Interim Results

Ted Baker PLC

("Ted Baker", the "Group")

Interim Results for the 28 weeks ended 13 August 2011

Strong Group performance reflecting continued investment

in the Ted Baker brand

Highlights

·; Strong Group performance across all areas of our business

·; Retail sales up 13.0% on a 6.7% increase in average retail square footage

o UK and European retail sales up 7.8% to £69.2m

o US retail sales up 74.0% to $16.7m

·; Retail stores opened in Manchester (2), Paris and Hong Kong

·; Wholesale sales up 32.8% to £21.6m

·; Licence income up 5.5% to £3.1m

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

"Ted Baker has delivered a strong performance during the first half of 2011 reflecting the continued investment in our brand and the strength and passion of our team.

Our Autumn/Winter collections have been positively received and we look forward to opening our first stores in Tokyo and in Beijing early next year. We are also excited to announce that we have signed a lease for a store on the internationally renowned Fifth Avenue, New York to be opened in the middle of next year.

As in previous years, results for the full year will be dependent on trading in the important second half and, at this stage, we remain understandably cautious given the uncertain economic environment, although believe that we are well placed to deal with the challenges ahead."

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Chairman's Statement

I am pleased to announce a 16.6% increase in Group revenue to £102.8m and a 12.7% improvement in profit before tax to £8.5m. This result reflects our continued investment in the Ted Baker brand, both in the UK and internationally, the strength of our collections and the growing international reach of our multi-channel distribution strategy.

The retail division performed well across all markets, despite a subdued start to retail trading at the beginning of the financial year, with sales up 13.0% on a 6.7% increase in average retail square footage.

Wholesale sales were up 32.8% reflecting a good performance from our UK wholesale business, which includes our wholesale export business, and continuing growth in our US wholesale business. Part of this increase was also due to the phasing of sales between the first and second half of the year.

Licence income from our product and territorial licences continued to grow in line with our expectations increasing by 5.5% to £3.1m.

Financial Results

Group revenue increased by 16.6% to £102.8m (2010: £88.1m) for the 28 weeks ended 13 August 2011 ("the period"). Although input margins have been largely maintained the composite gross margin decreased to 59.5% (2010: 61.2%), reflecting a change in mix between retail and wholesale sales and a higher level of promotional activity in our retail markets.

Operating expenses increased by 13.9% in the period to £56.2m (2010: £49.3m). Distribution costs, which mainly comprise the cost of retail stores, outlets and concessions, increased by 10.9% to £41.2m (2010: £37.1m), reflecting the increase in average retail square footage and an increase in turnover related property costs.

Administrative expenses increased by 23.3% to £15.0m (2010: £12.2m) reflecting the 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 increased by 12.7% to £8.5m (2010: £7.5m) resulting in basic earnings per share of 14.8p (2010: 12.9p). The effective tax rate of 27.4% (2010 full year effective rate: 28.7%) was in line with our expectations for the full financial year and reflects the reduction in the rate of corporation tax in the UK from 28% to 26% which came into effect on 1 April 2011.

The net decrease in cash and cash equivalents of £16.5m (2010: £4.9m) reflected higher working capital and an increase in capital expenditure.

Total working capital, which comprises inventories, trade and other receivables and trade and other payables, increased by £14.7m to £46.3m (2010: £31.6m). Inventories increased due to underlying growth of our business and earlier timing of stock receipts towards the end of the period. The timing of stock payments also resulted in a decrease in trade and other payables. The increase in trade and other receivables reflected growth in the number of retail concessions and growth in our wholesale business.

Capital expenditure of £8.2m (2010: £4.8m) reflected the opening of stores in Manchester, Paris and Hong Kong and concessions through leading department stores in the US, Spain and Portugal, as well as investment in some new stores due to open in the second half of the year. Further investment was also made in the infrastructure of the business and the refurbishment of some existing stores.

Dividends

The Board has declared an interim dividend of 7.15p (2010: 6.3p), representing an increase of 13.5%, which will be payable on 25 November 2011 to shareholders on the register at the close of business on 21 October 2011.

Leveraging the Brand

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

·; considered expansion of our 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 existing and new international 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, the US and Hong Kong and an online business based in the UK, primarily serving the UK and Europe, with a separate site dedicated to the Americas.

Retail sales were up 13.0% to £81.2m (2010: £71.9m) with average retail square footage increasing by 6.7% to 234,564 sq.ft (2010: 219,936 sq.ft). Sales per square foot rose by 5.4% to £332 (2010: £315).

Sales through our e-commerce business increased by 29.9% compared to the same period last year. During the period we launched a "Click and Collect" service in the UK and are pleased with the response from our customers at this early stage.

The retail gross margin was 64.0% (2010: 65.4%) reflecting a higher level of promotional activity in our markets and an improved performance in our outlets which led to a change in mix between full price and outlet sales.

Retail operating costs were 11.0% up on space ahead 6.7% resulting in a slight reduction in retail operating contribution of 14.0% (2010: 14.5%). The increase in costs above the growth in space was the result of an increase in turnover related property costs.

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 were 32.8% above the same period last year at £21.6m (2010: £16.2m) with gross margins of 42.5% (2010: 42.9%). The increase in sales predominantly reflects a good performance from our UK business and continuing growth in both our wholesale export business and our US wholesale business. Part of the increase was also due to the phasing of sales between the first and second half of the year.

Licence Income

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

Licence income for the period increased in line with expectations to £3.1m (2010: £3.0m).

Our territorial and product licences continue to perform in line with expectations, with good performances in the period from our licensed stores in the Middle East and Asia, our licensed products exclusive to Debenhams and our licensed footwear partner, Pentland Group.

Collections

Ted Baker Womenswear delivered a strong performance with sales up 22.6% to £53.1m (2010: £43.3m). Womenswear represented 51.7% of total sales (2010: 49.1%), a portion of which represented more Womenswear space added in the first half of the year.

Ted Baker Menswear also performed well with sales increasing 10.9% to £49.7m (2010: £44.8m). Menswear represented 48.3% of total sales (2010: 50.9%).

Geographic Performance

United Kingdom & Europe

Sales in the period in our UK and Europe retail division were up 7.8% to £69.2m (2010: £64.2m). This good performance was delivered despite the subdued start to retail trading at the beginning of the financial year. During the period we opened two stores in Manchester, a second store in Paris and concessions through leading department stores in Spain and Portugal and are pleased with their performances at this early stage.

During the period we disposed of our Langley Court and Westbourne Grove, London stores as part of an ongoing review of our store portfolio.

Average square footage rose by 1.7% over the period to 188,865 sq.ft (2010: 185,780 sq.ft). At 13 August 2011, total retail square footage was 193,264 sq.ft (2010: 186,605 sq.ft), representing an increase of 3.6%. Retail sales per square foot increased 5.4% from £331 to £349.

At 13 August 2011, we operated 34 stores (2010: 33), 164 concessions (2010: 154) and 10 outlet stores (2010: 10).

Sales from our UK wholesale business increased by 26.2% to £18.8m (2010: £14.9m) due to a good performance from our UK wholesale business and continued growth in our wholesale export business. Part of this increase also reflected the phasing of sales between the first and second half of the financial year.

US

Sales from our US retail division increased by 74.0% to $16.7m (2010: $9.6m), which in sterling was equivalent to sales up 63.5% to £10.3m (2010: £6.3m). During the period we opened concessions through a leading department store and are very pleased with their performance. As at 13 August 2011, we operated 7 concessions across the United States (2010: nil), 13 stores (2010: 11) and 2 outlet stores (2010: 2).

Average square footage rose 28.2% over the period to 41,034 sq.ft (2010: 32,006 sq.ft). At 13 August 2011, total retail square footage was up 20.1% on last year at 42,605 sq.ft (2010: 35,477 sq.ft). Retail sales per square foot rose 33.8% from $299 to $400.

Sales from our US wholesale business increased by 114.3% to $4.5m (2010: $2.1m) reflecting the continued growth of the business under our own management.

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 reflects the Ted Baker culture. As at 13 August 2011, we operated a total of 26 stores (2010: 20 stores) across those territories.

Stores operated through our licence partners in the Middle East continue to perform well. Consequently these partners continue to seek further opportunities in this region. As at 13 August 2011, we operated 7 stores (2010: 5 stores) across the Middle East.

In February we opened a second store in Hong Kong under our own management and are pleased by performance in the region.

In July we opened a concession within a leading department store in the Marina Bay Sands mall in Singapore with our licence partner in that territory, RSH Limited. As at 13 August 2011, we operated a total of 15 stores across Asia (2010: 13).

In August we opened our first store in Auckland, New Zealand through a joint venture with our licence partner in that territory, Flair Industries Pty Ltd, and we are pleased with its progress at this early stage. As at 13 August 2011, we operated 4 stores in Australasia (2010: 2 stores).

Current Trading and Outlook

Retail

The strong performance seen in the first half of 2011 has continued into the second half of the year, although the last few weeks have been affected by unseasonably warm weather.

Since the end of the period, we have moved our store in the Bicester Outlet Village to a larger unit and trading has been very positive at this early stage. In November we will move our store in the Bluewater shopping centre to a larger unit.

In Eire, we opened a further concession in Dublin in September and are encouraged by early trading.

In the US, we will be opening a further store in San Diego and a further outlet near Boston. Since the end of the period, we have opened a further concession through a leading department store, with three more concessions planned before the end of the financial year. We have also signed a lease for a store on Fifth Avenue, New York which we expect to open in June 2012.

In Asia, we have taken possession of a store in Tokyo, Japan and plan to open towards the end of this financial year. We will also be opening a store in Beijing, China at the start of the next financial year.

Wholesale

Trading in our UK wholesale business has been in line with expectations but we anticipate that the phasing of sales will unwind in the second half of the year. In the US, our wholesale business continues to perform well. We anticipate Group wholesale sales for the full year being some 12.0% ahead of last year.

Licence Income

Our product and territorial licences continue to perform in line with expectations.

Outlook

Whilst we have made a good start to the financial year, our results for the full year will be dependent on trading in the second half of the financial year and, at this stage, we remain cautious given the uncertain macroeconomic environment. Our costs and commitments remain under control and, with our strong balance sheet, we will continue to invest in the long term development of the Ted Baker brand.

We intend to make our next interim management statement, covering the period since the start of the second half of the financial year, in mid November.

Condensed Group Income Statement

For the 28 weeks ended 13 August 2011

Condensed Group Statement of Comprehensive Income

For the 28 weeks ended 13 August 2011

Condensed Group Statement of Changes in Equity - Unaudited

For the 28 weeks ended 13 August 2011

Condensed Group Statement of Changes in Equity - Unaudited

For the 28 weeks ended 14 August 2010

Condensed Group Statement of Changes in Equity - Audited

For the 52 weeks ended 29 January 2011

Condensed Group Balance Sheet

At 13 August 2011

Condensed Group Cash Flow Statement

For the 28 weeks ended 13 August 2011

Notes to the Condensed Interim Financial Statements

For the 28 weeks ended 13 August 2011

1. Basis of preparation

a. Reporting entity

Ted Baker PLC is a company domiciled in the United Kingdom. The condensed interim financial statements ("interim financial statements") of Ted Baker PLC as at and for the 28 weeks ended 13 August 2011 comprise the Company and its subsidiaries (together referred to as the "Group").

The Group financial statements as at and for the 52 weeks ended 29 January 2011 are available upon request from the Company's registered office at Ted Baker PLC, The Ugly Brown Building, 6a St. Pancras Way, London NW1 0TB or at www.tedbakerplc.com.

b. Statement of compliance

These interim financial statements have been prepared in accordance with "IAS 34 Interim Financial Reporting" as adopted by the EU and the requirements of the Disclosures and Transparency Rules. They do not include all of the information required for full annual financial statements and should be read in conjunction with the Group financial statements as at and for the 52 weeks ended 29 January 2011. These interim financial statements were approved by the Board of Directors on 6 October 2011.

The comparative figures for the 52 weeks ended 29 January 2011 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditors and delivered to the registrar of companies. The report of the auditors was (i) unqualified; (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report; and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006. These sections address whether proper accounting records have been kept, whether the Company's accounts are in agreement with these records and whether the auditors have obtained all the information and explanations necessary for the purposes of the audit.

The financial information in this document is unaudited, but has been reviewed by the auditors in accordance with the Auditing Practices Board guidance on Review of Interim Financial Information.

c. Going concern

The Group financial statements for the 52 weeks ended 29 January 2011, approved by the Board on 24 March 2011, included information on the business environment in which the Group operates, including the factors that are likely to impact the future prospects of the Group, together with the principal risks and uncertainties that the Group faces. In addition, the notes to the consolidated financial statements set out the Group's objectives, policies and processes for managing its financial and capital risk and its exposures to credit, market and liquidity risk. Many of the risks and uncertainties reported are such that their potential to impact the Group's operations are inherent and remain valid as regards to their potential impact during the second half of 2011. The impact of the economic environment in which the Group's businesses operate is considered in the Chairman's Statement.

The Directors have prepared trading and cash flow forecasts for a period of one year from the date of approval of these interim financial statements. The Directors have a reasonable expectation that the Group has adequate cash headroom and expects to meet all banking covenant requirements. Accordingly, they continue to adopt a going concern basis in preparing the financial statements of the Group.

d. Significant accounting policies

Except as noted below, these interim financial statements have been prepared using the same accounting policies as used in the preparation of the Group's financial statements for the 52 weeks ended 29 January 2011 and as discussed therein.

Revised and amended standards and interpretations

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:

·; Amendment to IAS 32, Financial Instruments: Presentation: Classification of Rights Issues;

·; IFRIC 19, Extinguishing Financial Liabilities with Equity Instruments;

·; IAS24, Related Party Disclosures; and

·; Amendment to IFRIC 14, IAS 19, The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction.

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.

The accounting policies of the reportable segments are the same as described in note (s) on page 52 of the Group financial statements as at and for the 52 weeks ended 29 January 2011. Information regarding the results of each reportable segment is included below. 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.

Segment revenue and segment result

Wholesale sales are shown after the elimination of inter-company sales of £9,816,000 (14 August 2010: £6,601,000, 29 January 2011: £14,596,000).

3. Finance income and expenses

4. Earnings per share

5. Dividends per share

The Board has declared an interim dividend of 7.15p per share (2010: 6.3p) payable on 25 November 2011 to shareholders on the register at the close of business on 21 October 2011.

6. Income tax expense

The Group's full year forecast effective tax rate in respect of continuing operations for the 28 weeks ended 13 August 2011 was 27.4% (28 weeks ended 14 August 2010: 29.3%, 52 weeks ended 29 January 2011: 28.7%).

The UK corporation tax rate reduced from 28% to 26% on April 1, 2011 and the effective tax rate takes this reduction into account. As a further reduction to 25% was substantially enacted in Finance Act 2011, the closing deferred tax assets and liabilities have been remeasured. The proposed future reductions in the rate to 23% will be reflected when the relevant legislation is substantively enacted. The effective tax rate is expected to fall in line with these future rate reductions.

7. Share based payments

Share options and Long Term Incentive Plans "LTIP" awards

Equity settled awards are granted to employees in the form of share options, share awards or the award of units that can convert to nil-cost options.

Share options are granted at an option price equal to the Company share price at the grant date, or at a discount of 20% in the case of SAYE share options. No consideration is payable when share awards or nil-cost options vest. The vesting period is generally between three and five years and the share options expire between three and ten years after grant. Share options and awards will also expire if the employee leaves the Group prior to the exercise or vesting date.

The terms and conditions of the grants made during the 28 weeks ended 13 August 2011 are as follows:

The basis of measuring fair value is consistent with that disclosed in the consolidated financial statements for the 52 weeks ended 29 January 2011. The range of inputs into the Black-Scholes model was as follows:

Value Creation Plan

The award of units is made under the Ted Baker 2009 Value Creation Plan ("2009 VCP"). Units have no value at grant, but subject to the satisfaction of earnings per share, share price and total shareholder return performance targets can convert and give participants the right to be granted nil-cost options at the end of the performance period.

No awards were made under the 2009 VCP in the 28 weeks ended 13 August 2011.

The charge to the income statement for 28 weeks ended 13 August 2011 for VCP awards amounted to £208,527 (2010: £208,527). Included in the charge for the period is an amount in respect of R S Kelvin, who is employed by the Company, amounting to £37,326 (2010: £37,326).

8. Reconciliation of cash and cash equivalents per balance sheet to the cash flow statement