Annual Results

24 March 2011

Ted Baker PLC

Annual results for the 52 weeks ended 29 January 2011

Strong Group performance reflecting strength of the brand and growing international reach

Highlights

·; Retail sales up 11.9% on a 7.4% increase in average retail square footage

·; New retail stores opened in Scottsdale, Santa Monica, New York and Chicago

·; Wholesale sales up 28.9%, largely reflecting the encouraging start to our US wholesale business

·; Underlying licence income up 6.4%

·; Proposed final dividend of 14.3p, making the total dividend 20.6p, an increase of 20.1%

Commenting, Ray Kelvin, Founder and Chief Executive, said:

"The Group's excellent performance is testament to the strength of the Ted Baker brand, with design, quality and attention to detail at the heart of everything we do. We have continued carefully to expand the brand internationally and, supported by our strong balance sheet, will build on this momentum in 2011, with new store openings in the first half of the year including Paris, Hong Kong and Manchester.

We have been pleased by the customer response to our Spring/Summer collections, both in the UK and internationally. Whilst the economic outlook for 2011 is uncertain, we have demonstrated in previous years our ability to trade through more difficult times and are confident that we are well placed to continue to do so.

On behalf of the Board I would like to thank all the team at Ted Baker, without whom this strong performance would not have been possible."

Chairman's Statement

I am delighted to report a strong performance across the Group, which resulted in a 14.7% increase in Group revenue to £187.7m and a 24.2% increase in profit before tax to £24.2m. This result reflects the strength of the Ted Baker brand and collections and the growing international reach of our multi-channel distribution strategy.

The retail division delivered an increase in revenue of 11.9% to £152.7m on a 7.4% increase in average retail square footage. Trading in the UK was good and we were particularly pleased by the strong improvement in trading in our overseas markets.

Wholesale sales for the Group increased by 28.9% to £35.0m. This was driven by the re-launch of our US wholesale business, under our own management, and a good performance in our UK wholesale business, which included growth in our wholesale export business.

Licence income from our product and territorial licences increased by 13.4% to £6.2m and included a full contribution in the year from our US product licences.

Results

Group revenue for the 52 weeks ended 29 January 2011 increased by 14.7% to £187.7m (2010: £163.6m). The composite gross margin increased to 61.7% (2010: 61.1%) reflecting buying efficiencies and less promotional activity in our overseas markets.

Profit before tax increased by 24.2% to £24.2m (2010: £19.5m) and by 19.6% excluding the impairment charge of £0.8m in the previous year. Basic earnings per share increased by 27.3% to 41.5p (2010: 32.6p).

The Group has a strong balance sheet and continues to maintain its focus on cash management. Net cash generated from operating activities during the year was £18.1m (2010: £21.1m).

Dividends

The Board is recommending a final dividend of 14.3p per share, making a total for the year of 20.6p per share (2010: 17.15p per share), an increase of 20.1% on the prior year. Subject to approval the final dividend will be paid on 17 June 2011 to shareholders on the register on 13 May 2011.

People

This strong performance is testament to the dedication and commitment of the Ted Baker team. The passion and enthusiasm of our teams around the world is a key factor in our success and continuing development. On behalf of the Board, I would like to thank all of my colleagues for their contribution during the year.

On 15 June 2010 we were delighted to announce the appointment to the Board of Anne Sheinfield as an Independent Non-Executive Director. Anne is a commercial lawyer with 20 years' post qualification experience in the theatre, TV and music areas of entertainment. Anne brings with her a wealth of intellectual property and commercial legal experience.

Current Trading and Outlook

We anticipate that 2011 will be a challenging year given the economic outlook, but are pleased by the positive reaction to our Spring/Summer collections. There has been much discussion on the pressures on consumer spending, but we believe that we are well positioned to meet these challenges due to the strength of the Ted Baker brand and collections. We continue to manage the risks arising from exchange rate fluctuations and rising input prices in order to minimise the impact on our business.

Retail

Following a strong post-Christmas sale period, we entered the new season with a clean stock position. Although retail trading at the start of the new financial year was subdued, recent trends are more encouraging.

We opened a further store in Hong Kong in February and will be opening a second store in Paris and a store in the Trafford Centre, Manchester in March. We plan to open concessions through leading department stores in the US, Spain and Portugal during the first half of the financial year.

Wholesale

Trading in our UK wholesale business has started well and forward order commitments are in line with our expectations.

In the US, our wholesale business continues to perform well and we will continue to develop and grow this business.

Licence Income

Our product and territorial licences continue to perform in line with our expectations. We plan to open a store in Auckland, New Zealand with our joint venture partner in the second half of the financial year. Our other territorial licence partners in the Middle East and Asia continue to seek further opportunities to expand the Ted Baker brand in those territories.

Group

The Ted Baker brand continues to perform well in an uncertain trading environment and we believe that we are well placed to deal with the challenges ahead. We continue to ensure that our costs and commitments are controlled and in line with the trends anticipated for 2011.

We remain focused on our multi-channel distribution strategy and, with our strong balance sheet, will continue to expand the Ted Baker brand in existing and new international markets.

We intend to make our next interim management statement, covering trading since the start of the financial year, on 14 June 2011.

Robert Breare

Non-Executive Chairman

24 March 2011

Business Review

OUR BUSINESS

Ted Baker is a leading designer brand that operates through three main distribution channels: retail; wholesale; and licensing. We offer a wide range of collections including: Menswear; Womenswear; Global; Phormal; Endurance; Born; Accessories; Lingerie and Underwear; Childrenswear; Fragrance and Skinwear; Footwear; Neckwear; Eyewear; and Watches.

The brand has grown steadily from its origins as a single shirt specialist store in Glasgow to the global business it is today. We distribute through our own and licensed retail outlets, leading department stores and selected independents in Europe, the US, the Middle East, Asia and Australasia.

Our strategy is to become a leading global designer brand, based on three main elements:

·; considered expansion of the Ted Baker collections. We review our collections continually to ensure we react to trends and meet our customers' expectations. In addition, we look for opportunities to extend the breadth of collections and enhance our offer;

·; controlled distribution through three main channels: retail; wholesale; and licensing. We consider each new opportunity to ensure it is right for the brand and will deliver margin led growth; and

·; carefully managed development of overseas markets. We continue to manage growth in existing territories while considering new territories for expansion.

Underlying our strategy is an emphasis on design, product quality and attention to detail, which is delivered by the passion, commitment and dedication of our teams, licence partners and wholesale customers ("trustees").

GLOBAL GROUP PERFORMANCE

Retail

We operate stores and concessions across the UK, Europe, US and Hong Kong and an on-line business based in the UK, primarily serving the UK and Europe, with a separate site dedicated to the Americas.

The retail division delivered a strong performance with sales up 11.9% to £152.7m (2010: £136.5m). Average retail square footage rose by 7.4% over the year to 225,828 sq ft (2010: 210,238 sq ft). Total retail square footage at 29 January 2011 was 229,026 sq ft (2010: 217,733 sq ft), representing an increase of 5.2% on the prior year. Retail sales per square foot rose 2.5% from £632 to £648.

The retail gross margin was 65.5% (2010: 64.9%). This increase was driven by buying efficiencies and less promotional activity in our overseas markets during the year.

Retail operating costs were in line with our expectations. The increase in these costs above the increase in average selling space is a result of the new space added towards the end of the year that will mature over time. This, combined with the improvement in sales and gross margin, resulted in a slight reduction in retail operating contribution from 18.3% to 18.0%.

Wholesale

We currently operate a wholesale business in the UK serving 15 countries across Europe and a wholesale business in the US.

Group wholesale sales rose by 28.9% to £35.0m (2010: £27.1m) and the gross margin increased to 44.8% (2010: 41.9%) reflecting buying efficiencies and the mix of product sales. The growth in sales largely reflects the encouraging start to our US wholesale business and a good performance from our UK wholesale business, which includes our growing wholesale export business.

Licence income

We operate both territorial and product licences. Our territorial licences cover the Middle East, Asia and Australasia, through which we operate licenced retail stores and, in some territories, wholesale operations. Our product licences cover lingerie & sleepwear, perfume & fragrance, watches, footwear, eyewear, neckwear and childrenswear.

Licence income was up 13.4% to £6.2m (2010: £5.5m). Excluding the effect of our US product licences, underlying licence income increased by 6.4%. We are pleased with the performances from our territorial and product licences during the period. We have seen continued good performances from our collections with product licence partner, Debenhams, with whom we have an exclusive childrenswear collection and, B by Ted Baker, a new and exclusive lingerie & sleepwear collection.

Our US product licences included a full contribution in the period from our US product licences signed directly with companies who had previously held product sub-licences with Hartmarx Corporation.

Collections

A good performance from Ted Baker Menswear was reflected by an increase in sales of 11.1% to £98.2m (2010: £88.4m). Menswear represented 52.3% of total sales (2010: 54.0%).

Ted Baker Womenswear delivered another strong performance with sales up 19.0% to £89.5m (2010: £75.2m). Womenswear represented 47.7% of total sales (2010: 46.0%).

GEOGRAPHIC PERFORMANCE

United Kingdom and Europe

Sales in our UK and Europe retail division were up 8.2% to £136.7m (2010: £126.4m). A good performance in the UK was supported by improved trading conditions in Europe.

Average square footage rose by 4.1% over the period to 188,035 sq ft (2010: 180,606 sq ft). At 29 January 2011, total retail square footage was 187,043 sq ft (2010: 186,024 sq ft) representing an increase of 0.5%. Retail sales per square foot increased 2.1% from £680 to £694.

During the year we opened seven further concessions in Eire, ten concessions across Italy and one further concession in the UK, offset by three concession closures in the UK and one in Eire. At 29 January 2011 we operated 33 stores (2010: 33), 165 concessions (2010: 151) and 10 outlet stores (2010:10).

Our e-commerce business benefited from the further enhancements made to our transactional website in the prior year, with a significant increase in the sales compared to last year.

Sales in our UK wholesale division were up 13.1% to £30.7m (2010: £27.1m). This performance recognises growth in our wholesale export business and a strong performance from our UK wholesale business given that the comparative period included sales from wholesale accounts which have transferred to retail concessions.

US

Sales from our US retail division increased by 29.6%, against a difficult comparative period, to $20.6m (2010: $15.9m), which, in sterling resulted in a 33.0% increase to £13.4m (2010: £10.1m).

We have taken advantage of the challenging conditions presented in the US to expand our business and opened four further stores during the year in Scottsdale, Santa Monica, New York and Chicago. Average square footage rose by 16.0% to 34,368 sq ft (2010: 29,632 sq ft) and retail sales per square foot increased 11.0% from $536 to $595. As at 29 January 2011 we now have 13 stores (2010: 9) and 2 outlets (2010: 2).

Towards the end of the year we launched our US transactional website and are pleased with its progress at this early stage.

As previously mentioned, we re-launched our US wholesale business under our own management during the year. This business traded well with total sales reaching $6.6m (2010: nil).

Middle East, Asia and Australasia

We continue to develop the Ted Baker brand across the Middle East, Asia and Australasia working closely with our partners in those territories to ensure the visual merchandising of the stores and the training of the teams reflect the Ted Baker culture. As at 29 January 2011 we operated a total of 23 stores (2010: 20 stores) across these territories.

We opened stores in the Dubai Marina Mall, Dubai, and the Abu Dhabi Marina Mall, Abu Dhabi during the year through our licence partner, RSH Limited. We opened a store in November in the 360 Degree Mall, Kuwait, with our licence partner in that territory, Al-Mutawa and Al-Khatib Retail Company, and are encouraged by early trading. As at 29 January 2011 we operated 7 stores across the Middle East (2010: 4 stores).

Our licence partner in Taiwan, Yun San, continued to make good progress and opened a concession in the Hanshin Arena Shopping Plaza in October.

At the start of the year we acquired two stores in Hong Kong from our former licence partner in the territory, Li & Fung, although one of these stores was scheduled to close in May. We are very pleased with the performance of these stores under our own management and as previously mentioned have now opened a further store in Hong Kong. We are also actively seeking further opportunities in the territory.

Including the closure of our store in Kuala Lumpur, Malaysia, as at 29 January 2011 we operated a total of 13 stores across Asia (2010: 14 stores).

In October we opened a store in the Pitt Street Mall, Sydney, Australia. This is our third store in Australia through a joint venture with our licence partner in that territory, Flair Industries Pty Ltd. Our existing stores continue to make good progress but the Sydney store has performed below our expectations to date as the redevelopment of the mall has not yet been completed. As at 29 January 2011 we operated 3 stores in Australasia (2010: 2).

Financial Review

Revenue and Gross Margin

Group revenue increased by 14.7% to £187.7m (2010: £163.6m), driven by an 11.9% increase in retail sales to £152.7m (2010: £136.5m) and a 28.9% increase in wholesale sales to £35.0m (2010: £27.1m).

The composite gross margin for the Group was 61.7% (2010: 61.1%), this net increase reflects buying efficiencies, which benefited both our wholesale and retail businesses, and the reduction in promotional activity throughout the year in our overseas retail markets. The improvement in the composite gross margin was partially offset by wholesale sales representing a greater proportion of our sales mix than in the comparative period. The retail gross margin increased to 65.5% (2010: 64.9%) and the wholesale gross margin increased to 44.8% (2010: 41.9%).

Operating Expenses

Operating expenses rose by 14.3% to £97.9m (2010: £85.7m). Excluding employee performance related bonus costs of £2.4m (2010: £1.9m), underlying operating expenses rose by 14.1%. Distribution costs, which include the costs of retail stores, outlets and concessions, increased by 14.1% to £73.7m (2010: £64.6m). The increase in these costs above the increase in average selling space reflects the addition of new space towards the end of the year that will mature over time. Administration expenses increased by 18.9% to £24.3m (2010: £20.4m). Excluding employee performance related bonus, administration expenses rose by 18.5% reflecting growth in the US team to support our US retail and wholesale businesses and growth in other central functions to support our expansion into international markets.

Profit Before Tax

Profit before tax grew by 24.2% to £24.2m (2010: £19.5m). This result was after the payment of an employee performance related bonus of £2.4m (2010: £1.9m). Bonus payments in both years were as a result of over achievement of internal targets in the financial year.

Impairment Losses

The Group incurred no impairment losses in the year (2010: £0.8m). The impairment loss in the prior year related to the carrying value of retail assets in Eire. This accounting charge had no cash flow effect on the Group.

Finance Income and Expenses

Net interest payable during the year of £30,000 (2010: £138,000). The reduction reflects the higher Group cash position for the majority of the year compared to last year.

The foreign exchange loss during the year of £48,000 (2010: £226,000) was due to the retranslation of monetary assets and liabilities denominated in foreign currencies.

Taxation

The Group tax charge for the year was £6.9m (2010: £6.0m), an effective tax rate of 28.7% (2010: 30.6%). The prior year rate excluding impairment was 29.5%. The Emergency Budget, announced on 22 June 2010, announced that the UK corporation tax rate will fall from 28.0% to 24.0% over a four year period. As a result we expect to see a future reduction in our effective rate in line with these changes.

Cash Flow

Net cash generated from operating activities was £18.1m (2010: £21.1m). The decrease on the prior year is principally due to an increase in working capital as opposed to a decrease in the prior year, offset by increased profit.

Total working capital as per the Group balance sheet, which comprises inventories, trade and other receivables and trade and other payables increased by £6.5m to £34.9m (2010: £28.4m). The movement in working capital as per the Group cash flow statement is lower due to translation differences. The timing of the Chinese New Year, which fell closer to the end of our financial year, resulted in stock being receipted earlier into the business, leading to an increase in inventories and trade payables. The increase in inventories also reflects the below average levels at the prior year end and the anticipated growth of our business in the coming year. The increase in trade receivables reflected the growth in the number of retail concessions and growth in our US wholesale business.

Capital expenditure of £10.0m (2010: £4.5m) reflected the opening and refurbishment of stores, concessions and outlets and the continued investment in the infrastructure of the business. Included within this figure is £1.0m (2010: £0.5m) of expenditure which relates to stores that are due to open in 2011.

The purchase of the non-controlling entity of £0.6m (2010: nil) relates to the purchase of the remaining shares in our joint venture, Ted Baker (New York) Inc, that were held by a third party. We now own 100.0% of this subsidiary (2010: 66.0%).

Shareholder Return

Basic earnings per share increased by 27.3% to 41.5p (2010: 32.6p).

The proposed final dividend of 14.3p per share will make a total for the year of 20.6p per share (2010: 17.15p per share), an increase of 20.1% on the previous year.

Free cash flow per share, which is calculated using the net cash generated from operating activities, was 41.8p (2010: 48.8p), this reduction was due to the change in working capital.

Currency Management

The most significant exposure to foreign exchange fluctuation relates to purchases made in foreign currencies, principally the US Dollar and the Euro.

A proportion of the Group's purchases are hedged in accordance with the Group's risk management policy, typically 12 months in advance. The balance of purchases is naturally hedged as the business operates internationally and income is generated in the local currency.

At the balance sheet date, the Group had hedged its projected commitments in respect of the year ending January 2012.

Borrowing Facilities

The Group has borrowing facilities of £20.0m (2010: £15.0m) available to it. The facilities comprise an unsecured committed facility of £3.0m and a revolving advance facility of £7.0m with the Royal Bank of Scotland PLC and an uncommitted, unsecured multi-option facility of £10.0m with Barclays Bank PLC.

The borrowing facilities held with The Royal Bank of Scotland PLC are made up by a £3.0m multi-currency facility and a £7.0m revolving credit facility. The facility held with Barclays Bank PLC is an uncommitted, unsecured multi-option facility of £10.0m. All facilities expire on 5 February 2012. The Group will seek to renew its facilities prior to these renewal dates. Based on current forecasts the Group does not envisage any difficulties with the renewal of these facilities.

At the balance sheet date, the borrowing facilities were unutilised.

Principal Risks and Uncertainties

The Board recognises there are a number of risks and uncertainties that face the Group. The Board, with the help of the executive committee, that comprises the chief executive, the finance director and subsidiary directors (the "Executive Committee"), has established a structured approach to identify, assess and manage these risks and this is regularly monitored and updated by the Risk Committee. Although not exhaustive, the following list highlights some of the principal risks which are not shown in order of importance:

Group Income Statement

For the 52 weeks ended 29 January 2011

Group Statement of Comprehensive Income

For the 52 weeks ended 29 January 2011

Group Statement of Changes in Equity

For the 52 weeks ended 29 January 2011

Group Statement of Changes in Equity

For the 52 weeks ended 30 January 2010

Company Statement of Changes in Equity

For the 52 weeks ended 29 January 2011

For the 52 weeks ended 30 January 2010

Group and Company Balance Sheet

At 29 January 2011

These financial statements were approved by the Board of Directors on 24 March 2011 and were signed on its behalf by:

L D Page

Director

Group and Company Cash Flow Statement

For the 52 weeks ended 29 January 2011

Notes to the Financial Statements

For the 52 weeks ended 29 January 2011

1. Basis of preparation

EU law (IAS Regulation EC 1606/2002) requires that the Group financial statements, for the 52 weeks ended 29 January 2011, are prepared in accordance with International Financial Reporting Standards (IFRSs) adopted for use in the EU ("adopted IFRSs").

This financial information has been prepared on the basis of the recognition and measurement requirements of adopted IFRSs as at 29 January 2011.

The financial information set out above does not constitute the Group's statutory accounts for the 52 weeks ended 29 January 2011 or 52 weeks ended 30 January 2010. The annual financial information presented in this annual results announcement for the 52 weeks ended 29 January 2011 is based on, and is consistent with, that in the Group's audited financial statements for the 52 weeks ended 29 January 2011, and those financial statements will be delivered during the second week of May 2011. The auditor's report on those financial statements is unqualified and does not contain any statement under Section 498 (2) or (3) of the Companies Act 2006.

Statutory accounts for 30 January 2010 have been delivered to the registrar of companies. The auditors' have reported on those accounts; their reports were i) unqualified and, ii) did not contain statements under Section 498 (2) or (3) of the Companies Act 2006.

Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Business Review on pages 4 to 6. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Chairman's Statement on pages 2 and 3. In addition the Group's financial statements include the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk.

The Group's forecasts and projections, taking into account reasonably possible changes in trading performance, show that the Group has sufficient financial resources. As a consequence the Directors have a reasonable expectation that the Company and the Group are well placed to manage their business risks and to continue in operational existence for the foreseeable future, despite the current uncertain global economic outlook. Accordingly, the Directors continue to adopt the going concern basis in preparing the consolidated financial statements.

Significant accounting policies

Except as described below, the accounting policies applied by the Group in this annual results announcement are the same as those applied by the Group in its consolidated financial statements for the 52 weeks ended 30 January 2010.

The following adopted accounting standards and interpretations, issued by the International Accounting Standards Board (IASB) or International Financial Reporting, Interpretations Committee (IFRIC), have been adopted for the first time by the Group in the current financial year with no significant impact on its consolidated results or financial position:

·; IFRS 3 (revised 2008), Business Combinations;

·; Amendment to IAS 27, Consolidated and Separate Financial Statements;

·; Amendment to IAS 39, Financial Instruments: Recognition and Measurement: Eligible Hedged Items;

·; Amendment to IAS 2, Share-based Payment: Group Cash-settled Share-based Payment Transactions;

·; Improvements to IFRS's 2009;

·; IFRIC 17, Distributions of Non-cash Assets to Owners; and

·; IFRIC 18, Transfers of Assets from Customers.

The Group does not consider that any other standards, amendments or interpretations issued by the IASB, but not yet applicable, will have significant impact on the financial statements.

2. Segment information

The Group has three reportable segments; retail, wholesale and licence income.

For each of the three segments, the Group's chief operating decision maker (the "Board") reviews internal management reports on a four weekly basis.

Performance for the retail segment is measured based on operating contribution, whereas performance of the wholesale segment is measured based on gross profit and performance of the licence segment is measured based on royalty income, as included in the internal management reports that are reviewed by the Board.

Segment results are used to measure performance as management believes that such information is the most relevant in evaluating the performance of certain segments relative to other entities that operate within these industries. Inter-segment pricing is determined on an arm's length basis.

a) Segment revenue and segment result

Wholesale sales are shown after the elimination of inter-segment sales of £14,596,000 (2010: £7,113,000).

b) Geographical information

*Non-current assets exclude deferred tax assets.

c) Revenue by collection

3. Profit before tax

4. Finance income and expenses

5. Income tax expense

a) The tax charge comprises

b) Deferred tax movement by type

c) Factors affecting the tax charge for the period

The tax assessed for the period is higher than the tax calculated at domestic rates applicable to profits in the respective countries. The differences are explained below.

d) Deferred and current tax recognised directly in equity

The Chancellor announced in the Budget on 23 March 2011 that the decrease in the UK corporation tax rate for large companies will be increased such that there will be a 2% reduction in the headline rate from 28% to 26% with effect from 1 April 2011. The proposed 1% per annum reductions in the headline rate for the next 4 years remains such that it is proposed that the headline rate will decrease to 23% by 1 April 2014.

As the deferred tax assets and liabilities should be recognised based on the corporation tax rates substantively enacted at the balance sheet date, the 27% rate remains appropriate for the current year.

Accordingly, in 2010, £66,000 has been credited to the income statement. Had the further tax rate changes been substantively enacted before the balance sheet date, it would have had the effect of reducing the net deferred tax liability to UK operations by £171,000.

6. Dividends per share

A final dividend in respect of 2011 of 14.3p per share, amounting to a dividend payable of £5,952,201, is to be proposed at the Annual General Meeting on 14 June 2011.

7. Earnings per share

Own shares held by the Ted Baker Group Employee Benefit Trust, the Ted Baker 1998 Employee Benefit Trust and treasury shares have been eliminated from the weighted average number of ordinary shares. The options exercised during the year, and conditional share awards distributed, if they vest, are covered by shares held either in treasury or by these Trusts.

Diluted earnings per share have been calculated using additional ordinary shares of 5p each available under the 1997 Unapproved Share Option Scheme, the 1997 Executive Share Option Scheme, the Ted Baker Performance Share Plan and the Ted Baker 2009 VCP.

There were no share related events after the balance sheet date that may affect earnings per share.

8. Property, plant and equipment

Additions included within the assets under construction category are stated net of transfers to other property, plant and equipment categories. Transfers from the assets under construction category in the period amounted to £506,000 (2010: £203,000) whilst additions into this category were £1,031,000 (2010: £506,000).

Impairment losses recognised in the year were £nil (2010: £750,000). The impairment losses in the prior year were as a result of a review of the carrying value of the portfolio of store assets.

Impairment of property, plant and equipment

The Group has determined that for the purposes of impairment testing, each store and outlet is a cash-generating unit. Cash-generating units are tested for impairment if there are indications of impairment at the balance sheet date.

Recoverable amounts for cash-generating units are based on value in use, which is calculated from cash flow projections using data from the Group's latest internal forecasts, the results of which are reviewed by the Board. The key assumptions for the value in use calculations are those regarding discount rates, growth rates and expected changes in margins. Management estimates discount rates using pre-tax rates that reflect the current market assessment of the time value of money and the risks specific to the cash-generating units. Changes in selling prices and direct costs are based on past experience and expectations of future changes in the market.

The pre-tax discount rate used to calculate value in use is derived from the Group's weighted average cost of capital.

The impairment losses relate to stores whose recoverable amounts (value in use) did not exceed the asset carrying values. In all cases, impairment losses arose due to stores performing below projected trading levels.

9. Related Parties

The Company has a related party relationship with its directors and executive officers.

Directors of the Company and their immediate relatives control 41 per cent of the voting shares of the Company.

At the 29 January 2011, the main trading company owed the parent company £24,710,000 (2010: £24,108,000). The main trading company was owed £23,313,000 (2010: £11,869,000) from the other subsidiaries within the Group.

Transactions between subsidiaries were priced on an arms length basis.

The Group has a 50% interest in a joint venture with Flair Industries Pty Ltd. As at 29 January 2011, the joint venture owed £286,000 to the main trading company (2010: £261,000). In the period, the value of sales made to the joint venture by the Group was £565,000 (2010: £364,000).

The Group considers the Board of executive directors as key management. Further details are provided in the Remuneration Report in the Group's financial statements.

Responsibility statement of the directors in respect of the Annual Results

We, the directors of the Company, confirm that to the best of our knowledge:

(a) the financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit for the Group and the undertakings included in the consolidation taken as a whole; and

(b) pursuant to Chapter 4 of the Disclosure and Transparency Rules, the Group's annual results contains a fair review of the development and performance of the business and the position of the Group, and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

On behalf of the Board

Cautionary statement regarding forward-looking statements

This document contains certain forward-looking statements. These forward-looking statements include matters that are not historical facts or are statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the Company's results of operations, financial condition, liquidity, prospects, growth, strategies, and the industries in which the Company operates. Forward-looking statements are based on the information available to the directors at the time of preparation of this document, and will not be updated during the year. The directors can give no assurance that these expectations will prove to be correct. Due to inherent uncertainties, including both economic and business risk factors underlying such forward-looking information, actual results may differ materially from those expressed or implied by these forward-looking statements.