Source - RNS
RNS Number : 1686M
Ted Baker PLC
11 October 2016
 

                                                                                               

Ted Baker Plc

("Ted Baker", the "Group")

 

Interim Results Announcement for the 28 weeks ended 13 August 2016

 

'Good performance across all channels despite challenging trading conditions'

 

 

 

 

Highlights

28 weeks

ended

13 August

2016

28 weeks

ended

15 August

2015

Change

Group Revenue

£259.5m

£226.8m

14.4%

Profit Before Tax

£21.5m

£17.8m

20.5%

Basic EPS

37.1p

29.8p

24.5%

Interim Dividend

14.8p

13.2p

12.1%

 

·    Group revenue up 14.4% (10.7% in constant currency) to £259.5m

·    Retail sales including e-commerce up 13.6% (9.6% in constant currency)

·    UK and Europe retail sales up 8.5% (6.7% in constant currency) to £131.2m

·    North America retail sales up 28.7% (18.8% in constant currency) to £51.1m

·    Asia retail sales up 15.8% (6.5% in constant currency) to £8.8m

·    E-commerce sales up 29.7% (28.0% in constant currency) to £29.7m

·    Planned expansion continued with:

·    Two new stores in the US, one new store in each of Canada and China, and one new outlet in Canada

·    Further concessions with leading department stores across the UK, Europe, and Asia

·    Licensee store openings in Azerbaijan, Egypt, Mexico, South Africa, Taiwan and Vietnam

·    Wholesale sales up 16.7% (13.7% in constant currency) to £68.4m

·    Licence income up 23.2% to £7.9m

 

 

 

 

Commenting, Ray Kelvin CBE, Founder and Chief Executive, said:

 

'Ted Baker continues to perform well across all distribution channels despite challenging trading conditions across our markets. Our continued growth and development reflects the strength of the Ted Baker brand, our business model and the skill, innovation and passion of our global teams.

 

We remain firmly focused on the long-term development of the Ted Baker brand and are continuing to invest in our infrastructure and people to support the future growth of our business in both new and existing markets.'

 

This announcement contains inside information.

 

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

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 470 stores, concessions and outlets worldwide comprising: 186 in the UK; 97 in continental Europe; 106 in North America; 72 in the Middle East, Asia and Africa; and 9 in Australasia.

 

We offer a wide range of collections including: Menswear; Womenswear; Phormal; Endurance; Accessories; Audio; 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 a good performance for the first half of the year across all channels despite challenging external trading conditions, reflecting the strength of the Ted Baker brand and our business model. This resulted in a 14.4% (10.7% in constant currency) increase in Group revenue for the 28 weeks ended 13 August 2016 (the "period") to £259.5m (2015: £226.8m) and a 20.5% increase in profit before tax to £21.5m (2015: £17.8m).

 

The retail channel performed well, with retail sales including e-commerce up 13.6% to £191.1m (9.6% in constant currency) on a 9.7% increase in average retail square footage.  Our e-commerce business is an integral and increasingly important component within our retail proposition and has performed very well, delivering sales growth of 29.7%. Geographic expansion continued with store openings across all territories. We continue to invest to develop brand awareness in newer markets.

 

Wholesale sales increased by 16.7% (13.7% in constant currency) to £68.4m with a good performance from our UK business and a strong performance from our North American business.

 

Licence income increased by 23.2% to £7.9m as both our product and territorial licences continued to perform well. During the period, our existing licence partners opened further stores in Azerbaijan, Egypt, Mexico and Taiwan. We also opened new licence partner stores in South Africa and Vietnam and are encouraged by their performance at this early stage.

 

In September 2016, we successfully launched the Microsoft Dynamics AX system across our North American business. We will continue the roll-out to our other territories over the current year and early next year, which will allow us to enhance efficiency, to streamline our operations and to support the evolution of the business.  

 

In October 2016, we took our first delivery of inventory into our new distribution facility in the UK. Over the coming months, we will transition operations from our three current   distribution centres into this facility. This will become our European distribution centre handling all operations for our retail (including e-commerce) and wholesale business across the UK and Europe, supporting our long term growth strategy.

 

Financial Results

Group revenue increased by 14.4% (10.7% in constant currency) to £259.5m (2015: £226.8m) for the 28 weeks ended 13 August 2016. The composite gross margin increased to 58.9% (2015: 57.6%), mainly due to an increase in the retail gross margin.  

 

Distribution costs, which comprise the cost of retail operations and distribution centres increased by 22.7% (17.7% in constant currency) to £103.7m (2015: £84.6m). As a percentage of sales they increased to 40.0% (2015: 37.3%) due to the dual running costs arising from our new European distribution centre.

 

Administrative expenses, including the performance-related bonus provision and dual system running costs, increased by 5.4% (4.1% in constant currency). Excluding the employee performance related bonus provision of £0.0m (2015: £1.4m), administrative expenses increased by 9.9% (8.7% in constant currency) to £35.5m (2015: £32.3m) and as a percentage of sales decreased to 13.7% (2015: 14.2%).

 

Dual running costs incurred in respect of our new distribution centre and the systems roll-out were £2.0m in the first half of the year.  We would expect to incur similar costs in the second half of the year.

 

The net foreign exchange gain during the period of £1.2m (2015: loss of £0.7m) was due to the translation of monetary assets and liabilities denominated in foreign currencies following the devaluation of sterling that followed the UK's EU referendum result.

 

Net interest payable during the period was £1.5m (2015: £0.6m). The increase was largely due to the interest payable on the term loan that financed the acquisition of the freehold of the Ugly Brown Building in January 2016.

 

Profit before tax increased by 20.5% to £21.5m (2015: £17.8m). This profit growth was in part aided by foreign exchange gains of £1.2m (2015: loss of £0.7m). Basic earnings per share increased by 24.5% to 37.1p (2015: 29.8p).

 

The effective tax rate of 24.0% (2016 full year effective rate: 24.6%) is higher than the UK corporation tax rate for the period of 20%, 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 2015, the UK corporation tax rate fell from 21% to 20% and further reductions to 19% from 1 April 2017 and to 17% from 1 April 2020 have been substantively enacted.

 

The net decrease in cash and cash equivalents of £32.9m (2015: £34.7m) primarily reflected an increase in working capital and further capital expenditure to support our long-term development.

 

Total working capital, which comprises inventories, trade and other receivables and trade and other payables, increased by £18.2m to £132.5m (2015: £114.3m). This was mainly driven by an increase in inventories of £20.6m to £135.6m (2015: £115.0m) reflecting the growth of our business, stock on hand for our wholesale customers and licence partners, and some earlier phasing of stock deliveries between the first and second half of the year.

 

The increase in trade and other receivables of £12.5m to £56.4m (2015: £43.9m) was driven by the growth in our wholesale business and the impact of foreign exchange rates on the translation of overseas subsidiaries. Trade and other payables increased by £14.9m to £59.5m (2015: £44.6m) as a consequence of the timing of stock intake and other payments as well as the foreign exchange impact explained above.

 

Capital expenditure of £21.5m (2015: £17.7m) comprises the costs of opening and refurbishing stores, concessions and outlets. It also reflects the initial phases of the fit-out of our new European distribution centre as well as 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 £45m, subject to the timing of planned openings in the early stages of next year.

 

Borrowing Facilities

During the period, the Group agreed an extension of its multi-currency revolving credit facility with the Royal Bank of Scotland and Barclays. A new agreement was signed on 31 May 2016 which increased the Group's committed borrowing facility from £85m to £110m expiring in March 2018.

 

This increased facility provides the resources to fund the planned capital expenditure 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 14.8p (2015: 13.2p), representing an increase of 12.1%, which will be payable on 18 November 2016 to shareholders on the register at the close of business on 21 October 2016.

 

People

The performance in the period is testament to our talented teams across the world, whose commitment and passion are 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 develop Ted Baker as a global lifestyle brand.

 

 

 

Global Group Performance

 

 

28 weeks ended

13 August 2016

28 weeks ended

15 August 2015

Variance

Constant currency variance

Group

Revenue

£259.5m

£226.8m

14.4%

10.7%

 

Gross Margin

58.9%

57.6%

+130bps

 

 

Operating contribution*

8.3%

8.3%

-

 

 

Profit before tax as a % of revenue

8.3%

7.9%

+40bps

 

Retail

Revenue

£191.1m

£168.2m

13.6%

9.6%

 

Gross Margin

65.6%

64.0%

+160bps

 

 

Average square footage**

381,441

347,793

9.7%

 

 

Closing square footage**

387,086

355,324

8.9%

 

 

Sales per square foot***

£423

£418

1.2%

(2.7%)

Wholesale

Revenue

£68.4m

£58.6m

16.7%

13.7%

 

Gross margin

40.1%

39.2%

90bps

 

Licence income

Revenue

£7.9m

£6.4m

23.2%

 

*Operating contribution is defined as operating profit before exceptional items as a percentage of revenue.

**Excludes license partner stores

*** Excludes e-commerce sales

 

 

 

Retail

Our retail channel comprises stores, concessions and e-commerce, which is now an integral part of our retail experience. We operate stores and concessions across the UK, Europe, North America and Asia as well as localised e-commerce sites in the UK, continental Europe, US, Canada and Australia. We also have e-commerce businesses with some of our concession partners.

 

Retail sales were up 13.6% (9.6% in constant currency) to £191.1m (2015: £168.2m), despite a challenging trading environment across all of our markets.  This growth was driven by continued investment in new stores and a strong e-commerce performance, where sales grew 29.7% to £29.7m (2015: £22.9m) and represented 15.5% (2015: 13.6%) of total retail sales.  We have continued to develop our retail proposition with continued investment in each of our e-commerce sites, aiming to provide a more relevant customer experience through improved design, performance and personalised content. We also launched our first language specific site in Germany and have been very pleased with its performance.  Average retail square footage increased by 9.7% to 381,441 sq ft (2015: 347,793 sq ft) and retail sales per square foot increased 1.2% (decrease of 2.7% in constant currency) to £423 (2015: £418).

 

The retail gross margin increased to 65.6% (2015: 64.0%) driven primarily by an improved full price sell through.

 

Retail operating costs increased by 20.6% (15.6% in constant currency) to £100.8m (2015: £83.6m), and as a percentage of retail sales increased to 52.8% (2015: 49.7%).  As anticipated, an element of the increase in retail operating costs is due to dual running costs as a result of the new European distribution centre, but also included some store pre-opening costs in our North American market.


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 16.7% (13.7% in constant currency) to £68.4m (2015: £58.6m) reflecting a good performance from our UK business and a strong result from our North American business.

 

The wholesale gross margin increased to 40.1% (2015: 39.2%). This was largely due to a proportionate increase in sales to our trustees, which carry a higher margin.

 

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, in some territories, wholesale operations. Our product licences cover Audio, 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 23.2% to £7.9m (2015: £6.4m) with both product and territorial licences performing well. There were notable performances from our product licensees in Childrenswear, Eyewear, Footwear and Suiting. In July 2016, we opened our first store in Vietnam with our new licence partner Maison, and in August 2016, we opened our first store in South Africa with our new licence partner Stuttafords. We are encouraged by their performance to date. An additional store opening is planned in South Africa for later in the year.

 

Collections

Ted Baker Womenswear performed well with sales up 13.8% to £148.9m (2015: £130.9m). Ted Baker Menswear delivered a good performance with sales increasing 15.3% to £110.6m (2015: £95.9m). We are pleased with the positive reactions to the collections both in the UK and internationally.

 

Womenswear represented 57.4% of total sales (2015: 57.7%) during the period and Menswear represented 42.6% of total sales (2015: 42.3%), which is broadly representative of the division in retail selling space.

 

 

 

 

Geographic Performance

 

United Kingdom & Europe

 

28 weeks

ended

13 August

2016

28 weeks

ended

15 August

2015

Variance

Constant currency variance

Retail Revenue*

£131.2m

£120.9m

8.5%

6.7%

Average square footage*

245,377

233,435

5.1%

-

Closing square footage*

247,088

235,633

4.9%

-

Sales per square foot**

£432

£432

-

(2.0%)

Wholesale revenue

£46.6m

£43.9m

6.2%

6.2%

Own stores

38

37

1

-

Concessions

229

218

11

-

Outlets

13

12

1

-

Partner stores

3

3

-

-

Total

283

270

13

-

*Excludes licence partner stores

** Excludes e-commerce sales

 

Retail sales in the period in the UK and Europe increased 8.5% (6.7% in constant currency) to £131.2m (2015: £120.9m) despite tough trading conditions and recent events in northern Europe. 

 

E-commerce sales increased by 26.5% to £25.3m (2015: £20.0m) further demonstrating how e-commerce sales are an integral part of the retail proposition in the UK and European markets. We launched our first language specific site in Germany and are very pleased with its performance.

 

As a percentage of UK and Europe retail sales, e-commerce sales represent 19.3% (2015: 16.5%).

                                                                       

During the period, we opened further concessions with premium department stores in the UK, France, Germany and Spain. We are pleased with their performance and remain positive about growth opportunities for our brand in these markets.

 

Sales from our UK wholesale business increased 6.2% to £46.6m (2015: £43.9m). This reflected a good performance from sales to trustees, including our wholesale export business and the supply of product to our retail licence partners.

 

 

 

 

North America

 

28 weeks

ended

13 August

2016

28 weeks

ended

15 August

2015

Variance

Constant currency variance

Retail Revenue*

£51.1m

£39.7m

28.7%

18.8%

Average square footage*

107,692

89,405

20.5%

 

Closing square footage*

112,317

92,585

21.3%

 

Sales per square foot**

£434

£412

5.3%

(2.9%)

Wholesale revenue

£21.8m

£14.6m

49.3%

36.6%

Own stores

28

21

7

-

Concessions

55

51

4

-

Outlets

11

6

5

-

Partner stores

12

1

11

-

Total

106

79

27

-

*Excludes licence partner stores

** Excludes e-commerce sales

 

We continue to be pleased with our progress across the retail and wholesale channels in North America, despite well documented challenges facing the North American retail market, which has seen increased levels of promotional activity and a fall in tourism. This has resulted in a challenging environment for not only our stores but also for our key trading partners. However, 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 28.7% (18.8% in constant currency) to £51.1m (2015: £39.7m) driven by our continued expansion. In the period, we opened two new stores in each of New York and Seattle, and a new store in Ottawa and an outlet in Vancouver.  We also opened a further five concessions in Mexico with our licence partner.

 

Our e-commerce business delivered a strong performance with sales increasing by 51.7% (43.7% constant currency) to £4.4m (2015: £2.9m). As a percentage of North America retail sales, e-commerce sales represent 8.6% (2015: 7.1%).

 

Sales from our North American wholesale business increased by 49.3% (36.6% in constant currency), to £21.8m (2015: £14.6m) reflecting the increased brand recognition in this territory. 

 

 

 

Middle East, Asia, Africa & Australasia

 

28 weeks

ended

13 August

2016

28 weeks

ended

15 August

2015

Variance

Constant currency variance

Retail Revenue

£8.8m

£7.6m

15.8%

6.5%

Average square footage

28,372

24,953

13.7%

 

Closing square footage

27,681

27,106

2.1%

 

Sales per square foot

£310

£306

1.3%

(6.4%)

Own stores

8

8

-

-

Concessions

10

8

2

-

Outlets

3

3

-

-

Partner stores

60

48

12

-

Total

81

67

14

-

 

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. However, as has been widely reported, the trading environment continues to be challenging. Retail sales in Asia increased 15.8% (6.5% in constant currency) to £8.8m (2015: £7.6m). During the period, we opened a store in Beijing and concessions in China and Japan. We closed a store in Hong Kong in July 2016 which will be relocated in the second half of the financial year.

 

Our licensed stores across the Middle East, Asia and Africa continued to perform well. Our existing licence partners opened new stores in Azerbaijan, Egypt, and Taiwan and we opened stores with new licence partners in South Africa and Vietnam during the period. As at 13 August 2016, we operated a total of 51 partner stores (2015: 41).

 

The joint venture with our Australian licence partner, Flair Industries Pty Ltd, continues to perform well. As at 13 August 2016, we operated 9 stores in Australasia (2015: 7 stores).

 

 

 

Current Trading and Outlook

 

Retail

We are pleased with the reaction to our Autumn/Winter collections, however, on-going external factors impacting trading across our established markets have meant that conditions remain challenging.

 

In the UK and Europe, we have continued our expansion with concession openings in the UK and Germany. We plan to open an outlet in Spain, and further concessions in the UK, France, Germany and Spain later this year.

 

In North America, we have continued our expansion with the relocation of our New York Soho store and the opening of a new store in Calgary. We remain focused on developing our presence further in this market with plans to open a new store in Atlanta and an additional store in Miami.

 

In Asia, we have opened two further concessions in Japan and a concession in China. Later in the year we will relocate one of our Hong Kong stores and open further concessions in China. We have closed a store in Japan in anticipation of its relocation next financial year.

 

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 would expect low double-digit sales growth (in constant currency) for the full year.

 

Licence Income

Our product and territorial licences continue to perform well, with further store openings in Dubai and Mexico and we also plan to open further stores in Bahrain, Indonesia, Saudi Arabia and South Africa. We have signed a new territorial licence agreement with a partner in India and plan to open stores in the next financial year.

 

Outlook

The Group continues to perform well despite challenging trading conditions and we remain focused on the long-term development of Ted Baker as a global lifestyle brand. We continue to invest in infrastructure and people to support the future growth of our business in new and existing markets.

 

Whilst the Group has had a good start to the financial year, our results for the full year will, as always, be dependent on the second half trading period. Underpinned by the strength of the Ted Baker brand, our business model and balanced distribution channels, we remain confident of delivering continued growth and development.

 

Despite the challenging conditions, the Board is confident of making further progress for the full year and 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

11 October 2016

 

 

 

Condensed Group Income Statement

For the 28 weeks ended 13 August 2016

 

 

 

 

 

 

 

 

 

Unaudited 28 weeks

ended

13 August

2016

 

 

Unaudited

28 weeks

ended

15 August

2015

 

 

Audited

52 weeks ended

30 January

2016

 

 

Note

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

Revenue

2

259,460

 

226,755

 

456,169

 

Cost of sales

2

(106,687)

 

(96,148)

 

(183,147)

 

Gross profit

2

152,773

 

130,607

 

273,022

 

 

 

 

 

 

 

 

 

Distribution costs

 

(103,744)

 

(84,568)

 

(169,762)

 Administrative expenses

 

(35,540)

 

(33,727)

 

(57,435)

 

Licence income

 

7,904

 

6,413

 

14,384

Other operating income

 

125

 

83

 

(840)

 

Operating profit

2

21,518

 

18,808

 

59,369

 

 

 

 

 

 

 

 

 

Finance income

3

1,265

 

22

 

531

 

Finance expenses

3

(1,572)

 

(1,338)

 

(1,931)

 

Share of profit of jointly controlled entity, net of tax

 

260

 

323

 

695

 

Profit before tax

2

21,471

 

17,815

 

58,664

 

 

 

 

 

 

 

 

 

Income tax expense

6

(5,153)

 

(4,721)

 

(14,429)

 

Profit for the period

 

16,318

 

13,094

 

44,235

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share

4

 

 

 

 

 

 

Basic

 

37.1p

 

29.8p

 

100.6p

 

Diluted

 

 

36.6p

 

29.4p

 

99.3p

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                 

 

 

 

Condensed Group Statement of Comprehensive Income

For the 28 weeks ended 13 August 2016

 

 

 

Unaudited 28 weeks

ended

13 August

2016

 

Unaudited

28 weeks

ended

15 August

2015

 

Audited

52 weeks ended

30 January

2016

 

£'000

£'000

£'000

 

 

 

 

Profit for the period

16,318

13,094

44,235

 

 

 

 

Other comprehensive income / (loss)

Items that may be reclassified subsequently to the income statement:

 

 

 

Net effective portion of changes in fair value of cash flow hedges

10,656

(1,886)

951

Net change in fair value of cash flow hedges transferred to profit or loss

(2,394)

(92)

(669)

Net exchange rate movement

2,931

(818)

2,599

Other comprehensive profit / (loss) for the period, net of tax

11,193

(2,796)

2,881

 

 

 

 

Total comprehensive income for the period

27,511

10,298

47,116

 

 

 

 

 

 

 

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

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 - Unaudited         

For the 28 weeks ended 15 August 2015

 

 

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 31 January 2015

2,196

9,331

1,368

(288)

127,967

140,574

Comprehensive income for the period

 

 

 

 

 

 

Profit for the period

-

-

-

-

13,094

13,094

Exchange differences on translation of foreign operations

-

-

-

(1,120)

-

(1,120)

Current tax on foreign currency translation

-

-

-

302

-

302

Effective portion of changes in fair value of cash flow hedges

-

-

(2,382)

-

-

(2,382)

Net change in fair value of cash flow hedges transferred to profit or loss

-

-

(92)

-

-

(92)

Deferred tax associated with movement in hedging reserve

-

-

496

-

-

496

Total comprehensive income for the period

-

-

(1,978)

(818)

13,094

10,298

Transactions with owners recorded directly in equity

 

 

 

 

 

 

Increase in issued share capital

2

259

-

-

-

261

Share based payments charges

-

-

-

-

1,026

1,026

Movement on current and deferred tax on share-based payments

-

-

-

-

1,715

1,715

Dividends paid

-

-

-

-

(12,739)

(12,739)

Total transactions with owners

2

259

-

-

(9,998)

(9,737)

Balance at 15 August 2015

2,198

9,590

(610)

(1,106)

131,063

141,135

 

 

 

 

 

Condensed Group Statement of Changes in Equity - Audited

For the 52 weeks ended 30 January 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 31 January 2015

2,196

9,331

1,368

(288)

127,967

140,574

 

Comprehensive income for the period

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

44,235

44,235

 

Exchange differences on translation of foreign operations

-

-

-

3,242

-

3,242

 

Current tax on foreign currency translation

-

-

-

(643)

-

(643)

 

Effective portion of changes in fair value of cash flow hedges

-

-

996

-

-

996

 

Net change in fair value of cash flow hedges transferred to profit or loss

-

-

(669)

-

-

(669)

 

Deferred tax associated with movement in hedging reserve

-

-

    (45)

-

-

(45)

 

Total comprehensive income for the period

-

-

282

2,599

44,235

47,116

 

Transactions with owners recorded directly in equity

 

 

 

 

 

 

 

Increase in issued share capital

3

286

-

-

289

 

Share based payments charges

-

-

-

-

2,019 

2,019

 

Movement on current and deferred tax on share based payments

-

-

-

-

1,144 

1,144

 

Dividends paid

-

-

-

-

(18,543)

(18,543)

 

Total transactions with owners

3

286

-

-

(15,380)

(15,091)

 

 

 

 

 

 

 

 

 

Balance at 30 January 2016

2,199

9,617

1,650

2,311

156,822

172,599

 

                           
 

 

 

 

Condensed Group Balance Sheet

At 13 August 2016

 

 

               

 

 

 

Unaudited

13 August 2016

 

Unaudited

15 August 2015

 

Audited

30 January 2016

 

Note

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

Intangible assets

9

20,682

 

15,447

 

17,247

Property, plant and equipment

10

134,893

 

58,222

 

123,397

Investments in equity accounted investee

 

1,901

 

1,613

 

1,641

Deferred tax assets

 

7,639

 

6,967

 

6,313

Prepayments

 

426

 

412

 

414

 

 

165,541

 

82,661

 

149,012

Current assets

 

 

 

 

 

 

Inventories

 

135,649

 

115,048

 

125,323

Trade and other receivables

 

56,396

 

43,861

 

49,303

Amount due from equity accounted investee

 

925

 

694

 

563

Derivative financial assets

11

10,117

 

1,118

 

2,850

Cash and cash equivalents

8

25,525

 

14,354

 

13,295

 

 

228,612

 

175,075

 

191,334

Current liabilities

 

 

 

 

 

 

Trade and other payables

 

(59,532)

 

(44,611)

 

(61,088)

Bank overdraft

8

(81,702)

 

(68,770)

 

(37,869)

Term loan

 

(4,500)

 

-

 

(1,500)

Income tax payable

 

(5,743)

 

(1,977)

 

(8,382)

Derivative financial liabilities

11

(1,228)

 

(1,243)

 

(352)

 

 

(152,705)

 

(116,601)

 

(109,191)

Non-current liabilities

 

 

 

 

 

 

Deferred tax liability

 

(62)

 

-

 

(56)

Term loan

 

(55,500)

 

-

 

(58,500)

 

 

(55,562)

 

-

 

(58,556)

 

 

 

 

 

 

 

Net assets

 

185,886

 

141,135

 

172,599

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Share capital

 

2,203

 

2,198

 

2,199

Share premium

 

9,897

 

9,590

 

9,617

Other reserves

 

9,912

 

(610)

 

1,650

Translation reserve

 

5,242

 

(1,106)

 

2,311

Retained earnings

 

158,632

 

131,063

 

156,822

Total equity

 

185,886

 

141,135

 

172,599

 

 

 

 

 

 

 

                     

 

 

 

 

Condensed Group Cash Flow Statement

For the 28 weeks ended 13 August 2016

 

 

Unaudited

28 weeks ended

13 August

2016

 

Unaudited

28 weeks ended

15 August

2015

 

Audited

52 weeks ended

30 January

2016

 

£'000

 

£'000

 

£'000

Cash generated from operations

 

 

 

 

 

Profit for the period

16,318

 

13,094

 

44,235

Adjusted for:

 

 

 

 

 

Income tax expense

5,153

 

4,721

 

14,429

Depreciation and amortisation

10,559

 

7,764

 

14,929

Impairment

-

 

-

 

188

Loss on disposal of property, plant & equipment

22

 

-

 

58

Share-based payments charges

1,039

 

1,026

 

2,019

Net finance expenses

307

 

1,316

 

1,400

Net change in derivative financial assets and liabilities carried at fair value through profit or loss

985

 

337

 

840

Share of profit in joint venture

(260)

 

(323)

 

(695)

Decrease in non-current prepayments

31

 

28

 

52

Increase in inventories

(6,608)

 

(4,899)

 

(12,142)

Increase in trade and other receivables

(14,193)

 

(5,706)

 

(10,805)

Increase/(decrease) in trade and other payables

243

 

(12,048)

 

1,566

Interest paid

(1,389)

 

(640)

 

(1,376)

Income taxes paid

(8,705)

 

(8,978)

 

(13,127)

Net cash generated from operating activities

3,502

 

(4,308)

 

41,571

 

 

 

 

 

 

Cash flow from investing activities

 

 

 

 

 

Purchases of property, plant & equipment and intangibles

(21,460)

 

(17,908) 

 

(89,535)

Interest received

13

 

-

 

-

Dividends received from joint venture

-

 

-

 

344

Net cash from investing activities

(21,447)

 

(17,908)

 

(89,191)

 

 

 

 

 

 

Cash flow from financing activities

 

 

 

 

 

Proceeds from term loan

-

 

-

 

60,000

Dividends paid

(15,215)

 

(12,739)

 

(18,543)

Proceeds from issue of shares

284

 

261

 

289

Net cash from financing activities

(14,931)

 

(12,478)

 

41,746

 

 

 

 

 

 

Net decrease in cash and cash equivalents

(32,876)

 

(34,694)

 

(5,874)

Cash and cash equivalents at the beginning of the period

(24,574)

 

(18,824)

 

(18,824)

Exchange rate movement

1,273

 

(898)

 

124

 

Net cash and cash equivalents at the end of the period

(56,177)

 

 

(54,416)

 

 

(24,574)

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at the end of the period

25,525

 

14,354

 

13,295

Bank overdraft at the end of the period

(81,702)

 

(68,770)

 

(37,869)

 

Net cash and cash equivalents at the end of the period

(56,177)

 

  (54,416)

 

 

(24,574)

 

 

 

 

 

 

 

 

 

Notes to the Condensed Interim Financial Statements

For the 28 weeks ended 13 August 2016

 

1.   Basis of preparation

 

a. Reporting entity

Ted Baker Plc 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, 13 August 2016 comprise the Company and its subsidiaries (together referred to as the "Group").

 

The Group financial statements as at, and for the 52 weeks ended 30 January 2016 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 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 30 January 2016. These interim financial statements were approved by the Board of Directors on 11 October 2016.

 

The comparative figures for the 52 weeks ended 30 January 2016 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditors and delivered to the registrar of companies. The report of the auditors was (i) unqualified; (ii) did not include a reference to any matters to which the auditors 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 auditors have 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 auditors 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 30 January 2016, approved by the Board on 17 March 2016, 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 28 January 2017. The impact of the economic environment in which the Group's businesses operate is considered in the Chairman's Statement.

 

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

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 30 January 2016. Adoption of amendments to published standards and interpretations effective for the Group for the 28 weeks ended 13 August 2016 have had no significant impact on the financial position and performance of the Group.

 

 

 

 

 

 

2.   Segment information

 

Segment revenue and segment result

 

 

£'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

 

 

 

 

 

 

 

 

 

 

Segment result

24,562

27,403

7,904

59,869

Other operating costs

-

-

-

(38,476)

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

 

 

 

 

 

 

 

 

Unaudited - 28 weeks ended 15 August 2015

Retail

Wholesale

Licensing

Total

 

 

 

 

 

 

£'000

£'000

£'000

£'000

 

 

 

 

 

Revenue

168,167

58,588

-

226,755

Cost of sales

(60,505)

(35,643)

-

(96,148)

Gross profit

107,662

22,945

-

130,607

Operating costs

(83,604)

-

-

(83,604)

Operating contribution

24,058

22,945

-

47,003

Licence income

-

-

6,413

6,413

Segment result

24,058

22,945

6,413

53,416

 

Reconciliation of segment result to profit before tax

 

 

Segment result

24,058

22,945

6,413

53,416

Other operating costs

-

-

-

(34,691)

Other operating expense

-

-

-

83

Operating profit

 

 

 

18,808

Net finance expense

-

-

-

(1,316)

Share of profit of jointly controlled entity, net of tax

-

-

-

323

Profit before tax

 

 

 

17,815

 

 

 

 

 

Capital expenditure

8,773

661

-

9,434

Unallocated capital expenditure

-

-

-

8,293

Total capital expenditure

 

 

 

17,727

 

 

 

 

 

Depreciation and amortisation

6,157

160

-

6,317

Unallocated depreciation and amortisation

-

-

-

1,447

Total depreciation and amortisation

 

 

 

7,764

 

 

 

 

 

Segment assets

180,409

45,698

-

226,107

Deferred tax assets

-

-

-

6,967

Derivative financial assets

-

-

-

1,118

Intangible assets - head office

-

-

-

11,821

Plant, property and equipment - head office

-

-

-

9,004

Other assets

-

-

-

2,719

Total assets

 

 

 

257,736

 

 

 

 

 

Segment liabilities

(84,086)

(29,295)

-

(113,381)

Income tax payable

-

-

-

(1,977)

Other liabilities

-

-

 

(1,243)

Total liabilities

 

 

 

(116,601)

 

 

 

 

 

Net assets

 

 

 

141,135

               

 

 

 

 

 

 

 

 

 

 

Audited - 52 weeks ended 30 January 2016

 

 

 

Retail

 

 

 

Wholesale

 

 

 

Licensing

 

 

 

Total

 

£'000

£'000

£'000

£'000

 

 

 

 

 

Revenue

 

348,433

107,736

-

456,169

Cost of sales

(122,557)

(60,590)

-

(183,147)

Gross profit

225,876

47,146

-

273,022

Operating costs

(163,484)

-

-

(163,484)

Operating contribution

62,392

47,146

-

109,538

Licence income

-

-

14,384

14,384

Segment result

62,392

47,146

14,384

123,922

 

 

 

 

 

Reconciliation of segment result to profit before tax

 

 

 

 

 

 

 

 

 

Segment result

62,392

47,146

14,384

123,922

Other operating costs

-

-

-

(63,713)

Other operating expense

-

-

-

(840)

Operating profit

 

 

 

59,369

Net finance expense

-

-

-

(1,400)

Share of profit of jointly controlled entity, net of tax

-

-

-

695

Profit before tax

-

-

-

58,664

 

 

 

 

 

Capital expenditure

19,386

1,153

-

20,539

Unallocated capital expenditure

-

-

-

68,994

Total capital expenditure

 

 

 

89,533

 

 

 

 

 

Depreciation and amortisation

11,966

258

-

12,224

Unallocated depreciation and amortisation

-

-

-

2,705

Total depreciation and amortisation

 

 

 

14,929

 

 

 

 

 

Segment assets

186,826

60,468

-

247,294

Deferred tax assets

-

-

-

6,313

Derivative financial assets

-

-

-

2,850

Intangible assets - head office

-

-

-

14,199

Property, plant and equipment - head office

-

-

-

67,072

Other assets

-

-

-

2,618

Total assets

 

 

 

340,346

 

 

 

 

 

Segment liabilities

(75,232)

(23,726)

-

(98,958)

Income tax payable

-

-

-

(8,382)

Term loan

-

-

-

(60,000)

Other liabilities

-

-

-

(407)

Total liabilities

 

 

 

(167,747)

 

 

 

 

 

Net assets

 

 

 

172,599

           

 

 

 

 

 

 

 

3.   Finance income and expenses

 

 

 

Unaudited 

 

Unaudited 

 

Audited 

 

 

28 weeks 

ended

13 August

2016 

 

28 weeks 

ended 15 August

2015

 

52 weeks ended

30 January 2016

 

 

 

 

 

 

 

 

 

£'000

 

£'000

 

£'000

Finance income

 

 

 

 

 

 

- Interest receivable

 

13

 

13

 

-

- Foreign exchange gains

 

1,252

 

9

 

531

 

 

1,265

 

22

 

531

Finance expenses

 

 

 

 

 

 

- Interest payable

 

(1,518)

 

(640)

 

(1,430)

- Foreign exchange losses

 

(54)

 

(698)

 

(501)

 

 

(1,572)

 

(1,338)

 

(1,931)

 

 

 

 

 

 

 

4.   Earnings per share

 

 

 

Unaudited 

 

Unaudited 

 

Audited 

 

 

28 weeks 

ended  

13 August

2016 

 

28 weeks 

 ended

15 August

2015 

 

52 weeks              ended

30 January                 2016

 

 

 

 

 

 

 

Number of shares:

 

No.

 

No.

 

No. 

Weighted number of ordinary shares outstanding

 

43,986,705

 

43,934,613

 

43,950,203

Effect of dilutive options

 

631,423

 

656,613

 

612,138

Weighted number of ordinary shares outstanding - diluted

 

44,618,128

 

44,591,226

 

44,562,341

 

 

 

 

 

 

 

Earnings:

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

Profit for the period, basic and diluted

 

16,318

 

13,094

 

44,235

 

 

 

 

 

 

 

Basic earnings per share

 

37.1p

 

29.8p

 

100.6p

Diluted earnings per share

 

36.6p

 

29.4p

 

99.3p

 

 

 

 

 

 

 

5.   Dividends per share

 

 

 

Unaudited

 

Unaudited

 

Audited

 

 

28 weeks ended 13 August 2016

 

28 weeks ended 15 August 2015

 

52 weeks ended 30 January 2016

 

 

 

 

 

 

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

Final dividend paid for the prior year of 34.6p per ordinary share (2015: 29.0p)

 

15,215

 

12,739

 

12,739

Interim dividend paid 2016: Nil (2015: Nil)

 

-

 

-

 

5,804

 

 

15,215

 

12,739

 

18,543

 

 

 

 

 

 

 

 

The Board has declared an interim dividend of 14.8p per share (2015:13.2p) payable on 18 November 2016 to shareholders on the register at 21 October 2016.

 

 

 

 

 

 

6.   Income tax expense

 

The Group's full year forecast effective tax rate in respect of continuing operations for the 28 weeks ended 13 August 2016 is 24.0% (28 weeks ended 15 August 2015: 26.5%, 52 weeks ended 30 January 2016: 24.6%).

 

This effective tax rate is higher than the UK corporation tax rate for the period of 20% 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 2015, the UK corporation tax rate fell from 21% to 20% and further reductions to 19% from 1 April 2017 and to 17% from 1 April 2020 have been substantively enacted.

 

Our future effective tax rate is expected to remain higher than the UK tax rate as a result of overseas profits arising in jurisdictions with higher tax rates than the UK.

 

 

 

 

7.   Long-Term Incentive Plan

 

Share awards are made in the form of nil-cost options under the Ted Baker Plc Long-Term Incentive Plan 2013 ("LTIP 2013"), which was approved by the shareholders at the general meeting held on 20 June 2013.  A fourth award of options was granted under the LTIP 2013 on 5 May 2016. 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 vests is linked to the level of profit growth achieved.

 

The terms and conditions of the LTIP 2013 awards made during the 28 weeks ended 13 August 2016 are as follows:

 

 

Grant date

Type of award

Number of shares

Vesting conditions

Vesting period

 

5 May 2016

 

LTIP 2013

 

234,159

 

 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 13 August 2016 for LTIP 2013 awards amounted to £869,170 (28 weeks ended 15 August 2015: £912,154, 52 weeks ended 30 January 2016: £1,777,000)). Included in the charge for the period is an amount in respect of R S Kelvin, who is employed by the Company, amounting to £134,622 (28 weeks ended 15 August 2015: £125,501, 52 weeks ended 30 January 2016: £246,147).

 

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

1,705.0p - 2,855.0p

Share price at grant (based on 3-6 month average) for share price performance condition

1,318.0p - 2,744.0p

Risk free interest rate

0.51% - 1.18%

Expected life of options

3 years

Share price volatility

29.0%-31.05%

Dividend yield

1.41% - 2.02%

 

 

 

 

8.   Reconciliation of cash and cash equivalents per balance sheet to the cash flow statement

 

 

 

 

Unaudited 

 

Unaudited 

Audited

 

 

 

13  August 2016 

 

15  August 2015 

30 January 2016

 

 

 

 

 

 

 

 

 

 

£'000 

 

£'000 

£'000

 

 

 

 

 

 

 

Cash and cash equivalents per balance sheet

 

 

25,525

 

14,354

13,295

Bank overdraft per balance sheet

 

 

(81,702)

 

(68,770)

(37,869)

Cash and cash equivalents per cash flow statement

 

 

(56,177)

 

(54,416)

(24,574)

 

 

 

 

 

 

 

 

During the period, the Group agreed an extension of its multi-currency revolving credit facility with the Royal Bank of Scotland and Barclays. A new agreement was signed on 31 May 2016, increasing the Group's committed borrowing facility from £85.0m to £110.0m expiring on March 2018. 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.

 

9.   Intangible assets

 

Intangible asset additions during the period include £4.3m (15 August 2015: £3.1m, 30 January 2016: £6.0m) in relation to the Microsoft Dynamics AX systems and to e-commerce platforms.

 

10.  Property, plant and equipment

 

Property, plant and equipment asset additions during the period include £17.2m (15 August 2015: £14.6m, 30 January 2016: £83.5m including £58.0m in relation to the acquisition of the Ugly Brown Building freehold interest) in relation to stores opened and refurbished, as well as costs relating to the new European distribution centre.

 

11.  Financial Instruments

 

The Group held certain financial instruments at fair value at 13 August 2016. The definitions and valuation techniques employed for these as at 13 August 2016 are consistent with those used at 30 January 2016 and disclosed in Note 22 on pages 95 to 101 of the 2016 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 30 January 2016, 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

13 August

2016

£'000

Unaudited

15 August 2015

£'000

Audited

30 January 2016

£'000

Assets at fair value:

 

 

 

Currency derivatives

10,117

1,118

2,850

Liabilities at fair value:

 

 

 

Currency derivatives

(1,228)

(1,243)

(352)

 

 

12.  Related parties

 

The Company has a related party relationship with its executive and non-executive directors.

 

Directors of the Company and their immediate relatives control 35.5% (2015: 35.6%) of the voting shares of the Company.

 

At 13 August 2016, the main trading Company owed the parent company £31,968,000 (15 August 2015: £29,037,000) and one of its subsidiaries £1,367,000 (15 August 2015: £nil). The main trading company was owed £131,311,000 (15 August 2015: £84,326,000) 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 a joint venture company in Australia which is also the parent company of a subsidiary joint venture in New Zealand. As at 13 August 2016, the joint venture owed £925,000 to the main trading company (15 August 2015: £694,000). The value of sales made to the joint venture by the Group in the period was £1,519,000 (15 August 2015: £1,427,000).

 

 

13.  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 17 and 18 of the Ted Baker Annual Report and Accounts for the year ended 30 January 2016, 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

·      Risk that our offer will not satisfy the needs of our customers or that we fail to correctly identify trends

·      Failure in growing the international business through franchise operations, licensees and e-commerce

·      Significant external events affecting our supply chain, customers and partners, risking an increase in our cost base and adversely affecting our revenue

 

Operational Risks

·      Failure in our supply chain affecting our ability to deliver our offer to customers and/or partners

·      Operational problems affecting the internal 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

 

Financial Risks

·      Failure of counterparties

·      Currency, interest and credit risks

·      Financial covenants under credit facilities

 

 

 

 

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 38 of the financial statements as at, and for, the 52 weeks to 30 January 2016. 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

11 October 2016                                    11 October 2016

 

 

 

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

Introduction

We have been engaged by the company to review the condensed set of financial statements in the interim results announcement for the 28 weeks ended 13 August 2016 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. We have read the other information contained in the interim results announcement and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

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 Disclosure and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("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.

Directors' responsibilities

The interim results announcement is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the interim results announcement in accordance with the DTR of the UK FCA.

The annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this interim results announcement has been prepared in accordance with IAS 34 Interim Financial Reporting 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 interim results announcement based on our review.

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. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) 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.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim results announcement for the 28 weeks ended 13 August 2016 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.

 

Robert Brent

for and on behalf of KPMG LLP

Chartered Accountants

15 Canada Square

London

E14 5GL

11 October 2016


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR GGGBUUUPQGBU

Related Charts

Ted Baker (TED)

0.00 (0.00%)
delayed 18:15PM