TIDMBRBY
RNS Number : 4632Y
Burberry Group PLC
13 May 2021
13 May 2021
Burberry Group plc
Preliminary results for 52 weeks ended 27 March 2021
The next chapter: growth and acceleration
"In the last three years we have transformed our business and
built a new Burberry, anchored firmly in luxury. We have
revitalised our brand image, renewed our product offer and elevated
our customer experience while making further progress on our
ambitious social and environmental agenda. In spite of COVID-19, we
achieved our objectives for the period and delivered a strong set
of results in FY21, ending the year with good full-price sales
growth. In this next chapter, supported by these foundations and
the strength of our teams, we will accelerate our growth and
deliver value creation while continuing to build a more inclusive
and sustainable future."
Marco Gobbetti, Chief Executive Officer
-- Recovery accelerated through the year leading to Q4 FY21 comparable store sales increasing 32% year on year and
-5% compared with Q4 FY19 despite an average 16% of stores being closed. Within this, full-price sales grew 63%
in the quarter (12% versus Q4 FY19) driven by Mainland China, Korea and the U.S.
-- For the full year revenue decreased 10% at CER, impacted by store closures and reduced tourism, with strong
recovery in the second half +8% at CER (-30% in H1 FY21): Within this, FY21 full-price comparable store sales
grew +7%, accelerating through the year driven by:
-- excellent response to product, with growth in our strategic categories and in selling prices
-- increasing brand strength attracting new and younger customers
-- local customer traction, thanks to innovative selling formats during lockdowns
-- Leveraged digital leadership, including opening our Social Retail store in Shenzhen Bay, driving double digit
comparable sales growth across all regions
-- Adjusted operating profit GBP396m, -8% CER, reported operating profit GBP521m up 176%
-- Full year dividend reinstated at FY19 levels of 42.5p on the back of strong cash generation
Period ended 27 March 28 March % change
Reported
GBP million 2021 2020 FX CER*
------------------------------- --------- --------- --------- -------
Revenue 2,344 2,633 (11) (10)
Retail comparable store
sales* (9%) (3%)
Adjusted operating profit* 396 433 (9) (8)
Adjusted operating profit
margin * 16.9% 16.4% +50bps +50bps
Adjusted Diluted EPS (pence)* 67.3 78.7 (14) (14)
Reported operating profit 521 189 176
Reported operating profit
margin 22.2% 7.2%
Reported diluted EPS (pence) 92.7 29.8 211
Free cash flow** 349 66
Dividend (pence) 42.5 11.3
------------------------------- --------- --------- --------- -------
*See page 20 for definitions of alternative performance
measures
Outlook**
In our next chapter we will focus on delivering growth whilst
continuing to enhance the quality of our business. Taking FY20 as
the base year, we expect revenue to grow at a high single digit
percentage compound annual growth rate at FY21 CER in the medium
term. This will be underpinned by the continued outperformance of
full-price sales. We will continue to strengthen brand equity by
exiting markdowns in mainline stores in FY22. This is a headwind
against our comparable store sales growth amounting to a mid-single
digit percentage in the full year.
In FY22 adjusted operating margin progression will be impacted
by operating expense normalisation and increased investment to
accelerate growth, with more meaningful margin accretion
thereafter.
We are focused on and continue to invest in our sustainability
and social goals by becoming carbon neutral by 2022, championing
diversity and inclusion and positively impacting one million people
in the communities in which we operate.
Further guidance is included in the Appendix.
**FY22 outlook on page 17
All metrics and commentary in the Group Financial Highlights and
Business and Financial Review exclude adjusting items unless stated
otherwise.
The following alternative performance measures are presented in
this announcement: CER, adjusted profit measures, comparable sales,
free cash flow, cash conversion, adjusted EBITDA and net debt. The
definition of these alternative performance measures are in the
Appendix on page 20.
Certain financial data within this announcement have been
rounded.
Enquiries
Investors and analysts 020 3367 4458
Julian Easthope VP, Investor Relations julian.easthope@burberry.com
Media 020 3367 3764
Andrew Roberts VP, Corporate Relations andrew.roberts@burberry.com
-- There will be a live webcast presentation today at 9.30am (UK time) for investors and analysts
-- The presentation can be viewed live on the Burberry website www.burberryplc.com
-- The supporting slides and an indexed replay will be available on the website later in the day
-- Burberry will issue its First Quarter Trading Update on 16 July 2021
-- The AGM will be held on 14 July 2021
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. Nothing in
this announcement should be construed as a profit forecast. 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 is listed on the London Stock Exchange (BRBY.L) and is
a constituent of the FTSE 100 index. ADR symbol OTC:BURBY.
BURBERRY, the Equestrian Knight Device, the Burberry Check, and
the Thomas Burberry Monogram and Print are trademarks belonging to
Burberry.
www.burberryplc.com
Twitter: @BurberryCorp
LinkedIn: Burberry
GROUP FINANCIAL HIGHLIGHTS
Revenue
-- Revenue GBP2,344m -10% CER, -11% reported
-- Retail comparable store sales -9% (H1: -25%; H2: +5%), returning to growth in H2 FY21
Adjusted profit
-- Adjusted operating profit GBP396m, -8% CER, -9% reported
-- Gross margin before adjusting items up 270bps at CER and 260bps at reported rates, benefitting from full-price
and other mix effects and reduced inventory provisioning charges
-- Operating expenses before adjusting items -7% at both CER and reported rates, benefitting from cost management
and delivery of restructuring programmes
-- Adjusted diluted EPS 67.3p, -14% at both CER and reported
Reported profit measures
-- Operating profit GBP521m, up 176% after adjusting items of GBP125m credit (FY20: GBP244m charge)
-- Diluted EPS 92.7p, up 211% reported
Cash measures
-- Full year dividend declared at FY19 levels of 42.5p (FY20: 11.3p) with the progressive policy reinstated
-- Free cash flow of GBP349m (FY20: GBP66m) due to strong cash management
-- Cash net of overdrafts and borrowing of GBP919m at 27 March 2021 (28 March 2020: GBP587m Cash net of overdrafts
amounted to GBP1.2bn with borrowings of GBP297m. The GBP300m revolving credit facility (RCF) is currently undrawn,
and the UK Government sponsored COVID Corporate Financing Facility (CCFF) was repaid in February 2021
Summary income statement
Period ended 27 March 28 March % change % change
GBP million 2021 2020 Reported CER
FX
Revenue 2,344 2,633 (11) (10)
Cost of sales* (704) (859) (18)
----------------------------- --------- --------- ---------- ---------
Gross profit* 1,640 1,774 (8)
Gross margin * 70.0% 67.4% +260bps +270bps
Operating expenses* (1,244) (1,341) (7) (7)
Opex as a % of sales* 53.1% 51.0%
----------------------------- --------- --------- ---------- ---------
Adjusted operating profit* 396 433 (9) (8)
Adjusted operating margin
* 16.9% 16.4% +50bps +50bps
Adjusting operating
items 125 (244)
----------------------------- --------- --------- ---------- ---------
Operating profit 521 189 176
Operating margin 22.2% 7.2%
Net finance (charge)(**) (31) (20)
----------------------------- --------- --------- ---------- ---------
Profit before taxation 490 169 190
Taxation (114) (47)
Attributable profit 376 122
Adjusted profit before
taxation* 366 414 (12) (11)
Adjusted diluted EPS
(pence)* 67.3 78.7 (14) (14)
Diluted EPS (pence) 92.7 29.8 211
Weighted average number
of diluted ordinary shares
(millions) 405.1 409.0
----------------------------- --------- --------- ---------- ---------
* Excludes adjusting items. All items below adjusting operating
items on a reported basis
For detail, see Appendix. ** Includes adjusting finance charge
of GBP1m (FY20: GBP1m)
BUSINESS AND FINANCIAL REVIEW
FY21 was the third year of our journey to transform Burberry and
anchor our brand firmly in luxury. Against the backdrop of the
COVID-19 pandemic, our goal this year was to strengthen our
foundations, adapting to the environment and positioning the brand
for acceleration and growth.
Despite the onset of the COVID-19 pandemic, which led to a
significant reduction in operating hours and an average of 18% of
our global store network closed in the financial year, we completed
the objectives for the first phase of our strategy, ending FY21
with strong full-price momentum.
Supported by the strong foundations we have built, we adapted
swiftly, driving performance through new product launches and
inspiring communications and shifted our focus to rebounding
economies and digital channels. As a result, we achieved +7% growth
in full-price comparable store sales in the year, with double-digit
growth across Americas, Korea and Mainland China and good traction
across our core strategic categories.
In terms of brand activity, we continued to reinforce our luxury
positioning through emotive campaigns and activations and adopted a
highly localised approach in every market. Recent examples include
the launch of our first locally produced campaign film for Lunar
New Year in January. This had an exceptional response from local
Chinese consumers and increased the number of new fans to our
WeChat page in a single month by 15x compared to our 2020 monthly
average. In addition, in February and from the start of the new
financial year in April respectively, we debuted Riccardo's first
dedicated menswear and womenswear presentations for AW21. These
presentations generated an extraordinary amount of conversation on
Instagram, with triple- and double-digit growth compared to our
SS21 Show, respectively. Similarly in March, we drove further brand
heat with the launch of our global campaign to celebrate our SS21
collection which generated social coverage almost double our SS20
campaign. Continuing to build brand momentum, these activations
have also attracted new and younger customers to the brand.
Our new collections have also resonated strongly, supporting
double digit growth in full-price sales to both new and repeat
customers. In addition, within full-price, our strategic pillars -
leather goods and outerwear - have returned to mid and high single
digit growth respectively for FY21. Strong performance in leather
goods has been supported by our new established shapes including
the Pocket, which was the focus of our first bag campaign and
programme of pop-ups earlier in the year, and the Olympia, our
newest shape and the focus of our upcoming bag campaign in May.
Across outerwear, we have focused on elevating and diversifying our
offer. For example, in January we launched Future Archive, a unique
capsule reinterpreting outerwear classics from the Burberry
archive. By successfully driving the performance of our strategic
pillars, we have supported high single digit growth in prices -
further demonstrating the strength of our brand.
In terms of distribution, we elevated the brand experience
across our full-price channels and leveraged our digital resources
to support both offline and online sales. Within Mainline, we
continued to invest in upgrading the store portfolio with 11 new
openings and 15 closures this year and developed our new store
concept, which we will begin to roll out in early FY22. In
addition, we increased our focus on in-person and virtual
appointments to mitigate the impact of reduced traffic and drive
traction with local customers. This contributed to growth in sales
to local clients in most regions. We also leveraged our digital
capabilities to bridge online and offline, including scaling our
omnichannel journeys (e.g. virtual appointments, virtual client
events) as well as pioneering social retail - launching our first
social retail store in Shenzhen Bay. Our Shenzhen store has
provided a testing ground for a number of innovative experiences
and concepts that we plan to roll out in the coming year to drive
further consumer engagement. In terms of online, we have continued
to capture the recent shifts in consumer behaviour through our
digital innovations to deliver double digit growth in full-price
online sales across all regions, from a strong base.
Building a more sustainable future
We maintained our focus on driving positive change and building
a more sustainable future through our Responsibility agenda. All of
our stores in Mainland China are now carbon neutral and we are on
track this year to use 100% renewable electricity and have a carbon
neutral footprint across all of our operations globally. In the
next 12 months, every product we make will have more than one
positive environmental or social attribute, achieved by driving
improvements at the sourcing and product manufacturing stage.
Stretching our ambitions, we now aim to be net-zero across our own
operations and extended supply chain by 2040 and will continue to
set leading standards for our industry and pioneer innovative
solutions to create real system change.
Embedding D&I
We also made strong progress on our commitment to build a more
diverse, equitable and inclusive organisation. We rolled out our
global Diversity and Inclusion strategy, with aspirational goals
supported by training and global programmes designed to attract and
retain diverse talent, foster an open and inclusive culture and
drive education and awareness. During the year, Burberry was the
first luxury company to partner with the Business Disability Forum,
Investing in Ethnicity, and the Stonewall Diversity Champions
Programme, and one of the first in our industry to join The
Valuable 500. We also became signatories of the British Retail
Consortium D&I Charter and BBC's Creative Allies initiative,
working collaboratively to achieve progress across the retail and
creative industries. To mark International Women's Day 2021, we
continued our support for London Youth and The Prince's Trust Women
Supporting Women initiative, providing resources and development
opportunities for young women. Our commitment to gender equality
was recognised by Burberry's inclusion in the 2021 Bloomberg
Gender-Equality Index, scoring 10 percentage points more than the
company average and reflected by a leading position in the latest
Hampton-Alexander Review report for women in leadership in the FTSE
100 for the third consecutive year.
Responding to COVID-19
Throughout the year, the health and wellbeing of our people has
been our priority. We implemented rigorous safety measures across
our sites whilst providing resources to support our teams. We also
further strengthened our support for the global effort to combat
the outbreak of COVID-19. Burberry and the Burberry Foundation
recently made donations to UNICEF's COVID-19 Vaccines Appeal,
building on our efforts earlier in the year to provide funding for
food charities, vaccine research and retool our trench coat factory
in Castleford, Yorkshire to manufacture non-surgical gowns and
source masks through our global supply chain. Following Burberry's
partnership with Marcus Rashford MBE and charities supporting youth
in the UK, USA and Asia, the Burberry Foundation also entered a
longer term partnership with London Youth, providing young people
in some of London's most deprived communities with the resources
and support to build resilience against the impacts of the COVID-19
pandemic.
UK withdrawal from the EU
We continue to adapt to the EU-UK Trade and Cooperation
Agreement to ensure minimal disruption to our operations and
customers. We have initiated a number of actions to mitigate duty
costs including collating evidence in support of claiming
preferential duty rates, streamlining product flows to minimise
movements of goods between the UK and EU, and establishing a
customs warehouse.
The next chapter: accelerate and grow
Having successfully navigated our transformation and established
a strong foundation, we are well-positioned to embark on the next
chapter of growth and acceleration. In this phase, we will leverage
our unique brand equity to deliver sustainable, high-quality growth
and continue to drive positive change. In terms of revenue, we will
accelerate growth by focusing on five levers: i) continuing to
build brand advocacy and community; ii) focusing on our core luxury
categories, outerwear and leather goods; iii) driving our store
performance through the roll-out of our new store concept and
scaling of new, omnichannel experiences; iv) supercharging online
sales by leveraging our leadership in digital; and v) increasing
our focus on full-price, including significantly reducing markdown
in Mainline by the end of FY22. This acceleration will support our
profitability through increased full-price and digital penetration,
improved sales density and continued tight cost control. As a
result, our ambition in the medium-term is to achieve high-single
digit compound revenue growth at FY21 CER on FY20 base- with
overperformance in full-price - and meaningful operating margin
accretion.
Throughout, we will be relentless in our focus on our
sustainability and social priorities. We are committed to
continuing to build not only a financially stronger Burberry but
also a better company. We will fuel the creativity of our
colleagues by championing diversity, equality and inclusion and
supporting their wellbeing. We will empower young people in our
communities, providing more of them with the skills, confidence and
opportunities to succeed. Lastly, we will create a more sustainable
future for luxury by further reducing our environmental impacts and
helping transform our industry.
Financial performance
-- Performance in the year was driven by full-price sales offset by both a planned reduction in markdown activity as
we further elevate the brand, and from outlets that were impacted by tourist flows. With no impact from space,
retail sales declined 9% at both CER and reported exchange rates. Wholesale declined 17% at CER and reported
exchange rates in the year with a good recovery in the second half. In total, the group saw revenue down 10% at
CER and 11% at reported exchange rates to GBP2,344m (FY20 GBP2,633m)
-- Group adjusted operating profit fell 8% at CER, with a strong recovery in H2 rising by 48% following the 71%
decline in H1. Gross margin increased in the year by 270bps CER (260bps reported), benefitting from full-price
and other mix effects and reduced charges for inventory provisioning. Adjusted operating expenses fell by 7% at
CER, with strong cost management and delivery of the restructuring programmes. This excludes GBP54m of rent
concessions negotiated during the COVID-19 crisis and GBP9m of government grants. During the year, we paid the UK
business rates in full and did not take advantage of the UK Government Coronavirus Job Retention Scheme. Reported
operating profit increased 176% including an adjusting item credit of GBP125m. FX was a minor headwind in the
year of GBP3m
-- We generated free cash flow in the year of GBP349m, significantly above the prior year level of GBP66m due to
lower lease payments, reduced capex and tax payments as well as tight management of working capital. Inventory in
particular was well controlled, with gross inventory 16% below last year and 7% down from FY19 levels,
benefitting from improved sell-through. Capital expenditure reduced to GBP115m (FY20 GBP149m) with some projects
impacted by COVID-19
Revenue analysis
Revenue by channel
Period ended 27 March 28 March % change
Reported
GBP million 2021 2020 FX CER
------------------------------ --------- --------- --------- -----
Retail 1,910 2,110 (9) (9)
Retail comparable store
sales growth (9%) (3%)
Wholesale 396 476 (17) (17)
Licensing 38 47 (19) (20)
--------- --------- --------- -----
Revenue 2,344 2,633 (11) (10)
------------------------------ --------- --------- --------- -----
Retail
FY21 Q1 Q2 Q3 Q4 FY Q4 FY21
v
Q4 FY19*
------ ----- ----- ---- -----
Comparable store sales
growth (45%) (6%) (9%) 32% (9%) (5%)
Comparable full-price
sales growth (38%) (1%) 9% 63% 7% 12%
------------------------ ------ ----- ----- ---- ----- ----------
*Q4 FY21 comparable store sales growth compared with Q4 FY19
-- Retail sales fell 9% at constant and reported exchange rates
-- Comparable store sales declined 9% (H1: -25%; H2: +5%). Underlying performance was strong with full-price sales
growth of 7% offset by store closures and a significant reduction in tourist traffic due to COVID-19, together
with the planned reduction in markdown activity in the second half of the year. Overall, markdowns had a low
single digit percentage adverse impact on FY21 sales growth
-- Comparable store sales grew 32% in the fourth quarter (-5% against Q4 FY19) as we began to anniversary the impact
from the pandemic and with a sequential acceleration in sales in Asia Pacific and Americas whilst EMEIA remained
impacted by lockdowns
-- Nil impact from space on FY21 revenue
Comparable store sales by region:
FY21 Q1 Q2 Q3 Q4 FY Q4 FY21
v
Q4 FY19
------ ------ ------ ------ ------
Group (45%) (6%) (9%) 32% (9%) (5%)
Asia Pacific (10%) 10% 11% 75% 18% 17%
EMEIA (74%) (39%) (37%) (26%) (44%) (44%)
Americas (70%) 21% (8%) 40% (9%) 15%
-------------- ------ ------ ------ ------ ------ ---------
Asia Pacific grew by 18% year on year
-- Asia Pacific saw the best regional performance in the year, led by Mainland China and Korea
-- Mainland China saw strong double digit growth with comparable store sales accelerating in the fourth quarter to
53% against FY19 driven by a successful Lunar New Year campaign
-- Korea also delivered strong double digit percentage growth with a significant improvement in comparable store
sales in the last quarter of the year
-- South Asia Pacific (SAP) declined by a double digit percentage, affected by limited tourist traffic and airport
store closures
-- Japan also fell, impacted by a lack of international travel
EMEIA fell by 44% year on year
-- EMEIA has been especially impacted by travel trends and store closures
-- Continental Europe saw a decline broadly in line with the regional average; however, local spend returned to
growth from the second quarter
-- The UK remained challenged with London performance weak given high tourist exposure
-- Middle East returned to growth in the second half of the year driven by strong local demand and improved tourist
flows
Americas declined by 9% year on year
-- Americas saw a robust performance in full-price sales from Q2 FY21, increasing 17% in the year
-- Within this, the US was particularly strong driven by attracting new younger customers to the brand
Digital performed well in the year with double digit percentage
growth driven by the Americas and Mainland China.
By product
-- Full-price sales grew across all product categories in FY21 and in the fourth quarter against Q4 FY19
-- Product performance was impacted by the pandemic with a shift towards casualisation and evergreen items
-- Outerwear was driven by strong performance in Coats and Jackets, Quilts and Downs with exceptional performance in
Mainland China and Korea
-- Within Ready-to-wear, Tops and Bottoms continued to outperform with a strong performance in Shirts and Jersey
within Men's and Knitwear within Women's
-- Leather goods remained a key focus in FY21 with the new bag pillars performing well. The new shapes continue to
account for more than 60% of our women's leather bag sales
-- Digital full-price sales saw high double digit percentage growth across all categories with a particularly strong
performance in Accessories driven by leather goods and shoes
Store footprint
The transformation of our distribution continued as we addressed
high priority programmes:
-- In FY21 we opened 17 stores and closed 23 stores
-- Key openings included 13 in Mainland China including our first Social Retail store in Shenzhen Bay
-- Cumulative 34 stores closed to date of the 38 planned closures from the non-strategic store rationalisation
programme
-- A cumulative 85 stores are now new or refurbished and aligned to our new creative vision, an increase of 21 in
the year
-- In support of our goal to be net-zero by 2040, we finance or refinance buildings that have achieved one of the
following certifications:
o Leadership in Energy and Environmental Design (LEED): Platinum
or Gold level
o Building Research Establishment Environmental Assessment
Method (BREEAM): Excellent or Outstanding level
Wholesale
Wholesale revenue declined 17% at CER and reported exchange
rates with a return to growth in the second half of the year with
sales up 8% at reported exchange rates.
Licensing
Licensing revenue fell 19% at reported exchange rates due to
lower sales from the COVID-19 fallout.
Operating profit analysis
Adjusted operating profit
Period ended 27 March 28 March % change
2021 2020
GBP million
Reported CER
FX
--------- --------- --------
Revenue 2,344 2,633 (11) (10)
Cost of sales* (704) (859) (18)
Gross profit* 1,640 1,774 (8)
Gross margin %* 70.0% 67.4% +260bps +270bps
Operating expenses* (1,244) (1,341) (7) (7)
Opex as a % of sales* 53.1% 51.0%
---------------------------- --------- --------- --------- --------
Adjusted operating profit* 396 433 (9) (8)
Adjusted operating margin
%* 16.9% 16.4% +50bps +50bps
---------------------------- --------- --------- --------- --------
*Excludes adjusting items
Adjusted operating profit declined 9% and margin increased by
50bps at reported exchange rates.
-- Gross margin increased 270bps at CER (260bps reported). Business performance accounted for around two thirds of
the gross margin improvement benefitting from full-price, channel and regional (predominantly Mainland China)
mix. The gross margin benefited from COVID provisions taken in the PY by around 80 bps
-- Adjusted operating expenses fell by 7% against last year, benefitting from strong cost management and delivery of
the restructuring programmes. The 2017 cost savings programme has delivered savings of GBP150m since inception
including an incremental GBP25m in FY21
-- In July 2020 we announced a cost reduction programme to deliver the planned GBP55m savings with GBP45m of
associated costs. This programme remains on track and we achieved the targeted GBP35m of savings in FY21 with an
associated cost of GBP22m that was presented as an adjusting item. We expect the remaining GBP20m benefit from
the cost reduction programme will be achieved in FY22, with further costs of GBP23m to be incurred
Adjusted operating profit amounted to GBP396m including a GBP3m
FX headwind in FY21.
Adjusting items(*)
Adjusting items were a credit of GBP124m (FY20: GBP245m
charge).
Adjusting items* 27 March 28 March
Period ended 2021 2020
GBP million
---------
The impact of COVID-19
Inventory provisions 22 (68)
Rent concessions 54 -
Store impairments 47 (157)
Government grants 9 -
Receivable impairments 5 (11)
Assets under the course of construction
impairment - (10)
Related other sundry items - 5
--------- ---------
COVID-19 adjusting items** 137 (241)
Restructuring costs (30) (10)
Profit on sale of property 18 -
BME deferred consideration income - 2
Disposal of beauty business - 5
Adjusting operating items 125 (244)
Adjusting financing items (1) (1)
Adjusting items 124 (245)
----------------------------------------- ---------
*For more details see note 7 of the Financial Statements
** COVID-19 adjusting item includes a GBP22m credit (FY20:
GBP68m charge) that has been recognised through COGS relating to
inventory provisions
The major adjusting items are as follows:
-- Impact of the COVID-19 pandemic: the majority of adjusting items relate to rent concessions across our retail
network and impairment reversals to the carrying value of stores and inventory due to positive trading in FY21.
In addition, COVID-19 related government grants were also treated as an adjusting item
-- Restructuring costs: GBP22m related to the organisational changes announced in July 2020 and the final charge of
GBP8m relating to the cost-efficiency programme announced in 2017
-- Profit on sale of property: relates to the sale of a property in France
Adjusted profit before tax*
After an adjusted net finance charge of GBP30m (FY20 GBP19m),
adjusted profit before tax was GBP366m (FY20 GBP414m).
*For detail on adjusting items see note 7 of the Financial
Statements
Taxation*
The effective tax rate on adjusted profit increased to 25.4%
(FY20: 22.3%). This was higher than normal due to COVID-19
impacting the geographical shift in profits towards higher tax
jurisdictions. The reported tax rate on FY21 profit before taxation
was 23.3% (FY20: 27.9%).
* For detail see note 9 of the Financial Statements
Cash flow
Represented statement of cash flows
The following table is a representation of the cash flows,
excluding the impact of adjusting items, to highlight the
underlying movements.
Period ended 27 March 28 March
GBP million 2021 2020
Adjusted operating profit 396 433
Depreciation and amortisation 277 331
Working capital (25) (66)
Other 29 (73)
---------------------------------------- --------- --------
Cash inflow from operations 677 625
Payment of lease principal and related
cash flows (155) (244)
Capital expenditure (115) (149)
Proceeds from disposal of non-current 27 3
assets
Interest (27) (19)
Tax (58) (150)
---------------------------------------- --------- --------
Free cash flow 349 66
---------------------------------------- --------- --------
Free cash flow was GBP349m (FY20 of GBP66m) and cash conversion
was 111% (2020: 52%) reflecting strong cash discipline. We had the
following key flows:
-- Working capital saw a GBP25m outflow. Within this, inventories reduced 16% in gross terms due to disciplined
inventory control, generating an inflow of GBP21m in the year (FY20 inflow of GBP27m), with significantly lower
payables outflow more than offsetting higher receivables outflow compared to prior year
-- Lease related payments fell GBP89m including benefit of GBP54m of COVID-19 related rent concessions
-- Capital expenditure reduced to GBP115m (2020: GBP149m) as projects were impacted by the pandemic
-- Tax paid reduced to GBP58m against the prior year in which payments were elevated mostly due to the accelerated
collection by HMRC in the UK
Cash net of overdrafts at 27 March 2021 was GBP1.2bn (28 March
2020: GBP0.9bn). We repaid the RCF in June 2020 and in September
issued a GBP0.3bn Sustainability Bond after obtaining a public
investment grade credit rating. For short term security, we
borrowed GBP0.3bn under the Government backed CCFF during the year,
repaying this early, in February 2021.
Our net debt(*) including reported lease liabilities was GBP101m
(28 March 2020: GBP538m). Net Debt / adjusted EBITDA was 0.1x on a
rolling 12 months period (28 March 2020 0.7x), significantly below
our target range of 0.5x to 1.0x.
Progressive dividend policy reinstated with the full year
dividend declared at FY19 levels of 42.5p.
*For a definition of net debt see page 21.
Period ended 27 March 28 March
GBP million 2021 2020
Adjusted EBITDA - rolling
12 months 673 764
Cash net of overdrafts (1,216) (887)
RCF drawn - 300
Bond 297 -
Lease debt 1,020 1,125
--------- ---------
Net Debt 101 538
Net Debt/Adjusted EBITDA 0.1x 0.7x
--------- ---------
APPIX
Detailed guidance for FY22
Item Financial impact
Markdown policy We will be exiting markdowns in mainline stores
in FY22. This will lead to a headwind against
our comparable store sales of mid-single digits
in the full year with Q1 FY21 comp impacted
by HSD
---------------------------------------------------------
Wholesale revenue H1 wholesale to increase by around 50%
---------------------------------------------------------
Impact of retail We expect space to be broadly neutral in the
space on revenues year
---------------------------------------------------------
Tax We expect the adjusted tax rate to be around
22%
---------------------------------------------------------
Capex Expected to be in the range GBP180m to GBP190m
- increasing due to investment in store refurbishments,
digital and IT
---------------------------------------------------------
Currency Headwind on revenue of GBP96m and GBP34m on
adjusted operating profit at 30 April spot rates
---------------------------------------------------------
Dividend Resumption of progressive dividend policy
---------------------------------------------------------
Calendar Please note that FY22 is a 53 week year with
an additional week in Q4
---------------------------------------------------------
Note : guidance based on CER at FY21 rates
Retail/wholesale revenue by destination*
Period ended 27 March 28 March % change
GBP million 2021 2020 Reported FX CER
---------------------------- --------- --------- ------------ -----
Asia Pacific (94% retail)* 1,203 1,041 16 16
EMEIA (59% retail)* 628 960 (35) (35)
Americas (86% retail)* 475 585 (19) (15)
Total 2,306 2,586 (11) (10)
---------------------------- --------- --------- ------------
* Mix based on FY21
Retail/wholesale revenue by product
division
Period ended 27 March 28 March % change
GBP million 2021 2020 Reported FX CER
-------------------- --------- --------- ------------- -----
Accessories 841 948 (11) (11)
Women's 653 796 (18) (18)
Men's 668 715 (7) (6)
Children's & other 144 127 14 15
Total 2,306 2,586 (11) (10)
-------------------- --------- --------- -------------
Store portfolio
Directly-operated stores
--------------------------------------- ----------
Stores Concessions Outlets Total Franchise
stores
----------------- ------- ------------ -------- ----------
At 28 March
2020 218 149 54 421 44
Additions 11 1 5 17 -
Closures (15) (5) (3) (23) -
At 27 March
2021 214 145 56 415 44
------- ------------ --------
Store portfolio by region*
Directly-operated stores
--------------------------------------- ----------
Stores Concessions Outlets Total Franchise
At 27 March stores
2021
----------------- ------- ------------ -------- ----------
Asia Pacific 97 90 22 209 7
EMEIA 56 46 18 120 37
Americas 61 9 16 86 -
Total 214 145 56 415 44
------- ------------ --------
*Excludes the impact of pop up stores
Adjusted operating 27 March 28 March % change % change
profit* 2021 2020 Reported CER
Period ended FX
GBP Millions
Retail/wholesale 361 390 (7) (6)
Licensing 35 43 (20) (21)
-------------------- --------- --------- ---------- ---------
Adjusted operating
profit 396 433 (9) (8)
Adjusted operating
margin 16.9% 16.4% +50bps +50bps
-------------------- --------- --------- ---------- ---------
*For additional detail on adjusting items see note 7 of the
Financial Statements
Exchange rates
Spot rates Average effective
exchange rates
30 April FY21 FY20
GBP1= 2021
----------------------- ----------- --------- ---------
Euro 1.15 1.12 1.14
US Dollar 1.39 1.30 1.27
Chinese Yuan Renminbi 9.03 8.85 8.88
Hong Kong Dollar 10.82 10.08 9.89
Korean Won 1,545 1,514 1,504
----------------------- ----------- --------- ---------
Profit before tax reconciliation
Period ended 27 March 28 March % change % change
2021 2020 Reported CER
GBP million FX
Adjusted profit before
tax 366 414 (12) (11)
Adjusting items*
COVID-19 related items 137 (241)
Restructuring costs (30) (10)
Profit on sale of property 18 -
BME deferred consideration
liability - 2
Disposal of Beauty
operations - 5
Adjusting financing
items (1) (1)
---------------------------- --------- --------- ---------- ---------
Profit before tax 490 169 190
---------------------------- --------- --------- ---------- ---------
Alternative performance measures
Alternative performance measures (APMs) are non-GAAP measures.
The Board uses the following APMs to describe the Group's financial
performance and for internal budgeting, performance monitoring,
management remuneration target setting and for external reporting
purposes.
APM Description and purpose GAAP measure reconciled to
Constant This measure removes Results at reported rates
Exchange the effect of changes
Rates (CER) in exchange rates compared
to the prior period. It
incorporates both the
impact of the movement
in exchange rates on the
translation of overseas
subsidiaries' results
and also on foreign currency
procurement and sales
through the Group's UK
supply chain.
--------------------------------- -------------------------------------------
Comparable The year-on-year change Retail Revenue:
sales in sales from stores trading Period ended 27 March 28 March
over equivalent time periods YoY% 2021 2020
and measured at constant ------------------- --------- ---------
foreign exchange rates. Comparable sales* (9%)* (3%)
It also includes online Change in space - (1%)
sales. This measure is FX - 1%
used to strip out the ------------------- --------- ---------
impact of permanent store Retail revenue (9%) (3%)
openings and closings,
or those closures relating *Includes full-price comp +7%
to refurbishments, allowing
a comparison of equivalent
store performance against
the prior period. The
measurement of comparable
sales has not excluded
stores temporarily closed
as a result of the COVID-19
outbreak
Full-price sales:
Net sales of Group's
directly operated mainline
comparable stores excluding
Markdown sales.
--------------------------------- -------------------------------------------
Q4 FY21 The change in sales over Retail Revenue:
vs Q4 FY19 two years measured at % change Q4 FY21
comparable constant foreign exchange vs Q4 FY19
sales rates. It also includes ----------------- ------------
online sales. The measurement Reported growth (2%)
of comparable sales has Comparable
not excluded stores temporarily sales (5%)
closed as a result of Change in space 5%
the COVID-19 outbreak. CER retail 0%
This measure reflects FX (2%)
the two year aggregation ----------------- ------------
of the growth rates.
--------------------------------- -------------------------------------------
Adjusted Adjusted profit measures Reported Profit:
Profit are presented to provide A reconciliation of reported
additional consideration profit before tax to adjusted
of the underlying performance profit before tax and the Group's
of the Group's ongoing accounting policy for adjusted
business. These measures profit before tax are set out
remove the impact of those in the financial statements.
items which should be
excluded to provide a
consistent and comparable
view of performance .
--------------------------------- -------------------------------------------
Free Cash Free cash flow is defined Net cash generated from operating
Flow as net cash generated activities:
from operating activities Period ended 27 March 28 March
less capital expenditure GBPm 2021 2020
plus cash inflows from -------------------- --------- ---------
disposal of fixed assets Net cash generated
and including cash outflows from operating
for lease principal payments activities 592 456
and other lease related Capex (115) (149)
items. Lease principal
and related
cash flows (155) (244)
Proceeds from
disposal of
non-current
assets 27 3
-------------------- --------- ---------
Free cash
flow 349 66
-------------------- --------- ---------
Cash Conversion Cash conversion is defined Net cash generated from operating
as free cash flow pre-tax/adjusted activities:
profit before tax. It ---------------------------------------
provides a measure of Period ended 27 March 28 March
the Group's effectiveness GBPm 2021 2020
in converting its profit ----------------- --------- ---------
into cash. Free cash
flow 349 66
Tax paid 58 150
----------------- --------- ---------
Free cash
flow before
tax 407 216
----------------- --------- ---------
Adjusted profit
before tax 366 414
Cash conversion 111% 52%
------------------------------------ ----------------------------------------------
Net Debt Net debt is defined as Cash net of overdrafts:
the lease liability recognised Period ended 27 March 28 March
on the balance sheet plus GBPm 2021 2020
borrowings less cash net ----------------- --------- ---------
of overdrafts. Cash net of
overdrafts 1,216 887
Lease liability (1,020) (1,125)
Borrowings (297) (300)
----------------- --------- ---------
Net debt (101) (538)
------------------------------------ ----------------------------------------------
Adjusted Adjusted EBITDA is defined Reconciliation from operating
EBITDA as operating profit, excluding profit to adjusted EBITDA:
adjusting operating items, Period ended 27 March 28 March
depreciation of property, GBPm 2021 2020
plant and equipment, depreciation ---------------------- --------- ---------
of right of use assets Operating profit 521 189
and amortisation of intangible Adjusted operating
assets. Any depreciation items (125) 244
or amortisation included Amortisation
in adjusting operating of intangible
items are not double-counted. assets 33 26
Adjusted EBITDA is shown Depreciation
for the calculation of of property,
Net Debt/EBITDA for our plant and equipment 72 84
gearing ratios. Depreciation
of right-of-use
assets 172 221
---------------------- --------- ---------
Adjusted EBITDA 673 764
------------------------------------ ----------------------------------------------
GROUP INCOME STATEMENT
52 weeks 52 weeks
to to
27 March 28 March
2021 2020
Note GBPm GBPm
---------------------------------------------- ---- --------- ---------
Revenue 4 2,343.9 2,633.1
Cost of sales (681.4) (927.6)
---------------------------------------------- ---- --------- ---------
Gross profit 1,662.5 1,705.5
Net operating expenses 5 (1,141.4) (1,516.8)
---------------------------------------------- ---- --------- ---------
Operating profit 521.1 188.7
Financing
---------------------------------------------- ---- --------- ---------
Finance income 3.1 7.6
Finance expense (33.3) (26.6)
Other financing charge (0.7) (1.2)
---------------------------------------------- ---- --------- ---------
Net finance expense 8 (30.9) (20.2)
---------------------------------------------- ---- --------- ---------
Profit before taxation 6 490.2 168.5
Taxation 9 (114.3) (46.9)
---------------------------------------------- ---- --------- ---------
Profit for the year 375.9 121.6
---------------------------------------------- ---- --------- ---------
Attributable to:
Owners of the Company 375.7 121.7
Non-controlling interest 0.2 (0.1)
---------------------------------------------- ---- --------- ---------
Profit for the year 375.9 121.6
---------------------------------------------- ---- --------- ---------
Earnings per share
Basic 10 93.0p 29.8p
Diluted 10 92.7p 29.8p
---------------------------------------------- ---- --------- ---------
GBPm GBPm
Reconciliation of adjusted profit before
taxation:
Profit before taxation 490.2 168.5
Adjusting operating items:
Cost of sales 6 (22.3) 68.3
Net operating expenses 6 (102.9) 176.1
Adjusting financing items 6 0.7 1.2
---------------------------------------------- ---- --------- ---------
Adjusted profit before taxation - non-GAAP
measure 365.7 414.1
---------------------------------------------- ---- --------- ---------
Adjusted earnings per share - non-GAAP
measure
Basic 10 67.5p 78.9p
Diluted 10 67.3p 78.7p
---------------------------------------------- ---- --------- ---------
Dividends per share
Interim 11 - 11.3p
Proposed final (not recognised as a liability
at 27 March/28 March) 11 42.5p -
---------------------------------------------- ---- --------- ---------
GROUP STATEMENT OF COMPREHENSIVE INCOME
52 weeks 52 weeks
to to
27 March 28 March
2021 2020
Note GBPm GBPm
--------------------------------------------- ---- --------- ---------
Profit for the year 375.9 121.6
Other comprehensive income(1) :
Cash flow hedges 23 - 2.7
Net investment hedges 23 - (1.2)
Foreign currency translation differences (51.4) 18.5
Actuarial gains on post-employment benefit
plans 1.0 -
Tax on other comprehensive income:
Cash flow hedges 9 - (0.5)
Net investment hedges 9 - 0.2
Foreign currency translation differences 9 2.4 (0.9)
Actuarial gains on post-employment benefit
plans (0.2) -
--------------------------------------------- ---- --------- ---------
Other comprehensive (loss)/income for
the year, net of tax (48.2) 18.8
--------------------------------------------- ---- --------- ---------
Total comprehensive income for the year 327.7 140.4
--------------------------------------------- ---- --------- ---------
Total comprehensive income attributable
to:
Owners of the Company 327.7 140.4
Non-controlling interest - -
--------------------------------------------- ---- --------- ---------
327.7 140.4
--------------------------------------------- ---- --------- ---------
1. All items included in other comprehensive income, with the
exception of Actuarial gains on post-employment benefit plans, may
subsequently be reclassified to profit and loss in a future
period.
GROUP BALANCE SHEET
As at As at
27 March 28 March
2021 2020
Note GBPm GBPm
------------------------------------- ---- --------- ---------
ASSETS
Non-current assets
Intangible assets 12 237.0 247.0
Property, plant and equipment 13 280.4 294.9
Right-of-use assets 14 818.1 834.0
Investment properties 2.4 2.5
Deferred tax assets 137.1 171.5
Trade and other receivables 15 45.0 53.7
1,520.0 1,603.6
------------------------------------- ---- --------- ---------
Current assets
Inventories 16 402.1 450.5
Trade and other receivables 15 276.9 252.1
Derivative financial assets 2.2 6.7
Income tax receivables 39.7 50.4
Cash and cash equivalents 17 1,261.3 928.9
------------------------------------- ---- --------- ---------
1,982.2 1,688.6
------------------------------------- ---- --------- ---------
Total assets 3,502.2 3,292.2
------------------------------------- ---- --------- ---------
LIABILITIES
Non-current liabilities
Trade and other payables 18 (99.4) (102.3)
Lease liabilities 19 (809.6) (910.0)
Borrowings 22 (297.1) (300.0)
Deferred tax liabilities (0.8) (0.1)
Retirement benefit obligations (1.0) (1.9)
Provisions for other liabilities and
charges 20 (31.8) (28.6)
------------------------------------- ---- --------- ---------
(1,239.7) (1,342.9)
------------------------------------- ---- --------- ---------
Current liabilities
Trade and other payables 18 (392.9) (447.5)
Bank overdrafts 21 (45.4) (41.6)
Lease liabilities 19 (210.0) (215.5)
Derivative financial liabilities (2.6) (4.8)
Income tax liabilities (27.9) (7.9)
Provisions for other liabilities and
charges 20 (24.0) (13.2)
(702.8) (730.5)
------------------------------------- ---- --------- ---------
Total liabilities (1,942.5) (2,073.4)
------------------------------------- ---- --------- ---------
Net assets 1,559.7 1,218.8
------------------------------------- ---- --------- ---------
EQUITY
Capital and reserves attributable to
owners of the Company
Ordinary share capital 23 0.2 0.2
Share premium account 223.0 220.8
Capital reserve 23 41.1 41.1
Hedging reserve 23 4.7 4.7
Foreign currency translation reserve 23 196.4 245.2
Retained earnings 1,091.2 702.2
------------------------------------- ---- --------- ---------
Equity attributable to owners of the
Company 1,556.6 1,214.2
Non-controlling interest in equity 3.1 4.6
------------------------------------- ---- --------- ---------
Total equity 1,559.7 1,218.8
------------------------------------- ---- --------- ---------
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 30 March
2019 0.2 216.9 272.3 965.6 1,455.0 5.0 1,460.0
----------------------------------- ---- -------- -------- --------- --------- ------- --------------- -------
Adjustment on initial
application of IFRS 16 - - - (57.1) (57.1) (0.4) (57.5)
Adjustment on initial
application of IFRIC 23 - - - (4.4) (4.4) - (4.4)
----------------------------------- ---- -------- -------- --------- --------- ------- --------------- -------
Adjusted balance as at
31 March 2019 0.2 216.9 272.3 904.1 1,393.5 4.6 1,398.1
----------------------------------- ---- -------- -------- --------- --------- ------- --------------- -------
Profit for the year - - - 121.7 121.7 (0.1) 121.6
Other comprehensive income:
Cash flow hedges 23 - - 2.7 - 2.7 - 2.7
Net investment hedges 23 - - (1.2) - (1.2) - (1.2)
Foreign currency translation
differences 23 - - 18.4 - 18.4 0.1 18.5
Tax on other comprehensive
income 23 - - (1.2) - (1.2) - (1.2)
----------------------------------- ---- -------- -------- --------- --------- ------- --------------- -------
Total comprehensive income
for the year - - 18.7 121.7 140.4 - 140.4
----------------------------------- ---- -------- -------- --------- --------- ------- --------------- -------
Transactions with owners:
Employee share incentive
schemes
Value of share options
granted - - - 2.8 2.8 - 2.8
Value of share options
transferred to liabilities - - - 0.1 0.1 - 0.1
Tax on share options
granted - - - (0.6) (0.6) - (0.6)
Exercise of share options - 3.9 - - 3.9 - 3.9
Purchase of own shares
Share buy-back - - - (150.7) (150.7) - (150.7)
Dividends paid in the
year - - - (175.2) (175.2) - (175.2)
----------------------------------- ---- -------- -------- --------- --------- ------- --------------- -------
Balance as at 28 March
2020 0.2 220.8 291.0 702.2 1,214.2 4.6 1,218.8
----------------------------------- ---- -------- -------- --------- --------- ------- --------------- -------
Profit for the year - - - 375.7 375.7 0.2 375.9
Other comprehensive income:
Foreign currency translation
differences 23 - - (51.2) - (51.2) (0.2) (51.4)
Actuarial gains on post-employment
benefit plans - - - 1.0 1.0 - 1.0
Tax on other comprehensive
income 23 - - 2.4 (0.2) 2.2 - 2.2
----------------------------------- ---- -------- -------- --------- --------- ------- --------------- -------
Total comprehensive income
for the year - - (48.8) 376.5 327.7 - 327.7
----------------------------------- ---- -------- -------- --------- --------- ------- --------------- -------
Transactions with owners:
Employee share incentive
schemes
Value of share options
granted - - - 12.1 12.1 - 12.1
Tax on share options
granted - - - 0.7 0.7 - 0.7
Exercise of share options - 2.2 - Ð 2.2 - 2.2
Acquisition of additional
interest in subsidiary 26 - - - (0.2) (0.2) (1.5) (1.7)
Purchase of own shares
Held by ESOP trusts - - - (0.1) (0.1) - (0.1)
Balance as at 27 March
2021 0.2 223.0 242.2 1,091.2 1,556.6 3.1 1,559.7
----------------------------------- ---- -------- -------- --------- --------- ------- --------------- -------
GROUP STATEMENT OF CASH FLOWS
52 weeks 52 weeks
to to
27 March 28 March
2021 2020
Note GBPm GBPm
------------------------------------------------- ---- --------- ---------
Cash flows from operating activities
Operating profit 521.1 188.7
Amortisation of intangible assets 12 32.9 26.4
Depreciation of property, plant and equipment 13 71.4 83.3
Depreciation of right-of-use assets 14 172.4 221.1
COVID-19-related rent concessions 1 (54.1) -
Impairment charge of intangible assets 12 8.8 11.6
Net impairment (reversal)/charge of property,
plant and equipment 13 (7.5) 26.4
Net impairment (reversal)/charge of right-of-use
assets 14 (33.7) 140.3
(Gain)/loss on disposal of property,
plant and equipment and intangible assets (22.7) 0.7
Gain on disposal of right-of-use assets (1.1) (2.1)
Gain on disposal of Beauty operations - (5.0)
Loss/(gain) on derivative instruments 3.8 (3.1)
Charge in respect of employee share incentive
schemes 12.1 2.8
(Payment)/receipt from settlement of
equity swap contracts (1.5) 0.2
Decrease in inventories 20.9 27.4
Increase in receivables (39.0) (9.8)
Decrease in payables and provisions (7.2) (84.0)
------------------------------------------------- ---- --------- ---------
Cash generated from operating activities 676.6 624.9
Interest received 2.9 7.2
Interest paid (30.1) (26.0)
Taxation paid (58.0) (150.3)
------------------------------------------------- ---- --------- ---------
Net cash generated from operating activities 591.4 455.8
Cash flows from investing activities
Purchase of property, plant and equipment (72.9) (85.3)
Purchase of intangible assets (41.9) (63.5)
Proceeds from sale of property, plant
and equipment 27.2 3.0
Initial direct costs of right-of-use
assets (2.9) (5.6)
Net cash outflow from investing activities (90.5) (151.4)
Cash flows from financing activities
Dividends paid in the year 11 - (175.2)
Payment of deferred consideration for
acquisition of non-controlling interest 18 (2.6) (2.7)
Proceeds from borrowings 22 595.1 300.0
Repayment of borrowings 22 (599.8) -
Payment of lease principal (152.2) (228.4)
Payment on termination of lease - (9.7)
Payment to acquire additional interest
in subsidiary from non--controlling interest 26 (1.7) -
Issue of ordinary share capital 2.2 3.8
Purchase of own shares through share
buy-back 23 - (150.7)
Purchase of own shares by ESOP trusts (0.1) -
------------------------------------------------- ---- --------- ---------
Net cash outflow from financing activities (159.1) (262.9)
Net increase in cash and cash equivalents 341.8 41.5
Effect of exchange rate changes (13.2) 8.5
Cash and cash equivalents at beginning
of year 887.3 837.3
------------------------------------------------- ---- --------- ---------
Cash and cash equivalents at end of year 1,215.9 887.3
------------------------------------------------- ---- --------- ---------
As at As at
27 March 28 March
2021 2020
Note GBPm GBPm
------------------------------------- ---- --------- ---------
Cash and cash equivalents as per the
Balance Sheet 17 1,261.3 928.9
Bank overdrafts 21 (45.4) (41.6)
------------------------------------- ---- --------- ---------
Cash net of overdrafts 1,215.9 887.3
------------------------------------- ---- --------- ---------
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
The financial information contained within this report has been
prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 and
International Financial Reporting Standards adopted pursuant to
Regulation (EC) No. 1606/2002 as it applies in the European Union,
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 52 weeks to 28 March 2020 have been
filed with the Registrar of Companies, and those for 2021 will be
delivered in due course. The reports of the auditors on those
statutory accounts for the 52 weeks to 28 March 2020 and 27 March
2021 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.
Going concern
The impact of the COVID-19 pandemic on the global economy and
the operating activities of many businesses, including the luxury
market, has resulted in a volatile climate and continued
uncertainty. The further impact of this pandemic on the Group is
uncertain at the date of signing these financial statements. In
considering the appropriateness of adopting the going concern basis
in preparing the financial statements, the directors have assessed
the potential cash generation of the Group and considered a range
of downside scenarios. This assessment covers from the date of
signing the financial statements up to 1 October 2022 for any
indicators that the going concern basis of preparation is not
appropriate.
The directors have assessed the potential cash generation of the
Group against a range of projected scenarios (including a severe
but plausible downside). These scenarios were informed by a
comprehensive review of the macroeconomic scenarios using third
party projections of scientific, epidemiological and macroeconomic
data for the luxury fashion industry:
-- The Group central planning scenario reflects a balanced projection with a continued focus on growing markets,
maintaining momentum built in FY2020/21 as part of the customer strategy.
-- As a sensitivity, this central planning scenario has been flexed to reflect a 26% downgrade to revenues in FY
2021/22, as well as the associated consequences for EBITDA and cash. Management consider this represents a severe
but plausible downside scenario appropriate for assessing going concern. This was designed to test an even more
challenging trading environment as a result of COVID-19 together with the potential impacts of one or more of the
Group's other principal risks.
The severe but plausible downside modelled the following risks
occurring simultaneously:
-- A significant impact on revenue in FY 2021/22 compared to the central planning scenario caused by the impact of a
reputational incident such as negative sentiment propagated through social media.
-- A longer-term decrease in revenue caused by a resurgence of the pandemic and store re-closures.
-- The impact of prolonged recovery of travel to 2019 levels.
In addition, the potential impact of other principal risks,
including the impact of foreign exchange volatility, were
considered. The directors have also considered mitigating actions,
which may be taken to reduce discretionary and other operating cash
outflows. The directors have also considered the Group's current
liquidity and available facilities. Details of cash, overdrafts,
borrowings and facilities are set out in notes 17, 21 and 22
respectively of these financial statements, which includes access
to a GBP300.0 million revolving credit facility, currently undrawn
and not relied upon in this going concern assessment.
In all the scenarios assessed, taking into account current
liquidity and available facilities, the Group was able to maintain
sufficient liquidity to continue trading. On the basis of the
assessment performed, the directors consider it is appropriate to
continue to adopt the going concern basis in preparing the
consolidated financial statements for the 52 weeks ended 27 March
2021.
Accounting policies
The principal accounting policies applied in the preparation of
the consolidated financial statements are consistent with those set
out in the statutory accounts for the 52 weeks to 28 March 2020,
with the exception of the following:
IFRS 16 Leases - COVID-19-Related Rent Concessions
The COVID-19-Related Rent Concessions amendment to IFRS 16
Leases was adopted by the IASB on 28 May 2020 and endorsed by the
European Union on 12 October 2020. The amendment applies to
accounting periods from 1 June 2020 but early application is
permitted and the Group has elected to apply the amendment in the
current year. The amendment allows for a simplified approach to
accounting for rent concessions occurring as a direct result of
COVID-19 and for which the following criteria are met:
-- The revised consideration is substantially the same, or less than, the consideration prior to the change;
-- The concessions affect only payments originally due on or before 30 June 2021; and
-- There is no substantive change to other terms and conditions of the lease.
Lessees are not required to assess whether eligible rent
concessions are lease modifications, allowing the lessee to account
for eligible rent concessions as if they were not lease
modifications. During the period, the Group has agreed rent
concessions both in the form of rent forgiveness in which the
landlord has agreed to forgive all or a portion of rents due with
no obligation to be repaid in the future, and rent deferrals in
which the landlord has agreed to forego rents in one period with a
proportional increase in rents due in a future period.
The Group has chosen to account for eligible rent forgiveness as
negative variable lease payments. The rent concession has been
recognised once a legally binding agreement is made between both
parties by derecognising the portion of the lease liability that
has been forgiven and recognising the benefit in the Income
Statement. As a result, the Group has recognised GBP54.1 million in
COVID-19-related rent concessions in the Income Statement within
'net operating expenses' in the current period. This has been
presented as an adjusting item (refer to note 7). In the Statement
of Cash Flows, the forgiveness results in lower payments of lease
principal. The negative variable lease payments in the Income
Statement is a non-cash item which is added back to calculate cash
generated from operating activities.
Rent deferrals do not change the total consideration due over
the life of the lease. Deferred rent payments are recognised as a
payable until the period the original rent payment is due. As a
result, the Group has recognised GBP4.3 million within other
payables. Payments relating to rent deferrals are recognised as
payments of lease principal when the payment is made.
Standards not yet adopted
Certain new accounting standards and interpretations have been
published that are not mandatory for the 52 weeks to 27 March 2021
and have not been early adopted by the Group. These standards are
not expected to have a material impact on the entity in the current
or future reporting periods and on foreseeable future
transactions.
Key sources of estimation uncertainty
Preparation of the consolidated financial statements in
conformity with IFRS requires that management make certain
estimates and assumptions that affect the measurement of reported
revenues, expenses, assets and liabilities and the disclosure of
contingent liabilities.
If in the future such estimates and assumptions, which are based
on management's best estimates at the date of the financial
statements, deviate from actual circumstances, the original
estimates and assumptions will be updated as appropriate in the
period in which the circumstances change.
Estimates are continually evaluated and are based on historical
experience and other factors, including expectations of future
events that are believed to be reasonable under the
circumstances.
The COVID-19 pandemic (COVID-19) has had a major impact on the
global economy throughout the current year. While the adverse
impact on the Group's operations and financial position has
significantly diminished during the course of the financial year,
at the date of signing these financial statements, there remains
significant uncertainty regarding the timing of any global recovery
from COVID-19, and the return to previous levels of footfall in
city centres, travel and tourism in some locations. As a result,
the impact of COVID-19 on the Group's assets remains a significant
source of estimation uncertainty.
The key areas where the estimates and assumptions applied have a
significant risk of causing a material adjustment to the carrying
value of assets and liabilities within the next financial year are
discussed below.
Impairment, or reversals of impairment, of property, plant and
equipment and right-of-use assets
Property, plant and equipment and right-of-use assets are
reviewed for impairment if events or changes in circumstances
indicate that the carrying amount may not be recoverable. When a
review for impairment is conducted, the recoverable amount of an
asset or a cash generating unit is determined based on value-in-use
calculations prepared using managementÕs best estimates and
assumptions at the time.
Last year end, management recorded impairments of retail
property, plant and equipment and right-of-use assets, based on the
estimated impact of COVID-19 on the Group. At that time, the impact
of COVID-19 was at its highest and many of the Group's retail
stores worldwide were closed. Since last year end, the rate of
recovery has exceeded management estimates, indicating a potential
impairment reversal. Therefore, management has updated their
assumptions as at 27 March 2021, reflecting their latest plans over
the next three years to March 2024, followed by longer-term growth
rates of mid-single digits. This has resulted in net reversals of
impairments.
Management has also reviewed the remaining retail property,
plant and equipment and right-of-use assets, not covered by the
above reassessment, for any indications of impairment. No new
impairments of property, plant and equipment and right-of-use
assets outside the scope of the reassessment of last year's
assumptions were identified.
Refer to notes 13 and 14 for further details of retail property,
plant and equipment, right-of-use assets and impairment reviews
carried out in the period and for sensitivities relating to this
key source of estimation uncertainty.
Inventory provisioning
The Group manufactures and sells luxury goods and is subject to
changing consumer demands and fashion trends. The recoverability of
the cost of inventories is assessed every reporting period, by
considering the expected net realisable value of inventory compared
to its carrying value. Where the net realisable value is lower than
the carrying value, a provision is recorded. When calculating
inventory provisions, management considers the nature and condition
of the inventory, as well as applying assumptions in respect of
anticipated saleability of finished goods and future usage of raw
materials.
Last year end, management recorded provisions against inventory,
based on the estimated impact of COVID-19 on the Group. As noted
above, performance during the current year has exceeded the
estimates made at last year end and hence management has updated
their assumptions regarding future performance. This has resulted
in a release of inventory provisions, both relating to inventory
sold during the current year, where this was for a higher net
realisable value than had been assumed, and relating to assumptions
regarding the net realisable value of inventory held at 27 March
2021.
Management has also reviewed the remaining inventory, not
covered by the above reassessment, and provisions have been
recorded where appropriate based on future trading
expectations.
Refer to note 16 for further details of the carrying value of
inventory and inventory provisions and for sensitivities relating
to this key source of estimation uncertainty.
Uncertain tax positions
In common with many multinational companies, Burberry faces tax
audits in jurisdictions around the world in relation to transfer
pricing of goods and services between associated entities within
the Group. These tax audits are often subject to inter-government
negotiations. The matters under discussion are often complex and
can take many years to resolve. Tax liabilities are recorded based
on management's estimate of either the most likely amount or the
expected value amount depending on which method is expected to
better reflect the resolution of the uncertainty. Given the
inherent uncertainty in assessing tax outcomes, the Group could, in
future periods, experience adjustments to these tax liabilities
that have a material positive or negative effect on the Group's
results for a particular period.
During the next year it is possible that some or all of the
current disputes are resolved. Management estimates that the
outcome across all matters under dispute or in negotiation between
governments could be in the range of a decrease of GBP11 million to
an increase of GBP15 million relative to the current tax
liabilities recognised at 27 March 2021. This would have an impact
of approximately 3% to 4% on the Group's effective tax rate.
Key judgements in applying the Group's accounting policies
Judgements are those decisions made when applying accounting
policies which have a significant impact on the amounts recognised
in the Group financial statements. Key judgements that have a
significant impact on the amounts recognised in the Group financial
statements for the 52 weeks to 27 March 2021 and the 52 weeks to 28
March 2020 are as follows:
Where the Group is a lessee, judgement is required in
determining the lease term at initial recognition where extension
or termination options exist. In such instances, all facts and
circumstances that may create an economic incentive to exercise an
extension option, or not exercise a termination option, have been
considered to determine the lease term. Considerations include, but
are not limited to, the period assessed by management when
approving initial investment, together with costs associated with
any termination options or extension options. Extension periods (or
periods after termination options) are only included in the lease
term if the lease is reasonably certain to be extended (or not
terminated). Where the lease term has been extended by assuming an
extension option will be recognised, this will result in the
initial right-of-use assets and lease liabilities at inception of
the lease being greater than if the option was not assumed to be
exercised. Likewise, assuming a break option will be exercised will
reduce the initial right-of-use assets and lease liabilities.
During the 52 weeks to 27 March 2021, significant judgements
regarding breaks and options in relation to individually material
leases resulted in approximately GBP91.7 million in undiscounted
future cash flows not being included in the initial right-of-use
assets and lease liabilities.
2. 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 closing
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
----------------------- --------------------
52 weeks
to 52 weeks As at As at
27 March to 28 March 27 March 28 March
2021 2020 2021 2020
---------------------- --------- ------------ --------- ---------
Euro 1.12 1.14 1.17 1.12
US Dollar 1.30 1.27 1.38 1.24
Chinese Yuan Renminbi 8.85 8.88 9.02 8.75
Hong Kong Dollar 10.08 9.89 10.72 9.64
Korean Won 1,514 1,504 1,558 1,512
---------------------- --------- ------------ --------- ---------
3. Adjusted profit before taxation
In order to provide additional consideration of the underlying
performance of the Group's ongoing business, the Group's results
include a presentation of Adjusted operating profit and Adjusted
profit before taxation ('adjusted PBT'). Adjusted PBT is defined as
profit before taxation and before adjusting items. Adjusting items
are those items which, in the opinion of the directors, should be
excluded in order to provide a consistent and comparable view of
the performance of the Group's ongoing business. Generally, this
will include those items that are largely one-off and material in
nature as well as income or expenses relating to acquisitions or
disposals of businesses or other transactions of a similar nature,
including the impact of changes in fair value of expected future
payments or receipts relating to these transactions. Adjusting
items are identified and presented on a consistent basis each year
and a reconciliation of adjusted PBT to profit before tax is
included in the financial statements. Adjusting items and their
related tax impacts, as well as adjusting taxation items, are added
back to/deducted from profit attributable to owners of the Company
to arrive at adjusted earnings per share. Refer to note 7 for
further details of adjusting items.
4. 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 the Group'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 Europe
and the US.
Licensing revenues are generated through the receipt of
royalties from global licensees of beauty products, eyewear and
from licences relating to the use of non-Burberry trademarks in
Japan.
The Board assesses channel performance based on a measure of
adjusted operating profit. This measurement basis excludes the
effects of adjusting 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
-------------------- -------------------- --------------------
52 weeks 52 weeks 52 weeks 52 weeks 52 weeks 52 weeks
to to to to to to
27 March 28 March 27 March 28 March 27 March 28 March
2021 2020 2021 2020 2021 2020
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------- --------- --------- --------- --------- --------- ---------
Retail 1,909.9 2,110.2 - - 1,909.9 2,110.2
Wholesale 396.0 475.8 - - 396.0 475.8
Licensing - - 39.1 48.5 39.1 48.5
----------------------- --------- --------- --------- --------- --------- ---------
Total segment
revenue 2,305.9 2,586.0 39.1 48.5 2,345.0 2,634.5
Inter-segment
revenue(1) - - (1.1) (1.4) (1.1) (1.4)
----------------------- --------- --------- --------- --------- --------- ---------
Revenue from external
customers 2,305.9 2,586.0 38.0 47.1 2,343.9 2,633.1
----------------------- --------- --------- --------- --------- --------- ---------
Depreciation and
amortisation 276.7 330.8 - - 276.7 330.8
Impairment of
intangible assets(2) 8.8 1.6 - - 8.8 1.6
Net impairment
of property, plant
and equipment(3) 0.8 (2.0) - - 0.8 (2.0)
Net impairment
of right-of-use
assets(4) - 12.8 - - - 12.8
Other non-cash
items:
Share-based payments 12.1 2.8 - - 12.1 2.8
----------------------- --------- --------- --------- --------- --------- ---------
Adjusted operating
profit 361.4 389.8 34.5 43.3 395.9 433.1
----------------------- --------- --------- --------- --------- --------- ---------
Adjusting items(5) 124.5 (245.6)
Finance income 3.1 7.6
Finance expense (33.3) (26.6)
----------------------- --------- --------- --------- --------- --------- ---------
Profit before
taxation 490.2 168.5
----------------------- --------- --------- --------- --------- --------- ---------
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. Impairment of intangible assets for the 52 weeks to 28 March
2020 was presented excluding GBP10.0 million relating to charges as
a result of the impact of COVID-19, which was presented as an
adjusting item (refer to note 7).
3. Net impairment charge relating to property, plant and
equipment for the 52 weeks to 27 March 2021 is presented excluding
a net reversal of GBP8.8 million (last year: charge of GBP28.4
million) relating to reversals and charges as a result of impact of
COVID-19 and a charge of GBP0.5 million (last year: GBPnil)
relating to restructuring costs. These have been presented as
adjusting items (refer to note 7).
4. Net impairment of right-of-use assets for the 52 weeks to 27
March 2021 is presented excluding a net reversal of GBP37.8 million
(last year: charge of GBP128.1 million) relating to reversals and
charges as a result of the impact of COVID-19 and a charge of
GBP4.1 million (last year: credit of GBP0.6 million) relating to
restructuring costs, which have been presented as adjusting items
(refer to note 7).
5. Adjusting items relate to the Retail and Wholesale segment.
Refer to note 7 for details of adjusting items.
Retail/Wholesale Licensing Total
-------------------- -------------------- --------------------
52 weeks 52 weeks 52 weeks 52 weeks 52 weeks 52 weeks
to to to to to to
27 March 28 March 27 March 28 March 27 March 28 March
2021 2020 2021 2020 2021 2020
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- --------- --------- --------- --------- --------- ---------
Additions to non-current
assets 233.6 447.5 - - 233.6 447.5
Total segment
assets 1,952.2 2,020.9 6.7 11.2 1,958.9 2,032.1
------------------------- --------- --------- --------- --------- --------- ---------
Goodwill 105.2 109.3
Cash and cash
equivalents 1,261.3 928.9
Taxation 176.8 221.9
------------------------- --------- --------- --------- --------- --------- ---------
Total assets per
Balance Sheet 3,502.2 3,292.2
------------------------- --------- --------- --------- --------- --------- ---------
Additional revenue analysis
All revenue is derived from contracts with customers. The Group
derives retail and wholesale revenue from contracts with customers
from the transfer of goods and related services at a point in time.
Licensing revenue is derived over the period the licence agreement
gives the customer access to the Group's trademarks.
52 weeks 52 weeks
to to
27 March 28 March
2021 2020
Revenue by product division GBPm GBPm
---------------------------- --------- ---------
Accessories 840.9 947.5
Women's 652.6 796.5
Men's 667.6 714.8
Children's/Other 144.8 127.2
Retail/Wholesale 2,305.9 2,586.0
Licensing 38.0 47.1
---------------------------- --------- ---------
Total 2,343.9 2,633.1
---------------------------- --------- ---------
52 weeks 52 weeks
to to
27 March 28 March
2021 2020
Revenue by destination GBPm GBPm
----------------------- --------- ---------
Asia Pacific 1,203.2 1,040.5
EMEIA(1) 628.0 960.6
Americas 474.7 584.9
Retail/Wholesale 2,305.9 2,586.0
Licensing 38.0 47.1
----------------------- --------- ---------
Total 2,343.9 2,633.1
----------------------- --------- ---------
1. EMEIA comprises Europe, Middle East, India and Africa.
Entity-wide disclosures
Revenue derived from external customers in the UK totalled
GBP145.2 million for the 52 weeks to 27 March 2021 (last year:
GBP319.6 million).
Revenue derived from external customers in foreign countries
totalled GBP2,198.7 million for the 52 weeks to 27 March 2021 (last
year: GBP2,313.5 million). This amount includes GBP407.9 million of
external revenues derived from customers in the US (last year:
GBP491.9 million) and GBP751.9 million of external revenues derived
from customers in China (last year: GBP461.5 million).
The total of non-current assets, other than financial
instruments, and deferred tax assets located in the UK is GBP477.2
million (last year: GBP490.8 million). The remaining GBP864.8
million of non-current assets are located in other countries (last
year: GBP894.4 million), with GBP223.4 million located in the US
(last year: GBP232.5 million), GBP115.4 million located in China
(last year: GBP113.6 million), and GBP112.0 million located in
Japan (last year: GBP115.4 million).
5. Net operating expenses
Restated
52 weeks 52 weeks
to to
27 March 28 March
2021 2020
Note GBPm GBPm
------------------------------- ----- --------- ---------
Operating income (15.6) (18.8)
Selling and distribution costs 942.6 1,075.9
Administrative expenses 317.3 283.6
-------------------------------------- --------- ---------
1,244.3 1,340.7
------------------------------------- --------- ---------
Adjusting operating income 6 (81.3) (7.1)
Adjusting operating expenses 6 (21.6) 183.2
------------------------------- ----- --------- ---------
(102.9) 176.1
------------------------------------- --------- ---------
Net operating expenses 1,141.4 1,516.8
-------------------------------------- --------- ---------
As a result of more granular financial information, a prior year
reclassification of GBP217.3 million from Administrative expenses
to Selling and distribution costs has been recognised. This
reclassification related largely to people costs and other indirect
operating costs relating to marketing and supply chain activities
which were historically considered to be administrative in nature
and are now disclosed as Selling and distribution costs based on
the underlying nature of the work being performed. This change has
no impact elsewhere in these financial statements.
Operating income has also been separately disclosed in the
current year. Historically, operating costs were presented net of
operating income. The comparative period has been re-presented for
consistency. For the 52 weeks to 28 March 2020, GBP17.0 million in
Operating income was reclassified from Selling and distribution
costs and GBP1.8 million from Administrative expenses.
6. Profit before taxation
52 weeks 52 weeks
to to
27 March 28 March
2021 2020
Note GBPm GBPm
------------------------------------------------ ---- --------- ---------
Adjusted profit before taxation is stated
after charging/(crediting):
Depreciation of property, plant and equipment
Within cost of sales 2.1 1.2
Within selling and distribution costs 56.0 68.4
Within administrative expenses 13.3 13.7
Depreciation of right-of-use assets
Within cost of sales 0.4 0.4
Within selling and distribution costs 154.6 200.6
Within administrative expenses 17.4 20.1
Amortisation of intangible assets
Within selling and distribution costs 1.7 1.0
Within administrative expenses 31.2 25.4
Loss on disposal of property, plant and
equipment and intangible assets(1) 0.3 0.7
Gain on disposal of right-of-use assets (1.1) (2.1)
Net impairment charge/(reversal) relating
to property, plant and equipment(2) 13 0.8 (2.0)
Net impairment charge relating to right-of-use
assets(3) 14 - 12.8
Impairment of intangible assets(4) 12 8.8 1.6
Employee costs(5) 487.5 478.5
Other lease expense
Property lease variable lease expense 19 118.1 96.2
Property lease in holdover expense 19 15.4 11.2
Non-property short-term lease expense 19 4.8 9.9
Operating lease income
Income from lease of freehold property - (0.7)
Net exchange (gain)/loss on revaluation
of monetary assets and liabilities (5.4) 8.7
Net loss on derivatives - fair value
through profit and loss 7.4 3.4
Receivables net impairment (reversal)/charge(6) (0.9) 3.2
------------------------------------------------ ---- --------- ---------
1. Loss on disposal of property, plant and equipment and
intangible assets for the 52 weeks to 27 March 2021 is presented
excluding GBP23.0 million (last year: GBPnil) relating to the gain
on sale of property in France. This has been presented as an
adjusting item (refer to note 7).
2. Net impairment charge relating to property, plant and
equipment for the 52 weeks to 27 March 2021 is presented excluding
a net reversal of GBP8.8 million (last year: charge of GBP28.4
million) relating to charges as a result of the impact of COVID-19
and a charge of GBP0.5 million (last year: GBPnil) relating to
restructuring costs. These have been presented as adjusting items
(refer to note 7).
3. Net impairment charge of right-of-use assets for the 52 weeks
to 27 March 2021 is presented excluding a net reversal of GBP37.8
million (last year: charge of GBP128.1 million) relating to charges
as a result of the impact of COVID-19 and a charge of GBP4.1
million (last year: credit of GBP0.6 million) relating to
restructuring costs, which have been presented as adjusting items
(refer to note 7).
4. Impairment of intangible assets for the 52 weeks to 28 March
2020 was presented excluding GBP10.0 million relating to charges as
a result of the impact of COVID-19, which was presented as an
adjusting item (refer to note 7).
5. Employee costs for the 52 weeks to 27 March 2021 are
presented excluding a charge of GBP21.0 million (last year: GBP5.4
million) arising as a result of the Group's restructuring
programmes and a charge of GBP4.3 million relating to employee
profit sharing agreements on the sale of property in France, which
have been presented as adjusting items. During the 52 weeks to 28
March 2020 a credit of GBP6.2 million was recognised as an
adjusting item related to the reversal of accrued costs for
share-based payments no longer expected to vest as a result of
COVID-19. Refer to note 7 for further details.
6. Receivables net impairment charge for the 52 weeks to 27
March 2021 is presented excluding a reversal of GBP5.2 million
(last year: charge of GBP11.1 million) relating to charges as a
result of the impact of COVID-19, which has been presented as an
adjusting item (refer to note 7).
52 weeks 52 weeks
to to
27 March 28 March
2021 2020
Note GBPm GBPm
Adjusting items
Adjusting operating items
Impact of COVID-19:
Impairment (reversal)/charge relating
to retail cash generating units 7 (46.6) 156.5
Impairment (reversal)/charge relating
to inventory 7 (22.3) 68.3
Impairment charge relating to intangible
assets 7 - 10.0
Impairment (reversal)/charge relating
to receivables 7 (5.2) 11.1
Other impacts of COVID-19 7 - (5.0)
COVID-19-related rent concessions 7 (54.1) -
Furlough grant income 7 (8.5) -
Other adjusting items:
Gain on disposal of property 7 (18.7) -
Gain on disposal of Beauty operations 7 - (5.0)
Restructuring costs 7 29.8 10.6
Revaluation of deferred consideration
liability 7 0.4 (2.1)
------------------------------------------- ----- --------- ---------
Total adjusting operating items (125.2) 244.4
-------------------------------------------------- --------- ---------
Adjusting financing items
Finance charge on deferred consideration
liability 7 0.7 1.2
Total adjusting financing items 0.7 1.2
-------------------------------------------------- --------- ---------
As at As at
27 March 28 March
2021 2020
GBPm GBPm
------------------------------------------ --------- ---------
Analysis of adjusting operating items:
Included in Operating expenses 5 (102.9) 176.1
Included in Cost of sales (Impairment
(reversal)/charge relating to inventory) (22.3) 68.3
Total (125.2) 244.4
---------------------------------------------- --------- ---------
7. Adjusting items
As at As at
27 March 28 March
2021 2020
GBPm GBPm
--------------------------------- --------- ---------
Total adjusting items (pre-tax) (124.5) 245.6
Tax on adjusting items 21.5 (45.4)
Total adjusting items (post-tax) 103.0 (200.2)
---------------------------------- --------- ---------
Impact of COVID-19
COVID-19 has impacted both business operations and financial
markets worldwide. COVID-19 has also had a significant impact on
the financial results of the Group during the current and previous
year. In the financial statements for the year ended 28 March 2020,
the Group recorded adjusting items relating to the impairment of
the carrying value of assets as a result of the expected impact of
COVID-19 on the Group's activities and future trading. This
resulted in charges of GBP245.9 million relating to impairments of
retail cash generating units, intangible assets and receivables and
to inventory provisions. These charges were presented as adjusting
items as they were considered to be material and one-off in
nature.
At 27 March 2021, these impairments and provisions have been
reviewed and the assumptions updated where appropriate, to reflect
management's latest expectations. The impact of changes in
assumptions has been presented as an update to the adjusting item
charge. Further details regarding the approach applied to measure
these updates are set out below for each of the specific adjusting
items.
Other items, where they are considered one-off in nature and
directly related to the impact of COVID-19, have been presented as
adjusting items. Income recorded in the year following application
of the temporary COVID-19 Related Rent Concession amendment to IFRS
16 has been presented as an adjusting item. This is considered
appropriate given that the amendment to IFRS 16 is only applicable
for a limited period of time and it is explicitly related to
COVID-19. Grant income recorded in the year, relating to government
furlough arrangements worldwide, has also been presented as an
adjusting item, as it is also explicitly related to COVID-19, and
the arrangements are expected to last for a limited period of time.
In aggregate these items give rise to a material amount of income
in the year. Further details of these adjusting items are set out
below.
All other financial impacts of COVID-19 are included in adjusted
operating profit. As a result, additional costs recorded in the
year, including masks, other personal protection equipment, hand
sanitisers, production inefficiencies due to social distancing,
operating costs of retail stores during closure and the cost of
voluntary payment of UK rates, have not been separately presented
as adjusting items. These additional costs are not considered to be
one-off in nature, and in some cases the discrete impact of
COVID-19 on these costs cannot be reliably measured. Hence it is
considered more appropriate to include these additional costs in
adjusted operating profit.
Impairment of retail cash generating units
During the 52 weeks to 28 March 2020, an impairment charge of
GBP156.5 million, recorded within selling and distribution costs in
net operating expenses for impairment of retail store assets due to
the impact of COVID-19, was presented as an adjusting item. It
comprised a charge of GBP28.4 million, recorded against property,
plant and equipment, and a charge of GBP128.1 million, recorded
against right-of-use assets. A related tax credit of GBP28.7
million was also recognised in the year.
During the 52 weeks to 27 March 2021, the impairment provisions
remaining have been reassessed, using management's latest
expectations, and a net reversal of GBP46.6 million has been
recorded and presented as an adjusting item. This comprised a
charge of GBP1.6 million and a reversal of GBP10.4 million against
property, plant and equipment and a charge of GBP11.0 million and a
reversal of GBP48.8 million against right-of-use assets. A related
tax charge of GBP5.2 million has also been recognised in the
year.
Any charges or reversals which did not arise from the
reassessment of the original impairment adjusting item, had they
arisen, would have not have been included in this adjusting item.
However, there were no other impairment charges or reversals
relating to retail cash generating units in the year. Refer to note
13 for details of impairment of retail cash generating units.
Impairment of inventory
During the 52 weeks to 28 March 2020, inventory provisions of
GBP68.3 million were recorded in cost of sales, due to the impact
of COVID-19. These charges related to current and recent seasons
that under normal circumstances would be expected to sell through
with limited loss and were presented as an adjusting item. A
related tax credit of GBP12.5 million was also recognised in the
year.
During the 52 weeks to 27 March 2021, reversals of inventory
provisions, relating to inventory which had been provided for as an
adjusting item at the previous year end and has either been sold,
or is now expected to be sold, at a higher net realisable value
than had been assumed when the provision had been initially
estimated, of GBP22.3 million have been recorded and presented as
an adjusting items. A related tax charge of GBP4.8 million has also
been recognised in the year. All other charges and reversals
relating to inventory provisions have been recorded in adjusted
operating profit. Refer to note 16 for details of inventory
provisions.
Impairment of receivables
During the 52 weeks to 28 March 2020, due to the global
financial uncertainty arising from COVID-19, management reassessed
and increased the expected credit loss rates for trade and other
receivables, resulting in a charge of GBP11.1 million reported
within selling and distributions costs in net operating expenses
for impairment of receivables in the year. This charge relating to
the increase in expected credit loss rates was presented as an
adjusting item. A related tax credit of GBP2.1 million was also
recognised in the year.
During the 52 weeks to 27 March 2021, the expected credit loss
rates have been reassessed, taking into account the experience of
losses incurred during the year and changes in market conditions at
27 March 2021 compared to the previous year end. As a result of
this reassessment, management has reduced some of the expected
credit loss rates. The reversal of GBP5.2 million, resulting from
the reduction in credit loss rate assumption, has also been
recorded as an adjusting item. A related tax charge of GBP1.1
million has also been recognised in the year. All other charges and
reversals relating to impairment of receivables, arising from
changes in the value and aging of the receivables portfolio, have
been included in adjusted operating profit.
COVID-19-related rent concessions
The Group has elected to apply the COVID-19-Related Rent
Concessions amendment to IFRS 16 in the current year as described
in note 1. Eligible rent forgiveness amounts have been treated as
negative variable lease payments, resulting in a credit of GBP54.1
million for the 52 weeks to 27 March 2021 being recorded in net
operating expenses. This income has been presented as an adjusting
item, as set out above. A related tax charge of GBP9.6 million has
also been recognised in the current year.
COVID-19-related furlough grant income
The Group has recorded grant income of GBP8.5 million within
selling and distribution costs in net operating expenses for the 52
weeks to 27 March 2021, relating to government support for
retention of employees on furlough, as a result of COVID-19. These
grants related to income received from a number of government
arrangements worldwide. None of the income related to UK based
employees. This income has been presented as an adjusting item, as
set out above. A related tax charge of GBP2.2 million has also been
recognised in the current year.
Other adjusting items
Gain on disposal of property
On 22 December 2020, the Group completed the sale of an owned
property in France for cash proceeds of GBP27.2 million resulting
in a net gain on disposal of GBP23.0 million, recorded within
administrative expenses in net operating expenses. A profit of
GBP18.7 million has been presented as an adjusting item, after
deducting incremental costs of GBP4.3 million relating to employee
profit sharing agreements. This charge was recognised as an
adjusting item, in accordance with the Group's accounting policy,
as this profit from asset disposal is considered to be material and
one-off in nature. A related tax charge of GBP4.6 million was also
recognised in the year.
Restructuring costs
Restructuring costs of GBP8.2 million (last year: GBP10.6
million) were incurred in the current year, arising as a result of
the Group's cost-efficiency programme announced in May 2016. These
costs were recorded largely within administrative expenses in net
operating expenses and are presented as an adjusting item as they
are considered material and discrete in nature, being part of a
restructuring programme running from May 2016 to March 2021. The
costs in the current year are principally attributable to
redundancies and functional restructuring costs. A related tax
credit of GBP1.6 million (last year: GBP2.2 million) has also been
recognised in the current year.
In July 2020, the Group announced organisational changes which
include the creation of three new business units, allowing the
Group to pool expertise within each unit to enhance product focus,
increase agility and elevate quality. As part of these
organisational changes, which include office space rationalisation,
the Group will further streamline office-based functions to help
improve efficiency. Restructuring costs of GBP21.6 million were
incurred in the current year in relation to these organisational
changes and it is anticipated that total restructuring costs of
GBP45.0 million will be incurred by the end of the programme.
Overall, the programme remains on track to materially complete in
FY2022. The costs principally relate to redundancies and vacant
property. These costs are recorded largely within administrative
expenses in net operating expenses. They are presented as an
adjusting item, in accordance with the Group's accounting policy,
as the costs of the restructuring are considered material and
discrete in nature. A related tax credit of GBP4.4 million has also
been recognised in the current year.
Items relating to the deferred consideration liability
On 22 April 2016, the Group entered into an agreement to
transfer the economic right to the non-controlling interest in
Burberry Middle East LLC to the Group in consideration of
contingent payments to be made to the minority shareholder over the
period to 2023.
A charge of GBP0.4 million in relation to the revaluation of
this balance has been recognised within administrative expenses in
net operating expenses for the 52 weeks to 27 March 2021 (last
year: credit of GBP2.1 million). A financing charge of GBP0.6
million in relation to the unwinding of the discount on the
non-current portion of the deferred consideration liability has
also been recognised for the 52 weeks to 27 March 2021 (last year:
GBP1.0 million). These movements are unrealised.
On 19 September 2018, the Group acquired Burberry Manifattura
S.R.L. Consideration for the acquisition included a future
performance related deferred consideration payment to be made in
2021. A financing charge of GBP0.1 million in relation to the
unwinding of the discount on the non-current portion of the
deferred consideration liability has been recognised for the 52
weeks to 27 March 2021 (last year: GBP0.2 million). These movements
are unrealised.
No tax has been recognised on either of these items, as the
future payments are not considered to be deductible
for tax purposes. These items are presented as adjusting items
in accordance with the Group's accounting policy, as they arise
from changes in the value of the liability for expected future
payments relating to the purchase of a non-controlling interest in
the Group and acquisition of a subsidiary respectively.
Adjusting items relating to prior year
Impact of COVID-19
Impairment of intangible assets
During the 52 weeks to 28 March 2020, following changes to
management's investment plans, due to the potential impact of
COVID-19 on available resources, an impairment charge of GBP10.0
million was recorded in relation to computer software assets under
construction. Due to resulting delay in the development of this
software, management no longer expected to fully utilise the
expenditure incurred to date. A related tax credit of GBP1.9
million was also recognised in the year.
Other impacts of COVID-19
During the 52 weeks to 28 March 2020, a credit of GBP5.0
million, principally related to the reversal of accrued costs for
share-based payments no longer expected to vest as a result of the
impact of COVID-19 on the expected performance of the Group, was
presented as an adjusting item. A related tax charge of GBP1.0
million was also recognised in the year.
Other adjusting items
Gain on disposal of Beauty operations
During the year ended 31 March 2018, the Group entered into two
agreements with Coty Geneva SARL Versoix (Coty) to grant Coty a
licence to sell its fragrance and beauty products and to transfer
the Group's Beauty operations to Coty. In the 52 weeks to 28 March
2020 a credit of GBP5.0 million was recorded relating to
reassessments of provisions for contract termination and
consideration for assets transferred to Coty on completion and was
presented as an adjusting item. A related tax charge of GBP1.0
million was also recognised in the 52 weeks to 28 March 2020.
8. Financing
52 weeks 52 weeks
to to
27 March 28 March
2021 2020
Note GBPm GBPm
------------------------------------------ ---- --------- ---------
Bank interest income - amortised cost 0.6 2.1
Other finance income - amortised cost 0.5 0.6
------------------------------------------ ---- --------- ---------
Finance income - amortised cost 1.1 2.7
Bank interest income - fair value through
profit and loss 2.0 4.9
Finance income 3.1 7.6
Interest expense on lease liabilities 19 (24.9) (24.9)
Interest expense on overdrafts (0.2) (0.5)
Interest expense on borrowings (4.7) (0.1)
Bank charges (1.7) (0.8)
Other finance expense (1.8) (0.3)
------------------------------------------ ---- --------- ---------
Finance expense (33.3) (26.6)
------------------------------------------ ---- --------- ---------
Finance charge on deferred consideration
liability 7 (0.7) (1.2)
Net finance expense (30.9) (20.2)
------------------------------------------ ---- --------- ---------
9. Taxation
Analysis of charge for the year recognised in the Group Income
Statement:
52 weeks 52 weeks
to to
27 March 28 March
2021 2020
GBPm GBPm
-------------------------------------------------- --------- ---------
Current tax
UK corporation tax
Current tax on income for the 52 weeks to 27
March 2021 at 19% (last year: 19%) 48.3 58.7
Double taxation relief (6.7) (3.3)
Adjustments in respect of prior years(1) (23.2) 0.2
-------------------------------------------------- --------- ---------
18.4 55.6
Foreign tax
Current tax on income for the year 50.8 27.4
Adjustments in respect of prior years(1) 19.0 (1.3)
-------------------------------------------------- --------- ---------
Total current tax 88.2 81.7
-------------------------------------------------- --------- ---------
Deferred tax
UK deferred tax
Origination and reversal of temporary differences 22.5 (6.4)
Impact of changes to tax rates - (1.4)
Adjustments in respect of prior years(1) 9.4 (0.6)
-------------------------------------------------- --------- ---------
31.9 (8.4)
Foreign deferred tax
Origination and reversal of temporary differences (6.7) (30.0)
Impact of changes to tax rates (0.3) -
Adjustments in respect of prior years(1) 1.2 3.6
-------------------------------------------------- --------- ---------
Total deferred tax 26.1 (34.8)
-------------------------------------------------- --------- ---------
Total tax charge on profit 114.3 46.9
-------------------------------------------------- --------- ---------
1. Adjustments in respect of prior years relate mainly to a net
increase in provisions for tax contingencies and tax accruals to
tax return adjustments.
Analysis of charge for the year recognised in other
comprehensive income and directly in equity:
52 weeks 52 weeks
to to
27 March 28 March
2021 2020
GBPm GBPm
---------------------------------------------------------- --------- ---------
Current tax
Recognised in other comprehensive income
Current tax (credit)/charge on exchange differences
on loans (foreign currency translation reserve) (2.4) 0.9
Current tax (credit)/charge on cash flow hedges
deferred in equity (hedging reserve) (0.2) 0.3
Current tax charge on cash flow hedges transferred
to income (hedging reserve) 0.2 0.2
Current tax credit on net investment hedges deferred
in equity (hedging reserve) - (0.2)
Total current tax recognised in other comprehensive
income (2.4) 1.2
---------------------------------------------------------- --------- ---------
Recognised in equity
Current tax credit on share options (retained
earnings) (0.1) (0.9)
---------------------------------------------------------- --------- ---------
Total current tax recognised directly in equity (0.1) (0.9)
---------------------------------------------------------- --------- ---------
Deferred tax
Recognised in other comprehensive income
Deferred tax charge on actuarial gains on post-employment
benefit plans 0.2 -
---------------------------------------------------------- --------- ---------
Total deferred tax recognised in other comprehensive
income 0.2 -
---------------------------------------------------------- --------- ---------
Recognised in equity
Deferred tax (credit)/charge on share options
(retained earnings) (0.6) 1.5
---------------------------------------------------------- --------- ---------
Total deferred tax recognised directly in equity (0.6) 1.5
---------------------------------------------------------- --------- ---------
The tax rate applicable on profit varied from the standard rate
of corporation tax in the UK due to the following factors:
52 weeks 52 weeks
to to
27 March 28 March
2021 2020
GBPm GBPm
------------------------------------------------ --------- ---------
Profit before taxation 490.2 168.5
Tax at 19% (last year: 19%) on profit before
taxation 93.1 32.0
Rate adjustments relating to overseas profits 17.5 (2.2)
Permanent differences (1.0) 17.4
Tax on dividends not creditable 0.9 1.2
Current year tax losses not recognised 0.3 2.2
Prior year temporary differences and tax losses
recognised (2.6) (4.2)
Adjustments in respect of prior years 6.4 1.9
Adjustments to deferred tax relating to changes
in tax rates (0.3) (1.4)
------------------------------------------------ --------- ---------
Total taxation charge 114.3 46.9
------------------------------------------------ --------- ---------
Total taxation recognised in the Group Income Statement arises
on the following items:
52 weeks 52 weeks
to to
27 March 28 March
2021 2020
GBPm GBPm
--------------------------------------- --------- ---------
Tax on adjusted profit before taxation 92.8 92.3
Tax on adjusting items 21.5 (45.4)
Total taxation charge 114.3 46.9
--------------------------------------- --------- ---------
10. Earnings per share
The calculation of basic earnings per share is based on profit
or loss attributable to owners 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.
52 weeks 52 weeks
to to
27 March 28 March
2021 2020
GBPm GBPm
-------------------------------------------------- --------- ---------
Attributable profit for the year before adjusting
items(1) 272.7 321.9
Effect of adjusting items(1) (after taxation) 103.0 (200.2)
-------------------------------------------------- --------- ---------
Attributable profit for the year 375.7 121.7
-------------------------------------------------- --------- ---------
1. Refer to note 7 for details of adjusting items.
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 ESOP trusts and treasury shares held by the Company or its
subsidiaries.
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.
52 weeks 52 weeks
to to
27 March 28 March
2021 2020
Millions Millions
--------------------------------------------------- --------- ---------
Weighted average number of ordinary shares in
issue during the year 404.1 408.0
Dilutive effect of the employee share incentive
schemes 1.0 1.0
--------------------------------------------------- --------- ---------
Diluted weighted average number of ordinary shares
in issue during the year 405.1 409.0
--------------------------------------------------- --------- ---------
11. Dividends paid to owners of the Company
52 weeks 52 weeks
to to
27 March 28 March
2021 2020
GBPm GBPm
------------------------------------------------ ---------- ---------
Prior year final dividend paid GBPnil per share
(prior year: 31.5p) - 129.2
Interim dividend paid GBPnil per share (prior
year: 11.3p) - 46.0
------------------------------------------------ ---------- ---------
Total - 175.2
------------------------------------------------ ---------- ---------
A final dividend in respect of the 52 weeks to 27 March 2021 of
42.5p (last year: GBPnil) per share, amounting to GBP171.9 million,
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 6 August 2021 to
the shareholders on the register at the close of business on 2 July
2021. The ex-dividend date is 1 July 2021 and the final day for
dividend reinvestment plan ('DRIP') elections is 16 July 2021.
12. Intangible assets
Intangible
Trademarks, assets
licences in the
and other course
intangible Computer of
Goodwill assets software construction Total
Cost GBPm GBPm GBPm GBPm GBPm
------------------------------- -------- ----------- --------- ------------- ------
As at 30 March 2019 115.1 12.5 153.3 46.9 327.8
Effect of foreign exchange
rate changes 1.0 0.1 0.1 - 1.2
Additions - 0.4 27.0 35.9 63.3
Reclassifications from assets
in the course of construction - 0.2 18.4 (18.6) -
As at 28 March 2020 116.1 13.2 198.8 64.2 392.3
Effect of foreign exchange
rate changes (4.8) - (2.3) - (7.1)
Additions - 0.7 24.5 10.8 36.0
Disposals - - (14.7) - (14.7)
Reclassifications from assets
in the course of construction - - 30.5 (30.5) -
As at 27 March 2021 111.3 13.9 236.8 44.5 406.5
------------------------------- -------- ----------- --------- ------------- ------
Accumulated amortisation
and impairment
------------------------------- -------- ----------- --------- ------------- ------
As at 30 March 2019 6.5 5.2 95.1 - 106.8
Effect of foreign exchange
rate changes 0.3 - 0.2 - 0.5
Charge for the year - 0.9 25.5 - 26.4
Impairment charge on assets - - - 11.6 11.6
As at 28 March 2020 6.8 6.1 120.8 11.6 145.3
Effect of foreign exchange
rate changes (0.7) - (2.1) - (2.8)
Charge for the year - 0.9 32.0 - 32.9
Disposals - - (14.7) - (14.7)
Impairment charge on assets - - 1.2 7.6 8.8
As at 27 March 2021 6.1 7.0 137.2 19.2 169.5
------------------------------- -------- ----------- --------- ------------- ------
Net book value
------------------------------- -------- ----------- --------- ------------- ------
As at 27 March 2021 105.2 6.9 99.6 25.3 237.0
As at 28 March 2020 109.3 7.1 78.0 52.6 247.0
------------------------------- -------- ----------- --------- ------------- ------
During the 52 weeks to 27 March 2021 an impairment charge of
GBP7.6 million (last year: GBP11.6 million) was recognised in
relation to computer software assets under construction and GBP1.2
million (last year: GBPnil) was recognised in relation to computer
software assets following a review of supply chain strategy and
future software requirements. During the 52 weeks to 28 March 2020,
GBP10.0 million of the charge related to rescheduling of the
development of a software project following changes to management's
investment plans due to the impact of COVID-19 and was presented as
an adjusting item (refer to note 7).
Impairment testing of goodwill
The carrying value of the goodwill allocated to cash generating
units:
As at As at
27 March 28 March
2021 2020
GBPm GBPm
-------------------------------- --------- ---------
China 46.8 48.2
Korea 26.5 27.3
Retail and Wholesale segment(1) 18.8 19.7
Other 13.1 14.1
-------------------------------- --------- ---------
Total 105.2 109.3
-------------------------------- --------- ---------
1. Goodwill which arose on acquisition of Burberry Manifattura
S.R.L. has been allocated to the group of cash generating units
which make up the Group's Retail and Wholesale operating segment
cash generating unit. This reflects the level at which the goodwill
is being monitored by management.
The Group tests goodwill for impairment annually or when 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 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 at a value equal to
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 and
the discount rates applied.
The value-in-use calculations have been prepared using
management's cost and revenue projections for the next three years
to 30 March 2024 and a longer-term growth rate of 4% to 28 March
2026. A terminal value has been included in the value-in-use
calculation based on the cash flows for the year ending 28 March
2026 incorporating the assumption that growth beyond 28 March 2026
is equivalent to nominal inflation rates, assumed to be 2%, which
are not significant to the assessment.
The value-in-use estimates indicated that the recoverable amount
of the cash generating unit exceeded the carrying value for each of
the cash generating units. As a result, no impairment has been
recognised in respect of the carrying value of goodwill in the
year.
For the material goodwill balances of China, Korea and the
Retail and Wholesale segment, sensitivity analyses have been
performed by management. The sensitivities include applying a 15%
reduction in revenue and gross profit from management's base cash
flow projections, considering the potential outcome from a more
severe long-term impact of COVID-19. Under this scenario, the
estimated recoverable amount of goodwill in China, Korea and the
Retail and Wholesale segment still exceeded the carrying value.
The pre-tax discount rates for China, Korea and the Retail and
Wholesale segment were 14.1%, 12.3% and 10.1% respectively (last
year: China 15.0%, Korea 13.4%, and the Retail and Wholesale
segment 11.1%).
The other goodwill balance of GBP13.1 million (last year:
GBP14.1 million) consists of amounts relating to seven cash
generating units none of which have goodwill balances individually
exceeding GBP6.0 million as at 27 March 2021 (last year: GBP7.0
million).
13. Property, plant and equipment
Fixtures, Assets
Freehold fittings in the
land and Leasehold and course
buildings improvements equipment of construction Total
Cost GBPm GBPm GBPm GBPm GBPm
---------------------------------- ---------- ------------- ---------- ---------------- -------
As at 30 March 2019 144.8 450.6 349.1 27.0 971.5
---------------------------------- ---------- ------------- ---------- ---------------- -------
Adjustment on initial application
of IFRS 16 - - (2.9) - (2.9)
---------------------------------- ---------- ------------- ---------- ---------------- -------
Adjusted balance as at 31
March 2019 144.8 450.6 346.2 27.0 968.6
---------------------------------- ---------- ------------- ---------- ---------------- -------
Effect of foreign exchange
rate changes 5.7 9.1 7.5 (0.2) 22.1
Additions - 50.9 23.1 21.6 95.6
Disposals (3.6) (26.2) (15.8) (0.7) (46.3)
Reclassifications from assets
in the course of construction - 12.4 11.8 (24.2) -
---------------------------------- ---------- ------------- ---------- ---------------- -------
As at 28 March 2020 146.9 496.8 372.8 23.5 1,040.0
Effect of foreign exchange
rate changes (12.0) (30.0) (21.7) (0.5) (64.2)
Additions - 44.0 11.3 15.0 70.3
Disposals (5.6) (26.6) (45.4) (0.3) (77.9)
Reclassifications from assets
in the course of construction - 8.5 12.2 (20.7) -
As at 27 March 2021 129.3 492.7 329.2 17.0 968.2
---------------------------------- ---------- ------------- ---------- ---------------- -------
Accumulated depreciation
and impairment
---------------------------------- ---------- ------------- ---------- ---------------- -------
As at 30 March 2019 53.6 313.6 297.4 - 664.6
Adjustment on initial application
of IFRS 16 - - (2.2) - (2.2)
---------------------------------- ---------- ------------- ---------- ---------------- -------
Adjusted balance as at 31
March 2019 53.6 313.6 295.2 - 662.4
---------------------------------- ---------- ------------- ---------- ---------------- -------
Effect of foreign exchange
rate changes 2.3 6.8 6.5 - 15.6
Charge for the year 4.1 47.7 31.5 - 83.3
Disposals (0.6) (26.2) (15.8) - (42.6)
Net impairment (reversal)/charge
on assets (0.5) 20.7 5.7 0.5 26.4
---------------------------------- ---------- ------------- ---------- ---------------- -------
As at 28 March 2020 58.9 362.6 323.1 0.5 745.1
---------------------------------- ---------- ------------- ---------- ---------------- -------
Effect of foreign exchange
rate changes (5.5) (22.4) (19.9) - (47.8)
Charge for the year 3.9 45.9 21.6 - 71.4
Disposals (1.5) (26.6) (45.3) - (73.4)
Impairment charge on assets 0.8 1.5 0.6 - 2.9
Impairment reversal on assets - (8.6) (1.8) - (10.4)
As at 27 March 2021 56.6 352.4 278.3 0.5 687.8
---------------------------------- ---------- ------------- ---------- ---------------- -------
Net book value
---------------------------------- ---------- ------------- ---------- ---------------- -------
As at 27 March 2021 72.7 140.3 50.9 16.5 280.4
As at 28 March 2020 88.0 134.2 49.7 23.0 294.9
---------------------------------- ---------- ------------- ---------- ---------------- -------
During the 52 weeks to 27 March 2021, management carried out a
review of retail cash generating units for any indication of
impairment or reversal of impairments previously recorded. Where
indications of impairment charges or reversals were identified, the
impairment review compared the value-in-use of the cash generating
units to their net book values at 27 March 2021. The pre-tax cash
flow projections used for this review were based on financial plans
of expected revenues and costs of each retail cash generating unit,
approved by management, reflecting their latest plans over the next
three years to 30 March 2024, followed by longer-term growth rates
of mid-single digits and inflation rates appropriate to each
store's location. The pre-tax discount rates used in these
calculations were between 9.6% and 14.1% (last year: between 9.2%
and 21.1%) based on the Group's weighted average cost of capital
adjusted for country-specific borrowing costs, tax rates and risks
for those countries in which a charge or reversal was incurred.
Where indicators of impairment have been identified and the
value-in-use was less than the carrying value of the cash
generating unit, an impairment of property, plant and equipment and
right-of-use asset was recorded. Where the value-in-use was greater
than the net book value, and the cash generating unit had been
previously impaired, the impairment was reversed, to the extent
that could be supported by the value-in use and allowing for any
depreciation that would have been incurred during the period the
impairment was recorded. The fair value less cost to sell of the
cash generating units was also considered, taking into account
potential alternative uses for property, such as subletting of
leasehold or sale of freehold. A review for any other indicators of
impairment charges or reversals across the retail portfolio was
also carried out.
In the financial statements for the year ended 28 March 2020 a
charge of GBP156.5 million was recorded, as an adjusting item
within net operating expenses, relating to the impairment of retail
cash generating units as a result of the impact of COVID-19. During
the 52 weeks to 27 March 2021, where these impairments, previously
charged as an adjusting item, were reassessed and updated, any
reversal or additional charge was also recorded as an adjusting
item. This resulted in a net impairment reversal of GBP46.6 million
reflecting improved trading expectations compared to those assumed
at 28 March 2020 which has also been presented as an adjusting item
in the current year. A charge of GBP1.6 million and a reversal of
GBP10.4 million was recorded against property, plant and equipment
(last year: net impairment charge of GBP28.4 million) and a charge
of GBP11.0 million and a reversal of GBP48.8 million was recorded
against right-of-use assets (last year: net impairment charge of
GBP128.1 million). Refer to note 14 for further details of
right-of-use assets. Refer to note 7 for details of adjusting
items.
A net charge of GBPnil (last year: GBP11.2 million) was recorded
within net operating expenses as a result of the annual review of
impairment for all other retail store assets, excluding those
impaired as a result of the impact of COVID-19. A charge of GBPnil
(last year: credit of GBP2.0 million) was recorded against
property, plant and equipment and a charge of GBPnil (last year:
GBP13.2 million) was recorded against right-of-use assets.
Management has considered the potential impact of changes in
assumptions on the impairment recorded against the Group's retail
assets. Given the significant uncertainty regarding the impact of
COVID-19 on the Group's retail operations and on the global
economy, management has considered sensitivities to the impairment
charge as a result of changes to the estimate of future revenues
achieved by the retail stores. The sensitivities applied are an
increase or decrease in revenue of 15% from the estimate used to
determine the impairment charge or reversal. It is estimated that a
15% decrease/increase in revenue assumptions for the 53 weeks to 02
April 2022, with no change to subsequent forecast revenue growth
rate assumptions, would result in a GBP54.2 million increase /
GBP26.4 million decrease in the impairment charge of retail store
assets in the 52 weeks to 27 March 2021.
The net impairment reversal recorded in property, plant and
equipment related to 25 retail cash generating units (last year:
net impairment charge related to 140 retail cash generating units)
for which the total recoverable amount at the balance sheet date is
GBP32.6 million (last year: GBP59.9 million).
In addition, an impairment charge of GBP1.3 million (last year:
GBPnil) was recognised in relation to non-retail property, plant
and equipment, of which GBP0.5 million was recognised as part of
restructuring costs in adjusting items. Refer to note 7 for details
of adjusting items. As a result the total net impairment reversal
for property, plant and equipment was GBP7.5 million (last year:
net impairment charge of GBP26.4 million).
14. Right-of-use assets
Property Non-property
right- right-of-use
of-use assets assets Total
Net book value GBPm GBPm GBPm
---------------------------------- -------------- ------------- -------
As at 30 March 2019 - - -
Adjustment on initial application
of IFRS 16 877.4 0.7 878.1
---------------------------------- -------------- ------------- -------
Adjusted balance as at 31 March
2019 877.4 0.7 878.1
---------------------------------- -------------- ------------- -------
Effect of foreign exchange rate
changes 22.9 - 22.9
Additions 277.9 - 277.9
Remeasurements 16.5 - 16.5
Depreciation for the year (220.8) (0.3) (221.1)
Net impairment charge on assets (140.3) - (140.3)
---------------------------------- -------------- ------------- -------
As at 28 March 2020 833.6 0.4 834.0
---------------------------------- -------------- ------------- -------
Effect of foreign exchange rate
changes (38.7) - (38.7)
Additions 127.3 - 127.3
Remeasurements(1) 34.2 - 34.2
Depreciation for the year (172.1) (0.3) (172.4)
Impairment charge on assets (15.1) - (15.1)
Impairment reversal on assets 48.8 - 48.8
---------------------------------- -------------- ------------- -------
As at 27 March 2021 818.0 0.1 818.1
---------------------------------- -------------- ------------- -------
1. Remeasurements of lease liabilities include COVID-19-related
rent forgiveness of GBP54.1 million (last year: nil) which have
been recognised as a credit in the Income Statement at 27 March
2021 (refer to note 19).
As a result of the assessment of retail cash generating units
for impairment, an impairment charge of GBP11.0 million and a
reversal of GBP48.8 million, resulting in a net reversal of GBP37.8
million (last year: net impairment charge of GBP141.3 million) was
recorded for impairment of right-of-use assets. Refer to note 13
for further details of impairment assessment of retail cash
generating units. This net impairment reversal of GBP37.8 million
relates to the impact of COVID-19 on the value-in-use of retail
cash generating units (last year: GBP128.1 million charge). No
impairment charge or reversal relating to other trading impacts was
recognised during the year (last year: GBP13.2 million charge). The
charge relating to COVID-19 has been presented as an adjusting item
(refer to note 7).
The net impairment reversal recorded in right-of-use assets
relates to 27 retail cash generating units (last year: net
impairment charge related to 140 retail cash generating units) for
which the total recoverable amount at the balance sheet date is
GBP199.6 million (last year: GBP344.7 million).
In addition, an impairment charge of GBP4.1 million (last year:
impairment reversal of GBP1.0 million) was recognised in relation
to vacant office premises. This charge was recognised as part of
restructuring costs in adjusting items (last year: reversal of
GBP0.6 million). Refer to note 7 for details of adjusting
items.
As a result, the net impairment reversal for right-of-use assets
was, in total, GBP33.7 million (last year: net impairment charge of
GBP140.3 million).
15. Trade and other receivables
As at As at
27 March 28 March
2021 2020
GBPm GBPm
---------------------------------------------- --------- ---------
Non-current
Other financial receivables(1) 40.9 46.9
Other non-financial receivables(2) 1.4 4.1
Prepayments 2.7 2.7
---------------------------------------------- --------- ---------
Total non-current trade and other receivables 45.0 53.7
---------------------------------------------- --------- ---------
Current
Trade receivables 154.8 123.5
Provision for expected credit losses (7.9) (16.5)
---------------------------------------------- --------- ---------
Net trade receivables 146.9 107.0
Other financial receivables(1) 33.1 31.9
Other non-financial receivables(2) 48.5 67.4
Prepayments 39.6 35.0
Accrued income 8.8 10.8
---------------------------------------------- --------- ---------
Total current trade and other receivables 276.9 252.1
---------------------------------------------- --------- ---------
Total trade and other receivables 321.9 305.8
---------------------------------------------- --------- ---------
1. Other financial receivables include rental deposits, cash
settled equity swaps and other sundry debtors.
2. Other non-financial receivables relates to indirect taxes,
other taxes and duties and statutory employee furlough
receivables.
Included in total trade and other receivables are non-financial
assets of GBP92.2 million (last year: GBP109.2 million).
16. Inventories
As at As at
27 March 28 March
2021 2020
GBPm GBPm
------------------ --------- ---------
Raw materials 12.2 13.3
Work in progress 0.8 1.5
Finished goods 389.1 435.7
------------------ --------- ---------
Total inventories 402.1 450.5
------------------ --------- ---------
As at As at
27 March 28 March
2021 2020
GBPm GBPm
------------------------- --------- ---------
Total inventories, gross 518.7 620.0
Provisions (116.6) (169.5)
------------------------- --------- ---------
Total inventories, net 402.1 450.5
------------------------- --------- ---------
Inventory provisions of GBP116.6 million (last year: GBP169.5
million) are recorded, representing 22.5% (last year: 27.3%) of the
gross value of inventory. The provisions reflect management's best
estimate of the net realisable value of inventory, where this is
considered to be lower than the cost of the inventory.
The cost of inventories recognised as an expense and included in
cost of sales amounted to GBP651.7 million (last year: GBP893.1
million).
As at 28 March 2020, GBP68.3 million of the provision was
included in cost of sales as a result of the estimated reduction in
net realisable value of inventory due to COVID-19 and was presented
as an adjusting item. This provision related to the current season
and recent seasons that, under more normal circumstances, would be
expected to sell through with limited loss. In the current year,
GBP3.9 million of the provision has been utilised, where inventory
previously provided for had been sold below cost in the current
year and is recognised in cost of sales. An additional GBP22.3
million has been released upon re-assessment of the provision,
where inventory previously provided for has been sold, or is now
expected to be sold, for a higher net realisable value than has
been estimated last year as performance during the current year has
exceeded, and is expected to continue to exceed, the assumptions
made at last year end. This reversal is presented as an adjusting
item. Refer to note 7 for details of adjusting items. All other
charges and reversals relating to inventory provisions have been
included in adjusted operating profit.
Taking into account the significant uncertainty regarding the
outcome of COVID-19 and its impact on retail operations and the
global economy, as well as other factors impacting the net
realisable value of inventory including trading assumptions being
higher or lower than expected, management considers that a
reasonable potential range of outcomes could result in an increase
or decrease in inventory provisions of GBP24.0 million in the next
12 months. This would result in a potential range of inventory
provisions of 17.9% to 27.1% as a percentage of the gross value of
inventory as at 27 March 2021.
The net movement in inventory provisions included in cost of
sales for the 52 weeks to 27 March 2021 was a release of GBP10.5
million (last year: charge of GBP88.9 million). The total release
of inventory provisions during the current year, which is included
in the net movement, was GBP67.1 million (last year: reversal of
GBP16.2 million). Both these amounts include the reversal of
GBP22.3 million, referred to above, which has been presented as an
adjusting item.
17. Cash and cash equivalents
As at As at
27 March 28 March
2021 2020
GBPm GBPm
------------------------------------------------- --------- ---------
Cash and cash equivalents held at amortised cost
Cash at bank and in hand 189.8 138.7
Short-term deposits 159.4 126.3
------------------------------------------------- --------- ---------
349.2 265.0
Cash and cash equivalents held at fair value
through the profit and loss
Short-term deposits 912.1 663.9
------------------------------------------------- --------- ---------
Total 1,261.3 928.9
------------------------------------------------- --------- ---------
Cash and cash equivalents classified as fair value through
profit and loss relate to deposits held in low volatility net asset
value money market funds. The cash is available immediately and,
since the funds are managed to achieve low volatility, no
significant change in value is anticipated. The funds are monitored
to ensure there are no significant changes in value.
As at 27 March 2021 and 28 March 2020, no impairment losses were
identified on cash and cash equivalents held at amortised cost.
18. Trade and other payables
As at As at
27 March 28 March
2021 2020
GBPm GBPm
------------------------------------------- --------- ---------
Non-current
Other payables(1) 7.9 7.1
Deferred income and non-financial accruals 14.2 4.1
Contract liabilities 70.4 77.0
Deferred consideration(2) 6.9 14.1
------------------------------------------- --------- ---------
Total non-current trade and other payables 99.4 102.3
------------------------------------------- --------- ---------
Current
Trade payables 129.3 197.3
Other taxes and social security costs 52.2 48.1
Other payables(1) 12.6 3.9
Accruals 169.1 175.2
Deferred income and non-financial accruals 6.6 6.0
Contract liabilities 13.4 12.7
Deferred consideration(2) 9.7 4.3
------------------------------------------- --------- ---------
Total current trade and other payables 392.9 447.5
------------------------------------------- --------- ---------
Total trade and other payables 492.3 549.8
------------------------------------------- --------- ---------
1. Other payables are comprised of COVID-19 rent deferrals,
interest and employee related liabilities.
2. Deferred consideration relates to the acquisition of Burberry
Manifattura S.R.L. on 19 September 2018 and of the economic right
to the non-controlling interest in Burberry Middle East LLC on 22
April 2016. The change in the deferred consideration liability in
the period arises as a result of a financing cash outflow and
non-cash movements. Payments of GBP2.6 million were made in the 52
weeks to 27 March 2021 (last year: GBP2.7 million).
Included in total trade and other payables are non-financial
liabilities of GBP156.8 million (last year: GBP147.9 million).
Contract liabilities
Retail contract liabilities relate to unredeemed balances on
issued gift cards and similar products, and advanced payments
received for sales which have not yet been delivered to the
customer. Licensing contract liabilities relate to deferred revenue
arising from the upfront payment for the Beauty licence which is
being recognised in revenue over the term of the licence on a
straight-line basis reflecting access to the trademark over the
licence period to 2032.
As at As at
27 March 28 March
2021 2020
GBPm GBPm
------------------------------- --------- ---------
Retail contract liabilities 6.8 6.1
Licensing contract liabilities 77.0 83.6
Total contract liabilities 83.8 89.7
------------------------------- --------- ---------
The amount of revenue recognised in the year relating to
contract liabilities at the start of the year is set out in the
following table. All revenue in the year relates to performance
obligations satisfied in the year. All contract liabilities at the
end of the year relate to unsatisfied performance obligations.
52 weeks
to 52 weeks
27 March to 28 March
2021 2020
GBPm GBPm
------------------------------------------------- --------- ------------
Retail revenue relating to contract liabilities 2.4 2.4
Deferred revenue from Beauty licence 6.6 6.6
Revenue recognised that was included in contract
liabilities at the start of the year 9.0 9.0
------------------------------------------------- --------- ------------
19. Lease liabilities
Property Non-property
lease liabilities lease liabilities Total
GBPm GBPm GBPm
---------------------------------------- ------------------ ------------------ -------
Balance as at 30 March 2019 - - -
Adjustment on initial application
of IFRS 16 1,044.3 0.7 1,045.0
---------------------------------------- ------------------ ------------------ -------
Adjusted balance as at 31 March 2019 1,044.3 0.7 1,045.0
---------------------------------------- ------------------ ------------------ -------
Effect of foreign exchange rate changes 31.9 - 31.9
Created during the year 272.3 - 272.3
Amounts paid(1) (253.0) (0.3) (253.3)
Discount unwind 24.9 - 24.9
Remeasurements 4.7 - 4.7
---------------------------------------- ------------------ ------------------ -------
Balance as at 28 March 2020 1,125.1 0.4 1,125.5
---------------------------------------- ------------------ ------------------ -------
Effect of foreign exchange rate changes (52.8) - (52.8)
Created during the year 124.4 - 124.4
Amounts paid(1) (176.8) (0.3) (177.1)
Discount unwind 24.9 - 24.9
Remeasurements(2) (21.0) - (21.0)
Transfers(3) (4.3) - (4.3)
---------------------------------------- ------------------ ------------------ -------
Balance as at 27 March 2021 1,019.5 0.1 1,019.6
---------------------------------------- ------------------ ------------------ -------
As at As at
27 March 28 March
2021 2020
GBPm GBPm
------------------------------------- --------- ---------
Analysis of total lease liabilities:
Non-current 809.6 910.0
Current 210.0 215.5
Total 1,019.6 1,125.5
------------------------------------- --------- ---------
1. The amounts paid of GBP177.1 million (last year: GBP253.3
million) includes GBP152.2 million (last year: GBP228.4 million)
arising as a result of a financing cash outflow and GBP24.9 million
(last year: GBP24.9 million) arising as a result of an operating
cash outflow.
2. Remeasurements include COVID-19-related rent forgiveness of
GBP54.1 million (last year: nil) which have been recognised as a
credit in the Income Statement at 27 March 2021. This credit is
included as an adjusting item. Refer to note 7.
3. Transfers of GBP4.3 million relate to COVID-19-related rent
deferrals which have been transferred to Other payables.
The Group enters into property leases for retail properties,
including stores, concessions, warehouse and storage locations and
office property. The remaining lease terms for these properties
range from a few months to 17 years (last year: few months to 18
years). Many of the leases include break options and/or extension
options to provide operational flexibility. Some of the leases for
concessions have rolling lease terms or rolling break options.
Management assesses the lease term at inception based on the facts
and circumstances applicable to each property including the period
over which the investment appraisal was initially considered.
Potential future undiscounted lease payments related to periods
following the exercise date of an extension or break option not
included in the lease term, and therefore not included in lease
liabilities, are approximately GBP425 million in relation to the
next available extension option which are assessed as not
reasonably certain to be exercised and GBP125 million in relation
to break options which are expected to be exercised.
Management reviews the retail lease portfolio on an ongoing
basis, taking into account retail performance and future trading
expectations. Management may exercise extension options, negotiate
lease extensions or modifications. In other instances, management
may exercise break options, negotiate lease reductions or decide
not to negotiate a lease extension at the end of the lease term.
The most significant factor impacting future lease payments is
changes management choose to make to the store portfolio.
Future increases and decreases in rent linked to an inflation
index or rate review are not included in the lease liability until
the change in cash flows takes effect. Approximately 20% (last
year: 20%) of the Group's lease liabilities are subject to
inflation linked reviews and 37% (last year: 33%) are subject to
rent reviews. Rental changes linked to inflation or rent reviews
typically occur on an annual basis.
Many of the retail property leases also incur payments based on
a percentage of revenue achieved at the location. Changes in future
variable lease payments will typically reflect changes in the
Group's retail revenues, including the impact of regional mix.
The Group also enters into non-property leases for equipment,
advertising fixtures and machinery. Generally, these leases do not
include break or extension options. The most significant impact to
future cash flows relating to leased equipment, which are primarily
short-term, would be the Group's usage of leased equipment to a
greater or lesser extent.
Details of income statement charges and income from leases are
set out in note 6. The right-of-use asset categories on which
depreciation is incurred are presented in note 14. Interest expense
incurred on lease liabilities is presented in note 8.
Total cash outflows in relation to leases in the 52 weeks ended
27 March 2021 are GBP312.2 million (last year: GBP383.4 million).
This relates to payments of GBP152.2 million on lease principal
(last year: GBP228.4 million), GBP24.9 million on lease interest
(last year: GBP24.9 million), GBP114.9 million on variable lease
payments (last year: GBP99.3 million), and GBP20.2 million other
lease payments principally relating to short-term leases and leases
in holdover (last year: GBP30.8 million).
20. Provisions for other liabilities and charges
Property Other
obligations costs Total
GBPm GBPm GBPm
---------------------------------------- ------------ ------ ------
Balance as at 30 March 2019 79.4 5.9 85.3
Adjustment on initial application of
IFRS 16 (48.0) - (48.0)
---------------------------------------- ------------ ------ ------
Adjusted balance as at 31 March 2019 31.4 5.9 37.3
---------------------------------------- ------------ ------ ------
Effect of foreign exchange rate changes 1.1 0.1 1.2
Created during the year 7.3 3.9 11.2
Discount unwind 0.1 - 0.1
Utilised during the year (3.1) (2.1) (5.2)
Released during the year (1.3) (1.5) (2.8)
---------------------------------------- ------------ ------ ------
Balance as at 28 March 2020 35.5 6.3 41.8
Effect of foreign exchange rate changes (2.3) (0.4) (2.7)
Created during the year 9.1 10.7 19.8
Discount unwind 0.7 - 0.7
Utilised during the year (0.7) (0.8) (1.5)
Released during the year (0.7) (1.6) (2.3)
---------------------------------------- ------------ ------ ------
Balance as at 27 March 2021 41.6 14.2 55.8
---------------------------------------- ------------ ------ ------
The net charge in the year for property obligations is GBP8.4
million (last year: GBP6.0 million), relating to additional
property reinstatements costs. The net charge in the year for other
costs of GBP9.1 million (last year: GBP2.4 million) relates to
expected future outflows for property disputes, employee matters
and tax compliance.
As at As at
27 March 28 March
2021 2020
GBPm GBPm
------------------------------ --------- ---------
Analysis of total provisions:
Non-current 31.8 28.6
Current 24.0 13.2
------------------------------ --------- ---------
Total 55.8 41.8
------------------------------ --------- ---------
The non-current provisions relate to property reinstatement
costs which are expected to be utilised within 17 years (last year:
18 years).
21. Bank overdrafts
Included within bank overdrafts is GBP45.4 million (last year:
GBP40.9 million) representing balances on cash pooling arrangements
in the Group.
The Group has a number of committed and uncommitted arrangements
agreed with third parties. At 27 March 2021, the Group held bank
overdrafts of GBPnil (last year: GBP0.7 million) excluding balances
on cash pooling arrangements.
The fair value of overdrafts approximate the carrying amount
because of the short maturity of these instruments.
22. Borrowings
As at 28 As at 27
March Proceeds Repayment Non-cash March
2020 from borrowings of borrowings movements 2021
GBPm GBPm GBPm GBPm GBPm
-------------------------- -------- ---------------- -------------- ---------- --------
Non-current
Revolving credit facility 300.0 - (300.0) - -
1.125% GBP300m medium
term notes 2025 - 296.7 - 0.4 297.1
Current
Commercial paper issued
under CCFF program - 298.4 (299.8) 1.4 -
-------------------------- -------- ---------------- -------------- ---------- --------
Total borrowings 300.0 595.1 (599.8) 1.8 297.1
-------------------------- -------- ---------------- -------------- ---------- --------
On 25 November 2014, the Group entered into a GBP300.0 million
multi-currency revolving credit facility with a syndicate of banks.
In March 2020, the Group drew down on this facility in full. On 9
June 2020 the Group repaid this facility in full. On 18 June 2020
the Group extended the facility for 12 months, and it now matures
in November 2022. A waiver for the existing leverage covenant for
the periods ending up to and including 25 September 2021 and a
restriction on shareholder distributions during the period of the
waiver, which the Group can opt out of prior to 25 September 2021,
was agreed. As a result of the intention to declare a final
dividend, the Group will need to opt out of the waiver prior to the
Annual General Meeting in July 2021.
The Group is in compliance with the financial leverage and other
covenants within this facility, taking into account the waiver
referred to above, and has been in compliance throughout the
financial year. The Group expects to be in compliance with the
covenants, as required, when the waiver is opted out of before the
Annual General Meeting.
On 14 May 2020, Burberry Limited issued commercial paper with a
face value of GBP300.0 million, issued at a discount with zero
coupon, and a maturity of 17 March 2021. The commercial paper was
issued under a GBP300.0 million facility the Group agreed under the
UK Government sponsored COVID Corporate Finance Facility (CCFF). An
increase to the Group's CCFF of GBP300.0 million to GBP600.0
million was made available from 29 May 2020 however no further
commercial paper was issued. The CCFF was repaid in full on 10
February 2021 and the facility expired on 23 March 2021.
On 21 September 2020, Burberry Group plc issued medium term
notes with a face value of GBP300.0 million maturing on 21
September 2025 (the sustainability bond). Proceeds from the
sustainability bond will allow the Group to finance projects which
support the Group's sustainability agenda. There are no financial
penalties for not using the proceeds as anticipated. Interest on
the sustainability bond is payable semi-annually.
During the year ending 27 March 2021 the non-cash changes to
bank borrowing amounted to GBP1.8 million (last year: GBPnil).
23. Share capital and reserves
Allotted, called up and fully paid share capital Number GBPm
------------------------------------------------- ----------- ----
Ordinary shares of 0.05p (as at 28 March 2020:
0.05p) each
------------------------------------------------- ----------- ----
As at 30 March 2019 411,456,001 0.2
Allotted on exercise of options during the year 434,790 -
Cancellation of treasury shares (7,184,905) -
------------------------------------------------- ----------- ----
As at 28 March 2020 404,705,886 0.2
Allotted on exercise of options during the year 158,473 -
As at 27 March 2021 404,864,359 0.2
------------------------------------------------- ----------- ----
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 52 weeks to 27 March 2021, the
Company did not enter into any share buy-back agreements (last
year: GBP150.0 million). Own shares purchased by the Company, as
part of a share buy-back programme, are classified as treasury
shares and their cost offset against retained earnings. When
treasury shares are cancelled, a transfer is made from retained
earnings to the capital redemption reserve, equivalent to the
nominal value of the shares purchased and subsequently cancelled.
In the 52 weeks to 27 March 2021, no treasury shares were cancelled
(last year: 7.2 million treasury shares with a nominal value of
GBP3,600).
The cost of shares purchased by ESOP trusts are offset against
retained earnings, as the amounts paid reduce the profits available
for distribution by the Company. As at 27 March 2021, the amount of
own shares held by ESOP trusts and offset against retained earnings
is GBP12.9 million (last year: GBP19.5 million). As at 27 March
2021, the ESOP trusts held 0.8 million shares (last year: 1.2
million) in the Company, with a market value of GBP15.0 million
(last year: GBP15.7 million). In the 52 weeks to 27 March 2021 the
ESOP trusts and the Company have waived their entitlement to
dividends of GBPnil (last year: GBP1.0 million).
The capital reserve consists of non-distributable reserves and
the capital redemption reserve arising on the purchase of own
shares.
Other reserves in the Statement of Changes in Equity consists of
the capital reserve, the foreign currency translation reserve, and
the hedging reserves. The hedging reserves consist of the cash flow
hedge reserve and the net investment hedge reserve.
Hedging reserves
----------------------------- -------- ------------------------- ------------ ------
Foreign
currency
Capital Cash flow Net investment translation
reserve hedges hedge reserve Total
GBPm GBPm GBPm GBPm GBPm
----------------------------- -------- --------- -------------- ------------ ------
Balance as at 30 March
2019 41.1 (1.9) 5.4 227.7 272.3
Other comprehensive income:
Cash flow hedges - gains
deferred in equity - 1.8 - - 1.8
Cash flow hedges - losses
transferred to income - 0.9 - - 0.9
Net investment hedges
- losses deferred in equity - - (1.2) - (1.2)
Foreign currency translation
differences - - - 18.4 18.4
Tax on other comprehensive
income - (0.5) 0.2 (0.9) (1.2)
----------------------------- -------- --------- -------------- ------------ ------
Total comprehensive income
for the year - 2.2 (1.0) 17.5 18.7
----------------------------- -------- --------- -------------- ------------ ------
Balance as at 28 March
2020 41.1 0.3 4.4 245.2 291.0
Other comprehensive income:
Cash flow hedges - losses
deferred in equity - (0.9) - - (0.9)
Cash flow hedges - losses
transferred to cost of
sales - 0.9 - - 0.9
Foreign currency translation
differences - - - (51.2) (51.2)
Tax on other comprehensive
income - - - 2.4 2.4
----------------------------- -------- --------- -------------- ------------ ------
Total comprehensive loss
for the year - - - (48.8) (48.8)
----------------------------- -------- --------- -------------- ------------ ------
Balance as at 27 March
2021 41.1 0.3 4.4 196.4 242.2
----------------------------- -------- --------- -------------- ------------ ------
As at 27 March 2021 the amount held in the hedging reserve
relating to matured net investment hedges is GBP4.4 million net of
tax (last year: GBP4.4 million).
24. Capital commitments
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.
As at As at
27 March 28 March
2021 2020
GBPm GBPm
------------------------------------------------ --------- ---------
Capital commitments contracted but not provided
for:
Property, plant and equipment 25.0 29.5
Intangible assets 2.7 5.2
------------------------------------------------ --------- ---------
Total 27.7 34.7
------------------------------------------------ --------- ---------
25. 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:
52 weeks 52 weeks
to to
27 March 28 March
2021 2020
GBPm GBPm
-------------------------------------------------- --------- ---------
Salaries, short-term benefits and social security
costs 7.8 7.9
Termination benefits 0.5 -
Share--based compensation (all awards and options
settled in shares) 1.5 (0.8)
-------------------------------------------------- --------- ---------
Total 9.8 7.1
-------------------------------------------------- --------- ---------
There were no other material related party transactions in the
year.
26. Transactions with non-controlling interests
On 11 January 2021 the Group acquired the remaining 25% economic
interest in Burberry Saudi Limited Co. which was held by Fawaz
Abdulaziz Alhokair & Co, a non-Group company, for consideration
of SAR 9 million (GBP1.7 million), bringing the Group's
shareholding from 75% to 100%. The impact of this transactions has
been presented in the financial statements of the Group as a charge
taken through Statement of Changes in Equity of GBP0.2 million and
a cash outflow recognised in the Statement of Cash Flows of GBP1.7
million. Non-controlling interests with a book value of GBP1.5
million were transferred to retained earnings
27. Contingent liabilities
The Group is subject to claims against it and to tax audits in a
number of jurisdictions which arise in the ordinary course of
business. These typically relate to Value Added Taxes, sales taxes,
customs duties, corporate taxes, transfer pricing, payroll taxes,
various contractual claims, legal proceedings and other matters.
Where appropriate, the estimated cost of known obligations have
been provided in these financial statements in accordance with the
Group's accounting policies. The Group does not expect the outcome
of current similar contingent liabilities to have a material effect
on the Group's financial position.
28. Events after the balance sheet date
In April 2021, the Group entered into agreements to sell two
freehold properties, which are currently owned by the Group. One of
the properties is held as an investment property at 27 March 2021.
The disposal of this property is expected to complete in the first
half of the next financial year. It has not been presented as held
for sale as its net book value, being GBP2.4 million, is not
considered significant. The other property is held in property,
plant and equipment. Its disposal is expected to complete more than
12 months after the balance sheet date and hence it has not been
classified as held for sale on the balance sheet.
These disposals are expected to result in net cash proceeds of
approximately GBP17.0 million and profits on disposal of
approximately GBP5.0 million in aggregate.
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END
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