RNS Number:8640J
Ted Baker PLC
17 March 2005
17 March 2005
Ted Baker PLC
Preliminary Results for the 52 weeks ended 29 January 2005
Highlights
* Group turnover up by 19.0% to #105.8m (2004: #88.8m)
- Retail sales up 16.9% to #71.7m (2004: #61.3m)
- Wholesale sales up 23.8% to #34.1m (2004: #27.5m).
- Licence income up 28.0% to #3.2m (2004, 53 weeks: #2.5m)
* Profit before tax up 20.5% to #16.8m (2004: #13.9m)
* Basic earnings per share up 20.7% at 27.4p per share (2004: 22.7p
per share)
* Final dividend of 7.3p per share, making a total for the year of
10.8p per share, an increase of 12.5% (2004, 53 weeks: 9.6p per share)
* Closing net funds of #8.9m compared to opening net funds of #5.8m
* Successful London openings of the new 'World of Ted' store in Regent
Street, the Endurance Store in Covent Garden and the 'Best in Show' store
in Westbourne Grove
* Careful retail expansion in the USA progressing well with the launch
of two additional stores in San Francisco and Las Vegas
Commenting on the results, Ray Kelvin, Chief Executive, said:
"I am delighted to report another excellent year for Ted Baker as reflected in
our strong turnover and profit growth over the period. The brand performed well
in the UK and overseas as we continued to focus on our key strengths of design,
product quality and attention to detail.
The current year has started well with both retail and wholesale sales ahead of
last year and we will continue our careful expansion of the brand through
retail, wholsesale and licensing."
Enquiries:
Ted Baker Tel: 020 7796 4133 on 17 March 2005 only
Ray Kelvin, Chief Executive thereafter Tel: 020 7255 4800
Lindsay Page, Finance Director
gcg hudson sandler Tel: 020 7796 4133
Noemie de Andia / Sandrine gallien
Visit Ted's e-commerce site at www.tedbaker.com and click on 'Share Info' to be
taken to our investor relations website.
Notes to Editors
Ted Baker is a leading UK fashion brand for men and women with three distinct
distribution channels: retail, wholesale and licensing. We pursue a policy of
careful brand management and growth by extending the breadth of our collections,
controlling our three distribution channels and developing our presence in key
overseas markets, especially the United States. We do not advertise but rather
support our brand profile by opening stores in selected retail locations and
cultivating the unique personality of our brand and unrivalled attention to
detail in our collections. Our innovative stance is illustrated by the
successful development of the "Endurance" suits collection which uses high
performance fabrics and cutting edge designs perfectly adapted to the Ted Baker
customers' demanding lifestyles.
CHAIRMAN'S STATEMENT
I am delighted to report another set of excellent results characterised by
double-digit sales growth in our three divisions: retail, wholesale and
licensing, as well as strong profit before tax growth reflecting the strength of
the brand. The Ted Baker brand continues to be well received in the United
States where we have made further progress this year.
Results
Group turnover increased by 19.0% to #105.8m (2004: #88.8m) for the 52 weeks
ended 29 January 2005. Operating profit increased by 18.6% to #16.9m (2004:
#14.3m) and profit before tax increased by 20.5% to #16.8m (2004: #13.9m).
Basic earnings per share increased by 20.7% to 27.4p per share (2004: 22.7p per
share).
Dividends
The Board is pleased to recommend a final dividend of 7.3p per share (2004: 6.4p
per share) making a total for the year of 10.8p per share (2004: 9.6p per share)
an increase of 12.5% over the previous year and brings the dividend level in
line with our targeted dividend cover of two and a half times. The final
dividend will be payable on 24 June 2005 to those shareholders on the register
on 20 May 2005.
Share Buy-back
In line with market practice, the Company will seek authority from shareholders
at the Annual General Meeting to buyback 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 certain directors 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 Annual
General Meeting.
Current Trading
We have made a good start to the new financial year with total retail sales
ahead by 23.3% for the first six weeks, compared with the same period last year.
Wholesale sales are up 15.7% and the phasing of deliveries has been similar to
the same period last year. We remain confident of another successful year for
the growth and development of our brand.
Robert Breare
Non-Executive Chairman
Chief Executive's Review
I am delighted to report another excellent year for Ted Baker as reflected in
our strong turnover and profit growth over the period. The brand performed well
in the UK and overseas as we continued to focus on our key strengths of design,
product quality and attention to detail. During the period we successfully
launched the Endurance store in Covent Garden, London, and opened our 'Best in
Show' store in Westbourne Grove, London, and a new 'World of Ted' store in
Regent Street, London. In the United States we have continued our careful retail
expansion with the opening of two additional stores in San Francisco and Las
Vegas.
Retail
The retail division performed strongly during the year with sales growth up
16.9% to #71.7m (2004: #61.3m). The average retail square footage rose by 15.4%
over the period to 114,153 sq. ft. (2004: 98,888 sq. ft.). At 29 January 2005,
total retail square footage was 129,023 sq. ft. (2004: 103,787 sq. ft.)
representing an increase of 24.3%. Retail sales per square foot increased from
#620 to #628.
At 29 January 2005, the retail division consisted of 96 retail locations
comprising 19 UK stores, 6 overseas stores, 64 concessions and 7 outlet stores.
This compares against the previous year where the retail division consisted of
87 retail locations comprising 18 UK stores, 4 overseas stores, 59 concessions
and 6 outlet stores.
In the UK, we continue to look for the right retail locations to showcase the
Ted Baker brand and the breadth of our collections. During the period we
launched our innovative Endurance suit store in Covent Garden, London, which
hosts the complete Ted Baker Endurance collection. In August, we opened our '
Best in Show' store in Westbourne Grove, London to carry the most directional
pieces of the Ted Baker collections in a prestigious retail environment and in
November we relocated our existing Soho store to a new 'World of Ted store' in
Regent Street, London. During the period, we also opened stores in Stansted
Airport and Guildford. In addition, we opened an outlet store in Cheshire Oaks,
the Wirral, and a further six concessions in leading department stores.
In the United States, we continued our expansion strategy with the opening of a
store in Union Square in San Francisco in June and in the Forum shops at
Caesar's Palace in Las Vegas in October. The initial success of these stores is
encouraging and confirms our belief that the Ted Baker brand ethos travels well
overseas. Our existing stores in New York and San Jose continue to perform in
line with our expectations, while Miami has continued to underperform in the
period due to the weakness of the centre in which it operates. We continue to
look for suitable store opportunities in the United States.
Wholesale
Our wholesale division performed strongly during the year reflecting continued
expansion of our collections and the addition of suitable new trustees for our
brand. Sales from the wholesale division rose by 23.8% to #34.1m (2004: #27.5m),
reflecting growth both in our established collections, especially Endurance and
Ted Baker Jean, and also our newer collections, including Childrenswear and
Accessories.
Licence Income
Licence income increased by 28.0% to #3.2m (2004: 53 weeks: #2.5m) reflecting
our sustained effort in further developing our product and territorial licences.
In the US, our wholesale licensee, Hartmarx Corporation, made good progress with
significant growth being achieved with the top independent stores and department
stores, which stock our brand. Whilst the level of licence income generated
remains below the guaranteed minimum level at this stage we anticipate that the
minimum guarantee will be exceeded within the next two years.
This year saw the first full year of trading from our new sunglasses and
opthalmics licensee, Mondottica Ltd, and we were very pleased with their
performance which considerably exceeded our expectations. Our shoe and
fragrance licensees both performed well during the year and were in line with
our expectations. Both licensees are now looking to develop the US market in
light of the increasing profile of the brand there. Our watch licensee also
recorded a very strong performance during the year.
The first year of trading for our territorial licence for Australia and New
Zealand has been ahead of expectations and a good foundation has been laid for
future growth.
Collections
Menswear turnover increased by 25.0% to #57.1m (2004: #45.7m) and Womenswear
grew by 13.9% to #41.5m (2004: #36.4m) as we continued to extend the breadth of
our ranges. In particular, our Accessories and Jeans collections registered
above average growth and our successful Endurance range now includes a washable
designer suit, 'The Fish out of Water', which has been well received. Other
collections contributed turnover of #7.1m (2004: #6.7m), which represented an
increase of 6.4%. This growth particularly reflects the success of our more
recently launched Childrenswear and Footwear collections.
Outlook
The current year has started well with both retail and wholesale sales ahead of
last year. Following a year of significant expansion of our retail space in the
UK and in the United States we are now looking forward to fine-tuning our estate
to reflect the most recent developments in the Ted Baker collections. In the UK,
we relocated our two Nottingham stores to a larger store shortly before the year
end and are particularly pleased with its performance to date. In addition, we
plan to open seven new concessions in leading department stores in the first
half of the year. We will also continue our careful expansion overseas with the
expected opening of our sixth store in the United States, in Los Angeles during
the Summer 2005.
Ray Kelvin
Chief Executive
Finance Director's Report
The financial results reflect our continued focus on margin led growth and
strong cash management. Our net margin before taxation increased to 15.9%
(2004: 15.7%) and opening net funds of #5.8m improved to closing net funds of
#8.9m.
Gross Margin
Retail gross margins were slightly above last year at 66.8% (2004: 66.7%) and
the wholesale gross margin decreased to 42.6% (2004: 43.1%) reflecting changes
in the product mix, particularly the growth of Childrenswear and the development
of our Endurance Sport range.
The increase in wholesale sales as a proportion of total sales and the reduction
in the composite wholesale gross margin led to a reduction in the composite
gross margin to 59.0% (2004: 59.4%).
Operating Expenses
Operating expenses rose by 18.9% to #49.0m (2004: #41.2m). Distribution costs,
which include the costs of new retail stores, outlets and concessions increased
by 14.6% to #34.4m (2004: #30.0m) which was in line with the increase in average
retail selling space. Administration expenses rose by 30.5% to #14.6m (2004:
#11.2m) reflecting further investment in our team and infrastructure. During the
year we leased an additional floor at the Ugly Brown Building, which will
provide sufficient space for the foreseeable future and we continue to
strengthen our design, sourcing and merchandising teams. As a result of our
successful year the discretionary bonus has also increased significantly.
Interest
The net interest charge during the year was below last year at #0.2m (2004:
#0.4m) reflecting continued generation of cash from operations.
Taxation
The tax charge for the year was #5.1m (2004: #4.3m), an effective tax rate of
30.2% (2004: 31.1%). The effective rate was lower mainly as a result of an
adjustment in respect of prior periods.
Shareholder Return
Basic earnings per share increased by 20.7% to 27.4p per share (2004: 22.7p per
share). Free cash flow per share increased 12.8% from 28.9p to 32.6p and the
dividend per share increased by 12.5% from 9.6p to 10.8p.
Cash Flow and Working Capital
Net cash inflow from operating activities was #18.5m (2004: #16.5m) primarily
reflecting increased trading and continued tight cash management. Working
capital was tightly controlled and increased from #4.5m to #5.7m largely in line
with the growth of the business. Stock levels increased by 31.2% as a result of
the increase in retail square footage during the year and the growth and phasing
of the wholesale business.
Capital expenditure was #7.5m (2004: #4.1m) and largely comprised investment in
new retail stores.
Net cash outflow from financing was #2.3m (2004: net cash inflow #0.9m)
reflecting the early repayment of our #4.0m loan facility, offset by a new
facility for the Ted Baker Group Employee Benefit Trust.
Treasury and Risk Management
The principal risks to the Group arise from exchange rate and interest rate
fluctuations. The Board reviews and agrees policies for managing these risks on
a regular basis. Where appropriate, the Group uses financial instruments to
mitigate these risks. All transactions in derivatives, principally forward
foreign exchange contracts, are taken solely to manage these risks. No
transactions of a speculative nature are entered into. The most significant
exposure to foreign exchange fluctuations relates to purchases in foreign
currencies.
The Group's policy is to hedge substantially all the risks of such currency
fluctuations by using forward contracts taking into account forecast foreign
currency cash inflows. There has been no change since the year-end to the major
financial risks faced by the Group or the Group's approach to the management of
those risks.
International Financial Reporting Standards
The Company will be required to adopt International Financial Reporting
Standards (IFRS) with effect from its year ending January 2006. The Company has
set up a project team to achieve the transition to IFRS to enable it to report
under IFRS for the first time when it announces its interim results in 2005. We
have performed a high level review of the differences between IFRS and our
current accounting policies, and we are now quantifying the financial impacts of
convergence with IFRS. We are also looking at the wider implementation aspects.
Based on our work to date, we believe that the changes will mainly result in
differences to various accounting treatments including dividends, foreign
currency hedging, lease incentives and share based payments. It is our
intention to restate the year ended 29 January 2005 results on an IFRS basis
prior to our interim results, with an explanation of the major changes.
Lindsay Page
Finance Director
Consolidated Profit and Loss Account 52 weeks 53 weeks
For the 52 weeks ended 29 January 2005 ended ended
29 January 31 January
2005 2004
Notes #'000 #'000
Turnover 2 105,753 88,842
Cost of sales 2 (43,357) (36,088)
Gross profit 2 62,396 52,754
Other operating expenses (net) 3 (45,481) (38,494)
Operating profit 2 16,915 14,260
Interest receivable 68 31
Interest payable (221) (382)
Profit on ordinary activities before taxation 2, 4 16,762 13,909
Tax on profit on ordinary activities (5,066) (4,333)
Profit on ordinary activities after taxation 11,696 9,576
Minority interest - equity (21) 3
Profit for the financial year 11,675 9,579
Dividends paid and proposed (4,661) (4,066)
Retained profit for the period 7,014 5,513
Earnings per share 5
Basic earnings per share 27.4p 22.7p
Diluted earnings per share 26.7p 22.2p
Statement of total recognised gains and losses
For the 52 weeks ended 29 January 2005
#'000 #'000
Profit for the financial year 11,675 9,579
Exchange rate movement (33) (283)
Total recognised gains relating to the year 11,642 9,296
The accompanying notes are an integral part of this consolidated profit and loss
account.
There are no differences between the Company's historical cost profit and that
recorded in the profit and loss account (2004: #nil).
A statement on movements on reserves is given in note 8. The profit from the
current and previous periods was entirely derived from continuing activities.
Consolidated Balance Sheet 29 January Restated 31
January
At 29 January 2005 2005
2004
Notes #'000 #'000
Fixed assets
Tangible assets 17,852 14,410
Current assets
Stocks 22,725 17,321
Debtors 8,762 7,054
Cash at bank and in hand 9,603 9,811
41,090 34,186
Creditors: amounts falling due within one year (25,162) (19,646)
Net current assets 15,928 14,540
Total assets less current liabilities 33,780 28,950
Creditors: amounts falling due after more than one year (750) (4,000)
Provisions for liabilities and charges (623) (480)
Net assets 32,407 24,470
Capital and reserves
Called-up share capital 8 2,149 2,131
Share premium 8 6,983 5,358
Profit and loss account 8 23,315 17,042
Equity shareholders' funds 32,447 24,531
Minority interests - equity 8 (40) (61)
Total capital and reserves 32,407 24,470
CONSOLIDATED CASHFLOW STATEMENT 52 weeks Restated
For the 52 weeks ended 29 January 2005 ended 53 weeks
29 January ended
2005 31 January
2004
Notes #'000 #'000
Net cash inflow from operating activities 6 18,535 16,488
Returns on investments and servicing of finance
Interest received 59 19
Interest paid (231) (367)
Net cash outflow from returns on investment and
servicing of finance (172) (348)
Taxation
UK corporation tax paid (4,344) (3,843)
Capital expenditure and financial investment 7 (7,566) (1,915)
Equity dividends paid (4,250) (3,743)
Cash inflow before financing 2,203 6,639
Financing
Loan repayment (4,000) -
Debt due after more than one year 750 -
Shares issued 550 1,564
Shares purchased - (694)
Sale of own shares 380 7
Net cash (outflow) / inflow from financing (2,320) 877
(Decrease)/increase in cash in the period 7 (117) 7,516
Notes
1. Basis of preparation
The financial information set out above does not constitute the Company's
statutory accounts for the 52 weeks ended 29 January 2005 or 53 weeks ended 31
January 2004 but is derived from those accounts. Statutory accounts for 2004
have been delivered to the registrar of companies, and those for 2005 will be
delivered following the Company's annual general meeting. The auditors have
reported on those accounts; their reports were unqualified and did not contain
statements under section 237(2) or (3) of the Companies Act 1985.
Further copies of the financial statements will be available after the annual
general meeting from the Company Secretary of Ted Baker PLC, The Ugly Brown
Building, 6a St. Pancras Way, London NW1 0TB. Copies of the financial
statements can also be found online on our investor relations site at
www.tedbaker.com.
The Group has implemented Urgent Issues Task Force Abstract 38 'Accounting for
ESOP Trusts' (UITF 38) during the year. The comparative results have been
restated accordingly and the impact is explained in note 8. In accordance with
UITF 38, the consideration paid for the shares held by employee trusts are
deducted in arriving at shareholders' funds and are no longer recognised as
investments.
2. Segment information
The turnover and profit before taxation 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 turnover 52 weeks 53 weeks
ended ended
29 January 31 January
2005 2004
#'000 #'000
Turnover by brand
Menswear 57,137 45,709
Womenswear 41,492 36,438
Other 7,124 6,695
105,753 88,842
b) Classes of business - by divisional activity
i) 52 weeks ended 29 January 2005
Retail Wholesale Total
#000 #000 #000
Turnover 71,669 34,084 105,753
Cost of sales (23,795) (19,562) (43,357)
Gross profit 47,874 14,522 62,396
Common operating costs (45,481)
Operating profit 16,915
Net interest payable (153)
Profit before taxation 16,762
Analysis of net assets
Net assets 18,897 4,657 23,554
Net financial assets 8,853
32,407
ii) 53 weeks ended 31 January 2004 (restated)
Retail Wholesale Total
#'000 #'000 #'000
Turnover 61,321 27,521 88,842
Cost of sales (20,415) (15,673) (36,088)
Gross profit 40,906 11,848 52,754
Common operating costs (38,494)
Operating profit 14,260
Net interest payable (351)
Profit before taxation 13,909
Analysis of net assets
Net assets 14,834 3,825 18,659
Net financial assets 5,811
24,470
Wholesale sales are stated net of inter-company sales of #2,567,000 (2004:
#912,000)
c) Classes of business - by geographic origin United
i) 52 weeks ended 29 January 2005 Kingdom Other Total
#'000 #'000 #'000
Turnover 101,188 4,565 105,753
Cost of sales (41,603) (1,754) (43,357)
Gross profit 59,585 2,811 62,396
Common operating costs (45,481)
Operating profit 16,915
Net interest payable (153)
Profit before taxation 16,762
Analysis of net assets
Net assets 26,288 (2,734) 23,554
Net financial assets 8,853
32,407
ii) 53 weeks ended 31 January 2004 (restated)
United Other Total
Kingdom
#'000 #'000 #'000
Turnover 85,650 3,192 88,842
Cost of sales (34,874) (1,214) (36,088)
Gross profit 50,776 1,978 52,754
Common operating costs (38,494)
Operating profit 14,260
Net interest payable (351)
Profit before taxation 13,909
Analysis of net assets
Net assets 20,974 (2,315) 18,659
Net financial assets 5,811
24,470
United Kingdom sales are stated net of inter-company sales of #2,567,000 (2004:
#912,000)
Other includes sales arising mainly in the United States. Turnover by
destination is not materially different from turnover by geographic origin.
3. Other operating expenses (net)
52 weeks 53 weeks
ended ended
29 January 31 January
2005 2004
#'000 #'000
Distribution costs 34,417 30,044
Administrative expenses 14,579 11,169
Other operating income (3,515) (2,719)
Other operating expenses (net) 45,481 38,494
4. Profit on ordinary activities before taxation
52 weeks 53 weeks
ended ended
29 January 31 January
2005 2004
#000 #000
Profit on ordinary activities before taxation is stated after charging:
Depreciation and amounts written off owned tangible fixed assets 3,451 3,285
Impairment of fixed assets. 381 -
Operating lease rentals 7,060 5,485
Auditors' remuneration for group audit services 33 28
Auditors' remuneration for group non-audit services 9 7
Auditors' remuneration for parent company audit services 6 6
Auditors' remuneration for parent company non-audit services - -
Loss on sale of fixed assets 152 -
Amounts payable to KPMG Audit Plc in respect of non-audit services relate to
review work associated with the interim statement.
5. Earnings per share
52 weeks 53 weeks
ended ended
29 January 31 January
2005 2004
No. No.
Number of shares:
Weighted number of ordinary shares outstanding 42,375,426 41,909,936
Effect of dilutive options 1,067,613 927,015
Weighted number of ordinary shares outstanding - diluted 43,443,039 42,836,951
Earnings: #'000 #'000
Profit for the financial year 11,675 9,579
Less: dividends on own shares (66) (67)
Profit - basic and diluted 11,609 9,512
Basic earnings per share 27.4p 22.7p
Diluted earnings per share 26.7p 22.2p
Own shares held by the Ted Baker Group Employee Benefit Trust and the Ted Baker
1998 Employee Benefit Trust have been eliminated from the weighted average
number of ordinary shares. Dividend income received by the Company as a result
of holding these own shares has been eliminated from the profit on ordinary
activities after taxation and minority interests. The options exercised during
the year and long-term incentive scheme awards distributed were of shares held
by these Trusts.
Diluted earnings per share have been calculated using additional ordinary shares
available under the 1997 Unapproved Share Option Scheme, the 1997 Executive
Share Option Scheme and the Ted Baker Performance Share Plan.
6. Reconciliation of operating profit to operating cash flows
52 weeks Restated
ended 53 weeks
29 January ended
2005 31 January
#'000 2004
#'000
Operating profit 16,915 14,260
Impairment of fixed assets 381 -
Depreciation charges 3,451 3,285
Loss on sale of tangible fixed assets 152 -
Increase in stocks (5,457) (3,435)
(Increase) / decrease in debtors (1,554) 264
Increase in creditors 4,647 2,114
Net cash inflow from operating activities 18,535 16,488
7. Analysis of cashflows
52 weeks 53 weeks
ended ended
29 January 31 January
2005 2004
#'000 #'000
a) Capital expenditure and financial investment
Purchase of tangible fixed assets (7,527) (4,131)
Sale of tangible fixed assets (39) 2,216
Net cash outflow (7,566) (1,915)
b) Reconciliation of net cashflow to movement in
net funds
(Decrease)/increase in cash in the period (117) 7,516
Loan repayment 4,000 -
Increase in debt due after more than 1 year (750) -
Cashflow 3,133 7,516
Non-cash movements 5 -
Exchange rate movement (96) (483)
Net funds / (debt) at start of period 5,811 (1,222)
Net funds at end of period 8,853 5,811
c) Analysis of net funds/ At 31 January Cashflow Non-cash Exchange At 29 January
(debt)
2004 movements rate 2005
movement
#000 #000 #000 #000 #000
Cash at bank and in hand 9,811 (117) 5 (96) 9,603
Debt due after more than (4,000) 3,250 - - (750)
one year
5,811 3,133 5 (96) 8,853
8. Share Capital and Reserves
Reserve for Profit and Minority
own shares loss account
Share Share premium Other Interests
capital #'000 #'000
#'000 #'000 #'000
#'000
At 31 January 2004 2,131 5,358 - 18,200 18,200 (61)
Prior period adjustment UITF38 - - (1,158) - (1,158) -
At 31 January 2004 as restated 2,131 5,358 (1,158) 18,200 17,042 (61)
Retained profit for the year - - - 7,014 7,014 21
Shares issued 18 1,625 - (1,093) (1,093) -
Shares vested - - 380 - 380 -
Gain on sale of own shares - - - 5 5 -
Exchange rate movement - - - (33) (33) -
At 29 January 2005 2,149 6,983 (778) 24,093 23,315 (40)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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