TIDMTED
RNS Number : 8470H
Ted Baker PLC
19 March 2015
19 March 2015
Ted Baker PLC
("Ted Baker", the "Group")
Annual Results for the 53 weeks ended 31 January 2015
Highlights:
2015 2014 Change
Group Revenue GBP387.6m GBP321.9m 20.4%
Profit Before Tax and
Exceptional Items GBP49.5m GBP40.0m 23.7%
Profit Before Tax GBP48.8m GBP38.9m 25.3%
Adjusted EPS 83.2p 69.0p 20.6%
Basic EPS 82.0p 67.2p 22.0%
Total Dividend 40.3p 33.7p 19.6%
-- Group revenue up 20.4% to GBP387.6m
-- Retail sales up 18.4% to GBP306.9m
o UK and Europe retail sales up 16.7% to GBP231.8m
o US and Canada retail sales up 24.9% to GBP63.3m
o E-commerce sales up 58.2% to GBP36.7m
-- Wholesale sales up 28.5% to GBP80.7m
-- Licence income up 31.2% to GBP11.7m
-- Proposed final dividend of 29.0p bringing total dividend to 40.3p an increase of 19.6%
Ray Kelvin CBE, Founder and Chief Executive, said:
"This was another excellent year as we continued to develop Ted
Baker as a leading lifestyle brand across global markets and
distribution channels.
We continue to invest in the brand as we develop in new markets
where we see long term growth. All the while, we remain totally
focused on the quality, design and attention to detail which
underpins every area of the Group.
Our customers' reaction to our Spring/Summer collections across
markets has been very encouraging and we are excited by our new
store openings in the coming months, which include a first store
devoted to showcasing our extended licence product range in
Spitalfields, London.
The strength and success of the Ted Baker brand is testament to
the skill, talent and 'Tedication' of our team across the world,
and I would like to take this opportunity to thank them for their
hard work and 'pashion' during the year. We look forward with
continued confidence as we further develop Ted Baker globally."
Enquiries:
Ted Baker PLC Tel: 020 7796 4133 on 19 March 2015 only
Ray Kelvin CBE, Chief Executive Tel: 020 7255 4800 thereafter
Lindsay Page, Chief Operating Officer & Group Finance Director
Charles Anderson, Company Secretary
Hudson Sandler Tel: 020 7796 4133
Alex Brennan
Michael Sandler
Kate Hoare
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 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.
Ted Baker has 398 stores and concessions worldwide, comprising
of 183 in the UK, 83 in Europe, 75 in the US and Canada, 50 in the
Middle East and Asia and 7 in Australasia.
The brand offers a wide range of collections including:
Menswear; Womenswear; Global; Phormal; Endurance; Accessories;
Lingerie and Sleepwear; Childrenswear; Fragrance and Skinwear;
Footwear; Neckwear; Eyewear; Watches; Luggage; Audio and
Homewear.
Chairman's Statement
I am pleased to report another strong year in the global
development of the Ted Baker brand. We delivered a strong
performance across all channels and territories during the 53 weeks
to 31 January 2015 (the "period"), resulting in a 20.4% increase in
Group revenue to GBP387.6m (2014: GBP321.9m) (22.5% in constant
currency) and a 23.7% increase in profit before tax and exceptional
items to GBP49.5m (2014: GBP40.0m).
The retail division performed well, delivering an increase in
revenue of 18.4% to GBP306.9m (2014: GBP259.1m) (20.8% in constant
currency) on an increase in average square footage of 9.3%.
Performance across our established territories was strong and we
continue to invest in our newer markets and build brand awareness
for the long term development of the brand. We have continued our
geographic expansion with openings across all territories and
successfully migrated our US e-commerce site onto our new platform
in July 2014, following the launch of the new UK site in the prior
year.
Wholesale sales for the Group increased by 28.5% to GBP80.7m
(2014: GBP62.8m) (29.8% in constant currency), reflecting a good
performance from our UK wholesale business, which includes the
supply of goods to our licensed stores and our export business, as
well as a strong performance from our North American wholesale
business.
Licence income from our territorial and product licences
increased by 31.2% to GBP11.7m (2014: GBP8.9m). During the period,
our licence partners opened stores in Abu Dhabi, Dubai, Saudi
Arabia, Panama and Turkey and our joint venture in Australasia
opened a further two stores.
We continue to invest in our infrastructure and successfully
launched the first phase of the Microsoft Dynamics AX business
system at the start of February 2015, as planned. We will continue
to roll out this system globally across the Group over the next
year to enhance the efficiency of the business, streamline our
operations and support our long term growth strategy.
Financial Results
Group revenue for the period rose by 20.4% to GBP387.6m (2014:
GBP321.9m). The composite gross margin decreased to 60.7% (2014:
61.7%), mainly as a result of a change in sales mix between
wholesale and retail sales and partly due to a slight decrease in
the retail and wholesale margins.
Profit before tax and exceptional items increased by 23.7% to
GBP49.5m (2014: GBP40.0m) and profit before tax increased by 25.3%
to GBP48.8m (2014: GBP38.9m). Adjusted basic earnings per share,
which exclude exceptional items, increased by 20.6% to 83.2p (2014:
69.0p) and basic earnings per share increased by 22.0% to 82.0p
(2014: 67.2p).
Exceptional costs in the period of GBP5.3m (2014: GBP1.0m)
relate to a legal dispute with a previous insurer, details of which
were previously disclosed in the prior year annual accounts.
Exceptional income for the period of GBP4.7m (2014: GBPnil) is
comprised of GBP3.7m in relation to the early termination of a
licence agreement and GBP1.0m relating to a settlement of an
intellectual property dispute.
The Group's net borrowing position at the end of the period was
GBP18.8m (2014: GBP8.8m). This reflected the on-going significant
investment in capital expenditure during the year and increased
inventory in line with the Group's growth. The estimated net
borrowing position at the end of week 52 was GBP15.4m (2014:
GBP8.8m).
Dividends
The Board is recommending a final dividend of 29.0p per share
(2014: 24.2p), making a total for the year of 40.3p per share
(2014: 33.7p per share), an increase of 19.6% on the prior period.
Subject to approval by shareholders at the Annual General Meeting
to be held on 12 June 2015, the final dividend will be paid on 19
June 2015 to shareholders on the register on 22 May 2015.
People
I would like to take this opportunity to thank all of my
colleagues across the world for their continued commitment and
contribution. This strong performance is testament to our talented
teams, whose creativity and passion are key to our success as we
continue to grow the business and develop Ted Baker as a global
lifestyle brand.
Current Trading and Outlook
Retail
Our retail business has started the new financial year well, and
we are encouraged by the positive reaction to our Spring/Summer
collections. We continue to develop Ted Baker in the UK with store
openings planned in Stansted and in Spitalfields, London, which
will showcase our licenced product range. We will further develop
our e-commerce site to enhance customer experience and advance the
local content provided to our European customers, including
language options specific to key countries. In Europe, we plan to
open a new store in Amsterdam, our first Spanish outlet in
Barcelona and further concessions, in France, Germany, the
Netherlands and Spain during the year.
In North America, our growth will continue with the opening of
four new stores and three outlets, a relocation of our store in Los
Angeles and further concessions through a leading department store.
Our new US e-commerce site is proving successful following its
launch in July 2014, delivering improved design, performance and
personalised content. Towards the end of 2014, we launched our
Canadian e-commerce site and are pleased by its performance at this
early stage.
In Asia, we remain focused on building brand awareness in this
market where we are in the relatively early stages of development.
We are opening our first street level store in Hong Kong at the end
of April and further concessions in China and South Korea.
Wholesale
Our wholesale business is delivering a strong performance that
is in line with our expectations. We anticipate further growth
across our wholesale businesses, which should result in high single
digit growth in sales in the coming year.
Licence Income
Our product and territorial licences continue to perform well,
with further openings planned in Azerbaijan, Dubai, Egypt, Saudi
Arabia, Singapore, Taiwan and Thailand in the new financial
year.
Group
The Group 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 working to further enhance 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. While there will be an element of
additional costs while we run down our existing systems, we will
continue to monitor and control associated costs. Capital
expenditure in the new financial year is anticipated to be at the
same level as last year at some GBP26m, due to further store
openings and the on-going investment in new systems across the
business.
We intend to make our next interim management statement,
covering trading since the start of the financial year, in mid June
2015.
David Bernstein CBE
Non-Executive Chairman
19 March 2015
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; Accessories; Lingerie and
Sleepwear; Childrenswear; Fragrance and Skinwear; Footwear;
Neckwear; Eyewear; Watches, Luggage, Audio and Homewear.
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 our global business and each of our
distribution channels.
These have been detailed below and considered further throughout
the strategic report.
Key performance 53 weeks 52 weeks Variance Constant
indicator ended ended currency
31 January 25 January variance
2015 2014
----------- ------------------------ ------------ ------------ --------- ----------
Group Revenue GBP387.6m GBP321.9m 20.4% 22.5%
----------- ------------------------ ------------ ------------ --------- ----------
Gross margin 60.7% 61.7% (1.0)
------------------------------------ ------------ ------------ --------- ----------
Profit before
tax (excluding
exceptional
items) as a
% of revenue 12.8% 12.4% 0.4
------------------------------------ ------------ ------------ --------- ----------
Retail Revenue GBP306.9m GBP259.1m 18.4% 20.8%
----------- ------------------------ ------------ ------------ --------- ----------
Gross margin 65.5% 66.1% (0.6)
------------------------------------ ------------ ------------ --------- ----------
Operating contribution
%* 13.0% 12.6% 0.4
------------------------------------ ------------ ------------ --------- ----------
Average square
footage ** 332,089 303,951 9.3%
------------------------------------ ------------ ------------ --------- ----------
Closing square
footage ** 344,898 316,648 8.9%
------------------------------------ ------------ ------------ --------- ----------
Sales per square
foot*** GBP814 GBP780 4.4% 6.6%
------------------------------------ ------------ ------------ --------- ----------
Wholesale Revenue GBP80.7m GBP62.8m 28.5% 29.8%
----------- ------------------------ ------------ ------------ --------- ----------
Gross margin 42.4% 43.4% (1.0)
------------------------------------ ------------ ------------ --------- ----------
Licence Revenue GBP11.7m GBP8.9m 31.2% -
income
----------- ------------------------ ------------ ------------ --------- ----------
Operating cashflow
Group per share **** 68.7p 73.1p (6.0)%
----------- ------------------------ ------------ ------------ --------- ----------
Working capital***** GBP90.9m GBP69.9m 30.0%
------------------------------------ ------------ ------------ --------- ----------
*Operating contribution is defined as operating profit before
exceptional items as a percentage of revenue.
**Excludes licensed partner stores
*** Excludes online sales
**** Operating cashflow per share is defined as net cash
generated from operating activities divided by the weighted number
of ordinary shares (diluted)
***** Working capital comprises inventories, trade and other
receivables and trade and other payables.
Business Review
Global Group Performance
Retail
Ted Baker operates 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
separate US and Canadian websites dedicated to the Americas. We
also have e-commerce businesses with some of our concession
partners.
The retail division performed well with sales up 18.4% (20.8% in
constant currency) to GBP306.9m (2014: GBP259.1m). Average retail
square footage rose by 9.3% over the period to 332,089 sq ft (2014:
303,951 sq ft). Total retail square footage at 31 January 2015 was
344,898 sq ft (2014: 316,648 sq ft), an increase of 8.9% on the
prior year. Retail sales per square foot rose 4.4% (6.6% in
constant currency) from GBP780 to GBP814.
The performance of our e-commerce business was strong and sales
increased by 58.2% to GBP36.7m (2014: GBP23.2m) driven by growth
across all areas of our e-commerce business. Our UK site continues
to benefit from the re-launch of our UK platform in late 2013,
providing a more relevant customer experience through improved
design, performance and personalised content. This was followed by
the successful migration of our US site in July 2014 and we are
pleased with its performance.
The retail gross margin reduced slightly to 65.5% (2014: 66.1%),
largely reflecting an increase in our outlet sales as a proportion
of total sales. Retail operating costs increased 17.4% in line with
our expectations to GBP143.5m (2014: GBP122.2m) and as a percentage
of retail sales, decreased slightly to 46.8% (2014: 47.1%).
Wholesale
We currently operate a wholesale business in the UK serving
countries across the world, particularly in Europe, as well as
supplying products to our licensed stores. In addition, we operate
a wholesale business in North America.
Group wholesale sales increased by 28.5% (29.8% in constant
currency) to GBP80.7m (2014: GBP62.8m), reflecting a good
performance from both our UK wholesale business, with sales
increasing by 25.3% to GBP64.9m (2014: GBP51.8m), and our North
American wholesale business, with sales increasing by 39.1% (45.0%
in constant currency) to GBP15.3m (2014: GBP11.0m) as the brand
continues to gain traction.
Gross margins were down from last year at 42.4% (2014: 43.4%),
which was principally the result of a greater proportion of
wholesale sales to our licensed stores, which carry a lower
margin.
Licence income
We operate both territorial and product licences. Our
territorial licences cover Europe, South America, the Middle East,
Asia and Australasia, where our partners operate licensed retail
stores and in some territories, wholesale operations. Our product
licences cover fragrance and skinwear, watches, footwear, eyewear,
men's suits, neckwear, jewellery, childrenswear, lingerie and
sleepwear, homeware, luggage and audio.
Licence income was up 31.2% to GBP11.7m (2014: GBP8.9m), with
both territorial and product licences performing well. There were
notable performances from our product licencees in footwear,
eyewear, neckwear, skinwear and lingerie. In September, we opened
our first store in Panama with our licence partner and we are
encouraged by performance so far. Our licensed stores in the Middle
East, operated by our territorial partner, RSH Limited, also
performed particularly well during the period with further openings
planned as a result.
Collections
Ted Baker Womenswear delivered a good performance with sales up
22.6% to GBP219.3m (2014: GBP178.9m). Womenswear benefited from a
greater proportion of new space added during the period and as a
result represented 56.6% of total sales (2014: 55.6%).
Ted Baker Menswear performed well with sales up 17.7% to
GBP168.3m (2014: GBP143.0m). Menswear represented 43.4% of total
sales in the period (2014: 44.4 %).
Geographic Performance
United Kingdom and Europe
53 weeks 52 weeks Variance Constant
ended ended currency
31 January 25 January variance
2015 2014
------------------------ ------------ ------------ --------- ----------
Retail revenue* GBP231.8m GBP198.6m 16.7% 17.8%
------------------------ ------------ ------------ --------- ----------
Average square footage
* 228,584 212,745 7.4%
------------------------ ------------ ------------ --------- ----------
Closing square footage
* 233,387 218,622 6.8%
------------------------ ------------ ------------ --------- ----------
Sales per square
foot** GBP869 GBP834 4.2% 5.4%
------------------------ ------------ ------------ --------- ----------
Wholesale revenue GBP64.9m GBP51.8m 25.3% 25.3%
------------------------ ------------ ------------ --------- ----------
Own stores 37 35 2
------------------------ ------------ ------------ --------- ----------
Concessions 214 203 11
------------------------ ------------ ------------ --------- ----------
Outlets 12 11 1
------------------------ ------------ ------------ --------- ----------
Partner stores 3 2 1
------------------------ ------------ ------------ --------- ----------
Total 266 251 15
------------------------ ------------ ------------ --------- ----------
* Excludes licensed partner stores
** Excludes online sales
Sales in our UK and Europe retail division were up 16.7% to
GBP231.8m (2014: GBP198.6m) (17.8% in constant currency),
reflecting a good performance in our established UK market and a
very good performance in continental Europe where we continue to
expand.
In the UK we opened new stores during the year in Glasgow,
Heathrow Terminal 2, Heathrow Terminal 4 and relocated our
Birmingham store. We closed our store in Heathrow Terminal 1 due to
the closure of the terminal and closed one further store. Our
European expansion continued as we opened a new store in Marseille
and a new outlet in Paris, France. We also opened further
concessions with premium department stores in France, Portugal,
Spain and the Netherlands. We are pleased with their performances
and remain positive about growth opportunities for the brand in
these markets. We also opened a further store with our licence
partner in Istanbul, Turkey.
Our e-commerce business performed very well during the period
with sales increasing by 54.2% to GBP33.3m (2014: GBP21.6m),
reflecting continuing growth in the UK.
Sales from our UK wholesale division increased by 25.3% to
GBP64.9m (2014: GBP51.8m) reflecting a good performance from our UK
wholesale business, including the supply of product to our licensed
stores, and continued growth in our wholesale export business.
North America
53 weeks 52 weeks Variance Constant
ended ended currency
31 January 25 January variance
2015 2014
------------------------ ------------ ------------ --------- ----------
Retail revenue GBP63.3m GBP50.7m 24.9% 31.3%
------------------------ ------------ ------------ --------- ----------
Average square footage
* 82,360 72,326 13.9%
------------------------ ------------ ------------ --------- ----------
Closing square footage
* 89,240 76,867 16.1%
------------------------ ------------ ------------ --------- ----------
Sales per square
foot** GBP726 GBP687 5.7% 11.3%
------------------------ ------------ ------------ --------- ----------
Wholesale revenue GBP15.3m GBP11.0m 39.1% 45.0%
------------------------ ------------ ------------ --------- ----------
Own stores 20 16 4
------------------------ ------------ ------------ --------- ----------
Concessions 48 42 6
------------------------ ------------ ------------ --------- ----------
Outlets 6 5 1
------------------------ ------------ ------------ --------- ----------
Partner Stores 1 0 1
------------------------ ------------ ------------ --------- ----------
Total 75 63 12
------------------------ ------------ ------------ --------- ----------
* Excludes licensed partner stores
** Excluding online sales
We are very pleased with our progress across the retail and
wholesale channels in North America both of which performed very
well and we are confident that the Ted Baker brand is continuing to
gain traction and recognition in this territory.
Sales from our retail division increased by 24.9% to GBP63.3m
(2014: GBP50.7m) (31.3% in constant currency). During the period we
continued our expansion in North America with new stores in Las
Vegas, Miami, Philadelphia and Toronto, an outlet in Desert Hills,
California, and six further concessions through a leading
department store.
Our e-commerce business delivered a strong performance,
following the successful migration of our US e-commerce website
onto our new platform in July 2014 with sales increasing
115.7%.
Our licencee successfully launched our first store in
Panama.
Sales from our North American wholesale business increased by
39.1% to GBP15.3m (2014: GBP11.0m) (45.0% in constant currency)
reflecting the continued growth of our business.
Middle East, Asia and Australasia
53 weeks 52 weeks Variance Constant
ended ended currency
31 January 25 January variance
2015 2014
------------------------ ------------ ------------ --------- ----------
Retail revenue GBP11.8m GBP9.9m 19.2% 26.1%
------------------------ ------------ ------------ --------- ----------
Average square footage
* 21,145 18,880 12.0%
------------------------ ------------ ------------ --------- ----------
Closing square footage
* 22,271 21,159 5.3%
------------------------ ------------ ------------ --------- ----------
Sales per square
foot GBP559 GBP525 6.5% 12.6%
------------------------ ------------ ------------ --------- ----------
Wholesale revenue GBP0.5m - 100% 100%
------------------------ ------------ ------------ --------- ----------
Own stores 7 7 -
------------------------ ------------ ------------ --------- ----------
Concessions 7 7 -
------------------------ ------------ ------------ --------- ----------
Outlets 2 1 1
------------------------ ------------ ------------ --------- ----------
Partner stores 41 33 8
------------------------ ------------ ------------ --------- ----------
Total 57 48 9
------------------------ ------------ ------------ --------- ----------
* Excludes licensed partner stores
We continue to develop the Ted Baker brand across Asia,
Australasia and the Middle East through our retail and licensing
channels. We work closely with our territorial partners to ensure
the visual merchandising of the licensed stores and training of the
teams is reflective of the Ted Baker culture.
In Asia we remain encouraged by reactions to the brand and
whilst we still remain in the relatively early stages of
development, we are positive about the long term opportunities in
this territory. Retail sales in Asia increased 19.2% to GBP11.8m
(2014: GBP9.9m) (26.1% in constant currency). In China, we opened a
further outlet store. In Japan, we opened two concessions through a
leading department store and closed one. In South Korea, we opened
one concession and closed two concessions.
During the period, our Middle East licence partners opened
further stores in Abu Dhabi, Dubai, Egypt and three in Saudi
Arabia, and all are performing very well. As at 31 January 2015,
our licence partners operated 34 stores and concessions across the
rest of the world. (2014: 28).
The joint venture with our Australasian licence partner Flair
Industries Pty Ltd continues to perform well, during the period, we
opened two new stores in Brisbane and Melbourne, Australia. As at
31 January 2015, we operated 7 stores in Australasia (2014: 5
stores).
Financial Review
Revenue and Gross Margin
Group revenue increased by 20.4% to GBP387.6m (2014: GBP321.9m),
driven by an 18.4% increase in retail sales to GBP306.9m (2014:
GBP259.1m) and a 28.5% increase in wholesale sales to
GBP80.7m(2014: GBP62.8m).
The composite gross margin for the Group decreased to 60.7%
(2014: 61.7%) mainly as a result of a change in sales mix between
wholesale and retail sales.
Operating Expenses Pre-Exceptional items
Distribution costs increased by 17.3% in line with our
expectations to GBP144.6m (2014: GBP123.2m) and as a percentage of
sales decreased to 37.3% (2014: 38.3%).
Administration expenses increased by 17.6% to GBP51.0m (2014:
GBP43.4m). Excluding the employee performance related bonus of
GBP4.9m (2014: GBP3.9m), administration expenses rose by 16.7% 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.
Profit Before Tax
Profit before tax and exceptional items increased by 23.7% to
GBP49.5m (2014: GBP40.0m) and profit before tax increased by 25.3%
to GBP48.8m (2014: GBP38.9m).
Exceptional items
Exceptional income for the period of GBP4.7m (2014: GBPnil)
comprises GBP3.7m in relation to the early termination of a licence
agreement and GBP1.0m in relation to the settlement of an
intellectual property dispute. The early termination relates to the
mutual agreement in February 2014 to terminate a licence agreement
earlier than anticipated due to a variation in that licence
partner's long-term strategy following a change in senior
management.
Exceptional costs for the period of GBP5.3m (2014: GBP1.0m)
relate to a legal dispute with a previous insurer. The Group
received a judgement in October 2014 that its claim against this
previous insurer for loss of profit arising from the theft of
inventory from its warehouse from 2004 to 2008 had not been upheld
by the court. In line with accounting standards, a full provision
has been made for all costs incurred and judged payable by the
Company.
The prior year's exceptional costs of GBP1.0m included GBP0.7m
for impairment charges in respect of a retail store in the
Meatpacking District, New York and a retail store in Paris, both
locations failed to deliver on their potential. The balance of
GBP0.3m relates to an onerous lease for our retail store in
Liverpool, where we ceased trading following the expansion of our
Liverpool One Store in Merseyside.
Finance Income and Expenses
Net finance costs payable during the period were GBP1.2m (2014:
GBP1.1m). 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 our
long-term expansion.
The net foreign exchange loss during the year of GBP0.3m (2014:
a gain of GBP0.1m) was due to the retranslation of monetary assets
and liabilities denominated in foreign currencies.
Taxation
The Group tax charge for the year was GBP12.9m (2014: GBP10.1m),
an effective tax rate of 26.5% (2014: 25.9%). This effective tax
rate is higher than the UK tax rate for the period of 21.32%
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 2014, the UK corporation tax
rate fell from 23% to 21% and will fall to 20% from 1 April 2015.
Our closing deferred tax assets and liabilities have therefore been
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.
53(rd) Week Impact
The inclusion of an additional week does not have a material
impact on profit before tax for the period, but does mean that
inventories include an additional week of Spring/Summer intake
compared to the previous year. The net borrowing position at the
end of the period includes a quarterly payment of VAT, which is
payable on 31(st) January each year and usually falls in the first
week of a new financial year. Excluding the impact of the
additional week would reduce net borrowings by GBP3.4m.
Cash Flow
The net decrease in cash and cash equivalents of GBP10.1m (2014:
GBP1.7m increase) primarily reflected an increase in working
capital and further capital expenditure to support our long term
development.
Total Group working capital, which comprises inventories, trade
and other receivables and trade and other payables, increased by
GBP21m to GBP90.9m (2014: GBP69.9m). This was mainly driven by an
increase in inventories of GBP30.7m to GBP111.1m (2014:GBP80.4m)
reflecting the growth of our business, stock on hand for our
wholesale customers and licence partners and an additional GBP6m of
Spring/Summer intake due to the 53(rd) week.
Group capital expenditure amounted to GBP25.7m (2014: GBP18.1m)
reflecting 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 US site.
The Group's net borrowing position at the end of the period was
GBP18.8m (2014: GBP8.8m) and the estimated position at the end of
week 52 was GBP15.4m (2014: GBP8.8m).
Shareholder Return
Basic earnings per share increased by 22.0% to 82.0p (2014:
67.2p).Adjusted earnings per share, which exclude net exceptional
items, increased by 20.6% to 83.2p (2014: 69.0p).
The proposed final dividend of 29.0p per share will make a total
for the period of 40.3p per share (2014: 33.7p per share), an
increase of 19.6% on the previous year.
Operating cash flow per share, which is calculated using the net
cash generated from operating activities, was 68.7p (2014: 73.1p)
and reflected a decrease 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 30 January 2016.
Borrowing Facilities
In September 2014, the Group increased its borrowing facility to
GBP65.0m (2014: GBP50.0m). 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 2018. 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 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 and subsidiary
directors (the "Executive Committee") have established a structured
approach to identify, assess and manage these risks and this is
regularly monitored and updated by the Risk Committee. The Risk
Committee includes the Chief Operating Officer and various
subsidiary directors and heads of department. 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 Brand The strength of We carefully
Risks and reputational our brand and consider each
risk its reputation new opportunity
are important and each such
to the business. customer and
There is a risk partner with
that our brand whom we do business.
may be undermined Such partners
or damaged by are monitored
our actions or on an ongoing
those of our partners. basis to ensure
they remain appropriate
Incorrect management to the brand.
of social media
interactions could Our dedicated
have an adverse team closely
effect on our monitors social
reputation. media channels
and addresses
any issues in
accordance with
our protocol.
------------------ ----------------------------- --------------------------
Development Failure in growing We perform extensive
of overseas the international due diligence
markets business through on all potential
franchise operations, partners and
licensee's and to assess our
e-commerce. Risk appropriate route
that the group to market. We
fails to prioritise operate in a
the right territories range of international
or investment. markets, which
helps to mitigate
over reliance
and exposure
to any one territory.
------------------ ----------------------------- --------------------------
Fashion As with all fashion We maintain a
and Design brands there is high level of
a risk that our market awareness
offer will not and an understanding
satisfy the needs of consumer trends
of our customers and fashion to
or we fail to ensure that we
correctly identify remain able to
trends, both resulting respond to changes
in lower sales in consumer preference.
and reduced market
share.
------------------ ----------------------------- --------------------------
External External events All factors affecting
events may occur which these stakeholders
may affect the are monitored
global, economic closely on an
and financial ongoing basis
environment in ensuring that
which we operate. we are prepared
These events can for and can react
affect our suppliers, to changes in
customers and the external
partners, risking environment,
an increase in allowing us to
our cost base reduce our exposure
and adversely as early as possible.
affecting our The geographic
revenue. spread of our
business and
supply chain
also helps to
mitigate these
risks.
Operational Supply If garments do Our supply chain
Risks chain not reach us on is diversified
time and to specification, across a number
there is a risk of suppliers
of a loss of revenue in different
and customer confidence. regions, reducing
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.
------------ ------------------ ----------------------------- --------------------------
Infrastructure There is a risk The business
of operational continuity plan
problems, including is constantly
disruption to reviewed and
the infrastructure updated by the
that supports Risk Committee.
our business, In addition,
which may lead business disruption
to a loss of revenue, is covered by
data and inventory. our insurance
policies.
------------------ ----------------------------- --------------------------
Social We are committed Four members
Responsibility to operating in of the Executive
a responsible Committee have
and sustainable been tasked with
manner as regards overseeing specific
our supply chain, areas of our
environment and social responsibility
community. If agenda. We have
we fail to operate an employee whose
in a manner that sole responsibility
supports our philosophy, is to monitor
this could damage this agenda and
the trust and ensure our practices
confidence of fall in line
our stakeholders. with it.
------------------ ----------------------------- --------------------------
IT and Advances in technology Commitment of
Cyber have resulted additional specialist
security in more data being resources and
transmitted electronically, the continual
posing an increased upgrading of
security risk. security equipment
There is also and software
the possibility mitigate these
of unintentional risks.
loss of controlled
data by authorised
users.
------------------ ----------------------------- --------------------------
Implementation We are in the The Group's IT
of new process of implementing Steering Committee
ERP system Microsoft Dynamics meets on a two
AX across the weekly basis
business. With to review the
any project of implementation
this scale, there and all other
is a risk of a major IT projects.
poorly managed The Committee
implementation comprises members
or take up of of the Executive
new systems, which Committee and
could lead to the Board and
business disruptions. is advised by
external professional
advisers.
------------------ -----------------------------
Robust change
management and
project governance
with professional
project managers
recruited to
oversee the project
team which includes
key business
stakeholders.
------------------ ----------------------------- --------------------------
People Our performance Retention of
is linked to the key talent is
performance of important and
our people and, we take active
in particular, steps to provide
to the leadership stability and
of key individuals. security to the
The loss of a key team. We
key individual carry out an
whether at management annual benchmarking
level or within review to ensure
a specialist skill that we provide
set could have competitive remuneration
a detrimental and total reward
effect on our packages. We
operations and, also utilise
in some cases, long-term incentive
the creative vision schemes to retain
for the brand. key talent. Employee
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 period.
------------------ ----------------------------- --------------------------
Regulatory We operate within The Group closely
and legal many markets globally monitors changes
framework and must comply in the legal
with various regulatory and regulatory
requirements. framework within
Failure to do the markets in
so could lead which it operates.
to financial penalties We work closely
and/or reputational with specialists
damage. in each market
to ensure compliance
with local laws
and regulations.
------------ ------------------ ----------------------------- --------------------------
Financial Currency, In the course The Group's policies
Risks interest, of its operations, for dealing with
credit we are exposed these risks are
and counterparty to these financial discussed in
credit risks which if detail in the
risks, they were to arise Group's financial
including may have material statements.
financial financial impacts
covenants on the Group.
under
the credit
facilities
------------ ------------------ ----------------------------- --------------------------
Group Income Statement
For the 53 weeks ended 31 January 2015
Note 53 weeks 52 weeks
ended ended
31-Jan 25-Jan
2015 2014
GBP'000 GBP'000
Revenue 2 387,564 321,921
Cost of sales (152,359) (123,451)
---------- ----------
Gross profit 235,205 198,470
Distribution costs (144,584) (123,211)
Administrative Expenses (56,373) (44,427)
Administrative expenses
before exceptional costs (51,034) (43,381)
Exceptional costs 3 (5,339) (1,046)
----------------------------------- ----- ---------- ----------
Licence income 11,665 8,888
Other operating income 3,846 (132)
Other operating income/(expense)
before exceptional income (812) (132)
Exceptional income 3 4,658 -
----------------------------------- ----- ---------- ----------
Operating profit 49,759 39,588
Finance income 4 108 316
Finance expenses 4 (1,621) (1,312)
Share of profit of jointly
controlled entity, net of
tax 525 331
---------- ----------
Profit before tax 3 48,771 38,923
Profit before tax and exceptional
items 49,452 39,969
Exceptional costs (5,339) (1,046)
Exceptional income 4,658 -
----------------------------------- ----- ---------- ----------
Income tax expense 5 (12,921) (10,071)
Profit for the period 35,850 28,852
========== ==========
Earnings per share 7
Basic 82.0p 67.2p
Diluted 81.0p 66.3p
Group Statement of Comprehensive Income
For the 53 weeks ended 31 January 2015
53 weeks 52 weeks
ended ended
31-Jan 25-Jan
2015 2014
GBP'000 GBP'000
Profit for the period 35,850 28,852
--------- ---------
Other comprehensive income
Items that may be reclassified to the
Income Statement
Net effective portion of changes in
fair value of cash flow hedges 1,328 (2,486)
Net change in fair value of cash flow
hedges transferred to profit or loss 1,890 545
Exchange differences on translation
of foreign operations net of tax 2,692 (3,276)
--------- ---------
Other comprehensive income for the
period 5,910 (5,217)
Total comprehensive income for the
period 41,760 23,635
========= =========
Group Statement of Changes in Equity
For the 53 weeks ended 31 January 2015
Share Share Cash Translation Retained Total
capital Premium flow Reserve earnings equity
hedging attributable
reserve to equity
shareholders
of the
parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 25 January
2014 2,194 9,139 (1,850) (2,980) 105,561 112,064
Comprehensive income
for the period
Profit for the
period 35,850 35,850
Exchange differences
on translation
of foreign operations - - - 3,475 - 3,475
Current tax on
foreign currency
translation - - - (783) - (783)
Effective portion
of changes in fair
value of cash flow
hedges - - 2,132 - - 2,132
Net change in fair
value of cash flow
hedges transferred
to profit or loss - - 1,890 - - 1,890
Deferred tax associated
with movement in
hedging reserve - - (804) - - (804)
Total comprehensive
income for the
period - - 3,218 2,692 35,850 41,760
========= ========= ========= ============ ========== ==============
Transactions with
owners recorded
directly in equity
Increase in issued
share capital 2 192 - - - 194
Share based payments
charges - - - - 1,390 1,390
Movement on current
and deferred tax
on share based
payments - - - - 672 672
Disposal of own - - - - - -
/ treasury shares
Dividends paid - - - - (15,506) (15,506)
--------- --------- --------- ------------ ---------- --------------
Total transactions
with owners 2 192 - - (13,444) (13,250)
========= ========= ========= ============ ========== ==============
Balance at 31 January
2015 2,196 9,331 1,368 (288) 127,967 140,574
========= ========= ========= ============ ========== ==============
Group Statement of Changes in Equity
For the 52 weeks ended 25 January 2014
Share Share Cash Translation Retained Total
capital premium flow Reserve earnings equity
hedging
reserve
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
======== ======== ======== =========== ========= ========
Company Statement of Changes in Equity
For the 53 weeks ended 31 January 2015
Share Share Other Retained Total
capital premium reserves earnings Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 25 January
2014 2,194 9,139 16,073 30,295 57,701
Profit for the period - - - 18,013 18,013
Transactions with
owners recorded directly
in equity
Increase in issued
share capital 2 192 - - 194
Share based payments
charges - - - 176 176
Share based payments
charges for awards
granted to subsidiary
employees - - 1,214 - 1,214
Disposal of own shares - - - - -
(15,
Dividends paid - - - (15,506) 506)
-------- -------- --------- --------- -------
Total transactions
with owners 2 192 1,214 2,683 4,091
======== ======== ========= ========= =======
Balance at 31 January
2015 2,196 9,331 17,287 32,978 61,792
======== ======== ========= ========= =======
Company Statement of Changes in Equity
For the 52 weeks ended 25 January 2014
Share Share Other Retained Total
capital premium reserves earnings Equity
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
======== ======== ========= ========= ========
Group and Company Balance Sheet
At 31 January 2015
Note Group Group Company Company
31-Jan 25-Jan 31-Jan 25-Jan
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Intangible assets 8 12,855 6,080 - -
Property, plant
and equipment 9 51,804 45,083 - -
Investments in
subsidiary - - 19,709 18,162
Investment in equity
accounted investee 1,290 1,024 - -
Deferred tax assets 5,659 4,450 - -
Prepayments 461 564 - -
--------- --------- -------- --------
Non-current assets 72,069 57,201 19,709 18,162
Inventories 111,114 80,432 - -
Trade and other
receivables 36,873 34,793 41,510 39,111
Amount due from
equity accounted
investee 679 164 - -
Derivative financial
assets 3,547 499 - -
Cash and cash equivalents 7,380 28,521 583 440
--------- --------- -------- --------
Current assets 159,593 144,409 42,093 39,551
Trade and other
payables (57,046) (45,289) (10) (12)
Bank overdraft (26,204) (37,282) - -
Income tax payable (7,202) (3,857) - -
Derivative financial
liabilities (636) (3,118) - -
--------- --------- -------- --------
Current liabilities (91,088) (89,546) (10) (12)
Net assets 140,574 112,064 61,792 57,701
========= ========= ======== ========
Equity
Share capital 2,196 2,194 2,196 2,194
Share premium 9,331 9,139 9,331 9,139
Other reserves 1,368 (1,850) 17,287 16,073
Translation reserve (288) (2,980) - -
Retained earnings 127,967 105,561 32,978 30,295
Total equity attributable
to equity shareholders
of the parent company 140,574 112,064 61,792 57,701
Total equity 140,574 112,064 61,792 57,701
========= ========= ======== ========
Group and Company Cash Flow Statement
For the 53 weeks ended 31 January 2015
Group Group Company Company
53 weeks 52 weeks 53 weeks 52 weeks
ended ended ended ended
31 January 25 January 31 January 25 January
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Cash generated
from operations
Profit for the
period 35,850 28,852 18,013 16,697
Adjusted for:
Income tax expense 12,921 10,071 - -
Depreciation and
amortisation 12,536 10,889 - -
Net impairment - 725 - -
Loss on disposal
of property, plant
& equipment 462 308
Share based payments 1,390 606 176 75
Net finance losses 1,513 996 - -
Net change in
derivative financial
assets and liabilities (1,507) 463 - -
Share of profit
in joint venture (525) (331) - -
Decrease in non-current
prepayments 71 91 - -
Increase in inventory (29,131) (12,215) - -
Increase in trade
and other receivables (1,815) (3,787) (2,401) (4,735)
Increase in trade
and other payables 11,653 4,780 - -
Interest paid (1,594) (1,169) - -
Income taxes paid (11,419) (8,470) - -
------------ ------------ ------------ ------------
Net cash generated
from operating
activities 30,405 31,809 15,788 12,037
------------ ------------ ------------ ------------
Cash flow from
investing activities
Purchases of property,
plant & equipment
and intangibles (25,476) (18,082) - -
Proceeds from
sale of property,
plant & equipment 5 73 - -
Investment in
subsidiaries - - (333)
Dividends received
from joint venture 259 - - -
Interest (paid)/received 1 (43) - -
------------ ------------ ------------ ------------
Net cash from
investing activities (25,211) (18,052) (333) -
------------ ------------ ------------ ------------
Cash flow financing
activities
Proceeds from
option holders
for exercise of
options - 71 - 71
Dividends paid (15,506) (12,110) (15,506) (12,110)
Proceeds from
issue of shares 194 2 194 2
------------ ------------ ------------ ------------
Net cash from
financing activities (15,312) (12,037) (15,312) (12,037)
------------ ------------ ------------ ------------
Net (decrease)
/ increase in
cash and cash
equivalents (10,118) 1,720 143 -
------------ ------------ ------------ ------------
Cash and cash
equivalents at
the beginning
of the period (8,761) (10,039) 440 440
Exchange rate
movement 55 (442) - -
------------ ------------ ------------ ------------
Net cash and cash
equivalents at
the end of the
period (18,824) (8,761) 583 440
------------ ------------ ------------ ------------
Cash and cash
equivalents at
the end of the
period 7,380 28,521 583 440
Bank overdraft
at the end of
the period (26,204) (37,282) - -
------------ ------------ ------------ ------------
Net cash and cash
equivalents at
the end of the
period (18,824) (8,761) 583 440
------------ ------------ ------------ ------------
Notes to the Financial Statements
1. Basis of preparation
EU law (IAS Regulation EC 1606/2002) requires that the Group
financial statements, for the 53 weeks ended 31 January 2015 are
prepared in accordance with International Financial Reporting
Standards (IFRSs) adopted for use in the EU ("adopted IFRSs").
This financial information has been prepared on the basis of the
recognition and measurement requirements of adopted IFRSs as at 31
January 2015. The financial information set out above does not
constitute the Group's statutory accounts for the 53 weeks ended 31
January 2015 or 52 weeks ended 25 January 2014. The annual
financial information presented in this annual results announcement
for the 53 weeks ended 31 January 2015 is based on, and is
consistent with, that in the Group's audited financial statements
for the 53 weeks ended 31 January 2015, and those financial
statements will be delivered in May 2015. 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 25 January 2014 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 4. In addition
the financial statements include 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 was renewed on 29 September
2014, increasing the Group's committed borrowing facility from
GBP50m to GBP65m for the 3.5years to March 2018. 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. 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:
-- costs in relation to a legal dispute with a previous insurer;
-- income for an early termination of a licence partner agreement; and
-- the receipt for a settlement of an intellectual property dispute.
Exceptional items in the prior 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 were no longer trading due to store relocation. This space was
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 25 January 2014.
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.
The accounting policies of the reportable segments are the same
as described in note 1 on pages 21 to 22. 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 before exceptional items 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
53 weeks ended 31 January 2015 Retail Wholesale Licence income Total
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 306,914 80,650 - 387,564
Cost of sales (105,940) (46,419) - (152,359)
---------- ---------- --------------- ----------
Gross profit 200,974 34,231 - 235,205
Operating costs (143,484) - - (143,484)
---------- ---------- --------------- ----------
Operating contribution 57,490 34,231 - 91,721
Licence income - - 11,665 11,665
---------- ---------- --------------- ----------
Segment result 57,490 34,231 11,665 103,386
Reconciliation of segment
result to profit before tax
Segment result 57,490 34,231 11,665 103,386
Other operating costs - - - (52,134)
Exceptional costs - - - (5,339)
Exceptional income - - - 4,658
Other operating expense - - - (812)
----------
Operating profit - - - 49,759
Net finance expense - - - (1,513)
Share of profit of jointly controlled entity, net of tax - - - 525
----------
Profit before tax - - - 48,771
==========
Capital expenditure 16,550 42 - 16,592
Unallocated capital expenditure - - - 9,112
----------
Total capital expenditure - - - 25,704
==========
Depreciation and amortisation 10,392 116 - 10,508
Unallocated depreciation and amortisation - - - 2,028
----------
Total depreciation and amortisation - - - 12,536
==========
Segment assets 165,790 44,253 - 210,043
Other assets - - - 21,619
----------
Total assets - - - 231,662
==========
Segment liabilities (65,926) (17,324) - (83,250)
Other liabilities - - - (7,838)
----------
Total liabilities - - - (91,088)
==========
Net assets - - - 140,574
==========
Wholesale sales are shown after the elimination of inter-company
sales of GBP54,541,000 (2014: GBP38,397,000).
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
==========
b) Geographical information
UK & Europe US & Canada Asia Total
GBP'000 GBP'000 GBP'000 GBP'000
53 weeks ended 31 January 2015
Revenue 296,765 78,546 12,253 387,564
Non-current assets* 44,196 19,436 2,778 66,410
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
*Non-current assets exclude deferred tax assets.
c) Revenue by collection
53 weeks ended 52 weeks ended
31 January 25 January
2015 2014
------------ --------------- ---------------
GBP'000 GBP'000
Menswear 168, 310 143,044
Womenswear 219,254 178,877
--------------- ---------------
387,564 321,921
=============== ===============
3. Profit before tax
Profit before tax is stated 53 weeks 52 weeks
after charging/(crediting): ended ended
31 January 25 January
2015 2014
GBP'000 GBP'000
Depreciation and amortisation 12,536 10,889
Exceptional costs 5,339 1,046
Exceptional income (4,658) -
Operating lease rentals for
leasehold properties 28,375 27,710
Loss on sale of property,
plant & equipment 462 308
Auditors remuneration
Audit of these financial
statements 10 9
Audit of financial statements
of subsidiaries of the company 179 126
Interim financial statements
review 17 17
Audit related assurance
services 21 21
Taxation compliance and
other advisory services 114 81
All other services (forensic
services) 569 218
Exceptional income for the period of GBP4.7m (25 January 2014:
GBPnil) comprises GBP3.7m in relation to the early termination of a
licence partner agreement and GBP1.0m in relation to the settlement
of an intellectual property dispute. The early termination relates
to the mutual agreement in February 2014 to terminate our licence
agreement earlier than anticipated due to a variation in that
licence partner's long-term strategy following a change in senior
management.
Exceptional costs for the period of GBP5.3m (25 January 2014:
GBP1.0m) relate to a legal dispute with a previous insurer. The
Group received a judgement in October 2014 that its claim against a
previous insurer for loss of profit arising from the theft of
inventory from its warehouse from 2004 to 2008 had not been upheld
by the court. In line with accounting standards, a full provision
has been made for all costs incurred and judged payable by the
Company.
The exceptional costs of GBP1.0m incurred during the 52 weeks to
25 January 2014 included 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 of which locations had 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.
4. Finance income and expenses
53 weeks 52 weeks
ended ended
31 January 25 January
2015 2014
GBP'000 GBP'000
Finance income
- Interest receivable 7 146
- Foreign exchange gains 101 170
108 316
=========== -----------
Finance expenses
- Interest payable (1,184) (1,279)
- Foreign exchange losses (437) (33)
----------- -----------
(1,621) (1,312)
=========== ===========
5. Income tax expense
a) The tax charge comprises
53 weeks 52 weeks
ended ended
31 January 25 January
2015 2014
GBP'000 GBP'000
Current tax 14,351 8,999
Deferred tax (779) 1,873
Prior year (over)/under provision
- Current Tax 869 1,376
- Deferred Tax (1,520) (2,177)
----------- -----------
12,921 10,071
=========== ===========
b) Deferred tax movement by type
53 weeks 52 weeks
ended ended
31 January 25 January
2015 2014
---------------------------- ----------- -----------
GBP'000 GBP'000
Property, plant & equipment (94) (520)
Share based payments 32 22
Overseas losses 20 2,516
Inventory 514 (248)
Other 307 103
----------- -----------
779 1,873
=========== ===========
c) Factors affecting the tax charge for the period
The tax assessed for the period is higher than the tax
calculated at domestic rates applicable to profits in the
respective countries. The differences are explained below.
53 weeks 52 weeks
ended ended
31 January 25 January
2015 2014
------------------------------------- ----------- -----------
GBP'000 GBP'000
Profit before tax 48,771 38,923
Profit multiplied by the standard
rate in the UK - 21.32%, (2014:
standard rate in the UK of
23.16%) 10,398 9,015
Income not taxable/expenses
not deductible for tax purposes 902 (55)
Overseas losses not recognised 912 1,068
Movement in current and deferred
tax on share awards and options 210 (7)
Prior year (over)/under provision (651) (801)
Effect of rate change on corporation
tax - (255)
Difference due to overseas
tax rates 1,150 1,106
Total income tax expense 12,921 10,071
=========== ===========
d) Deferred and current tax recognised directly in equity
53 weeks 52 weeks
ended ended
31 January 25 January
2015 2014
----------------------------- ----------- -----------
GBP'000 GBP'000
Current tax on share awards
and options (1,201) (1,245)
Deferred tax on share awards
and options 529 278
Deferred tax associated with
movement in hedging reserve 804 (490)
Current tax associated with
foreign exchange movements
in reserves 783 (1,115)
----------- -----------
915 (2,572)
=========== ===========
There will be a reduction in the UK corporation tax rate from
21% to 20% with effect from 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
53 weeks 52 weeks
ended ended
31 January 25 January
2015 2014
------------------------------- ----------- -----------
GBP'000 GBP'000
Final dividend paid for prior
year of 24.2p per ordinary
share (2014: 18.7p) 10,566 7,965
Interim dividend paid of 11.3p
per ordinary share (2014:
9.5p) 4,940 4,145
----------- -----------
15,506 12,110
=========== ===========
A final dividend in respect of 2015 of 29.0p per share,
amounting to a dividend payable of GBP12,738,624, is to be proposed
at the Annual General Meeting on 16 June 2015.
7. Earnings per share
53 weeks 52 weeks
ended ended
31 January 25 January
2015 2014
------------------------------- ----------- -----------
Number of shares: No. No.
Weighted number of ordinary
shares outstanding 43,703,369 42,960,023
Effect of dilutive options 542,027 537,103
Weighted number of ordinary
shares outstanding - diluted 44,245,396 43,497,126
=========== ===========
Earnings: GBP'000 GBP'000
Profit for the period basic
and diluted 35,850 28,852
Profit for the period adjusted
* 36,372 29,627
Basic earnings per share 82.0p 67.2p
Adjusted earnings per share
* 83.2p 69.0p
Diluted earnings per share 81.0p 66.3p
Treasury shares have been eliminated from the weighted average
number of ordinary shares. Options relating to the 2009 VCP
exercised during the year were covered by shares held in Treasury.
All treasury shares were used by the year end.
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 net exceptional costs (net of tax) of
GBP522,000 (2014: GBP775,000).
8. Intangible assets
Key Money Computer Computer Total
software software
under development
--------------- --------- --------- ------------------ -------
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 25 January
2014 949 2,670 2,598 6,217
Additions - 999 6,680 7,679
Exchange rate
movement (84) - - (84)
--------- --------- ------------------ -------
At 31 January
2015 865 3,669 9,278 13,812
Amortisation
At 25 January
2014 - 137 - 137
Charge for the
year - 811 - 811
Exchange rate
movement - 9 - 9
--------- --------- ------------------ -------
At 31 January
2015 - 957 - 957
--------- --------- ------------------ -------
Net book value
At 25 January
2014 949 2,533 2,598 6,080
========= ========= ================== =======
At 31 January
2015 865 2,712 9,278 12,855
========= ========= ================== =======
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 no amortisation
is charged each year as the residual value of the asset is
considered to be in excess of the carrying value. 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 US site which was ready for use in July
2014, 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 when the new platform was ready for
use. The Microsoft systems project remained in its development
phase during the year, therefore no amortisation has been charged
during the year.
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 25 January
2014 60,905 49,813 110 2,839 113,667
Additions /
transfers 12,010 8,095 - (2,080) 18,025
Disposals (711) (218) - - (929)
Exchange rate
movement 1,243 470 - 31 1,744
------------- ---------- --------- ------------- -------
At 31 January
2015 73,447 58,160 110 790 132,507
Depreciation
At 25 January
2014 30,791 37,692 101 - 68,584
Charge for the
year 6,375 5,348 2 - 11,725
Disposals (465) (52) - - (517)
Exchange rate
movement 537 374 - - 911
------------- ---------- --------- ------------- -------
At 31 January
2015 37,238 43,362 103 - 80,703
------------- ---------- --------- ------------- -------
Net book value
------------- ---------- --------- ------------- -------
At 25 January
2014 30,114 12,121 9 2,839 45,083
============= ========== ========= ============= =======
At 31 January
2015 36,209 14,798 7 790 51,804
============= ========== ========= ============= =======
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 /
transfers 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
============= ========== ========= ============= =======
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 GBP20,995,000 (2014: GBP11,022,000,)
whilst additions into this category were GBP18,915,000 (2014:
GBP12,223,000).
Impairment of property, plant and equipment
The Group has determined that for the purposes of impairment
testing, each store and outlet is 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.
There was no impairment charge for the 53 weeks ended January
2015.
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.
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
35.6% per cent of the voting shares of the Company.
At the 31 January 2015, No Ordinary Designer Label Limited
("NODL"), the main trading company owed Ted Baker Plc GBP41,510,000
(2014: GBP39,111,000). NODL was owed GBP50,025,000 (2014:
GBP59,184,000) from the other subsidiaries within the Group.
Transactions between subsidiaries were priced on an arm's length
basis.
The Group has a 50% interest in a joint venture, with Flair
Industries Pty Ltd. As at 31 January 2015, the joint venture owed
GBP679,000 to the main trading company (2014: GBP164,000). In the
period the value of sales made to the joint venture by the Group
was GBP2,507,000 (2014: GBP1,336,000).
The Group considers the Board of executive directors as key
management.
11. Post balance sheet events
On 10 March 2015 the Company entered into an agreement to
provide a trade mark licence and certain designservices to THAT
Bournemouth Company Limited ("THAT BCL") (the "THAT Group
Agreement"). R S Kelvin and L D Page are both directors of, and
shareholders in, THAT BCL and as such, THAT BCL is a related party
of the Company for the purposes of Chapter 11 of the Listing
Rules.
Under the Agreement, Ted Baker will provide THAT BCL with design
services for the development of apartments in Bournemouth and a
licence for marketing those apartments as "Styled by Ted Baker" for
a fee of GBP250,000.
The THAT Group Agreement falls within Listing Rule 11.1.10R and
a sponsor's written confirmation has been obtained stating that the
arrangements are fair and reasonable as far as the Company's
shareholders are concerned.
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 the applicable set of accounting
standards, 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 Strategic Report / Directors' 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 Chief Operating Officer
19 March 2015 19 March 2015
This information is provided by RNS
The company news service from the London Stock Exchange
END
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