TIDMTED
RNS Number : 9110C
Ted Baker PLC
04 October 2018
Ted Baker Plc
("Ted Baker", the "Group")
Interim Results Announcement for the 28 weeks ended 11 August
2018
'Continued progress in challenging trading conditions'
28 weeks 28 weeks
Highlights ended ended
11 August 12 August
2018 2017 Change
Group Revenue GBP306.0m GBP295.7m 3.5%
Profit Before Tax and Exceptional Items GBP25.0m GBP24.2m 3.5%
Profit Before Tax GBP24.5m GBP25.3m (3.2%)
Basic EPS 42.8p 43.6p (1.8%)
Adjusted EPS 43.8p 41.7p 5.0%
Interim Dividend 17.9p 16.6p 7.8%
-- Group revenue up 3.5% (5.5% in constant currency) to GBP306.0m
-- Retail sales including e-commerce up 1.1% (up 2.9% in constant currency) to GBP220.1m
-- UK and Europe retail sales up 1.0% (up 0.7% in constant currency) to GBP147.1m
-- North America retail sales up 1.8% (up 8.1% in constant currency) to GBP61.8m
-- Rest of the World retail sales down 1.8% (up 1.8% in constant currency) to GBP11.2m
-- E-commerce sales up 24.1% (up 25.7% in constant currency) to GBP53.0m
-- Planned expansion continued with:
-- Two new stores in the UK, three new stores in the US, one new
store in Spain, two new outlets in Germany and one new outlet in
France
-- Further concessions with leading department stores across the UK, Europe and North America
-- Licensee openings in India, Kazakhstan, Malaysia, Mexico, Singapore, Taiwan and Ukraine
-- Wholesale sales up 10.1% (up 12.8% in constant currency) to GBP85.9m
-- Licence income up 11.7% to GBP10.9m
-- Measured and controlled approach to cost saving initiatives
savings due to our business model
Commenting, Ray Kelvin CBE, Founder and Chief Executive,
said:
"Ted Baker has continued to develop and expand as a global
lifestyle brand across its markets and distribution channels
despite challenging external trading conditions. This continued
growth is testament to the strength of the Ted Baker brand, the
design and quality of our collections as well as the dedication and
talent of our teams.
Whilst we believe that the second half of the year will remain
challenging due to external factors, we are well positioned to
continue Ted Baker's long-term development. Our flexible business
model ensures that our customer has multiple channels to engage
with Ted Baker and our global e-commerce business continues to
expand, supported by our digital marketing strategy and unique
stores that showcase the brand."
Enquiries:
Ted Baker Plc Tel: 020 7796 4133
Ray Kelvin CBE, Founder and Chief Executive
Lindsay Page, Chief Operating Officer and Group Finance Director
Charles Anderson, Finance Director and Company Secretary
Hudson Sandler Tel: 020 7796 4133
Alex Brennan
Michael Sandler
Hattie O'Reilly
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 an increasing global presence with 544 stores,
concessions and outlets worldwide comprising: 201 in the UK; 116 in
Europe; 129 in North America; 89 in the Middle East, Asia and
Africa; and 9 in Australasia.
We offer a wide range of collections: Menswear; Womenswear;
Global; Phormal; Endurance; Accessories; Bedding; Childrenswear;
Crockery; Eyewear; Footwear; Fragrance and Skinwear; Gifting and
Stationery; Jewellery; Lingerie and Sleepwear; Luggage; Neckwear;
Rugs; Suiting; Technical Accessories; Tiles; and Watches.
Development of the Brand
Our strategy is to further develop as a leading global lifestyle
brand, based on three main elements:
-- considered expansion of our collections. We review our
collections continually to ensure we react to trends and meet our
customers' expectations. In addition, we look for opportunities to
extend the breadth of our collections and enhance our offer;
-- controlled distribution through three main channels: retail
(including e-commerce); 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 existing and new
international 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 dedication of our teams, licence partners and
wholesale customers.
Chairman's Statement
The first half of the year has continued to see challenging
external trading conditions across many of our global markets. In
addition, performance has been impacted by unseasonable weather
across the UK and Europe and North America in the early part of the
year and a very hot summer across the UK and Europe. Despite this
difficult backdrop, Group revenue increased by 3.5% (5.5% in
constant currency(1) ) and profit before tax and exceptional
items(2) increased by 3.5% to GBP25.0m (2017: GBP24.2m) for the 28
weeks ended 11 August 2018 (the "period"). Reported profit before
tax decreased by 3.2% to GBP24.5m (2017: GBP25.3m).
Against the backdrop of these challenging trading conditions,
retail sales (including e-commerce) increased by 1.1% to GBP220.1m
(2.9% in constant currency(1) ). Our e-commerce business is an
integral and increasingly important component within our retail
proposition and has performed well, delivering sales growth of
24.1% (25.7% in constant currency(1) ). Average retail square
footage increased by 5.5%. Our flexible business model, including a
relatively low number of own stores, and strong brand enables us to
adapt to structural changes in the retail sector.
Wholesale sales increased by 10.1% (12.8% in constant
currency(1) ) to GBP85.9m with a good performance from our UK
business, a strong performance from our North American business and
the earlier timing of deliveries. We anticipate achieving mid to
high single-digit growth (in constant currency(1) ) in the
wholesale business for the full year.
Licence income increased by 11.7% to GBP10.9m as both our
product and territorial licences continued to perform well. During
the period, our licence partners opened further stores in India,
Kazakhstan, Malaysia, Mexico, Singapore and Taiwan. We also opened
our first licensed partner store and first licensed partner
concession in Ukraine. There were notable performances from our
product licensees in Childrenswear, Eyewear, Fragrance and Skinwear
and Suiting.
We are pleased to have signed two new global licence agreements.
In June, we signed a new men's underwear and loungewear global
licence with Delta Galil. Since the period end, we signed a new
global watch licence with Timex Group, allowing us to benefit from
their expertise and long history as an authentic watchmaker. Both
of these new partners reflect our commitment to working with the
best product specialists that are able to support our status as a
truly global lifestyle brand.
We have successfully implemented the final phase of the
Microsoft Dynamics AX System across our UK and European business
and, as previously stated, we remain on track to complete the final
phases of this project in Asia towards the end of this financial
year. This will allow us to continue to enhance our efficiency,
streamline operations and support the development of the
business.
In July, we commenced the transition to our new distribution
facility in North America. Once fully operational, this will serve
our retail, wholesale and e-commerce businesses across North
America supporting our long-term growth strategy.
Since the period end, the Group entered into an agreement with
Pentland Group Plc, our footwear licensee since 2001, to acquire
the issued share capital of No Ordinary Shoes Limited and No
Ordinary Shoes USA LLC. Pentland currently holds the exclusive
global licence to manufacture and distribute footwear under the Ted
Baker brand. The aggregated sales for both companies for the year
ended 31 December 2017 totalled GBP39.8m. Approximately 25% of
these were sales to Ted Baker. The acquisition will complete on 31
December 2018 and is expected to be earnings enhancing for the year
ending 25 January 2020 and beyond. This is an exciting opportunity
for us to drive further growth in our footwear business, by
leveraging our global footprint and infrastructure.
Financial Results
Group revenue increased by 3.5% (5.5% in constant currency(1) )
to GBP306.0m (2017: GBP295.7m) for the 28 weeks ended 11 August
2018. The composite gross margin decreased to 58.3% (2017:
58.9%).
Distribution costs, which comprise the cost of retail operations
and distribution centres, increased by 3.2% (5.2% in constant
currency(1) ) to GBP121.6m (2017: GBP117.8m). Distribution costs
before exceptional items(2) increased by 2.7% to GBP121.1m and as a
percentage of sales, they remained broadly consistent at 39.6%
(2017: 39.8%) reflecting the variable elements of costs in our
business model.
Administrative expenses increased by 3.1% (4.7% in constant
currency(1) ) to GBP41.6m (2017: GBP40.4m). Administrative expenses
before exceptional items(2) increased by 0.4% to GBP41.6m (2017:
GBP41.5m) and as a percentage of sales decreased to 13.6% (2017:
14.0%). This decrease is a result of a measured and controlled
approach to multiple cost saving initiatives across the central
functions of the business.
Dual running costs incurred in respect of our systems roll-out
were GBP1.3m (2017: GBP1.2m) in the first half of the year. We
would expect to incur further costs of GBP1.1m in the second half
of the year.
Exceptional costs of GBP0.6m (2017: income of GBP1.1m) related
to debtor balances owed by House of Fraser which are no longer
expected to be recovered following its entry into administration on
10 August 2018.
The net foreign exchange loss during the period of GBP0.1m
(2017: gain GBP0.4m) was due to the translation of monetary assets
and liabilities denominated in foreign currencies. Net interest
payable during the period was GBP1.9m (2017: GBP1.6m).
Profit before tax and exceptional items(2) increased by 3.5% to
GBP25.0m (2017: GBP24.2m) and profit before tax decreased by 3.2%
to GBP24.5m (2017: GBP25.3m). Adjusted earnings per share(3) ,
which excludes exceptional items, increased by 5.0% to 43.8p (2017:
41.7p) and basic earnings per share decreased by 1.8% to 42.8p
(2017: 43.6p).
The forecast effective tax rate of 22.2% (2018 full year
effective rate: 23.3%) is higher than the forecast UK corporation
tax rate for the period of 19%, largely due to higher overseas tax
rates and the non-recognition of losses in overseas territories
where the brand is still in its development phase.
The net decrease in cash and cash equivalents of GBP24.4m (2017:
GBP30.6m) primarily reflected an increase in working capital,
further capital expenditure to support our long-term development
and the payment of the full year dividend. During the period, we
made repayments of GBP3.0m (2017: GBP3.0m) on the secured term loan
used to purchase The Ugly Brown Building.
Total working capital, which comprises inventories, trade and
other receivables and trade and other payables, increased by
GBP31.3m to GBP188.2m (2017: GBP156.9m). This was mainly driven by
an increase in inventories of GBP31.7m to GBP208.2m (2017:
GBP176.4m) reflecting the projected growth of our business, some
earlier phasing of stock deliveries between the first and second
half of the year and to a lesser extent, the impact of the movement
in foreign exchange rates. We have been focussed on a number of
working capital initiatives that will start to deliver benefits by
the year end.
Trade and other receivables decreased by GBP0.5m to GBP65.4m
(2017: GBP65.9m) and trade and other payables decreased by GBP0.2m
to GBP85.3m (2017: GBP85.5m).
Capital expenditure of GBP18.7m (2017: GBP19.4m) comprised the
costs of opening and refurbishing stores, concessions and outlets.
It also reflected the on-going investment in business-wide systems,
e-commerce and infrastructure, including our distribution centres
in the UK and North America to support our continued growth. We
expect full year capital expenditure to be in line with previous
guidance of GBP30.0m, subject to the timing of planned
openings.
Dividends
The Board has declared an interim dividend of 17.9p (2017:
16.6p), representing an increase of 7.8%, which will be payable on
23 November 2018 to shareholders on the register at the close of
business on 12 October 2018.
People
Against a backdrop of difficult market conditions, the
performance in the period is a testament to our talented teams
across the world, whose commitment and passion remain key to our
success. I would like to take this opportunity to thank all of my
colleagues for their continued hard work as we continue to grow the
business and further develop Ted Baker as a global lifestyle
brand.
Global Group Performance
28 weeks 28 weeks Variance Constant
ended ended currency
11 August 12 August variance(1)
2018 2017
Group Revenue GBP306.0m GBP295.7m 3.5% 5.5%
---------------------------- ----------- ----------- ---------- -------------
Gross margin 58.3% 58.9% (60 bps)
---------------------------------------- ----------- ----------- ---------- -------------
Operating contribution
(excluding exceptional
items(4) ) * 8.7% 8.5% 20 bps
---------------------------------------- ----------- ----------- ---------- -------------
Operating contribution** 8.5% 8.9% (40 bps)
---------------------------------------- ----------- ----------- ---------- -------------
Profit before tax
(excluding exceptional
items(2) ) as a
% of revenue 8.2% 8.2% -
---------------------------------------- ----------- ----------- ---------- -------------
Profit before tax
as a % of revenue 8.0% 8.6% (60 bps)
---------------------------------------- ----------- ----------- ---------- -------------
Retail Revenue GBP220.1m GBP217.7m 1.1% 2.9%
---------------------------- ----------- ----------- ---------- -------------
E-commerce GBP53.0m GBP42.7m 24.1% 25.7%
---------------------------------------- ----------- ----------- ---------- -------------
Gross margin 64.2% 65.6% (140 bps)
---------------------------------------- ----------- ----------- ---------- -------------
Average square footage*** 422,343 400,313 5.5%
---------------------------------------- ----------- ----------- ---------- -------------
Closing square footage*** 433,466 409,470 5.9%
---------------------------------------- ----------- ----------- ---------- -------------
Sales per square
foot including e-commerce GBP521 GBP544 (4.2%) (2.5%)
---------------------------------------- ----------- ----------- ---------- -------------
Sales per square
foot excluding e-commerce GBP396 GBP437 (9.4%) (7.8%)
---------------------------------------- ----------- ----------- ---------- -------------
Wholesale Revenue GBP85.9m GBP78.0m 10.1% 12.8%
---------------------------- ----------- ----------- ---------- -------------
Gross margin 43.4% 40.2% 320 bps -
---------------------------------------- ----------- ----------- ---------- -------------
Licence
income Revenue GBP10.9m GBP9.7m 11.7% 11.7%
---------------------------- ----------- ----------- ---------- -------------
*Operating contribution (excluding exceptional items) is defined
as operating profit before exceptional items as a percentage of
revenue
**Operating contribution is defined as operating profit as a
percentage of revenue
***Excludes licence partner stores
Retail
Our retail channel comprises stores, concessions and e-commerce,
providing a multichannel customer experience. We operate stores and
concessions across the UK and Europe, North America, Asia and
Africa and localised e-commerce sites in the UK, continental
Europe, the US, Canada and Australia. We also operate e-commerce
sites with some of our concession partners. Our unique stores
showcase the Ted Baker brand and are key to the growth and success
of our e-commerce business. Our relatively low number of own stores
and higher number of concession locations allows us to maintain a
flexible store business model.
Retail sales were up 1.1% (2.9% in constant currency(1) ) to
GBP220.1m (2017: GBP217.7m). Performance was impacted by
unseasonable weather across the UK and Europe and North America in
the early part of the period, a very hot summer across the UK and
Europe, and challenging external trading conditions, particularly
in the UK. The growth was driven by continued investment across the
retail channel in new stores and our e-commerce platforms. We are
pleased with our e-commerce performance, where sales grew 24.1%
(25.7% in constant currency(1) ) to GBP53.0m (2017: GBP42.7m) and
represented 24.1% (2017: 19.6%) of total retail sales.
The total growth in retail sales of 1.1% (2.9% in constant
currency(1) ) compares to an increase in average retail square
footage of 5.5% to 422,343 sq ft (2017: 400,313 sq ft). Retail
sales per square foot (excluding e-commerce) decreased 9.4%
(decrease of 7.8% in constant currency(1) ) to GBP396 (2017:
GBP437) demonstrating the challenging external trading conditions
together with changing customer behaviour with customers shopping
both online and in store.
The retail gross margin decreased to 64.2% (2017: 65.6%) as a
result of a measured increase in promotional activity in response
to the challenging external trading conditions.
Retail operating costs increased by 2.2% (4.2% in constant
currency(1) ) to GBP116.5m (2017: GBP114.0m), and as a percentage
of retail sales increased to 52.9% (2017: 52.4%).
Wholesale
Our wholesale business in the UK serves countries across the
world, particularly in the UK and Europe, as well as supplying
products to stores operated by our territorial licence partners. In
addition, we operate a wholesale business in North America serving
the US and Canada.
Wholesale sales increased by 10.1% (12.8% in constant
currency(1) ) to GBP85.9m (2017: GBP78.0m) reflecting a good
performance from our UK business, a strong result from our North
American business and the earlier timing of deliveries.
The wholesale gross margin increased to 43.4% (2017: 40.2%).
This was as a result of a greater proportion of wholesale sales to
our trustee partners which carry a higher margin than sales to our
retail licence partners and some foreign exchange benefit in the
current year.
Licence Income
We operate both territorial and product licences. Our
territorial licences cover selected countries in Europe, North
America, the Middle East, Asia, Australasia and Africa, where our
partners operate licensed retail stores and concessions and, in
some territories, wholesale operations. Our product licences cover
Bedding, Childrenswear, Crockery, Eyewear, Footwear, Fragrance and
Skinwear, Gifting and Stationery, Jewellery, Lingerie and
Sleepwear, Luggage, Neckwear, Rugs, Suiting, Technical Accessories,
Tiles and Watches.
Licence income was up 11.7% to GBP10.9m (2017: GBP9.7m) with
both product and territorial licences performing well. There were
notable performances from our product licensees in Childrenswear,
Eyewear, Fragrance and Skinwear and Suiting.
Collections
We are pleased with the positive reactions to our Ted Baker
Womenswear collection with sales up 7.8% to GBP191.3m (2017:
GBP177.4m). Womenswear represented 62.5% (2017: 60.0%) of total
sales in part due to the increased proportion of e-commerce sales
where we experience a higher proportion of Womenswear sales.
Ted Baker Menswear sales were down 3.0% to GBP114.7m (2017:
GBP118.3m). Sales were impacted by the challenging trading
conditions within our UK business. Menswear represented 37.5% of
total sales (2017: 40.0%).
Geographic Performance
United Kingdom and Europe
28 weeks 28 weeks Variance Constant
ended ended currency
11 August 12 August variance(1)
2018 2017
Total retail revenue GBP147.1m GBP145.6m 1.0% 0.7%
----------- ----------- --------- -------------
E-commerce revenue GBP42.6m GBP34.7m 22.8% 22.9%
----------- ----------- --------- -------------
Average square footage* 264,393 252,484 4.7% -
----------- ----------- --------- -------------
Closing square footage* 274,170 256,419 6.9% -
----------- ----------- --------- -------------
Sales per square foot
including e-commerce
sales GBP556 GBP577 (3.6%) (3.8%)
----------- ----------- --------- -------------
Sales per square foot
excluding e-commerce
sales GBP395 GBP439 (10.0%) (10.4%)
----------- ----------- --------- -------------
Wholesale revenue GBP54.9m GBP50.0m 9.8% 9.8%
----------- ----------- --------- -------------
Own stores 40 37 3 -
----------- ----------- --------- -------------
Concessions 252 242 10 -
----------- ----------- --------- -------------
Outlets 19 16 3 -
----------- ----------- --------- -------------
Partner stores / concessions 6 5 1 -
----------- ----------- --------- -------------
Total 317 300 17 -
----------- ----------- --------- -------------
*Excludes licence partner stores
Retail sales in the period in the UK and Europe increased 1.0%
(0.7% in constant currency(1) ) to GBP147.1m (2017: GBP145.6m)
despite challenging trading conditions, particularly in our
concession business with House of Fraser in the lead up to its
administration in August 2018. Performance was also impacted by
unseasonable weather across the period.
E-commerce sales increased by 22.8% (22.9% in constant
currency(1) ) to GBP42.6m (2017: GBP34.7m) demonstrating how
e-commerce sales are an integral part of the retail proposition in
the UK and European markets. As a percentage of UK and Europe
retail sales, e-commerce sales represented 29.0% (2017: 23.8%).
Sales per square foot excluding e-commerce sales decreased 10.4%
in constant currency(1) , however, our stores remain key to the
success of the e-commerce business through initiatives such as
order in store, click and collect, as well as showcasing the
brand.
During the period, we opened one store in London Bridge, one in
London Luton Airport and one in Barcelona Airport, together with
three outlets; one in Lyon, France and one in each of Neumunster
and Weirtheim, Germany. We closed one store in France. We opened
further concessions with premium department stores in France,
Germany, the UK and Spain. We also opened our first licence partner
store in Ukraine. We are pleased with the performance of our new
stores and remain positive about longer term growth opportunities
for our brand.
Sales from our UK wholesale business increased 9.8% to GBP54.9m
(2017: GBP50.0m). This reflected a good performance from sales to
trustees, particularly those with a strong online customer
proposition, and our growing European export business.
North America
28 weeks 28 weeks Variance Constant
ended ended currency
11 August 12 August variance(1)
2018 2017
Total retail revenue GBP61.8m GBP60.7m 1.8% 8.1%
----------- ----------- --------- -------------
E-commerce revenue GBP8.7m GBP6.9m 26.1% 35.8%
----------- ----------- --------- -------------
Average square footage* 127,599 117,776 8.3% -
----------- ----------- --------- -------------
Closing square footage* 133,106 120,499 10.5% -
----------- ----------- --------- -------------
Sales per square foot
including e-commerce sales GBP484 GBP516 (6.2%) (0.2%)
----------- ----------- --------- -------------
Sales per square foot
excluding e-commerce sales GBP416 GBP457 (9.0%) (3.5%)
----------- ----------- --------- -------------
Wholesale revenue GBP31.0m GBP28.0m 10.7% 18.0%
----------- ----------- --------- -------------
Own stores 35 32 3 -
----------- ----------- --------- -------------
Concessions 61 55 6 -
----------- ----------- --------- -------------
Outlets 12 11 1 -
----------- ----------- --------- -------------
Partner stores / concessions 21 21 - -
----------- ----------- --------- -------------
Total 129 119 10 -
----------- ----------- --------- -------------
*Excludes licence partner stores
We remain confident that the Ted Baker brand is becoming more
established and continuing to gain recognition in this
territory.
Sales from our retail division increased by 1.8% (8.1% in
constant currency(1) ) to GBP61.8m (2017: GBP60.7m) driven by our
continued expansion and sales per square foot excluding e-commerce
sales decreased 3.5% in constant currency(1) .
In the period, we opened new stores in Austin, Orlando and San
Francisco and further concessions across North America. In
addition, we opened a further licence partner store in Mexico.
Our e-commerce business delivered a strong performance with
sales increasing by 26.1% (35.8% constant currency(1) ) to GBP8.7m
(2017: GBP6.9m). As a percentage of North America retail sales,
e-commerce sales represented 14.1% (2017: 11.4%).
Sales from our North American wholesale business increased by
10.7% (18.0% in constant currency(1) ), to GBP31.0m (2017:
GBP28.0m) reflecting a strengthening relationship with key trustees
that attract domestic customers across North America. This further
demonstrates increasing brand recognition in this territory.
Rest of the World
28 weeks 28 weeks Variance Constant
ended ended currency
11 August 12 August variance(1)
2018 2017
Total retail revenue GBP11.2m GBP11.4m (1.8%) 1.8%
----------- ----------- --------- -------------
E-commerce revenue GBP1.7m GBP1.1m 54.5% 50.4%
----------- ----------- --------- -------------
Average square footage* 30,351 30,053 1.0% -
----------- ----------- --------- -------------
Closing square footage* 26,190 32,552 (19.5%) -
----------- ----------- --------- -------------
Sales per square foot
including e-commerce
sales GBP369 GBP379 (2.6%) 0.8%
----------- ----------- --------- -------------
Sales per square foot
excluding e-commerce
sales GBP313 GBP341 (8.2%) (4.4%)
----------- ----------- --------- -------------
Own stores 10 10 - -
----------- ----------- --------- -------------
Concessions 12 16 (4) -
----------- ----------- --------- -------------
Outlets 1 3 (2) -
----------- ----------- --------- -------------
Partner stores / concessions 75 63 12 -
----------- ----------- --------- -------------
Total 98 92 6 -
----------- ----------- --------- -------------
*Excludes licence partner stores
We continue to develop the Ted Baker brand across the Middle
East, Asia, Africa and Australasia through our retail and licensing
channels.
In Asia, sales decreased 1.8% (increased 1.8% in constant
currency(1) ) to GBP11.2m (2017: GBP11.4m) and sales per square
foot excluding e-commerce sales decreased 4.4% in constant
currency(1) . We continue to refine and develop our strategy for
success in Asia. In China we closed one store, one concession and
one outlet and in Hong Kong we closed one store.
Our e-commerce concession businesses in China and Japan
performed well with sales of GBP1.7m (2017: GBP1.1m) which as a
percentage of Asian retail sales represented 15.2% (2017:
9.6%).
Our licensed stores across the Middle East, Asia and Africa
continued to perform well. Our existing licence partners opened new
stores in India, Kazakhstan, Malaysia, Singapore and Taiwan. As at
11 August 2018, we operated a total of 66 partner stores (2017:
53).
The joint venture with our Australian licence partner, Flair
Industries Pty Ltd, continues to perform well. As at 11 August
2018, we operated 9 stores in Australasia (2017: 10 stores).
Current Trading and Outlook
Global markets have continued to see challenging external
trading conditions which have impacted performance. In the UK,
Europe and the East Coast of America, trade has also been affected
by the unseasonably hot weather in September. In addition, trading
in the UK has been impacted by the well-publicised challenges
facing some of our trading partners.
Our Autumn / Winter collections have been well received and we
are confident that we remain well positioned to continue the
brand's momentum and long term development.
Retail
In the UK and Europe, we have continued our measured and
controlled expansion with our first outlet opening in Italy and
further concession openings in Germany and Spain. We plan to open a
new outlet in London later this year. We will continue to invest in
our e-commerce sites to enhance the customer experience.
In North America, we have continued our expansion with a new
store in Chicago and will continue to develop our presence with
plans to open a store in San Diego later this year.
In the Rest of the World, we remain focused on building brand
awareness, as we are still in the relatively early stages of
investment in these markets.
Wholesale
In our wholesale business, we anticipate reporting mid to high
single-digit sales growth (in constant currency(1) ) for the full
year.
Licence Income
Our product and territorial licences continue to perform well.
Since the period end, our licence partners have opened stores in
Saudi Arabia and Thailand with further licence partner store
openings planned in Dubai, India and Saudi Arabia. We also plan to
open licence partner stores in new territories, including our first
store in Kosovo.
Outlook
We have a very clear strategy for the continued expansion of Ted
Baker as a global lifestyle brand across both established and newer
markets. Our flexible business model ensures that our customers
have multiple channels to engage with the brand. Our growing
e-commerce business, underpinned by stores that showcase the brand,
mean that we are well positioned to deal with the structural
changes in an evolving retail environment and continue Ted Baker's
long-term development.
The board is mindful of the uncertainties in its markets over
the second half of the year, but remains focussed on making further
progress for the full year. We intend to make our next trading
update, covering the period since the start of the second half of
the financial year, in early December.
David Bernstein CBE
Non-Executive Chairman
4 October 2018
NOTES:
(1) Constant currency comparatives are obtained by applying the
exchange rates that were applicable for the 28 weeks ended 12
August 2017 to the financial results in overseas subsidiaries for
the 28 weeks ended 11 August 2018 to remove the impact of exchange
rate fluctuations.
(2) Profit before tax and exceptional items is a non-GAAP
measure. For further information about this measure, and the
reasons why we believe it is important for an understanding of the
performance of the business, please refer to Note 3 of the
Financial Statements.
(3) Adjusted basic earnings per share is a non-GAAP measure. For
further information about this measure, and the reasons why we
believe it is important for an understanding of the performance of
the business, please refer to Note 3 of the Financial
Statements.
(4) Operating contribution (excluding exceptional items) is a
non-GAAP measure. For further information about this measure, and
the reasons why we believe it is important for an understanding of
the performance of the business, please refer to Note 3 of the
Financial Statements.
Condensed Group Income Statement
For the 28 weeks ended 11 August 2018
Unaudited 28 weeks Unaudited Audited
ended 28 weeks 52 weeks ended
11 August ended 27 January
2018 12 August 2018
2017
Note GBP'000 GBP'000 GBP'000
Revenue 2 305,988 295,726 591,670
Cost of sales (127,535) (121,673) (230,865)
------------------- ----------- ----------------
Gross profit 178,453 174,053 360,805
Distribution costs (121,608) (117,817) (231,996)
----- ------------------- ----------- ----------------
Distribution costs before exceptional items (121,051) (117,817) (231,996)
Exceptional items 3 (557) - -
----- ------------------- ----------- ----------------
Administrative expenses (41,608) (40,353) (80,160)
------------------------------------------------------- ----- ------------------- ----------- ----------------
Administrative expenses before exceptional items (41,608) (41,461) (75,484)
Exceptional items 3 - 1,108 (4,676)
------------------------------------------------------- ----- ------------------- ----------- ----------------
Licence income 10,868 9,726 21,443
Other operating income 40 680 635
------------------- ----------- ----------------
Operating profit 26,145 26,289 70,727
Finance income 4 548 484 802
Finance expense 4 (2,504) (1,666) (3,314)
Share of profit of jointly controlled entity, net of
tax 296 191 574
Profit before tax 24,485 25,298 68,789
Profit before tax and exceptional items 25,042 24,190 73,465
Exceptional items 3 (557) 1,108 (4,676)
Income tax expense 7 (5,436) (6,021) (16,045)
Income tax expense before exceptional items (5,529) (5,757) (16,868)
Income tax relating to exceptional items 93 (264) 823
------------------------------------------------------- ----- ------------------- ----------- ----------------
Profit for the period 19,049 19,277 52,744
------------------- ----------- ----------------
Earnings per share
Basic 5 42.8p 43.6p 119.0p
Diluted 5 42.7p 43.1p 118.3p
Condensed Group Statement of Comprehensive Income
For the 28 weeks ended 11 August 2018
Unaudited 28 weeks Unaudited Audited
ended 28 weeks 52 weeks ended
11 August ended 27 January
2018 12 August 2018
2017
GBP'000 GBP'000 GBP'000
Profit for the period 19,049 19,277 52,744
-------- ----------- ----------------
Other comprehensive income / (expense) Items that may be reclassified
subsequently to the
income statement:
Net effective portion of changes in fair value of cash flow hedges 3,148 (5,088) (9,738)
Net exchange rate movement 7,938 (1,050) (7,926)
-------- ----------- ----------------
Other comprehensive income / (expense) for the period, net of tax 11,086 (6,138) (17,664)
Total comprehensive income for the period 30,135 13,139 35,080
-------- ----------- ----------------
Condensed Group Statement of Changes in Equity - Unaudited
For the 28 weeks ended 11 August 2018
Total equity
attributable
Cash flow to equity
hedging Translation Retained shareholders
Share capital Share premium reserve reserve earnings of the parent
Balance at 27
January 2018 2,224 10,487 (3,002) (35) 214,376 224,050
Comprehensive
income for the
period
Profit for the
period - - - - 19,049 19,049
Exchange
differences on
translation of
foreign
operations - - - 9,840 - 9,840
Current tax on
foreign
currency
translation - - - (1,902) - (1,902)
Effective
portion of
changes in
fair value of
cash flow
hedges - - 4,058 - - 4,058
Deferred tax
associated
with movement
in hedging
reserve - - (910) - - (910)
--------------- --------------- --------------- --------------- --------------- ---------------
Total
comprehensive
income for the
period - - 3,148 7,938 19,049 30,135
--------------- --------------- --------------- --------------- --------------- ---------------
Net change in
fair value of
cash flow
hedges
transferred to
cost of
inventory - - 616 - - 616
Increase in
issued share
capital 4 37 - - - 41
Share-based
payment
charges /
(credit) - - - - (6) (6)
Movement on
current and
deferred tax
on share-based
payments - - - - (605) (605)
Dividends paid - - - - (19,377) (19,377)
--------------- --------------- --------------- --------------- --------------- ---------------
Total 4 37 616 - (19,988) (19,331)
--------------- --------------- --------------- --------------- --------------- ---------------
Balance at 11
August 2018 2,228 10,524 762 7,903 213,437 234,854
=============== =============== =============== =============== =============== ===============
Condensed Group Statement of Changes in Equity - Unaudited
For the 28 weeks ended 12 August 2017
Total equity
attributable
Cash flow to equity
hedging Translation Retained shareholders
Share capital Share premium reserve reserve earnings of the parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 28
January 2017 2,208 9,935 6,736 7,891 183,774 210,544
Comprehensive
income for the
period
Profit for the
period - - - - 19,277 19,277
Exchange
differences on
translation of
foreign
operations - - - (1,400) - (1,400)
Current tax on
foreign
currency
translation - - - 350 - 350
Effective
portion of
changes in
fair value of
cash flow
hedges - - (3,077) - - (3,077)
Net change in
fair value of
cash flow
hedges
transferred to
profit or loss - - (3,205) - - (3,205)
Deferred tax
associated
with movement
in hedging
reserve - - 1,194 - - 1,194
--------------- --------------- --------------- --------------- --------------- ---------------
Total
comprehensive
income for the
period - - (5,088) (1,050) 19,277 13,139
--------------- --------------- --------------- --------------- --------------- ---------------
Transactions
with owners
recorded
directly in
equity
Increase in
issued share
capital 8 474 - - - 482
Share-based
payment
charges - - - - 943 943
Movement on
current and
deferred tax
on share-based
payments - - - - (167) (167)
Dividends paid - - - - (17,176) (17,176)
--------------- --------------- --------------- --------------- --------------- ---------------
Total
transactions
with owners 8 474 (-) - (16,400) (15,918)
--------------- --------------- --------------- --------------- --------------- ---------------
Balance at 12
August 2017 2,216 10,409 1,648 6,841 186,651 207,765
=============== =============== =============== =============== =============== ===============
Condensed Group Statement of Changes in Equity - Audited
For the 52 weeks ended 27 January 2018
Total equity
Cashflow attributable
hedging to equity
Share Share reserve Translation Retained shareholders
capital premium reserve earnings of the parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 28
January
2017 2,208 9,935 6,736 7,891 183,774 210,544
Comprehensive income
for the period
Profit for the
period - - - - 52,744 52,744
Exchange differences
on translation of
foreign operations - - - (9,889) - (9,889)
Current tax on
foreign
currency
translation - - - 1,963 - 1,963
Effective portion
of changes in fair
value of cash flow
hedges - - (7,423) - - (7,423)
Net change in fair
value of cash flow
hedges transferred
to profit or loss - - (4,599) - - (4,599)
Deferred tax
associated
with movement in
hedging reserve - - 2,284 - - 2,284
---------- ---------- ----------- -------------- ----------- ---------------
Total comprehensive
income for the
period - - (9,738) (7,926) 52,744 35,080
---------- ---------- ----------- -------------- ----------- ---------------
Transactions with
owners recorded
directly
in equity
Increase in issued
share capital 16 552 - - - 568
Share-based payment
charges - - - - 1,876 1,876
Movement on current
and deferred tax
on share-based
payments - - - - 535 535
Dividends paid - - - - (24,553) (24,553)
---------- ---------- ----------- -------------- ----------- ---------------
Total transactions
with owners 16 552 - - (22,142) (21,574)
---------- ---------- ----------- -------------- ----------- ---------------
Balance at 27
January
2018 2,224 10,487 (3,002) (35) 214,376 224,050
---------- ---------- ----------- -------------- ----------- ---------------
Condensed Group Balance Sheet
At 11 August 2018
Unaudited 11 August 2018 Unaudited Audited
12 August 2017 27 January 2018
Note GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 10 37,206 29,765 34,373
Property, plant and equipment 11 145,302 145,312 139,075
Investment in equity accounted
investee 2,189 2,088 1,893
Deferred tax assets 4,407 4,444 4,114
Prepayments 857 395 353
------------------------- ---------------- -----------------
189,961 182,004 179,808
------------------------- ---------------- -----------------
Current assets
Inventories 208,154 176,435 187,227
Trade and other receivables 65,377 65,934 64,273
Amount due from equity accounted
investee 482 597 666
Derivative financial assets 12 1,268 3,575 478
Cash and cash equivalents 9 19,153 18,030 16,712
-------------------------
294,434 264,571 269,356
------------------------- ---------------- -----------------
Current liabilities
Trade and other payables (85,315) (85,510) (82,858)
Bank overdraft 9 (102,366) (85,388) (76,043)
Term loan (4,500) (6,000) (5,500)
Income tax payable (9,035) (9,171) (8,522)
Provisions for liabilities and - (756) -
charges
Derivative financial liabilities 12 - (718) (3,918)
-------------------------
(201,216) (187,543) (176,841)
------------------------- ---------------- -----------------
Non-current liabilities
Deferred tax liabilities (3,325) (1,767) (1,273)
Term loan (45,000) (49,500) (47,000)
------------------------- ---------------- -----------------
(48,325) (51,267) (48,273)
------------------------- ---------------- -----------------
Net assets 234,854 207,765 224,050
------------------------- ---------------- -----------------
Equity
Share capital 2,228 2,216 2,224
Share premium 10,524 10,409 10,487
Other reserves 762 1,648 (3,002)
Translation reserve 7,903 6,841 (35)
Retained earnings 213,437 186,651 214,376
------------------------- ---------------- -----------------
Total equity 234,854 207,765 224,050
------------------------- ---------------- -----------------
Condensed Group Cash Flow Statement
For the 28 weeks ended 11 August 2018
Unaudited Unaudited Audited
28 weeks ended 28 weeks ended 52 weeks ended
11 August 12 August 27 January
2018 2017 2018
GBP'000 GBP'000 GBP'000
Cash generated from operations
Profit for the period 19,049 19,277 52,744
Adjusted for:
Income tax expense 5,436 6,021 16,045
Depreciation and amortisation 12,941 12,285 23,238
Impairments - - 4,533
Loss on disposal of property, plant & equipment 9 2 166
Share-based payments (6) 943 1,876
Net finance expense 1,956 1,182 2,512
Net change in derivative financial assets and liabilities
carried at fair value (802) (758) 1,517
Share of profit in joint venture (296) (191) (574)
(Increase) / Decrease in non-current prepayments (491) 33 63
Increase in inventory (15,009) (18,906) (34,067)
Decrease / (Increase) in trade and other receivables 1,094 (6,541) (6,779)
(Decrease) / Increase in trade and other payables (23) 4,842 2,845
Decrease in provisions for liabilities and charges - (2,161) (2,917)
Interest paid (1,792) (1,548) (3,341)
Income taxes paid (5,683) (6,346) (13,975)
---------------- ---------------- ----------------
Net cash generated from operating activities 16,383 8,134 43,886
---------------- ---------------- ----------------
Cash flow from investing activities
Purchases of property, plant & equipment and intangibles (18,508) (19,101) (36,562)
Proceeds from sale of property, plant & equipment - - 115
Interest received 54 25 61
Dividends received from joint venture - - 578
----------------
Net cash from investing activities (18,454) (19,076) (35,808)
---------------- ---------------- ----------------
Cash flow from financing activities
Repayment of term loan (3,000) (3,000) (6,000)
Dividends paid (19,377) (17,176) (24,553)
Proceeds from issue of shares 41 482 568
---------------- ---------------- ----------------
Net cash from financing activities (22,336) (19,694) (29,985)
---------------- ---------------- ----------------
Net decrease in cash and cash equivalents (24,407) (30,636) (21,907)
Cash and cash equivalents at the beginning of the period (59,331) (36,673) (36,673)
Exchange rate movement 525 (49) (751)
---------------- ---------------- ----------------
Net cash and cash equivalents at the end of the period (83,213) (67,358) (59,331)
---------------- ---------------- ----------------
Cash and cash equivalents at the end of the period 19,153 18,030 16,712
Bank overdraft at the end of the period (102,366) (85,388) (76,043)
---------------- ---------------- ----------------
Net cash and cash equivalents at the end of the period (83,213) (67,358) (59,331)
---------------- ---------------- ----------------
Notes to the Condensed Interim Financial Statements
For the 28 weeks ended 11 August 2018
1. Basis of preparation
a. Reporting entity
Ted Baker Plc ("the Company") is a company domiciled in the
United Kingdom. The condensed interim financial statements
("interim financial statements") of Ted Baker Plc as at, and for
the 28 weeks ended 11 August 2018 comprise the Company and its
subsidiaries (together referred to as the "Group").
The Group financial statements as at, and for the 52 weeks ended
27 January 2018 are available upon request from the Company's
registered office at Ted Baker Plc, The Ugly Brown Building, 6a St.
Pancras Way, London NW1 0TB and at www.tedbakerplc.com.
b. Statement of compliance
These interim financial statements have been prepared in
accordance with "IAS 34 Interim Financial Reporting" as adopted by
the EU and the requirements of the Disclosures and Transparency
Rules. They do not include all of the information required for full
annual financial statements and should be read in conjunction with
the Group financial statements as at, and for the 52 weeks ended 27
January 2018. These interim financial statements were approved by
the Board of Directors on 4 October 2018.
The comparative figures for the 52 weeks ended 27 January 2018
are not the Company's statutory accounts for that financial year.
Those accounts have been reported on by the Company's auditor and
delivered to the registrar of companies. The report of the auditor
was (i) unqualified; (ii) did not include a reference to any
matters to which the auditor drew attention by way of emphasis
without qualifying their report; and (iii) did not contain a
statement under section 498(2) or (3) of the Companies Act 2006.
These sections address whether proper accounting records have been
kept, whether the Company's accounts are in agreement with these
records and whether the auditor has obtained all the information
and explanations necessary for the purposes of the audit.
The financial information in this document is unaudited, but has
been reviewed by the auditor in accordance with the Auditing
Practices Board guidance on Review of Interim Financial
Information.
c. Going concern
The Group financial statements for the 52 weeks ended 27 January
2018, approved by the Board on 22 March 2018, included information
on the business environment in which the Group operates, including
the factors that are likely to impact the future prospects of the
Group, together with the principal risks and uncertainties that the
Group faces. In addition, the notes to the consolidated financial
statements set out the Group's objectives, policies and processes
for managing its financial and capital risk and its exposures to
credit, market and liquidity risk. Many of the risks and
uncertainties reported are such that their potential to impact the
Group's operations are inherent and remain valid as regards to
their potential impact during the second half of the financial year
ending 26 January 2019.
The directors have prepared trading and cash flow forecasts for
a period of one year from the date of approval of these interim
financial statements. The directors have a reasonable expectation
that the Group has adequate cash headroom and expects to meet all
banking covenant requirements. Accordingly, they continue to adopt
a going concern basis in preparing the financial statements of the
Group.
d. Significant accounting policies
This is the first set of the Group financial statements, where
IFRS 15 and IFRS 9 have been applied. There was no impact on the
previously reported numbers from application of IFRS 15. Changes to
significant accounting policies from application of IFRS 9 are
disclosed below.
The adoption of IFRS 9 has no material impact on the Group's
financial statements. Under IAS 39, the cash flow hedge reserve
relating to cash flow hedges of foreign currency risk associated
with forecast inventory purchases were subsequently reclassified to
inventory and the amount was presented within the Group Statement
of Comprehensive Income. Under IFRS 9, the amounts accumulated in
the cash flow hedge reserve are instead included directly in the
initial cost of the inventory item when it is recognised and are no
longer presented within the Group Statement of Comprehensive
Income. Prior year balances have not been restated.
IFRS 16 replaces existing leases guidance, including IAS 17
Leases, IFRIC 4 Determining whether an Arrangement contains a
Lease, SIC-15 Operating Leases - Incentives and SIC-27 Evaluating
the Substance of Transactions Involving the Legal Form of a
Lease.
The standard is effective for annual periods beginning on or
after 1 January 2019. Early adoption is permitted.
IFRS 16 introduces a single, on-balance sheet lease accounting
model for lessees. A lessee recognises a right-of-use asset
representing its right to use the underlying asset and a lease
liability representing its obligation to make lease payments. There
are recognition exemptions for short-term leases and leases of low
value items. Lessor accounting remains similar to the current
standard i.e. lessors continue to classify leases as finance or
operating leases.
The Group has completed an initial assessment of the potential
impact on its consolidated financial statements but has not yet
completed its detailed assessment. The actual impact of applying
IFRS 16 on the financial statements in the period of initial
application will depend on future economic conditions, including
the Group's borrowing rate, the composition of the Group's lease
portfolio at that date, the Group's latest assessment of whether it
will exercise any lease renewal options and the extent to which the
Group chooses to use practical expedients and recognition
exemptions.
Thus far, the most significant impact identified is that the
Group will recognise new assets and liabilities for its operating
leases of stores. As at 27 January 2018, the Group's future minimum
lease payments under non-cancellable operating leases amounted to
GBP266,691,000 on an undiscounted basis.
2. Segment information
Segment revenue and segment result
Unaudited - 28 weeks ended 11 August 2018 Retail Wholesale Licensing Total
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 220,106 85,882 - 305,988
Cost of sales (78,906) (48,629) - (127,535)
---------- ---------- ---------- ----------
Gross profit 141,200 37,253 - 178,453
Operating costs (116,478) - - (116,478)
---------- ---------- ---------- ----------
Operating contribution 24,722 37,253 - 61,975
Licence income - - 10,868 10,868
---------- ---------- ---------- ----------
Segment result 24,722 37,253 10,868 72,843
Reconciliation of segment result to profit before tax
Segment result 24,722 37,253 10,868 72,843
Other operating costs - - - (46,181)
Exceptional items - - - (557)
Other operating income - - - 40
Operating profit - - - 26,145
Net finance expense - - - (1,956)
Share of profit of jointly controlled entity, net of tax - - - 296
----------
Profit before tax - - - 24,485
----------
Capital expenditure 10,289 316 - 10,605
Unallocated capital expenditure - - - 8,103
----------
Total capital expenditure - - - 18,708
----------
Depreciation and amortisation 8,628 256 - 8,884
Unallocated depreciation and amortisation - - - 4,057
----------
Total depreciation and amortisation - - - 12,941
----------
Segment assets 256,740 105,741 - 362,481
Deferred tax assets - - - 4,407
Derivative financial assets - - - 1,268
Intangible assets - head office - - - 32,021
Plant, property and equipment - head office - - - 80,690
Other assets - - - 3,528
----------
Total assets - - - 484,395
----------
Segment liabilities (136,725) (50,956) - (187,681)
Income tax payable - - - (9,035)
Term loan - - - (49,500)
Other liabilities - - - (3,325)
----------
Total liabilities - - - (249,541)
----------
Net assets - - - 234,854
----------
Unaudited - 28 weeks ended 12 August 2017 Retail Wholesale Licensing Total
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 217,696 78,030 - 295,726
Cost of sales (74,974) (46,699) - (121,673)
---------- ---------- ---------- ------------
Gross profit 142,722 31,331 - 174,053
Operating costs (114,013) - - (114,013)
---------- ---------- ---------- ------------
Operating contribution 28,709 31,331 - 60,040
Licence income - - 9,726 9,726
---------- ---------- ---------- ------------
Segment result 28,709 31,331 9,726 69,766
Reconciliation of segment result to profit before tax
Segment result 28,709 31,331 9,726 69,766
Other operating costs - - - (45,265)
Exceptional items - - - 1,108
Other operating income - - - 680
Operating profit - - - 26,289
Net finance expense - - - (1,182)
Share of profit of jointly controlled entity, net of tax - - - 191
------------
Profit before tax - - - 25,298
------------
Capital expenditure 11,515 433 - 11,948
Unallocated capital expenditure - - - 7,415
------------
Total capital expenditure 19,363
------------
Depreciation and amortisation 8,810 261 - 9,071
Unallocated depreciation and amortisation - - - 3,214
------------
Total depreciation and amortisation 12,285
------------
Segment assets 238,485 93,789 - 332,274
Deferred tax assets - - - 4,444
Derivative financial assets - - - 3,575
Intangible assets - head office - - - 25,601
Plant, property and equipment - head office - - - 77,601
Other assets - - - 3,080
------------
Total assets 446,575
------------
Segment liabilities (125,805) (45,093) - (170,898)
Income tax payable - - - (9,171)
Provisions for liabilities and charges - - - (756)
Term loan - - - (55,500)
Other liabilities - - - (2,485)
------------
Total liabilities (238,810)
------------
Net assets 207,765
------------
Audited 52 weeks ended 27 January 2018 Retail Wholesale Licensing Total
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 442,451 149,219 - 591,670
Cost of sales (146,230) (84,635) - (230,865)
---------- ---------- ---------- ----------
Gross profit 296,221 64,584 360,805
Operating costs (225,224) - - (225,224)
---------- ---------- ---------- ----------
Operating contribution 70,997 64,584 - 135,581
Licence income - - 21,443 21,443
---------- ---------- ---------- ----------
Segment result 70,997 64,584 21,443 157,024
Reconciliation of segment
result to profit before tax
Segment result 70,997 64,584 21,443 157,024
Other operating costs - - - (82,256)
Exceptional items - - - (4,676)
Other operating income - - - 635
----------
Operating profit - - - 70,727
Net finance expense - - - (2,512)
Share of profit of jointly controlled entity, net of tax - - - 574
----------
Profit before tax - - - 68,789
==========
Capital expenditure 21,621 396 - 22,017
Unallocated capital expenditure - - - 14,821
----------
Total capital expenditure - - - 36,838
==========
Depreciation and amortisation 16,386 455 - 16,841
Unallocated depreciation and amortisation - - - 6,397
----------
Total depreciation and amortisation - - - 23,238
==========
Segment assets 241,427 92,343 - 333,770
Deferred tax assets - - - 4,114
Derivative financial assets - - - 478
Intangible assets - head office - - - 28,611
Property, plant and equipment - head office - - - 79,279
Other assets - - - 2,912
==========
Total assets - - - 449,164
==========
Segment liabilities (117,940) (40,961) - (158,901)
Income tax payable - - - (8,522)
Provisions for liabilities and charges - - - -
Term loan - - - (52,500)
Other liabilities - - - (5,191)
----------
Total liabilities - - - (225,114)
==========
Net assets - - - 224,050
==========
3. Exceptional items
Exceptional items are those items which, in the opinion of the
Directors, should be excluded in order to provide a consistent and
comparable view of the underlying performance of the Group's
ongoing business. Generally, exceptional items include those items
that do not occur often and are material.
The Directors believe that the profit before tax and exceptional
items, operating contribution (excluding exceptional items) and the
adjusted earnings per share measures provide useful information for
shareholders on the underlying performance of the business. These
measures are also consistent with how underlying business
performance is measured internally. The profit before tax and
exceptional items measure is not a recognised profit measure under
IFRS and may not be directly comparable with adjusted profit
measures used by other companies.
Exceptional costs in the 28 weeks ended 11 August 2018 of
GBP0.6m related to debtor balances owed by House of Fraser which
are not expected to be recovered following its entry into
administration.
Exceptional income in the 28 weeks ended 12 August 2017 of
GBP1.1m related to the release of the provision for the Group's
legacy warehouses following assignment of the leases.
Exceptional costs in the 52 weeks ended 27 January 2018 amounted
to GBP4.7m and comprised the impairment of retail assets, relating
to three stores in the US and one store in Europe of GBP4.5m, and
restructuring costs of GBP1.3m, partially offset by income of
GBP1.1m related to the release of the provision for the Group's
legacy warehouses following assignment of the leases.
Reconciliation of profit before tax to profit before tax and
exceptional items
Unaudited Unaudited Audited
28 weeks 28 weeks 52 weeks
ended ended ended
11 August 12 August 27 January
2018 2017 2018
---------------------------------- ---------- ---------- -----------
GBP'000 GBP'000 GBP'000
Profit before tax 24,485 25,298 68,789
========== ========== ===========
Provision for specific trade
and other receivables 557 - -
Impairment of retail assets,
relating to three stores in
the US and one store in Europe - - 4,533
Restructuring costs - - 1,251
Movement in provisions related
to the Group's legacy warehouses - (1,108) (1,108)
Exceptional items 557 (1,108) 4,676
---------- ---------- -----------
Profit before tax and exceptional
items 25,042 24,190 73,465
========== ========== ===========
4. Finance income and expenses
Unaudited Unaudited Audited
28 weeks 28 weeks 52 weeks ended
ended ended 27 January 2018
11 August 12 August
2018 2017
GBP'000 GBP'000 GBP'000
Finance income
- Interest receivable 54 25 61
- Foreign exchange gains 494 459 741
----------- ----------- -----------------
548 484 802
----------- ----------- -----------------
Finance expenses
- Interest payable (1,925) (1,656) (3,301)
- Foreign exchange losses (579) (10) (13)
----------- ----------- -----------------
(2,504) (1,666) (3,314)
----------- ----------- -----------------
5. Earnings per share
Unaudited Unaudited Audited
28 weeks 28 weeks 52 weeks ended
ended ended 27 January 2018
11 August 12 August
2018 2017
Number of shares: No. No. No.
Weighted number of ordinary shares outstanding 44,509,556 44,226,509 44,306,134
Effect of dilutive options 82,576 501,764 289,241
----------- ----------- -----------------
Weighted number of ordinary shares outstanding - diluted 44,592,132 44,728,273 44,595,375
----------- ----------- -----------------
Earnings: GBP'000 GBP'000
Profit for the period - basic and diluted 19,049 19,277 52,744
Profit for the period - adjusted* 19,513 18,433 56,597
Basic earnings per share 42.8p 43.6p 119.0p
Adjusted earnings per share* 43.8p 41.7p 127.7p
Diluted earnings per share 42.7p 43.1p 118.3p
Adjusted diluted earnings per share* 43.8p 41.2p 126.9p
Diluted earnings per share and adjusted diluted earnings per
share have been calculated using additional ordinary shares of 5p
each available under the Ted Baker Sharesave Scheme and the Ted
Baker Long-Term Plc Incentive Plan 2013.
*Adjusted profit for the period and adjusted earnings per share
are shown before exceptional costs (net of tax) of GBP0.5m (28
weeks ended 12 August 2017: exceptional income of GBP0.8m, 52 weeks
ended 27 January 2018: exceptional costs of GBP3.9m).
6. Dividends per share
Unaudited Unaudited Audited
28 weeks ended 11 August 28 weeks ended 12 August 52 weeks ended 27
2018 2017 January 2018
GBP'000 GBP'000 GBP'000
Final dividend paid for
the prior year of 43.5p
per ordinary share (2017:
38.8p) 19,377 17,176 17,176
Interim dividend paid
2018: GBPnil (2017:
GBPnil) - - 7,377
-------------------------- -------------------------- -------------------------
19,377 17,176 24,553
-------------------------- -------------------------- -------------------------
The Board has declared an interim dividend of 17.9p per share
(2017:16.6p) payable on 23 November 2018 to shareholders on the
register at 12 October 2018.
7. Income tax expense
The Group's full year forecast effective tax rate in respect of
continuing operations for the 28 weeks ended 11 August 2018 is
22.2% (28 weeks ended 12 August 2017: 23.8%; 52 weeks ended 27
January 2018: 23.3%).
This effective tax rate is higher than the UK corporation tax
rate for the period of 19% due to higher overseas tax rates and the
non-recognition of losses in overseas territories where the
businesses are still in their development phase.
There will be a further reduction in the UK corporation tax rate
to 17% from 1 April 2020.
Our future effective tax rate is expected to remain above the UK
tax rate as a result of a growing proportion of overseas profits
arising in jurisdictions with higher tax rates than the UK.
8. Long-Term Incentive Plan
Share awards are made in the form of nil-cost options over the
Ordinary shares in Ted Baker Plc under the Long-Term Incentive Plan
2013 ("LTIP 2013"), which was approved by the shareholders at the
general meeting held on 20 June 2013. The options are exercisable
three years after the date of grant subject to the satisfaction of
profit before tax per share and share price performance targets,
each measured over a three year period. The profit before tax per
share target is calibrated so that the percentage of awards that
vests is linked to the level of profit growth achieved. A fifth
award of options was granted under the LTIP 2013 on 3 April
2018.
The terms and conditions of the LTIP 2013 awards made during the
28 weeks ended 11 August 2018 are as follows:
Grant date Type of award Number of shares Vesting conditions Vesting period
3 April 2018 LTIP 2013 251,786 Adjusted profit before tax per Up to 100% after three years
share growth of 10-15% per
annum and 10% share price
growth
over the vesting period
The credit to the income statement for the 28 weeks ended 11
August 2018 for LTIP 2013 awards amounted to GBP229,248 (28 weeks
ended 12 August 2017: charge of GBP743,402, 52 weeks ended 27
January 2018: charge of GBP1,494,000). Included in the credit for
the period is an amount in respect of R S Kelvin, who is employed
by the Company, amounting to GBP37,371 (28 weeks ended 12 August
2017: charge of GBP97,234, 52 weeks ended 27 January 2018: charge
of GBP185,000).
The Monte-Carlo valuation methodology has been used as the basis
of measuring fair value of awards made under the LTIP 2013. The
range of inputs into the Monte-Carlo model was as follows:
Share price at grant 2,364.0p - 2,855.0p
Share price at grant (based on 3-6 month average) for share price performance condition 2,385.0p - 2,809.0p
Risk free interest rate 0.18% - 0.87%
Expected life of options 3 years
Share price volatility 29.0% - 33.18%
Dividend yield 1.41% - 2.27%
9. Reconciliation of cash and cash equivalents per balance sheet to the cash flow statement
Unaudited Unaudited Audited
11 August 2018 12 August 2017 27 January 2018
GBP'000 GBP'000 GBP'000
Cash and cash equivalents per balance sheet 19,153 18,030 16,712
Bank overdraft per balance sheet (102,366) (85,388) (76,043)
--------------- --------------- ----------------
Cash and cash equivalents per cash flow statement (83,213) (67,358) (59,331)
--------------- --------------- ----------------
10. Intangible assets
Intangible asset additions during the period were GBP4.9m (12
August 2017: GBP7.0m, 27 January 2018: GBP13.3m) in relation to the
Microsoft Dynamics AX system, further development of our e-commerce
platforms and investment in other business wide systems to support
the long term development of the business.
11. Property, plant and equipment
Property, plant and equipment asset additions during the period
were GBP13.8m (12 August 2017: GBP12.4m, 27 January 2018: GBP23.5m)
primarily in relation to store refurbishments, openings and our
distribution centre in the UK and North America to support our
continued growth.
12. Financial Instruments
The Group held certain financial instruments at fair value at 11
August 2018. The definitions and valuation techniques employed for
these as at 11 August 2018 are consistent with those used at 27
January 2018 and disclosed in Note 23 on pages 118 to 125 of the
2018 Annual Report:
- Level 1 quoted prices (unadjusted) in active markets for
identical assets or liabilities.
- Level 2 inputs other than quoted prices included within Level
1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3 inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
Valuation of all financial assets and liabilities carried at
fair value by the Group is based on hierarchy Level 2.
While the carrying values of assets and liabilities at fair
value have changed since 27 January 2018, the Group does not
consider the movements in value to be significant, and the
categorisation of these assets and liabilities in accordance with
the disclosure requirements of IFRS 7 has not materially
changed.
Level 2 assets and liabilities are shown as:
Unaudited Unaudited Audited
11 August 12 August 27 January
2018 2017 2018
GBP'000 GBP'000 GBP'000
Assets at fair value:
Currency derivatives 1,147 3,575 334
Interest rate swap 121 - 144
Liabilities at fair value:
Currency derivatives - (418) (3,918)
Interest rate swap - (300) -
13. Related parties
The Group considers its Executive and Non-Executive Directors as
key management and therefore has a related party relationship with
them.
Directors of the Company and their immediate relatives control
35.1% (12 August 2017: 35.3%) of the voting shares of the
Company.
At 11 August 2018, the main trading company owed the parent
company GBP36,601,000 (12 August 2017: GBP37,013,000). The main
trading company was owed GBP164,297,000 (12 August 2017:
GBP142,141,000) from other subsidiaries within the Group.
Transactions between subsidiaries and between the parent and
subsidiaries were priced on an arm's length basis.
The Group has a 50% interest in the ordinary share capital of No
Ordinary Retail Company Pty, a company incorporated in Australia.
As at 11 August 2018, the joint venture owed GBP482,000 to the main
trading company (12 August 2017: GBP596,000). The value of sales
made to the joint venture by the Group in the period was
GBP1,308,000 (12 August 2017: GBP1,465,000).
14. Principal risks and uncertainties
The principal risks and uncertainties affecting the Group were
identified as part of the Group Strategic Report, set out on pages
22 to 26 of the Ted Baker Annual Report and Accounts for the 52
weeks ended 27 January 2018, a copy of which is available on the
Group's investor relations website at www.tedbakerplc.com.
The Group has established a structured approach to identify,
assess and manage these risks and this is regularly monitored and
updated by the Risk Committee. The following list highlights some
of the principal risks, which are unchanged from the prior year end
and remain relevant for the second half of the financial year:
Strategic Risks
* Brand and reputational risk as a result of our
actions or those of our partners or supply chain;
* Failure in the development of the Group's
international business through franchise operations,
licensees and e-commerce;
* Risk that our offer will not satisfy the needs of our
customers or that we fail to correctly identify
trends;
* Significant external events that may occur which may
affect the global, economic and financial environment
in which we operate; and
* The increased level of economic and consumer
uncertainty arising from the UK's decision to leave
the European Union.
Operational Risks
* Failure in our supply chain affecting our ability to
deliver our offer to customers and/or partners;
* Outlook in the retail sector remains uncertain with
increasing pressures on the Group's customers;
* Operational problems affecting the infrastructure of
our business;
* Failure to operate in a sustainable and responsible
manner;
* Cybersecurity or IT breach and unauthorised data
access or loss;
* Poorly managed implementation or take-up of new
systems, leading to business disruptions;
* Loss of key individuals;
* Non-compliance with applicable legislation and
regulations; and
* Unauthorised use of our designs, trademarks and other
intellectual property rights.
Financial Risks
* Currency, interest and credit risks; and
* Fluctuations in foreign currencies.
Responsibility statement of the directors in respect of the
interim financial statements
The directors confirm that to the best of their knowledge:
-- the condensed financial statements have been prepared in
accordance with IAS 34, Interim Financial Reporting as adopted by
the EU;
-- the interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being
an indication of important events that have occurred during the
first 28 weeks of the financial year and their impact on the
condensed financial statements, and a description of the principal
risks and uncertainties for the remaining 24 weeks of the financial
year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first 28
weeks of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
The directors of Ted Baker Plc are listed on page 36 of the
Annual Report and Accounts as at, and for, the 52 weeks ended 27
January 2018. A list of current directors is maintained on the Ted
Baker Plc website, at: www.tedbakerplc.com
By order of the Board
R S Kelvin CBE L D Page
Founder and Chief Executive Chief Operating Officer and Group Finance Director
4 October 2018 4 October 2018
Cautionary statement regarding forward-looking statements
This announcement contains certain forward-looking statements.
These forward-looking statements include matters that are not
historical facts or are statements regarding the Group's
intentions, beliefs or current expectations concerning, among other
things, the Group's results of operations, financial condition,
liquidity, prospects, growth, strategies, and the industries in
which the Group operates. Forward-looking statements are based on
the information available to the directors at the time of
preparation of this announcement, and will not be updated during
the year. The directors can give no assurance that these
expectations will prove to have been 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.
INDEPENT REVIEW REPORT TO TED BAKER PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
28 weeks ended 11 August 2018 which comprises the Condensed Group
Income Statement, the Condensed Group Statement of Comprehensive
Income, the Condensed Group Statement of Changes in Equity, the
Condensed Group Balance Sheet, the Condensed Group Cash Flow
Statement and the related explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the 28 weeks ended 11
August 2018 is not prepared, in all material respects, in
accordance with IAS 34 Interim Financial Reporting as adopted by
the EU and the Disclosure Guidance and Transparency Rules ("the
DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. We read the other information contained in the
half-yearly financial report and consider whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in Note 1, the annual financial statements of the
Group are prepared in accordance with International Financial
Reporting Standards as adopted by the EU. The directors are
responsible for preparing the condensed set of financial statements
included in the half-yearly financial report in accordance with IAS
34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company for our
review work, for this report, or for the conclusions we have
reached.
Lourens de Villiers
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
4 October 2018
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR UGGBPUUPRGRW
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