RNS No 4600x
TED BAKER PLC
24th April 1998
Ted Baker PLC
Preliminary Results for the 53 weeks ended 31 January 1998
Highlights
* Turnover up 47.3% to #20.7m
* Profit before tax and exceptional costs up 35% to #5.75m
* Adjusted earnings per share up 36.7% to 9.53p
* Maiden final dividend of 3.0p net per share
* Significant growth in wholesale sales, up 75%, and further progress in
U.S
* Retail sales up 36%
* Significant development of Ted Baker Woman business, now 18.8% of
turnover
* Launch of Edward Baker
Ray Kelvin, Chief Executive, said:
"We're taking care of Ted."
Enquiries:
Ray Kelvin, Chief Executive Lindsay Page, Finance Director
0171 796 4133 on 24 April, 1998, 0171 387 0122 thereafter
Piers Hooper/Tim Robertson 0171 796 4133 (Hudson Sandler)
Ted Baker PLC
Chairman's Statement
Financial Highlights
It is with great pleasure that I report our maiden results as a listed company
for the period ended 31 January 1998. I am also delighted to announce
excellent results for the pro forma 53 weeks ended 31 January 1998 ("financial
year") under review, against a variable retail trading environment.
Review of results
Sales for the financial year increased by 47.3% from #14.0 million to #20.7
million. Operating profit before exceptional costs rose by 33.4% from #4.2
million to #5.5 million and profit before taxation and exceptional costs rose
by 35% from #4.26 million to #5.75 million. Adjusted earnings per share were
9.53p compared to 6.97p for the same period last year, an increase of 36.7%.
The Board intends to recommend to shareholders a maiden dividend in respect of
the second half of the financial year of 3.0p net per share. This would, in a
full year of listing, have equated to 4.5p per share. The dividend is
expected to be paid on 19 June 1998 to shareholders on the register at 11 May
1998.
Operations
The strength of the Ted Baker brand has enabled the Group to perform well
against a background of mixed fortunes in the sector. Ted Baker is one of the
leading designer menswear brands in the UK and together with its continuing
success I am delighted to report that Ted Baker Woman, our womenswear brand,
has moved ahead strongly. Additionally our boyswear brand, Teddy Boy, is now
established and our newly introduced brand, Edward Baker is showing promise.
During the period under review volume and margins have increased in both
retail and wholesale trading, reflecting not only the continuing strength of
the brands but also the efficiency of our sourcing, manufacture and
distribution. We aim to ensure that this focus on efficiency runs in tandem
with the creativity that supports our brands.
While the strongest growth in revenues has been, as planned, in our wholesale
trading business we are already seeing the benefits of the addition of
increased trading space to several of our retail outlets as well as the
opening of additional concessions within major department stores.
Ted Baker has made further progress in the United States, both on the West and
East Coasts, centered on Los Angeles and New York respectively. We believe
that there is a significant growth opportunity in this market and intend to
continue our carefully controlled expansion strategy to create an
international brand.
People
I am delighted that so many of our team are now shareholders or members of the
option scheme established prior to flotation. We will continue to focus on
ensuring that staff remain among the most highly motivated employees in our
industry. On behalf of the Board, I take this opportunity to thank them for
their hard work over the last financial year.
Flotation on the London Stock Exchange
The listing of the Company's shares on the Official List of the London Stock
Exchange was a significant event in the life of Ted Baker. I am pleased to
report that our shares have traded well since listing in July 1997
Current trading and prospects
The Group has made a strong start to the new financial year, with wholesale
sales up by over 70% for the first eleven weeks against the same period last
year and retail sales ahead by 18%, both of which are in line with
expectations. I believe the strength of the Ted Baker brands, together with
our operational efficiencies, will assist in ensuring that we outperform many
of our competitors. Our approach to trading from a small number of retail
stores and through a strong wholesale business, combined with careful
expansion overseas, should maintain our robust financial performance. Your
Board continues to have confidence in the future success and development of
the Group.
Chief Executive's review
Our Company's mission statement closes with the question "would Ted do it that
way?". This governs all of our activities: past, present and future. The
year under review has seen our key brand, Ted Baker, grow from strength to
strength as well as the development of our junior brand, Teddy Boy. During
this financial year we also saw our womenswear collection, Ted Baker Woman,
begin to realise its enormous potential in the womenswear market. Since the
financial year end we have also been preparing to launch a contemporary suit
collection under the Edward Baker name.
The Ted Baker fashion philosophy remains 'that in fashion you should lead, not
follow, but never lead too far'. Ted Baker is a premium quality product,
using innovative fabrics, with a distinctive colour palette and high design
content. Branding on the products remains subtle but the look and feel is
sufficiently distinctive to ensure that the product is easily identifiable.
The brand is supported largely by word of mouth based upon the quality of the
product, our distinctive retail stores and the care taken to ensure that our
wholesale customers, who are adopted as 'trustees' of the brand, have the
correct profile.
Operations
While our key brand is Ted Baker, an increasing share of our overall sales
performance is being contributed by our Ted Baker Woman brand. The turnover
contribution from Ted Baker Woman has more than doubled from #1.55m to #3.89m
which constituted 18.8% of turnover. We also introduced Edward Baker, a
formal, fashionable menswear brand, which was well received.
Ted Baker's Spring/Summer collection for 1997 featured a palette of
'Refresher' colours that were highly distinctive and sold well. Through the
Autumn/Winter season our customers were offered a collection in rich hues of
tobacco, brown and tan.
We increased our jerseywear range and introduced for the first time a
collection of leather outerwear and performance casualwear.
Significant growth was achieved in both retail and wholesale divisions, with
increases in turnover of 36% and 75% respectively.
Retail
Our increased average selling space included new concessions in Selfridges and
four outlets of Bentalls and additional space created through extending our
Liverpool store in April, reconfiguring our Glasgow outlet in August and
opening the first floor of our Manchester site in November. Retail sales
increased by 12.9% on a like-for-like basis.
We continue to explore opportunities to increase selling space in our existing
locations as our product range expands, particularly with the rapid
development of Ted Baker Woman, and we have begun an extension of our Soho
store.
Wholesale
UK wholesale sales increased significantly from #3.75 million to #5.95
million. The average number of trustee outlets rose from 184 to 252 (37%
increase) and average sales per outlet rose by 14.6% from #20,600 to #23,600.
We continue to maintain premium brand value through a careful selection
process and close control of all of our 'trustees'. All 'trustees' are
supplied with point of sale material and other promotional products to support
Ted Baker in their stores.
Our franchise operations in Amsterdam and Zurich opened during the financial
year and will help promote the brand in mainland Europe. To support our
growing business in the United States, where wholesale sales have increased
from #335,000 to #1,016,000, a New York showroom was opened in June. This
enables us to control and manage the brand in the same way as we have
developed domestically: always ensuring that 'Ted' is in safe hands.
Take care of Ted.
Finance Director's Review
The financial year has seen gross margins move ahead, on retail from 62.5% to
65.0% and on wholesale slightly from 40.4% to 40.5%, resulting in the overall
gross margin improving from 56.1% to 56.5%. These improvements are largely
the result of buying efficiencies but the results have also been influenced
favourably by the strength of sterling. The increasing contribution from
wholesale sales, and particularly that element that is earned overseas with
its associated higher costs, will mean that, in the long term the overall
gross margin is unlikely to increase significantly and may even reduce
slightly.
Cash flow
Net cash flow from operating activities was #1.3m, after paying exceptional
directors' bonuses relating to the previous year of #2.8m and reflects an
increase in stock levels of some #1m resulting from growth of business.
Capital expenditure of #1m largely reflects extensions to three of the
existing stores, five new concessions added during the year and the new
showrooms created in the both the UK and the US. Capital expenditure is
expected to be higher in the current year although this will be subject to the
timing of any expenditure to extend existing retail outlets. The Company
raised #1m at flotation which was used to meet the costs of the flotation.
Goodwill
Goodwill arising on the acquisition of No Ordinary Designer Label Limited by
Ted Baker plc, which reflects the excess of the fair value of the
consideration given over the fair value of the identifiable assets and
liabilities acquired, has been written off against reserves. Financial
reporting standard 10 was published in December 1997 and applies to accounting
periods ending on or after 23 December 1998. The standard requires purchased
goodwill to be capitalised as an asset and amortised systematically over its
useful economic life and may give rise to a restatement of the financial
statements for the 52 weeks ending 30 January 1999.
Information technology
Considerable effort has been made in ensuring that our operational controls
are more than able to manage the growth of our business. Following an in-
depth review of our information technology needs the group is in the process
of updating and augmenting its management information systems. This process
should be completed by the end of the financial year and is expected to cost
some #350,000. As a result the Group will be fully prepared for the
millennium and the potential introduction of the ECU in the UK. This system
will provide the Group with an enhanced and resilient information technology
base for growth over the next few years.
Consolidated profit and loss account
PROFORMA
Period 53 weeks 52 weeks
ended ended ended
31 Jan 31 Jan 25 Jan
1998 1998 1997
#'000 #'000 #'000
Turnover 14,306 20,682 14,038
Cost of sales (5,883) (8,993) (6,161)
---------- ----------- ---------
Gross profit 8,153 11,689 7,877
Other operating expenses
(net) (5,000) (6,830) (6,858)
---------- ----------- ---------
Operating profit 3,153 4,859 1,019
====== ====== ======
Profit before exceptional
costs 3,838 5,544 4,157
Flotation costs (685) (685) -
Exceptional directors'
emoluments - - (3,138)
Interest receivable 118 205 98
---------- ---------- ----------
Profit on ordinary activities before
taxation 3,271 5,064 1,117
Tax on profit on ordinary
activities (1,291) (1,850) (991)
---------- ---------- ----------
Profit on ordinary
activities after taxation 1,980 3,214 126
--------- -----------
Dividends paid and proposed (1,238)
----------
Retained profit for the
period 742
----------
Earnings per share
Basic 4.8p 7.86p 0.31p
Adjusted 6.47p 9.53p 6.97p
Other than the profit for the period, which was entirely derived from
continuing activities, there were no other recognised gains or losses in the
period or in either proforma periods.
Consolidated balance sheet
PROFORMA
31 January 1998 25 January 1997
#'000 #'000
Fixed assets
Tangible assets 1,645 957
Investments - own shares 194 -
---------- ----------
1,839 957
Current assets
Stocks 3,284 2,200
Debtors 1,242 565
Cash at bank 4,679 3,982
---------- ----------
9,205 6,747
Creditors: amounts falling due
within one year (7,064) (6,579)
---------- ----------
Net current assets 2,141 168
---------- ----------
Total assets less current liabilities 3,980 1,125
Creditors: amounts falling due after
more than one year (200) -
Provisions for liabilities and charges (65) (80)
---------- ----------
Net assets 3,715 1,045
====== ======
Capital and reserves
Called-up share capital 2,063
Other reserve 910
Capital redemption reserve -
Profit and loss account 742
----------
Equity shareholders' funds 3,715
======
Consolidated cash flow statement
PROFORMA
Period ended 53 weeks ended 52 weeks ended
31 January 1998 31 January 1998 25 January 1997
#'000 #'000 #'000
Net cash inflow from operating
activities 1,891 1,309 3,402
Returns on investments
and servicing of finance
- interest received 118 205 97
UK corporation tax paid (453) (453) (417)
Capital expenditure and
financial investment (853) (1,180) (413)
Acquisitions 2,803 (237) -
Equity dividends paid - (120) -
---------- ---------- ----------
Cash inflow/(outflow) before
management of liquid resources
and financing 3,506 476 2,669
Management of liquid
resources (3,950) (50) (2,425)
Financing 1,173 1,173 (95)
---------- ---------- ----------
Increase in cash in
the period 729 647 149
====== ====== ======
Notes
1. Basis of preparation
The consolidated financial information has been prepared under the historical
cost convention and in accordance with applicable accounting standards. The
accounting policies are consistent with those set out in the financial
statements of No Ordinary Designer Label Limited (formerly Ted Baker Limited)
for the 52 weeks ended 25 January 1997.
The consolidated financial information is presented on proforma and actual
bases:
(i) Actual basis
The actual group profit and loss account and cash flow statement consolidate
the financial statements of Ted Baker PLC and all its subsidiary undertakings
for the period ended 31 January 1998. Ted Baker PLC was incorporated on 23
June 1997 and acquired No Ordinary Designer Label Limited (formerly Ted Baker
Limited) on 24 June 1997. The acquisition method of accounting has been
adopted, whereby the results of subsidiary undertakings acquired or disposed
of in the period are included in the profit and loss account from the date of
acquisition or up to the date of disposal.
(ii) Proforma basis
In order to demonstrate the underlying operating performance of the group, the
financial information also includes proforma group profit and loss accounts,
balance sheets and cash flow statements. The proforma profit and loss
accounts consolidate the accounts of Ted Baker PLC and all its subsidiary
undertakings as though the group had been in existence throughout the reported
periods, by applying merger accounting principles to the company's acquisition
of No Ordinary Designer Label Limited.
Consequently although Ted Baker PLC was not incorporated until 23 June 1997
and the acquisition of No Ordinary Designer Label Limited was not completed
until 24 June 1997, the proforma financial information is presented as if the
businesses had always been part of the same group.
The financial information set out above does not constitute the company's
statutory accounts for the period ended 31 January 1998 which are expected to
be sent to shareholders on 11 May 1998 and the audit has not yet been
completed. The financial statements for the period ended 31 January 1998 will
be delivered to the Registrar of Companies following the company's annual
general meeting. Further copies of the financial statements will be available
after that date from the Company Secretary of Ted Baker PLC, 41 Chalton
Street, London NW1 1JE.
2. Earnings per share
Earnings per share for the period ended 31 January 1998 have been calculated
on profit on ordinary activities after taxation and the weighted average
number of Ordinary Shares in issue, being 41,264,801 Ordinary Shares of 5p
each.
Earnings per share for the proforma periods have been calculated on the basis
that the shares issued to acquire No Ordinary Designer Label Limited (formerly
Ted Baker Limited) were in issue throughout those periods, being 40,524,061
Ordinary Shares of 5p each.
Adjusted earnings per share has been calculated on profit on ordinary
activities after tax but excluding exceptional director's emoluments and the
associated tax charge and exceptional flotation costs. The Directors believe
that this gives a better indication of the underlying performance of the
Group.
These can be reconciled as follow:
PROFORMA
Period ended 53 weeks ended 52 weeks ended
31 January 1998 31 January 1998 25 January 1997
#'000 #'000 #'000
Profit on ordinary activities after
taxation 1,980 3,214 126
Exceptional directors' emoluments - - 3,138
Corporation tax associated with
exceptional directors' emoluments - - (440)
Exceptional flotation costs 685 685 -
---------- ---------- ----------
2,665 3,899 2,824
====== ====== ======
3. Segment information
The turnover and profit before taxation are attributable to the group's
principal activity, the design, contracted manufacture, wholesale and retail
of high quality fashion clothing. Turnover is wholly attributable to the UK
market, except for US sales of #654,000 - (Proforma 53 weeks ended 31 January
1998: #1,016,000, 1997: #335,000) and sales to mainland Europe of #63,000 -
(proforma 53 weeks ended 31 January 1998: #173,000, 1997: #Nil).
(a) Analysis of turnover
PROFORMA
Period ended 53 weeks ended 52 weeks ended
31 January 1998 31 January 1998 25 January 1997
#'000 #'000 #'000
Menswear 11,174 16,465 12,415
Womenswear 2,641 3,892 1,551
Boyswear 221 325 72
---------- ---------- ----------
14,036 20,682 14,038
====== ====== =====
(b) Classes of business Retail Wholesale Total
#'000 #'000 #'000
Period ended 31 January 1998
Turnover 9,998 4,038 14,036
Cost of sales (3,104) (2,779) (5,883)
---------- ---------- ----------
Gross profit 6,894 1,259 8,153
====== ======
Common costs (5,000)
----------
Operating profit 3,153
Net interest receivable 118
----------
Profit before taxation 3,271
======
Proforma 53 weeks ended 31 January 1998
Retail Wholesale Total
#'000 #'000 #'000
Turnover 13,543 7,139 20,682
Cost of sales (4,745) (4,248) (8,993)
---------- -------- ------------
Gross profit 8,798 2,891 11,689
====== ======
Common costs (6,830)
----------
Operating profit 4,859
Net interest receivable 205
-----------
Profit before taxation 5,064
======
Proforma 52 weeks ended 25 January 1997
Retail Wholesale Total
#'000 #'000 #'000
Turnover 9,956 4,082 14,038
Cost of sales (3,729) (2,432) (6,161)
---------- -------- ------------
Gross profit 6,227 1,650 7,877
====== ======
Common costs (6,858)
----------
Operating profit 1,019
Net interest receivable 98
----------
Profit before taxation 1,117
======
In the opinion of the Directors, it would be impracticable to provide an
analysis of net assets by class of business due to the integrated nature of
Ted Baker's assets.
4. Consolidated cash flow statement
(a) Reconciliation of operating profit to operating cash flows
PROFORMA
Period ended 31 53 weeks ended 52 weeks ended
January 1998 31 January 1998 25 January 1997
#'000 #'000 #'000
Operating profit 3,153 4,859 1,019
Depreciation charges 206 299 149
Loss on sale of tangible fixed
assets 24 24 1
Profit on sale of tangible fixed
assets (23) (24) -
Increase in stocks (426) (1,084) (1,478)
Increase in debtors (126) (367) (255)
Increase/(decrease) in
creditors (902) (2,383) 3,991
Decrease in provisions (15) (15) (25)
---------- ---------- ----------
Net cash inflow from
operating activities 1,891 1,309 3,402
====== ====== ======
(b) Analysis of cash flows
Capital expenditure and financial investment
Purchase of tangible fixed
assets (705) (1,047) (416)
Sale of tangible fixed assets 46 61 3
Purchase of own shares (194) (194) -
----------- ---------- ----------
Net cash outflow (853) (1,180) (413)
====== ====== ======
Management of liquid resources
Cash invested in term
deposits (3,950) (50) (2,425)
---------- ---------- ----------
Net cash outflow (3,950) (50) (2,425)
====== ====== ======
(b) Analysis of cash flows (continued)
PROFORMA
Period ended 53 weeks ended 52 weeks ended
31 January 1998 31 January 1998 25 January 1997
#'000 #'000 #'000
Financing
Issue of ordinary share capital 1,000 1,000 -
Repurchase of own shares - - (95)
Issue costs (27) (27) -
New secured loan 200 200 -
---------- ---------- ----------
Net cash inflow/(outflow) 1,173 1,173 (95)
====== ====== ======
Reconciliation of net cash flow to movement in net funds
Increase in cash in the period 729 647 149
Cash inflow from increase in
debt (200) (200) -
Cash used to increase liquid
resources 3,950 50 2,425
---------- ---------- ----------
Change in net funds 4,479 497 2,574
Net funds at start of period - - -
---------- ---------- ----------
Net funds at end of period 4,479 497 2,574
====== ====== ======
END
FR BIGBSBBDCCIX
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