REPORT & ACCOUNTS 2010/11
Contents
DIRECTORS’ REPORT: OVERVIEW
05
Chairman’s Statement
07
Business Review
10
12
Financial Review
Principal Risks and Uncertainties
DIRECTORS’ REPORT: GOVERNANCE
17
Corporate Governance Statements
20
Sustainability and The Environment
21
People
DIRECTORS’ REPORT: OTHER STATUTORY DISCLOSURES
25
26
31
34
35
Board of Directors
Directors’ Remuneration Report
Other Disclosures
Statement of Directors’ Responsibilities
Independent Auditors’ Report to the Members of Ted Baker PLC
FINANCIAL STATEMENTS
Group and Company Primary Financial Statements
Notes to the Financial Statements
Five Year Summary
41
47
77
Ted’s advisers
Registered Office: The Ugly Brown Building, 6a St. Pancras Way, London NW1 OTB
Secretary: Charles Anderson ACMA
Financial Advisers and Stockbrokers: Espirito Santo Investment Bank, 10 Paternoster Square, London, EC4M 7AL
Solicitors: Jones Day, 21 Tudor Street, London EC4Y ODJ
Auditors: KPMG Audit Plc, 15 Canada Square, Canary Wharf, E14 5GL
Bankers: Barclays Bank PLC, 1 Churchill Place, London E14 5HP
The Royal Bank of Scotland PLC, 62-63 Threadneedle Street, London EC2R 8LA
Registrars: Capita Registrars, 34 Beckenham Road, Beckenham, Kent BR3 4TU
Ted Baker PLC - Registered in England No: 03393836
Ted Baker Report and Accounts 2010 / 2011
Ted ’s Finest Materials
Character, style and originality are key ingredients of the Ted Baker brand,
and Ted’s unique imagination and bespoke attitude is reflected across all of his
collections. When it comes to choosing the finest fabrics for his Phormalwear
suiting range, all roads lead to Italy – and Ted always prefers to use
100% Italian wool or, for Pashion (illustrated here), mohair and silk blends.
Ted Baker Report and Accounts 2009 / 2010
00
Ted Baker Report and Accounts 2010 / 2011
DIRECTORS' REPORT: OVERVIEW
Cairman’s Statement
I am delighted to report a strong performance across the Group,
which resulted in a 14.7% increase in Group revenue to £187.7m and
a 24.2% increase in profit before tax to £24.2m. This result reflects
the strength of the Ted Baker brand and collections and the growing
international reach of our multi-channel distribution strategy.
The retail division delivered an increase in revenue of 11.9%
to £152.7m on a 7.4% increase in average retail square footage.
Trading in the UK was good and we were particularly pleased
by the strong improvement in trading in our overseas markets.
Wholesale sales for the Group increased by 28.9% to £35.0m.
This was driven by the re-launch of our US wholesale business,
under our own management, and a good performance in
our UK wholesale business, which included growth in our
wholesale export business.
Licence income from our product and territorial licences
increased by 13.4% to £6.2m and included a full contribution
in the year from our US product licences.
Results
Group revenue for the 52 weeks ended 29 January 2011
increased by 14.7% to £187.7m (2010: £163.6m). The
composite gross margin increased to 61.7% (2010: 61.1%)
reflecting buying efficiencies and less promotional activity in
our overseas markets.
Profit before tax increased by 24.2% to £24.2m (2010: £19.5m)
and by 19.6% excluding the impairment charge of £0.8m in the
previous year. Basic earnings per share increased by 27.3% to
41.5p (2010: 32.6p).
The Group has a strong balance sheet and continues to
maintain its focus on cash management. Net cash generated
from operating activities during the year was £18.1m
(2010: £21.1m).
Dividends
The Board is recommending a final dividend of 14.3p per share,
making a total for the year of 20.6p per share (2010: 17.15p
per share), an increase of 20.1% on the prior year. Subject to
approval the final dividend will be paid on 17 June 2011 to
shareholders on the register on 13 May 2011.
People
This strong performance is testament to the dedication
and commitment of the Ted Baker team. The passion and
enthusiasm of our teams around the world is a key factor in our
success and continuing development. On behalf of the Board, I
would like to thank all of my colleagues for their contribution
during the year.
On 15 June 2010 we were delighted to announce the
appointment to the Board of Anne Sheinfield as an Independent
Non-Executive Director. Anne is a commercial lawyer with
20 years’ post qualification experience in the theatre, TV and
music areas of entertainment. Anne brings with her a wealth of
intellectual property and commercial legal experience.
Current Trading and Outlook
We anticipate that 2011 will be a challenging year given the
economic outlook, but are pleased by the positive reaction
to our Spring/Summer collections. There has been much
discussion on the pressures on consumer spending, but we
believe that we are well positioned to meet these challenges
due to the strength of the Ted Baker brand and collections.
We continue to manage the risks arising from exchange rate
fluctuations and rising input prices in order to minimise the
impact on our business.
Retail
Following a strong post-Christmas sale period, we entered
the new season with a clean stock position. Although retail
trading at the start of the new financial year was subdued,
recent trends are more encouraging.
We opened a further store in Hong Kong in February and will
be opening a second store in Paris and a store in the Trafford
Centre, Manchester in March. We plan to open concessions
through leading department stores in the US, Spain and
Portugal during the first half of the financial year.
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Ted Baker Report and Accounts 2010 / 2011
DIRECTORS' REPORT: OVERVIEW
Cairman’s Statement continued
Wholesale
Trading in our UK wholesale business has started well and
forward order commitments are in line with our expectations.
In the US, our wholesale business continues to perform well
and we will continue to develop and grow this business.
Licence Income
Our product and territorial licences continue to perform
in line with our expectations. We plan to open a store in
Auckland, New Zealand with our joint venture partner in
the second half of the financial year. Our other territorial
licence partners in the Middle East and Asia continue to
seek further opportunities to expand the Ted Baker brand in
those territories.
Group
The Ted Baker brand continues to perform well in an uncertain
trading environment and we believe that we are well placed
to deal with the challenges ahead. We continue to ensure that
our costs and commitments are controlled and in line with the
trends anticipated for 2011.
We remain focused on our multi-channel distribution strategy
and, with our strong balance sheet, will continue to expand the
Ted Baker brand in existing and new international markets.
We intend to make our next interim management statement,
covering trading since the start of the financial year,
on 14 June 2011.
Robert Breare
Non-Executive Chairman
24 March 2011
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Ted Baker Report and Accounts 2010 / 2011
DIRECTORS' REPORT: OVERVIEW
Business Review
Ted Baker is a leading designer brand that operates through three
main distribution channels: retail; wholesale; and licensing. We offer
a wide range of collections including: Menswear; Womenswear;
Global; Phormal; Endurance; Born; Accessories; Lingerie and
Sleepwear; Childrenswear; Fragrance and Skinwear; Footwear;
Neckwear; Eyewear; and Watches.
Our Business
The brand has grown steadily from its origins as a single shirt
specialist store in Glasgow to the global business it is today. We
distribute through our own and licensed retail outlets, leading
department stores and selected independents in Europe, the
US, the Middle East, Asia and Australasia.
Our strategy is to become a leading global designer brand,
based on three main elements:
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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;
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wholesale; and licensing. We consider each new opportunity
to ensure it is right for the brand and will deliver margin led
growth; and
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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 (“trustees”).
Global group performance
Retail
We operate stores and concessions across the UK, Europe,
US and Hong Kong and an on-line business based in the UK,
primarily serving the UK and Europe, with a separate site
dedicated to the Americas.
The retail division delivered a strong performance with sales
up 11.9% to £152.7m (2010: £136.5m). Average retail square
footage rose by 7.4% over the year to 225,828 sq ft (2010:
210,238 sq ft). Total retail square footage at 29 January 2011
was 229,026 sq ft (2010: 217,733 sq ft), representing an increase
of 5.2% on the prior year. Retail sales per square foot rose 2.5%
from £632 to £648.
The retail gross margin was 65.5% (2010: 64.9%). This increase
was driven by buying efficiencies and less promotional activity
in our overseas markets during the year.
Retail operating costs were in line with our expectations.
The increase in these costs above the increase in average
selling space is a result of the new space added towards the
end of the year that will mature over time. This, combined
with the improvement in sales and gross margin, resulted in
a slight reduction in retail operating contribution from 18.3%
to 18.0%.
Wholesale
We currently operate a wholesale business in the UK serving
15 countries across Europe and a wholesale business in
the US.
Group wholesale sales rose by 28.9% to £35.0m (2010: £27.1m)
and the gross margin increased to 44.8% (2010: 41.9%)
reflecting buying efficiencies and the mix of product sales.
The growth in sales largely reflects the encouraging start to
our US wholesale business and a good performance from our
UK wholesale business, which includes our growing wholesale
export business.
07
Ted Baker Report and Accounts 2010 / 2011
DIRECTORS' REPORT: OVERVIEW
Business Review continued
territorial and product
Licence income
We operate both
licences.
Our territorial licences cover the Middle East, Asia and
Australasia, through which we operate licensed retail stores
and, in some territories, wholesale operations. Our product
licences cover lingerie & sleepwear, perfume & fragrance,
watches, footwear, eyewear, neckwear and childrenswear.
Licence income was up 13.4% to £6.2m (2010: £5.5m).
Excluding the effect of our US product licences, underlying
licence income increased by 6.4%. We are pleased with the
performances from our territorial and product licences during
the period. We have seen continued good performances from
our collections with product licence partner, Debenhams, with
whom we have an exclusive childrenswear collection and, B by
Ted Baker, a new and exclusive lingerie & sleepwear collection.
Our US product licences included a full contribution in the
period from our US product licences signed directly with
companies who had previously held product sub-licences with
Hartmarx Corporation.
Collections
A good performance from Ted Baker Menswear was reflected
by an increase in sales of 11.1% to £98.2m (2010: £88.4m).
Menswear represented 52.3% of total sales (2010: 54.0%).
Ted Baker Womenswear delivered another strong performance
with sales up 19.0% to £89.5m (2010: £75.2m). Womenswear
represented 47.7% of total sales (2010: 46.0%).
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Ted Baker Report and Accounts 2010 / 2011
DIRECTORS' REPORT: OVERVIEW
Geographic Performance
United Kingdom and Europe
Sales in our UK and Europe retail division were up 8.2% to
£136.7m (2010: £126.4m). A good performance in the UK was
supported by improved trading conditions in Europe.
Average square footage rose by 4.1% over the period to
188,035 sq ft (2010: 180,606 sq ft). At 29 January 2011, total
retail square footage was 187,043 sq ft (2010: 186,024 sq ft)
representing an increase of 0.5%. Retail sales per square foot
increased 2.1% from £680 to £694.
During the year we opened seven further concessions in Eire,
ten concessions across Italy and one further concession in the
UK, offset by three concession closures in the UK and one in
Eire. At 29 January 2011 we operated 33 stores (2010: 33), 165
concessions (2010: 151) and 10 outlet stores (2010:10).
Middle East, Asia and Australasia
We continue to develop the Ted Baker brand across the Middle
East, Asia and Australasia working closely with our partners
in those territories to ensure the visual merchandising of
the stores and the training of the teams reflect the Ted Baker
culture. As at 29 January 2011 we operated a total of 23 stores
(2010: 20 stores) across these territories.
We opened stores in the Dubai Marina Mall, Dubai, and
the Abu Dhabi Marina Mall, Abu Dhabi during the year
through our licence partner, RSH Limited. We opened a
store in November in the 360 Degree Mall, Kuwait, with our
licence partner in that territory, Al-Mutawa and Al-Khatib
Retail Company, and are encouraged by early trading. As at
29 January 2011 we operated 7 stores across the Middle East
(2010: 4 stores).
Our e-commerce business benefited from the further
enhancements made to our transactional website in the prior
year, with a significant increase in the sales compared to
last year.
Our licence partner in Taiwan, Yun San, continued to make
good progress and opened a concession in the Hanshin Arena
Shopping Plaza in October.
At the start of the year we acquired two stores in Hong Kong
from our former licence partner in the territory, Li & Fung,
although one of these stores was scheduled to close in May.
We are very pleased with the performance of these stores
under our own management and as previously mentioned
have now opened a further store in Hong Kong. We are also
actively seeking further opportunities in the territory.
Including the closure of our store in Kuala Lumpur, Malaysia,
as at 29 January 2011 we operated a total of 13 stores across
Asia (2010: 14 stores).
In October we opened a store in the Pitt Street Mall, Sydney,
Australia. This is our third store in Australia through a
joint venture with our licence partner in that territory, Flair
Industries Pty Ltd. Our existing stores continue to make
good progress but the Sydney store has performed below our
expectations to date as the redevelopment of the mall has not
yet been completed. As at 29 January 2011 we operated 3 stores
in Australasia (2010: 2).
Sales in our UK wholesale division were up 13.1% to £30.7m
(2010: £27.1m). This performance recognises growth in our
wholesale export business and a strong performance from
our UK wholesale business given that the comparative period
included sales from wholesale accounts which have transferred
to retail concessions.
US
Sales from our US retail division increased by 29.9%, against
a difficult comparative period, to $20.6m (2010: $15.9m),
which, in sterling resulted in a 33.0% increase to £13.4m
(2010: £10.1m).
We have taken advantage of the challenging conditions
presented in the US to expand our business and opened four
further stores during the year in Scottsdale, Santa Monica,
New York and Chicago. Average square footage rose by 16.0%
to 34,368 sq ft (2010: 29,632 sq ft) and retail sales per square
foot increased 11.0% from $536 to $595. As at 29 January 2011
we now have 13 stores (2010: 9) and 2 outlets (2010: 2).
Towards the end of the year we launched our US transactional
website and are pleased with its progress at this early stage.
As previously mentioned, we re-launched our US wholesale
business under our own management during the year.
This business traded well with total sales reaching $6.6m
(2010: nil).
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Ted Baker Report and Accounts 2010 / 2011
DIRECTORS' REPORT: OVERVIEW
Financial Review
Revenue and Gross Margin
Group revenue increased by 14.7% to £187.7m (2010:
£163.6m), driven by an 11.9% increase in retail sales to
£152.7m (2010: £136.5m) and a 28.9% increase in wholesale
sales to £35.0m (2010: £27.1m).
The composite gross margin for the Group was 61.7%
(2010: 61.1%), this net increase reflects buying efficiencies,
which benefited both our wholesale and retail businesses,
and the reduction in promotional activity throughout the
year in our overseas retail markets. The improvement in the
composite gross margin was partially offset by wholesale sales
representing a greater proportion of our sales mix than in
the comparative period. The retail gross margin increased to
65.5% (2010: 64.9%) and the wholesale gross margin increased
to 44.8% (2010: 41.9%).
Operating Expenses
Operating expenses rose by 14.3% to £97.9m (2010: £85.7m).
Excluding employee performance related bonus costs of
£2.4m (2010: £1.9m), underlying operating expenses rose
by 14.1%. Distribution costs, which include the costs of
retail stores, outlets and concessions, increased by 14.1% to
£73.7m (2010: £64.6m). The increase in these costs above
the increase in average selling space reflects the addition of
new space towards the end of the year that will mature over
time. Administration expenses increased by 18.9% to £24.3m
(2010: £20.4m). Excluding employee performance related
bonus, administration expenses rose by 18.5% reflecting
growth in the US team to support our US retail and wholesale
businesses and growth in other central functions to support
our expansion into international markets.
Profit Before Tax
Profit before tax grew by 24.2% to £24.2m (2010: £19.5m).
This result was after the payment of an employee performance
related bonus of £2.4m (2010: £1.9m). Bonus payments in
both years were as a result of over achievement of internal
targets in the financial year.
Impairment Losses
The Group incurred no impairment losses in the year (2010:
£0.8m). The impairment loss in the prior year related to the
carrying value of retail assets in Eire. This accounting charge
had no cash flow effect on the Group.
Finance Income and Expenses
Net interest payable during the year was £30,000 (2010:
£138,000). The reduction reflects the higher Group cash
position for the majority of the year compared to last year.
The foreign exchange loss during the year of £48,000 (2010:
£226,000) was due to the retranslation of monetary assets and
liabilities denominated in foreign currencies.
Taxation
The Group tax charge for the year was £6.9m (2010: £6.0m),
an effective tax rate of 28.7% (2010: 30.6%). The prior year
rate excluding impairment was 29.5%. The Emergency
Budget, announced on 22 June 2010, announced that the UK
corporation tax rate will fall from 28.0% to 24.0% over a four
year period. As a result we expect to see a future reduction in
our effective rate in line with these changes.
Cash Flow
Net cash generated from operating activities was £18.1m
(2010: £21.1m). The decrease on the prior year was principally
due to an increase in working capital as opposed to a decrease
in the prior year, offset by increased profit.
Total working capital as per the Group balance sheet, which
comprises inventories, trade and other receivables and trade
and other payables increased by £6.5m to £34.9m (2010:
£28.4m). The movement in working capital as per the Group
cash flow statement is lower due to translation differences. The
timing of the Chinese New Year, which fell closer to the end
of our financial year, resulted in stock being receipted earlier
into the business, leading to an increase in inventories and
trade payables. The increase in inventories also reflects the
below average levels at the prior year end and the anticipated
growth of our business in the coming year. The increase in
trade receivables reflected the growth in the number of retail
concessions and growth in our US wholesale business.
Capital expenditure of £10.0m (2010: £4.5m) reflected the
opening and refurbishment of stores, concessions and outlets
and the continued investment in the infrastructure of the
business. Included within this figure is £1.0m (2010: £0.5m) of
expenditure which relates to stores that are due to open in 2011.
The purchase of the non-controlling entity of £0.6m (2010:
nil) relates to the purchase of the remaining shares in our joint
venture, Ted Baker (New York) Inc, that were held by a third
party. We now own 100.0% of this subsidiary (2010: 66.0%).
Shareholder Return
Basic earnings per share increased by 27.3% to 41.5p
(2010: 32.6p).
10
Ted Baker Report and Accounts 2010 / 2011
The proposed final dividend of 14.3p per share will make a
total for the year of 20.6p per share (2010: 17.15p per share),
an increase of 20.1% on the previous year.
Free cash flow per share, which is calculated using the net cash
generated from operating activities, was 41.8p (2010: 48.8p),
this reduction was due to the change in working capital.
Currency Management
The most significant exposure to foreign exchange fluctuation
relates to purchases made in foreign currencies, principally
the US Dollar and the Euro.
A proportion of the Group’s purchases are hedged in
accordance with the Group’s risk management policy, typically
12 months in advance. The balance of purchases is naturally
hedged as the business operates internationally and income is
generated in the local currency.
At the balance sheet date, the Group had hedged its projected
commitments in respect of the year ending January 2012.
Borrowing Facilities
The Group has borrowing facilities of £20.0m (2010: £15.0m)
available to it. The facilities comprise an unsecured committed
facility of £3.0m and a revolving advance facility of £7.0m with
the Royal Bank of Scotland PLC and an uncommitted, unsecured
multi-option facility of £10.0m with Barclays Bank PLC.
The borrowing facilities held with The Royal Bank of Scotland
PLC are made up by a £3.0m multi-currency facility and a
£7.0m revolving credit facility. The facility held with Barclays
Bank PLC is an uncommitted, unsecured multi-option facility
of £10.0m. All facilities expire on 5 February 2012. The Group
will seek to renew its facilities prior to these renewal dates.
Based on current forecasts the Group does not envisage any
difficulties with the renewal of these facilities.
the balance sheet date,
At
were unutilised.
the borrowing
facilities
Cautionary statement regarding forward-looking
statements
This document contains certain forward-looking statements.
These forward-looking statements include matters that are
not historical facts or are statements regarding the Company’s
intentions, beliefs or current expectations concerning, among
other things, the Company’s results of operations, financial
condition, liquidity, prospects, growth, strategies, and the
industries in which the Company operates. Forward-looking
statements are based on the information available to the
directors at the time of preparation of this document, and
will not be updated during the year. The directors can give
no assurance that these expectations will prove to be correct.
Due to inherent uncertainties, including both economic
and business risk factors underlying such forward-looking
information, actual results may differ materially from those
expressed or implied by these forward-looking statements.
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Ted Baker Report and Accounts 2010 / 2011
DIRECTORS' REPORT: OVERVIEW
Principal Risks & Uncertainties
The Board recognises there are a number of risks and uncertainties that the Group faces. The Board, with the help of the executive
committee, that comprises the chief executive, the finance director and subsidiary directors (the “Executive Committee”), has
established a structured approach to identify, assess and manage these risks and this is regularly monitored and updated by the
Risk Committee. Although not exhaustive, the following list highlights some of the principal risks which are not shown in order
of importance:
Strategic Risks
External events
External events may occur which may affect the
All factors affecting these stakeholders are
Issue
Potential impact
Mitigation
global, economic and financial environment in
monitored closely on an ongoing basis ensuring
which we operate. These events can affect our
that we are prepared for, and can react to, changes
suppliers, customers and partners, risking an
in the external environment, allowing us to
increase in our cost base and adversely affecting
reduce our exposure as early as possible. The
our revenue
spread of our business and supply chain also
helps to mitigate these risks
Brand and
The strength of our brand and its reputation are
We carefully consider each new opportunity
reputational risk
important to the business. There is a risk that our
and each wholesale customer and partner with
brand may be undermined or damaged by our
whom we do business. These are monitored on an
actions or those of our partners
ongoing basis to ensure they remain appropriate
to the brand
Fashion and Design
As with all fashion brands there is a risk that our
The Group maintains a high level of market
offer will not satisfy the needs of our customers
awareness and an understanding of consumer
trends and fashion to ensure that we remain able
to respond to changes in consumer preference
Operational Risks
Supply chain
If garments do not reach us on time and to
Our supply chain is diversified across a number
specification, there is a risk of a loss of revenue and
of suppliers in different regions, reducing reliance
customer confidence
on a small number of key suppliers. Suppliers
are treated as key business partners and we work
closely with them to mitigate these risks
Cost inflation
We may face increases in our operating costs due to
Operating costs are monitored regularly to ensure
growth in raw material, labour, property and other
that any cost pressures are quickly identified and
costs, some of which are outside the scope of
appropriate action is taken
our control
Infrastructure
There is a risk of operational problems, including
The business continuity plan is constantly
disruption to the infrastructure that supports our
reviewed and updated by the Risk Committee. In
business, which may lead to a loss of revenue, data
addition, business disruption is covered by our
and inventory
insurance policies
Social Responsibility We are committed to operating in a responsible and
Four members of the Executive Committee have
sustainable manner as regards our supply chain,
been tasked with overseeing specific areas of our
environment and community. If we fail to operate in
social responsibility agenda. The Group has an
a manner that supports our philosophy, this could
employee whose sole responsibility is to monitor
damage the trust and confidence of our stakeholders
this agenda and ensure our practices fall in line
with it
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Ted Baker Report and Accounts 2010 / 2011
Operational Risks - (continued)
IT security
Advances in technology have resulted in more
Commitment of additional specialist resources
Issue
Potential impact
Mitigation
data being transmitted electronically, posing an
and the continual upgrading of security
increased security risk. There is also the possibility
equipment and software mitigate these risks
of unintentional loss of controlled data by
authorised users
People
The Group’s performance is linked to the
Retention of key talent is important and we take
performance of our people and, in particular, to the
active steps to provide stability and security to the
leadership from key individuals. The loss of a key
key team. We carry out an annual benchmarking
individual, whether at management level or within
review to ensure that we provide competitive
a specialist skill set, could have a detrimental affect
remuneration and total reward packages. We also
on our operations and, in some cases, the creative
utilise long-term incentive schemes to retain key
vision for the brand
talent. Employee engagement through our culture
and environment strengthens the commitment of
team members and has a positive impact on our
attrition rate
Regulatory and legal
The Group operates within many markets globally
The Group closely monitors changes in the legal
framework
and is subject to regulations affecting its activities
and regulatory framework within the markets in
which it operates. We work closely with specialists
in each market to ensure compliance with local
laws and regulations
Financial Risks
Currency, interest,
In the course of its operations, the Group is exposed
The Group’s policies for dealing with these risks
credit and
to these financial risks which if they were to arise
are discussed in detail in note 22 on pages 68 to 76
counterparty
may have material financial impacts on the Group
credit risks
13
Ted Baker Report and Accounts 2010 / 2011
Ted ’s Feminine Touch
Recreating the delicacy and detail of vintage bird cages through fine pencil
drawings, Ted developed this unforgettable print for his Spring/Summer 11
Womenswear collection. Featuring birds perched on or inside the various
cages with a shot of colour and playfulness across all styles and fabrics, it
offers a feminine and appealing design that women have taken to their hearts.
00
Ted Baker Report and Accounts 2009 / 2010
DIRECTORS' REPORT: GOVERNANCE
CORPORATE GOVERNANCE STATEMENTS
Statement of compliance with the Combined Code
The Company has complied throughout the year with all of the
provisions of the Combined Code on Corporate Governance
issued in June 2008 (the “Combined Code”). The Board has
noted and is aware of the recently introduced UK Corporate
Governance Code (which will apply to the financial period of
the Group ending 28 January 2012). The Board will seek to
comply with the new code where it determines that to do so
would be beneficial to the Company and its stakeholders.
The Board meets regularly throughout the year. It considers all
issues relating to the strategy, direction and future development
of the Group. The Board has a schedule of matters reserved
to it for decision that is regularly updated. The requirement
for Board approval on these matters is understood and
communicated widely throughout the Group. The non-
executive directors meet with the chairman separately during
the year. In addition the non-executive directors meet without
the chairman present to appraise the chairman’s performance.
Statement about applying the principles of
Good Governance
The Company has applied the principles of Good Governance
set out in section 1 of the Combined Code by complying
with the Code of Best Practice. Further explanation of how
the principles have been applied is set out below and, in
connection with directors’ remuneration, in the Directors’
Remuneration Report on pages 26 to 30.
The Board
The Board currently comprises a non-executive chairman, a
chief executive, one other executive director and three non-
executive directors. Biographies of these directors appear
on page 25.
David Bernstein has held the position of non-executive
director since 2003 and has been confirmed by the Board as the
Company’s senior independent director. All the non-executive
directors are considered by the Board to be independent of
management and free of any relationship that could materially
interfere with the exercise of their independent judgement.
Operational decision making, operational performance
and the formulation of strategic proposals to the Board
are controlled by the Executive Committee. The Executive
Committee meets regularly throughout the year.
To enable the Board to function effectively and the
directors to discharge their responsibilities, full and timely
access is provided to all relevant information. There is
an agreed procedure for directors to take independent
professional advice, if necessary, at the Company’s expense.
This is in addition to the access every director has to the
Company Secretary.
On 15 June 2010 the Board appointed Anne Sheinfield as an
independent non-executive director. Anne is a commercial
lawyer with 20 years’ post qualification experience in the
theatre, TV and music areas of entertainment.
Board and committee attendance
The table below details the number of Board and committee
meetings held during the 52 weeks ended 29 January 2011 and
the attendance record of each director.
Number of meetings held
Robert Breare
David A Bernstein
Ronald Stewart
Anne Sheinfield
Raymond S Kelvin
Lindsay D Page
Anne Sheinfield was appointed as a non-executive director on 15 June 2010.
Board
meetings
Audit
committee
Remuneration
committee
Nomination
committee
9
9
8
9
6
9
9
3
3
3
3
-
-
-
1
1
1
1
-
-
-
1
1
1
1
-
-
-
17
Ted Baker Report and Accounts 2010 / 2011
DIRECTORS' REPORT: GOVERNANCE
CORPORATE GOVERNANCE
STATEMENTS continued
Audit Committee
The Audit Committee (the “Committee”) is chaired by Ronald
Stewart and its other members are Robert Breare and David
Bernstein, all of whom are independent non-executive Directors
and served throughout the course of the year. The Committee
met three times during the year with full attendance.
The Committee meets to review and approve the interim and
annual financial statements, before submission for approval by
the Board and considers any matters raised by the auditors.
The committee will consider significant financial reporting
judgements contained in the financial statements, including
accounting policies and compliance, areas of management
judgements and estimates and the effectiveness of financial
reporting and controls. The Board considers all members to
have relevant financial experience.
The Committee oversees the Company’s relationship with
the external auditors and makes recommendations to the
Board in relation to their appointment, re-appointment
and removal and approves their remuneration and terms of
engagement. The Committee also reviews the independence
of the external auditors and the Company’s policy on the
supply of non-audit services by the external auditors. The
Company has adopted a formal policy on the supply of non-
audit services by the external auditors. They may only provide
such services on condition that such advice does not conflict
with their statutory responsibilities and ethical guidance. The
Committee Chairman’s pre-approval is required before the
Company uses non-audit services that exceed financial limits
set out by that policy and the aggregate spend is also reviewed
by the Committee on an annual basis. Details of the auditors'
remuneration for audit work and non-audit fees are disclosed
in note 3 to the Financial Statements.
The Committee is responsible for the review of the Company’s
procedures for responding to the allegations of whistleblowers
and the arrangements by which staff may, in confidence, raise
concerns about possible financial reporting irregularities.
The Committee is also responsible for reviewing the internal
audit work plan, monitoring the delivery of that plan during
the year and reviewing the effectiveness of the internal audit
activities. It also considers the work of the Risk Committee,
whose main role is to review, on behalf of the Board, the
key risks inherent in the business and the system of control
necessary to manage such risks.
The terms of reference for the Committee are available on
request from the Company Secretary.
Nomination Committee
The Nomination Committee (the “Committee”) is chaired by
Robert Breare and its other members are David Bernstein and
Ronald Stewart, all of whom are independent non-executive
Directors and served throughout the course of the year.
The Committee is responsible for nominating candidates for
appointment to the Board and met once during the year with
full attendance, resulting in the appointment of Anne Sheinfield
as an independent non-executive director on 15 June 2010.
All non-executive directors are advised of
time
commitment considered necessary to enable them to fulfil
their responsibilities prior to appointment.
the
The terms of reference for the Committee are available on
request from the Company Secretary.
Appointments to the Board
Newly appointed directors are given training appropriate to
the level of their previous experience. Non-executive directors
meet regularly with members of the executive committee and
other personnel within the organisation. In addition, site
visits ensure that the non-executive directors gain first hand
experience of developments within the Group.
Any director appointed during the year is required, under the
provisions of the Company’s Articles of Association, to retire
and seek re-election by the shareholders at the next Annual
General Meeting.
The Company’s Articles of Association require one third of
the Directors for the time being to retire, and each Director
to retire from office at least once every three years. A retiring
Director is eligible for re-election.
Communication with Shareholders
The Group attaches considerable
the
effectiveness of its communication with its shareholders.
The full report and accounts are sent to all shareholders and
further copies are distributed to others with potential interest
in the Group’s performance.
importance
to
The directors seek to build on a mutual understanding
of objectives between the Company and its institutional
shareholders by making general presentations after the interim
and preliminary results; meeting shareholders to discuss long-
term issues and gather feedback; and communicating regularly
throughout the year. All shareholders have access to these
presentations, as well as to the annual report and accounts and
to other information about the Company, through the website
18
Ted Baker Report and Accounts 2010 / 2011
at www.tedbaker.com. They may also attend the Company’s
Annual General Meeting at which they have the opportunity
to ask questions.
Non-executive directors are kept informed of the views of
shareholders by the executive directors and are provided with
independent feedback from investor meetings.
Conflicts of interests
Following approval at the 2008 Annual General Meeting,
the Company’s Articles of Association were amended to take
account of certain provisions of the Companies Act 2006
relating to directors’ conflicts of interest. These provisions
permit the Board to consider, and if thought fit, to authorise
situations where a director has an interest that conflicts, or may
possibly conflict, with the interests of the Company. The Board
has adopted procedures for the approval of such conflicts. The
Board’s powers to authorise conflicts are operating effectively
and the procedures are being followed.
Internal Control
The Board is ultimately responsible for the Group’s system of
internal control and for reviewing its effectiveness. However,
such a system is designed to manage rather than eliminate the
risk of failure to achieve business objectives, and can provide
only reasonable and not absolute assurance against material
misstatement or loss.
Following publication of guidance for directors on internal
control “Internal Control: Guidance for Directors on the
Combined Code” (the “Turnbull guidance”), the Board
confirms that there is an ongoing process for identifying,
evaluating and managing the significant risks faced by the
Group, that has been in place for the year under review and
up to the date of approval of the annual report and accounts,
and that this process is regularly reviewed by the Board and
accords with the Turnbull guidance.
The Board has reviewed the effectiveness of the system of
internal control. In particular, it has reviewed and updated
the process for identifying and evaluating the significant risks
affecting the business and the policies and procedures by
which these risks are managed. Management is responsible for
the identification and evaluation of significant risks applicable
to their areas of the business together with the design and
operation of suitable internal controls. These risks are assessed
on a continual basis and may be associated with a variety of
internal or external sources including control breakdowns,
disruption in information systems, competition, natural
catastrophe and regulatory requirements.
The Group has an independent internal audit function whose
findings are regularly reviewed by the Executive Committee
and the Board. The Audit Committee monitors and reviews
the effectiveness of the internal audit activities.
Management reports regularly on its review of risks and how
they are managed to the Risk Committee, whose main role is
to review, on behalf of the Board, the key risks inherent in the
business and the system of control necessary to manage such
risks, and to present their findings to the Board.
The Chief Executive reports to the Board on behalf of the
Executive Committee on significant changes in the business
and the external environment which affects significant risks.
The Finance Director provides the Board with monthly
financial
includes key performance
indicators. Where areas for improvement in the system are
identified, the Board considers the recommendations made by
the Risk Committee and the Audit Committee.
information which
The Risk Committee includes the Finance Director and
various heads of department. It reviews, on a twice yearly
basis, the risk management and control process and considers:
(cid:116)(cid:1)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:66)(cid:86)(cid:85)(cid:73)(cid:80)(cid:83)(cid:74)(cid:85)(cid:90)(cid:13)(cid:1)(cid:83)(cid:70)(cid:84)(cid:80)(cid:86)(cid:83)(cid:68)(cid:70)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:68)(cid:80)(cid:14)(cid:80)(cid:83)(cid:69)(cid:74)(cid:79)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:80)(cid:84)(cid:70)(cid:1)(cid:74)(cid:79)(cid:87)(cid:80)(cid:77)(cid:87)(cid:70)(cid:69)(cid:1)
in the identification, assessment and management of
significant risks faced by the Group;
(cid:116)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:83)(cid:70)(cid:84)(cid:81)(cid:80)(cid:79)(cid:84)(cid:70)(cid:1) (cid:85)(cid:80)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:84)(cid:74)(cid:72)(cid:79)(cid:74)(cid:277)(cid:68)(cid:66)(cid:79)(cid:85)(cid:1) (cid:83)(cid:74)(cid:84)(cid:76)(cid:84)(cid:1) (cid:88)(cid:73)(cid:74)(cid:68)(cid:73)(cid:1) (cid:73)(cid:66)(cid:87)(cid:70)(cid:1) (cid:67)(cid:70)(cid:70)(cid:79)(cid:1)
identified by management and others;
(cid:116)(cid:1)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:78)(cid:66)(cid:74)(cid:79)(cid:85)(cid:70)(cid:79)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:66)(cid:1)(cid:68)(cid:80)(cid:79)(cid:85)(cid:83)(cid:80)(cid:77)(cid:1)(cid:70)(cid:79)(cid:87)(cid:74)(cid:83)(cid:80)(cid:79)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:69)(cid:74)(cid:83)(cid:70)(cid:68)(cid:85)(cid:70)(cid:69)(cid:1)(cid:85)(cid:80)(cid:88)(cid:66)(cid:83)(cid:69)(cid:84)
the proper management of risk; and
(cid:116)(cid:1)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:66)(cid:79)(cid:79)(cid:86)(cid:66)(cid:77)(cid:1)(cid:83)(cid:70)(cid:81)(cid:80)(cid:83)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:81)(cid:83)(cid:80)(cid:68)(cid:70)(cid:69)(cid:86)(cid:83)(cid:70)(cid:84)(cid:15)
Additionally, the Risk Committee keeps abreast of all changes
made to the systems and follows up on areas that require
improvement. It reports to the Board at twice yearly intervals
or more frequently should the need arise.
The UK Bribery Act
The Board is aware of the forthcoming UK Bribery Act,
which is expected to come into force during 2011. The Board
is proactively reviewing its procedures in anticipation of
this legislation.
19
Ted Baker Report and Accounts 2010 / 2011
DIRECTORS' REPORT: GOVERNANCE
SUSTAINABILITY AND THE ENVIRONMENT
We believe in being open and honest in the way we do business
and doing the right thing by all of our stakeholders; by
operating in a responsible and sustainable manner.
How we work
Mr L D Page has been given specific responsibility for overseeing
the formulation of the Group’s policies and procedures for
managing risks arising from social, environmental and ethical
matters (“SEE”). In addition, the Board has tasked four members
of the Executive Committee to oversee specific areas of our SEE
agenda for the Group. These Executive Committee members
participate because of the relevance of their departments to our
ongoing commitment in these areas, Brand Communication,
Product Design, Production and Special Projects (Interior
Design). We employed a full time Green Guardian in April 2010
to manage the Group’s cross-functional team (the “Green Team”)
which is responsible for addressing SEE concerns of the Group.
Key Issues
Ethical and Sustainable Sourcing
Ethical and sustainable sourcing is an area of great importance
to the Group. We believe that our products should be produced
in factories that are committed to providing a fair and safe
environment for their workers. Our trusted partners within
the supply chain are one of our most valuable assets. The Group
is committed to reducing our impact on the environment,
reducing our use of resources and increasing efficiencies
wherever possible to ensure our business is sustainable.
(cid:116)(cid:1) (cid:34)(cid:77)(cid:77)(cid:1)(cid:53)(cid:70)(cid:69)(cid:1)(cid:35)(cid:66)(cid:76)(cid:70)(cid:83)(cid:1)(cid:84)(cid:86)(cid:81)(cid:81)(cid:77)(cid:74)(cid:70)(cid:83)(cid:84)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:72)(cid:80)(cid:87)(cid:70)(cid:83)(cid:79)(cid:70)(cid:69)(cid:1)(cid:67)(cid:90)(cid:1)(cid:80)(cid:86)(cid:83)(cid:1)(cid:36)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:90)(cid:1)(cid:36)(cid:80)(cid:69)(cid:70)(cid:1)
of Conduct, which is based on the Social Accountability
International Code, an internationally recognised benchmark
for ethical excellence, and can be found at www.tedbaker.com
(cid:116)(cid:1) (cid:56)(cid:70)(cid:1)
(cid:66)(cid:79)(cid:79)(cid:80)(cid:86)(cid:79)(cid:68)(cid:70)(cid:69)(cid:1) (cid:80)(cid:86)(cid:83)(cid:1) (cid:81)(cid:66)(cid:83)(cid:85)(cid:79)(cid:70)(cid:83)(cid:84)(cid:73)(cid:74)(cid:81)(cid:1) (cid:88)(cid:74)(cid:85)(cid:73)(cid:1) (cid:79)(cid:80)(cid:85)(cid:14)(cid:71)(cid:80)(cid:83)(cid:14)(cid:81)(cid:83)(cid:80)(cid:277)(cid:85)(cid:1)
organisation, MADE-BY in May 2010. MADE-BY is a
non-profit multi-stakeholder initiative set up to improve
sustainability within the fashion industry. We are working
with it to set realistic and achievable internal targets to
improve
in
line with its internationally accredited benchmarks. Our
first scorecard, detailing our current performance against
these benchmarks, will be issued on MADE-BY’s website
during 2011
the social and environmental standards
(cid:116)(cid:1) (cid:48)(cid:86)(cid:83)(cid:1)(cid:81)(cid:66)(cid:83)(cid:85)(cid:79)(cid:70)(cid:83)(cid:84)(cid:73)(cid:74)(cid:81)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:46)(cid:34)(cid:37)(cid:38)(cid:14)(cid:35)(cid:58)(cid:1)(cid:73)(cid:66)(cid:84)(cid:1)(cid:70)(cid:79)(cid:66)(cid:67)(cid:77)(cid:70)(cid:69)(cid:1)(cid:86)(cid:84)(cid:1)(cid:85)(cid:80)(cid:1)(cid:66)(cid:68)(cid:68)(cid:70)(cid:84)(cid:84)(cid:1)
its expertise on sustainable fibres. We have set long term
internal targets for the quantity of sustainable fibres used
within our collections, and will be showing our progress
yearly on our MADE-BY scorecards
Environmental Impacts
(cid:116)(cid:1) (cid:34)(cid:84)(cid:1) (cid:66)(cid:1) (cid:40)(cid:83)(cid:70)(cid:70)(cid:79)(cid:1) (cid:22)(cid:17)(cid:17)(cid:1) (cid:46)(cid:70)(cid:78)(cid:67)(cid:70)(cid:83)(cid:13)(cid:1) (cid:88)(cid:70)(cid:1) (cid:66)(cid:83)(cid:70)(cid:1) (cid:68)(cid:80)(cid:78)(cid:78)(cid:74)(cid:85)(cid:85)(cid:70)(cid:69)(cid:1) (cid:85)(cid:80)(cid:1) (cid:83)(cid:70)(cid:69)(cid:86)(cid:68)(cid:74)(cid:79)(cid:72)(cid:1)
our carbon footprint and were rewarded in June 2010 with
a Platinum Award. This reflects the extent of our carbon
reductions and acknowledges the successful implementation
of our carbon saving initiatives
(cid:116)(cid:1) (cid:56)(cid:70)(cid:1) (cid:66)(cid:83)(cid:70)(cid:1) (cid:88)(cid:80)(cid:83)(cid:76)(cid:74)(cid:79)(cid:72)(cid:1) (cid:80)(cid:79)(cid:1) (cid:67)(cid:80)(cid:85)(cid:73)(cid:1) (cid:66)(cid:1) (cid:67)(cid:66)(cid:84)(cid:70)(cid:77)(cid:74)(cid:79)(cid:70)(cid:1) (cid:78)(cid:70)(cid:66)(cid:84)(cid:86)(cid:83)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1) (cid:71)(cid:80)(cid:83)(cid:1) (cid:80)(cid:86)(cid:83)(cid:1)
carbon footprint as well as on projects that will help reduce
it such as installing energy efficient LED lights within
our showrooms and SMART meters within our stores to
monitor energy consumption
(cid:116)(cid:1) (cid:34)(cid:77)(cid:77)(cid:1)(cid:80)(cid:71)(cid:1)(cid:80)(cid:86)(cid:83)(cid:1)(cid:67)(cid:86)(cid:84)(cid:74)(cid:79)(cid:70)(cid:84)(cid:84)(cid:1)(cid:85)(cid:83)(cid:66)(cid:87)(cid:70)(cid:77)(cid:1)(cid:74)(cid:84)(cid:1)(cid:36)(cid:66)(cid:83)(cid:67)(cid:80)(cid:79)(cid:47)(cid:70)(cid:86)(cid:85)(cid:83)(cid:66)(cid:77)(cid:165)(cid:15)(cid:1)(cid:263)(cid:74)(cid:84)(cid:1)(cid:78)(cid:70)(cid:66)(cid:79)(cid:84)(cid:1)(cid:85)(cid:73)(cid:66)(cid:85)(cid:1)
the unavoidable emissions generated by the air, road and rail
journeys, required to visit our stores and suppliers, have been
reduced to net zero through purchasing carbon credits from
Voluntary Carbon Standard (“VCS”) validated projects
(cid:116)(cid:1) (cid:56)(cid:70)(cid:1)(cid:68)(cid:80)(cid:79)(cid:85)(cid:74)(cid:79)(cid:86)(cid:70)(cid:1)(cid:85)(cid:80)(cid:1)(cid:81)(cid:66)(cid:83)(cid:85)(cid:74)(cid:68)(cid:74)(cid:81)(cid:66)(cid:85)(cid:70)(cid:1)(cid:74)(cid:79)(cid:1)(cid:263)(cid:70)(cid:1)(cid:36)(cid:66)(cid:83)(cid:67)(cid:80)(cid:79)(cid:1)(cid:37)(cid:74)(cid:84)(cid:68)(cid:77)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:1)(cid:49)(cid:83)(cid:80)(cid:75)(cid:70)(cid:68)(cid:85)(cid:1)
to measure and disclose our greenhouse gas emissions and
climate change strategies
(cid:116)(cid:1) (cid:56)(cid:70)(cid:1) (cid:81)(cid:66)(cid:83)(cid:85)(cid:74)(cid:68)(cid:74)(cid:81)(cid:66)(cid:85)(cid:70)(cid:1) (cid:74)(cid:79)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:56)(cid:66)(cid:84)(cid:85)(cid:70)(cid:81)(cid:66)(cid:76)(cid:1) (cid:36)(cid:80)(cid:78)(cid:81)(cid:77)(cid:74)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1) (cid:52)(cid:68)(cid:73)(cid:70)(cid:78)(cid:70)(cid:1) (cid:66)(cid:84)(cid:1) (cid:81)(cid:66)(cid:83)(cid:85)(cid:1)
of the Producer Responsibility Obligation (Packaging Waste)
Regulations 1997, and continue to reduce unnecessary packaging
(cid:116)(cid:1) (cid:48)(cid:86)(cid:83)(cid:1) (cid:70)(cid:78)(cid:81)(cid:77)(cid:80)(cid:90)(cid:70)(cid:70)(cid:84)(cid:1) (cid:66)(cid:83)(cid:70)(cid:1) (cid:80)(cid:86)(cid:83)(cid:1) (cid:72)(cid:83)(cid:70)(cid:66)(cid:85)(cid:70)(cid:84)(cid:85)(cid:1) (cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:13)(cid:1) (cid:66)(cid:79)(cid:69)(cid:1) (cid:88)(cid:70)(cid:1) (cid:73)(cid:66)(cid:87)(cid:70)(cid:1) (cid:40)(cid:83)(cid:70)(cid:70)(cid:79)(cid:1)
Team members in every department and store encouraging
colleagues to be more environmentally aware
(cid:116)(cid:1) (cid:56)(cid:70)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:68)(cid:80)(cid:79)(cid:84)(cid:85)(cid:66)(cid:79)(cid:85)(cid:77)(cid:90)(cid:1)(cid:77)(cid:80)(cid:80)(cid:76)(cid:74)(cid:79)(cid:72)(cid:1)(cid:66)(cid:85)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:88)(cid:66)(cid:84)(cid:85)(cid:70)(cid:1)(cid:80)(cid:86)(cid:83)(cid:1)(cid:67)(cid:86)(cid:84)(cid:74)(cid:79)(cid:70)(cid:84)(cid:84)(cid:1)(cid:68)(cid:83)(cid:70)(cid:66)(cid:85)(cid:70)(cid:84)(cid:13)(cid:1)
and working towards our overall aim to ensure no waste
goes to landfill. We participate in recycling schemes in
all properties
(cid:116)(cid:1) (cid:56)(cid:70)(cid:1)(cid:73)(cid:66)(cid:87)(cid:70)(cid:1)(cid:74)(cid:79)(cid:84)(cid:85)(cid:66)(cid:77)(cid:77)(cid:70)(cid:69)(cid:1)(cid:85)(cid:88)(cid:80)(cid:1)(cid:67)(cid:86)(cid:68)(cid:76)(cid:71)(cid:66)(cid:84)(cid:85)(cid:1)(cid:67)(cid:70)(cid:70)(cid:1)(cid:68)(cid:80)(cid:77)(cid:80)(cid:79)(cid:74)(cid:70)(cid:84)(cid:1)(cid:80)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:83)(cid:80)(cid:80)(cid:71)(cid:1)(cid:80)(cid:71)(cid:1)
our London head office, to help give the bees a haven in
which to recuperate their local population
Community
Our Charity Partner for 2009/2010 was Everyman, a prostate
and testicular cancer charity. We used our underwear boxes
as a vehicle to further raise awareness of their charity and
funds for research into prostate and testicular cancer. We have
also worked with them business wise to support a number of
their initiatives.
We have also made other one-off in-kind donations throughout
the year. Donations paid during the year can be found
on page 33.
20
Ted Baker Report and Accounts 2010 / 2011
DIRECTORS' REPORT: GOVERNANCE
PEOPLE
overseas expansion our workforce is becoming more diverse
and we respect cultural differences and actively seek to learn
about them in each territory we operate.
Health, Safety and Welfare
Our duty and commitment to the well being of our team is
supported by activity such as healthcare, occupational health,
health seminars and funding for flu jabs. During the period, we
introduced a Cycle to Work Scheme, with a Childcare Voucher
Scheme introduced in previous years. During 2011, we will
introduce an Employee Assistance Programme which will
further support our genuine concern for the well-being of our
team. The prevention and identification of risks and accidents
is supported by an external Health and Safety service provider
and ongoing training of management teams. A dedicated
Health & Safety Officer will be recruited to strengthen our
knowledge and commitment in this area of our business.
Disabled Employees
Applications for employment by disabled persons are always
fully and fairly considered, bearing in mind the aptitudes of the
applicant concerned. In the event of team members becoming
disabled every effort is made to ensure that their employment
with the Group continues and that appropriate training is
arranged. It is the policy of the Group that the training, career
development and promotion of disabled persons should, as far
as possible, be identical with that of other employees.
Employee Engagement
The Group places considerable value on the involvement of
its team members and continues to keep them informed on
matters affecting them and on the significant factors affecting
the performance of the Group. This is achieved through
formal and informal meetings and employee representatives
are consulted regularly on a wide range of matters affecting
employees current and future interests. Team members are
regularly informed of the Group’s performance and the factors
affecting its performance during the year.
The talent, commitment and passion of the Ted Baker team are
key factors in the success of our business and brand. The value
we place on our team is shown in the way we motivate them,
encourage learning and development, nurture their growth
and potential, and recognise and reward their contributions.
Culture
The spirit in which we conduct our business and interact with
our team always takes into consideration ‘Would Ted do it that
way?’ We regularly host internal events, including sessions
with the chief executive, telling the story behind the brand
and also Family Days where we open our doors to friends and
family. During the period we invited investors and analysts to a
series of presentations led by the Ted Baker management team
to demonstrate the culture of our business and the strength of
the team behind the brand.
Reward and Recognition
Remuneration is reviewed annually and a benchmarking
review is undertaken to ensure we remain competitive and
fair across all areas of the business. Our rewards include
bonus schemes linked to sales targets and individual and
corporate performance. We encourage our team members to
join our Save As You Earn (“SAYE”) schemes. This year we
saw the launch of our Wisdom Awards; recognition for the
longer serving members of the team and a chance for them
to celebrate and share their stories with the rest of the team.
is reviewed bi-annually with each
Learning and Development
Performance
team
member to discuss personal and career development.
Within this process, goals and objectives are set and linked
to personal growth and business development. We allow
our team members to broaden their abilities and knowledge
by exposing them to new experiences. We invest in training
which ranges from specialist and technical skills training, to
in-house developed courses focusing on management skills,
leadership skills, brand awareness and self awareness. Firm
career paths exist across the Group and inter-departmental
and international moves play a large part in maintaining and
growing talent.
Diversity
The Group believes in respecting individuals and their rights
in the workplace. With this in mind, specific policies are in
place covering harassment and bullying, whistle blowing,
equal opportunities and data protection. Our team represents
a wide and diverse workforce from all backgrounds, sexual
orientation, nationality, ethnic and religious groups. We
support sponsorship of visa applications, where appropriate,
to retain specific talent within the business. With continued
21
Ted Baker Report and Accounts 2010 / 2011
Ted ’s Tactile Textiles
All Ted Baker prints are designed in house, and each one is intended to capture
a sense of both the character and individuality of the man himself. The abstract
nature of this floral print from Ted’s Spring/Summer 11 menswear collection
offers both texture and depth and combines with the highest quality fabrics,
finishes and surfaces to ensure Ted’s unique personality is woven into its very heart.
DIRECTORS' REPORT: OTHER STATUTORY DISCLOSURES
BOARD OF DIRECTORS
Robert Breare
Non-Executive Chairman (58)
Robert has extensive experience of consumer facing businesses
and was formerly a founder and Chief Executive Officer of
Arcadian International Plc, which included Malmaison Hotels.
Robert is non-executive chairman of Individual Restaurant
Company plc and holds other non-executive positions. He
is chairman of the nomination committee and a member of
the audit and remuneration committees. Robert is an
independent director.
David Alan Bernstein
Non-Executive Director (67)
David is chairman of The Football Association and non-
executive chairman of Wembley National Stadium Limited,
Blacks Leisure plc, Sports and Leisure Group Ltd and The
Orchid Group Ltd. Previously he was joint managing director
of Pentland Group Plc and chairman of Manchester City
plc. He is chairman of the remuneration committee and a
member of the audit and nomination committees. David is an
independent director and the senior non-executive director.
Raymond Stuart Kelvin, CBE
Chief Executive (55) (‘Closest Man To Ted’)
Ray, the founder of Ted Baker, has worked in the fashion
industry for over 37 years. In 1973 he founded PC Clothing
Limited, a supplier of womenswear to high street retailers. In
1987 Ray developed the Ted Baker brand and has been chief
executive of Ted Baker since its launch in 1988.
Lindsay Dennis Page, MA, ACA
Finance Director (52)
Lindsay joined Ted Baker as finance director in February
1997. He joined Binder Hamlyn in 1981, became a founder
member of the corporate finance department in 1986 and a
partner in 1990. Binder Hamlyn subsequently merged with
Arthur Andersen in 1994.
Ronald Stewart
Non-Executive Director (63)
Ron spent all his 39 year banking career at The Royal Bank of
Scotland PLC, retiring in 2003 as Deputy Managing Director
of its Corporate Banking Department in London. He is a
Trustee of several Christian charities and a Governor of Reeds
School in Surrey. He is chairman of the audit committee and
a member of the nomination and remuneration committees.
Ron is an independent director.
Anne Sheinfield
Non-Executive Director (45)
Anne was appointed as a non-executive director on 15
June 2010. Anne is a commercial lawyer with 20 years’ post
qualification experience in the theatre, TV and music areas of
entertainment and has a wealth of intellectual property and
commercial legal experience. Anne is an independent director.
25
Ted Baker Report and Accounts 2010 / 2011
DIRECTORS' REPORT: OTHER STATUTORY DISCLOSURES
DIRECTORS’ REMUNERATION REPORT
This report has been prepared in accordance with section 420 of
the Companies Act 2006 and in compliance with the provisions
of the Combined Code, as disclosed in the Company’s corporate
governance statements, and the requirements of Schedule 8 of the
Large and Medium-sized Companies and Groups (Accounts and
Reports) Regulations 2008 regarding the contents of the report.
Remuneration Committee
The Remuneration Committee (the “Committee”) is chaired by
David Bernstein and its other members are Robert Breare and
Ronald Stewart, all of whom are independent non-executive
Directors and served throughout the course of the year. The
Committee met once during the year with full attendance.
The Committee consulted Ernst & Young LLP (which also
provided tax, legal and accounting services to the Group in
the year) on executive remuneration issues.
The Committee is responsible for setting the remuneration
packages of the executive directors of the Board and other senior
executives who fall within the scope of the Committee. It approves
all service contracts or other contracts between the Company and
its executive directors and senior executives and considers and, if
thought fit, approves any outside interests and other directorships of
the executive directors. The Committee also reviews and approves
the design of the Company’s share based incentive schemes
and determines the level of awards to be made and approves the
performance targets. The terms of reference for the Committee are
available on request from the Company Secretary.
Remuneration Policy
The aim of the Group’s remuneration policy is to attract,
motivate and retain high quality management and to incentivise
them according to the levels of value generated for shareholders.
The total size of the remuneration package is judged by comparison
with the value of packages of similar companies, having regard to:
(cid:116)(cid:1) (cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:84)(cid:74)(cid:91)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:90)(cid:13)(cid:1)(cid:74)(cid:85)(cid:84)(cid:1)(cid:85)(cid:86)(cid:83)(cid:79)(cid:80)(cid:87)(cid:70)(cid:83)(cid:13)(cid:1)(cid:81)(cid:83)(cid:80)(cid:277)(cid:85)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:79)(cid:86)(cid:78)(cid:67)(cid:70)(cid:83)(cid:1)(cid:80)(cid:71)(cid:1)
people employed;
(cid:116)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)(cid:69)(cid:74)(cid:87)(cid:70)(cid:83)(cid:84)(cid:74)(cid:85)(cid:90)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:77)(cid:70)(cid:89)(cid:74)(cid:85)(cid:90)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:67)(cid:86)(cid:84)(cid:74)(cid:79)(cid:70)(cid:84)(cid:84)(cid:28)
(cid:116)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)(cid:72)(cid:70)(cid:80)(cid:72)(cid:83)(cid:66)(cid:81)(cid:73)(cid:74)(cid:68)(cid:66)(cid:77)(cid:1)(cid:84)(cid:81)(cid:83)(cid:70)(cid:66)(cid:69)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:67)(cid:86)(cid:84)(cid:74)(cid:79)(cid:70)(cid:84)(cid:84)(cid:28)(cid:1)(cid:66)(cid:79)(cid:69)
(cid:116)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)(cid:72)(cid:83)(cid:80)(cid:88)(cid:85)(cid:73)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:70)(cid:89)(cid:81)(cid:66)(cid:79)(cid:84)(cid:74)(cid:80)(cid:79)(cid:1)(cid:81)(cid:83)(cid:80)(cid:277)(cid:77)(cid:70)(cid:15)
Non-executive directors are remunerated with fees in line
with market rates. They do not receive any pension or other
benefits, other than reasonable expenses, and they do not
participate in any bonus or share schemes.
Key Components of Executive Remuneration
Remuneration packages are structured to provide a balance
between fixed basic salary and variable remuneration based
on individual and Group performance.
Basic Salary
Basic salary is reviewed annually by the Committee having
regard to competitive market practice and each director’s
contribution to the business, thus allowing for individual
performance. When reviewing the salaries of the Executive
Directors, the Committee also has regard to pay and
employment conditions elsewhere in the Group.
Annual Bonus
The annual grant of bonuses is conditional upon achievement of
targets by reference to agreed financial performance measures
and external expectations, namely profit before tax and growth
in earnings per share. These are designed to provide a direct link
between the rewards for executives and returns to shareholders.
Bonuses are capped at 100 per cent of basic salary. This scheme
is applicable to Mr R S Kelvin and Mr L D Page. Amounts
received in the year may be found on page 29.
Pensions and Other Benefits
The Company operates a money purchase scheme with a
Company contribution of 12.5 per cent of basic salary for
executive directors apart from Mr R S Kelvin. Taxable benefits
include such items as company cars, fuel and medical expense
insurance. Life assurance is provided as a non-taxable benefit.
Long Term Incentive Schemes
The Committee strongly believes that executives should
participate in equity-based incentives which support the
Company’s overall business strategy and objectives. In
addition, share ownership by executives strengthens the link
between their personal interests and those of the shareholders.
This was historically approached through annual grants of
conditional share awards under the Performance Share Plan
and grants of share options every three to five years under the
1997 Executive Share Option Scheme and/or the Performance
Share Plan. These plans impose an aggregate individual limit
on the market value of shares which may be subject to options
or awards of ten times that individual’s annual remuneration.
The Committee’s policy was usually to grant share options
based on between one and four times an individual’s annual
remuneration, and to grant conditional awards based on one
times an individual’s annual remuneration.
Following the Committee’s extensive review of the existing
conditional share awards and share options in 2009, the
26
Ted Baker Report and Accounts 2010 / 2011
Committee introduced the Value Creation Plan. The Value
Creation Plan focuses executives on shareholder returns as the
rewards earned are directly linked to share price performance and
total shareholder return exceeding the return on an appropriate
index. Since the introduction of the Value Creation Plan, no
awards or options have been granted under the Performance
Share Plan or the 1997 Executive Share Option Scheme.
The following schemes are in operation for the
benefit of executive directors:
The Ted Baker 2009 Value Creation Plan
Under this plan, an award of units is made which has no value
at grant but, subject to satisfaction of earnings per share, share
price and total shareholder return performance targets, converts
into nil cost options to acquire ordinary shares in the Company
at the end of the three year performance period. Conversion of
units is based on each unit having a value calculated by reference
to a pool of value, being 12.5 per cent of the market value of all
issued ordinary shares in the Company above the share price
growth target (described in the next paragraph) multiplied by
the number of ordinary shares in issue at that date, and then
divided by the total number of units awarded. The aggregate
value of the units held by an executive is then divided by the
market price per share on conversion to determine the number
of shares subject to that executive’s nil cost options. A nil cost
option over 50 per cent of the shares will be granted to the
executive at the end of the performance period and a further
nil cost option over the balance of the shares after a further year.
The terms and conditions of the awards of units granted on 13
August 2009 are as follows:
(cid:116)(cid:1) (cid:79)(cid:80)(cid:1)(cid:67)(cid:70)(cid:79)(cid:70)(cid:277)(cid:85)(cid:1)(cid:74)(cid:84)(cid:1)(cid:81)(cid:83)(cid:80)(cid:87)(cid:74)(cid:69)(cid:70)(cid:69)(cid:1)(cid:86)(cid:79)(cid:77)(cid:70)(cid:84)(cid:84)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:70)(cid:66)(cid:83)(cid:79)(cid:74)(cid:79)(cid:72)(cid:84)(cid:1)(cid:81)(cid:70)(cid:83)(cid:1)(cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:1)(cid:72)(cid:83)(cid:80)(cid:88)(cid:85)(cid:73)(cid:1)
over the performance period is greater than 5 per cent per
annum compound above the consensus forecasts for the
(cid:277)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:1)(cid:70)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:43)(cid:66)(cid:79)(cid:86)(cid:66)(cid:83)(cid:90)(cid:1)(cid:19)(cid:17)(cid:18)(cid:17)(cid:28)
(cid:116)(cid:1) (cid:79)(cid:80)(cid:1) (cid:67)(cid:70)(cid:79)(cid:70)(cid:277)(cid:85)(cid:1) (cid:74)(cid:84)(cid:1) (cid:81)(cid:83)(cid:80)(cid:87)(cid:74)(cid:69)(cid:70)(cid:69)(cid:1) (cid:86)(cid:79)(cid:77)(cid:70)(cid:84)(cid:84)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:1) (cid:81)(cid:83)(cid:74)(cid:68)(cid:70)(cid:1) (cid:72)(cid:83)(cid:80)(cid:88)(cid:85)(cid:73)(cid:1) (cid:74)(cid:84)(cid:1)
greater than 10 per cent per annum compound over the
(cid:81)(cid:70)(cid:83)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:81)(cid:70)(cid:83)(cid:74)(cid:80)(cid:69)(cid:28)(cid:1)(cid:66)(cid:79)(cid:69)
(cid:116)(cid:1) (cid:79)(cid:80)(cid:1) (cid:67)(cid:70)(cid:79)(cid:70)(cid:277)(cid:85)(cid:1) (cid:74)(cid:84)(cid:1) (cid:81)(cid:83)(cid:80)(cid:87)(cid:74)(cid:69)(cid:70)(cid:69)(cid:1) (cid:86)(cid:79)(cid:77)(cid:70)(cid:84)(cid:84)(cid:1) (cid:85)(cid:80)(cid:85)(cid:66)(cid:77)(cid:1) (cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:73)(cid:80)(cid:77)(cid:69)(cid:70)(cid:83)(cid:1) (cid:83)(cid:70)(cid:85)(cid:86)(cid:83)(cid:79)(cid:1)
exceeds the return on the FTSE General Retail Sector Index
over the performance period.
The 2009 awards under the plan have been supplemented, in
accordance with the plan rules, with a parallel linked issue of
B ordinary shares in the Company’s subsidiary, No Ordinary
Designer Label Limited, to recipients of the 2009 awards. The
award holders purchased the B ordinary shares at fair market
value and they will only be able to realise any value in those
shares by reference to the value of No Ordinary Designer Label
Limited above a predetermined hurdle value at the end of the
three year performance period applicable to the 2009 awards
described above. At the end of the performance period, an
(cid:66)(cid:88)(cid:66)(cid:83)(cid:69)(cid:1)(cid:73)(cid:80)(cid:77)(cid:69)(cid:70)(cid:83)(cid:1)(cid:68)(cid:66)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:83)(cid:70)(cid:71)(cid:80)(cid:83)(cid:70)(cid:1)(cid:83)(cid:70)(cid:68)(cid:70)(cid:74)(cid:87)(cid:70)(cid:1)(cid:73)(cid:74)(cid:84)(cid:1)(cid:67)(cid:70)(cid:79)(cid:70)(cid:277)(cid:85)(cid:1)(cid:86)(cid:79)(cid:69)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:81)(cid:77)(cid:66)(cid:79)(cid:1)
either by exercising the nil cost option under the 2009 award
(cid:80)(cid:83)(cid:1)(cid:84)(cid:70)(cid:77)(cid:77)(cid:74)(cid:79)(cid:72)(cid:1)(cid:35)(cid:1)(cid:80)(cid:83)(cid:69)(cid:74)(cid:79)(cid:66)(cid:83)(cid:90)(cid:1)(cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:84)(cid:13)(cid:1)(cid:67)(cid:86)(cid:85)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:72)(cid:83)(cid:80)(cid:84)(cid:84)(cid:1)(cid:67)(cid:70)(cid:79)(cid:70)(cid:277)(cid:85)(cid:1)(cid:85)(cid:80)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:66)(cid:88)(cid:66)(cid:83)(cid:69)(cid:1)
holder cannot exceed the gross value realisable under the 2009
(cid:66)(cid:88)(cid:66)(cid:83)(cid:69)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:73)(cid:70)(cid:1)(cid:68)(cid:66)(cid:79)(cid:79)(cid:80)(cid:85)(cid:1)(cid:83)(cid:70)(cid:68)(cid:70)(cid:74)(cid:87)(cid:70)(cid:1)(cid:66)(cid:79)(cid:90)(cid:1)(cid:67)(cid:70)(cid:79)(cid:70)(cid:277)(cid:85)(cid:1)(cid:70)(cid:66)(cid:83)(cid:77)(cid:74)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:66)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:85)(cid:74)(cid:78)(cid:70)(cid:1)
described above in relation to the nil cost option.
The Ted Baker 1997 Executive Share Option Scheme
Under this scheme, options may be granted to subscribe for
new shares and to acquire shares from the Ted Baker Group
(cid:38)(cid:78)(cid:81)(cid:77)(cid:80)(cid:90)(cid:70)(cid:70)(cid:1) (cid:35)(cid:70)(cid:79)(cid:70)(cid:277)(cid:85)(cid:1) (cid:53)(cid:83)(cid:86)(cid:84)(cid:85)(cid:15)(cid:1) (cid:263)(cid:70)(cid:1) (cid:70)(cid:89)(cid:70)(cid:83)(cid:68)(cid:74)(cid:84)(cid:70)(cid:1) (cid:80)(cid:71)(cid:1) (cid:68)(cid:86)(cid:83)(cid:83)(cid:70)(cid:79)(cid:85)(cid:77)(cid:90)(cid:1) (cid:84)(cid:86)(cid:67)(cid:84)(cid:74)(cid:84)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)
options is subject to earnings per share growth over three
(cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:81)(cid:70)(cid:83)(cid:74)(cid:80)(cid:69)(cid:84)(cid:13)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:277)(cid:83)(cid:84)(cid:85)(cid:1)(cid:67)(cid:70)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:80)(cid:79)(cid:70)(cid:1)(cid:74)(cid:79)(cid:1)(cid:88)(cid:73)(cid:74)(cid:68)(cid:73)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:72)(cid:83)(cid:66)(cid:79)(cid:85)(cid:1)
is made. If compound earnings per share growth is at least
7.5 per cent per annum, 25 per cent of the options will be
exercisable, rising on a straight line basis to 100 per cent if
compound growth of 12.5 per cent per annum is achieved. Mr
R S Kelvin and Mr L D Page hold options under this scheme.
The Ted Baker Performance Share Plan
Under this plan, both conditional share awards and share
options may be granted.
Awards made on 4 April 2008 were also subject to compound
earnings per share growth performance conditions, with 25
per cent vesting only on 7.5 per cent per annum growth and
the balance vesting on a straight line basis thereafter up to 100
per cent if growth of 12.5 per cent per annum was achieved.
Mr R S Kelvin and Mr L D Page held awards under this plan.
The exercise of subsisting share options was subject to the
same performance conditions as the 1997 Executive Share
Option Scheme.
The Ted Baker Sharesave Scheme
Under this scheme, options are made available to all employees
to encourage share ownership. The exercise of options is not
subject to performance conditions. Mr L D Page holds options
under this scheme.
Contracts of Service
Each executive director has a service contract with a notice
period of 12 months. The Board sets non-executive directors’
fees. Service contracts and letters of appointment are available
for inspection at the Company’s registered office.
27
Ted Baker Report and Accounts 2010 / 2011
DIRECTORS' REPORT: OTHER STATUTORY DISCLOSURES
DIRECTORS’ REMUNERATION
REPORT continued
Robert Breare
David A Bernstein
Raymond S Kelvin
Lindsay D Page
Ronald Stewart
Anne Sheinfield
Date of service
contract
1 November 2001
24 January 2003
17 July 1997
17 July 1997
25 February 2009
15 June 2010
Un-expired term
Notice period
Provision for
compensation
6 months
6 months
12 months
12 months
6 months
6 months
6 months
6 months
12 months
12 months
6 months
6 months
None
None
None
None
None
None
Total shareholder value
The following graph charts the total cumulative shareholder return of the Company from January 2006 to January 2011.
Total Shareholder Return - 5 Years
Ted Baker PLC
FTSE All Share
General Retailers
180
160
140
120
100
80
60
40
20
0
)
£
(
e
u
l
a
V
Jan ‘06
Jul ‘06
Jan ‘07
Jul ‘07
Jan ‘08
Jul ‘08
Jan ‘09
Jul ‘09
Jan ‘10
Jul ‘10
Jan ‘11
Audited Information
The auditors are required to report on the individual aspects of remuneration, which may be found in the following section of
this report.
Directors’ remuneration, interests and transactions
Emoluments
Money purchase pension contributions
52 weeks ended
29 January
2011
52 weeks ended
30 January
2010
£’000
1,145
35
1,180
£’000
1,037
31
1,068
28
Ted Baker Report and Accounts 2010 / 2011
Directors’ emoluments
Executive
R S Kelvin
L D Page
Non-executive
R Breare
D A Bernstein
D B Hewitt
R Stewart
A Sheinfield *
Fees/basic
salary
£’000
Benefits
£’000
Performance
related
bonus
£’000
296
279
43
33
-
33
22
706
6
2
-
-
-
-
-
8
52 weeks ended
29 January
2011
52 weeks ended
30 January
2010
£’000
527
487
43
33
-
33
22
£’000
493
432
40
30
14
28
-
225
206
-
-
-
-
-
431
1,145
1,037
* Anne Sheinfield was appointed as a non-executive director on 15 June 2010
Performance related bonuses are determined by the Committee based on achievement of targets by reference to agreed financial
performance measures and external expectations, namely profit before tax and growth in earnings per share. Bonuses are capped
at 100% of basic salary.
Directors’ Long Term Incentive Schemes
Awards under the Ted Baker 2009 Value Creation Plan
On 13 August 2009, the Committee made the award of units set out below under the Ted Baker 2009 Value Creation Plan (the
“VCP”) subject to a three year performance period ending 12 August 2012. Awards under the VCP are subject to growth in
earnings per share, share price and total shareholder return over a three year period, details of which may be found on page 27.
R S Kelvin
L D Page
Average share price at
award date
No. of units
awarded
Share price at first
vesting date
No. of shares
vested
376.1p
376.1p
17,900 (17.9% of
total issued units
15,600 (15.6% of
total issued units*)
-
-
-
-
*In parallel to the award of these units, Mr L D Page also acquired 4,444 B ordinary shares in the capital of No Ordinary Designer Label Limited on 29 January 2010 under
the terms of the VCP. At the end of the performance period, Mr L D Page can receive his benefit under the VCP either by exercising the nil cost option which may be granted
under the units award or by selling his B ordinary shares.
29
Ted Baker Report and Accounts 2010 / 2011
DIRECTORS' REPORT: OTHER STATUTORY DISCLOSURES
DIRECTORS’ REMUNERATION
REPORT continued
Conditional Share Awards
On 4 April 2008, the Trustees of the Ted Baker 1998 Employee Benefit Trust made the conditional share awards set out below
under the Ted Baker Performance Share Plan (the “Plan”) for the three years ending 29 January 2011. Awards under the Plan were
subject to the growth of the Company’s earnings per share over a three year period, details of which may be found on page 27.
Diluted earnings per share rose by a compound rate of 4.9 per cent during the three years resulting in none of the shares vesting.
R S Kelvin
L D Page
Share price at
award date
No. of shares
awarded
Share price at first
vesting date
No. of shares
vested
414.0p
414.0p
66,425
57,971
-
-
-
-
Share Options
Options granted to directors under the 1997 Executive Share Option Scheme were as follows:
R S Kelvin
LD Page
30 January
2010
No. of shares
Options (exercised)
or granted
No. of shares
8,453
8,499
-
-
29 January
2011
No. of shares
8,453
8,499
Option
price p
354.9
353.0
Earliest date
of exercise
Expiry Date
28 October 2011
27 October 2018
22 October 2011
21 October 2018
Share options granted to directors under the Ted Baker Performance Share Plan were as follows:
R S Kelvin
L D Page
30 January
2010
No. of shares
137,681
113,527
Options (exercised)
or granted
No. of shares
-
-
29 January
2011
No. of shares
137,681
113,527
Option
price p
414.0
414.0
Earliest date
of exercise
Expiry Date
30 January 2011
29 January 2018
30 January 2011
29 January 2018
The exercise of options was subject to the growth in the Company’s earnings per share over a three year period, details of which
may be found on page 27. Diluted earnings per share rose by a compound rate of 4.9 per cent during the three years resulting in
none of the options vesting.
Share options granted to directors under the Ted Baker Sharesave Scheme were as follows:
30 January
2010
No. of shares
5,165
Options (exercised)
or granted
No. of shares
-
29 January
2011
No. of shares
5,165
Option
price p
303.0
Earliest date
of exercise
Expiry Date
1 July 2014
1 January 2015
L D Page
Directors’ pension
52 weeks ended
29 January
2011
£’000
35
52 weeks ended
30 January
2010
£’000
31
L D Page
David Bernstein
Chairman of the Remuneration Committee
30
Ted Baker Report and Accounts 2010 / 2011
DIRECTORS' REPORT: OTHER STATUTORY DISCLOSURES
OTHER DISCLOSURES
The directors present their annual report on the affairs of the Group, together with the accounts and auditors’ report, for the 52
weeks ended 29 January 2011. The comparative period is for the 52 weeks ended 30 January 2010.
Principal Activities
Ted Baker is a leading designer brand and the principal activities of the Group comprise the design, wholesale and retail of
menswear, womenswear and related accessories. The subsidiary undertakings principally affecting the profits and net assets of
the Group in the period are listed in Note 12 to the accounts. The Group also has branches operating in Eire and Hong Kong and
a representative office in Italy.
Business Review and Future Prospects
A commentary on the Group’s progress during the period and its future prospects are set out in the Chairman’s Statement and
Business Review on pages 5 to 11.
The contents of this Directors’ Report together with:
(cid:116)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)(cid:36)(cid:73)(cid:66)(cid:74)(cid:83)(cid:78)(cid:66)(cid:79)(cid:8)(cid:84)(cid:1)(cid:52)(cid:85)(cid:66)(cid:85)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:80)(cid:79)(cid:1)(cid:81)(cid:66)(cid:72)(cid:70)(cid:84)(cid:1)(cid:22)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:23)(cid:28)
(cid:116)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)(cid:35)(cid:86)(cid:84)(cid:74)(cid:79)(cid:70)(cid:84)(cid:84)(cid:1)(cid:51)(cid:70)(cid:87)(cid:74)(cid:70)(cid:88)(cid:1)(cid:80)(cid:79)(cid:1)(cid:81)(cid:66)(cid:72)(cid:70)(cid:84)(cid:1)(cid:24)(cid:1)(cid:85)(cid:80)(cid:1)(cid:18)(cid:18)(cid:28)
(cid:116)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)(cid:49)(cid:83)(cid:74)(cid:79)(cid:68)(cid:74)(cid:81)(cid:66)(cid:77)(cid:1)(cid:51)(cid:74)(cid:84)(cid:76)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:54)(cid:79)(cid:68)(cid:70)(cid:83)(cid:85)(cid:66)(cid:74)(cid:79)(cid:85)(cid:74)(cid:70)(cid:84)(cid:1)(cid:80)(cid:79)(cid:1)(cid:81)(cid:66)(cid:72)(cid:70)(cid:84)(cid:1)(cid:18)(cid:19)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:18)(cid:20)(cid:28)
(cid:116)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)(cid:52)(cid:86)(cid:84)(cid:85)(cid:66)(cid:74)(cid:79)(cid:66)(cid:67)(cid:74)(cid:77)(cid:74)(cid:85)(cid:90)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:38)(cid:79)(cid:87)(cid:74)(cid:83)(cid:80)(cid:79)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:83)(cid:70)(cid:81)(cid:80)(cid:83)(cid:85)(cid:1)(cid:80)(cid:79)(cid:1)(cid:81)(cid:66)(cid:72)(cid:70)(cid:1)(cid:19)(cid:17)(cid:28)(cid:1)(cid:66)(cid:79)(cid:69)
(cid:116)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)(cid:49)(cid:70)(cid:80)(cid:81)(cid:77)(cid:70)(cid:1)(cid:83)(cid:70)(cid:81)(cid:80)(cid:83)(cid:85)(cid:1)(cid:80)(cid:79)(cid:1)(cid:81)(cid:66)(cid:72)(cid:70)(cid:1)(cid:19)(cid:18)
constitute the Business Review and are incorporated into this report by reference.
Results and Dividends
The audited accounts for the 52 weeks ended 29 January 2011 are set out on pages 41 to 76. The Group profit for the 52 weeks, after
taxation, was £17,280,000 (2010: £13,527,000). The directors recommend a final dividend of 14.3p per ordinary share (2010: 0.5p)
payable on 17 June 2011 to ordinary shareholders on the register on 13 May 2011 which, together with the interim dividend of 6.3p
per share (2010: 5.25p per share) paid on 26 November 2010, makes a total of 20.6p per share for the period (2010: 17.15p per share).
Directors
The directors during the financial year were those listed on page 25. Details of the directors’ beneficial interests in the shares of
the Company are shown on page 32. Details of their options are given in the Directors’ Remuneration Report on pages 26 to 30.
Brief details of the career of each director are set out on page 25.
Mr R S Kelvin and Mr D A Bernstein will retire by rotation at the next annual general meeting and, being eligible, will offer
themselves for re-election.
Mr R Breare faces annual re-election due to his length of service as a non-executive Director of the Company.
In line with the terms of her appointment, Ms A Sheinfield will also retire by rotation at the next annual general meeting and,
being eligible, will offer herself for re-election.
Substantial Shareholdings
On 24 March 2011, the Company had been notified, in accordance with the Disclosure Rules and Transparency Rules (DTR5),
of substantial interests in the ordinary share capital of the Company. For details see the table below.
31
Ted Baker Report and Accounts 2010 / 2011
DIRECTORS' REPORT: OTHER STATUTORY DISCLOSURES
DIRECTORS' REPORT: OTHER STATUTORY DISCLOSURES
OTHER DISCLOSURES continued
Name of holder
R S Kelvin
Fidelity Investments
Schroder Investment Management
Scottish Widows
Legal & General Investment Management
Number
16,537,276
4,404,994
3,463,777
3,174,600
2,239,899
% Held
39.7
10.6
8.3
7.6
5.4
During the period between 24 March 2011 and 6 May 2011, being the latest date prior to the posting of the annual report and accounts, there have been no disclosures made to the
Company pursuant to DTR 5.
Share Capital and Control
As at 29 January 2011, the Company’s authorised share capital was 80,000,000 ordinary shares of 5 pence each (in nominal
value). Details of the Company’s share capital are shown in Note 19 to the consolidated financial statements on page 64. On 29
January 2011 there were 43,198,033 ordinary shares in issue of which the Company holds 1,574,249 ordinary shares in treasury.
The Company may not exercise any rights (such as voting rights) in respect of the treasury shares and the treasury shares carry
no right to receive dividends or other distributions of assets.
The rules about the appointment and replacement of directors are contained in the Company’s Articles of Association.
Specific rules regarding the re-election of directors are referred to in the Corporate Governance Statements report on pages 17
to 19. Changes to the Articles of Association must be approved by the shareholders in accordance with the legislation in force
from time to time. The powers of the directors are determined by legislation and the Articles of Association of the Company
in force from time to time. Powers relating to the issuing and buying back of shares are included in the Company’s Articles of
Association and shareholder approval of such authorities may be sought, if considered appropriate by directors, at the Annual
General Meeting.
There are a number of agreements that take effect, alter or terminate upon a change of control of the Company following a
takeover bid, such as commercial contracts, bank loan agreements and employee share schemes. None of these is deemed to be
significant in terms of its potential impact on the business of the Company.
The Company does not have agreements with any director or employee that would provide compensation for loss of office or
employment resulting from a takeover, save that the Company’s share schemes contain provisions which may cause options and
awards granted to employees to vest on a takeover.
Directors’ Interests
The directors who held office at 29 January 2011 had interests in the shares of Ted Baker PLC as shown in the table below.
R S Kelvin
L D Page
R Stewart
% of share capital
29 January 2011
Beneficial
30 January 2010
Beneficial
39.7
0.7
-
16,537,276
16,537,276
293,851
300
318,851
-
During the period between 29 January 2011 and 6 May 2011, being the latest date prior to the posting of the annual report and accounts, there have been no subsequent changes in
the interests of directors.
Going Concern
The directors have reviewed the Group’s budgets and long term projections. After making enquiries, the directors have a
reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the
foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.
32
Ted Baker Report and Accounts 2010 / 2011
Creditor Payment Policy
The Company’s policy, in relation to all of its suppliers, is to settle the terms of payment when agreeing the terms of the transaction
and to abide by those terms provided that it is satisfied that the supplier has provided the goods or services in accordance with
the agreed terms and conditions. The Company does not follow any code or statement on payment practice. The number of days’
purchases outstanding for payment by the Group at the end of the year was 52 days (2010: 34 days). At the year end the Company
had no trade creditors.
Donations
The value of charitable donations made during the period was £27,368 (2010: £2,450).
Social Responsibility
Details of the Group’s social, ethical and environmental responsibility initiatives are set out in the Sustainability and the
Environment statement on page 20.
People
Details of the Group’s policies with respect to people and employees are set out in the People statement on page 21.
Health and Safety
The Group remains committed to providing a safe place to work and shop for all employees and customers. Annual risk
assessments are carried out at all locations and a committee, comprised of representatives within the business and an external
adviser, reviews and resolves any health and safety issues.
Risk Management
The Company’s policies on currency and interest rate risk are outlined in Note 22 of the Financial Statements on pages 68 to 76.
Directors’ Statement Regarding Disclosure of Information to Auditors
The directors who held office at the date of approval of this Directors’ Report confirm that, so far as they are aware, there is no
relevant audit information of which the Company’s auditors are unaware. Further, each director has taken all the steps that
he ought to have taken as a director to ensure the Board is aware of any relevant audit information and to establish that the
Company’s auditors are aware of any such information.
Auditors
The directors will place a resolution before the annual general meeting to re-appoint KPMG Audit Plc as auditors for the
ensuing year.
The report was approved by the Board of Directors on 24 March 2011 and signed on its behalf by:
C F Anderson,
Secretary
Registered office - The Ugly Brown Building, 6a St. Pancras Way, London NW1 0TB
33
Ted Baker Report and Accounts 2010 / 2011
DIRECTORS' REPORT: OTHER STATUTORY DISCLOSURES
STATEMENT OF DIRECTORS’
RESPONSIBILITIES
The directors are responsible for preparing the Annual Report and Group and Parent company financial statements in accordance
with applicable law and regulations.
Company law requires the directors to prepare group and parent company financial statements for each financial year. Under
that law they have elected to prepare both the group and the parent company financial statements in accordance with IFRSs as
adopted by the EU and applicable law.
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the group and parent company and of their profit or loss for that period. In preparing each of the
group and parent company financial statements, the directors are required to:
(cid:116)(cid:1) (cid:84)(cid:70)(cid:77)(cid:70)(cid:68)(cid:85)(cid:1)(cid:84)(cid:86)(cid:74)(cid:85)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:81)(cid:80)(cid:77)(cid:74)(cid:68)(cid:74)(cid:70)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:85)(cid:73)(cid:70)(cid:79)(cid:1)(cid:66)(cid:81)(cid:81)(cid:77)(cid:90)(cid:1)(cid:85)(cid:73)(cid:70)(cid:78)(cid:1)(cid:68)(cid:80)(cid:79)(cid:84)(cid:74)(cid:84)(cid:85)(cid:70)(cid:79)(cid:85)(cid:77)(cid:90)(cid:28)
(cid:116)(cid:1) (cid:78)(cid:66)(cid:76)(cid:70)(cid:1)(cid:75)(cid:86)(cid:69)(cid:72)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:70)(cid:84)(cid:85)(cid:74)(cid:78)(cid:66)(cid:85)(cid:70)(cid:84)(cid:1)(cid:85)(cid:73)(cid:66)(cid:85)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:83)(cid:70)(cid:66)(cid:84)(cid:80)(cid:79)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:81)(cid:83)(cid:86)(cid:69)(cid:70)(cid:79)(cid:85)(cid:28)
(cid:116)(cid:1) (cid:84)(cid:85)(cid:66)(cid:85)(cid:70)(cid:1)(cid:88)(cid:73)(cid:70)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:90)(cid:1)(cid:73)(cid:66)(cid:87)(cid:70)(cid:1)(cid:67)(cid:70)(cid:70)(cid:79)(cid:1)(cid:81)(cid:83)(cid:70)(cid:81)(cid:66)(cid:83)(cid:70)(cid:69)(cid:1)(cid:74)(cid:79)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:83)(cid:69)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:42)(cid:39)(cid:51)(cid:52)(cid:84)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:69)(cid:80)(cid:81)(cid:85)(cid:70)(cid:69)(cid:1)(cid:67)(cid:90)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:38)(cid:54)(cid:28)(cid:1)(cid:66)(cid:79)(cid:69)
(cid:116)(cid:1) (cid:81)(cid:83)(cid:70)(cid:81)(cid:66)(cid:83)(cid:70)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:277)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:84)(cid:85)(cid:66)(cid:85)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:80)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:72)(cid:80)(cid:74)(cid:79)(cid:72)(cid:1)(cid:68)(cid:80)(cid:79)(cid:68)(cid:70)(cid:83)(cid:79)(cid:1)(cid:67)(cid:66)(cid:84)(cid:74)(cid:84)(cid:1)(cid:86)(cid:79)(cid:77)(cid:70)(cid:84)(cid:84)(cid:1)(cid:74)(cid:85)(cid:1)(cid:74)(cid:84)(cid:1)(cid:74)(cid:79)(cid:66)(cid:81)(cid:81)(cid:83)(cid:80)(cid:81)(cid:83)(cid:74)(cid:66)(cid:85)(cid:70)(cid:1)(cid:85)(cid:80)(cid:1)(cid:81)(cid:83)(cid:70)(cid:84)(cid:86)(cid:78)(cid:70)(cid:1)(cid:85)(cid:73)(cid:66)(cid:85)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:72)(cid:83)(cid:80)(cid:86)(cid:81)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:81)(cid:66)(cid:83)(cid:70)(cid:79)(cid:85)(cid:1)
company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company’s
transactions and disclose with reasonable accuracy at any time the financial position of the parent company and enable them to
ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps
as are reasonably open to them to safeguard the assets of the group and to prevent and detect fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the
company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Responsibility statement of the directors in respect of the Annual Report
We, the directors of the Company, confirm that to the best of our knowledge:
(a) the financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the EU,
give a true and fair view of the assets, liabilities, financial position and profit for the Group and the undertakings included in the
consolidation taken as a whole; and
(b) pursuant to Chapter 4 of the Disclosure and Transparency Rules, the Group’s annual report contains a fair review of the
development and performance of the business and the position of the Group, and the undertakings included in the consolidation
taken as a whole, together with a description of the principal risks and uncertainties that they face.
On behalf of the Board
R S Kelvin
Chief Executive
24 March 2011
L D Page
Finance Director
24 March 2011
34
Ted Baker Report and Accounts 2010 / 2011
DIRECTORS' REPORT: OTHER STATUTORY DISCLOSURES
INDEPENDENT AUDITORS’ REPORT TO
THE MEMBERS OF TED BAKER PLC
We have audited the financial statements of Ted Baker PLC for the 52 weeks ended 29 January 2011 which comprise the Group
Income Statement, the Group Statement of Comprehensive Income, the Group and Parent Company Statement of Changes in
Equity, the Group and Parent Company Balance Sheets, the Group and Parent Cash Flow Statement and the related notes. The
financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the EU and, as regards the parent company financial statements, as applied in accordance with
the provisions of the Companies Act 2006.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to
state to them in an auditor’s 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 and the company’s members, as a body, for our audit work, for this report, or
for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors’ Responsibilities Statement set out on page 34, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit, and
express an opinion on, the financial statements in accordance with applicable law and International Standards on Auditing (UK
and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB’s website at www.frc.org.uk/apb/scope/
private.cfm.
Opinion on financial statements
In our opinion:
(cid:116)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)(cid:277)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:84)(cid:85)(cid:66)(cid:85)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:72)(cid:74)(cid:87)(cid:70)(cid:1)(cid:66)(cid:1)(cid:85)(cid:83)(cid:86)(cid:70)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:71)(cid:66)(cid:74)(cid:83)(cid:1)(cid:87)(cid:74)(cid:70)(cid:88)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:84)(cid:85)(cid:66)(cid:85)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:72)(cid:83)(cid:80)(cid:86)(cid:81)(cid:8)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:81)(cid:66)(cid:83)(cid:70)(cid:79)(cid:85)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:90)(cid:8)(cid:84)(cid:1)(cid:66)(cid:268)(cid:66)(cid:74)(cid:83)(cid:84)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:85)(cid:1)(cid:19)(cid:26)(cid:1)(cid:43)(cid:66)(cid:79)(cid:86)(cid:66)(cid:83)(cid:90)(cid:1)
2011 and of the group’s profit for the period then ended;
(cid:116)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)(cid:72)(cid:83)(cid:80)(cid:86)(cid:81)(cid:1)(cid:277)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:84)(cid:85)(cid:66)(cid:85)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:73)(cid:66)(cid:87)(cid:70)(cid:1)(cid:67)(cid:70)(cid:70)(cid:79)(cid:1)(cid:81)(cid:83)(cid:80)(cid:81)(cid:70)(cid:83)(cid:77)(cid:90)(cid:1)(cid:81)(cid:83)(cid:70)(cid:81)(cid:66)(cid:83)(cid:70)(cid:69)(cid:1)(cid:74)(cid:79)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:83)(cid:69)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:42)(cid:39)(cid:51)(cid:52)(cid:84)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:69)(cid:80)(cid:81)(cid:85)(cid:70)(cid:69)(cid:1)(cid:67)(cid:90)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:38)(cid:54)(cid:28)(cid:1)
(cid:116)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)(cid:81)(cid:66)(cid:83)(cid:70)(cid:79)(cid:85)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:90)(cid:1)(cid:277)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:84)(cid:85)(cid:66)(cid:85)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:73)(cid:66)(cid:87)(cid:70)(cid:1)(cid:67)(cid:70)(cid:70)(cid:79)(cid:1)(cid:81)(cid:83)(cid:80)(cid:81)(cid:70)(cid:83)(cid:77)(cid:90)(cid:1)(cid:81)(cid:83)(cid:70)(cid:81)(cid:66)(cid:83)(cid:70)(cid:69)(cid:1)(cid:74)(cid:79)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:83)(cid:69)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:42)(cid:39)(cid:51)(cid:52)(cid:84)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:69)(cid:80)(cid:81)(cid:85)(cid:70)(cid:69)(cid:1)(cid:67)(cid:90)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:38)(cid:54)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:66)(cid:84)(cid:1)
applied in accordance with the provisions of the Companies Act 2006; and
(cid:116)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)(cid:277)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:84)(cid:85)(cid:66)(cid:85)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:73)(cid:66)(cid:87)(cid:70)(cid:1)(cid:67)(cid:70)(cid:70)(cid:79)(cid:1)(cid:81)(cid:83)(cid:70)(cid:81)(cid:66)(cid:83)(cid:70)(cid:69)(cid:1)(cid:74)(cid:79)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:83)(cid:69)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:83)(cid:70)(cid:82)(cid:86)(cid:74)(cid:83)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:36)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:74)(cid:70)(cid:84)(cid:1)(cid:34)(cid:68)(cid:85)(cid:1)(cid:19)(cid:17)(cid:17)(cid:23)(cid:1)(cid:66)(cid:79)(cid:69)(cid:13)(cid:1)(cid:66)(cid:84)(cid:1)(cid:83)(cid:70)(cid:72)(cid:66)(cid:83)(cid:69)(cid:84)(cid:1)
the group financial statements, Article 4 of the IAS Regulation.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion:
(cid:116)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)(cid:81)(cid:66)(cid:83)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:37)(cid:74)(cid:83)(cid:70)(cid:68)(cid:85)(cid:80)(cid:83)(cid:84)(cid:8)(cid:1)(cid:51)(cid:70)(cid:78)(cid:86)(cid:79)(cid:70)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:51)(cid:70)(cid:81)(cid:80)(cid:83)(cid:85)(cid:1)(cid:85)(cid:80)(cid:1)(cid:67)(cid:70)(cid:1)(cid:66)(cid:86)(cid:69)(cid:74)(cid:85)(cid:70)(cid:69)(cid:1)(cid:73)(cid:66)(cid:84)(cid:1)(cid:67)(cid:70)(cid:70)(cid:79)(cid:1)(cid:81)(cid:83)(cid:80)(cid:81)(cid:70)(cid:83)(cid:77)(cid:90)(cid:1)(cid:81)(cid:83)(cid:70)(cid:81)(cid:66)(cid:83)(cid:70)(cid:69)(cid:1)(cid:74)(cid:79)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:83)(cid:69)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:36)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:74)(cid:70)(cid:84)(cid:1)
Act 2006; and
(cid:116)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)(cid:74)(cid:79)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:72)(cid:74)(cid:87)(cid:70)(cid:79)(cid:1)(cid:74)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:37)(cid:74)(cid:83)(cid:70)(cid:68)(cid:85)(cid:80)(cid:83)(cid:84)(cid:8)(cid:1)(cid:51)(cid:70)(cid:81)(cid:80)(cid:83)(cid:85)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:277)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:88)(cid:73)(cid:74)(cid:68)(cid:73)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:277)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:84)(cid:85)(cid:66)(cid:85)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:81)(cid:83)(cid:70)(cid:81)(cid:66)(cid:83)(cid:70)(cid:69)(cid:1)(cid:74)(cid:84)(cid:1)(cid:68)(cid:80)(cid:79)(cid:84)(cid:74)(cid:84)(cid:85)(cid:70)(cid:79)(cid:85)(cid:1)
with the financial statements.
35
Ted Baker Report and Accounts 2010 / 2011
DIRECTORS' REPORT: OTHER STATUTORY DISCLOSURES
INDEPENDENT AUDITORS’ REPORT TO THE
MEMBERS OF TED BAKER PLC continued
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
(cid:116)(cid:1) (cid:66)(cid:69)(cid:70)(cid:82)(cid:86)(cid:66)(cid:85)(cid:70)(cid:1) (cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1) (cid:83)(cid:70)(cid:68)(cid:80)(cid:83)(cid:69)(cid:84)(cid:1) (cid:73)(cid:66)(cid:87)(cid:70)(cid:1) (cid:79)(cid:80)(cid:85)(cid:1) (cid:67)(cid:70)(cid:70)(cid:79)(cid:1) (cid:76)(cid:70)(cid:81)(cid:85)(cid:1) (cid:67)(cid:90)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:81)(cid:66)(cid:83)(cid:70)(cid:79)(cid:85)(cid:1) (cid:68)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:90)(cid:13)(cid:1) (cid:80)(cid:83)(cid:1) (cid:83)(cid:70)(cid:85)(cid:86)(cid:83)(cid:79)(cid:84)(cid:1) (cid:66)(cid:69)(cid:70)(cid:82)(cid:86)(cid:66)(cid:85)(cid:70)(cid:1) (cid:71)(cid:80)(cid:83)(cid:1) (cid:80)(cid:86)(cid:83)(cid:1) (cid:66)(cid:86)(cid:69)(cid:74)(cid:85)(cid:1) (cid:73)(cid:66)(cid:87)(cid:70)(cid:1) (cid:79)(cid:80)(cid:85)(cid:1) (cid:67)(cid:70)(cid:70)(cid:79)(cid:1)
received from branches not visited by us; or
(cid:116)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)(cid:81)(cid:66)(cid:83)(cid:70)(cid:79)(cid:85)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:90)(cid:1)(cid:277)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:84)(cid:85)(cid:66)(cid:85)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:81)(cid:66)(cid:83)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:37)(cid:74)(cid:83)(cid:70)(cid:68)(cid:85)(cid:80)(cid:83)(cid:84)(cid:8)(cid:1)(cid:51)(cid:70)(cid:78)(cid:86)(cid:79)(cid:70)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:51)(cid:70)(cid:81)(cid:80)(cid:83)(cid:85)(cid:1)(cid:85)(cid:80)(cid:1)(cid:67)(cid:70)(cid:1)(cid:66)(cid:86)(cid:69)(cid:74)(cid:85)(cid:70)(cid:69)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:79)(cid:80)(cid:85)(cid:1)(cid:74)(cid:79)(cid:1)(cid:66)(cid:72)(cid:83)(cid:70)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)
with the accounting records and returns; or
(cid:116)(cid:1) (cid:68)(cid:70)(cid:83)(cid:85)(cid:66)(cid:74)(cid:79)(cid:1)(cid:69)(cid:74)(cid:84)(cid:68)(cid:77)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:69)(cid:74)(cid:83)(cid:70)(cid:68)(cid:85)(cid:80)(cid:83)(cid:84)(cid:8)(cid:1)(cid:83)(cid:70)(cid:78)(cid:86)(cid:79)(cid:70)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:84)(cid:81)(cid:70)(cid:68)(cid:74)(cid:277)(cid:70)(cid:69)(cid:1)(cid:67)(cid:90)(cid:1)(cid:77)(cid:66)(cid:88)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:79)(cid:80)(cid:85)(cid:1)(cid:78)(cid:66)(cid:69)(cid:70)(cid:28)(cid:1)(cid:80)(cid:83)
(cid:116)(cid:1) (cid:88)(cid:70)(cid:1)(cid:73)(cid:66)(cid:87)(cid:70)(cid:1)(cid:79)(cid:80)(cid:85)(cid:1)(cid:83)(cid:70)(cid:68)(cid:70)(cid:74)(cid:87)(cid:70)(cid:69)(cid:1)(cid:66)(cid:77)(cid:77)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:74)(cid:79)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:70)(cid:89)(cid:81)(cid:77)(cid:66)(cid:79)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:88)(cid:70)(cid:1)(cid:83)(cid:70)(cid:82)(cid:86)(cid:74)(cid:83)(cid:70)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:80)(cid:86)(cid:83)(cid:1)(cid:66)(cid:86)(cid:69)(cid:74)(cid:85)(cid:28)(cid:1)(cid:80)(cid:83)
(cid:116)(cid:1) (cid:66)(cid:1)(cid:36)(cid:80)(cid:83)(cid:81)(cid:80)(cid:83)(cid:66)(cid:85)(cid:70)(cid:1)(cid:40)(cid:80)(cid:87)(cid:70)(cid:83)(cid:79)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:52)(cid:85)(cid:66)(cid:85)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:73)(cid:66)(cid:84)(cid:1)(cid:79)(cid:80)(cid:85)(cid:1)(cid:67)(cid:70)(cid:70)(cid:79)(cid:1)(cid:81)(cid:83)(cid:70)(cid:81)(cid:66)(cid:83)(cid:70)(cid:69)(cid:1)(cid:67)(cid:90)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:90)(cid:15)(cid:1)
Under the Listing Rules we are required to review:
(cid:116)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)(cid:69)(cid:74)(cid:83)(cid:70)(cid:68)(cid:85)(cid:80)(cid:83)(cid:84)(cid:8)(cid:1)(cid:84)(cid:85)(cid:66)(cid:85)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:13)(cid:1)(cid:84)(cid:70)(cid:85)(cid:1)(cid:80)(cid:86)(cid:85)(cid:1)(cid:80)(cid:79)(cid:1)(cid:81)(cid:66)(cid:72)(cid:70)(cid:1)(cid:20)(cid:19)(cid:13)(cid:1)(cid:74)(cid:79)(cid:1)(cid:83)(cid:70)(cid:77)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:85)(cid:80)(cid:1)(cid:72)(cid:80)(cid:74)(cid:79)(cid:72)(cid:1)(cid:68)(cid:80)(cid:79)(cid:68)(cid:70)(cid:83)(cid:79)(cid:28)
(cid:116)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)(cid:81)(cid:66)(cid:83)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:36)(cid:80)(cid:83)(cid:81)(cid:80)(cid:83)(cid:66)(cid:85)(cid:70)(cid:1)(cid:40)(cid:80)(cid:87)(cid:70)(cid:83)(cid:79)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:52)(cid:85)(cid:66)(cid:85)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:80)(cid:79)(cid:1)(cid:81)(cid:66)(cid:72)(cid:70)(cid:1)(cid:18)(cid:24)(cid:1)(cid:83)(cid:70)(cid:77)(cid:66)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:80)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:90)(cid:8)(cid:84)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:77)(cid:74)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:79)(cid:74)(cid:79)(cid:70)(cid:1)(cid:81)(cid:83)(cid:80)(cid:87)(cid:74)(cid:84)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)
the June 2008 Combined Code specified for our review; and
(cid:116)(cid:1) (cid:68)(cid:70)(cid:83)(cid:85)(cid:66)(cid:74)(cid:79)(cid:1)(cid:70)(cid:77)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:83)(cid:70)(cid:81)(cid:80)(cid:83)(cid:85)(cid:1)(cid:85)(cid:80)(cid:1)(cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:73)(cid:80)(cid:77)(cid:69)(cid:70)(cid:83)(cid:84)(cid:1)(cid:67)(cid:90)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:35)(cid:80)(cid:66)(cid:83)(cid:69)(cid:1)(cid:80)(cid:79)(cid:1)(cid:69)(cid:74)(cid:83)(cid:70)(cid:68)(cid:85)(cid:80)(cid:83)(cid:84)(cid:8)(cid:1)(cid:83)(cid:70)(cid:78)(cid:86)(cid:79)(cid:70)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:15)(cid:1)(cid:1)
Mike Barradell (Senior Statutory Auditor)
for and on behalf of KPMG Audit Plc, Statutory Auditor
Chartered Accountants
15 Canada Square
London
E14 5GL
24 March 2011
36
Ted Baker Report and Accounts 2010 / 2011
37
Ted Baker Report and Accounts 2010 / 2011
Weaving Ted ’s Magic
A veritable explosion of breathtaking lights, this ‘shattered crystal’ graphic is
a key print that has weaved its magic across Ted’s womenswear accessories
for Spring/Summer 11. Using digital fragmentation to bring to life his love of
exotic colour and fabrics, this chameleon-like print sparkles both day and night
and has ensured Ted continues to remain popular with the ladies, worldwide.
FINANCIAL STATEMENTS
GROUP AND COMPANY PRIMARY
FINANCIAL STATEMENTS
Group Income Statement
For the 52 weeks ended 29 January 2011
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
- Other administrative expenses
- Impairment losses
Licence income
Other operating income
Operating profit
Finance income
Finance expenses
Share of profit of jointly controlled entity, net of tax
Profit before tax
Income tax expense
Profit for the period
Attributable to:
- Equity shareholders of the parent company
- Non-controlling interest
Profit for the period
Earnings per share
Basic
Diluted
Note
2
4
4
12
3,6
6
9
52 weeks ended
29 January
2011
£’000
187,700
(71,923)
115,777
52 weeks ended
30 January
2010
£’000
163,586
(63,659)
99,927
(73,690)
(64,573)
(24,259)
-
6,227
77
24,132
42
(120)
174
24,228
(6,948)
17,280
17,280
-
17,280
41.5p
41.4p
(20,395)
(750)
5,493
80
19,782
10
(374)
86
19,504
(5,977)
13,527
13,576
(49)
13,527
32.6p
32.6p
41
Ted Baker Report and Accounts 2010 / 2011
FINANCIAL STATEMENTS
GROUP AND COMPANY PRIMARY
FINANCIAL STATEMENTS continued
Group Statement of Comprehensive Income
For the 52 weeks ended 29 January 2011
Profit for the period
Other comprehensive income
Net effective portion of changes in fair value of cash flow hedges
Net change in fair value of cash flow hedges transferred to profit or loss
Exchange rate movement
Other comprehensive income for the period
52 weeks ended
29 January
2011
52 weeks ended
30 January
2010
£’000
17,280
143
(279)
112
(24)
£’000
13,527
(1,334)
(391)
(1,058)
(2,783)
Total comprehensive income for the period
17,256
10,744
Total comprehensive income attributable to:
- Equity shareholders of the parent company
- Non-controlling interest
Total comprehensive income for the period
17,256
-
17,256
10,793
(49)
10,744
42
Ted Baker Report and Accounts 2010 / 2011
Group Statement of Changes in Equity
For the 52 weeks ended 29 January 2011
Share
capital
Share
premium
£’000
2,160
£’000
9,137
Cash flow
hedging
reserve
£’000
(12)
Translation
reserve
£’000
124
Retained
earnings
£’000
54,906
Total equity
attributable to equity
shareholders of the
parent
Non-controlling
interest
Total equity
£’000
66,315
£’000
(85)
Balance at 30 January 2010
Comprehensive income for the period
Profit for the period
Deferred tax associated with movement in
hedging reserve
Effective portion of changes in fair value of
cash flow hedges
Net change in fair value of cash flow hedges
transferred to profit or loss
Exchange rate movement
Total comprehensive income for the period
Transactions with owners recorded directly in equity
Share options / awards charge
Movement on current / deferred tax
on share options / awards
Purchase of non-controlling interest
Disposal of own / treasury shares
Dividends paid
Total transactions with owners
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
55
88
(279)
-
(136)
-
-
-
-
-
-
-
-
-
-
112
112
-
-
-
-
-
-
17,280
17,280
-
-
-
-
17,280
426
298
(715)
19
(7,575)
(7,547)
55
88
(279)
112
17,256
426
298
(715)
19
(7,575)
(7,547)
-
-
-
-
-
-
-
-
85
-
-
85
£’000
66,230
17,280
55
88
(279)
112
17,256
426
298
(630)
19
(7,575)
(7,462)
Balance at 29 January 2011
2,160
9,137
(148)
236
64,639
76,024
-
76,024
For the 52 weeks ended 30 January 2010
Balance at 31 January 2009
Comprehensive income for the period
Profit for the period
Deferred tax associated with movement in hedging reserve
Effective portion of changes in fair value of cash flow hedges
Net change in fair value of cash flow hedges transferred to
profit or loss
Exchange rate movement
Total comprehensive income for the period
Transactions with owners recorded directly in equity
Share options / awards charge
Movement on current / deferred tax
on share options / awards
Disposal of own / treasury shares
Dividends paid
Total transactions with owners
Share
capital
Share
premium
£’000
2,160
£’000
9,137
Cash flow
hedging
reserve
£’000
1,713
Translation
reserve
£’000
1,182
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(375)
(959)
(391)
-
(1,725)
-
-
-
-
(1,058)
(1,058)
-
-
-
-
-
-
-
-
-
-
Retained
earnings
£’000
48,010
13,576
-
-
-
-
13,576
192
13
43
(6,928)
(6,680)
Total equity
attributable to equity
shareholders of
the parent
£’000
62,202
13,576
(375)
(959)
(391)
(1,058)
10,793
192
13
43
(6,928)
(6,680)
Non-controlling
interest
Total equity
£’000
(36)
£’000
62,166
(49)
13,527
-
-
-
-
(375)
(959)
(391)
(1,058)
(49)
10,744
-
-
-
-
-
192
13
43
(6,928)
(6,680)
Balance at 30 January 2010
2,160
9,137
(12)
124
54,906
66,315
(85)
66,230
43
Ted Baker Report and Accounts 2010 / 2011
FINANCIAL STATEMENTS
GROUP AND COMPANY PRIMARY
FINANCIAL STATEMENTS continued
Company Statement of Changes in Equity
For the 52 weeks ended 29 January 2011
Balance at 30 January 2010
Profit for the period
Transactions with owners recorded directly in equity
Share options / awards charge
Share options / awards granted to subsidiary employees
Disposal of own shares
Dividends paid
Total transactions with owners
Share
capital
£’000
2,160
Share
premium
£’000
9,137
Other reserves
Retained earnings
Total Equity
£’000
14,605
£’000
15,381
£’000
41,283
-
-
-
-
-
-
-
-
-
-
-
-
-
-
357
-
-
357
8,060
8,060
69
-
19
(7,575)
(7,487)
69
357
19
(7,575)
(7,130)
Balance at 29 January 2011
2,160
9,137
14,962
15,954
42,213
For the 52 weeks ended 30 January 2010
Balance at 31 January 2009
Profit for the period
Transactions with owners recorded directly in equity
Share options / awards credit
Share options / awards granted to subsidiary employees
Disposal of own shares
Dividends paid
Total transactions with owners
Share
capital
£’000
2,160
Share
premium
£’000
9,137
Other reserves
Retained earnings
Total Equity
£’000
14,445
£’000
453
£’000
26,195
-
-
-
-
-
-
-
-
-
-
-
-
-
-
160
-
-
160
21,781
21,781
32
-
43
(6,928)
(6,853)
32
160
43
(6,928)
(6,693)
Balance at 30 January 2010
2,160
9,137
14,605
15,381
41,283
44
Ted Baker Report and Accounts 2010 / 2011
Group and Company Balance Sheet
At 29 January 2011
Non-current assets
Intangible assets
Property, plant and equipment
Investments in subsidiary
Investment in equity accounted investee
Deferred tax assets
Prepayments
Current assets
Inventories
Trade and other receivables
Amount due from equity accounted investee
Derivative financial assets
Cash and cash equivalents
Current liabilities
Trade and other payables
Income tax payable
Derivative financial liabilities
Non-current liabilities
Deferred tax liabilities
Net assets
Equity
Share capital
Share premium
Other reserves
Translation reserve
Retained earnings
Total equity attributable to equity shareholders of the parent company
Non-controlling interest
Total equity
Note
Group
29 January
2011
£’000
Company
29 January
2011
£’000
Group
30 January
2010
£’000
Company
30 January
2010
£’000
10
11
12
12
13
14
15
12
16
17
18
16
13
19
19
19
19
19
997
28,368
-
345
2,470
777
32,957
42,492
27,384
286
102
13,536
83,800
(34,970)
(3,761)
(455)
(39,186)
(1,547)
(1,547)
76,024
2,160
9,137
(148)
236
64,639
76,024
-
76,024
-
-
17,051
-
-
-
17,051
-
24,712
-
-
464
25,176
(14)
-
-
(14)
-
-
42,213
2,160
9,137
14,962
-
15,954
42,213
-
42,213
634
25,508
-
171
1,598
842
28,753
33,450
19,698
261
280
13,698
67,387
(24,779)
(3,511)
(304)
(28,594)
(1,316)
(1,316)
66,230
2,160
9,137
(12)
124
54,906
66,315
(85)
66,230
-
-
16,694
-
-
-
16,694
-
24,112
-
-
489
24,601
(12)
-
-
(12)
-
-
41,283
2,160
9,137
14,605
-
15,381
41,283
-
41,283
These financial statements were approved by the Board of Directors on 24 March 2011 and were signed on its behalf by:
L D Page
Director
45
Ted Baker Report and Accounts 2010 / 2011
FINANCIAL STATEMENTS
GROUP AND COMPANY PRIMARY
FINANCIAL STATEMENTS continued
Group and Company Cash Flow Statement
For the 52 weeks ended 29 January 2011
Cash generated from operations
Profit for the period
Adjusted for:
Income tax expense
Depreciation
Impairment losses
Loss on disposal of property, plant & equipment
Share options / awards charge
Net finance losses / (gains)
Net change in derivative financial assets and liabilities
Share of profit in joint venture
Decrease in non-current prepayments
(Increase) / decrease in inventory
(Increase) / decrease in trade and other receivables
Increase /(decrease) in trade and other payables
Interest paid
Income taxes paid
Net cash generated from operating activities
Cash flow from investing activities
Purchases of property, plant & equipment
Purchase of non-controlling entity
Proceeds from sale of property, plant & equipment
Interest received
Net cash from investing activities
Cash flow from financing activities
Own shares acquired
Proceeds from option holders for exercise of options
Dividends paid
Net cash from financing activities
Net (decrease) / increase in cash and cash equivalents
Cash and cash equivalents at 30 January 2010 / 31 January 2009
Exchange rate movement
Cash and cash equivalents at 29 January 2011 / 30 January 2010
Group
52 weeks ended
29 January
2011
£’000
17,280
6,948
6,470
-
225
426
30
138
(174)
61
(9,026)
(7,511)
10,140
(83)
(6,859)
18,065
(10,036)
(630)
32
38
(10,596)
-
19
(7,575)
(7,556)
(87)
13,698
(75)
13,536
Company
52 weeks ended
29 January
2011
£’000
8,060
-
-
-
-
69
(5)
-
-
-
-
(600)
2
-
-
7,526
-
-
-
5
5
-
19
(7,575)
(7,556)
(25)
489
-
464
Group
52 weeks ended
30 January
2010
£’000
13,527
5,977
6,295
750
110
192
138
1,118
(86)
64
3,026
1,649
(4,908)
(157)
(6,602)
21,093
(4,538)
-
-
8
(4,530)
-
43
(6,928)
(6,885)
9,678
4,660
(640)
13,698
Company
52 weeks ended
30 January
2010
£’000
21,781
-
-
-
-
32
(3)
-
-
-
-
(14,960)
10
-
-
6,860
-
-
-
3
3
-
43
(6,928)
(6,885)
(22)
511
-
489
46
Ted Baker Report and Accounts 2010 / 2011
FINANCIAL STATEMENTS
NOTES TO THE
FINANCIAL STATEMENTS
1) Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated and parent financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise stated.
a) Basis of preparation
Both the consolidated and parent financial statements have been prepared and approved by the directors in accordance with
International Financial Reporting Standards as adopted by the EU (‘Adopted IFRSs’). On publishing the parent company
financial statements here together with the consolidated financial statements, the Company is taking advantage of the exemption
in Section 408 of the Companies Act 2006 not to present its individual income statement and related notes that form a part of
these approved financial statements.
The Group’s business activities, together with the factors likely to affect its future development, performance and position are set
out on pages 5 to 13. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described
in the Financial Review on pages 10 to 11. In addition Note 22 to the financial statements includes the Group’s objectives, policies
and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging
activities; and its exposures to credit risk and liquidity risk.
The Group’s forecasts and projections, taking into account reasonably possible changes in trading performance, show that the
Group has sufficient financial resources. As a consequence the directors have a reasonable expectation that the Company and
the Group are well placed to manage their business risks and to continue in operational existence for the foreseeable future,
despite the current uncertain global economic outlook. Accordingly, the directors continue to adopt the going concern basis in
preparing the consolidated financial statements.
The consolidated and parent financial statements have been prepared under the historical cost convention, except for financial
assets and financial liabilities (including derivative instruments), which are held at fair value.
The preparation of financial statements in conformity with adopted IFRSs requires management to make judgements, estimates
and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.
The estimates and associated assumptions are based on historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period
in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the
revision affects both current and future periods. The Group’s significant judgement areas relate to inventory provisions and
impairment of assets.
Revised and amended standards and interpretations
The following adopted accounting standards and interpretations, issued by the International Accounting Standards Board (IASB)
or International Financial Reporting, Interpretations Committee (IFRIC), have been adopted for the first time by the Group in
the current financial year with no significant impact on its consolidated results or financial position:
(cid:116)(cid:1) (cid:42)(cid:39)(cid:51)(cid:52)(cid:1)(cid:20)(cid:1)(cid:9)(cid:83)(cid:70)(cid:87)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:19)(cid:17)(cid:17)(cid:25)(cid:10)(cid:13)(cid:1)(cid:35)(cid:86)(cid:84)(cid:74)(cid:79)(cid:70)(cid:84)(cid:84)(cid:1)(cid:36)(cid:80)(cid:78)(cid:67)(cid:74)(cid:79)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:28)
(cid:116)(cid:1) (cid:34)(cid:78)(cid:70)(cid:79)(cid:69)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:85)(cid:80)(cid:1)(cid:42)(cid:34)(cid:52)(cid:1)(cid:19)(cid:24)(cid:13)(cid:1)(cid:36)(cid:80)(cid:79)(cid:84)(cid:80)(cid:77)(cid:74)(cid:69)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:52)(cid:70)(cid:81)(cid:66)(cid:83)(cid:66)(cid:85)(cid:70)(cid:1)(cid:39)(cid:74)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:52)(cid:85)(cid:66)(cid:85)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:28)
(cid:116)(cid:1) (cid:34)(cid:78)(cid:70)(cid:79)(cid:69)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:85)(cid:80)(cid:1)(cid:42)(cid:34)(cid:52)(cid:1)(cid:20)(cid:26)(cid:13)(cid:1)(cid:39)(cid:74)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:42)(cid:79)(cid:84)(cid:85)(cid:83)(cid:86)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:27)(cid:1)(cid:51)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:46)(cid:70)(cid:66)(cid:84)(cid:86)(cid:83)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:27)(cid:1)(cid:38)(cid:77)(cid:74)(cid:72)(cid:74)(cid:67)(cid:77)(cid:70)(cid:1)(cid:41)(cid:70)(cid:69)(cid:72)(cid:70)(cid:69)(cid:1)(cid:42)(cid:85)(cid:70)(cid:78)(cid:84)(cid:28)
(cid:116)(cid:1) (cid:34)(cid:78)(cid:70)(cid:79)(cid:69)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:85)(cid:80)(cid:1)(cid:42)(cid:34)(cid:52)(cid:1)(cid:19)(cid:13)(cid:1)(cid:52)(cid:73)(cid:66)(cid:83)(cid:70)(cid:14)(cid:67)(cid:66)(cid:84)(cid:70)(cid:69)(cid:1)(cid:49)(cid:66)(cid:90)(cid:78)(cid:70)(cid:79)(cid:85)(cid:27)(cid:1)(cid:40)(cid:83)(cid:80)(cid:86)(cid:81)(cid:1)(cid:36)(cid:66)(cid:84)(cid:73)(cid:14)(cid:84)(cid:70)(cid:85)(cid:85)(cid:77)(cid:70)(cid:69)(cid:1)(cid:52)(cid:73)(cid:66)(cid:83)(cid:70)(cid:14)(cid:67)(cid:66)(cid:84)(cid:70)(cid:69)(cid:1)(cid:49)(cid:66)(cid:90)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:53)(cid:83)(cid:66)(cid:79)(cid:84)(cid:66)(cid:68)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:28)
47
Ted Baker Report and Accounts 2010 / 2011
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL
STATEMENTS continued
(cid:116)(cid:1) (cid:42)(cid:78)(cid:81)(cid:83)(cid:80)(cid:87)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:85)(cid:80)(cid:1)(cid:42)(cid:39)(cid:51)(cid:52)(cid:8)(cid:84)(cid:1)(cid:19)(cid:17)(cid:17)(cid:26)(cid:28)
(cid:116)(cid:1) (cid:42)(cid:39)(cid:51)(cid:42)(cid:36)(cid:1)(cid:18)(cid:24)(cid:13)(cid:1)(cid:37)(cid:74)(cid:84)(cid:85)(cid:83)(cid:74)(cid:67)(cid:86)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:47)(cid:80)(cid:79)(cid:14)(cid:68)(cid:66)(cid:84)(cid:73)(cid:1)(cid:34)(cid:84)(cid:84)(cid:70)(cid:85)(cid:84)(cid:1)(cid:85)(cid:80)(cid:1)(cid:48)(cid:88)(cid:79)(cid:70)(cid:83)(cid:84)(cid:28)(cid:1)(cid:66)(cid:79)(cid:69)
(cid:116)(cid:1) (cid:42)(cid:39)(cid:51)(cid:42)(cid:36)(cid:1)(cid:18)(cid:25)(cid:13)(cid:1)(cid:53)(cid:83)(cid:66)(cid:79)(cid:84)(cid:71)(cid:70)(cid:83)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:34)(cid:84)(cid:84)(cid:70)(cid:85)(cid:84)(cid:1)(cid:71)(cid:83)(cid:80)(cid:78)(cid:1)(cid:36)(cid:86)(cid:84)(cid:85)(cid:80)(cid:78)(cid:70)(cid:83)(cid:84)(cid:15)
The Group does not consider that any other standards, amendments or interpretations issued by the IASB, but not yet applicable,
will have significant impact on the financial statements.
b) Basis of consolidation
The consolidated accounts include the accounts of the Company and its subsidiary undertakings made up to 29 January 2011.
Unless otherwise stated, the acquisition method of accounting has been adopted. Under this method, the results of subsidiary
undertakings acquired or disposed of in the year are included in the consolidated financial statements from the date of acquisition
or up to the date of disposal.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies
of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern
the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting
rights that presently are exercisable or convertible are taken into account.
The financial statements of subsidiaries are included in the consolidated financial statements from the date that control
commences until the date that control ceases. Jointly controlled entities are those entities over whose activities the Group has
joint control, established by contractual agreement and requiring the venturers’ unanimous consent for strategic financial and
operating decisions. Jointly controlled entities are accounted for using the equity method (equity accounted investees) and are
initially recognised at cost.
The consolidated financial statements include the Group’s share of the total recognised income and expense and equity movements
of equity accounted investees, from the date that significant influence or joint control commences until the date that significant
influence or control ceases. When the Group’s share of losses exceeds its interest in an equity accounted investee, the Group’s
carrying amount is reduced to nil and recognition of further losses is discounted except to the extent that the Group has incurred
legal or constructive obligations or made payments on behalf of an investee.
c) Foreign currency
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the foreign exchange
rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance
sheet date are translated to functional currency at the foreign exchange rate ruling at that date. Foreign exchange differences
arising on translation are recognised in the income statement. Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are translated to functional currency at foreign exchange rates ruling at the dates the values
were determined.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are
translated to sterling at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations
are translated to sterling at average foreign exchange rates ruling at the dates of the transactions. Foreign exchange differences
arising on retranslation since the transition date to IFRS are recognised directly in a separate component of equity. When a
foreign operation is disposed of, in part or in full, the relevant amount in the foreign currency translation reserve is transferred to
profit or loss.
48
Ted Baker Report and Accounts 2010 / 2011
d) Revenue recognition
Revenue represents amounts receivable for goods provided in the normal course of business, net of trade discounts, VAT and
other sales related taxes. Retail revenue is recognised when a Group entity sells a product to the customer. Wholesale revenue is
recognised when goods are delivered. Licence income is recognised on an accruals basis in accordance with the risks and rewards
of the relevant agreements.
The Group sells retail products with the right of return and experience is used to estimate and provide for the value of such
returns at the time of sale when considered significant. Credit notes or exchanges are available to customers returning unwanted
products with proof of purchase within 28 days of the date of purchase.
Sale of gift vouchers are treated as future liabilities, and revenue is recognised when the gift vouchers are redeemed against a
later transaction.
e) Leases
Rentals under operating leases are charged as incurred, unless there are pre-determined rental increases in the lease, in which
case they are recognised on a straight-line basis over the lease term. Leasehold incentives received are recognised as an integral
part of total lease expense, over the term of the lease.
Certain rental expense is determined on the basis of revenue achieved in specific retail locations and is accrued for on that basis.
The Group’s intangible assets, as shown in Note 10, relates to leased premises which have a guaranteed residual value. The
guaranteed value arises because the next tenant, based on current market conditions, will pay this amount to the Group. Due to
the likelihood that the money will be recoverable, the asset is not amortised.
f) Pension costs
Contributions payable to defined contribution schemes in respect of pension costs and other post retirement benefits are charged
to the consolidated income statement in the period to which they relate. Differences between contributions payable in the year
and contributions actually paid are shown as either accruals or prepayments in the balance sheet.
g) Share based payments
The Group operates an equity settled share based compensation plan.
Share options and conditional share awards
Share options and conditional share awards are measured at fair value at the date of grant using the Black-Scholes pricing model,
taking into account the terms and conditions of the options/awards vesting. The grant date fair value is expensed on a straight
line basis over the vesting period (i.e. the period in which the employees become unconditionally entitled to share options/
awards) based on an estimate of shares that will eventually vest. Shares of Ted Baker PLC held by the Company for the purpose of
filling obligations in respect of employee share plans are deducted from equity in the balance sheet. Any surplus or deficit arising
on the sale of the Ted Baker PLC shares held by the Company is included as an adjustment to reserves.
Value Creation Plan
The Group also operates a Value Creation Plan (VCP) which awards entitlements to certain employees and directors of the
Group. These entitlements are convertible into options over ordinary shares subject to the Group’s share price reaching certain
targets. The fair value of the amount payable to the employee is recognised as an expense with a corresponding increase in equity.
The fair value is initially recognised at the date of the award of the entitlements and spread over the period during which the
entitlements are convertible into ordinary shares. The fair value of the entitlements is based on a Monte Carlo valuation model,
taking into account the terms and conditions upon which the instruments were granted.
Transactions of the Company-sponsored Employee Benefit Trust (EBT) are treated as being those of the Company and are
therefore reflected in the parent company and group financial statements. In particular, the EBT’s purchases and sales of shares
in the Company are debited and credited directly to equity.
49
Ted Baker Report and Accounts 2010 / 2011
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL
STATEMENTS continued
Where the Company grants options over its own shares to the employees of its subsidiaries, it recognises, in its individual
financial statements, an increase in the cost of investment in its subsidiaries equivalent to the equity-settled share-based payment
charge recognised in its consolidated financial statements with the corresponding credit being recognised directly in equity.
h) Derivatives
The Group holds derivative financial instruments to hedge its foreign currency exposure. Derivatives are recognised initially
at fair value; attributable transaction costs are recognised in profit or loss when incurred. Subsequent to initial recognition,
derivatives are measured at fair value, and changes therein are accounted for as described below.
Cash flow hedges
Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised directly in other
comprehensive income to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value
are recognised in profit or loss.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then hedge
accounting is discontinued prospectively. The cumulative gain or loss previously recognised in other comprehensive income
remains there until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount recognised in
other comprehensive income is transferred to the carrying amount of the asset when it is recognised. In other cases the amount
recognised in other comprehensive income is transferred to profit or loss in the same period that the hedged item affects profit
or loss.
i) Taxation
Corporation tax payable is recognised on taxable profits using tax rates enacted or substantively enacted at the balance sheet
date. Deferred tax is recognised in full, using the balance sheet liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, if the deferred
tax arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the
transaction affects neither accounting nor taxable profit or loss, it is not accounted for. Deferred tax is determined using tax rates
(and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related
deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax is not recognised for temporary differences relating to investments in subsidiaries to the extent they will not reverse
in the foreseeable future.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the
temporary differences can be utilised.
Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in
which case it is recognised in equity. Income tax comprises current and deferred tax.
j) Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the Group and Company financial statements
in the period in which it is declared.
k) Intangible assets
Intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and impairment losses.
Amortisation is charged to the income statement on a straight line basis over the estimated useful lives of intangible assets unless
such lives are indefinite.
50
Ted Baker Report and Accounts 2010 / 2011
l) Property, plant and equipment
Property, plant and equipment are stated at cost, net of accumulated depreciation and impairment losses. Depreciation is
provided on all property, plant and equipment at rates calculated to write off the cost, less estimated residual value, of each asset
over its expected useful life, on the following bases:
Leasehold improvements:
Fixtures, fittings and office equipment:
Motor vehicles:
Assets under construction:
Straight line over the period of the lease.
20% to 25% per annum on a straight-line basis apart
from computer equipment, which is 33% per annum
on a straight-line basis.
25% per annum on a straight-line basis.
Are deemed to have not started their useful lives and
as such are not depreciated until the assets are in use
and transferred to one of the categories above.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset’s carrying
amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated
recoverable amount.
Gains and losses on disposals are determined by comparing the disposal proceeds with the carrying amount and are included in
the income statement.
m) Investments
Investments in subsidiaries by the Company are shown at cost less accumulated impairment losses which are recognised in the
income statement.
n) Impairment of property, plant and equipment and indefinite life intangible assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are
subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds
its estimated recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.
Recoverable amounts for cash-generating units are based on value in use, which is calculated from cash flow projections using
data from the Group’s latest internal forecasts, the results of which are reviewed by the Board.
The key assumptions for the value in use calculations are those regarding discount rates, growth rates and expected changes in
margins. Management uses a pre-tax discount rate derived from the Group’s weighted average cost of capital. Internal forecasts
reflect the current market assessment and risks specific to the cash-generating units. Changes in selling prices and direct costs
are based on past experience and expectations of future changes in the market.
Impairment losses are recognised in the income statement. For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Where an impairment loss
subsequently reverses, the carrying amount of the asset is increased to the revised estimate of the recoverable amount, but so that
the increased carrying value does not exceed the carrying value that would have been determined if no impairment loss had been
recognised for the asset in prior years. A reversal of an impairment loss is recognised in income immediately.
o) Inventories
Inventories and work in progress are stated at the lower of cost and net realisable value. Cost includes materials, direct labour and
inward transportation costs. Net realisable value is based on estimated selling price, less further costs expected to be incurred to
completion and disposal. Provision is made for obsolete, slow moving or defective items where appropriate.
p) Cash and cash equivalents
Cash and cash equivalents comprises cash balances and money market deposits. Bank overdrafts that are repayable on demand
51
Ted Baker Report and Accounts 2010 / 2011
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL
STATEMENTS continued
and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the
purpose of the statement of cash flows.
q) Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial
recognition, interest bearing borrowings are stated at amortised cost with any difference between cost and redemption value
being recognised in the income statement over the period of the borrowings on an effective interest basis.
r) Finance income and expenses
Net financing costs comprise interest payable on borrowings calculated using the effective interest rate method, interest receivable
on funds invested, dividend income, foreign exchange gains and losses, and gains and losses on hedging instruments that are
recognised in the income statement.
Interest income is recognised in the income statement as it accrues, using the effective interest method. Dividend income is
recognised in the income statement on the date the entity’s right to receive payments is established which in the case of quoted
securities is usually the ex-dividend date.
s) Segment reporting
A segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses,
including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments’
operating results are reviewed regularly by the Group’s Board to make decisions about resources to be allocated to a segment and
assess its performance, and for which discrete financial information is available (see note 2).
t) Financial guarantee contracts
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within its group,
the Company considers these to be insurance arrangements, and accounts for them as such. In this respect, the Company treats
the guarantee contract as a contingent liability until such time as it becomes probable that the Company will be required to make
a payment under the guarantee.
u) Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in
equity as a deduction, net of tax, from the proceeds.
Where any group company purchases the Company’s equity share capital (treasury shares), the consideration paid, including
any directly incremental costs (net of income taxes), is deducted from retained earnings in equity attributable to the Company’s
equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received,
net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable
to the Company’s equity holders.
v) Accounting estimates and judgements
The directors have made significant accounting estimates and judgements in applying the Group’s accounting policies in the
following areas:
Impairment – the directors have used forecast models and an appropriate pre-tax weighted average cost of capital in their property,
plant and equipment impairment calculations. Growth assumptions are based on directors’ knowledge and historical experience.
Inventory valuation – the directors have used their knowledge and experience of the fashion industry in determining the level
and rates of provisioning required to calculate the appropriate inventory carrying values.
2. Segment information
The Group has three reportable segments; retail, wholesale and licence income.
52
Ted Baker Report and Accounts 2010 / 2011
For each of the three segments, the Group’s chief operating decision maker (the “Board”) reviews internal management reports
on a four weekly basis.
The accounting policies of the reportable segments are the same as described in pages 48 to 52. Information regarding the results
of each reportable segment is included below. Performance for the retail segment is measured based on operating contribution,
whereas performance of the wholesale segment is measured based on gross profit and performance of the licence segment is
measured based on royalty income, as included in the internal management reports that are reviewed by the Board.
Segment results are used to measure performance as management believes that such information is the most relevant in
evaluating the performance of certain segments relative to other entities that operate within these industries. Inter-segment
pricing is determined on an arm’s length basis.
a) Segment revenue and segment result
52 weeks ended 29 January 2011
Revenue
Cost of sales
Gross profit
Operating costs
Operating contribution
Licence income
Segment result
Reconciliation of segment result to profit before tax
Segment result
Other operating costs
Other operating income
Operating profit
Net finance expense
Share of profit of jointly controlled entity, net of tax
Profit before tax
Capital expenditure
Unallocated capital expenditure
Total capital expenditure
Depreciation
Unallocated depreciation
Total depreciation
Segment assets
Other assets
Total assets
Segment liabilities
Other liabilities
Total liabilities
Net assets
Retail
£’000
152,724
(52,615)
100,109
(72,649)
27,460
-
27,460
Wholesale
Licence income
£’000
34,976
(19,308)
15,668
-
15,668
-
15,668
£’000
-
-
-
-
-
6,227
6,227
27,460
15,668
6,227
-
-
6,336
4,980
-
-
360
132
86,784
22,946
(28,824)
(6,601)
-
-
-
-
-
-
Total
£’000
187,700
(71,923)
115,777
(72,649)
43,128
6,227
49,355
49,355
(25,300)
77
24,132
(78)
174
24,228
6,696
2,812
9,508
5,112
1,358
6,470
109,730
7,027
116,757
(35,425)
(5,308)
(40,733)
76,024
Wholesale sales are shown after the elimination of inter-company sales of £14,596,000 (2010: £7,113,000).
53
Ted Baker Report and Accounts 2010 / 2011
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL
STATEMENTS continued
52 weeks ended 30 January 2010
Revenue
Cost of sales
Gross profit
Operating costs
Operating contribution
Licence income
Segment result
Reconciliation of segment result to profit before tax
Segment result
Impairment losses
Other operating costs
Other operating income
Operating profit
Net finance expense
Share of profit of jointly controlled entity, net of tax
Profit before tax
Capital expenditure
Unallocated capital expenditure
Total capital expenditure
Depreciation
Unallocated depreciation
Total depreciation
Segment assets
Other assets
Total assets
Segment liabilities
Other liabilities
Total liabilities
Net assets
Total
£’000
163,586
(63,659)
99,927
(63,641)
36,286
5,493
41,779
41,779
(750)
(21,327)
80
19,782
(364)
86
19,504
3,978
566
4,544
5,060
1,235
6,295
91,665
4,475
96,140
(25,083)
(4,827)
(29,910)
66,230
Retail
£’000
136,455
(47,884)
88,571
(63,641)
24,930
-
24,930
24,930
(750)
-
-
3,844
-
4,958
-
Wholesale
Licence income
£’000
27,131
(15,775)
11,356
-
11,356
-
11,356
£’000
-
-
-
-
-
5,493
5,493
11,356
5,493
-
-
-
134
-
102
-
-
-
-
-
-
-
-
-
-
74,896
16,769
(20,923)
(4,160)
54
Ted Baker Report and Accounts 2010 / 2011
b) Geographical information
52 weeks ended 29 January 2011
Revenue
Non-current assets*
52 weeks ended 30 January 2010
Revenue
Non-current assets*
*Non-current assets exclude deferred tax assets.
c) Revenue by collection
Menswear
Womenswear
3. Profit before tax
Profit before tax is stated after charging:
Depreciation
Impairment losses
UK & Europe
£’000
167,422
23,431
153,527
22,885
US
£’000
17,678
6,922
10,059
4,270
Other
£’000
2,600
134
-
-
Total
£’000
187,700
30,487
163,586
27,155
52 weeks ended
29 January
2011
£’000
98,229
89,471
187,700
52 weeks ended
30 January
2010
£’000
88,376
75,210
163,586
52 weeks ended
29 January
2011
52 weeks ended
30 January
2010
£’000
6,470
-
15,865
9
76
20
20
225
£’000
6,295
750
15,510
9
76
20
3
110
Operating lease rentals for leasehold properties
Fees payable to the Company’s auditor for the audit of the Company’s annual accounts
Fees payable to the Company’s auditor and associates for the audit of the Company’s subsidiaries, pursuant to legislation
Fees payable to the Company’s auditor for other services supplied, persuant to legislation
Other services provided by the Company’s auditor
Loss on sale of property, plant & equipment
55
Ted Baker Report and Accounts 2010 / 2011
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL
STATEMENTS continued
4. Finance income and expenses
Finance income
- Interest receivable
- Foreign exchange gains
Finance expenses
- Interest payable
- Foreign exchange losses
5. Staff numbers and costs
The average number of employees (including executive directors) was:
Sales
Design
Administration
Their aggregate remuneration comprised:
Wages and salaries
Share based charge
Social security costs
Pension costs
52 weeks ended
29 January
2011
£’000
52 weeks ended
30 January
2010
£’000
35
7
42
(65)
(55)
(120)
10
-
10
(148)
(226)
(374)
52 weeks ended
29 January
2011
52 weeks ended
30 January
2010
No.
1,472
56
172
1,700
£’000
32,007
426
2,880
515
35,828
No.
1,372
32
173
1,577
£’000
28,145
192
2,516
432
31,285
The figures stated above are Group staff costs and as such include the costs for Mr R S Kelvin, who is the only salaried employee
of the parent company for both years. Further details of his remuneration may be found in the Directors’ Remuneration Report
on page 29.
6. Income tax expense
a) The tax charge comprises
Current tax
Deferred tax
Prior year under provision
52 weeks ended
29 January
2011
52 weeks ended
30 January
2010
£’000
7,461
(633)
120
6,948
£’000
6,336
(521)
162
5,977
56
Ted Baker Report and Accounts 2010 / 2011
b) Deferred tax movement by type
Property, plant & equipment
Share based payments
Overseas losses
Inventory
Other (gains) / losses
For further details please refer to note 13.
52 weeks ended
29 January
2011
52 weeks ended
30 January
2010
£’000
(412)
(159)
(41)
(12)
(9)
(633)
£’000
(396)
(6)
(111)
(43)
35
(521)
c) Factors affecting the tax charge for the period
The tax assessed for the period is higher than the tax calculated at domestic rates applicable to profits in the respective countries.
The differences are explained below.
Profit before tax
Profit multiplied by the standard rate in the UK – 28%, (2010: standard rate in the UK of 28%)
Expenses not deductible for tax purposes
Overseas losses not recognised
Movement in current and deferred tax on share awards and options
Prior year under provision
Effect of rate change on corporation tax
Difference due to overseas tax rates
Total income tax expense
d) Deferred and current tax recognised directly in equity
Deferred tax credit on share awards and options
Deferred tax associated with movement in hedging reserve
in hedging reserve
52 weeks ended
29 January
2011
52 weeks ended
30 January
2010
£’000
24,228
6,784
191
133
(46)
120
(66)
(168)
6,948
£’000
19,504
5,461
427
42
49
162
-
(164)
5,977
52 weeks ended
29 January
2011
52 weeks ended
30 January
2010
£’000
(298)
(55)
(353)
£’000
(13)
375
362
The Chancellor announced in the Budget on 23 March 2011 that the decrease in the UK corporation tax rate for large companies
will be increased such that there will be a 2% reduction in the headline rate from 28% to 26% with effect from 1 April 2011. The
proposed 1% per annum reductions in the headline rate remains such that it is proposed that the headline rate will decrease to
23% by 1 April 2014.
57
Ted Baker Report and Accounts 2010 / 2011
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL
STATEMENTS continued
As the deferred tax assets and liabilities should be recognised based on the corporation tax rates substantively enacted at the
balance sheet date, the 27% rate remains appropriate for the current year.
Accordingly, in the period, £66,000 has been credited to the income statement. Had the further tax rate changes been substantively
enacted before the balance sheet date, it would have had the effect of reducing the net deferred tax liability in relation to UK
operations by £171,000.
7. Profit attributable to Ted Baker PLC
The profit after tax of Ted Baker PLC, the parent company was £8,060,000 (2010: £21,781,000). The directors have approved the
income statement for the parent company.
8. Dividends per share
Final dividend paid for prior year of 0.5p per ordinary share (2010: 11.4p)
Second interim dividend paid for prior year of 11.4p per ordinary share (2010: £Nil)
Interim dividend paid of 6.3p per ordinary share (2010: 5.25p)
52 weeks ended
29 January
2011
52 weeks ended
30 January
2010
£’000
208
4,745
2,622
7,575
£’000
4,743
-
2,185
6,928
A final dividend in respect of 2011 of 14.3p per share, amounting to a dividend payable of £5,952,201, is to be proposed at the
Annual General Meeting on 14 June 2011.
9. Earnings per share
Number of shares:
Weighted number of average ordinary shares outstanding
Effect of dilutive options and awards
Weighted number of average ordinary shares outstanding – diluted
Earnings:
Profit for the period basic and diluted
Basic earnings per share
Diluted earnings per share
52 weeks ended
29 January
2011
No.
41,622,472
163,956
41,786,428
£’000
17,280
41.5
41.4
52 weeks ended
30 January
2010
No.
41,613,798
10,183
41,623,981
£’000
13,576
32.6
32.6
The weighted number of average ordinary shares excludes own shares held by the Ted Baker Group Employee Benefit Trust, the
Ted Baker 1998 Employee Benefit Trust and treasury shares.
Diluted earnings per share have been calculated using the weighted average number of ordinary shares outstanding. In addition,
account has been taken of any share options and awards made under the long term incentive schemes which will have a dilutive
effect when exercised or vested. The actual dilutive effect will only be determined on exercise or vesting and in particular, the dilutive
impact of the Ted Baker 2009 Value Creation Plan will be determined by the number of nil cost options ultimately granted to
participants at the end of the three year performance period.
58
Ted Baker Report and Accounts 2010 / 2011
There were no share related events after the balance sheet date that may affect earnings per share.
10. Intangible assets
Cost and net book value
At 30 January 2010
Additions
Exchange rate movement
At 29 January 2011
Cost and net book value
At 31 January 2009
Exchange rate movement
At 30 January 2010
£’000
634
366
(3)
997
£’000
673
(39)
634
The intangible assets, both brought forward and added during the period, relate to the right to lease stores that have a guaranteed
residual value. The guaranteed value arises because the next tenants based on current market conditions are required to pay these
amounts to the Group. Due to the nature of this the assets are considered recoverable and therefore not amortised. The current
market rate rents, for both stores, continue to be above the rent under the lease terms and hence no decline in values are foreseen.
11. Property, plant and equipment
Cost
At 30 January 2010
Additions
Disposals
Exchange rate movement
At 29 January 2011
Depreciation
At 30 January 2010
Charge for the year
Impairment losses
Disposals
Exchange rate movement
At 29 January 2011
Net book value
At 30 January 2010
At 29 January 2011
Leasehold
Improvements
Fixtures, fittings &
office equipment
£’000
£’000
Motor
vehicles
£’000
Assets under
construction
£’000
33,485
4,380
(279)
71
37,657
15,926
2,785
-
(105)
9
18,615
17,559
19,042
29,974
4,603
(249)
30
34,358
22,562
3,679
-
(178)
15
26,078
7,412
8,280
170
-
(45)
1
126
139
6
-
(35)
1
111
31
15
506
525
-
-
1,031
-
-
-
-
-
-
506
1,031
Total
£’000
64,135
9,508
(573)
102
73,172
38,627
6,470
-
(318)
25
44,804
25,508
28,368
59
Ted Baker Report and Accounts 2010 / 2011
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL
STATEMENTS continued
Additions included within the assets under construction category are stated net of transfers to other property, plant and equipment
categories. Transfers from the assets under construction category in the period amounted to £506,000 (2010: £203,000) whilst
additions into this category were £1,031,000 (2010: £506,000).
Impairment losses recognised in the year were £nil (2010: £750,000). The impairment losses in the prior year were as a result of
a review of the carrying value of the portfolio of store assets.
Cost
At 31 January 2009
Additions
Disposals
Exchange rate movement
At 30 January 2010
Depreciation
At 31 January 2009
Charge for the year
Impairment losses
Disposals
Exchange rate movement
At 30 January 2010
Net book value
At 31 January 2009
At 30 January 2010
Leasehold
Improvements
Fixtures, fittings &
office equipment
£’000
£’000
Motor
vehicles
£’000
Assets under
construction
£’000
32,188
2,043
(14)
(732)
33,485
13,019
2,508
680
(8)
(273)
15,926
19,169
17,559
29,021
2,186
(815)
(418)
29,974
19,734
3,768
70
(711)
(299)
22,562
9,287
7,412
165
12
-
(7)
170
123
19
-
-
(3)
139
42
31
203
303
-
-
506
-
-
-
-
-
-
203
506
Total
£’000
61,577
4,544
(829)
(1,157)
64,135
32,876
6,295
750
(719)
(575)
38,627
28,701
25,508
Impairment of property, plant and equipment
The Group has determined that for the purposes of impairment testing, each store and outlet is a cash-generating unit. Cash-
generating units are tested for impairment if there are indications of impairment at the balance sheet date.
Recoverable amounts for cash-generating units are based on value in use, which is calculated from cash flow projections using
data from the Group’s latest internal forecasts, the results of which are reviewed by the Board. The key assumptions for the value
in use calculations are those regarding discount rates, growth rates and expected changes in margins. Management estimates
discount rates using pre-tax rates that reflect the current market assessment of the time value of money and the risks specific
to the cash-generating units. Changes in selling prices and direct costs are based on past experience and expectations of future
changes in the market.
The pre-tax discount rate used to calculate value in use is derived from the Group’s weighted average cost of capital.
The impairment losses relate to stores whose recoverable amounts (value in use) did not exceed the asset carrying values. In all
cases, impairment losses arose due to stores performing below projected trading levels.
60
Ted Baker Report and Accounts 2010 / 2011
12. Investments (Company)
a) Subsidiary undertakings
The Company and Group have shares in the following subsidiary undertakings. All of the subsidiaries have been included in the
consolidated accounts (*held directly by Ted Baker PLC).
Subsidiary undertaking
No Ordinary Designer Label Ltd
(formerly Ted Baker Limited)*
Ted Baker Investments (Jersey) Ltd*
Ted Baker Limited
Ted Baker (New York) Inc
Ted Baker (France) SARL
Ted Baker Japan KK
Country of
incorporation
& operation
UK
Jersey
US
US
France
Japan
Principal
activity
Design, wholesale & retail of
designer clothing & accessories
Investment
holding company
Retail of designer
clothing & accessories
Retail of designer
clothing & accessories
Retail of designer
clothing & accessories
Retail of designer
clothing & accessories
b) Subsidiary undertakings - cost and net book value
At 30 January 2010
Increase in cost of investment for share options / awards granted to subsidiary employees
At 29 January 2011
At 31 January 2009
Increase in cost of investment for share options / awards granted to subsidiary employees
At 30 January 2010
Holding
Ordinary
Shares
100%
100%
100%
100%
100%
100%
Company
£’000
16,694
357
17,051
Company
£’000
16,534
160
16,694
c) Interest in Joint Venture
The Group has a 50% interest in a joint venture with Flair Industries Pty Ltd which is represented by three stores in Australia
(2010: two stores).
Investment in Joint Venture
52 weeks ended
29 January
2011
£’000
345
52 weeks ended
30 January
2010
£’000
171
The above carrying value represents the initial cost of the investment undertaken, as well as any subsequent change in net assets
of the venture, as at 29 January 2011.
61
Ted Baker Report and Accounts 2010 / 2011
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL
STATEMENTS continued
Amounts due from equity accounted investee
52 weeks ended
29 January
2011
£’000
286
52 weeks ended
30 January
2010
£’000
261
There are no contingent liabilities relating to the Group’s interest in the joint venture, and no contingent liabilities of the venture
itself. The joint venture’s assets, liabilities and profit at 29 January 2011 are as follows:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Share capital
Retained earnings
Current year profit, net of tax
Exchange rate movement
Total equity
13. Deferred tax assets and liabilities
Assets
Share based payments
Derivative financial instruments
Liabilities
Property, plant & equipment
Other *
Net deferred tax liability
Deferred tax asset on foreign operations arising from:
Foreign trading losses
Inventory
Property, plant & equipment
Other – vacation accrual
52 weeks ended
29 January
2011
52 weeks ended
30 January
2010
£’000
1,509
425
-
(1,077)
857
23
395
348
91
857
52 weeks ended
29 January
2011
£’000
474
55
(403)
(1,673)
(1,547)
1,904
349
178
39
2,470
£’000
889
277
-
(728)
438
23
185
172
58
438
52 weeks ended
30 January
2010
£’000
17
-
(396)
(937)
(1,316)
1,162
302
134
-
1,598
Recognition of deferred tax assets is based on the generation of future taxable profits that will allow utilisation of losses.
62
Ted Baker Report and Accounts 2010 / 2011
Deferred tax assets are only recognised on the foreign trading losses when these businesses pass their development phase, and
when management considers it probable that future taxable profits will be available against which they can be utilised.
The amount of unused cumulative tax losses for which no deferred tax asset has been recognised in the balance sheet is £689,000
(2010: £587,000).
* Other includes a deferred tax liability for UK tax payable on US operations for which no double tax relief will be available.
14. Inventories
Raw materials and packaging
Work in progress
Finished goods and goods for resale
Cost of inventories recognised as an expense
Inventories written down and recognised as an expense in the period
15. Trade and other receivables
Trade receivables
Amounts owed by Group undertakings
Prepayments and accrued income
16. Derivative financial instruments
Forward foreign exchange contracts
52 weeks ended
29 January
2011
52 weeks ended
30 January
2010
£’000
2,174
805
39,513
42,492
62,881
1,683
Group
30 January
2010
£’000
14,436
-
5,262
19,698
Assets
30 January
2010
£’000
280
£’000
2,072
750
30,628
33,450
67,524
1,182
Company
30 January
2010
£’000
-
24,108
4
24,112
Liabilities
29 January
2010
£’000
(304)
Group
29 January
2011
£’000
18,182
-
9,202
27,384
Assets
29 January
2011
£’000
102
Company
29 January
2011
£’000
-
24,710
2
24,712
Liabilities
29 January
2011
£’000
(455)
Derivative financial instruments are used to hedge exposure to fluctuations in foreign exchange rates that arise in the normal
course of the Group’s business.
The ineffective portion recognised in the income statement that arises from cash flow hedges amounts to a loss of £nil (2010: £nil).
Gains and losses in equity of forward exchange contracts at 29 January 2011 will be released to the income statement at various
dates within 12 months of the balance sheet date, as the hedged forecast transactions occur.
63
Ted Baker Report and Accounts 2010 / 2011
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL
STATEMENTS continued
17. Reconciliation of cash and cash equivalents per balance sheet to cash flow statement
Cash and cash equivalents per cash flow statement / balance sheet
18. Trade and other payables
Trade payables
Accruals and deferred income
Other taxes and social security
19. Capital and reserves
Group
52 weeks ended
29 January 2011
Company
52 weeks ended
29 January 2011
Group
52 weeks ended
30 January 2010
Company
52 weeks ended
30 January 2010
£’000
13,536
£’000
464
£’000
13,698
£’000
489
Group
29 January
2011
£’000
18,888
13,385
2,697
34,970
Company
29 January
2011
£’000
-
14
-
14
Group
30 January
2010
£’000
10,392
11,471
2,916
24,779
Company
30 January
2010
£’000
-
12
-
12
Authorised – 80,000,000 ordinary shares of 5p each
Allotted, called up and fully paid – 43,198,033 ordinary shares of 5p each (2010: 43,198,033)
52 weeks ended
29 January
2011
52 weeks ended
30 January
2010
£’000
4,000
2,160
£’000
4,000
2,160
At 29 January 2011, the Ted Baker Group Employee Benefit Trust (“Employee Trust”) and the Ted Baker 1998 Employee Benefit
Trust (“1998 Trust”) did not hold any ordinary shares in Ted Baker PLC (2010: Employee Trust - £Nil, 1998 Trust - £Nil).
The Company held 1,574,249 shares in treasury at 29 January 2011 (2010: 1,579,557).
Other Reserves and retained earnings
Other Reserves and retained earnings include the following reserve accounts:
Cash Flow Hedging reserve
The effective portion of financial instruments that is designated as hedging instruments and is documented as part of an effective
hedge of future cash flows is recognised directly in equity and recycled to the income statement when the underlying cash flows
occur, or are no longer expected to occur. At 29 January 2011, the value of financial instruments that are designated as hedging
instruments recorded in equity was -£148,000 (2010: -£12,000).
Translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the Group’s financial statements
of foreign operations.
Other reserves - Company
This reserve relates to the premium on equity consideration used in the acquisition of a subsidiary, No Ordinary Designer
Label Limited, by Ted Baker PLC in 1997, which is classified within Other Reserves under the Companies Act. This reserve also
includes the cost of share options and awards granted to subsidiary employees of the parent company. This reduction in other
reserves is reflected in retained earnings in the Group Statement of Changes in Equity.
64
Ted Baker Report and Accounts 2010 / 2011
Retained Earnings
In 2010 the Group acquired an additional 34% in Ted Baker (New York) Inc for £0.6m in cash increasing its ownership to 100%.
The carrying amount of net assets in the Group’s financial statements on the date of acquisition was £0.1m. The Group eliminated
its non controlling interest of £0.1m and recognised a decrease in retained earnings of £0.7m.
20. Share based payments
Share options and conditional share awards
Equity settled awards are granted to employees in the form of share options or share awards. Share options are granted at an
option price equal to the Company’s share price at the grant date, or at a discount of up to 20% in the case of SAYE share options.
No consideration is payable where share awards vest. The vesting period is generally between three and five years.
Movements in the number of share options and awards outstanding and their related weighted average exercise prices are as follows:
At beginning of period
Granted during the period
Exercised during the period
Lapsed during the period
Outstanding at the end of period
Exercisable at end of period
Weighted average
exercise price
2011
240.7p
432.0p
361.0p
235.9p
344.7p
-
Number of
options/awards
2011
1,921,415
42,093
(5,308)
(1,803,953)
154,247
Weighted average
exercise price
2010
Number of
options/awards
2010
241.7p
303.0p
314.0p
378.9p
240.7p
1,865,698
138,886
(13,823)
(69,346)
1,921,415
-
-
-
The charge for the year to the income statement amounted to £38,868 (2010: £22,930).
The weighted average share price at the date of exercise of share options exercised during the year was 531.0p (2010: 342.5p).
Share options and awards outstanding at the end of the period were as follows:
Expiry date
Excercise price
Fair value
at grant date
Number o f
options / awards
at 29 January 2011
Number o f
options / awards
at 30 January 2010
17 November 2004
17 November 2005
18 April 2006
31 July 2006
23 March 2007
27 November 2007
4 April 2008
4 April 2008
21 October 2008
21 October 2008
27 October 2008
15 May 2009
15 May 2009
14 May 2010
14 May 2010
31 January 2011
31 January 2012
*
*
*
31 January 2014
*
29 January 2018
20 October 2018
20 October 2018
26 October 2018
1 January 2013
1 January 2015
31 January 2015
31 January 2017
361.0p
334.0p
-
-
-
429.0p
-
414.0p
362.0p
353.0p
354.9p
303.0p
303.0p
432.0p
432.0p
141.5p
160.0p
443.5p
458.8p
551.5p
144.6p
367.4p
65.2p
53.9p
57.3p
40.7p
82.5p
84.6p
124.6p
129.4p
-
2,602
-
-
-
18,810
-
-
-
-
-
23,445
78,584
22,537
8,269
5,308
5,675
212,198
157,548
139,515
25,943
378,316
740,877
27,624
84,990
8,453
29,641
108,400
-
-
* Share awards outstanding at the end of the period do not have an expiry date, but vest by reference to performance over the following
three financial years.
The fair value of employee share options and awards were calculated using the Black-Scholes model.
154,247
1,924,488
65
Ted Baker Report and Accounts 2010 / 2011
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL
STATEMENTS continued
The range of inputs into the Black-Scholes model were as follows:
Weighted average share price
Weighted average exercise price
Risk free interest rate
Expected life of options
Share price volatility
Dividend yield
52 weeks ended
29 January
2011
441.4p
241.6p
52 weeks ended
30 January
2010
439.1p
240.7p
1.49% - 5.29%
2.17% - 5.29%
3-5 years
19.1% - 32.1%
2.24% - 4.62%
3-5 years
19.1% - 32.1%
2.24% - 4.62%
The share price volatility was determined by calculating the historic volatility of the Group’s share price over a time period
matching the expected life of the option.
Value Creation Plan
The award of units is made under the Ted Baker 2009 Value Creation Plan (“2009 VCP”), which was approved by shareholders at
the General Meeting held on 16 June 2009. Units have no value at grant, but subject to the satisfaction of earnings per share, share
price and total shareholder return performance targets can convert and give participants the right to be granted nil-cost options
at the end of the performance. Further details of the plan are outlined in the notice of meeting dated 13 May 2009.
The terms and conditions of the award of units granted under the 2009 VCP are as follows:
Grant date
Type
of award
Number
of units
Vesting
conditions
Vesting
period
13 August 2009
Award of units
100,000
Growth in earnings per share, share
price and total shareholder return
over a three year performance period
50% after three years and the balance
one year later
VCP awards outstanding at the end of the period were as follows:
At 30 January 2010
VCP entitlements awarded during the year
Lapsed during the year
Outstanding at 29 January 2011
At 29 January 2011
At 30 January 2010
No. of entitlements
No. of entitlements
100,000
-
-
100,000
-
100,000
-
100,000
66
Ted Baker Report and Accounts 2010 / 2011
The VCP awards are valued using a Monte Carlo model. The inputs into the model are as follows:
Share price on award date
Average share price at award date
Number of simulations
Expected life of options
Dividend yield
Risk free interest rate
Ted Baker volatility
FTSE index volatility
Correlation between Ted Baker and FTSE index
Share price hurdle per annum
Payout over share price hurdle
Vesting percentage for meeting performance conditions
Shares in issue
13 August
2009
£3.98
£3.76
10,000
3 years
4.18%
2.21%
25.0%
33.0%
12.0%
10.0%
12.5%
100.0%
41,618,476
The charge for the year to the income statement amounted to £387,264 (2010: £178,737). Included in the charge for the year is an
amount in respect of R S Kelvin who is employed by the Company, amounting to £69,320 (2010: £31,994).
21. Financial commitments
a) Capital commitments
The Group has capital commitments of £2,682,000 at 29 January 2011 (2010: £1,118,000) which were not provided in the
financial statements.
b) Operating leases
Total of future lease payments under non-cancellable operating leases are as follows:
Within one year
Between one and five years
Later than five years
52 weeks ended
29 January
2011
52 weeks ended
30 January
2010
£’000
18,267
58,980
36,626
113,873
£’000
15,388
62,820
35,706
113,914
The Group leases a number of stores, warehouses and head office facilities under operating leases. The leases are of varied length
with the longest lease running until 2029.
Leases of land and buildings are typically subject to rent reviews at specified intervals and provide for the lessee to pay all
insurance, maintenance and repair costs.
Certain rental expense is determined on the basis of revenue achieved in specific retail locations and is accrued for on that basis.
The total amount paid under these agreements was £12,934,000 (2010: £12,704,000).
67
Ted Baker Report and Accounts 2010 / 2011
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL
STATEMENTS continued
c) Pension arrangements
The Group operates a number of defined contribution schemes for senior management and a stakeholder pension scheme for
employees, for which the pension cost charge for the period amounted to £515,000 (2010: £432,000). Contributions totalling
£18,778 (2010: £18,045) are included in other receivables at the year end.
22. Financial instruments and risk management
a) Carrying amount and fair values of financial assets and liabilities
Financial assets and liabilities - Group
The fair values of financial assets and liabilities of the Group, together with the carrying amounts shown in the balance sheet,
are as follows:
Financial assets
Trade receivables
Accrued income
Amount due from equity accounted investee
Derivative financial assets
Cash and cash equivalents
Total financial assets
Financial liabilities
Trade and other payables
Derivative financial liabilities
Total financial liabilities
Net financial (liabilities) / assets
Carrying Amount
29 January
2011
£’000
18,182
1,099
286
102
13,536
33,205
(34,970)
(455)
(35,425)
(2,220)
Fair value
29 January
2011
£’000
18,182
1,099
286
102
13,536
33,205
(34,970)
(455)
(35,425)
(2,220)
Carrying Amount
30 January
2010
£’000
14,436
1,163
261
280
13,698
29,838
(24,779)
(304)
(25,083)
4,755
Fair value
30 January
2010
£’000
14,436
1,163
261
280
13,698
29,838
(24,779)
(304)
(25,083)
4,755
68
Ted Baker Report and Accounts 2010 / 2011
Financial assets and liabilities - Company
The fair values of financial assets and liabilities of the Company, together with the carrying amounts shown in the balance sheet,
are as follows:
Financial assets
Amounts owed by group undertakings
Cash and cash equivalents
Total financial assets
Financial liabilities
Trade and other payables
Total financial liabilities
Net financial assets
Carrying Amount
29 January
2011
£’000
24,710
464
25,174
(14)
(14)
Fair value
29 January
2011
£’000
24,710
464
25,174
(14)
(14)
Carrying Amount
30 January
2010
£’000
24,108
489
24,597
(12)
(12)
Fair value
30 January
2010
£’000
24,108
489
24,597
(12)
(12)
25,160
25,160
24,585
24,585
The methods and assumptions used to estimate fair values of financial assets and liabilities are as follows:
1. Cash and cash equivalents have been stated at their book values due to their short maturities or immediate or
short-term access.
2. The fair values of trade receivables, amount due from equity accounted investee and amounts owed by Group undertakings
have been stated at their book value due to their short maturities.
3. The fair value of derivatives is determined by reference to third party valuations (usually from a bank) or by reference to
readily observable market prices.
4. The fair values of trade and other payables have been stated at their book values due to their short maturities.
5. Valuation of all financial derivative assets and liabilities carried at fair value by the Group is based on hierarchy Level 2. Fair
value hierarchy levels are defined as follows:
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).
b) Derivative financial instruments
Currency derivatives
Contractual/
notional amounts
29 January 2011
£’000
26,598
26,598
Assets
29 January
2011
£’000
102
102
Liabilities
29 January
2011
Contractual/
notional amounts
30 January 2010
£’000
(455)
(455)
£’000
21,187
21,187
Assets
30 January
2010
£’000
280
280
Liabilities
30 January
2010
£’000
(304)
(304)
69
Ted Baker Report and Accounts 2010 / 2011
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL
STATEMENTS continued
c) Cash flow hedging reserve movements
The following table indicates the cash flow hedging reserve balance at 29 January 2011 and the periods in which the cash flows
are expected to occur. The periods in which the cash flows are expected to impact the profit and loss are materially the same.
Within six months
Between six months and one year
Between one and two years
Unrecognised losses
Currency derivatives
29 January
2011
Currency derivatives
30 January
2010
£’000
(148)
-
-
(148)
£’000
(12)
-
-
(12)
The following table identifies the movements in the cash flow hedging reserve during the year, including where gains and losses
have been recognised in the income statement.
Opening balance
Gains / (losses) recognised in hedging reserve
Amounts recovered from hedging reserve and recognised in income statement
Deferred tax associated with movement in the hedging reserve
Closing balance
Currency derivatives
29 January
2011
Currency derivatives
30 January
2010
£’000
(12)
88
(279)
55
(148)
£’000
1,713
(959)
(391)
(375)
(12)
d) Financial risk identification and management
The Group’s multinational operations and debt financing requirements expose it to a variety of financial risks. In the course of
its business the Group is exposed to:
(cid:116)(cid:1) (cid:78)(cid:66)(cid:83)(cid:76)(cid:70)(cid:85)(cid:1)(cid:83)(cid:74)(cid:84)(cid:76)(cid:28)
(cid:116)(cid:1) (cid:68)(cid:83)(cid:70)(cid:69)(cid:74)(cid:85)(cid:1)(cid:83)(cid:74)(cid:84)(cid:76)(cid:28)(cid:1)(cid:66)(cid:79)(cid:69)
(cid:116)(cid:1) (cid:77)(cid:74)(cid:82)(cid:86)(cid:74)(cid:69)(cid:74)(cid:85)(cid:90)(cid:1)(cid:83)(cid:74)(cid:84)(cid:76)
The Group’s financial risk management process seeks to enable the early identification, evaluation and effective management of
key risks facing the business. Risk management policies and systems have been established and are reviewed regularly to reflect
changes in the market conditions and the Group’s activities. The Group, through its standards and procedures, aims to develop a
disciplined and constructive control environment in which all employees understand their roles and obligations.
i) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the
Group’s income or the value of its holdings of financial instruments. At the balance sheet date, the only significant market risk to
the Group arises from foreign currency risk.
70
Ted Baker Report and Accounts 2010 / 2011
The Group operates internationally and is therefore exposed to foreign currency risk primarily on purchases denominated in US
dollars and Euros.
The Board reviews and agrees policies for managing exchange rate risks on a regular basis. Where appropriate, the Group
uses financial instruments to mitigate these risks. All transactions in derivatives, principally forward exchange contracts,
are taken solely to manage these risks. No transactions of a speculative nature are entered into. Foreign exchange risk arises
when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the entity’s
functional currency.
The Group’s policy is to hedge substantially all the risks of such currency fluctuations by using forward contracts taking into
account forecast foreign currency cash inflows and outflows.
The Group’s risk management policy is to hedge the vast majority of anticipated cash flows (mainly purchases of inventory) in
each major foreign currency for the subsequent 12 months. The vast majority of projected purchases in each major currency
qualifies as ‘highly probable’ forecast transactions for hedge accounting purposes.
Foreign currency risk
The Group operates internationally and is therefore exposed to foreign currency transaction risk, primarily on purchases
denominated in US dollars and Euros. Where appropriate, the Group uses financial instruments to mitigate these risks. The Group
also publishes its financial statements in sterling and is therefore exposed to foreign currency translation risks due to movements in
foreign exchange rates on the translation of the results and underlying net assets of its foreign operations into sterling.
Transaction risk
Currency transaction exposure occurs where a business makes sales and purchases in a currency other than its functional
currency. It also arises where monetary assets and liabilities of a business are not denominated in its functional currency, and
where dividends or surplus funds are remitted from overseas. The Group’s policy is to match transaction exposures wherever
possible, and to hedge actual exposures and firm commitments as soon as they occur by using forward foreign exchange contracts.
An element of this risk is mitigated by natural hedges as the Group operates internationally and income is generated in the
local currencies.
Economic (forecast) risk
The Group also uses forward foreign currency contracts to hedge its exposure to movements in exchange rates on its highly
probable forecast foreign currency purchases on a rolling 12 month basis. The Group does not formally define the proportion of
highly probable forecast purchases to hedge, but agrees an appropriate percentage on an individual basis with each business by
reference to the Group’s risk management policies and prevailing market conditions. The Group documents currency derivatives
used to hedge its forecast transactions as cash flow hedges. To the extent that cash flow hedges are effective, gains and losses are
deferred in equity until the forecast transaction occurs, at which point the gains and losses are recycled either to the income
statement or to the non-financial asset acquired.
The majority of the Group’s currency derivatives have original maturities of less than one year.
The Group’s most significant currency transaction exposure is the purchases of inventories which are denominated in a number
of currencies, predominantly Euros and US dollars.
The analysis of the Group’s foreign currency exposure to financial assets and liabilities by currency of denomination is as follows:
71
Ted Baker Report and Accounts 2010 / 2011
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL
STATEMENTS continued
Financial assets
Trade receivables
Cash and cash equivalents*
Financial liabilities
Trade and other payables
US Dollar
29 January
2011
£’000
84
(7,291)
(7,207)
(3,597)
(3,597)
Euro
29 January
2011
£’000
1,425
4,780
6,205
(2,857)
(2,857)
(10,804)
3,348
Other
29 January
2011
£’000
125
1,031
1,156
(255)
(255)
901
* The US Dollar overdraft forms part of a multi-currency overdraft facility and as such is netted off against other cash balances and
is not recognised as an overdraft in its own right.
Financial assets
Trade receivables
Cash and cash equivalents*
Financial liabilities
Trade and other payables
US Dollar
30 January
2010
£’000
33
(5,055)
(5,022)
(1,101)
(1,101)
Euro
30 January
2010
£’000
342
845
1,187
(1,416)
(1,416)
(6,123)
(229)
Other
30 January
2010
£’000
125
21
146
(135)
(135)
11
The following significant exchange rates applied during the year:
US dollar
Euro
Average rate
29 January
2011
1.543
1.170
Mid-spot rate
29 January
2011
1.589
1.161
Average rate
30 January
2010
1.580
1.127
Mid-spot rate
30 January
2010
1.610
1.155
Sensitivity Analysis
The Group has used a sensitivity analysis technique that measures the estimated change to the income statement and equity
of a 10% strengthening or weakening in sterling against all other currencies, using the rates applicable at 29 January 2011. The
analysis assumes that all other variables, in particular, interest rates, remain constant.
72
Ted Baker Report and Accounts 2010 / 2011
The following sensitivity analysis illustrates the impact that a 10% strengthening of the Group’s reporting currency against local
functional currencies would have had on profit before tax and non-controlling interest and equity. The analysis covers currency
translation exposures at the year end on the Group’s financial assets and liabilities that are not denominated in the functional
currencies of those businesses.
A 10% (2010: 10%) strengthening or weakening of the sterling against the following currencies at 29 January 2011 would have
increased / (decreased) equity and profit by the amounts shown in the following table:
Test of 10% (2010: 10%) strengthening in sterling against other currencies
£’000
£’000
£’000
£’000
Impact on profit
29 January
2011
Impact on equity
29 January
2011
Impact on profit
30 January
2010
Impact on equity
30 January
2010
US Dollar
Euro
Test of 10% (2010: 10%) weakening in sterling against other currencies
US Dollar
Euro
(982)
304
(678)
1,200
(372)
828
(982)
304
(678)
1,200
(372)
828
(557)
(21)
(578)
680
25
705
(557)
(21)
(578)
680
25
705
Interest rate risk
The Group’s exposure to interest rate risk is limited to floating rate financial assets and liabilities.
The interest rate profile of the financial assets and liabilities of the Group are as follows:
Financial assets subject to interest rate risk
Sterling
US Dollar
Euro
Other
Group
29 January
2011
£’000
11,785
(4,586)
5,252
1,030
13,481
Company
29 January
2011
Group
30 January
2010
Company
30 January
2010
£’000
464
-
-
-
464
£’000
16,296
(4,092)
1,412
22
13,638
£’000
489
-
-
-
489
There were no fixed rate financial assets or liabilities at 29 January 2011 and 30 January 2010.
ii) Credit risk
Credit risk is the risk that counterparties to financial instruments do not perform according to the terms of the contract or
instrument. The Group is exposed to counterparty credit risk when dealing with its credit customers, and from certain
financing activities.
The immediate credit exposure of financial instruments is represented by those financial instruments that have a net positive fair
value by counterparty at 29 January 2011. The Group considers its maximum exposure to credit risk to be:
73
Ted Baker Report and Accounts 2010 / 2011
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL
STATEMENTS continued
Cash and cash equivalents
Trade receivables
Accrued income
Amount due from equity accounted investee
Derivative financial assets
52 weeks ended
29 January
2011
52 weeks ended
30 January
2010
£’000
13,481
18,182
1,099
286
102
33,150
£’000
13,638
14,436
1,163
261
280
29,778
All cash balances and derivative financial assets are held with reputable banks or financial institutions.
As at 29 January 2011, there were no significant financial guarantees or third-party obligations that increase the credit risk of the
financial assets set out above.
Although the Group has seen no direct evidence of changes to the credit risk of its counterparties that hold cash balances and
derivative financial assets, the current focus on financial liquidity in all international markets has introduced increased financial
volatility. The Group uses market knowledge, changes in credit ratings and other techniques to identify significant changes to
the financial profile of its counterparties.
Trade receivables
Credit risk arises on credit exposure to wholesale customers including outstanding receivables and committed transactions.
However, this risk is substantially mitigated by insurance being taken out up to the amount of the credit limit.
All new wholesale customers are checked against appropriate trade references and details such as frequency/delinquency. The
limits applied to each customer are set in conjunction with our credit insurer’s advice. Monitoring of credit limits is undertaken
on a daily basis.
No credit limits were exceeded in the reporting period and management will continue with its current approach to credit control
to prevent any future losses from non-performance arising.
The Group is not able to protect its royalty income with credit insurance, although it does not consider this a significant credit
risk, as a prudent approach to income recognition is taken in the accounts. Forecasts are obtained from all its licence partners
throughout the year to allow extensive visibility of future income.
iii) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding
through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic
nature of the underlying businesses, Group treasury maintains flexibility in funding by maintaining availability under committed
credit lines.
Management monitors rolling forecasts of the Group’s liquidity reserve (comprises undrawn borrowing facility and cash and
cash equivalents) on the basis of expected cash flow. This is generally carried out at entity level in the operating companies of the
Group in accordance with practice and limits set by the Group. In addition, the Group’s liquidity management policy involves
projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these; and monitoring
balance sheet liquidity ratios against internal and external regulatory requirements. Based on current cash flow projections,
the Group expects to have sufficient headroom against its borrowing facilities (see section below for further details on the
borrowing facilities).
74
Ted Baker Report and Accounts 2010 / 2011
The table below analyses the Group’s financial liabilities and derivative financial liabilities into relevant maturity groupings based
on the remaining period to the contractual maturity date, at the balance sheet date. The amounts disclosed in the table are the
contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting
is not significant.
At 29 January 2011
Non-derivative financial liabilities
Trade and other payables
Derivative financial liabilities
Derivative financial instruments
At 30 January 2010
Non-derivative financial liabilities
Trade and other payables
Derivative financial liabilities
Derivative financial instruments
Less than
1 year
£’000
Between
1-2 years
£’000
Between
2-5 years
£’000
Over
5 years
£’000
Contracted
amount
£’000
Carrying
amount
£’000
34,970
455
24,779
304
-
-
-
-
-
-
-
-
-
-
-
-
34,970
34,970
455
455
24,779
24,779
304
304
Borrowing facilities
Borrowing facilities of £20,000,000 (2010: £15,000,000) are available to the Group in 2011 in respect of which all conditions
precedent have been met.
The borrowing facilities available to the Group consist of facilities with The Royal Bank of Scotland PLC of £10.0m and a facility
of £10.0m with Barclays Bank PLC, all facilities are subject to an annual renewal.
The borrowing facilities held with The Royal Bank of Scotland PLC are made up by a £3.0m multi-currency facility and a £7.0m
revolving credit facility. The facility held with Barclays Bank PLC is an uncommitted, unsecured multi-option facility of £10.0m.
All facilities expire on 5 February 2012. The Group will seek to renew its facilities prior to these renewal dates. Based on current
forecasts the Group does not envisage any difficulties with the renewal of these facilities.
The Group is obliged to perform monthly financial covenant tests as part of its facility agreement with The Royal Bank of
Scotland PLC, based upon the following:
(cid:116)(cid:1) (cid:78)(cid:74)(cid:79)(cid:74)(cid:78)(cid:86)(cid:78)(cid:1)(cid:79)(cid:70)(cid:85)(cid:1)(cid:85)(cid:66)(cid:79)(cid:72)(cid:74)(cid:67)(cid:77)(cid:70)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:84)(cid:28)
(cid:116)(cid:1) (cid:66)(cid:1)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:1)(cid:80)(cid:71)(cid:1)(cid:81)(cid:83)(cid:80)(cid:277)(cid:85)(cid:1)(cid:67)(cid:70)(cid:71)(cid:80)(cid:83)(cid:70)(cid:1)(cid:74)(cid:79)(cid:85)(cid:70)(cid:83)(cid:70)(cid:84)(cid:85)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:85)(cid:66)(cid:89)(cid:1)(cid:85)(cid:80)(cid:1)(cid:67)(cid:80)(cid:83)(cid:83)(cid:80)(cid:88)(cid:74)(cid:79)(cid:72)(cid:1)(cid:68)(cid:80)(cid:84)(cid:85)(cid:84)(cid:28)(cid:1)(cid:66)(cid:79)(cid:69)
(cid:116)(cid:1) (cid:66)(cid:1)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:1)(cid:80)(cid:71)(cid:1)(cid:79)(cid:70)(cid:85)(cid:1)(cid:68)(cid:66)(cid:84)(cid:73)(cid:1)(cid:280)(cid:80)(cid:88)(cid:1)(cid:85)(cid:80)(cid:1)(cid:69)(cid:70)(cid:67)(cid:85)(cid:1)(cid:84)(cid:70)(cid:83)(cid:87)(cid:74)(cid:68)(cid:70)(cid:1)(cid:77)(cid:74)(cid:66)(cid:67)(cid:74)(cid:77)(cid:74)(cid:85)(cid:90)(cid:15)
The Group, as part of its regular forecasting process, has a forward looking view of these financial covenant tests and based on
current projections there are no indications that any of these covenants will be breached during the term of the agreement. No
covenants were breached during the year to 29 January 2011.
At 29 January 2011, the borrowing facilities were unutilised (2010: unutilised).
75
Ted Baker Report and Accounts 2010 / 2011
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL
STATEMENTS continued
e) Capital management
The Board’s policy is to maintain a strong capital base, defined as total shareholders’ equity, totalling £76,024,000 at 29 January
2011 (2010: £66,230,000), so as to maintain investor, creditor and market confidence and to sustain future development
of the business.
From time to time the Company purchases its own shares on the market; the timing of these purchases depends on market
prices. Primarily the shares are intended to be used for issuing shares under the Group and Company’s share option and award
programmes. Buy and sell decisions are made on a specific transaction basis by the Board; the Group and Company do not have
a defined share buy-back plan.
It is the Board’s intention to achieve a dividend cover ratio of 2 times every year.
There were no changes in the Group and Company’s approach to capital management during the year.
Neither the Company nor any of its subsidiaries is subject to externally imposed capital requirements.
23. Related Parties
The Company has a related party relationship with its directors and executive officers.
Directors of the Company and their immediate relatives control 40.4 per cent of the voting shares of the Company.
At the 29 January 2011, the main trading company owed the parent company £24,710,000 (2010: £24,108,000). The main trading
company was owed £23,313,000 (2010: £11,869,000) from the other subsidiaries within the Group.
Transactions between subsidiaries were priced on an arms length basis.
The Group has a 50% interest in a joint venture, with Flair Industries Pty Ltd. As at 29 January 2011, the joint venture owed
£286,000 to the main trading company (2010: £261,000). In the period the value of sales made to the joint venture by the Group
was £565,000 (2010: £364,000).
The Group considers
Remuneration Report.
the executive directors as key management. Further details are provided
in
the
76
Ted Baker Report and Accounts 2010 / 2011
FINANCIAL STATEMENTS
FIVE YEAR SUMMARY
Results
Revenue
Operating profit
Profit before tax
Profit before tax and impairment
Profit for the period
Assets employed
Property, plant and equipment
Non-current assets
Net current assets / (liabilities)
Non-current liabilities
52 weeks
ended 27
January
2007
£’000
125,648
20,049
20,050
20,050
14,416
19,209
1,007
31,108
(43)
52 weeks
ended 26
January
2008
£’000
142,231
22,142
22,057
22,057
15,242
23,061
1,738
31,756
(843)
53 weeks
ended 31
January
2009
£’000
152,661
17,161
17,766
19,552
12,568
28,701
2,623
31,417
(575)
52 weeks
ended 30
January
2010
£’000
163,586
19,782
19,504
20,254
13,527
25,508
3,245
38,793
(1,316)
52 weeks
ended 29
January
2011
£’000
187,700
24,132
24,228
24,228
17,280
28,368
4,589
44,614
(1,547)
Net assets
51,281
55,712
62,166
66,230
76,024
Financed by
Shareholders' funds
Non-controlling interest
Key statistics
Basic earnings per share
Diluted earnings per share
Dividends per share
Dividend cover
Return on capital employed
51,338
(57)
51,281
33.9p
33.6p
14.6p
2.3 times
53.8%
55,723
(11)
55,712
36.1p
35.9p
16.4p
2.2 times
51.4%
62,202
(36)
62,166
29.6p
29.6p
16.65p
1.8 times
32.6%
66,315
(85)
66,230
32.6p
32.6p
17.15p
1.9 times
37.4%
76,024
-
76,024
41.5p
41.4p
20.6p
2.0 times
39.3%
77
Ted Baker Report and Accounts 2010 / 2011
Part of the Fabric of Ted
Creating bespoke homes for his clothing and accessories is a key part of the
fabric of Ted’s world and each of his stores is tailored to suit the location
in which it sits. Ted’s second store in Hong Kong, for example, is based in
the bustling New Town Plaza of Shatin and uses the area’s rich history
as a famous picnic spot as its design inspiration – including this mural of
a Victorian picnic scene which adorns the fitting room walls. Texture,
ambience and eccentricity combine to ensure that no two Ted stores are alike.