25th Mar 2009 07:00
25 March 2009
Ted Baker PLC
Annual results for the 53 weeks ended 31 January 2009
Highlights
Creditable performance from the Ted Baker brand in a very challenging market
Retail sales up 14.8%
New retail stores opened in Westfield London including a Ted Baker Pashion store, South Molton Street London, Heathrow Terminal 5, City of London, Bristol, Liverpool, Cambridge and Belfast
Good performance from the Licence division with underlying Licence income up 9.2%
|
2009 |
2008 |
Change |
|
|
Group Revenue |
£152.7m |
£142.2m |
+7.3% |
|
Profit Before Tax and Impairment* |
£19.6m |
£22.1m |
-11.4% |
|
Basic EPS excluding Impairment |
33.8p |
36.1p |
-6.4% |
|
Profit Before Tax |
£17.8m |
£22.1m |
-19.5% |
|
Basic EPS |
29.6p |
36.1p |
-18.0% |
|
Proposed Final Dividend |
11.4p |
11.4p |
- |
|
Cash Balance |
£4.7m |
£13.1m |
-64.4% |
* Excluding impairment losses of £1.8m
Commenting, Ray Kelvin, Founder and Chief Executive, said:
"I am pleased to report that the Group has delivered a good result for the year in a very challenging environment. This creditable performance can be attributed to the passion and commitment of our team, the strength of the Ted Baker brand, our quality and attention to detail and the resilience of our multi-channel distribution strategy.
The economic climate remains uncertain and our expectations for the year ahead reflect this. However, we believe the Group is well placed to weather this difficult environment. We have a strong balance sheet and will continue to invest in the development of the Ted Baker brand worldwide and take advantage of opportunities that may arise."
|
Enquiries: |
|
|
Ted Baker PLC |
Tel: 020 7796 4133 on 25 March 2009 only |
|
Ray Kelvin, Chief Executive |
Tel: 020 7255 4800 thereafter |
|
Lindsay Page, Finance Director |
|
|
Hudson Sandler |
Tel: 020 7796 4133 |
|
Michael Sandler / Kate Hough |
CHAIRMAN'S STATEMENT
The Group has delivered a good result in a very challenging market. During the year our trading environment has come under significant and increasing pressures, particularly in the second half of the financial year. Our creditable performance can be attributed to the strength of the Ted Baker brand, our quality and attention to detail and the resilience of our multi-channel distribution strategy.
Our retail division delivered sales growth of 14.8% to £118.2m, on a 18.8% increase in average retail square footage, as we continued to increase our presence across the United Kingdom. Our licence division also saw further growth with licence income up 3.8% to £5.5m.
As anticipated, wholesale sales were 12.2% down for the year. The underlying business of the division continued to perform well, although, the overall result was offset by the transfer of some wholesale accounts to retail concessions and the ongoing actions taken in respect of those customers who are no longer appropriate for our brand.
Results
Group revenue rose by 7.3% to £152.7m (2008: £142.2m) for the 53 weeks ended 31 January 2009. Profit before tax and impairment fell by 11.4% to £19.6m (2008: £22.1m) and profit before tax fell by 19.5% to £17.8m (2008: £22.1m).
Basic earnings per share before impairment fell by 6.4% to 33.8p (2008: 36.1p) and basic earnings per share fell by 18.0% to 29.6p (2008: 36.1p).
The Group has a strong balance sheet and continues to maintain its focus on cash management. Net cash generated from operations during the period was £11.1m (2008: £19.5m).
Dividends
The Board is recommending a final dividend of 11.4p per share (2008: 11.4p per share) making a total for the year of 16.65p per share (2008: 16.4p per share) an increase of 1.5% on the previous year. The final dividend will be payable on 19 June 2009 to those shareholders on the register on 15 May 2009.
Share Buy-back
In line with market practice, the Company will seek to renew the authority from shareholders to buy back up to 10% of the ordinary issued share capital of the Company in the next twelve months. As the exercise of such authority could give rise to an obligation on the part of Ray Kelvin, Founder and Chief Executive of the Company, to make a mandatory offer under Rule 9 of The City Code on Takeovers and Mergers, such authority will also be conditional on the Panel on Takeovers and Mergers agreeing to grant a dispensation from that obligation. Further details of this will be sent out in a letter accompanying the Notice of Meeting.
People
This good result in a challenging environment would not have been possible without our dedicated and committed team. The enthusiasm of our teams around the world and their passion for our brand is a key factor in our continued development. On behalf of the Board, I would like to thank everyone at Ted Baker for their continuing efforts and hard work during the year.
On 25 February 2009 we were delighted to announce the appointment of Ron Stewart as an independent non-executive director. Prior to his retirement in 2003, Ron was Deputy Managing Director Corporate Banking (London) of The Royal Bank of Scotland PLC and has over 39 years of banking experience. On behalf of my colleagues, I would like to welcome Ron to the Board and we look forward to his contribution in the future.
Current Trading and Outlook
Group
The economic climate remains uncertain and our expectations for the current financial year reflect this. In line with market expectations, results for the year ending January 2010 will be below the level achieved in the year ended January 2009. We have taken action to ensure our costs and commitments remain controlled and in line with the trends we anticipate for 2009. We believe that we are well prepared to deal with the challenges that lie ahead.
The Group is financially strong and will continue to invest in the development of the Ted Baker brand worldwide and take advantage of opportunities that may arise.
Retail
Trading for the year to date is slightly ahead of our expectations. We continue to experience difficult trading conditions in our overseas markets, offset by a better than anticipated performance in the UK. Following a strong sale period we entered the new season with a clean stock position and our Spring / Summer collections have been well received by our customers.
Wholesale
We also expect our wholesale business to be affected by the current economic environment. Our wholesale customers are generally cautious in their outlook for the year and this is being reflected in their overall forward order commitments. Wholesale sales will also be affected by further transfers to the retail division, our decision to focus the childrenswear business on licenced product and the closure of certain accounts no longer appropriate for our brand. As a result, we anticipate a further fall in wholesale sales in the current year at least equivalent to that experienced in the prior year.
Licence Income
Our licencees generally continue to report good progress and perform in line with our expectations, with the exception of our licence partner for North America, Hartmarx Corporation, who filed for protection under Chapter 11 of the US Bankruptcy Code.
We intend to make our next interim management statement, covering trading since the start of the financial year, towards the end of May 2009.
Robert Breare
Non-Executive Chairman
25 March 2009
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; Accessories; Lingerie and Underwear; Childrenswear; Fragrance and Skinwear; Footwear; 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 and the Middle East and Asia.
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
Sales across the retail division rose by 14.8% to £118.2m (2008: £103.0m). This good performance was delivered in challenging trading conditions across all territories. Average retail square footage rose by 18.8% over the period to 185,102 sq ft (2008: 155,849 sq ft). At 31 January 2009, total retail square footage was 202,206 sq ft (2008: 165,261 sq ft), representing an increase of 22.4% on the prior year. Despite the tough market backdrop we saw only a 3.7% fall in retail sales per sq ft from £651 to £627.
The retail gross margin was 63.2% (2008: 64.9%) with an underlying input margin slightly ahead of last year, diluted by the effect of three outlet stores that were not open for a full year in the comparable period and a higher level of promotional activity, necessary given the competitive environment in the second half of the financial year.
Wholesale
As anticipated, wholesale sales were 12.2% below last year, at £34.4m (2008: £39.2m). We estimate that around 70% of this decline arose from actions taken in respect of customers who are no longer appropriate to the brand. Sales were also affected by the transfer of some wholesale accounts to retail concessions.
Wholesale gross margins were 42.5% (2008: 40.3%) principally as a result of an improvement in the underlying input margin due to buying efficiencies.
Licence income
Ted Baker operates two types of licences: territorial licences covering North America, the Middle East, Asia, Australia and New Zealand; and product licences covering perfume & fragrance, watches, footwear, eyewear, childrenswear and lingerie.
Licence income for the year was up 3.8% to £5.5m (2008: £5.3m) and included a first full year of contribution from our licensed childrenswear collection exclusive to Debenhams which continues to perform well. With the exception of Hartmarx Corporation, our licence partner for North America (see below), all our other territorial and product licencees have also performed well.
On 23 January 2009, Hartmarx Corporation filed for protection under Chapter 11 of the US Bankruptcy Code. As a result of this we have not recognised the unpaid royalty income for the period October 2008 to the end of the financial year. At the date of this announcement the outcome remains uncertain, although we do not expect it to have a material financial effect on our business.
Our territorial and product licencees, excluding Hartmarx Corporation, were 9.2% ahead of last year.
During the year we signed a new watch licence for all territories, with the Advanced Watch Company Limited, trading as the Geneva Watch Company, following the expiry of the licence with Zeon in November.
Collections
Ted Baker Menswear sales were up 6.9% to £84.8m (2008: £79.3m). Menswear represented 55.5% of total sales (2008: 55.8%).
Ted Baker Womenswear sales were up 10.8% to £63.3m (2008: £57.2m), reflecting the growing strength of our Womenswear collections supported by our two standalone stores dedicated purely to Womenswear. Womenswear represented 41.5% of total sales (2008: 40.2%).
Sales of other collections, comprising Childrenswear and Footwear, were £4.5m (2008: £5.7m). These collections represented 3.0% of our total sales (2008: 4.0%). Having reviewed our Childrenswear business we have taken the decision to focus on the Baker by Ted Baker collections at Debenhams and will not be operating a designer childrenswear business for the foreseeable future.
GEOGRAPHIC PERFORMANCE
United Kingdom and Europe
Our UK and Europe retail division delivered a good performance for the year with sales up 15.5% to £107.8m (2008: £93.3m).
Average square footage rose by 20.1% over the period to 157,393 sq ft (2008: 131,085 sq ft). At 31 January 2009, total retail square footage was 174,148 sq ft (2008: 138,838 sq ft) representing an increase of 25.4%. Retail sales per square foot decreased from £700 to £671.
New store openings during the period included 'Ted Baker and Friends', our first store in the City of London, Ted Baker Pashion located in the White City luxury village and our second standalone store dedicated purely to Womenswear in South Molton Street London. Further store openings included Bristol, Cambridge, Liverpool One, a mainline store in White City, Heathrow Terminal 5 and Belfast. Also during the period, we opened 24 womenswear concessions in John Lewis.
At 31 January 2009 we operated 32 stores (2008: 23), 124 concessions (2008: 85) and 10 outlet stores (2008: 10).
Our e-commerce business continues to develop positively and we plan to make further enhancements to our transactional website site in 2009.
US
Our US retail division has delivered a disappointing performance for the period in a difficult trading environment. Sales decreased by 2.6% to $19.0m (2008: $19.5m) but in sterling due to the strengthening of the US Dollar, sales increased by 8.2% to £10.5m (2008: £9.7m).
Average square footage rose by 11.9% over the period to 27,709 sq ft (2008: 24,764 sq ft) as a result of the opening of a new Outlet in Las Vegas. Retail sales per square foot decreased from $787 to $686.
As at 31 January 2009 we operated 8 stores (2008: 8) and 1 outlet store (2008: 0).
Middle East, Asia and Australasia
Through our territorial licence partners Li and Fung Group of Companies and RSH Limited, we continue to expand carefully the Ted Baker brand across the Middle East and Asia and we were pleased to announce a further opening in the Dubai Mall during the year. We saw strong growth in the stores during the year as a whole, although the deteriorating economic climate began to have a negative effect on performance towards the end of the year.
The total number of stores and concessions in these territories is now 18 and we work closely with our partners in these territories to ensure the visual merchandising of the stores and the training of the teams reflect the Ted Baker ethos and culture.
Our store in Melbourne Australia, which is operated through a joint venture with our licence partner in the territory, completed a good first full year of trading. Our licencee continues to make progress in developing the brand across the territory.
FINANCIAL REVIEW
Gross Margin
The composite gross margin for the Group was 58.5% (2008: 58.1%), largely as a result of retail representing a greater proportion of our sales mix, albeit at a slightly lower gross margin than last year.
The composite gross margin in the United Kingdom increased to 59.1% (2008: 58.1%), whilst the composite gross margin in other territories fell to 54.2% (2008: 58.7%). The latter result was principally due to the full year impact of two new outlet stores.
Operating Expenses
Operating expenses rose by 14.8% to £75.9m (2008: £66.2m). Distribution costs, which include the costs of retail stores, outlets and concessions increased by 17.4% to £56.7m (2008: £48.3m), which was below the 18.8% increase in average retail selling space due to tight cost management and certain variable costs moving in line with turnover. Administration expenses increased by 7.6% to £19.2m (2008: £17.8m), reflecting the increased activity of our business.
Other Operating Income
Our territorial licence partner covering North America, Hartmarx Corporation, filed for protection under Chapter 11 of the US Bankruptcy Code on 23 January 2009. We are monitoring the situation, the outcome of which remains unclear at the date of this announcement. We have not recognised the unpaid royalty income for the period October 2008 to the end of the financial year, although excluding this, we do not anticipate a material financial impact on our business.
Profit Before Tax
Profit before tax and impairment fell by 11.4% to £19.6m (2008: £22.1m). This result was after the loss of royalty income in respect of Hartmarx Corporation, although, this was offset by the foreign exchange gain (see below).
Impairment Losses
The Group incurred a £1.8m impairment loss in relation to the carrying value of a number of retail assets. This accounting charge has no cash flow effect on the Group.
Finance Income and Expenses
Net interest payable during the year of £0.2m was in line with the prior year (2008: £0.2m) and reflected the seasonality of the Group's cashflow.
The foreign exchange gain during the year of £0.7m (2008: £0.1m) was principally due to the effect of the strengthening of both the US Dollar and the Euro on the retranslation of monetary assets and liabilities denominated in foreign currencies.
Taxation
The Group tax charge for the year was £5.2m (2008: £6.8m), an effective tax rate of 29.3% (2008: 30.9%).
The lower effective rate was primarily due to the reduction in UK taxation from 30% to 28% in April 2008. Otherwise, drivers affecting the tax charge for the Group remain broadly consistent with the prior period and we expect our effective rate to remain at around 29%.
Working Capital
Total working capital at the balance sheet date, which comprises inventories, trade and other receivables and trade and other payables increased by £6.3m to £28.0m (2008: £21.7m). The majority of this increase relates to a one off contractual change in payment terms. In addition, the strengthening of the US Dollar and the Euro has increased the sterling value of the working capital.
Cash Flow
Net cash generated from operating activities was £11.1m (2008: £19.5m). The decrease on the prior year was principally down to the movement in working capital as described above, but also reflected the lower profit in the period.
The movement in working capital as per the Group cash flow statement is higher due to the inclusion of the movement in derivative financial assets and significant translation differences at the year end.
Capital expenditure of £11.8m (2008: £8.7m) primarily reflected the opening of stores, concessions and outlets as demonstrated by the increase in retail square footage. This expenditure also included some refurbishment of existing locations.
During the period we acquired 500,000 own shares at a cost of £2.0m (2008: £4.9m) to be held in treasury.
Shareholder Return
Basic earnings per share before impairment fell by 6.4% from 36.1p to 33.8p, which is lower than the decrease in profit before tax due to the effect of the reduction in UK taxation.
The proposed final dividend per share is unchanged from the prior year at 11.4p per share. Free cash flow per share, which is calculated using the net cash generated from activities, was 26.0p (2008: 45.4p).
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 our income is generated in their currencies.
At the balance sheet date, the Group had hedged its projected commitments in respect of the year ending January 2010.
Borrowing Facilities
Borrowing facilities of £22.5m (2008: £13.0m) were available to the Group at 31 January 2009.
During the period the Group renewed its banking facilities with The Royal Bank of Scotland PLC, which comprised an unsecured committed facility of £12.5m. The Group also negotiated a £10.0m uncommitted, unsecured multi-option facility with Barclays Bank PLC.
At the balance sheet date, the borrowing facilities were unutilised.
Principal Risks and Uncertainties
The current unprecedented trading environment has affected, and will continue to affect, all areas of our business. We also recognise that we will be affected by the impact this will have on our customers, partners and suppliers. The Board has taken, and will continue to take, the necessary actions to recognise and deal with these challenges.
In September 2008, having considered the anticipated outlook for the remainder of 2008, the Board took actions to reduce costs and commitments in line with the trends envisaged for 2009. This activity covered all areas of our business and we believe that we are prepared to deal with the challenges that lie ahead.
There are a number of risks and uncertainties that face the Group, which are monitored by the Risk Committee. Although not exhaustive, the following list highlights some of the main issues:
as with all fashion brands, our teams are constantly striving to ensure that our offer is fashionable;
we rely on our teams, trustees and partners to protect our brand and ensure that it is presented in an appropriate way. This risk is minimised by careful consideration of each new opportunity and each partner with whom we do business;
global, economic and financial factors affecting our suppliers, customers and partners;
we may face increases in our operating costs due to growth in payroll, property and other costs, some of which may be outside the scope of our control;
the risks arising from exchange rate and interest rate fluctuations, although these are minimised through the use of financial instruments;
the strength of the financial sector, including credit insurance, impacting on the ability of the Group to operate effectively and efficiently. This risk is minimised by broadening our exposure to a number of different financial institutions;
operational problems including disruption to the infrastructure that supports our business; and
we recognise the importance of our teams within the business and have put in place a structure that minimises reliance on key individuals.
Cautionary statement regarding forward-looking statements
This announcement 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 announcement, and will not be updated during the year. The Directors can give no assurance that these expectations will prove to have been 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.
Group Income Statement
For the 53 weeks ended 31 January 2009
|
Note |
53 weeks ended 31 January 2009 |
52 weeks ended 26 January 2008 |
|||
|
£'000 |
£'000 |
||||
|
Revenue |
2 |
152,661 |
142,231 |
||
|
Cost of sales |
(63,295) |
(59,560) |
|||
|
Gross profit |
89,366 |
82,671 |
|||
|
Distribution costs |
(56,744) |
(48,320) |
|||
|
Administrative expenses |
|||||
|
- Other administrative expenses |
(19,204) |
(17,844) |
|||
|
- Impairment losses |
8 |
(1,786) |
- |
||
|
Other operating income |
5,529 |
5,635 |
|||
|
Operating profit |
17,161 |
22,142 |
|||
|
Finance income |
4 |
837 |
292 |
||
|
Finance expenses |
4 |
(307) |
(387) |
||
|
Share of profit of jointly controlled entity, net of tax |
75 |
10 |
|||
|
Profit before tax |
3 |
17,766 |
22,057 |
||
|
Income tax expense |
5 |
(5,198) |
(6,815) |
||
|
Profit for the period |
12,568 |
15,242 |
|||
|
Attributable to: |
|||||
|
Equity shareholders of the parent company |
12,593 |
15,196 |
|||
|
Minority interests |
(25) |
46 |
|||
|
Profit for the period |
12,568 |
15,242 |
|||
|
Earnings per share |
6 |
||||
|
Basic |
29.6p |
36.1p |
|||
|
Diluted |
29.6p |
35.9p |
|||
The income statement relates to continuing operations
Group Statement of Changes in Equity
For the 53 weeks ended 31 January 2009
|
Share capital |
Share premium account |
Cash flow hedging reserve |
Translation reserve |
Retained earnings |
Total equity attributable to equity shareholders of the parent company |
Minority interests |
Total equity |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Balance at 26 January 2008 |
2,160 |
9,137 |
251 |
(520) |
44,695 |
55,723 |
(11) |
55,712 |
|
Share option credit |
- |
- |
- |
- |
(301) |
(301) |
- |
(301) |
|
Movement on current / deferred tax on share options |
- |
- |
- |
- |
(44) |
(44) |
- |
(44) |
|
Deferred tax associated with movement in hedging reserve |
- |
- |
375 |
- |
- |
375 |
- |
375 |
|
Effective portion of changes in fair value of cash flow hedges |
- |
- |
3,396 |
- |
- |
3,396 |
- |
3,396 |
|
Net change in fair value of cash flow hedges transferred to profit or loss |
- |
- |
(2,309) |
- |
- |
(2,309) |
- |
(2,309) |
|
Exchange rate movement |
- |
- |
- |
1,702 |
- |
1,702 |
- |
1,702 |
|
Income and expense recognised directly in equity |
- |
- |
1,462 |
1,702 |
(345) |
2,819 |
- |
2,819 |
|
Profit for the period |
- |
- |
- |
- |
12,593 |
12,593 |
(25) |
12,568 |
|
Own shares acquired |
- |
- |
- |
- |
(2,014) |
(2,014) |
- |
(2,014) |
|
Disposal of treasury shares |
- |
- |
- |
- |
64 |
64 |
- |
64 |
|
Dividends paid |
- |
- |
- |
- |
(6,983) |
(6,983) |
- |
(6,983) |
|
Total recognised income and expense for the period |
- |
- |
1,462 |
1,702 |
3,315 |
6,479 |
(25) |
6,454 |
|
Balance at 31 January 2009 |
2,160 |
9,137 |
1,713 |
1,182 |
48,010 |
62,202 |
(36) |
62,166 |
For the 52 weeks ended 26 January 2008
|
Share capital |
Share premium account |
Cash flow hedging reserve |
Translation reserve |
Retained earnings |
Total equity attributable to equity shareholders of the parent company |
Minority interests |
Total equity |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Balance at 27 January 2007 (restated) |
2,160 |
9,052 |
(90) |
(493) |
40,709 |
51,338 |
(57) |
51,281 |
|
Share option charge |
- |
- |
- |
- |
234 |
234 |
- |
234 |
|
Movement on current/ deferred tax on share options |
- |
- |
- |
- |
(80) |
(80) |
- |
(80) |
|
Effective portion of changes in fair value of cash flow hedges |
- |
- |
590 |
- |
- |
590 |
- |
590 |
|
Net change in fair value of cash flow hedges transferred to profit or loss |
- |
- |
(249) |
- |
- |
(249) |
- |
(249) |
|
Exchange rate movement |
- |
- |
- |
(27) |
- |
(27) |
- |
(27) |
|
Income and expense recognised directly in equity |
- |
- |
341 |
(27) |
154 |
468 |
- |
468 |
|
Profit for the period |
- |
- |
- |
- |
15,196 |
15,196 |
46 |
15,242 |
|
Own shares acquired |
- |
- |
- |
- |
(4,936) |
(4,936) |
- |
(4,936) |
|
Transfer of treasury shares from PLC to Employee Benefit Trust |
- |
85 |
- |
- |
- |
85 |
- |
85 |
|
Disposal of own / treasury shares |
- |
- |
- |
- |
(7) |
(7) |
- |
(7) |
|
Dividends paid |
- |
- |
- |
- |
(6,421) |
(6,421) |
- |
(6,421) |
|
Total recognised income and expense for the period |
- |
85 |
341 |
(27) |
3,986 |
4,385 |
46 |
4,431 |
|
Balance at 26 January 2008 |
2,160 |
9,137 |
251 |
(520) |
44,695 |
55,723 |
(11) |
55,712 |
Group Balance Sheet
At 31 January 2009
|
Note |
31 January 2009 |
26 January 2008 |
||
|
£'000 |
£'000 |
|||
|
Non-current assets |
||||
|
Intangible assets |
673 |
543 |
||
|
Property, plant and equipment |
8 |
28,701 |
23,061 |
|
|
Investments in equity accounted investee |
85 |
10 |
||
|
Deferred tax assets |
904 |
336 |
||
|
Prepayments |
961 |
849 |
||
|
31,324 |
24,799 |
|||
|
Current assets |
||||
|
Inventories |
37,315 |
29,315 |
||
|
Trade and other receivables |
20,466 |
14,128 |
||
|
Amount due from equity accounted investee |
139 |
178 |
||
|
Derivative financial assets |
2,444 |
603 |
||
|
Cash and cash equivalents |
4,660 |
13,105 |
||
|
65,024 |
57,329 |
|||
|
Current liabilities |
||||
|
Trade and other payables |
(29,806) |
(21,777) |
||
|
Income tax payable |
(3,801) |
(3,418) |
||
|
Derivative financial liabilities |
- |
(378) |
||
|
(33,607) |
(25,573) |
|||
|
Non-current liabilities |
||||
|
Deferred tax liabilities |
(575) |
(843) |
||
|
(575) |
(843) |
|||
|
Net assets |
62,166 |
55,712 |
||
|
Equity |
||||
|
Share capital |
2,160 |
2,160 |
||
|
Share premium account |
9,137 |
9,137 |
||
|
Other reserves |
1,713 |
251 |
||
|
Translation reserve |
1,182 |
(520) |
||
|
Retained earnings |
48,010 |
44,695 |
||
|
Total equity attributable to equity shareholders of the parent company |
62,202 |
55,723 |
||
|
Minority interests |
(36) |
(11) |
||
|
Total equity |
62,166 |
55,712 |
Group Cash Flow Statement
For the 53 weeks ended 31 January 2009
|
53 weeks ended 31 January 2009 |
52 weeks ended 26 January 2008 |
|
|
£'000 |
£'000 |
|
|
Cash generated from operations |
||
|
Profit for the period |
12,568 |
15,242 |
|
Adjusted for: |
||
|
Income tax expense |
5,198 |
6,815 |
|
Depreciation |
5,990 |
4,807 |
|
Impairment losses |
1,786 |
- |
|
Loss on disposal of property, plant & equipment |
106 |
184 |
|
Share option (credit) / charge |
(301) |
234 |
|
Net finance gains / (losses) |
161 |
217 |
|
Net change in cash flow hedges |
1,087 |
341 |
|
Share of profit in joint venture |
(75) |
(10) |
|
Decrease / (increase) in non-current prepayments |
80 |
(789) |
|
Increase in inventories |
(5,923) |
(1,449) |
|
Increase in trade and other receivables |
(11,159) |
(3,050) |
|
Increase in trade and other payables |
6,967 |
1,324 |
|
Interest paid |
(330) |
(344) |
|
Income taxes paid |
(5,052) |
(4,068) |
|
Net cash generated from operating activities |
11,103 |
19,454 |
|
Cash flow from investing activities |
||
|
Purchases of property, plant & equipment |
(11,828) |
(8,709) |
|
Proceeds from sale of property, plant & equipment |
14 |
- |
|
Interest received |
149 |
171 |
|
Net cash from investing activities |
(11,665) |
(8,538) |
|
Cash flow from financing activities |
||
|
Own shares acquired |
(2,014) |
(4,936) |
|
Proceeds from option holders for exercise of options |
64 |
78 |
|
Dividends paid |
(6,983) |
(6,421) |
|
Net cash from financing activities |
(8,933) |
(11,279) |
|
Net decrease in cash and cash equivalents |
(9,495) |
(363) |
|
Cash and cash equivalents at 26 January 2008 / 27 January 2007 |
13,105 |
13,513 |
|
Exchange rate movement |
1,050 |
(45) |
|
Cash and cash equivalents at 31 January 2009 / 26 January 2008 |
4,660 |
13,105 |
Notes
1) Basis of preparation
EU law (IAS Regulation EC 1606/2002) requires that the Group financial statements, for the 53 weeks ended 31 January 2009, 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 31 January 2009.
The financial information set out above does not constitute the Group's statutory accounts for the 53 weeks ended 31 January 2009 or 26 January 2008. The annual financial information presented in this annual results announcement for the 53 weeks ended 31 January 2009 is based on, and is consistent with, that in the Group's audited financial statements for the 53 weeks ended 31 January 2009, and those financial statements will be delivered during the second week of May 2009. The auditor's report on those financial statements is unqualified and does not contain any statement under Section 237 of the Companies Act 1985.
Statutory accounts for 2007 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 237 (2) or (3) of the Companies Act 1985.
2) Segment information
The revenue and profit before tax are attributable to the Group's principal activities, the design and contracted manufacture of high quality fashion clothing and related accessories for wholesale and retail customers.
a) Analysis of revenue by brand
|
53 weeks ended 31 January 2009 |
52 weeks ended 26 January 2008 |
|
|
£'000 |
£'000 |
|
|
Menswear |
84,775 |
79,312 |
|
Womenswear |
63,342 |
57,181 |
|
Other |
4,544 |
5,738 |
|
152,661 |
142,231 |
b) Primary reporting format - divisional segments
|
53 weeks ended 31 January 2009 |
Retail |
Wholesale |
Total |
|
£'000 |
£'000 |
£'000 |
|
|
Revenue |
118,237 |
34,424 |
152,661 |
|
Cost of sales |
(43,505) |
(19,790) |
(63,295) |
|
Gross profit |
74,732 |
14,634 |
89,366 |
|
Operating costs |
(66,152) |
(9,796) |
(75,948) |
|
Impairment losses |
(1,786) |
- |
(1,786) |
|
Operating profit before other operating income |
6,794 |
4,838 |
11,632 |
|
Other operating income |
5,529 |
||
|
Operating profit |
17,161 |
||
|
Net finance income |
530 |
||
|
Share of profit of jointly controlled entity, net of tax |
75 |
||
|
Profit before tax |
17,766 |
||
|
Income tax expense |
(5,198) |
||
|
Profit for the period |
12,568 |
||
|
Segment assets |
75,566 |
19,654 |
95,220 |
|
Investment in equity accounted investee |
85 |
||
|
Amounts due from equity accounted investee |
139 |
||
|
Deferred tax assets |
904 |
||
|
Total assets |
96,348 |
||
|
Segment liabilities |
(23,085) |
(6,721) |
(29,806) |
|
Deferred tax liabilities and income tax payable |
(4,376) |
||
|
Total liabilities |
(34,182) |
||
|
Net assets |
62,166 |
||
|
Capital expenditure |
11,748 |
378 |
12,126 |
|
Depreciation |
5,803 |
187 |
5,990 |
|
52 weeks ended 26 January 2008 |
Retail |
Wholesale |
Total |
|
£'000 |
£'000 |
£'000 |
|
|
Revenue |
103,036 |
39,195 |
142,231 |
|
Cost of sales |
(36,168) |
(23,392) |
(59,560) |
|
Gross profit |
66,868 |
15,803 |
82,671 |
|
Operating costs |
(55,841) |
(10,323) |
(66,164) |
|
Operating profit before other operating income |
11,027 |
5,480 |
16,507 |
|
Other operating income |
5,635 |
||
|
Operating profit |
22,142 |
||
|
Net finance expense |
(95) |
||
|
Share of profit of jointly controlled entity, net of tax |
10 |
||
|
Profit before tax |
22,057 |
||
|
Income tax expense |
(6,815) |
||
|
Profit for the period |
15,242 |
||
|
Segment assets |
60,581 |
21,023 |
81,604 |
|
Investment in equity accounted investee |
10 |
||
|
Amounts due from equity accounted investee |
178 |
||
|
Deferred tax assets |
336 |
||
|
Total assets |
82,128 |
||
|
Segment liabilities |
(16,050) |
(6,105) |
(22,155) |
|
Deferred tax liabilities and income tax payable |
(4,261) |
||
|
Total liabilities |
(26,416) |
||
|
Net assets |
55,712 |
||
|
Capital expenditure |
8,375 |
460 |
8,835 |
|
Depreciation |
4,579 |
228 |
4,807 |
Wholesale sales are shown after the elimination of inter-company sales of £7,846,000 (2008: £4,855,000). The majority of other operating income relates to the Licence income for both 2009 and 2008.
* In accordance with IAS14, "segmental reporting", segmental assets and liabilities do not include current and deferred tax balances.
c) Secondary reporting format - geographical segments by origin
|
53 weeks ended 31 January 2009 |
United Kingdom |
Other |
Total |
|
£'000 |
£'000 |
£'000 |
|
|
Revenue |
135,186 |
17,475 |
152,661 |
|
Cost of sales |
(55,289) |
(8,006) |
(63,295) |
|
Gross profit |
79,897 |
9,469 |
89,366 |
|
Operating costs |
(65,553) |
(10,395) |
(75,948) |
|
Impairment losses |
(1,312) |
(474) |
(1,786) |
|
Operating profit before other operating income |
13,032 |
(1,400) |
11,632 |
|
Other operating income |
5,529 |
||
|
Operating profit |
17,161 |
||
|
Net finance income |
530 |
||
|
Share of profit of jointly controlled entity, net of tax |
75 |
||
|
Profit before tax |
17,766 |
||
|
Income tax expense |
(5,198) |
||
|
Profit for the period |
12,568 |
||
|
Segment assets |
77,130 |
18,090 |
95,220 |
|
Investment in equity accounted investee |
85 |
||
|
Amounts due from equity accounted investee |
139 |
||
|
Deferred tax assets |
904 |
||
|
Total assets |
96,348 |
||
|
Segment liabilities |
(27,439) |
(2,367) |
(29,806) |
|
Deferred tax liabilities and income tax payable |
(4,376) |
||
|
Total liabilities |
(34,182) |
||
|
Net assets |
62,166 |
||
|
Capital expenditure |
10,945 |
1,181 |
12,126 |
|
Depreciation |
5,031 |
959 |
5,990 |
|
52 weeks ended 26 January 2008 |
United Kingdom |
Other |
Total |
|
£'000 |
£'000 |
£'000 |
|
|
Revenue |
127,901 |
14,330 |
142,231 |
|
Cost of sales |
(53,638) |
(5,922) |
(59,560) |
|
Gross profit |
74,263 |
8,408 |
82,671 |
|
Operating costs |
(58,558) |
(7,606) |
(66,164) |
|
Operating profit before other operating income |
15,705 |
802 |
16,507 |
|
Other operating income |
5,635 |
||
|
Operating profit |
22,142 |
||
|
Net finance income |
(95) |
||
|
Share of profit of jointly controlled entity, net of tax |
10 |
||
|
Profit before tax |
22,057 |
||
|
Income tax expense |
(6,815) |
||
|
Profit for the period |
15,242 |
||
|
Segment assets |
67,553 |
14,051 |
81,604 |
|
Investment in equity accounted investee |
10 |
||
|
Amounts due from equity accounted investee |
178 |
||
|
Deferred tax assets |
336 |
||
|
Total assets |
82,128 |
||
|
Segment liabilities |
(20,335) |
(1,820) |
(22,155) |
|
Deferred tax liabilities and income tax payable |
(4,261) |
||
|
Total liabilities |
(26,416) |
||
|
Net assets |
55,712 |
||
|
Capital expenditure |
6,589 |
2,246 |
8,835 |
|
Depreciation |
4,083 |
724 |
4,807 |
United Kingdom sales are shown after the elimination of inter-company sales of £7,846,000 (2008: £4,855,000).
Other includes sales arising mainly in the United States and Eire. Revenue by destination is not materially different from revenue by geographic origin.
* In accordance with IAS14, "segmental reporting", segmental assets and liabilities do not include current and deferred tax balances.
3) Profit before taxation
|
Profit before taxation is stated after charging: |
53 weeks ended 31 January 2009 |
52 weeks ended 26 January 2008 |
|
£'000 |
£'000 |
|
|
Depreciation |
5,990 |
4,807 |
|
Impairment losses |
1,786 |
- |
|
Operating lease rentals |
12,299 |
10,132 |
|
Fees payable to the Company's auditor for the audit of the Company's annual accounts |
7 |
6 |
|
Fees payable to the Company's auditor for the audit of the Company's subsidiaries, pursuant to legislation |
75 |
67 |
|
Fees payable to the Company's auditor for other services supplied pursuant to legislation |
18 |
17 |
|
Other services provided by the Company's auditor |
- |
1 |
|
Loss on disposal of property, plant & equipment |
106 |
184 |
4) Finance income and expenses
|
53 weeks ended 31 January 2009 |
52 weeks ended 26 January 2008 |
|
|
£'000 |
£'000 |
|
|
Finance income |
||
|
- Interest receivable |
146 |
170 |
|
- Foreign exchange gains |
691 |
122 |
|
837 |
292 |
|
|
Finance expenses |
||
|
- Interest payable |
(307) |
(387) |
5) Income tax expense
a) The tax charge comprises
|
53 weeks ended 31 January 2009 |
52 weeks ended 26 January 2008 |
|
|
£'000 |
£'000 |
|
|
Current tax |
5,591 |
6,912 |
|
Deferred tax |
(156) |
39 |
|
Prior year over provision |
(237) |
(136) |
|
5,198 |
6,815 |
b) Deferred tax movement by type
|
53 weeks ended 31 January 2009 |
52 weeks ended 26 January 2008 |
|
|
£'000 |
£'000 |
|
|
Property, plant & equipment |
(261) |
(189) |
|
Share based payments |
224 |
88 |
|
Overseas losses |
(378) |
418 |
|
Inventory |
(7) |
(160) |
|
Other |
266 |
(118) |
|
(156) |
39 |
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.
|
53 weeks ended 31 January 2009 |
52 weeks ended 26 January 2008 |
|
|
£'000 |
£'000 |
|
|
Profit before tax |
17,766 |
22,057 |
|
Profit multiplied by a weighted average rate - 28.33%, (2008: 30%) |
5,033 |
6,617 |
|
Expenses not deductible for tax purposes |
397 |
430 |
|
Overseas losses not recognised |
34 |
- |
|
Statutory deductions for share options |
(3) |
2 |
|
Prior year corporation tax items |
(108) |
(894) |
|
Prior year deferred tax items |
(129) |
758 |
|
Effect of rate change on deferred tax |
- |
(63) |
|
Effect of rate change on corporation tax |
5 |
- |
|
Difference due to overseas tax rates |
(31) |
22 |
|
Utilisation of previously unrecognised tax losses |
- |
(57) |
|
Total income tax expense |
5,198 |
6,815 |
The UK current tax rate reduced from 30% to 28% with effect from 1 April 2008. In line with this change, the rate applied to UK current tax provisions is an effective rate of 28.33%.
d) Deferred and current tax recognised directly in equity
|
53 weeks ended 31 January 2009 |
52 weeks ended 26 January 2008 |
|
|
£'000 |
£'000 |
|
|
Deferred tax credit on share options |
(49) |
(192) |
|
Current tax on share options |
5 |
112 |
|
(44) |
(80) |
6) Earnings per share
|
53 weeks ended 31 January 2009 |
52 weeks ended 26 January 2008 |
|
|
No. |
No. |
|
|
Number of shares: |
||
|
Weighted number of ordinary shares outstanding |
42,563,397 |
42,066,481 |
|
Effect of dilutive options |
7,904 |
254,711 |
|
Weighted number of ordinary shares outstanding - diluted |
42,571,301 |
42,321,192 |
|
Earnings: |
||
|
Profit for the period basic and diluted - £'000 |
12,593 |
15,196 |
|
Basic earnings per share |
29.6p |
36.1p |
|
Diluted earnings per share |
29.6p |
35.9p |
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 long-term incentive scheme awards distributed were covered by shares held by the 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 and the Ted Baker Performance Share Plan.
There were no share related events after the balance sheet date that may affect earnings per share.
7) Dividends per share
|
53 weeks ended 31 January 2009 |
52 weeks ended 26 January 2008 |
|
|
£'000 |
£'000 |
|
|
Final dividend paid for prior year of 11.4p per ordinary share (2008: 10.3p) |
4,799 |
4,322 |
|
Interim dividend paid of 5.25p per ordinary share (2008: 5.0p) |
2,184 |
2,099 |
|
6,983 |
6,421 |
A final dividend in respect of 2009 of 11.4p per share, amounting to £4,742,930 is to be proposed at the Annual General Meeting on 16 June 2009.
8) Property, plant and equipment
|
Leasehold Improvements |
Fixtures, fittings & office equipment |
Motor vehicles |
Assets under construction |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Cost |
|||||
|
At 26 January 2008 |
22,029 |
23,341 |
139 |
1,912 |
47,421 |
|
Additions |
8,888 |
4,933 |
14 |
(1,709) |
12,126 |
|
Disposals |
(500) |
(166) |
- |
- |
(666) |
|
Exchange rate movement |
1,771 |
913 |
12 |
- |
2,696 |
|
At 31 January 2009 |
32,188 |
29,021 |
165 |
203 |
61,577 |
|
Depreciation |
|||||
|
At 26 January 2008 |
9,035 |
15,240 |
85 |
- |
24,360 |
|
Charge for the year |
2,290 |
3,670 |
30 |
- |
5,990 |
|
Impairment losses |
1,599 |
187 |
- |
- |
1,786 |
|
Disposals |
(363) |
(96) |
- |
- |
(459) |
|
Exchange rate movement |
458 |
733 |
8 |
- |
1,199 |
|
At 31 January 2009 |
13,019 |
19,734 |
123 |
- |
32,876 |
|
Net book value |
|||||
|
At 26 January 2008 |
12,994 |
8,101 |
54 |
1,912 |
23,061 |
|
At 31 January 2009 |
19,169 |
9,287 |
42 |
203 |
28,701 |
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 estimate 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 rates used to calculate value in use is derived from the Group's weighted average cost of capital.
The impairment loss recognised in the year of £1,786,000 (2008: £nil) is a result of a review of the carrying value of the store portfolio assets.
The impairment losses relate to stores whose recoverable amounts (value in use) do not exceed the asset carrying values. In all cases, impairment losses arise due to stores performing below forecasted 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 31 January 2009, the main trading company owed the parent company £9,149,000 (2008: £8,710,000). The main trading company was owed £10,873,000 (2008: £12,921,000) 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. As at 31 January 2009, the joint venture owed £139,000 to the main trading company (2008: £178,000). In the period the value of sales made to the joint venture by the Group was £280,000 (2008: £252,000).
The Group considers the Board of executive directors as key management. Further details are provided in the Remuneration Report.
Responsibility statement of the directors in respect of the annual financial report
We, the directors of the Company, confirm that to the best of our knowledge:
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
Pursuant to Chapter 4 of the Disclosure and Transparency Rules, the Group's annual report 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.
The contents of this announcement, including the responsibility statement above, have been extracted from the annual report and accounts for the period ended 31 January 2009 which can be found at www.tedbaker.com and will be despatched to shareholders during the second week of May 2009. Accordingly the responsibility statement makes reference to the financial statements of the Company and the Group and to the relevant narratives appearing in that annual report and accounts rather than the contents of this announcement.
On behalf of the board
|
Ray Kelvin |
Lindsay Page |
|
Chief Executive |
Financial Director |
|
25 March 2009 |
25 March 2009 |
Related Shares:
TED.L