RNS Number:2859S
Ted Baker PLC
06 October 2005
6 October 2005
Ted Baker plc
Interim Results for the 28 weeks ended 13 August 2005
Highlights
* Group revenue up 16.8% to #57.2m (2004: #49.0m)
* Retail sales up 16.6% to #35.7m (2004: #30.7m)
* Wholesale sales up 17.1% to #21.4m (2004: #18.3m)
* Licence income in line with last year at #1.8m (2004: #1.8m)
* Profit before tax increased by 12.4% to #6.3m (2004 restated: #5.6m)
* Basic earnings per share up 8.7% at 10.0p (2004 restated: 9.2p)
* Interim dividend up 11.4% to 3.9p per share (2004: 3.5p per share)
* US expansion progressing well with the successful launch in June of our '
Best in Show' store in Los Angeles, the extension to our New York store and
the planned opening of a new store in Dallas in November.
* First Asian territorial licence signed with the Li & Fung group of
companies for retail and wholesale distribution in Hong Kong, Macau, China,
Taiwan and South Korea.
Commenting, Ray Kelvin, Chief Executive, said:
"We are pleased to report strong first-half results despite a tough UK retail
environment. Both turnover and profits have increased highlighting the
continuing appeal of the brand as well as the resilience of our multi-channel
distribution strategy. Our expansion into the United States is progressing well
with the successful launch of a "Best in Show" store in Los Angeles in June.
We are delighted to report that we have signed our first territorial licence in
Asia, covering, Hong Kong, Macau, China, Taiwan and South Korea. This represents
a significant step in our long-term strategy to develop a global brand.
We are very encouraged by the positive reaction from our customers to the autumn
/ winter collections, although we have not been immune to the recent slowdown in
the UK retail market. While the Christmas period remains key to our overall
performance, the Board remains confident of a successful outcome for the year."
Enquiries:
Ted Baker plc Tel: 020 7796 4133 on 6 October 2005 only
Ray Kelvin, Chief Executive Tel: 020 7255 4800 thereafter
Lindsay Page, Finance Director
Hudson Sandler Tel:020 7796 4133
Noemie de Andia
Sandrine Gallien
Visit Ted's new e-commerce site at www.tedbaker.co.uk
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 pleased to report a strong first half performance despite a marked slowdown
in the UK retail environment. Both turnover and profits are significantly up on
last year, reflecting the strength of the Ted Baker brand and the continuing
appeal of our innovative collections. During the period we continued to build on
our presence in the United States with the successful opening of a 'Best in
Show' store in Los Angeles and we have made a significant step forward in our
global expansion plans with the signing of our first Asian licence.
FINANCIAL RESULTS
Group revenue increased by 16.8% to #57.2m (2004: #49.0m) in the 28 weeks ended
13 August 2005, with increases in both the retail and wholesale businesses.
The retail gross margin was broadly in line with last year while the wholesale
gross margin was ahead by 1% due to buying efficiencies, particularly in some of
our newer collections. This resulted in an improvement in the composite gross
margin at 57.0% (2004: 56.8%).
Distribution costs increased by 22.2% compared to last year, largely reflecting
the increase in our retail selling space. Administration expenses increased by
11.0% compared to last year, which included the expansion of the head office to
the first floor of the Ugly Brown Building to support the growth of the brand.
Operating profit increased by 9.7% to #6.2m (2004 restated: #5.7m). Profit
before tax for the period improved by 12.4% to #6.3m (2004 restated: #5.6m). The
effective tax rate of 32.0% compares to a rate of 29.7% for the same period last
year, which benefited from one off deductions relating to the exercise of share
options. Basic earnings per share increased by 8.7% to 10.0p (2004 restated:
9.2p).
DIVIDENDS
The Board has declared an increased interim dividend of 3.9p per share (2004:
3.5p) payable on 25 November 2005 to shareholders on the register at the close
of business on 4 November 2005.
RETAIL
Retail sales were up 16.6% to #35.7m (2004: #30.7m). Gross margins remained
strong and were broadly in line with last year at 65.9% (2004: 66.1%).
Average retail square footage increased by 24.6% to 131,769 sq.ft. (2004:
105,786 sq.ft.) as we expanded our retail space both in the UK and overseas.
Sales per square foot were down at #271 (2004: #290) due to a significant
increase in retail space as a result of relocations and new openings, which have
lower than average trading densities.
Our retail expansion in the United States continued with the opening of our '
Best in Show' store in Los Angeles in June. The 3,310 sq.ft. store is
quintessentially British and showcases the best of the menswear and womenswear
collections. The initial reaction to this store has been very positive. Our
other stores in the United States continue to trade in line with our
expectations, apart from Miami, which has continued to disappoint due to the
immaturity of the shopping centre in which it is located. We have reached an
agreement to exit this location in early 2006. There will be no profit impact
associated with this exit as the assets were fully written off in the previous
financial year.
WHOLESALE
The wholesale division continued to grow strongly in the first half and
represented 37.5% of group sales in the period (2004: 37.4%). Wholesale sales
increased by 17.1% to #21.5m (2004: #18.3m) reflecting growth across the
collections, particularly menswear and some earlier phasing of autumn / winter
deliveries.
Gross margins were above last year at 42.1% (2004: 41.1%) due to buying
efficiencies, particularly in some of our newer ranges.
LICENCE INCOME
Our licence income was in line with last year at #1.8m (2004: #1.8m) reflecting
the impact of a weaker dollar on the US licence income and a change in phasing
of licence income between the first and second half. We anticipate that
licence income will be ahead of last year for the full financial year as the
phasing unwinds.
We are particularly pleased with the continued development of our eyewear
licence as well as the progress made by our partner in Australia and New
Zealand.
COLLECTIONS
Sales of Ted Baker Menswear in the period enjoyed a strong performance
increasing by 22.5% reflecting the continuing expansion of our menswear
collections and the success of the Endurance range. Menswear now represents
56.3% of sales (2004: 53.8%). Womenswear increased by 15.4% and represented
38.1% of our total sales (2004: 38.5%). Sales of other collections, comprising
Childrenswear, Homeware and Footwear, were #3.2m (2004: #3.8m) and this
reduction mainly reflected a tough branded clothing market for childrenswear.
Other collections now represent 5.6% of sales (2004: 7.7%).
IFRS
For the year ending 28 January 2006, the Group will be required to prepare its
financial statements in accordance with International Financial Reporting
Standards (IFRS). Accordingly, the Group's interim results for the 28 weeks
ended 13 August 2005 have been prepared and reported under IFRS.
The adoption of IFRS represents an accounting change only and does not affect
the underlying business or cash flows. Details of the changes may be found in
note five of the interim financial statements. The most significant change has
been in the recognition of a fair value charge for share options, which has
resulted in an additional net charge of #0.3m in the first half of the year. We
estimate that the full year net charge will amount to #0.5m.
FIRST ASIAN LICENSING AGREEMENT
We are very pleased to announce that we have signed our first Asian licence
agreement with Li & Fung Licensing Limited, part of Li & Fung (Retailing)
Limited, a member of Li & Fung group of companies ('The Li & Fung Group'). The
Li & Fung Group operates three distinctive businesses - export trading, retail
and distribution - in 40 countries and employs over 12,000 people worldwide.
The licence agreement grants retail and wholesale distribution rights for the
Ted Baker brand in Hong Kong, Macau, China, Taiwan and South Korea. The
agreement, which is subject to minimum guarantees and distribution targets, runs
to 31 December 2011, and may be renewed for a further five years subject to
specific performance criteria.
We are delighted to be partnering with Li & Fung Licensing Ltd on the
development of our Asian business and although the financial impact of the
agreement will not be material in the short term, it represents significant
progress in our strategy to develop Ted Baker as a global brand.
CURRENT TRADING AND PROSPECTS
In the seven weeks to 1 October 2005, retail sales were 4.7% ahead of the same
period last year. We are encouraged by the positive reaction of our customers
to our autumn / winter collections although we have not been immune to the
recent slowdown in the UK retail market. Wholesale sales were 2.7% ahead of the
same period last year, reflecting in part the earlier phasing of deliveries in
the first half.
We have recently launched a new specialist classic shirt collection, Ted Baker
Archive, which combines tradition with a contemporary edge. The initial
reaction has been encouraging.
Our US expansion remains at the heart of our strategy. We are pleased to
announce the extension of our New York store in Soho to include a 1,700 sq.ft.
dedicated area for womenswear and we will open a new store in North Park Centre,
in Dallas in November. We continue to consider further opportunities within the
US retail market.
While the Christmas period remains key to our overall performance, the Board
remains confident of a successful outcome for the year.
Robert Breare
6 October 2005
Unaudited consolidated income statement
For the 28 weeks ended 13 August 2005
28 weeks ended 28 weeks ended 52 weeks ended
13 August 14 August 29 January
2005 2004 2005
Note
#'000 #'000 #'000
Revenue 57,182 48,968 105,753
Cost of sales (24,603) (21,170) (43,357)
Gross profit 32,579 27,798 62,396
Distribution costs (19,704) (16,118) (34,417)
Administration expenses (8,757) (7,886) (15,089)
Other operating income 2,088 1,862 3,515
Operating profit 6,206 5,656 16,405
Financial income 2 99 35 68
Financial expenses 2 (48) (125) (221)
Profit before tax 6,257 5,566 16,252
Income tax expense (2,002) (1,655) (4,884)
Profit for the period 4,255 3,911 11,368
Attributable to:
Equity shareholders 4,263 3,898 11,347
Minority interests (8) 13 21
Profit for the period 4,255 3,911 11,368
Earnings per share 3
Basic 10.0p 9.2p 26.6p
Diluted 9.7p 9.1p 26.0p
Unaudited consolidated statement of changes in equity
For the 28 weeks ended 13 August 2005
Share Share Other Retained Minority Total
capital premium reserves earnings interest equity
#'000 #'000 #'000 #'000 #'000 #'000
Balance at 29 January 2005 2,149 6,983 - 27,738 (40) 36,830
Transitional IFRS adjustments - - 286 - - 286
Balance at 30 January 2005 2,149 6,983 286 27,738 (40) 37,116
Share option charge - - - 337 - 337
Deferred tax on share options - - - 222 - 222
Change in fair value - - (66) - - (66)
Change in hedge reserve - - 193 - - 193
Exchange rate movement - - - 26 - 26
Profit for the period - - - 4,263 (8) 4,255
Purchase of own shares - - - (447) - (447)
Shares vested - - - 229 - 229
Gain on sale of own shares - - - 41 - 41
Dividends paid - - - (3,138) - (3,138)
Balance at 13 August 2005 2,149 6,983 413 29,271 (48) 38,768
Share Share Other Retained Minority Total
capital premium reserves earnings interest equity
#'000 #'000 #'000 #'000 #'000 #'000
Balance at 31 January 2004 2,131 5,358 - 20,086 (61) 27,514
Share option charge - - - 322 - 322
Deferred tax on share options - - - 177 - 177
Exchange rate movement - - - 2 - 2
Profit for the period - - - 3,898 13 3,911
Shares issued 17 1,500 - (1,040) - 477
Shares vested - - - 110 - 110
Dividends paid - - - (2,746) - (2,746)
Balance at 14 August 2004 2,148 6,858 - 20,809 (48) 29,767
Unaudited consolidated balance sheet
At 13 August 2005
13 August 14 August 29 January
Note 2005 2004 2005
#'000 #'000 #'000
Non-current assets
Intangible assets 501 495 506
Property, plant and equipment 18,021 15,128 17,346
Deferred income tax assets 1,512 591 1,190
Available-for-sale financial assets 362 - -
20,396 16,214 19,042
Current assets
Inventories 24,887 19,849 22,725
Trade and other receivables 12,925 11,586 8,762
Derivative financial assets 118 - -
Cash and cash equivalents 4,954 5,593 9,603
42,884 37,028 41,090
Total assets 63,280 53,242 60,132
Current liabilities
Trade and other payables (18,023) (14,689) (15,806)
Borrowings (1,308) (5,238) -
Current tax payable (3,722) (3,068) (6,123)
Derivative financial liabilities (86) - -
(23,139) (22,995) (21,929)
Non-current liabilities
Borrowings (750) - (750)
Deferred tax liabilities (623) (480) (623)
(1,373) (480) (1,373)
Total liabilities (24,512) (23,475) (23,302)
Net assets 38,768 29,767 36,830
Equity
Share capital 2,149 2,148 2,149
Share premium account 6,983 6,858 6,983
Other reserves 413 - -
Retained earnings 29,271 20,809 27,738
Total equity attributable to equity
holders of the parent
38,816 29,815 36,870
Minority interests (48) (48) (40)
Total equity 38,768 29,767 36,830
Unaudited consolidated cash flow statement
For the 28 weeks ended 13 August 2005
28 weeks ended 28 weeks ended 52 weeks ended
13 August 14 August 29 January
2005 2004 2005
Note
#'000 #'000 #'000
Cash flows from operating activities
Cash generated from operations 4 2,553 2,821 18,535
Interest paid (38) (101) (231)
Income taxes paid (2,674) (3,142) (4,344)
Net cash generated from operating
activities (159) (422) 13,960
Cash flows from investing activities
Purchases of property, plant & equipment (2,675) (2,912) (7,527)
Proceeds from sale of property, plant and
equipment 35 - (39)
Interest received 43 30 59
Net cash from investing activities (2,597) (2,882) (7,507)
Cash flow from financing activities
Proceeds from issue of ordinary shares - 477 550
Purchase of own shares (447) - -
Shares vested 229 110 380
Loan repayment - - (4,000)
Increase in borrowings - - 750
Dividends paid (3,138) (2,746) (4,250)
Net cash from financing activities (3,356) (2,159) (6,570)
Net decrease in cash and cash equivalents (6,112) (5,463) (117)
Reconciliation of cash flows to movement
in net funds / (debt)
Net funds at start of period 8,853 5,811 5,811
Net decrease in cash and cash equivalents (6,112) (5,463) (117)
Loan repayment - - 4,000
Increase in borrowings - - (750)
Non cash movements 42 - 5
Exchange rate movement 113 7 (96)
Net funds at end of period 2,896 355 8,853
Notes to the interim financial statements
For the 28 weeks ended 13 August 2005
1. Basis of preparation
EU law (IAS Regulation EC 1606/2002) requires that the next annual consolidated
financial statements of the Company, for the 52 weeks ending 28 January 2006, be
prepared in accordance with International Financial Reporting Standards (IFRSs)
adopted for use in the EU ("adopted IFRSs").
This interim financial information has been prepared on the basis of the
recognition and measurement requirements of adopted IFRSs as at 13 August 2005
that are effective (or available for early adoption) at 28 January 2006, the
Group's first annual reporting date at which it is required to use adopted
IFRSs. Based on these adopted IFRSs, the directors have applied the accounting
policies, as set out in note 5, which they expect to apply when the first annual
IFRS financial statements are prepared for the 52 weeks ending 28 January 2006.
The adopted IFRSs that will be effective (or available for early adoption) in
the annual financial statements for the 52 weeks ending 28 January 2006 are
still subject to change and to additional interpretations and therefore cannot
be determined with certainty. Accordingly, the accounting policies for that
annual period will be determined when the annual financial statements are
prepared for the 52 weeks ending 28 January 2006.
Due to the transition from UK Generally Accepted Accounting Principles (UK GAAP)
to IFRS, the comparative figures for the 52 weeks ended 29 January 2005 for Ted
Baker PLC are not the statutory accounts for that period. The financial
statements for that period prepared under UK GAAP have been delivered to the
Registrar of Companies. The auditors' report on these financial statements was
unqualified and did not include a statement under Section 237 (2) or (3) of the
Companies Act 1985.
2. Financial income and expenses
28 weeks 28 weeks 52 weeks
ended ended ended
13 August 14 August 29 January
2005 2004 2005
#'000 #'000 #'000
Financial income
- Interest receivable 46 35 68
- Exchange rate movement 53 - -
99 35 68
Financial expenses
- Interest payable (48) (125) (221)
(48) (125) (221)
3. Earnings per share (unaudited)
28 weeks 28 weeks 52 weeks
ended ended ended
13 August 14 August 29 January
2005 2004 2005
No No No
Number of shares:
Weighted number of ordinary shares outstanding 42,504,123 42,289,521 42,375,426
Effect of dilutive options 1,159,850 223,918 991,840
Weighted number of ordinary shares outstanding
- diluted 43,663,973 42,513,439 43,367,266
Earnings: #'000 #'000 #'000
Profit attributable to equity shareholders' 4,263 3,898 11,347
Less: dividends on own shares (19) (24) (66)
Profit - basic and diluted 4,244 3,874 11,281
Basic earnings per share 10.0p 9.2p 26.6p
Diluted earnings per share 9.7p 9.1p 26.0p
4. Cash generated from operations
28 weeks ended 28 weeks ended 52 weeks ended
13 August 14 August 29 January
2005 2004 2005
#'000 #'000 #'000
Profit for the period 4,255 3,911 11,368
Adjusted for:
- Tax 2,002 1,655 4,884
- Depreciation 2,041 1,690 3,451
- (Profit) / loss on disposal of property, plant &
equipment 2 (10) 152
- Impairment of fixed assets - - 381
- Share option charge 337 322 605
- Net finance costs 2 90 153
- Change in hedge reserve 51 - -
Changes in working capital
- Increase in inventories (2,076) (2,526) (5,457)
- Increase in trade and other receivables (4,489) (4,524) (1,554)
- Increase in trade and other payables 428 2,213 4,552
Cash generated from operations 2,553 2,821 18,535
5. Adoption of IFRS
a. Revised accounting policies
Revised accounting policies adopted as a result of the application of IFRS are
given below. All other accounting policies applied are consistent with those
disclosed in the financial statements of Ted Baker PLC for the 52 weeks ended 29
January 2005.
The Group has taken advantage of certain exemptions under IFRS 1 (first time
adoption of International Financial Reporting Standards) to assist in the
transition to reporting under IFRS, which are noted below.
IFRS 2 - Share based payments
In accordance with IFRS 2, the Group is required to recognise an expense for the
fair value of share options issued at the date of grant. The fair value is
calculated using the Black Scholes Model and the expense is recognised over the
vesting period of the scheme. The Group has elected to take the exemption to
only apply the measurement criteria of IFRS 2 to options granted after 7
November 2002. Deferred tax is calculated on the basis of the difference between
market price at the balance sheet date and the option exercise price. The excess
of the deferred tax over the cumulative P&L charge at the prevailing tax rate is
recognised in equity.
IFRS 3 - Business combinations
The Group has elected not to apply IFRS 3, Business Combinations retrospectively
to acquisitions that took place before the date of transition.
IAS 10 - Proposed dividends
Dividend distributions to the Company's shareholders are recognised as
liabilities in the Group's financial statements in the period in which the
dividends are approved by the Company's shareholders.
IAS 12 - Income taxes
Income tax on the profit and loss for the year comprises current and deferred
tax. Current tax payable is provided on taxable profits using tax rates at the
balance sheet date. Deferred tax is provided using the balance sheet liability
method, providing for temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for
taxation purposes. A deferred tax asset is only recognised to the extent that it
is probable that future taxable profits will be available against which the
asset can be utilised.
IAS 17 - Leasing
Payments made under operating leases are charged to the income statement on a
straight-line basis over the period of the lease. Inducements to enter into a
lease are recognised over the lease term. Premiums paid to enter into leases are
capitalised and classified as an intangible asset.
IAS 21 - Cumulative translation differences
The Group has elected to take the exemption in IFRS 1 allowing all brought
forward translation gains and losses to be set to zero.
IAS 32 and 39 - Financial instruments
The Group has elected to take the exemption not to restate comparative
information for financial instruments for IAS 32. As a result, the comparative
information for the 28 weeks ended 14 August 2004 and the 52 weeks ended 29
January 2005 is as previously reported under UK GAAP. Financial instruments that
are documented as part of an effective hedge of future cash flows are recognised
directly in equity and recycled to the income statement when the underlying cash
flows occur, or are no longer expected to occur.
Other financial instruments held by the Group are classified as being available
for sale and are stated at fair value, with any resultant gain or loss being
recognised in equity. When these investments are derecognised, the cumulative
gain or loss is recognised in the income statement.
b. Reconciliation of UK GAAP to IFRS profit
28 weeks 52 weeks ended
ended 14 ended 29
August 2004 January 2005
#'000 #'000
Profit before tax as previously reported under UK GAAP 5,841 16,762
IFRS Adjustments:
- Share based payments (275) (510)
Profit before tax in accordance with IFRS 5,566 16,252
Taxation as previously reported under UK GAAP (1,752) (5,066)
Tax effect of IFRS adjustment 97 182
Profit for the period in accordance with IFRS 3,911 11,368
c. Reconciliation of equity under IFRS to UK GAAP
31 January 14 August 29 January
2004 2004 2005
#'000 #'000 #'000
Total equity previously reported under UK GAAP 24,470 27,795 32,407
- Prior period adjustment UITF 38 under UK GAAP - (157) -
Total equity as restated under UK GAAP 24,470 27,638 32,407
IFRS Adjustments:
- Deferred Taxation 317 591 1,190
- Dividend recognition 2,727 1,491 3,138
- Other - 47 95
Total equity in accordance with IFRS 27,514 29,767 36,830
6. Interim report
This interim report will be sent by post to all registered shareholders. Copies
will be available to the public from the Company Secretary at the registered
office: Ted Baker PLC, The Ugly Brown Building, 6a St Pancras Way, London NW1
OTB.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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