TED.L Regulatory News (TED)

17 Mar 2005 07:03

Ted Baker PLC17 March 2005 17 March 2005 Ted Baker PLC Preliminary Results for the 52 weeks ended 29 January 2005 Highlights • Group turnover up by 19.0% to £105.8m (2004: £88.8m) - Retail sales up 16.9% to £71.7m (2004: £61.3m) - Wholesale sales up 23.8% to £34.1m (2004: £27.5m). - Licence income up 28.0% to £3.2m (2004, 53 weeks: £2.5m) • Profit before tax up 20.5% to £16.8m (2004: £13.9m) • Basic earnings per share up 20.7% at 27.4p per share (2004: 22.7p per share) • Final dividend of 7.3p per share, making a total for the year of 10.8p per share, an increase of 12.5% (2004, 53 weeks: 9.6p per share) • Closing net funds of £8.9m compared to opening net funds of £5.8m • Successful London openings of the new 'World of Ted' store in Regent Street, the Endurance Store in Covent Garden and the 'Best in Show' store in Westbourne Grove • Careful retail expansion in the USA progressing well with the launch of two additional stores in San Francisco and Las Vegas Commenting on the results, Ray Kelvin, Chief Executive, said: "I am delighted to report another excellent year for Ted Baker as reflected inour strong turnover and profit growth over the period. The brand performed wellin the UK and overseas as we continued to focus on our key strengths of design,product quality and attention to detail. The current year has started well with both retail and wholesale sales ahead oflast year and we will continue our careful expansion of the brand throughretail, wholsesale and licensing." Enquiries:Ted Baker Tel: 020 7796 4133 on 17 March 2005 onlyRay Kelvin, Chief Executive thereafter Tel: 020 7255 4800Lindsay Page, Finance Director gcg hudson sandler Tel: 020 7796 4133Noemie de Andia / Sandrine gallien Visit Ted's e-commerce site at www.tedbaker.com and click on 'Share Info' to betaken to our investor relations website. Notes to Editors Ted Baker is a leading UK fashion brand for men and women with three distinctdistribution channels: retail, wholesale and licensing. We pursue a policy ofcareful brand management and growth by extending the breadth of our collections,controlling our three distribution channels and developing our presence in keyoverseas markets, especially the United States. We do not advertise but rathersupport our brand profile by opening stores in selected retail locations andcultivating the unique personality of our brand and unrivalled attention todetail in our collections. Our innovative stance is illustrated by thesuccessful development of the "Endurance" suits collection which uses highperformance fabrics and cutting edge designs perfectly adapted to the Ted Bakercustomers' demanding lifestyles. CHAIRMAN'S STATEMENT I am delighted to report another set of excellent results characterised bydouble-digit sales growth in our three divisions: retail, wholesale andlicensing, as well as strong profit before tax growth reflecting the strength ofthe brand. The Ted Baker brand continues to be well received in the UnitedStates where we have made further progress this year. Results Group turnover increased by 19.0% to £105.8m (2004: £88.8m) for the 52 weeksended 29 January 2005. Operating profit increased by 18.6% to £16.9m (2004:£14.3m) and profit before tax increased by 20.5% to £16.8m (2004: £13.9m).Basic earnings per share increased by 20.7% to 27.4p per share (2004: 22.7p pershare). Dividends The Board is pleased to recommend a final dividend of 7.3p per share (2004: 6.4pper share) making a total for the year of 10.8p per share (2004: 9.6p per share)an increase of 12.5% over the previous year and brings the dividend level inline with our targeted dividend cover of two and a half times. The finaldividend will be payable on 24 June 2005 to those shareholders on the registeron 20 May 2005. Share Buy-back In line with market practice, the Company will seek authority from shareholdersat the Annual General Meeting to buyback up to 10% of the ordinary issued sharecapital of the Company in the next twelve months. As the exercise of suchauthority could give rise to an obligation on the part of certain directors ofthe Company to make a mandatory offer under Rule 9 of The City Code on Takeoversand Mergers, such authority will also be conditional on the Panel on Takeoversand Mergers agreeing to grant a dispensation from that obligation. Furtherdetails of this will be sent out in a letter accompanying the Notice of AnnualGeneral Meeting. Current Trading We have made a good start to the new financial year with total retail salesahead by 23.3% for the first six weeks, compared with the same period last year.Wholesale sales are up 15.7% and the phasing of deliveries has been similar tothe same period last year. We remain confident of another successful year forthe growth and development of our brand. Robert BreareNon-Executive Chairman Chief Executive's Review I am delighted to report another excellent year for Ted Baker as reflected inour strong turnover and profit growth over the period. The brand performed wellin the UK and overseas as we continued to focus on our key strengths of design,product quality and attention to detail. During the period we successfullylaunched the Endurance store in Covent Garden, London, and opened our 'Best inShow' store in Westbourne Grove, London, and a new 'World of Ted' store inRegent Street, London. In the United States we have continued our careful retailexpansion with the opening of two additional stores in San Francisco and LasVegas. Retail The retail division performed strongly during the year with sales growth up16.9% to £71.7m (2004: £61.3m). The average retail square footage rose by 15.4%over the period to 114,153 sq. ft. (2004: 98,888 sq. ft.). At 29 January 2005,total retail square footage was 129,023 sq. ft. (2004: 103,787 sq. ft.)representing an increase of 24.3%. Retail sales per square foot increased from£620 to £628. At 29 January 2005, the retail division consisted of 96 retail locationscomprising 19 UK stores, 6 overseas stores, 64 concessions and 7 outlet stores.This compares against the previous year where the retail division consisted of87 retail locations comprising 18 UK stores, 4 overseas stores, 59 concessionsand 6 outlet stores. In the UK, we continue to look for the right retail locations to showcase theTed Baker brand and the breadth of our collections. During the period welaunched our innovative Endurance suit store in Covent Garden, London, whichhosts the complete Ted Baker Endurance collection. In August, we opened our 'Best in Show' store in Westbourne Grove, London to carry the most directionalpieces of the Ted Baker collections in a prestigious retail environment and inNovember we relocated our existing Soho store to a new 'World of Ted store' inRegent Street, London. During the period, we also opened stores in StanstedAirport and Guildford. In addition, we opened an outlet store in Cheshire Oaks,the Wirral, and a further six concessions in leading department stores. In the United States, we continued our expansion strategy with the opening of astore in Union Square in San Francisco in June and in the Forum shops atCaesar's Palace in Las Vegas in October. The initial success of these stores isencouraging and confirms our belief that the Ted Baker brand ethos travels welloverseas. Our existing stores in New York and San Jose continue to perform inline with our expectations, while Miami has continued to underperform in theperiod due to the weakness of the centre in which it operates. We continue tolook for suitable store opportunities in the United States. Wholesale Our wholesale division performed strongly during the year reflecting continuedexpansion of our collections and the addition of suitable new trustees for ourbrand. Sales from the wholesale division rose by 23.8% to £34.1m (2004: £27.5m),reflecting growth both in our established collections, especially Endurance andTed Baker Jean, and also our newer collections, including Childrenswear andAccessories. Licence Income Licence income increased by 28.0% to £3.2m (2004: 53 weeks: £2.5m) reflectingour sustained effort in further developing our product and territorial licences. In the US, our wholesale licensee, Hartmarx Corporation, made good progress withsignificant growth being achieved with the top independent stores and departmentstores, which stock our brand. Whilst the level of licence income generatedremains below the guaranteed minimum level at this stage we anticipate that theminimum guarantee will be exceeded within the next two years. This year saw the first full year of trading from our new sunglasses andopthalmics licensee, Mondottica Ltd, and we were very pleased with theirperformance which considerably exceeded our expectations. Our shoe andfragrance licensees both performed well during the year and were in line withour expectations. Both licensees are now looking to develop the US market inlight of the increasing profile of the brand there. Our watch licensee alsorecorded a very strong performance during the year. The first year of trading for our territorial licence for Australia and NewZealand has been ahead of expectations and a good foundation has been laid forfuture growth. Collections Menswear turnover increased by 25.0% to £57.1m (2004: £45.7m) and Womensweargrew by 13.9% to £41.5m (2004: £36.4m) as we continued to extend the breadth ofour ranges. In particular, our Accessories and Jeans collections registeredabove average growth and our successful Endurance range now includes a washabledesigner suit, 'The Fish out of Water', which has been well received. Othercollections contributed turnover of £7.1m (2004: £6.7m), which represented anincrease of 6.4%. This growth particularly reflects the success of our morerecently launched Childrenswear and Footwear collections. Outlook The current year has started well with both retail and wholesale sales ahead oflast year. Following a year of significant expansion of our retail space in theUK and in the United States we are now looking forward to fine-tuning our estateto reflect the most recent developments in the Ted Baker collections. In the UK,we relocated our two Nottingham stores to a larger store shortly before the yearend and are particularly pleased with its performance to date. In addition, weplan to open seven new concessions in leading department stores in the firsthalf of the year. We will also continue our careful expansion overseas with theexpected opening of our sixth store in the United States, in Los Angeles duringthe Summer 2005. Ray KelvinChief Executive Finance Director's Report The financial results reflect our continued focus on margin led growth andstrong cash management. Our net margin before taxation increased to 15.9%(2004: 15.7%) and opening net funds of £5.8m improved to closing net funds of£8.9m. Gross Margin Retail gross margins were slightly above last year at 66.8% (2004: 66.7%) andthe wholesale gross margin decreased to 42.6% (2004: 43.1%) reflecting changesin the product mix, particularly the growth of Childrenswear and the developmentof our Endurance Sport range. The increase in wholesale sales as a proportion of total sales and the reductionin the composite wholesale gross margin led to a reduction in the compositegross margin to 59.0% (2004: 59.4%). Operating Expenses Operating expenses rose by 18.9% to £49.0m (2004: £41.2m). Distribution costs,which include the costs of new retail stores, outlets and concessions increasedby 14.6% to £34.4m (2004: £30.0m) which was in line with the increase in averageretail selling space. Administration expenses rose by 30.5% to £14.6m (2004:£11.2m) reflecting further investment in our team and infrastructure. During theyear we leased an additional floor at the Ugly Brown Building, which willprovide sufficient space for the foreseeable future and we continue tostrengthen our design, sourcing and merchandising teams. As a result of oursuccessful year the discretionary bonus has also increased significantly. Interest The net interest charge during the year was below last year at £0.2m (2004:£0.4m) reflecting continued generation of cash from operations. Taxation The tax charge for the year was £5.1m (2004: £4.3m), an effective tax rate of30.2% (2004: 31.1%). The effective rate was lower mainly as a result of anadjustment in respect of prior periods. Shareholder Return Basic earnings per share increased by 20.7% to 27.4p per share (2004: 22.7p pershare). Free cash flow per share increased 12.8% from 28.9p to 32.6p and thedividend per share increased by 12.5% from 9.6p to 10.8p. Cash Flow and Working Capital Net cash inflow from operating activities was £18.5m (2004: £16.5m) primarilyreflecting increased trading and continued tight cash management. Workingcapital was tightly controlled and increased from £4.5m to £5.7m largely in linewith the growth of the business. Stock levels increased by 31.2% as a result ofthe increase in retail square footage during the year and the growth and phasingof the wholesale business. Capital expenditure was £7.5m (2004: £4.1m) and largely comprised investment innew retail stores. Net cash outflow from financing was £2.3m (2004: net cash inflow £0.9m)reflecting the early repayment of our £4.0m loan facility, offset by a newfacility for the Ted Baker Group Employee Benefit Trust. Treasury and Risk Management The principal risks to the Group arise from exchange rate and interest ratefluctuations. The Board reviews and agrees policies for managing these risks ona regular basis. Where appropriate, the Group uses financial instruments tomitigate these risks. All transactions in derivatives, principally forwardforeign exchange contracts, are taken solely to manage these risks. Notransactions of a speculative nature are entered into. The most significantexposure to foreign exchange fluctuations relates to purchases in foreigncurrencies. The Group's policy is to hedge substantially all the risks of such currencyfluctuations by using forward contracts taking into account forecast foreigncurrency cash inflows. There has been no change since the year-end to the majorfinancial risks faced by the Group or the Group's approach to the management ofthose risks. International Financial Reporting Standards The Company will be required to adopt International Financial ReportingStandards (IFRS) with effect from its year ending January 2006. The Company hasset up a project team to achieve the transition to IFRS to enable it to reportunder IFRS for the first time when it announces its interim results in 2005. Wehave performed a high level review of the differences between IFRS and ourcurrent accounting policies, and we are now quantifying the financial impacts ofconvergence with IFRS. We are also looking at the wider implementation aspects.Based on our work to date, we believe that the changes will mainly result indifferences to various accounting treatments including dividends, foreigncurrency hedging, lease incentives and share based payments. It is ourintention to restate the year ended 29 January 2005 results on an IFRS basisprior to our interim results, with an explanation of the major changes. Lindsay PageFinance Director Consolidated Profit and Loss Account 52 weeks 53 weeksFor the 52 weeks ended 29 January 2005 ended ended 29 January 31 January 2005 2004 Notes £'000 £'000 Turnover 2 105,753 88,842Cost of sales 2 (43,357) (36,088)Gross profit 2 62,396 52,754 Other operating expenses (net) 3 (45,481) (38,494)Operating profit 2 16,915 14,260Interest receivable 68 31Interest payable (221) (382)Profit on ordinary activities before taxation 2, 4 16,762 13,909 Tax on profit on ordinary activities (5,066) (4,333) Profit on ordinary activities after taxation 11,696 9,576 Minority interest - equity (21) 3Profit for the financial year 11,675 9,579 Dividends paid and proposed (4,661) (4,066)Retained profit for the period 7,014 5,513 Earnings per share 5Basic earnings per share 27.4p 22.7pDiluted earnings per share 26.7p 22.2p Statement of total recognised gains and lossesFor the 52 weeks ended 29 January 2005 £'000 £'000 Profit for the financial year 11,675 9,579Exchange rate movement (33) (283)Total recognised gains relating to the year 11,642 9,296 The accompanying notes are an integral part of this consolidated profit and lossaccount. There are no differences between the Company's historical cost profit and thatrecorded in the profit and loss account (2004: £nil). A statement on movements on reserves is given in note 8. The profit from thecurrent and previous periods was entirely derived from continuing activities. Consolidated Balance Sheet 29 January Restated 31 JanuaryAt 29 January 2005 2005 2004 Notes £'000 £'000Fixed assetsTangible assets 17,852 14,410 Current assetsStocks 22,725 17,321Debtors 8,762 7,054Cash at bank and in hand 9,603 9,811 41,090 34,186 Creditors: amounts falling due within one year (25,162) (19,646) Net current assets 15,928 14,540 Total assets less current liabilities 33,780 28,950Creditors: amounts falling due after more than one year (750) (4,000)Provisions for liabilities and charges (623) (480)Net assets 32,407 24,470 Capital and reservesCalled-up share capital 8 2,149 2,131Share premium 8 6,983 5,358Profit and loss account 8 23,315 17,042 Equity shareholders' funds 32,447 24,531Minority interests - equity 8 (40) (61) Total capital and reserves 32,407 24,470 CONSOLIDATED CASHFLOW STATEMENT 52 weeks RestatedFor the 52 weeks ended 29 January 2005 ended 53 weeks 29 January ended 2005 31 January 2004 Notes £'000 £'000 Net cash inflow from operating activities 6 18,535 16,488 Returns on investments and servicing of financeInterest received 59 19Interest paid (231) (367)Net cash outflow from returns on investment andservicing of finance (172) (348) TaxationUK corporation tax paid (4,344) (3,843)Capital expenditure and financial investment 7 (7,566) (1,915)Equity dividends paid (4,250) (3,743) Cash inflow before financing 2,203 6,639 FinancingLoan repayment (4,000) -Debt due after more than one year 750 -Shares issued 550 1,564Shares purchased - (694)Sale of own shares 380 7Net cash (outflow) / inflow from financing (2,320) 877 (Decrease)/increase in cash in the period 7 (117) 7,516 Notes 1. Basis of preparation The financial information set out above does not constitute the Company'sstatutory accounts for the 52 weeks ended 29 January 2005 or 53 weeks ended 31January 2004 but is derived from those accounts. Statutory accounts for 2004have been delivered to the registrar of companies, and those for 2005 will bedelivered following the Company's annual general meeting. The auditors havereported on those accounts; their reports were unqualified and did not containstatements under section 237(2) or (3) of the Companies Act 1985. Further copies of the financial statements will be available after the annualgeneral meeting from the Company Secretary of Ted Baker PLC, The Ugly BrownBuilding, 6a St. Pancras Way, London NW1 0TB. Copies of the financialstatements can also be found online on our investor relations site atwww.tedbaker.com. The Group has implemented Urgent Issues Task Force Abstract 38 'Accounting forESOP Trusts' (UITF 38) during the year. The comparative results have beenrestated accordingly and the impact is explained in note 8. In accordance withUITF 38, the consideration paid for the shares held by employee trusts arededucted in arriving at shareholders' funds and are no longer recognised asinvestments. 2. Segment information The turnover and profit before taxation are attributable to the Group'sprincipal activities, the design and contracted manufacture of high qualityfashion clothing and related accessories for wholesale and retail customers. a) Analysis of turnover 52 weeks 53 weeks ended ended 29 January 31 January 2005 2004 £'000 £'000Turnover by brandMenswear 57,137 45,709Womenswear 41,492 36,438Other 7,124 6,695 105,753 88,842b) Classes of business - by divisional activityi) 52 weeks ended 29 January 2005 Retail Wholesale Total £000 £000 £000 Turnover 71,669 34,084 105,753Cost of sales (23,795) (19,562) (43,357)Gross profit 47,874 14,522 62,396Common operating costs (45,481)Operating profit 16,915Net interest payable (153)Profit before taxation 16,762 Analysis of net assetsNet assets 18,897 4,657 23,554Net financial assets 8,853 32,407ii) 53 weeks ended 31 January 2004 (restated) Retail Wholesale Total £'000 £'000 £'000 Turnover 61,321 27,521 88,842Cost of sales (20,415) (15,673) (36,088)Gross profit 40,906 11,848 52,754Common operating costs (38,494)Operating profit 14,260Net interest payable (351)Profit before taxation 13,909 Analysis of net assetsNet assets 14,834 3,825 18,659Net financial assets 5,811 24,470 Wholesale sales are stated net of inter-company sales of £2,567,000 (2004:£912,000) c) Classes of business - by geographic origin Unitedi) 52 weeks ended 29 January 2005 Kingdom Other Total £'000 £'000 £'000 Turnover 101,188 4,565 105,753Cost of sales (41,603) (1,754) (43,357)Gross profit 59,585 2,811 62,396Common operating costs (45,481)Operating profit 16,915Net interest payable (153)Profit before taxation 16,762 Analysis of net assetsNet assets 26,288 (2,734) 23,554Net financial assets 8,853 32,407ii) 53 weeks ended 31 January 2004 (restated) United Other Total Kingdom £'000 £'000 £'000 Turnover 85,650 3,192 88,842Cost of sales (34,874) (1,214) (36,088)Gross profit 50,776 1,978 52,754Common operating costs (38,494)Operating profit 14,260Net interest payable (351)Profit before taxation 13,909 Analysis of net assetsNet assets 20,974 (2,315) 18,659Net financial assets 5,811 24,470 United Kingdom sales are stated net of inter-company sales of £2,567,000 (2004:£912,000) Other includes sales arising mainly in the United States. Turnover bydestination is not materially different from turnover by geographic origin. 3. Other operating expenses (net) 52 weeks 53 weeks ended ended 29 January 31 January 2005 2004 £'000 £'000 Distribution costs 34,417 30,044Administrative expenses 14,579 11,169Other operating income (3,515) (2,719)Other operating expenses (net) 45,481 38,494 4. Profit on ordinary activities before taxation 52 weeks 53 weeks ended ended 29 January 31 January 2005 2004 £000 £000Profit on ordinary activities before taxation is stated after charging:Depreciation and amounts written off owned tangible fixed assets 3,451 3,285Impairment of fixed assets. 381 -Operating lease rentals 7,060 5,485Auditors' remuneration for group audit services 33 28Auditors' remuneration for group non-audit services 9 7Auditors' remuneration for parent company audit services 6 6Auditors' remuneration for parent company non-audit services - -Loss on sale of fixed assets 152 - Amounts payable to KPMG Audit Plc in respect of non-audit services relate toreview work associated with the interim statement. 5. Earnings per share 52 weeks 53 weeks ended ended 29 January 31 January 2005 2004 No. No.Number of shares:Weighted number of ordinary shares outstanding 42,375,426 41,909,936Effect of dilutive options 1,067,613 927,015Weighted number of ordinary shares outstanding - diluted 43,443,039 42,836,951 Earnings: £'000 £'000Profit for the financial year 11,675 9,579Less: dividends on own shares (66) (67)Profit - basic and diluted 11,609 9,512 Basic earnings per share 27.4p 22.7pDiluted earnings per share 26.7p 22.2p Own shares held by the Ted Baker Group Employee Benefit Trust and the Ted Baker1998 Employee Benefit Trust have been eliminated from the weighted averagenumber of ordinary shares. Dividend income received by the Company as a resultof holding these own shares has been eliminated from the profit on ordinaryactivities after taxation and minority interests. The options exercised duringthe year and long-term incentive scheme awards distributed were of shares heldby these Trusts. Diluted earnings per share have been calculated using additional ordinary sharesavailable under the 1997 Unapproved Share Option Scheme, the 1997 ExecutiveShare Option Scheme and the Ted Baker Performance Share Plan. 6. Reconciliation of operating profit to operating cash flows 52 weeks Restated ended 53 weeks 29 January ended 2005 31 January £'000 2004 £'000 Operating profit 16,915 14,260Impairment of fixed assets 381 -Depreciation charges 3,451 3,285Loss on sale of tangible fixed assets 152 -Increase in stocks (5,457) (3,435)(Increase) / decrease in debtors (1,554) 264Increase in creditors 4,647 2,114Net cash inflow from operating activities 18,535 16,488 7. Analysis of cashflows 52 weeks 53 weeks ended ended 29 January 31 January 2005 2004 £'000 £'000a) Capital expenditure and financial investmentPurchase of tangible fixed assets (7,527) (4,131)Sale of tangible fixed assets (39) 2,216Net cash outflow (7,566) (1,915) b) Reconciliation of net cashflow to movement in net funds(Decrease)/increase in cash in the period (117) 7,516Loan repayment 4,000 -Increase in debt due after more than 1 year (750) -Cashflow 3,133 7,516Non-cash movements 5 -Exchange rate movement (96) (483)Net funds / (debt) at start of period 5,811 (1,222)Net funds at end of period 8,853 5,811 c) Analysis of net funds/ At 31 January Cashflow Non-cash Exchange At 29 January(debt) 2004 movements rate 2005 movement £000 £000 £000 £000 £000Cash at bank and in hand 9,811 (117) 5 (96) 9,603Debt due after more than (4,000) 3,250 - - (750)one year 5,811 3,133 5 (96) 8,853 8. Share Capital and Reserves Reserve for Profit and Minority own shares loss account Share Share premium Other Interests capital £'000 £'000 £'000 £'000 £'000 £'000 At 31 January 2004 2,131 5,358 - 18,200 18,200 (61)Prior period adjustment UITF38 - - (1,158) - (1,158) -At 31 January 2004 as restated 2,131 5,358 (1,158) 18,200 17,042 (61)Retained profit for the year - - - 7,014 7,014 21Shares issued 18 1,625 - (1,093) (1,093) -Shares vested - - 380 - 380 -Gain on sale of own shares - - - 5 5 -Exchange rate movement - - - (33) (33) -At 29 January 2005 2,149 6,983 (778) 24,093 23,315 (40) This information is provided by RNS The company news service from the London Stock Exchange