TIDMBRBY
RNS Number : 8931D
Burberry Group PLC
23 May 2012
23 May 2012
Burberry Group plc
Preliminary results
for the year ended 31 March 2012
Highlights
-- Strong financial results
- Revenue up 24% to GBP1,857m
- Retail/wholesale operating margin 16.4%, up 80bp (H2: up 130bp)
- Adjusted PBT up 26% to GBP376m; reported PBT up 24% to GBP366m
- Full year dividend up 25% to 25.0p
- Net cash increased to GBP338m after GBP177m investment spend
-- Strong, balanced foundation supported growth in FY 2011/12
- By channel
-- Retail revenue up 31% underlying; 68% of revenue (H2:
72%)
-- Opened 23 mainline stores
-- First flagships in Hong Kong, Paris and Taipei
- By region
-- All regions up double-digit
-- Asia Pacific largest region at 37% of retail/wholesale
revenue
-- Flagship markets in UK and France performed well
- By product division
-- All product divisions up double-digit
-- Non-apparel largest division at 39% of retail/wholesale
revenue
-- Core outerwear and large leather goods about half of
revenue
-- Replenishment about 50% of mainline revenue
-- Investing in front-end growth opportunities in FY 2012/13
- Capital expenditure planned at GBP180-200m
- Retail
-- 12-14% space growth
-- Biased to larger format stores in flagship markets, including
London, Chicago and Hong Kong
- Technology
-- Customer insight and service
-- Innovation in digital marketing and retail
- Further modest improvement in full year retail/wholesale
operating margin planned, delivered in H2
Angela Ahrendts, Chief Executive Officer, commented:
"Burberry has completed another successful year, with revenue up
24% and adjusted profit before tax up 26%. An intense focus by our
global teams on business, brand and culture in recent years has
resulted in a strong foundation across channels, regions and
products. While we remain vigilant about the external environment,
we will continue to invest in front-end opportunities within our
brand, digital and retail strategies, to drive sustained,
profitable growth and enduring customer engagement over the long
term."
All metrics and commentary in the Group Financial Highlights and
Business and Financial Review except reported EPS exclude the
results of the discontinued Spanish operations.
Adjusted measures exclude:
1. Restructuring costs of nil in 2012 (2011: GBP1.0m credit
relating to the Group's cost efficiency programme announced in
January 2009).
2. The put option liability finance charge relating to the third
party 15% economic interest in the Chinese business in 2012 of
GBP10.2m (2011: GBP3.2m).
3. Losses from discontinued Spanish operations in 2012 of GBP0.3m (2011: GBP6.2m).
Underlying change is calculated at constant exchange rates.
Certain financial data within this announcement have been
rounded.
Enquiries
Burberry 020 3367 3524
Stacey Cartwright EVP, Chief Financial Officer
Fay Dodds Director of Investor Relations
Jenna Littler Director of Corporate
Relations
Brunswick 020 7404 5959
Nick Claydon
There will be a presentation today at 9.30am (UK time) to
investors and analysts at Horseferry House, Horseferry Road,
London, SW1P 2AW. The presentation can be viewed live on the
Burberry website (www.burberryplc.com) and can also be accessed
live via a dial-in facility on + 44 (0)20 3140 8286. The supporting
slides and an indexed replay will also be available on the website
later in the day.
Burberry will update on trading on 11 July 2012 when it will
issue its Interim Management Statement in respect of the First
Quarter. The AGM will be held on 12 July 2012.
Certain statements made in this announcement are forward-looking
statements. Such statements are based on current expectations and
are subject to a number of risks and uncertainties that could cause
actual results to differ materially from any expected future
results in forward-looking statements. Burberry Group plc
undertakes no obligation to update these forward-looking
statements, and will not publicly release any revisions it may make
to these forward-looking statements that may result from events or
circumstances arising after the date of this document. All persons,
wherever located, should consult any additional disclosures that
Burberry Group plc may make in any regulatory announcements or
documents which it publishes. All persons, wherever located, should
take note of these disclosures. This announcement does not
constitute an invitation to underwrite, subscribe for or otherwise
acquire or dispose of any Burberry Group plc shares, in the UK, or
in the US, or under the US Securities Act 1933 or in any other
jurisdiction.
BURBERRY, the Equestrian Knight Device and the Burberry Check
are trademarks belonging to Burberry which are registered and
enforced worldwide.
Group financial highlights
Total revenue up 24% to GBP1,857m (2011: GBP1,501m)
Retail/wholesale revenue up 25% and adjusted operating profit up
31%; operating margin of 16.4% (2011: 15.6%)
Adjusted profit before tax up 26% to GBP376m (2011: GBP298m);
reported profit before tax up 24% to GBP366m (2011: GBP296m)
Tax rate on adjusted profit before tax of 26.7% (2011:
27.9%)
Adjusted diluted earnings per share up 26% to 61.6p (2011:
48.9p); reported diluted earnings per share up 26% to 59.3p (2011:
46.9p)
Full year dividend per share up 25% to 25.0p (2011: 20.0p),
consistent with policy of 40% dividend payout based on adjusted
EPS
Year-end net cash of GBP338m (2011: GBP298m), after GBP153m
capital expenditure, GBP24m acquisition spend and GBP61m ESOP share
purchase
Year to 31 March % change
GBP million 2012 2011 reported underlying
FX
----------------------------------- --------- -------- --------- -----------
Revenue 1,857.2 1,501.3 24 23
Cost of sales (558.3) (491.6) (14)
--------- -------- --------- -----------
Gross margin 1,298.9 1,009.7 29
Operating expenses(*) (922.0) (708.6) (30)
--------- -------- --------- -----------
Adjusted operating profit 376.9 301.1 25 23
Net finance charge(*) (0.7) (3.2) -
--------- -----------
Adjusted profit before
taxation 376.2 297.9 26 24
Exceptional items (10.2) (2.2)
--------- -------- ---------
Profit before taxation 366.0 295.7 24
Taxation (100.6) (83.2)
Discontinued operations(#) (0.3) (6.2)
Non-controlling interest (1.8) 2.1
--------- --------
Attributable profit 263.3 208.4
--------- --------
Adjusted EPS (pence)() 61.6 48.9
EPS (pence)() 59.3 46.9
Weighted average number
of ordinary shares (millions)() 444.3 444.0
Adjusted measures exclude restructuring costs, the China put
option liability finance charge and discontinued operations
* Operating expenses in the table above exclude restructuring
costs of nil in 2012 (2011: GBP1.0m credit) included in the
reported expenses of GBP922.0m (2011: GBP707.6m). The net finance
charge in the table above excludes a GBP10.2m China put option
liability finance charge (2011: GBP3.2m) included in the reported
finance charge of GBP10.9m (2011: GBP6.4m)
(#) Discontinued operations in Spain in 2012 delivered a loss of
GBP0.3m (2011: GBP6.2m)
() EPS is calculated on a diluted basis
BUSINESS AND FINANCIAL REVIEW
In FY 2011/12, Burberry delivered revenue up 24% and adjusted
profit before tax up 26%, balanced by channel, region and product
division.
The strong foundation that Burberry has built in recent years
will enable sustained, profitable growth over the long term, as
much of the investment shifts to drive the front end of the
business, especially in flagship markets, digital innovation and
customer insight.
Looking forward to FY 2012/13, while vigilant about the external
environment, Burberry plans to continue to invest to drive growth.
While the phasing of revenue and investment is expected to lead to
retail/wholesale operating margin being lower in the six months to
September 2012 than in the same period last year, Burberry expects
to deliver a further modest improvement in the retail/wholesale
operating margin in the full year.
Leverage the franchise
-- Burberry continued to extend its reach and impact through
innovative marketing, leveraging its brand content to engage and
connect with consumers globally. On Burberry World (burberry.com),
traffic and revenue were up double-digit. Burberry continued to
advance its leading position on social media in the luxury sector,
doubling the number of Facebook fans to 12 million at the year end,
extending its presence on key Chinese social media platforms and
launching new initiatives like Tweetwalk. With a focus on flagships
markets, Burberry increased investment in outdoor advertising at
key transport hubs and iconic urban locations.
-- Outerwear remained a primary growth driver in both retail and
wholesale, driven by product innovation, core replenishment and
digital marketing. Art of the Trench, Burberry's social media
platform, the runway shows and Burberry Bespoke all featured or led
with outerwear, keeping it top of mind with consumers.
-- Menswear is a significant growth opportunity for Burberry,
given its heritage. New initiatives such as tailoring, range
intensification, retail merchandising, specialised service modules
and increased mens only marketing all contributed to the
performance. Menswear grew by 26% underlying and represented 24% of
retail/wholesale revenue.
Intensify non-apparel
-- Non-apparel grew by 22% underlying to remain Burberry's largest product division at 39% of retail/wholesale revenue. Replenishment ended the year at around 60% of mainline non-apparel sales.
-- Large leather goods remained around half of mainline
non-apparel sales, helped by innovation in design, materials and
shapes.
-- Burberry continued to unlock the potential of global product
licences. The launch of the Burberry Body fragrance was supported
by a synchronised global marketing campaign across all platforms
and regions.
-- Men's non-apparel sales increased by over 50% in mainline
retail, with growth broadly spread across large leather goods,
small leather goods and soft accessories. Men's non-apparel already
accounts for around 25% of total non-apparel sales ordered through
burberry.com - a higher proportion than in-store.
Accelerate retail-led growth
-- With 31% underlying growth, retail accounted for 68% of
revenue in the full year (72% in the second half). Investment was
increasingly concentrated in the flagship markets, which benefit
from a high net worth local population and the travelling luxury
consumer. Together, these flagship markets accounted for
approaching 60% of mainline revenue.
-- Burberry continued to evolve its store portfolio, opening 23
mainline stores and 25 concessions during the year, while closing
10 and 16 respectively. The openings included the first larger
format stores in Hong Kong, Paris and Taipei to better showcase the
brand, product and digital innovation.
About a net 15 mainline stores are planned to open in FY
2012/13, biased towards larger format stores. These include the
new, relocated store in Regent Street, London, the rebuilt store in
Chicago and Pacific Place in Hong Kong. Capital expenditure for FY
2012/13 is planned at GBP180-200m (2012: GBP153m).
-- Burberry increased retail productivity, with comparable store
sales growth of 14%. Better assortment planning, strong execution
of monthly floorsets synchronised across all channels, improved
replenishment processes and further investment in global customer
service all contributed.
Invest in under-penetrated markets
-- Burberry completed the integration of its Chinese operations,
following the acquisition in September 2010. Continued progress was
made in developing the capabilities of the central team, enhancing
merchandising, marketing (including social media) and store service
levels, while implementing SAP and evolving the store
portfolio.
Comparable store sales growth for the year was well over 20%,
with the fourth quarter lower as the business started to
anniversary the benefits of the new practices implemented post
acquisition. At the year end, Burberry had 63 stores in mainland
China, accounting for about 12% of group retail/wholesale
revenue.
-- Burberry continues to invest in high growth luxury markets,
with three directly-operated stores in Brazil, two in Mexico and
seven in India. These markets are still in investment phase.
Between five to ten new stores are planned for Central and Latin
America in FY 2012/13, with further strengthening of the brand
presence and operational capabilities.
-- Americas wholesale is currently 8% of group retail/wholesale
revenue. With strong brand momentum, Burberry is in investment
phase, opening more brand-enhancing, dedicated shop-in-shops in key
US department stores.
Pursue operational excellence
-- With the global implementation of the SAP platform nearly
completed, Burberry is leveraging its technology investment to
drive productivity and efficiency through improved reporting,
assortment planning, procurement and replenishment processes, aided
by further investment in functional modules. Burberry is also
building a customer insight platform.
-- Burberry has further invested in its manufacturing and
logistics capabilities. For example, a new European distribution
hub was opened in Italy to improve speed of delivery and energy
efficiency, while reducing cost per unit.
-- Working with key technology partners, Burberry continues to
invest in a social enterprise platformto enable it to connect
better all the constituencies around the brand.
Revenue analysis
Revenue by channel
Year to 31 March % growth
GBP million 2012 2011 reported underlying
FX
--------------------------------- --------- -------- --------- -----------
Retail 1,270.3 962.3 32 31
Wholesale 478.3 440.6 9 8
Licensing 108.6 98.4 10 5
Revenue - continuing operations 1,857.2 1,501.3 24 23
Discontinued Spanish operations - 49.3
1,857.2 1,550.6
Revenue from continuing operations was GBP1,857m, an increase of
23% on an underlying basis.
Retail
68% of revenue (2011: 64%); generated from 192 mainline stores,
208 concessions within department stores, digital commerce and 44
outlets
-- Retail sales increased by 31% on an underlying basis (32% at reported FX)
-- Comparable store sales growth was 14% (H1: 16%; H2 12%)
-- The acquired stores in China contributed 6% of the 31%
underlying growth, up to the anniversary of their acquisition from
1 September 2010
-- The balance of growth (11%) came from new space
-- Average retail selling space increased by 14%, with the
acquired Chinese stores contributing an additional 5% space
In mainline stores in the year, growth was balanced, with
double-digit increases in all regions and product divisions,
underpinned by core outerwear and large leather goods, which
accounted for about half of sales. The penetration of replenishment
styles remained at about 50% of mainline revenue. New merchandising
strategies gained traction, including knitwear and men's tailoring
(doubling in the year from a small base).
Burberry London and Prorsum accounted for around 45% of mainline
apparel revenue (2011: 40%). Average selling prices continued to
increase due to product mix, pricing increases and better full
price sell-through. Digital commerce sales, including via iPads in
store, continued to outperform.
There was double-digit growth in mainline comparable store sales
in all four regions.
Asia Pacific
Retail accounted for about 85% of Asia Pacific revenue,
including a full year's contribution from the Chinese stores
acquired in September 2010.
There was double-digit comparable store sales growth in China,
Hong Kong, Singapore and Taiwan, while the Korean market was soft.
Burberry's small retail operations in Japan selling the global
non-apparel collection made solid progress.
Europe
Retail accounted for about two-thirds of Europe revenue. There
was double-digit mainline comparable stores sales growth in the UK,
France and Germany, especially in flagship markets. Southern
Europe, especially Italy, remained weak.
Americas
Retail accounted for about two-thirds of Americas revenue, with
double-digit comparable store sales growth in the year. Space was
added mainly in Brazil and Mexico, while continuing to rationalise
and upgrade US outlets.
Rest of World
Retail accounted for just over half of revenue for Rest of
World. The largest contributor was Burberry Middle East with 17
stores in the United Arab Emirates, Kuwait and Qatar. These
delivered double-digit comparable store sales growth during the
year, with some slowdown in the fourth quarter. Five franchise
stores in Saudi Arabia were transferred into a subsidiary in which
Burberry has a 60% stake. The business in India, which has seven
stores, continued to perform strongly.
Wholesale
26% of revenue (2011: 29%); generated from sales to department
stores, multi-brand specialty accounts, Emerging Market franchisees
and Travel Retail
-- Wholesale revenue increased by 8% underlying (9% at reported FX)
-- Excluding China, underlying growth was 14% (H1: 20%; H2: 7%)
-- Outerwear and consistent execution of monthly floorsets drove growth
Wholesale revenue growth was affected by the conversion from
wholesale to retail of the China operations, the five Saudi Arabia
stores and Spanish menswear; as well as the acceleration of the
planned rationalisation of the brand's distribution in the United
States and Europe, especially in the second half of the year.
Adjusting for all these factors, underlying growth for the year
would have been over 20% rather than 8%.
Asia Pacific
The majority of wholesale revenue in Asia Pacific is Travel
Retail which had another year of good growth, partly reflecting
increased tourism within flagship markets in the region.
Europe
Europe remains Burberry's largest wholesale region, accounting
for about 40% of group wholesale revenue. Outperformance with key
department store and other partners has more than compensated for
the continued rationalisation of small, non brand-enhancing
specialty accounts.
Americas
Wholesale growth in the Americas exceeded 20% in the year,
excluding the impact of the accelerated rationalisation of the
brand's distribution. With the move from generic outerwear
departments near completion, upgrading real estate within the key
department stores to support the brand's segmentation is a core
strategy. Around 30 dedicated shop-in-shops were opened, bringing
the total to over 80.
Rest of World
Wholesale revenue in Rest of World, which is mainly to franchise
partners, saw strong growth, especially in the two largest markets
of Turkey and Russia.
At the year end, Burberry had 57 franchise stores, up by a net
one during the year. Five stores in Saudi Arabia were transferred
to retail, with franchise stores opened in markets as diverse as
Thailand, South Africa and Croatia.
Licensing
6% of revenue (2011: 7%); of which approximately two-thirds from
Japan (split roughly three-quarters apparel and one-quarter from
various short-term, mainly non-apparel, licences), with the balance
from global product licences (fragrance, eyewear and timepieces)
and European wholesale childrenswear
-- Licensing revenue in the year increased by 5% on an underlying basis (up 10% at reported FX)
-- Consistent with full year guidance
At constant exchange rates, royalty income from Japan was
broadly unchanged from last year. Income from the apparel licence
increased in line with the 2009 renegotiation. This enabled further
non-renewals of short-term non-apparel licences, reducing profit by
about GBP7m.
Burberry continued to unlock the potential of its global licence
products, with 20% growth in royalty income. This was led by the
Burberry Body - Burberry's most successful fragrance launch to
date. The innovative global digital and outdoor advertising
campaign that supported the fragrance gave the brand unprecedented
visibility across all its major markets. Further progress was also
made on aligning the product and distribution of eyewear and
watches more closely with Burberry's luxury positioning.
Discussions continue between Burberry and Interparfums regarding
the potential establishment of a new operating model for the
Burberry fragrance and beauty business.
Operating profit analysis
Adjusted operating profit
Year to 31 March % growth
GBP million 2012 2011 reported underlying
FX
-------------------------------- -------- --------- --------- -------------
Retail/wholesale 286.9 219.5 31 31
Licensing 90.0 81.6 10 4
Adjusted operating profit 376.9 301.1 25 23
Adjusted operating margin 20.3% 20.1%
Adjusted operating profit increased by 25% to GBP376.9m,
including a GBP5.4m translation benefit from exchange rates.
Retail/wholesale adjusted operating profit
Year to 31 March % change
GBP million 2012 2011 reported
FX
-------------------------------- --------- -------- ---------
Revenue 1,748.6 1,402.9 25
Cost of sales (558.3) (491.6) (14)
--------- -------- ---------
Gross margin 1,190.3 911.3 31
Gross margin 68.1% 64.9%
Operating expenses (903.4) (691.8) (31)
--------- -------- ---------
Adjusted operating profit 286.9 219.5 31
Operating expenses as %
of sales 51.7% 49.3%
Adjusted operating margin 16.4% 15.6%
Retail/wholesale adjusted operating profit grew by 31% to
GBP286.9m. Burberry, as guided, dynamically managed gross margin
and operating expenses to enable further investment in the business
while modestly improving the operating margin - up 80 basis points
to 16.4%. The improvement in the operating margin was second half
weighted (H1: up 10bp; H2 up 130bp) reflecting the phasing of
investment and costs and the higher absolute revenue base in the
second half than the first half.
Gross margin for the year increased by 320 basis points to
68.1%. The key drivers were the conversion of China from wholesale
to retail, its subsequent outperformance, benefits from pricing and
sourcing and further channel and regional mix shifts.
Operating expenses as a percentage of revenue were 51.7%,
reflecting the shift to retail. As well as general inflation, the
increase in operating expenses is attributable to investment in
three key areas:
-- New space;
-- New markets, especially China until the anniversary of the
acquisition in September 2011, as well as Saudi Arabia, Central and
Latin America and India; and
-- Central functions to support the growth and momentum in the
business. Investment was increased in areas such as marketing,
client services, customer insight and IT.
Licensing operating profit
Year to 31 March Year to 31 March
2012
GBP million 2012 2011 underlying
----------------------- --------- --------- ------------------
Revenue 108.6 98.4 103.2
Cost of sales - - -
--------- --------- ------------------
Gross margin 108.6 98.4 103.2
Gross margin 100% 100%
Operating expenses (18.6) (16.8) (18.7)
--------- --------- ------------------
Operating profit 90.0 81.6 84.5
Operating margin 82.9% 82.9%
Licensing revenue increased by 5% on an underlying basis (up 10%
at reported FX). With slightly higher operating expenses as
Burberry strengthened its in-house team, operating margin was
unchanged at 82.9%, giving operating profit of GBP90.0m, including
a GBP5.5m FX benefit.
Exceptional items
Year to 31 March
GBP million 2012 2011
---------------------------- ---------- -------
Restructuring credit - 1.0
China put option liability
finance charge (10.2) (3.2)
(10.2) (2.2)
The restructuring credit of GBP1.0m in 2011 relates to the
release of a provision held in respect of the cost efficiency
programme announced in January 2009.
The China put option liability finance charge relates to the
fair value movement on the put option liability over the
non-controlling interest in the acquired Chinese business. In 2012,
the charge was GBP10.2m (2011: GBP3.2m) which has been treated as
an exceptional item.
Discontinued operations
Year to 31 March
GBP million 2012 2011
------------------------------- --------- --------
Spain operating profit/(loss) 2.5 (2.1)
Restructuring costs (2.8) (4.1)
Loss for discontinued Spanish
operations (0.3) (6.2)
In 2012, the GBP2.5m operating profit from the discontinued
Spanish operations was offset by restructuring costs, including a
further write-down of freehold assets held for sale.
Total restructuring cash spend was GBP8.6m.
Taxation
In FY 2011/12, Burberry had a tax charge of GBP101m (2011:
GBP83m), giving a tax rate on adjusted profit of 26.7% (2011:
27.9%).
The tax rate on adjusted profit for FY 2012/13 is currently
expected to be between 25-26%.
Net cashflow
Net cash at 31 March 2012 was GBP338m, up from GBP298m at 31
March 2011. The Group funded GBP153m of capital expenditure and
GBP24m relating to the China and Saudi Arabia acquisitions. Other
major outflows were tax (GBP108m), dividends (GBP99m) and the
purchase of shares by the Employee Share Option Plan (ESOP) Trust
to satisfy historic share scheme awards (GBP61m).
Capital expenditure at GBP153m (2011: GBP108m) was below
guidance, reflecting the timing of payments especially on the
larger projects. The spend was biased towards larger format new
stores and refurbishments, which accounted for about 25% of the
total in 2012, compared to around 10% for 2011.
Inventory at 31 March 2012 was GBP311m (2011: GBP248m), an
increase of 25% year-on-year. Over half of the growth was to
support new stores, with the balance largely reflecting increased
replenishment and stock in transit due to shipping by sea.
2012/13 outlook
Retail
In the year to 31 March 2013, Burberry plans a 12-14% increase
in average retail selling space, with a shift from smaller to
larger format stores. Burberry expects to open about a net 15
mainline stores, biased towards Emerging Markets and flagship
markets with high tourist inflows.
Wholesale
In the six months to 30 September 2012, Burberry projects
underlying wholesale revenue to increase by a mid single-digit
percentage, despite further rationalisation of the brand's
distribution in both Europe and the United States. Double-digit
percentage growth is again expected in key US department store
doors, Emerging Markets franchise partners and Asia Travel
Retail.
Licensing
In the year to 31 March 2013, Burberry expects licensing revenue
at constant and reported exchange rates to be broadly unchanged
year-on-year. The global product licences are again expected to
deliver double-digit percentage underlying growth. This will be
offset by the planned termination and downsizing of Japanese
non-apparel licences.
Retail/wholesale operating margin
In FY 2012/13, Burberry plans to continue to invest in areas
such as new stores, marketing and IT to drive growth. While the
phasing of revenue and investment is expected to lead to
retail/wholesale operating margin being lower in the six months to
30 September 2012 than in the same period last year, Burberry
expects to deliver a further modest improvement in the
retail/wholesale operating margin in the year to 31 March 2013.
Capital expenditure
For FY 2012/13, Burberry is planning capital expenditure of
between GBP180-200m. This will be focused on retail expansion, with
about one-third of the spend planned in larger format stores,
including Regent Street, London, Chicago and Pacific Place, Hong
Kong.
APPENDIX
Retail/wholesale revenue by destination
Year to 31 March % growth
GBP million 2012 2011 reported underlying
FX
--------------- --------- -------- --------- -----------
Asia Pacific 652.5 457.1 43 41
Europe 552.6 474.6 16 15
Americas 434.5 386.5 12 15
Rest of World 109.0 84.7 29 31
--------- -------- --------- -----------
1,748.6 1,402.9 25 24
Retail/wholesale revenue by product division
Year to 31 March % growth
GBP million 2012 2011 reported underlying
FX
--------------- --------- -------- --------- -----------
Non-apparel 689.4 563.3 22 22
Womenswear 582.5 456.6 28 27
Menswear 410.5 325.9 26 26
Childrenswear 65.7 55.5 19 19
Other 0.5 1.6 - -
--------- -------- --------- -----------
1,748.6 1,402.9 25 24
Store portfolio
Directly-operated stores
----------------------------------------- ----------
Mainline Concessions Outlets Total Franchise
stores stores
------------------ --------- ------------ -------- ------ ----------
At 31 March 2011 174 199 44 417 56
Additions 23 25 7 55 9
Closures (10) (16) (7) (33) (3)
Transfers* 5 - - 5 (5)
------------------ --------- ------------ -------- ------ ----------
At 31 March 2012 192 208 44 444 57
* Transfers are the five stores in Saudi Arabia
Store portfolio by region
Directly-operated stores
------------------ ----------------------------------------- ----------
At 31 March 2012 Mainline Concessions Outlets Total Franchise
stores stores
------------------ --------- ------------ -------- ------ ----------
Asia Pacific 54 152 10 216 17
Europe 38 53 16 107 23
Americas* 74 1 17 92 3
Rest of World 26 2 1 29 14
------------------ --------- ------------ -------- ------ ----------
Total 192 208 44 444 57
* Three franchise stores in the Americas are in Mexico
Retail net selling square footage
At 31 March 000s square feet
------------- -----------------
2008 740
2009 845
2010 890
2011 1,010
2012 1,145
GROUP INCOME STATEMENT
Year to Year to
31 March 31 March
2012 2011
Note GBPm GBPm
================================================ ==== ========= =========
Continuing operations
Revenue 2 1,857.2 1,501.3
Cost of sales (558.3) (491.6)
================================================ ==== ========= =========
Gross profit 1,298.9 1,009.7
Net operating expenses 3 (922.0) (707.6)
================================================ ==== ========= =========
Operating profit 376.9 302.1
Financing
================================================ ==== ========= =========
Interest income 2.9 1.9
Interest expense (3.6) (5.1)
Other financing charges (10.2) (3.2)
================================================ ==== ========= =========
Net finance charge 5 (10.9) (6.4)
================================================ ==== ========= =========
Profit before taxation 4 366.0 295.7
Taxation 6 (100.6) (83.2)
================================================ ==== ========= =========
Profit for the year from continuing operations 265.4 212.5
Loss for the year from discontinued operations 20 (0.3) (6.2)
================================================ ==== ========= =========
Profit for the year 265.1 206.3
================================================ ==== ========= =========
Attributable to:
Equity holders of the Company 263.3 208.4
Non-controlling interest 1.8 (2.1)
================================================ ==== ========= =========
Profit for the year 265.1 206.3
================================================ ==== ========= =========
Earnings per share
- basic 7 60.4p 47.9p
- diluted 7 59.3p 46.9p
================================================ ==== ========= =========
Earnings per share from continuing operations
- basic 7 60.4p 49.3p
- diluted 7 59.3p 48.3p
================================================ ==== ========= =========
GBPm GBPm
Reconciliation of adjusted profit before
taxation:
Profit before taxation 366.0 295.7
Exceptional items:
- restructuring credit relating to continuing
operations 4 - (1.0)
- put option liability finance charge 4 10.2 3.2
================================================ ==== ========= =========
Adjusted profit before taxation - non-GAAP
measure 376.2 297.9
================================================ ==== ========= =========
Adjusted earnings per share - non-GAAP
measure
- basic 7 62.8p 49.9p
- diluted 7 61.6p 48.9p
================================================ ==== ========= =========
Dividends per share
- interim 8 7.00p 5.00p
- proposed final (not recognised as a liability
at 31 March) 8 18.00p 15.00p
================================================ ==== ========= =========
GROUP STATEMENT OF COMPREHENSIVE INCOME
Year to Year to
31 March 31 March
2012 2011
Note GBPm GBPm
=========================================== ==== ========= =========
Profit for the year 265.1 206.3
Other comprehensive income:
- cash flow hedges 17 3.3 4.9
- foreign currency translation differences (3.8) (15.3)
Tax on other comprehensive income:
- cash flow hedges (0.8) (1.4)
- foreign currency translation differences (0.2) 2.0
=========================================== ==== ========= =========
Other comprehensive expense for the year,
net of tax (1.5) (9.8)
=========================================== ==== ========= =========
Total comprehensive income for the year 263.6 196.5
=========================================== ==== ========= =========
Total comprehensive income attributable
to:
Equity holders of the Company 261.2 198.8
Non-controlling interest 2.4 (2.3)
=========================================== ==== ========= =========
263.6 196.5
=========================================== ==== ========= =========
GROUP BALANCE SHEET
As at As at
31 March 31 March
2012 2011
Note GBPm GBPm
============================================= ==== ========= =========
ASSETS
Non-current assets
Intangible assets 9 133.1 114.7
Property, plant and equipment 10 328.8 281.8
Investment properties 2.8 3.0
Deferred tax assets 84.1 70.4
Trade and other receivables 11 22.3 15.2
Derivative financial assets 14.7 9.2
============================================= ==== ========= =========
585.8 494.3
============================================= ==== ========= =========
Current assets
Inventories 12 311.1 247.9
Trade and other receivables 11 145.2 132.5
Derivative financial assets 3.2 1.6
Income tax receivables 10.1 8.3
Cash and cash equivalents 13 546.9 466.3
============================================= ==== ========= =========
1,016.5 856.6
============================================= ==== ========= =========
Assets classified as held for sale 20 8.3 13.5
============================================= ==== ========= =========
1,024.8 870.1
============================================= ==== ========= =========
Total assets 1,610.6 1,364.4
============================================= ==== ========= =========
LIABILITIES
Non-current liabilities
Trade and other payables 14 (104.9) (84.4)
Deferred tax liabilities (1.4) (1.8)
Derivative financial liabilities (0.2) -
Retirement benefit obligations (0.8) (0.6)
Provisions for other liabilities and charges 15 (15.1) (9.6)
============================================= ==== ========= =========
(122.4) (96.4)
============================================= ==== ========= =========
Current liabilities
Bank overdrafts and borrowings 16 (208.6) (168.4)
Derivative financial liabilities (1.9) (3.9)
Trade and other payables 14 (324.4) (283.4)
Provisions for other liabilities and charges 15 (8.2) (18.6)
Income tax liabilities (53.7) (60.0)
============================================= ==== ========= =========
(596.8) (534.3)
============================================= ==== ========= =========
Total liabilities (719.2) (630.7)
============================================= ==== ========= =========
Net assets 891.4 733.7
============================================= ==== ========= =========
EQUITY
Capital and reserves attributable to the
Company's equity holders
Ordinary share capital 17 0.2 0.2
Share premium account 202.6 192.5
Capital reserve 17 33.9 28.9
Hedging reserve 17 4.9 2.4
Foreign currency translation reserve 17 118.6 123.2
Retained earnings 507.1 366.4
============================================= ==== ========= =========
867.3 713.6
Non-controlling interest in equity 24.1 20.1
============================================= ==== ========= =========
Total equity 891.4 733.7
============================================= ==== ========= =========
GROUP STATEMENT OF CHANGES IN EQUITY
Attributable to owners
of the Company
============================================
Ordinary Share
Share premium Other Retained Non-controlling Total
capital account reserves earnings Total interest equity
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=========================== ==== ========= ========= ========== ========== ====== =============== ==========
Balance as at 1 April 2010 0.2 186.1 162.4 241.4 590.1 13.4 603.5
=========================== ==== ========= ========= ========== ========== ====== =============== ==========
Profit/(Loss) for the year - - - 208.4 208.4 (2.1) 206.3
Other comprehensive income:
Cash flow hedges 17 - - 4.9 - 4.9 - 4.9
Foreign currency
translation differences - - (15.1) - (15.1) (0.2) (15.3)
Tax on other comprehensive
income - - 0.6 - 0.6 - 0.6
=========================== ==== ========= ========= ========== ========== ====== =============== ==========
Total comprehensive
(expense)/income for the
year - - (9.6) 208.4 198.8 (2.3) 196.5
=========================== ==== ========= ========= ========== ========== ====== =============== ==========
Transfer between reserves - - 1.7 (1.7) - - -
Transactions with owners:
Employee share incentive
schemes
- value of share options
granted - - - 28.3 28.3 - 28.3
- value of share options
transferred to liabilities - - - (0.7) (0.7) - (0.7)
- tax on share options
granted - - - 15.2 15.2 - 15.2
- exercise of share awards - 6.4 - (5.6) 0.8 - 0.8
Purchase of own shares by
ESOP trusts - - - (6.6) (6.6) - (6.6)
Sale of own shares by ESOP
trusts - - - 0.3 0.3 - 0.3
Business combinations - - - - - 3.3 3.3
Liability on put option
over non-controlling
interest - - - (45.2) (45.2) - (45.2)
Capital contribution by
non-controlling interest - - - - - 7.0 7.0
Dividends paid in the year - - - (67.4) (67.4) (1.3) (68.7)
=========================== ==== ========= ========= ========== ========== ====== =============== ==========
Balance as at 31 March 2011 0.2 192.5 154.5 366.4 713.6 20.1 733.7
=========================== ==== ========= ========= ========== ========== ====== =============== ==========
Profit for the year - - - 263.3 263.3 1.8 265.1
Other comprehensive income:
Cash flow hedges 17 - - 3.3 - 3.3 - 3.3
Foreign currency
translation differences - - (4.4) - (4.4) 0.6 (3.8)
Tax on other comprehensive
income - - (1.0) - (1.0) - (1.0)
=========================== ==== ========= ========= ========== ========== ====== =============== ==========
Total comprehensive
(expense)/income for the
year - - (2.1) 263.3 261.2 2.4 263.6
=========================== ==== ========= ========= ========== ========== ====== =============== ==========
Transfer between reserves - - 5.0 (5.0) - - -
Transactions with owners:
Employee share incentive
schemes
- value of share options
granted - - - 31.8 31.8 - 31.8
- value of share options
transferred to liabilities - - - (0.8) (0.8) - (0.8)
- tax on share options
granted - - - 17.4 17.4 - 17.4
- exercise of share awards - 10.1 - (9.5) 0.6 - 0.6
Purchase of own shares by
ESOP trusts - - - (60.7) (60.7) - (60.7)
Sale of own shares by ESOP
trusts - - - 0.1 0.1 - 0.1
Capital contribution by
non-controlling interest - - - - - 4.9 4.9
Dividends paid in the year - - - (95.9) (95.9) (3.3) (99.2)
=========================== ==== ========= ========= ========== ========== ====== =============== ==========
Balance as at 31 March 2012 0.2 202.6 157.4 507.1 867.3 24.1 891.4
=========================== ==== ========= ========= ========== ========== ====== =============== ==========
GROUP STATEMENT OF CASH FLOWS
Year to Year to
31 March 31 March
2012 2011
Note GBPm GBPm
=============================================== ==== ========= =========
Cash flows from operating activities
Operating profit 376.9 302.1
Operating loss from discontinued operations 20 (0.3) (6.2)
Depreciation 74.3 53.7
Amortisation 13.3 8.9
Net impairment charges 6.8 -
Write-down of assets held for sale 20 4.5 3.7
Loss on disposal of property, plant and
equipment and intangible assets 0.3 1.1
Fair value gains on derivative instruments (5.7) (6.2)
Charges in respect of employee share incentive
schemes 31.8 28.3
Increase in inventories (61.8) (58.9)
Increase in receivables (17.6) (11.4)
Increase in payables 60.0 51.3
=============================================== ==== ========= =========
Cash generated from operating activities 482.5 366.4
Interest received 2.7 1.9
Interest paid (3.3) (5.1)
Taxation paid (108.2) (98.1)
=============================================== ==== ========= =========
Net cash generated from operating activities 373.7 265.1
Cash flows from investing activities
Purchase of property, plant and equipment (126.1) (86.5)
Purchase of intangible assets (27.0) (21.9)
Acquisition of subsidiaries, net of cash
acquired 19 (23.5) (51.9)
=============================================== ==== ========= =========
Net cash outflow from investing activities(1) (176.6) (160.3)
Cash flows from financing activities
Dividends paid in the year 8 (95.9) (67.4)
Dividends paid to non-controlling interest (3.3) (1.3)
Capital contributions by non-controlling
interest 4.9 7.0
Issue of ordinary share capital 0.6 0.8
Sale of own shares by ESOP trusts 0.1 0.3
Purchase of own shares by ESOP trusts (60.7) (6.6)
Proceeds from borrowings - 24.0
Repayments of borrowings - (24.1)
=============================================== ==== ========= =========
Net cash outflow from financing activities(1) (154.3) (67.3)
Net increase in cash and cash equivalents 42.8 37.5
Effect of exchange rate changes (2.4) (1.5)
Cash and cash equivalents at beginning
of year 299.2 263.2
=============================================== ==== ========= =========
Cash and cash equivalents at end of year 339.6 299.2
=============================================== ==== ========= =========
ANALYSIS OF NET CASH
As at As at
31 March 31 March
2012 2011
Note GBPm GBPm
============================================= ==== ========= =========
Cash and cash equivalents as per the Balance
Sheet 13 546.9 466.3
Bank overdrafts 16 (207.3) (167.1)
============================================= ==== ========= =========
Cash and cash equivalents per the Statement
of Cash Flows 339.6 299.2
============================================= ==== ========= =========
Bank and other borrowings 16 (1.3) (1.3)
============================================= ==== ========= =========
Net cash 338.3 297.9
============================================= ==== ========= =========
(1) Net cash outflows from investing and financing activities
for the year to 31 March 2011 have been re-presented to reflect the
reclassification of capital contributions by non-controlling
interest.
NOTES TO THE FINANCIAL INFORMATION
1. Basis of preparation
The financial information contained within this report has been
prepared in accordance with EU endorsed International Financial
Reporting Standards (IFRS), IFRS Interpretations Committee (IFRS
IC) interpretations and parts of the Companies Act 2006 applicable
to companies reporting under IFRS. This financial information does
not constitute the Burberry Group's (the Group) Annual Report and
Accounts within the meaning of section 435 of the Companies Act
2006.
Statutory accounts for the year ended 31 March 2011 have been
filed with the Registrar of Companies, and those for 2012 will be
delivered in due course. The reports of the auditors on those
statutory accounts for years ended 31 March 2011 and 31 March 2012
were unqualified, did not contain an emphasis of matter paragraph
and did not contain a statement under either section 400(2) or
section 498(3) of the Companies Act 2006.
The principle accounting policies applied in the preparation of
the consolidated financial statements are consistent with those set
out in the statutory accounts for 2010/11.
2. Segmental analysis
The Chief Operating Decision Maker has been identified as the
Board of Directors. The Board reviews the Group's internal
reporting in order to assess performance and allocate resources.
Management has determined the operating segments based on the
reports used by the Board.
The Board considers Burberry's business through its two channels
to market, being Retail/Wholesale and Licensing. Retail/Wholesale
revenues are generated by the sale of luxury goods through Burberry
mainline stores, concessions, outlets and digital commerce as well
as Burberry franchisees, prestige department stores globally and
multi-brand specialty accounts.
The flow of global product between Retail and Wholesale channels
and across our regions is monitored and optimised at a corporate
level and implemented via the Group's inventory hubs situated in
Asia, Europe and the US. Licensing revenues are generated through
the receipt of royalties from Burberry's partners in Japan and
global licensees of fragrances, eyewear, timepieces and European
childrenswear.
The Board assesses channel performance based on a measure of
adjusted operating profit. This measurement basis excludes the
effects of exceptional items. The measure of earnings for each
operating segment that is reviewed by the Board includes an
allocation of corporate and central costs. Interest income and
charges are not included in the result for each operating segment
that is reviewed by the Board.
Retail/Wholesale Licensing Total
==================== ==================== ====================
Year to Year to Year to Year to Year to Year to
31 March 31 March 31 March 31 March 31 March 31 March
2012 2011 2012 2011 2012 2011
GBPm GBPm GBPm GBPm GBPm GBPm
============================== ========= ========= ========= ========= ========= =========
Retail 1,270.3 962.3 - - 1,270.3 962.3
Wholesale 478.3 440.6 - - 478.3 440.6
Licensing - - 118.9 116.5 118.9 116.5
============================== ========= ========= ========= ========= ========= =========
Total segment revenue 1,748.6 1,402.9 118.9 116.5 1,867.5 1,519.4
Inter-segment revenue(1) - - (10.3) (18.1) (10.3) (18.1)
============================== ========= ========= ========= ========= ========= =========
Revenue from external
customers 1,748.6 1,402.9 108.6 98.4 1,857.2 1,501.3
============================== ========= ========= ========= ========= ========= =========
Depreciation and amortisation 87.6 58.1 - - 87.6 58.1
Net impairment charges 6.8 - - - 6.8 -
Other non-cash expenses
- Share based payments 25.4 22.6 6.4 5.7 31.8 28.3
Adjusted operating profit 286.9 219.5 90.0 81.6 376.9 301.1
============================== ========= ========= ========= ========= ========= =========
Interest receivable and
similar income 2.9 1.9
Interest payable and
similar charges (3.6) (5.1)
Exceptional items(2) (10.2) (2.2)
============================== ========= ========= ========= ========= ========= =========
Profit before taxation 366.0 295.7
============================== ========= ========= ========= ========= ========= =========
(1) Inter-segment transfers or transactions are entered into
under the normal commercial terms and conditions that would be
available to unrelated third parties.
(2) Refer to note 4 for details of exceptional items.
Retail/Wholesale Licensing Total
==================== ==================== ====================
Year to Year to Year to Year to Year to Year to
31 March 31 March 31 March 31 March 31 March 31 March
2012 2011 2012 2011 2012 2011
GBPm GBPm GBPm GBPm GBPm GBPm
========================== ========= ========= ========= ========= ========= =========
Additions to non-current
assets 150.7 123.1 - - 150.7 123.1
Total segment assets 875.5 728.6 4.5 4.2 880.0 732.8
========================== ========= ========= ========= ========= ========= =========
Goodwill 81.2 73.1
Cash and cash equivalents 546.9 466.3
Taxation 94.2 78.7
Assets held for sale 8.3 13.5
========================== ========= ========= ========= ========= ========= =========
Total assets per Balance
Sheet 1,610.6 1,364.4
========================== ========= ========= ========= ========= ========= =========
Year to Year to
31 March 31 March
2012 2011
Revenue by product GBPm GBPm
==================== ========= =========
Non-apparel 689.4 563.3
Womenswear 582.5 456.6
Menswear 410.5 325.9
Childrenswear/Other 66.2 57.1
==================== ========= =========
Retail/Wholesale 1,748.6 1,402.9
Licensing 108.6 98.4
==================== ========= =========
Total 1,857.2 1,501.3
==================== ========= =========
Year to Year to
31 March 31 March
2012 2011
Revenue by destination GBPm GBPm
======================= ========= =========
Asia Pacific 652.5 457.1
Europe 552.6 474.6
Americas 434.5 386.5
Rest of the world 109.0 84.7
======================= ========= =========
Retail/Wholesale 1,748.6 1,402.9
Licensing 108.6 98.4
======================= ========= =========
Total 1,857.2 1,501.3
======================= ========= =========
Revenue to external customers originating in the UK totalled
GBP471.2m for the year to 31 March 2012 (2011: GBP402.9m).
Revenue to external customers originating in foreign countries
totalled GBP1,386.0m for the year to 31 March 2012 (2011:
GBP1,098.4m). This amount includes GBP392.9m of external revenues
originating in the US (2011: GBP357.6m) and GBP213.9m of external
revenues originating in China (2011: GBP93.1m).
The total of non-current assets other than financial instruments
and deferred tax assets located in the UK is GBP111.7m (2011:
GBP90.2m). The remaining GBP375.3m of non-current assets are
located in other countries (2011: GBP324.5m), with GBP146.8m
located in the US (2011: GBP141.3m) and GBP67.0m located in China
(2011: GBP57.6m).
3. Net operating expenses
Year to Year to
31 March 31 March
2012 2011
Note GBPm GBPm
============================================== ==== ========= =========
Selling and distribution costs 459.4 333.5
Administrative expenses 463.4 375.9
Property rental income under operating leases (0.8) (0.8)
Exceptional items
Restructuring costs 4 - (1.0)
============================================== ==== ========= =========
Total 922.0 707.6
============================================== ==== ========= =========
4. Profit before taxation
Year to Year to
31 March 31 March
2012 2011
GBPm GBPm
============================================================= ========= =========
Profit before taxation is stated after charging/(crediting):
Depreciation of property, plant and equipment
- within cost of sales 0.3 0.3
- within distribution costs 13.4 7.6
- within administrative expenses 60.5 41.3
Amortisation of intangible assets (included within
administrative expenses) 13.3 8.9
Loss on disposal of property, plant and equipment
and intangible assets 0.3 1.1
Net impairment charge relating to retail assets 3.8 -
Net impairment charge relating to intangible assets 3.0 -
Employee costs 358.7 298.9
Operating lease rentals
- minimum lease payments 112.0 88.5
- contingent rents 70.9 51.7
Net exchange loss/(gain) included in the Income
Statement 3.3 (1.0)
Trade receivables net impairment charge 1.4 1.3
Exceptional items
Put option liability finance charges 10.2 3.2
Restructuring costs - (1.0)
============================================================= ========= =========
The above table excludes any amounts relating to the
discontinued Spanish operations. Depreciation of property, plant
and equipment in the discontinued Spanish operation was nil for the
current year (2011: GBP4.4m).
Exceptional financing charges
The exceptional financing charge for the years ended 31 March
2012 and 31 March 2011 relates to fair value movements and the
unwinding of the discount on the put option liability over the
non-controlling interest in Burberry (Shanghai) Trading Co., Ltd.
Refer to note 14 for further details of the carrying value of the
put option liability.
Exceptional operating items
The year to 31 March 2011 includes an exceptional credit for the
release of GBP1.0m of the restructuring provision held in respect
of the cost efficiency programme announced in the year to 31 March
2009.
Auditor remuneration
Fees incurred during the year in relation to audit and non-audit
services are analysed below. All work performed by the external
auditors is controlled by an authorisation policy agreed by the
Audit Committee. The overriding principle precludes the auditors
from engaging in non-audit services that would compromise their
independence. Non-audit services are provided by the auditors where
they are best placed to provide the service due to their previous
experience or market leadership in a particular area.
Year to Year to
31 March 31 March
2012 2011
GBPm GBPm
======================================================== ========= =========
Audit services in respect of the accounts of the
Company and consolidation 0.3 0.3
Audit services in respect of the accounts of subsidiary
companies 1.1 0.9
======================================================== ========= =========
1.4 1.2
Audit related assurance services 0.2 0.1
Services relating to taxation
- compliance services 0.1 0.3
- advisory services 0.3 0.3
Other non-audit related services 0.1 -
======================================================== ========= =========
Total 2.1 1.9
======================================================== ========= =========
The Group has early adopted the statutory changes in relation to
the Group auditor's remuneration in line with the UK Companies'
Regulations 2011 (Statutory Instrument 2011/2198) for the year
ended 31 March 2012.
5. Net finance charge
Year to Year to
31 March 31 March
2012 2011
Note GBPm GBPm
=============================================== ==== ========= =========
Bank interest income 2.9 1.9
=============================================== ==== ========= =========
Interest income 2.9 1.9
=============================================== ==== ========= =========
Interest expense on bank loans and overdrafts (3.6) (5.1)
Interest expense (3.6) (5.1)
Other financing charges - put option liability 4 (10.2) (3.2)
=============================================== ==== ========= =========
Net finance charge (10.9) (6.4)
=============================================== ==== ========= =========
6. Taxation
Analysis of charge for the year recognised in the Group Income
Statement:
Year to Year to
31 March 31 March
2012 2011
GBPm GBPm
================================================== ========= =========
Current tax
UK corporation tax
Current tax on income for the year to 31 March
2012 at 26% (2011: 28%) 79.9 69.5
Double taxation relief (1.7) (2.2)
Adjustments in respect of prior years (1.7) (5.2)
================================================== ========= =========
76.5 62.1
Foreign tax
Current tax on income for the year 36.8 39.7
Adjustments in respect of prior years (1.5) 0.2
================================================== ========= =========
Total current tax 111.8 102.0
================================================== ========= =========
Deferred tax
UK deferred tax
Origination and reversal of temporary differences (1.1) (4.8)
Impact of changes to tax rates 1.3 1.0
Adjustments in respect of prior years (0.4) (1.7)
================================================== ========= =========
(0.2) (5.5)
Foreign deferred tax
Origination and reversal of temporary differences (16.0) (11.0)
Impact of changes to tax rates (0.1) -
Adjustments in respect of prior years 5.1 (2.3)
================================================== ========= =========
Total deferred tax (11.2) (18.8)
================================================== ========= =========
Total tax charge on profit 100.6 83.2
================================================== ========= =========
Analysis of charge for the year recognised in other
comprehensive income and directly in equity:
Year to Year to
31 March 31 March
2012 2011
GBPm GBPm
======================================================== ========= =========
Current tax
Recognised in other comprehensive income
Current tax charge/(credit) on exchange differences
on loans (foreign currency translation reserve) 0.1 (0.9)
======================================================== ========= =========
Total current tax recognised in other comprehensive
income 0.1 (0.9)
======================================================== ========= =========
Recognised in equity
Current tax credit on share options (retained earnings) (13.8) (2.1)
======================================================== ========= =========
Total current tax recognised directly in equity (13.8) (2.1)
======================================================== ========= =========
Deferred tax
Recognised in other comprehensive income
Deferred tax (credit)/charge on cash flow hedges
deferred in equity (hedging reserve) (0.6) 2.2
Deferred tax charge/(credit) on cash flow hedges
transferred to income (hedging reserve) 1.4 (0.8)
Deferred tax charge/ (credit) on exchange differences
on loans (foreign currency translation reserve) 0.1 (1.1)
======================================================== ========= =========
Total deferred tax recognised in other comprehensive
income 0.9 0.3
======================================================== ========= =========
Recognised in equity
Deferred tax credit on share options (retained
earnings) (3.6) (13.1)
======================================================== ========= =========
Total deferred tax recognised directly in equity (3.6) (13.1)
======================================================== ========= =========
The tax rate applicable on profit varied from the standard rate
of corporation tax in the UK due to the following factors:
Year to Year to
31 March 31 March
2012 2011
GBPm GBPm
================================================= ========= =========
Tax at 26% (2011: 28%) on profit before taxation 95.2 82.8
Rate adjustments relating to overseas profits (8.9) (8.0)
Permanent differences 8.3 11.8
Current year tax losses not recognised 3.2 4.6
Adjustments in respect of prior years 1.5 (9.0)
Adjustments to deferred tax relating to changes
in tax rates 1.3 1.0
================================================= ========= =========
Total taxation charge 100.6 83.2
================================================= ========= =========
Total taxation recognised in the Group Income Statement arises
on:
Year to Year to
31 March 31 March
2012 2011
GBPm GBPm
================================ ========= =========
Adjusted profit before taxation 100.6 83.0
Exceptional items - 0.2
================================ ========= =========
Total taxation charge 100.6 83.2
================================ ========= =========
7. Earnings per share
The calculation of basic earnings per share is based on profit
or loss attributable to equity holders of the Company for the year
divided by the weighted average number of ordinary shares in issue
during the year. Basic and diluted earnings per share based on
adjusted profit before taxation are also disclosed to indicate the
underlying profitability of the Group.
Year to Year to
31 March 31 March
2012 2011
GBPm GBPm
==================================================== ========= =========
Attributable profit for the year before exceptional
items(1) and discontinued operations 273.8 217.0
Effect of exceptional items(1) (after taxation) (10.2) (2.4)
==================================================== ========= =========
Attributable profit for the year from continuing
operations 263.6 214.6
==================================================== ========= =========
Attributable loss from discontinued operations(2) (0.3) (6.2)
==================================================== ========= =========
Attributable profit for the year 263.3 208.4
==================================================== ========= =========
(1) Refer to note 4 for details of exceptional items.
(2) Refer to note 20 for details of basic and diluted earnings
per share from discontinued operations.
The weighted average number of ordinary shares represents the
weighted average number of Burberry Group plc ordinary shares in
issue throughout the year, excluding ordinary shares held in the
Group's employee share option plan trusts (ESOP trusts).
Diluted earnings per share is based on the weighted average
number of ordinary shares in issue during the year. In addition,
account is taken of any options and awards made under the employee
share incentive schemes, which will have a dilutive effect when
exercised.
Year to Year to
31 March 31 March
2012 2011
Millions Millions
==================================================== ========= =========
Weighted average number of ordinary shares in issue
during the year 435.9 435.0
Dilutive effect of the employee share incentive
schemes 8.4 9.0
==================================================== ========= =========
Diluted weighted average number of ordinary shares
in issue during the year 444.3 444.0
==================================================== ========= =========
8. Dividends paid to owners of the Company
Year to Year to
31 March 31 March
2012 2011
GBPm GBPm
==================================================== ========= =========
Prior year final dividend paid 15.00p per share
(2011: 10.50p) 65.4 45.7
Interim dividend paid 7.00p per share (2011: 5.00p) 30.5 21.7
==================================================== ========= =========
Total 95.9 67.4
==================================================== ========= =========
A final dividend in respect of the year to 31 March 2012 of
18.00p (2011: 15.00p) per share, amounting to GBP79.0m (2011:
GBP65.4m), has been proposed for approval by the shareholders at
the Annual General Meeting subsequent to the balance sheet date.
The final dividend to Burberry Group plc shareholders has not been
recognised as a liability at the year end and will be paid on 2
August 2012 to shareholders on the register at the close of
business on 6 July 2012.
9. Intangible assets
Trade marks
and other
intangible Computer
Goodwill assets software Total
Cost GBPm GBPm GBPm GBPm
=================================== ======== =========== ========= =====
As at 1 April 2010 34.9 17.1 38.2 90.2
Effect of foreign exchange rate
changes (1.9) 0.1 (0.4) (2.2)
Additions - 6.6 14.4 21.0
Disposals - - (0.4) (0.4)
Business combination 40.1 - - 40.1
=================================== ======== =========== ========= =====
As at 31 March 2011 73.1 23.8 51.8 148.7
Effect of foreign exchange rate
changes 1.5 (0.9) (0.1) 0.5
Additions - 1.1 22.7 23.8
Disposals - (0.2) (5.8) (6.0)
Reclassification from assets under
construction (note 10) - 1.9 1.3 3.2
Business combinations (note 19) 6.6 - - 6.6
=================================== ======== =========== ========= =====
As at 31 March 2012 81.2 25.7 69.9 176.8
=================================== ======== =========== ========= =====
Accumulated amortisation
=================================== ======== =========== ========= =====
As at 1 April 2010 - 9.0 16.6 25.6
Effect of foreign exchange rate
changes - 0.1 (0.2) (0.1)
Charge for the year - 1.9 7.0 8.9
Disposals - - (0.4) (0.4)
=================================== ======== =========== ========= =====
As at 31 March 2011 - 11.0 23.0 34.0
Effect of foreign exchange rate
changes - (0.5) (0.1) (0.6)
Charge for the year - 2.0 11.3 13.3
Disposals - (0.2) (5.8) (6.0)
Net impairment charge on assets - - 3.0 3.0
=================================== ======== =========== ========= =====
As at 31 March 2012 - 12.3 31.4 43.7
=================================== ======== =========== ========= =====
Net book value
=================================== ======== =========== ========= =====
As at 31 March 2012 81.2 13.4 38.5 133.1
As at 31 March 2011 73.1 12.8 28.8 114.7
=================================== ======== =========== ========= =====
Impairment testing of goodwill
The carrying value of the goodwill allocated to cash generating
units:
As at As at
31 March 31 March
2012 2011
GBPm GBPm
====== ========= =========
China 41.9 38.9
Korea 22.8 23.4
Other 16.5 10.8
====== ========= =========
Total 81.2 73.1
====== ========= =========
The Group tests goodwill for impairment annually or where there
is an indication that goodwill might be impaired. The recoverable
amount of all cash generating units has been determined on a
value-in-use basis. Value-in-use calculations for each cash
generating unit are based on projected three year pre-tax
discounted cash flows together with a discounted terminal value.
The cash flows have been discounted at pre-tax rates reflecting the
Group's weighted average cost of capital adjusted for country
specific tax rates and risks. Where the cash generating unit has a
non-controlling interest which was recognised as its proportionate
interest in the net identifiable assets of the acquired subsidiary
at the acquisition date, the carrying amount of the goodwill has
been grossed up, to include the goodwill attributable to the
non-controlling interest, for the purpose of impairment testing the
goodwill attributable to the cash generating unit. The key
assumptions contained in the value-in-use calculations include the
future revenues, the margins achieved, the assumed life of the
business and the discount rates applied.
The value-in-use calculations for the initial review have been
prepared using management's approved financial plans for the year
ending 31 March 2013 as the source for the first year cash flow.
These plans contain management's best view of the expected
performance for the year ended 31 March 2013, based on the
performance achieved in the current year and management's knowledge
of the market environment and future business plans.
In China and Korea, which contain the most material goodwill
balances, the cash flows included in the value-in-use calculation
for the following two years and for the terminal value have assumed
no growth beyond that contained within the financial plan for the
year ending 31 March 2013. The Group carries out an initial review
for indication of impairment using conservative growth assumptions
beyond the first year cash flow. Should this initial review
indicate that impairment may have arisen, a further review will be
carried out, using more detailed assumptions, to confirm and then
quantify any potential impairment. This approach is considered
appropriate by management due to the amount of headroom between
recoverable amount and carrying value of goodwill at present.
The adjusted weighted average cost of capital rates for China
and Korea were 14.4% and 12.5% respectively (2011: 13.5%;
14.1%).
No impairment has been recognised in respect of the carrying
value of the goodwill balance in the year as, for each cash
generating unit, the recoverable amount of goodwill exceeds its
carrying value.
As the initial review using conservative assumptions does not
indicate that impairment may have arisen, management do not
consider it appropriate to conduct a further sensitivity analysis
because a reasonably possible change in assumptions would not
result in an impairment.
10. Property, plant and equipment
Fixtures,
Freehold land and Leasehold fittings and Assets in the course
buildings improvements equipment (1) of construction Total
Cost GBPm GBPm GBPm GBPm GBPm
===================== ==================== ===================== ==================== ==================== ======
As at 1 April 2010 92.2 169.2 226.2 9.6 497.2
Effect of foreign
exchange rate
changes (3.7) (6.5) (4.4) - (14.6)
Additions - 18.7 62.2 21.4 102.3
Disposals - (0.3) (23.9) (0.2) (24.4)
Reclassification from
assets under
construction - 4.3 6.6 (10.9) -
Transfers to
investment
properties (3.8) - - - (3.8)
Business combination
(note 19) - - 6.3 - 6.3
Transfers to assets
held for sale (note
20) (29.6) - (6.6) - (36.2)
===================== ==================== ===================== ==================== ==================== ======
As at 31 March 2011 55.1 185.4 266.4 19.9 526.8
Effect of foreign
exchange rate
changes (0.1) (1.0) (3.4) 0.3 (4.2)
Additions 0.5 40.5 54.2 31.7 126.9
Disposals (1.3) (8.0) (32.8) - (42.1)
Reclassification from
assets under
construction - 3.2 11.0 (17.4) (3.2)
Business combination
(note 19) - - 3.0 - 3.0
Reclassification(2) - 27.5 (27.5) - -
===================== ==================== ===================== ==================== ==================== ======
As at 31 March 2012 54.2 247.6 270.9 34.5 607.2
===================== ==================== ===================== ==================== ==================== ======
Accumulated
depreciation and
impairment
===================== ==================== ===================== ==================== ==================== ======
As at 1 April 2010 33.1 62.5 145.5 - 241.1
Effect of foreign
exchange rate
changes (1.3) (2.1) (3.1) - (6.5)
Charge for the year 1.9 19.6 32.1 - 53.6
Disposals - (0.3) (23.0) - (23.3)
Transfers to
investment
properties (0.7) - - - (0.7)
Transfers to assets
held for sale (note
20) (16.7) - (2.5) - (19.2)
===================== ==================== ===================== ==================== ==================== ======
As at 31 March 2011 16.3 79.7 149.0 - 245.0
Effect of foreign
exchange rate
changes - (0.7) (2.1) - (2.8)
Charge for the year 1.9 27.9 44.4 - 74.2
Disposals (1.3) (7.9) (32.6) - (41.8)
Net impairment charge
on assets - 2.5 1.3 - 3.8
Reclassification(2) - 8.9 (8.9) - -
===================== ==================== ===================== ==================== ==================== ======
As at 31 March 2012 16.9 110.4 151.1 - 278.4
===================== ==================== ===================== ==================== ==================== ======
Net book value
===================== ==================== ===================== ==================== ==================== ======
As at 31 March 2012 37.3 137.2 119.8 34.5 328.8
As at 31 March 2011 38.8 105.7 117.4 19.9 281.8
===================== ==================== ===================== ==================== ==================== ======
(1) Included in fixtures, fittings and equipment are finance
lease assets with a net book value of GBP2.0m (2011: GBP2.3m).
(2) During the current year, GBP18.6m of assets have been
reclassified from fixtures and fittings to leasehold improvements
as this is more representative of the nature of these assets. There
is no impact on the depreciation charge for the year as a result of
this reclassification.
During the year to 31 March 2012, a net impairment charge of
GBP3.8m (2011: GBPnil) was identified as part of the annual
impairment review.
Where indicators of impairment were identified, the impairment
review compared the value-in-use of the assets to the carrying
values at 31 March 2012. The pre-tax cash flow projections were
based on financial plans approved by management and extrapolated
beyond the budget year to the lease exit dates using growth rates
and inflation rates appropriate to each country's economic
conditions. The pre-tax discount rates used in these calculations
were between 10.8% and 16.7% (2011: between 12.2% and 18.5%), based
on the Group's weighted average cost of capital adjusted for
country-specific tax rates and risks.
11. Trade and other receivables
As at As at
31 March 31 March
2012 2011
GBPm GBPm
============================================== ========= =========
Non-current
Deposits and prepayments 22.3 15.2
============================================== ========= =========
Total non-current trade and other receivables 22.3 15.2
============================================== ========= =========
Current
Trade receivables 103.0 100.7
Provision for doubtful debts (7.6) (12.1)
============================================== ========= =========
Net trade receivables 95.4 88.6
Other receivables 26.4 22.3
Prepayments and accrued income 23.4 21.6
============================================== ========= =========
Total current trade and other receivables 145.2 132.5
============================================== ========= =========
Total trade and other receivables 167.5 147.7
============================================== ========= =========
Of the non-current deposits and prepayments balance, GBP16.3m
(2011: GBP10.4m) is due within five years from the balance sheet
date, with the remainder due at various stages after this. The
entire balance is non-interest bearing.
The individually impaired receivables relate to balances with
trading parties which have passed their payment due dates or where
uncertainty exists over recoverability. As at 31 March 2012, trade
receivables of GBP28.0m (2011: GBP18.4m) were impaired. The amount
of the provision against these receivables was GBP7.6m as of 31
March 2012 (2011: GBP12.1m). It was assessed that a portion of the
receivables is expected to be recovered. Individually impaired
receivables of GBP2.1m (2011: GBP3.7m) relate to the discontinued
Spanish operations. The ageing of the impaired trade receivables is
as follows:
As at As at
31 March 31 March
2012 2011
GBPm GBPm
============================ ========= =========
Current 0.2 3.2
Less than one month overdue 21.8 7.0
One to three months overdue 1.3 3.1
Over three months overdue 4.7 5.1
============================ ========= =========
28.0 18.4
============================ ========= =========
As at 31 March 2012, trade receivables of GBP0.1m (2011:
GBP5.3m) were overdue but not impaired. The ageing of these overdue
receivables is as follows:
As at As at
31 March 31 March
2012 2011
GBPm GBPm
============================ ========= =========
Less than one month overdue 0.1 4.6
One to three months overdue - 0.6
Over three months overdue - 0.1
============================ ========= =========
0.1 5.3
============================ ========= =========
Movement on the provision for doubtful debts is as follows:
Year to Year to
31 March 31 March
2012 2011
GBPm GBPm
========================================================= ========= =========
As at 1 April 12.1 16.8
Increase in provision for doubtful debts 2.1 5.6
Receivables written off during the year as uncollectable (5.9) (0.8)
Unused provision reversed (0.7) (9.5)
========================================================= ========= =========
As at 31 March 7.6 12.1
========================================================= ========= =========
There were GBP0.4m of impaired receivables within other
receivables (2011: nil). The maximum exposure to credit risk at the
reporting date with respect to trade receivables is the carrying
amount on the Balance Sheet. The Group does not hold any collateral
as security.
The carrying amounts of the Group's trade and other receivables
are denominated in the following currencies:
Year to Year to
31 March 31 March
2012 2011
GBPm GBPm
====================== ========= =========
Sterling 39.1 59.0
US Dollar 24.3 22.9
Euro 39.5 12.1
Chinese Yuan Renminbi 23.9 23.5
Other currencies 40.7 30.2
====================== ========= =========
167.5 147.7
====================== ========= =========
The nominal value less impairment provision of trade and other
receivables is assumed to approximate its fair value because of the
short maturity of these instruments.
12. Inventories
As at As at
31 March 31 March
2012 2011
GBPm GBPm
================== ========= =========
Raw materials 5.7 5.1
Work in progress 0.5 0.6
Finished goods 304.9 242.2
================== ========= =========
Total inventories 311.1 247.9
================== ========= =========
The cost of inventories recognised as an expense and included in
cost of sales for the continuing and discontinued operations
amounted to GBP539.3m (2011: GBP500.0m). The net movement in
inventory provisions included in cost of sales for the year ended
31 March 2012 was a cost of GBP4.4m (2011: credit of GBP17.9m).
In the year to 31 March 2012, the Group reversed GBP1.5m (2011:
GBP4.6m) of previous inventory writedowns in relation to the stock
held in the discontinued Spanish operations. The cost of
inventories physically destroyed in the year is GBP8.3m (2011:
GBP6.6m).
13. Cash and cash equivalents
As at As at
31 March 31 March
2012 2011
GBPm GBPm
========================= ========= =========
Cash at bank and in hand 262.6 235.1
Short-term deposits 284.3 231.2
========================= ========= =========
Total 546.9 466.3
========================= ========= =========
The fair value of short-term deposits approximates the carrying
amount because of the short maturity of the instruments.
14. Trade and other payables
As at As at
31 March 31 March
2012 2011
GBPm GBPm
=================================================== ========= =========
Non-current
Deferred consideration 1.1 1.9
Put option liability over non-controlling interest 57.8 47.3
Other creditors, accruals and deferred income 46.0 35.2
=================================================== ========= =========
Total non-current trade and other payables 104.9 84.4
=================================================== ========= =========
Current
Trade creditors 118.8 85.8
Other taxes and social security costs 23.3 16.7
Deferred consideration 1.1 12.5
Other creditors 5.8 20.5
Accruals and deferred income 175.4 147.9
=================================================== ========= =========
Total current trade and other payables 324.4 283.4
=================================================== ========= =========
Total trade and other payables 429.3 367.8
=================================================== ========= =========
Following the acquisition of the Burberry retail and
distribution business in China, Sparkle Roll Holdings Limited, a
non-Group company, retains a 15% economic interest in the Group's
business in China. Put and call options exist over this interest
stake which are exercisable after 5 years from acquisition date in
the case of the call option, and 10 years from acquisition date in
the case of the put option. The net present value of the put option
has been recognised as a non-current financial liability under IAS
39.
The key assumptions in arriving at the fair value of the put
option are the future performance of both the Group's business in
China and the future performance of the Group, the Burberry Group
plc market capitalisation at the date of exercise and the risk free
rate in China.
The maturity of the other non-current creditors, accruals and
deferred income, all of which do not bear interest, is as
follows:
As at As at
31 March 31 March
2012 2011
GBPm GBPm
============================= ========= =========
Between one and two years 3.7 3.2
Between two and three years 3.8 3.3
Between three and four years 1.8 2.5
Between four and five years 4.3 2.7
Over five years 33.5 25.4
============================= ========= =========
Total 47.1 37.1
============================= ========= =========
The fair value of trade and other payables approximate their
carrying amounts and are unsecured.
15. Provisions for other liabilities and charges
Property Restructuring Other
obligations costs costs Total
GBPm GBPm GBPm GBPm
================================ ============ ============= ====== ======
Balance as at 1 April 2010 9.7 30.2 - 39.9
Effect of foreign exchange rate
changes (0.1) (0.5) - (0.6)
Created during the year 5.0 7.0 3.1 15.1
Utilised during the year (3.1) (20.3) - (23.4)
Released during the year - (2.8) - (2.8)
================================ ============ ============= ====== ======
Balance as at 31 March 2011 11.5 13.6 3.1 28.2
Effect of foreign exchange rate
changes 0.1 (0.3) (0.2) (0.4)
Created during the year 9.4 - 1.2 10.6
Utilised during the year (2.2) (8.4) (2.7) (13.3)
Released during the year (0.3) (1.4) (0.1) (1.8)
================================ ============ ============= ====== ======
Balance as at 31 March 2012 18.5 3.5 1.3 23.3
================================ ============ ============= ====== ======
As at As at
31 March 31 March
2012 2011
GBPm GBPm
============================== ========= =========
Analysis of total provisions:
Non-current 15.1 9.6
Current 8.2 18.6
============================== ========= =========
Total 23.3 28.2
============================== ========= =========
The non-current provisions relate to provisions for onerous
leases and property reinstatement costs which are expected to be
utilised within 18 years. Of the total restructuring provision of
GBP3.5m (2011: GBP13.6m), GBP3.3m (2011: GBP13.4m) represents a
current liability. The majority of this relates to the closure of
the Spanish operations. The GBP0.2m (2011: GBP0.2m) non-current
portion relates to onerous leases.
16. Bank overdrafts and borrowings
As at As at
31 March 31 March
2012 2011
GBPm GBPm
================= ========= =========
Unsecured:
Bank overdrafts 207.3 167.1
Bank borrowings 0.8 0.8
Other borrowings 0.5 0.5
================= ========= =========
Total 208.6 168.4
================= ========= =========
Included within bank overdrafts is GBP204.7m (2011: GBP166.1m)
representing balances on cash pooling arrangements in the Group.
The remaining overdrafts of GBP2.6m (2011: GBP1.0m) are provided by
a number of committed and uncommitted arrangements agreed with
third party banks.
On 28 March 2011, a GBP300m multi-currency revolving credit
facility was agreed with a syndicate of third party banks. At 31
March 2012, there were no outstanding drawings (2011: GBPnil).
Interest is charged on this facility at LIBOR plus 0.90% on
drawings less than GBP100m, at LIBOR plus 1.05% on drawings between
GBP100m and GBP200m and at LIBOR plus 1.20% on drawings over
GBP200m. The facility matures on 30 June 2016.
On 1 October 2010, a Yen 145m bilateral facility was agreed with
a third party bank. At 31 March 2012, the amount drawn down was Yen
100.8m (2011: Yen 100.8m). Interest is charged on this facility at
the Japanese short-term prime rate plus 0.5%. The facility matures
on 30 September 2012. The undrawn facility at 31 March 2012 was Yen
44.2m.
Other borrowings relate to a loan provided by a minority
interest partner totalling GBP0.5m due to mature on 8 November
2012. Interest is charged on this loan at the Japanese short-term
prime rate plus 0.5%.
The fair value of borrowings and overdrafts approximates the
carrying amount because of the short maturity of these
instruments.
17. Share capital and reserves
Allotted, called up and fully paid share capital Number GBPm
================================================= =========== ====
Ordinary shares of 0.05p (2011: 0.05p) each
================================================= =========== ====
As at 1 April 2011 435,811,738 0.2
Allotted on exercise of options during the year 2,956,370 -
================================================= =========== ====
As at 31 March 2012 438,768,108 0.2
================================================= =========== ====
At 31 March 2012, 30,027 of the 0.05p ordinary shares in issue
are held as treasury shares (2011: 77,215).
The Company has a general authority from shareholders, renewed
at each Annual General Meeting, to repurchase a maximum of 10% of
its issued share capital. During the year to 31 March 2012, no
ordinary shares were repurchased by the Company under this
authority (2011: nil).
The cost of own shares held by the Group has been offset against
retained earnings, as the amounts paid reduce the profits available
for distribution by the Company. As at 31 March 2012 the amounts
offset against this reserve are GBP41.9m (2011: GBP2.8m). In the
year to 31 March 2012 the Burberry Group plc ESOP trust has waived
its entitlement to dividends of GBP0.2m (2011: GBPnil).
During the year profits of GBP5.0m (2011: GBP1.7m) have been
transferred to capital reserves due to statutory requirements of
subsidiaries. The capital reserve consists of non-distributable
reserves and the capital redemption reserve arising on the purchase
of own shares.
Other reserves
========================================
Foreign
currency
Hedging translation Capital
reserve reserve reserve Total
GBPm GBPm GBPm GBPm
============================================ ======== ============ ======== ======
Balance as at 1 April 2010 (1.1) 136.3 27.2 162.4
Other comprehensive income:
Cash flow hedges - losses deferred
in equity (2.6) - - (2.6)
Cash flow hedges - losses transferred
to income 7.5 - - 7.5
Foreign currency translation differences - (15.1) - (15.1)
Tax on other comprehensive income/(expense) (1.4) 2.0 - 0.6
============================================ ======== ============ ======== ======
Total comprehensive income/(expense)
for the year 3.5 (13.1) - (9.6)
Transfer between reserves - - 1.7 1.7
============================================ ======== ============ ======== ======
Balance as at 31 March 2011 2.4 123.2 28.9 154.5
Other comprehensive income:
Cash flow hedges - losses deferred
in equity (2.2) - - (2.2)
Cash flow hedges - losses transferred
to income 5.5 - - 5.5
Foreign currency translation differences - (4.4) - (4.4)
Tax on other comprehensive income/(expense) (0.8) (0.2) - (1.0)
============================================ ======== ============ ======== ======
Total comprehensive income/(expense)
for the year 2.5 (4.6) - (2.1)
Transfer between reserves - - 5.0 5.0
============================================ ======== ============ ======== ======
Balance as at 31 March 2012 4.9 118.6 33.9 157.4
============================================ ======== ============ ======== ======
18. Capital commitments
As at As at
31 March 31 March
2012 2011
GBPm GBPm
===================================================== ========= =========
Capital commitments contracted but not provided for:
- property, plant and equipment 35.7 10.3
- intangible assets 2.0 1.2
===================================================== ========= =========
Total 37.7 11.5
===================================================== ========= =========
Contracted capital commitments represent contracts entered into
by the year end and future work in respect of major capital
expenditure projects where activity has commenced by the year end
relating to property, plant and equipment and intangible
assets.
19. Business combinations
Year ended 31 March 2012
Burberry Saudi Company Limited
On 19 June 2011, the Group formed Burberry Saudi Company Limited
(Burberry Saudi), a company registered in the Kingdom of Saudi
Arabia, with Fawaz Abdulaziz Alhokair & Co SLSC, a third party
company registered in the Kingdom of Saudi Arabia. Burberry Saudi
will manage the Burberry retail business within the Saudi Arabian
market.
Burberry has a 60% interest in the issued share capital of the
company, the majority of the voting rights and the power to appoint
the majority of the directors. Burberry Saudi has been consolidated
as a subsidiary as at 31 March 2012. The non-controlling interest
in the consolidated net assets of this company has been identified
as a separate component of equity.
On 19 June 2011, the distribution agreement with the existing
franchise partner in Saudi Arabia expired, and Burberry Saudi
acquired the Burberry retail business from that franchisee.
Details of the net assets acquired and goodwill are as
follows:
GBPm
=============================================== ====
Cash consideration 10.0
=============================================== ====
Total purchase consideration 10.0
Fair value of net identifiable assets acquired 4.3
=============================================== ====
Goodwill 5.7
=============================================== ====
The goodwill arising on the acquisition, which is included
within intangible assets, is attributable to the acquisition of the
Saudi Arabian business assets and the benefits expected from
further expansion in this region. The goodwill recognised relates
to equity attributable to the owners of the company and to
non-controlling interest and is not tax deductible.
The assets and liabilities arising from the acquisition are as
follows:
Fair value
GBPm
========================================================================== ==========
Inventories 1.4
Property, plant and equipment 3.0
Liabilities (0.1)
========================================================================== ==========
Net identifiable assets acquired 4.3
========================================================================== ==========
Net identifiable assets acquired attributable to non-controlling interest 1.7
========================================================================== ==========
The Group incurred transaction costs of GBP0.1m in respect of
the acquisition.
The acquired Saudi Arabian retail assets generated revenues of
GBP9.1m and a profit of GBP2.7m to the Group for the period from
acquisition to 31 March 2012.
Pro forma full year information
Had the acquisition occurred on 1 April 2011, it would have
contributed approximately GBP1.8m of Group revenue in addition to
that noted above, while the Group operating profit impact in
addition to that noted above would have been neutral for the year
ended 31 March 2012.
Year ended 31 March 2011
Burberry (Shanghai) Trading Co., Ltd
On 16 July 2010, the Group entered into an agreement to acquire
the Burberry retail and distribution business within China from its
distributor in Hong Kong, Kwok Hang Holdings Ltd. The acquisition
allows the Group to further leverage its proven brand in China's
high growth luxury market.
On 1 September 2010, Burberry (Shanghai) Trading Co., Ltd, a
wholly owned Group company incorporated in the People's Republic of
China, took control of key store assets and inventory across 50
retail stores. Daily operations at 43 of the stores fully
transferred to the Group on that date. The remaining 7 stores had
all transferred daily operations by 31 January 2011.
Details of the net assets acquired and goodwill are as
follows:
GBPm
==================================================== =====
Cash consideration 39.4
Deferred consideration(1) 28.2
Contribution of share of the Group's existing China
business (1.9)
==================================================== =====
Total purchase consideration 65.7
==================================================== =====
(1) A change in assumptions applied to the value of deferred
consideration to be paid was made subsequent to initial
recognition, but within the measurement period. This resulted in an
increase of GBP0.9m to goodwill.
The assets and liabilities arising from the acquisition are as
follows:
Fair value
GBPm
========================================================================== ==========
Inventories 23.1
Property, plant and equipment 6.3
Liabilities (0.3)
========================================================================== ==========
Net identifiable assets acquired 29.1
========================================================================== ==========
Net identifiable assets acquired attributable to non-controlling interest (4.4)
Goodwill 41.0
========================================================================== ==========
Total purchase consideration 65.7
========================================================================== ==========
Sparkle Roll Holdings Limited, a non Group company, retains a
15% economic interest in the Burberry retail and distribution
business within China. Put and call options exist over this
economic interest which are exercisable after five years in the
case of the call option, and ten years in the case of the put
option. Refer to note 14 for further details of the carrying value
of the put option liability.
In total, goodwill of GBP41.0m arose on the acquisition of the
China retail and distribution business and is included within
intangible assets. This is attributable to the benefits expected
from further expansion in this region. The goodwill is not tax
deductible.
Outflow of cash to acquire business, net of cash acquired: GBPm
=========================================================== ====
Cash consideration on acquisition date 39.4
Cash consideration post-acquisition 26.0
Cash and cash equivalents in subsidiaries acquired -
=========================================================== ====
Cash outflow to acquire business 65.4
=========================================================== ====
Of the total cash outflow disclosed above, GBP51.9m was paid in
the year ended 31 March 2011. The remaining GBP13.5m was paid in
the year ended 31 March 2012.
Deferred consideration of GBP2.2m remains outstanding at 31
March 2012 (refer to note 14).
The Group incurred transaction costs of GBP0.9m in respect of
the acquisition.
20. Discontinued operations and assets classified as held for
sale
In the year to 31 March 2010, the Group announced the
restructuring of its Spanish operations. By 31 March 2011, the
production of the local Spanish collection, and related operations
had ceased. The Spanish operations have been treated as
discontinued for the years ended 31 March 2012 and 31 March 2011,
and the results from the discontinued operations have been shown
separately from the results of the Group's continuing
operations.
An analysis of the results of the discontinued Spanish
operations is presented below:
Year to Year to
31 March 31 March
2012 2011
GBPm GBPm
================================================= ========= =========
Revenue - 49.3
Cost of sales(1) 1.5 (24.8)
================================================= ========= =========
Gross profit 1.5 24.5
Net operating expenses(2) (1.8) (30.7)
================================================= ========= =========
Operating loss (0.3) (6.2)
Net finance charges - -
================================================= ========= =========
Loss before taxation for discontinued operations (0.3) (6.2)
Taxation - -
================================================= ========= =========
Loss after taxation for discontinued operations (0.3) (6.2)
================================================= ========= =========
(1) Cost of sales for the year ended 31 March 2012 results from
a provision release due to more effective than anticipated
clearance of residual inventory.
(2) Net operating expenses includes a charge of GBP4.5m (2011:
GBP3.7m) in relation to the write-down of assets held for sale to
fair value less cost to sell.
Cash flows generated from the discontinued Spanish operations
have been included in the Group consolidated Statement of Cash
Flows. The cash flows relating to the discontinued operations for
the years ended 31 March 2012 and 31 March 2011 are:
Year to Year to
31 March 31 March
2012 2011
GBPm GBPm
===================================================== ========= =========
Net cash inflow from operating activities 1.3 3.6
Net cash outflow from investing activities - -
Net cash outflow from financing activities(1) (0.1) (7.9)
===================================================== ========= =========
Net increase/(decrease) in cash and cash equivalents 1.2 (4.3)
Effect of exchange rate changes - -
Cash and cash equivalents at beginning of period 0.1 4.4
===================================================== ========= =========
Cash and cash equivalents at end of period 1.3 0.1
===================================================== ========= =========
(1) The net cash outflow from financing activities represents
the repayment of intercompany loans from Group entities which form
part of continuing operations.
The earnings per share attributable to the discontinued Spanish
operations for the years ended 31 March 2012 and 31 March 2011
are:
Year to Year to
31 March 31 March
Notes 2012 2011
================================================ ===== ========= =========
Earnings per share from discontinued operations
- basic 7 (0.0)p (1.4)p
- diluted 7 (0.0)p (1.4)p
================================================ ===== ========= =========
Assets classified as held for sale
In September 2010, GBP17.0m of assets were reclassified to
assets held for sale, representing the carrying value of the
freehold properties in Spain. These assets have subsequently been
written down to fair value less costs to sell and at 31 March 2012
the carrying value of the assets is GBP8.3m (2011: GBP13.5m).
Management remains committed to selling these properties and
continues to actively market them as such.
21. Related party transactions
Transactions between the Company and its subsidiaries, which are
related parties of the Company, have been eliminated on
consolidation and are not disclosed in this note. Total
compensation in respect of key management, who are defined as the
Board of Directors and certain members of senior management, is
considered to be a related party transaction.
The total compensation in respect of key management for the year
was as follows:
Year to Year to
31 March 31 March
2012 2011
GBPm GBPm
================================= ========= =========
Salaries and short-term benefits 10.2 9.7
Post-employment benefits 0.2 0.3
Share based compensation 6.9 7.0
================================= ========= =========
Total 17.3 17.0
================================= ========= =========
22. Translation of the results of overseas businesses
The results of overseas subsidiaries are translated into the
Group's presentation currency of Sterling each month at the
weighted average exchange rate for the month according to the
phasing of the Group's trading results. The weighted average
exchange rate is used, as it is considered to approximate the
actual exchange rates on the date of the transactions. The assets
and liabilities of such undertakings are translated at the year end
exchange rates. Differences arising on the retranslation of the
opening net investment in subsidiary companies, and on the
translation of their results, are taken directly to the foreign
currency translation reserve.
Goodwill and fair value adjustments arising on the acquisition
of a foreign operation are treated as assets and liabilities of the
foreign operation and translated at the closing rate.
The principal exchange rates used were as follows:
Average rate Closing rate
==================== ====================
Year to Year to As at As at
31 March 31 March 31 March 31 March
2012 2011 2012 2011
====================== ========= ========= ========= =========
Euro 1.16 1.18 1.20 1.13
US Dollar 1.60 1.56 1.60 1.61
Chinese Yuan Renminbi 10.15 10.51 10.07 10.52
Hong Kong Dollar 12.38 12.11 12.41 12.49
Korean Won 1,775 1,786 1,811 1,763
====================== ========= ========= ========= =========
The average exchange rate achieved by the Group on its Yen
royalty income, taking into account its use of Yen forward foreign
exchange contracts on a monthly basis approximately twelve months
in advance of royalty receipts, was Yen 133.1: GBP1 in the year to
31 March 2012 (2011: Yen 143.7: GBP1).
23. Adjusted profit before taxation and exceptional items
Exceptional items include those items that are largely one-off
and material in nature. Fair value movements on options held over
equity interests, which are held for the purpose of future business
developments, rather than speculative purposes, are also considered
to be exceptional items and are separately presented in the Income
Statement. These items are added back/deducted from profit/loss
before taxation to arrive at adjusted profit/loss before taxation.
These items and their related tax impacts are added back/deducted
from profit attributable to equity holders of the Company to arrive
at adjusted earnings per share. These measures are disclosed in
order to provide additional consideration of the underlying
performance of the Group's ongoing business. Details of exceptional
items are disclosed in note 4.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GMGZKRZNGZZM
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