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.
CONTENTS
STRATEGIC REPORT
CHAIRMAN’S STATEMENT
BUSINESS MODEL AND STRATEGY
BUSINESS REVIEW
FINANCIAL REVIEW
PRINCIPAL RISKS AND UNCERTAINTIES
SUSTAINABILITY
PEOPLE
DIRECTORS’ REPORT
CORPORATE GOVERNANCE STATEMENT
BOARD OF DIRECTORS
AUDIT COMMITTEE REPORT
NOMINATION COMMITTEE REPORT
DIRECTORS’ REMUNERATION REPORT
OTHER STATUTORY AND REGULATORY 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
4
8
12
18
20
24
28
32
36
37
43
46
67
70
72
78
84
122
Registered Office:
Company Secretary:
Financial Advisers and Sponsor:
Auditors:
Bankers:
Registrars:
The Ugly Brown Building, 6a St. Pancras Way, London NW1 0TB
Charles Anderson ACMA
Liberum Capital Limited, 25 Ropemaker St, London EC2Y 9LY
KPMG LLP, 15 Canada Square, Canary Wharf E14 5GL
Barclays Bank Plc, 1 Churchill Place, London E14 5HP
The Royal Bank of Scotland Plc, 62-63 Threadneedle Street, London EC2R 8LA
Capita Asset Services, 34 Beckenham Road, Beckenham, Kent BR3 4TU
Ted Baker Plc – Registered in England number: 03393836
1
Ted Baker Plc Annual Report and Accounts 2016/17
DISTRIBUTION CHANNELS
Ted carefully manages distribution
through three main channels:
RETAIL
£400.7M
(15.0% INCREASE)
WHOLESALE
£130.3M
(20.9% INCREASE)
LICENSING
£18.2M
(26.8% INCREASE)
UK AND EUROPE
NORTH AMERICA
ASIA
39 STORES*
45 STORES*
30 STORES*
237 CONCESSIONS
55 CONCESSIONS
14 OUTLETS
11 OUTLETS
15 CONCESSIONS
3 OUTLETS
2
INSERT HEADING AFRICA
4 STORES*
MIDDLE EAST
AUSTRALASIA
28 STORES*
9 STORES*
…AND WHOLESALE AND
LICENSING RELATIONSHIPS
IN OVER 35 COUNTRIES
ACROSS THE GLOBE.
*Store numbers include licence partner
stores and outlets.
3
Ted Baker Plc Annual Report and Accounts 2016/17 STRATEGIC REPORT
CHAIRMAN’S STATEMENT
I am pleased to report that Group revenue
increased by 16.4% (10.8% in constant currency)1
to £531.0m (2016: £456.2m) and profit before
tax and exceptional items2 increased by 12.1%
to £65.8m (2016: £58.7m)2 for the 52 weeks
ended 28 January 2017 (the “period”). This
good performance reflects the strength of the
Ted Baker brand and business model and was
achieved despite a backdrop of ongoing external
factors which have impacted trading across
all of our markets. In particular, we have seen
increased levels of promotional activity and a fall
in international tourism in North America, and the
trading environment continued to be challenging
in Asia.
4
STRATEGIC REPORT
The retail channel performed well, with retail sales
including e-commerce up 15.0% (9.2% in constant
currency)1 to £400.7m (2016: £348.4m) on an increase
in average square footage of 8.5%. Our e-commerce
business is an integral and increasingly important
component within our retail proposition and has
performed very well, delivering strong sales growth of
35.1% (32.3% in constant currency)1 to £72.3m (2016:
£53.5m). We continued our geographic expansion with
openings across the UK and Europe, North America
and Asia and we continue to invest and build brand
awareness in our newer markets for the long-term
development of the brand.
The wholesale channel delivered a
strong
performance, with sales up 20.9% (15.9% in constant
currency)1 to £130.3m (2016: £107.7m). This reflects
a good performance from our UK wholesale business,
which includes the supply of goods to our licensed stores
and our export business, as well as a strong performance
from our North American wholesale business.
Our territorial and product licences delivered strong
performances, as licence income increased by 26.8% to
£18.2m (2016: £14.4m). During the period, our licence
partners opened stores and concessions in Azerbaijan,
Dubai, Egypt, Indonesia, Mexico and Taiwan. We also
opened our first stores in Bahrain and Vietnam and are
pleased with their performances so far.
During the period, we successfully launched the next
phase of the Microsoft Dynamics AX system across our
North American business. We will continue the roll-out
of the next phases of the project to our other territories
over the coming months, which will allow us to enhance
efficiency, streamline our operations and support the
evolution of the business.
In October 2016, we took our first delivery of
inventory into our new European distribution centre in
the UK and have successfully transitioned one of our
legacy warehouses into this facility with the remaining
two to complete in the coming months. The European
distribution centre will handle all operations for
our retail, wholesale and e-commerce businesses
across the UK and Europe, supporting our long-term
growth strategy.
Having completed the purchase of the iconic Ugly
Brown Building in the prior period, the Group continues
to consider its expansion and development opportunities.
The Group has extended the term of its option to purchase
50% of neighbouring Block A to 31 May 2017.
5
FINANCIAL RESULTS
Group revenue for the period increased by 16.4%
(10.8% in constant currency)1 to £531.0m (2016:
£456.2m). The Group gross margin increased to 61.0%
(2016: 59.9%) as a result of improved full price sell-
through in our retail channel and an improved mix of
wholesale sales to trustee customers, as well as some
foreign exchange benefits.
Profit before tax and exceptional items2 increased by
12.1% to £65.8m (2016: £58.7m) and profit before tax
increased by 4.4% to £61.3m (2016: £58.7m). Adjusted
basic earnings per share, which excludes exceptional
items, increased by 13.3% to 114.0p (2016: 100.6p)
and basic earnings per share increased by 5.1% to
105.7p (2016: 100.6p).
Exceptional items in the period of £4.5m (2016: £nil)
include a provision for lease commitments relating to
the Group’s legacy warehouses of £2.9m along with
£0.7m of other closure costs and £0.9m in respect of
closure costs for a concept store in London. There were
no exceptional items in the previous period.
The Group’s net borrowing position at the end of the
period was £95.2m (2016: £84.6m). This reflects the
secured term loan of £58.5m (2016: £60.0m) used to
purchase The Ugly Brown Building and other net debt
of £36.7m (2016: £24.6m). The increase in other net
debt reflects the ongoing capital expenditure during the
period and increased working capital in line with the
Group’s growth.
DIVIDENDS
The Board is recommending a final dividend of 38.8p
per share (2016: 34.6p), making a total for the period
of 53.6p per share (2016: 47.8p per share), an increase
of 12.1% on the prior period. Subject to approval by
shareholders at the Annual General Meeting to be held
on 13 June 2017, the final dividend will be paid on
23 June 2017 to shareholders on the register on
19 May 2017.
PEOPLE
I would like to take this opportunity to thank all of my
colleagues across the world for their continued hard
work and commitment. The performance in the period
is testament to our talented teams, whose commitment
and passion are key to our success as we continue to
grow the business and develop Ted Baker as a global
lifestyle brand.
Ted Baker Plc Annual Report and Accounts 2016/17 STRATEGIC REPORT
CURRENT TRADING AND OUTLOOK
RETAIL
In the UK and Europe, we plan to open a new store
in each of Oxford and Paris, an outlet in Gloucester
and our first Dutch outlet in Roermond, along with
further concessions in the UK, France, Germany and
the Netherlands. We will continue to invest in our
e-commerce sites to enhance customer experience.
In North America, we will continue to develop our
presence with plans to open stores in Los Angeles and
Houston, and relocate our Miami Aventura store. We
also plan to open new concessions in Canada with a
premium department store.
In Asia, we remain focused on building brand
awareness, where we are still in the relatively early
stages of investment. In line with our development
strategy in this territory, we have relocated a store in
Tokyo and plan to open a further store in Shanghai and
new concessions in Japan and South Korea.
WHOLESALE
We anticipate further growth across our wholesale
businesses, which should result in high single-digit sales
growth (in constant currency)1 in the coming period.
LICENCE INCOME
Our product and territorial licences continue to perform
well, with further store openings planned in Australia,
Dubai, Kuwait, Lebanon, Mexico, Qatar, Saudi Arabia
and Turkey along with our first store in India.
GROUP
Trading across our markets continues to be impacted by
ongoing external factors. We have a clear strategy for
the continued expansion of Ted Baker as a global lifestyle
brand across both established and newer markets. This
is underpinned by our controlled distribution across
channels as well as the design, quality and attention to
detail that are at the core of everything we do.
To deliver our expansion plans, capital expenditure
in the new financial period is planned to be at £35.0m
(2017: £43.8m). This relates to continued investment
in the new European distribution centre, further
store openings and refurbishments, and the ongoing
investment in new IT systems across the business.
Ted Baker’s business model, as well as the strength
of the brand and collections, support our confidence in
the Group’s continued development and further growth.
We intend to make our trading statement covering
trading from the start of the financial period in
mid-June 2017.
David Bernstein CBE
Non-Executive Chairman
23 March 2017
NOTES:
1 Constant currency variances are calculated by applying the previous financial period foreign exchange rates to current period results in overseas
subsidiaries to remove the impact of exchange rate fluctuations.
2 Exceptional items are excluded from profit before tax and exceptional items due to these items being one-off and material in nature.
The Directors believe these measures provide a consistent and comparable view of the underlying performance of the Group’s ongoing business.
6
E
R
O
C
R
U
O RK AT O
W
M
A
E
T
STRATEGIC REPORT
BUSINESS MODEL AND STRATEGY
Ted Baker has grown steadily from its origins as a
single shirt specialist store in Glasgow to the global
lifestyle brand it is today. In order to protect the ethos
and persona for which we have gained an enviable
reputation, we always ask ourselves the question:
“Would Ted do it that way?”
PRODUCT
Ted Baker is a quintessentially British brand with a quirky
yet commercial fashion offering that prides itself in
always being able to satisfy the needs of our customer.
Our approach is focused on unwavering attention to
detail and firm commitment to quality.
We offer a wide range of collections including:
Menswear; Womenswear; Global; Phormal; Endurance;
Accessories; Bedding; Childrenswear; Crockery;
Eyewear; Footwear; Fragrance and Skinwear; Gifting
and Stationery; Jewellery; Lingerie and Sleepwear;
Technical
Luggage; Neckwear; Rugs;
Accessories; Tiles; and Watches.
Suiting;
The menswear collection is a reflection of popular
contemporary culture, with a sense of style and humour
mixed in. It also includes our Phormalwear range,
offering a number of distinctive suiting collections
that combine heritage British tailoring with a modern
outlook. The womenswear collection is a fresh and
feminine mix of European elegance with London flair,
and is a celebration of beauty, individuality and exquisite
attention to detail.
retail, which
DISTRIBUTION CHANNELS
The brand operates through three main distribution
channels:
includes e-commerce;
wholesale; and licensing, which includes territorial
and product licences. We want our customer to enjoy a
seamless experience regardless of how they choose to
shop and interact with the brand.
The retail channel comprises stores, concessions and
e-commerce, which is now an integral part of our retail
experience. We operate stores and concessions across
the UK, Europe, North America and Asia, and localised
e-commerce sites for the UK, Europe, US, Canada and
Australia. We also have e-commerce businesses with
some of our concession partners.
Stores and concessions are designed to showcase
the brand’s unique style of retail theatre and to ensure
8
our customers enjoy a welcoming and pleasurable
shopping experience. Each store boasts a fully bespoke
design that is full of innovative and distinctive touches.
E-commerce enables us to offer our customers
access to an extended product range and provides
us with a means to talk directly with our customers
and engage them with the brand in non-traditional
ways. We focus on ensuring that we provide a user-
friendly online brand and shopping experience across
multiple devices.
The wholesale business in the UK serves countries
across the world, primarily in the UK and Europe, as
well as supplying products to stores operated by our
territorial licence partners. In addition, we operate a
wholesale business in North America serving the US
and Canada. Our wholesale partners (“Trustees”) are
custodians of our collections and uphold our brand
integrity by ensuring that their retail environment
and brand adjacencies are in keeping with the profile
and positioning of the brand. We have built up strong
relationships with some of the best independent
retailers and department stores around the world.
We operate both territorial and product licences.
Our licence partners are all experts in their field and
share our passion for unwavering attention to detail and
firm commitment to quality.
Territorial licences cover specific countries or regions
in Asia, Australasia, Europe, the Middle East and North
America, where our partners operate licensed retail
stores and, in some territories, wholesale operations.
Product licences cover: Bedding; Childrenswear;
Crockery; Eyewear;
Fragrance and
Footwear;
Skinwear; Gifting and Stationery; Jewellery; Lingerie
and Sleepwear; Luggage; Neckwear; Rugs; Suiting;
Technical Accessories; Tiles; and Watches.
GEOGRAPHIC REACH
Ted Baker is a truly global lifestyle brand with 490 stores
and concessions worldwide, comprising 192 in the UK,
98 in Europe, 111 in the US and Canada, 80 in the
Middle East, Africa and Asia and 9 in Australasia.
The Group opened its first shop in the UK in Glasgow
in 1988 and has since established itself in all the major
fashion centres in the UK. We have also built a growing
presence in Europe with stores and concessions in
Belgium, France, Germany, Ireland, the Netherlands,
Portugal, and Spain. Our e-commerce and wholesale
businesses complement our locations in Europe.
STRATEGIC REPORT
In 1998, the Group opened its first store in North
America in New York. Since then, the Group has
established a presence across the US from the East
to West Coasts and into Canada through both own
stores and concessions. In addition, the Group has a
standalone e-commerce site in North America that is
localised to each of Canada and the US, and a rapidly
growing wholesale business.
As part of our strategy to invest for the longer-term
development of the brand, we have launched the brand
in Asia with stores and concessions in China, Hong Kong,
Japan and Korea. We also understand the growing
desire of our customers to buy our products online and
trade on renowned local websites in this region.
Through our territorial licences we also trade in
many other countries across Africa, Australasia and the
Middle East.
STRATEGY
Our strategy is to enhance our position as a leading
global lifestyle brand by the continuous development of
three main elements of our business model:
• considered extension of the Ted Baker collections
to achieve our brand growth potential. We review
our collections continually to ensure we anticipate
and react to trends and meet our customers’
expectations. In addition, we look for opportunities
to extend the breadth of collections and enhance
our offer;
• controlled distribution through three main channels:
retail; wholesale; and licensing. We consider each
new opportunity to ensure it is right for the brand
and will deliver margin-led growth; and
• further international growth through carefully
managed development of overseas markets. We
continue to manage growth in existing territories
while considering new territories for expansion.
Underlying our strategy is an emphasis on design,
product quality and attention to detail, delivered by the
passion, commitment and skill of our teams, licence
partners and wholesale customers.
9
Ted Baker Plc Annual Report and Accounts 2016/17 D I V I N G I N TO THE NUMBERS
D I V I N G I N TO THE NUMBERS
STRATEGIC REPORT
KEY PERFORMANCE INDICATORS
We review the ongoing performance of the business using key performance indicators.
The Key Performance Indicators (“KPI’s”) that the Directors judge to be most effective in assessing progress against
the Group’s objectives and strategy have been detailed below and are considered throughout the Strategic Report.
KEY PERFORMANCE INDICATOR
Group
Revenue
Gross margin
Profit before tax (excluding exceptional items)
as a % of revenue
Operating contribution (excluding exceptional items) %2
Operating contribution (including exceptional items) %2
Retail
Revenue
E-commerce
Gross margin
Average square footage3
Closing square footage3
Sales per square foot excluding e-commerce
Wholesale
Revenue
Gross margin
Licence income
Revenue
Group
Operating cashflow per share4
Working capital5
52 WEEKS
ENDED 28
JANUARY
2017
£531.0m
52 WEEKS
ENDED 30
JANUARY
2016
VARIANCE
CONSTANT
CURRENCY
VARIANCE1
£456.2m
16.4%
10.8%
61.0%
12.4%
12.6%
11.8%
£400.7m
£72.3m
66.1%
387,373
395,088
£848
£130.3m
45.1%
£18.2m
118.4p
£136.8m
59.9%
110 bps
12.9%
13.0%
13.0%
£348.4m
£53.5m
(50 bps)
(40 bps)
(120 bps)
15.0%
35.1%
64.8%
130 bps
357,096
377,830
£826
8.5%
4.6%
2.7%
£107.7m
20.9%
43.8%
130 bps
£14.4m
93.3p
£113.5m
26.8%
26.9%
20.5%
9.2%
32.3%
(3.2%)
15.9%
1 Constant currency variances are calculated by applying the previous financial period foreign exchange rates to current period results in overseas
subsidiaries to remove the impact of exchange rate fluctuations.
2 Operating contribution is defined as operating profit as a percentage of revenue.
3 Excludes licensed partner stores.
4 Operating cashflow per share is defined as net cash generated from operating activities divided by the weighted number of ordinary shares (diluted).
5 Working capital comprises inventories, trade and other receivables and trade and other payables.
11
Ted Baker Plc Annual Report and Accounts 2016/17
The retail gross margin increased to 66.1% (2016:
64.8%), primarily reflecting an improved full price sell-
through in our retail channel, as well as some foreign
exchange benefits.
Retail operating costs increased 24.3% (17.0% in
constant currency)1 to £203.3m (2016: £163.5m) and
as a percentage of retail sales, increased to 50.7%
(2016: 46.9%). An element of the increase in retail
operating costs is due to dual running costs arising from
the new European distribution centre, and some store
pre-opening costs in our North American market.
WHOLESALE
Our wholesale business in the UK serves countries across
the world, primarily in the UK and Europe, as well as
supplying products to stores operated by our territorial
licence partners. In addition, we operate a wholesale
business in North America serving the US and Canada.
Group wholesale sales increased by 20.9% (15.9%
in constant currency)1 to £130.3m (2016: £107.7m),
reflecting a good performance from our UK wholesale
business, with sales increasing by 10.4% to £86.1m
(2016: £78.0m), and a strong performance from
our North American wholesale business, with sales
increasing by 48.8% (30.7% in constant currency)1 to
£44.2m (2016: £29.7m).
The wholesale gross margin increased to 45.1%
(2016: 43.8%), which was principally the result of a
greater proportion of wholesale sales to our trustee
partners which carry a higher margin, as well as some
foreign exchange benefits.
STRATEGIC REPORT
BUSINESS REVIEW
retail, which
DISTRIBUTION CHANNELS
The brand operates through three main distribution
channels:
includes e-commerce;
wholesale; and licensing, which includes territorial
and product licences. As part of our strategy we look to
further develop each of these routes to market, whilst
ensuring the controlled distribution of our product.
RETAIL
Our retail channel comprises stores, concessions and
e-commerce, which is now an integral part of our retail
experience. We operate stores and concessions across
the UK, Europe, North America and Asia, and localised
e-commerce sites for the UK, Europe, US, Canada and
Australia. We also have e-commerce businesses with
some of our concession partners.
The retail division performed well, with sales up
15.0% (9.2% in constant currency)1 to £400.7m (2016:
£348.4m) despite a challenging trading environment
across our global markets. The growth was driven by
continued investments in new and existing stores and a
strong e-commerce performance, where sales grew by
35.1% (32.3% in constant currency)1 to £72.3m (2016:
£53.5m) and represented 18.0% (2016: 15.4%) of our
total retail sales.
We continue to develop our retail proposition
with further investment in each of our e-commerce
sites, aiming to provide a more relevant customer
experience through improved design, performance and
personalised content. During the period, we launched
for
our first
France and Germany and have been pleased with
their performance.
language-specific e-commerce sites
Average retail square footage rose by 8.5% over
the period to 387,373 sq ft (2016: 357,096 sq ft).
Total retail square footage at 28 January 2017 was
395,088 sq ft (2016: 377,830 sq ft), an increase of 4.6%
on the prior period. Retail sales excluding e-commerce
per square foot rose 2.7% (-3.2% in constant currency)1
to £848 (2016: £826).
12
STRATEGIC REPORT
LICENCE INCOME
We operate both territorial and product licences. Our
licence partners are all experts in their field and share
our passion for unwavering attention to detail and firm
commitment to quality.
COLLECTIONS
Ted Baker Womenswear delivered a good performance
with sales up 19.7% to £304.3m (2016: £254.1m).
total sales
Womenswear represented 57.3% of
(2016: 55.7%).
Our territorial licences cover specific countries or
regions in Asia, Australasia, Europe, the Middle East and
North America, where our partners operate licensed retail
stores and, in some territories, wholesale operations.
Ted Baker Menswear performed well with sales
up 12.2% to £226.7m (2016: £202.1m). Menswear
represented 42.7% of total sales in the period
(2016: 44.3%).
Our product licences cover: Bedding; Childrenswear;
Crockery; Eyewear;
Fragrance and
Footwear;
Skinwear; Gifting and Stationery; Jewellery; Lingerie
and Sleepwear; Luggage; Neckwear; Rugs; Suiting;
Technical Accessories; Tiles; and Watches.
Both territorial and product licences delivered good
performances, with licence income up 26.8% to £18.2m
(2016: £14.4m). There were notable performances
from our product licensees in Childrenswear, Eyewear,
Footwear, Homeware, Skinwear and Suiting.
In July 2016, we opened our first store in Vietnam
with our new licence partner Maison, and we are
encouraged by the performance to date. In November
2016, we opened our first store in Bahrain, and are
pleased by the performance so far.
13
Ted Baker Plc Annual Report and Accounts 2016/17 STRATEGIC REPORT
GEOGRAPHIC PERFORMANCE
UNITED KINGDOM AND EUROPE
Total retail revenue*
E-commerce revenue
Average square footage*
Closing square footage*
Sales per square foot including e-commerce sales
Sales per square foot excluding e-commerce sales
Wholesale revenue
Own stores
Concessions
Outlets
Partner stores
Total
52 WEEKS ENDED
28 JANUARY
2017
52 WEEKS ENDED
30 JANUARY
2016
VARIANCE
CONSTANT
CURRENCY
VARIANCE1
10.7%
30.6%
4.3%
2.7%
6.1%
1.8%
10.4%
8.4%
29.8%
3.9%
(0.8%)
£279.5m
£61.1m
246,826
250,624
£1,132
£885
£86.1m
36
237
14
3
290
£252.5m
£46.8m
236,685
244,007
£1,067
£869
£78.0m
38
224
13
3
278
* Excludes licensed partner stores.
Retail sales in the UK and Europe increased by 10.7% to
£279.5m (2016: £252.5m) (8.4% in constant currency)1
despite tough trading conditions and the impact of
terrorism in Northern Europe.
Our e-commerce business performed very well
during the period with sales increasing by 30.6% to
£61.1m (2016: £46.8m). E-commerce sales are an
integral part of the retail proposition in the UK and
European markets. We launched our first language-
specific sites for France and Germany and are pleased
with their performance.
As a percentage of UK and Europe retail sales,
e-commerce sales represented 21.9% (2016: 18.5%).
During the period, we opened an outlet in
Madrid, Spain, and further concessions with premium
department stores in the UK, France, Germany and
Spain. We closed two stores, one in the UK and one
in France. We are pleased with the performance of the
new openings and remain positive about further growth
opportunities for our brand in these markets.
Sales from our UK wholesale division increased by
10.4% to £86.1m (2016: £78.0m) reflecting a good
performance from sales to Trustees, which include our
wholesale export business and the supply of product to
our retail licence partners.
14
STRATEGIC REPORT
NORTH AMERICA
Total retail revenue*
E-commerce revenue
Average square footage*
Closing square footage*
Sales per square foot including e-commerce sales
Sales per square foot excluding e-commerce sales
Wholesale revenue
Own stores
Concessions
Outlets
Partner stores
Total
52 WEEKS ENDED
28 JANUARY
2017
52 WEEKS ENDED
30 JANUARY
2016
VARIANCE
CONSTANT
CURRENCY
VARIANCE1
28.3%
48.5%
18.6%
9.5%
8.1%
6.5%
48.8%
13.0%
31.2%
(4.7%)
(6.1%)
30.7%
£103.4m
£9.8m
112,110
116,590
£922
£835
£44.2m
31
55
11
14
111
£80.6m
£6.6m
94,496
106,471
£853
£784
£29.7m
25
55
10
7
97
Our e-commerce businesses delivered strong
performances with sales increasing 48.5% to £9.8m
(31.2% in constant currency)1. As a percentage of North
America retail sales, e-commerce sales represent 9.5%
(2016: 8.2%).
Sales from our North American wholesale business
increased by 48.8% to £44.2m (2016: £29.7m) (30.7%
in constant currency)1 reflecting the brand’s increased
appeal and recognition in this territory.
* Excludes licensed partner stores.
We are very pleased with our progress across both the
retail and wholesale channels in North America, despite
well documented challenges facing the North American
retail market, which has seen increased levels of
promotional activity and a fall in international tourism.
This has resulted in a challenging environment not only
for our stores but also for our key trading partners.
However, we remain confident that the Ted Baker brand
is becoming more established and continuing to gain
recognition in this territory.
Sales from our retail division in North America
increased by 28.3% to £103.4m (2016: £80.6m) (13.0%
in constant currency)1. During the period, we continued
our expansion with new stores in Atlanta, Miami, New
York, Seattle and relocated our Dallas store, and we
opened new stores in Calgary, Ottawa and an outlet
in Vancouver. We also opened seven concessions in
Mexico with our licence partner. We closed one store in
New York.
15
Ted Baker Plc Annual Report and Accounts 2016/17 STRATEGIC REPORT
MIDDLE EAST, ASIA, AFRICA AND AUSTRALASIA
Total retail revenue*
E-commerce revenue
Average square footage*
Closing square footage*
Sales per square foot including e-commerce sales
Sales per square foot excluding e-commerce sales
Own stores
Concessions
Outlets
Partner stores
Total
* Excludes licensed partner stores.
52 WEEKS ENDED
28 JANUARY
2017
52 WEEKS ENDED
30 JANUARY
2016
VARIANCE
15.6%
-
9.7%
1.9%
5.4%
(2.9%)
£17.8m
£1.4m
28,438
27,874
£625
£576
8
15
3
63
89
£15.4m
-
25,915
27,352
£593
£593
8
8
3
54
73
CONSTANT
CURRENCY
VARIANCE1
2.6%
-
(6.5%)
(14.0%)
We continue to develop the Ted Baker brand across the
Middle East, Asia and Australasia through our retail and
licensing channels.
the
We
remain positive about
long-term
opportunities in Asia. However, as has been widely
reported, the trading environment continues to be
challenging. Retail sales in Asia increased 15.6% to
£17.8m (2016: £15.4m) (2.6% in constant currency)1.
In Hong Kong, we relocated one store; in China, we
opened a store in Beijing and four further concessions;
and in Japan, we opened three concessions and closed
one store in Tokyo, which has been relocated since the
period end. During the period, we launched online
concession businesses in China and Japan, and we are
pleased with the early reaction to these sites.
During the period, our Middle Eastern licence
partners performed particularly well and opened stores
in each of Azerbaijan, Dubai and Egypt and our first store
in Bahrain. Our South East Asian licence partner opened
a store in Indonesia, and a new licence partner store
opened in Vietnam. We opened two stores in Taiwan
and closed one. As at 28 January 2017, our licence
partners operated 54 stores and concessions across the
Middle East, South East Asia, and Africa (2016: 45).
The joint venture with our Australasian licence
partner, Flair Industries Pty Ltd, continued to perform
well. As at 28 January 2017, we operated 9 stores in
Australasia (2016: 9 stores).
NOTES:
1 Constant currency variances are calculated by applying the previous financial period foreign exchange rates to current period results in overseas
subsidiaries to remove the impact of exchange rate fluctuations.
The Directors believe this measure provides a consistent and comparable view of the underlying performance of the Group’s ongoing business.
16
F
I
R
S
T
O
F
F
T
H
E
B
L
O
C
K
S
STRATEGIC REPORT
FINANCIAL REVIEW
REVENUE AND GROSS MARGIN
Group revenue increased by 16.4% (10.8% in constant
currency)1 to £531.0m (2016: £456.2m), driven by a
15.0% (9.2% in constant currency)1 increase in retail
sales to £400.7m (2016: £348.4m) and a 20.9% (15.9%
in constant currency)1 increase in wholesale sales to
£130.3m (2016: £107.7m).
The gross margin for the Group increased to 61.0%
(2016: 59.9%) as a result of improved full price sell-
through in our retail channel and an improved mix of
wholesale sales to trustee customers, as well as some
foreign exchange benefits.
OPERATING EXPENSES PRE-EXCEPTIONAL
ITEMS2
Distribution costs increased by 22.7% (15.5% in constant
currency)1 to £208.2m (2016: £169.8m) and as a
percentage of sales increased to 39.2% (2016: 37.2%).
An element of the increase in distribution costs is due
to dual running costs arising from the new European
distribution centre, and some store pre-opening costs in
our North American market.
Administration expenses excluding exceptional
costs2 increased by 14.2% (10.6% in constant currency)1
to £65.6m (2016: £57.4m). Excluding the employee
performance related bonus of £nil (2016: £2.7m),
administration expenses rose by 19.8% due to growth
of our central functions, both in the UK and overseas,
and the continued deployment of our information
technology infrastructures to support our growth.
Dual running costs incurred in respect of our new
European distribution centre and the systems roll-out
were £4.0m in the period.
PROFIT BEFORE TAX
Profit before tax and exceptional items2 increased by
12.1% to £65.8m (2016: £58.7m) and profit before tax
increased by 4.4% to £61.3m (2016: £58.7m).
EXCEPTIONAL ITEMS
Exceptional items in the period of £4.5m (2016: £nil)
include a provision for lease commitments relating to
the Group’s legacy warehouses of £2.9m along with
£0.7m of other closure costs and £0.9m in respect of
closure costs for a concept store in London. There were
no exceptional items in the previous period.
18
FINANCE INCOME AND EXPENSES
Net interest payable during the period was £2.9m
(2016: £1.4m). The increase was largely due to interest
payable on the term loan that financed the purchase of
the freehold of The Ugly Brown Building.
The net foreign exchange gain during the period
of £1.1m (2016: £nil) was due to the translation of
monetary assets and liabilities denominated in foreign
currencies following the devaluation of Sterling that
followed the UK’s EU referendum result.
TAXATION
The Group tax charge for the period was £14.7m
(2016: £14.4m), an effective tax rate of 24.0% (2016:
24.6%). This effective tax rate is higher than the UK
tax rate for the period of 20% largely due to higher
overseas tax rates and to the non-recognition of losses
in overseas territories where the businesses are still in
their development phase. The UK corporation tax rate
will reduce to 19% from 1 April 2017 and 17% from
1 April 2020.
Our closing UK deferred tax assets and liabilities
have been measured at 19% based on the corporation
tax rate at which they are anticipated to unwind and
overseas deferred tax assets and liabilities have been
measured at the applicable overseas tax rates.
Our future effective tax rate is expected to be higher
than the UK tax rate as a result of a growing proportion
of overseas profits arising in jurisdictions with higher tax
rates than the UK.
CASH FLOW
The net decrease in cash and cash equivalents of
£13.5m (2016: £5.9m) primarily reflected an increase
in working capital and further capital expenditure to
support our long-term development.
Total working capital, which comprises inventories, trade
and other receivables and trade and other payables,
increased by £23.3m to £136.8m (2016: £113.5m).
This was mainly driven by an increase in inventories of
£33.2m to £158.5m (2016: £125.3m) reflecting the
growth of our business, stock on hand for our wholesale
customers and licence partners, and earlier phasing of
stock deliveries at the end of the financial period due to
the timing of Chinese New Year, which fell at the end of
the period. In addition to this, inventory has increased
due to the impact of foreign exchange rates on the
translation of inventory in overseas subsidiaries.
STRATEGIC REPORT
Income taxes paid decreased by £2.5m to £10.6m
(2016: £13.1m). This was largely due to accelerated tax
deductions on US store openings and refurbishments.
Group capital expenditure of £43.8m (2016:
£89.5m including £58.0m relating to the purchase of
The Ugly Brown Building) relates to the opening and
refurbishment of stores, concessions and outlets, the
fit-out of our new European distribution centre and
the ongoing investment in business-wide IT systems to
support our continued growth.
The Group’s net borrowing position at the end of the
period was £95.2m (2016: £84.6m).
SHAREHOLDER RETURN
Basic earnings per share increased by 5.1% to 105.7p
(2016: 100.6p). Adjusted earnings per share, which
exclude exceptional items2, increased by 13.3% to
114.0p (2016: 100.6p).
The proposed final dividend of 38.8p per share
will make a total for the period of 53.6p per share
(2016: 47.8p per share), an increase of 12.1% on the
previous period.
Operating cash flow per share was 118.4p (2016:
93.3p) and reflected an increase in cash generated from
operating activities.
BORROWING FACILITIES
During the period, the Group agreed an extension of
its multi-currency revolving credit facility with The Royal
Bank of Scotland and Barclays. A new agreement was
signed on 31 May 2016 which increased the Group’s
committed borrowing facility from £85m to £110m
expiring in March 2018. The increase is a function of the
growth in our business and is necessary to fund capital
expenditure to support the Group’s long-term strategy.
In the prior period, the Group entered into a five year
£60m secured term loan, in addition to the existing multi-
currency revolving credit facility with The Royal Bank of
Scotland and Barclays. The term loan is amortised over
fifteen years and the proceeds were used to finance the
purchase of The Ugly Brown Building.
The facility and term loan contain appropriate
financial covenants that are tested on a quarterly basis.
The Group monitors actual and prospective compliance
with these on a regular basis.
TREASURY RISK 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,
which allows for foreign currency to be hedged for up
to 24 months in advance. The balance of purchases is
hedged naturally as the business operates internationally
and income is generated in the local currencies.
In June 2016, ahead of the UK referendum on Brexit,
the Group extended its hedging arrangements for US
Dollars to April 2018. At the balance sheet date, the
Group has hedged its projected commitments in respect
of the period ending 27 January 2018 as well as a
proportion of its requirements for the following period.
The Group is exposed to movements in UK interest
rates as both the revolving credit facility and term loan
accrue interest based on LIBOR plus a fixed margin.
During the period, the Group entered into interest
rate swap agreements, fixing £30.0m of the floating
rate net debt.
NOTES:
1 Constant currency variances are calculated by applying the previous financial period foreign exchange rates to current period results in overseas
subsidiaries to remove the impact of exchange rate fluctuations.
2 Exceptional items are excluded from profit before tax and exceptional items due to these items being one-off and material in nature.
3 Exceptional items are excluded from adjusted earnings per share due to these items being one-off and material in nature.
The Directors believe these measures provide a consistent and comparable view of the underlying performance of the Group’s ongoing business.
19
Ted Baker Plc Annual Report and Accounts 2016/17
STRATEGIC REPORT
PRINCIPAL RISKS AND
UNCERTAINTIES
The Board is ultimately responsible for the Group’s
system of risk management and internal control and for
reviewing their effectiveness. The Board confirms that
there is an ongoing process for identifying, evaluating
and managing the significant risks faced by the Group,
which has been in place for the period and up to the
date of approval of these financial statements, and
that this process is regularly reviewed by the Board.
However, such systems are 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.
In order to help manage these risks and uncertainties,
the Board has delegated responsibility for monitoring
the effectiveness of the Group’s systems of internal
control and risk management to the Audit Committee.
In addition, the Group has established a Risk
Committee that includes the Finance Director and
various members of the Executive Committee and heads
of departments. The Risk Committee reviews the risk
management and control process in each key business
area on an ongoing basis, and provides a platform for
management to drive improvement across the business.
The Risk Committee considers:
• the authority, resources and co-ordination of those
involved in the identification, assessment and
management of significant risks faced by the Group;
• the response to the significant risks which have been
identified by management and others;
• the maintenance of a controlled environment
directed towards the proper management of risk; and
• the annual reporting procedures.
Having considered the key risks inherent in the
business and the system of control necessary to manage
such risks, the Finance Director presents the Risk
Committee’s findings to the Board on a regular basis.
In addition, the Chief Executive reports to the Board on
changes in the business and the external environment
which affect significant risks.
20
On behalf of the Board, the Audit Committee
has reviewed the effectiveness of the system of risk
management and internal control during the period. 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, and also by reference
to the Group’s five year strategic and financial plan.
During the period the Board has placed significant focus
on risk management. As such, during the period the
Audit Committee engaged PricewaterhouseCoopers
LLP (“PwC”) to undertake a detailed review of the
Group’s risk framework and internal audit function via
in-depth interviews with senior management and key
stakeholders across the Group.
The Group has an independent internal audit
function whose findings are regularly reviewed by
the Board and the Executive Committee. The Audit
Committee monitors and reviews the effectiveness of
the internal audit activities.
The Chief Operating Officer provides the Board
with monthly financial information which includes key
performance indicators.
The Board has carried out a robust assessment of
the principal risks facing the Group, including those that
would threaten its business model, future performance,
solvency or liquidity. Although not exhaustive, the
following list highlights some of the principal risks
identified by the Group (which are not shown in order
of importance). Additional risks and uncertainties not
presently known, or currently considered to be less
material, may also have an adverse effect on the Group:
STRATEGIC REPORT
ISSUE
POTENTIAL IMPACT
MITIGATION
STRATEGIC
RISKS
Brand and
Reputational Risk
The strength and reputation of the Ted Baker
brand is important to the business. There is a
risk that our brand may be undermined or
damaged by our actions or those of our
partners or supply chain.
We carefully consider each new partner with whom
we do business. Such partners are subject to due
diligence and are monitored on an ongoing basis
to ensure they remain appropriate to the brand.
Our dedicated social media team closely monitors
social media channels and addresses any
reputational issues in accordance with our protocol.
Development of
Overseas Markets
Failure in growing the international business
through franchise operations, licencees and
e-commerce. Risk that the Group fails to
prioritise the right territories or investment or fails
to support these markets with systems and supply
chain capability.
We perform extensive due diligence on all
potential partners and territories and to assess
our appropriate routes to market. We operate
in a range of international markets, which helps
to mitigate over-reliance and exposure to any
one territory.
Fashion and Design As with all fashion brands there is a risk that our
offer will not satisfy the needs of our customers
or we fail to correctly identify trends in an
increasingly competitive market, resulting in
lower sales and reduced market share.
We maintain a high level of market awareness
and an understanding of consumer trends and
fashion to ensure that we remain able to respond
to changes in consumer preference. We use
customer data to develop targeted marketing and
promotional activity.
We continue to focus on product design, quality
and attention to detail.
External Events
External events may occur which may affect the
global, economic and financial environment in
which we operate. These events can affect our
suppliers, customers and partners, increasing our
cost base and adversely affecting our revenue.
These risk factors are monitored closely on an
ongoing basis ensuring that we are prepared
for and can react to changes in the external
environment, allowing us to reduce our exposure
as early as possible.
Brexit
The UK’s decision to leave the European
Union has increased the level of economic
and consumer uncertainty.
OPERATIONAL
RISKS
Supply Chain
If garments do not reach us on time and to
specification, there is a risk of a loss of revenue
and customer confidence. Over-reliance on key
suppliers could also have an impact on
our business.
The geographic spread of our business and
supply chain also helps to mitigate these risks.
The Group and its external advisers continue to
carefully monitor the potential impact of Brexit.
Our presence in a range of international markets
helps mitigate the impact of this risk.
Our supply chain is diversified across a number
of suppliers in different regions, reducing reliance
on a small number of key suppliers. Suppliers are
treated as key business partners and we work
closely with them to mitigate these risks.
The Group continues to improve and evolve
its supply chain.
Infrastructure
There is a risk of operational problems, including
disruption to the infrastructure that supports our
business, which may lead to a loss of revenue,
data and inventory.
The business continuity plan is constantly
reviewed and updated by the Risk Committee.
In addition, business disruption is covered by
our insurance policies.
Social Responsibility We are committed to operating in a responsible
Cyber Security
and sustainable manner as regards our supply
chain, environment and community. If we
fail to operate in a manner that supports our
philosophy, this could damage the trust and
confidence of our stakeholders.
The business is reliant on sensitive data being
transmitted electronically, and is subject
to threats from hacking or viruses or other
unauthorised data breaches.
There is the possibility of unintentional loss of
controlled data by authorised users.
A subcommittee of the Executive Committee has
been tasked with overseeing specific areas of our
social responsibility agenda. Ted’s Conscience
Team is responsible for monitoring this agenda
and ensuring our practices fall in line with it. More
information is set out on page 24 (Sustainability).
The Group has invested in additional specialist
IT resources.
The continual upgrading of security equipment
and software also mitigates these risks.
Tightly controlled security controls and data
recovery and business continuity plans have
been implemented with the support of specialist
third parties.
21
Ted Baker Plc Annual Report and Accounts 2016/17 STRATEGIC REPORT
ISSUE
POTENTIAL IMPACT
MITIGATION
OPERATIONAL
RISKS
CONTINUED
IT Infrastructure and
Implementation
of ERP
People
The Group’s IT infrastructure is key to the
operation of its business.
We are in the process of implementing Microsoft
Dynamics AX across the business. With any
project of this scale, there is a risk of a poorly
managed implementation or take-up of new
systems, which could lead to business disruptions.
This, and the implementation of other new
business systems, has potential to impact
interdependent systems.
Our performance is linked to the performance of
our people and, in particular, to the leadership
of key individuals. The loss of a key individual
whether at management level or within a
specialist skill set could have a detrimental
affect on our operations and, in some cases, the
creative vision for the brand.
Regulatory and
Legal Framework
We operate in a range of international markets
and must comply with various regulatory
requirements. Failure to do so could lead to
financial penalties and/or reputational damage.
The Group’s IT Steering Committee meets on a
two weekly basis to review the implementation
and all other major IT projects. This Committee
comprises members of the Executive Committee
and is advised by external professional advisers.
The IT Steering Committee has established
a Design Authority charged with overseeing
the scheduling of the implementation of any
new system.
Robust change management and professional
project managers recruited to oversee the project
team which includes key business stakeholders.
Identification and retention of key talent is
important and we take active steps to provide
stability and security to the key team. We carry
out an annual benchmarking review to ensure
that we provide competitive remuneration and
total reward packages. We also utilise long-term
incentive schemes to retain key talent. Employee
engagement through our culture and environment
strengthen the commitment of team members and
has a positive impact on our attrition rate.
Succession plans are in place and have been
reviewed during the period.
The Group closely monitors changes in the legal
and regulatory framework within the markets in
which it operates. We work closely with specialist
advisers in each market to ensure compliance
with local laws and regulations.
Infringement of the
Group’s Intellectual
Property
Unauthorised use of the Group’s designs,
trademarks and other intellectual property rights
could damage the Ted Baker brand and the
Group’s reputation.
The Group, with its external advisers, rigorously
manages and defends its intellectual property.
The Group deals with counterfeit goods in
accordance with its robust enforcement strategy.
FINANCIAL
RISKS
Currency, Interest,
Credit and
Counterparty Credit
Risks, including
Financial Covenants
under the Group’s
credit facilities
Foreign Exchange
In the course of its operations, we are exposed
to these financial risks which, if they were to
arise, may have material financial impacts on
the Group.
The Group’s policies for dealing with these
risks are discussed in detail in Note 23 to the
financial statements.
The Group is exposed to fluctuations in the
exchange rates of key currencies.
The Group’s Foreign Exchange strategy is
closely managed by the Finance Director and
the Group’s external advisers. The Group has
adopted a hedging policy to mitigate short-term
foreign exchange risk.
22
STRATEGIC REPORT
VIABILITY STATEMENT
In accordance with provision C.2.2 of the UK Corporate
Governance Code dated September 2014 (the “Code”)
the Directors have assessed the viability of the Group
over a five year period, taking into account the Group’s
current position and the potential impact of the principal
risks documented above.
The Group operates a five year plan, which is
updated and reviewed annually by the Board. Within
the five year plan, detailed scenario planning and stress
testing has been carried out over a five year period.
The Directors therefore consider the five year period
to 30 January 2022 to be the appropriate period to
assess the viability and prospects of the Group with a
high level of certainty.
The Directors’ assessment has been
further
enhanced by analysing the current and future risks,
controls and assurances available, resulting in a clear
picture of the risk profile across the whole business.
The principal risks, including specific operational risks,
that could affect the future viability of the Group over
the next five years are identified on pages 20 to 22 in
Principal Risks and Uncertainties.
In making this assessment the Directors have
considered the resilience of the Group to the occurrence
of these risks in severe but plausible scenarios, taking
into account the effectiveness of any mitigating actions.
In addition, the Board has considered the impact on the
Group’s cash flows, headroom, covenants and other key
financial ratios having stress tested the potential impact
of these scenarios, both individually and in combination.
Sensitivity analysis was also used to stress test the
Group’s strategic plan and to confirm that sufficient
headroom would remain available under the Group’s
credit facilities. The Board considers that under each
scenario tested the mitigating actions would be effective
and sufficient to ensure the continued viability of the
Group. For the reasons stated above, based on the
robust assessment undertaken, the Directors confirm
they have a reasonable expectation that the Group will
be able to continue in operation, and meet its liabilities
as they fall due, over the period of assessment.
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 twelve months
from the approval of these accounts. For this reason,
they continue to adopt the going concern basis in
preparing the financial statements.
23
Ted Baker Plc Annual Report and Accounts 2016/17 PLANET
The Group has engaged in a number of environmental
projects during the course of the period:
• We continue to participate in the Carbon Disclosure
Project to measure and disclose our greenhouse
gas emissions and climate change strategies. Our
disclosure score improved from 93 D in the previous
period to an overall score of B;
• All of our business travel within scopes 1 and 3 is
CarbonNeutral®. This means that the unavoidable
emissions generated by air, road and rail journeys
required to visit our stores, trustees and suppliers
have been offset in full through the purchase of
carbon credits from verified carbon reduction projects;
• We are constantly reviewing the waste our business
generates in an effort to achieve our overall aim
of sending no waste to landfill. We participate in
the Wastepack Compliance Scheme as part of the
Producer Responsibility Obligations (Packaging
Waste) Regulations 1997 and continue to reduce
unnecessary packaging;
• We work with local schools and charities to recycle
as much waste from head office as we can;
• We have been working with the charity Newlife to
ensure that all faulty garments returned to our UK
stores do not end up in landfill. Since March 2014
we have been sending these faulty garments to
Newlife for resale as second-hand garments;
• Through our relationships with Oxfam and Newlife
we have been able to ensure that our end of line
garments are utilised in the best way, raising over
£485,000 and diverting over 30 tonnes of waste
from landfill.
STRATEGIC REPORT
SUSTAINABILITY
At Ted Baker we believe in being open and honest in the
way we do business, this includes doing the right thing by
all of our stakeholders throughout our supply chain and
operating in a fair and sustainable manner. During the
period we began implementing our new sustainability
strategy “Fashioning a Better Future”, developed from
our Ted3 plan which was introduced in 2012.
We approach our social, environmental and ethical
commitments (“SEE”) with the same focus and attention
to detail that permeates the rest of the business. To
ensure that we continue to meet our responsibilities
in these important areas Fashioning a Better Future
focuses on Planet, People and Product. Our Global
Sustainability Strategy has been developed and
continues to be advanced and improved ensuring that
every department is included.
is responsible
HOW WE WORK
for
The Chief Operating Officer
overseeing the formulation of the Group’s policies
and procedures to manage risks arising from 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). Our full-time Ted’s
Conscience department co-ordinates these areas and
the Group’s cross-functional team which is responsible
for addressing SEE concerns of the Group.
OUR SUSTAINABILITY FOCUS
We believe in three very important areas of sustainability:
1. Planet: the Group is committed to managing and
reducing its impact on the environment;
2. People: the Group is committed to looking after
those who create, make and wear our product; and
3. Product: the Group is committed to producing
beautiful, more sustainable product.
24
PRODUCT
As part of our commitment to product we place great
emphasis on producing more sustainable products.
• We are part of the Sustainable Clothing Action
Plan (“SCAP”), a DEFRA sponsored action plan
organised to improve the sustainability of clothing
throughout its lifecycle by bringing together industry,
government and third parties. SCAP members
collaborate to develop sector-wide targets along
with the tools and guidance necessary to achieve
them. As a SCAP 2020 signatory, we are challenged
to reduce carbon, water and the amount of waste
generated or consumed by our products by 15%
by 2020;
• We have introduced internal sustainable fibre
targets to our collections to ensure that we are
meeting our SCAP commitment and, as part of SCAP,
we participate in the Metrics group. This Group
identifies the key industry metrics that businesses
should measure and is working on a tool to measure
baseline carbon, water and waste footprints. It also
identifies improvement actions that businesses could
take in this area;
• We became a member of the Better Cotton Initiative
(BCI) in 2016. The aim of the BCI is to make global
cotton production better for the people who produce
it, better for the environment it grows in and better
for the cotton industry’s future. Through education
and training the farmers learn more sustainable
farming methods and pool their resources with the
aim of reducing environmental impacts, using less
water and harmful pesticides, and increasing yields.
STRATEGIC REPORT
PEOPLE
Our employees and the people who work in our supply
chains are our greatest asset and it is very important
to the Group that our products are produced in
factories that are committed to providing a fair and safe
environment for their workers. To enable this:
• Ted Baker Ethical, Production and Buying teams
regularly visit our suppliers to build and maintain
relationships. These are key in ensuring open and
honest communication;
• All Ted Baker suppliers are governed by our Ethical
Code of Conduct. We review and revise our Code
of Conduct regularly to ensure that it reflects
legislative changes and make sure that our suppliers
continue to make improvements. The Code is based
on international conventions such as; The Ethical
Trade Initiative Base Code, The United Nations
Universal Declaration of Human Rights and The
Fundamental Conventions of the International
Labour Organisation, and can be found at http://
www.tedbakerplc.com/~/media/Files/T/Ted-Baker/
documents/ted-ethical-code-of-conduct-2016.pdf;
• Through our partnership with MADE-BY, a non-
profit multi-stakeholder initiative set up to improve
sustainability within the fashion industry, we began
reporting, through MODE Tracker, a new progress
tracking tool. It is aimed at supporting fashion
brands to become more sustainable, focusing on
eight areas of fashion business including People,
Product and Own Operations;
• We continue to encourage our employees to donate
unwanted items through our "Oxfam Collects"
Collection Point;
• In December 2014 we started to collect donations
for leftover restaurant food. Those proceeds are
donated to Magic Breakfast, a charity that provides
underprivileged school children in London with
much needed breakfasts before school. During the
period, we raised enough money to provide 13,409
Magic Breakfasts;
• We keep two Buckfast bee colonies on the roof of
our London head office from which we had a hugely
successful honey harvest for the seventh
year running.
25
Ted Baker Plc Annual Report and Accounts 2016/17 STRATEGIC REPORT
GREENHOUSE GAS EMISSIONS
The Group has for a number of years participated
in the Carbon Disclosure Project and is now required,
the Companies Act 2006
in accordance with
(Strategic Report and Directors’ Report) Regulations
2013 (the “Regulations”), to report its greenhouse gas
(“GHG”) emissions.
The Group has adopted a GHG reporting policy
and a management system based on the methodology
established under the Greenhouse Gas Protocol, which
has been used to calculate the Group’s Scope 1 and 2
emissions in the period for activities within the financial
control of the Group.
In measuring the Group’s GHG emissions, all the
Group’s stores, warehouses and head offices around
the world were taken into account. The space occupied
by the Group within concession stores is excluded
from Scope 1 and 2 calculations because the Group
has neither financial nor operational control over a
concession area. Such emissions are included in the
Group’s scope 3 figures which are published in our
annual Carbon Disclosure Project Report.
The Group’s GHG emissions during the period are disclosed in the table below.
Scope 1 – Direct CO2 emissions (tonnes CO2e)
Scope 2 – Indirect CO2 emissions (tonnes CO2e)
Total tonnes CO2e emissions
tCO2e per square foot
tCO2e per thousand GBP sales
2017
129
4,469
4,598
0.012
0.009
2016
138
4,062
4,200
0.012
0.009
GHG emissions for the period ended 28 January 2017 have been calculated using the appropriate 2016 UK
Government Conversion Factors for Company Reporting and, for energy consumed overseas, the International
Energy Agency Emission Factors.
THE BRIBERY ACT 2010
The Board continues to proactively review the Group’s
procedures to ensure they are sufficiently robust to
prevent corruption.
MODERN SLAVERY ACT 2015
The Group has issued a statement in compliance
with the Modern Slavery Act which is available at
www.tedbakerplc.com. The statement sets out the
Group’s policies for assessing the risk of modern slavery
within its supply chain and the steps taken to improve
transparency. This will be a continued focus for the
Group and we will continue to work through a cross-
functional Steering Committee to develop the policies in
line with the evolving business and landscape.
26
CAUSIN
G A
S
C
E
N
T
S
A
T
I
O
N
LEARNING, DEVELOPMENT AND
TALENT MANAGEMENT
Individual performance is reviewed biannually with
to discuss personal and career
each employee
development and to set, and assess performance against
goals and objectives linked to personal growth and
business development, as well as Ted’s environmental
and social commitments. We invest in training which
ranges from outsourced specialist and technical skills
training, to in-house developed ‘Hand Made by Ted’
bespoke courses offered by the Ted Academy. During
the period we launched ‘Grow Your Own with Ted’, an
in-house development programme to support growth
in individual and team talent. Ted’s School of Excellence
was also launched focused on developing skills
and brand knowledge in the first thirteen weeks of a
retail employee’s time with Ted. A new ‘Settling-In’
tool was also introduced to manage the probationary
period process.
Continuing to bring in fresh and specialist talent, as
well as nurturing existing team members, remains high
on our business and people agenda. Distinct career
paths exist across the Group and inter-departmental
and international transfers play a large part in
retaining and growing talent as well as ensuring the
Ted story translates across the globe. Our manpower
and succession plans are monitored and evaluated
regularly to highlight skills and learning gaps, anticipate
vacancies and harness talent. Following the success of
the apprenticeship programme, Ted’s Extraordinary
Diploma, we commenced our second programme
during the period. This programme helps to identify
top talent for our business as we continue to grow and
evolve in a changing consumer and digital age.
STRATEGIC REPORT
PEOPLE
The incredible talent, enduring commitment and
passion of the Ted Baker team are key factors in the
success of the Group. We encourage employees with
learning and development opportunities, nurture their
growth and potential and recognise and reward their
contributions. This is illustrated by the energy and
inspired performance of our team who drive innovation
and growth.
REWARD AND RECOGNITION
During the period we further developed our Pay for
Performance remuneration approach for employees
at our London head office (“Tedquarters”). Such
employees’ performance
is measured against
competency criteria, objectives linked to business
success and behavioural identifiers that directly support
our unique culture and brand values. This approach
enables Ted to award remuneration annually based
individual success and achievement.
directly on
We continue to review all other employee groups’
remuneration annually and a benchmarking analysis
is undertaken against market intelligence to ensure we
remain competitive and commensurate across all areas
of the business.
In each territory we offer reward and recognition
schemes in line with local legislative and market
requirements for employees. Our reward packages
include bonus schemes linked to sales targets and
individual and corporate performance. We encourage
all UK employees to join our Save As You Earn share
scheme which provides Ted with confidence in the
commitment of its team. Ted also provides a Long-
Term Incentive Plan (“LTIP”) for key senior employees
throughout the business spanning a three year award
period. The LTIP is currently in its fourth tranche of issue
and it is anticipated that this will continue on a rolling
yearly award basis to enhance total annual reward and
support retention. During the period we celebrated
the sixth year of Wisdom Awards, our scheme that
recognises long-serving members of the team and
provides a chance for them to celebrate and share their
Ted stories.
28
STRATEGIC REPORT
DIVERSITY
The Group believes in respecting individuals and their
rights in the workplace and that diversity supports the
dynamic of our teams to deliver success. With this in
mind, specific policies are in place setting out our
stance and commitment to managing harassment and
bullying, whistle blowing and equality and diversity.
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. We respect cultural difference
and actively seek to learn about each territory we
operate within.
Our commitment to diversity across the Group
continues and consideration to diversity and gender is
given with a view to appointing the best placed individual
for each new role. The charts below demonstrate the
gender split across the Board of Directors, the Group’s
leadership and senior management teams and global
employees as at 28 January 2017.
Ted Baker Plc Board of Directors
Executive Committee and other senior managers
Global employees
2017
2016
MALE
FEMALE
TOTAL
MALE
FEMALE
TOTAL
5
55
1
64
6
119
5
34
1
54
6
88
1,063
2,160
3,223
1,108
2,168
3,276
Ted Baker Plc Board of Directors
Executive Committee
and other senior managers
Global employees
UK
North America
Europe
Asia
MALE
FEMALE
MALE
FEMALE
MALE
FEMALE
MALE
FEMALE
TOTAL
5
41
604
1
37
-
7
1,123
258
-
18
486
-
1
-
5
134
414
-
5
65
-
5
6
119
139
3,223
HEALTH, SAFETY AND WELFARE
Our duty and commitment to the well-being of our
team is supported by activity such as private healthcare,
occupational health, health seminars and funding for
flu jabs. During the period, we conducted Wellness
health assessment days and we offer health and fitness
classes to our team members at Tedquarters. We run
a Childcare Voucher Scheme in the UK. An Employee
Assistance Programme in the UK and US further
supports our concern for the health and well-being of
our employees.
The Group employs a dedicated health and safety
team to support the identification of risks and prevention
of accidents and provides ongoing education and
training to strengthen employees’ knowledge and
commitment in this area.
their employment with the Group continues and that
where appropriate reasonable adjustments are made
and relevant training and education of the wider team is
arranged. It is the policy of the Group that the training,
career development and promotion of persons with
disabilities should, as far as possible, be identical with
that of other employees.
CULTURE
Our brand values are important in everything we do
and are instilled in employees at their initial induction
and at sessions with the Founder & Chief Executive
telling the story behind the brand. Employees are
encouraged to always ask: ‘Would Ted do it that way?’
We continue employees’ cultural journeys through a
host of varied events.
EMPLOYEES WITH DISABILITIES
Applications for employment by persons with disabilities
are always fully and fairly considered, focusing on the
aptitudes and abilities of the applicant concerned. In
the event of an employee becoming disabled during
their employment, every effort is made to ensure that
29
Ted Baker Plc Annual Report and Accounts 2016/17 STRATEGIC REPORT
EMPLOYEE ENGAGEMENT
The Group places considerable value on
the
involvement of its employees and continues to keep
them informed of matters affecting them and the
Group, communicating in a way that aligns with the
brand tone of voice and actively encourages feedback.
This is achieved through formal and informal meetings,
BroadcasTED communications, Talk to Ted sessions,
team member surveys and e-postcard messages from
Ted. Team representatives are consulted regularly on
a wide range of matters affecting employees’ current
and future interests. Employees are regularly informed
of the Group’s performance and any factor affecting its
performance during the period, in addition to business
development
interest and
initiatives
encourage participation.
to maintain
SYSTEMS
In the period we invested in a new integrated HR
and Payroll system that will be rolled out across the
Group in a phased approach. This will present greater
efficiencies and new ways of working. With focus on
self-serve technology, enhanced communications and
talent management, we can expect improved people
processes and analytics.
The Strategic Report was approved by the Board of
Directors on 23 March 2017 and signed on its behalf by:
Charles Anderson
Finance Director & Company Secretary
23 March 2017
Registered Office:
The Ugly Brown Building
6a St. Pancras Way
London
NW1 0TB
Company No: 03393836
30
H
A
V
N
G
I
W
H
E
N
Y
O
U
’
R
E
F
L
I
E
S
T
I
M
E
FUN
H
A
V
N
G
I
Y
O
U
’
R
E
W
H
E
N
F
L
I
E
S
T
I
M
E
DIRECTORS’ REPORT
CORPORATE GOVERNANCE
STATEMENT
STATEMENT OF COMPLIANCE WITH THE CODE
During the period the Company was subject to the
UK Corporate Governance Code dated September
2014. The Code was issued by the Financial Reporting
Council and is available for review on the Financial
Reporting Council’s website https://www.frc.org.uk/.
The Board confirms that the Company has complied
with the provisions set out in the Code throughout the
year, except in respect of Code Provision C.3.1 (Audit
Committee to have at least three independent Non-
Executive Directors). An explanation of the reason for
this departure from the Code is set out on page 37.
An explanation of how the main principles have
been applied is set out on pages 67 to 69 and, in
connection with Directors’ remuneration,
the
in
Directors’ Remuneration Report on pages 46 to 66.
BOARD COMPOSITION
The Board currently comprises the Non-Executive
Chairman, the Chief Executive, the Chief Operating
Officer & Group Finance Director and three independent
Non-Executive Directors. Biographies of these Directors
appear on page 36. The Board is of the view that its
current membership provides an appropriate balance of
skills, experience, independence and knowledge, which
enables it to discharge its responsibilities effectively.
This is reinforced by the findings of the external Board
evaluation carried out in the prior period.
BOARD INDEPENDENCE
The Board considers Non-Executive Directors Ronald
Stewart, Anne Sheinfield and Andrew Jennings to be
independent for the purposes of the Code.
BOARD OPERATION
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. These include decisions on the
Group’s strategy, financial budgets, major capital
expenditure and transactions, appointment of territorial
and product licence partners, store openings, dividend
policy, Group bonus and risk profile. 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.
Operational
decision making,
operational
performance and the formulation of strategic proposals
to the Board are controlled by the Group’s Executive
Committee, which is comprised of the Board of Directors
of No Ordinary Designer Label Limited (the Group’s
operating subsidiary) together with relevant heads
of department as required. The Executive Committee
meets regularly throughout the year.
TED BAKER PLC
BOARD OF DIRECTORS
NOMINATION
COMMITTEE
REMUNERATION
COMMITTEE
AUDIT
COMMITTEE
EXECUTIVE
COMMITTEE
32
RISK
COMMITTEE
IT STEERING
COMMITTEE
SOCIAL RESPONSIBILITY
COMMITTEE
DIRECTORS’ REPORT
To enable the Board to function effectively and for
the Directors to discharge their responsibilities, full and
timely access is provided to all relevant information. A
comprehensive board pack is prepared and circulated
in advance of each Board meeting. Board members
regularly input into the level and quality of information
provided, and request specific board papers on
additional agenda items. There is an agreed procedure
for Directors
independent professional
advice, if necessary, at the Company’s expense.
This is in addition to the access each Director has to the
Company Secretary.
take
to
The Company maintains an appropriate level of
Director and Officer Liability insurance cover and,
through the Articles of Association and Directors’ terms
of appointment, has agreed to indemnify the Directors
against certain liabilities to third parties and costs
and expenses incurred as a result of holding office as
a Director. Save for such indemnity provisions in the
Company’s Articles of Association and in the Directors’
terms of appointment (which were in force throughout
the period and are in force as at the date of these
financial statements), there are no qualifying third-party
indemnity provisions in force.
The Code requires that the Board provides a fair,
balanced and understandable assessment of the
Company’s position and prospects in its external
reporting. The Directors were responsible for the
preparation and approval of the Annual Report and
Accounts and consider them, taken as a whole, to be
fair, balanced and understandable and believe that this
provides the information necessary for shareholders
to assess the Company’s position and performance,
business model and strategy.
BOARD EVALUATION
During the previous period, an externally facilitated
evaluation of the Board and Committees’ effectiveness
was undertaken by Sean O’Hare of Boardroom Dialogue
Limited, an independent external adviser with no other
connection to the Company.
That Board evaluation concluded that the Board was
working well, considering the right topics on a timely
basis and with an appropriate level of challenge. Areas
of focus for the Non-Executive Directors continue to
be enhancing Board engagement with the Executive
long-term
Committee and building on existing
succession planning throughout the Group, which have
been addressed during the current period.
During the period, the Board undertook an informal
evaluation of its own performance, its committees’
performance and the performance of its Directors, with
continuing assessment undertaken throughout the
year in review. Informal evaluations and assessments
conducted by the Board and its committees covered
a range of issues around Board and Committee
membership, roles and responsibilities, and succession.
The next externally facilitated Board evaluation shall
be conducted in accordance with the requirements of
the Code.
BOARD AND COMMITTEE ATTENDANCE
The table below details the number of Board and Committee meetings held during the period and the attendance
record of each Director.
BOARD
MEETINGS
AUDIT
COMMITTEE
REMUNERATION
COMMITTEE
NOMINATION
COMMITTEE
NUMBER OF MEETINGS HELD
Ray Kelvin
Lindsay Page
David Bernstein
Anne Sheinfield
Ronald Stewart
Andrew Jennings
10
10
9
10
10
10
10
2
NA
NA
2
2
2
2
-
NA
NA
-
-
-
NA
3
NA
NA
3
NA
3
3
33
Ted Baker Plc Annual Report and Accounts 2016/17 CONFLICTS OF INTERESTS
The Company’s Articles of Association 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.
DIRECTORS’ REPORT
COMMUNICATION WITH SHAREHOLDERS
The Group attaches considerable importance to 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.
Led by the Chief Executive, the Chief Operating
Officer and the Finance Director, the Group seeks 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 and potential investors
to discuss long-term issues and gathering feedback;
and communicating regularly throughout the year via
its investor relations programme. 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 investor relations website at
www.tedbakerplc.com. Shareholders 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.
34
Y
A
R
B
M
A
H
C
R
U
O
N
O
N
A
R
I
T
’
N
O
D
DIRECTORS’ REPORT
BOARD OF DIRECTORS
DAVID ALAN BERNSTEIN, CBE
NON-EXECUTIVE CHAIRMAN (73)
David is Chairman of the British Red Cross. Previously
he was joint Managing Director of Pentland Group Plc
and Chairman of Blacks Leisure Plc, Manchester City Plc,
the Football Association. In the New Year Honours list of
2014 David was appointed Commander of the Order of
the British Empire (CBE) for services to football.
RONALD STEWART, FCIB
NON-EXECUTIVE DIRECTOR (69)
Ron was appointed as a Non-Executive Director on 25
February 2009. 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 Chairman of the PCC at
St Andrew's Church in Oxshott, a Trustee of several local
charities and a Governor of Reeds School and Chairman
of Reeds School Enterprises in Surrey.
Committee Membership: David is Chairman of the
Nomination Committee and a member of the Audit and
Remuneration Committees.
Committee Membership: Ron is Chairman of the
Audit Committee and a member of the Nomination
and Remuneration Committees. Ron is the Senior
Independent Director.
RAYMOND STUART KELVIN, CBE
CHIEF EXECUTIVE (61)
("CLOSEST MAN TO TED")
Ray, the founder of Ted Baker, has worked in the fashion
industry for over 40 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. In the New Year Honours list of 2011 Ray
was appointed Commander of the Order of the British
Empire (CBE) for services to the fashion industry.
Committee Membership: Not applicable.
LINDSAY DENNIS PAGE, MA, ACA
CHIEF OPERATING OFFICER & GROUP
FINANCE DIRECTOR (58)
Lindsay joined Ted Baker as Finance Director in February
1997. He joined Binder Hamlyn in 1981 and 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.
Lindsay was appointed as the Group’s Chief Operating
Officer in addition to his role as Group Finance Director
on 8 July 2014.
Committee Membership: Not applicable.
ANNE SHEINFIELD
NON-EXECUTIVE DIRECTOR (51)
Anne was appointed as a Non-Executive Director on
15 June 2010. Anne is a commercial lawyer with more
than two decades of post-qualification experience in the
theatre, TV and music areas of entertainment and has
a wealth of intellectual property and commercial legal
experience.
Committee Membership: Anne is Chairman of
the Remuneration Committee and a member of the
Nomination Committee. Anne is an Independent Director.
ANDREW JENNINGS
NON-EXECUTIVE DIRECTOR (68)
Andrew was appointed as a Non-Executive Director on
1 February 2014. He has worked in the international
retail industry for over 40 years at some of the world's
most respected high-end department stores. Previously
he was Chief Executive Officer of the Karstadt Group in
Germany and prior to this has held a number of senior
executive positions at leading UK and international
retailers including Saks Fifth Avenue in the USA; Holt
Renfrew in Canada; Harrods and House of Fraser in the
UK; and Brown Thomas in Ireland.
Committee Membership: Andrew is a member of
the Audit, Nomination and Remuneration Committees.
Andrew is an Independent Director.
36
DIRECTORS’ REPORT
AUDIT COMMITTEE REPORT
DEAR SHAREHOLDER,
The role of the Audit Committee is to monitor the integrity
of the Group’s financial statements and reporting
responsibilities and to maintain its internal control and
compliance procedures. During the period, the Audit
Committee focused on the Group’s risk management
systems (particularly cyber risk, inventory and foreign
currency risk).
This Audit Committee Report has been prepared in
accordance with the Code and includes:
• a description of the significant issues that the Audit
Committee considered in relation to the financial
statements, and how these issues were addressed;
• an explanation of how the Audit Committee
has assessed the effectiveness of the external
audit process and the approach taken to the
reappointment of the external auditor, and
information on the length of tenure of the
current audit firm and when a tender was last
conducted; and
• an explanation of how the Group’s auditor’s
objectivity and independence are safeguarded
when providing non-audit services.
Meetings with senior management, internal audit
and the external auditor, together with the regular
circulation and review of board papers and financial
information, have enabled the Audit Committee to
discharge its duties and responsibilities effectively.
AUDIT COMMITTEE MEMBERSHIP
During the period, Ronald Stewart was Chairman of
the Audit Committee. The other members were David
Bernstein and Andrew Jennings.
Provision C.3.1 of the Code provides that the
Audit Committee should comprise of at least three
independent Non-Executive Directors, and that the
Chairman of the company should not be a member
of the Audit Committee. The Board recognises that
the Company has not been compliant with Provision
C.3.1 of the Code during the period but considers
David Bernstein, notwithstanding his appointment
as Chairman, to be a valuable member of the Audit
Committee because of his recent and extensive relevant
financial experience.
The terms of reference for the Audit Committee are
available on the Company’s website www.tedbakerplc.com.
37
Ted Baker Plc Annual Report and Accounts 2016/17 DIRECTORS’ REPORT
KEY MATTERS
A summary of the key matters considered by the Audit Committee during the period is set out below:
AGENDA ITEMS
Full Year Report/Interim Report
KPMG Audit Committee Paper summarising the results
from the year-end external audit
KPMG Audit Committee Paper summarising the results
from the interim review
KPMG Management Letter on control observations
Effectiveness of external auditors
Independence of KPMG
Risk management
Findings of internal audit reviews
Key tax risks and approach
Impairment policy review
Terms of reference of the Audit Committee
Whistle blowing
Non-audit services provided by KPMG
Non-audit spend
Employment of former KPMG staff
Materiality
Resourcing
Cyber risk review
Post investment appraisal (stores)
Stock analysis
Foreign currency risk
Social media policy review
Key supplier risk
Impact of Brexit
General data protection regulation
MARCH
2016
JULY
2016
OCTOBER
2016
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
The main areas of judgement and estimation are set out in the accounting policies on pages 84 to 91.
38
USING OUR B O T T L
E
DIRECTORS’ REPORT
SIGNIFICANT ISSUES
The Audit Committee received and reviewed reports
from management and the external auditors setting
out the significant issues in relation to the financial
statements for the period which related to the carrying
value of inventory and the carrying value of retail fixed
assets (being leasehold improvements).
These issues were discussed and challenged with
management during the period. They were also
discussed with the external auditors at the time the Audit
Committee reviewed and agreed the external auditors’
group audit plan, when the external auditors reviewed
the half year interim financial statements in October
2016, and also at the conclusion of the audit of the
financial statements for the period.
1) Carrying value of inventory
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. Inventory is
carried in the financial statements at the lower of cost
and net realisable value. Sales in the fashion industry
can be extremely volatile with consumer demand
changing significantly based on current trends. As a
result there is a risk that the cost of inventory exceeds
its net realisable value. Management calculates the
inventory provision on the basis of the ageing profile of
what is in stock. Provisions are considered on a seasonal
basis taking into consideration the various channels that
are available to the Group to sell existing inventory and
the estimated prices that can be achieved. Any changes
to the prices that can be achieved could impact the
provisions that are required to cover the risks associated
with holding older season inventory. Adjustments are
made where appropriate based on Directors’ knowledge
and experience to calculate the appropriate inventory
carrying values.
Management confirmed to the Audit Committee that
there have been no significant changes to the approach
used to estimate inventory provisions from the prior year.
The external auditors explained to the Audit Committee
the work they had conducted during the year. On the
basis of their audit work, the external auditors reported
no inconsistencies or misstatements that were material
in the context of the financial statements as a whole;
and in the view of the Audit Committee this supports the
appropriateness of the Group’s methodology.
40
2) Carrying value of retail fixed assets (being
leasehold improvements)
Leasehold improvements for stores are identified
for further impairment testing primarily on the basis
of current and projected performance, with growth
assumptions based on Directors’ knowledge and
experience. Given the relative immaturity of the
brand outside the UK, the payback period is typically
longer and it is not uncommon for new stores to make
losses in their start-up phase. Judgement is therefore
applied by the Directors in assessing the trigger
point for impairment, recognising that losses in the
start-up phase are not always indicative of the future
performance of a particular store. The future forecasts
are inherently judgemental and the key sensitivity
includes achieving the growth rates for a particular
store and relevant to the specific market. A change in
these assumptions will impact the future forecasts and
management’s assessment of the profitability of each
store. The assumptions are continually reviewed against
current trading performance and external factors that
impact the fashion industry and consumer demand for
specific regions, including for example macro-economic
conditions that may impact consumer spending patterns
and tourism. The Directors use their knowledge of the
fashion industry and experience built over many years
to set and monitor the assumptions included within
the forecasts.
The external auditors explained to the Audit
Committee the work they had conducted during the
year. On the basis of their audit work, the external
auditors reported no inconsistencies or misstatements
that were material in the context of the financial
statements as a whole; and in the view of the Audit
Committee this supports the appropriateness of the
Group’s methodology.
3) Misstatements
Management confirmed to the Audit Committee that
it was not aware of any material misstatements or
immaterial misstatements made intentionally to achieve
a particular presentation. The external auditors reported
to the Audit Committee the misstatements that they
had found in the course of their work and no material
amounts remain unadjusted. The Audit Committee
confirms that it is satisfied that the external auditors
have fulfilled their responsibilities with diligence and
professional scepticism.
DIRECTORS’ REPORT
reports
After reviewing and challenging the presentations
and
from management and consulting
where necessary with the external auditors, the Audit
Committee is satisfied that the financial statements
appropriately address the critical judgements and key
estimates (both in respect to the amounts reported and
the disclosures). The Audit Committee is also satisfied
that the significant assumptions used for determining the
value of assets and liabilities have been appropriately
scrutinised, challenged and are sufficiently robust.
4) Future IFRS developments
The Audit Committee has discussed future accounting
developments likely to affect the presentation of the
Group’s financial statements.
TAX GOVERNANCE FRAMEWORK
The Finance Director is responsible for the Group’s tax
policy which is implemented with the assistance of the
senior finance and Group tax team. This is reviewed
on an ongoing basis as part of the regular financial
planning cycle. In addition, the Group’s tax status is
reported regularly to the Board and Audit Committee.
The Audit Committee is responsible for monitoring all
significant tax matters including the Group’s tax policy.
In accordance with the measures announced in
the Finance Act 2016, Ted Baker will publish on its
website details of the Group’s Tax Strategy as it relates
to or affects UK taxation in the financial year ended
27 January 2018.
the Board
in relation
EXTERNAL AUDIT
The Audit Committee oversees the Group’s relationship
with the external auditors and makes recommendations
their appointment,
to
reappointment and removal and approves
their
remuneration and terms of engagement. The Board and
Audit Committee also review the independence of the
external auditors and consider the engagement of the
external auditors to supply non-audit services.
to
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 Audit
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
41
that
recognises
spend is also reviewed by the Audit Committee on an
annual basis. Details of the auditors' remuneration for
audit and non-audit fees are disclosed in Note 3 to the
financial statements for the period.
The Audit Committee
the
independence of the external auditors is an essential
part of the audit framework and the assurance that it
provides. The Audit Committee monitors any non-
audit work that is undertaken by the external auditors
to ensure that their objectivity and independence is not
compromised. The Audit Committee regularly reviews
the level of non-audit fees and as noted above pre-
approval for any such services is required from the Audit
Committee Chairman above set monetary thresholds. In
approving any non-audit services the Audit Committee
considers any threats, perceived or actual, to the
auditors’ independence taking regard of the guidance
contained in the relevant ethical standards.
To assess the effectiveness of the external auditors,
the Audit Committee reviewed:
• the external auditors fulfilment of the agreed audit
plan and variations from it;
• reports highlighting the major issues that arose
during the course of the audit; and
• feedback from the businesses evaluating the
performance of each assigned audit team.
The Audit Committee held meetings with the
external auditors before each Audit Committee
meeting to review key issues within their scope of
interest and responsibility. To fulfil its responsibility
for oversight of the external audit process, the Audit
Committee reviewed:
• the terms, areas of responsibility, associated
duties and scope of the audit as set out in the
external auditors' engagement letter for the
forthcoming year;
• the external auditors' overall work plan for the
forthcoming year;
• the external auditors' fee proposal;
• the major issues that arose during the course of the
audit and their resolution;
• key accounting and audit judgements;
Ted Baker Plc Annual Report and Accounts 2016/17 DIRECTORS’ REPORT
• the level of errors identified during the audit; and
• recommendations made by the external auditor
in their management letters and the adequacy of
management’s response.
Consideration is also given by the Audit Committee
to the need to include the risk of the withdrawal of the
external auditor from the market in its risk evaluation
and planning.
The Audit Committee considers the reappointment
of the external auditor each year and assesses their
independence on an on-going basis. KPMG have been
the Company’s external auditors since 2001, with
a competitive audit tender process last carried out in
2012. The Audit Committee notes the final Order from
the Competition and Markets Authority and the new EU
Regulation on audit rotation and will ensure compliance
with these requirements in considering when next to
tender the external audit. The requirements of the Code
and the Order and EU Regulation notwithstanding,
the Audit Committee will continue to monitor the
effectiveness of the external auditors on an annual
basis and will tender in accordance with the new
EU regulations.
KPMG have expressed their willingness to continue
in office as external auditors. The Audit Committee has
recommended to the board that KPMG LLP be appointed
as the Group’s external auditors for the 2017/18
financial period.
WHISTLEBLOWING
The Audit Committee is responsible for the review
of the Company’s procedures for responding to the
allegations of whistle blowers and the arrangements
by which staff may, in confidence, raise concerns about
possible financial reporting irregularities.
Ronald Stewart
Chairman of the Audit Committee
23 March 2017
42
No appointments to the Board were made in the
period, however general discussions on long-term
succession planning, including the timing and the
process for recruitment and transition, were held by the
Chairman with members of the Nomination Committee
and at Board level.
DIVERSITY
We strongly support the principle of boardroom diversity,
of which gender is one element. Anne Sheinfield has
been on the Board since June 2010 and the Board is
very pleased to benefit from her valuable contribution.
Boardroom diversity,
is an
important consideration when assessing a candidate's
ability to contribute to, and complement the abilities of,
a balanced Board.
including gender,
Our Board appointments will always be made on
merit against objective criteria, and this will continue
to be the priority rather than aiming to achieve an
externally prescribed diversity target.
The Group continues to support the development
and progression of all employees, with the aim of
maintaining and achieving diversity throughout all
levels of the organisation.
David Bernstein CBE
Chairman of the Nomination Committee
23 March 2017
DIRECTORS’ REPORT
NOMINATION COMMITTEE REPORT
DEAR SHAREHOLDER,
The role of the Nomination Committee is to establish
a framework for the process of appointment of new
Directors to the Board. The Nomination Committee is
also responsible for overseeing succession planning
identification and
requirements,
assessment of potential Board candidates and making
recommendations to the Board for its approval.
including
the
NOMINATION COMMITTEE MEMBERSHIP
During the period the Nomination Committee was
chaired by David Bernstein and its other members were
Ronald Stewart, Anne Sheinfield and Andrew Jennings.
The composition of the Nomination Committee during
the year complied with Provision B.2.1 of the Code.
The Nomination Committee is responsible for
nominating candidates for appointment to the Board.
All Non-Executive Directors are advised of the time
commitment considered necessary to enable them to
fulfil their responsibilities prior to appointment.
The
terms of reference
the Nomination
Committee are available on the Company’s website
www.tedbakerplc.com.
for
APPOINTMENTS TO THE BOARD
The Company’s Articles of Association require one third
of the Directors for the time being to retire each year,
and for each Director to retire from office at least once
every three years. However, in line with Provision B.7.1
of the Code, the Board has determined that all Directors
must retire and stand for re-election by shareholders on
an annual basis.
43
Ted Baker Plc Annual Report and Accounts 2016/17 D
N
U
O
R
G A
G I N
N
A
R H
E
V
E
N
D
N
U
O
R
G A
G I N
N
A
R H
E
V
E
N
DIRECTORS’ REPORT
DIRECTORS’ REMUNERATION
REPORT
PART A: ANNUAL STATEMENT
DEAR SHAREHOLDER,
I am pleased to present the Directors’ Remuneration
Report, which has been prepared on behalf of the
Board by the Remuneration Committee in accordance
with the requirements of the Companies Act 2006 and
Schedule 8 of the Large and Medium-sized Companies
and Groups (Accounts and Reports) Regulations 2008,
as amended, and meets the relevant requirements of
the Listing Rules of the Financial Conduct Authority and
the UK Corporate Governance Code.
The Remuneration Report is split into three parts:
• Part A: The Annual Statement.
• Part B: The Directors’ Remuneration Policy which
sets out the Company’s policy on Directors’
remuneration that will apply with effect from this
year’s Annual General Meeting (“AGM”), and the
key factors that were taken into account in setting
the policy. The Directors’ Remuneration Policy, first
published in the 2014 Annual Report has been
revised to incorporate the changes highlighted
below and is subject to a binding shareholder vote
at this year’s AGM, and after that at least every
third year.
• Part C: The Annual Report on Remuneration which
sets out payments and awards made to Executive
Directors and Non-Executive Directors and details
the synergy between Company performance and
remuneration for the period.
2016/17– A YEAR IN REVIEW
The Group delivered a good performance in challenging
trading conditions in 2016/17. Continued investment
has been made in the long-term future of the brand,
including the recruitment of new specialist talent to
key areas to support investment made in core
infrastructure projects.
Our unique and talented teams continue to develop
the brand and further the growth of the business.
Their commitment to take on diverse and complex
challenges with passion and professionalism has further
strengthened the Ted Baker brand. However, while the
Group has achieved a good performance in the year
despite challenging conditions, the profit target set at
the beginning of the year has not been exceeded. As
a result, no annual bonus payment to the Executive
Directors or the wider employee population will
be made.
I am pleased, however, to report the first award made
under the shareholder-approved Ted Baker Plc Long-
Term Incentive Plan 2013 (the “2013 LTIP”) vested in
full in July 2016. Both the share price and profit growth
performance conditions were confidently achieved.
Furthermore, a fourth award of options was made under
the 2013 LTIP in May 2016. This award of options carries
the same performance conditions as the three previous
awards and will vest in April 2019.
Last period’s Directors’ Remuneration Report
(excluding the remuneration policy) was approved by
93.1% of shareholders, and the Directors’ Remuneration
Policy in force during the current period was approved
by 97.2% of shareholders at the AGM held on 10 June
2014. This high level of shareholder approval confirms
our reasonable approach to remuneration. I hope that
we will continue to receive this strong level of support
at this year’s AGM for the new remuneration policy set
out in Part B.
The key changes proposed to the existing policy have
been determined after taking into account shareholder
feedback. These are summarised below:
• introduction of malus and clawback provisions
to annual bonus payments and long-term
incentive awards;
• introduction of minimum shareholding guidelines
for the Executive Directors; and,
• amendments to clarify approach to increases in
base salary.
46
DIRECTORS’ REPORT
2017/18 – THE YEAR AHEAD
In arriving at the proposed base salaries payable for
2017/18, the Remuneration Committee has proposed a
1.5% increase in basic salaries of the Executive Directors.
This is consistent with the approach to salary increases
for employees across the Group where a 1.5% increase
has been applied, subject to individual objectives being
met, and except in cases of exceptional performance,
changes in roles or responsibilities, or promotion. The
wider employee population, excluding the Executive
Directors, may also benefit from a further increase in
base salary of up to 1.5% at the half subject to profit
targets being met.
into
reports
Independent benchmarking
the
remuneration packages of the Non-Executive Directors,
the Executive Directors and senior management
population were conducted during the year. The reports
confirmed that the Group’s policy of achieving total
remuneration at the targeted median level was being
met for Executive Directors and senior management,
and that no further adjustment beyond the general
increase to base salaries proposed above was required.
Remuneration of the Non-Executive Directors was
found to be below median, and further increases will be
made effective from 1 April 2017 to bring their salaries
in line with the targeted median level that the Group’s
remuneration policy aims to deliver. Further details
are provided in the annual report on remuneration in
part C.
IN CONCLUSION
The annual report on remuneration provides further
details and the Directors’ Remuneration Policy sets out
how we are continuously building for the future.
I would like to thank you for your support in
approving the outgoing remuneration policy and hope
that we can rely on your vote in favour of the new
Directors’ Remuneration Report at this year’s Annual
General Meeting.
Anne Sheinfield
Chairman of the Remuneration Committee
47
Ted Baker Plc Annual Report and Accounts 2016/17 Remuneration packages for Executive Directors are
structured to provide a balance between fixed basic
salary and variable remuneration based on individual
and Group performance.
Non-Executive Directors are remunerated with
fees in line with market rates. They do not receive any
pension or other benefits, other than the reimbursement
of reasonable expenses, and they do not participate in
any bonus or share schemes.
SHORT AND LONG-TERM REMUNERATION
Group policy is to use fixed annual elements of
remuneration such as salary, pension and benefits to
recognise the status of our Executive Directors and to
ensure current and future market competitiveness.
The use of short-term annual bonus incentives and
Long-Term Incentive Plans (“LTIPs”) provides a direct
link between remuneration and KPI’s. It also creates
a synergy between the Executive Directors’ personal
return and the return to investors.
Both the short and long-term incentives are used to
motivate and reward them for sustaining and growing
the success of the Ted Baker Group.
DIRECTORS’ REPORT
PART B: DIRECTORS’ REMUNERATION POLICY
REMUNERATION POLICY
The policy described in this section is intended to
apply for the three years beginning on the date of the
2017 Annual General Meeting, subject to shareholder
approval. We have included an explanation of how
our forward-looking policy differs from the policy that
was approved at the 2014 AGM and which has been in
operation for the three last financial years.
The aim of the Group’s remuneration policy is to
attract, motivate and retain high quality management.
The policy is designed to incentivise senior executives
according to the levels of value generated for
shareholders, and to use performance metrics that
create a strong linkage between senior management
remuneration and business performance over the short
and the longer term.
The total size of the remuneration package is judged
by comparison with the value of packages of similar
companies, having regard to:
• the size of the company, its turnover, profits and
number of people employed;
• the diversity and complexity of the business;
• the geographical spread of the business; and
• the growth and expansion profile.
We use target performance to estimate the total
potential reward and benchmark it according to the
criteria outlined above. External benchmarking analysis
is commissioned periodically to make sure that we
remain competitive within the broader retail sector
and with other companies of similar size. The latest
benchmarking report was carried out during the current
period and the results presented to the Remuneration
Committee in February 2017.
48
DIRECTORS’ REPORT
REMUNERATION POLICY TABLE – EXECUTIVE DIRECTORS
ELEMENT
MAXIMUM POTENTIAL OPERATION AND LINK
BASE SALARY
No maximum salary but
annual increases will be
broadly consistent with
increase in base salary of
wider employee population
unless there is a change in
role or responsibility, or
where periodic
benchmarking demonstrates
that the overall remuneration
package falls below the
Group’s policy of the targeted
median level.
TO STRATEGY
Salary reviewed annually
and reflects the role and
sustained value of the
individual in terms of
skills, experience and
contribution.
Increases will be applied
taking into account inflation
and global economic
conditions, and are in
line with wider employee
increases, unless the results
of benchmarking reports
demonstrate a further
increase is necessary to
achieve targeted median
level for any Executive
Director.
ANNUAL BONUS*
Up to 100% of base salary. Drives and rewards annual
performance.
Profit targets are reviewed
annually at the start of the
financial period.
Payment is determined
by the Remuneration
Committee following the
end of the financial period.
PERFORMANCE
TARGETS AND
TIME PERIOD
N/A
CHANGES TO POLICY
SINCE 2016/17
Clarification of the role of
benchmarking in setting
base salary.
Introduction of malus and
clawback provisions to
bonus payments made
after 1 April 2017.
Achievement of profit
before tax, annual
bonus and exceptional/
non-recurring items
against targets* for the
financial period.
The Remuneration
Committee reserves the
right to make adjustments
if the outcome does
not reflect underlying
performance.
Threshold vesting is 0%.
Malus and clawback
provisions introduced for
annual bonus payments
made after 1 April 2017.
Malus can be applied up
to the date of payment.
Clawback can be applied
for a period of two years
after the date of payment.
49
Ted Baker Plc Annual Report and Accounts 2016/17 DIRECTORS’ REPORT
ELEMENT
LTIPs**
MAXIMUM
POTENTIAL
OPERATION AND
LINK TO STRATEGY
Annual award of up to
150% of base salary.
The Remuneration
Committee has the
right to award up to
200% of basic salary in
exceptional circumstances.
Annual award of options
over shares which
vest dependent on the
achievement of profit
targets with a share
price underpin.
Drives the overall business
strategy and objectives,
and aligns the interests
of shareholders and the
executive team over the
longer term.
CHANGES TO POLICY
SINCE 2016/17
Introduction of malus and
clawback provisions to LTIP
awards granted after
1 April 2017.
PERFORMANCE
TARGETS AND
TIME PERIOD
25% vesting if compound
annual growth of profit
before tax per share of
10% over the 3 year
performance period
beginning with the financial
period in which the awards
are made, rising to 100%
vesting at 15% growth.**
Share awards will only vest
if the share price has risen
by 10% over the 3 year
period commencing on
the date that the awards
are made.
Dividends are only paid on
LTIP options which have
vested and been exercised.
Malus and clawback
provisions introduced for
awards made after 1 April
2017. Malus can be applied
up to the date of vesting.
Clawback can be applied
for a period of 2 years after
the date of vesting.
Performance conditions
for future awards may
vary but the Remuneration
Committee will consult with
shareholders on any major
changes proposed.
THE TED BAKER
SHARESAVE SCHEME
All Executive Directors,
excluding Ray Kelvin, have
the option to save up to the
statutory limit towards options
over shares in Ted Baker Plc
over any 3 or 5 year period.
To align the interests of
Executive Directors with the
long-term interests of the
shareholders.
None.
None.
SHARE OWNERSHIP
GUIDELINES
N/A
RETIREMENT
BENEFITS
OTHER BENEFITS
All Executive Directors,
excluding Ray Kelvin,
are entitled to pension
contributions to a money
purchase scheme of up to
12.5% of base salary.
Entitlements include car
allowance and medical
expense insurance.
New element of policy.
Increase alignment
between the Executive
Directors and shareholders.
Shows a clear commitment
by Executive Directors to
creating value in the
long term.
The guideline encourages
existing Executive Directors
to hold a minimum 200%
of base salary in shares.
Any new Executive Director
is encouraged to hold at
least 100% of base salary
in shares. Shareholdings for
new Executive Directors can
be acquired over 5 years.
Positioned to ensure broad
competitiveness with
market practice.
N/A
None.
N/A
None.
Maximum car allowance
entitlements are based
on the estimated costs of
running a private car.
50
DIRECTORS’ REPORT
NOTES TO THE EXECUTIVE DIRECTORS’ POLICY TABLE
*Annual bonus
Profit targets are set by the Remuneration Committee at the start of the financial year by reference to internal budgets and taking account of consensus
market expectations for profit before tax and exceptional/non-recurring items. Market expectations for profit are considered a key measure of
business performance for our shareholders.
The funds available for payment of the annual bonus are determined by the achievement of profit before tax, annual bonus and exceptional/non-
recurring items in a financial period in excess of the target.
The maximum bonus payable to staff is capped as a percentage of base salary which varies according to individual contracts. The maximum annual
bonus payable to an Executive Director is capped at 100% of base salary.
**LTIPs
In arriving at the performance criteria for the 2013 LTIP, the comparator group used for benchmarking purposes consisted of listed companies in the
retail sector and other companies with similar enterprise value to Ted Baker.
This scheme was introduced in July 2013 for Executive Directors and other senior executives across the Group. The criteria used to measure performance
are growth targets based on adjusted profit before tax per share over the performance period and share price growth over the award period. The profit
per share growth targets were set following consideration of consensus market analyst expectations and the share price growth target was agreed in
consultation between the Remuneration Committee and shareholders.
The Remuneration Committee felt that these criteria were appropriate for the Group in view of its investment in expansion and should encourage
management to focus on longer-term profitable growth. The performance criteria were reviewed in the period and deemed to remain appropriate for
the Group in the context of its current strategy.
The share price growth target has been favoured over a TSR-based measure because the unique profile of the Group’s business means that a readily
comparable TSR benchmark was not available. A commitment has, however, been made to apply the existing dividend policy consistently.
REMUNERATION POLICY TABLE
NON-EXECUTIVE DIRECTORS
The Board aims to recruit high-calibre Non-Executive
Directors (“NEDs”) with broad commercial, international
or other relevant experience. The remuneration policy
for NEDs is set by the Board having taken account
of the fees paid by other companies of a similar size and
complexity.
When
remuneration
arrangements offered will generally be in line with those
set out in the Non-Executive Directors’ Remuneration
Policy table below.
recruiting NEDs,
the
CHANGES TO POLICY
SINCE 2016/17
None.
APPROACH TO
SETTING FEES
BASIS OF FEES
OTHER ITEMS
Fees are reviewed at appropriate
intervals taking into account the
time commitment expected and
practice in peer companies of a
similar size, sector and complexity.
Each NED is paid a basic fee
for undertaking Non-Executive
Director and Board duties. A
higher fee is typically paid to the
Chairman of the Board.
Non-Executive Director fees
are not subject to clawback or
withholding arrangements.
The NEDs do not participate in the
Group’s annual bonus scheme,
long-term incentive plans, health
care arrangements or employee
share schemes and do not receive
any retirement benefits.
The Group provides each NED
with relevant liability insurance for
the duration of their appointment.
NEDs are reimbursed for
reasonable expenses, none of
which comprise taxable benefits.
All NEDs stand for reappointment
on an annual basis at every AGM.
51
Ted Baker Plc Annual Report and Accounts 2016/17 DIRECTORS’ REPORT
DIFFERENCES IN REMUNERATION POLICY
FOR ALL EMPLOYEES
A consistent remuneration approach is applied at all
levels throughout the Group, except as outlined below,
to make sure that business strategy and performance are
aligned and that the total reward is sufficient to attract
and retain high-performing and talented individuals.
All employees of Ted Baker are entitled to a base salary,
annual or periodic bonus and benefits dependent upon
their role within the Group. The maximum opportunity
available for a base salary increase is consistent across
all employees. The maximum opportunity for bonus and
benefits is based on seniority, responsibility and function
of the role.
Conditional long-term share awards are only
available to Executive Directors and other members of
senior management across the Group. Share option
grants under the Ted Baker Sharesave Scheme are
available to all UK employees.
The introduction of malus and clawback provisions
proposed for Executive Director annual bonus payments
and awards made under the 2013 LTIP after 1 April
2017 will similarly be applied to senior members of the
Group management team.
its meeting
STATEMENT OF CONSIDERATION OF
EMPLOYMENT CONDITIONS ELSEWHERE
IN THE COMPANY
The Group Head of Human Resources presents to
the Remuneration Committee at
in
February each year on proposed salary increases
for the general employee population and on any
changes to remuneration policy within the Group.
The Remuneration Committee limits any increases
in base salary for Executive Directors so that they are
broadly in line with the increase to be applied across
the general employee population unless there has been
a change in role, or if the salary and total reward falls
below the targeted median range.
Proposed
remuneration
arrangements
are
discussed with employee communication groups and
senior management. The Remuneration Committee
does not specifically invite employees to comment on
the Executive Directors’ remuneration policy but any
comments made by employees are taken into account.
the
As well as periodically benchmarking
remuneration packages of an Executive Director peer-
group, the benchmarking exercise which underpins
the Group’s remuneration policy also considers
the remuneration levels of other senior executives in
the Group.
The Remuneration Committee’s conclusion following
recent benchmarking conducted during the period was
that the Group should continue with its established
policy of targeting total remuneration levels for senior
management across the Group within the median range
in order to retain and reward key individuals.
52
N
O
O
R
D
I
N
A
R
Y
B
O
A
R
D
M
E
E
TIN
G
S
DIRECTORS’ REPORT
SERVICE CONTRACTS AND POLICY OF PAYMENTS FOR LOSS OF OFFICE
OTHER PROVISIONS
IN SERVICE CONTRACTS
Executive Directors’ service
contracts include non-compete
and non-poaching provisions.
N/A
N/A
N/A
N/A
STANDARD PROVISION
POLICY
DETAILS
Notice periods in Executive
Director Service Contracts
12 months’ notice from
the Company.
12 months’ notice from
the Executive Director.
Executive Directors may be
required to work during their
notice period, be placed on
gardening leave for all or part of
the notice period, or be provided
with pay in lieu of notice if not
required to work the full period
of notice.
Compensation for loss of office in
service contracts
No more than 12 months’
salary, pension and benefits
(excluding bonus).
Payable monthly and adjusted
if the Executive Director obtains
alternative employment.
Treatment of annual bonus
on termination
Treatment of unvested and
deferred share awards on
termination under plan rules
No payment unless employed
on the date of payment of
bonus except for “good leavers”.
The Remuneration Committee
retains discretion to determine
whether an Executive Director is
a “good leaver” taking account
of circumstances including in
particular death, disability
and redundancy.
All awards lapse except for
“good leavers” (e.g. on death,
disability, ill health, injury,
retirement, redundancy). The
Remuneration Committee retains
discretion to treat an Executive
Director as a “good leaver” in
other circumstances.
Treatment of unvested and
deferred share awards in the
event of a change in control of
the Group
“Good leavers” are entitled to a
bonus pro-rated to the period of
service during the period provided
the financial targets have been
achieved and all necessary
conditions have been met.
The Remuneration Committee has
discretion to reduce the
entitlement of a “good leaver” in
line with performance and the
circumstances of the termination.
For “good leavers”, the extent of
vesting is at the discretion of the
Remuneration Committee taking
account of performance to date of
leaving and pro-rated for period
of employment in the vesting
period for the award.
The Remuneration Committee’s
discretion to treat an Executive
Director as a “good leaver” will
take into account the particular
circumstances of the Executive
Director’s departure.
In the event of a change in control
of the Group prior to the end of
the period set for achievement
of performance targets the
performance period will be
shortened to the date of change
of control and awards will vest on
change of control based on the
extent to which any performance
conditions are satisfied by
reference to that shortened
performance period. If the change
of control occurs after the end of
the performance period, awards
will vest on change of control to
the extent that the performance
conditions have been satisfied.
54
DIRECTORS’ REPORT
STANDARD PROVISION
POLICY
DETAILS
OTHER PROVISIONS
IN SERVICE CONTRACTS
Outside appointments
Executive Directors may accept
one Board appointment in
another listed company.
Non-Executive Directors
NEDs have letters of appointment
with the Company which provide:
3 - 6 months’ notice from the
Company
3 - 6 months’ notice from the
NED.
N/A
N/A
The Remuneration Committee
Chairman’s approval must
be sought before accepting
appointment. Fees may be
retained by the Executive Director.
NEDs may be required to work
during the notice period, be
placed on gardening leave for all
or part of the notice period, or
may be provided with pay in lieu
of notice if not required to work
the full period of notice.
CONTRACTS OF SERVICE AND LETTERS OF APPOINTMENT
Each Executive Director has a service contract with a notice period of twelve months. Service contracts and letters of
appointment are available for inspection at the registered office. The Board sets NEDs’ fees.
DATE OF SERVICE
CONTRACT/LETTER OF
APPOINTMENT
UNEXPIRED
TERM
NOTICE PERIOD
PROVISION FOR
COMPENSATION
DAVID BERNSTEIN
24 January 2003
RAY KELVIN
LINDSAY PAGE
RONALD STEWART
ANNE SHEINFIELD
ANDREW JENNINGS
17 July 1997
17 July 1997
25 February 2009
15 June 2010
1 February 2014
6 months
12 months
12 months
3 months
3 months
3 months
6 months
12 months
12 months
3 months
3 months
3 months
None
None
None
None
None
None
RECRUITMENT REMUNERATION
The Group’s strong brand identity, cultural and family
ethos attract a high calibre of candidate. If needed,
external recruitment agencies are engaged to recruit for
specialist roles.
The Remuneration Committee’s approach
to
recruitment remuneration is to pay at the comparable
internal rate and no more than is necessary to attract
candidates with the appropriate level of skill and
experience to the role. The Remuneration Committee
retains the principle of a median level total remuneration
package when benchmarking for new and senior roles.
In order to attract key talent to Ted Baker the
Remuneration Committee will, in certain circumstances,
consider making a buy-out award to compensate a
candidate for losses incurred by leaving a previous
employer to join the Group. The specifics of any buy-
out award would be dependent on the individual
circumstances of recruitment and would not be
considered as regular practice and nor would the
Remuneration Committee commit to matching any
expected value of awards. If a buy-out award were
made, the Remuneration Committee would seek to
make them on a like-for-like basis to ensure that the
value awarded would be no greater than the value
forfeited by the individual. The Committee may choose
to apply performance conditions to these awards.
A relocation package within HMRC guidelines will
be offered to Executive Directors who are required to
relocate to take up their appointment within the Group.
The remuneration package for any new Executive
Directors would be made up of the same or broadly
similar components to those used to reward existing
Executive Directors of the Group. The remuneration
package would comprise an appropriate mixture of
fixed and variable remuneration as may be required
to attract a candidate of appropriate skill and level
of qualification.
Consistent with the policy applied to existing
Executive Directors,
the maximum variable pay
elements for any new recruit would comprise annual
bonus of up to 100% of base salary, and awards under
the 2013 LTIP of up to 150% of base salary (200% in
exceptional circumstances).
55
Ted Baker Plc Annual Report and Accounts 2016/17 DIRECTORS’ REPORT
TOTAL REMUNERATION OPPORTUNITY
The total remuneration for each of the Executive Directors that could result from the remuneration policy in 2017/18
under three different performance scenarios is shown below:
RAY KELVIN
2,000
LTIP
Annual Bonus
Fixed Pay
909
18%
30%
469
1,598
42%
28%
100%
52%
30%
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
LINDSAY PAGE
2,000
LTIP
Annual Bonus
Fixed Pay
922
18%
28%
502
1,578
41%
27%
100%
54%
32%
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
FIXED
TARGET
MAXIMUM
FIXED
TARGET
MAXIMUM
(Note: Figures are stated in £’000s)
(Note: Figures are stated in £’000s)
NOTES:
Fixed pay is base salary plus pension and benefits for 2017/18.
Target performance is the level of performance required to deliver 60% of the maximum bonus and 25% of the full LTIP award and the scenario
assumes that the share price growth target of 10% is met at the vesting date.
Maximum performance would result in a bonus payment of 100% of salary and 100% vesting of the LTIP award. Again, this assumes that the share
price growth target is also met.
For the purpose of the scenarios illustrated above the LTIP variable amount is calculated by reference to basic salary at the percentage of the Award
that would vest under each scenario.
56
DIRECTORS’ REPORT
STATEMENT OF CONSIDERATION OF
SHAREHOLDER VIEWS
The Remuneration Committee
reviews annual
shareholder feedback on the Directors’ Remuneration
Report to ensure their views are given due consideration
in
the Company’s remuneration policy.
Feedback is sought from key shareholders on any major
changes to components of executive remuneration,
including the level of awards to be made and the
performance targets in respect of the Company’s long-
term incentive schemes.
forming
In 2013 the Remuneration Committee consulted
with key shareholders on the design of the Ted Baker
Plc Long-Term Incentive Plan 2013. The consultation
included consideration of the move from a single
performance period spanning three years to rolling
annual awards, performance metrics and conditions,
and the level of awards. A number of meetings were
held with key shareholders to discuss their comments
and feedback before the scheme was finalised and
approved at the general meeting on 20 June 2013.
During 2016/17 a review of the ongoing suitability
of the design of the 2013 LTIP was undertaken. It was
concluded that the design of the 2013 LTIP and its
performance conditions remained appropriate for the
Company and no significant changes have therefore
been proposed. The only amendment to the 2013
LTIP proposed in the Directors’ Remuneration Policy
that will be subject to a binding shareholder vote at
the forthcoming AGM is the introduction of malus and
clawback provisions to awards made after 1 April 2017.
In accordance with the views shared by shareholders,
malus and clawback provisions have also been proposed
for bonus payments made after 1 April 2017. These
measures protect shareholder interests and, taken
together with the introduction of minimum shareholding
guidelines, help align the interests of shareholders with
the executive team.
57
Ted Baker Plc Annual Report and Accounts 2016/17 DIRECTORS’ REPORT
PART C: ANNUAL REPORT ON REMUNERATION
The tables below set out in a single figure the total amount of remuneration, including each element, received by
each of the Executive and Non-Executive Directors for the periods ended 28 January 2017 and 30 January 2016.
DIRECTORS’ SINGLE TOTAL FIGURE OF REMUNERATION (AUDITED)
PERIOD ENDED
28 JANUARY
2017
EXECUTIVE
Ray Kelvin
Lindsay Page
NON-EXECUTIVE
David Bernstein
Ron Stewart
Anne Sheinfield
Andrew Jennings
PERIOD ENDED
30 JANUARY
2016
EXECUTIVE
Ray Kelvin
Lindsay Page
NON-EXECUTIVE
David Bernstein
Ron Stewart
Anne Sheinfield
Andrew Jennings
SALARY
BENEFITS*
PERFORMANCE
RELATED
BONUS
LONG-TERM
INCENTIVE
PLANS**
PENSION
TOTAL 2017
£’000
£’000
£’000
£’000
£’000
£’000
445
425
70
50
50
50
1,090
15
18
-
-
-
-
33
-
-
-
-
-
-
-
757
702
-
-
-
-
1,459
-
53
-
-
-
-
53
1,217
1,198
70
50
50
50
2,635
SALARY
BENEFITS*
PERFORMANCE
RELATED
BONUS
LONG-TERM
INCENTIVE
PLANS**
PENSION
TOTAL 2016
£’000
£’000
£’000
£’000
£’000
£’000
434
417
65
45
45
45
1,051
8
18
-
-
-
-
26
223
213
-
-
-
-
436
-
-
-
-
-
-
-
-
53
-
-
-
-
53
665
701
65
45
45
45
1,566
*Benefits comprise private medical insurance, car benefits and the discount on any SAYE options granted during the period. With effect from May
2016, Ray Kelvin exercised his right to start to receive the maximum entitlement to car allowance of £15,000 per annum.
**The value of LTIPs included in the Directors’ single total figure of remuneration tables above relates to Award 1 of the 2013 LTIP which vested in full
on 2 July 2016 (2016: No Awards vested). The value included is calculated using the number of options that vested at the share price on the date the
Award vested (£23.63), less the cost of exercise (nominal cost of 5p per ordinary share).
ANNUAL RATES OF SALARY IN FORCE DURING THE PERIOD
Ray Kelvin
31 January 2016 – 31 March 2016
1 April 2016 – 28 January 2017
Lindsay Page
31 January 2016 – 31 March 2016
1 April 2016 – 28 January 2017
58
£’000
445
445
425
425
DIRECTORS’ REPORT
ANNUAL BONUS (AUDITED)
For the financial period ended 28 January 2017, the financial targets set at the beginning of the period were not
exceeded, and therefore no bonus was achieved.
ACTUAL PERFORMANCE AGAINST PERFORMANCE TARGETS (AUDITED)
PERFORMANCE – RELATED BONUS
The profit targets for the annual bonus and the extent of their achievement are summarised in the table below
(straight-line interpolation between points in the range).
Profit target*
Percentage of bonus payable to Ray Kelvin
Percentage of bonus payable to Lindsay Page
THRESHOLD BONUS
MAXIMUM BONUS
2017
£66.4m
0%
0%
2017
£76.5m
100%
100%
ACTUAL
PERFORMANCE
2017
£65.8m
0%
0%
*The profit target is arrived at after adjusting profit before tax for exceptional/non-recurring items and annual bonus, as explained earlier in the
Directors’ Remuneration Policy.
LONG-TERM INCENTIVE SCHEMES (AUDITED)
AWARDS UNDER THE TED BAKER PLC LONG-TERM INCENTIVE PLAN 2013
During the period, the first award granted under the 2013 LTIP vested in full on 2 July 2016. The table below
summarises actual outcomes against the performance conditions set for that award:
SHARE PRICE INCREASE UNDERPIN*
PROFIT PER SHARE GROWTH**
PERFORMANCE CONDITIONS
Threshold performance target
Maximum performance target
Actual performance achieved
Percentage of maximum achieved
10.0%
10.0%
99.6%
100%
10.0%
15.0%
22.8%
100%
*Based on base average 6 month share price at the award date of £13.18 and the 6 month average at the vesting date of £26.31.
**Based on base profit per share in 2012/13 of 71.8p and final profit per share of 133.0p in 2015/16.
Awards made under the 2013 LTIP are subject to performance conditions of compound annual growth in
profit before tax and exceptional items per share over the three year performance period and share price growth
over the three year award period as detailed below.
PERFORMANCE CONDITIONS
THRESHOLD
TARGET
STRETCH
SUPER-STRETCH
Adjusted profit before tax per share
Share price growth
10%
10%
12%
10%
13.5%
10%
15%
10%
59
Ted Baker Plc Annual Report and Accounts 2016/17
DIRECTORS’ REPORT
EXECUTIVE DIRECTORS’ INTERESTS IN THE COMPANY’S SHARE SCHEMES (AUDITED)
DATE
OF
GRANT
MAXIMUM
RECEIVABLE
AT 30
JANUARY
2016
AWARDED
DURING
THE YEAR
EXERCISED
DURING
THE YEAR
LAPSED
DURING
THE
YEAR
MAXIMUM
RECEIVABLE
AT 28
JANUARY
2017
OPTION
PRICE
(p)
SHARE
PRICE
ON
DATE OF
GRANT
(p)
SHARE
PRICE
ON
DATE OF
EXERCISE
(p)
EXERCISE
PERIOD/
VESTING
DATE
Ray
Kelvin
2013
LTIP
TOTAL
Lindsay
Page
2013
LTIP
SAYE
TOTAL
3 July
2013
1 May
2014
32,106
30,421
30 April
2015
23,380
5 May
2016
-
85,907
3 July
2013
1 May
2014
29,779
28,393
30 April
2015
22,329
5 May
2016
-
20 May
2014
1,875
82,376
-
-
-
28,236
28,236
-
-
-
26,967
-
-
-
-
-
-
(29,779)
-
-
-
-
26,967
(29,779)
-
-
-
-
-
-
-
-
-
-
-
32,106
30,421
23,380
28,236
114,143
-
28,393
22,329
26,967
1,875
79,564
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
1,705.0
1,849.0
2,855.0
2,364.0
-
-
-
-
1,705.0
2,942.0
1,849.0
2,855.0
2,364.0
-
-
-
-
1,600
2,000.0
2 July 2016 -
2 July 2023
30 April 2017 -
30 April 2024
29 April 2018 -
29 April 2025
4 May 2019 -
4 May 2026
2 July 2016 -
2 July 2023
30 April 2017 -
30 April 2024
29 April 2018 -
29 April 2025
4 May 2019 -
4 May 2026
1 July 2019 -
1 January 2020
LTIP awards granted in respect of Ray Kelvin and Lindsay Page represent 24% of the total number of LTIP awards granted during the period (2016:
24%). The balance included other senior executives across the Group.
60
DIRECTORS’ REPORT
DIRECTORS’ SHAREHOLDING (AUDITED)
The Directors who held office during the period and at 28 January 2017 had the following interests, including family
interests, in the shares of the Company.
UNVESTED
VESTED BUT
UNEXERCISED
Director
Shares beneficially owned
as at 28 January 2017
Share options granted
under 2013 LTIP subject to
performance conditions
Ray Kelvin
Lindsay Page
David Bernstein
Ronald Stewart
Anne Sheinfield
15,540,280
81,229
6,000
313
-
Andrew Jennings
5,000
82,037
77,689
-
-
-
-
Share options
granted under Ted
Baker Sharesave
Scheme without
performance
conditions
-
1,875
-
-
-
-
LTIP 2013 share
options
Shareholding
guideline met
32,106
-
-
-
-
-
Yes
Yes
N/A
N/A
N/A
N/A
PAYMENTS FOR LOSS OF OFFICE (AUDITED)
No payments were made in the period for loss of office (2016: £nil).
PAYMENTS TO PAST DIRECTORS (AUDITED)
No payments were made in the period to past Directors (2016: £nil).
61
Ted Baker Plc Annual Report and Accounts 2016/17 DIRECTORS’ REPORT
PERFORMANCE GRAPH AND TABLE
The following graph charts the total cumulative shareholder return of the Company from January 2009 to January 2017.
Ted Baker Plc
FTSE All Share Personal Goods
FTSE All Share
1,200
1,100
1,000
900
800
700
600
500
400
300
200
100
0
January
‘09
January
‘10
January
‘11
January
‘12
January
‘13
January
‘14
January
‘15
January
‘16
January
‘17
The graph above shows the Company’s performance against the FTSE All Share Personal Goods index, the sector
against which it is tracked by market analysts, and also against the FTSE All Share index to illustrate the Company’s
performance in the general market.
62
PRECISION WEAVING DIRECTORS’ REPORT
CEO REMUNERATION
Total remuneration
% of maximum performance related bonus paid
% of maximum LTIP vesting
2010
£’000
2011
£’000
2012
£’000
2013
£’000
493
Note 1
527
Note 1
569
Note 1
4,126
Note 2
75%
0%
76%
0%
67%
0%
0%
100%
2014
£’000
701
90%
0%
2015
£’000
757
100%
0%
2016
£’000
665
50%
0%
2017
£’000
1,217
Note 3
0%
100%
Note 1: The performance criteria in respect of LTIP schemes due to vest in these years were not met and therefore no value crystallised under
these schemes.
Note 2: The amount included in total remuneration in respect of variable LTIP awards in 2013 comprises the number of nil-cost option awards
vesting under the Ted Baker 2009 Value Creation Plan in August 2012 at the share price on the date the awards first became exercisable.
Under this scheme awards converted into a number of options which was dependent upon the satisfaction of various performance targets.
These options were exercisable over two tranches, the first in October 2012 and the second in October 2013.
Note 3: The first of the awards made under the Ted Baker Plc Long-Term Incentive Plan 2013 vested in full in July 2016. Subsequent awards
will vest, dependent on performance conditions being met, annually in future years.
PERCENTAGE CHANGE IN CEO’S REMUNERATION
The table below shows how the percentage change in the CEO’s total remuneration excluding share-based payments
in 2016 and 2017 compares with the percentage change in the average remuneration for all employees within
the Group.
Chief Executive Officer
All employees
SALARY AND BENEFITS CHANGE
ANNUAL BONUS CHANGE
4.1%
11.7%
(100%)
(100%)
RELATIVE IMPORTANCE OF SPEND
The following table sets out the percentage change in dividends and employee remuneration for the period ended
28 January 2017, compared to the period ended 30 January 2016.
Dividends*
Employee remuneration (£’000s)
2017
£’000
23,658
87,642
2016
£’000
21,018
76,885
PERCENTAGE CHANGE
12.6%
14.0%
*The value of dividends disclosed is the total interim dividend paid during the period and the final dividend proposed for the respective period.
64
REMUNERATION COMMITTEE AND ADVISERS
REMUNERATION COMMITTEE
The Remuneration 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 Remuneration Committee. It approves
all service contracts and other contracts between
the Company and its Executive Directors and senior
executives and, if thought fit, approves any outside
interests and other directorships of the Executive
Directors. The Remuneration Committee also reviews
and approves the design of the Company’s long-term
incentive schemes and determines the level of awards to
be made and approves the performance targets.
The Remuneration Committee is chaired by Anne
Sheinfield and its other members are David Bernstein,
Ronald Stewart and Andrew Jennings. Ronald Stewart
and Andrew Jennings are independent NEDs as noted
in the corporate governance statements. In line with
Provision D.2.1 of the Code, David Bernstein, as Non-
Executive Chairman, may be a member, but not chair
the Remuneration Committee, as he was considered to
be independent on appointment.
The terms of reference for the Remuneration
Committee are available on the Company’s website at
www.tedbakerplc.com.
DIRECTORS’ REPORT
STATEMENT OF IMPLEMENTATION OF
REMUNERATION POLICY IN THE FOLLOWING
FINANCIAL PERIOD
The Remuneration Policy in effect during the period was
approved at the Annual General Meeting on 10 June
2014 and took effect for the three years commencing
on that date. The updated policy outlined in Section B of
the Directors’ Remuneration Report will be voted upon
at the Annual General Meeting on 13 June 2017 and,
provided it is approved, will take effect from that date.
The Remuneration Committee approved base
salaries that will be in force from 1 April 2017 of
£451,675 for the Company Chief Executive Officer
and £431,375 for the Chief Operating Officer & Group
Finance Director. The 1.5% increase in the base salary
of Executive Directors was determined after considering
inflation and other global economic factors, and is
consistent with the general increase in salary proposed
for employees across the Group.
Fees of £85,000 for the Chairman, £60,000 for
Ron Stewart and £55,000 for both Anne Sheinfield and
Andrew Jennings were approved by a subcommittee of
the Board and will be in force from 1 April 2017. The
decision to increase fees payable to the Non-Executive
Directors followed the conclusions of an external
benchmarking report carried out during the period,
which revealed that existing fees were below median.
The decision to increase fees is consistent with Company
policy to remunerate at a median level.
The target profit before tax, annual bonus and
exceptional items, on which the 2017/18 annual
bonus is based, is derived after considering consensus
market analyst expectations and maximum bonus pool
thresholds in line with the existing annual bonus policy.
The target for the 52 weeks ending 27 January 2018 is
not disclosed for reasons of commercial sensitivity, but
will be disclosed in the annual accounts for that period.
A further award of options under the 2013 LTIP will
be made in the 52 weeks ending 27 January 2018.
Awards to Executive Directors under this scheme will
likely be based on up to 150% of basic salary. However,
the Board has approval from shareholders to grant
awards of up to 200% of basic salary under this scheme
in exceptional circumstances. The performance criteria
for the next round of 2013 LTIP awards will be the same
as those applied to the four awards previously made
under the 2013 LTIP.
65
Ted Baker Plc Annual Report and Accounts 2016/17
DIRECTORS’ REPORT
ADVISERS
During the period, the Remuneration Committee was assisted in its work by PwC, which was appointed by the Company
in consultation with the Remuneration Committee. PwC is retained by the Remuneration Committee as its independent
executive remuneration adviser. The Remuneration Committee assesses advice provided by PwC from time to time to
consider whether it is independent. Comfort is obtained from PwC’s adherence to the Remuneration Consultants Group
Code of Conduct.
ADVISER
APPOINTED BY SERVICE PROVIDED TO
THE REMUNERATION
COMMITTEE
FEES BASED ON
HOURLY RATES
OTHER SERVICES PROVIDED
TO THE COMPANY
PricewaterhouseCoopers LLP
Company
£19,000 Tax, legal, project management
and accounting services to
the Group.
Remuneration and
benchmarking review.
Review of Directors’
Remuneration Report
Advice on impact of
current trends on executive
remuneration and impact
for the Group.
STATEMENT OF VOTING AT GENERAL MEETING
At the last Annual General Meeting, votes on the remuneration report (excluding the Directors’ Remuneration Policy)
were cast as follows,
Approval of the 2016 Directors’
Remuneration Report
FOR
%
NUMBER
93.09%
32,843,743
AGAINST
%
NUMBER
1.15%
406,873
WITHHELD
%
NUMBER
REASONS FOR
VOTES AGAINST,
IF APPLICABLE
ACTION TAKEN
BY COMMITTEE
5.76%
2,031,469
The number of
votes against the
Remuneration
Report was not
considered to
be significant
N/A
The Directors’ Remuneration Policy is subject to a binding vote by shareholders every three years and was last
approved at the Annual General Meeting held on 10 June 2014.
FOR
%
NUMBER
AGAINST
%
NUMBER
WITHHELD
%
NUMBER
REASONS FOR
VOTES AGAINST,
IF APPLICABLE
Approval of Directors’ Remuneration
Policy included within the 2014
Directors’ Remuneration Report
97.21%
2.79%
38,322,794
1,099,638
0.00%
-
The number of
votes against
the LTIP was not
considered to
be significant
ACTION
TAKEN BY
REMUNERATION
COMMITTEE
N/A
The updated Directors’ Remuneration Policy outlined in Section B of this report will be voted upon at the Annual
General Meeting on 13 June 2017 and, provided it is approved, will take effect from that date.
The Directors’ Remuneration Report was approved on behalf of the Board on 23 March 2017 and signed
on its behalf by:
Anne Sheinfield
Chairman of the Remuneration Committee
66
DIRECTORS’ REPORT
OTHER STATUTORY AND
REGULATORY 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 28 January 2017. The comparative
period is for the 52 weeks ended 30 January 2016.
The information on the following pages, together
with the sections of the Annual Report incorporated by
reference, constitutes the Strategic Report:
• Chairman's Statement on page 4
• Business Model and Strategy on page 8
• Business Review on page 12
• Financial Review on page 18
• Principal Risks and Uncertainties on page 20
• Sustainability on page 24
• People on page 28
The information on the following pages, together
with the sections of the Annual Report incorporated by
reference, constitutes the Directors’ Report:
• Governance on page 32
• Board of Directors on page 36
• Other Statutory and Regulatory Disclosures on page 67
The Directors’ Report also includes additional
disclosures required by the UKLA’s Disclosure and
Transparency Rules and Listing Rules.
For the purposes of DTR 4.1.5R(2) and DTR 4.1.8,
this Directors’ Report and the Strategic Report comprise
the Management Report.
NAME OF HOLDER
Ray Kelvin
Capital Research & Management
Standard Life Investments
SUBSIDIARY UNDERTAKINGS
The subsidiary undertakings of the Group in the period
are listed in Note 12 to the accounts. The Group also has
branches operating in Eire and Portugal.
RESULTS AND DIVIDENDS
The audited accounts for the 52 weeks ended 28 January
2017 are set out on pages 78 to 121. The Group profit
for the 52 weeks, after taxation, was £46.6m (2016:
£44.2m). The Directors recommend a final dividend of
38.8p per ordinary share (2016: 34.6p) payable on 23
June 2017 to ordinary shareholders on the register on
19 May 2017 which, together with the interim dividend
of 14.8p per share (2016: 13.2p) paid on 18 November
2016, makes a total of 53.6p per share for the period
(2016: 47.8p). The Group maintains a dividend policy of
broadly achieving a 2.1x dividend cover.
DIRECTORS
The Directors during the period were those listed on
page 36. Details of the Directors’ beneficial interests
in the shares of the Company are shown on page 69.
Details of their interests in share options are given in the
Directors’ Remuneration Report on page 46. Brief details
of the career of each Director are set out on page 36.
SUBSTANTIAL SHAREHOLDINGS
As at 28 January 2017, 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:
NUMBER
15,540,280
4,308,842
2,407,274
% HELD
35.18
9.76
5.45
Pursuant to LR9.8.6(1), the Company confirms that it was notified on 18 April 2017 that Standard Life Investments holds 2,338,694 ordinary shares (5.29%)
in the share capital of the Company. The Company was not notified of any other notifiable transactions between the end of the period and 18 April 2017.
SHARE CAPITAL AND CONTROL
As at 28 January 2017, the Company’s authorised share
capital was 80,000,000 ordinary shares of 5p each (in
nominal value). Details of the Company’s share capital
are shown in Note 20 to the consolidated financial
statements on page 111. As at 28 January 2017 there
were 44,168,656 ordinary shares in issue. The rights
and obligations attaching to the Company’s shares,
in addition to those conferred on their holders by law,
are set out in the Articles of Association. The holders of
ordinary shares are entitled to receive all shareholder
documents, attend and speak at general meetings of
the Company, exercise all voting rights and receive
dividends and participate in other distributions of assets.
67
Ted Baker Plc Annual Report and Accounts 2016/17
The Articles provide that any Director who was
appointed by the Board during the period shall retire
at the next Annual General Meeting following his or
her appointment, but that Director may then stand for
election by the Company's shareholders. Additionally,
at each Annual General Meeting one third of the
Directors must retire from office and each Director
must retire at least once every three years. Retiring
Directors may stand for re-election by the Company's
shareholders. Notwithstanding the provisions of the
Articles, the Company's current practice, in accordance
with the recommendations of the Code, is to require
each Director to stand for election or re-election by the
Company's shareholders on an annual basis. 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’ REPORT
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. Other than as set out in the
Articles of Association, the Company is not aware of any
agreements between shareholders restricting the voting
rights or the right to transfer shares in the Company.
The Directors were granted authority at the 2016
Annual General Meeting (the “2016 AGM”) to allot
shares in the capital of the Company up to an aggregate
nominal amount of £732,857 (being approximately one
third of the issued share capital prior to the 2016 AGM).
This authority is due to lapse at the Annual General
Meeting in 2017 (the “2017 AGM”). At the 2017 AGM,
shareholders will be asked to grant a similar allotment
authority. The Directors were also empowered at the
2016 AGM to make non-pre-emptive issues for cash up
to an aggregate nominal amount of £219,857 (which,
in line with the revised Pre-Emption Group guidelines,
reflected the customary disapplication power over 5%.
of the issued share capital prior to the 2016 AGM,
together with a further 5%. provided that the additional
element is only used in connection with acquisitions and
specified capital investments). This power is also due to
lapse at the 2017 AGM and shareholders will be asked
to grant a similar power. In line with best practice and
the Pre-Emption Group’s latest guidance, shareholders
will be asked to approve two separate resolutions in
respect of the customary and additional rights, in the
form of the Pre-Emption Group’s template resolutions.
The Company did not seek an authority at the 2016 AGM
to buy back its own shares and there was no authority in
place as at the end of the period.
The Articles of Association provide
the
Company's shareholders may appoint any person
to act as a Director or, on special notice, remove any
Director from office by passing an ordinary resolution at
a general meeting. The Articles also empower the Board
to appoint any person as a Director.
that
The Articles set out when a Director must leave
office. These include where a Director resigns, becomes
bankrupt or is prohibited from acting as a Director for
other reasons, is absent from the business for the long-
term or is required to resign by all the other Directors.
68
DIRECTORS’ REPORT
DIRECTORS’ INTERESTS
The Directors who held office at 28 January 2017 and their connected persons had interests in the shares of the
Company as shown in the table below.
Ray Kelvin
Lindsay Page
David Bernstein
Ron Stewart
Andrew Jennings
% OF SHARE
28 JANUARY 2017
30 JANUARY 2016
CAPITAL
35.18%
0.18%
-
-
-
BENEFICIAL NO.
BENEFICIAL NO.
15,540,280
15,540,280
81,229
6,000
313
5,000
81,229
6,000
313
5,000
Pursuant to LR 9.8.6R(1) there has been no change in the beneficial interests of the Directors between the end of
the period and 18 April 2017.
CONTROLLING SHAREHOLDER
Pursuant to LR 9.8.4R(14)(a), the Directors confirm
that the Company entered into a written and legally
binding relationship agreement with Ray Kelvin on 14
November 2014 which is intended to ensure that Ray
Kelvin complies with the independence provisions set
out in LR 6.1.4D R (the “Relationship Agreement”).
Pursuant to LR 9.8.4R(14)(c)(i), the Directors confirm
that the Company has complied with the independence
provisions set out in the Relationship Agreement during
the period. In addition, pursuant to LR 9.8.4R(14)(c)
(ii), the Directors confirm that, so far as the Company is
aware, Ray Kelvin and his associates have complied with
the independence provisions set out in the Relationship
Agreement during the period.
This paragraph sets out all information required
by LR9.8.4R that is applicable to the Company during
the period.
DONATIONS
The value of charitable donations made during the
period was £15,617 (2016: £30,580). There were no
political donations made during the period (2016: £nil).
SOCIAL RESPONSIBILITY
Details of the Group’s social, ethical and environmental
responsibility initiatives are set out in the Sustainability
statement on pages 24 to 27.
PEOPLE
Details of the Group’s policies with respect to people
and employees are set out in the People statement on
page 28 to 30.
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 financial risk management
are outlined in Note 23 of the Financial Statements on
pages 114 to 120. Such information is incorporated into
this Directors’ Report by reference.
POST BALANCE SHEET EVENTS
There have been no important events affecting the
Group since the end of the period.
DIRECTORS’ STATEMENT REGARDING
DISCLOSURE OF INFORMATION TO AUDITOR
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 auditor is 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 auditor is aware of any such information.
The report was approved by the Board of Directors
on 23 March 2017 and signed on its behalf by:
Charles Anderson
Finance Director & Company Secretary
69
Ted Baker Plc Annual Report and Accounts 2016/17 DIRECTORS’ REPORT
STATEMENT OF DIRECTORS’
RESPONSIBILITIES IN RESPECT OF
THE ANNUAL REPORT AND THE
FINANCIAL STATEMENTS
The Directors are responsible for preparing the Annual
Report and the 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 period. The Directors are required to
prepare the Group financial statements in accordance
International Financial Reporting Standards
with
(IFRSs) as adopted by the EU and applicable law and
have elected to prepare the parent company financial
statements on the same basis.
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:
Directors’ Report, Directors’ Remuneration Report and
Corporate Governance Statement that complies with
that law and those regulations.
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
FINANCIAL REPORT
We, the Directors of the Company, whose names and
functions are set out on page 36 confirm that to the best
of our knowledge:
• the financial statements, prepared in accordance
with the applicable set of accounting standards, give
a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company and the
undertakings included in the consolidation taken as
a whole; and
• select suitable accounting policies and then apply
• the Management Report, which comprises the
them consistently;
• make judgements and estimates that are
reasonable and prudent;
• state whether they have been prepared in
accordance with IFRSs as adopted by the EU; and
• prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Group and the parent 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.
Under applicable law and regulations, the Directors
are also responsible for preparing a Strategic Report,
Strategic Report and the Directors' Report, includes
a fair review of the development and performance
of the business and the position of the issuer and the
undertakings included in the consolidation taken as
a whole, together with a description of the principal
risks and uncertainties that they face.
We consider the Annual Report and financial
statements, taken as a whole, is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the Group’s position and
performance, business model and strategy.
On behalf of the Board:
Ray Kelvin
Founder &
Chief Executive
23 March 2017
Lindsay Page
Chief Operating Officer &
Group Finance Director
23 March 2017
70
L
E
E
OT T O B E R
G
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF TED BAKER
PLC ONLY
OPINIONS AND CONCLUSIONS ARISING
FROM OUR AUDIT
1. OUR OPINION ON THE FINANCIAL
STATEMENTS IS UNMODIFIED
We have audited the financial statements of Ted Baker
Plc for the 52 week period ended 28 January 2017 set
out on pages 78 to 121. In our opinion:
• the financial statements give a true and fair view
of the state of the Group’s and of the parent
company’s affairs as at 28 January 2017 and of the
Group’s profit for the period then ended;
• the Group financial statements have been properly
prepared in accordance with International Financial
Reporting Standards as adopted by the European
Union (IFRSs as adopted by the EU);
• the parent company financial statements have
been properly prepared in accordance with IFRSs
as adopted by the EU and as applied in accordance
with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006 and, as regards the Group financial
statements, Article 4 of the IAS Regulation.
2. OUR ASSESSMENT OF RISKS OF
MATERIAL MISSTATEMENT
In arriving at our audit opinion above on the financial
statements the risks of material misstatement that
had the greatest effect on our audit were as follows
(unchanged from 2016):
• Valuation of Inventory £158.5m
(2016: £125.3m)
Refer to page 37 (Audit Committee statement), page
90 (accounting policy note) and page 109 (financial
statement disclosures).
The risk: Inventory is carried in the Financial
Statements at the lower of cost and net realisable value.
Sales in the fashion industry can be extremely volatile
with consumer demand changing significantly based on
current trends. As a result there is a risk that the carrying
value of inventory exceeds its net realisable value.
Our response: Our procedures were designed
to challenge the adequacy of the Group’s provisions
against inventory by seasonal collection and included:
• testing on a sample basis the controls related to
inventory stock counts and purchases;
• testing on a sample basis that items on the stock
ageing listing by season were classified in the
appropriate ageing bracket;
• assessing, in accordance with the relevant
accounting standards, the inventory cost
methodology and the reasonableness of items
included in the cost of inventory;
• evaluated current year provision by assessing
historical accuracy. We examined the Group’s
historical trading patterns of inventory sold at full
price and inventory sold below full price through
alternative clearance routes, together with the
related margins achieved for each channel. We
used the information on trading patterns to assess
whether the provisions held have historically been
set at an appropriate level; and
• assessing, based on our knowledge of the Group
and the market, the appropriateness of the
provision percentages applied by challenging the
assumptions made by the Directors on the extent to
which older season inventory can be sold through
various channels.
We have also considered the adequacy of the
Group’s disclosures in respect of the levels of provisions
against inventory.
• Valuation of Retail Store Assets (leasehold
improvements, fixtures, fittings, and office
equipment) £80.7m (2016: £62.1m)
Refer to page 37 (Audit Committee statement),
page 89 (accounting policy note) and pages 102 to 103
(financial statement disclosures).
The risk: The Group has invested a significant
amount of capital both within and outside the UK in its
retail store portfolio. Given the relative immaturity of
the brand outside the UK, the payback period is typically
longer than for UK stores. The Group had 462 (2016:
422) stores and 28 (2016: 26) outlets as at 28 January
2017. There is a risk that the carrying value of retail
store leasehold improvements, fixtures, fittings and
office equipment may be overstated if the profitability
expectations for the related stores are adversely
impacted by trading and other conditions that were
not anticipated in the initial business case. The level of
72
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF TED BAKER
PLC ONLY
judgement involved in assessing impairment indicators
on retail stores is one of the key judgemental areas that
our audit is concentrated on.
Our response: Our procedures were designed
to challenge whether there were any indicators of
impairment and the need for any provisions against the
asset carrying value and included:
• Evaluating the methodology, completeness,
and accuracy of the Group’s impairment trigger
assessment. This assessment is undertaken for all
stores regardless of the period of time the store
has been open. This analysis is used to identify
those stores performing below expectations
and accordingly with assets at a greater risk
of impairment;
• For stores identified by the above analysis,
we considered whether there was an indicator
of impairment based on the number of years
the store has been open, as well as the local
market conditions;
• Where there were indicators of impairment,
assessing the cash flow forecasts for that store
against historical performance and knowledge
of the market to check whether the recoverable
amount exceeds the carrying amount of the
leasehold improvements. This included:
- testing the accuracy of the calculations;
- assessing the key assumptions including growth
rates in turnover and margin expectations by
reference to historical rates achieved, the accuracy
of previous forecasts and our understanding of the
maturity of the brand in the particular region;
- considering the appropriateness of the discount
rates applied by benchmarking against other
comparable companies and assessing the key
assumptions applied within the Group’s adjusted
WACC against available external market data; and
- applying sensitivity analysis on the key assumptions
used in the cash flow forecasts to assess the possible
range of outcomes and the overall risk of any
material impairment.
We have also considered the adequacy of the
Group’s disclosures in respect of impairment of retail
fixed assets.
3. OUR APPLICATION OF MATERIALITY AND
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
The materiality for the Group financial statements as a
whole was set at £3.0m (2016: £2.8m) determined with
reference to a benchmark of Group profit before tax of
which it represents 4.8% (2016: 4.8%).
We reported to the Audit Committee any corrected
or uncorrected identified misstatements exceeding
£150,000 (2016: £140,000) in addition to other
identified misstatements that warranted reporting on
qualitative grounds.
Of the Group’s 22 (2016: 23) reporting components,
the Group audit team subjected the 3 (2016: 4) UK
components to an audit for Group reporting purposes
and 1 (2016: 3) US component to specified risk focused
audit procedures performed by component auditors in
the US.
The components within the scope of our work accounted for the following percentages of the Group’s results:
NUMBER OF
COMPONENTS
GROUP
REVENUE
TOTAL PROFITS AND
LOSSES THAT MADE
UP GROUP PROFIT
BEFORE TAX
TOTAL
ASSETS
2017
Audits for group reporting purposes
Specified risk focused audit procedures
TOTAL
2016
Audits for group reporting purposes
Specified risk focused audit procedures
TOTAL
61%
24%
85%
67%
24%
91%
3
1
4
4
3
7
73
92%
4%
96%
82%
9%
91%
64%
22%
86%
67%
23%
90%
Ted Baker Plc Annual Report and Accounts 2016/17 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF TED BAKER
PLC ONLY
the
For
remaining components, we performed
analysis at an aggregated Group level to re-examine
our assessment that there were no significant risks of
material misstatement within these.
The Group audit
instructed component
team
auditors in the US as to the significant areas to be
covered, including where relevant the risks detailed
above and the information to be reported back. The UK
components audits were covered by the Group team.
The Group audit team approved the components’
materialities which ranged from £2.2m - £2.9m (2016:
£2.1m - £2.7m), having regard to the mix of size and
risk profile of the Group across the components.
The Group team visited the component auditor in
the US and telephone conference meetings were held
with the US component auditor. At these meetings the
Group team discussed the audit strategy and the findings
reported to the Group audit team were discussed in more
detail, and any further work required by the Group audit
team was then performed by the US component auditor.
4. OUR OPINION ON OTHER MATTERS
PRESCRIBED BY THE COMPANIES ACT 2006
IS UNMODIFIED
In our opinion:
• the part of the Directors’ Remuneration Report to be
audited has been properly prepared in accordance
with the Companies Act 2006; and
• the information given in the Strategic Report and the
Directors’ Report for the financial period for which
the financial statements are prepared is consistent
with the financial statements.
Based solely on the work required to be undertaken
in the course of the audit of the financial statements and
from reading the Strategic Report and the Directors’ Report:
• we have not identified material misstatements in
those reports; and
• in our opinion, those reports have been prepared in
accordance with the Companies Act 2006.
5. WE HAVE NOTHING TO REPORT ON
THE DISCLOSURES OF PRINCIPAL RISKS
Based on the knowledge we acquired during our audit,
we have nothing material to add or draw attention to in
relation to:
• the Directors’ viability statement on page 23,
concerning the principal risks, their management,
and, based on that, the Directors’ assessment and
expectations of the Group’s continuing in operation
over the next five years to 2022; or
• the disclosures in Note 1 of the financial statements
concerning the use of the going concern basis
of accounting.
6. WE HAVE NOTHING TO REPORT IN
RESPECT OF THE MATTERS ON WHICH WE
ARE REQUIRED TO REPORT BY EXCEPTION
Under ISAs (UK and Ireland) we are required to report to
you if, based on the knowledge we acquired during our
audit, we have identified other information in the Annual
Report that contains a material inconsistency with either
that knowledge or the financial statements, or a material
misstatement of fact, or that is otherwise misleading.
In particular, we are required to report to you if:
• we have identified material inconsistencies between
the knowledge we acquired during our audit and
the Directors’ statement that they consider that the
Annual Report and financial statements taken as
a whole is fair, balanced and understandable and
provides the information necessary for shareholders
to assess the Group’s position and performance,
business model and strategy; or
• the Audit Committee statement does not
appropriately address matters communicated by us
to the Audit Committee.
Under the Companies Act 2006 we are required to
report to you if, in our opinion:
• adequate accounting records have not been kept
by the parent company, or returns adequate for our
audit have not been received from branches not
visited by us; or
• the parent company financial statements and the
part of the Directors’ Remuneration Report to be
audited are not in agreement with the accounting
records and returns; or
• certain disclosures of directors’ remuneration
specified by law are not made; or
• we have not received all the information and
explanations we require for our audit.
• Under the Listing Rules we are required to review:
74
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF TED BAKER
PLC ONLY
• the Directors’ statements, set out on page 70,
in relation to going concern and longer-term
viability; and
• the part of the Corporate Governance Statement
on page 32 relating to the Company’s compliance
with the eleven provisions of the 2014 UK Corporate
Governance Code specified for our review.
We have nothing to report in respect of the
above responsibilities.
SCOPE AND RESPONSIBILITIES
As explained more fully in the Directors’ Responsibilities
Statement set out on page 70, the Directors are
responsible for the preparation of the financial
statements and for being satisfied that they give
a true and fair view. A description of the scope of
an audit of financial statements is provided on the
Financial Reporting Council’s website at www.frc.org.
uk/auditscopeukprivate. This report is made solely to
the Company’s members as a body and is subject to
important explanations and disclaimers regarding our
responsibilities, published on our website at www.kpmg.
com/uk/auditscopeukco2014a, which are incorporated
into this report as if set out in full and should be read
to provide an understanding of the purpose of this
report, the work we have undertaken and the basis of
our opinions.
Robert Brent (Senior Statutory Auditor)
for and on behalf of KPMG LLP,
Statutory Auditor
Chartered Accountants
15 Canada Square
London
E14 5GL
23 March 2017
75
Ted Baker Plc Annual Report and Accounts 2016/17
EASY O
N T
H
E
E
Y
E
S
EASY O
N T
H
E
E
Y
E
S
FINANCIAL STATEMENTS
GROUP AND COMPANY PRIMARY FINANCIAL STATEMENTS
GROUP INCOME STATEMENT
FOR THE 52 WEEKS ENDED 28 JANUARY 2017
NOTE
52 WEEKS ENDED
28 JANUARY 2017
52 WEEKS ENDED
30 JANUARY 2016
Revenue
Cost of sales
GROSS PROFIT
Distribution costs
Administrative expenses
Administrative expenses before exceptional costs
Exceptional costs
Licence income
Other operating expense
OPERATING PROFIT
Finance income
Finance expense
Share of profit of jointly controlled entity, net of tax
PROFIT BEFORE TAX
PROFIT BEFORE TAX AND EXCEPTIONAL COSTS
Exceptional costs
Income tax expense
PROFIT FOR THE PERIOD
EARNINGS PER SHARE
Basic
Diluted
2
3
4
4
12
3
6
9
£’000
530,986
(207,257)
323,729
(208,221)
(70,103)
(65,590)
(4,513)
18,237
(1,145)
62,497
1,597
(3,373)
550
61,271
65,784
(4,513)
(14,703)
46,568
105.7p
104.5p
£’000
456,169
(183,147)
273,022
(169,762)
(57,435)
(57,435)
-
14,384
(840)
59,369
531
(1,931)
695
58,664
58,664
-
(14,429)
44,235
100.6p
99.3p
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE 52 WEEKS ENDED 28 JANUARY 2017
52 WEEKS ENDED
28 JANUARY 2017
52 WEEKS ENDED
30 JANUARY 2016
PROFIT FOR THE PERIOD
OTHER COMPREHENSIVE INCOME
ITEMS THAT MAY BE RECLASSIFIED TO THE INCOME STATEMENT
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 differences on translation of foreign operations net of tax
OTHER COMPREHENSIVE INCOME FOR THE PERIOD
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD
78
£‘000
46,568
10,521
(5,435)
5,580
10,666
57,234
£‘000
44,235
951
(669)
2,599
2,881
47,116
FINANCIAL STATEMENTS
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE 52 WEEKS ENDED
28 JANUARY 2017
SHARE
CAPITAL
SHARE
PREMIUM
TRANSLATION
RESERVE
RETAINED
EARNINGS
CASH
FLOW
HEDGING
RESERVE
TOTAL EQUITY
ATTRIBUTABLE
TO EQUITY
SHAREHOLDERS
OF THE PARENT
BALANCE AT 30 JANUARY 2016
2,199
9,617
1,650
2,311
156,822
172,599
£’000
£’000
£’000
£’000
£’000
£’000
COMPREHENSIVE INCOME
FOR THE PERIOD
Profit for the period
Exchange differences on translation
of foreign operations
Current tax on foreign currency translation
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
Deferred tax associated with movement
in hedging reserve
TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD
TRANSACTIONS WITH OWNERS
RECORDED DIRECTLY IN EQUITY
Increase in issued share capital
Share-based payments charges
Movement on current and deferred tax on
share-based payments
Dividends paid
TOTAL TRANSACTIONS
WITH OWNERS
-
-
-
-
-
-
-
9
-
-
-
9
-
-
-
-
-
-
-
318
-
-
-
318
-
-
-
11,714
(5,435)
(1,193)
-
46,568
46,568
7,038
(1,458)
-
-
-
-
-
-
-
-
7,038
(1,458)
11,714
(5,435)
(1,193)
5,086
5,580
46,568
57,234
-
-
-
-
-
-
-
-
-
-
-
1,839
281
(21,736)
(19,616)
327
1,839
281
(21,736)
(19,289)
210,544
BALANCE AT 28 JANUARY 2017
2,208
9,935
6,736
7,891
183,774
79
Ted Baker Plc Annual Report and Accounts 2016/17
FINANCIAL STATEMENTS
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE 52 WEEKS ENDED
30 JANUARY 2016
SHARE
CAPITAL
SHARE
PREMIUM
TRANSLATION
RESERVE
RETAINED
EARNINGS
CASH
FLOW
HEDGING
RESERVE
TOTAL EQUITY
ATTRIBUTABLE
TO EQUITY
SHAREHOLDERS
OF THE PARENT
£’000
2,196
£’000
9,331
£’000
1,368
£’000
(288)
£’000
£’000
127,967
140,574
BALANCE AT 31 JANUARY 2015
COMPREHENSIVE INCOME
FOR THE PERIOD
Profit for the period
Exchange differences on translation
of foreign operations
Current tax on foreign
currency translation
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
Deferred tax associated with movement
in hedging reserve
TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD
TRANSACTIONS WITH OWNERS
RECORDED DIRECTLY IN EQUITY
Increase in issued share capital
Share-based payments charges
Movement on current and deferred
tax on share-based payments
Dividends paid
TOTAL TRANSACTIONS
WITH OWNERS
-
-
-
-
-
-
-
3
-
-
-
3
-
-
-
996
(669)
(45)
282
-
-
-
-
-
-
44,235
44,235
3,242
(643)
-
-
-
-
-
-
-
-
3,242
(643)
996
(669)
(45)
2,599
44,235
47,116
-
-
-
-
-
-
2,019
1,144
(18,543)
(15,380)
289
2,019
1,144
(18,543)
(15,091)
172,599
BALANCE AT 30 JANUARY 2016
2,199
1,650
2,311
156,822
-
-
-
-
-
-
-
286
-
-
-
286
9,617
80
FINANCIAL STATEMENTS
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE 52 WEEKS ENDED 28 JANUARY 2017
BALANCE AT 30 JANUARY 2016
Profit for the period
TRANSACTIONS WITH OWNERS RECORDED DIRECTLY
IN EQUITY
Increase in issued share capital
Share-based payments charges
Share-based payments charges for awards granted to
subsidiary employees
Dividends paid
TOTAL TRANSACTIONS WITH OWNERS
SHARE
CAPITAL
SHARE
PREMIUM
OTHER
RESERVES
RETAINED
EARNINGS
TOTAL
EQUITY
£’000
2,199
£’000
£’000
£’000
£’000
9,617
19,060
38,697
69,573
-
9
-
-
-
9
-
318
-
-
-
-
-
-
27,246
27,246
-
219
327
219
1,620
-
1,620
-
(21,736)
(21,736)
318
1,620
(21,517)
(19,570)
BALANCE AT 28 JANUARY 2017
2,208
9,935
20,680
44,426
77,249
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE 52 WEEKS ENDED 30 JANUARY 2016
BALANCE AT 31 JANUARY 2015
Profit for the period
TRANSACTIONS WITH OWNERS RECORDED DIRECTLY
IN EQUITY
Increase in issued share capital
Share-based payments charges
Share-based payments charges for awards granted to
subsidiary employees
Dividends paid
TOTAL TRANSACTIONS WITH OWNERS
SHARE
CAPITAL
SHARE
PREMIUM
OTHER
RESERVES
RETAINED
EARNINGS
TOTAL
EQUITY
£’000
2,196
-
3
-
-
-
3
£’000
9,331
-
286
-
-
-
£’000
£’000
£’000
17,287
32,978
61,792
-
-
-
24,016
24,016
-
246
289
246
1,773
-
1,773
-
(18,543)
(18,543)
286
1,773
(18,297)
(16,235)
BALANCE AT 30 JANUARY 2016
2,199
9,617
19,060
38,697
69,573
81
Ted Baker Plc Annual Report and Accounts 2016/17 FINANCIAL STATEMENTS
GROUP AND COMPANY BALANCE SHEET
AT 28 JANUARY 2017
NOTE
GROUP
28 JANUARY
2017
GROUP
30 JANUARY
2016
COMPANY
28 JANUARY
2017
COMPANY
30 JANUARY
2016
Intangible assets
Property, plant and equipment
Investments in subsidiary
Investment in equity accounted investee
Deferred tax assets
Prepayments
NON-CURRENT ASSETS
Inventories
Trade and other receivables
Amount due from equity accounted investee
Derivative financial assets
Cash and cash equivalents
CURRENT ASSETS
Trade and other payables
Bank overdraft
Term loan
Income tax payable
Provisions for liabilities and charges
Derivative financial liabilities
CURRENT LIABILITIES
Deferred tax liability
Provisions for liabilities and charges
Term loan
NON-CURRENT LIABILITIES
NET ASSETS
EQUITY
Share capital
Share premium
Other reserves
Translation reserve
Retained earnings
TOTAL EQUITY ATTRIBUTABLE TO EQUITY
SHAREHOLDERS OF THE PARENT COMPANY
TOTAL EQUITY
10
11
12
12
13
14
15
12
16
17
18
17
23
19
16
13
19
23
20
20
20
20
20
£’000
24,445
£’000
17,247
144,354
123,397
£’000
£’000
-
-
-
-
-
1,897
4,446
401
-
23,102
21,482
1,641
6,313
414
-
-
-
-
-
-
175,543
149,012
23,102
21,482
158,500
59,251
653
8,974
125,323
49,303
563
2,850
-
-
51,932
47,486
-
-
-
-
615
21,401
13,295
2,238
248,779
191,334
54,170
48,101
(80,995)
(58,074)
(6,000)
(10,327)
(915)
(616)
(61,088)
(37,869)
(1,500)
(8,382)
-
(352)
(23)
(10)
-
-
-
-
-
-
-
-
-
-
(156,927)
(109,191)
(23)
(10)
(2,349)
(2,002)
(56)
-
(52,500)
(58,500)
(56,851)
(58,556)
-
-
-
-
-
-
-
-
210,544
172,599
77,249
69,573
2,208
9,935
6,736
7,891
2,199
9,617
1,650
2,311
2,208
9,935
2,199
9,617
20,680
19,060
-
-
183,774
156,822
44,426
38,697
210,544
172,599
210,544
172,599
77,249
77,249
69,573
69,573
These financial statements were approved by the Board of Directors on 23 March 2017 and were signed on its behalf by:
Lindsay Page
Director
Company number: 03393836
82
FINANCIAL STATEMENTS
GROUP AND COMPANY CASH FLOW STATEMENT
FOR THE 52 WEEKS ENDED 28 JANUARY 2017
CASH GENERATED FROM OPERATIONS
Profit for the period
Adjusted for:
Income tax expense
Depreciation and amortisation
Impairment
Loss on disposal of property, plant and equipment
Share-based payments
Net finance expense
Net change in derivative financial assets and liabilities carried at fair value
through profit or loss
Share of profit in joint venture
Decrease in non-current prepayments
Increase in inventory
Increase in trade and other receivables
Increase in trade and other payables
Increase in provisions for liabilities and charges
Interest paid
Income taxes paid
GROUP
52 WEEKS
ENDED
28 JANUARY
2017
GROUP
52 WEEKS
ENDED
30 JANUARY
2016
£’000
£’000
COMPANY
52 WEEKS
ENDED
28 JANUARY
2017
£’000
COMPANY
52 WEEKS
ENDED
30 JANUARY
2016
£’000
46,568
44,235
27,246
24,016
14,703
20,966
-
416
1,839
1,776
677
(550)
59
(27,128)
(16,335)
20,392
2,917
(2,886)
14,429
14,929
188
58
2,019
1,400
840
(695)
52
(12,142)
(10,805)
1,566
-
(1,376)
(10,644)
(13,127)
-
-
-
-
-
-
219
247
-
-
-
-
-
-
-
-
-
-
(4,446)
(5,977)
13
-
-
-
-
-
-
-
NET CASH GENERATED FROM OPERATING ACTIVITIES
52,770
41,571
23,032
18,286
CASH FLOW FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment and intangibles
(43,753)
(89,535)
Proceeds from sale of property, plant and equipment
Investment in subsidiaries
Dividends received from joint venture
Interest received
93
-
294
15
-
-
344
-
NET CASH FROM INVESTING ACTIVITIES
(43,351)
(89,191)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from term loan
Repayment of term loan
Dividends paid
Proceeds from issue of shares
NET CASH FROM FINANCING ACTIVITIES
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
Net cash and cash equivalents at the beginning of the period
Exchange rate movement
-
60,000
(1,500)
-
327
(22,909)
(13,490)
(24,574)
1,391
289
41,746
(5,874)
(18,824)
124
NET CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
(36,673)
(24,574)
Cash and cash equivalents at the end of the period
Bank overdraft at the end of the period
21,401
13,295
(58,074)
(37,869)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,623
615
-
2,238
2,238
-
32
583
-
615
615
-
615
(21,736)
(18,543)
(21,736)
(18,543)
327
289
(21,409)
(18,254)
NET CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
(36,673)
(24,574)
2,238
83
Ted Baker Plc Annual Report and Accounts 2016/17 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 Company
financial statements are set out below. These policies
have been consistently applied to all the periods
presented, unless otherwise stated.
A) BASIS OF PREPARATION
the consolidated and Company financial
Both
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 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 4 to
19. The financial position of the Group, its cash flows,
liquidity position and borrowing facilities are described
in the Chairman’s Statement on pages 4 to 6. In addition,
Note 23 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.
to
As highlighted
the financial
in Note 23
statements, the Group meets its day-to-day working
capital requirements through a committed overdraft
facility expiring in March 2018 which is a multi-
currency revolving credit facility with The Royal Bank of
Scotland and Barclays. The facility will be used to the
extent necessary to fund working capital and capital
expenditure to support the Group’s growth strategy.
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
84
twelve months from the date of signing these financial
statements, 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 certain 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
No new standards, amendments or interpretations,
effective for the first time for the period beginning on or
after 31 January 2016, have had a material impact on
the Group or Company.
IFRS 15, ‘Revenue from Contracts with Customers’
which is effective from 1 January 2018 has been
considered by the Group and it was concluded this will
not be significant to the Group’s financial statements in
the future.
At the balance sheet date there are a number
of new standards and amendments
to existing
standards in issue but not yet effective. None of these
isexpected to have a significant effect on the financial
statements of the Group or Company, except the
D
E
UIT
R
F
&
D
E
T
I
U
S
FINANCIAL STATEMENTS
following, set out below:
IFRS 9, ‘Financial instruments’, which is effective for
periods beginning on or after 1 January 2018, replaces
IAS 39 and addresses the classification, measurement
and recognition of financial assets and financial
liabilities. This was endorsed by the EU in November
2016 and as such the impact on the Group is currently
being assessed.
IFRS 16, ‘Leases’ addresses the definition of a lease,
recognition and measurement of leases and establishes
principles for reporting useful information to users of
financial statements about the leasing activities of both
lessees and lessors. A key change arising from IFRS 16
is that most operating leases will be accounted for on
balance sheet for lessees. The standard replaces IAS
17 ‘Leases’, and related interpretations. The standard
is effective for annual periods beginning on or after 1
January 2019. The quantitative impact of IFRS 16 on
the Group’s net assets and results is being assessed.
IFRS 16 is expected to have a material impact on the
balance sheet as both assets and liabilities will increase
and is also expected to have a material impact on key
components within the income statements because
operating lease rental charges will be replaced by
depreciation and finance costs. IFRS 16 will not have
any impact on the underlying commercial performance
of the Group or the cash flow generated in the period.
B) BASIS OF CONSOLIDATION
The consolidated accounts include the accounts of the
Company and its subsidiary undertakings made up to 28
January 2017. 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 period 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.
its power over the entity. In assessing control, the Group
takes into consideration potential voting rights that are
currently exercisable. The acquisition date is the date
on which control is transferred to the acquirer. The
financial statements of subsidiaries are included in the
consolidated financial statements from the date that
control commences until the date that control ceases.
Losses applicable to the non-controlling interests in a
subsidiary are allocated to the non-controlling interests
even if doing so causes the non-controlling interests to
have a deficit balance.
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.
Subsidiaries are entities controlled by the Group. The
Group controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through
Exchange differences arising from a monetary
item receivable from or payable to a foreign entity, the
settlement of which is neither planned nor likely in the
foreseeable future, are considered to form part of a net
86
FINANCIAL STATEMENTS
investment in a foreign operation and are recognised
directly in equity in the translation reserve.
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 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.
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 a customer. Wholesale revenue is recognised
when title has passed in accordance with the individual
terms of trade. Licence income receivable from licencees
is accrued as earned on the basis of the terms of the
relevant licence agreement, which is typically on the
basis of a minimum payment spread over the licence
period and a variable amount based on turnover.
Accrued income is from licence income earned but not
billed in the period.
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. Cash
refunds are available to customers returning unwanted
products with proof of purchase within 14 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
87
expenses, over the term of the lease.
Certain rental expenses are determined on the basis
of revenue achieved in specific retail locations and
are accrued for on that basis. The Group engages in
lease and concession arrangements that include fixed
and variable elements, depending on the terms of the
underlying agreement. The Group has disclosed in Note
3 the amounts charged in the period, and in Note 22
sets out the firm commitments for future periods.
The Group’s intangible asset, 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 period 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 granted under the Sharesave Scheme
and the Ted Baker Plc Long-Term Incentive Plan are
measured at fair value at the date of grant using
the Black-Scholes and Monte-Carlo pricing models
respectively. The pricing models take 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 fulfilling 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.
Ted Baker Plc Annual Report and Accounts 2016/17 FINANCIAL STATEMENTS
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.
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 and interest rate
exposures. Derivatives are recognised initially at fair
value. 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 foreign currency and interest
rate derivatives which are designated as effective
hedges of future cash flows are recognised in equity in
the cash flow hedging reserve, and remain there until
the forecast transaction occurs. When the hedged item
is a non-financial asset, the amount recognised in equity
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 the
income statement in the same period that the hedged
item affects the income statement.
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.
Changes in the fair value of foreign currency
derivatives which are ineffective or do not meet the
criteria for hedge accounting are recognised in the
income statement.
The Group does not hold any
fair value
hedging instruments.
88
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.
Expenditure on development activities is capitalised
if the product is technically and commercially feasible
and the Group intends and has the technical ability and
sufficient resources to complete development, future
economic benefits are probable and if the Group can
measure reliably the expenditure attributable to the
intangible asset during its development. Development
activities involve a plan or design for the production
improved products or
of new or substantially
processes. The expenditure capitalised includes direct
labour and an appropriate proportion of overheads.
FINANCIAL STATEMENTS
Capitalised development expenditure is stated at cost
less accumulated amortisation and less accumulated
impairment losses.
Amortisation is charged to the income statement
on a straight-line basis over the estimated useful lives
of intangible assets. Key money is not amortised but
systematically tested for impairment at each balance
sheet date as the Directors are of the opinion the
residual value of the asset is in excess of the carrying
value. Other intangible assets are amortised from the
date they are available for use. The estimated useful
lives are as follows:
Key money:
No amortisation charged.
Computer software:
4 – 8 years.
Computer software under development:
Assets under development are stated at cost less transfers to completed assets when substantially
all of the activities necessary for the asset to be ready for use have occurred.
L) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.
Depreciation is provided on property, plant and equipment at rates calculated to write off the cost, less estimated
residual value, of each asset on the following bases:
Freehold land:
Freehold buildings:
Leasehold improvements:
Not depreciated.
Straight line over 50 years.
Straight line over the shorter of the period of the unexpired term of the lease or the useful
economic life of the improvement.
Fixtures, fittings and office equipment:
20% to 25% per annum on a straight-line basis apart from computer equipment, which is 33% per
annum on a straight-line basis or over the expected useful economic life of the asset.
Motor vehicles:
25% per annum on a straight-line basis over the expected useful economic life of the asset.
Assets under construction:
Assets in the course of construction are stated at cost less transfers to completed assets when
substantially all of the activities necessary for the asset to be ready for use have occurred.
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) IMPAIRMENT OF PROPERTY, PLANT
AND EQUIPMENT AND INTANGIBLE ASSETS
Assets that are subject to depreciation or 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 use a pre-
tax discount rate derived from the Group’s adjusted
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
loss subsequently
impairment
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
89
Ted Baker Plc Annual Report and Accounts 2016/17 FINANCIAL STATEMENTS
if no impairment loss had been recognised for the
asset in prior years. A reversal of an impairment loss is
recognised in income immediately.
N) INVESTMENTS
Investments in subsidiaries by the Company are shown
at cost less accumulated impairment losses which are
recognised in the income statement.
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 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.
90
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) PROVISIONS
A provision is recognised in the balance sheet when the
Group has a present legal or constructive obligation as
a result of a past event, it is more likely than not that an
outflow of economic benefits will be required to settle
the obligation and the obligation can be estimated
reliably. Provisions are discounted if the impact on the
provision is deemed to be material.
FINANCIAL STATEMENTS
W) ACCOUNTING ESTIMATES
AND JUDGMENTS
The Directors have made significant accounting
estimates and judgements in applying the Group’s
accounting policies in the following areas:
IMPAIRMENT
Leasehold improvements for stores are identified
for further impairment testing primarily on the basis
of current and projected performance, with growth
assumptions based on Directors’ knowledge and
experience. Given the relative immaturity of the brand
outside the UK, the payback period is typically longer
and it is not uncommon for new stores to make losses
in their start-up phase. Judgment is therefore applied
by the Directors in assessing the trigger point for
impairment, recognising that losses in the start-up phase
are not always indicative of the future performance of a
particular store. The Directors have used forecast models
and an appropriate pre-tax adjusted weighted average
cost of capital in its property, plant and equipment
impairment calculations.
INVENTORY VALUATION
their knowledge and
The Directors have used
experience of the fashion industry in determining the
level and rates of provisioning required to calculate
the appropriate inventory carrying values. Inventory is
carried in the financial statements at the lower of cost
and net realisable value. Sales in the fashion industry can
be extremely volatile with consumer demand changing
significantly based on current trends. As a result there is
a risk that the cost of inventory exceeds its net realisable
value. Management calculates the inventory provision
on the basis of the ageing profile of what is in stock.
Adjustments are made where appropriate based on
Directors’ knowledge and experience to calculate the
appropriate inventory carrying values.
91
X) NON-GAAP PERFORMANCE MEASURES
Exceptional items are those items which, in the opinion
of the Directors, should be excluded in order to provide
a consistent and comparable view of the underlying
performance of
the Group’s ongoing business.
Generally this will include those items that are largely
one-off and material in nature. Exceptional items are
identified and presented on a consistent basis each
period and a reconciliation of profit before tax and
exceptional items to profit before tax is included in the
financial statements.
Exceptional items in the period included:
• costs in relation to the closure of the Group’s legacy
warehouses in the UK. The Directors believe this cost
to be one-off in nature as the Group does not close
existing warehouses or move to new warehouses
regularly; and
• costs in relation to the closure of a concept store in
London. The Directors believe this cost to be one-off
in nature as the Group does not open concept
stores frequently.
There were no exceptional items in the prior period.
Exceptional items and their related tax impacts are
added back/deducted from profit attributable to the
owners of the Company to arrive at adjusted earnings
per share.
that
The Directors believe
the profit before
exceptional items and adjusted earnings per share
measures provide useful information for shareholders
on the underlying performance of the business as these
exceptional items are one-off and material in nature.
These measures are also consistent with how underlying
business performance is measured internally.
The exceptional profit before tax measure is not a
recognised profit measure under IFRS and may not be
directly comparable with adjusted profit measures used
by other companies.
Constant currency variances are calculated by
applying the previous financial period foreign exchange
rates to current period results in overseas subsidiaries
to remove the impact of exchange rate fluctuations.
The Directors believe this provides a consistent and
comparable view of the underlying performance of the
Group’s ongoing business.
Ted Baker Plc Annual Report and Accounts 2016/17 FINANCIAL STATEMENTS
2. SEGMENT INFORMATION
The Group has three reportable segments: retail,
wholesale and licence income.
For each of the three segments, the Executive
Committee reviews internal management reports on a
four weekly basis.
The accounting policies of the reportable segments
are the same as described in Note 1 on pages 84 to
91. 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 before exceptional items 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.
92
F
E
E
L
I
N
G
H
E
E
L A
N
D H
E
A
R
T
Y
FINANCIAL STATEMENTS
2. SEGMENT INFORMATION CONTINUED
A) SEGMENT REVENUE AND SEGMENT RESULT
52 WEEKS ENDED 28 JANUARY 2017
RETAIL WHOLESALE
LICENSING
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
Exceptional costs
Other operating expense
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 and amortisation
Unallocated depreciation and amortisation
TOTAL DEPRECIATION AND AMORTISATION
Segment assets
Deferred tax assets
Derivative financial assets
Intangible assets – head office
Property, plant and equipment – head office
Other assets
TOTAL ASSETS
Segment liabilities
Income tax payable
Provisions for liabilities and charges
Term loan
Other liabilities
TOTAL LIABILITIES
NET ASSETS
£’000
400,724
(135,704)
£’000
130,262
(71,553)
265,020
58,709
(203,253)
-
61,767
58,709
£’000
-
-
-
-
-
-
-
18,237
61,767
58,709
18,237
61,767
58,709
18,237
-
-
-
-
-
-
-
21,358
-
-
16,588
-
-
-
-
-
-
-
-
-
411
-
-
397
-
-
225,632
83,161
-
-
-
-
-
-
-
-
-
-
-
-
(104,953)
(34,116)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
TOTAL
£’000
530,986
(207,257)
323,729
(203,253)
120,476
18,237
138,713
138,713
(70,558)
(4,513)
(1,145)
62,497
(1,776)
550
61,271
21,769
21,985
43,754
16,985
3,981
20,966
308,793
4,446
8,974
21,718
77,440
2,951
424,322
(139,069)
(10,327)
(2,917)
(58,500)
(2,965)
(213,778)
210,544
Wholesale sales are shown after the elimination of inter-company sales of £89,695,272 (2016: £65,535,811).
94
FINANCIAL STATEMENTS
52 WEEKS ENDED 30 JANUARY 2016
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
Exceptional costs
Other operating expense
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 and amortisation
Unallocated depreciation and amortisation
TOTAL DEPRECIATION AND AMORTISATION
Segment assets
Deferred tax assets
Derivative financial assets
Intangible assets – head office
Property, plant and equipment – head office
Other assets
TOTAL ASSETS
Segment liabilities
Income tax payable
Term loan
Other liabilities
TOTAL LIABILITIES
NET ASSETS
95
RETAIL WHOLESALE
LICENSING
£’000
£’000
£’000
348,433
(122,557)
107,736
(60,590)
225,876
47,146
(163,484)
-
62,392
47,146
-
-
-
-
-
-
-
14,384
TOTAL
£’000
456,169
(183,147)
273,022
(163,484)
109,538
14,384
62,392
47,146
14,384
123,922
62,392
47,146
14,384
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19,386
1,153
-
-
11,966
-
-
-
-
258
-
-
186,826
60,468
-
-
-
-
-
-
-
-
-
-
-
-
(75,232)
(23,726)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
123,922
(63,713)
-
(840)
59,369
(1,400)
695
58,664
20,539
68,994
89,533
12,224
2,705
14,929
247,294
6,313
2,850
14,199
67,072
2,618
340,346
(98,958)
(8,382)
(60,000)
(407)
(167,747)
172,599
Ted Baker Plc Annual Report and Accounts 2016/17 FINANCIAL STATEMENTS
2. SEGMENT INFORMATION CONTINUED
B) GEOGRAPHICAL INFORMATION
52 WEEKS ENDED 28 JANUARY 2017
Revenue
Non-current assets*
52 WEEKS ENDED 30 JANUARY 2016
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 and amortisation
Impairment of property, plant and equipment
Exceptional costs
LEASEHOLD PROPERTIES AND CONCESSION RENTALS*
Fixed lease payments
Variable rental and commission payments
Loss on sale of property, plant and equipment and intangibles
AUDITOR REMUNERATION
Audit of these financial statements
Amounts receivable by the Company’s auditor and their associates in respect of:
Audit of financial statements of subsidiaries of the Company
Interim financial statements review
Audit related assurance services
Taxation compliance and other advisory services
UK
USA
£’000
316,542
118,879
£’000
130,941
34,571
REST OF
WORLD
£’000
83,503
17,647
TOTAL
£’000
530,986
171,097
291,804
103,642
99,931
25,578
64,434
13,479
456,169
142,699
52 WEEKS ENDED
28 JANUARY
2017
52 WEEKS ENDED
30 JANUARY
2016
£’000
226,731
304,255
£’000
202,083
254,086
530,986
456,169
52 WEEKS ENDED
28 JANUARY
2017
52 WEEKS ENDED
30 JANUARY
2016
£’000
20,966
-
4,513
56,558
36,125
416
12
300
17
21
10
£’000
14,929
188
-
41,171
29,724
58
11
205
17
20
114
*Disclosed above are the costs charged in the period relating to leasehold properties and concession arrangements. These are either fixed in nature
or variable based on revenue levels for a particular store or concession, where relevant, excluding e-commerce sales with concession partners.
Exceptional costs in the period of £4.5m (2016: £nil) include a provision for lease commitments relating to the
Group’s legacy warehouses of £2.9m along with £0.7m of other closure costs and £0.9m in respect of closure costs
for a concept store in London.
There were no amounts recognised as exceptional costs or income during the 52 weeks ended 30 January 2016.
96
FINANCIAL STATEMENTS
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 payment charge
Social security costs
Pension costs
52 WEEKS ENDED
28 JANUARY
2017
52 WEEKS ENDED
30 JANUARY
2016
£’000
£’000
15
1,582
1,597
(2,933)
(440)
(3,373)
-
531
531
(1,430)
(501)
(1,931)
52 WEEKS ENDED
28 JANUARY
2017
52 WEEKS ENDED
30 JANUARY
2016
No.
2,429
94
643
3,166
£’000
76,240
1,841
7,779
1,782
No.
2,281
78
596
2,955
£’000
67,178
2,019
6,266
1,422
The figures stated above are Group staff costs and as such include the costs for Ray Kelvin, who is the only salaried
employee of the parent company for both periods.
Further details of his remuneration may be found in the Directors’ Remuneration Report on page 46 to 66.
87,642
76,885
97
Ted Baker Plc Annual Report and Accounts 2016/17 FINANCIAL STATEMENTS
5. STAFF NUMBERS AND COSTS CONTINUED
DIRECTORS’ REMUNERATION
Executive Directors’ remuneration
Non-Executive Directors’ remuneration
Amounts received by Executive Directors under long-term incentive schemes
Company contributions to Executive Directors’ money purchase pension plans
52 WEEKS ENDED
28 JANUARY
2017
52 WEEKS ENDED
30 JANUARY
2016
£’000
903
220
875
53
£’000
1,313
200
-
53
The aggregate of remuneration and amounts receivable under long-term incentive schemes of the highest paid
Director was £1,318,000 (2016: £665,000). In the period ended 28 January 2017, amounts received under long-
term incentive schemes related to the exercise of options due to Lindsay Page under Award 1 of the 2013 LTIP.
Options due to Ray Kelvin remained unexercised at the period end. Further details can be found in the Directors'
Remuneration Report.
No amounts in relation to pension contributions to a money purchase scheme were made on behalf of Ray
Kelvin during the 52 weeks ended 28 January 2017 or the 52 weeks ended 30 January 2016. Amounts in relation to
pension contributions to a money purchase scheme were made on behalf of Lindsay Page during the period totalling
£53,125 (2016: £53,125).
Retirement benefits are accruing to the following number of Directors under money purchase schemes
1
1
52 WEEKS ENDED
28 JANUARY
2017
52 WEEKS ENDED
30 JANUARY
2016
6. INCOME TAX EXPENSE
A) THE TAX CHARGE COMPRISES
Current tax
United Kingdom corporation tax
Overseas tax
Deferred tax
United Kingdom corporation tax
Overseas tax
PRIOR PERIOD (OVER)/UNDER PROVISION
Current tax
Deferred tax
52 WEEKS ENDED
28 JANUARY
2017
52 WEEKS ENDED
30 JANUARY
2016
£’000
12,343
3,625
977
(1,038)
(4,481)
3,277
14,703
£’000
11,609
5,060
46
(854)
(2,854)
1,422
14,429
The movements in prior period current and deferred tax provisions are largely a result of accelerated tax relief claims
on fixed assets in the US (2016: movements largely due to accelerated capital allowances in the UK).
98
FINANCIAL STATEMENTS
6. INCOME TAX EXPENSE CONTINUED
B) DEFERRED TAX MOVEMENT BY TYPE
Property, plant and equipment
Share-based payments
Overseas losses
Inventory
Other
For further details please refer to Note 13.
52 WEEKS ENDED
28 JANUARY
2017
52 WEEKS ENDED
30 JANUARY
2016
£’000
(464)
(49)
379
(41)
236
61
£’000
(107)
336
412
(65)
232
808
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 – 20% (2016: standard rate in the UK of 20.16%)
Income not taxable/expenses not deductible for tax purposes
Overseas losses not recognised
Movement in current and deferred tax on share awards and options
Prior period over provision
Effect of rate change on corporation tax
Difference due to overseas tax rates
TOTAL INCOME TAX EXPENSE
52 WEEKS ENDED
28 JANUARY
2017
52 WEEKS ENDED
30 JANUARY
2016
£’000
61,271
12,254
675
1,494
31
(1,204)
-
1,453
14,703
£’000
58,664
11,827
759
678
30
(1,432)
41
2,526
14,429
D) DEFERRED AND CURRENT TAX RECOGNISED DIRECTLY IN EQUITY
Current tax credit on share awards and options
Deferred tax charge / (credit) on share awards and options
Deferred tax charge associated with movement in hedging reserve
Current tax charge associated with foreign exchange movements in reserves
52 WEEKS ENDED
28 JANUARY
2017
52 WEEKS ENDED
30 JANUARY
2016
£’000
(554)
273
1,193
1,458
2,370
£’000
(190)
(954)
45
643
(456)
There will be a reduction in the UK corporation tax rate to 19% from 1 April 2017 and to 17% from 1 April 2020.
As the deferred tax assets and liabilities should be recognised based on the corporation tax rate at which they
are anticipated to unwind, the assets and liabilities on UK operations have been recognised at a rate of 19%. Those
assets and liabilities arising on foreign operations have been recognised at the applicable overseas tax rates.
99
Ted Baker Plc Annual Report and Accounts 2016/17 FINANCIAL STATEMENTS
7. PROFIT ATTRIBUTABLE TO TED BAKER PLC
The profit after tax for the 52 weeks ended 28 January 2017 of Ted Baker Plc, the parent company was £27,246,000
(2016: £24,016,000). The Directors have approved the income statement for the parent company.
8. DIVIDENDS PER SHARE
Final dividend paid for prior period of 34.6p per ordinary share (2016: 29.0p)
Interim dividend paid of 14.8p per ordinary share (2016: 13.2p)
52 WEEKS ENDED
28 JANUARY
2017
52 WEEKS ENDED
30 JANUARY
2016
£’000
15,215
6,521
21,736
£’000
12,739
5,804
18,543
A final dividend in respect of 2017 of 38.8p per share, amounting to a dividend payable of £17,137,466 is to be
proposed at the Annual General Meeting on 13 June 2017.
9. EARNINGS PER SHARE
Number of shares:
Weighted number of ordinary shares outstanding
Effect of dilutive options
52 WEEKS ENDED
28 JANUARY
2017
52 WEEKS ENDED
30 JANUARY
2016
No.
No.
44,034,459
43,950,203
516,310
612,138
WEIGHTED NUMBER OF ORDINARY SHARES OUTSTANDING – DILUTED
44,550,769
44,562,341
EARNINGS:
Profit for the period – basic and diluted
Profit for the period – adjusted*
Basic earnings per share
Adjusted earnings per share*
Diluted earnings per share
Adjusted diluted earnings per share
£’000
46,568
50,178
105.7p
114.0p
104.5p
112.6p
£’000
44,235
44,235
100.6p
100.6p
99.3p
99.3p
Diluted earnings per share and adjusted diluted earnings per share have been calculated using additional ordinary shares of 5p each available under
the Ted Baker Sharesave Scheme and the Ted Baker Plc Long-Term Incentive Plan 2013.
There were no share related events after the balance sheet date that may affect earnings per share.
* Adjusted profit for the period and adjusted earnings per share are shown before the net exceptional costs (net of tax) of £3.6m (2016: £nil).
100
FINANCIAL STATEMENTS
10. INTANGIBLE ASSETS
KEY MONEY
COMPUTER
SOFTWARE
COMPUTER
SOFTWARE
UNDER
DEVELOPMENT
TOTAL
£’000
£’000
£’000
£’000
COST
At 30 January 2016
Additions/transfers
Disposals
Exchange rate movement
AT 28 JANUARY 2017
AMORTISATION
At 30 January 2016
Charge for the period
Disposals
Exchange rate movement
AT 28 JANUARY 2017
NET BOOK VALUE
AT 30 JANUARY 2016
AT 28 JANUARY 2017
COST
At 31 January 2015
Additions/transfers
Exchange rate movement
AT 30 JANUARY 2016
AMORTISATION
At 31 January 2015
Charge for the period
Exchange rate movement
AT 30 JANUARY 2016
NET BOOK VALUE
AT 31 JANUARY 2015
AT 30 JANUARY 2016
879
-
(351)
96
624
-
-
-
-
-
879
624
8,361
5,134
-
124
10,649
4,205
-
-
13,619
14,854
2,642
1,925
-
85
4,652
5,719
8,967
-
-
-
-
-
10,649
14,854
COMPUTER
SOFTWARE
UNDER
DEVELOPMENT
19,889
9,339
(351)
220
29,097
2,642
1,925
-
85
4,652
17,247
24,445
TOTAL
KEY MONEY
COMPUTER
SOFTWARE
£’000
£’000
£’000
£’000
3,669
4,634
58
8,361
957
1,652
33
2,642
2,712
5,719
9,278
1,371
-
10,649
-
-
-
-
13,812
6,005
72
19,889
957
1,652
33
2,642
9,278
10,649
12,855
17,247
865
-
14
879
-
-
-
-
865
879
101
Ted Baker Plc Annual Report and Accounts 2016/17 FINANCIAL STATEMENTS
10. INTANGIBLE ASSETS CONTINUED
The key money brought forward relates 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 no amortisation
is charged each period as the residual value of the asset
is considered to be in excess of the carrying value. The
current market rate rents, for both stores included within
the intangible assets, continue to be above the rent
under the lease terms and hence no decline in values
is foreseen.
11. PROPERTY, PLANT AND EQUIPMENT
Additions
included within computer software
relate to the Microsoft Dynamics AX systems and
further development of our e-commerce platforms.
Additions included within the computer software under
development category relate to the Microsoft Dynamics
AX system and are stated net of transfers to computer
software. Transfers from the computer software under
development category in the period amounted to
£5,134,000 (2016: £4,634,000) whilst additions into
this category were £9,339,000 (2016: £6,005,000).
FREEHOLD LAND
AND BUILDINGS
LEASEHOLD
IMPROVEMENTS
FIXTURES,
FITTINGS
AND OFFICE
EQUIPMENT
MOTOR
VEHICLES
ASSETS UNDER
CONSTRUCTION
TOTAL
£’000
£’000
£’000
£’000
£’000
£’000
COST
At 30 January 2016
Additions / transfers
Disposals
Exchange rate movement
57,973
-
-
-
87,384
23,816
(1,538)
6,351
69,813
8,038
(986)
3,298
110
1
-
-
3,308
2,560
-
336
218,588
34,415
(2,524)
9,985
AT 28 JANUARY 2017
57,973
116,013
80,163
111
6,204
260,464
DEPRECIATION
At 30 January 2016
Charge for the period
Disposals
Impairment
Exchange rate movement
32
451
-
-
-
AT 28 JANUARY 2017
483
45,120
10,562
(1,466)
-
2,438
56,654
49,934
8,026
(898)
-
1,804
58,866
NET BOOK VALUE
AT 30 JANUARY 2016
AT 28 JANUARY 2017
57,941
57,490
42,264
59,359
19,879
21,297
105
2
-
-
-
107
5
4
-
-
-
-
-
-
95,191
19,041
(2,364)
-
4,242
116,110
3,308
123,397
6,204
144,354
102
FINANCIAL STATEMENTS
11. PROPERTY, PLANT AND EQUIPMENT CONTINUED
FREEHOLD LAND
AND BUILDINGS
LEASEHOLD
IMPROVEMENTS
FIXTURES,
FITTINGS
AND OFFICE
EQUIPMENT
MOTOR
VEHICLES
ASSETS UNDER
CONSTRUCTION
TOTAL
£’000
£’000
£’000
£’000
£’000
£’000
COST
At 31 January 2015
Additions / transfers
Disposals
Exchange rate movement
-
57,973
-
-
73,447
12,470
(280)
1,747
58,160
10,704
(105)
1,054
110
-
-
-
790
2,381
-
137
132,507
83,528
(385)
2,938
AT 30 JANUARY 2016
57,973
87,384
69,813
110
3,308
218,588
DEPRECIATION
At 31 January 2015
Charge for the period
Disposals
Impairment
Exchange rate movement
AT 30 JANUARY 2016
NET BOOK VALUE
AT 31 JANUARY 2015
AT 30 JANUARY 2016
-
32
-
-
-
32
37,238
7,218
(250)
187
727
43,362
6,025
(77)
1
623
103
2
-
-
-
45,120
49,934
105
-
-
-
-
-
-
80,703
13,277
(327)
188
1,350
95,191
-
57,941
36,209
42,264
14,798
19,879
7
5
790
3,308
51,804
123,397
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
(2016: £23,174,000)
whilst additions into this category were £34,415,000
(2016: £25,555,000).
to £31,855,000
IMPAIRMENT OF LEASEHOLD IMPROVEMENTS
The Group has determined that for the purposes of
impairment testing, each store and outlet is 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 adjusted 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.
There was no impairment charge for the 52 weeks
ended 28 January 2017.
The impairment charge for the 52 weeks ended 30
January 2016 included a charge in respect to one retail
asset in the UK that had failed to deliver on its potential.
103
Ted Baker Plc Annual Report and Accounts 2016/17 FINANCIAL STATEMENTS
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.
ADDRESS
PRINCIPAL ACTIVITY
HOLDING
ORDINARY
SHARES
100%
Design, wholesale and retail of
designer clothing and accessories
SUBSIDIARY UNDERTAKING
COUNTRY OF
INCORPORATION
AND OPERATION
No Ordinary Designer Label Ltd
(formerly Ted Baker Limited)*
Ted Baker Limited
UK
US
Ted Baker Canada Inc
Canada
Ted Baker (France) SARL
France
Ted Baker Spain S. L.
Spain
Ted Baker Netherlands B. V.
The Netherlands
Ted Baker Germany GmbH
Germany
Ted Baker Belgium N.V.
Belgium
Ted Baker Hong Kong Limited
Hong Kong
Ted Baker Japan KK
Ted Baker Korea Yuhan Hoesa
Japan
Korea
Ted Baker (Beijing)
Commercial Company
The People’s Republic
of China
The Ugly Brown Building
6a St Pancras Way
London NW1 0TB
United Kingdom
413 Talmage Road
Ukiah
California 95482
USA
1959 Upper Water Street
Halifax, Nova Scotia
Canada B3J3E5
168 Avenue
Charles de Gaulle
92522 Neuilly sur Seine
France
c/o Arturo Soria
263B
28033
Madrid, Spain
Leidsestraat 64, Amsterdam
1017PD
The Netherlands
c/o Roever Broenner Susat
Mazars GmbH & Co. KG
Alt-Moabit 2
10557
Berlin, Germany
De Keyserlei 5
Box 58
2018 Antwerp
Belgium
Room 3001–2
Tower 2
The Gateway
25–27 Canton Road
Tsim Sha Tsui
Hong Kong
4-25-14, Jingumae
Shibuya-Ku
Tokyo, Japan
Seoul Finance Center
Level 21
136 Sejong-daero
Jung-gu
Seoul, Korea
D210-D212, 2nd Floor
Fangcaodi North Lane
Chaoyang District
Beijing
100025, PRC
104
Retail and wholesale of designer
clothing and accessories
100%
Retail of designer clothing
100%
and accessories
Retail of designer clothing
100%
and accessories
Retail of designer clothing
100%
and accessories
Retail of designer clothing
100%
and accessories
Retail of designer clothing
100%
and accessories
Retail of designer clothing
100%
and accessories
Retail of designer clothing
100%
and accessories
Retail of designer clothing
100%
and accessories
Retail of designer clothing
100%
and accessories
Retail of designer clothing
100%
and accessories
FINANCIAL STATEMENTS
12. INVESTMENTS (COMPANY)
A) SUBSIDIARY UNDERTAKINGS CONTINUED
SUBSIDIARY UNDERTAKING
COUNTRY OF
INCORPORATION
AND OPERATION
ADDRESS
PRINCIPAL ACTIVITY
HOLDING
ORDINARY
SHARES
Big Lobster Limited
Little Lobster Limited
* Held directly by Ted Baker Plc.
UK
UK
The Ugly Brown Building
6a St Pancras Way
London NW1 0TB
United Kingdom
The Ugly Brown Building
6a St Pancras Way
London NW1 0TB
United Kingdom
B) SUBSIDIARY UNDERTAKINGS – COST AND NET BOOK VALUE
At 30 January 2016
Increase in cost of investment for share options / awards granted to subsidiary employees
AT 28 JANUARY 2017
At 31 January 2015
Increase in cost of investment for share options / awards granted to subsidiary employees
AT 30 JANUARY 2016
Property
100%
Dormant
100%
COMPANY
£’000
21,482
1,620
23,102
COMPANY
£’000
19,709
1,773
21,482
C) INTEREST IN JOINT VENTURE
The Group has a 50% interest in the ordinary share capital of No Ordinary Retail Company Pty, a company
incorporated in Australia through its wholly owned subsidiary, No Ordinary Designer Label Limited. The joint venture
is represented by eight stores in Australia and one store in New Zealand (2016: eight stores in Australia and one
store in New Zealand).
Opening investment in Joint Venture
Share of profit of Joint Venture
Dividend received
CLOSING INVESTMENT IN JOINT VENTURE
52 WEEKS ENDED
28 JANUARY
2017
52 WEEKS ENDED
30 JANUARY
2016
£’000
1,641
550
(294)
1,897
£’000
1,290
695
(344)
1,641
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 28 January 2017.
105
Ted Baker Plc Annual Report and Accounts 2016/17
FINANCIAL STATEMENTS
12. INVESTMENTS (COMPANY) CONTINUED
C) INTEREST IN JOINT VENTURE CONTINUED
AMOUNTS DUE FROM EQUITY ACCOUNTED INVESTEE
28 JANUARY
2017
30 JANUARY
2016
£’000
653
£’000
563
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 profit for the period ended 28 January and its assets and liabilities are as follows:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
NET ASSETS
Share capital
Retained earnings
Current period profit, net of tax
Exchange rate movement
TOTAL EQUITY
28 JANUARY
2017
30 JANUARY
2016
£’000
3,710
2,994
-
(3,289)
3,415
31
2,246
1,100
38
3,415
£’000
2,714
2,278
-
(2,538)
2,454
25
1,094
1,390
(55)
2,454
106
F
L
O
A
T
I
N
G
L
I
K
E
A
B
U
T
T
E
R
F
L
Y
,
S
T
I
N
G
N
G
L
I
I
K
E
A
B
E
E
FINANCIAL STATEMENTS
13. DEFERRED TAX ASSETS AND LIABILITIES
AS AT 28 JANUARY 2017
DEFERRED TAX ASSET/(LIABILITY)
ON UK OPERATIONS ARISING FROM:
ASSETS
Share-based payments
Other
LIABILITIES
Property, plant and equipment
Derivative financial instruments
DEFERRED TAX ASSET/(LIABILITY)
ON UK OPERATIONS
DEFERRED TAX ASSET ON FOREIGN
OPERATIONS ARISING FROM:
Foreign trading losses
Inventory
Property, plant and equipment
Other
DEFERRED TAX LIABILITY ON FOREIGN
OPERATIONS ARISING FROM:
ASSET/
(LIABILITY)
BROUGHT
FORWARD
(CHARGE)/
CREDIT TO
INCOME
STATEMENT
(CHARGE)/
CREDIT TO
EQUITY
FOREIGN
EXCHANGE ON
RETRANSLATION
ASSET /
(LIABILITY)
CARRIED
FORWARD
£’000
£’000
£’000
£’000
£’000
2,372
100
(2,048)
(386)
(49)
(41)
(831)
-
(273)
-
-
(1,193)
38
(921)
(1,466)
2,363
1,301
1,097
1,514
(502)
(7)
(1,717)
(125)
-
-
-
-
-
-
(1,466)
-
-
-
-
-
266
178
31
47
-
522
522
2,050
59
(2,879)
(1,579)
(2,349)
2,127
1,472
(589)
1,436
-
4,446
2,097
Property, plant and equipment
(56)
56
NET DEFERRED TAX ASSET ON
FOREIGN OPERATIONS
TOTAL
6,219
6,257
(2,295)
(3,216)
Recognition of deferred tax assets is based on the generation of future taxable profits that will allow
the utilisation of losses.
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 tax effect of the unused cumulative tax losses for which no deferred tax asset has been recognised in the
balance sheet is £5,401,000 (2016: £3,318,000). £2,534,000 of losses will expire in two to five years. A further
£2,277,000 of losses will expire in six to ten years. £590,000 of losses have no time expiry.
108
FINANCIAL STATEMENTS
14. INVENTORIES
Raw materials and packaging
Work in progress
Finished goods and goods for resale
Cost of inventories recognised as an expense within cost of sales during the period
Inventories written down and recognised as an expense in the period
GROUP
28 JANUARY
GROUP
30 JANUARY
2017
£’000
6,371
1,331
150,798
158,500
209,386
8,485
2016
£’000
7,176
984
117,163
125,323
180,304
4,168
There were no reversals of write downs during the period (2016: £nil).
Inventories written down and recognised as an expense in the period relates to inventory written down to the
net realisable value. This includes stock items previously provided for and the net movement in inventory provisions
during the period. The write down and any reversal are included in cost of sales.
15. TRADE AND OTHER RECEIVABLES
Trade receivables
Amounts owed by Group undertakings
Prepayments and accrued income
Other taxes and social security
GROUP
28 JANUARY
2017
£’000
41,999
-
15,791
1,461
59,251
COMPANY
28 JANUARY
GROUP
30 JANUARY
COMPANY
30 JANUARY
2017
£’000
-
51,932
-
-
51,932
2016
£’000
30,136
-
17,975
1,192
49,303
2016
£’000
-
47,486
-
-
47,486
16. DERIVATIVE FINANCIAL INSTRUMENTS
ASSETS
28 JANUARY
2017
£’000
LIABILITIES
28 JANUARY
2017
£’000
ASSETS
30 JANUARY
2016
£’000
LIABILITIES
30 JANUARY
2016
£’000
DERIVATIVES THAT ARE DESIGNED AND
EFFECTIVE AS HEDGING INSTRUMENTS
AND CARRIED AT FAIR VALUE:
Forward foreign exchange contracts
Interest rate swap
DERIVATIVES THAT ARE CARRIED AT FAIR
VALUE THROUGH PROFIT OR LOSS:
Foreign currency options
-
(66)
(550)
(616)
2,300
-
550
2,850
(33)
-
(319)
(352)
8,870
-
104
8,974
109
Ted Baker Plc Annual Report and Accounts 2016/17 FINANCIAL STATEMENTS
16. DERIVATIVE FINANCIAL INSTRUMENTS CONTINUED
Forward foreign exchange contracts are used to hedge exposure to fluctuations in foreign exchange rates that arise
in the normal course of the Group’s business.
Interest rate swaps are used to hedge exposures to fluctuations in the interest rate payable on the Group’s term loan.
The Group did not have any ineffective cashflow hedges in the period (2016: £nil).
Gains and losses in equity relating to derivatives in effective hedging relationships at 28 January 2017 will remain
there until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount recognised in
equity 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 the income statement in the same period that the hedged item
affects the income statement.
The charge to the income statement in respect of charges in the fair value of foreign currency derivatives that do
not meet the criteria for hedge accounting was £677,000 (2016: £840,000).
17. RECONCILIATION OF CASH AND CASH EQUIVALENTS PER BALANCE SHEET TO CASH
FLOW STATEMENT
Cash and cash equivalents per balance sheet
Bank overdraft per balance sheet
NET CASH AND CASH EQUIVALENTS PER
CASH FLOW STATEMENT
18. TRADE AND OTHER PAYABLES
Trade payables
Accruals and deferred income
Other taxes and social security
GROUP
28 JANUARY
2017
COMPANY
28 JANUARY
2017
GROUP
30 JANUARY
2016
£’000
21,401
(58,074)
£’000
2,238
-
£’000
13,295
(37,869)
(36,673)
2,238
(24,574)
GROUP
28 JANUARY
2017
COMPANY
28 JANUARY
2017
GROUP
30 JANUARY
2016
£’000
45,329
29,093
6,573
80,995
£’000
-
23
-
23
£’000
31,657
21,923
7,508
61,088
19. PROVISIONS FOR LIABILITIES AND CHARGES
At 30 January 2016
Provided in the period (see Note 3)
Utilised in the period
At 28 January 2017
The balances are analysed as follows:
Current
Non-current
At 28 January 2017
110
COMPANY 30
JANUARY
2016
£’000
615
-
615
COMPANY 30
JANUARY
2016
£’000
-
10
-
10
PROPERTY
PROVISIONS
£’000
-
2,917
-
2,917
915
2,002
2,917
FINANCIAL STATEMENTS
19. PROVISIONS FOR LIABILITIES AND CHARGES CONTINUED
Property provisions comprise an onerous lease provision and a dilapidations provision. The dilapidations provision will
be used upon the exit or expiry of the leases on the Group’s existing distribution centres. The onerous lease provision,
which also relates to the Group’s existing distribution centres is expected to be utilised over the remaining life of the lease.
The average remaining lease term for these properties is three years.
20. CAPITAL AND RESERVES
Authorised – 80,000,000 ordinary shares of 5p each (2016: 80,000,000)
Allotted, called up and fully paid – 44,168,656 ordinary shares of 5p each (2016: 43,971,454)
28 JANUARY
30 JANUARY
2017
£’000
4,000
2,208
2016
£’000
4,000
2,199
At 28 January 2017, 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 (2016: Employee Trust – nil,
1998 Trust – nil).
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 are designated as hedging instruments and are documented as
part of an effective hedge of future cash flows are recognised directly in equity and recycled to the income statement
when the underlying cash flows occur, or are no longer expected to occur.
TRANSLATION RESERVE
The translation reserve comprises all foreign exchange differences arising from the translation of the 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 employees of the Group. This reduction in
other reserves is reflected in retained earnings in the Group Statement of Changes in Equity.
111
Ted Baker Plc Annual Report and Accounts 2016/17 FINANCIAL STATEMENTS
21. SHARE-BASED PAYMENTS
LONG-TERM INCENTIVE PLAN
Share awards are made in the form of nil-cost options over Ordinary shares in Ted Baker Plc under the Long-Term
Incentive Plan 2013 (“LTIP 2013”), which was approved by the shareholders at the general meeting held on 20 June
2013. The options are exercisable three years after the date of grant subject to the satisfaction of profit before tax
per share and share price performance targets, each measured over a three year period. The profit before tax per
share target is calibrated so that the percentage of awards that vest is linked to the level of profit growth achieved.
Share options and awards granted under the LTIP 2013 and outstanding at the end of the period were as follows:
GRANT DATE
EXPIRY DATE
3 July 2013
1 May 2014
30 April 2015
5 May 2016
2 July 2023
30 April 2024
29 April 2025
4 May 2026
NUMBER OF
OPTIONS
GRANTED
FAIR VALUE AT
GRANT DATE
NUMBER OF
AWARDS
OUTSTANDING
AT 28 JANUARY
2017
NUMBER OF
AWARDS
OUTSTANDING
AT 30 JANUARY
2016
220,226
254,141
192,860
234,159
901,386
1,140.0p
695.0p
1,785.0p
875.0p
42,964
230,646
179,201
231,533
214,324
242,691
186,393
-
684,344
643,408
The terms and conditions of the awards granted during the period ended 28 January 2017 were the same as those for the
awards made under the LTIP 2013 in previous periods and are as follows:
GRANT DATE
5 May 2016
TYPE OF AWARD
NUMBER OF OPTIONS
VESTING CONDITIONS
VESTING PERIOD
LTIP 2013
234,159
Adjusted profit before
tax per share growth of
10–15% per annum and
10% share price growth
over the vesting period
Up to 100%
after 3 years
The charge for the period to the income statement in respect of options issued under the LTIP 2013 amounted to
£1,505,000 (2016: £1,777,000). In respect of Ray Kelvin, who is employed by the Company, there is a charge of
£219,000 in the period (2016: £246,000).
The Monte-Carlo valuation methodology has been used as the basis of measuring the fair value of all awards made
under the LTIP 2013. The range of inputs into the Monte-Carlo model for awards made was as follows:
Share price at grant
Share price at grant (based on 6 month average) for share price performance condition
Risk free interest rate
Expected life of options
Share price volatility
Dividend yield
1,705.0p - 2,855.0p
1,318.0p - 2,744.0p
0.51% - 1.18%
3 years
29.0% -31.05%
1.41% - 2.02%
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.
112
FINANCIAL STATEMENTS
22. FINANCIAL COMMITMENTS
A) CAPITAL COMMITMENTS
The Group has capital commitments of £15,095,165 at 28 January 2017 (2016: £13,819,909) which were not
provided in the financial statements.
B) OPERATING LEASES
Total of future lease payments under non-cancellable operating leases is as follows:
AS AT
28 JANUARY
2017
£’000
58,399
145,827
99,396
AS AT
30 JANUARY
2016
£’000
45,536
130,173
82,227
303,622
257,936
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 £1,782,000
(2016: £1,422,000). Contributions totalling £129,706
are included in other payables at the period end
(2016: £400,995).
Within one year
Between one and five years
Later than five years
table
includes
the minimum
future
The above
commitments assuming no lease terminations. Under
certain arrangements if a lease is terminated the
quantum of any future minimum lease payments is
subject to the terms of the contract which may result in
final payments lower than those disclosed above.
Our operating leases for retail stores often contain
rental expenses based on revenue (‘revenue leases’).
Under the terms of certain revenue leases there are
minimum payments due, together with variable amounts
in excess of those minimums which are based on the
store’s future revenue levels. For certain other revenue
leases there are no minimum payment conditions within
the terms of the lease such that rental charges are
contingent wholly on future store revenue levels.
The table above includes only committed minimum
payments and excludes the variable or contingent
elements of future rental payments. As a result, the
amounts charged to the Income Statement may be
materially higher than the financial commitment at the
prior period end.
113
Ted Baker Plc Annual Report and Accounts 2016/17 FINANCIAL STATEMENTS
23. 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:
CARRYING
AMOUNT
28 JANUARY
2017
FAIR
VALUE
28 JANUARY
2017
CARRYING
AMOUNT
30 JANUARY
2016
FAIR
VALUE
30 JANUARY
2016
£’000
£’000
£’000
£’000
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
Bank overdraft
Provision
Term loan
41,999
1,063
653
8,974
21,401
74,090
(74,422)
(616)
(58,074)
(2,917)
(58,500)
41,999
1,063
653
8,974
21,401
74,090
(74,422)
(616)
(58,074)
(2,917)
(58,500)
TOTAL FINANCIAL LIABILITIES
NET FINANCIAL LIABILITIES
(194,529)
(120,439)
(194,529)
(120,439)
30,136
1,179
563
2,850
13,295
48,023
(53,580)
(352)
(37,869)
-
(60,000)
(151,801)
(103,778)
30,136
1,179
563
2,850
13,295
48,023
(53,580)
(352)
(37,869)
-
(60,000)
(151,801)
(103,778)
There are no significant trade debtor balances overdue and no significant amounts impaired at the end of the period.
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
28 JANUARY
2017
FAIR
VALUE
28 JANUARY
2017
CARRYING
AMOUNT
30 JANUARY
2016
FAIR
VALUE
30 JANUARY
2016
£’000
£’000
£’000
£’000
51,932
2,238
54,170
(23)
(23)
51,932
2,238
54,170
(23)
(23)
47,486
615
48,101
(10)
(10)
47,486
615
48,101
(10)
(10)
54,147
54,147
48,091
48,091
114
FINANCIAL STATEMENTS
The methods and assumptions used to estimate fair
values of financial assets and liabilities are as follows:
Valuation of all financial 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).
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. The fair value of the term loan considers the present
value of expected payment discounted using a risk-
adjusted discount rate.
B) DERIVATIVE FINANCIAL INSTRUMENTS
CONTRACTUAL/
NOTIONAL
AMOUNTS
28 JANUARY
2017
£’000
72,874
30,000
102,874
ASSETS
28 JANUARY
2017
LIABILITIES
28 JANUARY
2017
£’000
8,974
-
8,974
£’000
(550)
(66)
(616)
CONTRACTUAL/
NOTIONAL
AMOUNTS
30 JANUARY
2016
£’000
34,285
-
34,285
ASSETS
30 JANUARY
2016
LIABILITIES
30 JANUARY
2016
£’000
2,850
-
2,850
£’000
(352)
-
(352)
Currency derivatives
Interest rate swap
C) CASH FLOW HEDGING RESERVE MOVEMENTS
The following table indicates the cash flow hedging reserve balance at 28 January 2017 and the periods in which the
cash flows are expected to occur. The periods in which the cash flows are expected to impact the income statement
are materially the same.
Within six months
Between six months and one year
Between one and two years
UNRECOGNISED GAINS
CURRENCY DERIVATIVES
28 JANUARY
CURRENCY DERIVATIVES
30 JANUARY
2017
£’000
2,647
2,982
1,173
6,802
2016
£’000
5
587
1,058
1,650
The cash flow hedging reserve relating to interest rate swaps at 28 January 2017 is a loss of £66,000. The cashflows
are expected to occur over the period to maturity of the term loan.
115
Ted Baker Plc Annual Report and Accounts 2016/17 FINANCIAL STATEMENTS
23. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT CONTINUED
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:
• market risk;
• credit risk; and
• liquidity risk 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 and interest rate risk.
FOREIGN CURRENCY RISK
The Group operates internationally and is therefore
exposed to foreign currency risk primarily on purchases
of inventory 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.
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 policy allows for these
risks to be hedged for up to 24 months ahead in order to
fix the cost in Sterling.
The vast majority of projected purchases in each
major currency qualifies as ‘highly probable’ forecast
transactions for hedge accounting purposes.
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.
FOREIGN CURRENCY 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 28 January 2017. The analysis
assumes that all other variables, in particular, interest
rates, remain constant.
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 period end on the Group’s financial
assets and liabilities that are not denominated in the
functional currencies of those businesses.
A 10% (2016: 10%) strengthening or weakening
of Sterling against the following currencies at 28
January 2017 would have increased / (decreased)
equity and profit by the amounts shown in the
following table:
116
T H INKING OUTSIDE THE SH
O
E
B
O
X
FINANCIAL STATEMENTS
23. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT CONTINUED
TEST OF 10% (2016: 10%) STRENGTHENING IN
STERLING AGAINST OTHER CURRENCIES
US Dollar
Euro
TEST OF 10% (2016: 10%) WEAKENING IN
STERLING AGAINST OTHER CURRENCIES
US Dollar
Euro
IMPACT ON
PROFIT
28 JANUARY
2017
IMPACT ON
EQUITY
28 JANUARY
2017
IMPACT ON
PROFIT
30 JANUARY
2016
IMPACT ON
EQUITY
30 JANUARY
2016
£’000
(1,656)
366
(1,290)
2,024
(447)
1,577
£’000
(1,656)
366
(1,290)
2,024
(447)
1,577
£’000
(933)
260
(673)
1,141
(318)
823
£’000
(933)
260
(673)
1,141
(318)
823
INTEREST RATE RISK
The Group’s exposure to interest rate risk is limited to floating rate financial assets and liabilities.
The Group’s policy is to minimise the impact of adverse interest rate movements through the use of interest rate
management tools. Any interest rate management tools are to be aligned with timescales of current and forecast net
debt for which underlying projections can be made with an appropriate degree of accuracy. During the period, the
Group entered into interest rate swap agreements, fixing a portion of the floating rate net debt.
The interest rate profile of the financial assets and liabilities of the Group are as follows:
FINANCIAL ASSETS AND LIABILITIES SUBJECT TO
INTEREST RATE RISK
GROUP
28 JANUARY
2017
COMPANY
28 JANUARY
2017
GROUP
30 JANUARY
2016
COMPANY
30 JANUARY
2016
Sterling
US Dollar
Euro
Other
£’000
(83,780)
6,897
5,900
5,661
£’000
2,238
-
-
-
£’000
(92,545)
(57)
2,607
5,324
£’000
615
-
-
-
(65,322)
2,238
(84,671)
615
The above table does not include the notional value of net debt for which interest rate swaps are in place.
118
FINANCIAL STATEMENTS
INTEREST RATE SENSITIVITY ANALYSIS
The following sensitivity analysis illustrates the impact that a change of 50 basis points in interest rates at the
balance sheet date would have increased / (decreased) equity and profit by the amounts shown below. This
calculation assumes that the change occurred at the balance sheet date and had been applied to risk exposures
existing at that date.
Interest rate increase of 0.5%
Interest rate decrease of 0.5%
IMPACT ON
PROFIT
28 JANUARY
2017
IMPACT ON
EQUITY
28 JANUARY
2017
IMPACT ON
PROFIT
30 JANUARY
2016
IMPACT ON
EQUITY
30 JANUARY
2016
£’000
(327)
327
£’000
(327)
327
£’000
(423)
423
£’000
(423)
423
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’s principal
financial assets are cash, trade and other receivables
and derivative financial assets. The Group’s credit risk is
primarily attributable to its trade and other receivables.
TRADE AND OTHER RECEIVABLES
Credit risk arises on credit exposure to wholesale
customers
receivables
and committed transactions. However, this risk is
substantially mitigated by insurance being taken out up
to the amount of the credit limit.
outstanding
including
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. Forecasts are obtained from
all its licence partners throughout the period 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 (which comprises the 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
regulatory
ratios against
requirements. Based on current cash flow projections,
the Group expects to have sufficient headroom against
its borrowing facilities (see the section below for further
details on the borrowing facilities).
internal and external
119
Ted Baker Plc Annual Report and Accounts 2016/17 FINANCIAL STATEMENTS
23. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT CONTINUED
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 twelve months equal their
carrying balances as the impact of discounting is not significant.
AT 28 JANUARY 2017
NON-DERIVATIVE FINANCIAL LIABILITIES
Trade and other payables
Bank overdraft
Term loan
DERIVATIVE FINANCIAL LIABILITIES
CARRYING
AMOUNT
CONTRACTED
AMOUNT LESS
THAN 1 YEAR
CONTRACTED
AMOUNT
1–2 YEARS
CONTRACTED
AMOUNT
2–5 YEARS
£’000
£’000
£’000
£’000
74,422
58,074
58,500
74,422
58,074
6,000
-
-
-
-
5,500
47,000
Derivative financial instruments
616
616
AT 30 JANUARY 2016
NON-DERIVATIVE FINANCIAL LIABILITIES
Trade and other payables
Bank overdraft
Term loan
DERIVATIVE FINANCIAL LIABILITIES
53,580
37,869
60,000
53,580
37,869
1,500
-
-
-
-
-
-
6,000
52,500
Derivative financial instruments
352
352
-
-
In May 2016, the Group agreed an extension of its
multi-currency revolving credit facility with The Royal
Bank of Scotland and Barclays. The new agreement
increased the Group’s committed borrowing facility
from £85.0m to £110.0m expiring in March 2018. This
increased facility provides the resources to fund the
planned capital expenditure to support the Group’s
long-term growth strategy. The new borrowing facility
is on the same terms and contains the same covenants
as the previous facility. Interest is payable based on
LIBOR plus a margin. The Group had utilised £51.5m
(2016: £36.0m) of the £110.0m credit facility as at
28 January 2017.
In the prior period, the Group borrowed £60.0m
under a five year Sterling-denominated term credit
facility with The Royal Bank of Scotland and Barclays.
The facility was used to support the purchase of The Ugly
Brown Building. The term loan is amortised over fifteen
years with refinancing required every five years, with an
interest rate based on LIBOR plus a margin and quarterly
loan repayments which commenced in December 2016.
During the period, £1.5m was repaid.
The facilities contain financial covenants which are
believed to be appropriate in the current economic
climate and tested on a quarterly basis. The Group
monitors actual and prospective compliance with these
on a regular basis.
The financial covenant tests are based upon
the following:
• a ratio of total net debt to EBITDA;
• a fixed charge cover ratio; and
• minimum net tangible assets.
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 28 January 2017.
120
FINANCIAL STATEMENTS
E) CAPITAL MANAGEMENT
The Board’s policy is to maintain a strong capital base, defined as total shareholders’ equity, totalling £210,544,000
at 28 January 2017 (2016: £172,599,000), 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 period.
24. RELATED PARTIES
The Group considers its Executive and Non-Executive Directors as key management and their compensation therefore
comprises a related-party transaction.
Salaries and short-term benefits
Contributions to money purchase pension schemes
Share-based payment charges
Directors of the Company and their immediate relatives
control 35.4% of the voting shares of the Company.
At 28 January 2017, No Ordinary Designer Label
Limited (NODL), the main trading company owed Ted
Baker Plc £51,932,000 (2016: £47,486,000). NODL
was owed £136,813,000 (2016: £55,931,000) from
the other subsidiaries within the Group.
Transactions between subsidiaries were priced on an
arm’s length basis.
The Group has a 50% interest in the ordinary share
capital of No Ordinary Retail Company Pty, a company
incorporated in Australia, through its wholly owned
subsidiary No Ordinary Designer Label Limited. As at 28
January 2017, the joint venture owed £653,000 to the
main trading company (2016: £563,000). In the period
the value of sales made to the joint venture by the Group
was £2,696,000 (2016: £2,427,000).
52 WEEKS ENDED
28 JANUARY
2017
52 WEEKS ENDED
30 JANUARY
2016
£’000
2,582
53
427
3,062
£’000
1,513
53
480
2,046
Ray Kelvin and Lindsay Page are both directors of, and
shareholders in, THAT Bournemouth Company Limited,
THAT TopCo Limited and THAT Bournemouth Big Hotel
Limited and as such, these entities are a related party
of the Company for the purposes of Chapter 11 of the
Listing Rules.
During the period the Group provided design
services to THAT Bournemouth Company Limited for
which licence income fees were charged of £192,000
(2016: £170,000). No amounts were outstanding as at
28 January 2017 (2016: £nil).
During the period the main trading company
provided office space to THAT TopCo Limited for
which rental charges were made of £34,560 and
other miscellaneous charges of £3,446 (2016: £nil).
No amounts were outstanding as at 28 January 2017
(2016: £nil).
During the period the main trading company
supplied services to THAT Bournemouth Big Hotel
Limited for which charges were made of £16,551 (2016:
£nil). No amounts were outstanding as at 28 January
2017 (2016: £nil).
121
Ted Baker Plc Annual Report and Accounts 2016/17 FINANCIAL STATEMENTS
FIVE YEAR SUMMARY
RESULTS
Revenue
Operating profit
Profit before tax
Profit before tax and impairment
Profit before tax and exceptional items
52 WEEKS
ENDED
26 JANUARY
2013
52 WEEKS
ENDED
25 JANUARY
2014
53 WEEKS
ENDED
31 JANUARY
2015
52 WEEKS
ENDED
30 JANUARY
2016
52 WEEKS
ENDED
28 JANUARY
2017
£’000
£’000
£’000
£’000
£’000
254,466
321,921
387,564
456,169
530,986
29,514
28,922
29,687
31,536
39,588
38,923
39,648
39,969
49,759
48,771
48,771
49,452
59,369
58,664
58,853
58,664
62,497
61,271
61,271
65,784
PROFIT FOR THE PERIOD
21,597
28,852
35,850
44,235
46,568
ASSETS EMPLOYED
Property, plant and equipment
Non-current assets
Net current assets
Non-current liabilities
NET ASSETS
FINANCED BY:
Shareholders’ funds
Non-controlling interest
KEY STATISTICS
Basic earnings per share
Adjusted earnings per share
Diluted earnings per share
Dividends per share
Dividend cover
45,412
6,873
47,105
(497)
45,083
12,118
54,863
-
51,804
20,265
68,505
123,397
144,354
25,615
82,143
31,189
91,852
-
(58,556)
(56,851)
98,893
112,064
140,574
172,599
210,544
98,893
112,064
140,574
172,599
210,544
-
-
-
-
-
98,893
112,064
140,574
172,599
210,544
51.5p
56.4p
49.9p
26.6p
67.2p
69.0p
66.3p
33.7p
82.0p
83.2p
81.0p
40.3p
100.6p
100.6p
99.3p
47.8p
105.7p
114.0p
104.5p
53.6p
1.9 times
2.0 times
2.0 times
2.1 times
2.0 times
Dividend cover before exceptional costs
2.1 times
2.0 times
2.1 times
2.1 times
2.1 times
Pre-tax return on capital employed before exceptional costs
Post-tax return on capital employed before exceptional costs
29.7%
22.2%
33.9%
25.1%
32.0%
23.5%
30.5%
23.0%
27.3%
20.8%
122
NOTES
NOTES
T
U
O
T
R
A
E
H
R
U
O
Y
T
A
E