TIDMTED
RNS Number : 7426C
Ted Baker PLC
20 March 2014
20 March 2014
Ted Baker PLC
("Ted Baker", the "Group")
Annual Results for the 52 weeks ended 25 January 2014
Highlights:
2014 2013 Change
Group Revenue 321.9m 254.5m 26.5%
Profit Before Tax and Exceptional
Costs 40.0m 31.5m 26.7%
Profit Before Tax 38.9m 28.9m 34.6%
Adjusted EPS 69.0p 56.4p 22.3%
Basic EPS 67.2p 51.5p 30.5%
Total Dividend 33.7p 26.6p 26.7%
-- Group revenue up 26.5% to GBP321.9m
-- Retail sales up 24.6% to GBP259.1m
o UK and Europe retail sales up 20.3% to GBP198.6m
o US and Canada retail sales up 38.1% to GBP50.7m
o E-commerce sales up 55.7% to GBP23.2m
-- Wholesale sales up 35.0% to GBP62.8m
-- Licence income up 18.4% to GBP8.9m
-- Proposed final dividend of 24.2p bringing total dividend to 33.7p an increase of 26.7%
-- Successful launch of new e-commerce platform for the UK site in November 2013
Ray Kelvin CBE, Founder and Chief Executive, said:
"This has been another excellent year during which we have
continued to build Ted Baker as a global lifestyle brand. We have
further developed our presence internationally and invested in
markets where we see long term growth opportunities whilst
remaining unwavering in our focus on quality, design and attention
to detail that underpins everything we do.
We have continued to invest in the business to support our
growth, including the successful launch in November of our new
e-commerce platform that provides opportunities for future growth
and multi-channel developments.
I would like to take this opportunity to thank the Ted Baker
team across the world. Our continued strong performance in what
remains a competitive market and the ongoing development of the
brand on the world stage would not have been possible without their
hard work, skill and Tedication during the year."
Enquiries:
Ted Baker PLC Tel: 020 7796 4133 on 20 March 2014 only
Ray Kelvin CBE, Chief Executive Tel: 020 7255 4800 thereafter
Lindsay Page, Finance Director
Hudson Sandler Tel: 020 7796 4133
Alex Brennan
Michael Sandler
Julia Cooke
www.tedbaker.com
www.tedbakerplc.com
Media images available for download at:
http://www.tedbakerplc.com/ted/en/mediacentre/imagelibrary
Notes to editors:
Ted Baker PLC - "No Ordinary Designer Label"
Ted Baker is a leading global lifestyle brand distributing
across five continents through its three main distribution
channels: retail (including e-commerce); wholesale; and
licensing.
Ted Baker has 362 stores and concessions worldwide, comprising
of 181 in the UK, 70 in Europe, 63 in North America, 43 in the
Middle East and Asia and 5 in Australasia.
Ted Baker offers a wide range of collections including:
Menswear; Womenswear; Global; Phormal; Endurance; Born by Ted
Baker; Accessories; Lingerie and Sleepwear; Childrenswear;
Fragrance and Skinwear; Footwear; Neckwear; Eyewear; and Watches,
all of which are underpinned by an unwavering emphasis on design,
product quality and attention to detail.
Chairman's Statement
I am pleased to report that the Group has delivered a strong
performance across all channels during the 52 weeks to 25 January
2014 ("the period"), resulting in a 26.5% increase in Group revenue
to GBP321.9m (2013: GBP254.5m) and a 26.7% increase in profit
before tax and exceptional costs to GBP40.0m (2013: GBP31.5m).
The retail division performed very well in what remained a
competitive trading environment, delivering an increase in revenue
of 24.6% to GBP259.1m (2013: GBP208.0m), on an increase in average
square footage of 10.7%. Gross margins were largely in line with
last year at 66.1% (2013: 66.2%). Performance in our established
territories was strong and we continue to invest in newer markets
where we see long term opportunities for the brand.
Wholesale sales for the Group increased by 35.0% to GBP62.8m
(2013: GBP46.5m), which reflects a strong performance from our UK
wholesale business, which includes the supply of goods to our
licensed stores and our export business, and a very good
performance from our US wholesale business.
Licence income from our territorial and product licences
increased by 18.4% to GBP8.9m (2013: GBP7.5m).
We continue to focus on the long term development of Ted Baker
as a global lifestyle brand. We developed our presence in both new
and existing markets and have further invested in people and
infrastructure to support our long term growth opportunities. This
included the development of a new e-commerce platform, which was
successfully launched in November 2013 and is a key part of our
growth strategy. I am also pleased to announce that we have
recently agreed with Microsoft to deploy and support Microsoft
Dynamics AX business systems globally across the Group. These new
systems will enable us to enhance the efficiency of the business,
streamline our operations and provide a solid platform as we
continue to grow and develop our business globally.
Results
Group revenue for the period rose by 26.5% to GBP321.9m (2013:
GBP254.5m). The composite gross margin decreased to 61.7% (2013:
62.4%), reflecting an increase in wholesale sales as a proportion
of total sales and a decrease in the wholesale margin. This
decrease in wholesale margin was a result of a greater proportion
of sales to our territorial licence partners, which carry a lower
margin and a slight reduction in the underlying wholesale margin
due to product mix in the first half of the year.
Profit before tax and exceptional costs increased by 26.7% to
GBP40.0m (2013: GBP31.5m) and profit before tax increased by 34.6%
to GBP38.9m (2013: GBP28.9m).
Exceptional costs incurred during the year of GBP1.0m (2013:
GBP2.6m) include GBP0.7m of impairment charges in respect of some
retail assets and GBP0.3m due to an onerous lease on a store where
we are no longer trading.
Adjusted basic earnings per share, which exclude exceptional
costs, increased by 22.3% to 69.0p (2013: 56.4p) and basic earnings
per share increased by 30.5% to 67.2p (2013: 51.5p).
The Group's net borrowing position at the end of the year was
GBP8.8m (2013: GBP10.0m). This reflected the on-going significant
investment in capital expenditure during the year, increased
inventory to support future growth and the earlier receipt of
inventory into the business at the year-end to meet demand.
Dividends
The Board is recommending a final dividend of 24.2p per share
(2013:18.7p), making a total for the year of 33.7p per share (2013:
26.6p per share), an increase of 26.7% on the prior year. Subject
to approval by shareholders at the Annual General Meeting to be
held on 10 June 2014, the final dividend will be paid on 20 June
2014 to shareholders on the register on 9 May 2014.
Financial Reporting
This year's annual report incorporates a number of new features
in line with the revised UK Corporate Governance Code. These
include the Board's confirmation that the report presents a fair,
balanced and understandable assessment of the Group's position and
prospects, and an enhanced audit report.
People
This strong performance is testament to the skill, passion and
commitment of the Ted Baker team and I would like to take this
opportunity to thank all of my colleagues around the world for
their hard work.
On 9 January 2014, we were delighted to announce the appointment
of Andrew Jennings to the Board as an independent Non-Executive
Director, effective from 1 February 2014. Andrew brings a wealth of
international retail experience gained over 40 years at some of the
world's most respected high-end department stores. His experience
will be invaluable and we are very much looking forward to his
contribution as the brand grows and develops. Andrew has recently
been appointed to the Audit Committee and will join the Nomination
and Remuneration Committees after a suitable period of induction,
in accordance with the provisions of the UK Corporate Governance
Code applying to larger companies.
It is with great sadness that I have to report that Robert
Breare, a colleague and former Non-Executive Chairman, passed away
in July. During his 11 year tenure, Robert combined his
entrepreneurial insight with an infectious enthusiasm for the
business to make a major contribution to the Group during a
significant period of global development. The Group acknowledges
his contribution with gratitude and he is sadly missed by his
colleagues.
Current Trading and Outlook
Ted Baker continues to perform well in a competitive trading
environment and we remain focused on the long term development of
the brand globally. Further openings are planned across all of our
markets. In our newer markets, where we are investing for the
longer term, we are also focussed on enhancing brand awareness.
We continue to invest in people and infrastructure to support
the future growth of Ted Baker. The Group is well positioned to
deal with the challenges and opportunities ahead, particularly
during the implementation of the new Microsoft Dynamics AX business
systems across the Group to support our future growth. We
anticipate that the roll out of these systems will commence at the
start of 2015 and whilst there will be an element of additional
costs whilst we run down our existing systems, we will continue to
ensure that our costs and commitments are controlled. Capital
expenditure in the current year is anticipated to be higher than
last year at GBP25m, in part due to the investment in new systems
across the business.
Retail
Our retail business has started the new financial year well, and
we are encouraged by the reaction to our Spring/Summer collections.
We continue to develop our UK business with store openings planned
in Glasgow and London Heathrow Terminal Two and the relocation of
our outlet store in York. Following the successful launch of our
new e-commerce platform, we will further develop our e-commerce
site to provide a more relevant customer experience and advance the
local content provided to our European customers, including
language options specific to key countries.
In continental Europe, we have recently opened further
concessions in France and the Netherlands with further openings
planned in Spain. We will also be opening a store in Marseilles in
May and an outlet store in Paris in March.
In the US, our growth continues with the opening of three new
stores as well as further concessions through a leading department
store. Following the successful UK launch, our US e-commerce site
will also undergo migration to the new platform in the year ahead;
delivering improved design, performance and personalised content
that creates a more relevant customer experience.
In Asia, following a year of significant expansion, we remain
focused on building brand awareness in these markets where we
remain in the relatively early stages of development. We have very
recently opened a concession through a leading department store in
Tokyo, Japan.
Wholesale
Our wholesale business is delivering a good performance that is
in line with our expectations. We anticipate further growth across
all of our wholesale businesses, which should result in low double
digit growth in sales in the coming year.
Licence Income
Our product and territorial licences continue to perform well
and are in line with our expectations.
Our licensed partners recently opened stores in Dubai and Egypt
with further openings planned in Saudi Arabia, Abu Dhabi, Taiwan
and Thailand during the year.
I am pleased to announce a new agreement with a licence partner
in Central America, who plans to open one new store in Panama
during the year.
Group
The Group continues to perform well and we remain focused on the
long term development of the Ted Baker brand. We are pleased with
the achievements we have made this year and look forward to another
year of progress across all markets and channels.
We intend to make our next interim management statement,
covering trading since the start of the financial year in mid June
2014.
David Bernstein
Non-Executive Chairman
20 March 2014
Strategic Report
Business Model and Strategy
Ted Baker is a global lifestyle brand that operates through
three main distribution channels: retail, which includes
e-commerce; wholesale; and licensing, which includes territorial
and product licences.
The brand has grown steadily from its origins as a single shirt
specialist store in Glasgow to the global lifestyle brand it is
today. We distribute through our own and licensed retail outlets,
leading department stores and selected independent stores in
Europe, North America, the Middle East, Asia and Australasia.
We offer a wide range of collections including: Menswear;
Womenswear; Global; Phormal; Endurance; Born by Ted Baker;
Accessories; Lingerie and Sleepwear; Childrenswear; Fragrance and
Skinwear; Footwear; Neckwear; Eyewear; and Watches.
Our strategy is to become a leading global lifestyle brand,
based on three main elements:
-- considered expansion of the Ted Baker collections. We review
our collections continually to ensure we anticipate and 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 skill of our teams, licence partners and wholesale
customers ("trustees").
Key Performance Indicators
We review the on-going performance of the business using key
performance indicators for each of our distribution channels.
Performance measures for our retail business include total sales,
average and closing square foot, sales per square foot and gross
retail margins. Wholesale performance measures include total sales
and gross wholesale margins, and licence income is measured through
year on year revenue growth.
Business Review
GLOBAL GROUP PERFORMANCE
Retail
We operate stores and concessions across the UK, continental
Europe, North America and Asia and an e-commerce business based in
the UK, primarily serving the UK and Europe, with a separate
transactional website dedicated to the Americas and e-commerce
businesses with some of our concession partners.
The retail division delivered a strong performance with sales up
24.6% to GBP259.1m (2013: GBP208.0m). Average retail square footage
rose by 10.7% over the year to 303,951 sq ft (2013: 274,531 sq ft).
Total retail square footage at 25 January 2014 was 316,648 sq ft
(2013: 294,329 sq ft), an increase of 7.6% on the prior year.
Retail sales per square foot rose 11.0% from GBP703 to GBP780.
Sales through our e-commerce business increased by 55.7% to
GBP23.2m (2013: GBP14.9m). In November 2013, we launched a new
e-commerce platform for our UK site, providing increased
personalisation, local content for our overseas customers and
opportunities for future growth and multi-channel developments.
The retail gross margins were largely in line with last year at
66.1% (2013: 66.2%).
Retail operating costs increased in line with our expectations
to GBP122.2m (2013: GBP100.1m) and as a percentage of retail sales
decreased to 47.1% (2013: 48.1%). This resulted in an increase in
retail operating contribution to 18.9% (2013: 18.1%) of sales,
following significant expansion and store openings in the previous
year.
Wholesale
We currently operate a wholesale business in the UK serving
countries across the world, particularly in Europe and a wholesale
business in the US.
Group wholesale sales increased by 35.0% to GBP62.8m (2013:
GBP46.5m), reflecting a strong performance from our UK wholesale
business, which includes the supply of goods to our licensed stores
and our export business and a very good performance from our US
wholesale business. Gross margins declined to 43.4% (2013: 45.2%),
which was the result of a greater proportion of wholesale sales to
our licensed stores, which carry a lower margin and a slight
reduction in the underlying wholesale margin due to the product mix
in the first half of the year.
Licence income
We operate both territorial and product licences. Our
territorial licences cover the Middle East, Asia, and Australasia,
through which we operate licenced retail stores and, in some
territories, wholesale operations. Our product licences cover
lingerie & sleepwear, fragrance, watches, footwear, eyewear,
suiting, neckwear, skinwear, and childrenswear.
Licence income was up 18.4% to GBP8.9m (2013: GBP7.5m). We have
seen particularly good performances from our footwear collection
with our licenced partner, Pentland Group and our suiting business
in North America with licence partner Jack Victor. Our licensed
stores in the Middle East and Asia performed well during the
period.
Collections
Ted Baker Womenswear delivered a very good performance with
sales up 30.5% to GBP178.9m (2013: GBP137.1m). Womenswear benefited
from a greater proportion of new space added during the period and
as a result represented 55.6% of total sales (2013: 53.9%).
Ted Baker Menswear performed well with sales increasing by 21.9%
to GBP143.0m (2013: GBP117.4m). Menswear represented 44.4% of total
sales in the period (2013: 46.1 %).
GEOGRAPHIC PERFORMANCE
United Kingdom and Europe
Sales in our UK and Europe retail division were up 20.3% to
GBP198.6m (2013: GBP165.1m). This strong performance was delivered
in what remained a competitive trading environment.
Average retail square footage rose by 4.1% over the period to
212,745 sq ft (2013: 204,331 sq ft). At 25 January 2014 total
retail square footage was 218,622 sq ft (2013: 210,768 sq ft)
representing an increase of 3.7%. Retail sales per square foot
increased by 13.0% from GBP738 to GBP834.
During the year, we opened a new store in Gatwick South, further
concessions with leading department stores in France, Spain,
Germany and the Netherlands and an outlet store in Belgium. We are
pleased with their performances and positive about growth in these
markets.
Our first two stores in Turkey were opened with a licence
partner during the year and we are encouraged by their
performance.
At 25 January 2014, we operated 35 stores (2013: 35), 203
concessions (2013: 183), 11 outlet stores (2013: 10) and 2 stores
through a licence partner (2013: nil).
Our e-commerce business performed very well during the period
with sales increasing by 51.0% to GBP21.6m (2013: GBP14.3m), with
the UK site benefiting from the launch of a new platform in
November 2013.
Sales from our UK wholesale division increased by 32.5% to
GBP51.8m (2013: GBP39.1m) reflecting a good performance from our UK
wholesale business and continued growth in our wholesale export
business.
US and Canada
Sales from our US and Canadian retail division increased by
38.1% to GBP50.7m (2013: GBP36.7m), which includes sales from our
US e-commerce business which is in its early stage of
development.
Following a year of significant expansion, we have continued to
develop the brand in this market through the opening of nine
concessions in the US with a leading department store and an outlet
store in Toronto, Canada. We are pleased with our performance as
the brand gains increasing traction and recognition and are
positive about the impact of our store on Fifth Avenue, New York in
raising brand awareness and supporting the development of Ted Baker
both in the US and indeed globally.
Average square footage rose by 21.8% to 72,326 sq ft (2013:
59,384 sq ft) and retail sales per square foot increased 13.2% from
GBP607 to GBP687. This reflects both higher sales densities in the
concessions opened during the year and an improvement in brand
awareness in this market. As at 25 January 2014, we had 16 stores
(2013: 16), 42 concessions (2013: 33) and 5 outlet stores (2013:
4).
Sales from our US wholesale business increased by 46.7% to
GBP11.0m (2013: GBP7.5m) reflecting the continued growth of our
business.
Middle East, Asia and Australasia
We are developing the Ted Baker brand across the Middle East,
Asia, and Australasia. As at 25 January 2014, we, together with our
licence partners, operated a total of 40 (2013: 31) stores, 7
concessions (2013: 4) and 1 outlet (2013: nil) across these
territories.
In Asia, we are investing in newer markets to support the long
term growth of the business. Sales from our retail division
increased 59.7% to GBP9.9m (2013: GBP6.2m).
Average retail square footage rose by 74.6% to 18,880 sq ft
(2013:10,816 sq ft), whilst retail sales per square foot decreased
8.2% from GBP572 to GBP525 reflecting the opening of new space.
In China we opened two further stores in Shanghai and three
concessions through leading department stores. We also opened an
outlet store in Shanghai. In Japan we opened our first concession
in Tokyo through a leading department store and closed one
concession in South Korea. As at 25 January 2014, we operated 7
stores (2013: 5 stores), 7 concessions (2013: 4) and 1 outlet
(2013: nil) across Asia. We are encouraged by reactions to the
brand and whilst we remain in the relatively early stages of
development, we are positive about the long term opportunities in
this territory.
We operate with licence partners across Asia and the Middle
East. During the period, our Asia licence partners opened
concessions in Indonesia and Singapore, and three stores were
closed. Our licensed stores across the Middle East performed very
well with openings in Lebanon, Kuwait, Abu Dhabi and Dubai during
the period and one closure in Dubai. As at 25 January 2014, our
licence partners operated 28 stores and concessions across the
Middle East and Asia (2013: 22).
The joint venture with our Australasian licence partner
continues to perform well and in March 2013 we opened a new store
with our partner in Adelaide, Australia. As at 25 January 2014, we
operated 5 stores in Australasia (2013: 4 stores).
Financial Review
Revenue and Gross Margin
Group revenue increased by 26.5% to GBP321.9m (2013: GBP254.5m),
driven by a 24.6% increase in retail sales to GBP259.1m (2013:
GBP208.0m) and a 35.0% increase in wholesale sales to GBP62.8m
(2013: GBP46.5m).
The composite gross margin for the Group decreased to 61.7%
(2013: 62.4%), reflecting an increase in the proportion of total
sales attributable to our wholesale business. While retail margins
were in line, wholesale margins were lower due to a greater
proportion of wholesale sales to our territorial licence partners,
which carry a lower margin, and to a slight reduction in the
underlying wholesale margin due to the product mix in the first
half of the year.
Operating Expenses Pre-Exceptional Costs
Distribution costs increased in line with our expectations to
GBP123.2m (2013: GBP101.4m) and as a percentage of sales decreased
to 38.3% (2013: 39.8%).
Administration expenses increased by 31.5% to GBP43.4m (2013:
GBP33.0m). Excluding the employee performance related bonus of
GBP3.9m (2013: GBPnil), administration expenses rose by 19.7% due
to our growth in central functions, both in the UK and overseas and
the continued deployment of our distribution and information
technology infrastructures to support our growth.
Exceptional costs
The exceptional costs incurred during the year of GBP1.0m (2013:
GBP2.6m) includes GBP0.7m of impairment charges in respect of a
retail store in the Meatpacking district, New York and a retail
store in Paris, both locations of which have failed to deliver on
their potential. The balance of GBP0.3m relates to an onerous lease
for our retail store in Liverpool, where we are no longer trading
following the expansion of our Liverpool One Store in
Merseyside.
The prior year figure included GBP1.6m of rental costs for our
stores on Fifth Avenue, New York and in Tokyo, Japan for the
periods before they commenced trading. The balance of GBP1.0m
included an impairment charge of GBP0.8m in respect of some retail
assets, notably a retail development in the UK that failed to
deliver on its potential and the remaining GBP0.2m was primarily
set up costs incurred for our expansion into China.
Profit Before Tax
Profit before tax and exceptional costs increased by 26.7% to
GBP40.0m (2013: GBP31.5m) and profit before tax increased by 34.6%
to GBP38.9m (2013: GBP28.9m).
Finance Income and Expenses
Net interest payable during the year was GBP1,133,000 (2013:
GBP612,000). This increase reflects higher Group borrowing compared
to the prior year as a result of the on-going significant
investment in capital expenditure and increased working capital to
support the Group's expansion.
The net foreign exchange gain during the year of GBP137,000
(2013: loss of GBP178,000) was due to the retranslation of monetary
assets and liabilities denominated in foreign currencies.
Taxation
The Group tax charge for the year was GBP10.1m (2013: GBP7.3m),
an effective tax rate of 25.9% (2012: 25.3%).This effective tax
rate is higher than the UK tax rate for the period of 23.16%
largely due to higher overseas tax rates and the non-recognition of
losses in overseas territories where the businesses are still in
their development phase. On 1 April 2013, the UK corporation tax
rate fell from 24% to 23% and will fall to 21% from 1 April 2014. A
further reduction to 20% (from 1 April 2015) has been substantively
enacted and therefore our closing deferred tax assets and
liabilities have been re-measured at this rate.
Our future effective tax rate is expected to be higher than the
UK tax rate as a result of overseas profits arising in
jurisdictions with higher tax rates than the UK.
Cash Flow
The net increase in cash and cash equivalents was GBP1.7m (2013:
GBP11.9m decrease). An increase in net cash generated from
operating activities of GBP14.1m (2013: GBP6.2m) was offset by an
increase in financing and investing activities.
Total Group working capital, which comprises inventories, trade
and other receivables and trade and other payables, increased by
GBP8.9m to GBP69.9m (2013: GBP61.0m), principally as a result of an
increase in year-end inventory levels reflecting the underlying
growth of our business and the earlier phasing of deliveries into
the business to ensure smooth transition to the Spring/Summer
season across all our markets following strong trading.
Group capital expenditure amounted to GBP18.1m (2013: GBP19.8m)
and reflected the opening and refurbishment of stores, concessions
and outlets, investment in business wide systems to support our
future growth and a new e-commerce platform for the UK site.
Post balance sheet events
In February 2014, we mutually terminated an agreement with a
licence partner earlier than anticipated. Under the terms of our
licence agreement we received a payment of GBP2.7m for compensation
of royalties that would be due to us had the agreement continued to
its original completion date. In line with accounting standards
this will be accounted for in the 2014/15 financial statements as
exceptional income.
Shareholder Return
Basic earnings per share increased by 30.5% to 67.2p (2013:
51.5p). Adjusted earnings per share, which exclude exceptional
costs of GBP1.0m (2013: GBP2.6m), increased by 22.3% to 69.0p
(2013: 56.4p)
The proposed final dividend of 24.2p per share will make a total
for the year of 33.7p per share (2013: 26.6p per share), an
increase of 26.7% on the previous year.
Free cash flow per share, which is calculated using the net cash
generated from operating activities, was 73.1p (2013: 41.0p) and
reflected an increase in cash generated from operating
activities.
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 hedged naturally as the
business operates internationally and income is generated in the
local currencies.
At the balance sheet date, the Group had hedged its projected
commitments in respect of the year ending January 2015.
Borrowing Facilities
In July 2013, the Group increased its three year committed
borrowing facility to GBP50.0m (2013: GBP40.0m). The facility is a
multi-currency revolving credit facility with The Royal Bank of
Scotland and Barclays which is due to expire on 1 March 2015. The
increase is a function of the growth in our business and is
necessary to fund capital expenditure to support the Group's long
term strategy. The Group is in discussions with The Royal Bank of
Scotland and Barclays to arrange the renewal of the facility from 1
March 2015 and is confident that this will be agreed.
The facilities contain appropriate financial covenants and are
tested on a quarterly basis. The Group monitors actual and
prospective compliance with these on a regular basis.
Cautionary statement regarding forward-looking statements
This document 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 document, and will not be updated during the year. The
directors can give no assurance that these expectations will prove
to be 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.
Principal Risks and Uncertainties
The Board recognises there are a number of risks and
uncertainties that face the Group. The Board, with the help of the
chief executive, the finance director and subsidiary directors (the
"Executive Committee"), has established a structured approach to
identify, assess and manage these risks and this is regularly
monitored and updated by the Risk Committee. Although not
exhaustive, the following list highlights some of the principal
risks which are not shown in order of importance:
Issue Potential impact Mitigation
------------------ ---------------------------- --------------------------------- ---------------------------------
Strategic Risks External events External events may occur which All factors affecting these
may affect the global, economic stakeholders are monitored
and financial environment closely on an ongoing basis
in which we operate. These ensuring
events can affect our suppliers, that we are prepared for and can
customers and partners, risking react to changes in the external
an increase in our cost base and environment, allowing us
adversely affecting our revenue. to reduce our exposure as early
as possible. The spread of our
business and supply chain also
helps to mitigate these risks.
------------------ ---------------------------- --------------------------------- ---------------------------------
Brand and reputational risk The strength of our brand and We carefully consider each new
its reputation are important to opportunity and each wholesale
the business. There is a risk customer and partner with whom
that our brand may be undermined we do business. These are
or damaged by our actions or monitored on an ongoing basis to
those of our partners. ensure they remain appropriate
to the brand.
------------------ ---------------------------- --------------------------------- ---------------------------------
Fashion and Design As with all fashion brands there The Group maintains a high level
is a risk that our offer will of market awareness and an
not satisfy the needs of our understanding of consumer trends
customers, resulting in lower and fashion to ensure that we
sales and reduced market share. remain able to respond to
changes in consumer preference.
------------------ ---------------------------- --------------------------------- ---------------------------------
Operational Risks Supply chain If garments do not reach us on Our supply chain is diversified
time and to specification, there across a number of suppliers in
is a risk of a loss of revenue different regions, reducing
and customer confidence. reliance on a small number of
key suppliers. Suppliers are
treated as key business partners
and we work closely with them to
mitigate these risks.
------------------ ---------------------------- --------------------------------- ---------------------------------
Cost inflation We may face increases in our Operating costs are monitored
operating costs due to growth in regularly to ensure that any
raw material, labour, property cost pressures are quickly
and other costs, placing identified
pressure on our pricing and appropriate action is taken.
strategy, margins and
profitability.
------------------ ---------------------------- --------------------------------- ---------------------------------
Infrastructure There is a risk of operational The business continuity plan is
problems, including disruption constantly reviewed and updated
to the infrastructure that by the Risk Committee. In
supports addition, business disruption is
our business, which may lead to covered by our insurance
a loss of revenue, data and policies.
inventory.
---------------------------- --------------------------------- ---------------------------------
Social Responsibility We are committed to operating in Four members of the Executive
a responsible and sustainable Committee have been tasked with
manner as regards our supply overseeing specific areas of
chain, environment and our social responsibility
community. If we fail to operate agenda. The Group has an
in a manner that supports our employee whose sole
philosophy, responsibility is to
this could damage the trust and monitor this agenda and ensure
confidence of our stakeholders. our practices fall in line with
it.
------------------ ---------------------------- --------------------------------- ---------------------------------
Issue Potential impact Mitigation
---------------------------- ---------------------------- ---------------------------- ----------------------------
Operational Risks - IT security Advances in technology have Commitment of additional
(continued) resulted in more data being specialist resources and
transmitted electronically, the continual upgrading of
posing security equipment
an increased security risk. and software mitigate these
There is also the risks.
possibility of
unintentional loss of
controlled
data by authorised users.
---------------------------- ---------------------------- ---------------------------- ----------------------------
Implementation of new ERP The Group is in the process The Group's IT Steering
system of implementing Microsoft Committee meets on a two
Dynamics AX across the weekly basis to review the
business. With implementation
any project of this scale, and all other major IT
there is a risk of a poorly projects. The Committee
managed implementation or comprises members of the
take up of executive committee
new systems, which could and the Board and is
lead to business advised by professional
disruptions. advisers.
Strong change management
and project governance with
professional project
managers recruited
to oversee the project team
which includes key business
stakeholders.
---------------------------- ---------------------------- ---------------------------- ----------------------------
People The Group's performance is Retention of key talent is
linked to the performance important and we take
of our people and, in active steps to provide
particular, to stability and security
the leadership of key to the key team. We carry
individuals. The loss of a out an annual benchmarking
key individual whether at review to ensure that we
management level provide competitive
or within a specialist remuneration and total
skill set could have a reward packages. We also
detrimental effect on our utilise long-term incentive
operations and, in schemes to retain
some cases, the creative key talent. Employee
vision for the brand. engagement through our
culture and environment
strengthen the commitment
of team members and has a
positive impact on our
attrition rate.
Succession plans are in
place and have been
reviewed during the year.
---------------------------- ---------------------------- ----------------------------
Regulatory and legal The Group operates within The Group closely monitors
framework many markets globally and changes in the legal and
must comply with various regulatory framework within
regulatory requirements. the markets
Failure to do so could lead in which it operates. We
to financial penalties work closely with
and/or reputational damage. specialists in each market
to ensure compliance
with local laws and
regulations.
---------------------------- ---------------------------- ---------------------------- ----------------------------
Financial Risks Currency, interest, credit In the course of its The Group's policies for
and counterparty credit operations, the Group is dealing with these risks
risks, including financial exposed to these financial are discussed in detail in
covenants under risks which if they the Group's financial
the credit facilities were to arise may have statements
material financial impacts
on the Group.
---------------------------- ---------------------------- ---------------------------- ----------------------------
Group Income Statement
For the 52 weeks ended 25 January 2014
Note 52 weeks ended 52 weeks ended
25 January 26 January
2014 2013
GBP'000 GBP'000
Revenue 2 321,921 54,466
Cost of sales (123,451) (95,740)
-------------- --------------
Gross profit 198,470 158,726
Distribution costs (123,211) (101,357)
Administrative expenses (43,381) (32,984)
Exceptional costs 3 (1,046) (2,614)
Licence income 8,888 7,509
Other operating (expense)/income (132) 234
Operating profit 39,588 29,514
Finance income 4 316 34
Finance expenses 4 (1,312) (824)
Share of profit of jointly controlled
entity, net of tax 331 198
Profit before tax 3,5 38,923 28,922
Income tax expense 5 (10,071) (7,325)
-------------- --------------
Profit for the period 28,852 21,597
============== ==============
Earnings per share 7
Basic 67.2 51.5
Diluted 66.3 49.9
Group Statement of Comprehensive Income
For the 52 weeks ended 25 January 2014
52 weeks ended 52 weeks ended
25 January 26 January
2014 2013
GBP'000 GBP'000
Profit for the period 28,852 21,597
--------------- ---------------
Other comprehensive income
Items that may be reclassified to the Income Statement
Net effective portion of changes in fair value of cash flow hedges (2,486) (320)
Net change in fair value of cash flow hedges transferred to profit or loss 545 723
Exchange differences on translation of foreign operations net of tax (3,276) 152
--------------- ---------------
Other comprehensive income for the period (5,217) 555
Total comprehensive income for the period 23,635 22,152
=============== ===============
Group Statement of Changes in Equity
For the 52 weeks ended 25 January 2014
Share Share Cash flow Translation Retained Total
capital premium hedging Reserve earnings equity
reserve attributable
to equity
shareholders
of the
parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 26 January
2013 2,160 9,137 91 296 87,209 98,893
Comprehensive income
for the period
Profit for the period - - - - 28,852 28,852
Exchange differences
on translation of foreign
operations - - - (4,391) - (4,391)
Current tax on foreign
currency translation - - - 1,115 - 1,115
Effective portion of
changes in fair value
of cash flow hedges - - (2,976) - - (2,976)
Net change in fair value
of cash flow hedges transferred
to profit or loss - - 545 - - 545
Deferred tax associated
with movement in hedging
reserve - - 490 - - 490
Total comprehensive income
for the period - - (1,941) (3,276) 28,852 23,635
======== ======== ========= =========== ========= =============
Transactions with owners
recorded directly in
equity
Increase in issued share
capital 34 2 - - (34) 2
Share based payments
charges - - - - 606 606
Movement on current and
deferred tax on share
based payments - - - - 967 967
Disposal of own / treasury
shares - - - - 71 71
Dividends paid - - - - (12,110) (12,110)
-------- -------- --------- ----------- --------- -------------
Total transactions with
owners 34 2 - - (10,500) (10,464)
======== ======== ========= =========== ========= =============
Balance at 25 January
2014 2,194 9,139 (1,850) (2,980) 105,561 112,064
======== ======== ========= =========== ========= =============
Group Statement of Changes in Equity
For the 52 weeks ended 26 January 2013
Share Share Cash flow Translation Retained Total
capital premium hedging Reserve earnings equity
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 28 January
2012 2,160 9,137 (312) 144 74,056 85,185
Comprehensive income
for the period
Profit for the period - - - - 21,597 21,597
Exchange differences
on translation of foreign
operations - - - 152 - 152
Effective portion of
changes in fair value
of cash flow hedges - - (189) - - (189)
Net change in fair value
of cash flow hedges transferred
to profit or loss - - 723 - - 723
Deferred tax associated
with movement in hedging
reserve - - (131) - - (131)
Total comprehensive income
for the period - - 403 152 21,597 22,152
======== ======== ========= =========== ========= ========
Transactions with owners - - - -
recorded directly in
equity
Share based payments
charges - - - - 240 240
Movement on current and
deferred tax on share
based payments - - - - 1,225 1,225
Disposal of own / treasury
shares - - - - 222 222
Dividends paid - - - - (10,131) (10,131)
-------- -------- --------- ----------- --------- --------
Total transactions with
owners - - - - (8,444) (8,444)
======== ======== ========= =========== ========= ========
Balance at 26 January
2013 2,160 9,137 91 296 87,209 98,893
======== ======== ========= =========== ========= ========
Company Statement of Changes in Equity
For the 52 weeks ended 25 January 2014
Share capital Share premium Other reserves Retained Total Equity
earnings
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 26 January 2013 2,160 9,137 15,542 25,596 52,435
Profit for the period - - - 16,697 16,697
Transactions with owners
recorded directly in equity
Increase in issued share
capital 34 2 - (34) 2
Share based payments charges - - - 75 75
Share based payments charges
for awards granted to subsidiary
employees - - 531 - 531
Disposal of own shares - - - 71 71
Dividends paid - - - (12,110) (12,110)
------------- ------------- -------------- --------- ------------
Total transactions with
owners 34 2 531 4,699 5,266
============= ============= ============== ========= ============
Balance at 25 January 2014 2,194 9,139 16,073 30,295 57,701
============= ============= ============== ========= ============
For the 52 weeks ended 26 January 2013
Share capital Share premium Other reserves Retained Total Equity
earnings
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 28 January 2012 2,160 9,137 15,339 21,285 47,921
Profit for the period - - - 14,183 14,183
Transactions with owners
recorded directly in equity
Share based payments charges - - - 37 37
Share based payments charges
for awards granted to subsidiary
employees - - 203 - 203
Disposal of own shares - - - 222 222
Dividends paid - - - (10,131) (10,131)
------------- ------------- -------------- --------- ------------
Total transactions with
owners - - 203 4,311 4,514
============= ============= ============== ========= ============
Balance at 26 January 2013 2,160 9,137 15,542 25,596 52,435
============= ============= ============== ========= ============
Group and Company Balance Sheet
At 25 January 2014
Note Group Group Company Company
25 January 26 January 25 January 26 January
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 8 6,080 983 - -
Property, plant and equipment 9 45,083 45,412 - -
Investments in subsidiary - - 18,162 17,631
Investment in equity accounted
investee 1,024 693 - -
Deferred tax assets 4,450 4,523 - -
Prepayments 564 674 - -
------------ ------------ ------------ ------------
57,201 52,285 18,162 17,631
------------ ------------ ------------ ------------
Current assets
Inventories 80,432 67,673 - -
Trade and other receivables 34,793 34,124 39,111 34,376
Amount due from equity accounted
investee 164 225 - -
Derivative financial assets 499 544 - -
Cash and cash equivalents 28,521 9,823 440 440
------------ ------------ ------------ ------------
144,409 112,389 39,551 34,816
------------ ------------ ------------ ------------
Current liabilities
Trade and other payables (45,289) (40,793) (12) (12)
Bank overdraft (37,282) (19,862) - -
Income tax payable (3,857) (4,360) - -
Derivative financial liabilities (3,118) (269) - -
------------ ------------ ------------ ------------
(89,546) (65,284) (12) (12)
------------ ------------ ------------ ------------
Non-current liabilities
Deferred tax liabilities - (497) - -
------------ ------------ ------------ ------------
- (497) - -
------------ ------------ ------------ ------------
Net assets 112,064 98,893 57,701 52,435
============ ============ ============ ============
Equity
Share capital 2,194 2,160 2,194 2,160
Share premium 9,139 9,137 9,139 9,137
Other reserves (1,850) 91 16,073 15,542
Translation reserve (2,980) 296 - -
Retained earnings 105,561 87,209 30,295 25,596
------------ ------------ ------------ ------------
Total equity attributable to equity
shareholders of the parent company 112,064 98,893 57,701 52,435
Total equity 112,064 98,893 57,701 52,435
============ ============ ============ ============
These financial statements were approved by the Board of
Directors on 20 March 2014 and were signed on its behalf by:
L D Page
Director
Group and Company Cash Flow Statement
For the 52 weeks ended 25 January 2014
Group Group Company Company
52 weeks 52 weeks 52 weeks 52 weeks
ended ended ended ended
25 January 26 January 25 January 26 January
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Cash generated from
operations
Profit for the period 28,852 21,597 16,697 14,183
Adjusted for:
Income tax expense 10,071 7,325 - -
Depreciation and amortisation 10,889 9,040 - -
Net impairment 725 765 - -
Loss on disposal of
property, plant &
equipment 308 102 - -
Share based payments 606 240 75 37
Net finance losses 996 789 - (5)
Net change in derivative
financial assets and
liabilities 463 (1,461) - -
Share of profit in
joint venture (331) (198) - -
Decrease in non-current
prepayments 91 29 - -
Increase in inventory (12,215) (15,762) - -
Increase in trade
and other receivables (3,787) (2,570) (4,735) (4,324)
Increase in trade
and other payables 4,780 5,586 - 8
Interest paid (1,169) (633) - -
Income taxes paid (8,470) (7,122) - -
------------ ------------ ------------ ------------
Net cash generated
from operating activities 31,809 17,727 12,037 9,899
------------ ------------ ------------ ------------
Cash flow from investing
activities
Purchases of property,
plant & equipment (18,082) (19,774) - -
Proceeds from sale
of property, plant
& equipment 73 9 - -
Interest (paid)/received (43) 8 - 6
------------ ------------ ------------ ------------
Net cash from investing
activities (18,052) (19,757) - 6
------------ ------------ ------------ ------------
Cash flow financing
activities
Proceeds from option
holders for exercise
of options 71 222 71 222
Dividends paid (12,110) (10,131) (12,110) (10,131)
Proceeds from issue
of shares 2 - 2 -
------------ ------------ ------------ ------------
Net cash from financing
activities (12,037) (9,909) (12,037) (9,909)
------------ ------------ ------------ ------------
Net increase in cash
and cash equivalents 1,720 (11,939) - (4)
Cash and cash equivalents
at the beginning of
the period (10,039) 1,770 440 444
Exchange rate movement (442) 130 - -
------------ ------------ ------------ ------------
Net cash and cash
equivalents at the
end of the period (8,761) (10,039) 440 440
------------ ------------ ------------ ------------
Cash and cash equivalents
at the end of the
period 28,521 9,823 440 440
Bank overdraft at
the end of the period (37,282) (19,862) - -
------------ ------------ ------------ ------------
Net cash and cash
equivalents at the
end of the period (8,761) (10,039) 440 440
------------ ------------ ------------ ------------
Notes to the Financial Statements
1. Basis of preparation
EU law (IAS Regulation EC 1606/2002) requires that the Group
financial statements, for the 52 weeks ended 25 January 2014 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 25
January 2014.
The financial information set out above does not constitute the
Group's statutory accounts for the 52 weeks ended 25 January 2014
or 52 weeks ended 26 January 2013. The annual financial information
presented in this annual results announcement for the 52 weeks
ended 25 January 2014 is based on, and is consistent with, that in
the Group's audited financial statements for the 52 weeks ended 25
January 2014, and those financial statements will be delivered in
May 2014. The auditor's report on those financial statements is
unqualified and does not contain any statement under Section 498
(2) or (3) of the Companies Act 2006.
Statutory accounts for 26 January 2013 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 498 (2) or (3) of the Companies
Act 2006.
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out on pages 3 to 10. The financial position of the Group,
its cash flows, liquidity position and borrowing facilities are
described in the Chairman's Statement on pages 3 to 5. In addition
the financial statements includes the Group's objectives, policies
and processes for managing its capital; its financial risk
management objectives; details of its financial instruments and
hedging activities; and its exposures to credit risk and liquidity
risk.
The company meets its day-to-day working capital requirements
through an overdraft facility which is due for renewal on 1 March
2015. The company will open renewal negotiations with the bank in
due course and has, at this stage, not sought any written
commitment that the facility will be renewed. However, the company
has held discussion with its bankers about its future borrowing
needs and no matters have been drawn to its attention to suggest
that renewal may not be forthcoming on acceptable terms.
The Group's forecasts and projections, taking into account
reasonably possible changes in trading performance, show that the
Group has sufficient financial resources. As a consequence the
Directors have a reasonable expectation that the Company and the
Group are well placed to manage their business risks and to
continue in operational existence for the foreseeable future,
despite the current uncertain global economic outlook. Accordingly,
the Directors continue to adopt the going concern basis in
preparing the consolidated financial statements.
Non-GAAP performance measures
The directors believe that the profit before exceptional items
and adjusted earnings per share measures provide additional useful
information for shareholders on the underlying performance of the
business. These measures are consistent with how underlying
business performance is measured internally.
The exceptional profit before tax measure is not a recognised
profit measure under IFRS and may not be directly comparable with
adjusted profit measures used by other companies.
Exceptional items in the current year include:
-- An impairment charge in respect of two retail stores; one in
the New York's Meatpacking district, and one in Paris.
-- An onerous lease in relation to a retail store in Liverpool
we are no longer trading due to store relocation. This space will
be sub-let until expiry of the lease.
Significant accounting policies
Except as described below, the accounting policies applied by
the Group in this annual results announcement are the same as those
applied by the Group in its consolidated financial statements for
the 52 weeks ended 26 January 2013.
There were no revisions to adopted IFRS that became applicable
in the period which had a significant impact on the Group's
financial statements.
The Group does not consider that any other standards, amendments
or interpretations issued by the IASB, but not yet applicable, will
have a significant impact on the financial statements in future
years.
2. Segment information
The Group has three reportable segments; retail, wholesale and
licence income.
For each of the three segments, the Group's chief operating
decision maker (the "Board") reviews internal management reports on
a four weekly basis.
Information regarding the results of each reportable segment is
included below. Performance for the retail segment is measured
based on operating contribution, whereas performance of the
wholesale segment is measured based on gross profit and performance
of the licence segment is measured based on royalty income, as
included in the internal management reports that are reviewed by
the Board.
Segment results are used to measure performance as management
believes that such information is the most relevant in evaluating
the performance of certain segments relative to other entities that
operate within these industries. Inter-segment pricing is
determined on an arm's length basis.
a) Segment revenue and segment result
52 weeks ended 25 January 2014 Retail Wholesale Licence income Total
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 259,143 62,778 - 321,921
Cost of sales (87,909) (35,542) - (123,451)
---------- ---------- --------------- ----------
Gross profit 171,234 27,236 - 198,470
Operating costs (122,176) - - (122,176)
---------- ---------- --------------- ----------
Operating contribution 49,058 27,236 - 76,294
Licence income - - 8,888 8,888
---------- ---------- --------------- ----------
Segment result 49,058 27,236 8,888 85,182
Reconciliation of segment
result to profit before tax
Segment result 49,058 27,236 8,888 85,182
Other operating costs (44,416)
Exceptional costs (1,046)
Other operating expense (132)
----------
Operating profit 39,588
Net finance expense (996)
Share of profit of jointly controlled entity, net of tax 331
----------
Profit before tax 38,923
==========
Capital expenditure 13,009 281 - 13,290
Unallocated capital expenditure 4,578
----------
Total capital expenditure 17,868
==========
Depreciation and amortisation 8,433 183 - 8,616
Unallocated depreciation and amortisation 2,273
----------
Total depreciation and amortisation 10,889
==========
Segment assets 153,844 37,803 - 191,647
Other assets 9,963
----------
Total assets 201,610
==========
Segment liabilities (66,469) (16,102) - (82,571)
Other liabilities (6,975)
----------
Total liabilities (89,546)
==========
Net assets 112,064
==========
Wholesale sales are shown after the elimination of inter-company
sales of GBP38,397,000 (2013: GBP28,714,000).
52 weeks ended 26 January 2013 Retail Wholesale Licence income Total
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 207,953 46,513 - 254,466
Cost of sales (70,268) (25,472) - (95,740)
---------- ---------- --------------- ----------
Gross profit 137,685 21,041 - 158,726
Operating costs (100,121) - - (100,121)
---------- ---------- --------------- ----------
Operating contribution 37,564 21,041 - 58,605
Licence income - - 7,509 7,509
---------- ---------- --------------- ----------
Segment result 37,564 21,041 7,509 66,114
Reconciliation of segment
result to profit before tax
Segment result 37,564 21,041 7,509 66,114
Other operating costs (34,220)
Exceptional costs (2,614)
Other operating income 234
----------
Operating profit 29,514
Net finance expense (790)
Share of profit of jointly controlled entity, net of tax 198
----------
Profit before tax 28,922
==========
Capital expenditure 17,358 194 - 17,552
Unallocated capital expenditure 2,305
----------
Total capital expenditure 19,857
==========
Depreciation and amortisation 6,814 199 - 7,013
Unallocated depreciation and amortisation 2,027
----------
Total depreciation 9,040
==========
Segment assets 126,688 26,842 - 153,530
Other assets 11,144
----------
Total assets 164,674
==========
Segment liabilities (49,568) (11,087) - (60,655)
Other liabilities (5,126)
----------
Total liabilities (65,781)
==========
Net assets 98,893
==========
b) Geographical information
UK & Europe US & Canada Asia Total
GBP'000 GBP'000 GBP'000 GBP'000
52 weeks ended 25 January 2014
Revenue 250,314 61,703 9,904 321,921
Non-current assets* 34,747 14,447 3,557 52,751
52 weeks ended 26 January 2013
Revenue 204,146 44,134 6,186 254,466
Non-current assets* 27,877 16,498 3,387 47,762
*Non-current assets exclude deferred tax assets.
c) Revenue by collection
52 weeks ended 52 weeks ended
25 January 26 January
2014 2013
------------ --------------- ---------------
GBP'000 GBP'000
Menswear 143,044 117,355
Womenswear 178,877 137,111
--------------- ---------------
321,921 254,466
=============== ===============
3. Profit before tax
Profit before tax is stated after 52 weeks ended 52 weeks ended
charging: 25 January 26 January
2014 2013
GBP'000 GBP'000
Depreciation and amortisation 10,889 9,040
Exceptional costs 1,046 2,614
Operating lease rentals for leasehold
properties 27,710 22,430
Loss on sale of property, plant &
equipment 308 102
Auditors remuneration
Audit of these financial statements 9 9
Audit of financial statements of subsidiaries
of the company 126 101
Interim financial statements review 17 20
Audit related assurance services 21 18
Taxation compliance services 30 9
Other tax advisory services 51 31
All other services (forensic services) 218 165
The exceptional costs incurred during the year of GBP1.0m (2013:
GBP2.6m) include GBP0.7m of impairment charges in respect of the
retail assets of a store in the Meatpacking district, New York and
a store in Paris, both locations of which have failed to deliver on
their potential. The balance of GBP0.3m relates to an onerous lease
for one of our Liverpool based stores, where we have ceased trading
following the expansion of our Liverpool One store in
Merseyside.
The exceptional costs incurred during the 52 weeks to 26 January
2013 were in respect of GBP1.6m rent paid in advance for stores
that did not commence trading until the first half of the period.
The balance of GBP1.0m includes an impairment charge of GBP0.8m in
respect of some retail assets, notably a retail development in the
UK that failed to deliver on its potential. The remaining GBP0.2m
related primarily to set up costs incurred for our expansion into
China.
4. Finance income and expenses
52 weeks ended 52 weeks ended
25 January 26 January
2014 2013
GBP'000 GBP'000
Finance income
- Interest receivable 146 34
- Foreign exchange gains 170 -
316 34
=============== --------------
Finance expenses
- Interest payable (1,279) (646)
- Foreign exchange losses (33) (178)
--------------- --------------
(1,312) (824)
=============== ==============
5. Income tax expense
a) The tax charge comprises
52 weeks ended 52 weeks ended
25 January 26 January
2014 2013
GBP'000 GBP'000
Current tax 8,999 8,550
Deferred tax 1,873 (1,510)
Prior year (over)/under provision (801) 285
--------------- --------------
10,071 7,325
=============== ==============
b) Deferred tax movement by type
52 weeks ended 52 weeks ended
25 January 26 January
2014 2013
----------------------------- --------------- ---------------
GBP'000 GBP'000
Property, plant & equipment (520) 466
Share based payments 22 80
Overseas losses 2,516 (1,957)
Inventory (248) (51)
Other 103 (48)
--------------- ---------------
1,873 (1,510)
=============== ===============
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.
52 weeks ended 52 weeks ended
25 January 26 January
2014 2013
------------------------------------------- --------------- ---------------
GBP'000 GBP'000
Profit before tax 38,923 28,922
Profit multiplied by the standard rate
in the UK - 23.16%, (2013: standard
rate in the UK of 24.32%) 9,015 7,034
Income not taxable/expenses not deductible
for tax purposes (55) 655
Overseas losses not recognised 1,068 123
Movement in current and deferred tax
on share awards and options (7) (62)
Prior year (over)/under provision (801) 285
Effect of rate change on corporation
tax (255) (169)
Difference due to overseas tax rates 1,106 (541)
Total income tax expense 10,071 7,325
=============== ===============
d) Deferred and current tax recognised directly in equity
52 weeks ended 52 weeks ended
25 January 26 January
2014 2013
----------------------------------------- --------------- ---------------
GBP'000 GBP'000
Current tax on share awards and options (1,245) (319)
Deferred tax on share awards and options 278 (906)
Deferred tax associated with movement
in hedging reserve (490) 131
Current tax associated with foreign
exchange movements in reserves (1,115) -
--------------- ---------------
(2,572) (1,094)
=============== ===============
There was a reduction in the UK corporation tax rate from 24% to
23% with effect from 1 April 2013. There are further announced
reductions such that the headline rate will decrease to 20% by 1
April 2015.
As the deferred tax assets and liabilities should be recognised
based on the corporation tax rate substantively enacted at the
balance sheet date, the assets and liabilities on UK operations
have been recognised at a rate of 20%. Those assets and liabilities
arising on foreign operations have been recognised at the
applicable overseas tax rates.
6. Dividends per share
52 weeks ended 52 weeks ended
25 January 26 January
2014 2013
-------------------------------------------- --------------- ---------------
GBP'000 GBP'000
Final dividend paid for prior year
of 18.7p per ordinary share (2013:
16.25p) 7,965 6,767
Interim dividend paid of 9.5p per ordinary
share (2013: 7.9p) 4,145 3,364
--------------- ---------------
12,110 10,131
=============== ===============
A final dividend in respect of 2014 of 24.2p per share,
amounting to a dividend payable of GBP10,563,081, is to be proposed
at the Annual General Meeting on 10 June 2014.
7. Earnings per share
52 weeks ended 52 weeks ended
25 January 26 January
2014 2013
---------------------------------------- --------------- ---------------
Number of shares: No. No.
Weighted number of ordinary shares
outstanding 42,960,023 41,939,012
Effect of dilutive options 537,103 1,343,134
Weighted number of ordinary shares
outstanding - diluted 43,497,126 43,282,146
=============== ===============
Earnings: GBP'000 GBP'000
Profit for the period basic and diluted 28,852 21,597
Profit for the period adjusted * 29,627 23,635
Basic earnings per share 67.2p 51.5p
Adjusted earnings per share * 69.0p 56.4p
Diluted earnings per share 66.3p 49.9p
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 conditional
share awards distributed, if they vest, are covered by shares held
either in treasury or by these 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, the
Ted Baker Performance Share Plan and the Ted Baker Plc Long Term
Incentive Plan 2013.
There were no share related events after the balance sheet date
that may affect earnings per share.
* Adjusted profit for the period and adjusted earnings per share
are shown before the exceptional costs (net of tax) of GBP775,000
(2013: GBP2,038,000).
8. Intangible assets
Key Money Computer Computer software Total
software under development
----------------------- --------- --------- ------------------ -------
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 26 January 2013 983 - - 983
Additions - 2,670 2,598 5,268
Exchange rate movement (34) - - (34)
--------- --------- ------------------ -------
At 25 January 2014 949 2,670 2,598 6,217
Amortisation
At 26 January 2013 - - - -
Charge for the year - 137 - 137
Exchange rate movement - - - -
--------- --------- ------------------ -------
At 25 January 2014 - 137 - 137
--------- --------- ------------------ -------
Net book value
At 26 January 2013 983 - - 983
========= ========= ================== =======
At 25 January 2014 949 2,533 2,598 6,080
========= ========= ================== =======
The key money brought forward relates to the right to lease
stores that have a guaranteed residual value. The guaranteed value
arises because the next tenants based on current market conditions
are required to pay these amounts to the Group. Due to the nature
of this, the assets are considered recoverable and therefore not
amortised. The current market rate rents, for both stores included
within the intangible assets, continue to be above the rent under
the lease terms and hence no decline in values is foreseen.
The additions during the year relate to IT systems for the new
e-commerce platform for the UK site, ready for use in November 2013
and for the Microsoft Dynamics AX systems which will be implemented
across the group. The e-commerce costs are being amortised over 4
years from November 2013, when the new platform was ready for use.
The Microsoft systems project remains in its development phase,
therefore no amortisation has been charged during the year.
Amortisation on this asset will commence when these systems are
ready for use.
9. Property, plant and equipment
Leasehold Fixtures, Motor Assets Total
Improvements fittings vehicles under
& office construction
equipment
----------------------- ------------- ---------- --------- ------------- -------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 26 January 2013 57,439 45,384 101 1,637 104,561
Additions 5,744 5,603 9 1,244 12,600
Disposals (973) (634) - - (1,607)
Exchange rate movement (1,305) (540) - (42) (1,887)
------------- ---------- --------- ------------- -------
At 25 January 2014 60,905 49,813 110 2,839 113,667
Depreciation
At 26 January 2013 25,781 33,269 99 - 59,149
Charge for the year 5,677 5,073 2 - 10,752
Impairment 671 54 - - 725
Disposals (847) (392) - - (1,239)
Exchange rate movement (491) (312) - - (803)
------------- ---------- --------- ------------- -------
At 25 January 2014 30,791 37,692 101 - 68,584
------------- ---------- --------- ------------- -------
Net book value
------------- ---------- --------- ------------- -------
At 26 January 2013 31,658 12,115 2 1,637 45,412
============= ========== ========= ============= =======
At 25 January 2014 30,114 12,121 9 2,839 45,083
============= ========== ========= ============= =======
Leasehold Fixtures, Motor Assets Total
Improvements fittings vehicles under
& office construction
equipment
----------------------- ------------- ---------- --------- ------------- -------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 28 January 2012 44,279 37,358 126 3,725 85,488
Additions 13,302 8,431 - (1,876) 19,857
Disposals (120) (395) (25) - (540)
Exchange rate movement (22) (10) - (212) (244)
------------- ---------- --------- ------------- -------
At 26 January 2013 57,439 45,384 101 1,637 104,561
Depreciation
At 28 January 2012 21,282 28,410 116 - 49,808
Charge for the year 4,098 4,941 1 - 9,040
Impairment 513 252 - - 765
Disposals (84) (327) (18) - (429)
Exchange rate movement (28) (7) - - (35)
------------- ---------- --------- ------------- -------
At 26 January 2013 25,781 33,269 99 - 59,149
------------- ---------- --------- ------------- -------
Net book value
------------- ---------- --------- ------------- -------
At 28 January 2012 22,997 8,948 10 3,725 35,680
============= ========== ========= ============= =======
At 26 January 2013 31,658 12,115 2 1,637 45,412
============= ========== ========= ============= =======
Additions included within the assets under construction category
are stated net of transfers to other property, plant and equipment
categories. Transfers from the assets under construction category
in the period amounted to GBP11,021,838 (2013:GBP3,725,000) whilst
additions into this category were GBP12,223,089 (2013:
GBP1,637,000).
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 estimates 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 rate used to calculate value in use is
derived from the Group's weighted average cost of capital.
The impairment losses relate to stores whose recoverable amounts
(value in use) did not exceed the asset carrying values. In all
cases, impairment losses arose due to stores performing below
projected trading levels.
The impairment charge of GBP0.7m for the 52 weeks ended 25
January 2014 relates to the carrying value of a retail store in the
Meatpacking district, New York and a retail store in Paris.
The impairment charge of GBP0.8m for the 52 weeks ended 26
January 2013 includes a charge in respect to some retail assets,
notably a retail development in the UK that has failed to deliver
on its potential.
10. Related Parties
The Company has a related party relationship with its directors
and executive officers.
Directors of the Company and their immediate relatives control
35.9% per cent of the voting shares of the Company.
At the 25 January 2014, No Ordinary Designer Label Limited
("NODL"), the main trading company owed Ted Baker Plc GBP39,111,000
(2013: GBP34,376,000). NODL was owed GBP59,184,000 (2013:
GBP57,111,000) 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, with Flair
Industries Pty Ltd. As at 25 January 2014, the joint venture owed
GBP164,000 to the main trading company (2013: GBP225,000). In the
period the value of sales made to the joint venture by the Group
was GBP1,336,000 (2013: GBP808,000).
The Group considers the Board of executive directors as key
management.
11. Post balance sheet events
In February 2014 we came to a mutual agreement with a licence
partner to terminate an agreement earlier than anticipated due to a
variation in that licence partner's long term strategy following a
change in senior management.
Under the terms of the termination agreement we received a
payment of GBP2.7m for compensation of minimum guaranteed royalties
that would have been due to us had the agreement continued to its
original completion date.
In line with accounting standards the termination of the
agreement is considered to be a non-adjusting post balance sheet
event and will be accounted for in the 2014/15 financial
statements.
Given the significance and nature of the amount the termination
payment of GBP2.7m will be shown as exceptional income in the
group's income statement in the year ending January 2015.
Responsibility statement of the directors in respect of the
Annual Results
We, the directors of the Company, confirm that to the best of
our knowledge:
(a) each of the Group and Parent company financial statements,
prepared in accordance with IFRS gives a true and fair view of the
assets, liabilities, financial position and profit or loss of the
issuer and the undertakings included in the consolidation taken as
a whole; and
(b) the management report includes a fair review of the
development and performance of the business and the position of the
company and the undertakings included in the consolidation taken as
a whole, together with a description of the principle risks and
uncertainties that they face.
On behalf of the Board
R S Kelvin L D Page
Chief Executive Finance Director
20 March 2014 20 March 2014
Cautionary statement regarding forward-looking statements
This document 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 document, and will not be updated during the year. The
directors can give no assurance that these expectations will prove
to be 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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