TIDMTED
RNS Number : 7179B
Ted Baker PLC
14 June 2021
Ted Baker Plc
("Ted Baker", the "Group")
Preliminary Results Announcement for the 53 weeks ended 30
January 2021
Strategic progress and increasing brand strength position the
business for future success
Rachel Osborne, Chief Executive Officer, commented:
"We are making good progress against our strategic
transformation plan and Ted Baker is increasingly well placed to
take advantage of the significant growth opportunities ahead of us.
The Ted Baker brand has strengthened further, with the number of
active customers growing to 1.2m by the end of the year.
"While the impact of COVID-19 is clear in our results and has
amplified some of the legacy issues impacting the business, Ted
Baker has responded proactively and is in a much stronger place
than it was a year ago. During the period, we delivered robust
cashflow generation, fixed our balance sheet, refreshed our senior
leadership team and today we are upgrading our financial targets
for the second time since outlining our new strategy last
summer.
Additionally, we have made good progress with our sustainability
strategy, Fashioning a Better Future, including the mapping of all
of our factory partners within our supply chain and significantly
increasing our usage of cotton from sustainable sources to 69%.
"We are a year into Ted Baker's transformation plan and continue
to believe that we have the right strategy and team in place to set
the business up for a stronger, more sustainable future."
53 weeks 52 weeks Change
ended ended
30 January 25 January
2021 2020 (restated(1) )
Group Revenue GBP352.0m GBP630.5m (44.2)%
Underlying (Loss)/Profit Before Tax(2) GBP(59.2)m GBP4.8m n/a
(Loss)/Profit Before Tax GBP(107.7)m GBP(77.6)m 38.8%
Basic EPS (56.2)p (153.0)p n/a
Underlying(2) EPS (26.0)p 6.7p n/a
Dividend(3) nil 7.8p n/a
Notes: (1) Details of the restatement are included in the annual report and accounts
(2) Before non-underlying items
(3) Declared and paid
Financial Summary
- This year was a 53-week year and the extra week added 2% to
sales. Throughout this document, unless otherwise stated, we will
compare sales and profit in the 53 weeks to January 2021 with the
52 weeks in the prior year. Due to the level of disruption in the
year, we do not believe comparison on a 52-week basis would be
helpful.
- Group revenue down 44.2% (down 44.1% in constant currency) to
GBP352.0m compared to GBP630.5m in the prior year, driven by the
ongoing impact of COVID restrictions on trading globally.
- Underlying loss before tax of GBP59.2m, primarily driven by
lower revenue levels, and partially offset by our cost actions.
- Retail sales including eCommerce down 42.2% (down 42.1% in
constant currency) to GBP254.3m, compared to GBP439.9m in the prior
year.
- ECommerce sales up 22.0% (up 22.1% in constant currency) to
GBP144.9m, compared to GBP118.7m in the prior year, supported by
continued investment in our digital business and significant
improvements to our customer journey. Growth in our directly
operated eCommerce channels of 30.2%.
- Wholesale sales down 50.3% (down 48.6% in constant currency)
to GBP85.3m, compared to GBP171.5m in the prior year, reflecting
market pressure on our Trustees.
- Improvement in net cash of GBP 193.8m, which exceeds the net
proceeds of the equity raise and disposal of the UBB building,
representing positive free cash flow generation.
- Net cash of GBP66.7m at 30 January 2021, well ahead of management's expectations.
- Upgrade of financial target. We now expect a net cash position at YE2023.
- Renewed Revolving Credit Facility (RCF). The Group has ongoing
support from our four existing lending banks, with its facilities
extended from August 2022 to November 2023, with a GBP90m facility
until January 2022 and then GBP80m until November 2023, including a
new set of covenants.
Operational and strategic highlights
In June 2020 we launched our three-year strategic transformation
programme, Ted's Growth Formula. Our progress in executing this
plan has been encouraging, despite several of the legacy issues
facing the business having been amplified by COVID. Alongside a
rapid and effective response to the pandemic, the foundations of
our business are now fixed, and we are switching our focus to
growth. Key highlights for the period include:
- Brand strength enhanced. The Ted Baker brand remains healthy,
notwithstanding the impact of extensive store closures during the
pandemic lockdown period. Customers have responded positively to
our refreshed social media, campaign imagery and new product. NPS
increased during the period and we have 1.2m active digital
customers.
- Excellent cash flow management embedded into business. The
business has demonstrated cashflow discipline throughout the
period, with a tight grip on working capital and the implementation
of a new commercial stock cycle.
- Significant cost action taken. The Group commenced a full cost
review at the start of the year, which increased in scope and scale
during COVID, with GBP31m of annualised payroll savings and GBP8m
of negotiated rent savings during the year.
- China JV delivered strong growth in first full year of
operation. Our Chinese business grew 6% during the year, despite
the store closures during Q1. Growth was robust in both stores and
online and we have a healthy pipeline of new stores in the year
ahead. Q1 2022 has seen growth of 262% vs. prior year and 47%
growth vs. Q1 2020.
These strong foundations have supported our further progress
across the three core pillars of our strategy, which are designed
to deliver a structurally more profitable business with higher ROCE
and higher sustainable free cash flow generation. Highlights for
the full year period and following the period end include:
1. Refresh and reenergise the product and brand
- New product pyramid in place ensuring that brand identity is
reflected in product while maintaining appropriate alignment with
the market.
- Mad(e) in Britain capsule collection, which sits at the top of
the pyramid and sets the creative tone for the collection, launched
in November 2020 and was positively received.
- New Global Creative Director Anthony Cuthbertson joined in
November 2020 and has hit the ground running, bringing a new energy
and creative vision to Ted Baker.
- Good progress against our sustainability targets and a broader
ESG programme in development, including 69% of cotton from
sustainable sources and 100% of terminal product being donated to
charity and avoiding landfill in the financial year.
2. Prioritise digital & asset light growth
- All our key metrics relating to eCommerce and digital improved
year-on-year, including new customer acquisition, total customers,
online conversion rate, social media engagement, and retention.
- Significant enhancements to our digital experience. Key
initiatives delivered during the period include:
o Major upgrade of our payment options to now include Apple Pay,
Google Pay, Klarna and a series of local payment options.
o Introduction of virtual appointments via Hero, with in-store
colleagues
o Launch of our new VIP programme DevoTED.
o Launch of Live Chat, among the first in our peer group to
introduce this feature.
o Launch of Live Commerce
- We have signed several new high-quality product licence deals
with category-leaders in recent months:
o Building on the successful start to our Childrenswear licence,
NEXT has been appointed as our new licence partner for lingerie and
nightwear.
o Baird Group has been appointed as our new licence partner for
Men's Formalwear for the UK and Ireland.
o Bedeck has been appointed as our new licence partner for
bedding and towels.
- We have strengthened our territory licence division with a number of deals:
o Our strategic partnership with AFG has been enhanced, to now
include a full omni-channel relationship for retail, eCommerce and
wholesale for much of the MENA region. AFG has committed to open 14
new stores in the region over the coming six years. We have
extended our agreement for ten years.
o MAP has been appointed our new licence partners for
Indonesia.
3. Significant cost out programme
- We have made material savings across our central costs and retail store costs.
o Central and retail store costs: Annualised savings across both
functions will be GBP31.0m per annum at a cash cost of GBP3.9m,
ahead of previous guidance.
o Store estate: We have negotiated and delivered rent savings of
GBP8m during the financial year. We also benefitted from GBP27.8m
of turnover-related rent savings, reflecting the flexible nature of
a large amount of our Retail space. We will be continuing our
programme of rent renegotiations in the year ahead to reflect the
new commercial realities.
Current Trading and Outlook
The Group is reporting Q1 revenues, for the first 12 weeks to 24
April 2021.
Q1 trading as been materially impacted by ongoing COVID
restrictions, with lockdowns in place in the UK, Europe and Canada
for parts of this period.
- Q1 FY22 Group revenue down 19.9% (down 17.3% in constant
currency), driven by ongoing impact of COVID restrictions on
trading globally.
o eCommerce up 4.5% (up 25.9% vs. Q1 FY20), as the Group starts
to take a less heavy promotional stance compared to the prior
year.
o Retail stores down 40.7% (down 73.1% vs. Q1 FY20). Globally,
the Group lost 10 more trading days during the period than the
prior year, with 53 days of trading during Q1 FY21 and 83 in Q1
FY20. We are encouraged with how our UK stores have performed since
reopening on 12 April, albeit that revenue remains below FY20
levels. Our retail stores in metro cities and travel retail
locations accounted for 36% of pre-COVID global store revenues and
those stores remain materially below FY20 trading levels.
o Wholesale and Licence down 22.4% (down 48.3% vs. Q1 FY20)
reflecting cautious ordering from store-based trustees, as well as
continued restrictions on store openings in Europe.
- Gross profit margin for eCommerce has increased around 250
bps, reflecting the Group reducing promotional levels.
- eCommerce performance is set against an exceptionally
promotional market last year. Our promotional stance in the FY22
quarter remained in line with the market, but we have begun to move
towards a more typical promotional schedule.
- Net cash was GBP29.6m at 24 April 2021. This positive cash
position reflects continuing action to manage working capital and
reduce expenditure. Revolving credit facilities of GBP133m remained
undrawn throughout the period.
The Group is implementing a new reporting calendar, aligned to
internal management reporting, Q2 will represent weeks 13-28, Q3
weeks 29-40 and Q4 weeks 41-52. This new calendar will allow
greater insights around trading margin and period end cash
position. The Group does not intend to report against periods
outside this new calendar, which is considered an appropriate level
of financial disclosure.
Following the successful execution of the five operational
targets that were set for Year 1 of the transformation plan, the
Group has announced six operational targets for the new financial
year, on the assumption of no further major lockdowns in core
territories. The targets are as follows:
o Improve Product Proposition: increase full price sales mix in
H2 by 500bps
o Drive Digital Development: complete eCommerce re-platform
launch
o Sustain Brand Strength: Maintain top quartile NPS score
o Grow Global Footprint: Open 10 new stores in strategic
markets
o Promote ESG: Increase sustainable cotton use to at least
75%
o Continue Property Cost Reduction: Base rent saving of at least
15%, and each renegotiation to deliver at least 50% reduction in
base rent
Enquiries:
Ted Baker Plc Tel: +44 (0) 20 7255 4800
Rachel Osborne, Chief Executive Officer
David Wolffe, Chief Financial Officer
Tulchan Communications Tel: +44 (0) 20 7353 4200
Jonathan Sibun/Jessica Reid
Media images available for download at:
http://www.tedbakerplc.com/ted/en/mediacentre/imagelibrary
Notes to Editors
Ted Baker Plc - "No Ordinary Designer Label"
Ted Baker is a global lifestyle brand distributing across five
continents through its three main distribution channels: retail
(including eCommerce); wholesale; and licensing.
Ted Baker has 521 stores and concessions worldwide, comprising
182 in the UK, 99 in Europe, 136 in North America, 95 in the Middle
East, Africa and Asia, and 9 in Australasia.
We offer a wide range of collections including Menswear;
Womenswear; Accessories; Bedding; Childrenswear; Eyewear; Footwear;
Fragrance and Skinwear; Gifting and Stationery; Jewellery; Lingerie
and Sleepwear; Men's Underwear and Loungewear; Luggage; Neckwear;
Rugs; Suiting; Technical Accessories; Wallpaper; and Watches.
Business and Financial Review
Business Review
The COVID-19 pandemic had a significant impact on the Group's
performance, resulting in stores remaining closed for a significant
proportion of the year and depressed in our key markets.
Global Group Summary
53 weeks 52 weeks Variance Constant
ended ended currency
30 January 25 January variance(1)
2021 2020
Group Revenue GBP352.0m GBP630.5m (44.2%) (44.1%)
-------------------------------- ------------ ------------ ---------- -------------
Gross margin (excluding
non-underlying items) 54.2% 55.6% (140) bps
-------------------------------------------- ------------ ------------ ---------- -------------
Operating contribution
(excluding non-underlying (1,700)
items) * (14.1%) 2.9% bps
-------------------------------------------- ------------ ------------ ---------- -------------
Operating (loss)/ (1,860)
contribution margin** (28.1%) (9.5%) bps
-------------------------------------------- ------------ ------------ ---------- -------------
(Loss)/Profit before
tax (excluding non-underlying
items) as a % of (1760)
revenue (16.8%) 0.8% bps
-------------------------------------------- ------------ ------------ ---------- -------------
(Loss) before tax (1,830)
as a % of revenue (30.6%) (12.3%) bps
-------------------------------------------- ------------ ------------ ---------- -------------
Retail Revenue GBP254.3m GBP439.9m (42.2%) (42.1%)
-------------------------------- ------------ ------------ ---------- -------------
Ecommerce revenue GBP144.9m GBP118.7m 22.0% 22.1%
-------------------------------------------- ------------ ------------ ---------- -------------
Gross margin 57.5% 59.9% (240) bps
-------------------------------------------- ------------ ------------ ---------- -------------
Average square footage*** 421,435 442,790 (4.8%)
-------------------------------------------- ------------ ------------ ---------- -------------
Closing square footage*** 411,602 438,483 (6.1%)
-------------------------------------------- ------------ ------------ ---------- -------------
Sales per square
foot including eCommerce 603 994 (39.3%) (39.2%)
-------------------------------------------- ------------ ------------ ---------- -------------
Sales per square
foot excluding eCommerce 260 725 (64.2%) (64.2%)
-------------------------------------------- ------------ ------------ ---------- -------------
Wholesale Revenue GBP85.3m GBP171.5m (50.3%) (48.6%)
-------------------------------- ------------ ------------ ---------- -------------
Gross margin 37.6% 39.8% 220 bps
-------------------------------------------- ------------ ------------ ---------- -------------
Licensing Revenue GBP12.4m GBP19.0m (34.5%) (34.5%)
-------------------------------- ------------ ------------ ---------- -------------
*Operating contribution/(loss) (excluding non-underlying items)
is defined as operating profit/(loss) before non-underlying items
as a percentage of revenue.
**Operating contribution margin is defined as operating
profit/(loss) as a percentage of revenue.
***Excludes licence partner stores.
Channel Performance
Retail
Our retail channel comprises stores, concessions and eCommerce,
providing an omni-channel experience. We operate stores and
concessions across the UK, Europe, North America and South Africa,
and localised eCommerce sites in the UK, continental Europe, the
US, Canada and Australia. We also have eCommerce businesses with
many of our concession partners. Our stores are important to the
success of our digital businesses through supporting brand
awareness and showcasing our products. The relatively high number
of concession locations and short lease length on our stores
(averaging 3.5 years) allow us to maintain a flexible business
model.
The performance of the Retail business reflects the
unprecedented trading conditions across the world, with stores
remaining closed to comply with local lockdowns, particularly
during the first half of the year. Where they were remained open,
footfall was significantly below normal levels. Demand shifted onto
online channels, with eCommerce sales increasing to 57.0% (2020:
27.0%) of total retail sales in the year. Store performance
improved in the second half as the impact of lockdown and trading
restrictions was reduced, particularly in the run-up to the peak
Christmas trading period.
We have continued to review and refine our store portfolio in
line with new trading conditions. Given lower footfall, and despite
discussions with landlords to renegotiate rent, we determined that
a several locations would no longer be viable to operate and could
be exited cost-effectively. We closed four stores during the year,
contributing to a reduction in the average retail square footage of
4.8% to 421,435 sq ft (2020: 442,790 sq ft). This follows the
transfer in the second half of FY20 of 14 stores in China and Hong
Kong to joint ventures and 4 stores in Japan to a license partner.
These stores generated GBP9.0m in sales during 2020.
During the first half the Group furloughed store colleagues in
response to government-imposed lockdowns. As it became apparent
that market demand was likely to remain weak for the remainder of
the year, we reviewed the store staffing model and a significant
number of roles were made redundant to ensure that stores remained
viable. We benefitted from government support, such as business
rates holidays and job support schemes, as well as rent savings and
waivers through negotiations with landlords and reductions in
turnover-related rent. Driving business through our online
channels, as well as the highly offer-driven market through the
year, necessitated some increased expenditure on marketing and
promotions. As a result of all the cost movements combined, retail
operating costs excluding non-underlying items decreased by 28.7%
to GBP165.5m (2020: GBP232.2m).
Wholesale
Our wholesale business in the UK serves countries across the
world, primarily in the UK and Europe, as well as supplying
products to stores operated by our territorial licence partners. In
addition, we operate a wholesale business in North America serving
the US and Canada.
Wholesale sales decreased by 50.3% (48.6% in constant
currency(1) ) to GBP85.3m (2020: GBP171.5m) as our wholesale
trustees' businesses were also affected by COVID. Margin was
adversely affected by the discounts we offered to support a number
of key trustee businesses and an increase in the mix of off-price
product, which contributed to the reduction in wholesale gross
margin to 37.6% (2020: 39.8%) in the period.
Licence Income in revenue
We operate both territorial and product licences. Our licence
partners are carefully selected as experts in their field and share
our passion for unwavering attention to detail and firm commitment
to quality.
Territorial licences cover specific countries or regions in
Asia, Australasia, Europe, the Middle East, Africa and Central
America, where our partners operate licensed retail stores and, in
some territories, wholesale operations.
Product licences cover Bedding; Childrenswear; Eyewear;
Fragrance and Skincare; Gifting and Stationery; Jewellery; Lingerie
and Sleepwear; Men's Underwear and Loungewear; Luggage; Neckwear;
Rugs; Suiting; Ted's Grooming Rooms; Technical Accessories;
Wallpaper; and Watches.
Licence income decreased by 34.5% to GBP12.4m (2020: GBP19.0m).
Product licence income was affected by the challenging trading
environment and particularly impacted in formalwear, adversely
affected by the increase in working from home, as well as the
replacement of existing agreements for watches and childrenswear
with new partners. Royalty payments from regional franchise
operators were also impacted by the restrictions on trading and
lower sales levels, particularly in the Middle East and Asia.
Collection Performance
Ted Baker womenswear sales decreased by 40.7% to GBP219.7m
(2020: GBP370.4m) and represented 64.7% (2020: 60.6%) of total
sales. Ted Baker menswear sales were down 50.3% to GBP119.8m (2020:
GBP241.1m) and represented 35.3% of total sales (2020: 39.4%).
Demand for more formal styles and occasionwear were particularly
affected by lockdown, and these represent a greater proportion of
the menswear range.
Geographic Performance
United Kingdom and Europe
53 weeks 52 weeks Variance Constant
ended ended currency
30 January 25 January variance(1)
2021 2020
Revenue (inc. Licensing) GBP246.8m GBP422.6m (41.6%) (41.7%)
------------ ------------ --------- -------------
Total retail revenue GBP181.9m GBP296.9m (38.7%) (38.9%)
------------ ------------ --------- -------------
Store revenue GBP67.3m GBP202.3m (66.7%) (67.0%)
------------ ------------ --------- -------------
ECommerce revenue GBP114.6m GBP94.6m 21.2% 21.0%
------------ ------------ --------- -------------
Average square footage* 276,437 284,533 (2.8%)
------------ ------------ --------- -------------
Closing square footage* 269,283 291,557 (7.6%)
------------ ------------ --------- -------------
Sales per square foot
including eCommerce sales GBP658 GBP1,043 (36.9%) (37.1%)
------------ ------------ --------- -------------
Sales per square foot
excluding eCommerce sales GBP244 GBP711 (65.7%) (66.0%)
------------ ------------ --------- -------------
Wholesale revenue GBP52.4m GBP106.7m (50.9%) (48.4%)
------------ ------------ --------- -------------
Own stores 45 46 (2.2%)
------------ ------------ --------- -------------
Concessions 205 242 (15.3%)
------------ ------------ --------- -------------
Outlets 21 22 (4.5%)
------------ ------------ --------- -------------
Partner stores/concessions 10 11 (9.1%)
------------ ------------ --------- -------------
Total 281 321 (12.5%)
------------ ------------ --------- -------------
*Excludes licence partner stores
Lockdowns in several territories meant that our stores had to
remain closed for parts of the year, with footfall remaining
depressed even when stores were open. City centres and areas
traditionally popular with tourists were the most badly affected.
As a result, Retail sales in the UK and Europe decreased by 38.7%
(38.9% in constant currency(1) ) to GBP181.9m (2020: GBP296.9m),
with eCommerce sales increasing to represent 63.0% (2020: 31.9%) of
the total. Many of our trustees and licence partners were also
impacted by the challenging trading conditions, driving sales from
our UK wholesale business lower by 50.9% (48.4% in constant
currency)(1) .
North America
53 weeks 52 weeks Variance Constant
ended ended currency
30 January 25 January variance(1)
2021 2020
Revenue GBP102.8m GBP194.6m (47.2%) (46.7%)
------------ ------------ --------- -------------
Total retail revenue GBP69.9m GBP129.8m (46.1%) (45.6%)
------------ ------------ --------- -------------
Store revenue GBP39.7m GBP107.7m (63.2%) (62.8%)
------------ ------------ --------- -------------
ECommerce revenue GBP30.3m GBP22.1m 37.2% 3 8.3%
------------ ------------ --------- -------------
Average square footage* 137,894 138,152 (0.2%)
------------ ------------ --------- -------------
Closing square footage* 135,215 139,822 (3.3%)
------------ ------------ --------- -------------
Sales per square foot
including eCommerce sales GBP507 GBP9 39 (46.0%) (45.5%)
------------ ------------ --------- -------------
Sales per square foot
excluding eCommerce sales GBP288 GBP780 (63.1%) (62.7%)
------------ ------------ --------- -------------
Wholesale revenue GBP32.8m GBP64.8m (49.3%) (48.9%)
------------ ------------ --------- -------------
Own stores 35 38 (7.9%)
------------ ------------ --------- -------------
Concessions 64 64 0%
------------ ------------ --------- -------------
Outlets 12 12 0%
------------ ------------ --------- -------------
Partner stores/concessions 25 26 (3.8%)
------------ ------------ --------- -------------
Total 136 140 (2.9%)
------------ ------------ --------- -------------
*Excludes licence partner stores.
In comparison to the UK & Europe, disruption to trading in
North America stores started later, and the adverse impact on
demand from COVID-19 was supplemented by political and social
unrest. We closed 3 stores during the year, where the economics of
reopening were unattractive, and renegotiated leases to further
improve profitability in a number of other locations. This
contributed in a drop in Retail sales of 46.1% (45.6% in constant
currency(1) ) to GBP69.9m (2020: GBP129.8m).Our eCommerce business
delivered a strong performance, with sales increasing by 37% to
GBP30.3m (2020: GBP22.1m), Ecommerce sales represented 43.3% of
total retail sales (2020: 17.0%).
Rest of the World
53 weeks 52 weeks Variance Constant
ended ended currency
30 January 25 January variance(1)
2021 2020
Revenue GBP2.4m GBP13.3m (82.0%) (79.8%)
------------ ------------ --------- -------------
Total retail revenue GBP2.4m GBP13.3m (82.0%) (79.8%)
------------ ------------ --------- -------------
Store revenue GBP2.4m GBP11.2m (78.7%) (76.1%)
------------ ------------ --------- -------------
ECommerce revenue - GBP2.1m (100.0%) (100.0%)
------------ ------------ --------- -------------
Average square footage* 7,104 20,105 (64.7%)
------------ ------------ --------- -------------
Closing square footage* 7,104 7,104 0%
------------ ------------ --------- -------------
Sales per square foot
including eCommerce sales GBP337 GBP662 (49.1%) (42.9%)
------------ ------------ --------- -------------
Sales per square foot
excluding eCommerce sales GBP337 GBP558 (39.6%) (32.3%)
------------ ------------ --------- -------------
Own stores 4 4 0%
------------ ------------ --------- -------------
Concessions 0 0 0%
------------ ------------ --------- -------------
Outlets 0 0 0%
------------ ------------ --------- -------------
Partner stores/concessions 79 83 (4.8%)
------------ ------------ --------- -------------
Joint venture locations 21 15 40.0%
------------ ------------ --------- -------------
Total 104 102 2.0%
------------ ------------ --------- -------------
*Excludes licence partner stores.
The reduction in sales outside of our core European and North
American businesses reflects the evolution of our distribution
strategy.
In the second half of FY20, we transitioned our businesses in
China (including Hong Kong S.A.R. and Macau S.A.R.) to a joint
venture, covering 14 stores and concessions, and eCommerce, with
the income from these businesses now reflected in other income.
In China, our venture's expansion plans have been delayed by
COVID, but managed to open seven during the period, and now
operates 21 stores and concessions across the region (2020: 15
locations).
In Japan, we announced an agreement with our licence partner
Sojitz Infinity in August 2019, and transitioned operations into
the partnership during the second half of FY20. Our partner opened
three new stores, and now operates seven stores and concessions
across the region (2020: four locations).
The joint venture with our Australian licence partner, Flair
Industries Pty Ltd, operates nine stores in Australasia (2020: nine
stores).
Financial Review
The COVID-19 pandemic had a significant impact on the Group's
performance, resulting in stores remaining closed for a significant
proportion of the year and depressed demand in our key markets.
While a proportion of demand shifted to online channels, this was
not enough to compensate for the shortfall in store sales in the
year. As a result, Group revenue decreased by 44.2% (44.1% decrease
in constant currency(1) ) to GBP352.0m (2020: GBP630.5m) for the 53
weeks ended 30 January 2021.
This reduction in revenue was particularly marked during Quarter
2 when the full impact of lockdowns began to bite internationally,
and affected all channels, especially wholesale.
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Gross margin before non-underlying items was 54.2% (2020:
55.6%). At a trading level, the impact of falling demand,
restrictions on store trading and retailers' need for cash was that
the market became highly promotional. This was particularly
pronounced during the first half, as we acted to clear stock and
drive additional cash. Margins improved substantially during the
second half as stores in the UK and Europe re-opened and inventory
levels were brought in line. The second half improvement was
limited, however, as sales of higher margin categories occasionwear
and outerwear remained below normal levels on account of increased
working from home and reduced opportunities for socialising.
The Group reacted rapidly to unprecedentedly challenging
conditions of rapidly shrinking sales by reducing operational
expenditure, furloughing staff in both stores and head office,
utilising support schemes offered by the British and other
governments and initiating cost control and restructuring
programmes. Excluding non-underlying costs, distribution costs,
which comprise the cost of retail operations and distribution
centres, decreased by 28.0% to GBP175.9m (2020: GBP244.1m), and
administration expenses decreased by 19.6% to GBP71.0m (2020:
GBP88.3m). These decreases resulted from the implementation of cost
savings initiatives in the business, including
-- making headcount reductions in store and head office
permanent staff, where appropriate, saving GBP31m on an annualised
basis
-- initiating discussions with our landlords to abate fixed rent
during the closure periods and reduce rent thereafter to reflect
lower levels of footfall. This generated savings of GBP8.0m in the
year.
Loss/profit before tax and non-underlying items and Loss/profit
before tax
The loss before tax was GBP107.7m (2020: loss of GBP77.6m). The
loss before tax, non-underlying items was GBP59.2m (2020: profit of
GBP4.8m).
Non-underlying items
Non-underlying items before tax in the period amounted to
GBP48.6m (2020: GBP82.4m) and comprised the following items
expenses / (income):
53 weeks ended 52 weeks ended
30 January 25 January
2021 2020 (Restated)
--------------------------------------------- --------------- -----------------
GBP'000 GBP'000
Included in cost of sales:
Inventory changes in estimates (6,065) (32,351)
Change to inventory obsolescence provision - (13,539)
Onerous contract provision (1,973) -
Other 81 2,221
--------------- -----------------
Included in Gross Profit (7,957) (43,669)
Included in distribution costs :
(Loss) on disposal of business - (7,585)
Impairment of intangibles, property,
plant and equipment and right-of-use
assets (45,303) (13,969)
Other closure costs - (603)
Included in administrative costs:
Acquisition costs and unwind of fair
value accounting adjustments (1,987) (4,710)
Reorganisation, restructuring costs and
other legal and professional costs (11,415) (7,852)
Included in Other Operating (Loss)/income:
Gain on disposal of business 17,446 -
Included in operating profit (49,216) (78,388)
Included in share of post-tax profits
from joint venture:
Unwind of fair value adjustments (7) (989)
Included in finance income/(expense):
Foreign exchange on the translation of
monetary assets and liabilities denominated
in foreign currencies 655 (3,026)
Non-underlying items (48,568) (82,403)
--------------- -----------------
Note: details of the restatement and of the above items can be
found in the notes to the accounts
Finance income and expenses
Net finance expenses were GBP7.7m (2020: GBP15.5m). The IFRS 16
interest expense for the period was GBP6.8m (2020: GBP8.3m).
Excluding the impact of non-underlying items, net finance expenses
were GBP8.4m (2020: GBP12.4m).
Taxation
The Group tax credit for the period was GBP21.3m (2020: credit
of GBP9.4m). This effective tax rate is lower than the UK tax rate
for the period of 19%, primarily due to the Group being loss making
in territories where it has major market operations and due to the
utilisation of previously unrecognised tax losses in territories
with higher tax rates.
Cash Flow
We took prompt action to support the Group's cash position, to
ensure it has sufficient resources to trade through an extended
period of weak demand while investing in profitable growth. We
brought in additional financing through the sale of the Ugly Brown
Building for gross proceeds of GBP77.8m and the issuance of
GBP105.0m new equity (gross).
The Group's working capital position was also reviewed. Actions
to maintain cash and manage liquidity included
-- increased sell-through and liquidation of older, excess stock
-- significantly intake reductions to align stock levels with demand
-- agreeing extended payment terms with suppliers
-- deferral of rental payments
As a result, net working capital, which comprises inventories,
trade and other receivables and trade and other payables, decreased
by GBP68.3m to GBP34.4m (2020: GBP102.7m). Continued tight cash
management ensured that, despite a second UK lockdown during
December and January, net cash outflow was minimal during the
second half.
Group capital expenditure of GBP7.0m (2020: GBP25.8m) has been
significantly reduced. We are continuing to invest in systems and
infrastructure to support our digital businesses and improve
efficiency, but investment on physical locations has been limited
only to essential works.
Borrowing facilities
The Group's net cash balance at 30 January 2020 was GBP66.7m
(2020: net debt GBP127.1m). On 23 March 2020, the Group announced
that its lending bank syndicate agreed to increase the headroom
under the Group's revolving credit facilities of GBP180m (Facility
A), by a further GBP13.5m until 18 December 2020 (Facility B). On
20 May 2020, the lending bank syndicate agreed to increase the
headroom under Facility B by a further GBP11.5m, taking the total
Facility B facility to GBP25m, with a revised Facility B expiry
date of 18 January 2022.
The additional facility announced on 23 March 2020 was made
available in conjunction with the exchange of contracts for the
sale of Big Lobster Limited, a wholly owned Group subsidiary, which
owns the Group's Head Office in London. In connection with the
sale, the Group entered into a short-term lease of the property for
a period following completion from 1 June 2020 to 31 March 2023.
The consideration from the sale was GBP78.75m paid in cash by the
buyer on completion, in June 2020. The net proceeds of the sale of
GBP72.2m, after fees and taxes, was applied to repay existing
indebtedness under Facility A to significantly de-lever the Group.
The remaining available facilities totalled GBP132.8m, with
GBP107.8m in Facility A and GBP25m in Facility B.
On 25 May 2021 the Group announced that it signed an extension
to its revolving credit facility with its existing lending
syndicate. The new agreement extends the revolving credit facility
maturity from September 2022 to November 2023 and amends the
covenants. Under the new agreement, the existing Facility A of
GBP107.8m maturing in September 2022 and Facility B of GBP25m
maturing in January 2022, will be replaced by a new RCF of GBP90m
reducing to GBP80m in January 2022 until maturity in November 2023.
The existing lending syndicate continues to show ongoing support to
the Group.
The amended revolving credit facility includes among other
changes amendments to the quarterly covenant tests on adjusted
EBITDA, leverage ratio and fixed charge cover, providing further
financial flexibility for the Group.
Treasury risk management
The most significant exposure to foreign exchange fluctuation
relates to purchases made in foreign currencies, principally the US
Dollar and the Euro.
A proportion of the Group's purchases are hedged in accordance
with the Group's risk management policy, which allows for foreign
currency to be hedged for up to twenty-four months in advance. The
balance of purchases is hedged naturally as the business operates
internationally and income is generated in the local currencies.
The Group is also exposed to movements in foreign exchange rates on
intercompany balances denominated in a foreign currency. These are
not hedged. In April 2020, the Group exited its foreign exchange
contracts to crystallise a cash gain of GBP6.9m, and as a result,
the Group's foreign exchange risk was unhedged for most of FY21. At
30 January 2021, the Group held foreign exchange contracts for the
right to purchase USD.
The Group is exposed to movements in UK interest rates as the
revolving credit facility accrues interest based on floating LIBOR
plus a margin. The Group does not hold any interest rate hedge
contracts.
Brexit
The Group undertook a significant preparatory steps for Brexit
on 1 January 2021 at the end of the current transitional period,
and despite the challenging timing of the deal between the UK
Government and European Union, we have put in place a number of
administrative and legal changes to our operational processes to
mitigate the impact of Brexit. To date, the main operational
impacts have been the flow of goods into the UK through the ports,
and from the UK to stores and customers in Europe.
We have set up a customs warehouse in the UK, which became
operational in April 2021 and has partially mitigated the impact of
higher duties, but there remain a number of other areas
outstanding, including rules of origin and reclamation of input
VAT. We expect that a full year impact of Brexit on profits will be
c.GBP5m, and anticipate, only to a limited extent, mitigating the
extra cost of duties through the reflowing of inventory for our EU
stores.
Earnings per share and dividends
The basic loss per share was 56.2p (2020: loss per share
153.0p). Underlying loss per share, which excludes non-underlying
items, changed to a loss of 26.0p (2020: earnings per share
6.7p).
Given current trading conditions and the high level of
uncertainty about the future, the Board has determined that no
final dividend is to be paid (2020: 40.7p). In the long term we
remain committed to paying dividends and returning surplus cash to
our shareholders.
David Wolffe
Chief Financial Officer
Notes:
1. Constant currency comparatives are obtained by applying the
exchange rates that were applicable for the period ended 25 January
2020 to the financial results in overseas subsidiaries for the 53
weeks ended 30 January 2021 to remove the impact of exchange rate
fluctuations
Principal Risks and Uncertainties
Risk management is a key part of Ted Baker's business strategy
and success. As with any business, we face inherent risks, and we
keep these under constant review. At the same time, we consider
potential new risks and actions we can take to reduce or where
possible eliminate them. Of course, risk management is not an exact
science; it is designed to manage the risk of failure to reach our
business objectives. Not surprisingly, in a year that has seen
heightened risks ranging from COVID-19 to the recapitalisation of
the balance sheet and the stock inventory review, risk has been
high on our agenda.
As a result, we have reviewed our approach to risk through the
year. Important actions included the refresh of the management Risk
Committee and developing our Group-wide programme to risk, which
lets us identify, analyse and assess risks and then manage, control
and monitor them. The Board and the Audit & Risk Committee work
together with the management Risk Committee to deal with different
aspects of the process. Our ongoing process for identifying,
evaluating and managing the significant and emerging risks faced by
the Group has been in place throughout the year.
Oversight
Our risk oversight is designed to give a clear picture of risk
from every angle, from Group to operational levels.
Board The Board is ultimately responsible for our approach
to risk management and internal controls. It
is also responsible for reviewing the effectiveness
of our management and controls and setting the
Group's appetite for risk. This is done on a
regular basis, helping us to identify emerging
risk and assess the status of existing risk.
Risk management will continue to be a key focus
for the Board next year.
Audit & Risk The Audit & Risk Committee is responsible for
Committee overseeing and reviewing the effectiveness of
the Group's internal control and risk management
systems. It reports its findings to the Board
regularly through the year and also assesses
the findings and recommendations of the Management
Risk Committee and the Group's external and internal
audit processes, then looks critically at how
the business responds.
---------------------------------------------------------
Executive The Executive Team is responsible for the identification
Team and evaluation of significant risks applicable
to their areas of the business, along with the
design and operation of suitable internal controls.
These risks are assessed on an ongoing basis
through the year and may be associated with a
variety of internal or external sources.
---------------------------------------------------------
Management The management Risk Committee was re-established
Risk Committee last year. It reviews risk management and control
process for each of our key business areas. Its
members include relevant people from the Executive
Team and heads of department. This is designed
to give more people ownership of risk across
the business and to keep risk front of mind on
a day-to-day basis.
---------------------------------------------------------
This year, the Audit & Risk Committee reviewed and adopted
revised terms of reference which can be found on the Company
website www.tedbakerplc.com. The revised terms cover:
o The authority, resources and co-ordination of those involved
in the identification, assessment and management of significant
risks faced by the Group.
o The response to the significant risks which have been
identified by management and others.
o The maintenance of a controlled environment directed towards
the proper management of risk.
o The ability to raise awareness of potential emerging risks and
their assessment.
o The annual reporting procedures.
Principal Risks
Principal Risks
Risk category Potential issue Mitigation Change in
/ issue level of
risk
---------------------- ---------------------------- --------------------------- --------------------
Market COVID-19 The longevity While some sales Increased,
risks of the pandemic may migrate to as pandemic
could lead to the Company's impact spread
further lockdown eCommerce operations, globally
store closures, it is unlikely
team members on that sales through
furlough and the this distribution
need to discount. channel will fully
This could lead replace revenue
to more redundancies lost to store
and store closures and concession
in the longer closures. We will
term. need to explore
all UK government
support schemes
and take steps
to reduce costs
and protect cash
flow. This will
include suspending
all non-essential
capital expenditure,
stopping discretionary
operating expenses,
furloughing team
members and restricting
travel
---------------------- ---------------------------- --------------------------- --------------------
Economic Due to a slowdown We carefully manage Increased,
downturn in the economy, costs and regularly as a result
there is a decrease update the Board of the global
in demand for on performance. pandemic
Ted Baker's products. We work to ensure
For example, people our fixed costs
have less disposable are managed well.
income to spend And we make sure
on non-essential we are 'no ordinary
items. This could brand', with product
lead to the need that reflects
to discount and this differentiated
reduce margin positioning and
or hold excess continues to attract
stock, ultimately customers.
affecting the
bottom line and
business
profitability/viability,
as well as damaging
the Ted Baker
brand.
---------------------- ---------------------------- --------------------------- --------------------
Competition A lack of insight We regularly review Increased,
around customers performance, product, as a result
and competitors price and our of the global
could result in competitors to pandemic
Ted Baker being make sure we are
overtaken by the best placed to
competition, particularly succeed in a competitive
if our market market. We continue
position isn't to invest in our
clear. This could online business,
reduce our market including the
share and supply appointment of
chain buying power a Chief Customer
if we are not Officer, Jennifer
seen as competitive Roebuck, to steer
with other brands this activity.
or we fail to
offer a competitive
and suitably diverse
product mix.
---------------------- ---------------------------- --------------------------- --------------------
Changing We fail to understand We maintain a Increased,
customer and respond to high level of as a result
preferences changes in customer market awareness of the global
preferences. For and an understanding pandemic
example, lack of consumer trends
of stock diversity and fashion so
or preferred shopping we can respond
channel, or lack to changes in
of influencer consumer preference.
recommendation, We use customer
results in Ted data to develop
Baker losing its targeted marketing
competitive edge. and promotional
This could lead activity. We continue
to a loss of sales, to focus on product
reduced margins, design, quality
missed opportunities and attention
for growth or to detail
a poor balance
of sales channels
---------------------- ---------------------------- --------------------------- --------------------
Execution Failing to deliver The Group's Directors No change
of transformation our corporate and Executive
strategy transformation Team have set
strategy could up regular reviews
result in Ted to monitor and
Baker not realising assess the ongoing
the long-term progress of the
goals of the business. new transformation
This could be strategy with
a result of: detailed execution
o The wrong plans. These plans
transformation are designed to
strategy being successfully deliver
rolled out to the new strategy
the business (or while reducing
failing to pivot any new risk
that strategy
if the operating
environment changes).
o A lack of bandwidth
- starting on
too many activities
without sufficient
resource, an inability
to focus on future
value due to
short-term
firefighting,
an inability to
retain and recruit
the right talent,
confusion around
responsibility
for individual
workstreams,
misaligned
prioritisation
or competing
priorities.
For example, failing
to align our finance
strategy with
the wider business
strategy, inability
to deliver strategy
due to budget
constraints.
---------------------- ---------------------------- --------------------------- --------------------
Real estate Unable to respond We have launched Increased,
agility to market changes a comprehensive as a result
around real estate programme of landlord of the global
- meaning we cannot renegotiations pandemic
negotiate new internationally
contracts that to ensure that
support a profitable existing and new
store opening contracts are
and/or exit old both flexible
contracts that and commercially
are no longer viable,
commercially viable.
Inability to structure
leases in a flexible
way could limit
our ability to
operate on the
high street or
being tied to
long and potentiality
expensive leases
---------------------- ---------------------------- --------------------------- --------------------
Margin deliverability Factors such as We maintain a No change
/ foreign foreign exchange regular and rigorous
exchange movements, an forecasting cycle
inability to pass that enables early
on increased costs action to hedge
to customers and foreign exchange
produce goods risk and manage
for less could cost variations.
mean the Company
fails to meet
our goal to improve
margin.
---------------------- ---------------------------- --------------------------- --------------------
Reputational Brand reputation A revitalised Our dedicated Increased
risks / identity product mix with team focuses on as we implement
crisis a new composition reputational matters the transformation
of product categories, relating to Ted strategy
combined with Baker. The team
a change in focus is made up of
on target audience internal stakeholders
could send mixed and external consultants.
messages to consumers, We deal with reputational
resulting in a issues swiftly
loss of core loyal and in a considered
customers and way. We carefully
failure to engage consider each
new customers new partner we
and influencers do business with.
And all partners
are subject to
due diligence
and monitored
on an ongoing
basis to make
sure they remain
appropriate for
the brand.
---------------------- ---------------------------- --------------------------- --------------------
Corporate Exposure of stakeholders We have clear No change
reputation to negative media governance and
stories could people policies
lead to reputational that seek to prevent
damage affecting reputational issues
the ability to arising.
attract and retain
investors, customers
and team members
---------------------- ---------------------------- --------------------------- --------------------
Supply Supplier A failure to evaluate We have reduced Reduced
and risk suppliers, set the number of
value up suitable commercial suppliers globally,
chain contracts, or concentrating
risks establish supplier on our strongest
management protocols partnerships
(including ongoing
monitoring), could
leave Ted Baker
exposed to supplier
failure, an inability
to source goods
or significant
margin pressure.
---------------------- ---------------------------- --------------------------- --------------------
Critical Without creating We continue to Increased,
path / agility a more agile approach review the length as a result
to the critical of our critical of the global
path and enhancing path to maximise pandemic
speed to market our responsiveness
we won't be able and agility. We
to take advantage maintain flexibility
of opportunities in buying through
in the market creating room
as they arise for 'open to buy'
and would lose in portions of
out to competitors stock planning
who can respond and 'speed to
faster. market' in areas
of product design.
---------------------- ---------------------------- --------------------------- --------------------
Control environment Insufficient or We are executing No change
inadequate checks, a broad controls
controls and processes remediation programme
could result in with the support
limited financial of a specialist
oversight, leading team from Deloitte.
to errors, misstatement This programme
or fraud. A weak ensures continuous
control environment review of controls
could lead to as well as progressive
poor business improvements.
decisions or decisions
made by team members
who do not have
adequate insight
or authority such
as changing supplier
or customer payment
terms, oversight
over stock quantities
and stock buy.
A weak control
environment could
also lead to an
impaired ability
to forecast revenues
and profits and
inaccurate accounting.
---------------------- ---------------------------- --------------------------- --------------------
Merchandising Inventory risk We maintain a No change
/ stock obsolescence due to stock obsolescence regular and rigorous
could lead to forecasting cycle
a write-off that that enables appropriate
damages profitability stock ordering,
and asset value. as well as early
This could be action to recognise
a result of inaccurate and monetise elevated
forecasting, lack stock levels
of relevance to
customers, high
price points or
poor inventory
controls, and
poor management
of revenue data
to drive decision-making
---------------------- ---------------------------- --------------------------- --------------------
IT resilience A lack of resiliency We have a steering No change
and continuity or business continuity committee to review
plans could result major IT projects
in a failure to and an infrastructure
withstand any of senior team
shocks and an members across
inability to adapt IT, legal and
during a crisis. procurement along
For example, failure with external
to take more sales professional advisers.
online while shops We have introduced
are forced to a new security
close, inability manager role and
to adapt effectively adopted new security
and communicate measures during
action required the year. In addition,
during a crisis. the Group has
a clear and robust
approach to change
management with
project managers
to overseas major
projects with
the key business
stakeholders.
---------------------- ---------------------------- --------------------------- --------------------
People Talent management Failing to attract Identification No change
risks and retain the and retention
best talent could of key talent
mean we cannot is vital and we
achieve our strategic take active steps
goals through to keep the team
a lack of the stable and secure.
innovation, objectivity An annual benchmarking
and diversity review ensures
we need to support we offer competitive
customer and market remuneration and
needs. We may total reward packages.
not meet our business We also utilise
objectives if long-term incentive
we fail to retain schemes to retain
and train existing key talent. Employee
team members so engagement through
their skill sets our culture and
evolve to meet environment strengthens
the needs of the the commitment
business. Failing of team members
to attract new and has a positive
team members with impact on our
the right capabilities retention rate.
and ensuring market Succession plans
competitiveness are in place and
(through competitive have been reviewed
salary, benefits during the period.
and flexible working) The Group has
could also undermine put policies and
our ability to procedures in
complete our transformation place to detect
strategy. and deal with
people matters.
This includes
robust reporting
channels through
an independent
helpline.
---------------------- ---------------------------- --------------------------- --------------------
Diversity Without a sufficient The business has New risk
and inclusion focus on inclusion engaged a specialist
across all levels consultancy to
of the business support us as
there is a risk we build our inclusion
that team members strategy. We have
will become demotivated held listening
which could damage sessions across
performance and the Group and
reputation we are building
a clear plan to
recognise inclusivity
as a global business
---------------------- ---------------------------- --------------------------- --------------------
Emerging risks and uncertainties
Risk category Description
/ issue
------------------------------------------------------
Data analytics A lack of understanding and effective use of
/ data management collected data could result in Ted Baker missing
opportunities to strengthen its business and
drive informed decision-making through robust
management information and data analysis. For
example, this could include using collected
customer data to perform analytics that gather
insights on customer demands and use this to
improve decision-making and customer engagement.
------------------------------------------------------
Marketing / Limited investment in marketing and supporting
consumer targeting the new product mix or targeting the incorrect
customer profile, new influencers and joint
venture partners could lead to missed revenue
opportunities, with products failing to realise
their full potential and being overshadowed
by competitor products. Focusing on customers
who don't align with Ted Baker's product and
brand could also lead to a loss of brand equity.
------------------------------------------------------
Risk and crisis The absence of a clearly defined risk management
management strategy and poor dedicated resource could
result in a lack of awareness of internal and
external business critical risks. This could
lead to: a lack of insight into how and when
risks could affect the business and the potential
damage they could cause; an inability to identify
and address emerging risks; a failure to monitor
changes in the level of existing risks; and
a failure to ensure effective controls are
in place to manage these risks. All this could
result in failure to proactively manage risks,
leading to the need to adjust the business
strategy and/or associated assumptions with
little warning.
------------------------------------------------------
Sales channel Disagreement about and a lack of clarity on
optimisation Ted Baker's channel strategy, including our
eCommerce strategy, could result in missed
growth opportunities. This could lead to competitors
overtaking Ted Baker's market share with customers
seeking out a more versatile retailer
------------------------------------------------------
Increasing Failure to comply with relevant regulatory
regulations requirements in relation to tax, financial
/ legal / tax reporting, health and safety and GDPR could
compliance lead to fines and legal actions. For example,
fines or penalties when there is failure to
comply with changing export/import regulation
------------------------------------------------------
Sustainability Our business depends on our suppliers being
and climate able to maintain continuity of service to provide
change a consistent supply of goods to customers.
Natural events and increasing changes to government
policy may impact our suppliers' ability to
do this.
------------------------------------------------------
Viability statement
In accordance with Provision 31 of the UK Corporate Governance
Code dated July 2018 (the Code), the Directors have assessed the
prospects and viability of the Group, taking into account the
Group's current position and the potential impact of principal
risks documented above.
The Group's objective remains the same; to continue to grow and
develop the Ted Baker brand through Ted's Growth Formula which is
supported by the actions undertaken during the year to support the
balance sheet in the sale and leaseback of our head office and
equity raise.
The Group operates a three-year plan, which is updated and
reviewed regularly by the Board. Within the three-year plan,
detailed scenario planning and stress testing was carried out over
a period to 27 January 2024, in the form of a Base Case and a
Severe but Plausible forecast, to assess the viability and
prospects of the Group with a high level of certainty. The key
assumptions made in the formulation of the three-year plan are the
increased exposure and promotion of the Ted Baker brand through
digital, geographical diversification of sales, growth of eCommerce
and turnover projections. The Severe but Plausible forecast was
overlaid after considering a prolonged severe disruption to trade
caused by the COVID-19 pandemic, while also considering current and
future risks disclosed in the Annual Report.
The Directors' assessment has been further enhanced by analysing
the current and future risks, controls and assurances available,
resulting in a clear picture of the risk profile across the whole
business. The principal risks that could affect the future
viability of the Group over the three years are identified above in
Principal Risks and Uncertainties. In making this assessment the
Directors have considered the resilience of the Group to the
occurrence of these risks in both Base Case and Severe but
Plausible scenarios.
In addition, the Board has considered the impact on the Group's
cash flows, headroom, covenants and other key financial ratios
under both Base Case and Severe but Plausible scenarios. The Board
has considered the Group's refinancing and covenants within the
Financial Review section above, and below within the Going Concern
section. Sensitivity analysis was used to stress test the Group's
Base Case and Severe but Plausible scenarios to confirm that
sufficient headroom would remain available under the Group's credit
facilities. The sensitivity analysis was performed in the form of a
Reverse Stress Test described further in the Going Concern section
below. The Group has also stressed tested the Group's strategic
plans in light of COVID-19 and the impact on the business and
global trade. The situation is continually evolving which in turn
is creating uncertainty across most of the Group's markets. The
Board has considered that under each scenario tested, the
mitigating actions would be effective and sufficient to ensure the
continued viability of the Group and adequate liquidity and
covenant headroom exists. The directors have further considered the
Severe but Plausible downside scenario and the associated
uncertainty expanded in the Going Concern section below.
For the reasons stated above, based on the robust assessment
undertaken, the Directors confirm they have a reasonable
expectation that the Group will be able to continue in operation,
and meets its liabilities as they fall due, over the period of
assessment.
Going concern statement
The consolidated financial statements have been prepared on a
going concern basis. The Directors have prepared a going concern
assessment covering the 12-month period from the date of signing
these financial statements, which demonstrates that the Group is
capable of continuing to operate within its existing facilities and
can meet its financial covenant tests during the period. The
Directors' assessment considers the principal risks facing the
business, and a series of financial forecasts, which include a
review of current performance and forecasts of revenue across all
sales channels combined with ongoing expenditure including capital
expenditure and borrowing facilities. The forecasts have been
prepared whilst considering various levels of disruption from the
COVID-19 pandemic. The Directors have concluded that it is
appropriate to adopt the going concern basis of accounting in
preparing these financial statements.
Group Income Statement
For the 53 weeks ended 30 January 2021
53 weeks ended 30 January 52 weeks ended 25 January
2021 2020
Underlying Non-underlying Total Underlying Non-underlying Total
items(1) items(1) (Restated)(2)
(Restated)(2)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 351,983 - 351,983 630,478 - 630,478
Cost of sales (161,271) (7,957) (169,228) (279,719) (43,669) (323,388)
Gross
profit/(loss) 190,712 (7,957) 182,755 350,759 (43,669) 307,090
Distribution
costs (175,854) (45,303) (221,157) (244,124) (22,157) (266,281)
Administrative
costs (71,025) (13,402) (84,427) (88,345) (12,562) (100,907)
Other operating
income and
expenses 6,488 17,446 23,934 144 - 144
Operating
(loss)/profit (49,679) (49,216) (98,895) 18,434 (78,388) (59,954)
Share of
post-tax
(losses) from
joint ventures (1,136) (7) (1,143) (1,229) (989) (2,218)
Finance income 399 655 1,054 138 - 138
Finance expense (8,745) - (8,745) (12,565) (3,026) (15,591)
(Loss)/Profit
before tax (59,161) (48,568) (107,729) 4,778 (82,403) (77,625)
Taxation 19,149 2,135 21,284 (1,804) 11,243 9,439
----------- --------------- ---------- ----------- --------------- --------------
(Loss)/Profit
after tax
attributable
to owners of
the company (40,012) (46,433) (86,445) 2,974 (71,160) (68,186)
----------- --------------- ---------- ----------- --------------- --------------
Loss per share
Basic (56.2p) (153.0p)
Diluted (56.2p) (153.0p)
Dividends per
share
Interim - 7.8p
Final - -
(1) More details on non-underlying items and a reconciliation of
Alternative Performance Measures are included in the annual report
and accounts
(2) M ore details of the restatement are included in the annual
report and accounts
Group Statement of Comprehensive Income
For the 53 weeks ended 30 January 2021
53 weeks 52 weeks
ended ended
30 January 25 January
2021 2020 (Restated)(1)
GBP'000 GBP'000
(Loss) after tax attributable to owners of
the company (86,445) (68,186)
------------ --------------------
Other comprehensive (loss)/income
Items that may be reclassified to the Income
Statement
Net effective portion of changes in fair value
of cash flow hedges (422) 2,227
Exchange differences on translation of foreign
operations net of tax (746) 1,472
------------ --------------------
Other comprehensive (loss)/income for the
period (1 ,168) 3,699
(87,6
Total comprehensive (loss) for the period 13) (64,487)
============ ====================
(1) M ore details of the restatement are included in the annual
report and accounts
Group Statement of Changes in Equity
For the 53 weeks ended 30 January 2021
Total equity
attributable
to equity
Translation Retained shareholders
Share capital Share premium Other reserves reserve earnings of the parent
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 25
January 2020
(restated)(1) 2,228 10,555 (743) 6,328 122,305 140,673
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Comprehensive
Loss for the
period
Loss for the
period - - - - (86,445) (86,445)
Exchange
differences on
translation of
foreign
operations - - - (1,333) - (1,333)
Current tax on
foreign
currency
translation - - - 587 - 587
Effective
portion of
changes in
fair value of
cash flow
hedges - - (428) - - (428)
Deferred tax
associated
with movement
in hedging
reserve - - 6 - - 6
--------------- --------------- --------------- --------------- --------------- ---------------
Total
comprehensive
loss for the
period - - (422) (746) (86,445) (87,613)
--------------- --------------- --------------- --------------- --------------- ---------------
Transactions
recognised
directly in
equity
Increase in
issued share
capital 7,002 90,749 - - - 97,751
Share-based
payment
charges - - - - 1,204 1,204
Movement on
current and
deferred tax
on share-based
payments - - - - 21 21
--------------- --------------- --------------- --------------- --------------- ---------------
Total 7,002 90,749 - - 1,225 98,976
--------------- --------------- --------------- --------------- --------------- ---------------
Balance at 30
January 2021 9,230 101,304 (1,165) 5,582 37,085 152,036
=============== =============== =============== =============== =============== ===============
(1) M ore details of the restatement are included in the annual
report and accounts
Group Statement of Changes in Equity
For the 52 weeks ended 25 January 2020
Share Share Other Translation Retained Total equity
capital premium reserves reserve earnings(2) attributable
to equity
shareholders
of the Company(2)
------------------------------ --------- --------- ---------- ------------ ------------- -------------------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 26 January
2019 2,228 10,555 (183) 4,856 211,012 228,468
Adjustment on initial
application of IFRS
16(1) - - - - 894 894
--------- --------- ---------- ------------ ------------- -------------------
Balance at 27 January
2019 (restated)(2) 2,228 10,555 (183) 4,856 211,906 229,362
--------- --------- ---------- ------------ ------------- -------------------
Comprehensive (loss)/income
for the period
Loss for the period(2) - - - - (68,186) (68,186)
Exchange differences
on translation of
foreign operations - - - 1,764 - 1,764
Current tax on foreign
currency translation - - - (173) - (173)
Foreign exchange
differences on disposal
of subsidiaries - - - (119) - (119)
Effective portion
of changes in fair
value of cash flow
hedges - - 2,205 - - 2,205
Deferred tax associated
with movement in
hedging reserve - - 22 - - 22
-------------------
Total comprehensive
(loss)/income for
the period - - 2,227 1,472 (68,186) (64,487)
--------- --------- ---------- ------------ ------------- -------------------
Transactions recognised
directly in equity
Net change in fair
value of cash flow
hedges transferred
to cost of inventory - - (2,787) - - (2,787)
Share-based payment
charges - - - - 225 225
Movement on current
and deferred tax
on share-based payments - - - - (25) (25)
Dividends paid - - - - (21,615) (21,615)
--------- --------- ---------- ------------ ------------- -------------------
Total transactions
with owners - - (2,787) - (21,415) (24,202)
--------- --------- ---------- ------------ ------------- -------------------
Balance at 25 January
2020 (restated)(2) 2,228 10,555 (743) 6,328 122,305 140,673
========= ========= ========== ============ ============= ===================
(1) The Group has initially applied IFRS 16 at 27 January 2019,
using the simplified modified retrospective transition
approach.
(2) M ore details of the restatement are shown in the annual
report and accounts
Company Statement of Changes in Equity
For the 53 weeks ended 30 January 2021
Share Share Other Retained Total equity
capital premium reserves earnings
---------------------------------- -------- -------- --------- --------- ------------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 25 January 2020 2,228 10,555 22,781 17,586 53,150
-------- -------- --------- --------- ------------
Profit for the period - - - 157 157
-------- -------- --------- --------- ------------
Transactions with owners
recorded directly in equity
Increase in issued share
capital 7,002 90,749 - - 97,751
Share-based payments charges
for awards granted to subsidiary
employees - - 1,204 1,204
Dividends paid - - - - -
-------- -------- --------- --------- ------------
Total transactions with
owners 7,002 90,749 1,204 - 98,955
-------- -------- --------- --------- ------------
Balance at 30 January 2021 9,230 101,304 23,985 17,743 152,262
======== ======== ========= ========= ============
Company Statement of Changes in Equity
For the 52 weeks ended 25 January 2020
Share Share Other Retained Total equity
capital premium reserves earnings
---------------------------------- -------- -------- --------- --------- ------------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 26 January 2019 2,228 10,555 22,556 44,791 80,130
-------- -------- --------- --------- ------------
(Loss) for the period - - - (5,590) (5,590)
-------- -------- --------- --------- ------------
Transactions with owners
recorded directly in equity
Share-based payments charges
for awards granted to subsidiary
employees - - 225 - 225
Dividends paid - - - (21,615) (21,615)
-------- -------- --------- --------- ------------
Total transactions with
owners - - 225 (21,615) (21,390)
-------- -------- --------- --------- ------------
Balance at 25 January 2020 2,228 10,555 22,781 17,586 53,150
======== ======== ========= ========= ============
Group and Company Balance Sheet
At 30 January 2021
Group Group Company Company
30 January 25 January 30 January 25 January
2021 2020 2021 2020
(Restated)(1)
GBP'000 GBP'000 GBP'000 GBP'000
Intangible assets 34,758 46,964 - -
Property, plant and equipment 39,401 122,730 - -
Right-of-use assets 81,759 137,987 - -
Investment in equity accounted
investee 3,691 5,088 - -
Investment in subsidiary
companies - - 26,407 25,203
Amounts owed by Group undertakings - - 119,672 -
Deferred tax assets 27,635 17,638 1,100 943
Prepayments 541 634 - -
----------- -------------- ----------- -----------
Non-current assets 187,785 331,041 147,179 26,146
----------- -------------- ----------- -----------
Inventories 87,848 131,663 - -
Trade and other receivables 44,666 67,271 - -
Amount due from equity accounted
investee 4,305 4,462 - -
Amounts owed by Group undertakings - - - 27,096
Derivative financial assets - 203 - -
Income tax receivable 7,983 2,343 - -
Cash and cash equivalents 66,671 52,912 5,195 21
----------- -------------- ----------- -----------
Current assets 211,473 258,854 5,195 27,117
----------- -------------- ----------- -----------
Total assets 399,258 589,895 152,374 53,263
----------- -------------- ----------- -----------
Trade and other payables (98,138) (96,202) (112) (113)
Bank overdraft - (180,000) - -
Income tax payable (2,607) - - -
Lease liabilities (33,754) (36,381) - -
Provisions (1,973) - - -
Derivative financial liabilities (1,191) (1,095) - -
----------- -------------- ----------- -----------
Current liabilities (137,663) (313,678) (112) (113)
----------- -------------- ----------- -----------
Deferred tax liability - (3,588) - -
Provisions (2,942) - - -
Lease liabilities (106,617) (131,956) - -
----------- -------------- ----------- -----------
Non-current liabilities (109,559) (135,544) - -
----------- -------------- ----------- -----------
Total liabilities (247,222) (449,222) (112) (113)
----------- -------------- ----------- -----------
Net assets 152,036 140,673 152,262 53,150
----------- -------------- ----------- -----------
Group and Company Balance Sheet
At 30 January 2021
=========== ============== =========== ===========
Group Group Company Company
30 January 25 January 30 January 25 January
2021 2020 2021 2020
(Restated)(1)
GBP'000 GBP'000 GBP'000 GBP'000
Share capital 9,230 2,228 9,230 2,228
Share premium 101,304 10,555 101,304 10,555
Other reserves (1,165) (743) 23,985 22,781
Translation reserve 5,582 6,328 - -
Retained earnings 37,085 122,305 17,743 17,586
-----------
Total equity attributable to
equity shareholders of the parent
company 152,036 140,673 152,262 53,150
----------- -------------- ----------- -----------
Total equity 152,036 140,673 152,262 53,150
=========== ============== =========== ===========
(1) M ore details of the prior period errors or misstatements
are shown in the annual report and accounts
Group and Company Cash Flow Statement
For the 53 weeks ended 30 January 2021
Group Group Company Company
53 weeks 52 weeks ended 53 weeks 53 weeks
ended 25 January ended ended
30 January 2020 25 January 25 January
2021 (Restated)(2) 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Cash generated from operations
(Loss)/Profit for the period (86,445) (68,186) 157 (5,590)
Adjusted for:
Income tax credit (21,284) (9,439) (157) (943)
Depreciation and amortisation 53,109 65,058 - -
Amortisation of reacquired right 1,746 1,890 - -
Impairment 45,303 13,969 - -
(Profit)/Loss on disposal of business (17,446) 7,585 - -
Loss on disposal of property, plant
and equipment 933 447 - -
Write off property, plant and equipment 325 - - -
Share-based payments charge 1,204 225 - -
Net finance expense 7,691 15,453 - -
Change in accounting estimates for
inventory - 45,890 - -
IFRS16 practical expediency (361) - - -
Net change in derivative financial
assets and liabilities carried at
fair value through profit or loss - (44) - -
Share of loss in joint venture 1,143 2,218 - -
Increase in provisions 4,915 - - -
Decrease in non-current prepayments 126 127 - -
Decrease in inventory 43,821 21,715 - -
Decrease in trade and other receivables 21,966 10,700 - 28,728
Increase/(decrease) in trade and
other payables 3,174 (2,202) - (658)
Income taxes received/(paid) 4,021 (6,953) -
Net cash generated from operating
activities 63,941 98,453 (92,557) 21,537
------------ ---------------- ------------ ------------
Cash flow from investing activities
Purchases of property, plant and
equipment and intangibles (6,981) (25,823) - -
Proceeds from sale of property,
plant and equipment 77,782 227 - -
Investment in equity accounted investee - (5,710) - -
Disposal of cash on disposal of
Asian business - (865) - -
Increase in loans to group companies - - (92,557)
Interest received 94 - - -
Dividends received from joint venture 254 278 - -
Payments from joint venture 157 138 - -
------------ ---------------- ------------ ------------
Net cash from investing activities 71,306 (31,755) (92,557) -
------------ ---------------- ------------ ------------
Cash flow financing activities
Repayment of term loan/ overdraft (180,000) (47,000) - -
Drawdown of overdraft - 88,504 - -
Repayment of capital element of
leases (29,045) (34,089) - -
Repayment of interest element of
leases (6,781) (7,248) - -
Interest paid (1,974) (4,256) - -
Dividends paid - (21,615) - (21,615)
Proceeds from issue of shares 105,003 - 105,003 -
Cost of issue of shares (7,252) - (7,252) -
------------ ---------------- ------------ ------------
Net cash from financing activities (120,049) (25,704) 97,751 (21,615)
------------ ---------------- ------------ ------------
Net increase/(decrease) in cash
and cash equivalents 15,198 40,994 5,174 (78)
Net cash and cash equivalents at
the beginning of the period 52,912 14,654 21 99
Exchange rate movement (1,439) (2,736) - -
------------ ---------------- ------------ ------------
Net cash and cash equivalents at
the end of the period(1) 66,671 52,912 5,195 21
------------ ---------------- ------------ ------------
(1) The Group cashflow for the 52 weeks ended 25 January 2020
has been represented to exclude overdrafts from cash and cash
equivalents
(2) M ore details of the restatement are shown in the annual
report and accounts
Notes to the Financial Statements
Summary of Significant Accounting Policies
The principal accounting policies applied in the preparation of
these consolidated and Company financial statements are set out
below. These policies have been consistently applied to all the
periods presented, unless otherwise stated.
Basis of Preparation
The financial information set out in this preliminary
announcement does not constitute Ted Baker plc's statutory accounts
for the 53 weeks ended 30 January 2021 or the 52 weeks ended 25
January 2020. Statutory accounts for the 53 weeks ended 30 January
2021 will be delivered to the Registrar of Companies following the
Company's Annual General Meeting. The auditor has issued a report
on those accounts which was qualified solely in respect of
comparative figures. The basis for the qualified opinion is set out
below. The auditor's report did not contain a statement under
Section 498 (2) of the Companies Act 2006 but contained a statement
under Section 498(3) that, solely in respect of the matter below,
they had not obtained all the information and explanations that
they considered necessary for the purpose of their audit.
Basis for qualified opinion which is qualified solely in respect
of the comparative figures
The Group recorded, in its financial statements for the 52 weeks
ended 25 January 2020, a number of adjustments to inventory values,
including amendments to inventory which had been overstated at the
previous year end. It has not been possible for the auditors to
determine what the impact of these adjustments would have been on
inventory values at 26 January 2019 and consequently on retained
profit at that date and on the income and expenditure and
calculated cash flows for the 52 week period ended 25 January 2020.
Accordingly, the auditors have been unable to determine whether the
comparative figures shown in the financial statements relating to
that period have been prepared on a fully comparable basis.
Statutory accounts for the 52 weeks ended 25 January 2020 have
been delivered to the Registrar of Companies. The Auditor has
reported on those accounts; their report was unqualified, did draw
attention by way of emphasis to going concern, and did not contain
a statement under Section 498 (2) or (3) of the Companies Act 2006.
The financial information contained in this results announcement
has been prepared on the basis of the accounting policies set out
in the statutory financial statements for the 52 weeks ended 25
January 2020.
Whilst the financial information included in this announcement
has been computed in accordance with the recognition and
measurement requirements of IFRS in accordance with international
financial reporting standards adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union, this announcement
does not itself contain sufficient disclosures to comply with
IFRS.
Adoption of new accounting standards, interpretations and
amendments
The group has applied the following standards and amendments for
the first time in these financial statements:
-- Definition of Material - Amendments to IAS 1 and IAS 8
-- Definition of a Business - Amendments to IFRS 3
-- Covid-19 - Related Rent Concessions - Amendment to IFRS16
The application of these new standards and amendments did not
have a material impact on the Financial Statements.
Certain new accounting standards and interpretations have been
published that are not yet effective and have not been early
adopted by the group. These standards are not expected to have a
material impact on the entity in the current or future reporting
periods and on foreseeable future transactions.
Going concern
The consolidated financial statements have been prepared on a
going concern basis. The Directors have prepared a going concern
assessment covering the 12 month period from the date of signing
these financial statements, which demonstrates that the Group is
capable of continuing to operate within its existing facilities and
can meet its financial covenant tests during the period. The
Directors assessment considers the principal risks facing the
business, and a series of financial forecasts, which include a
review of current performance and forecasts of revenue across all
sales channels combined with ongoing expenditure including capital
expenditure and borrowing facilities. The forecasts have been
prepared whilst considering various levels of disruption from the
Covid-19 pandemic. The Directors have concluded that it is
appropriate to adopt the going concern basis of accounting in
preparing these financial statements for the reasons set out
below.
The Group acted quickly to mitigate the impact of Covid-19 by
taking steps to strengthen the balance sheet through the
restructuring of debt, the sale and leaseback of the Group's Head
Office and the equity raise completed in June 2020. At 30 January
2021, the Group held GBP66.7 million of cash balances.
At 30 January 2021, the Group's financing arrangements comprised
of two facilities, a GBP107.8 million Revolving Credit Facility
maturing in September 2022, and a GBP25 million restricted
Revolving Credit Facility maturing in January 2022. At year end,
neither facility had been drawn down. On 24 May 2021, the Group
successfully refinanced existing debt facilities, reducing the size
of the facility to reflect future forecasts for the business. The
existing facilities totalling GBP132.8 million have been replaced
with a GBP90 million Revolving Credit Facility, reducing to GBP80
million in January 2022, before maturing in November 2023.
Financial covenants within the facility have been set at levels
that reflect past store closures and future levels of disruption
modelled within the Severe but Plausible scenario. The Directors
have concluded that this facility provides adequate liquidity and
financial covenant headroom under all downside scenarios described
below.
In making the going concern assessment, the Group has modelled a
number of scenarios for the period to June 2022. The Base Case
scenario is consistent with the Board approved FY22 Budget. This
scenario assumes there are no further lockdowns with a slow return
to global economic recovery. This includes growth assumptions that
factor a continued challenge to physical retail, wholesale and
licence channels. The Group has forecast strong growth in the
online retail channel driven by a continued customer shift towards
online spend compared to pre-Covid preferences, supported by
continued investment in our online platforms and related marketing
spend. Total forecast Group sales remain below pre-Covid levels for
the 12 month going concern period with margins returning to
pre-Covid levels.
In light of the considerable uncertainty surrounding the ongoing
impact of Covid-19, a Severe but Plausible downside scenario has
also been modelled, applying severe but plausible assumptions to
the Base Case. This scenario assumes all sales channels, including
own stores, online, wholesale and licence income, are further
disrupted throughout the 12 month going concern period. Further,
this scenario assumes a two-month lockdown in December 2021 and
January 2022, with a gradual recovery in the months that follow.
The Severe but Plausible scenario does not assume any deterioration
in margins and only assumes that directly attributable variable
costs are reduced, with all remaining costs in line with the Base
Case. Within the 12 month going concern period, this translates to
total turnover that is +23% and -32% against the same period in
2021 and 2020. Under the Severe but Plausible scenario, the Group
has adequate liquidity and covenant headroom throughout the going
concern period.
In addition, the Directors have performed a Reverse Stress Test,
applying further downside trade reductions to the Severe but
Plausible scenario to demonstrate the value of lost sales until
financial covenants within the facility signed 24 May 2021 are
breached. Liquidity under the facility is adequate, even under the
Reverse Stress Test. In addition to the trade reductions described
below, this scenario considers the year-to-date performance as at
the date of the assessment and a reduction to directly attributable
variable costs associated with a reduction in turnover. If such a
downside scenario were to materialise, the Directors would consider
significant cost savings initiatives around areas such as central
and head office payroll, overhead expenditure, marketing costs,
rents, warehousing costs and professional fees, however for the
purpose of this analysis, none of these cost saving efforts are
included within the modelling. In the Reverse Stress Test, trade
reductions have been gradually applied to all sales channels during
the 12 month going concern period. Store, wholesale and licence
income reductions of up to 20% and online reductions of up to 10%
have been applied against the Severe but Plausible scenario. Within
the 12 month going concern period, this translates to total
turnover that is +11% and -39% against the same period in 2021 and
2020. In the Reverse Stress Test, the quarterly financial covenant
reported in April 2022 would be the only one impacted during the
going concern assessment period, allowing the Directors time to
take appropriate actions if there are early signs of a prolonged
reduction in trade.
As a result of the above analysis, the Directors have concluded
that the Group has sufficient financial resources to continue in
operation and meet its obligations as they fall due for the 12
months from the date of approval of these financial statements.
Changes in accounting estimates
In the prior accounting period, our inventory accounting basis
of estimating inventory cost included certain logistics and freight
costs in getting stock from the distribution centre to its final
location. The Directors now believe that this basis of estimating
is not suitable due to an increasingly multi-channel business in
which purchases may reach the consumer through a variety of
different routes. As a result of these changes, the estimation of
costs relating to this has become less reliable. The amount
capitalised in respect of these costs at 26 January 2020 was
GBP6.1m which has been expensed in the current period with no
similar amounts capitalised in the 53 weeks ended 30 January
2021.
Flagship stores
In previous accounting periods flagship stores were considered
corporate assets and were considered to support the wider business
in the geographic territory in which that store was located. The
Directors now believe that this treatment is not suitable due to an
increasingly multi-channel business which has reduced the
significance of flagship stores. Therefore, the impairment
estimation basis has been revised in the current period to align it
with the remainder of the store portfolio. This has resulted in an
impairment in the period of GBP1.9m.
IFRS16 - rent concessions
The Group has applied the practical expedient for the
application of rent concessions provided as a response to the
Covid-19 pandemic, as allowed by the amendment to IFRS16. The Group
has applied the practical expedient to all its leases within Europe
that meet the criteria set out in the amendment. The Group has not
applied the practical expedient to concessions in the rest of
world. GBP0.4m has been recognised in the Income Statement in the
period to reflect these lease concessions to which the practical
expedient has been applied.
Errors or misstatements
IFRS16 prior year adjustments identified in the current year
i) Incorrect classification of lease incentives - GBP13.3m
During the prior period GBP10.2m of creditor balances relating
to lease incentives were taken to reserves as an IFRS16 adjustment,
when they should have been offset against the right of use asset
for the lease they relate to. In addition, GBP3.1m of lease
incentives were held in other creditors at transition, when they
should have been offset against the right of use asset for the
lease they relate to.
Accordingly, GBP13.3m has been corrected retrospectively by
restating the right of use asset, other creditors has been restated
by GBP3.1m and retained earnings by GBP10.2m on the balance sheet
as at 25 January 2020. There was no impact on earnings for the
period or EPS.
ii) Incorrect impairment of assets - GBP2.2m
At 25 January 2019 the impairment of right of use assets was
overstated as a result of the above incorrect classification.
Accordingly, the GBP2.2m impact has been corrected
retrospectively by restating the income statement for the period to
25 January 2020 and the corresponding increase to right of use
assets and retained earnings.
Tangible and intangible fixed assets prior year adjustment
identified in the current year
iii) In prior years, computer software with a cost of GBP8.4m
and related accumulated depreciation of GBP3.7m was incorrectly
shown as part of tangible fixed assets. Subsequent depreciation
charges in respect of this computer software were expensed against
intangible fixed assets. At 26 January 2019 and 25 January 2020,
these assets were fully depreciated and no longer in use. To
correct this error, tangible fixed assets have been restated by
cost of GBP8.3m and depreciation of GBP3.7m in note 12 and by
restatement of depreciation of GBP4.7m in intangible fixed assets
in note 11 to correct this mis-classification at 26 January 2019
and 25 January 2020.
Inventory adjustments identified in the prior year
iv) Adjustments to the carrying amount of inventory at 26
January 2019 - GBP20.2m
As previously described in the Annual Report 2020, in December
2019 the Group identified that the value of inventory held on its
balance sheet at that time had been overstated following an
internal review. As a result of these findings, the Group engaged
Deloitte LLP to undertake an independent review of this issue.
Following the conclusion of Deloitte's review and the completion
of the year-end process and audit, the Group restated the balance
of inventory at 26 January 2019 from GBP225.8m to GBP205.6m, a
GBP20.2m restatement. The restatement was due to inappropriate cost
values being attributed to inventory, inventory reflected on the
balance sheet which did not physically exist and intercompany
profit in stock that was not adjusted for in previous
calculations.
The treatment for the items identified from the inventory review
were classified as changes in accounting estimates or errors or
misstatements, and is governed by IAS 8 'Accounting policies,
changes in accounting estimates and errors.'
v) Stock that did not physically exist - GBP6.5m
The adjustments primarily related to inventory held in system
locations that were not subject to inventory counts and were not
written off despite not physically existing. These balances
primarily arose as stock were moved between warehouses, between
retail and outlet stores and warehouses over seasons, and due to
weaknesses in the control environment over those moves and stock
locations.
vi) Adjustments to correct calculations - GBP13.7m
Adjustments were identified to correct calculations, including
to correct for the capitalisation of duties that should not have
been capitalised to inventory, and to eliminate parts of
intercompany profit in stock that was not adjusted for in previous
calculations.
In addition, the Group reviewed its approach to estimating the
carrying value of stock and adopted a more prudent methodology
which resulted in a GBP32.4m reduction in stock value, being
accounted for as a change in estimate booked as a non-underlying
expense in the income statement for the 52 weeks ended 30 January
2020 The Group also changed its stock provisioning policy from one
based on provisioning against seasons to one based on forward
forecasting the expected terminal stock value at the point at which
the stock has traded through its expected lifecycle of two years.
The impact of the increase in the obsolescence provision of
GBP13.5m was included within non underlying costs.
Alternative performance measures
In the reporting of financial information, the Group uses
certain measures that are not separately disclosable under IFRS or
the Companies Act. The Directors believe that these additional
measures, which are used internally, are useful to the users of the
financial statements in helping them understand the underlying
business performance. Non-underlying items are those items which,
in the opinion of the Directors, should be excluded in order to
provide a consistent and comparable view of the underlying
performance of the Group's ongoing business and are considered by
the Directors to be significant. The Directors also exclude foreign
exchange gains and losses on the translation of intercompany
monetary assets and liabilities denominated in foreign
currencies.
Non-underlying items are added back/deducted to derive certain
alternative performance measures as follows:
-- profit attributable to the owners of the Company, to arrive
at underlying earnings per share (after the tax effect of
non-underlying items); and
-- profit before tax, to arrive at profit before tax and non-underlying items.
The Directors believe the alternative performance measures
presented along with comparable GAAP measurements is useful to
provide information with which to measure our performance, and our
ability to invest in new opportunities. Management uses these
measures with the most directly comparable GAAP financial measures
in evaluating our operating performance and value creation.
Alternative financial measures should not be considered in
isolation from, or as a substitute for, financial information
presented in compliance with GAAP. The requirements for identifying
non-underlying items are on a consistent basis each period and
presented consistently, and a reconciliation of profit before tax
and non-underlying items to profit before tax is included in Note 3
below.
The profit before tax and non-underlying items and underlying
earnings per share are not recognised measures under IFRS and may
not be directly comparable with adjusted profit and earnings per
share measures used by other companies.
Constant currency comparatives are obtained by applying the
exchange rates that were applicable for the period ended 25 January
2020 to the financial results in overseas subsidiaries for the 53
weeks ended 30 January 2021 to remove the impact of exchange rate
fluctuations.
2. Segment Information
The Group has three reportable segments: retail, wholesale and
licensing. For each of the three segments, the Executive Committee
(considered to be the Chief Operating Decision Maker) reviews
internal management reports on a four-weekly basis.
a) Segment revenue and segment result
53 weeks ended 30 January 2021 Retail Wholesale Licensing Total
---------------------------------------------------------------- ---------- ---------- ---------- -----------
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 254,256 85,278 12,449 351,983
Cost of sales (108,102) (53,169) - (161,271)
---------- ---------- ---------- -----------
Gross profit before non-underlying items 146,154 32,109 12,449 190,712
Operating costs (165,458) - - (165,458)
---------- ---------- ---------- -----------
Operating (loss)/contribution before non-underlying items (19,304) 32,109 12,449 25,254
Reconciliation of segment
result to loss before tax
Segment result before non-underlying items (19,304) 32,109 12,590 25,254
Other operating costs - - - (81,421)
Other operating income - - - 6,488
-----------
Operating loss before non-underlying items (49,679)
Finance income - - - 399
Finance expense - - - (8,745)
Share of losses from joint ventures - - - (1,136)
-----------
Loss before tax and non-underlying items (59,161)
===========
Non-underlying items before tax - - - (48,568)
===========
Loss before tax (107,729)
===========
Capital expenditure 3,432 - - 3,432
Unallocated capital expenditure - - - 3,549
-----------
Total capital expenditure 6,981
Additions to right of use assets - - - 9,229
Total capital expenditure and additions to right of use assets 16,210
===========
Depreciation and amortisation (7,493) (206) - (7,699)
Unallocated depreciation and amortisation - - - (26,763)
Depreciation of right of use assets - - - ( 20,393 )
-----------
Total depreciation and amortisation (54,855)
===========
Segment assets 239,491 75,630 - 315,121
Property, plant and equipment - central - - - 2,279
Intangible assets - central - - - 34,491
Deferred tax assets - - - 27,635
Income tax receivable - - - 7,983
Inventories - central 3,107
Cash - central 2,344
Other receivables central 609
Unallocated assets(1) - - - 5,689
Total assets 399,258
===========
Segment liabilities (214,035) (28,341) - (242,376)
Central liabilities - - - (1,045)
Current tax payable - - - (2,607)
Unallocated liabilities(2) - - - (1,194)
-----------
Total liabilities (247,222)
===========
Net assets 152,036
-----------
(1) Other assets include prepayments, derivatives and central
allocations of inventory, cash and cash equivalents and other
receivables
.(2) Other liabilities include derivatives and central
allocations of trade and other payables and borrowings.
52 weeks ended 25 January 2020 (Restated)(3) Retail Wholesale Licensing Total
---------------------------------------------------------------- ---------- ---------- ---------- ----------
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 439,941 171,536 19,001 630,478
Cost of sales (176,520) (103,199) - (279,719)
---------- ---------- ---------- ----------
Gross profit before non-underlying items 263,421 68,337 19,001 350,759
Operating costs (232,175) - - (232,175)
---------- ---------- ---------- ----------
Operating contribution before non-underlying items 31,246 68,337 19,001 118,584
Reconciliation of segment
result to profit before tax
Segment result before non-underlying items 31,246 68,337 19,001 118,584
Other operating costs - - - (100,294)
Other operating income - - - 144
----------
Operating profit before non-underlying items - - - 18,434
Finance income - - - 138
Finance expense - - - (12,565)
Share of losses from joint ventures - - - (1,229)
----------
Profit before tax and non-underlying items - - - 4,778
==========
Non-underlying items before tax - - - (82,403)
==========
Loss before tax (77,625)
==========
Capital expenditure 13,610 515 - 14,125
Unallocated capital expenditure - - - 11,698
Total capital expenditure - 25,823
Additions to right of use assets - - 12,473
----------
Total capital expenditure and additions to right of use assets 38,296
==========
Depreciation and amortisation (14,394) (595) - (14,989)
Unallocated depreciation and amortisation - - - (13,911)
IFRS 16 Depreciation - - - (38,048)
----------
Total depreciation and amortisation - (66,948)
==========
Segment assets 326,703 94,513 - 421,216
Property, plant and equipment - central - - - 67,996
Intangible assets - central - - - 42,603
Right-of-use assets - central - - - 21,347
Deferred tax assets - - - 17,638
Income tax receivable - - - 2,343
Investment in equity accounted investee - - - 5,088
Amounts due from equity accounted investee - - - 4,462
Other assets(1) - - - 7,202
Total assets 589,895
==========
Segment liabilities (333,557) (75,989) - (409,546)
Lease liability - central - - - (29,665)
Deferred tax liability - - - (3,588)
Other liabilities(2) - - - (6,423)
----------
Total liabilities (449,222)
==========
Net assets 140,673
==========
(1) Other assets include prepayments, derivatives and central
allocations of inventory, cash and cash equivalents and other
receivables.
(2) Other liabilities include derivatives and trade and other
payables and borrowings.
(3) Details of the restatement can be found in the annual report
and accounts.
b) Geographical information
UK US Rest of the World(2) Total
----------------------------------------------- -------- -------- --------------------- --------
GBP'000 GBP'000 GBP'000 GBP'000
53 weeks ended 30 January 2021
Revenue 215,756 102,787 33,440 351,983
Non-current assets(1) 136,641 16,214 3,604 156,459
52 weeks ended 25 January 2020 (restated)(3)
Revenue 360,281 194,599 75,598 630,478
Non-current assets(1) 194,550 65.057 48,708 308,315
-----------------------------------------------
(1) Non-current assets exclude deferred tax assets and
investment in associates.
(2) Rest of the World includes Europe, Canada, Asia (up to
disposal) and South Africa.
(3) More details of the restatement are shown in the annual
report and accounts.
c) Revenue by collection(1)
53 weeks ended 52 weeks ended
30 January 25 January
2021 2020
--------------- --------------- ---------------
GBP'000 GBP'000
Menswear(1) 119,790 241,098
Womenswear(1) 219,744 370,379
339,534 611,477
=============== ===============
(1) Revenue by collection includes retail and wholesale revenue
and excludes licence income.
d) Retail revenue
53 weeks ended 52 weeks ended
30 January 25 January
2021 2020
------------- --------------- ---------------
GBP'000 GBP'000
Stores 109,402 321,214
E-commerce 144,854 118,727
254,256 439,941
=============== ===============
3. Loss Before Tax
Loss before tax is stated after charging/(crediting): 53 weeks 52 weeks ended
ended 25 January
30 January 2020 (Restated)(1)
2021
------------ --------------------
GBP'000 GBP'000
Depreciation and amortisation(2) 53,109 64,527
Non-underlying items (further detail
below) 48,568 82,403
Leasehold properties:
Variable rental payments(3) 1,728 5,429
Concessions:
Minimum contract payments(3) 3,621 9,235
Variable rental and commission payments(3) 39,325 36,222
Loss on sale of property, plant and
equipment and intangibles 933 447
Practical expedient on IFRS 16 application (361) -
Government schemes (4) (10,545) -
Close out of foreign exchange hedge
contracts (6,916) -
Gain on lease modifications (2,992) -
Auditors' remuneration:
Audit of these financial statements 150 20
Amounts receivable by the Company's
auditors and their associates in respect
of:
Audit of financial statements of subsidiaries
of the Company 754 1,600
Interim financial statements review 130 20
Other statutory auditors 73 37
Other assurance services - 17
(1) The restatement relates to the prior year stock
misstatement
(2) The Group has applied IFRS 16. Depreciation of right-of-use
asset of GBP26,763,000 (2020: GBP34,048,000) has been included
within GBP53,129,000 above (2020: GBP64,527,000). The depreciation
charge above excludes the amortisation of the reacquired right of
GBP1.7m (2020: GBP1.9m). 2020 also excludes GBP0.5m depreciation
charge for the closure of the outlet store in Italy. These charges
are included within non-underlying costs below.
(3) Disclosed above are the variable rentals charged relating to
leasehold properties and fixed and variable rentals charged in
relation to 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 not meeting the definition of a lease under
IFRS 16.
(4) Support received from governments around the world to
support businesses throughout the Covid-19 epidemic. Payments from
the UK government for furloughed employees amounted to
GBP8,460,000.
Reconciliation of profit before tax to profit before tax and
non-underlying items:
53 weeks ended 52 weeks ended
30 January 25 January
2021 2020 (Restated)(1)
-------------------------------------------- ----------- --------------- --------------------
GBP'000 GBP'000
Loss before tax (107,729) (77,625)
--------------- --------------------
Non-underlying items
Included in cost of sales:
Inventory changes in estimates 1 (6,065) (32,351)
Change to inventory obsolescence provision 2 - (13,539)
Onerous contract provision 3 (1,973) -
Other 81 2,221
--------------- --------------------
Included in gross profit (7,957) (43,669)
Included in distribution costs :
(Loss) on disposal of business 4 - (7,585)
Impairment of intangibles, property,
plant and equipment and right-of-use
assets 5 (45,303) (13,969)
Other closure costs - (603)
Included in administrative costs:
Acquisition costs and unwind of fair
value accounting adjustments 6 (1,987) (4,710)
Reorganisation, restructuring costs
and other legal and professional costs 7 (11,415) (7,852)
Included in other operating loss:
Gain on sale and leaseback of Head
Office 8 17,446 -
Included in operating loss (49,216) (78,388)
Included in share of post-tax profits
from joint venture:
Unwind of fair value adjustments (7) (989)
Included in finance income/(expense):
Foreign exchange on the translation
of monetary assets and liabilities
denominated in foreign currencies 9 655 (3,026)
--------------- --------------------
Non-underlying items (48,568) (82,403)
--------------- --------------------
(Loss)/Profit before tax and non-underlying
items (59,161) 4,778
--------------- --------------------
Notes
1. Further details surrounding the changes in accounting
estimates for inventory can be found in the full financial
statements
2. Changes to inventory obsolescence provision are detailed in the full financial statements
3. Details of the onerous contract provision can be found in the full financial statements
4. In the prior period the Group reorganised operations in Asia
(Hong Kong, China and Japan), which resulted in a loss on
disposal.
5. The Group impaired a number of assets resulting in a charge
of GBP44.6m (2020: GBP14.0m), including key money, leasehold
improvements and right-of-use assets.
6. Charges in the current and prior period relate to
amortisation of reacquired rights, fair value and accounting
adjustments in relation to the acquisition of the footwear business
in financial year 2019.
7. A number of costs were incurred during the year, relating to
the restructuring and reorganisation of the business. These
include:
a. GBP3.7m (2020: GBPnil) for redundancy costs.
b. GBP5.3 (2020: GBP2.2m) for restructuring costs
c. GBPNil ((2020: GBP2.7m) for stock investigation
d. GBPNil (2020: GBP1.4m) for investigations into the
allegations of misconduct of the former CEO
e. GBP2.5m (2020: GBP1.6m) for other legal and professional fees
8. Relates to the sale of the corporate head office building
9. Foreign exchange loss on re-translation of intercompany
balances denominated in foreign currencies.
(1) M ore details of the restatement are shown in the annual
report and accounts.
4. Finance Income and Expenses
53 weeks ended 52 weeks ended
30 January 25 January
2021 2020
--------------- ---------------
GBP'000 GBP'000
Finance income
- Interest receivable 94 138
- Foreign exchange gains 960 -
1,054 138
=============== ===============
Finance expenses
- Interest payable (1,964) (4,256)
- Interest on lease liabilities (6,781) (8,309)
- Foreign exchange losses - (3,026)
--------------- ---------------
(8,745) (15,591)
=============== ===============
5. Income Tax Expense
a) The tax charge comprises:
53 weeks ended
30 January 52 weeks ended
2021 25 January
2020
GBP'000 GBP'000
Current tax
United Kingdom corporation tax (180) -
Overseas Tax (1,275) 1,804
Deferred tax
United Kingdom corporation tax (7,129) (4,152)
Overseas Tax (10,737) (5,430)
Prior period under/(over) provision
Current tax (6,113) (414)
Deferred tax 4,150 (1,247)
--------------- -----------------
(21,284) (9,439)
=============== ===================
b) Current year deferred tax movement by type
53 weeks ended 52 weeks ended
30 January 25 January
2021 2020
----------------------------- --------------- ---------------
GBP'000 GBP'000
Property, plant & equipment 5,306 1,024
Share-based payments (3) (25)
Losses 7,929 4,906
Inventory 147 329
Other 4,487 4,593
--------------- ---------------
17,866 10,827
=============== ===============
c) Factors affecting the tax charge for the period
The tax assessed for the period is higher than the tax
calculated at the UK prevailing corporation tax rate of 19%. The
differences are explained below.
53 weeks ended 52 weeks ended
30 January 25 January
2021 2020
------------------------------------------- ------------------------ ---------------
GBP'000 GBP'000
Loss before tax (107,729) (79,856)
Loss multiplied by the standard rate
in the UK - 19%, (2020: standard rate
in the UK of 19%) (20,469) (15,173)
Income not taxable/expenses not deductible
for tax purposes (3,847) 8,280
Overseas losses not recognised 5,313 4,402
Withholding tax expensed 505 -
Chargeable gain on disposal 3,299 -
Movement in current and deferred tax
on share awards and options 180 35
Prior period over provision
(1,775) (1,707)
Recognition of losses previously not
recognised (20) (5,466)
Effect of rate change on deferred tax 166 (950)
Difference due to overseas tax rates (4,636) 1,140
------------------------ ---------------
Total income tax credit (21,284) (9,439)
======================== ===============
The tax charge for the current year includes a credit of
GBP2,135,000 in respect of non-underlying items. This arises from
deductible items, primarily in the UK, on the gain on sale and
leaseback of Head Office and IFRS16 impairments.
d) Deferred and current tax recognised directly in equity
53 weeks ended 52 weeks ended
30 January 25 January
2021 2020
----------------------------------------- --------------- ---------------
GBP'000 GBP'000
Deferred tax (credit)/ charge) on
share awards and options (20) 25
Deferred tax (credit)/ charge associated
with movement in hedging reserve (6) (22)
Deferred tax (credit)/ charge associated
with foreign exchange movements in
reserves (587) 173
--------------- ---------------
(613) 176
=============== ===============
The March 2020 Budget announced that a rate of 19% would
continue to apply with effect from 1 April 2020 and this was
substantively enacted on 17 March 2020
As the deferred tax assets and liabilities should be recognised
based on the corporation tax rate at which they are anticipated to
unwind, the assets and liabilities on UK operations have been
largely recognised at a rate of 19% (2020:17%). Assets and
liabilities arising on foreign operations have been recognised at
the applicable overseas tax rates.
The March 2021 Budget announced a further increase to the main
rate of corporation tax to 25% from April 2023. This rate has not
been substantively enacted at the balance sheet date, as result UK
deferred tax balances as at 30 January 2021 continue to be measured
at 19%. If all o the UK deferred tax was to reverse at the amended
rate the impact to the closing deferred tax position would be to
increase the deferred tax asset by GBP1.7m.
6. Dividends Per Share
53 weeks ended 52 weeks ended
30 January 25 January
2021 2020
-------------------------------------------- ---------------- ---------------
GBP'000 GBP'000
Final dividend paid for prior period
of nil p per ordinary share (2020:
40.7p) - 18,138
Interim dividend paid of nil per ordinary
share (2020: 7.8p) - 3,477
---------------- ---------------
- 21,615
================ ===============
The directors have temporarily suspended the dividend, and
hence, no final dividend is proposed for the period ended 30
January 2021.
7. Earnings Per Share
53 weeks ended 52 weeks ended
30 January 25 January
2021 2020 (Restated)(1)
---------------------------------------- --------------- --------------------
Number of shares: Number Number
Weighted number of ordinary shares
outstanding 153,941,467 44,565,753
Effect of dilutive options(3) 5,293,825 48,391
Weighted number of ordinary shares
outstanding - diluted 159,241,292 44,614,144
=============== ====================
Earnings: GBP'000 GBP'000
Loss for the period basic and diluted (86,445) (68,186)
Underlying (loss)/profit(2) (40,012) 2,974
Basic loss per share (56.2p) (153.0p)
Underlying (loss)/earnings per share(2) (26.0p) 6.7p
Diluted loss per share (56.2p) (153.0p)
Underlying diluted (loss)/earnings
per share(2) (26.0p) 6.7p
Due to the loss-making position at the year end, all potential
ordinary shares are considered to be antidilutive.
(1) M ore details of the restatement are shown in the annual
report and accounts.
(2) Underlying profit for the period and underlying earnings per
share is shown before non-underlying items. Non-underlying items
net of tax were GBP46,433,000 (2020: GBP71,160,000).
(3) 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.
8. Intangible Assets
Reacquired Key money Computer Computer software Total
right software under development
----------------------- ---------- --------- --------- ------------------- --------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 25 January 2020(1) 3,781 617 55,607 2,879 62,884
Additions - - - 3,692 3,692
Transfers - - 5,057 (5,057) -
Exchange rate movement - - (154) 54 (100)
---------- --------- --------- ------------------- --------
At 30 January 2021 3,781 617 60,510 1,568 66,476
Amortisation
At 25 January 2020(1) 2,035 - 13,885 - 15,920
Charge for the
period 1,746 - 13,509 - 15,255
Impairments - 653 - - 653
Exchange rate movement - (36) (74) - (110)
---------- --------- --------- ------------------- --------
At 30 January 2021 3,781 617 27,320 - 31,718
---------- --------- --------- ------------------- --------
Net book value
At 30 January 2021 - - 33,190 1,568 34,758
========== ========= ========= =================== ========
At 25 January 2020 1,746 617 41,722 2,879 46,964
========== ========= ========= =================== ========
(1) More details of the restatement are shown in the annual
report and accounts.
Reacquired Key money Computer Computer Total
right software software
(restated) under development
------------------ ---------- --------- ----------- ------------------ -------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 26 January
2019 3,781 633 47,957 4,147 56,518
Additions - - - 6,368 6,368
Transfers - - 7,636 (7,636) -
Exchange rate
movement - (16) 14 - (2)
---------- --------- ----------- ------------------ -------
At 25 January
2020 3,781 617 55,607 2,879 62,884
----------
Amortisation
At 26 January
2019 145 - 12,700 - 12,845
Prior period
restatement(1) - - (4,699) - (4,699)
---------- --------- ----------- ------------------ -------
At 26 January
2019 as restated 145 - 8,001 - 8,146
Charge for the
period 1,890 - 5,876 - 7,766
Exchange rate
movement - - 8 - 8
---------- --------- ----------- ------------------ -------
At 25 January
2020 2,035 - 13,885 - 15,920
---------- --------- ----------- ------------------ -------
Net book value
---------- --------- ----------- ------------------ -------
At 25 January
2020 1,746 617 41,722 2,879 46,964
========== ========= =========== ================== =======
At 26 January
2019 3,636 633 39,956 4,147 48,372
========== ========= =========== ================== =======
(1) More details of the restatement are shown in the annual
report and accounts.
Amounts included within computer software relate to the Group's
information technology and ERP systems and further development of
our e-commerce platforms and other business systems. The computer
software under development category is stated net of transfers to
computer software. Internally capitalised costs amount to GBPnil
(2020: GBP718,000).
Transfers from the computer software under development category
in the period amounted to GBP5,057,000 (2020: GBP7,636,000) while
additions into this category were GBP3,692,000 (2020:
GBP6,368,000).
9. Property, Plant and Equipment
Freehold Leasehold Fixtures, Motor Assets under Total
land and improvements fittings vehicles construction
buildings and office
equipment
(restated)
---------------------------- ---------- ------------- ----------- --------- ------------- --------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 25 January
2020(1) 57,973 126,687 104,871 111 1,524 291,166
Additions - - - - 3,289 3,289
Transfers - 212 3,774 - (3,986) -
Write offs - (3,240) (3,988) - - (7,228)
Disposals (57,973) (6,369) (7,976) (2) - (72,320)
Exchange rate
movement - (1,539) 3 - 22 (1,514)
---------- ------------- ----------- --------- ------------- --------
At 30 January
2021 - 115,751 96,684 109 849 213,393
---------- -------------
Depreciation
At 25 January
2020(1) 1,827 84,441 82,060 108 - 168,436
Charge for the
period 192 7,554 5,111 - - 12,857
Write offs - (3,037) (3,866) - - (6,903)
Disposals (2,019) (6,281) (2,703) 1 - (11,002)
Impairment - 7,142 5,001 - - 12,143
Exchange rate
movement - (1,309) (230) - - (1,539)
---------- -------------
At 30 January
2021 - 88,510 85,373 109 - 173,992
Net book value
At 30 January
2021 - 27,241 11,311 - 849 39,401
At 25 January
2020 56,146 42,246 22,811 3 1,524 122,730
(1) More details of the restatement are shown in the annual report
and accounts.
Freehold Leasehold Fixtures, Motor Assets under Total
land and improvements fittings vehicles construction
buildings and office
equipment
---------------------------- ---------- ------------- ----------- --------- ------------- --------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 26 January
2019 57,973 129,351 101,743 111 3,248 292,426
Prior period restatement(3) - - (8,384) - - (8,384)
At 26 January
2019 as restated 57,973 129,351 93,359 111 3,248 284,042
Additions/transfers - 6,828 14,624 - (1,997) 19,455
Disposals - (9,788) (2,802) - 210 (12,380)
Exchange rate
movement - 296 (310) - 63 49
---------- ------------- ----------- --------- ------------- --------
At 25 January
2020 57,973 126,687 104,871 111 1,524 291,166
---------- -------------
Depreciation
At 26 January
2019 1,379 82,580 76,494 108 - 160,561
Prior period restatement(3) - - (3,685) - - (3,685)
At 26 January
2019 as restated 1,379 82,580 72,809 108 - 156,876
Charge for the
period (1) 448 9,225 11,461 - - 21,134
Disposals (2) - (8,385) (2,421) - - (10,806)
Impairment - 744 537 - - 1,281
Exchange rate
movement - 277 (326) - - (49)
---------- -------------
At 25 January
2020 1,827 84,441 82,060 108 - 168,436
Net book value
At 25 January
2020 56,146 42,246 22,811 3 1,524 122,730
At 26 January
2019 56,594 46,771 20,550 3 3,248 127,166
(1) Depreciation includes GBP0.5m in relation the closure of our
outlet store in Italy. This charged has been included in other
closure costs within the non-underlying charge disclosed in the
full financial statements .
(2) Disposals include the disposal of property, plant and
equipment in Asia of GBP0.9m following the Asia reorganisation
during the year. This charge is included in the total loss on
disposal of Asian business of GBP7.6m within the non-underlying
charge disclosed in the full financial statements
(3) More details of the restatement are shown in the annual
report and accounts.
Transfers from the assets under construction category in the
period amounted to GBP3,986,000 (2020: GBP1,997,000) while
additions into this category were GBP3,289,000 (2020:
GBP19,455,000).
10. Related Parties
The Group considers its Executive and Non-Executive Directors,
together with the Executive Team 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:
53 weeks ended 52 weeks ended
30 January 25 January
2021 2020
GBP'000 GBP'000
Salaries, fees and short-term
benefits 3,297 1,092
Contributions to money purchase
pension schemes 57 55
Share-based payment (credit) / - -
charges
3,354 1,147
Directors of the Company as at 30 January 2021 and their
immediate relatives control 0.2% of the voting shares of the
Company.
At 30 January 2021, No Ordinary Designer Label Limited ("NODL"),
the main trading company owed Ted Baker Plc GBP122,677,000 (2020:
GBP27,096,000) and owed No Ordinary Shoes Limited GBP10,070,000
(2020: GBP10,070,000.) NODL was owed GBP105,290,000 (2020:
GBP174,488,000) from the other subsidiaries within the Group.
Transactions between subsidiaries were priced on an arm's length
basis.
The Group has a 50% interest in the ordinary share capital of No
Ordinary Retail Company Pty*, a company incorporated in Australia,
through its wholly owned subsidiary No Ordinary Designer Label
Limited. As at 30 January 2021, the joint venture owed GBP372,000
to the main trading company (2020: GBP530,000). In the period the
value of sales made to the joint venture by the Group was
GBP1,261,000 (2020: GBP2,485,000).
The Group has a 50% interest in the ordinary share capital of
Shanghai LongShang Trading Company Ltd*, a company incorporated in
Mainland China, Hong Kong and Macau, through its wholly owned
subsidiary No Ordinary Designer Label Limited. As at 30 January
2021, the joint venture owed GBP3,933,000 to the main trading
company (2020: GBP3,933,000). In the period the value of sales made
to the joint venture by the Group was GBP2,876,000 (2020:
GBP1,074,000).
Ray Kelvin, the former Chief Executive and a major shareholder
in the business, has the right to appoint a non-executive director.
He has exercised this right, and Colin La Fontaine Jackson has been
appointed to the Board in September 2020.
*The registered office addresses are as follows:
Related party Registered office address
No Ordinary Retail Company 6 Albert St, Preston VIC 3072,
Pty Australia
Ted Baker (Hong Kong) Limited Room 2001-2, Tower 2, The Gateway,
Harbour City, 25 Canton Road,
Tsim Sha Tsui, Kowloon, Hong
Kong
12. Impact of IFRS 16 'Leases'
Right-of-use assets
The Group has applied IFRS 16 using the simplified modified
retrospective transition approach.
Right-of-use assets are recognised in relation to the Group's
leases, representing the economic benefits of the Group's right to
use the underlying leased assets. The Group's lease portfolio is
principally comprised of property leases of stores, distribution
centres and overseas head offices.
The Group has applied the practical expedient for the
application of rent concessions provided as a response to the
COVID-19 pandemic, as allowed by the amendment to IFRS16.
Right-of-use asset 30 January 25 January
2021 2020
Cost GBP'000 GBP'000
Opening 188,219 -
Adoption of IFRS 16 - 185,409
Restatement(1) - (13,276)
Restated opening 188,219 172,133
Gross adjustment(2) (2,019) -
Additions 9,229 12,473
(Decrease)/increase in right-of-use
assets (9,179) 9,445
Disposals (4,706) (5,832)
Closing 181,544 188,219
Amortisation
Opening (50,232) -
Gross adjustment(2) 2,019 -
Charge for the period (26,763) (38,048)
Restatement(1) - 2,229
Disposals 4,706 2,426
Impairments(3) (29,515) (16,839)
Closing (99,785) (50,232)
Net book value 81,759 137,987
(1) M ore details of the restatement are shown in the annual
report and accounts.
(2) Gross adjustment between cost and amortisation brought
forward to better reflect underlying gross split.
(3) Impairments in the year of GBP29,515,000 consisted of the
interim impairment of GBP33,922,000 less a reversal of GBP4,407,000
arising from modifications.
Lease liabilities
When measuring lease liabilities, the Group discounted lease
payments using its incremental borrowing rate upon transition to
IFRS 16 and at subsequent remeasurement dates. The discount rates
applied range between 3.9% to 9.1%, they have been determined based
on comparable bond yields and are lease specific varying by
territory and lease length.
Amounts recognised in profit or loss
Group Group
30 January 25 January
2021 2020
GBP'000 GBP'000
Interest on lease liabilities (1) 6,781 8,309
(1) Expenses related to variable rental payments for leasehold
properties are detailed within the annual report and accounts.
.
Lease liabilities included in the statement of financial
position
Group Group
30 January 25 January
2021 2020
GBP'000 GBP'000
Current 33,754 36,381
Non-current 106,617 131,956
Total lease liabilities 140,371 168,337
Reconciliation of liabilities to cashflow arising from financing
activities:
Group Group
30 January 25 January 2020
2021
GBP'000 GBP'000
Opening 168,337 185,409
Gross Adjustment(1) (807) -
Changes from financing cash
flows:
Payment of lease liabilities (35,826) (41,337)
Remeasurement (361) -
Total changes from financing
cash flows (36,187) (41,337)
Increase in lease liability(2) 2,509 21,918
Disposal of lease liabilities - (3,406)
The effect of changes in foreign
exchange rates (262) (2,556)
Interest expense 6,781 8,309
Total other changes 9,028 24,265
140,371 168,337
(1) Gross adjustment to opening balance to better reflect the
gross split.
(2) Increase in lease liability consists of additions of
GBP9.229m and reductions of GBP6.720m arising from lease
modifications.
Maturity analysis - contractual undiscounted cash flows
Group Group
30 January 25 January 2020
2021
GBP'000 GBP'000
Less than one year 34,510 36,379
One to five years 98,531 107,024
More than five years 17,355 40,786
150,396 184,189
13. Post balance sheet events
On 24 May 2021, the Group successfully refinanced its existing
debt facilities of GBP132.8 million due to mature in September 2022
with one maturing in November 2023. The new Revolving Credit
Facility, reflecting the future business forecasts, is initially
for GBP90 million, reducing to GBP80 million in January 2022.
Unamortized fees from the original facility will be treated as an
underlying item in the financial statements for 2022. Fees
associated with the facility will be amortised over the expected
life of the facility as an underlying item.
In May 2022, the Group restructured its French business,
following a consultation with all colleagues in country, closing
three of its four owned stores or outlets. The future operating
model will be based around concession and partner sites. The costs
of approximately GBP2.2 million for redundancy, asset write-offs
and other fees, have been treated as non-underlying costs in
2022.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the annual report
and the financial statements in accordance with international
accounting standards in conformity with the requirements of the
Companies Act 2006 and applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
are required to prepare the group financial statements and have
elected to prepare the company financial statements in accordance
with international accounting standards in conformity with the
requirements of the Companies Act 2006. 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 company and of the profit or loss for the
group for that period. The Directors are also required to prepare
financial statements in accordance with international financial
reporting standards adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union.
In preparing these financial statements, the Directors are
required to:
o select suitable accounting policies and then apply them
consistently
o make judgements and accounting estimates that are reasonable
and prudent
o state whether they have been prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006, subject to any material
departures disclosed and explained in the financial statements.
o state whether they have been prepared in accordance with
international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union,
subject to any material departures disclosed and explained in the
financial statements
o prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business
o prepare a Directors' report, a Strategic report and Directors'
remuneration report which comply with the requirements of the
Companies Act 2006.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company's
transactions and disclose with reasonable accuracy at any time the
financial position of the company and enable them to ensure that
the financial statements comply with the Companies Act 2006 and, as
regards the group financial statements, Article 4 of the IAS
Regulation.
They are also responsible for safeguarding the assets of the
company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities. The Directors are
responsible for ensuring that the annual report and accounts, taken
as a whole, are fair, balanced, and understandable and provides the
information necessary for shareholders to assess the group's
performance, business model and strategy.
Website publication
The Directors are responsible for ensuring the annual report and
the financial statements are made available on a website. Financial
statements are published on the company's website in accordance
with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the company's website is the responsibility of the Directors.
The Directors' responsibility also extends to the ongoing integrity
of the financial statements contained therein.
Directors' responsibilities pursuant to DTR4
The Directors confirm to the best of their knowledge:
o The financial statements have been prepared in accordance with
the applicable set of accounting standards and Article 4 of the IAS
Regulation and give a true and fair view of the assets,
liabilities, financial position and profit and loss of the group
and company.
o The annual report includes a fair review of the development
and performance of the business and the financial position of the
group and company, together with a description of the principal
risks and uncertainties that they face.
We consider the Annual Report and Accounts, taken as a whole, is
fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group's position and
performance, business model and strategy.
On behalf of the Board
John Barton Rachel Osborne
Chair Chief Executive Officer
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June 14, 2021 02:00 ET (06:00 GMT)
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