries Berhad.

MUI Asia Limited is a wholly-owned subsidiary of Malayan United Industries Berhad.

Malayan United Industries Berhad has the right to appoint up to three directors to the Board of the Company.

30 Group undertakings

Company Country of incorporation and operation

Principal subsidiariesLaura Ashley Limited* England and WalesLaura Ashley Investments Limited* England and WalesTexplan Manufacturing Limited* England and WalesPremier Home Logistics Limited England and WalesLaura Ashley B.V. * NetherlandsLaura Ashley Holdings B.V.* NetherlandsLaura Ashley Manufacturing B.V. NetherlandsLaura Ashley S.A. FranceLaura Ashley GmbH GermanyLaura Ashley España S.A. SpainLaura Ashley (Ireland) Limited Ireland

All subsidiaries are wholly owned, and 100% of voting rights are held by the Group.

*held directly by Laura Ashley Holdings plc

As part of an internal restructuring of European operations, Laura Ashley BV is in liquidation.

Company Country of incorporation and operation

Associated undertakingLaura Ashley Japan Co., Ltd. Japan

26.79% of the issued ordinary share capital is held by Laura Ashley Holdings plc as at 29 January 2005.

Group undertakings are involved in the design, manufacture, sourcing, distribution and sale of Laura Ashley products. All Groupundertakings are unlisted.


48


4. Notes [91484] 4/5/05 21:34 Page 48

31 Share options

Share Option Scheme

Under the Laura Ashley 1995 Executive Share Option Scheme, the Board may grant options to subscribe for new, or acquire existing,ordinary shares in the Company to selected employees and Executive Directors. Options so granted entitle the recipient to obtainordinary shares in the Company at not less than market value shortly before the grant of the options.

An option is normally exercisable between three and ten years following its grant, provided a performance condition set by theRemuneration Committee has been satisfied, although option exercise periods of only one year have been specified for certainexecutives.The condition applied to date requires that options will be exercisable only if the Company’s growth in earnings per share,over any three year period between grant and exercise, exceeds the growth in the Retail Prices Index by an average of at least 2%per year and that a dividend has been declared on the Company’s ordinary shares in respect of the Company’s financial yearpreceding that in which the option is exercised. For this purpose, earnings per share are determined in accordance with FinancialReporting Standard 3, adjusted as the Remuneration Committee considers appropriate.

No further options may be granted under the terms of the Laura Ashley Share Option Scheme 1985, a similar scheme to the 1995Scheme.

At 27 April 2005, outstanding options, granted under the Laura Ashley Share Option Scheme 1985 and the Laura Ashley 1995Executive Share Option Scheme, were as follows:

Number of shares reservedDate of grant 2005 2004 Option Date from Latest

price which exercisable expiry date

21 October 1994* - 40,000 £0.70 21.10.97 20.10.0411 May 1995* 40,000 40,000 £0.78 11.05.98 10.05.0528 October 1997 20,000 20,000 £0.495 28.10.00 27.10.0711 November 1998 170,000 200,000 £0.35 11.11.01 10.11.0821 October 1999 30,000 326,428 £0.35 21.10.02 20.10.09

- 1,125,000 £0.50 21.10.03 20.10.09- 1,125,000 £1.00 21.10.04 20.10.09- 1,125,000 £1.50 21.10.05 20.10.09

*Laura Ashley Share Option Scheme 1985

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4. Notes [91484] 4/5/05 21:34 Page 49

31 Share optionscontinued

The middle market price of an ordinary share at 31 January 2004 was 10 pence and at 29 January 2005 was 11.75 pence. Duringthis financial year, the highest price of an ordinary share was 21.50 pence and the lowest price was 9.75 pence.

All the options detailed above relate to new issue shares. Options over 550,000 shares, will be satisfied by shares held by theemployee benefit trust described below.

Employee Benefit Trust

In July 1995 the Company established a discretionary employee benefit trust (the ‘EBT’), the Laura Ashley Employee ShareOwnership Trust, for the benefit of employees and former employees of the Group (including Executive Directors).The trustee isKleinwort Benson (Jersey) Trustees Limited (the ‘Trustee’) which is an independent professional trust company.The Company makesrecommendations to the Trustee in relation to the provision of benefits.

At 29 January 2005, the Trustee owned 2,487,992 (2004: 2,487,992) ordinary shares of 5p each which represented 0.33% (2004:0.33%) of the Company’s issued share capital and had a market value on that date of £0.3 million (2004: £0.2 million).The EBThas waived its rights to dividends on all its shares. At 29 January and 27 April 2005, 550,000 shares (2004: 570,000 shares) weresubject to options under the Laura Ashley 1995 Executive Share Option Scheme, and were granted on the following dates:

2005 2004 Option Date from Latestprice which exercisable expiry date

22 May 1997 50,000 70,000 £1.02 22.05.00 21.05.0711 November 1998 125,000 125,000 £0.35 11.11.01 10.11.08

125,000 125,000 £0.50 11.11.02 10.11.08125,000 125,000 £1.00 11.11.03 10.11.08125,000 125,000 £1.50 11.11.04 10.11.08

The EBT has been funded by an interest free loan facility from the Company of £5.0 million (2004: £5.0 million). At 29 January2005 the principal amount of the loan outstanding was £3.4 million (2004: £3.4 million).

The assets, liabilities, income and costs of the EBT are incorporated into the financial statements.The costs charged to the profit andloss account for the year ended 29 January 2005 were £2,000 (2004: £1,500).

At 31 January 1998, the Company made a provision of £2.4 million against its investment, thereby reducing its value from £3.2million to £0.8 million at the then price of 34.5p.

The Company has adopted Urgent Issues Task Force Abstract 38 ‘Accounting for ESOP Trusts’ during the period which requires thatan entity’s own shares held in an ESOP trust be deducted in arriving at shareholders’ funds.These shares were previously reported asassets. Its implementation has led to a prior year adjustment of a £0.8 million reduction in previously reported reserves at both31 January 2004 and 25 January 2003.


50


4. Notes [91484] 4/5/05 21:34 Page 50

2005 2004 2003 2002 2001 2000£m £m £m £m £m £m

Turnover 238.9 283.5 292.0 276.8 259.1 247.3 Operating profit/(loss) 4.8 3.3 (4.5) 8.5 8.8 (3.2)Share of operating profit of associated undertaking 0.4 0.6 0.9 1.1 1.5 0.6 Exceptional items - - (9.2) - - -Net interest payable (0.4) (0.8) (1.3) (0.3) (0.1) (1.5)Profit/(loss) on ordinary activities before taxation 4.8 3.1 (14.1) 9.3 10.2 (4.1)Taxation on profit/(loss) on ordinary activities (1.3) (1.1) (1.4) (1.2) (2.3) (0.3)Profit/(loss) on ordinary activities after taxation 3.5 2.0 (15.5) 8.1 7.9 (4.4)Dividends - - - - - -Retained profit/(loss) for the financial year 3.5 2.0 (15.5) 8.1 7.9 (4.4)

Balance sheetRestated Restated Restated

2005 2004 2003 2002 2001 2000£m £m £m £m £m £m

Fixed assets 35.4 37.3 44.2 42.2 30.1 23.6 Net current assets 34.2 30.3 23.0 31.0 36.3 34.3 Long-term creditors (5.1) (5.6) (8.4) (3.1) (0.9) (0.3)Provision for liabilities and charges (0.2) (1.1) (6.8) (2.1) (4.6) (4.9)Net assets 64.3 60.9 52.0 68.0 60.9 52.7 Issued share capital 37.3 37.3 29.8 29.8 29.8 29.8 Reserves 27.0 23.6 22.2 38.2 31.1 22.9 Equity shareholders’ funds 64.3 60.9 52.0 68.0 60.9 52.7

StatisticsEarnings/(loss) per share 0.47p 0.28p (2.62p) 1.37p 1.33p (0.86)pDividend per share - - - - - -Operating profit/(loss) as a percentage of sales 2.0% 1.1% (1.5)% 2.8% 2.7% (1.0)%Profit/(loss) on ordinary activities before taxationas a percentage of net assets 7.5% 5.1% (27.1)% 13.7% 16.7% (7.8)%Net asset value per ordinary share 8.41p 7.96p 8.70p 11.40p 10.21p 8.8pGearing - - 9.3% - - -

51


Group Financial Record

Profit and loss account

5. End [91484] 4/5/05 21:34 Page 51

Shareholders’ helpline number

0870 702 0000

Computershare Investor Services PLC, the Company’s

Registrars, has introduced a facility where shareholders

are able to access details of their shareholding over the

internet, subject to passing an identity check. You can

access this service on their website at

www.computershare.com. The site also includes

information on recent trends on the Company’s share

price.

Website address

Laura Ashley’s website address is www.lauraashley.com.

Financial calendar

Annual General Meeting

2.00 p.m., Thursday, 16 June 2005

Proxies to reach Registrars prior to

2.00 p.m., Tuesday, 14 June 2005

Meeting to be held at

The Breakfast Room, Corus Hotel Hyde Park,

Lancaster Gate, London W2 3LG

Trademarks

Accounting Periods 2005/2006

First half-year ends

Saturday, 30 July 2005

Second half-year ends

Saturday, 28 January 2006

52


Shareholders’ InformationAs at 27 April 2005

5. End [91484] 4/5/05 21:34 Page 52

53


Notice of 2005 Annual General Meeting

Notice is hereby given that the Annual General Meeting

of Laura Ashley Holdings plc will be held at The

Breakfast Room, Corus Hotel Hyde Park, Lancaster Gate,

London W2 3LG, on Thursday, 16 June 2005 at 2.00 p.m.

for the transaction of the following business:

Ordinary business

1. To receive and adopt the Directors’ Report and

Accounts for the year ended 29 January 2005, together

with the Auditors’ Report.

2. To elect Mr Roger Bambrough±+ in accordance with

the Articles of Association of the Company, as a

Director.

3. To elect Ms Sally Kealey*+ in accordance with the

Articles of Association of the Company, as a Director.

4. To elect Mr Andrew Khoo in accordance with the

Articles of Association of the Company, as a Director.

5. To re-elect Tan Sri Dr Khoo Kay Peng*+ who retires

by rotation in accordance with the Articles of

Association of the Company, as a Director.

6. To re-elect Ms Sally Cheong Siew Mooi±+ who

retires by rotation in accordance with the Articles of

Association of the Company, as a Director.

7. To reappoint Chantrey Vellacott DFK, Chartered

Accountants and Registered Auditors (or their

successors in business), as Auditors to the Company,

to hold office from the conclusion of the Annual

General Meeting to the conclusion of the next general

meeting of the Company at which the accounts are

laid before shareholders and to authorise the Directors

to determine their remuneration.

Special business

To consider and, if thought fit, pass the following

resolutions of which Resolutions 8 and 9 will be proposed

as ordinary resolutions and Resolutions 10 and 11 will be

proposed as special resolutions.

Ordinary resolutions

8. To approve the Remuneration Report of the

Directors.

9. THAT, in addition to and without prejudice to all

existing authorities, the Directors shall have general

and unconditional authority to exercise all powers of

the Company to allot relevant securities (within the

meaning of Section 80 of the Companies Act 1985)

having an aggregate nominal value of up to

£12,309,583.57 provided that this authority shall

expire at the conclusion of the next annual general

meeting of the Company, or 15 months from the date

of this Resolution, whichever is the earlier, save that

the Company may before such expiry make an offer

or agreement which would or might require relevant

securities to be allotted after such expiry and the

Directors may allot relevant securities in pursuance of

such offer or agreement as if the authority hereby

conferred had not expired.

Special resolutions

10. THAT, in addition to and without prejudice to all

existing authorities, the Directors be and are hereby

generally empowered pursuant to Section 95 of the

Companies Act 1985 (the ‘Act’) to allot equity

securities (within the meaning of Section 94 of the

Act) pursuant to the authority conferred by

Resolution 9 above as if Section 89(1) of the Act did

not apply to any such allotment provided that this

power shall be limited to:

(a) the allotment (otherwise than pursuant to sub-

paragraph (b) below) of equity securities which

are, or are to be, wholly paid up in cash up to an

aggregate nominal amount equal to £3,730,176.84

representing 10% of the issued share capital of the

Company; and

5. End [91484] 4/5/05 21:34 Page 53

54


Notice of 2005 Annual General Meetingcontinued

(b) the allotment of equity securities in connection

with a rights issue, open offer or otherwise to

ordinary shareholders in proportion (as nearly as

may be) to the respective numbers of ordinary

shares held by them subject to (i) the Directors

having a right to aggregate and sell for the benefit

of the Company all fractions of a share which may

arise in apportioning equity securities among the

ordinary shareholders of the Company and (ii)

such exclusions or other arrangements as the

Directors may deem necessary or expedient in

relation to legal or practical problems under the

laws of, or the requirements of, any recognised

regulatory body or any stock exchange in, or by

virtue of the ordinary shares being represented by

depository receipts in, any overseas territory,

and shall expire at the conclusion of the next annual

general meeting of the Company or 15 months from

the date of this Resolution, whichever is the earlier,

provided that the Company may before such expiry

make an offer or agreement which would or might

require equity securities to be allotted after such

expiry and the Directors may allot equity securities in

pursuance of such offer or agreement as if the power

hereby conferred had not expired.

11. THAT the Directors be and are hereby authorised to

make market purchases (as defined in Section 166 of

the Act) of the Company’s ordinary 5p shares

provided that:-

(a) the Company does not purchase under this

authority more than 111,905,304 ordinary shares;

(b) the Company does not pay less than 5p for each

ordinary share; and

(c) the Company does not pay for each ordinary

share more than 105% of the average of the

middle market price of the ordinary shares

according to the Daily Official List of the London

Stock Exchange for the five business days

immediately preceding the date on which the

Company agrees to buy the ordinary shares

concerned;

this authority shall expire at the conclusion of the next

annual general meeting of the Company or 15 months

from the date of this Resolution, whichever is the

earlier, provided that the Company may before such

expiry make an offer or agreement where the

purchase will or may be executed after the authority

terminates (either wholly or in part) and the Directors

may complete such purchase in pursuance of such

offer or agreement as if the power hereby conferred

had not expired.

To transact any other business considered appropriate

to be dealt with at an Annual General Meeting.

By Order of the Board

David R Cook ACA

Secretary

27 Bagleys Lane, Fulham, London SW6 2QA

27 April 2005

± Member of the Audit Committee

* Member of the Remuneration Committee

+Member of the Nomination Committee

5. End [91484] 4/5/05 21:34 Page 54

55


Notes

1. If you have sold or transferred all of your shares in the

Company, please send this document, together with the

accompanying form of proxy, to the purchaser or transferee

or to the stockbroker, bank or other agent through whom the

sale or transfer was effected, for delivery to the purchaser or

transferee.

2. The Company, pursuant to Regulation 41 of the

Uncertificated Securities Regulations 2001, specifies that only

holders of ordinary shares registered in the Register of

Members of the Company as at 2.00 pm on 14 June 2005

shall be entitled to attend and vote at the Annual General

Meeting in respect of the number of shares registered in their

name at that time. Changes to entries on the Register of

Members after 2.00 pm on 14 June 2005 shall be disregarded

in determining the right of any person to attend and vote at

the Meeting.

3. A member of the Company who is entitled to attend and

vote at the Meeting convened by this Notice, may appoint

one or more proxies to attend and, on a poll, vote in his or

her place. A proxy need not be a member of the Company. A

form of proxy is enclosed. In order to be valid, an instrument

appointing a proxy and any power of attorney under which it

is executed (or a notarially certified copy thereof) must be

deposited at Computershare Investor Services PLC, PO Box

1075, The Pavilions, Bridgwater Road, Bristol BS99 3FA, not

later than 48 hours before the time appointed for the

Meeting. The completion and return of a form of proxy will

not, however, preclude shareholders from attending and

voting in person at the Meeting should they so wish.

4. There will be available for inspection at the Company’s

Registered Office at 27 Bagleys Lane, Fulham, London SW6

2QA, during normal business hours on any weekday (public

holidays excluded) from the date of this Notice until the date

of the Annual General Meeting, and at the place of the

Meeting for 15 minutes prior to and during the Meeting the

following:

(a) the Register of Directors’ Interests in the shares of the

Company, kept in accordance with Section 325 of the

Companies Act 1985; and

(b) copies of the Directors’ service contracts and letters of

appointment.

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