TED BAKER Ted Baker Plc
('Ted Baker', the 'Group')
Interim Results Announcement for the 28 weeks ended 12 August 2017
'Further brand growth across distribution channels'
Highlights | 28 weeks ended 12 August 2017 | 28 weeks ended 13 August 2016 | Change |
Group Revenue | £295.7m | £259.5m | 14.0% |
Profit Before Tax and Exceptional Items | £24.2m | £21.5m | 12.7% |
Profit Before Tax | £25.3m | £21.5m | 17.8% |
Basic EPS | 43.6p | 37.1p | 17.5% |
Adjusted EPS | 41.7p | 37.1p | 12.4% |
Interim Dividend | 16.6p | 14.8p | 12.2% |
· Group revenue up 14.0% (9.5% in constant currency) to £295.7m
· Retail sales including e-commerce up 13.9% (9.2% in constant currency) to £217.7m
· UK and Europe retail sales up 11.0% (9.1% in constant currency) to £145.6m
· North America retail sales up 18.8% (7.8% in constant currency) to £60.7m
· Asia retail sales up 29.5% (19.6% in constant currency) to £11.4m
· E-commerce sales up 43.8% (40.7% in constant currency) to £42.7m
· Planned expansion continued with:
· Two new stores in the US and one new store in each of the UK, China and France, a relocation in Japan, and one new outlet in each of the UK and the Netherlands
· Further concessions with leading department stores across the UK, Europe, and Asia
· Licencee openings in Australia, Dubai, Kuwait, Lebanon, Mexico, Qatar, Saudi Arabia and Turkey
· Wholesale sales up 14.1% (10.2% in constant currency) to £78.0m
· Licence income up 23.1% to £9.7m
· Profit before tax and exceptional items up 12.7% to £24.2m
Commenting, Ray Kelvin CBE, Founder and Chief Executive, said:
'The Ted Baker brand has continued to perform well and in line with our expectations across all distribution channels. This good performance reflects the strength and appeal of the Ted Baker brand, our business model and the passion, creativity and innovation of our global teams.
We have a clear strategy for the development of the brand across both established and newer markets and this remains underpinned by the focus on design, quality and attention to detail that is at the core of everything we do.
We are dedicated to the long-term development of the Ted Baker brand and are continuing to invest in our infrastructure and people to support our future growth. Whilst trading conditions in some of our markets remain challenging, we are confident of making further progress for the full year, in line with our expectations.'
This announcement contains inside information. The person responsible for arranging the release of this announcement on behalf of the Company is Charles Anderson, Finance Director & Company Secretary.
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 Hattie O'Reilly Fern Duncan |
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 511 stores, concessions and outlets worldwide comprising: 192 in the UK; 108 in Europe; 119 in North America; 82 in the Middle East, Asia and Africa; and 10 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 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
I am pleased to report that Group revenue increased by 14.0% (9.5% in constant currency) and profit before tax and exceptional items increased by 12.7% to £24.2m (2016: £21.5m) for the 28 weeks ended 12 August 2017 (the 'period'). Profit before tax increased by 17.8% to £25.3m (2016: £21.5m). This good performance reflects the strength of the Ted Baker brand and our business model and was achieved despite external factors continuing to impact trading conditions in some of our global markets. In North America, in particular, we continue to experience higher levels of competitor promotional activity and lower international tourism which have impacted retail sales.
The retail channel performed well, with retail sales (including e-commerce) up 13.9% to £217.7m (9.2% in constant currency). Average retail square footage increased by 4.9%. Our e-commerce business is an integral and increasingly important component within our retail proposition and has performed very well, delivering sales growth of 43.8% (40.7% in constant currency). We continued to invest in our retail channel with considered store openings across all territories and further development of our e-commerce platforms.
Wholesale sales increased by 14.1% (10.2% in constant currency) to £78.0m with a good performance from our UK business and a strong performance from our North American business.
Licence income increased by 23.1% to £9.7m as both our product and territorial licences continued to perform well. During the period, our existing licence partners opened further stores in Australia, Dubai, Kuwait, Lebanon, Mexico, Qatar, Saudi Arabia and Turkey.
In May 2017, we launched the next phase of the Microsoft Dynamics AX system across our UK and European businesses to fully support our retail, e-commerce and wholesale channels. We anticipate completing the final phases of this project by the middle of next year, which will allow us to continue to enhance efficiency, streamline our operations and support the evolution of the business.
We have now successfully completed the transition from our three legacy distribution centres to our single European distribution centre in the UK, which handles all logistic operations for our retail, e-commerce and wholesale businesses across the UK and Europe, supporting our long-term growth strategy. Since the half year, we have assigned the leases for our three UK legacy distribution centres to third parties.
The Group continues to consider its expansion and development plans for the Ugly Brown Building and has decided not to exercise the option to purchase 50% of neighbouring Block A, as future capacity requirements will be accommodated within our existing plans.
Financial Results
Group revenue increased by 14.0% (9.5% in constant currency) to £295.7m (2016: £259.5m) for the 28 weeks ended 12 August 2017. The composite gross margin remained constant at 58.9% (2016: 58.9%).
Distribution costs, which comprise the cost of retail operations and distribution centres increased by 13.6% (8.5% in constant currency) to £117.8m (2016: £103.7m). As a percentage of sales they decreased to 39.8% (2016: 40.0%) due to the decrease in dual running costs associated with the transition to our new single European distribution centre, partially offset by investment in online marketing costs to increase awareness of local e-commerce sites and some pre-opening costs in Asia.
Administrative expenses increased by 13.5% to £40.4m (2016: £35.5m). Administrative expenses before exceptional items increased by 16.7% (14.0% in constant currency) to £41.5m (2016: £35.5m) and as a percentage of sales increased to 14.0% (2016: 13.7%). This was due to the growth in our central functions, both in the UK and overseas, the continued deployment of our information technology infrastructures to support our growth and investment in customer engagement.
Dual running costs incurred in respect of our new distribution centre and the systems roll-out were £1.2m (2016: £2.0m) in the first half of the year. We would expect to incur further costs of £0.9m in the second half of the year.
Exceptional income of £1.1m (2016: £Nil) related to the release of the provision for the Group's legacy warehouses following assignment of the leases.
The net foreign exchange gain during the period of £0.4m (2016: £1.2m) was due to the translation of monetary assets and liabilities denominated in foreign currencies. Net interest payable during the period was £1.6m (2016: £1.5m).
Profit before tax and exceptional items increased by 12.7% to £24.2m (2016: £21.5m) and profit before tax increased by 17.8% to £25.3m (2016: £21.5m). Adjusted basic earnings per share, which exclude exceptional items, increased by 12.4% to 41.7p (2016: 37.1p) and basic earnings per share increased by 17.5% to 43.6p (2016: 37.1p).
The forecast effective tax rate of 23.8% (2016 full year effective rate: 24.0%) is higher than the forecast UK corporation tax rate for the period of 19.16%, 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. On 1 April 2017, the UK corporation tax rate fell from 20% to 19% and a further reduction to 17% from 1 April 2020 has been substantively enacted.
The net decrease in cash and cash equivalents of £30.6m(2016: £32.9m) 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 £3.0m (2016: £Nil) 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 £24.3m to £156.9m (2016: £132.5m). This was mainly driven by an increase in inventories of £40.8m to £176.4m (2016: £135.6m) reflecting the growth of our business, stock on hand for our wholesale customers and licence partners, some earlier phasing of stock deliveries between the first and second half of the year and the impact of the movement in foreign exchange rates.
The increase in trade and other receivables of £9.5m to £65.9m (2016: £56.4m) was driven by the growth in our wholesale and licensed businesses. Trade and other payables increased by £26.0m to £85.5m (2016: £59.5m) as a consequence of the timing of stock intake and other payments.
Capital expenditure of £19.4m (2016: £21.5m) comprised the costs of opening and refurbishing stores, concessions and outlets. It also reflected the on-going investment in business-wide systems to support our continued growth. We expect full year capital expenditure to be in line with previous guidance of £35m, subject to the timing of planned openings.
Borrowing Facilities
Since the half year, the Group agreed an extension of its multi-currency revolving credit facility. A new agreement was signed on 25 September 2017 which increased the Group's committed borrowing facility from £110.0m to £135.0m expiring in September 2020.
This increased facility provides the resources to fund the planned investment in capital expenditure and working capital required to support the Group's long-term growth strategy. The new borrowing facility is on the same terms and contains the same covenants as the previous facility.
Dividends
The Board has declared an interim dividend of 16.6p (2016: 14.8p), representing an increase of 12.2%, which will be payable on 17 November 2017 to shareholders on the register at the close of business on 20 October 2017.
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.
As previously announced, on 29 September 2017 the Company appointed Anita Balchandani and Jennifer Roebuck as independent Non-Executive Directors. Anita and Jennifer will provide additional digital and retail experience to support the continued growth of the business. In addition, Anne Sheinfield stepped down as Non-Executive Director after more than 7 years in the role. The Board would like to thank Anne for her major contribution and dedicated service during her time with Ted Baker, in particular her stewardship of the Remuneration Committee.
Global Group Performance
28 weeks ended 12 August 2017 | 28 weeks ended 13 August 2016 | Variance | Constant currency variance | ||
Group | Revenue | £295.7m | £259.5m | 14.0% | 9.5% |
Gross margin | 58.9% | 58.9% | - | - | |
Operating contribution (excluding exceptional items %* | 8.5% | 8.3% | 20 bps | - | |
Operating contribution %** | 8.9% | 8.3% | 60 bps | - | |
Profit before tax (excluding exceptional items) as a % of revenue | 8.2% | 8.3% | (10 bps) | - | |
Profit before tax as a % of revenue | 8.6% | 8.3% | 30 bps | - | |
Retail | Revenue | £217.7m | £191.1m | 13.9% | 9.2% |
E-commerce | £42.7m | £29.7m | 43.8% | 40.7% | |
Gross margin | 65.6% | 65.6% | - | - | |
Average square footage*** | 400,313 | 381,441 | 4.9% | - | |
Closing square footage*** | 409,470 | 387,086 | 5.8% | - | |
Sales per square foot including e-commerce | £544 | £501 | 8.6% | 4.1% | |
Sales per square foot excluding e-commerce | £437 | £423 | 3.3% | (1.5%) | |
Wholesale | Revenue | £78.0m | £68.4m | 14.1% | 10.2% |
Gross margin | 40.2% | 40.1% | 10 bps | - | |
Licence income | Revenue | £9.7m | £7.9m | 23.1% | - |
*Operating contribution 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 license partner stores
Retail
Our retail channel comprises stores, concessions and e-commerce providing a seamless multichannel customer experience. We operate stores and concessions across the UK and Europe, North America and Asia 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 13.9% (9.2% in constant currency) to £217.7m (2016: £191.1m), despite a challenging trading environment across some of our global markets. This growth was driven by continued investment across the retail channel in new stores and our e-commerce platforms. We are particularly pleased with our strong e-commerce performance, where sales grew 43.8% (40.7% in constant currency) to £42.7m (2016: £29.7m) and represented 19.6% (2016: 15.5%) of total retail sales.
The total growth in retail sales of 13.9% (9.2% in constant currency) exceeded the increase in average retail square footage of 4.9% to 400,313 sq ft (2016: 381,441 sq ft). Retail sales per square foot (excluding e-commerce) increased 3.3% (decrease of 1.5% in constant currency) to £437 (2016: £423) demonstrating the changing customer behaviour with customers shopping both online and in store.
The retail gross margin remained constant at 65.6% (2016: 65.6%) as we continued to maintain the improved full price sell through experienced in the previous period.Retail operating costs increased by 13.1% (11.5% in constant currency) to £114.0m (2016: £100.8m), and as a percentage of retail sales decreased to 52.4% (2016: 52.8%). This was due to the decrease in dual running costs associated with the transition to our new single European distribution centre, partially offset by investment in online marketing costs to increase awareness of local e-commerce sites and some pre-opening costs in Asia.
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 14.1% (10.2% in constant currency) to £78.0m (2016: £68.4m) reflecting a good performance from our UK business and a strong result from our North American business.The wholesale gross margin remained broadly consistent at 40.2% (2016: 40.1%).
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 23.1% to £9.7m (2016: £7.9m) with both product and territorial licences performing well. There were notable performances from our product licensees in Eyewear, Fragrance and Skinwear and Suiting.
Collections
We are pleased with the positive reactions to our collections both in the UK and internationally. Ted Baker Womenswear performed well with sales up 19.1% to £177.4m (2016: £148.9m). Ted Baker Menswear delivered a good performance with sales increasing 7.0% to £118.3m (2016: £110.6m).
Womenswear represented 60.0% of total sales (2016: 57.4%) during the period and Menswear represented 40.0% of total sales (2016: 42.6%). The growth in the womenswear mix was driven by allocation of space as well as the increased proportion of e-commerce sales where we experience a higher percentage of womenswear sales.
Geographic Performance
United Kingdom & Europe
28 weeks ended 12 August 2017 | 28 weeks ended 13 August 2016 | Variance | Constant currency variance | |
Total retail revenue | £145.6m | £131.2m | 11.0% | 9.1% |
E-commerce revenue | £34.7m | £25.3m | 37.2% | 36.5% |
Average square footage* | 252,484 | 245,377 | 2.9% | - |
Closing square footage* | 256,419 | 247,088 | 3.8% | - |
Sales per square foot including e-commerce sales | £577 | £535 | 7.9% | 6.0% |
Sales per square foot excluding e-commerce sales | £439 | £432 | 1.6% | (0.3%) |
Wholesale revenue | £50.0m | £46.6m | 7.3% | - |
Own stores | 37 | 38 | (1) | - |
Concessions | 242 | 229 | 13 | - |
Outlets | 16 | 13 | 3 | - |
Partner stores / concessions | 5 | 3 | 2 | - |
Total | 300 | 283 | 17 | - |
*Excludes licence partner stores
Retail sales in the period in the UK and Europe increased 11.0% (9.1% in constant currency) to £145.6m (2016: £131.2m) despite challenging trading conditions.
E-commerce sales increased by 37.2% (36.5% in constant currency) to £34.7m (2016: £25.3m) 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 23.8% (2016: 19.3%).
Sales per square foot excluding e-commerce sales decreased slightly in constant currency. 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 a store in London and one in Paris and outlets in Gloucester and Roermond. We opened further concessions with premium department stores in the UK, France, Germany and the Netherlands. We also opened two licence partner stores in Turkey. We are pleased with their performances and remain positive about growth opportunities for our brand in these markets.
Sales from our UK wholesale business increased 7.3% to £50.0m (2016: £46.6m). This reflected a good performance from sales to trustees, particularly those with a strong online customer proposition.
North America
28 weeks ended 12 August 2017 | 28 weeks ended 13 August 2016 | Variance | Constant currency variance | |
Total retail revenue | £60.7m | £51.1m | 18.8% | 7.8% |
E-commerce revenue | £6.9m | £4.4m | 56.8% | 41.3% |
Average square footage* | 117,776 | 107,692 | 9.4% | - |
Closing square footage* | 120,499 | 112,317 | 7.3% | - |
Sales per square foot including e-commerce sales | £516 | £474 | 8.9% | (1.4%) |
Sales per square foot excluding e-commerce sales | £457 | £434 | 5.3% | (4.3%) |
Wholesale revenue | £28.0m | £21.8m | 28.4% | 16.7% |
Own stores | 32 | 28 | 4 | |
Concessions | 55 | 55 | - | |
Outlets | 11 | 11 | - | |
Partner stores / concessions | 21 | 12 | 9 | |
Total | 119 | 106 | 13 |
*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 18.8% (7.8% in constant currency) to £60.7m (2016: £51.1m) driven by our continued expansion. Sales per square foot excluding e-commerce sales decreased in constant currency due to in part to higher levels of competitor promotional activity in the North American market and lower international tourism.
In the period, we opened new stores in Houston and Los Angeles and expanded our Miami Aventura store. We also closed a store in Los Angeles.In addition, we opened further licence partner concessions in Mexico.
Our e-commerce business delivered a strong performance with sales increasing by 56.8% (41.3% constant currency) to £6.9m (2016: £4.4m). As a percentage of North America retail sales, e-commerce sales represented 11.4% (2016: 8.6%).
Sales from our North American wholesale business increased by 28.4% (16.7% in constant currency), to £28.0m (2016: £21.8m) reflecting a strengthening relationship with key trustees that attract domestic customers across North America, further demonstrating increased brand recognition in this territory.
Middle East, Asia, Africa & Australasia
28 weeks ended 12 August 2017 | 28 weeks ended 13 August 2016 | Variance | Constant currency variance | |
Total retail revenue | £11.4m | £8.8m | 29.5% | 19.6% |
E-commerce revenue | £1.1m | - | - | - |
Average square footage | 30,053 | 28,372 | 5.9% | - |
Closing square footage | 32,552 | 27,681 | 17.6% | - |
Sales per square foot including e-commerce sales | £379 | £310 | 22.3% | 13.0% |
Sales per square foot excluding e-commerce sales | £341 | £310 | 10.0% | 1.6% |
Own stores | 10 | 8 | 2 | |
Concessions | 16 | 10 | 6 | |
Outlets | 3 | 3 | - | |
Partner stores / concessions | 63 | 60 | 3 | |
Total | 92 | 81 | 11 |
We continue to develop the Ted Baker brand across the Middle East, Asia, Africa and Australasia through our retail and licensing channels.
In Asia, we remain positive about the long term opportunities in this territory. Retail sales in Asia increased 29.5% (19.6% in constant currency) to £11.4m (2016: £8.8m). During the period, we opened a store in Shanghai and relocated our Tokyo store, we also opened concessions in Japan and South Korea.
Our e-commerce concession businesses in China and Japan performed well with sales of £1.1m which as a percentage of Asian retail sales represented 9.6%.
Our licensed stores across the Middle East, Asia and Africa continued to perform well. Our existing licence partners opened new stores in Dubai, Kuwait, Lebanon, Qatar and Saudi Arabia. As at 12 August 2017, we operated a total of 53 partner stores (2016: 51).
The joint venture with our Australian licence partner, Flair Industries Pty Ltd, opened a new store in Bondi. As at 12 August 2017, we operated 10 stores in Australasia (2016: 9 stores).
Current Trading and Outlook
Retail
In the UK and Europe, we have continued our expansion with concession openings in Germany. We plan to open new stores in Oxford and London Luton Airport and further concessions in the UK, Germany and Spain later this year.
In North America, we have continued our expansion with six concession openings in Canada. We remain focused on developing our presence further in North America with plans to open a store in Montreal and an outlet in Chicago.
In Asia, we have closed our concessions in South Korea and transitioned our retail operations to a distributor with local knowledge and experience to drive growth in this country.
Wholesale
The good performance in our wholesale business in the first half of the year is expected to continue for the remainder of the year. As a result, we anticipate reporting high single digit sales growth (in constant currency) for the full year.
Licence Income
Our product and territorial licences continue to perform well. We have opened a store in Kuwait with further store openings planned in Qatar, Malaysia, Mexico and our first store in India later this year.
Outlook
The Ted Baker brand continues to develop and expand as a global lifestyle brand across markets and distribution channels. We have a clear strategy for the development of the brand across both established and newer markets. This is underpinned by our controlled distribution as well as the design, quality and attention to detail that are at the core of everything we do.
Despite the continued challenging external market conditions, the Board is confident of making further progress for the full year in line with its expectations. We intend to make our next trading update, covering the period since the start of the second half of the financial year, in mid-November.
David Bernstein CBE
Non-Executive Chairman
10 October 2017
NOTES:
Constant currency variances are calculated by applying the foreign exchange rates for the 28 weeks ended 13 August 2016 to results in overseas subsidiaries for the 28 weeks ended 12 August 2017 to remove the impact of exchange rate fluctuations.
Exceptional items are excluded from profit before tax and exceptional items due to these items being one-off and material in nature.
Exceptional items are excluded from adjusted basic earnings per share due to these items being one-off and material in nature.
The Directors believe measures 1 -3 provide a consistent and comparable view of the underlying performance of the Group's ongoing business.
Condensed Group Income Statement
For the 28 weeks ended 12 August 2017
Unaudited 28 weeks ended 12 August 2017 | Unaudited 28 weeks ended 13 August 2016 | Audited 52 weeks ended 28 January 2017 | ||||||
Note | £'000 | £'000 | £'000 | |||||
Revenue | 2 | 295,726 | 259,460 | 530,986 | ||||
Cost of sales | 2 | (121,673) | (106,687) | (207,257) | ||||
Gross profit | 2 | 174,053 | 152,773 | 323,729 | ||||
Distribution costs | (117,817) | (103,744) | (208,221) | |||||
Administrative expenses | (40,353) | (35,540) | (70,103) | |||||
Administrative expenses before exceptional items | (41,461) | (35,540) | (65,590) | |||||
Exceptional income / (costs) | 3 | 1,108 | - | (4,513) | ||||
Licence income | 9,726 | 7,904 | 18,237 | |||||
Other operating income / (expense) | 680 | 125 | (1,145) | |||||
Operating profit | 2 | 26,289 | 21,518 | 62,497 | ||||
Finance income | 4 | 484 | 1,265 | 1,597 | ||||
Finance expense | 4 | (1,666) | (1,572) | (3,373) | ||||
Share of profit of jointly controlled entity, net of tax | 191 | 260 | 550 | |||||
Profit before tax | 2 | 25,298 | 21,471 | 61,271 | ||||
Profit before tax and exceptional items | 24,190 | 21,471 | 65,784 | |||||
Exceptional income / (costs) | 1,108 | - | (4,513) | |||||
Income tax expense | 7 | (6,021) | (5,153) | (14,703) | ||||
Profit for the period | 19,277 | 16,318 | 46,568 | |||||
Earnings per share | 5 | |||||||
Basic | 43.6p | 37.1p | 105.7p | |||||
Diluted | 43.1p | 36.6p | 104.5p | |||||
Condensed Group Statement of Comprehensive Income
For the 28 weeks ended 12 August 2017
Unaudited 28 weeks ended 12 August 2017 | Unaudited 28 weeks ended 13 August 2016 | Audited 52 weeks ended 28 January 2017 | |
£'000 | £'000 | £'000 | |
Profit for the period | 19,277 | 16,318 | 46,568 |
Other comprehensive (expense) / income Items that may be reclassified subsequently to the income statement: | |||
Net effective portion of changes in fair value of cash flow hedges | (1,883) | 10,656 | 10,521 |
Net change in fair value of cash flow hedges transferred to profit or loss | (3,205) | (2,394) | (5,435) |
Net exchange rate movement | (1,050) | 2,931 | 5,580 |
Other comprehensive (expense) / income for the period, net of tax | (6,138) | 11,193 | 10,666 |
Total comprehensive income for the period | 13,139 | 27,511 | 57,234 |
Condensed Group Statement of Changes in Equity - Unaudited
For the 28 weeks ended 12 August 2017
Share capital | Share premium | Cash flow hedging reserve | Translation reserve | Retained earnings | Total equity attributable to equity shareholders of the parent | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'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 payments 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 - Unaudited
For the 28 weeks ended 13 August 2016
Share capital | Share premium | Cash flow hedging reserve | Translation reserve | Retained earnings | Total equity attributable to equity shareholders of the parent | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Balance at 30 January 2016 | 2,199 | 9,617 | 1,650 | 2,311 | 156,822 | 172,599 |
Comprehensive income for the period | ||||||
Profit for the period | - | - | - | - | 16,318 | 16,318 |
Exchange differences on translation of foreign operations | - | - | - | 3,931 | - | 3,931 |
Current tax on foreign currency translation | - | - | - | (1,000) | - | (1,000) |
Effective portion of changes in fair value of cash flow hedges | - | - | 9,337 | - | - | 9,337 |
Net change in fair value of cash flow hedges transferred to profit or loss | - | - | (2,394) | - | - | (2,394) |
Deferred tax associated with movement in hedging reserve | - | - | 1,319 | - | - | 1,319 |
Total comprehensive income for the period | - | - | 8,262 | 2,931 | 16,318 | 27,511 |
Transactions with owners recorded directly in equity | ||||||
Increase in issued share capital | 4 | 280 | - | - | - | 284 |
Share-based payments charges | - | - | - | - | 1,039 | 1,039 |
Movement on current and deferred tax on share-based payments | - | - | - | - | (332) | (332) |
Dividends paid | - | - | - | - | (15,215) | (15,215) |
Total transactions with owners | 4 | 280 | - | - | (14,508) | (14,224) |
Balance at 13 August 2016 | 2,203 | 9,897 | 9,912 | 5,242 | 158,632 | 185,886 |
Condensed Group Statement of Changes in Equity - Audited
For the 52 weeks ended 28 January 2017
Share capital | Share premium | Cash flow hedging reserve | Translation reserve | Retained earnings | Total equity attributable to equity shareholders of the parent | ||||||||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||||||||
Balance at 30 January 2016 | 2,199 | 9,617 | 1,650 | 2,311 | 156,822 | 172,599 | |||||||
Comprehensive income for the period | |||||||||||||
Profit for the period | - | - | - | - | 46,568 | 46,568 | |||||||
Exchange differences on translation of foreign operations | - | - | - | 7,038 | - | 7,038 | |||||||
Current tax on foreign currency translation | - | - | - | (1,458) | - | (1,458) | |||||||
Effective portion of changes in fair value of cash flow hedges | - | - | 11,714 | - | - | 11,714 | |||||||
Net change in fair value of cash flow hedges transferred to profit or loss | - | - | (5,435) | - | - | (5,435) | |||||||
Deferred tax associated with movement in hedging reserve | - | - | (1,193) | - | - | (1,193) | |||||||
Total comprehensive income for the period | - | - | 5,086 | 5,580 | 46,568 | 57,234 | |||||||
Transactions with owners recorded directly in equity | |||||||||||||
Increase in issued share capital | 9 | 318 | - | - | - | 327 | |||||||
Share-based payments charges | - | - | - | - | 1,839 | 1,839 | |||||||
Movement on current and deferred tax on share-based payments | - | - | - | - | 281 | 281 | |||||||
Dividends paid | - | - | - | - | (21,736) | (21,736) | |||||||
Total transactions with owners | 9 | 318 | - | - | (19,616) | (19,289) | |||||||
Balance at 28 January 2017 | 2,208 | 9,935 | 6,736 | 7,891 | 183,774 | 210,544 | |||||||
Condensed Group Balance Sheet
At 12 August 2017
Unaudited 12 August 2017 | Unaudited 13 August 2016 | Audited 28 January 2017 | ||||||||
Note | £'000 | £'000 | £'000 | |||||||
Non-current assets | ||||||||||
Intangible assets | 10 | 29,765 | 20,682 | 24,445 | ||||||
Property, plant and equipment | 11 | 145,312 | 134,893 | 144,354 | ||||||
Investments in equity accounted investee | 2,088 | 1,901 | 1,897 | |||||||
Deferred tax assets | 4,444 | 7,639 | 4,446 | |||||||
Prepayments | 395 | 426 | 401 | |||||||
182,004 | 165,541 | 175,543 | ||||||||
Current assets | ||||||||||
Inventories | 176,435 | 135,649 | 158,500 | |||||||
Trade and other receivables | 65,934 | 56,396 | 59,251 | |||||||
Amount due from equity accounted investee | 597 | 925 | 653 | |||||||
Derivative financial assets | 12 | 3,575 | 10,117 | 8,974 | ||||||
Cash and cash equivalents | 9 | 18,030 | 25,525 | 21,401 | ||||||
264,571 | 228,612 | 248,779 | ||||||||
Current liabilities | ||||||||||
Trade and other payables | (85,510) | (59,532) | (80,995) | |||||||
Bank overdraft | 9 | (85,388) | (81,702) | (58,074) | ||||||
Term loan | (6,000) | (4,500) | (6,000) | |||||||
Income tax payable | (9,171) | (5,743) | (10,327) | |||||||
Provisions for liabilities and charges | (756) | - | (915) | |||||||
Derivative financial liabilities | 12 | (718) | (1,228) | (616) | ||||||
(187,543) | (152,705) | (156,927) | ||||||||
Non-current liabilities | ||||||||||
Deferred tax liability | (1,767) | (62) | (2,349) | |||||||
Provisions for liabilities and charges | - | - | (2,002) | |||||||
Term loan | (49,500) | (55,500) | (52,500) | |||||||
(51,267) | (55,562) | (56,851) | ||||||||
Net assets | 207,765 | 185,886 | 210,544 | |||||||
Equity | ||||||||||
Share capital | 2,216 | 2,203 | 2,208 | |||||||
Share premium | 10,409 | 9,897 | 9,935 | |||||||
Other reserves | 1,648 | 9,912 | 6,736 | |||||||
Translation reserve | 6,841 | 5,242 | 7,891 | |||||||
Retained earnings | 186,651 | 158,632 | 183,774 | |||||||
Total equity | 207,765 | 185,886 | 210,544 | |||||||
Condensed Group Cash Flow Statement
For the 28 weeks ended 12 August 2017
Unaudited 28 weeks ended 12 August 2017 | Unaudited 28 weeks ended 13 August 2016 | Audited 52 weeks ended 28 January 2017 | |||
£'000 | £'000 | £'000 | |||
Cash generated from operations | |||||
Profit for the period | 19,277 | 16,318 | 46,568 | ||
Adjusted for: | |||||
Income tax expense | 6,021 | 5,153 | 14,703 | ||
Depreciation and amortisation | 12,285 | 10,559 | 20,966 | ||
Loss on disposal of property, plant & equipment | 2 | 22 | 416 | ||
Share-based payments charges | 943 | 1,039 | 1,839 | ||
Net finance expenses | 1,182 | 307 | 1,776 | ||
Net change in derivative financial assets and liabilities carried at fair value through profit or loss | (758) | 985 | 677 | ||
Share of profit in joint venture | (191) | (260) | (550) | ||
Decrease in non-current prepayments | 33 | 31 | 59 | ||
Increase in inventories | (18,906) | (6,608) | (27,128) | ||
Increase in trade and other receivables | (6,541) | (14,193) | (16,335) | ||
Increase in trade and other payables | 4,842 | 243 | 20,392 | ||
(Decrease)/increase in provisions for liabilities and charges | (2,161) | - | 2,917 | ||
Interest paid | (1,548) | (1,389) | (2,886) | ||
Income taxes paid | (6,346) | (8,705) | (10,644) | ||
Net cash generated from operating activities | 8,134 | 3,502 | 52,770 | ||
Cash flow from investing activities | |||||
Purchases of property, plant & equipment and intangibles | (19,101) | (21,460) | (43,753) | ||
Proceeds from sale of property, plant & equipment | - | - | 93 | ||
Interest received | 25 | 13 | 15 | ||
Dividends received from joint venture | - | - | 294 | ||
Net cash from investing activities | (19,076) | (21,447) | (43,351) | ||
Cash flow from financing activities | |||||
Repayment of term loan | (3,000) | - | (1,500) | ||
Dividends paid | (17,176) | (15,215) | (21,736) | ||
Proceeds from issue of shares | 482 | 284 | 327 | ||
Net cash from financing activities | (19,694) | (14,931) | (22,909) | ||
Net decrease in cash and cash equivalents | (30,636) | (32,876) | (13,490) | ||
Cash and cash equivalents at the beginning of the period | (36,673) | (24,574) | (24,574) | ||
Exchange rate movement | (49) | 1,273 | 1,391 | ||
Net cash and cash equivalents at the end of the period | (67,358) | (56,177) | (36,673) | ||
Cash and cash equivalents at the end of the period | 18,030 | 25,525 | 21,401 | ||
Bank overdraft at the end of the period | (85,388) | (81,702) | (58,074) | ||
Net cash and cash equivalents at the end of the period | (67,358) | (56,177) | (36,673) |
Notes to the Condensed Interim Financial Statements
For the 28 weeks ended 12 August 2017
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 12 August 2017 comprise the Company and its subsidiaries (together referred to as the 'Group').
The Group financial statements as at, and for the 52 weeks ended 28 January 2017 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 or atwww.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 28 January 2017. These interim financial statements were approved by the Board of Directors on 10 October 2017.
The comparative figures for the 52 weeks ended 28 January 2017 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 28 January 2017, approved by the Board on 23 March 2017, 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 27 January 2018.
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. Significantaccounting policies
The accounting policies adopted in these interim financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the 52 weeks ended 28 January 2017. Adoption of amendments to published standards and interpretations effective for the Group for the 28 weeks ended 12 August 2017 have had no significant impact on the financial position and performance of the Group.
2. Segment information
Segment revenue and segment result
Unaudited - 28 weeks ended 12 August 2017 | Retail | Wholesale | Licensing | Total |
£'000 | £'000 | £'000 | £'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 income/(costs) | - | - | - | 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 |
Unaudited - 28 weeks ended 13 August 2016 | Retail | Wholesale | Licensing | Total |
£'000 | £'000 | £'000 | £'000 | |
Revenue | 191,070 | 68,390 | - | 259,460 |
Cost of sales | (65,700) | (40,987) | - | (106,687) |
Gross profit | 125,370 | 27,403 | - | 152,773 |
Operating costs | (100,808) | - | - | (100,808) |
Operating contribution | 24,562 | 27,403 | - | 51,965 |
Licence income | - | - | 7,904 | 7,904 |
Segment result | 24,562 | 27,403 | 7,904 | 59,869 |
Reconciliation of segment result to profit before tax | ||||
Segment result | 24,562 | 27,403 | 7,904 | 59,869 |
Other operating costs | - | - | - | (38,476) |
Exceptional income / (costs) | - | - | - | - |
Other operating income | - | - | - | 125 |
Operating profit | 21,518 | |||
Net finance expense | - | - | - | (307) |
Share of profit of jointly controlled entity, net of tax | - | - | - | 260 |
Profit before tax | 21,471 | |||
Capital expenditure | 12,087 | 327 | - | 12,414 |
Unallocated capital expenditure | - | - | - | 9,046 |
Total capital expenditure | 21,460 | |||
Depreciation and amortisation | 8,378 | 190 | - | 8,568 |
Unallocated depreciation and amortisation | - | - | - | 1,991 |
Total depreciation and amortisation | 10,559 | |||
Segment assets | 204,366 | 80,527 | - | 284,893 |
Deferred tax assets | - | - | - | 7,639 |
Derivative financial assets | - | - | - | 10,117 |
Intangible assets - head office | - | - | - | 17,559 |
Plant, property and equipment - head office | - | - | - | 70,693 |
Other assets | - | - | - | 3,252 |
Total assets | 394,153 | |||
Segment liabilities | (104,006) | (37,228) | - | (141,234) |
Income tax payable | - | - | - | (5,743) |
Term loan | - | - | - | (60,000) |
Other liabilities | - | - | - | (1,290) |
Total liabilities | (208,267) | |||
Net assets | 185,886 |
Audited - 52 weeks ended 28 January 2017 | Retail | Wholesale | Licensing | Total |
£'000 | £'000 | £'000 | £'000 | |
Revenue | 400,724 | 130,262 | - | 530,986 |
Cost of sales | (135,704) | (71,553) | - | (207,257) |
Gross profit | 265,020 | 58,709 | - | 323,729 |
Operating costs | (203,253) | - | - | (203,253) |
Operating contribution | 61,767 | 58,709 | - | 120,476 |
Licence income | - | - | 18,237 | 18,237 |
Segment result | 61,767 | 58,709 | 18,237 | 138,713 |
Reconciliation of segment result to profit before tax | ||||
Segment result | 61,767 | 58,709 | 18,237 | 138,713 |
Other operating costs | - | - | - | (70,558) |
Exceptional income / (costs) | - | - | - | (4,513) |
Other operating expense | - | - | - | (1,145) |
Operating profit | - | - | - | 62,497 |
Net finance expense | - | - | - | (1,776) |
Share of profit of jointly controlled entity, net of tax | - | - | - | 550 |
Profit before tax | - | - | - | 61,271 |
Capital expenditure | 21,358 | 411 | - | 21,769 |
Unallocated capital expenditure | - | - | - | 21,985 |
Total capital expenditure | - | - | - | 43,754 |
Depreciation and amortisation | 16,588 | 397 | - | 16,985 |
Unallocated depreciation and amortisation | - | - | - | 3,981 |
Total depreciation and amortisation | - | - | - | 20,966 |
Segment assets | 225,632 | 83,161 | - | 308,793 |
Deferred tax assets | - | - | - | 4,446 |
Derivative financial assets | - | - | - | 8,974 |
Intangible assets - head office | - | - | - | 21,718 |
Property, plant and equipment - head office | - | - | - | 77,440 |
Other assets | - | - | - | 2,951 |
Total assets | - | - | - | 424,322 |
Segment liabilities | (104,953) | (34,116) | - | (139,069) |
Income tax payable | - | - | - | (10,327) |
Provisions for liabilities and charges | - | - | - | (2,917) |
Term loan | - | - | - | (58,500) |
Other liabilities | - | - | - | (2,965) |
Total liabilities | - | - | - | (213,778) |
Net assets | - | - | - | 210,544 |
3. Exceptional income and expenses
The directors believe that the profit before exceptional items and the 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 income in the 28 weeks ended 12 August 2017 of £1.1m related to the release of the provision for the Group's legacy warehouses following assignment of the leases.
There were no exceptional items in the 28 weeks ended 13 August 2016.
Exceptional costs in the 52 weeks ended 28 January 2017 of £4.5m included a provision for lease commitments relating to the Group's legacy warehouses of £2.9m along with £0.7m of other closure costs and £0.9m in respect of closure costs for a concept store in London.
4. Finance income and expenses
Unaudited | Unaudited | Audited | ||||
28 weeks ended 12 August 2017 | 28 weeks ended 13 August 2016 | 52 weeks ended 28 January 2017 | ||||
£'000 | £'000 | £'000 | ||||
Finance income | ||||||
- Interest receivable | 25 | 13 | 15 | |||
- Foreign exchange gains | 459 | 1,252 | 1,582 | |||
484 | 1,265 | 1,597 | ||||
Finance expenses | ||||||
- Interest payable | (1,656) | (1,518) | (2,933) | |||
- Foreign exchange losses | (10) | (54) | (440) | |||
(1,666) | (1,572) | (3,373) |
5. Earnings per share
Unaudited | Unaudited | Audited | ||||
28 weeks ended 12 August 2017 | 28 weeks ended 13 August 2016 | 52 weeks ended 28 January 2017 | ||||
Number of shares: | No. | No. | No. | |||
Weighted number of ordinary shares outstanding | 44,226,509 | 43,986,705 | 44,034,459 | |||
Effect of dilutive options | 501,764 | 631,423 | 516,310 | |||
Weighted number of ordinary shares outstanding - diluted | 44,728,273 | 44,618,128 | 44,550,769 | |||
Earnings: | £'000 | £'000 | £'000 | |||
Profit for the period - basic and diluted | 19,277 | 16,318 | 46,568 | |||
Profit for the period - adjusted* | 18,433 | 16,318 | 50,178 | |||
Basic earnings per share | 43.6p | 37.1p | 105.7p | |||
Adjusted earnings per share* | 41.7p | 37.1p | 114.0p | |||
Diluted earnings per share | 43.1p | 36.6p | 104.5p | |||
Adjusted diluted earnings per share* | 41.2p | 36.6p | 112.6p |
*Adjusted profit for the period and adjusted earnings per share are shown before exceptional income (net of tax) of £0.8m (28 weeks ended 13 August 2016: £Nil, 52 weeks ended 28 January 2017: Exceptional costs of £3.6m).
6. Dividends per share
Unaudited | Unaudited | Audited | ||||
28 weeks ended 12 August 2017 | 28 weeks ended 13 August 2016 | 52 weeks ended 28 January 2017 | ||||
£'000 | £'000 | £'000 | ||||
Final dividend paid for the prior year of 38.8p per ordinary share (2016: 34.6p) | 17,176 | 15,215 | 15,215 | |||
Interim dividend paid 2017: Nil (2016: Nil) | - | - | 6,521 | |||
17,176 | 15,215 | 21,736 | ||||
The Board has declared an interim dividend of 16.6p per share (2016:14.8p) payable on 17 November 2017 to shareholders on the register at 20 October 2017.
7. Income tax expense
The Group's full year forecast effective tax rate in respect of continuing operations for the 28 weeks ended 12 August 2017 is 23.8% (28 weeks ended 13 August 2016: 24.0%, 52 weeks ended 28 January 2017: 24.0%).
This effective tax rate is higher than the UK corporation tax rate for the period of 19.16% 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 2017, the UK corporation tax rate reduced to 19% and there will be a further reduction to 17% from 1 April 2020.
Our future effective tax rate is expected to remain higher than 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 annual general meeting held on 20 June 2013. A fifth award of options was granted under the LTIP 2013 on 6 April 2017. The options will be 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 vestsis linked to the level of profit growth achieved.
The terms and conditions of the LTIP 2013 awards made during the 28 weeks ended 12 August 2017 are as follows:
Grant date | Type of award | Number of shares | Vesting conditions | Vesting period |
6 April 2017 | LTIP 2013 | 221,234 | Profit before tax per share growth of 10-15% per annum and 10% share price growth over the vesting period | Up to 100% after 3 years |
The charge to the income statement for the 28 weeks ended 12 August 2017 for LTIP 2013 awards amounted to £743,402 (28 weeks ended 13 August 2016: £869,170, 52 weeks ended 28 January 2017: £1,505,000). Included in the charge for the period is an amount in respect of R S Kelvin, who is employed by the Company, amounting to £97,234 (28 weeks ended 13 August 2016: £134,622, 52 weeks ended 28 January 2017: £219,000).
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 | 1,849.0p - 2,855.0p |
Share price at grant (based on 3-6 month average) for share price performance condition | 2,103.0p - 2,744.0p |
Risk free interest rate | 0.18% - 1.18% |
Expected life of options | 3 years |
Share price volatility | 29.0%-32.89% |
Dividend yield | 1.41% - 2.02% |
9. Reconciliation of cash and cash equivalents per balance sheet to the cash flow statement
Unaudited | Unaudited | Audited | ||||
12 August 2017 | 13 August 2016 | 28 January 2017 | ||||
£'000 | £'000 | £'000 | ||||
Cash and cash equivalents per cash flow statement | 18,030 | 25,525 | 21,401 | |||
Bank overdraft per balance sheet | (85,388) | (81,702) | (58,074) | |||
Cash and cash equivalents per cash flow statement | (67,358) | (56,177) | (36,673) | |||
During the period, the Group agreed an extension of its multi-currency revolving credit facility. A new agreement was signed on 25 September 2017, increasing the Group's committed borrowing facility from £110.0m to £135.0m expiring in September 2020. The new borrowing is on the same terms and contains the same covenants as the previous facility which are appropriate to the Group and will be tested on a quarterly basis.
10. Intangible assets
Intangible asset additions during the period were £7.0m (13 August 2016: £4.3m, 28 January 2017: £9.3m) in relation to the Microsoft Dynamics AX system, investment in other business wide systems to support the long term development of the business and further development of our e-commerce platforms.
11. Property, plant and equipment
Property, plant and equipment asset additions during the period were £12.4m (13 August 2016: £17.2m, 28 January 2017: £34.4m) primarily in relation to store refurbishments and openings.
12. Financial Instruments
The Group held certain financial instruments at fair value at 12 August 2017. The definitions and valuation techniques employed for these as at 12 August 2017 are consistent with those used at 28 January 2017 and disclosed in Note 23 on pages 114 to 121 of the 2017 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 28 January 2017, 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 12 August 2017 £'000 | Unaudited 13 August 2016 £'000 | Audited 28 January 2017 £'000 | |
Assets at fair value: | |||
Currency derivatives | 3,575 | 10,117 | 8,974 |
Liabilities at fair value: | |||
Currency derivatives | (418) | (1,228) | (550) |
Interest rate swap | (300) | - | (66) |
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 35.3% (13 August 2016: 35.5%) of the voting shares of the Company.
At 12 August 2017, the main trading company owed the parent company £37,013,000 (13 August 2016: £31,968,000) and one of its subsidiaries £Nil (13 August 2016: £1,367,000). The main trading company was owed £142,141,000 (13 August 2016: £131,311,000) 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 12 August 2017, the joint venture owed £596,000 to the main trading company (13 August 2016: £925,000). The value of sales made to the joint venture by the Group in the period was £1,465,000 (13 August 2016: £1,519,000).
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 20 to 22 of the Ted Baker Annual Report and Accounts for the 52 weeks ended 28 January 2017, a copy of which is available on the 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 year end and remain relevant for the second half of the financial year:
Strategic Risks |
· Reputational risk to our brand as a result of our actions or those of our partners; · Failure in growing the international business through franchise operations, licencees 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 affecting our supply chain, customers and partners, risking an increase in our cost base and adversely affecting our revenue; 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; |
· Operational problems affecting the infrastructure of our business; |
· Failure to operate in a sustainable and responsible manner; |
· IT security breach and loss of controlled data; |
· 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 Reportingas 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 28 January 2017. 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
10 October 2017 10 October 2017
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.
INDEPENDENT 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 12 August 2017 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 12 August 2017 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reportingas 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 Entityissued 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.
Sarah Rolls
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
10 October 2017
Ted Baker plc published this content on 10 October 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 10 October 2017 06:09:02 UTC.
Original documenthttp://otp.investis.com/clients/uk/ted_baker/rns/regulatory-story.aspx?cid=898&newsid=938082
Public permalinkhttp://www.publicnow.com/view/86F80B65428C34FF21CAE81444592A1C29AAC670
