Triumph Bancorp Inc Annual Report 2018

FY2018 Annual Report · Triumph Bancorp Inc

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A n n u a l R e po r t & A c co u n ts

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CONTENTS

STRATEGIC REPORT

CHAIRMAN’S STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

BUSINESS MODEL AND STRATEGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

BUSINESS REVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

FINANCIAL REVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

PRINCIPAL RISKS AND UNCERTAINTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

SUSTAINABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
PEOPLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

DIRECTORS’ REPORT

BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

CORPORATE GOVERNANCE STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

AUDIT COMMITTEE REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

NOMINATION COMMITTEE REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

DIRECTORS’ REMUNERATION REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

OTHER STATUTORY AND REGULATORY DISCLOSURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

STATEMENT OF DIRECTORS’ RESPONSIBILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TED BAKER PLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

FINANCIAL STATEMENTS

GROUP AND COMPANY PRIMARY FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

NOTES TO THE FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

FIVE YEAR SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127

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.

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, London E14 5GL
Barclays Bank Plc, 1 Churchill Place, London E14 5HP
The Royal Bank of Scotland Plc, 62-63 Threadneedle Street, London EC2R 8LA
HSBC Bank Plc, 8 Canada Square, Canary Wharf, London E14 5HQ
Link Asset Services, 34 Beckenham Road, Beckenham, Kent BR3 4TU

Ted Baker Plc - Registered in England No: 03393836

Ted Baker Plc Annual Report and Accounts 2017/18

DISTRIBUTION CHANNELS

Ted carefully manages distribution

through three main channels:

RETAIL

£442.5m

(10.4% INCREASE)

WHOLESALE

£149.2m

(14.6% INCREASE)

LICENSING

£21.4m

(17.6% INCREASE)

UK AND EUROPE

NORTH AMERICA

ASIA

AFRICA

MIDDLE EAST

AUSTRALASIA

41 STORES*

54 STORES*

34 STORES*

4 STORES*

34 STORES*

9 STORES*

252 CONCESSIONS

61 CONCESSIONS

14 CONCESSIONS

15 OUTLETS

12 OUTLETS

2 OUTLETS

…AND WHOLESALE AND LICENSING RELATIONSHIPS
IN OVER 35 COUNTRIES ACROSS THE GLOBE.

*Store numbers include licence partner stores.

STRATEGIC REPORT

CHAIRMAN’S STATEMENT

I am pleased to report that Group revenue
increased by 11.4% (9.6% in constant currency)1 to
£591.7m (2017: £531.0m) and profit before tax and
exceptional items2 increased by 11.7% to £73.5m
(2017: £65.8m) for the 52 weeks ended 27 January
2018 (the “period”). Profit before tax increased
by 12.3% to £68.8m (2017: £61.3m). This good
performance reflects the strength of the Ted Baker
brand and business model and was achieved
despite a backdrop of on-going challenging
external factors across our global markets.

STRATEGIC REPORT

The retail channel performed well, with retail sales including
e-commerce up 10.4% (8.5% in constant currency)1 to £442.5m
(2017: £400.7m) on an increase in average square footage of

was a result of an increased retail margin driven by an improved

full price sell-through and change in mix of full price and outlet

sales, offset by a decrease in the wholesale margin, reflecting

5.9%. Our e-commerce business is an integral and increasingly

a prior-year foreign exchange benefit that was not expected

important component within our retail proposition and has

to re-occur and a greater proportion of wholesale sales to our

performed very well, delivering strong sales growth of 39.8%
(38.7% in constant currency)1 to £101.1m (2017: £72.3m). We
continued our controlled geographic expansion with openings

territorial licence partners which carry a lower margin.

Profit before tax and exceptional items2 increased by
11.7% to £73.5m (2017: £65.8m) and profit before tax increased

across the UK and Europe, North America and the Rest of the

by 12.3% to £68.8m (2017: £61.3m). Adjusted basic earnings

World and we continue to invest and build brand awareness in

per share, which excludes exceptional items, increased by

our newer markets for the long-term development of the brand.

12.0% to 127.7p (2017: 114.0p) and basic earnings per share

The wholesale channel delivered a strong performance,
with sales up 14.6% (13.3% in constant currency)1 to £149.2m
(2017: £130.3m). This reflects a good performance from our UK

increased by 12.6% to 119.0p (2017: 105.7p).

Exceptional items in the period amounted to £4.7m (2017:

£4.5m) and comprised the impairment of retail assets, relating

wholesale business, which includes the supply of goods to our

to three stores in the US and one store in Europe of £4.5m,

licensed stores and our export business, as well as a strong

and restructuring costs of £1.3m, partially offset by income of

performance from our North American wholesale business.

£1.1m related to the release of provisions against the Group’s

Licence income delivered strong growth of 17.6% to

legacy warehouses following assignment of the leases.

£21.4m (2017: £18.2m). During the period, our licence partners

Exceptional items in the 52 weeks ended 28 January 2017 of

opened further stores and concessions in Australia, Dubai,

£4.5m included a provision for lease commitments relating to

Indonesia, Kuwait, Lebanon, Mexico, Qatar, Saudi Arabia

the Group’s legacy warehouses of £2.9m along with £0.7m of

and Turkey.

other closure costs and £0.9m in respect of closure costs for a

In May 2017, we launched the next phase of the Microsoft

concept store in London.

Dynamics AX system across our UK and European businesses

The Group’s net borrowing position at the end of the period

to fully support our retail, e-commerce and wholesale

was £111.8m (2017: £95.2m) being the secured term loan of

channels. We anticipate completing the final phases of this

£52.5m (2017: £58.5m) used to purchase The Ugly Brown

project towards the end of this year, and this will allow us to

Building and other net debt of £59.3m (2017: £36.7m). The

continue to enhance efficiency, streamline our operations and

increase in other net debt primarily reflects the ongoing capital

support the development of the business.

expenditure during the period and increased working capital.

We have now successfully completed the transition from

our three legacy distribution centres to our single European

distribution centre in the UK. The new distribution centre now

DIVIDENDS
Reflecting the Group’s continued good performance and the

handles all logistic operations for our retail, e-commerce and

Board’s confidence in the outlook, the Board is recommending

wholesale businesses across the UK and Europe, supporting

a final dividend of 43.5p per share (2017: 38.8p), making a total

our long-term growth strategy. In September 2017, we

for the period of 60.1p per share (2017: 53.6p per share), an

successfully assigned the leases for our three UK legacy

increase of 12.1% on the prior period. Subject to approval by

distribution centres to third parties.

shareholders at the Annual General Meeting to be held on 12

The Group continues to consider its expansion and

June 2018, the final dividend will be paid on 22 June 2018 to

development plans for The Ugly Brown Building and has

shareholders on the register on 18 May 2018.

decided not to exercise the option to purchase 50% of
neighbouring Block A, as future capacity requirements will be

accommodated within our enhanced plans for the current site.

FINANCIAL RESULTS
Group revenue for the period increased by 11.4% (9.6% in
constant currency)1 to £591.7m (2017: £531.0m). The Group
gross margin remained constant at 61.0% (2017: 61.0%). This

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 skill 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 2017/18 STRATEGIC REPORT

CURRENT TRADING AND OUTLOOK

RETAIL
In the UK and Europe, we have opened a new store in London

GROUP
The recent unseasonal weather across Europe and the East

Coast of America has had an impact on the early part of trading

for Spring/Summer and we anticipate that external trading

Luton Airport and plan to open new stores in Barcelona Airport

conditions will remain challenging across many of our global

and London Bridge station, an outlet in Lyon and our first outlet

markets. However, the new season collections have been well

in Neumunster, Germany, along with further concessions in the

received and the strength of our brand and business model

UK, France, Germany and Spain. We will continue to invest in

means that we remain well positioned to continue the Group’s

our e-commerce sites to enhance the customer experience.

momentum and long-term development. We have a clear

In North America, we will continue to develop our presence

strategy for the continued expansion of Ted Baker as a global

with plans to open stores in Austin and Orlando, along with

lifestyle brand across both established and newer markets.

further licence partner concessions in Mexico.

This is underpinned by our controlled distribution across

In the Rest of the World, we remain focused on building

channels as well as the design, quality and attention to detail

brand awareness, as we are still in the relatively early stages

that are central to everything we do.

of investment. In line with our development strategy in this

To deliver our expansion plans, capital expenditure in the

territory, we plan to open a further concession in Japan.

new financial period is planned to be at £30.0m (2018: £36.6m).

WHOLESALE
We anticipate further growth across our wholesale businesses,

which should result
(in constant currency)1 in the coming period.

in high single-digit sales growth

This relates to further store openings and refurbishments, and

the ongoing investment in new IT systems across the business.

We intend to make our trading statement covering trading

from the start of the financial period in mid-June 2018.

LICENCE INCOME
Our product and territorial licences continue to perform well.

We have opened a store in India, with further store openings

David Bernstein CBE
Non-Executive Chairman

planned in Egypt, India, Indonesia, Kazakhstan, Saudi Arabia,

22 March 2018

Singapore and Thailand.

NOTES:

1 Constant currency comparatives are obtained by applying the exchange rates that were applicable for the 52 weeks ended 28 January 2017 to the financial results in
overseas subsidiaries for the 52 weeks ended 27 January 2018 to remove the impact of exchange rate fluctuations.
2 Profit before tax and exceptional items is a non-GAAP measure. For further information about this measure, and the reasons why we believe it is important for an understanding
of the performance of the business, please refer to page 18 in the Financial Review, and Note 1(x) and Note 3 of the Financial Statements.
The Directors believe these measures provide a consistent and comparable view of the underlying performance of the Group’s ongoing business.

STRATEGIC REPORT

BUSINESS MODEL AND STRATEGY

E-commerce enables us to offer our customers access

is localised to each of Canada and the US, and a fast-growing

to an extended product range and provides us with a means

wholesale business.

STRATEGY
Our strategy is to enhance our position as a leading global

Ted Baker has grown steadily from its origins as a specialist

to talk directly with our customers and engage them with the

As part of our strategy to invest for the longer-term

lifestyle brand by the continuous development of three main

shirt store in Glasgow to the global lifestyle brand it is today.

brand in non-traditional ways. We focus on ensuring that we

development of the brand, we have launched the brand in Asia

elements of our business model:

In order to protect the ethos and persona for which we have

provide a user-friendly online brand and shopping experience

with stores and concessions in China, Hong Kong and Japan.

gained an enviable reputation, we always ask ourselves the

across multiple devices.

We also understand the growing desire of our customers to

• considered extension of the Ted Baker collections to

question: “Would Ted do it that way?”

The wholesale business in the UK serves countries

buy our products online and trade on renowned local websites

achieve our brand growth potential. We review our

PRODUCT
Ted Baker is a quintessentially British brand with a quirky yet

across the world, primarily in the UK and Europe, as well as

in this region.

collections continually to ensure we anticipate and react

supplying products to stores operated by our territorial licence

Through our territorial licences we also trade in many other

to trends and meet our customers’ expectations. In

partners. In addition, we operate a wholesale business in North

countries across Africa, Asia, Australasia and the Middle East.

addition, we look for opportunities to extend the breadth

of collections and enhance our offer;

• controlled distribution through three main channels: retail

(including e-commerce); wholesale; and licensing. We

consider each new opportunity to ensure it is right for the

brand and will deliver margin led growth; and

•

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.

commercial fashion offering that prides itself in always being

America serving the US and Canada. Our wholesale partners

able to satisfy the needs of our customer. Our approach is

(“Trustees”) are custodians of our collections and uphold

focused on unwavering attention to detail and firm commitment

our brand integrity by ensuring that their retail environment

to quality.

and brand adjacencies are in keeping with the profile and

We offer a wide range of collections including Menswear;

positioning of the brand. We have built up strong relationships

Womenswear; Global; Phormal; Endurance; Accessories;

with some of the best independent retailers and department

Bedding; Childrenswear; Crockery; Eyewear; Footwear;

stores around the world.

Fragrance and Skinwear; Gifting and Stationery; Jewellery;

We operate both territorial and product licences. Our

Lingerie and Sleepwear; Luggage; Neckwear; Rugs; Suiting;

licence partners are all experts in their field and share

Technical Accessories; Tiles; and Watches.

our passion for unwavering attention to detail and firm

The menswear collection is a reflection of popular

commitment to quality.

contemporary culture, with a sense of humour and style mixed

Territorial licences cover specific countries or regions in

in. It also includes our Phormalwear range, offering a number

Asia, Australasia, Europe, the Middle East and North America,

of distinctive suiting collections that combine heritage British

where our partners operate licensed retail stores and, in some

tailoring with a modern outlook. The womenswear collection

territories, wholesale operations.

is a fresh and feminine mix of European elegance with London

Product licences cover Bedding; Childrenswear; Crockery;

flair, and is a celebration of beauty, individuality and exquisite

Eyewear; Footwear; Fragrance and Skinwear; Gifting and

attention to detail.

Stationery; Jewellery; Lingerie and Sleepwear; Luggage;

Neckwear; Rugs; Suiting; Technical Accessories; Tiles;

DISTRIBUTION CHANNELS
The brand operates through three main distribution channels:

and Watches.

retail, which includes e-commerce; wholesale; and licensing,

which includes territorial and product licences. We want our

GEOGRAPHIC REACH
Ted Baker is a truly global lifestyle brand with 532 stores and

customers to enjoy a seamless experience regardless of how

concessions worldwide, comprised of 195 in the UK, 113 in

they choose to shop and interact with the brand.

Europe, 127 in North America, 88 in the Middle East, Africa and

The retail channel comprises stores, concessions and

Asia, and 9 in Australasia.

e-commerce, which is now an integral part of our retail

The Group opened its first shop in the UK in Glasgow in

experience. We operate stores and concessions across

1988 and has since established itself in all the major fashion

the UK, Europe, North America and Asia, and localised

destinations in the UK. We have also built a growing presence

e-commerce sites for the UK, Europe, US, Canada and
Australia. We also have e-commerce businesses with some of

in Europe with stores and concessions in Belgium, France,
Germany, Ireland, the Netherlands, Portugal, and Spain. Our

our concession partners.

e-commerce and wholesale businesses complement our

Stores and concessions are designed to showcase

locations in Europe.

the brand’s unique style of retail theatre and to ensure our

In 1998, the Group opened its first store in North America

customers enjoy a welcoming and pleasurable shopping
experience. Each store boasts a fully bespoke design that is

in New York. Since then, the Group has established a presence
across the US from the East to West Coasts and into Canada

full of innovative and distinctive touches.

through both own stores and concessions. In addition, the

Group has a standalone e-commerce site in North America that

Ted Baker Plc Annual Report and Accounts 2017/18 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

Operating contribution (excluding exceptional items) %2

Operating contribution (including exceptional items) %2

Profit before tax (excluding exceptional items)
as a % of revenue2

Profit before tax (including exceptional items)
as a % of revenue2

Retail

Total revenue

Store revenue

E-commerce revenue

Gross margin

Average square footage3

Closing square footage3

Sales per square foot excluding e-commerce sales

Wholesale

Revenue

Gross margin

Licence income Revenue

Group

Operating cashflow per share4

Working capital5

52 WEEKS ENDED
27 JANUARY
2018

52 WEEKS ENDED
28 JANUARY
2017

VARIANCE

CONSTANT
CURRENCY
VARIANCE1

£591.7m

£531.0m

11.4%

9.6%

61.0%

12.7%

12.0%

12.4%

11.6%

£442.5m

£341.4m

£101.1m

67.0%

410,190

420,158

£832

£149.2m

43.3%

£21.4m

98.4p

£168.6m

61.0%

12.6%

11.8%

12.4%

11.5%

£400.7m

£328.4m

£72.3m

66.1%

387,373

395,088

£848

£130.3m

10 bps

20 bps

10 bps

10.4%

4.0%

39.8%

90 bps

5.9%

6.3%

(1.9%)

14.6%

45.1%

(180 bps)

£18.2m

118.4p

£136.8m

17.6%

(16.9%)

23.3%

8.5%

1.8%

38.7%

(3.9%)

13.3%

1 Constant currency comparatives are obtained by applying the exchange rates that were applicable for the 52 weeks ended 28 January 2017 to the financial results in
overseas subsidiaries for the 52 weeks ended 27 January 2018 to remove the impact of exchange rate fluctuations.
2 Operating contribution is defined as operating profit as a percentage of revenue. For information about exceptional items please refer to page 18 in the Financial Review
and Note 1(x) and Note 3 of the Financial Statements.
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.

Ted Baker Plc Annual Report and Accounts 2017/18
STRATEGIC REPORT

BUSINESS REVIEW

DISTRIBUTION CHANNELS
The brand operates through three main distribution channels:

retail, which includes e-commerce; wholesale; and licensing,

which includes territorial and product licences. As part of

STRATEGIC REPORT

The retail gross margin increased to 67.0% (2017: 66.1%),

reflecting a change in mix between full price and outlet sales

LICENCE INCOME
We operate both territorial and product licences. Our licence

and also an improved full price sell-through in our retail channel.

partners are carefully selected as experts in their field and

Retail operating costs increased 10.8% (8.6% in constant
currency)1 to £225.2m (2017: £203.3m) and as a percentage of
retail sales, slightly increased to 50.9% (2017: 50.7%) due to

share our passion for unwavering attention to detail and firm

commitment to quality.

Both territorial and product licences delivered good

our strategy we look to further develop each of these routes

investment in online marketing costs to increase awareness of

performances, with licence income up 17.6% to £21.4m (2017:

to market, while ensuring the controlled distribution of

local e-commerce sites offset by the decrease in dual running

£18.2m). There were notable performances from our product

our product.

costs associated with the transition to our new single European

licensees in Childrenswear, Eyewear, Skinwear and Suiting.

In the second half of the period, we transitioned our retail

operations in South Korea to a distributor with the knowledge

and experience to drive growth locally.

distribution centre.

RETAIL
Our retail channel comprises stores, concessions and

e-commerce, which is now an integral part of our retail

WHOLESALE
Our wholesale business in the UK serves countries across the

experience. We operate stores and concessions across the UK,

world, primarily in the UK and Europe, as well as supplying

Europe, North America and the Rest of the World, and localised

products to stores operated by our territorial licence partners.

e-commerce sites for the UK, Europe, the US, Canada and

In addition, we operate a wholesale business in North America

Australia. We also have e-commerce businesses with some

serving the US and Canada.

of our concession partners. Our unique stores showcase the

Ted Baker brand and are key to the growth and success of

our e-commerce business. Our relatively low number of own

Group wholesale sales increased by 14.6% (13.3% in
constant currency)1 to £149.2m (2017: £130.3m), reflecting a
good performance from our UK wholesale business, with sales

stores and higher number of concession locations allows us to

increasing by 9.3% to £94.1m (2017: £86.1m), and a strong

maintain a flexible store business model.

The retail division performed well, with sales up 10.4%
(8.5% in constant currency)1 to £442.5m (2017: £400.7m)
despite a challenging trading environment across some of

performance from our North American wholesale business,
with sales increasing by 24.7% (21.0% in constant currency)1
to £55.1m (2017: £44.2m).

The wholesale gross margin decreased to 43.3% (2017:

our global markets. The growth was driven by continued

45.1%), reflecting a prior-year foreign exchange benefit that

investment across the retail channel in new and existing stores

was not expected to re-occur and a greater proportion of sales

and our e-commerce platform. We are particularly pleased

to our territorial licence partners, which carry a lower margin.

with our strong e-commerce performance, where sales grew
by 39.8% (38.7% in constant currency)1 to £101.1m (2017:
£72.3m) and represented 22.8% (2017: 18.0%) of our total

retail sales.

The growth in retail sales (including e-commerce) of
10.4% (8.5% in constant currency)1 exceeded the increase
in average retail square footage of 5.9% to 410,190 sq ft

COLLECTIONS
Ted Baker Menswear performed well with sales up 10.1% to

£249.7m (2017: £226.7m). Menswear represented 42.2% of

total sales in the period (2017: 42.7%). Ted Baker Womenswear

delivered a good performance with sales up 12.4% to £342.0m

(2017: £304.3m). Womenswear represented 57.8% of total

(2017: 387,373 sq ft). Retail sales per square foot (excluding

sales (2017: 57.3%). The growth in the womenswear mix

e-commerce) decreased 1.9% (decrease of 3.9% in constant
currency)1 to £832 (2017: £848) demonstrating the changing
customer behaviour with customers shopping both online and

was driven by allocation of space as well as the increased

proportion of e-commerce sales where we experience a higher

percentage of womenswear sales.

in store.

Ted Baker Plc Annual Report and Accounts 2017/18 STRATEGIC REPORT

GEOGRAPHIC PERFORMANCE

UNITED KINGDOM AND EUROPE

Total retail revenue*

Store 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
27 JANUARY
2018

52 WEEKS ENDED
28 JANUARY
2017

VARIANCE

CONSTANT
CURRENCY
VARIANCE1

6.4%

(1.4%)

34.7%

2.2%

(5.5%)

£301.1m

£218.6m

£82.5m

257,367

261,261

£1,170

£849

£94.1m

252

308

£279.5m

£218.4m

£61.1m

246,826

250,624

£1,132

£885

£86.1m

237

290

7.7%

0.1%

35.0%

4.3%

4.2%

3.4%

(4.1%)

9.3%

STRATEGIC REPORT

NORTH AMERICA

Total retail revenue*

Store 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

* Excludes licensed partner stores.

52 WEEKS ENDED
27 JANUARY
2018

52 WEEKS ENDED
28 JANUARY
2017

VARIANCE

CONSTANT
CURRENCY
VARIANCE1

£120.1m

£103.8m

£16.3m

121,081

126,524

£992

£857

£55.1m

127

£103.4m

£93.6m

£9.8m

112,110

116,590

£922

£835

£44.2m

111

16.2%

10.9%

66.3%

8.0%

8.5%

7.6%

2.6%

24.7%

12.4%

7.3%

61.4%

4.1%

(1.3%)

21.0%

* Excludes licensed partner stores.

in UK and Europe

Retail sales
increased by 7.7%
(6.4% in constant currency)1 to £301.1m (2017: £279.5m)
(6.4% in constant currency)1 despite ongoing challenging
trading conditions.

T3, and our outlets in Bicester and La Vallee. We opened

We are confident that the Ted Baker brand is becoming more

During the period, we opened new stores in Houston,

further concessions with premium department stores in the

established and continues to gain recognition in this territory.

Los Angeles and Montreal and expanded our Miami Aventura

Our e-commerce business performed very well during

with the performance of the new openings and remain positive

the period with sales increasing by 35.0% to £82.5m (2017:

about further growth opportunities for our brand across

£61.1m) demonstrating that e-commerce sales are an integral

these markets. During the period, we closed a concept store

part of the retail proposition in the UK and European markets.

in London, and temporarily closed a store and an outlet

UK, France, Germany, the Netherlands and Spain. We also

opened two licence partner stores in Turkey. We are pleased

Sales from our retail division in North America increased
by 16.2% (12.4% in constant currency)1 to £120.1m (2017:
£103.4m). Our e-commerce business performed particularly

increasing 66.3%

well with sales
in constant
currency)1 to £16.3m (2017: £9.8m). As a percentage of North
America retail sales, e-commerce sales represented 13.6%

(61.4%

As a percentage of UK and Europe retail sales, e-commerce

for refurbishment. Given the ongoing challenging trading

(2017: 9.5%).

sales represented 27.4% (2017: 21.9%).

conditions, in the period the Group has impaired one store in

Sales per square foot excluding e-commerce sales

Europe that failed to deliver on its potential.

decreased reflecting the move to online. However our stores

Sales from our UK wholesale division, which include our

Sales per square foot excluding e-commerce sales
decreased in constant currency1 due to in part higher levels of
competitor promotional activity in the North American market

store. We opened an outlet in Chicago and concessions in

Canada with a premium department store. We also opened

concessions in Mexico with our licence partner. We closed one

store in Los Angeles and one in New York and impaired three

stores in light of the above trading conditions.

Sales from our North American wholesale business
increased by 24.7% (21.0% in constant currency)1 to £55.1m
(2017: £44.2m) reflecting a strengthening relationship with

key trustees that attract domestic customers across North

America, further demonstrating increased brand recognition

remain key to the success of the e-commerce business

wholesale export business and the supply of product to our

and lower international tourism in the first half of the year.

in this territory.

through initiatives such as order in store and click and collect

retail licence partners, increased by 9.3% to £94.1m (2017:

However, the second half of the year has seen an improving

as well as showcasing the brand and the collections and

£86.1m) reflecting a good performance from sales to Trustees,

trend in this territory.

contribute a healthy financial return.

particularly those with a strong online customer proposition.

Expansion continued with store openings in London,

Oxford and Paris and outlets in Gloucester and Roermond. We

also relocated three of our stores which included Heathrow

Ted Baker Plc Annual Report and Accounts 2017/18 STRATEGIC REPORT

REST OF THE WORLD

Total retail revenue*

Store 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
27 JANUARY
2018

52 WEEKS ENDED
28 JANUARY
2017

VARIANCE

CONSTANT
CURRENCY
VARIANCE1

£21.3m

£19.0m

£2.3m

31,742

32,373

£670

£599

£17.8m

£16.4m

£1.4m

28,438

27,874

£625

£576

19.7%

15.9%

64.3%

11.6%

16.1%

7.2%

4.0%

(1)

17.3%

13.8%

57.8%

5.1%

1.9%

We continue to develop the Ted Baker brand across the

During the period, our Middle Eastern licence partners

Middle East, Asia, Africa and Australasia through our retail and

performed particularly well and opened stores in each of

licensing channels.

Dubai, Kuwait, Lebanon, Qatar and Saudi Arabia. Our South

We remain positive about the long-term opportunities

East Asian licence partner opened a store in Indonesia and

in Asia. However, as has been widely reported, the trading

Malaysia. As at 27 January 2018, our licence partners operated

environment continues to be challenging. Retail sales in Asia

60 stores and concessions across the Middle East, South East

increased 19.7% (17.3% in constant currency)1 to £21.3m

Asia and Africa (2017: 54).

(2017: £17.8m). In China, we opened a store in Shanghai, and in

The joint venture with our Australasian licence partner,

Japan, we relocated our Tokyo store and opened a concession.

Flair Industries Pty Ltd, continued to perform well. During the

In South Korea, we closed our concessions and transitioned

period, we opened one new store in Bondi and closed one in

our retail operations to a distributor with the knowledge and

Melbourne. As at 27 January 2018, we operated 9 stores in

experience to drive growth locally.

Australasia (2017: 9 stores).

NOTES:

STRATEGIC REPORT

FINANCIAL REVIEW

REVENUE AND GROSS MARGIN
Group revenue increased by 11.4% (9.6% in constant
currency)1 to £591.7m (2017: £531.0m), driven by a 10.4%
(8.5% in constant currency)1 increase in retail sales to £442.5m
(2017: £400.7m) and a 14.6% (13.3% in constant currency)1
increase in wholesale sales to £149.2m (2017: £130.3m).

STRATEGIC REPORT

Exceptional items in the 52 weeks ended 28 January 2017 of

£4.5m included a provision for lease commitments relating to

CASH FLOW
The net decrease in cash and cash equivalents of £21.9m

The increased facility provides the resources to fund the

planned investment in capital expenditure and working capital

the Group’s legacy warehouses of £2.9m along with £0.7m of

(2017: £13.5m) primarily reflected an increase in working

required to support the Group’s long-term growth strategy. The

other closure costs and £0.9m in respect of closure costs for a

capital and further capital expenditure to support our long-

new borrowing facility is on the same terms and contains the

concept store in London.

term development.

same covenants as the previous facility. The Group monitors

For further information about this measure, and the

Total working capital, which comprises inventories, trade

actual and prospective compliance on a regular basis.

The gross margin for the Group remained constant at

the Financial Statements.

by an increase in inventories of £28.7m to £187.2m (2017:

61.0% (2017: 61.0%) as a result of improved full price sell-

through in our retail channel offset by an increased proportion

of wholesale sales to trustees, which carry a lower margin.

FINANCE INCOME AND EXPENSES
Net interest payable during the period was £3.2m (2017: £2.9m).

£158.5m) reflecting the growth of our business, stock on hand

relates to purchases made in foreign currencies, principally the

for our wholesale customers and territorial licence partners,

US Dollar and the Euro.

and the impact of the movement in foreign exchange rates.

A proportion of the Group’s purchases are hedged in

TREASURY RISK MANAGEMENT
The most significant exposure to foreign exchange fluctuation

reasons why we believe it is important for an understanding

and other receivables and trade and other payables, increased

of the performance of the business, please refer to Note 1(x) of

by £31.8m to £168.6m (2017: £136.8m). This was mainly driven

OPERATING EXPENSES BEFORE
EXCEPTIONAL ITEMS2
Distribution costs, which comprise the cost of retail operations

and distribution centres increased by 11.4% (9.3% in constant
currency)1 to £232.0m (2017: £208.2m) and as a percentage
of sales remained consistent at 39.2% (2017: 39.2%). During

decrease in dual running costs associated with the transition

to our new single European distribution centre.

Administrative costs increased by 14.3% to £80.2m (2017:

£70.1m). Administration expenses excluding exceptional
costs2 increased by 15.1% (14.3% in constant currency)1 to
£75.5m (2017: £65.6m). This increase is due to the growth in our

The increase was largely due to higher average borrowings on

Group capital expenditure of £36.6m (2017: £43.8m) relates

accordance with the Group’s risk management policy, which

the revolving credit facility as well as an increase in LIBOR

to the opening and refurbishment of stores, concessions

allows for foreign currency to be hedged for up to 24 months in

rates in the fourth quarter of the year.

and outlets and the ongoing investment in business-wide IT

advance. The balance of purchases is hedged naturally as the

The net foreign exchange gain during the period of £0.7m

systems to support our continued growth.

business operates internationally and income is generated in

(2017: £1.1m) was due to the translation of monetary assets

The Group’s net borrowing position at the end of the period

the local currencies. In June 2016, ahead of the UK referendum

and liabilities denominated in foreign currencies. The decrease

was £111.8m (2017: £95.2m).

from the prior period was due to the appreciation of Sterling this

SHAREHOLDER RETURN
Basic earnings per share increased by 12.6% to 119.0p

(2017: 105.7p). Adjusted earnings per share, which exclude
exceptional items4, increased by 12.0% to 127.7p (2017: 114.0p).
The proposed final dividend of 43.5p per share will make a

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 26 January 2019 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

TAXATION
The Group tax charge for the year was £16.0m (2017: £14.7m),

an effective tax rate of 23.3% (2017: 24.0%). This effective tax

total for the period of 60.1p per share (2017: 53.6p per share),

based on LIBOR plus a fixed margin.

rate is higher than the UK tax rate for the period of 19.16% largely

an increase of 12.1% on the previous period.

During the previous period, the Group entered into

due to higher overseas tax rates and to the non-recognition

Operating cash flow per share was 98.4p (2017: 118.4p)

interest rate swap agreements, fixing £30.0m of the floating

the period we invested in online marketing costs to increase

year compared to the devaluation in the prior year following the

awareness of local e-commerce sites which was offset by a

UK’s EU referendum result.

central functions, both in the UK and overseas, the continued

of losses in overseas territories. The UK corporation tax rate

and reflected a decrease in cash generated from operating

rate net debt.

deployment of our information technology infrastructure to

reduced to 19% from 1 April 2017 and will reduce to 17% from

activities. The decrease was largely due to increased working

support our growth, and investment in customer engagement.

1 April 2020. The US federal corporate income tax rate has

capital, in particular inventory, reflecting the growth of our

Dual running costs incurred in respect of our new European

reduced to 21% with effect from 1 January 2018.

business and increased stock on hand.

distribution centre and the systems roll-out were £2.1m (2017:

Our closing UK deferred tax assets and liabilities have been

£4.0m) in the period, some of these are expected to continue

measured at 19% based on the corporation tax rate at which

into the next financial year.

they are largely anticipated to unwind. Overseas deferred tax

BORROWING FACILITIES
During the period, the Group agreed an extension of its multi-

PROFIT BEFORE TAX AND EXCEPTIONAL
ITEMS3 AND PROFIT BEFORE TAX
Profit before tax and exceptional items3 increased by 11.7%
to £73.5m (2017: £65.8m) and profit before tax increased by

12.3% to £68.8m (2017: £61.3m).

EXCEPTIONAL ITEMS2
Exceptional items in the period amounted to £4.7m (2017:

£4.5m) and comprised the impairment of retail assets, relating

to three stores in the US and one store in Europe of £4.5m,
and restructuring costs of £1.3m, partially offset by income of

£1.1m related to the release of provisions against the Group’s

legacy warehouses following assignment of the leases.

assets and liabilities have been measured at the applicable

currency revolving credit facility. A new agreement was signed

overseas tax rates.

on 25 September 2017 which increased the Group’s committed

Our future effective tax rate is expected to be higher

borrowing facility from £110.0m to £135.0m, expiring in

than the UK tax rate as a result of overseas profits arising in

September 2020.

jurisdictions with higher tax rates than the UK. The Group’s

effective tax rate will, however, benefit from the fall in the US
federal tax rate to 21%. We would expect future reductions in

the effective tax rate given the US federal rate reduction and

the UK rate reduction to 17% from 1 April 2020.

NOTES:

1 Constant currency variances are calculated by applying the exchange rates for the 52 weeks ended 28 January 2017 to results financial results in overseas subsidiaries for
the 52 weeks ended 27 January 2018 to remove the impact of exchange rate fluctuations.
2 For information about exceptional items please refer to Note 1(x) and Note 3 of the Financial Statements.
3 Profit before tax and exceptional items is a non-GAAP measure, adjusted for exceptional items.
4 Adjusted earnings per share is a non-GAAP measure, adjusted for exceptional items.

Ted Baker Plc Annual Report and Accounts 2017/18
STRATEGIC REPORT

PRINCIPAL RISKS AND
UNCERTAINTIES

STRATEGIC REPORT

In addition, the Group has established a Risk Committee

Having considered the key risks inherent in the business and

operation of suitable internal controls. These risks are

that includes the Finance Director and various members of the

the system of control necessary to manage such risks, the

assessed on a continual basis and may be associated with

Executive Board and heads of department. The Risk Committee

Finance Director presents the Risk Committee’s findings to

a variety of internal or external sources including control

The Board is ultimately responsible for the Group’s system

helps the Executive Board review the risk management and

the Board on a regular basis. In addition, the Chief Executive

breakdowns, disruption in information systems, competition,

of risk management and internal control and for reviewing its

control process in each key business area on an ongoing basis,

reports to the Board on changes in the business and the

natural catastrophes and regulatory requirements, and also

effectiveness, and for determining the Group’s risk appetite.

and provides a platform for management to drive improvement

external environment which affect significant risks.

with reference to the Group’s five year strategic and financial

The Board confirms that there is an ongoing process for

across the business. The Risk Committee considers:

In turn, the Audit Committee assesses the findings

plan. During the period, the Board has continued to place

identifying, evaluating and managing the significant risks

and recommendations of the Risk Committee and the Group’s

significant focus on risk management. Following the Audit

faced by the Group, which has been in place for the period and

• the authority, resources and co-ordination of those

external and internal audit processes and looks critically

Committee’s engagement of PricewaterhouseCoopers LLP

up to the date of approval of these financial statements, and

involved in the identification, assessment and

at how the business responds, as well as investigating

(“PwC”) to undertake a detailed review of the Group’s risk

that this process is regularly reviewed by the Board. However,

management of significant risks faced by the Group;

material issues and what actions they implement to prevent

framework and internal audit function in the prior period, the

such systems are designed to manage rather than eliminate

• the response to the significant risks which have been

future issues.

Board has again retained PwC to assist the Risk Committee

the risk of failure to achieve business objectives, and can

identified by management and others;

On behalf of the Board, the Audit Committee has reviewed

and Audit Committee in managing the Group’s risk profile and

provide only reasonable and not absolute assurance against

• the maintenance of a controlled environment directed

the effectiveness of the system of risk management and

increasing engagement with stakeholders in the Group.

material misstatement or loss.

towards the proper management of risk; and

internal control during the period, covering all material

The Group has an independent internal audit function

RISK MANAGEMENT PROCESS
In order to help manage the Group’s risks and uncertainties,

• the annual reporting procedures.

controls, including financial, operational and compliance

whose findings are regularly reviewed by the Board and the

controls. In particular, it has reviewed and updated the process

Executive Committee. The Audit Committee monitors and

An overview of the Group’s Risk Management Process is

for identifying and evaluating the significant risks affecting

reviews the effectiveness of the internal audit activities.

the Board has delegated responsibility for monitoring the

set out below:

effectiveness of the Group’s systems of internal control and

risk management to the Audit Committee.

the business and the policies and procedures by which

The Chief Operating Officer and Group Finance Director

these risks are managed. Management is responsible for the

provides the Board with monthly financial

information

identification and evaluation of significant risks applicable

which includes updates by reference to the Group’s key

to their areas of the business together with the design and

performance indicators.

TED BAKER PLC BOARD
Ultimately responsible for risk management

AUDIT COMMITTEE
Monitors the effectiveness of system of risk management and internal controls

EXECUTIVE BOARD
Oversees the Group’s risk management processes and monitors mitigating actions

RISK COMMITTEE
Reviews and challenges key risks, associated controls and management action plans

RISK FRAMEWORK
Ensures consistent approach across Group

WIDER BUSINESS

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Ted Baker Plc Annual Report and Accounts 2017/18

STRATEGIC REPORT

The Board has carried out a robust assessment of the

identified by the Group (which are not shown in order of

principal risks facing the Group, including those that would

importance). Additional risks and uncertainties not presently

threaten its business model, future performance, solvency

known, or currently considered to be less material, may also

or liquidity. The following list highlights the principal risks

have an adverse effect on the Group:

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.

Development
of overseas
markets

Fashion and
design

Our dedicated social media team closely
monitors social media channels and addresses
any reputational issues in accordance with
our protocol.

Failure in growing the international business
through franchise operations, licensees 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.

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.

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.

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.

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.

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.

The geographic spread of our business and
supply chain also helps to mitigate these risks.

The Group has established a Brexit Committee
which, together with its external advisers,
continues to carefully monitor the potential
impact of Brexit. Scenario planning includes the
impact of additional customs duties, VAT and
customs duty declarations; and the restriction on
the free movement of people.

In addition to this ongoing monitoring
and mitigation, 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

CHANGE IN
LEVEL OF
RISK

No material
change

Increased risk

No material
change

ISSUE

POTENTIAL IMPACT

MITIGATION

OPERATIONAL
RISKS
CONTINUED

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
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.

A sub-committee 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 ensure our practices fall in line
with it. More information is set out on page 28
(Sustainability).

CHANGE IN
LEVEL OF
RISK

No material
change

Cybersecurity

The business is subject to threats from hacking
or viruses or other unauthorised data breaches.

The Group has invested in additional specialist
IT resources.

Increased risk

There is the possibility of unintentional loss of
controlled data by authorised users.

The continual upgrading of security equipment
and software also mitigates these risks.

IT infrastructure
and
implementation
of ERP

The Group’s IT infrastructure is key to the
operation of its business.

We are in the process of implementing the final
phases of 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 and the business.

People

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
effect 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.

Tightly controlled security controls, an extensive
penetration testing programme, and data
recovery and business continuity plans have
been implemented with the support of specialist
third parties.

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
retention 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.

For example, the Group has established a
cross-functional GDPR steering committee
that has worked with external advisers to
ensure the Group’s policies and procedures
are GDPR compliant.

No material
change

Retail sector
outlook

Outlook in the retail sector remains uncertain,
with increasing pressures on the Group’s
customers.

The Group’s Credit Committee closely monitors
any outstanding debts and takes appropriate
action where necessary.

Increased risk

The Group manages its credit risk through
insurance, standby letters of credit or other
supplier financing products wherever possible.

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.

No material
change

The Group deals with counterfeit goods in
accordance with its robust enforcement strategy.

Ted Baker Plc Annual Report and Accounts 2017/18 STRATEGIC REPORT

ISSUE

POTENTIAL IMPACT

MITIGATION

In the course of its operations, the Group is
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.

FINANCIAL
RISKS

Currency,
interest,
credit and
counterparty
credit risks,
including
financial
covenants under
the Group’s
credit facilities

CHANGE IN
LEVEL OF
RISK

No material
change

Foreign
exchange

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.

No material
change

VIABILITY STATEMENT
In accordance with Provision C.2.2 of the UK Corporate

principal risks, and taking into account the effectiveness of any

mitigating actions. In addition, the Board has considered the

Governance Code dated April 2016 (the “Code”), the Directors

impact on the Group’s cash flows, headroom, covenants and

have assessed the prospects and viability of the Group over

other key financial ratios having stress tested the potential

a five year period, taking into account the Group’s current

impact of these scenarios, both individually and in combination.

position and the potential impact of the principal risks

Sensitivity analysis was also used to stress test the Group’s

documented above.

strategic plan and to confirm that sufficient headroom would

The Group operates a five year plan, which is updated

remain available under the Group’s credit facilities. The Board

and reviewed regularly by the Board. Within the five year plan,

considers that under each scenario tested, the mitigating

detailed scenario planning and stress testing has been carried

actions would be effective and sufficient to ensure the

out over a five year period. The Directors therefore consider

continued viability of the Group. For the reasons stated above,

the five year period to 29 January 2022 to be the appropriate

based on the robust assessment undertaken, the Directors

period to assess the viability and prospects of the Group with

confirm they have a reasonable expectation that the Group will

a high level of certainty.

be able to continue in operation, and meet its liabilities as they

The Directors’ assessment has been further enhanced by

fall due, over the period of assessment.

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

GOING CONCERN
The Directors have reviewed the Group’s budgets and long-

operational risks, that could affect the future viability of the

term projections. After making enquiries, the Directors have

Group over the next five years are identified on pages 22 to 26

a reasonable expectation that the Company and the Group

in Principal Risks and Uncertainties.

have adequate resources to continue in operational existence

In making this assessment the Directors have considered

for twelve months from the approval of these accounts. For

the resilience of the Group to the occurrence of these risks in

this reason, they continue to adopt the going concern basis of

severe but plausible scenarios, including by reference to certain

accounting in preparing the financial statements.

STRATEGIC REPORT

SUSTAINABILITY

PLANET
The Group has engaged in a number of environmental projects

PEOPLE
Our employees and the people who work in our supply chains

PRODUCT
As part of our commitment to product we place great emphasis

STRATEGIC REPORT

At Ted Baker we believe in being open and honest in the way

during the course of the period:

are our greatest asset and it is very important to the Group

on producing more sustainable products.

we do business. This includes doing the right thing by all of our

that our products are produced in factories that are committed

stakeholders throughout our supply chain and operating in a

• We continue to participate in the Carbon Disclosure

to providing a fair and safe environment for their workers.

• We are part of the Sustainable Clothing Action Plan

fair and sustainable manner. During the period we continued

Project to measure and disclose our greenhouse gas

To enable this:

emissions and climate change strategies. We maintained

(“SCAP”), a DEFRA sponsored action plan organised

to improve the sustainability of clothing throughout its

implementing our sustainability strategy “Fashioning a Better
Future”, developed from our Ted3 plan which was introduced
in 2012.

our disclosure score of B.

• We have begun working with Segura, an online platform

lifecycle by bringing together industry, government and

• All of our UK head office business travel within Scopes 1

that will help us to map our supply chain. We have so far

third parties. SCAP members collaborate to develop

We approach our social, environmental and ethical

commitments (“SEE”) with the same focus and attention to

and 3 is CarbonNeutral®. This means that the unavoidable
emissions generated by air, road and rail journeys required

brought on board all of our Chinese factories and their

sector-wide targets along with the tools and guidance

subcontractors. It is helping us to reach beyond our direct

necessary to achieve them. As a SCAP 2020 signatory,

detail that permeates the rest of the business. To ensure that

to visit our stores, trustees and suppliers have been offset

suppliers and ensure we have more visibility of the supply

we are challenged to reduce carbon, water and the

we continue to meet our responsibilities in these important

in full through the purchase of carbon credits from verified

chains that make Ted Baker product.

amount of waste generated or consumed by our

areas Fashioning a Better Future focuses on Planet, People

carbon reduction projects.

• Ted Baker Ethical, Production and Buying teams

products by 15% by 2020.

and Product. Our Global Sustainability Strategy has been

• We are constantly reviewing the waste our business

regularly visit our suppliers to build and maintain

• We have introduced internal sustainable fibre targets to

developed and continues to be advanced and improved

generates in an effort to achieve our overall aim of

relationships. These are key in ensuring open and

our collections to ensure that we are meeting our SCAP

ensuring that every department is included.

sending no waste to landfill. We participate in the

honest communication.

commitment, and, as part of SCAP, we participate in the

Wastepack Compliance Scheme as part of the Producer

• All Ted Baker suppliers are governed by our Ethical

Metrics group. This Group identifies the key industry

HOW WE WORK
The Chief Operating Officer and Group Finance Director is

Responsibility Obligations (Packaging Waste) Regulations

Code of Conduct. We review and revise our Code of

metrics that businesses should measure and is working

1997 and continue to reduce unnecessary packaging.

Conduct regularly to ensure that it reflects legislative

on a tool to measure baseline carbon, water and waste

responsible for overseeing the formulation of the Group’s

• We work with local schools and charities to recycle as

changes and make sure that our suppliers continue to

footprints. It also identifies improvement actions that

policies and procedures to manage risks arising from SEE. In

much waste from head office as we can.

make improvements. The Code is based on international

businesses could take in this area.

addition, the Board has tasked four members of the Executive

• We have been working with the charity Newlife to ensure

conventions such as the Ethical Trade Initiative Base

• We became a member of the Better Cotton Initiative

Committee to oversee specific areas of our SEE agenda for

that all faulty garments returned to our UK stores do

Code, the United Nations Universal Declaration of

(BCI) in 2016. The aim of the BCI is to make global cotton

the Group. These Executive Committee members participate

not end up in landfill. Since March 2014 we have been

Human Rights and the Fundamental Conventions of the

production better for the people who produce it, better

because of the relevance of their departments to our ongoing

sending these faulty garments to Newlife for resale as

International Labour Organisation, and can be found at

for the environment it grows in and better for the cotton

commitment in these areas – Brand Communication, Product

second-hand garments.

http://www.tedbakerplc.com/~/media/Files/T/Ted-Baker/

industry’s future. Through education and training the

Design, Production and Special Projects (Interior Design). Our

• Through our relationships with Oxfam, Newlife and Age UK

documents/ted-ethical-code-of-conduct-2016.pdf.

farmers learn more sustainable farming methods and pool

full-time Ted’s Conscience team co-ordinates these areas and

we have been able to ensure that our end of line garments

• Through our partnership with MADE-BY, a non-profit

their resources with the aim of reducing environmental

the Group’s cross-functional team which is responsible for

are utilised in the best way, raising over £580,000 and

multi-stakeholder initiative set up to improve sustainability

impacts, using less water and harmful pesticides, and

addressing SEE concerns of the Group.

diverting over 44 tonnes of waste from landfill since the

within the fashion industry, we report through MODE

increasing yields. Earlier this year we made a public

start of these relationships.

Tracker, a new progress tracking tool. It is aimed at

commitment to source 50% of our cotton as “more

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.

supporting fashion brands to become more sustainable,

sustainable cotton” by 2020. More sustainable cotton

focusing on eight areas of fashion business including

includes Better Cotton through BCI, Organic Cotton and

People, Product and Own Operations.

Recycled Cotton.

•

In December 2014, we started to collect donations of

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 6,309 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 eighth year running.

Ted Baker Plc Annual Report and Accounts 2017/18 STRATEGIC REPORT

GREENHOUSE GAS EMISSIONS
The Group has for a number of years participated in the Carbon

In measuring the Group’s GHG emissions, all of the Group’s

stores, warehouses and head offices around the world were

Disclosure Project and is now required, in accordance with the

taken into account. The space occupied by the Group within

Companies Act 2006 (Strategic Report and Directors’ Report)

concession stores is excluded from Scope 1 and 2 calculations

Regulations 2013 (the “Regulations”) to report its greenhouse

because the Group has neither financial nor operational

gas (“GHG”) emissions.

control over a concession area. Such emissions are included in

The Group has adopted a GHG reporting policy and a

the Group’s Scope 3 figures which are published in our annual

management system based on the methodology established

Carbon Disclosure Project Report.

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.

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

2018

175

4,389

4,564

0.012

0.008

2017

129

4,469

4,598

0.012

0.009

GHG emissions for the period ended 27 January 2018 have been calculated using the appropriate 2017 UK Government Conversion

Factors for Company Reporting and, for energy consumed overseas, the International Energy Agency Emission Factors.

THE BRIBERY ACT 2010
The Group has an established anti-bribery policy in place

MODERN SLAVERY ACT 2015
The Group has issued its second statement in compliance with

designed to manage risks relating to bribery and corruption.

the Modern Slavery Act which is available at www.tedbakerplc.

Ted’s Handbook, which is provided to all Ted employees,

com. The statement sets out the Group’s policies for assessing

includes information and instructions on how to manage these

the risk of modern slavery within its supply chain and the

risks and is supplemented by internal training. Ted also ensures

steps taken to improve transparency. The Group’s cross-

that suppliers are made aware of Ted’s anti-bribery policy

functional committee, the Modern Slavery Act Working Group

and how to manage risks by including relevant provisions in

(“MSWAG”), was established to critically assess and address

Ted’s Supplier Manual and other supply contracts. Both the

Ted’s modern slavery objectives. During the period, we have

handbook and the supplier manual are regularly kept under

introduced a tailored training programme to understand the

review to ensure they are sufficiently robust to prevent bribery

warning signs of modern slavery and also understand how our

practices can directly impact suppliers and their workforces.

We are also working with Segura to develop an online platform,

to enhance our existing supply chain management systems.

MSWAG will continue to develop the Group’s policies in line

with the evolving business and landscape, with a focus on

supply chain management and compliance.

and corruption.

STRATEGIC REPORT

PEOPLE

Talent, commitment and passion are three essential strands to

STRATEGIC REPORT

LEARNING, DEVELOPMENT AND
TALENT MANAGEMENT
Employee performance is reviewed formally during the

DIVERSITY
The Group believes in respecting individuals and their rights

applications, where appropriate, to retain specific talent within

the business. We respect cultural difference and actively seek

in the workplace and that diversity supports the dynamic

to learn about each territory we operate within.

the success of the Group. The energy and inspired performance

probationary period as the employee settles in to life at Ted and

of our teams to deliver success. With this in mind, specific

Our commitment to diversity across the Group continues

of our team are key factors in helping the Group to deliver

then bi-annually. This focuses on behaviours, competence,

policies are in place setting out our stance and commitment

and consideration to diversity and gender is given with a view

growth and drive innovation. The Group places significant

talent and career development. Goals and objectives linked

to managing harassment and bullying, whistle blowing,

to appointing the best placed individual for each new role. The

importance in building an out of the ordinary employee

to business development and contribution are a key focus to

equality and diversity. Our team represents a wide and diverse

tables below demonstrate the gender split across the Board

experience, creating learning and development opportunities,

ensure performance is directly linked to Group delivery. Talent

workforce from all backgrounds, sexual orientation, nationality,

of Directors, the Group’s leadership and senior management

nurturing individual employee growth and recognising and

is mapped every quarter to identify high performers, areas for

ethnic and religious groups. We support sponsorship of visa

teams and global employees as at 27 January 2018.

rewarding contribution.

development and gap analysis. This supports the development

REWARD AND RECOGNITION
The Group entered into its second year of a pay for performance

of dynamic and diversified teams.

We invest in employee development from specialist

and technical skills to bespoke courses developed by Ted’s

Ted Baker Plc Board of Directors

remuneration approach for employees at our London head

Academy. During the period we launched “Ted’s Fountain”, an

Executive Committee and other senior managers

office (“Tedquarters”) and also rolled out the scheme to the

online learning resource that allows each employee to easily

Global team members

2018

2017

Male

Female

1,141

2,441

Total

148

3,582

Male

Female

Total

119

1,063

2,160

3,223

USA head office. Such employees’ performance is measured

access trusted information to quickly improve their skills,

against competency criteria, objectives linked to business

knowledge and understanding of essential business topics.

success and behavioural identifiers that directly support our

Continuing to bring in fresh and specialist talent as well

unique culture and brand values. This approach enables Ted

as nurturing our existing employee population remains high

to award remuneration annually based directly on individual

on our business and people agenda. Inter-departmental

success and achievement. We continue to review all other

and international transfers play a large part in retaining and

employee groups’ remuneration annually and a benchmarking

growing talent as well as ensuring the Ted story translates

analysis is undertaken against market intelligence to ensure

across the globe.

we remain competitive and commensurate across all areas of

During the period, we established a Development Board

the business.

comprised of senior management across the business. Their

In each territory we offer reward and recognition schemes

focus is on assisting the Executive Board to achieve key

2018

North America

Europe

Asia

Ted Baker Plc Board of Directors

Executive Committee and
other senior managers

Global team members

Male

Female

Male

Female

Male

Female

Male

Female

687

1,358

294

513

424

146

Total

148

3,582

HEALTH, SAFETY AND WELFARE
Our duty and commitment to the well-being of our team is

EMPLOYEES WITH DISABILITIES
Applications for employment by persons with disabilities are

in line with local legislative and market requirements for

strategic aims and provides an opportunity to develop future

supported by activity such as private healthcare, occupational

always fully and fairly considered, focusing on the aptitudes

employees but also seek to bring parity across the Group

Ted leaders for the Group.

health, health seminars and funding for flu jabs. During

and abilities of the applicant concerned. In the event of an

where

feasible. Our

reward packages

include bonus

Following the success of Ted’s Extraordinary Diploma,

the period, we conducted a Well-being Week including

employee becoming disabled during their employment,

schemes linked to sales targets and individual and corporate

our latest and third programme, “Ted’s Extras”, now helps

financial, health and mental well-being seminars, to health

every effort is made to ensure that their employment with the

performance. We encourage all UK employees to join our Save

to identify highly motivated and engaged talent with multi-

assessments and healthy eating options. We offer health and

Group continues and that where appropriate reasonable

As You Earn share scheme. Ted also provides a Long-Term

faceted knowledge and develops their expertise across

fitness classes to our employees at Tedquarters. We also

adjustments are made and relevant training and education of

Incentive Plan (“LTIP”) for key senior employees throughout

various departmental functions.

run a Childcare Voucher Scheme in the UK. An Employee

the wider team is arranged. It is the policy of the Group that

the business spanning a three year award period. The LTIP is

currently in its fifth 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 seventh year of

Wisdom Awards, our Group scheme that recognises long

serving members of the team and provides the opportunity
for employees to share their unique Ted stories. Additionally

during the period we launched “The Bank of Tedland”, an “in

the moment” recognition scheme with cash rewards for out of

the ordinary performance.

Assistance Programme in the UK and US further supports our

the training, career development and promotion of persons

commitment to the well-being of our employees. To support

with disabilities should, as far as possible, be identical with

health and welfare we launched a new ‘Buy Holiday’ option for

that of other employees.

Tedquarters employees to ‘buy’ additional holiday.

The Group employs a dedicated Health and Safety team to

support the identification of risks and prevention of accidents

CULTURE
Our brand values are important in everything we do and are

in the workplace. The team provides ongoing education
and training to strengthen employees’ knowledge and

instilled into the hearts and minds of all our employees from
initial inductions with the Founder and Chief Executive telling

commitment in this area. This includes emergency and crisis

the story behind the brand. Employees are encouraged

event management and business continuity plans.

to always ask: ‘Would Ted do it that way?’ We continue

employees’ cultural journeys throughout their employment

with Ted through various events.

Ted Baker Plc Annual Report and Accounts 2017/18 STRATEGIC REPORT

EMPLOYEE ENGAGEMENT
The Group places considerable value on the involvement

of its employees and continues to keep them informed on

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. Employee 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

initiatives to maintain interest and encourage participation.

During the period we launched our first engagement survey

across the Group with exceptional results and validation that

the employee experience is a positive one. Results have been

shared with the global teams and Ted will continue to drive

continuous enhancement and improvement and work hard to

exceed employee expectations.

SYSTEMS
Our new integrated HR and Payroll system has been

implemented in the UK Tedquarters and we will continue

its implementation across the UK Retail population during

2018/19 along with adding modules

learning and

development, resourcing and talent management. The phased

roll-out will continue in forthcoming periods to the remainder of

the Group. With focus on self-serve technology we can expect

improved people processes and analytics.

The Strategic Report was approved by the Board of Directors

on 22 March 2018 and signed on its behalf by:

Charles Anderson
Finance Director and Company Secretary

22 March 2018

ANITA BALCHANDANI –
NON-EXECUTIVE DIRECTOR (43) (RESIGNED)
Anita was appointed as a Non-Executive Director on 29

September 2017 and resigned on 19 February 2018 following

her acceptance of a new full-time role which does not permit

her to hold any non-executive positions.

Committee Membership: During her time on the Board, Anita
was Chairman of the Remuneration Committee and a member

of the Audit Committee. Anita was an Independent Director.

DIRECTORS’ REPORT

BOARD OF DIRECTORS

CURRENT DIRECTORS:

DAVID ALAN BERNSTEIN CBE, FCA –
NON-EXECUTIVE CHAIRMAN (74)
David is Chairman of the British Red Cross and also Chairman

RON STEWART, FCIB –
NON-EXECUTIVE DIRECTOR (70)
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

DIRECTORS’ REPORT

DIRECTORS WHO RESIGNED
DURING THE PERIOD:

ANNE SHEINFIELD –
NON-EXECUTIVE DIRECTOR (52) (RESIGNED)
Anne was appointed as a Non-Executive Director on 15 June

is Chairman of the PCC at St Andrew’s Church in Oxshott, a

2010 and resigned on 29 September 2017.

Committee Membership: During her time on the Board,
Anne was Chairman of the Remuneration Committee and

a member of the Nomination Committee. Anne was an

Independent Director.

of Autorama UK Ltd and Cogress Limited. Previously he was

Trustee of several local charities, a Governor of Reeds School

Chairman of Manchester City Plc, the Football Association

and Chairman of Reeds School Enterprises in Surrey.

and Blacks Leisure Plc, he was also joint Managing Director

of Pentland Group Plc. In the New Year Honours List of 2014,

David was appointed Commander of the Order of the British

Committee Membership: Ron is Chairman of the Audit
Committee and a member of the Nomination and Remuneration

Empire (CBE) for services to football.

Committees. Ron is the Senior Independent Director.

Committee Membership: David is Chairman of the Nomination
Committee and a member of the Remuneration Committee.

RAYMOND STUART KELVIN CBE –
CHIEF EXECUTIVE (62) (“CLOSEST MAN TO TED”)
Ray, the founder of Ted Baker, has worked in the fashion industry

ANDREW JENNINGS –
NON-EXECUTIVE DIRECTOR (69)
Andrew was appointed as a Non-Executive Director on 1

February 2014. He has worked in the international retail industry

for over 45 years at some of the world’s most respected high-

end speciality and department stores. Previously he was Chief

for over 40 years. In 1973 he founded PC Clothing Limited, a

Executive Officer of the Karstadt Group in Germany and prior to

supplier of womenswear to high street retailers. In 1987 Ray

this has held a number of senior executive positions at leading

developed the Ted Baker brand and has been Chief Executive

UK and international retailers including Saks Fifth Avenue in

of Ted Baker since its launch in 1988. In the New Year Honours

the USA; Holt Renfrew in Canada; Harrods and House of Fraser

List of 2011, Ray was appointed Commander of the Order of the

in the UK; and Brown Thomas in Ireland.

British Empire (CBE) for services to the fashion industry.

Committee Membership: not applicable.

LINDSAY DENNIS PAGE, MA, ACA –
CHIEF OPERATING OFFICER AND
GROUP FINANCE DIRECTOR (59)
Lindsay joined Ted Baker as Finance Director in February

1997. He joined Binder Hamlyn in 1981, and became a founder

Committee Membership: Andrew is a member of the Audit,
Nomination and Remuneration Committees. Andrew is an

Independent Director. With effect from 19 February 2018,

Andrew is the Chairman of the Remuneration Committee.

JENNIFER ROEBUCK –
NON-EXECUTIVE DIRECTOR (43)
Jennifer was appointed as a Non-Executive Director on

member of the corporate finance department in 1986 and a

29 September 2017. Jennifer is an experienced digital

partner in 1990. Binder Hamlyn subsequently merged with

and e-commerce executive with a background in digital

Arthur Andersen in 1994. Lindsay was appointed as the

transformation and brand marketing, particularly in the lifestyle

Group’s Chief Operating Officer in addition to his role as Group

and clothing sector. Jennifer is the co-founder of REVL, the

Finance Director on 8 July 2014.

events app, and has wide experience working in the hospitality

Committee Membership: not applicable.

sector and also with technology led start-ups.

Committee Membership: Jennifer is a member of the Audit
Committee. Jennifer is an Independent Director.

Ted Baker Plc Annual Report and Accounts 2017/18 DIRECTORS’ REPORT

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 April 2016. The Code was issued by

Ted Baker’s culture and values are central to the success of the

the Financial Reporting Council and is available to view on the

business, and that includes strong governance throughout the

Financial Reporting Council’s website https://www.frc.org.uk/.

business, while asking ourselves the question: “Would Ted do

The Board confirms that the Company has complied with the

it that way?”

provisions set out in the Code throughout the year, except in

respect of Code Provision C.3.1. An explanation of the reason

for this departure from the Code is set out on page 42.

An explanation of how the Main Principles have been applied is set out below:

LEADERSHIP

EFFECTIVENESS

ACCOUNTABILITY

REMUNERATION

The Board has clear divisions of responsibility and is collectively responsible for the long-term success
of Ted Baker. Our Non-Executive Directors constructively challenge and help develop proposals on strategy.
See pages 38–40.

We evaluate the balance of skills, experience, independence and knowledge of the Board and its committees
to ensure we are effective. See pages 38–40.

We present a fair, balanced and understandable assessment of Ted’s position and prospects. The Board
maintains sound risk management and internal control systems. See pages 22–26.

Director remuneration is set to promote the long-term success of Ted. See the Directors’ Remuneration
Report on pages 50–68.

RELATIONSHIPS WITH
SHAREHOLDERS

Strong relationships with our shareholders are key to fulfilling our objectives. The Board ensures that
effective and frequent dialogue with our shareholders takes place. See page 40.

TED BAKER PLC
BOARD OF DIRECTORS

NOMINATION
COMMITTEE

REMUNERATION
COMMITTEE

AUDIT
COMMITTEE

EXECUTIVE
COMMITTEE

RISK
COMMITTEE

IT STEERING
COMMITTEE

SOCIAL RESPONSIBILITY
COMMITTEE

To enable the Board to function effectively and for the

Directors to discharge their responsibilities, full and timely

BOARD EVALUATION
During the period, the Board undertook an informal evaluation

access is provided to all relevant information. A comprehensive

of its own performance, its committees’ performance and

board pack and formal agenda is prepared and circulated in

the performance of its Directors, with continuing assessment

advance of each Board meeting. Board members regularly

undertaken throughout the year in review. Informal evaluations

input into the level and quality of information provided, and

and assessments conducted by the Board and its committees

BOARD COMPOSITION
The Board currently comprises the Non-Executive Chairman,

of matters reserved to it for decision that is regularly updated.

request specific board papers on additional agenda items.

covered a range of issues around Board and Committee

These include decisions on the Group’s strategy, financial

There is an agreed procedure for Directors to take independent

membership, roles and responsibilities, and succession.

the Chief Executive, the Chief Operating Officer and Group

budgets, major capital expenditure and

transactions,

professional advice, if necessary, at the Company’s expense.

The most recent externally facilitated evaluation of the

Finance Director and three

independent Non-Executive

appointment of territorial and product licence partners, store

This is in addition to the access each Director has to the

Board and Committees’ effectiveness was undertaken by

Directors. Biographies of these Directors appear on page

openings, dividend policy, Group bonus and risk profile.

Company Secretary.

Sean O’Hare of Boardroom Dialogue Limited, an independent

36. The Board is of the view that its current membership

The requirement for Board approval on these matters is

The Company maintains an appropriate level of Director

external adviser with no other connection to the Company, in

provides an appropriate balance of skills, experience,

understood and communicated widely throughout the Group.

and officer liability insurance cover and, through the Articles

the 2015/16 financial period.

independence and knowledge, which enables it to discharge

The Non-Executive Directors meet with the Chairman

of Association and Directors’ terms of appointment, has

That Board evaluation concluded that the Board was

its responsibilities effectively.

separately during the year. In addition, the Non-Executive

agreed to indemnify the Directors against certain liabilities to

working well, considering the right topics on a timely basis

BOARD INDEPENDENCE
The Board considers Non-Executive Directors Ron Stewart,

Directors meet without the Chairman present to appraise the

third parties and costs and expenses incurred as a result of

and with an appropriate level of challenge. Areas of focus for

Chairman’s performance.

holding office as a Director. Save for such indemnity provisions

the Non-Executive Directors continue to be enhancing Board

Operational decision making, operational performance

in the Company’s Articles of Association and in the Directors’

engagement with the Executive Committee and building on

Andrew Jennings and Jennifer Roebuck to be independent for

and the formulation of strategic proposals to the Board are

terms of appointment (which were in force throughout

existing long-term succession planning throughout the Group,

the purposes of the Code.

controlled by the Group’s Executive Committee, which is

the period and are in force as at the date of these financial

which have been addressed during the current period.

BOARD OPERATION
The Board meets regularly throughout the year. It considers,

comprised of the Board of Directors of No Ordinary Designer

statements), there are no qualifying third-party indemnity

The next externally facilitated Board evaluation will be

Label Limited (one of the Group’s operating subsidiaries)

provisions in force.

conducted in accordance with the requirements of the Code

together with relevant heads of department as required.

during the 2018/19 financial period.

with the support of the Board Committees and the Executive

The Executive Committee meets regularly throughout

Committee, all issues relating to the strategy, direction and
future development of the Group. The Board has a schedule

the year.

Ted Baker Plc Annual Report and Accounts 2017/18 DIRECTORS’ REPORT

DIRECTORS’ REPORT

BOARD AND COMMITTEE ATTENDANCE
The table below details the number of Board and Committee meetings held during the period and the attendance record

AUDIT COMMITTEE REPORT

3. TAX
The Audit Committee has considered a range of tax

of each Director.

NUMBER OF MEETINGS HELD

Ray Kelvin CBE

Lindsay Page

David Bernstein CBE1

Ron Stewart

Andrew Jennings

Anne Sheinfield2

Jennifer Roebuck

Anita Balchandani3

BOARD
MEETINGS

AUDIT
COMMITTEE

REMUNERATION
COMMITTEE

NOMINATION
COMMITTEE

N/A

1 David Bernstein CBE resigned from the Audit Committee on 29 September 2017.
2 Anne Sheinfield resigned from the Board on 29 September 2017.
3 Anita Balchandani resigned from the Board on 19 February 2018.

DEAR SHAREHOLDER,
The role of the Audit Committee is to monitor the integrity of the

matters including:

Group’s financial statements and reporting responsibilities and

• the potential impact of any tax matters on the Group’s

to maintain its internal control and compliance procedures.

financial statements;

This year, the Audit Committee met four times. In its

• the Group’s tax strategy; and

meetings it focused on the Group’s risk management, internal

• the impact of Brexit on the Group’s tax strategy.

controls, tax, and external risk factors.

1. RISK MANAGEMENT
The Audit Committee regularly reviews how the Board is

4. EXTERNAL RISK FACTORS
As described in more detail in Principal Risks and Uncertainties

set out on pages 22–26, the Audit Committee is responsible

managing the risks the Group is facing throughout the year.

for reviewing the effectiveness of the Group’s system of risk

This year, the Board has specifically acted to:

management and internal controls. During the period, the

• review the robustness of the Group’s systems in

external advisors to monitor the Group’s risk profile and to

Audit Committee has worked with the Risk Committee and

response to the growing threat to its cyber security,

assess external risk factors.

including external penetration testing;

COMMUNICATION WITH SHAREHOLDERS
importance
The Group attaches considerable

Company’s Annual General Meeting at which they have the

• ensure that the Group is prepared for the forthcoming

the

opportunity to ask questions.

General Data Protection Regulation; and

PREPARATION OF THE REPORT
This Audit Committee Report has been prepared in accordance

effectiveness of its communication with its shareholders.

Non-Executive Directors are kept informed of the views of

• mitigate the foreign currency risks that the Group’s

with the Code and includes:

The full report and accounts are sent to all shareholders and

shareholders by the Executive Directors and are provided with

global business is exposed to, as a result of recent

further copies are distributed to others with potential interest

independent feedback from investor meetings.

market volatility.

in the Group’s performance.

• a description of the significant issues that the Audit

Committee considered in relation to the financial

Led by the Chief Executive, the Chief Operating Officer

and the Finance Director, the Group seeks to build on a mutual

CONFLICTS OF INTEREST
The Company’s Articles of Association take account of certain

The Audit Committee is satisfied that the risk management

statements, and how these issues were addressed;

process adopted by the Board has remained robust and

• an explanation of how the Audit Committee has

understanding of objectives between the Company and its

provisions of the Companies Act 2006 relating to Directors’

effective during the period.

institutional shareholders by making general presentations

conflicts of interest. These provisions permit the Board to

after the interim and preliminary results; meeting shareholders

consider, and if thought fit, to authorise situations where a

and potential

investors

to discuss

long-term

issues

Director has an interest that conflicts, or may possibly conflict,

2. INTERNAL AUDIT
The Audit Committee considered the Group’s range of internal

of the external auditors and information on the length

of tenure of the current audit firm and when a tender

assessed the effectiveness of the external audit

process and the approach taken to the reappointment

and gathering

feedback; and communicating regularly

with the interests of the Company. The Board has adopted

control systems, including those in relation to:

was last conducted; and

throughout the year via its investor relations programme. All

procedures for the approval of such conflicts. The Board’s

shareholders have access to these presentations, as well as

powers to authorise conflicts are operating effectively and the

to the Annual Report and Accounts and to other information

procedures are being followed. During the period no situational

•

inventory and supply chains;

• digital branding and PR; and

• an explanation of how the Group’s auditors’ objectivity

and independence are safeguarded when providing

non-audit services.

about the Company through the investor relations website at

conflicts of interest were disclosed by the Directors.

• the detection of fraud, bribery and corruption.

www.tedbakerplc.com. Shareholders may also attend the

Having analysed and challenged the results of the internal

the external auditors, together with the regular circulation

audit at regular intervals, the Audit Committee is satisfied that

and review of board papers and financial information, have

the Group had suitable and effective internal controls in place

enabled the Audit Committee to discharge its duties and

during the period.

responsibilities effectively.

Meetings with senior management, internal audit and

More information in respect of the Audit Committee’s role

in reviewing internal controls and risk management practices

is set out on page 23.

Ted Baker Plc Annual Report and Accounts 2017/18 DIRECTORS’ REPORT

AUDIT COMMITTEE MEMBERSHIP
During the period, Ron Stewart was Chairman of the Audit

of the Audit Committee because of his extensive, relevant and

necessary financial experience.

Committee. The other members were Andrew Jennings

Anita Balchandani was a member of the Audit Committee

and,

from her appointment on 29 September 2017,

from her appointment on 29 September 2017 until her

Jennifer Roebuck.

resignation from the Board and associated committee

Provision C.3.1 of the Code provides that the Audit

positions on 19 February 2018.

Committee should comprise of at least three independent

The expertise of the Audit Committee members is

Non-Executive Directors, and that the Chairman of the

considered as part of the annual review of the Committee’s

DIRECTORS’ REPORT

AGENDA ITEMS

4. Risk management

Monitoring the Board’s management of risk

Receiving and reviewing the findings of the internal audit

5. Tax

Identifying and responding to the key tax risks to the Group

Overseeing the Group’s tax strategy

Company should not be a member of the Audit Committee.

effectiveness. The Board is satisfied that the Committee

6. Internal policies

This notwithstanding, David Bernstein CBE, Chairman of the

possesses recent and relevant financial experience, sectoral

Setting the terms of reference of the Audit Committee

Company, was a member of the Audit Committee until his

competence and appropriate levels of independence, and

Adopting an appropriate whistle blowing policy

resignation from that committee on 29 September 2017. In

that its members offer a depth of financial and commercial

Setting out the non-audit services provided by KPMG

this regard, the Board recognises that the Company has not

experience across various industries.

been fully compliant with Provision C.3.1 of the Code during

The terms of reference for the Audit Committee are

the period but, prior to additional NED appointments being

available on the Company’s website, www.tedbakerplc.com.

made, considered David Bernstein to be a valuable member

KEY MATTERS
A summary of the key matters considered by the Audit Committee during the period are set out below. The Audit Committee has

considered matters according to the following broad themes:

Setting out the non-audit spend

Investigating whether the Group employs former KPMG staff

7. External risks

Reviewing cash flow forecasts

Setting the level of materiality

Assessing how external influences will affect the Groups ability
to resource

Monitoring the Group’s Cyber Risk Review

Appraising the investment in new stores

Monitoring the foreign currency risk to the Group

Monitoring the likely impact of Brexit on the market

Monitoring the Group’s preparations for compliance with the
General Data Protection Regulation

MARCH
2017

JULY
2017

OCTOBER
2017

NOVEMBER
2017

The main areas of judgement and estimation are set out in the accounting policies on pages 89–95.

MARCH
2017

JULY
2017

OCTOBER
2017

NOVEMBER
2017

1. Financial oversight;

2. Conduct of the audit;

3. Statutory compliance;

4. Risk management;

5. Tax;

6. Internal policies; and

7. External risks.

AGENDA ITEMS

1. Financial oversight

Reviewing the progress of the Full Year Report/Interim Report

Assessing the KPMG Audit Committee Paper summarising the
results from the year-end external audit

Assessing the KPMG Audit Committee Paper summarising the
results from the interim review

2. Conduct of the audit

Overseeing the KPMG Audit Strategy

Receiving and reviewing the KPMG Management Letter
on control observations

Monitoring the effectiveness of external auditors

Monitoring the independence of KPMG

3. Statutory compliance

Ensuring compliance with mandatory audit rotation
and tendering

Tracking and adopting updates to accounting standards

Ted Baker Plc Annual Report and Accounts 2017/18 DIRECTORS’ REPORT

DIRECTORS’ REPORT

SIGNIFICANT ISSUES
The Audit Committee received and reviewed reports from

basis of current and projected performance, with growth

4) Future IFRS developments

above set monetary thresholds. In approving any non-audit

assumptions based on Directors’ knowledge and experience.

The Audit Committee has discussed future accounting

services the Audit Committee considers any threats, perceived

management and the external auditors setting out the

Given the relative immaturity of the brand outside the UK, the

developments likely to affect the presentation of the Group’s

or actual, to the auditors’ independence taking regard of the

significant issues in relation to the financial statements for

payback period is typically longer and it is not uncommon for

financial statements.

guidance contained in the relevant ethical standards.

the period which related to the carrying value of inventory

new stores to make losses in their start-up phase. Judgement

and the carrying value of retail fixed assets (being leasehold

is therefore applied by the Directors in assessing the trigger

improvements and fixtures and fittings).

point for impairment, recognising that losses in the start-up

TAX GOVERNANCE FRAMEWORK
The Finance Director is responsible for the Group’s tax policy

To assess the effectiveness of the external auditors, the

Audit Committee reviewed:

These

issues were discussed and challenged with

phase are not always indicative of the future performance

which is implemented with the assistance of the senior finance

management during the period. They were also discussed with

of a particular store. The future forecasts are inherently

and Group tax team. This is reviewed on an ongoing basis as

• the external auditors’ fulfilment of the agreed audit plan

the external auditors at the time the Audit Committee reviewed

judgemental and the key sensitivity includes achieving the

part of the regular financial planning cycle. In addition, the

and variations from it;

and agreed the external auditors’ Group audit plan, when

growth rates for a particular store and relevant to the specific

Group’s tax status is reported regularly to the Board and Audit

• reports highlighting the major issues that arose during the

the external auditors reviewed the half year interim financial

market. A change in these assumptions will impact the future

Committee. The Audit Committee is responsible for monitoring

course of the audit; and

statements in October 2017, and also at the conclusion of the

forecasts and management’s assessment of the profitability

all significant tax matters including the Group’s tax policy.

•

feedback from the businesses evaluating the performance

audit of the financial statements for the period.

of each store. The assumptions are continually reviewed

In accordance with the measures announced in Finance

of each assigned audit team.

against current trading performance and external factors that

Act 2016, Ted Baker has published on its website details of the

1) Carrying value of inventory

impact the fashion industry and consumer demand for specific

Group’s tax strategy as it relates to or affects UK taxation. The

The Audit Committee held meetings with the external

The Directors have used their knowledge and experience

regions, including for example macro-economic conditions

Group’s tax strategy is available on the Company’s website at

auditors before each Audit Committee meeting to review key

of the fashion industry in determining the level and rates of

that may impact consumer spending patterns and tourism.

http://www.tedbakerplc.com/investor-relations/tax-strategy.

issues within their scope of interest and responsibility. To fulfil

provisioning required to calculate the appropriate inventory

The Directors use their knowledge of the fashion industry

carrying values. Inventory is carried in the financial statements

and experience built over many years to set and monitor the

at the lower of cost and net realisable value. Sales in the fashion

assumptions included within the forecasts.

EXTERNAL AUDIT
The Audit Committee oversees the Group’s relationship with the

Audit Committee reviewed:

its responsibility for oversight of the external audit process, the

industry can be extremely volatile with consumer demand

The external auditors explained to the Audit Committee

external auditors and makes recommendations to the Board

• the terms, areas of responsibility, associated duties

changing significantly based on current trends. As a result there

the work they had conducted during the year. On the

in relation to their appointment, reappointment and removal

and scope of the audit as set out in the external

is a risk that the cost of inventory exceeds its net realisable

basis of their audit work, the external auditors reported no

and approves their remuneration and terms of engagement.

auditors’ engagement letter for the forthcoming year;

value. Management calculates the inventory provision on the

inconsistencies or misstatements that were material in the

The Board and Audit Committee also review the independence

• the external auditors’ overall work plan for the

basis of the ageing profile of what is in stock. Provisions are

context of the financial statements as a whole, and in the view

of the external auditors and consider the engagement of the

forthcoming year;

considered on a seasonal basis taking into consideration the

of the Audit Committee this supports the appropriateness of

external auditors to supply non-audit services.

• the external auditors’ fee proposal;

various channels that are available to the Group to sell existing

the Group’s methodology.

The Company has adopted a formal policy on the supply

• the major issues that arose during the course of the

inventory and the estimated prices that can be achieved. Any

changes to the prices that can be achieved could impact the

3) Misstatements

of non-audit services by the external auditors. They may only

audit and their resolution;

provide such services on condition that such advice does

• key accounting and audit judgements;

provisions that are required to cover the risks associated with

Management confirmed to the Audit Committee that they

not conflict with their statutory responsibilities and ethical

• the level of errors identified during the audit; and

holding older season inventory. Adjustments are made where

were not aware of any material misstatements or immaterial

guidance. The Audit Committee Chairman’s pre-approval is

• recommendations made by the external auditors

appropriate based on Directors’ knowledge and experience to

misstatements made intentionally to achieve a particular

required before the Company uses non-audit services that

in their management letters and the adequacy of

calculate the appropriate inventory carrying values.

presentation. The external auditors reported to the Audit

exceed £25,000. Where fees are expected to be above £50,000,

management’s response.

Management confirmed to the Audit Committee that there

Committee the misstatements that they had found in the course

this requires approval from the Audit Committee Chairman and

have been no significant changes to the approach used to

of their work and no material amounts remain unadjusted. The

one other member of the Audit Committee. The aggregate

Consideration is also given by the Audit Committee to

estimate inventory provisions from the prior year. The external

Audit Committee confirms that it is satisfied that the external

spend is also reviewed by the Audit Committee on an annual

the need to include the risk of the withdrawal of the external

auditors explained to the Audit Committee the work they

auditors have fulfilled their responsibilities with diligence and

basis. Details of the auditors’ remuneration for audit and non-

auditors from the market in its risk evaluation and planning.

had conducted during the year. On the basis of their audit

professional scepticism.

audit fees are disclosed in Note 3 to the financial statements

The Audit Committee considers the reappointment of the

work, the external auditors reported no inconsistencies or
misstatements that were material in the context of the financial

After reviewing and challenging the presentations and
reports from management and consulting where necessary

for the period.

The Audit Committee recognises that the independence of

external auditors each year and assesses their independence
on an ongoing basis. KPMG have been the Company’s external

statements as a whole, and in the view of the Audit Committee

with the external auditors, the Audit Committee is satisfied

the external auditors is an essential part of the audit framework

auditors since 2001, with a competitive audit tender process

this supports the appropriateness of the Group’s methodology.

that the financial statements appropriately address the critical

and the assurance that it provides. The Audit Committee

last carried out in 2012. The Audit Committee notes the final

2) Carrying value of retail fixed assets (being leasehold
improvements and fixtures and fittings)

reported and the disclosures). The Audit Committee is also
satisfied that the significant assumptions used for determining

auditors to ensure that their objectivity and independence is
not compromised. The Audit Committee regularly reviews the

EU Regulation on audit rotation and will ensure compliance
with these requirements in considering when next to tender

Leasehold improvements and fixtures and fittings for stores

the value of assets and liabilities have been appropriately

level of non-audit fees and as noted above pre-approval for any

the external audit, which must be completed by the year ended

are identified for further impairment testing primarily on the

scrutinised, challenged and are sufficiently robust.

such services is required from the Audit Committee Chairman

25 January 2025. The requirements of the Code and the Order

judgements and key estimates (both in respect to the amounts

monitors any non-audit work that is undertaken by the external

Order of the Competition and Markets Authority and the new

Ted Baker Plc Annual Report and Accounts 2017/18 DIRECTORS’ REPORT

DIRECTORS’ REPORT

and EU Regulation notwithstanding, the Audit Committee will

Director at regular intervals. The Audit Committee assesses

continue to monitor the effectiveness of the external auditors

the findings of the Risk Committee and tasks the internal

NOMINATION COMMITTEE REPORT

on an annual basis and will tender in accordance with the new

audit with investigating how the Group has responded to

EU regulations. Accordingly, the Company confirms that it

them. The Audit Committee approves the scope of the internal

DEAR SHAREHOLDER,
The role of the Nomination Committee is to establish a

Jennifer is an experienced digital and e-commerce

executive with a background in digital transformation and

brand marketing, particularly in the lifestyle and clothing

sector. Jennifer is the co-founder of REVL, the events app, and

complied with the provisions of the Competition and Markets

audit function (permitting for this to change in order to remain

framework for the process of appointment of new Directors to

has wide experience working with technology led start-ups.

Authority’s Order for the financial year under review.

abreast of any new developments encountered by the Group)

the Board. The Nomination Committee is also responsible for

On 19 February 2018, Anita Balchandani resigned from the

KPMG have expressed their willingness to continue

and challenges its conclusions. When appointing the Internal

overseeing succession planning requirements, including the

Board and associated committees following her acceptance of

in office as external auditors. The Audit Committee has

Audit team, the Audit Committee satisfied itself that the people

identification and assessment of potential Board candidates

a new full-time role which does not permit her to hold any non-

recommended to the Board that KPMG LLP be appointed as

assigned to it have the necessary experience and expertise to

and making recommendations to the Board for its approval.

executive positions.

the Group’s external auditors for the 2018/19 financial period

effectively fulfil their role. The performance of internal audit is

and the Directors will be proposing the reappointment of

evaluated according not only to the risks it identifies but also

KPMG at the Annual General Meeting in 2018.

to the proposals it offers to remedy those risks.

NOMINATION COMMITTEE MEMBERSHIP
During the period the Nomination Committee was chaired by

Nomination Committee considered long-term succession

planning including the timing and the process for recruitment

David Bernstein and its other members were Ron Stewart,

and transition during the period.

In addition to the above directorate changes, the

INTERNAL AUDIT
The Audit Committee also oversees the Group’s internal

WHISTLEBLOWING
The Audit Committee is responsible for the review of the

Andrew Jennings and, prior to her resignation from the

Board and associated committee positions on 29 September

audit function, including its role, mandate and audit plan.

Company’s procedures for responding to the allegations

2017, Anne Sheinfield. The composition of the Nomination

DIVERSITY
Boardroom diversity, including gender, is an important

Certain internal audit functions were outsourced to PwC. The

of whistle blowers and the arrangements by which staff may,

Committee during the year complied with Provision B.2.1 of

consideration when assessing a candidate’s ability to

Group has found that the effectiveness of the internal audit

in confidence, raise concerns about possible financial

the Code.

contribute to, and complement the abilities of, a balanced

has been increased by engaging PwC, as it has allowed the

reporting irregularities.

On behalf of the Board I would like to thank Anne for

Board. We strongly support the principle of boardroom

Group’s management to access a wider range of expertise

than it otherwise would have, and afforded management the

opportunity to have its processes and findings challenged by

an independent reviewer.

The focus of the internal audit is influenced by the risks,

Ronald Stewart
Chairman of the Audit Committee

controls and management action plans identified by the Risk

22 March 2018

Committee, which are presented to the Board by the Finance

her major contribution and dedicated service during her

diversity, as evidenced by Anne Sheinfield’s tenure from

time with Ted Baker, in particular her stewardship of the

June 2010 to 29 September 2017, and the appointments of

Remuneration Committee.

Jennifer Roebuck and Anita Balchandani.

The Nomination Committee is responsible for nominating

Our Board appointments will always be made on merit

candidates for appointment to the Board.

against objective criteria, and this will continue to be the

All Non-Executive Directors are advised of the time

priority rather than aiming to achieve an externally prescribed

commitment considered necessary to enable them to fulfil

diversity target.

their responsibilities prior to appointment.

The Group continues to support the development and

The terms of reference for the Nomination Committee are

progression of all employees, with the aim of maintaining and

available on the Company’s website, www.tedbakerplc.com.

achieving diversity throughout all levels of the organisation.

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.

David Bernstein CBE
Chairman of the Nomination Committee

However, in line with Provision B.7.1 of the Code, the Board

22 March 2018

has determined that all Directors must retire and stand for

re-election by shareholders on an annual basis.

During the period, Jennifer Roebuck and Anita Balchandani

were appointed to the Board on 29 September 2017. With

the assistance of an external search consultancy, Blackbook
Executive Search, the Committee considered a shortlist

of potential candidates in light of the balance of skills,

experience, independence and knowledge on the Board,

determining against objective criteria. Other than the provision

of executive search services, Blackbook does not have any
other connection with the Company.

Ted Baker Plc Annual Report and Accounts 2017/18 DIRECTORS’ REPORT

DIRECTORS’ REPORT

DIRECTORS’ REMUNERATION REPORT

2017/18 – A YEAR IN REVIEW
Our unique and talented teams are dedicated to developing

2018/19 – THE YEAR AHEAD
The Remuneration Committee has proposed a 1.8% and 2.0%

The Gender Pay Gap Report will be published on the

investor relations website at http://www.tedbakerplc.com.

PART A: ANNUAL STATEMENT

the brand and furthering the growth of the business. Their

increase in the basic salaries of the Chief Executive Officer

The Remuneration Committee will review this report and is

commitment to take on diverse and complex challenges with

and Chief Operating Officer and Group Finance Director

committed to ensuring equitable pay considerations across

DEAR SHAREHOLDER,
I am pleased to present the Directors’ Remuneration

passion and professionalism has increased the strength of

respectively. The increase was determined after considering

gender and relative scaled roles.

the Ted Baker brand to deliver continued levels of profitability.

inflation and other global economic factors. This is broadly

Report, which has been prepared on behalf of the Board

However, while the Group has achieved a good performance in

consistent with the salary increases for employees across

by the Remuneration Committee in accordance with the

the year, challenging conditions meant that the stretch profit

the Group where a 1.5% increase has been introduced by

IN CONCLUSION
Part B of this Report contains the Directors’ Remuneration

requirements of the Companies Act 2006 and Schedule 8 of the

target for the annual bonus set at the beginning of the period

reference to a pay for performance model with direct linkage

Policy, as approved by shareholders. Part C, the Annual Report

Large and Medium-sized Companies and Groups (Accounts

has not been exceeded. As a result, no annual bonus payment

to the successful achievement of key business objectives.

on Remuneration, provides further details on remuneration

and Reports) Regulations 2008, as amended, and meets the

to the Executive Directors or the wider employee population

This Group methodology for rewarding individual performance

during the period.

relevant requirements of the Listing Rules of the Financial

will be made.

ensures that each individual employee is challenged on

Conduct Authority and the UK Corporate Governance Code.

I am pleased to report that the second award made under

achieving goals linked with their departmental and wider

I would like to thank you for your ongoing support.

The Remuneration Report is split into three parts:

Plan 2013 (the “2013 LTIP”) vested in full in April 2017. Both

linked to strategic objectives are providing greater awareness,

the shareholder-approved Ted Baker PLC Long-Term Incentive

business objectives. While in its infancy, measures directly

the share price and profit growth performance conditions were

ownership and contribution. Exceptional increments above

• Part A: The Annual Statement.
• Part B: The Directors’ Remuneration Policy which sets out
the Company’s policy on Directors’ remuneration which

confidently achieved. Furthermore, a fifth award of options

the pay for performance increment are reserved for significant

was made under the 2013 LTIP Scheme in April 2017. This

change in role or responsibilities, market value at the median

Andrew Jennings
Chairman of the Remuneration Committee

award of options carries the equivalent share price and profit

level, and relative value to Ted.

22 March 2018

was approved at the Annual General Meeting (“AGM”)

growth performance conditions as the four previous awards

Awards will be made to Executive Directors under the annual

held on 13 June 2017, and the key factors that were taken

and will vest in April 2020.

bonus scheme and the LTIP. These awards will be subject to

into account in setting the policy. You will not be asked to

At the AGM held on 13 June 2017, the last period’s Directors’

share price and profit growth performance conditions as set

vote on the Directors’ Remuneration Policy this year, as it

Remuneration Report (excluding the Remuneration Policy) was

out in the Directors’ Remuneration Policy. These performance

is only usually subject to a binding shareholder vote every

approved by 99.5% of shareholders, and the new Directors’

conditions have enabled consistent incremental development

third year following its approval.

Remuneration Policy was approved by 95.2% of shareholders.

of Ted’s business model enhancing our position as a leading

• Part C: The Annual Report on Remuneration which sets
out payments and awards made to Executive Directors

As such, the Remuneration Policy will apply for the three years

global lifestyle brand.

from 13 June 2017. The high level of shareholder approval

and Non-Executive Directors during the 2017/18

confirms our approach to remuneration, which is intended to

financial year and details the synergy between Company

attract, motivate and retain high quality management.

performance and remuneration for that period.

Ted Baker Plc Annual Report and Accounts 2017/18 DIRECTORS’ REPORT

DIRECTORS’ REPORT

PART B: DIRECTORS’ REMUNERATION POLICY

Remuneration packages for Executive Directors are

REMUNERATION POLICY TABLE – EXECUTIVE DIRECTORS

REMUNERATION POLICY
The policy described in this section was approved by

structured to provide a balance between fixed basic

salary and variable remuneration based on individual and

Group performance.

shareholders on 13 June 2017 at the Company’s Annual

Non-Executive Directors are remunerated with fees in

General Meeting and applies for three years commencing on

line with market rates. They do not receive any pension or

that date. No changes have been made to the policy since

other benefits, other than the reimbursement of reasonable

it came into effect on that date. The policy can be found in

expenses, and they do not participate in any bonus or share

the Group’s annual accounts for the year ended 28 January

schemes. In the period, benchmarking of Non-Executive

2017 at www.tedbakerplc.com. The original policy approved

Director

fees was undertaken and the recommended

by shareholders on 10 June 2014 can be found in the Group’s

changes actioned.

annual accounts for the year ended 25 January 2014 at

www.tedbakerplc.com.

The aim of the Group’s remuneration policy is to attract,

SHORT AND LONG-TERM REMUNERATION
Group policy is to use fixed annual elements of remuneration

motivate and retain high quality management. The policy

such as salary, pension and benefits to recognise the status

is designed to incentivise senior executives according to

of our Executive Directors and to ensure current and future

the levels of value generated for shareholders, and to use

market competitiveness.

performance metrics that create a strong linkage between

The use of short-term annual bonus incentives and

senior management remuneration and business performance

Long-Term Incentive Plans (“LTIPs”) provides a direct link

over the short and the longer term.

between remuneration and KPI’s. It also creates a synergy

The total breadth of the remuneration package is evaluated

between the Executive Directors’ personal return and the

upon comparison with the individual components and total

return to investors.

reward value of packages offered within similar companies,

Both the short and long-term incentives are used to

having regard to:

motivate and reward them for sustaining and growing the

ELEMENT

MAXIMUM POTENTIAL

OPERATION AND LINK
TO STRATEGY

PERFORMANCE TARGETS AND
TIME PERIOD

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.

ANNUAL BONUS*

Up to 100% of base salary.

Salary reviewed annually and
reflects the role and sustained value
of the individual in terms of skills,
experience and contribution.

N/A

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.

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.

success of the Ted Baker Group.

LTIPS**

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.

• 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 as

and when required to ensure 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 prior period and the results presented to the Remuneration

Committee in February 2017. This used a comparator model of

the median salary of the CEO role in similar companies using
the criteria above, and structured on a percentage scaling for

relative levels within the Executive Management Board group.

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 three or five year period.

To align the interests of Executive
Directors with the long-term
interests of the shareholders.

N/A

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.

25% vesting if compound annual
growth of profit before tax per
share of 10% over the three 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 two 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.

Ted Baker Plc Annual Report and Accounts 2017/18 DIRECTORS’ REPORT

DIRECTORS’ REPORT

ELEMENT

MAXIMUM POTENTIAL

OPERATION AND LINK TO
STRATEGY

PERFORMANCE TARGETS AND
TIME PERIOD

SHARE OWNERSHIP
GUIDELINES

N/A

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. Shareholding
for new Executive Directors can be
acquired over five years.

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.

Positioned to ensure broad
competitiveness with market practice.

N/A

Maximum car allowance entitlements
are based on the estimated costs of
running a private car.

N/A

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 employees 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 share price growth target has been favoured over a total shareholder return (“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

companies of a similar size and complexity. A benchmarking

exercise of NED fees was undertaken in the period.

When recruiting NEDs, the remuneration arrangements

Directors (“NEDs”) with broad commercial, international or

offered will generally be in line with those set out in the Non-

other relevant experience. The remuneration policy for NEDs is

Executive Directors’ Remuneration Policy Table below.

set by the Board having taken account of the fees paid by other

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.

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.

Non-Executive Director fees are not subject to
clawback or withholding arrangements.

The Group provides each NED with relevant
liability insurance for the duration of their
appointment.

NEDs are reimbursed for reasonable expenses,
none of which comprises taxable benefits.

All NEDs stand for reappointment on an annual
basis at every AGM.

DIFFERENCES IN REMUNERATION POLICY
FOR ALL EMPLOYEES
A consistent remuneration approach is applied at all levels

throughout the Group, except as outlined below, to ensure that

STATEMENT OF CONSIDERATION OF
EMPLOYMENT CONDITIONS ELSEWHERE
IN THE COMPANY
The Group Head of Human Resources presents to the

business strategy and performance are aligned and that the

Remuneration Committee at its General Meeting in February

total reward is sufficient to attract and retain high-performing

of each year on proposed pay for performance salary

and talented individuals.

increment potential for the general employee population and

All employees of Ted Baker are entitled to a base salary,

on any changes to remuneration policy within the Group. The

access to a discretionary company and individual performance

Remuneration Committee limits any increases in base salary

based annual or periodic bonus and a range of benefits

for Executive Directors so that they are broadly in line with the

dependent upon their role within the Group. The maximum

mechanics applied across the general employee population

potential annual base salary increase in any one year is

for pay for performance and exceptional increases as

consistent across all employees via a pay for performance

detailed above. This includes the ability to make incremental

scheme. Any exceptional increase to base salary is structured

changes if the salary and total reward falls below the targeted

around specific criteria linked to significant change in role or

median range.

level of responsibility, market value at a median level, value

Proposed remuneration arrangements are discussed with

to Ted and cross departmental equality for like roles. The

employee communication groups and senior management.

maximum opportunity for bonus and benefits is based on

The Remuneration Committee does not specifically

seniority, responsibility and function of the role.

invite employees to comment on the Executive Directors’

Conditional long-term share awards are only available to

remuneration policy but any comments made by employees

Executive Directors and other members of senior management

are taken into account.

across the Group. Share option grants under the Ted Baker

As well as benchmarking the remuneration packages

Sharesave scheme are available to all UK employees.

of an Executive Director peer group as and when required,

Malus and clawback provisions for Executive Director
annual bonus payments and awards made under the 2013 LTIP

any benchmarking exercise undertaken which subsequently
underpins the Group’s remuneration policy for Executive

after 1 April 2017 are similarly applied to senior members of the

Directors also considers the remuneration levels of other

Group management team.

senior executives within the Group.

The Remuneration Committee continues to support its

established commitment to the Company policy of targeting
for senior management and
total remuneration

levels

employees across the Group within the median range in order

to retain and reward key individuals.

Ted Baker Plc Annual Report and Accounts 2017/18 DIRECTORS’ REPORT

DIRECTORS’ REPORT

SERVICE CONTRACTS AND POLICY OF PAYMENTS FOR LOSS OF OFFICE

STANDARD PROVISION

POLICY

DETAILS

Notice periods in Executive Director
service contracts

Twelve months’ notice from
the Company.

Twelve 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 twelve months’
salary, pension and benefits
(excluding bonus).

Payable monthly and adjusted
if the Executive Director obtains
alternative employment.

Treatment of annual bonus
on termination

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.

“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.

OTHER PROVISIONS IN
SERVICE CONTRACTS

Executive Directors’ service
contracts include non-compete
and non-poaching provisions.

N/A

Treatment of unvested and deferred
share awards on termination under
plan rules

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.

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.

N/A

Treatment of unvested and deferred
share awards in the event of a
change in control of the Group

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:

Three to six months’ notice from
the Company.

Three to six months’ notice from
the NED.

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.

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.

N/A

CONTRACTS OF SERVICE AND LETTERS OF APPOINTMENT
Each Executive Director has a service contract. Service contracts and letters of appointment are available for inspection at the

registered office. The Board sets NEDs’ fees.

David Bernstein

Ray Kelvin

Lindsay Page

Ron Stewart

Anne Sheinfield*

Andrew Jennings

Anita Balchandani**

Jennifer Roebuck

DATE OF SERVICE
CONTRACT/LETTER OF
APPOINTMENT

UNEXPIRED
TERM

NOTICE PERIOD

PROVISION FOR
COMPENSATION

24/1/2003

17/7/1997

1/4/2017

29/9/2017

N/A

2 years 2 months

N/A*

2 years 2 months

2 years 8 months**

2 years 8 months

6 months

12 months

3 months

None

*Anne Sheinfield resigned as Non-Executive Director after more than seven years in the role on 29 September 2017.
**Anita Balchandani resigned as Non-Executive Director on 19 February 2018.

RECRUITMENT REMUNERATION
The Group’s strong brand identity, cultural and family ethos

awarded would be no greater than the value forfeited by the

individual. The Committee may choose to apply performance

engages and attracts talented candidates of a high calibre.

conditions to these awards.

If required, external recruitment agencies are engaged to

A relocation package within HMRC guidelines will be

support the search for specialist roles however the employer

offered to Executive Directors who are required to relocate to

brand enables significant attraction through our own direct

take up their appointment within the Group.

hiring sources.

The remuneration package for any new Executive

The Remuneration Committee’s approach to recruitment

Directors would be made up of the same or broadly similar

remuneration is to set pay levels at the comparable internal

components to those used to reward existing Executive

rate and no more than is necessary to attract candidates with

Directors of the Group. The remuneration package would

the appropriate level of skill and experience to the role. The

comprise an appropriate mixture of fixed and variable

Remuneration Committee retains the principle of a median

remuneration as may be required to attract a candidate

level total remuneration package when benchmarking for new

of appropriate skill and level of qualification. Minimum

and senior roles.

shareholding requirements would be set at a lower level for all

In order to attract key talent to Ted Baker, the Remuneration

new Executive Directors joining the Group.

Committee will, in certain circumstances, consider making a

Consistent with the policy applied to existing Executive

buy-out award to compensate a candidate for losses incurred

Directors, the maximum variable pay elements for any new

by leaving a previous employer to join the Group. The specifics

recruit would comprise annual bonus of up to 100% of base

of any buy-out award would be dependent on the individual

salary, and awards under the 2013 LTIP of up to 150% of base

circumstances of recruitment and would not be considered as

salary (200% in exceptional circumstances).

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

Ted Baker Plc Annual Report and Accounts 2017/18 DIRECTORS’ REPORT

DIRECTORS’ REPORT

TOTAL REMUNERATION OPPORTUNITY
The total remuneration for each of the Executive Directors that could result from the remuneration policy in 2018/19 under three

different performance scenarios is shown below:

RAY KELVIN
2,000

LTIP

1,800

1,600

1,400

1,200

1,000

800

600

400

200

Annual Bonus

Fixed Pay

929

18%

30%

481

1,629

42%

28%

100%

52%

30%

LINDSAY PAGE
2,000

LTIP

Annual Bonus

Fixed Pay

944

17%

28%

516

1,614

41%

27%

100%

55%

32%

1,800

1,600

1,400

1,200

1,000

800

600

400

200

FIXED

TARGET

MAXIMUM

FIXED

TARGET

MAXIMUM

(Note: Figures are stated in £’000)

NOTES:

Fixed pay is base salary plus pension and benefits for 2018/19.

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 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.

STATEMENT OF CONSIDERATION OF
SHAREHOLDER VIEWS
The Remuneration Committee reviews annual shareholder

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

feedback on the Directors’ Remuneration Report to ensure

remained appropriate for the Company and no significant

their views are given due consideration in forming the

changes were proposed. The only amendment to the 2013 LTIP

Company’s remuneration policy. Feedback is sought from

in the Directors’ Remuneration Policy was the introduction

key shareholders on any major changes to components of

of malus and clawback provisions to awards made after

executive remuneration, including the level of awards to be

1 April 2017. This was approved by shareholders in a binding

made and the performance targets in respect of the Company’s

shareholder vote at the 13 June 2017 Annual General Meeting.

long-term incentive schemes.

In accordance with the views shared by shareholders,

In 2013 the Remuneration Committee consulted with key

malus and clawback provisions were also proposed and

shareholders on the design of the Ted Baker PLC Long-term

agreed by shareholders on 13 June 2017 for bonus payments

Incentive Plan 2013. The consultation included consideration

made after 1 April 2017. These measures protect shareholder

of the move from a single performance period spanning three

interests and, taken together with the

introduction of

years to rolling annual awards, performance metrics and

minimum shareholding guidelines help align the interests of

conditions, and the level of awards. A number of meetings

shareholders with the executive team.

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.

Ted Baker Plc Annual Report and Accounts 2017/18 DIRECTORS’ REPORT

DIRECTORS’ REPORT

PART C: ANNUAL REPORT ON REMUNERATION

ANNUAL RATES OF SALARY IN FORCE DURING THE PERIOD

The tables below set out in a single figure the total amount of remuneration, including each element, received by each of the

Ray Kelvin

Executive and Non-Executive Directors for the periods ended 27 January 2018 and 28 January 2017.

DIRECTORS’ SINGLE TOTAL FIGURE OF REMUNERATION (AUDITED)

PERIOD ENDED
27 JANUARY 2018

SALARY

BENEFITS*

PERFORMANCE
RELATED BONUS

LONG-TERM
INCENTIVE
PLANS**

PENSION

TOTAL 2018

29 January 2017–31 March 2017

1 April 2017–27 January 2018

Lindsay Page

29 January 2017–31 March 2017

1 April 2017–27 January 2018

£’000

445

452

425

431

£’000

EXECUTIVE

Ray Kelvin

Lindsay Page

NON-EXECUTIVE

David Bernstein

Ron Stewart

Anne Sheinfield

Andrew Jennings

Anita Balchandani

Jennifer Roebuck

451

434

1,168

852

796

£’000

1,321

1,302

1,648

2,906

PERIOD ENDED
28 JANUARY 2017

SALARY

BENEFITS*

PERFORMANCE
RELATED BONUS

LONG-TERM
INCENTIVE
PLANS**

PENSION

TOTAL 2017

£’000

EXECUTIVE

Ray Kelvin

Lindsay Page

NON-EXECUTIVE

David Bernstein

Ron Stewart

Anne Sheinfield

Andrew Jennings

445

425

1,090

757

702

1,459

1,217

1,198

2,635

*Benefits comprise private medical insurance, car benefits and the discount on any SAYE options granted during the period.
**The value of LTIPs included in the Directors’ single total figure of remuneration tables above relates to Award 2 of the 2013 LTIP which vested in full on 30 April 2017 (2016:
Award 1 of the 2013 LTIP which vested in full on 2 July 2016). The value included is calculated using the number of options that vested at the share price on the date the Award
vested (£28.07), less the cost of exercise (nominal cost of 5p per ordinary share).

ANNUAL BONUS (AUDITED)
For the financial period ended 27 January 2018, 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
2018

£77.3m

MAXIMUM
BONUS
2018

ACTUAL
PERFORMANCE
2018

£85.3m

100%

£73.5m

*The profit target is arrived at after adjusting profit before tax for exceptional 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 (AUDITED)
During the period, the second award granted under the 2013 LTIP vested in full on 30 April 2017. The table below summarises

actual outcomes against the performance conditions set for that Award.

Threshold performance target

Maximum performance target

Actual performance achieved

Percentage of maximum achieved

SHARE PRICE INCREASE UNDERPIN*

PROFIT PER SHARE GROWTH**

PERFORMANCE CONDITIONS

10.0%

30.5%

100%

10.0%

15.0%

17.8%

100%

*Based on base average six month share price at the award date of £21.03 and the six month average at the vesting date of £27.45.
**Based on base profit per share in 2013/14 of 91.1p and final profit per share of 148.9p in 2016/17.

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%

12%

10%

13.5%

10%

*Share awards will only vest if the share price has risen by 10% over the three year period commencing on the date that the awards are made.

15%

10%

Ted Baker Plc Annual Report and Accounts 2017/18 DIRECTORS’ REPORT

DIRECTORS’ REPORT

EXECUTIVE DIRECTORS’ INTERESTS IN THE COMPANY’S SHARE SCHEMES (AUDITED)

DATE
OF
GRANT

MAXIMUM
RECEIVABLE
AT
28 JANUARY
2017

AWARDED
DURING
THE YEAR

EXERCISED
DURING
THE YEAR

LAPSED
DURING
THE YEAR

MAXIMUM
RECEIVABLE
AT
27 JANUARY
2018

OPTION
PRICE
(PENCE)

SHARE
PRICE
ON
DATE OF
GRANT
(PENCE)

SHARE
PRICE ON
DATE OF
EXERCISE
(PENCE)

EXERCISE
PERIOD/
VESTING DATE

Ray Kelvin

2013
LTIP

3 July
2013

1 May
2014

30 April
2015

5 May
2016

6 April
2017

TOTAL

Lindsay Page

1 May
2014

30 April
2015

5 May
2016

6 April
2017

20 May
2014

2013
LTIP

SAYE

TOTAL

32,106

30,421

23,380

28,236

114,143

24,574

28,393

22,329

26,967

23,469

1,875

(32,106)

(30,421)

(62,527)

(28,393)

79,564

23,469

(28,393)

5.0

1,705.0

2,760.0

5.0

1,849.0

2,760.0

23,380

5.0

2,855.0

28,236

5.0

2,364.0

24,574

76,190

5.0

2,757.0

5.0

1,849.0

3,050.0

22,329

5.0

2,855.0

26,967

5.0

2,364.0

23,469

5.0

2,757.0

1,875

1,600.0

2,000.0

74,640

2 July 2016 -
2 July 2023

30 April 2017 -
30 April 2024

29 April 2018 -
29 April 2025

4 May 2019 -
4 May 2026

5 April 2020 -
5 April 2027

30 April 2017 -
30 April 2024

29 April 2018 -
29 April 2025

4 May 2019 -
4 May 2026

5 April 2020 -
5 April 2027

1 July 2019 -
1 January 2020

LTIP awards granted in respect of Ray Kelvin and Lindsay Page represent 22% of the total number of LTIP awards granted during the period (2017:
24%). The balance included other senior executives across the Group.

DIRECTORS’ SHAREHOLDING (AUDITED)
The Directors who held office during the period and at 27 January 2018 had the following interests, including family interests, in

the shares of the Company.

Director

Ray Kelvin

Lindsay Page

David Bernstein

Ron Stewart

Andrew Jennings

Anita Balchandani

Jennifer Roebuck

Anne Sheinfield

UNVESTED

VESTED BUT
UNEXERCISED

Shares beneficially
owned as at
27 January 2018

Share options granted
under 2013 LTIP subject to
performance conditions

Share options granted
under Ted Baker
Sharesave Scheme
without performance
conditions

LTIP 2013
share options

Shareholding
guideline met

15,540,280

81,229

6,000

334

5,005

76,190

72,765

1,875

Yes

N/A

PAYMENTS FOR LOSS OF OFFICE (AUDITED)
No payments were made in the period for loss of office (2017: £nil).

PAYMENTS TO PAST DIRECTORS (AUDITED)
No payments were made in the period to past Directors (2017: £nil).

Ted Baker Plc Annual Report and Accounts 2017/18 DIRECTORS’ REPORT

PERFORMANCE GRAPH AND TABLE
The following graph charts the total cumulative shareholder return of the Company from January 2009 to January 2018.

Ted Baker Plc

FTSE All Share Personal Goods

FTSE All Share

1,300

1,200

1,100

1,000

900

800

700

600

500

400

300

200

100

January
‘09

January
‘10

January
‘11

January
‘12

January
‘13

January
‘14

January
‘15

January
‘16

January
‘17

January
‘18

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.

DIRECTORS’ REPORT

CEO REMUNERATION
For the financial periods ended:

Total remuneration

% of maximum performance related
bonus paid

DIRECTORS’ REPORT

2010

£’000

2011

£’000

2012

£’000

2013

£’000

493
Note 1

527
Note 1

569
Note 1

4,126
Note 2

2014

£’000

701

2015

£’000

757

2016

£’000

665

2017

£’000

2018

£’000

1,217
Note 3

1,321
Note 4

75%

76%

67%

90%

100%

50%

STATEMENT OF IMPLEMENTATION OF
REMUNERATION POLICY IN THE FOLLOWING
FINANCIAL PERIOD
The Remuneration Policy in effect during the period was

REMUNERATION COMMITTEE AND ADVISERS

REMUNERATION COMMITTEE
The Remuneration Committee is responsible for setting the

approved at the Annual General Meeting on 13 June 2017 and

remuneration packages of the Executive Directors of the

took effect for the three years commencing on that date.

Board and other senior executives who fall within the scope of

The Remuneration Committee approved base salaries

the Remuneration Committee. It approves all service contracts

that will be in force from 1 April 2018 of £460,000 for the Chief

and other contracts between the Company and its Executive

% of maximum LTIP vesting

100%

Executive Officer and £440,000 for the Chief Operating Officer

Directors and senior executives and, if thought fit, approves

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.

and Group Finance Director. The 1.8% and 2.0% increases in

any outside interests and other directorships of the Executive

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.

Note 4: The second of the awards made under the Ted Baker PLC Long-Term Incentive Plan 2013 vested in full in April 2017. 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 2017 and

2018 compares with the percentage change in the average remuneration for all employees within the Group over the same period.

Chief Executive Officer

All Employees

*The percentage change is 0% as no bonus was paid in either year.

SALARY AND BENEFITS CHANGE

ANNUAL BONUS CHANGE

2.0%

(1.1)%

0%*

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.

the base salary of these Executive Directors was determined

Directors. The Remuneration Committee also reviews and

after considering inflation and other global economic factors,

approves the design of the Company’s long-term incentive

and is broadly consistent with the general increase available

schemes and determines the level of awards to be made and

in the Company pay for performance model for employees

approves the performance targets.

across the Group.

The Remuneration Committee is chaired by Andrew

There is no increase in the fees payable to Non-Executive

Jennings in an acting capacity and its other members are David

Directors in 2018/19. Fees were increased in the year with

Bernstein and Ron Stewart. Ron Stewart and Andrew Jennings

effect from 1 April 2017 following the conclusions of an external

are independent NEDs as noted in the corporate governance

benchmarking report carried out during the period, which

statements. In line with Provision D.2.1 of the Code, David

revealed that previous fees were below median and therefore

Bernstein, as Non-Executive Chairman, may be a member, but

fees were increased to be consistent with Company policy to

not chair the Remuneration Committee, as he was considered

remunerate at a median level.

to be independent on appointment.

The target profit before tax, annual bonus and exceptional

The terms of reference for the Remuneration Committee are

items, on which the 2018/19 annual bonus is based, is derived

available on the Company’s website at www.tedbakerplc.com.

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 26 January

2019 is not disclosed for reasons of commercial sensitivity, but

2017

PERCENTAGE CHANGE

will be disclosed in the annual accounts for that period.

Dividends*

Employee Remuneration

2018

£’000

26,723

94,320

£’000

23,658

87,624

13.0%

7.6%

*The value of dividends disclosed is the total interim dividend paid during the period and the final dividend proposed for the respective period.

A further award of options under the 2013 LTIP will be made

during the current financial year. 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 five awards previously made under the

2013 LTIP scheme, that is, profit per share growth with a share

price increase underpin of 10%. Details of the profit per share

growth targets for the 2018/19 awards will be disclosed on the
vesting of those awards.

Ted Baker Plc Annual Report and Accounts 2017/18 DIRECTORS’ REPORT

DIRECTORS’ REPORT

ADVISERS
During the period, the Remuneration Committee was assisted in its work by PwC, who was appointed by the Company in

consultation with the Remuneration Committee. PwC is retained by the Remuneration Committee as its independent executive

OTHER STATUTORY AND
REGULATORY DISCLOSURES

Directors’ Report and the Strategic Report comprise the

Management Report.

remuneration adviser. The Remuneration Committee assesses advice provided by PwC from time to time to consider whether it is

The Directors present their annual report on the affairs of the

independent. Comfort is obtained from PwC’s adherence to the Remuneration Consultants Group Code of Conduct.

Group, together with the accounts and auditors’ report, for the

SUBSIDIARY UNDERTAKINGS
The subsidiary undertakings of the Group in the period are

ADVISER

APPOINTED BY

PricewaterhouseCoopers LLP

Company

SERVICE PROVIDED TO
THE REMUNERATION
COMMITTEE

Review of LTIP design and
performance conditions

Review of Directors’
Remuneration Report

FEES BASED ON HOURLY
RATES

£14,140

OTHER SERVICES
PROVIDED TO THE
COMPANY

Tax, legal, project
management, accounting
and internal audit services
to 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 2017 Directors’
Remuneration Report

FOR
%
NUMBER

99.47%

38,562,292

AGAINST
%
NUMBER

0.53%

204,213

ACTION
TAKEN BY
REMUNERATION
COMMITTEE

N/A

WITHHELD
NUMBER

REASONS FOR
VOTES AGAINST,
IF APPLICABLE

The number of
votes against the
Remuneration
Report was not
considered to be
significant

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 13 June 2017.

Approval of Directors’ Remuneration
Policy included within the 2017 Directors’
Remuneration Report

FOR
%
NUMBER

95.23%

35,496,307

AGAINST
%
NUMBER

4.77%

1,777,901

ACTION
TAKEN BY
REMUNERATION
COMMITTEE

N/A

WITHHELD
NUMBER

REASONS FOR
VOTES AGAINST,
IF APPLICABLE

1,492,305

The number of
votes against the
updated policy
was not
considered to be
significant

The Directors’ Remuneration Report was approved on behalf of the Board on 22 March 2018 and signed on its behalf by:

Andrew Jennings
Chairman of the Remuneration Committee
22 March 2018

52 weeks ended 27 January 2018. The comparative period is

listed in Note 12 to the accounts. The Group also has branches

for the 52 weeks ended 28 January 2017.

operating in Eire and Portugal.

The information on the following pages, together with

the sections of the Annual Report incorporated by reference,

constitutes the Strategic Report:

RESULTS AND DIVIDENDS
The audited accounts for the 52 weeks ended 27 January 2018

are set out on pages 82–126. The Group profit for the 52 weeks,

• Chairman’s Statement on page 4

after taxation, was £52.7m (2017: £46.6m). The Directors

• Business Model and Strategy on page 8

recommend a final dividend of 43.5p per ordinary share (2017:

• Business Review on page 12

• Financial Review on page 18

38.8p) payable on 22 June 2018 to ordinary shareholders on

the register on 18 May 2018 which, together with the interim

• The use of financial instruments on page 118

dividend of 16.6p per share (2017: 14.8p per share) paid on 17

•

Indication of likely future developments on page 44

November 2017, makes a total of 60.1p per share for the period

• Principal Risks and Uncertainties on page 22

(2017: 53.6p per share). The Group maintains a dividend policy

• Sustainability on page 28

• People on page 32

of broadly achieving a 2.1x dividend cover.

• Employment of disabled persons on page 33

• Employee involvement on page 34

DIRECTORS
The Directors during the period were those listed on pages

• Greenhouse Gas Emissions on page 30

36–37. Details of the Directors’ beneficial interests in the

shares of the Company are shown on pages 60–68. Details

The information on the following pages, together with

of their interests in share options are given in the Directors’

the sections of the Annual Report incorporated by reference,

Remuneration Report on page 50. Brief details of the career of

constitutes the Directors’ Report:

each Director are set out on pages 36–37.

• Governance on page 38

• Board of Directors on page 36

SUBSTANTIAL SHAREHOLDINGS
As at 27 January 2018, the Company had been notified, in

• Other Statutory and Regulatory Disclosures on page 69

accordance with the Disclosure Guidance and Transparency

Rules (DTR5), of substantial interests in the ordinary share

The Directors’ Report also includes additional disclosures

capital of the Company set out below. In addition, pursuant

required by the UKLA’s Disclosure and Transparency Rules

to LR9.8.6(2) the table below also sets out the changes in

and Listing Rules.

interests disclosed to the Company in accordance with DTR 5

For the purposes of DTR 4.1.5R(2) and DTR 4.1.8, this

between the end of the period and 13 April 2018.

AS AT 27 JANUARY 2018

AS AT 13 APRIL 2018

NAME OF HOLDER

Ray Kelvin

The Capital Global Companies, Inc

Standard Life Aberdeen

Aviva Plc

Wasatch Advisors

Baillie Gifford & Co.

Highclere International Investors

BlackRock Inc

NUMBER

15,540,280

3,358,397

2,057,506

1,818,759

1,449,770

1,422,559

1,357,452

N/A

% HELD

34.94%

7.55%

4.63%

4.09%

3.26%

3.20%

3.05%

N/A

NUMBER

15,540,280

3,214,397

2,040,092

1,783,316

1,448,102

1,554,016

1,357,452

1,382,907

% HELD

34.94%

7.23%

4.59%

4.01%

3.26%

3.49%

3.05%

3.11%

Ted Baker Plc Annual Report and Accounts 2017/18
DIRECTORS’ REPORT

DIRECTORS’ REPORT

SHARE CAPITAL AND CONTROL
As at 27 January 2018, the Company’s authorised share capital

an ordinary resolution at a general meeting. The Articles also

empower the Board to appoint any person as a Director. The

DIRECTORS’ INTERESTS
The Directors who held office at 27 January 2018 and their connected persons had interests in the shares of the Company as shown

was 80,000,000 ordinary shares of 5p each (in nominal value).

Articles set out when a Director must leave office. These include

in the table below.

Details of the Company’s share capital are shown in Note 20

where a Director resigns, becomes bankrupt or is prohibited

to the consolidated financial statements on page 115. As at 27

from acting as a director for other reasons, is absent from the

January 2018 there were 44,474,208 ordinary shares in issue.

business for the long term or where a Director is required to

The rights and obligations attaching to the Company’s shares,

resign by all the other Directors.

in addition to those conferred on their holders by law, are set

The Articles provide that any Director who was appointed

out in the Articles of Association. The holders of ordinary shares

by the Board during the period shall retire at the next Annual

are entitled to receive all shareholder documents, attend

General Meeting following his or her appointment, but

and speak at general meetings of the Company, exercise all

that Director may then stand for election by the Company’s

voting rights and to receive dividends and participate in other

shareholders. Additionally, at each Annual General Meeting one

distributions of assets. The Company may not exercise any

third of the Directors must retire from office and each Director

rights (such as voting rights) in respect of the treasury shares

must retire at least once every three years. Retiring Directors

and the treasury shares carry no right to receive dividends

may stand for re-election by the Company’s shareholders.

or other distributions of assets. Other than as set out in the

Notwithstanding the provisions of the Articles, the Company’s

Articles of Association, the Company is not aware of any

current practice, in accordance with the recommendations of

agreements between shareholders restricting the voting rights

the Code, is to require each Director to stand for election or

or the right to transfer shares in the Company.

re-election by the Company’s shareholders on an annual basis.

The Directors were granted authority at the 2017 Annual

Changes to the Articles of Association must be approved by

General Meeting (the “2017 AGM”) to allot shares in the

the shareholders in accordance with the legislation in force

capital of the Company up to an aggregate nominal amount of

from time to time. The powers of the Directors are determined

£736,169 (being approximately 33% of the total ordinary share

by legislation and the Articles of Association of the Company

capital in issue prior to the 2017 AGM). This authority is due to

in force from time to time. Powers relating to the issuing and

lapse at the Annual General Meeting in 2018 (the “2018 AGM”).

buying back of shares are included in the Company’s Articles

At the 2018 AGM, shareholders will be asked to grant a similar

of Association and shareholder approval of such authorities

allotment authority. The Directors were also empowered at the

may be sought, if considered appropriate by Directors, at the

2017 AGM to make non pre-emptive issues for cash up to an

Annual General Meeting.

aggregate nominal amount of £110,425 (which, in line with the

The Articles can only be amended, or new Articles adopted,

Pre-Emption Group Statement of Principles (the “Principles”),

by a resolution passed by shareholders in general meeting by

reflected the customary disapplication power over 5% of the

at least three quarters of the votes cast.

issued ordinary share capital as it stood prior to the 2017 AGM),

There are a number of agreements that take effect, alter or

together with a further 5% of the issued ordinary share capital

terminate upon a change of control of the Company following

provided that this additional element could only be used in

a takeover bid, such as commercial contracts, bank loan

connection with acquisitions and specified capital investments

agreements and employee share schemes. None of these is

(as defined in the Principles). Both powers are due to lapse at

deemed to be significant in terms of its potential impact on the

the 2018 AGM at which shareholders will be asked to grant a

business of the Company.

similar powers in line with best practice and the Pre-Emption

The Company does not have agreements with any Director

Group’s Principles. The Company did not seek an authority at

or employee that would provide compensation for loss of

the 2017 AGM to buy back its own shares and there was no
authority in place as at the end of the period.

office or employment resulting from a takeover, save that the
Company’s share schemes contain provisions which may

The Articles of Association provide that the Company’s

cause options and awards granted to employees to vest on

shareholders may appoint any person to act as a Director or,

a takeover.

on special notice, remove any Director from office by passing

Ray Kelvin

Lindsay Page

David Bernstein

Ron Stewart

Andrew Jennings

% OF SHARE
CAPITAL

27 JANUARY 2018

28 JANUARY 2017

BENEFICIAL NUMBER

34.94%

0.18%

15,540,280

81,229

6,000

334

5,005

81,229

6,000

313

5,000

Pursuant to LR9.8.6R(1) the Company confirms it was notified on 28 March 2018 that Lindsay Page acquired 303 Ordinary Shares (0.18%) in the share capital of the Company.
There were no other changes in the beneficial interests of the Directors between the end of the period and 13 April 2018.

CONTROLLING SHAREHOLDER
Pursuant to LR 9.8.4R(14)(a), the Directors confirm that

HEALTH AND SAFETY
The Group remains committed to providing a safe place to

the Company entered into a written and legally binding

work and shop for all employees and customers. Annual

relationship agreement with Ray Kelvin on 14 November

risk assessments are carried out at all locations and a

2014 which is intended to ensure that Ray Kelvin complies

committee, comprised of representatives within the business

with the independence provisions set out in LR 6.1.4D R (the

and an external adviser, reviews and resolves any health and

“Relationship Agreement”).

safety issues.

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

RISK MANAGEMENT
The Company’s policies on financial risk management are

addition, pursuant to LR 9.8.4R(14)(c)(ii), the Directors confirm

outlined in Note 23 of the financial statements. Such information

that, so far as the Company is aware, Ray Kelvin and his

is incorporated into this Directors’ Report by reference.

associates have complied with the independence provisions

set out in the Relationship Agreement during the period.

This paragraph sets out all information required by

POST BALANCE SHEET EVENTS
There have been no important events affecting the Group since

LR9.8.4R that is applicable to the Company during the period.

the end of the period.

DONATIONS
The value of charitable donations made during the period was

£23,010 (2017: £15,617). There were no political donations

DIRECTORS’ STATEMENT REGARDING
DISCLOSURE OF INFORMATION TO AUDITORS
The Directors who held office at the date of approval of this

made during the period (2017: £nil).

Directors’ Report confirm that, so far as they are aware, there is

no relevant audit information of which the Company’s auditors

SOCIAL RESPONSIBILITY
Details of the Group’s social, ethical and environmental

are unaware. Further, each Director has taken all the steps that

he ought to have taken as a Director to ensure the Board is

responsibility initiatives are set out in the Sustainability and the

aware of any relevant audit information and to establish that

Environment statement at page 28.

the Company’s auditors are aware of any such information.

PEOPLE
Details of the Group’s policies with respect to people and

employees are set out in the People statement at page 32.

The report was approved by the Board of Directors on 22

March 2018 and signed on its behalf by:

Charles Anderson
Finance Director and Company Secretary

22 March 2018

Ted Baker Plc Annual Report and Accounts 2017/18 DIRECTORS’ REPORT

STATEMENT OF DIRECTORS’
RESPONSIBILITIES IN RESPECT OF
THE ANNUAL REPORT AND THE
FINANCIAL STATEMENTS

that are free from material misstatement, whether due to fraud

or error, and 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

The Directors are responsible for preparing the Annual Report

responsible for preparing a strategic report, directors’ report,

and the Group and parent company financial statements in

directors’ remuneration report and corporate governance

accordance with applicable law and regulations.

statement that complies with that law and those regulations.

Company law requires the Directors to prepare Group

The Directors are responsible for the maintenance and

and parent company financial statements for each financial

integrity of the corporate and financial information included on

year. Under that law they are required to prepare the Group

the Company’s website. Legislation in the UK governing the

financial statements in accordance with International Financial

preparation and dissemination of financial statements may

Reporting Standards as adopted by the European Union

differ from legislation in other jurisdictions.

(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

RESPONSIBILITY STATEMENT OF THE
DIRECTORS IN RESPECT OF THE ANNUAL
FINANCIAL REPORT
We confirm that to the best of our knowledge:

company and of their profit or loss for that period. In preparing

• the financial statements, prepared in accordance with the

each of the Group and parent company financial statements,

applicable set of accounting standards, give a true and fair

the Directors are required to:

view of the assets, liabilities, financial position and profit or

loss of the company and the undertakings included in the

• select suitable accounting policies and then apply

consolidation taken as a whole; and

them consistently;

• the Management Report, which comprises the Strategic

• make judgements and estimates that are reasonable,

Report and the Directors’ Report, includes a fair review of

relevant and reliable;

the development and performance of the business and the

• state whether they have been prepared in accordance with

position of the issuer and the undertakings included in the

IFRSs as adopted by the EU;

consolidation taken as a whole, together with a description

• assess the Group and parent company’s ability to continue

of the principal risks and uncertainties that they face.

as a going concern, disclosing, as applicable, matters

related to going concern; and

We consider the Annual Report and Accounts, taken as a

• use the going concern basis of accounting unless they

whole, is fair, balanced and understandable and provides the

either intend to liquidate the Group or the parent company

information necessary for shareholders to assess the Group’s

or to cease operations, or have no realistic alternative but

position and performance, business model and strategy.

to do so.

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

On behalf of the Board

Ray Kelvin
Founder and

Lindsay Page
Chief Operating Officer and

statements comply with the Companies Act 2006. They are

Chief Executive

Group Finance Director

responsible for such internal control as they determine is

22 March 2018

necessary to enable the preparation of financial statements

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TED BAKER PLC

1. OUR OPINION IS UNMODIFIED
We have audited the financial statements of Ted Baker Plc for

the 52 week period ended 27 January 2018 which comprise the

2. KEY AUDIT MATTERS: OUR ASSESSMENT OF
RISKS OF MATERIAL MISSTATEMENT
Key audit matters are those matters that, in our professional

Group Income Statement, Group Statement of Comprehensive

judgment, were of most significance in the audit of the financial

Our response: Our procedures were designed to challenge
whether there were any indicators of impairments and the need

The risk: Subjective estimate. Inventory is carried in the
Financial Statements at the lower of cost and net realisable

for any provisions against the asset carrying value and include:

value. Sales in the fashion industry can be extremely volatile

with consumer demand changing significantly based on

Income, Group Statement of Changes in Equity, Company

statements and include the most significant assessed risks of

• Test of detail: evaluating the methodology, completeness

current trends. As a result, there is a risk that the carrying value

Statement of Changes in Equity, Group and Company Balance

material misstatement (whether or not due to fraud) identified

and accuracy of the Group’s impairment trigger

of inventory exceeds in net realisable value.

Sheet, Group and Company Cash Flow Statement, and the

by us, including those which had the greatest effect on: the

assessment. This assessment is undertaken by the

related notes, including the accounting policies in Note 1.

overall audit strategy; the allocation of resources in the

Directors for all stores regardless of the period of time the

Our response: Our procedures were designed to challenge
the adequacy of the Group’s provisions against inventory by

In our opinion:

audit; and directing the efforts of the engagement team. We

store has been open. This analysis is used to identify those

seasonal collection. Our procedures included:

summarise below the key audit matters (unchanged from

stores performing below expectations and accordingly

• the financial statements give a true and fair view of the

2017), in decreasing order of audit significance, in arriving at

with assets at a greater risk of impairment. For stores

• Control operation: testing on a sample basis the design

state of the Group’s and of the parent Company’s affairs

our audit opinion above, together with our key audit procedures

identified by this analysis, we considered whether there

and operation of controls related to inventory stock counts

as at 27 January 2018 and of the Group’s profit for the 52

to address those matters and, as required for public interest

was an indicator of impairment based on the number

and purchases;

weeks then ended;

entities, our results from those procedures. These matters

of years the store has been open, as well as store

• the Group financial statements have been properly

were addressed, and our results are based on procedures

performance;

prepared in accordance with International Financial

undertaken, in the context of, and solely for the purpose of,

• Where there were indicators of impairment, our

Reporting Standards as adopted by the European Union

our audit of the financial statements as a whole, and in forming

procedures over the Directors’ calculation of recoverable

(IFRSs as adopted by the EU);

our opinion thereon, and consequently are incidental to

amount included:

• Test of detail: testing on a sample basis that items on

the stock ageing listing by season were classified in the

appropriate ageing bracket by reference to season;
• Historical trends: evaluated the current year provision

by assessing historical trends. We examined the Group’s

• the parent Company financial statements have been

that opinion, and we do not provide a separate opinion

properly prepared in accordance with IFRSs as adopted by

on these matters.

the EU and as applied in accordance with the provisions of

the Companies Act 2006; and

• the financial statements have been prepared in

• Valuation of store assets (leasehold improvements,
fixtures, fittings and office equipment) £73.9m

accordance with the requirements of the Companies Act

(2017: £80.7m)

2006 and, as regards the Group financial statements,

• Our business understanding: Assessing the key

historical trading patterns of inventory sold at full price

assumptions including growth rates in turnover and

and inventory sold below full price through alternative

margin expectations by reference to historical rates

clearance routes, together with the related margins

achieved, and our understanding of the specific factors

achieved for each channel. We used the information on

relevant to each store;

trading patterns to assess whether the provisions held

• Sensitivity analysis: Applying sensitivity analysis on the

have historically been set at an appropriate level; and

key assumptions used in the cash flow forecasts to assess

• Our business understanding: assessing, based

Article 4 of the IAS Regulation.

Refer

to page 41

(Audit Committee Report),

the possible range of outcomes and the overall risk of any

on our knowledge of the Group and the market, the

BASIS FOR OPINION
We conducted our audit in accordance with International

Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.

page 93 (accounting policy) and pages 106 and 107

material impairment.

(financial disclosures).

The risk: Forecast-based valuation. The Group has
invested a significant amount of capital both within and outside

Our results: The results of our testing were satisfactory
and we found the carrying value of retail store assets to be

Our responsibilities are described below. We believe that the

the UK in its store portfolio. Given the relative immaturity of the

acceptable (2017: acceptable).

audit evidence we have obtained is a sufficient and appropriate

brand outside the UK, the payback period is typically longer

basis for our opinion. Our audit opinion is consistent with our

than for UK stores. The Group had 503 (2017: 462) stores and

• Valuation of Inventory £187.2m (2017: £158.5m)

report to the Audit Committee.

29 (2017: 28) outlets as at 27 January 2018. There is a risk that

We were appointed as auditors for the 52 week period

the carrying value of the retail store leasehold improvements,

Refer to page 41 (Audit Committee Report), page 93

ended 27 January 2001. The period of total uninterrupted

fixtures, fittings and office equipment may be overstated if

(accounting policy) and page 113 (financial disclosures).

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.

Our results: From the evidence obtained, we considered

the level of provisioning to be acceptable (2017: acceptable).

engagement is for the 18 financial years ended 27 January

the profitability expectations for the related stores are

2018. We have fulfilled our ethical responsibilities under, and

adversely impacted by trading and other conditions that

we remain independent of the Group in accordance with, UK

were not anticipated in the initial business case. The level of

ethical requirements including the FRC Ethical Standard as
applied to listed public interest entities. No non-audit services

judgement involved in assessing impairment indicators on
retail stores is one of the key judgemental areas that our audit

prohibited by that standard were provided.

is concentrated on.

Ted Baker Plc Annual Report and Accounts 2017/18 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TED BAKER PLC

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TED BAKER PLC

• Recoverability of parent company’s investment in

subsidiaries £24.8m (2017: £23.1m) and recoverability

of parent’s debt due from Group entities £55.2m

(2017: £51.9m)

the results of that work, on those net assets, including

For the remaining components, we performed analysis

any form of assurance conclusion thereon.

assessing the ability of the subsidiary to obtain liquid

at an aggregated Group level to re-examine our assessment

Our responsibility is to read the other information and, in

funds and therefore the ability of the subsidiary to fund the

that there were no significant risks of material misstatement

doing so, consider whether, based on our financial statements

repayment of the receivable.

within these.

audit work, the information therein is materially misstated

Our results: We found the Group’s assessment of the
recoverability of the investment in subsidiaries and the

The Group audit team instructed component auditors in the

or inconsistent with the financial statements or our audit

US as to the significant areas to be covered, including where

knowledge. Based solely on that work we have not identified

relevant the risks detailed above and the information to be

material misstatements in the other information.

parent’s debt due from Group entities to be acceptable (2017:

reported back. The UK components audits were covered by the

Refer to page 93 (accounting policy) and page 108 to 109

and 113 (financial disclosures).

The risk: Low risk, high value. The carrying amount of
the parent company’s investments in subsidiaries represents

31% (2017: 30%) of the parent company’s total assets. The

acceptable).

carrying amount of the intra-group debtor balance represents

68% (2017: 67%) of the parent company’s total assets. Their

recoverability is not at a high risk of significant misstatement

3. OUR APPLICATION OF MATERIALITY AND AN
OVERVIEW OF THE SCOPE OF OUR AUDIT
The materiality for the Group financial statements as a whole

Group team. The Group audit team approved the components’

materiality’s which ranged from £0.6m to £2.3m (2017: £2.2m

Strategic Report and Directors’ Report
Based solely on our work on the other information:

to £2.9m), having regard to the mix of size and risk profile of

the Group across the components. The work on 2 components

• we have not identified material misstatements in the

(2017: 2 components) was performed by component auditors

Strategic Report and the Directors’ Report;

or subject to significant judgement. However, due to their

was set at £3.4m (2017: £3.0m), determined with reference to

and the rest, including the audit of the parent company, was

•

in our opinion the information given in those reports

materiality in the context of the parent company financial

a benchmark of Group profit before tax (of which it represents

performed by the Group team.

for the financial year is consistent with the financial

statements, this is considered to be the area that had the

4.9% (2017: 4.8%).

In 2018 and 2017, the Group team visited the component

statements; and

greatest effect on our overall parent company audit.

Materiality for the parent company financial statements

auditor in the US and telephone conference meetings were held

•

in our opinion those reports have been prepared in

Our response: Our procedures included:

as a whole was set at £0.8m (2017: £0.8m), determined with

with the US component auditor. At these meetings the Group

accordance with the Companies Act 2006.

• Tests of detail: Comparing the carrying amount of 100% of
investments with the relevant subsidiaries’ trial balance to

reference to a benchmark of company total assets (of which it

team discussed the audit strategy and the findings reported

represents 1.0% (2017: 1.0%).

to the Group audit team were discussed in more detail, and

We agreed to report to the Audit Committee any corrected

any further work required by the Group audit team was then

Directors’ Remuneration Report
In our opinion the part of the Directors’ Remuneration Report

identify whether their net assets, being an approximation

or uncorrected identified misstatements exceeding £175,000

performed by the US component auditor.

to be audited has been properly prepared in accordance with

of their minimum recoverable amount, were in excess

(2017: £150,000) in addition to other identified misstatements

of their carrying amount and assessing whether those

that warranted reporting on qualitative grounds.

subsidiaries have historically been profit-making.

Of the Group’s 24 reporting components (2017: 22

• Tests of detail: Assessing a sample of the highest value
Group debtors representing 92% of the total Group

reporting components), we subjected 4 components (2017: 3

components) to an audit for Group reporting purposes (3 UK

4. WE HAVE NOTHING TO REPORT ON
GOING CONCERN
We are required to report to you if:

the Companies Act 2006.

Disclosures of Principal Risks and Longer-Term Viability
Based on the knowledge we acquired during our financial

statements audit, we have nothing material to add or draw

debtors balance to identify, with reference to the relevant

components and 1 US component (2017: 3 UK components)

• we have anything material to add or draw attention to

attention to in relation to:

debtors’ trial balance, whether they have a positive net

and 1 component (Canada) to specified risk focused audit

in relation to the Directors’ statement in Note 1 to the

asset value and therefore coverage of the debt owed, as

procedures (2017: 1 component, US). The latter were not

financial statements on the use of the going concern basis

• the Directors’ confirmation within the Viability Statement

well as assessing whether those debtor companies have

individually financially significant enough to require a full scope

of accounting with no material uncertainties that may cast

on page 26 that they have carried out a robust assessment

historically been profit-making.

audit for group purposes, but did present specific individual

significant doubt over the Group and Company’s use of

of the principal risks facing the Group, including those that

• Assessing subsidiary audits: Assessing the work

risks that needed to be addressed.

performed by the subsidiary audit team, and considering

that basis for a period of at least twelve months from the

would threaten its business model, future performance,

date of approval of the financial statements; or

solvency and liquidity;

• the related statement under the Listing Rules set

• the Principal Risks and Uncertainties disclosures

The components within the scope of our work accounted for the following percentages of the Group’s results:

out on page 26 is materially inconsistent with our

describing these risks and explaining how they are being

NUMBER OF
COMPONENTS

TOTAL GROUP
REVENUE

TOTAL PROFITS AND
LOSSES THAT MADE UP
GROUP PROFIT BEFORE TAX

TOTAL GROUP
ASSETS

83%

87%

61%

24%

85%

88%

90%

92%

96%

88%

90%

64%

22%

86%

2018

Audits for Group reporting purposes

Specified risk focused audit procedures

TOTAL

2017

Audits for Group reporting purposes

Specified risk focused audit procedures

TOTAL

audit knowledge.

managed and mitigated; and

We have nothing to report in these respects.

how they have assessed the prospects of the Group, over

• the Directors’ explanation in the Viability Statement of

5. WE HAVE NOTHING TO REPORT ON
THE OTHER INFORMATION IN THE
ANNUAL REPORT
The Directors are responsible for the other information

what period they have done so and why they considered
that period to be appropriate, and their statement as to

whether 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 their

presented in the Annual Report together with the financial
statements. Our opinion on the financial statements does

assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.

not cover the other information and, accordingly, we do not

express an audit opinion or, except as explicitly stated below,

Ted Baker Plc Annual Report and Accounts 2017/18 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TED BAKER PLC

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TED BAKER PLC

Under the Listing Rules we are required to review the

Viability Statement. We have nothing to report in this respect.

Corporate Governance Disclosures
We are required to report to you if:

7. RESPECTIVE RESPONSIBILITIES
Directors’ Responsibilities
As explained more fully in their statement set out on page

We communicated

identified

laws and regulations

throughout our team and remained alert to any indications

of non-compliance throughout the audit. This included

72, the Directors are responsible for the preparation of the

communication from the Group to component audit teams of

financial statements including being satisfied that they give

relevant laws and regulations identified at Group level, with

• we have identified material inconsistencies between the

a true and fair view; such internal control as they determine

a request to report on any indications of potential existence

knowledge we acquired during our financial statements

is necessary to enable the preparation of financial statements

of non-compliance with relevant

laws and regulations

audit and the Directors’ statement that they consider that

that are free from material misstatement, whether due to fraud

(irregularities) in these areas, or other areas directly identified

the Annual Report and financial statements taken as a

or error; assessing the Group and parent Company’s ability

by the component team.

whole is fair, balanced and understandable and provides

to continue as a going concern, disclosing, as applicable,

As with any audit, there remained a higher risk of

the information necessary for shareholders to assess the

matters related to going concern; and using the going concern

non-detection of non-compliance with relevant laws and

Group’s position and performance, business model and

basis of accounting unless they either intend to liquidate the

regulations (irregularities), as these may involve collusion,

strategy; or

Group or the parent Company or to cease operations, or have

forgery, intentional omissions, misrepresentations, or the

• the section of the Annual Report describing the work of the

no realistic alternative but to do so.

override of internal controls.

Audit Committee does not appropriately address matters

communicated by us to the Audit Committee.

Auditor’s Responsibilities
Our objectives are to obtain reasonable assurance about

We are required to report to you if the Corporate

whether the financial statements as a whole are free from

8. THE PURPOSE OF OUR AUDIT WORK AND
TO WHOM WE OWE OUR RESPONSIBILITIES
This report is made solely to the Company’s members,

Governance Statement does not properly disclose a departure

material misstatement, whether due to fraud or other

as a body, in accordance with Chapter 3 of Part 16 of the

from the eleven provisions of the UK Corporate Governance

irregularities (see below), or error, and to issue our opinion in

Companies Act 2006. Our audit work has been undertaken so

Code specified by the Listing Rules for our review.

an auditor’s report. Reasonable assurance is a high level of

that we might state to the Company’s members those matters

We have nothing to report in these respects.

assurance, but does not guarantee that an audit conducted

we are required to state to them in an auditor’s report and for

6. WE HAVE NOTHING TO REPORT ON
THE OTHER MATTERS ON WHICH WE ARE
REQUIRED TO REPORT BY EXCEPTION
Under the Companies Act 2006, we are required to report to

in accordance with ISAs (UK) will always detect a material

no other purpose. To the fullest extent permitted by law, we

misstatement when it exists. Misstatements can arise from

do not accept or assume responsibility to anyone other than

fraud, other irregularities or error and are considered material

the Company and the Company’s members, as a body, for our

if, individually or in aggregate, they could reasonably be

audit work, for this report, or for the opinions we have formed.

expected to influence the economic decisions of users taken

you if, in our opinion:

on the basis of the financial statements.

A fuller description of our responsibilities is provided on

• adequate accounting records have not been kept by the

the FRC’s website at www.frc.org.uk/auditorsresponsibilities.

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

Irregularities – Ability to Detect
We identified areas of laws and regulations that could

the Directors’ Remuneration Report to be audited are not

reasonably be expected to have a material effect on the

in agreement with the accounting records and returns; or

financial statements from our sector experience, and through

• certain disclosures of Directors’ remuneration specified by

discussion with the Directors and other management (as

law are not made; or

required by auditing standards).

• we have not received all the information and explanations

We had regard to laws and regulations in areas that

we require for our audit.

We have nothing to report in these respects.

directly affect the financial statements including financial

reporting (including related company legislation) and taxation
legislation. We considered the extent of compliance with those

laws and regulations as part of our procedures on the related

financial statement items.

Lourens de Villiers
(Senior Statutory Auditor)

for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants

15 Canada Square

London

E14 5GL

22 March 2018

Ted Baker Plc Annual Report and Accounts 2017/18 FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

GROUP AND COMPANY PRIMARY FINANCIAL STATEMENTS

GROUP STATEMENT OF COMPREHENSIVE INCOME

NOTE

52 WEEKS ENDED
27 JANUARY
2018

52 WEEKS ENDED
28 JANUARY
2017

£’000

591,670

(230,865)

360,805

(231,996)

(80,160)

(75,484)

(4,676)

21,443

635

70,727

802

(3,314)

574

68,789

73,465

(4,676)

(16,045)

(16,868)

823

52,744

119.0p

118.3p

£’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)

(15,605)

902

46,568

105.7p

104.5p

GROUP INCOME STATEMENT

FOR THE 52 WEEKS ENDED
27 JANUARY 2018

Revenue

Cost of sales

GROSS PROFIT

Distribution costs

Administrative expenses

Administrative expenses before exceptional items

Exceptional items

Licence income

Other operating income/(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 ITEMS

Exceptional items

Income tax expense

Income tax expense before exceptional items

Income tax relating to exceptional items

PROFIT FOR THE PERIOD

EARNINGS PER SHARE

Basic

Diluted

FOR THE 52 WEEKS ENDED
27 JANUARY 2018

52 WEEKS ENDED
27 JANUARY
2018

52 WEEKS ENDED
28 JANUARY
2017

PROFIT FOR THE PERIOD

OTHER COMPREHENSIVE INCOME/(EXPENSE)

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 (EXPENSE)/INCOME FOR THE PERIOD

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

GROUP STATEMENT OF CHANGES IN EQUITY

£‘000

52,744

(5,139)

(4,599)

(7,926)

(17,664)

35,080

£‘000

46,568

10,521

(5,435)

5,580

10,666

57,234

FOR THE 52 WEEKS ENDED
27 JANUARY 2018

SHARE
CAPITAL

SHARE
PREMIUM

CASH FLOW
HEDGING
RESERVE

TRANSLATION
RESERVE

RETAINED
EARNINGS

TOTAL EQUITY
ATTRIBUTABLE
TO EQUITY
SHAREHOLDERS
OF THE PARENT

£’000

2,208

£’000

9,935

£’000

6,736

£’000

7,891

£’000

183,774

£’000

210,544

BALANCE AT 28 JANUARY 2017

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 payment charges

Movement on current and deferred tax on
share-based payments

Dividends paid

552

TOTAL TRANSACTIONS WITH OWNERS

BALANCE AT 27 JANUARY 2018

2,224

552

10,487

(7,423)

(4,599)

2,284

52,744

(9,889)

1,963

52,744

(9,889)

1,963

(7,423)

(4,599)

2,284

(9,738)

(7,926)

52,744

35,080

(3,002)

(35)

1,876

535

(24,553)

(22,142)

214,376

568

1,876

535

(24,553)

(21,574)

224,050

Ted Baker Plc Annual Report and Accounts 2017/18 FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

GROUP STATEMENT OF CHANGES IN EQUITY

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE 52 WEEKS ENDED
28 JANUARY 2017

SHARE
CAPITAL

SHARE
PREMIUM

CASH FLOW
HEDGING
RESERVE

TRANSLATION
RESERVE

RETAINED
EARNINGS

TOTAL EQUITY
ATTRIBUTABLE
TO EQUITY
SHAREHOLDERS
OF THE PARENT

£’000

2,199

£’000

9,617

£’000

1,650

£’000

2,311

£’000

156,822

£’000

172,599

BALANCE AT 30 JANUARY 2016

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 payment charges

Movement on current and deferred tax on
share-based payments

Dividends paid

TOTAL TRANSACTIONS WITH OWNERS

BALANCE AT 28 JANUARY 2017

2,208

318

9,935

11,714

(5,435)

(1,193)

46,568

7,038

(1,458)

46,568

7,038

(1,458)

11,714

(5,435)

(1,193)

5,086

5,580

46,568

57,234

6,736

7,891

1,839

281

(21,736)

(19,616)

183,774

327

1,839

281

(21,736)

(19,289)

210,544

FOR THE 52 WEEKS ENDED
27 JANUARY 2018

SHARE
CAPITAL

SHARE
PREMIUM

OTHER
RESERVES

RETAINED
EARNINGS

TOTAL
EQUITY

BALANCE AT 28 JANUARY 2017

Profit for the period

TRANSACTIONS WITH OWNERS RECORDED
DIRECTLY IN EQUITY

Increase in issued share capital

Share-based payment charges

Share-based payment charges for awards
granted to subsidiary employees

Dividends paid

TOTAL TRANSACTIONS WITH OWNERS

BALANCE AT 27 JANUARY 2018

£’000

2,208

£’000

9,935

552

£’000

20,680

£’000

44,426

25,825

185

£’000

77,249

25,825

568

185

1,691

(24,553)

2,224

552

10,487

1,691

22,371

(24,368)

(22,109)

45,883

80,965

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE 52 WEEKS ENDED
28 JANUARY 2017

SHARE
CAPITAL

SHARE
PREMIUM

OTHER
RESERVES

RETAINED
EARNINGS

TOTAL
EQUITY

BALANCE AT 30 JANUARY 2016

Profit for the period

TRANSACTIONS WITH OWNERS RECORDED
DIRECTLY IN EQUITY

Increase in issued share capital

Share-based payment charges

Share-based payment charges for awards
granted to subsidiary employees

Dividends paid

TOTAL TRANSACTIONS WITH OWNERS

£’000

2,199

BALANCE AT 28 JANUARY 2017

2,208

£’000

9,617

318

9,935

£’000

19,060

£’000

38,697

27,246

219

£’000

69,573

27,246

327

219

1,620

(21,736)

1,620

20,680

(21,517)

(19,570)

44,426

77,249

Ted Baker Plc Annual Report and Accounts 2017/18 FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

GROUP AND COMPANY BALANCE SHEET

AT 27 JANUARY 2018

NOTE

GROUP
27 JANUARY
2018

GROUP
28 JANUARY
2017

COMPANY
27 JANUARY
2018

COMPANY
28 JANUARY
2017

FOR THE 52 WEEKS ENDED
27 JANUARY 2018

GROUP AND COMPANY CASH FLOW STATEMENT

£’000

34,373

£’000

24,445

139,075

144,354

£’000

24,793

23,102

1,893

4,114

353

179,808

187,227

64,273

666

478

1,897

4,446

401

175,543

158,500

59,251

653

8,974

16,712

21,401

269,356

(82,858)

(76,043)

(5,500)

(8,522)

(3,918)

248,779

(80,995)

(58,074)

(6,000)

(10,327)

(915)

(616)

(176,841)

(156,927)

(1,273)

(2,349)

(2,002)

(47,000)

(52,500)

(48,273)

224,050

(56,851)

210,544

24,793

23,102

55,232

51,932

940

56,172

2,238

54,170

(23)

80,965

77,249

Intangible assets

Property, plant and equipment

Investment 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 liabilities

Provisions for liabilities and charges

Term loan

NON-CURRENT LIABILITIES

NET ASSETS

EQUITY

Share capital

Share premium

Other reserves

Translation reserve

Retained earnings

2,224

10,487

(3,002)

(35)

2,208

9,935

6,736

7,891

2,224

10,487

22,371

2,208

9,935

20,680

CASH FLOW FINANCING ACTIVITIES

Repayment of term loan

Dividends paid

Proceeds from issue of shares

214,376

183,774

45,883

44,426

NET CASH FROM FINANCING ACTIVITIES

TOTAL EQUITY ATTRIBUTABLE TO EQUITY SHAREHOLDERS
OF THE PARENT COMPANY

TOTAL EQUITY

224,050

210,544

80,965

77,249

These financial statements were approved by the Board of Directors on 22 March 2018 and were signed on its behalf by:

Lindsay Page
Chief Operating Officer and Group Finance Director

Company number: 03393836

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS

Net cash and cash equivalents at the beginning of the period

Exchange rate movement

NET CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD

Cash and cash equivalents at the end of the period

Bank overdraft at the end of the period

NET CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD

CASH GENERATED FROM OPERATIONS

Profit for the period

Adjusted for:

Income tax expense

Depreciation and amortisation

Impairments

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/(decrease) in trade and other payables

(Decrease)/increase in provisions for liabilities and charges

Interest paid

Income taxes paid

NET CASH GENERATED FROM OPERATING ACTIVITIES

43,886

52,770

22,687

23,032

CASH FLOW FROM INVESTING ACTIVITIES

Purchases of property, plant and equipment and intangibles

(36,562)

(43,753)

Proceeds from sale of property, plant and equipment

Dividends received from joint venture

Interest received

115

578

294

NET CASH FROM INVESTING ACTIVITIES

(35,808)

(43,351)

GROUP
52 WEEKS
ENDED
27 JANUARY
2018

GROUP
52 WEEKS
ENDED
28 JANUARY
2017

COMPANY
52 WEEKS
ENDED
27 JANUARY
2018

COMPANY
52 WEEKS
ENDED
28 JANUARY
2017

£’000

52,744

46,568

25,825

27,246

16,045

23,238

4,533

166

1,876

2,512

1,517

(574)

(34,067)

(6,779)

2,845

(2,917)

(3,341)

14,703

20,966

416

1,839

1,776

677

(550)

(27,128)

(16,335)

20,392

2,917

(2,886)

(13,975)

(10,644)

185

219

(3,299)

(24)

(4,446)

(24,553)

(21,736)

568

327

(23,985)

(21,409)

(1,298)

2,238

940

1,623

615

2,238

(6,000)

(24,553)

568

(29,985)

(21,907)

(36,673)

(751)

(59,331)

16,712

(76,043)

(59,331)

(1,500)

(21,736)

327

(22,909)

(13,490)

(24,574)

1,391

(36,673)

21,401

(58,074)

(36,673)

Ted Baker Plc Annual Report and Accounts 2017/18 NOTES TO THE FINANCIAL STATEMENTS

1) SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of

The consolidated and parent financial statements have

been prepared under the historical cost convention, except

for certain financial assets and financial liabilities (including

these consolidated and Company financial statements are set

derivative instruments), which are held at fair value.

out below. These policies have been consistently applied to all

The preparation of financial statements in conformity with

the periods presented, unless otherwise stated.

Adopted IFRSs requires management to make judgements,

A) BASIS OF PREPARATION
Both the consolidated and Company financial statements

estimates and assumptions that affect the application of

policies and reported amounts of assets and liabilities, income

and expenses. The estimates and associated assumptions

have been prepared and approved by the Directors in

are based on historical experience and various other factors

accordance with International Financial Reporting Standards

that are believed to be reasonable under the circumstances,

as adopted by the EU (“Adopted IFRSs”). On publishing the

the results of which form the basis of making the judgements

parent company financial statements here together with the

about carrying values of assets and liabilities that are not

consolidated financial statements, the Company is taking

readily apparent from other sources. Actual results may differ

advantage of the exemption in Section 408 of the Companies

from these estimates.

Act 2006 not to present its income statement and related notes

The estimates and assumptions are reviewed on an ongoing

that form a part of these approved financial statements.

basis. Revisions to accounting estimates are recognised in the

The Group’s business activities, together with the factors

period in which the estimate is revised if the revision affects

likely to affect its future development, performance and

only that period, or in the period of the revision and future

position are set out on pages 4–19. The financial position of the

periods if the revision affects both current and future periods.

Group, its cash flows, liquidity position and borrowing facilities

The Group’s significant judgement areas relate to inventory

are described in the Chairman’s Statement on pages 4–6.

valuation and impairment of assets.

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.

REVISED AND AMENDED STANDARDS
AND INTERPRETATIONS
No new standards, amendments or interpretations, effective

for the first time for the period beginning on or after 29 January

As highlighted in Note 23 to the financial statements, the

2017 have had a material impact on the Group or Company.

Group meets its day-to-day working capital requirements

IFRS 15, Revenue from Contracts with Customers, which

through a committed overdraft facility expiring in September

is effective from 1 January 2018, has been considered by the

2020 which is a multi-currency revolving credit facility with the

Group and it was concluded this will not be significant to the

Royal Bank of Scotland, Barclays and HSBC. The facility will

Group’s financial statements in the future.

be used to the extent necessary to fund working capital and

At the balance sheet date there are a number of new

capital expenditure to support the Group’s growth strategy.

standards and amendments to existing standards in issue

The Group’s forecasts and projections, taking into account

but not yet effective. None of these is expected to have a

reasonably possible changes in trading performance, show that

significant effect on the financial statements of the Group or

the Group has sufficient financial resources. As a consequence

Company, except the following, set out below:

the Directors have a reasonable expectation that the Company

IFRS 9, Financial Instruments, which is effective for periods

and the Group are well placed to manage their business risks

beginning on or after 1 January 2018, replaces IAS 39 and

and to continue in operational existence for the twelve months
from the date of signing these financial statements, despite

addresses the classification, measurement and recognition of
financial assets and financial liabilities. This was endorsed by

the current uncertain global economic outlook. Accordingly,

the EU in November 2016 and as such the full impact on the

the Directors continue to adopt the going concern basis in

Group is currently being assessed. If the Group adopted this

preparing the consolidated financial statements.

standard in the financial statements for the 52 weeks ended 27

January 2018, the impact of the change in hedge accounting for
financial instruments on the consolidated income statement

would have been a decrease in profit before tax of £767,000

with no impact on net assets.

Ted Baker Plc Annual Report and Accounts 2017/18 NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

IFRS 16, Leases, addresses the definition of a lease,

even if doing so causes the non-controlling interests to have a

recognition and measurement of leases and establishes

deficit balance.

D) REVENUE RECOGNITION
Revenue represents amounts receivable for goods provided in

charged to the consolidated income statement in the period to

which they relate. Differences between contributions payable

principles for reporting useful information to users of financial

Jointly controlled entities are those entities over whose

the normal course of business, net of trade discounts, VAT and

in the period and contributions actually paid are shown as

statements about the leasing activities of both lessees

activities the Group has joint control, established by contractual

other sales related taxes. Retail revenue is recognised when a

either accruals or prepayments in the balance sheet.

and lessors. A key change arising from IFRS 16 is that most

agreement and requiring the venturers’ unanimous consent for

Group entity sells a product to a customer. Wholesale revenue

operating leases will be accounted for on balance sheet for

strategic financial and operating decisions. Jointly controlled

is recognised when title has passed in accordance with the

lessees. The standard replaces IAS 17, Leases, and related

entities are accounted for using the equity method (equity

individual terms of trade. Licence income receivable from

G) SHARE-BASED PAYMENTS
The Group operates an equity-settled share-based

interpretations. The standard is effective for annual periods

accounted investees) and are initially recognised at cost.

licensees is accrued as earned on the basis of the terms of

compensation plan.

beginning on or after 1 January 2019. The quantitative impact

The consolidated financial statements include the Group’s

the relevant licence agreement, which is typically on the basis

of IFRS 16 on the Group’s net assets and results is being

share of the total recognised income and expense and equity

of a minimum payment spread over the licence period and a

assessed and will be quantified closer to the date of adoption.

movements of equity accounted investees, from the date that

variable amount based on turnover. Accrued income is from

IFRS 16 is expected to have a material impact on the balance

significant influence or joint control commences until the date

licence income earned but not billed in the period.

SHARE OPTIONS AND CONDITIONAL
SHARE AWARDS
Share options granted under the Sharesave scheme and the

sheet as both assets and liabilities will increase and is also

that significant influence or control ceases. When the Group’s

The Group sells retail products with the right of return and

Ted Baker PLC Long-Term Incentive Plan are measured at

expected to have a material impact on key components

share of losses exceeds its interest in an equity accounted

experience is used to estimate and provide for the value of

fair value at the date of grant using the Black-Scholes and

within the income statements because operating lease

investee, the Group’s carrying amount is reduced to £nil and

such returns at the time of sale when considered significant.

Monte-Carlo pricing models respectively. The pricing models

rental charges will be replaced by depreciation and finance

recognition of further losses is discounted except to the extent

Credit notes or exchanges are available to customers returning

take into account the terms and conditions of the options/

costs. IFRS 16 will not have any impact on the underlying

that the Group has incurred legal or constructive obligations or

unwanted products with proof of purchase within 28 days of

awards vesting. The grant date fair value is expensed on a

commercial performance of the Group or the cash flow

made payments on behalf of an investee.

the date of purchase. Cash refunds are available to customers

straight-line basis over the vesting period (i.e. the period in

generated in the period.

B) BASIS OF CONSOLIDATION
The consolidated accounts include the accounts of the

C) FOREIGN CURRENCY
Transactions in foreign currencies are translated to the

returning unwanted products with proof of purchase within 14

which the employees become unconditionally entitled to

days of the date of purchase.

share options/awards) based on an estimate of shares that will

Sales of gift vouchers are treated as future liabilities, and

eventually vest.

respective functional currencies of Group entities at the foreign

revenue is recognised when the gift vouchers are redeemed

Shares of Ted Baker Plc held by the Company for the

Company and its subsidiary undertakings made up to 27

exchange rate ruling at the date of the transaction. Monetary

against a later transaction.

January 2018. Unless otherwise stated, the acquisition

assets and liabilities denominated in foreign currencies at the

method of accounting has been adopted. Under this

balance sheet date are translated to functional currency at the

method, the results of subsidiary undertakings acquired or

foreign exchange rate ruling at that date. Foreign exchange

E) LEASES
Rentals under operating leases are charged as incurred, unless

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.

disposed of in the period are included in the consolidated

differences arising on translation are recognised in the income

there are pre-determined rental increases in the lease, in which

Transactions of

the Company-sponsored Employee

financial statements from the date of acquisition or up to the

statement. Non-monetary assets and liabilities denominated

case they are recognised on a straight-line basis over the lease

Benefit Trusts (“EBT”) are treated as being those of the

date of disposal.

in foreign currencies that are stated at fair value are translated

term. Leasehold incentives received are recognised as an

Company and are therefore reflected in the parent company

Inter-company transactions, balances and unrealised gains

to functional currency at foreign exchange rates ruling at the

integral part of total lease expense, over the term of the lease.

and Group financial statements. In particular, the EBT’s

on transactions between Group companies are eliminated.

dates the values were determined.

Certain rental expense are determined on the basis of

purchases and sales of shares in the Company are debited and

Unrealised losses are also eliminated unless the transaction

Exchange differences arising from a monetary item

revenue achieved in specific retail locations and are accrued

credited directly to equity.

provides evidence of an impairment of the asset transferred.

receivable from or payable to a foreign entity, the settlement

for on that basis. The Group engages in lease and concession

Where the Company grants options over its own shares to

Accounting policies of subsidiaries have been changed where

of which is neither planned nor likely in the foreseeable

arrangements that include fixed and variable elements,

the employees of its subsidiaries, it recognises, in its individual

necessary to ensure consistency with the policies adopted by

future, are considered to form part of a net investment in a

depending on the terms of the underlying agreement. The

financial statements, an increase in the cost of investment in

the Group.

foreign operation and are recognised directly in equity in the

Group has disclosed in Note 3 the amounts charged in the

its subsidiaries equivalent to the equity-settled share-based

Subsidiaries are entities controlled by the Group. The

translation reserve.

period, and in Note 22 sets out the firm commitments for

payment charge recognised in its consolidated financial

Group controls an entity when it is exposed to, or has rights

The assets and liabilities of foreign operations, including

future periods.

statements with the corresponding credit being recognised

to, variable returns from its involvement with the entity and has

goodwill and fair value adjustments arising on consolidation,

The Group’s intangible assets, as shown in Note 10, include

directly in equity.

the ability to affect those returns through its power over the
entity. In assessing control, the Group takes into consideration

are translated to Sterling at foreign exchange rates ruling
at the balance sheet date. The revenues and expenses of

leased premises which have a guaranteed residual value. The
guaranteed value arises because the next tenant, based on

potential voting rights that are currently exercisable. The

foreign operations are translated to Sterling at average

current market conditions, will pay this amount to the Group.

H) DERIVATIVES
The Group holds derivative financial instruments to hedge

acquisition date is the date on which control is transferred

foreign exchange rates ruling at the dates of the transactions.

Due to the likelihood that the money will be recoverable, the

its foreign currency and interest rate exposures. Derivatives

to the acquirer. The financial statements of subsidiaries

Foreign exchange differences arising on retranslation since

asset is not amortised.

are included in the consolidated financial statements from
the date that control commences until the date that control

the transition date are recognised directly in a separate
component of equity. When a foreign operation is disposed of,

ceases. Losses applicable to the non-controlling interests

in part or in full, the relevant amount in the foreign currency

in a subsidiary are allocated to the non-controlling interests

translation reserve is transferred to profit or loss.

F) PENSION COSTS
Contributions payable to defined contribution schemes in

respect of pension costs and other post retirement benefits are

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.

Ted Baker Plc Annual Report and Accounts 2017/18 NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

CASH FLOW HEDGES
Changes in the fair value of foreign currency and interest rate

I) TAXATION
Corporation tax payable is recognised on taxable profits using

L) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

derivatives which are designated as effective hedges of future

tax rates enacted or substantively enacted at the balance sheet

Depreciation is provided on property, plant and equipment at rates calculated to write off the cost, less estimated residual

cash flows are recognised in equity in the cash flow hedging

date. Deferred tax is recognised in full, using the balance sheet

value, of each asset on the following bases:

reserve, and remain there until the forecast transaction occurs.

liability method, on temporary differences arising between the

When the hedged item is a non-financial asset, the amount

tax bases of assets and liabilities and their carrying amounts in

recognised in equity is transferred to the carrying amount of

the consolidated financial statements. However, if the deferred

the asset when it is recognised. In other cases the amount

tax arises from initial recognition of an asset or liability in a

recognised in other comprehensive income is transferred to

transaction other than a business combination that at the time

Freehold land:

Freehold buildings:

Leasehold improvements:

the income statement in the same period that the hedged item

of the transaction affects neither accounting nor taxable profit

Fixtures, fittings and office equipment:

Not depreciated.

Straight line over fifty years.

Straight line over the shorter of the period of the unexpired term of the lease or the useful economic life of
the improvement.

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.

affects the income statement.

or loss, it is not accounted for. Deferred tax is determined using

If the hedging instrument no longer meets the criteria for

tax rates (and laws) that have been enacted or substantively

hedge accounting, expires or is sold, terminated or exercised,

enacted by the balance sheet date and are expected to apply

then hedge accounting is discontinued prospectively. The

when the related deferred tax asset is realised or the deferred

cumulative gain or loss previously recognised in other

tax liability is settled.

comprehensive income remains there until the forecast

Deferred tax is not recognised for temporary differences

transaction occurs.

relating to investments in subsidiaries to the extent they will

Changes in the fair value of foreign currency derivatives

not reverse in the foreseeable future.

which are ineffective or do not meet the criteria for hedge

Deferred tax assets are recognised to the extent that it

accounting are recognised in the income statement.

is probable that future taxable profit will be available against

The Group does not hold any fair value hedging

which the temporary differences can be utilised.

instruments.

Income tax is recognised in the income statement except

to the extent that it relates to items recognised directly in equity,

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

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

in which case it is recognised in equity. Income tax comprises

reviewed for impairment whenever events or changes in

if no impairment loss had been recognised for the asset in

current and deferred tax.

circumstances indicate that the carrying amount may not be

prior years. A reversal of an impairment loss is recognised in

J) DIVIDEND DISTRIBUTION
Dividend distribution to the Company’s shareholders is recognised as a liability in the Group and Company financial statements in

recoverable. An impairment loss is recognised for the amount

income immediately.

by which the asset’s carrying amount exceeds its estimated

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.

recoverable amount. The recoverable amount is the higher

of an asset’s fair value less costs to sell and value in use.

N) INVESTMENTS
Investments in subsidiaries by the Company are shown at cost

Recoverable amounts for cash-generating units are based on

less accumulated impairment losses which are recognised in

value in use, which is calculated from cash flow projections

the income statement.

Expenditure on development activities is capitalised if the product is technically and commercially feasible and the Group

using data from the Group’s latest internal forecasts, the

intends and has the technical ability and sufficient resources to complete development, future economic benefits are probable

results of which are reviewed by the Board.

and if the Group can measure reliably the expenditure attributable to the intangible asset during its development. Development

The key assumptions for the value in use calculations are

O) INVENTORIES
Inventories and work in progress are stated at the lower of cost

activities involve a plan or design for the production of new or substantially improved products or processes. The expenditure

those regarding discount rates, growth rates and expected

and net realisable value. Cost includes materials, direct labour

capitalised includes direct labour and an appropriate proportion of overheads. Capitalised development expenditure is stated at

changes in margins. Management use a pre-tax discount

and inward transportation costs. Net realisable value is based

cost less accumulated amortisation and less accumulated impairment losses.

rate derived from the Group’s adjusted weighted average

on estimated selling price, less further costs expected to be

Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets.

cost of capital. Internal forecasts reflect the current market

incurred to completion and disposal. Provision is made for

Key money is not amortised but systematically tested for impairment at each balance sheet date as the Directors are of the opinion

assessment and risks specific to the cash-generating units.

obsolete, slow moving or defective items where appropriate.

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:

Three to ten 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.

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.

P) CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprises cash balances and

For the purposes of assessing impairment, assets are grouped

money market deposits. Bank overdrafts that are repayable

at the lowest levels for which there are separately identifiable

on demand and form an integral part of the Group’s cash

cash flows (cash-generating units). Where an impairment
loss subsequently reverses, the carrying amount of the

management are included as a component of cash and cash
equivalents for the purpose of the statement of cash flows.

Ted Baker Plc Annual Report and Accounts 2017/18 NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

Q) INTEREST-BEARING BORROWINGS
Interest-bearing borrowings are recognised initially at fair

Where any Group company purchases the Company’s

equity share capital (treasury shares), the consideration paid,

INVENTORY VALUATION
The Directors have used their knowledge and experience

Exceptional items in the period included:

value less attributable transaction costs. Subsequent to

including any directly incremental costs (net of income taxes),

of the fashion industry in determining the level and rates of

• the impairment of assets in three retail stores in the US

initial recognition, interest-bearing borrowings are stated

is deducted from retained earnings in equity attributable to

provisioning required to calculate the appropriate inventory

and one in Europe. The Directors believe this to be

at amortised cost with any difference between cost and

the Company’s equity holders until the shares are cancelled

carrying values. Inventory is carried in the financial statements

exceptional as the Group does not frequently impair

redemption value being recognised in the income statement

or reissued. Where such shares are subsequently reissued,

at the lower of cost and net realisable value. Sales in the

assets of this quantum;

over the period of the borrowings on an effective interest basis.

any consideration received, net of any directly attributable

fashion industry can be extremely volatile with consumer

• restructuring costs incurred in aligning internal structures

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

incremental transaction costs and the related income tax

demand changing significantly based on current trends. As

to the Group’s strategic aims. The Directors believe this to

effects, is included in equity attributable to the Company’s

a result there is a risk that the cost of inventory exceeds its

be exceptional due to the infrequent occurrence of such

equity holders.

net realisable value. Management calculates the inventory

costs; and

V) PROVISIONS
A provision is recognised in the balance sheet when the Group

Adjustments are made where appropriate based on Directors’

warehouses following assignment of the leases. The

knowledge and experience to calculate the appropriate

Directors believe this to be exceptional as the initial

provision on the basis of the ageing profile of what is in stock.

• the release of the provision for the Group’s legacy

instruments that are recognised in the income statement.

has a present legal or constructive obligation as a result of a

inventory carrying values.

recognition of the cost of provision was treated

Interest income is recognised in the income statement as it

past event, it is more likely than not that an outflow of economic

as exceptional.

accrues, using the effective interest method. Dividend income

benefits will be required to settle the obligation and the

is recognised in the income statement on the date the entity’s

obligation can be estimated reliably. Provisions are discounted

X) NON-GAAP PERFORMANCE MEASURES
Exceptional items are added back/deducted to derive certain

Exceptional items in the prior period included:

right to receive payments is established which in the case of

if the impact on the provision is deemed to be material.

non-GAAP measures as follows:

quoted securities is usually the ex-dividend date.

• costs in relation to the closure of the Group’s legacy

S) SEGMENT REPORTING
A segment is a component of the Group that engages in

W) ACCOUNTING ESTIMATES
AND JUDGMENTS
The Directors have made significant accounting estimates and

• profit attributable to the owners of the Company, to arrive

warehouses in the UK. The Directors believe this cost to

at adjusted earnings per share (after the tax effect of

be infrequent in nature as the Group do not close existing

exceptional items); and

warehouses or move to new warehouses regularly; and

business activities from which it may earn revenues and incur

judgements in applying the Group’s accounting policies in the

• profit before tax, to arrive at profit before tax and

• costs in relation to the closure of a concept store in

expenses, including revenues and expenses that relate to

following areas:

exceptional items.

London. The Directors believe this cost to be infrequent

in nature as the Group does not open concept

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

IMPAIRMENT
Leasehold improvements for stores are identified for further

Exceptional items are those items which, in the opinion

stores frequently.

of the Directors, should be excluded in order to provide a

be allocated to a segment and assess its performance, and for

impairment testing primarily on the basis of current and

consistent and comparable view of the underlying performance

The Directors believe that the profit before tax and

which discrete financial information is available (see Note 2).

projected performance, with growth assumptions based

of the Group’s ongoing business. Generally, exceptional items

exceptional items and adjusted earnings per share measures

on Directors’ knowledge and experience. Given the relative

include those items that do not occur often and are material.

provide useful information for shareholders on the underlying

T) FINANCIAL GUARANTEE CONTRACTS
Where the Company enters into financial guarantee contracts

immaturity of the brand outside the UK, the payback period is

We believe

the non-GAAP performance measures

performance of the business. These measures are also

typically longer and it is not uncommon for new stores to make

presented along with comparable GAAP measurements

consistent with how underlying business performance is

to guarantee the indebtedness of other companies within

losses in their start-up phase. Judgment is therefore applied

is useful to provide information with which to measure our

measured internally.

its group, the Company considers these to be insurance

by the Directors in assessing the trigger point for impairment,

performance, and our ability to invest in new opportunities.

The profit before tax and exceptional items and adjusted

arrangements, and accounts for them as such. In this

recognising that losses in the start-up phase are not always

Management uses these measures with the most directly

earnings per share are not recognised measures under IFRS

respect, the Company treats the guarantee contract as a

indicative of the future performance of a particular store. The

comparable GAAP financial measures in evaluating our

and may not be directly comparable with adjusted profit and

contingent liability until such time as it becomes probable that

Directors have used forecast models and an appropriate pre-

operating performance and value creation. Non-GAAP

earnings per share measures used by other companies.

the Company will be required to make a payment under

tax adjusted weighted average cost of capital in its property,

financial measures should not be considered in isolation

Constant currency comparatives are obtained by applying

the guarantee.

plant and equipment impairment calculations.

from, or as a substitute for, financial information presented

the exchange rates that were applicable for the 52 weeks

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.

in compliance with GAAP. The requirements for identifying
exceptional items are on a consistent basis each period and

ended 28 January 2017 to the financial results in overseas
subsidiaries for the 52 weeks ended 27 January 2018 to remove

presented consistently, and a reconciliation of profit before tax

the impact of exchange rate fluctuations.

and exceptional items to profit before tax is included in Note 3

to the financial statements.

Ted Baker Plc Annual Report and Accounts 2017/18 NOTES TO THE FINANCIAL STATEMENTS

2. SEGMENT INFORMATION
The Group has three reportable segments: retail, wholesale

and licensing.

wholesale segment is measured based on gross profit and

performance of the licensing segment is measured based on

royalty income, as included in the internal management reports

For each of the three segments, the Executive Committee

that are reviewed by the Board.

reviews internal management reports on a four weekly basis.

Segment results before exceptional items are used to

The accounting policies of the reportable segments are

measure performance as management believes that such

the same as described in Note 1 on pages 89–95. Information

information is the most relevant in evaluating the performance

regarding the results of each reportable segment is included

of certain segments relative to other entities that operate

below. Performance for the retail segment is measured based

within these industries. Inter-segment pricing is determined on

on operating contribution, whereas performance of the

an arm’s length basis.

NOTES TO THE FINANCIAL STATEMENTS

2. SEGMENT INFORMATION CONTINUED
A) SEGMENT REVENUE AND SEGMENT RESULT

52 WEEKS ENDED 27 JANUARY 2018

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 items

Other operating income

OPERATING PROFIT

Net finance expense

Share of profit of jointly controlled entity, net of tax

PROFIT BEFORE TAX

Capital expenditure

Unallocated capital expenditure

TOTAL CAPITAL EXPENDITURE

Depreciation 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

442,451

(146,230)

296,221

(225,224)

70,997

£’000

149,219

(84,635)

64,584

£’000

21,443

70,997

64,584

21,443

21,621

16,386

396

455

241,427

92,343

(117,940)

(40,961)

Wholesale sales are shown after the elimination of inter-company sales of £113,081,488 (2017: £89,695,272).

TOTAL

£’000

591,670

(230,865)

360,805

(225,224)

135,581

21,443

157,024

(82,256)

(4,676)

635

70,727

(2,512)

574

68,789

22,017

14,821

36,838

16,841

6,397

23,238

333,770

4,114

478

79,279

28,611

2,912

449,164

(158,901)

(8,522)

(52,500)

(5,191)

(225,114)

224,050

2. SEGMENT INFORMATION CONTINUED
A) SEGMENT REVENUE AND SEGMENT RESULT CONTINUED

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 items

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)

265,020

(203,253)

61,767

£’000

130,262

(71,553)

58,709

£’000

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

(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

Ted Baker Plc Annual Report and Accounts 2017/18 NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

2. SEGMENT INFORMATION CONTINUED
B) GEOGRAPHICAL INFORMATION

52 WEEKS ENDED 27 JANUARY 2018

Revenue

Non-current assets*

52 WEEKS ENDED 28 JANUARY 2017

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

Exceptional items

LEASEHOLD PROPERTIES:

Fixed lease payments*

Variable rental payments*

CONCESSIONS:

Fixed lease payments*

Variable rental and commission payments*

Loss on sale of property, plant and equipment and intangibles

AUDITORS’ REMUNERATION:

Audit of these financial statements

Amounts receivable by the Company’s auditors and their associates in respect of:

Audit of financial statements of subsidiaries of the Company

Interim financial statements review

Other assurance services

Taxation compliance and other advisory services

£’000

336,056

127,429

USA REST OF WORLD

£’000

153,603

26,795

£’000

102,011

21,470

TOTAL

£’000

591,670

175,694

316,542

118,879

130,941

34,571

83,503

17,647

530,986

171,097

52 WEEKS ENDED
27 JANUARY
2018

52 WEEKS ENDED
28 JANUARY
2017

£’000

249,685

341,985

591,670

£’000

226,731

304,255

530,986

52 WEEKS ENDED
27 JANUARY
2018

52 WEEKS ENDED
28 JANUARY
2017

£’000

23,238

4,676

41,238

3,725

18,177

34,866

166

348

£’000

20,966

4,513

38,022

2,780

18,536

33,345

416

300

*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, including e-commerce sales with concession partners.

100

RECONCILIATION OF PROFIT BEFORE TAX TO PROFIT BEFORE TAX AND EXCEPTIONAL ITEMS

PROFIT BEFORE TAX

Impairment of retail assets, relating to three stores in the US and one store in Europe

Restructuring costs

Movement in provisions related to the Group’s legacy warehouses

Other closure costs

Closure costs for a concept store in London

EXCEPTIONAL ITEMS

PROFIT BEFORE TAX AND EXCEPTIONAL ITEMS

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 charges

Social security costs

Pension costs

52 WEEKS ENDED
27 JANUARY
2018

52 WEEKS ENDED
28 JANUARY
2017

£’000

68,789

4,533

1,251

(1,108)

4,676

73,465

£’000

61,271

2,917

659

937

4,513

65,784

52 WEEKS ENDED
27 JANUARY
2018

52 WEEKS ENDED
28 JANUARY
2017

£’000

741

802

(3,301)

(13)

(3,314)

£’000

1,582

1,597

(2,933)

(440)

(3,373)

52 WEEKS ENDED
27 JANUARY
2018

52 WEEKS ENDED
28 JANUARY
2017

No.

2,677

693

3,462

£’000

82,217

1,876

8,579

1,648

94,320

No.

2,429

643

3,166

£’000

76,240

1,841

7,779

1,782

87,642

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 pages 50–68.

101

Ted Baker Plc Annual Report and Accounts 2017/18 NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

5. STAFF NUMBERS AND COSTS CONTINUED
DIRECTORS’ REMUNERATION

6. INCOME TAX EXPENSE CONTINUED
B) DEFERRED TAX MOVEMENT BY TYPE

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
27 JANUARY
2018

52 WEEKS ENDED
28 JANUARY
2017

£’000

921

281

2,587

£’000

903

220

875

The aggregate of remuneration and amounts receivable under long-term incentive schemes of the highest paid Director was

£2,191,000 (2017: £1,318,000). In the period ended 27 January 2018, amounts received under long-term incentive schemes related

Property, plant and equipment

Share-based payments

Overseas losses

Inventory

Other

52 WEEKS ENDED
27 JANUARY
2018

52 WEEKS ENDED
28 JANUARY
2017

£’000

(388)

(174)

757

475

336

1,006

£’000

(464)

(49)

379

(41)

236

to the exercise of options due to Ray Kelvin under Award 1 of the 2013 LTIP and Ray Kelvin and Lindsay Page under Award 2 of the

For further details please refer to Note 13.

2013 LTIP. In the period ended 28 January 2017, amounts received under the long-term incentive schemes related to the exercise

of options due to Lindsay Page under Award 1 of the 2013 LTIP. 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

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.

weeks ended 27 January 2018 or the 52 weeks ended 28 January 2017. Amounts in relation to pension contributions to a money

The differences are explained below.

purchase scheme were made on behalf of Lindsay Page during the period totalling £53,922 (2017: £53,125).

Retirement benefits are accruing to the following number of Directors under money purchase schemes

Profit before tax

52 WEEKS ENDED
27 JANUARY
2018

52 WEEKS ENDED
28 JANUARY
2017

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
27 JANUARY
2018

52 WEEKS ENDED
28 JANUARY
2017

12,190

5,499

827

(1,833)

(2,403)

1,765

16,045

12,343

3,625

977

(1,038)

(4,481)

3,277

14,703

The movements in prior year current and deferred tax provisions are largely as a result of claiming interest deductions in US tax

returns previously not taken (2017: movements largely due to accelerated tax relief claims on fixed assets in the US).

Profit multiplied by the standard rate in the UK of 19.16% (2017: standard rate in the UK of 20%)

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 overprovision

Difference due to overseas tax rates

TOTAL INCOME TAX EXPENSE

D) DEFERRED AND CURRENT TAX RECOGNISED DIRECTLY IN EQUITY

Current tax credit on share awards and options

Deferred tax charge on share awards and options

Deferred tax (credit)/charge associated with movement in hedging reserve

Current tax (credit)/charge associated with foreign exchange movements in reserves

52 WEEKS ENDED
27 JANUARY
2018

52 WEEKS ENDED
28 JANUARY
2017

£’000

68,789

13,180

771

1,334

103

(638)

1,295

16,045

£’000

61,271

12,254

675

1,494

(1,204)

1,453

14,703

52 WEEKS ENDED
27 JANUARY
2018

52 WEEKS ENDED
28 JANUARY
2017

£’000

(1,058)

523

(2,284)

(1,963)

(4,782)

£’000

(554)

273

1,193

1,458

2,370

There was a reduction in the UK corporation tax rate to 19% from 1 April 2017 and there will be a further reduction to 17% from

1 April 2020. There was a reduction in the US federal corporate income tax rate to 21% from 1 January 2018.

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%. Assets and liabilities arising on foreign

operations have been recognised at the applicable overseas tax rates.

102

103

Ted Baker Plc Annual Report and Accounts 2017/18 NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

7. PROFIT ATTRIBUTABLE TO TED BAKER PLC
The profit after tax for the 52 weeks ended 27 January 2018 of Ted Baker Plc, the parent company was £25,825,000

10. INTANGIBLE ASSETS

(2017: £27,246,000). The Directors have approved the income statement for the parent company.

8. DIVIDENDS PER SHARE

Final dividend paid for prior period of 38.8p per ordinary share (2017: 34.6p)

Interim dividend paid of 16.6p per ordinary share (2017: 14.8p)

52 WEEKS ENDED
27 JANUARY
2018

52 WEEKS ENDED
28 JANUARY
2017

£’000

17,176

7,377

24,553

£’000

15,215

6,521

21,736

A final dividend in respect of 2018 of 43.5p per share, amounting to a dividend payable of £19,346,280 is to be proposed at the

Annual General Meeting on 12 June 2018.

9. EARNINGS PER SHARE

Number of shares:

Weighted number of ordinary shares outstanding

Effect of dilutive options

52 WEEKS ENDED
27 JANUARY
2018

52 WEEKS ENDED
28 JANUARY
2017

No.

44,306,134

44,034,459

289,241

516,310

WEIGHTED NUMBER OF ORDINARY SHARES OUTSTANDING – DILUTED

44,595,375

44,550,769

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

52,744

56,597

119.0p

127.7p

118.3p

126.9p

£’000

46,568

50,178

105.7p

114.0p

104.5p

112.6p

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 exceptional items (net of tax) of £3.9m (2017: £3.6m).

104

COST

At 28 January 2017

Additions/transfers

Disposals

Exchange rate movement

AT 27 JANUARY 2018

AMORTISATION

At 28 January 2017

Charge for the period

Disposals

Exchange rate movement

AT 27 JANUARY 2018

NET BOOK VALUE

AT 28 JANUARY 2017

AT 27 JANUARY 2018

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

KEY MONEY

COMPUTER
SOFTWARE

COMPUTER
SOFTWARE UNDER
DEVELOPMENT

TOTAL

£’000

624

738

1,381

624

1,381

13,619

14,300

(119)

27,800

4,652

3,377

(106)

7,923

8,967

19,877

14,854

(1,739)

13,115

14,854

13,115

KEY MONEY

COMPUTER
SOFTWARE

COMPUTER
SOFTWARE UNDER
DEVELOPMENT

29,097

13,299

(100)

42,296

4,652

3,377

(106)

7,923

24,445

34,373

TOTAL

£’000

879

(351)

624

879

624

£’000

8,361

5,134

124

10,649

4,205

13,619

14,854

2,642

1,925

4,652

5,719

8,967

10,649

14,854

19,889

9,339

(351)

220

29,097

2,642

1,925

4,652

17,247

24,445

105

Ted Baker Plc Annual Report and Accounts 2017/18 NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

10. INTANGIBLE ASSETS CONTINUED
The key money brought forward relates to the right to lease

Additions included within key money relate to the right

to lease a new store that has a guaranteed residual value.

stores that have a guaranteed residual value. The guaranteed

Additions included within computer software relate to the

value arises because the next tenants based on current market

Microsoft Dynamics AX system and further development of our

conditions are required to pay these amounts to the Group. Due

e-commerce platforms and other business systems. Additions

to the nature of this, the assets are considered recoverable and

included within the computer software under development

no amortisation is charged each period as the residual value of

category relate to the Microsoft Dynamics AX system and are

the asset is considered to be in excess of the carrying value.

stated net of transfers to computer software. Transfers from the

The current market rate rents, for both stores included within

computer software under development category in the period

the intangible assets, continue to be above the rent under the

amounted to £14,300,000 (2017: £5,134,000) while additions

lease terms and hence no decline in values is foreseen.

into this category were £12,561,000 (2017: £9,339,000).

11. PROPERTY, PLANT AND EQUIPMENT

FREEHOLD LAND
AND BUILDINGS

LEASEHOLD
IMPROVEMENTS

FIXTURES,
FITTINGS
AND OFFICE
EQUIPMENT

MOTOR
VEHICLES

ASSETS UNDER
CONSTRUCTION

TOTAL

£’000

COST

At 28 January 2017

Additions/transfers

Disposals

Exchange rate movement

57,973

116,013

10,570

(3,608)

(5,225)

AT 27 JANUARY 2018

57,973

117,750

DEPRECIATION

At 28 January 2017

Charge for the period

Disposals

Impairment

Exchange rate movement

AT 27 JANUARY 2018

NET BOOK VALUE

AT 28 JANUARY 2017

AT 27 JANUARY 2018

483

448

931

57,490

57,042

56,654

10,573

(3,435)

4,072

(2,018)

65,846

59,359

51,904

80,163

10,789

(2,799)

(1,991)

86,162

58,866

8,839

(2,690)

461

(1,326)

64,150

21,297

22,012

111

107

108

6,204

2,180

(270)

8,114

260,464

23,539

(6,407)

(7,486)

270,110

116,110

19,861

(6,125)

4,533

(3,344)

131,035

6,204

8,114

144,354

139,075

11. PROPERTY, PLANT AND EQUIPMENT CONTINUED

FREEHOLD LAND
AND BUILDINGS

LEASEHOLD
IMPROVEMENTS

FIXTURES,
FITTINGS
AND OFFICE
EQUIPMENT

MOTOR
VEHICLES

ASSETS UNDER
CONSTRUCTION

TOTAL

£’000

COST

At 30 January 2016

Additions/transfers

Disposals

Exchange rate movement

57,973

87,384

23,816

(1,538)

6,351

AT 28 JANUARY 2017

57,973

116,013

DEPRECIATION

At 30 January 2016

Charge for the period

Disposals

Impairment

Exchange rate movement

AT 28 JANUARY 2017

NET BOOK VALUE

AT 30 JANUARY 2016

AT 28 JANUARY 2017

451

483

57,941

57,490

45,120

10,562

(1,466)

2,438

56,654

42,264

59,359

69,813

8,038

(986)

3,298

80,163

49,934

8,026

(898)

1,804

58,866

19,879

21,297

110

111

105

107

3,308

2,560

336

218,588

34,415

(2,524)

9,985

6,204

260,464

95,191

19,041

(2,364)

4,242

116,110

3,308

6,204

123,397

144,354

Additions included within the assets under construction

in margins. Management estimates discount rates using

category are stated net of transfers to other property, plant

pre-tax rates that reflect the current market assessment

and equipment categories. Transfers from the assets under

of the time value of money and the risks specific to the

construction category in the period amounted to £21,359,000

cash-generating units. Changes in selling prices and direct

(2017: £31,855,000) while additions into this category were

costs are based on past experience and expectations of

£23,539,000 (2017: £34,415,000).

future changes in the market.

IMPAIRMENT OF LEASEHOLD IMPROVEMENTS
The Group has determined that for the purposes of impairment

The pre-tax discount rate used to calculate value in use

is derived from the Group’s adjusted weighted average cost

of capital.

testing, each store and outlet is tested for impairment if there

The impairment losses relate to stores whose recoverable

are indications of impairment at the balance sheet date.

amounts (value in use) did not exceed the asset carrying

Recoverable amounts for cash-generating units are

values. In all cases, impairment losses arose due to stores

based on value in use, which is calculated from cash flow
projections using data from the Group’s latest internal

performing below projected trading levels.

The impairment charge of £4.5m (2017: £nil) for the 52

forecasts, the results of which are reviewed by the Board. The

weeks ended 27 January 2018 is in respect of three stores

key assumptions for the value in use calculations are those

in the US and one store in Europe that have not performed

regarding discount rates, growth rates and expected changes

as expected.

106

107

Ted Baker Plc Annual Report and Accounts 2017/18 NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE 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

12. INVESTMENTS (COMPANY)
A) SUBSIDIARY UNDERTAKINGS CONTINUED

COUNTRY OF
INCORPORATION
AND OPERATION

ADDRESS

PRINCIPAL ACTIVITY

consolidated accounts.

SUBSIDIARY UNDERTAKING

No Ordinary Designer Label Ltd
(formerly Ted Baker Limited)*

Ted Baker Limited

Ted Baker Canada Inc.

Ted Baker (France) SARL

Ted Baker Spain S. L.

Canada

France

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

HOLDING
ORDINARY
SHARES

100%

Design, wholesale and retail of
designer clothing and accessories

Retail and wholesale of designer
clothing and accessories

Retail of designer clothing
and accessories

The Ugly Brown Building
6a St Pancras Way
London NW1 0TB
United Kingdom

1072 North State Street
Ukiah, California 95482
USA

1959 Upper Water Street
Halifax, Nova Scotia
Canada B3J 3E5

c/o Regus
9 Rue du 4 Septembre
75002 Paris, France

c/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

Unit LG1-08 and 09
Floor LG1
Parkview Green FangCaoDi
No. 9
Dongdaqiao Rd
Chaoyang District
Beijing, PRC

ADDRESS

PRINCIPAL ACTIVITY

HOLDING
ORDINARY
SHARES

100%

Retail of designer clothing
and accessories

SUBSIDIARY UNDERTAKING

Ted Baker SA (Pty) Ltd

COUNTRY OF
INCORPORATION
AND OPERATION

South Africa

Big Lobster Limited

Little Lobster Limited

*Held directly by Ted Baker Plc

Building 5 Inanda Greens
Business Park,
54 Wierda Rd
Westwierda Valley
Sandton 2146
South Africa

The Ugly Brown Building
6a St Pancras Way
London NW1 0TB
United Kingdom

B) SUBSIDIARY UNDERTAKINGS – COST AND NET BOOK VALUE

At 28 January 2017

Increase in cost of investment for share options/awards granted to subsidiary employees

AT 27 JANUARY 2018

At 30 January 2016

Increase in cost of investment for share options/awards granted to subsidiary employees

AT 28 JANUARY 2017

Property

100%

Dormant

100%

COMPANY

£’000

23,102

1,691

24,793

COMPANY

£’000

21,482

1,620

23,102

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 (2017: 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
27 JANUARY
2018

52 WEEKS ENDED
28 JANUARY
2017

£’000

1,897

574

(578)

1,893

£’000

1,641

550

(294)

1,897

108

109

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 27 January 2018.

Ted Baker Plc Annual Report and Accounts 2017/18 NOTES TO THE FINANCIAL STATEMENTS

12. INVESTMENTS (COMPANY)
C) INTEREST IN JOINT VENTURE CONTINUED

AMOUNTS DUE FROM EQUITY ACCOUNTED INVESTEE

27 JANUARY
2018

28 JANUARY
2017

£’000

666

£’000

653

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 27 January 2018 and its assets and liabilities are as follows:

27 JANUARY
2018

28 JANUARY
2017

£’000

3,272

3,276

(3,318)

3,230

2,135

1,148

(82)

3,230

£’000

3,710

2,994

(3,289)

3,415

2,246

1,100

3,415

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

110

NOTES TO THE FINANCIAL STATEMENTS

13. DEFERRED TAX ASSETS AND LIABILITIES

14. INVENTORIES

AS AT 27 JANUARY 2018

DEFERRED TAX ASSET/(LIABILITY)
ON UK OPERATIONS ARISING FROM:

ASSETS

Share-based payments

Other

Derivative financial instruments

LIABILITIES

Property, plant and equipment

NET DEFERRED TAX ASSET/
(LIABILITY) ON UK OPERATIONS

DEFERRED TAX ASSET ON FOREIGN
OPERATIONS ARISING FROM:

Foreign trading losses

Inventory

Other

DEFERRED TAX LIABILITY
ON FOREIGN OPERATIONS
ARISING FROM:

Property, plant and equipment

NET DEFERRED TAX ASSET
ON FOREIGN OPERATIONS

TOTAL

ASSET/
(LIABILITY)
BROUGHT
FORWARD

(CHARGE)/CREDIT
TO INCOME
STATEMENT

(CHARGE)/CREDIT
TO EQUITY

FOREIGN
EXCHANGE ON
RETRANSLATION

ASSET/(LIABILITY)
CARRIED
FORWARD

£’000

2,050

(1,579)

(2,879)

(2,349)

2,127

1,472

1,436

(589)

4,446

2,097

(174)

(39)

(472)

(685)

(238)

(27)

276

(85)

(74)

(759)

(523)

2,284

1,761

(173)

(154)

(29)

(258)

1,353

705

(3,351)

(1,273)

1,716

1,291

1,683

(576)

4,114

2,841

Recognition of deferred tax assets is based on the generation of future taxable profits that will allow 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

£7,085,000 (2017: £5,401,000). £3,221,000 of losses will expire in two to five years. A further £2,325,000 of losses will expire in six

to ten years. £1,539,000 of losses have no time expiry.

112

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

There were no reversals of write downs during the period (2017: £nil).

GROUP
27 JANUARY
2018

GROUP
28 JANUARY
2017

£’000

8,220

1,208

177,799

187,227

226,933

8,468

£’000

6,371

1,331

150,798

158,500

209,386

8,485

Inventories written down and recognised as an expense in the period relates to inventory written down to the net

realisable value 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

16. DERIVATIVE FINANCIAL INSTRUMENTS

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

GROUP
27 JANUARY
2018

COMPANY
27 JANUARY
2018

GROUP
28 JANUARY
2017

COMPANY
28 JANUARY
2017

£’000

42,658

19,628

1,987

64,273

£’000

55,232

£’000

41,999

15,791

1,461

59,251

£’000

51,932

ASSETS
27 JANUARY
2018

LIABILITIES
27 JANUARY
2018

ASSETS
28 JANUARY
2017

LIABILITIES
28 JANUARY
2017

£’000

128

144

206

478

(3,918)

8,870

104

8,974

(66)

(550)

(616)

113

Ted Baker Plc Annual Report and Accounts 2017/18 NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE 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

20. CAPITAL AND RESERVES

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 cash flow hedges in the period (2017: £nil).

Gains and losses in equity relating to derivatives in effective hedging relationships at 27 January 2018 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

Authorised – 80,000,000 ordinary shares of 5p each (2017: 80,000,000)

Allotted, called up and fully paid – 44,474,208
ordinary shares of 5p each (2017: 44,168,656)

27 JANUARY
2018

28 JANUARY
2017

£’000

4,000

2,224

£’000

4,000

2,208

transferred to the income statement in the same period that the hedged item affects the income statement.

The increase in issued share capital in the period of 305,552 shares (2017: 197,202 shares) relates to the exercise of share options,

The charge to the income statement in respect of charges in the fair value of foreign currency derivatives that do not meet the

including LTIPs.

criteria for hedge accounting was £767,000 (2017: £677,000).

At 27 January 2018, 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 (2017: Employee Trust – nil, 1998 Trust – nil).

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
27 JANUARY
2018

COMPANY
27 JANUARY
2018

GROUP
28 JANUARY
2017

COMPANY
28 JANUARY
2017

£’000

16,712

(76,043)

(59,331)

£’000

940

£’000

21,401

(58,074)

(36,673)

£’000

2,238

GROUP
27 JANUARY
2018

£’000

36,257

37,807

8,794

82,858

COMPANY
27 JANUARY
2018

£’000

GROUP
28 JANUARY
2017

£’000

45,329

29,093

6,573

80,995

COMPANY
28 JANUARY
2017

£’000

19. PROVISIONS FOR LIABILITIES AND CHARGES

At 28 January 2017

Released in the period (see Note 3)

Utilised in the period

AT 27 JANUARY 2018

PROPERTY PROVISIONS

£’000

2,917

(1,108)

(1,809)

Property provisions comprised an onerous lease provision and a dilapidations provision relating to the Group’s legacy distribution

centres. The provisions were partially utilised in the period and the remaining provisions were released to the Consolidated Income

Statement as an exceptional item (see Note 3) following the assignment of the leases.

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.

114

115

Ted Baker Plc Annual Report and Accounts 2017/18 NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE 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

22. FINANCIAL COMMITMENTS
A) CAPITAL COMMITMENTS
The Group has capital commitments of £17,703,635 at 27 January 2018 (2017: £15,095,165) which were not provided in the

financial statements.

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

B) OPERATING LEASES
Total of future lease payments under non-cancellable operating leases are as follows:

awards that vests 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

3 July 2013

1 May 2014

30 April 2015

5 May 2016

6 April 2017

EXPIRY DATE

NUMBER OF
OPTIONS GRANTED

FAIR VALUE AT

GRANT DATE

2 July 2023

30 April 2024

29 April 2025

4 May 2026

5 April 2027

220,226

254,141

192,860

234,159

221,234

1,122,620

1,140.0p

695.0p

1,785.0p

875.0p

1,355.0p

NUMBER OF
AWARDS
OUTSTANDING
AT 27 JANUARY
2018

NUMBER OF
AWARDS
OUTSTANDING
AT 28 JANUARY
2017

5,604

153,118

187,829

185,148

531,699

42,964

230,646

179,201

231,533

684,344

Leasehold properties:

Within one year

Between one and five years

Later than five years

Concessions:

Within one year

Between one and five years

Later than five years

AS AT
27 JANUARY
2018

AS AT
28 JANUARY
2017

£’000

42,855

131,705

79,689

11,983

459

266,691

45,859

144,993

99,396

12,540

834

303,622

The terms and conditions of the awards granted during the period ended 27 January 2018 were the same as those for the awards made

under the LTIP 2013 in previous periods and are as follows:

GRANT DATE

6 April 2017

TYPE OF AWARD

NUMBER OF OPTIONS

VESTING CONDITIONS

VESTING PERIOD

LTIP 2013

221,234

Up to 100% after three years

Adjusted profit before tax
per share growth of 10–15%
per annum and 10% share
price growth over the
vesting period

The charge for the period to the income statement in respect of options issued under the LTIP 2013 amounted to

£1,494,000 (2017: £1,505,000). In respect of Ray Kelvin, who is employed by the Company, there is a charge of £185,000 in the

period (2017: £219,000).

The Monte-Carlo valuation methodology has been used as the basis of measuring the fair value of 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 six month average) for share price performance condition

Risk free interest rate

Expected life of options

Share price volatility

Dividend yield

1,849.0p–2,855.0p

2,103.0p–2,744.0p

0.18%–1.18%

3 years

29.0%–32.89%

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.

The above table includes the minimum future commitments

assuming no lease terminations. Under certain arrangements

C) PENSION ARRANGEMENTS
The Group operates a number of defined contribution schemes

if a lease is terminated the quantum of any future minimum

for senior management and a stakeholder pension scheme for

lease payments is subject to the terms of the contract which

employees, for which the pension cost charge for the period

may result in final payments lower than those disclosed above.

amounted to £1,648,000 (2017: £1,782,000). Contributions

Our operating leases for retail stores often contain rental

totalling £186,328 are included in other payables at the period

expenses based on revenue (“revenue leases”). Under

end (2017: £129,706).

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.

116

117

Ted Baker Plc Annual Report and Accounts 2017/18
NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

23. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
A) CARRYING AMOUNT AND FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES

The methods and assumptions used to estimate fair values of

5. The fair value of the term loan considers the present value

financial assets and liabilities are as follows:

of expected payment discounted using a risk-adjusted

discount rate.

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,

1. Cash and cash equivalents have been stated at their

Valuation of all financial assets and liabilities carried at fair

book values due to their short maturities or immediate

value by the Group is based on hierarchy Level 2. Fair value

are as follows:

or short-term access.

hierarchy levels are defined as follows:

FINANCIAL ASSETS

Trade receivables

Accrued income

Amount due from equity accounted investee

Derivative financial assets

Cash and cash equivalents

TOTAL FINANCIAL ASSETS

FINANCIAL LIABILITIES

Trade and other payables

Derivative financial liabilities

Bank overdraft

Provision

Term loan

TOTAL FINANCIAL LIABILITIES

NET FINANCIAL LIABILITIES

CARRYING
AMOUNT
27 JANUARY
2018

FAIR VALUE
27 JANUARY
2018

CARRYING
AMOUNT
28 JANUARY
2017

FAIR VALUE
28 JANUARY
2017

£’000

42,658

1,819

666

478

16,712

62,333

(74,064)

(3,918)

(76,043)

(52,500)

(206,525)

(144,192)

42,658

1,819

666

478

16,712

62,333

(74,064)

(3,918)

(76,043)

(52,500)

(206,525)

(144,192)

41,999

1,063

653

8,974

21,401

74,090

(74,422)

(616)

(58,074)

(2,917)

(58,500)

(194,529)

(120,439)

41,999

1,063

653

8,974

21,401

74,090

(74,422)

(616)

(58,074)

(2,917)

(58,500)

(194,529)

(120,439)

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:

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.

B) DERIVATIVE FINANCIAL INSTRUMENTS

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).

CONTRACTUAL/
NOTIONAL
AMOUNTS
27 JANUARY
2018

£’000

59,900

30,000

89,900

ASSETS
27 JANUARY
2018

LIABILITIES
27 JANUARY
2018

£’000

334

144

478

£’000

(3,918)

CONTRACTUAL/
NOTIONAL
AMOUNTS
28 JANUARY
2017

£’000

72,874

30,000

102,874

ASSETS
28 JANUARY
2017

LIABILITIES
28 JANUARY
2017

£’000

8,974

£’000

(550)

(66)

(616)

Currency derivatives

Interest rate swap

C) CASH FLOW HEDGING RESERVE MOVEMENTS
The following table indicates the cash flow hedging reserve balance at 27 January 2018 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.

CARRYING
AMOUNT
27 JANUARY
2018

FAIR VALUE
27 JANUARY
2018

CARRYING
AMOUNT
28 JANUARY
2017

FAIR VALUE
28 JANUARY
2017

Within six months

£’000

Between six months and one year

Between one and two years

UNRECOGNISED (LOSS)/GAIN

CURRENCY DERIVATIVES
27 JANUARY
2018

CURRENCY DERIVATIVES
28 JANUARY
2017

£’000

(1,203)

(1,555)

(388)

(3,146)

£’000

2,647

2,982

1,173

6,802

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

118

55,232

940

56,172

55,232

940

56,172

51,932

2,238

54,170

(23)

54,147

51,932

2,238

54,170

(23)

54,147

The cash flow hedging reserve relating to interest rate swaps at 27 January 2018 is a gain of £144,000 (2017: loss of £66,000).

The cash flows are expected to occur over the period to maturity of the term loan.

119

Ted Baker Plc Annual Report and Accounts 2017/18 NOTES TO THE FINANCIAL STATEMENTS

23. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT CONTINUED

D) FINANCIAL RISK IDENTIFICATION
AND MANAGEMENT
The Group’s multinational operations and debt financing

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

requirements expose it to a variety of financial risks. In the

outflows. The policy allows for these risks to be hedged for up

course of its business the Group is exposed to:

to 24 months ahead in order to fix the cost in Sterling.

• market risk;

• credit risk; and

The vast majority of projected purchases in each major

currency qualifies as “highly probable” forecast transactions

for hedge accounting purposes.

•

liquidity risks have been established and are reviewed

The Group also publishes its financial statements in Sterling

regularly to reflect changes in the market conditions and

and is therefore exposed to foreign currency translation risks

the Group’s activities. The Group, through its standards

due to movements in foreign exchange rates on the translation

and procedures, aims to develop a disciplined and

of the results and underlying net assets of its foreign operations

constructive control environment in which all employees

into Sterling.

understand their roles and obligations.

I) MARKET RISK
Market risk is the risk that changes in market prices, such as

FOREIGN CURRENCY SENSITIVITY ANALYSIS
The Group has used a sensitivity analysis technique that

measures the estimated change to the income statement

foreign exchange rates, interest rates and equity prices, will

and equity of a 10% strengthening or weakening in Sterling

affect the Group’s income or the value of its holdings of financial

against all other currencies, using the rates applicable at 27

instruments. At the balance sheet date, the only significant

January 2018. The analysis assumes that all other variables, in

market risk to the Group arises from foreign currency and

particular, interest rates, remain constant.

interest rate risk.

FOREIGN CURRENCY RISK
The Group operates internationally and is therefore exposed

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

to foreign currency risk primarily on purchases of inventory

currency translation exposures at the period end on the Group’s

denominated in US Dollars and Euros.

financial assets and liabilities that are not denominated in the

The Board reviews and agrees policies for managing

functional currencies of those businesses.

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.

120

NOTES TO THE FINANCIAL STATEMENTS

23. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT CONTINUED
A 10% (2017: 10%) strengthening or weakening of the Sterling against the following currencies at 27 January 2018 would have

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

increased/(decreased) equity and profit by the amounts shown in the following table:

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.

TEST OF 10% (2017: 10%) STRENGTHENING IN
STERLING AGAINST OTHER CURRENCIES

US Dollar

Euro

TEST OF 10% (2017: 10%) WEAKENING IN STERLING
AGAINST OTHER CURRENCIES

US Dollar

Euro

IMPACT ON PROFIT
27 JANUARY
2018

IMPACT ON EQUITY
27 JANUARY
2018

IMPACT ON PROFIT
28 JANUARY
2017

IMPACT ON EQUITY
28 JANUARY
2017

£’000

1,445

1,534

(1,766)

(108)

(1,874)

£’000

1,445

1,534

(1,766)

(108)

(1,874)

£’000

1,656

(366)

1,290

(2,024)

447

(1,577)

£’000

1,656

(366)

1,290

(2,024)

447

(1,577)

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. The Group’s interest rate derivatives comprise 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 is as follows:

FINANCIAL ASSETS AND LIABILITIES SUBJECT TO
INTEREST RATE RISK

GROUP
27 JANUARY
2018

COMPANY
27 JANUARY
2018

GROUP
28 JANUARY
2017

COMPANY
28 JANUARY
2017

Sterling

US Dollar

Euro

Other

£’000

(95,229)

4,668

3,526

5,040

£’000

940

£’000

(83,780)

6,897

5,900

5,661

£’000

2,238

(81,995)

940

(65,322)

2,238

The above table does not include the notional value of net debt for which interest rate swaps are in place.

Interest rate increase of 0.5%

Interest rate decrease of 0.5%

IMPACT ON PROFIT
27 JANUARY
2018

IMPACT ON EQUITY
27 JANUARY
2018

IMPACT ON PROFIT
28 JANUARY
2017

IMPACT ON EQUITY
28 JANUARY
2017

£’000

(410)

410

£’000

(410)

410

£’000

(327)

327

£’000

(327)

327

II) CREDIT RISK
Credit risk is the risk that counterparties to financial instruments

Certain concession partners operate supplier finance

arrangements which allow for early collection of receivable

do not perform according to the terms of the contract or

balances. When available, the Group participates in such

instrument. The Group’s principal financial assets are cash,

arrangements thereby reducing risk of any outstanding

trade and other receivables, and derivative financial assets.

receivable balances.

The Group’s credit risk is primarily attributable to its trade and

No credit limits were exceeded in the reporting period

other receivables.

and management will continue with its current approach

to credit control to prevent any future losses from non-

TRADE AND OTHER RECEIVABLES
Credit risk arises on credit exposure to wholesale, license and

performance arising.

concession partners including outstanding receivables and

committed transactions. The Group substantially mitigates

III) LIQUIDITY RISK
Prudent

liquidity risk management

implies maintaining

credit risk through credit insurance, standby letters of credit or

sufficient cash and marketable securities, the availability of

supplier finance arrangements when possible.

funding through an adequate amount of committed credit

Wholesale partner receivables risk is mitigated by credit

facilities and the ability to close out market positions. Due to the

insurance being taken out up to the amount of the credit limit.

dynamic nature of the underlying businesses, Group treasury

All new wholesale customers are checked against appropriate

maintains flexibility in funding by maintaining availability under

trade references and details such as frequency/delinquency.

committed credit lines.

The limits applied to each customer are set in conjunction

Management monitors rolling forecasts of the Group’s

with our credit insurer’s advice. Monitoring of credit limits is

liquidity reserve (which comprises of the undrawn borrowing

undertaken on a daily basis.

facility and cash and cash equivalents) on the basis of expected

All license partners require a standby letter of credit up to

cash flow. This is generally carried out at entity level in the

the amount of their credit limit, which is determined based on

operating companies of the Group in accordance with practice

creditworthiness and volume of business. The Group is not

and limits set by the Group. In addition, the Group’s liquidity

able to protect its license partner income with credit insurance,

management policy involves projecting cash flows in major

although it does not consider this a significant credit risk.

currencies and considering the level of liquid assets necessary

Forecasts are obtained from all its license partners throughout

to meet these, and monitoring balance sheet liquidity ratios

the period to allow extensive visibility of future income.

against internal and external regulatory requirements. Based
on current cash flow projections, the Group expects to have

sufficient headroom against its borrowing facilities (see section

below for further details on the borrowing facilities).

122

123

Ted Baker Plc Annual Report and Accounts 2017/18 discounting is not significant.

AT 27 JANUARY 2018

NON-DERIVATIVE FINANCIAL LIABILITIES

Trade and other payables

Bank overdraft

Term loan

DERIVATIVE FINANCIAL LIABILITIES

Derivative financial instruments

AT 28 JANUARY 2017

NON-DERIVATIVE FINANCIAL LIABILITIES

Trade and other payables

Bank overdraft

Term loan

DERIVATIVE FINANCIAL LIABILITIES

Derivative financial instruments

NOTES TO THE 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

E) CAPITAL MANAGEMENT
The Board’s policy is to maintain a strong capital base, defined as total shareholders’ equity, totalling £224,050,000 at 27 January

on the remaining period to the contractual maturity date, at the balance sheet date. The amounts disclosed in the table are

2018 (2017: £210,544,000), so as to maintain investor, creditor and market confidence and to sustain future development of

the contractual undiscounted cash flows. Balances due within twelve months equal their carrying balances as the impact of

the business.

CARRYING AMOUNT

CONTRACTED
AMOUNT LESS
THAN 1 YEAR

CONTRACTED
AMOUNT
1–2 YEARS

CONTRACTED
AMOUNT
2–5 YEARS

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.

£’000

It is the Board’s intention to achieve a dividend cover ratio of two times every year.

There were no changes in the Group and Company’s approach to capital management during the period.

74,064

76,043

52,500

74,064

76,043

5,500

4,000

43,000

24. CASH FLOWS FROM FINANCING ACTIVITIES
Reconciliation of movements of liabilities to cash flows arising from financing activities:

TERM LOAN

SHARE CAPITAL

SHARE PREMIUM

3,918

3,437

481

AS AT 28 JANUARY 2017

CHANGES FROM FINANCING CASH FLOWS

Proceeds from issue of share capital

Repayment of borrowings

Dividends paid

74,422

58,074

58,500

74,422

58,074

6,000

5,500

47,000

TOTAL CHANGES FROM FINANCING CASH FLOWS

616

TOTAL EQUITY-RELATED OTHER CHANGES

£’000

58,500

(6,000)

£’000

2,208

RETAINED
EARNINGS

£’000

183,774

(24,553)

£’000

9,935

552

55,155

AT 27 JANUARY 2018

52,500

2,224

10,487

214,376

In September 2017, the Group agreed an extension of its multi-

The facilities contain financial covenants which are

currency revolving credit facility. A new agreement was signed

believed to be appropriate in the current economic climate and

on 25 September 2017, increasing the Group’s committed

tested on a quarterly basis. The Group monitors actual and

borrowing facility from £110.0m to £135.0m expiring in

prospective compliance with these on a regular basis.

September 2020. This

increased

facility provides

the

The financial covenant tests are based upon the following:

resources to fund the planned working capital requirements

and capital expenditure to support the Group’s long-term

• a ratio of total net debt to EBITDA;

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 £72.9m (2017: £51.5m) of the £135.0m credit

facility as at 27 January 2018.

In 2015/16, 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 15 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, £6.0m (2017: £1.5m) was repaid.

• 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

27 January 2018.

124

125

Ted Baker Plc Annual Report and Accounts 2017/18 NOTES TO THE FINANCIAL STATEMENTS

FIVE YEAR SUMMARY

25. RELATED PARTIES
The Group considers its Executive and Non-Executive Directors as key management and their compensation therefore comprises a

related-party transaction.

Total compensation in respect of key management for the period was as follows:

Salaries and short-term benefits

Contributions to money purchase pension schemes

Share-based payment charges

52 WEEKS ENDED
27 JANUARY
2018

552 WEEKS ENDED
28 JANUARY
2017

£’000

2,852

364

3,270

£’000

2,582

427

3,062

Directors of the Company and their immediate relatives control

and, as such, these entities are related parties of the Company

35.2% of the voting shares of the Company.

for the purposes of Chapter 11 of the Listing Rules.

At 27 January 2018, No Ordinary Designer Label Limited

Previously the Group provided design services to THAT

(“NODL”), the main trading company owed Ted Baker

Bournemouth Company Limited for which licence income fees

Plc £55,232,000

(2017: £51,932,000). NODL was owed

were charged (2017: £192,000). No services were provided in

RESULTS

Revenue

Operating profit

Profit before tax

Profit before tax and impairment

Profit before tax and exceptional items

PROFIT FOR THE PERIOD

ASSETS EMPLOYED

Property, plant and equipment

Non-current assets

Net current assets

Non-current liabilities

52 WEEKS
ENDED
25 JANUARY
2014

53 WEEKS
ENDED
31 JANUARY
2015

52 WEEKS
ENDED
30 JANUARY
2016

52 WEEKS
ENDED
28 JANUARY
2017

52 WEEKS
ENDED
27 JANUARY
2018

£’000

321,921

387,564

456,169

530,986

591,670

39,588

38,923

39,648

39,969

28,852

45,083

12,118

54,863

49,759

48,771

49,452

35,850

51,804

20,265

68,505

59,369

58,664

58,853

58,664

44,235

62,497

61,271

65,784

46,568

70,727

68,789

73,322

73,465

52,744

123,397

144,354

139,075

25,615

82,143

(58,556)

172,599

31,189

91,852

(56,851)

210,544

40,733

92,515

(48,273)

224,050

£138,911,000 (2017: £136,813,000) from the other subsidiaries

the year ended 27 January 2018. No amounts were outstanding

NET ASSETS

112,064

140,574

within the Group. Transactions between subsidiaries were

as at 27 January 2018 (2017: £nil).

priced on an arm’s length basis.

During the period the main trading company provided office

The Group has a 50% interest in the ordinary share capital

space to THAT TopCo Limited for which rental charges were

of No Ordinary Retail Company Pty*, a company incorporated

made of £122,550 (2017: £34,560) and other miscellaneous

in Australia, through its wholly owned subsidiary No Ordinary

charges of £8,946 (2017: £3,446). As at 27 January 2018, THAT

Designer Label Limited. As at 27 January 2018, the joint venture

TopCo Limited owed £102,418 to the main trading company

owed £666,000 to the main trading company (2017: £653,000).

(2017: £nil).

In the period the value of sales made to the joint venture by the

During the period the main trading company supplied

Group was £2,648,000 (2017: £2,696,000).

services to THAT Bournemouth Big Hotel Limited for which

Ray Kelvin and Lindsay Page are both directors of, and

charges were made of £6,741 (2017: £16,551). As at 27 January

shareholders in, THAT Bournemouth Company Limited*, THAT

2018, THAT Bournemouth Big Hotel Limited owed £1,849 to

TopCo Limited* and THAT Bournemouth Big Hotel Limited*

the main trading company (2017: £nil).

*The registered office addresses are as follows:

RELATED PARTY

No Ordinary Retail Company Pty

THAT Bournemouth Company Limited

THAT TopCo Limited

THAT Bournemouth Big Hotel Limited

REGISTERED OFFICE ADDRESS

6 Albert St, Preston VIC 3072, Australia

6A St Pancras Way, London, NW1 0TB

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

112,064

140,574

172,599

210,544

224,050

112,064

140,574

172,599

210,544

224,050

67.2p

69.0p

66.3p

33.7p

82.0p

83.2p

81.0p

40.3p

100.6p

99.3p

47.8p

105.7p

114.0p

104.5p

53.6p

119.0p

127.7p

118.3p

60.1p

2.0 times

2.1 times

2.0 times

Dividend cover before exceptional costs

2.0 times

2.1 times

Pre-tax return on capital employed before exceptional items

Post-tax return on capital employed before exceptional items

33.9%

25.1%

32.0%

23.5%

30.5%

23.0%

27.3%

20.8%

26.8%

20.6%

126

127

Ted Baker Plc Annual Report and Accounts 2017/18