REG - Burberry Group PLC - Burberry Preliminary Results
18/05/2022 07:00
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RNS Number : 8590L Burberry Group PLC 18 May 2022
18 May 2022
Burberry Group plc
Preliminary results for 53 weeks ended 2 April 2022
Continued focus on luxury and accelerating growth
"Burberry is a unique British company with an extraordinary history and
heritage and it is a privilege to take the reins in this next phase. The
company has made great progress over the last five years to elevate the brand,
product and customer experience into the luxury space. I look forward to
setting out my plans for building on these strong foundations and accelerating
growth at the interim results in November."
Jonathan Akeroyd, Chief Executive Officer
Period ended 53 weeks ended 52 weeks ended 27 March YoY % change YoY % change
2 April 53 vs 52-week 52 vs 52-week
£ million 2022 2021 Reported FX CER
Revenue 2,826 2,344 21 23
Retail comparable store sales* 18% (6% vs LLY**) (9%)
Retail full-price comparable store sales* 24% (30% vs LLY**) 7%
Adjusted operating profit* 523 396 32 38
Adjusted operating profit margin * 18.5% 16.9% +160bps +210bps
Adjusted Diluted EPS (pence)* 94.0 67.3 40 49
Reported operating profit 543 521 4
Reported operating profit margin 19.2% 22.2%
Reported diluted EPS (pence) 97.7 92.7 5
Free cash flow* 340 349
Dividend (pence) 47.0 42.5 11
*See page 17 for definitions of alternative performance measures, **LLY is
compared with FY20
FY22 is a 53-week year. The comparative period is 52 weeks to 27 March 2021.
To aid understanding, we are providing CER percentage changes on a 52-week
basis while absolute figures will be on a reported basis including the 53(rd)
week unless otherwise stated. FY23 will be a 52-week year.
· Despite a continuing challenging external environment, FY22 revenue
increased 10% at CER vs LLY (+23% vs LY) with a material improvement in the
quality of our sales mix
· Adjusted operating profit ahead of guidance, up 38% at CER to £523m.
Adjusted operating margin +210bps at CER demonstrates significant progress
towards our medium-term ambition, supported by a strong gross margin
· Q4 comparable store sales grew 7% vs LY with COVID-19 lockdowns in
Mainland China weighing on performance in March
· Strong brand momentum; excellent response to first in-person runway
show in two years
· Continued investment in outerwear and leather goods with full-price
sales up 39% and 28% vs LLY respectively in the year
· Introduced new store concept, which is transforming how customers
experience brand and product; 47 stores now in the new design, including Paris
flagship on Rue Saint Honoré
· Substantially met 2017-2022 responsibility targets; set new
industry-leading climate and nature commitments
· Strong financials and cash conversion above 100%. Full-year dividend
per share of 47.0p up 11% vs LY, restoring our normal pay-out ratio, and
planned £400m share buy back for completion in FY23
Outlook
We maintain our guidance of high single-digit revenue growth and meaningful
margin accretion at CER in the medium-term. Our outlook is dependent on the
impact of COVID-19 and rate of recovery in consumer spending in Mainland
China. While the current macro-economic environment creates some near term
uncertainty, we are actively managing the headwind from inflation. Based on 6
May 2022 spot rates we expect a currency tailwind of £159m on revenue and
£92m on adjusted operating profit in FY23.
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 17.
Certain financial data within this announcement have been rounded. Growth
rates and ratios are calculated on unrounded numbers.
Enquiries
Investors and analysts 020 3367 4458
Julian Easthope VP, Investor Relations julian.easthope@burberry.com (mailto:julian.easthope@burberry.com)
Media 020 3367 3764
Andrew Roberts SVP, Corporate Relations and Engagement andrew.roberts@burberry.com
· There will be a presentation today at 9.30am (UK time) to
investors and analysts at Horseferry House, Horseferry Road, London, SW1P 2AW
· The presentation can be viewed live on the Burberry website
www.burberryplc.com (http://www.burberryplc.com) and can also be accessed live
via a listen only dial-in facility on +44 (0)20 3936 2999 (access code 069960)
· 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 15
July 2022
· The AGM will be held on 12 July 2022
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
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Twitter: @BurberryCorp
LinkedIn: Burberry
GROUP FINANCIAL HIGHLIGHTS
Revenue
· Revenue £2,826m +23% CER, +21% reported
· Retail comparable store sales +18% (H1: +37%; H2: +7%)
· Retail full-price comparable store sales +24% (H1: +49%; H2: 10%)
Adjusted profit
· Adjusted operating profit £523m, +38% CER, +32% reported
· Adjusted gross margin of 70.6%, +60bps at CER and reported rates.
Driven by higher mix of full-price sales and price rises reflecting the
underlying strength in the brand
· Adjusted profit margin of 19.0% at CER, +210bps (18.5% reported)
· Operating expenses before adjusting items rose 19% at CER (+18%
reported) due to higher investment and cost normalisation
· Adjusted diluted EPS 94.0p, +49% at CER, +40% reported
Reported profit measures
· Operating profit £543m, +4% after adjusting items of £20m net
credit (FY21: £125m net credit)
· Diluted EPS 97.7p, +5% reported
Cash measures
· Full year dividend per share declared of 47.0p (FY21: 42.5p)
restoring a normal pay-out ratio
· Free cash flow of £340m (FY21: £349m) due to strong cash management
· Cash net of overdrafts and borrowings of £879m at 2 April 2022 (27
March 2021: £919m) with a £150m share buy back completed in the year. Cash
net of overdrafts amounted to £1.2bn with borrowings of £298m
Summary income statement
Period ended 53 weeks ended 52 weeks ended YoY % change YoY % change
£ million 2 April 27 March 53 vs 52-week 52 vs 52-week CER
2022 2021 Reported FX
Revenue 2,826 2,344 21 23
Cost of sales* (831) (704) 18
Gross profit* 1,995 1,640 22 24
Gross margin* 70.6% 70.0% +60bps +60bps
Operating expenses* (1,472) (1,244) 18 19
Opex as a % of sales* 52.1% 53.1%
Adjusted operating profit* 523 396 32 38
Adjusted operating margin * 18.5% 16.9% +160bps +210bps
Adjusting operating items 20 125
Operating profit 543 521 4
Operating margin 19.2% 22.2%
Net finance (charge)(**) (32) (31)
Profit before taxation 511 490 4
Taxation (114) (114)
Non-controlling interest (1) -
Attributable profit 396 376
Adjusted profit before taxation* 492 366 34 41
Adjusted diluted EPS (pence)* 94.0 67.3 40 49
Diluted EPS (pence) 97.7 92.7 5
Weighted average number of diluted ordinary shares (millions) 404.8 405.1
* Excludes adjusting items. All items below adjusting operating items on a
reported basis unless otherwise stated
For detail, see Appendix. ** Includes adjusting finance charge of £1m
(FY21: £1m)
BUSINESS AND FINANCIAL REVIEW
FY22 was the first year of the growth and acceleration phase of our strategy.
In this chapter, our focus is on leveraging our unique brand equity to deliver
sustainable, high-quality growth, while continuing our efforts to do well by
doing right.
Despite a continuing challenging external environment, FY22 revenue increased
10% vs FY20 and 23% vs FY21 at CER. Full-price comparable store sales advanced
30% vs LLY as our strategy to exit mainline and digital markdowns drove a
material enhancement in the quality of our revenue streams. Regionally,
Americas led full-price comparable store sales growth with sales almost
doubling in the US compared with FY20. Full-price comparable store sales were
also strong in South Korea where they increased 81% and in Mainland China
where they rose over 50% compared with FY20, despite regional lockdowns
impacting our performance, particularly in March. We also saw improving trends
in EMEIA despite an ongoing headwind from reduced tourists due to COVID-19
related travel restrictions.
We improved profitability with the adjusted gross margin, up 60bps to 70.6% at
CER despite pressures from Brexit duties and supply chain inflation. Adjusted
operating profit came in ahead of guidance, up 38% at CER vs FY21 to £523m at
reported rates. FY22 also delivered a marked improvement in the operating
leverage with adjusted operating margin increasing to 19.0% at CER (18.5%
reported).
In the fourth quarter, we held our first in-person runway show in two years
with the unveiling of our Autumn/Winter 2022 collection. The show was a
celebration of British culture, inspired by London and our unique heritage,
and highlighted icons from the Burberry archive, including our Equestrian
Knight Design. Compared to the Autumn/Winter 2021 presentations, show views
were up triple digits helping to drive significant growth in followers on
Instagram and global press coverage was up double digits. In March, we
collaborated with Supreme to launch an exclusive selection of pieces which
sold out within seconds on Burberry.com and created a lot of excitement around
the stores and across social media.
We maintained our focus on strong, localised marketing campaigns, engaging
with customers through innovative, luxury experiences. In the fourth quarter,
we launched an immersive Spring/Summer 2022 experience at our flagship store
on Rodeo Drive, Beverly Hills. As part of the store takeover, the exterior
facade of the building was enveloped in a kaleidoscopic abstract print that we
animated via an Instagram filter. Overall, our programme of brand activities
in the quarter generated strong reach and engagement globally with a triple
digit increase year-on-year in follower growth rate on Instagram and continued
strength in earned reach, up strong double digits vs last year. In addition,
we continued to see strong momentum on Tik Tok passing the one million
follower milestone in the fourth quarter.
During the year, we invested in our focus categories outerwear and leather
goods. FY22 full-price outerwear sales grew 39% vs LLY supported by our first
dedicated campaign celebrating our iconic offer. Leather goods also delivered
a strong performance, with FY22 full-price sales up 28% vs LLY with the fourth
quarter benefitting from the Frances tote, a recent extension to the TB family
as part of our Summer 22 collection. As we enter FY23, we are excited about
the recent launch of the Lola bag campaign starring Bella Hadid, Lourdes Leon,
Jourdan Dunn and Ella Richards and supported by a series of global World of
Lola pop-ups and pop-ins.
We elevated the customer experience with the roll out of our new store
concept. In total, we now have 47 stores in the new design including our Paris
flagship on Rue Saint Honoré, with the opening marked by the store exterior
draped in the iconic Burberry check in the Birch Brown colourway. The new
store concept is transforming how our customers experience our brand and
product and is supporting revenue growth. We have a further 65 stores planned
for FY23, meaning that by the end of the fiscal year, around a quarter of our
directly-operated stores will carry the new design. Digital remains a key
focus area for the business. We strengthened the integration between our
offline and online channels, expanding our aftercare offer, enabling customers
to access bespoke services via Burberry.com and ensuring our sales associates
can offer a truly omnichannel experience for consumers.
We continued to take industry-leading steps to advance our decarbonisation
agenda and are proud to have substantially met all targets we set as part of
our 2017-2022 responsibility strategy. We are now carbon neutral across our
own operations globally; all the electricity we use is from renewable sources;
and almost all our products have a positive attribute, meaning they carry a
social or environmental benefit. This strong foundation underpins our new
ambition to become Climate Positive by 2040, not only by becoming net zero
10-years ahead of the 1.5-degree pathway set out in the Paris Agreement but
also by further reducing emissions across our extended supply chain. At the
same time, we set a new biodiversity strategy, focused on protecting and
restoring nature, expanding support for farming communities and developing
regenerative supply chains.
We continued to support communities throughout the year, exceeding our goal of
positively impacting one million people by 2022 . We partnered once more with
Marcus Rashford MBE and charities across the UK, US and Asia to provide
literacy skills and safe creative spaces for underrepresented youth.
We extended our support for more equitable vaccine distribution to tackle
the global pandemic, with further donations to the UNICEF COVID-19 Vaccine
Appeal through The Burberry Foundation. With millions of lives impacted by
the humanitarian crisis in Ukraine, we also donated to the British Red Cross
Ukraine Crisis Appeal, Save the Children and UNICEF to help
provide essential services to displaced families, and we are donating more
than 20,000 blankets to Ukrainian refugees that we manufactured in Castleford
and with our supply partners in Italy.
We also maintained momentum on our global Diversity and Inclusion strategy.
Key initiatives include rolling out allyship training across the business,
introducing our first-ever global bereavement policy, menopause support and
policy for those experiencing domestic violence. This year, we were proud to
be the inaugural sponsor of the British Diversity Awards, honouring
changemakers and supporting Galop, the chosen Charity of the Year. On
International Women's Day 2022, we announced our ambition to be the best
place to work for women in the industry. We are proud to have been
recognised for our efforts, including being recognised in the Bloomberg
Gender-Equality Index for a second consecutive year and featuring as a best
performer in the inaugural FTSE Women Leaders report. We remain focused on
continuous improvement to drive positive change both within Burberry and
beyond.
Financial performance
In total, the Group delivered record revenue, up 23% vs FY21 at CER to
£2,826m (FY21: £2,344m) against a backdrop of recovery from the COVID-19
pandemic. Comparable store sales grew 18% vs FY21, with underlying performance
driven by full-price sales partially offset by the exit of markdowns in
mainline and digital stores. With a 2% benefit from space and 2% contribution
from the 53(rd) week, retail sales grew 19% at reported rates with a 3%
headwind from FX. Wholesale increased 35% at CER and 29% at reported rates.
Group adjusted operating profit grew 38% at CER (+32% at reported rates) to
reach a record level at £523m with adjusted operating margin, at 19.0% CER
(18.5% reported). Adjusted gross margin increased in the year by 60bps at CER
and reported rates, benefitting from a higher mix of full-price sales and
price increases. Adjusted operating expenses rose 19% at CER impacted by
higher investment and cost normalisation. Reported operating profit increased
4% including an adjusting item net credit of £20m. FX was a headwind of
£33m, slightly higher than guided.
We generated free cash flow in the year of £340m (FY21: £349m) with cash
conversion remaining strong at 106% (FY21: 111%). Cash generated from
operating activities increased year-on-year driven by higher profits and
reflecting tight working capital management. Lease related payments and
capital expenditure increased against FY21 with investment in the retail
network. Tax paid increased significantly due to higher taxable profits in
FY22 coupled with the prior year benefitting from accelerated payments made in
FY20.
Revenue analysis
Revenue by channel
Period ended 53 weeks ended 52 weeks ended % change
2 April 27 March
2022 2021
£ million 53 vs 52-week 52 vs 52-week
Reported FX CER
Retail 2,273 1,910 19 20
Retail comparable store sales growth 18% (9%)
Wholesale 512 396 29 35
Licensing 41 38 8 11
Revenue 2,826 2,344 21 23
Retail
FY22 vs LY FY22 vs LLY
Q1 Q2 H1 Q3 Q4 H2 FY Q1 Q2 H1 Q3 Q4 H2 FY
Comparable store sales growth 90% 6% 37% 7% 7% 7% 18% 1% Flat 1% -3% 37% 11% 6%
Full-price comparable sales growth 121% 10% 49% 15% 5% 10% 24% 26% 10% 18% 26% 68% 41% 30%
· Retail sales +20% at CER; +19% reported
· Impact of space +2%, 53(rd) week +2%
· Total comparable store sales grew 6% vs LLY (+18% vs LY) with ongoing
disruption from the COVID-19 pandemic during the year, particularly in the
fourth quarter
· Underlying performance was strong with full-price sales growth of 30%
vs LLY (+24% vs LY) partially offset by the planned exit of markdown across
mainline and digital stores and reduced trade in outlets. Overall, markdowns
had a 9% adverse impact on FY22 comparable store sales growth vs LLY (-6% vs
LY) and are no longer a headwind in FY23
· Comparable store sales grew 7% vs LY in the fourth quarter with
COVID-19 restrictions severely impacting our Asia business, particularly in
Mainland China. The quarter saw minimal headwind from markdowns (-2% vs LY)
Comparable store sales by region:
FY22 vs LLY Q1 Q2 H1 Q3 Q4 H2 FY Q4 vs LY
Group 1% flat 1% -3% 37% 11% 6% 7%
Asia Pacific 7% 3% 5% flat 59% 20% 13% -7%
EMEIA -38% -25% -31% -17% 10% -8% -18% 51%
Americas 34% 42% 38% 8% 45% 20% 28% 12%
Full-price comparable store sales by region:
FY22 vs LLY Q1 Q2 H1 Q3 Q4 H2 FY Q4 vs LY
Group 26% 10% 18% 26% 68% 41% 30% 5%
Asia Pacific 23% 5% 14% 22% 78% 42% 29% -5%
EMEIA -33% -27% -30% -4% 29% 7% -11% 54%
Americas 114% 81% 98% 72% 87% 77% 86% 13%
Asia Pacific FY22 comparable store sales grew by 13% with full-price up 29% vs
LLY:
· Mainland China comparable store sales grew 37% with full-price
comparable store sales up 54% vs LLY
· South Korea outperformed with comparable store sales up 44% vs LLY
with continued strength in full-price comparable store sales, 81% ahead of
FY20
· 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 FY22 comparable store sales fell by 18% with full-price down 11% vs LLY:
· A resilient performance given the ongoing drag from lack of tourists,
which accounted for around 50% of annual pre-pandemic revenues in the region
· Continental Europe saw a decline broadly in line with the regional
average; however, total local European customer spend was up over 30% vs
LLY
· The UK remained challenged with London performance weak given high
tourist exposure
· Middle East continues to grow, driven by strong local demand and
improved tourist flows
Americas FY22 comparable store sales grew by 28% with full-price up 86% vs
LLY:
· Americas has been the stand out region with full-price sales in the
US almost doubling vs LLY driven by new and younger consumers to the brand
By product
· Full-price sales grew across all product categories in FY22 vs LLY
· Outerwear was driven by strong performance in Jackets, Quilts and
Downs
· Within Ready-to-wear, Tops and Bottoms continued to outperform
· Leather goods remained a key focus in FY22 with extensions to both
the Lola and TB family. The core families continue to account for more than
70% of our women's leather bag sales
Store footprint
The transformation of our distribution network continued as we addressed high
priority programmes:
· In FY22 we opened 38 stores and closed 35 stores
· Key openings included 3 new flagship stores; Sloane Street (London),
Rue Saint Honoré (Paris) and Plaza 66 (Shanghai)
· During the year we completed 47 stores in the new design; 39 in Asia
including 17 in South Korea and 13 in Mainland China, 5 in EMEIA and 3 in
Americas. We have 65 stores planned for FY23
· Completed the non-strategic store rationalisation programme over the
past four years with 38 stores closed
Wholesale
Wholesale revenue increased 35% at CER (+29% at reported rates) driven by
strong orders in Americas and recovery in Asia from travel retail.
Licensing
Licensing revenue grew 11% at CER and 8% at reported exchange rates.
Operating profit analysis
Adjusted operating profit
Period ended 53 weeks ended 52 weeks ended 27 March % change
£ million 2 April 2021
2022
53 vs 52-week 52 vs 52-week
Reported FX CER
Revenue 2,826 2,344 21 23
Cost of sales* (831) (704)
Gross profit* 1,995 1,640
Gross margin %* 70.6% 70.0% +60bps +60bps
Operating expenses* (1,472) (1,244) 18 19
Opex as a % of sales* 52.1% 53.1%
Adjusted operating profit* 523 396 32 38
Adjusted operating margin %* 18.5% 16.9% +160bps +210bps
*Excludes adjusting items
Adjusted operating profit increased 38% at CER and margin up 210bps to 19.0%
at CER:
· Gross margin increased 60bps both at CER and reported rates
benefitting from a higher mix of full-price sales and price rises. Adjusted
operating expenses rose by 19% at CER against last year impacted by higher
investment and cost normalisation
· Adjusted operating profit at £523m including a £33m FX headwind in
FY22
Adjusting items(*)
Adjusting items were a net credit of £19m (FY21: £124m net credit).
Period ended 53 weeks ended 52 weeks ended
£ million 2 April 27 March
2022
2021
The impact of COVID-19
Inventory provisions 16 22
Rent concessions 18 54
Store impairments (5) 47
Government grants 2 9
Receivable impairments 1 5
COVID-19 adjusting items** 32 137
Restructuring costs (11) (30)
Profit on sale of property - 18
Revaluation of deferred consideration liability (1) -
Adjusting operating items 20 125
Adjusting financing items (1) (1)
Adjusting items 19 124
*For more details see note 6 of the Financial Statements
** COVID-19 adjusting item includes a £16m credit (FY21: £22m credit) that
has been recognised through COGS relating to inventory provisions
The major adjusting items are as follows:
· Impact of the COVID-19 pandemic: we saw a total credit of £32m
from COVID-19 related adjustments with £16m representing an inventory
provision reversal, £18m of rent concessions and £2m of Government grants.
The £5m impairment charge relates to a store that remains closed due to COVID
related travel restrictions
· Restructuring costs: incurred £11m bringing the total of our
cost programmes to £139m of the £152m total expected by the end of FY23,
with cumulative cost savings of £205m, aligned to guidance
Adjusted profit before tax*
After an adjusted net finance charge of £31m (FY21: £30m), adjusted profit
before tax was £492m (FY21: £366m).
*For detail on adjusting items see note 6 of the Financial Statements
Taxation*
The effective tax rate on adjusted profit decreased to 22.2% (FY21: 25.4%).
This was lower than the prior year due to increased adjusted profits
rebalancing the geographical mix. The reported tax rate on FY22 profit before
taxation was 22.3% (FY21: 23.3%).
* For detail see note 8 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 53 weeks ended 52 weeks ended
£ million 2 April 27 March
2022 2021
Adjusted operating profit 523 396
Depreciation and amortisation 313 277
Working capital 54 (25)
Other 19 29
Cash inflow from operations 909 677
Payment of lease principal and related cash flows (206) (155)
Capital expenditure (161) (115)
Proceeds from disposal of non-current assets 8 27
Interest (30) (27)
Tax (180) (58)
Free cash flow 340 349
Free cash flow was £340m (FY21: £349m) and cash conversion was 106% (FY21:
111%) reflecting strong cash discipline. We had the following key flows:
· Working capital saw a £54m inflow. Within this, inventories
reduced in gross terms due to disciplined inventory control, however on a net
basis increased due to lower provisioning levels generating an outflow of
£22m in the year (FY21 inflow of £21m). This was more than offset by a
significant inflow in trade payables resulting from timing of payments
· Lease related payments increased £51m year-on-year to £206m
(FY21: £155m) primarily driven by lower COVID rent rebates and new leases in
the year
· Capital expenditure increased £46m to £161m (FY21: £115m) due
to planned store network investment
· Tax paid increased significantly to £180m (FY21: £58m) due to
higher taxable profits in FY22 coupled with the prior year benefitting from
accelerated payments made in FY20
Cash net of overdrafts at 2 April 2022 was £1.2bn (27 March 2021: £1.2bn).
Our net debt(*) including reported lease liabilities was £179m (27 March
2021: £101m). Net Debt /adjusted EBITDA was 0.2x on a rolling 12 months
period (27 March 2021: 0.1x), significantly below our target range of 0.5x to
1.0x.
A final dividend per share declared at 35.4p giving a full year dividend per
share of 47.0p (FY21: 42.5p) restoring our normal pay-out ratio.
*For a definition of net debt see page 18.
Period ended 53 weeks ended 52 weeks ended
£ million 2 April 27 March
2022 2021
Adjusted EBITDA - rolling 12 months 836 673
Cash net of overdrafts (1,177) (1,216)
Bond 298 297
Lease debt 1,058 1,020
Net Debt 179 101
Net Debt/Adjusted EBITDA 0.2x 0.1x
APPENDIX
Detailed guidance for FY23
Item Financial impact
Markdowns Markdowns were fully exited in FY22 and are no longer a headwind going
forward.
Wholesale revenue Wholesale is expected to be flat in H1 FY23.
Impact of retail space on revenues Space is expected to be broadly stable in FY23.
Tax We expect the adjusted tax rate to be around 22%.
Capex Capex is expected to be £170m-£180m including around 65 stores
opened/refurbished in the new format.
Currency At 6 May 2022 spot rates, the impact of year-on-year exchange rate movements
is expected to be a £159m tailwind on revenue and £92m tailwind on adjusted
operating profit.
Dividend Final dividend per share recommended at 35.4p and with the interim of 11.6p
the combined full year dividend per share amounted to 47.0p - 11% ahead of
FY21.
Share buy back Announced £400m planned share buy back to be completed within FY23.
Calendar Please note that FY23 is a 52 week calendar year with FY22 a 53 week year. The
extra week in FY22 contributed £35m revenue and £9m adjusted operating
profit .
Note: guidance based on CER at FY22 rates
Retail/wholesale revenue by destination*
Period ended 53 weeks ended 2 April 52 weeks ended 27 March % change
£ million 2022 2021 53 vs 52-week 52 vs 52-week
Reported FX CER
Asia Pacific (91% retail)* 1,276 1,203 6 7
EMEIA (65% retail)* 813 628 29 32
Americas (82% retail)* 696 475 46 51
Total 2,785 2,306 21 23
* Mix based on FY22
Retail/wholesale revenue by product division
Period ended 53 weeks ended 2 April 52 weeks ended 27 March % change
£ million 2022 2021 53 vs 52-week 52 vs 52-week
Reported FX CER
Accessories 1,017 841 21 24
Women's 784 653 20 22
Men's 807 668 21 23
Children's & other 177 144 23 25
Total 2,785 2,306 21 23
Store portfolio
Directly-operated stores
Stores Concessions Outlets Total Franchise stores
At 27 March 2021 214 145 56 415 44
Additions 18 16 4 38 0
Closures (14) (18) (3) (35) (6)
At 2 April 2022 218 143 57 418 38
Store portfolio by region*
Directly-operated stores
Stores Concessions Outlets Total Franchise stores
At 2 April 2022
Asia Pacific 107 93 24 224 7
EMEIA 52 41 18 111 31
Americas 59 9 15 83 -
Total 218 143 57 418 38
*Excludes the impact of pop up stores
Adjusted operating profit* 53 weeks ended 52 weeks ended % change % change
Period ended 2 April 27 March 53 vs 52-week 52 vs 52-week
£ millions 2022 2021 Reported FX CER
Retail/wholesale 486 361 35 41
Licensing 37 35 7 10
Adjusted operating profit 523 396 32 38
Adjusted operating margin 18.5% 16.9% +160bps +210bps
*For additional detail on adjusting items see note 6 of the Financial
Statements
Exchange rates
Spot rates Average effective exchange rates
6 May FY22 FY21
2022
£1=
Euro 1.17 1.18 1.12
US Dollar 1.24 1.36 1.30
Chinese Yuan Renminbi 8.21 8.73 8.85
Hong Kong Dollar 9.70 10.63 10.08
Korean Won 1,553 1,596 1,514
Profit before tax reconciliation
Period ended 53 weeks ended 52 weeks ended % change % change
£ million 2 April 27 March 53 vs 52-week 52 vs 52-week
2022 2021 Reported FX CER
Adjusted profit before tax 492 366 34 41
Adjusting items*
COVID-19 related items 32 137
Restructuring costs (11) (30)
Profit on sale of property - 18
Revaluation of deferred consideration liability (1) -
Adjusting financing items (1) (1)
Profit before tax 511 490 4
*For additional detail on adjusting items see note 6 of the Financial
Statements
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 Exchange Rates (CER) This measure removes the effect of changes in exchange rates and the 53(rd) Results at reported rates
week compared to the prior period. The constant exchange rate 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 sales The year-on-year change in sales from stores trading over equivalent time Retail Revenue:
periods and measured at constant foreign exchange rates. It also includes
online sales. This measure is used to strip out the impact of permanent store
openings and closings, or those closures relating to refurbishments, allowing
Period ended 53 weeks ended 2 April 52 weeks ended 27 March
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.
YoY% 2022 2021
Comparable sales* 18% (9%)
Change in space 2% -
Full-price sales: CER retail 20% (9%)
53(rd) week 2% -
Full-price comparable store sales are sales from items sold at full retail FX (3%) -
price in our own mainline retail network and online. Retail revenue 19% (9%)
*Includes full-price comp +24% (FY21 +7%)
Comparable sales vs LLY The change in sales over two years measured at constant foreign exchange Retail Revenue:
rates. It also includes online sales. The measurement of comparable sales has
not excluded stores temporarily closed as a result of the COVID-19 outbreak.
This measure reflects the two year aggregation of the growth rates.
Period ended 53 weeks ended
%change 2 April
2022
Comparable sales 6%
Change in space 4%
CER retail 10%
53(rd) week 2%
FX (4%)
Retail revenue 8%
Adjusted Profit Adjusted profit measures are presented to provide additional consideration of Reported Profit:
the underlying performance of the Group's ongoing business. These measures
remove the impact of those items which should be excluded to provide a A reconciliation of reported profit before tax to adjusted profit before tax
consistent and comparable view of performance. and the Group's accounting policy for adjusted profit before tax are set out
in the financial statements.
*Includes full-price comp +24% (FY21 +7%)
Comparable sales vs LLY
The change in sales over two years measured at constant foreign exchange
rates. It also includes online sales. The measurement of comparable sales has
not excluded stores temporarily closed as a result of the COVID-19 outbreak.
This measure reflects the two year aggregation of the growth rates.
Retail Revenue:
Period ended 53 weeks ended
% change 2 April
2022
Comparable sales 6%
Change in space 4%
CER retail 10%
53(rd) week 2%
FX (4%)
Retail revenue 8%
Adjusted Profit
Adjusted profit measures are presented to provide additional consideration of
the underlying performance of the Group's ongoing business. These measures
remove the impact of those items which should be excluded to provide a
consistent and comparable view of performance.
Reported Profit:
A reconciliation of reported profit before tax to adjusted profit before tax
and the Group's accounting policy for adjusted profit before tax are set out
in the financial statements.
Free Cash Flow Free cash flow is defined as net cash generated from operating activities less Net cash generated from operating activities:
capital expenditure plus cash inflows from disposal of fixed assets and
including cash outflows for lease principal payments and other lease related
items.
Period ended 53 weeks ended 52 weeks ended
£m 2 April 27 March
2022 2021
Net cash generated from operating activities 699 592
Capex (161) (115)
Lease principal and related cash flows (206) (155)
Proceeds from disposal of non-current assets 8 27
Free cash flow 340 349
Cash Conversion Cash conversion is defined as free cash flow pre-tax/adjusted profit before Net cash generated from operating activities:
tax. It provides a measure of the Group's effectiveness in converting its
profit into cash.
Period ended 53 weeks ended 52 weeks ended
£m 2 April 27 March
2022 2021
Free cash flow 340 349
Tax paid 180 58
Free cash flow before tax 520 407
Adjusted profit before tax 492 366
Cash conversion 106% 111%
Net Debt Net debt is defined as the lease liability recognised on the balance sheet Cash net of overdrafts:
plus borrowings less cash net of overdrafts.
Period ended 53 weeks ended 52 weeks ended
£m 2 April 27 March
2022 2021
Cash net of overdrafts 1,177 1,216
Lease liability (1,058) (1,020)
Borrowings (298) (297)
Net debt (179) (101)
Adjusted EBITDA Adjusted EBITDA is defined as operating profit, excluding adjusting operating Reconciliation from operating profit to adjusted EBITDA:
items, depreciation of property, plant and equipment, depreciation of right of
use assets and amortisation of intangible assets. Any depreciation or
amortisation included in adjusting operating items are not double-counted.
Period ended 53 weeks ended 52 weeks ended
Adjusted EBITDA is shown for the calculation of Net Debt/EBITDA for our
gearing ratios.
£m 2 April 27 March
2022 2021
Operating profit 543 521
Adjusted operating items (20) (125)
Amortisation of intangible assets 39 33
Depreciation of property, plant and equipment 86 72
Depreciation of right-of-use assets 188 172
Adjusted EBITDA 836 673
Cash Conversion
Cash conversion is defined as free cash flow pre-tax/adjusted profit before
tax. It provides a measure of the Group's effectiveness in converting its
profit into cash.
Net cash generated from operating activities:
Period ended 53 weeks ended 52 weeks ended
£m 2 April 27 March
2022 2021
Free cash flow 340 349
Tax paid 180 58
Free cash flow before tax 520 407
Adjusted profit before tax 492 366
Cash conversion 106% 111%
Net Debt
Net debt is defined as the lease liability recognised on the balance sheet
plus borrowings less cash net of overdrafts.
Cash net of overdrafts:
Period ended 53 weeks ended 52 weeks ended
£m 2 April 27 March
2022 2021
Cash net of overdrafts 1,177 1,216
Lease liability (1,058) (1,020)
Borrowings (298) (297)
Net debt (179) (101)
Adjusted EBITDA
Adjusted EBITDA is defined as operating profit, excluding adjusting operating
items, depreciation of property, plant and equipment, depreciation of right of
use assets and amortisation of intangible assets. Any depreciation or
amortisation included in adjusting operating items are not double-counted.
Adjusted EBITDA is shown for the calculation of Net Debt/EBITDA for our
gearing ratios.
Reconciliation from operating profit to adjusted EBITDA:
Period ended 53 weeks ended 52 weeks ended
£m 2 April 27 March
2022 2021
Operating profit 543 521
Adjusted operating items (20) (125)
Amortisation of intangible assets 39 33
Depreciation of property, plant and equipment 86 72
Depreciation of right-of-use assets 188 172
Adjusted EBITDA 836 673
Group Income Statement
Note 53 weeks to 52 weeks to
2 April
27 March
2022
£m 2021
£m
Revenue 3 2,826 2,344
Cost of sales (815) (682)
Gross profit 2,011 1,662
Net operating expenses 4 (1,468) (1,141)
Operating profit 543 521
Financing
Finance income 3 3
Finance expense (34) (33)
Other financing charge (1) (1)
Net finance expense 7 (32) (31)
Profit before taxation 5 511 490
Taxation 8 (114) (114)
Profit for the year 397 376
Attributable to:
Owners of the Company 396 376
Non-controlling interest 1 -
Profit for the year 397 376
Earnings per share
Basic 9 98.2p 93.0p
Diluted 9 97.7p 92.7p
£m
Reconciliation of adjusted profit before taxation:
Profit before taxation 511 490
Adjusting operating items:
Cost of sales (income) 5 (16) (22)
Net operating (income)/expenses 5 (4) (103)
Adjusting financing items 5 1 1
Adjusted profit before taxation - non-GAAP measure 492 366
Adjusted earnings per share - non-GAAP measure
Basic 9 94.5p 67.5p
Diluted 9 94.0p 67.3p
Dividends per share
Interim 10 11.6p -
Proposed final (not recognised as a liability at 2 April/27 March) 10 35.4p 42.5p
Group statement of comprehensive income
Note 53 weeks to 52 weeks to
2 April
27 March
2021
2022
£m
£m
Profit for the year 397 376
Other comprehensive income(1):
Cash flow hedges (1) -
Foreign currency translation differences 22 (51)
Actuarial gains on post-employment benefit plans - 1
Tax on other comprehensive income:
Foreign currency translation differences 8 - 2
Other comprehensive (loss)/income for the year, net of tax 21 (48)
Total comprehensive income for the year 418 328
Total comprehensive income attributable to:
Owners of the Company 417 328
Non-controlling interest 1 -
418 328
All items included in other comprehensive income, with the exception of
actuarial gains on post-employment benefit plans, may subsequently
Group Balance Sheet
Note As at As at
2 April 27 March
2022 2021
£m
£m
ASSETS
Non-current assets
Intangible assets 11 240 237
Property, plant and equipment 12 322 280
Right-of-use assets 13 880 818
Investment properties - 3
Deferred tax assets 14 175 137
Trade and other receivables 15 45 45
1,662 1,520
Current assets
Inventories 16 426 402
Trade and other receivables 15 283 277
Derivative financial assets 5 2
Income tax receivables 86 40
Cash and cash equivalents 17 1,222 1,261
Assets held for sale 12 13 -
2,035 1,982
Total assets 3,697 3,502
LIABILITIES
Non-current liabilities
Trade and other payables 18 (91) (99)
Lease liabilities 19 (849) (810)
Borrowings 22 (298) (297)
Deferred tax liabilities 14 (1) (1)
Retirement benefit obligations (1) (1)
Provisions for other liabilities and charges 20 (36) (32)
(1,276) (1,240)
Current liabilities
Trade and other payables 18 (481) (393)
Bank overdrafts 21 (45) (45)
Lease liabilities 19 (209) (210)
Derivative financial liabilities (2) (2)
Income tax liabilities (39) (28)
Provisions for other liabilities and charges 20 (28) (24)
(804) (702)
Total liabilities (2,080) (1,942)
Net assets 1,617 1,560
EQUITY
Capital and reserves attributable to owners of the Company
Ordinary share capital 23 - -
Share premium account 227 223
Capital reserve 23 41 41
Hedging reserve 23 4 5
Foreign currency translation reserve 23 218 196
Retained earnings 1,123 1,092
Equity attributable to owners of the Company 1,613 1,557
Non-controlling interest in equity 4 3
Total equity 1,617 1,560
Group statement of changes in equity
Attributable to owners
of the Company
Note Ordinary share capital Share premium account Other reserves Retained earnings Total Non-controlling interest Total equity
£m
£m
£m
£m
£m
£m
£m
Balance as at 28 March 2020 - 221 291 702 1,214 5 1,219
Profit for the year - - - 376 376 - 376
Other comprehensive income:
Foreign currency translation differences 23 - - (51) - (51) - (51)
Actuarial gains on post-employment benefit plans - - - 1 1 - 1
Tax on other comprehensive income 23 - - 2 - 2 - 2
Total comprehensive income for the year - - (49) 377 328 - 328
Transactions with owners:
Employee share incentive schemes
Equity share awards - - - 12 12 - 12
Tax on share awards - - - 1 1 - 1
Exercise of share options - 2 - - 2 - 2
Acquisition of additional interest in subsidiary - - - - - (2) (2)
Balance as at 27 March 2021 - 223 242 1,092 1,557 3 1,560
Profit for the year - - - 396 396 1 397
Other comprehensive income:
Cash flow hedges - - (1) - (1) - (1)
Foreign currency translation differences 23 - - 22 - 22 - 22
Total comprehensive income for the year - - 21 396 417 1 418
Transactions with owners:
Employee share incentive schemes
Equity share awards - - - 16 16 - 16
Equity share awards transferred to liabilities - - - (1) (1) - (1)
Exercise of share options - 4 - - 4 - 4
Purchase of own shares
Share buyback - - - (153) (153) - (153)
Held by ESOP trusts - - - (8) (8) - (8)
Dividends paid in the year - - - (219) (219) - (219)
Balance as at 2 April 2022 - 227 263 1,123 1,613 4 1,617
GROUP STATEMENT OF CASH FLOWS
Note 53 weeks to 52 weeks to
2 April
27 March
2022
£m 2021
£m
Cash flows from operating activities
Operating profit 543 521
Amortisation of intangible assets 11 39 33
Depreciation of property, plant and equipment 12 86 71
Depreciation of right-of-use assets 13 188 172
COVID-19-related rent concessions 1 (18) (54)
Impairment charge of intangible assets 11 - 9
Net impairment charge/(reversal) of property, plant and equipment 12 1 (7)
Net impairment charge/(reversal) of right-of-use assets 13 7 (34)
Gain on disposal of property, plant and equipment and intangible assets (3) (23)
Gain on disposal of right-of-use assets - (1)
(Gain)/Loss on derivative instruments (4) 4
Charge in respect of employee share incentive schemes 16 12
(Payment) of settlement of equity swap contracts - (1)
(Increase)/decrease in inventories (22) 21
Increase in receivables (5) (39)
Increase/(decrease) in payables and provisions 81 (7)
Cash generated from operating activities 909 677
Interest received 2 3
Interest paid (32) (30)
Taxation paid (180) (58)
Net cash generated from operating activities 699 592
Cash flows from investing activities
Purchase of property, plant and equipment (124) (73)
Purchase of intangible assets (37) (42)
Proceeds from sale of property, plant and equipment 8 27
Initial direct costs of right-of-use assets (4) (3)
Payment in respect of acquisition of subsidiary (7) -
Net cash outflow from investing activities (164) (91)
Cash flows from financing activities
Dividends paid in the year 10 (219) -
Payment of deferred consideration for acquisition of non-controlling interest 18 (3) (3)
Proceeds from borrowings 22 - 595
Repayment of borrowings 22 - (600)
Payment of lease principal 19 (202) (151)
Payment on termination of lease - -
Payment to acquire additional interest in subsidiary from - (2)
non‑controlling interest
Issue of ordinary share capital 4 2
Purchase of own shares through share buy-back 23 (150) -
Purchase of own shares through share buy-back - stamp duty and fees 23 (3) -
Purchase of own shares by ESOP trusts (8) -
Net cash outflow from financing activities (581) (159)
Net increase in cash net of overdrafts (46) 342
Effect of exchange rate changes 7 (13)
Cash net of overdrafts at beginning of year 1,216 887
Cash net of overdrafts 1,177 1,216
Note 53 weeks to As at
2 April 27 March
2022 2021
£m £m
Cash and cash equivalents 17 1,222 1,261
Bank overdrafts 21 (45) (45)
Cash net of overdrafts 1,177 1,216
Notes to the Financial Statements
1. Basis of preparation
Burberry Group plc and its subsidiaries (the Group) is a global luxury goods
manufacturer, retailer and wholesaler. The Group also licenses third parties
to manufacture and distribute products using the 'Burberry' trademarks. All of
the companies which comprise the Group are controlled by Burberry Group plc
(the Company) directly or indirectly.
The consolidated financial statements of the Group have been prepared in
accordance with the requirements of the Companies Act 2006 and UK-adopted
International Accounting Standards. These consolidated financial statements
have been prepared under the historical cost convention, except as modified by
the revaluation of certain financial assets and financial liabilities at fair
value through profit or loss.
Statutory accounts for the 52 weeks to 27 March 2021 have been filed with the
Registrar of Companies, and those for 2022 will be delivered in due course.
The reports of the auditors on those statutory accounts for the 52 weeks to 27
March 2021 and the 53 weeks to 2 April 2022 were unqualified, did not contain
an emphasis of matter paragraph and did not contain a statement under either
section 400(2) or section 498(3) of the Companies Act 2006.
The consolidated financial statements are presented in £m in order to align
external reporting with the information presented to the Chief Operating
Decision Maker. Prior year comparatives have been rounded accordingly.
Consideration of climate-related matters
The Group has performed a climate-related scenario analysis as required by the
Task Force for Climate Related Financial Disclosures. This scenario analysis
takes into consideration different climate-related scenarios, including a 2°C
or lower scenario. Based on this scenario analysis, consideration has been
given to the impact of climate-related risks on management's judgements and
estimates, including inventory provisions and the impairment of property,
plant and equipment and right-of-use assets.
The impact of climate-related risks on the consolidated financial statements
for the 53 weeks to 2 April 2022 is not material.
The incurred costs and investments associated with our sustainability strategy
are reflected in the Group's financial statements, including within
inventories, property, plant and equipment, and operating profit.
The committed future financial investments associated with our sustainability
strategy are included within our budget and three year forward looking
financial plans. These financial plans have been used to support our
impairment reviews and going concern and viability assessment. Future plans
may incur additional investment on research and development and higher
expenditure on raw materials.
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 business environment and continued uncertainty. The future impact of
this pandemic and the challenging economic conditions 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 for any indicators
that the going concern basis of preparation is not appropriate covers the
period from the date of signing the financial statements up to 30 September
2023.
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 and maintaining momentum
built as part of the strategy
· As a sensitivity, this central planning scenario has been flexed
to reflect a 15% downgrade to revenues in FY 2022/23, 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
The severe but plausible downside considered the Group's principal risks and
aggregated:
· A longer term significant impact of the COVID-19 pandemic on
revenue to September 2023 compared to the central planning scenario
· A significant reputational incident such as negative sentiment
propagated through social media
· A reduction in the GDP growth assumptions in the Eurozone and
Americas materialising in the second half of FY 2022/23
· The impact of a 1 month interruption in one of our channels
arising from a technology vulnerability
· The introduction of carbon taxes in FY 2023/24 in line with a
scenario reflecting a 2oC global temperature increase compared to
pre-industrial levels
· A short term impact of a 10% weakening in a key non-sterling
currency for the Group before it is recovered through price adjustment
The directors have 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 £300
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 53 weeks ended 2 April
2022.
New standards, amendments and interpretations adopted in the period
There have been no new standards or interpretations issued and made effective
for the financial period commencing 28 March 2021 that have had a material
impact on the financial statements of the Group. The following amendment to
IFRS 16 was applied in the financial statements for the 52 weeks to 27 March
2021 and continued to be applied in the financial statements for the 53 weeks
to 2 April 2022.
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 United Kingdom on 12 October
2020. The amendment was intended to apply until 30 June 2021, but as the
impact of the COVID-19 pandemic is continuing, on 31 March 2021, the IASB
extended the period of application of the practical expedient to 30 June 2022.
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 2022 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 £18
million (last year: £54 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 6). 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 £nil
million (last year: £4 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 53 weeks to 2 April 2022 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
Basis of consolidation
The Group's annual financial statements comprise those of Burberry Group plc
(the Company) and its subsidiaries, presented as a single economic entity. The
results of the subsidiaries are prepared for the same reporting year as the
Company, using consistent accounting policies across the Group.
The financial year is the 53 weeks ended 2 April 2022 (last year: 52 weeks
ended 27 March 2021).
Subsidiaries are all entities (including special purpose entities) over which
the Group has control. The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group and cease to be consolidated from the date on which
control is transferred out of the Group. Where there is a loss of control of a
subsidiary, the consolidated financial statements include the results for the
portion of the reporting period during which the Group had control.
Intra-Group transactions, balances and unrealised profits on transactions
between Group companies are eliminated in preparing the Group financial
statements. The Group treats transactions with non-controlling interests as
transactions with equity owners of the Group. For acquisitions of additional
interests in subsidiaries from non-controlling interests, the difference
between any consideration paid and the relevant share acquired of the carrying
value of net assets of the subsidiary is recorded in equity. Gains or losses
on disposals of interests in subsidiaries to non-controlling interests are
also recorded in equity.
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 continued to have an 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. Further
details of the Group's accounting policies in relation to these areas are
provided in note 2.
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 management's best estimates and
assumptions at the time.
In March 2020, 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 March 2020, the rate
of recovery has exceeded management estimates, and a partial reversal of this
initial impairment was recognised at March 2021. Management has updated these
assumptions again as at 2 April 2022, reflecting their latest plans over the
next three years to March 2025, followed by longer-term growth rates of
mid-single digits and inflation rates appropriate to each store's location.
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.
Refer to notes 12 and 13 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.
In March 2020, management recorded provisions against inventory, based on the
estimated impact of COVID-19 on the Group. As noted above, performance since
March 2020 has exceeded the estimates made at the time. Management has updated
their assumptions regarding future performance as part of the current year
estimate. 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 both 27 March 2021 and
2 April 2022.
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.
Refer to note 8 for further details of management estimates surrounding the
outcome of all matters under dispute or negotiation between governments in
relation to current tax liabilities recognised at 2 April 2022, and for
sensitivities relating to this key source of estimation uncertainty.
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. Further details of the Group's accounting policies are provided in
note 2. Key judgements that have a significant impact on the amounts
recognised in the Group financial statements for the 53 weeks to 2 April 2022
and the 52 weeks to 27 March 2021 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.
Refer to note 19 for further details surrounding the judgements regarding the
impact of breaks and options on lease liabilities.
2. Accounting policies
The principal accounting policies of the Group are:
a) Revenue
The Group obtains revenue from contracts relating to sales of luxury goods to
retail and wholesale customers. Retail purchases are paid at time of purchase
while wholesale and licensing purchases are paid on short-term credit terms.
The Group also obtains revenue through licences issued to third parties to
produce and sell goods carrying 'Burberry' trademarks. Revenue is stated
excluding Value Added Tax and other sales related taxes.
Retail and wholesale revenue
For retail and wholesale revenue, the primary performance obligation is the
transfer of luxury goods to the customer. For retail revenue this is
considered to occur when control of the goods passes to the customer. For
in-store retail revenue, control transfers when the customer takes possession
of the goods in store and pays for the goods. For digital retail revenue,
control is considered to transfer when the goods are delivered to the
customer. The timing of transfer of control of the goods in wholesale
transactions depends upon the terms of trade in the contract. Principally for
wholesale revenue, revenue is recognised either when goods are collected by
the customer from the Group's premises, or when the Group has delivered the
goods to the location specified in the contract. Provision for returns and
other allowances are reflected in revenue when revenue from the customer is
first recognised. Retail customers typically have the right to return product
within a limited time frame while wholesale customers typically have the right
to return damaged products. Returns are initially estimated based on
historical levels and adjusted subsequently as returns are incurred.
Some wholesale contracts may require the Group to make payments to the
wholesale customer, for services directly relating to the sale of the Group's
goods, such as the cost of staff handling the Group's goods at the wholesaler.
Payments to the customer directly relating to the sale of goods to the
customer are recognised as a reduction in revenue, unless in exchange for a
distinct good or service. These charges are recognised in revenue at the later
of when the sale of the related goods to the customer is recognised or when
the customer is paid, or promised to be paid, for the service. Payments to the
customer relating to a service which is distinct from the sale of goods to the
customer are recognised in operating costs.
The Group sells gift cards and similar products to customers, which can be
redeemed for goods, up to the value of the card, at a future date. Revenue
relating to gift cards is recognised when the card is redeemed, up to the
value of the redemption. Unredeemed amounts on gift cards are classified as
contract liabilities. Typically, the Group does not expect to have significant
unredeemed amounts arising on its gift cards.
Licensing revenue
The Group's licences entitle the licensee to access the Group's trademarks
over the term of the licence. Hence revenue from licensing is recognised over
the term of access to the licence. Royalties receivable under licence
agreements are usually based on production or sales volumes and are accrued in
revenue as the subsequent production or sale occurs. Any amounts received
which have not been recognised in revenue are classified as
contract liabilities.
b) Segment reporting
As required by IFRS 8 Operating Segments, the segmental information presented
in the financial statements is reported in a manner consistent with the
internal reporting provided to the Chief Operating Decision Maker. The Chief
Operating Decision Maker, who is responsible for allocating resources and
assessing performance, has been identified as the Board of Directors.
The Group has centralised activities for designing, making and sourcing, which
ensure a global product offering is sold through retail and wholesale
channels worldwide. Resource allocation and performance is assessed across the
whole of the retail/wholesale channel globally. Hence the retail/wholesale
channel has been determined to be an operating segment.
Licensed products are manufactured and sold by third-party licensees. As a
result, this channel is assessed discretely by the Chief Operating Decision
Maker and has been determined to be an operating segment.
The Group presents an analysis of its revenue by channel, by product division
and by geographical destination.
c) Business combinations
The acquisition method of accounting is used to account for the acquisition of
subsidiaries by the Group. The cost of an acquisition is measured as the fair
value of the assets given, equity instruments issued and liabilities incurred
or assumed at the date of exchange. Contingent payments are remeasured at fair
value through the Income Statement. All transaction costs are expensed to the
Income Statement. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date, irrespective of the extent of any
non-controlling interest. Non-controlling interests in subsidiaries are
identified separately from the Group's equity, and are initially measured
either at fair value or at a value equal to the non-controlling interests'
share of the identifiable net assets acquired. The choice of the basis of
measurement is an accounting policy choice for each individual business
combination. The excess of the cost of acquisition together with the value of
any non-controlling interest over the fair value of the identifiable net
assets acquired is recorded as goodwill. If the cost of acquisition is less
than the fair value of the net assets of the subsidiary acquired, the
difference is recognised directly in the Income Statement.
d) Share schemes
The Group operates a number of equity-settled share-based compensation
schemes, under which services are received from employees (including executive
directors) as consideration for equity instruments of the Company. The cost of
the share-based incentives is measured with reference to the fair value of the
equity instruments awarded at the date of grant, including share awards and
options. Appropriate option pricing models, including Black-Scholes, are used
to determine the fair value of the option awards made. The fair value takes
into account the impact of any market performance conditions, but the impact
of non-market performance conditions is not considered in determining the fair
value on the date of grant. Vesting conditions which relate to non-market
conditions are allowed for in the assumptions used for the number of share
awards or options expected to vest. The estimate of the number of share awards
or options expected to vest is revised at each balance sheet date.
In some circumstances, employees may provide services in advance of the grant
date. The grant date fair value is estimated for the purposes of recognising
the expense during the period between the service commencement period and the
grant date.
The cost of the share-based incentives is recognised as an expense over the
vesting period of the share awards, or options, with a corresponding increase
in equity.
When share awards or options are exercised, they are settled either via issue
of new shares in the Company, or through shares held in an Employee Share
Option Plan (ESOP) trust, depending on the terms and conditions of the
relevant scheme. The proceeds received from the exercises, net of any directly
attributable transaction costs, are credited to share capital and share
premium accounts.
e) Leases
The Group is both a lessee and lessor of property, plant and equipment. A
contract is, or contains, a lease if the contract conveys the right to control
the use of an identified asset for a period of time in exchange for
consideration. An identified asset may be specifically or implicitly
specified. Control exists when the lessee has both the right to direct the use
of the identified asset and the right to obtain substantially all of the
economic benefits from that use.
Lessee accounting
The Group's principal lease arrangements where the Group acts as the lessee
are for property, most notably the lease of retail stores, corporate offices
and warehouses. Other leases are for office equipment, vehicles, and supply
chain equipment. Lease terms are negotiated on an individual basis and contain
a wide range of different terms and conditions.
The Group recognises all lease liabilities and the corresponding right-of-use
assets on the Balance Sheet, with the exception of certain short-term leases
(12 months or less) and leases of low value assets, which are expensed as
incurred. Leases and the corresponding right-of-use assets are initially
recognised when the Group obtains control of the underlying asset. Leases for
new assets are presented as additions to lease liabilities and right-of-use
assets.
Lease liabilities are initially measured on a present value basis. Lease
liabilities include the net present value of the following lease payments:
* Fixed payments, less any incentives
* Variable lease payments that are based on a future index or rate
* Amounts expected to be payable by the lessee under residual value guarantees
and
* The cost of exercising a purchase option if the lessee is reasonably certain
to exercise that option
Where the lease contains an extension option or a termination option which is
exercisable by the Group, as lessee, an assessment is made as to whether the
Group is reasonably certain to exercise the extension option, or not
exercise the termination option, considering all relevant facts and
circumstances that create an economic incentive. Considerations may include
the contractual terms and conditions for the optional periods compared to
market rates, costs associated with the termination of the lease and the
importance of the underlying asset to the Group's operations.
Variable lease payments dependent upon a future index or rate are measured
using the amounts payable at the commencement date until the index or rate is
known. Variable lease payments not dependent on an index or rate, including
lease payments based on a percentage of turnover, are excluded from the
calculation of lease liabilities.
Payments are discounted at the incremental borrowing rate of the lessee,
unless the interest rate implicit in the lease can be readily determined.
Right-of-use assets are classified as property or non-property. The Group has
elected not to apply the short-term exemption to the property class of
right-of-use assets. Where the exemption is applied to the non-property class
of right-of-use assets, lease payments are expensed as incurred. The low value
asset exemption has been applied to both the property and non-property class
of assets on a lease-by-lease basis where applicable.
In circumstances where the Group is in possession of a property but there is
no executed agreement or other binding obligation in relation to the property,
rent is expensed until such time the obligation becomes binding, at which
point, a right-of-use asset and lease liability will be recognised
prospectively. These lease costs are disclosed as lease in holdover expenses.
Refer to notes 5 and 19.
Right-of-use assets are measured at cost comprising the following:
· The amount of the initial measurement of the lease liability
· Any lease payments made at or before the commencement date less
any lease incentives received and
· Any initial direct costs incurred in entering into the lease
The Group recognises depreciation of right-of-use assets and interest on lease
liabilities in the Income Statement over the lease term. Repayments of lease
liabilities are classified separately in the Statement of Cash Flows where the
cash payments for the principal portion of the lease liability are presented
within financing activities, and cash payments for the interest portion are
presented within operating activities. Payments in relation to short-term
leases and leases of low value assets which are not included on the Balance
Sheet are included within operating activities.
Modifications to lease agreements, extensions to existing lease agreements and
changes to future lease payments relating to existing terms in the contract,
including market rent reassessments and index based changes, are presented as
remeasurements of the lease liabilities. The related right-of-use asset is
also remeasured. If the modification results in a reduction in scope of the
lease, either through shortening the lease term or through disposing of part
of the underlying asset, a gain or loss on disposal may arise relating to the
difference between the lease liabilities and the right-of-use asset applicable
to the reduction in scope.
Right-of-use assets are included in the review for impairment of property,
plant and equipment and intangible assets with finite economic lives, if
there is an indication that the carrying amount of the cash generating unit
may not be recoverable.
Lessor accounting
The Group also acts as a lessor of properties. Each of these leases are
classified as either a finance lease or an operating lease. Leases in which
substantially all of the risks and rewards incidental to ownership of an
underlying asset are transferred to the lessee by the lessor are classified as
finance leases. Leases which are not finance leases are classified as
operating leases.
Gross rental income in respect of operating leases is recognised on a
straight-line basis over the term of the leases.
f) Dividend distributions
Dividend distributions to Burberry Group plc's shareholders are recognised as
a liability in the period in which the dividend becomes a committed
obligation. Final dividends are recognised when they are approved by the
shareholders. Interim dividends are recognised when paid.
g) Pension costs
Eligible employees participate in defined contribution pension schemes, the
principal one being in the UK with its assets held in an independently
administered fund. The cost of providing these benefits to participating
employees is recognised in the Income Statement as they fall due and comprises
the amount of contributions to the schemes.
h) Intangible assets
Goodwill
Goodwill is the excess of the cost of acquisition together with the value of
any non-controlling interest, over the fair value of identifiable net assets
acquired. Goodwill on acquisition is recorded as an intangible asset. Fair
values are attributed to the identifiable assets, liabilities and contingent
liabilities that existed at the date of acquisition, reflecting their
condition at that date. Adjustments are also made to align the accounting
policies of acquired businesses with those of the Group.
Goodwill is assigned an indefinite useful life. Impairment reviews are
performed annually, or more frequently if events or changes in circumstances
indicate that the carrying value may not be recoverable. Impairment losses
recognised on goodwill are not reversed in future periods.
Trademarks, licences and other intangible assets
The cost of securing and renewing trademarks and licences, and the cost of
acquiring other intangible assets, is capitalised at purchase price and
amortised by equal annual instalments over the period in which benefits are
expected to accrue, typically ten years for trademarks, or the term of the
licence. The useful life of trademarks and other intangible assets is
determined on a case-by-case basis, in accordance with the terms of the
underlying agreement and the nature of the asset.
Computer software
Computer software costs are capitalised during the development phase at the
point at which there is sufficient certainty that it will deliver future
economic benefits to the Group. The cost of acquiring computer software
(including licences and separately identifiable development costs) is
capitalised as an intangible asset at purchase price, plus any directly
attributable cost of preparing that asset for its intended use. Software costs
are amortised on a straight-line basis over their estimated useful lives,
which may be up to seven years.
i) Property, plant and equipment
Property, plant and equipment, with the exception of assets in the course of
construction, is stated at cost or deemed cost, based on historical revalued
amounts prior to the adoption of IFRS, less accumulated depreciation and
provision to reflect any impairment in value. Assets in the course of
construction are stated at cost less any provision for impairment and
transferred to completed assets when substantially all of the activities
necessary for the asset to be ready for use have occurred. Cost includes the
original purchase price of the asset and costs attributable to bringing the
asset to its working condition for its intended use.
Depreciation
Depreciation of property, plant and equipment is calculated to write off the
cost or deemed cost, less residual value, of the assets in equal annual
instalments over their estimated useful lives at the following rates:
Type of asset Category of property, plant and equipment Useful life
Land Freehold land and buildings Not depreciated
Freehold buildings Freehold land and buildings Up to 50 years
Long life leasehold improvements Leasehold improvements Over the unexpired term of the lease
Short life leasehold improvements Leasehold improvements Up to 10 years
Plant and machinery Fixtures, fittings and equipment Up to 15 years
Retail fixtures and fittings Fixtures, fittings and equipment Up to 5 years
Office fixtures and fittings Fixtures, fittings and equipment Up to 5 years
Computer equipment Fixtures, fittings and equipment Up to 7 years
Assets in the course of construction Assets in the course of construction Not depreciated
Profit/loss on disposal of property, plant and equipment and intangible assets
Profits and losses on the disposal of property, plant and equipment and
intangible assets represent the difference between the net proceeds and net
book value at the date of sale. Disposals are accounted for when the relevant
transaction becomes unconditional.
j) Discontinued operations and assets held for sale
Non-current assets are classified as held for sale when their carrying amount
is to be recovered principally through a sale transaction rather than through
continued use, and a sale within the next 12 months is considered to be highly
probable. Assets classified as held for sale cease to be depreciated and they
are stated at the lower of carrying amount and fair value less cost to sell.
k) Impairment of non-financial assets
Assets that have an indefinite useful life are not subject to amortisation and
are tested annually for impairment. Assets under construction are also tested
annually. Assets that are subject to amortisation or depreciation are reviewed
for impairment whenever events or changes in circumstance indicate that the
carrying value may not be recoverable. An impairment loss is recognised for
the amount by which the carrying value exceeds its recoverable amount. The
recoverable amount is the higher of an asset's fair value less costs to sell
and value in use. For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable cash flows
being individual stores (cash generating units). Non-financial assets, other
than goodwill, for which an impairment has been previously recognised are
reviewed for possible reversal of impairment at each reporting date.
l) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost
consists of all costs of purchase, costs of conversion, design costs and
other costs incurred in bringing the inventories to their first point of sale
location and condition. The cost of inventories is determined using a
first-in, first-out (FIFO) method, taking account of the fashion seasons for
which the inventory was offered. Where necessary, provision is made to reduce
cost to no more than net realisable value having regard to the nature and
condition of inventory, as well as its anticipated utilisation and
saleability.
m) Taxation
Tax expense represents the sum of the tax currently payable and deferred tax
charge.
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the Income Statement because it
excludes items of income or expense which are taxable or deductible in other
years and it further excludes items which are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates which have
been enacted or substantively enacted at the balance sheet date.
Deferred tax is recognised, using the liabilities method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements. However, if the
temporary difference arises from initial recognition of an asset or liability
in a transaction other than a business combination that at the time of the
transaction affects neither accounting nor taxable profit or loss, no deferred
tax will be recognised. Deferred tax is determined using tax rates (and laws)
that have been enacted or substantively enacted at the balance sheet date and
are expected to apply when the related deferred tax asset is realised or the
deferred tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that
future taxable profits will be available against which the temporary
differences can be utilised.
Deferred tax is provided on temporary differences arising on investments in
subsidiaries, except where the timing of the reversal of the temporary
difference is controlled by the Group and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax liabilities
and when deferred tax assets and liabilities relate to income taxes levied by
the same taxation authority on either the same taxable entities or different
taxable entities where there is an intention to settle the balances on a net
basis.
n) Provisions
Provisions are recognised when there is a present legal or constructive
obligation as a result of past events, for which it is probable that an
outflow of economic benefits will be required to settle the obligation, and
where the amount of the obligation can be reliably estimated. When the effect
of the time value of money is material, provision amounts are calculated based
on the present value of the expenditures expected to be required to settle the
obligation. The present value is calculated using forward market interest
rates as measured at the balance sheet reporting date, which have been
adjusted for risks specific to the future obligation.
Property obligations
A provision for the present value of future property reinstatement costs is
recognised where there is an obligation to return the leased property to its
original condition at the end of a lease term. The reinstatement cost at the
end of a lease usually arises due to leasehold improvements and modifications
carried out by the Group in order to customise the property during tenure of
the lease. As a result, the cost of the reinstatement provision is recognised
as a component of the cost of the leasehold improvements in property, plant
and equipment when these are installed.
o) Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
Where any Group company purchases the Company's equity share capital (treasury
shares), the consideration paid, including any directly attributable
incremental costs, is deducted from equity attributable to owners of the
Company until the shares are cancelled, reissued or disposed of. Where such
shares are subsequently sold or reissued, any consideration received, net of
any directly attributable incremental transaction costs and the related income
tax effects, is included in equity attributable to owners of the Company.
p) Financial instruments
Financial instruments are initially recognised at fair value plus directly
attributable transaction costs on the Balance Sheet when the entity becomes a
party to the contractual provisions of the instrument. A financial asset is
derecognised when the contractual rights to the cash flow expire or
substantially all risks and rewards of the asset are transferred. A financial
liability is derecognised when the obligation specified in the contract is
discharged, cancelled or expired.
At initial recognition, all financial liabilities are stated at fair value.
Subsequent to initial recognition, all financial liabilities are stated at
amortised cost using the effective interest rate method except for
derivatives which are held at fair value and which are classified as fair
value through profit and loss, except where they qualify for hedge accounting.
Financial assets are classified as either amortised cost or fair value through
profit and loss depending on their cash flow characteristics. Assets with cash
flows that represent solely payments of principal and interest are measured at
amortised cost. The fair value of the Group's financial assets and liabilities
held at amortised cost mostly approximate their carrying amount due to the
short maturity of these instruments. Where the fair value of any financial
asset or liability held at amortised cost is materially different to the book
value, the fair value is disclosed.
The Group classifies its instruments in the following categories:
Financial instrument category Note Classification Measurement Fair value
measurement
hierarchy(2)
Cash and cash equivalents 17 Amortised cost Amortised cost N/A
Cash and cash equivalents 17 Fair value through profit and loss Fair value through profit and loss 2
Trade and other receivables 15 Amortised cost Amortised cost N/A
Trade and other receivables 15 Fair value through profit and loss Fair value through profit and loss 2
Trade and other payables 18 Other financial liabilities Amortised cost N/A
Borrowings 22 Other financial liabilities Amortised cost N/A
Leases 19 Lease liabilities Amortised cost N/A
Deferred consideration 18 Fair value through profit and loss Fair value through profit and loss 3
Forward foreign exchange contracts Fair value through profit and loss Fair value through profit and loss 2
Forward foreign exchange contracts used for hedging(1) Fair value - hedging instrument Fair value - hedging instrument(3) 2
Equity swap contracts Fair value through profit and loss Fair value through profit and loss 2
1. Cash flow hedge and net investment hedge accounting is applied to the
extent it is achievable.
2. The fair value measurement hierarchy is only applicable for financial
instruments measured at fair value.
3. Forward foreign exchange contracts used for hedging are classified as
Fair value - hedging instruments under IFRS 9, however IAS 39 hedge accounting
has been applied.
The measurements for financial instruments carried at fair value are
categorised into different levels in the fair value hierarchy based on the
inputs to the valuation technique used. The different levels are defined as
follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or
liabilities that the Group can access at the measurement date.
Level 2: inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly.
Level 3: includes unobservable inputs for the asset or liability.
Observable inputs are those which are developed using market data, such as
publicly available information about actual events or transactions. The Group
has an established framework with respect to measurement of fair values,
including Level 3 fair values. The Group regularly reviews any significant
inputs which are not derived from observable market data and considers, where
available, relevant third-party information, to support the conclusion that
such valuations meet the requirements of IFRS. The classification level in the
fair value hierarchy is also considered periodically. Significant valuation
issues are reported to the Audit Committee.
The fair value of those cash and cash equivalents measured at fair value
through profit and loss, principally money market funds, is derived from their
net asset value which is based on the value of the portfolio investment
holdings at the balance sheet date. This is considered to be a Level 2
measurement.
The fair value of forward foreign exchange contracts, equity swap contracts
and trade and other receivables, principally cash settled equity swaps, is
based on a comparison of the contractual and market rates and, in the case of
forward foreign exchange contracts, after discounting using the appropriate
yield curve as at the balance sheet date. All Level 2 fair value measurements
are calculated using inputs which are based on observable market data.
The fair value of the contingent payment component of deferred consideration
is considered to be a Level 3 measurement and is derived using a present value
calculation, incorporating observable and non-observable inputs. This
valuation technique has been adopted as it most closely mirrors the
contractual arrangement.
The Group's primary categories of financial instruments are listed below:
Cash and cash equivalents
Cash and short-term deposits on the Balance Sheet comprise cash at banks and
on hand and short-term highly liquid deposits with a maturity of three months
or less, that are readily convertible to a known amount of cash and subject to
an insignificant risk of changes in value. In the Statement of Cash Flows,
cash and cash equivalents also include bank overdrafts, which are recorded
under current liabilities on the Balance Sheet.
While cash at bank and in hand is classified as amortised cost, some
short-term deposits are classified as fair value through profit and loss.
Cash and cash equivalents held at amortised cost are subject to impairment
testing each period end.
Trade and other receivables
Trade and other receivables are included in current assets, except for
maturities greater than 12 months after the balance sheet date. Most
receivables are held with the objective to collect the contractual cash flows
and are therefore recognised initially at fair value and subsequently measured
at amortised cost using the effective interest rate method, less provision
for impairment. A provision for the expected credit losses on trade
receivables is established at inception. This is modified when there is a
change in the credit risk. The amount of the movement in the provision is
recognised in the Income Statement.
Cash settled equity swaps are classified as fair value through profit and
loss.
Trade and other payables
Trade and other payables are included in current liabilities, except for
maturities greater than 12 months after the balance sheet date. Payables are
recognised initially at fair value and subsequently measured at amortised cost
using the effective interest rate method.
Borrowings (including overdrafts)
Borrowings are recognised initially at fair value, inclusive of transaction
costs incurred. Borrowings are subsequently stated at amortised cost and the
difference between the proceeds (net of transaction costs) and the redemption
value is recognised in the Income Statement over the period of the borrowings
using the effective interest rate method. Borrowings are classified as current
liabilities unless the Group has an unconditional right to defer settlement of
the liability for at least 12 months after the balance sheet date.
Deferred consideration
Deferred consideration is initially recognised at the present value of the
expected future payments. It is subsequently remeasured at fair value at each
reporting period with the change in fair value relating to changes in expected
future payments recorded in the Income Statement as an operating expense or
income. Changes in fair value relating to unwinding of discounting to present
value are recorded as a financing expense.
Derivative instruments
The Group uses derivative financial instruments to hedge its exposure to
fluctuations in foreign exchange rates arising on certain trading
transactions. The principal derivative instruments used are forward foreign
exchange contracts taken out to hedge highly probable cash flows in relation
to future sales, and product purchases. The Group also may designate forward
foreign exchange contracts or foreign currency borrowings as a net investment
hedge of the assets of overseas subsidiaries.
When hedge accounting is applied, the Group documents at the inception of the
transaction the relationship between the spot element of the hedging
instruments and hedged items, as well as its risk management objective and
strategy for undertaking various hedge transactions. The Group also documents
its assessment, both at hedge inception and on an ongoing basis, of whether
the hedging instruments that are used in hedging transactions are highly
effective in offsetting changes in fair values or cash flows of hedged items.
Derivatives are initially recognised at fair value at the trade date and are
subsequently remeasured at their fair value. The method of recognising the
resulting gain or loss depends on whether the derivative is designated as a
hedging instrument, and if so, the nature of the item being hedged. The Group
designates certain derivatives as either: (1) hedges of the fair value of
recognised assets and liabilities or a firm commitment (fair value hedge); (2)
hedges of highly probable forecast transactions (cash flow hedges); (3) hedges
of net investment of the assets of overseas subsidiaries (net investment
hedges); or (4) classified as fair value through profit and loss.
The forward elements of the hedging instrument are recognised in operating
expenses.
Changes in the fair value relating to the spot element of derivatives that are
designated and qualify as fair value hedges are recorded in the Income
Statement immediately, together with any changes in the fair value of the
hedged item that is attributable to the hedged risk.
The effective portion of changes in the fair value relating to the spot
element of derivatives that are designated and qualify as cash flow hedges is
deferred in other comprehensive income. The gain or loss relating to the
ineffective portion of the gain or loss is recognised immediately in the
Income Statement. Amounts deferred in other comprehensive income are recycled
through the Income Statement in the periods when the hedged item affects the
Income Statement. When a hedging instrument expires or is sold, or when a
hedge no longer meets the criteria for hedge accounting, any cumulative gain
or loss existing in equity at the time remains in equity and is
recognised when the forecast transaction is ultimately recognised in the
Income Statement. When a forecast transaction is no longer expected to occur,
the cumulative gain or loss that was reported in equity is immediately
transferred to the Income Statement within 'net exchange gain/(loss) on
derivatives - fair value through profit and loss'. If a derivative instrument
is not designated as a hedge, the subsequent change to the fair value is
recognised in the Income Statement within operating expenses or interest
depending upon the nature of the instrument.
Where the Group hedges net investments in foreign operations through
derivative instruments or foreign currency borrowings, the gains or losses on
the effective portion of the change in fair value of derivatives that are
designated and qualify as a hedge of a net investment, or the gains or losses
on the retranslation of the borrowings are recognised in other comprehensive
income and are reclassified to the Income Statement when the foreign operation
that is hedged is disposed of.
q) Government grants
Government grants related to assets are recognised as deferred income when
there is reasonable certainty that any conditions attached to the grant will
be met and the grant will be received. They are amortised to operating income
over the useful life of the asset. Government grants related to income are
presented as operating income when it is reasonably certain that any
conditions attached will be met and that the grant will be received.
r) Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates (the functional currency). The consolidated financial
statements are presented in sterling which is the Company's functional and the
Group's presentation currency.
Transactions in foreign currencies
Transactions denominated in foreign currencies within each entity in the Group
are translated into the functional currency at the exchange rate prevailing at
the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies, which are held at the year end, are translated into the
functional currency at the exchange rate ruling at the balance sheet date
(closing rate). Exchange differences on monetary items are recognised in the
Income Statement in the period in which they arise, except where these
exchange differences form part of a net investment in overseas subsidiaries of
the Group, in which case such differences are taken directly to the hedging
reserve.
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
53 weeks to 52 weeks to As at As at
2 April
27 March
2 April 2022
27 March
2022
2021 2021
Euro 1.18 1.12 1.19 1.17
US Dollar 1.36 1.30 1.31 1.38
Chinese Yuan Renminbi 8.73 8.85 8.34 9.02
Hong Kong Dollar 10.63 10.08 10.26 10.72
Korean Won 1,596 1,514 1,592 1,558
s) 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 6 for further details of adjusting items.
3. 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, the
US, mainland China and Hong Kong, S.A.R. China.
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
53 weeks to 52 weeks to 53 weeks to 52 weeks to 53 weeks to 52 weeks to
2 April
27 March
2 April
27 March
2 April
27 March
2022
2021
2022
2021
2022
2021
£m
£m
£m
£m £m £m
Retail 2,273 1,910 - - 2,273 1,910
Wholesale 512 396 - - 512 396
Licensing - - 42 39 42 39
Total segment revenue 2,785 2,306 42 39 2,827 2,345
Inter-segment revenue(1) - - (1) (1) (1) (1)
Revenue from external customers 2,785 2,306 41 38 2,826 2,344
Depreciation and amortisation (313) (277) - - (313) (277)
Impairment of intangible assets - (9) - - - (9)
Net impairment of property, plant and equipment(2) (2) (1) - - (2) (1)
Net impairment of right-of-use assets(3) (1) - - - (1) -
Other non-cash items:
Share-based payments (16) (12) - - (16) (12)
Adjusted operating profit 486 361 37 35 523 396
Adjusting items(4) 19 124
Finance income 3 3
Finance expense (34) (33)
Profit before taxation 511 490
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. Net impairment charge relating to property, plant and equipment for the
53 weeks to 2 April 2022 is presented excluding a net reversal of £ 1
million (last year: reversal of £9 million) relating to charges as a result
of the impact of COVID-19. These have been presented as adjusting items (refer
to note 6).
3. Net impairment charge of right-of-use assets for the 53 weeks to 2 April
2022 is presented excluding a net charge of £6 million (last year: reversal
of £38 million) relating to charges as a result of the impact of COVID-19 and
a charge of £ nil (last year: charge of £4 million) relating to
restructuring costs, which have been presented as adjusting items (refer to
note 6).
4. Adjusting items relate to the Retail and Wholesale segment. Refer to note
6 for details of adjusting items.
Retail/Wholesale Licensing Total
53 weeks to 52 weeks to 53 weeks to 52 weeks to 53 weeks to 52 weeks to
2 April
27 March
2 April
27 March
2 April
27 March
2022
2021
2022
2021
2022
2021
£m
£m
£m
£m £m £m
Additions to non-current assets 400 234 - - 400 234
Total segment assets 2,099 1,952 6 7 2,105 1,959
Goodwill 109 105
Cash and cash equivalents 1,222 1,261
Taxation 261 177
Total assets per Balance Sheet 3,697 3,502
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.
Revenue by product division 53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
Accessories 1,017 841
Women's 784 653
Men's 807 668
Children's/Other 177 144
Retail/Wholesale 2,785 2,306
Licensing 41 38
Total 2,826 2,344
Revenue by destination 53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
Asia Pacific 1,276 1,203
EMEIA(1) 813 628
Americas 696 475
Retail/Wholesale 2,785 2,306
Licensing 41 38
Total 2,826 2,344
1. EMEIA comprises Europe, Middle East, India and Africa.
Entity-wide disclosures
Revenue derived from external customers in the UK totalled £210 million for
the 53 weeks to 2 April 2022 (last year: £145 million).
Revenue derived from external customers in foreign countries totalled £2,616
million for the 53 weeks to 2 April 2022 (last year: £2,199 million). This
amount includes £626 million of external revenues derived from customers
in the US (last year: £408 million) and £765 million of external revenues
derived from customers in China (last year: £752 million).
The total of non-current assets, other than financial instruments, and
deferred tax assets located in the UK is £439 million (last year: £477
million). The remaining £1,005 million of non-current assets are located in
other countries (last year: £865 million), with £263 million located in the
US (last year: £223 million) and £214 million located in China (last year:
£115 million).
4. Net operating expenses
Note 53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
Operating income (18) (16)
Selling and distribution costs 1,113 943
Administrative expenses 377 317
1,472 1,244
Adjusting operating income 6 (20) (81)
Adjusting operating expenses 6 16 (22)
(4) (103)
Net operating expenses 1,468 1,141
5. Profit before taxation
Note 53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
Adjusted profit before taxation is stated after charging/(crediting):
Depreciation of property, plant and equipment
Within cost of sales 2 2
Within selling and distribution costs 68 56
Within administrative expenses 16 13
Depreciation of right-of-use assets
Within selling and distribution costs 171 155
Within administrative expenses 17 17
Amortisation of intangible assets
Within selling and distribution costs 2 2
Within administrative expenses 37 31
Gain on disposal of property, plant and equipment and intangible assets(1) (3) -
Gain on disposal of right-of-use assets - (1)
Net impairment charge relating to property, plant and equipment(2) 12 2 1
Net impairment charge relating to right-of-use assets(3) 13 1 -
Impairment of intangible assets 11 - 9
Employee costs(4) 537 488
Other lease expense
Property lease variable lease expense 19 122 118
Property lease in holdover expense 19 17 15
Non-property short-term lease expense 19 5 5
Net exchange (gain) on revaluation of monetary assets and liabilities (10) (5)
Net loss on derivatives - fair value through profit and loss 9 7
Receivables net impairment charge/(reversal)(5) 1 (1)
1. Gain on disposal of property of £18m was presented as an adjusting item
last year (refer to note 6).
2. Net impairment charge relating to property, plant and equipment for the
53 weeks to 2 April 2022 is presented excluding a net reversal of £1
million (last year: reversal of £9 million) relating to charges as a result
of the impact of COVID-19. These have been presented as adjusting items (refer
to note 6).
3. Net impairment charge of right-of-use assets for the 53 weeks to 2 April
2022 is presented excluding a net charge of £6 million (last year: reversal
of £38 million) relating to charges as a result of the impact of COVID-19 and
a charge of £nil (last year: charge of £4 million) relating to restructuring
costs, which have been presented as adjusting items (refer to note 6).
4. Employee costs for the 53 weeks to 2 April 2022 are presented excluding a
charge of £10 million (last year: £21 million) arising as a result of the
Group's restructuring programmes and a charge of £nil relating to employee
profit sharing agreements (last year £4m on the sale of property in France) ,
which have been presented as adjusting items (refer to note 6).
5. Receivables net impairment charge for the 53 weeks to 2 April 2022 is
presented excluding reversal of £1 million (last year: reversal of £5
million) relating to charges as a result of the impact of COVID-19, which has
been presented as an adjusting item (refer to note 6).
Note 53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
Adjusting items
Adjusting operating items
Impact of COVID-19:
Impairment charge/(reversal) relating to retail cash generating units 6 5 (47)
Impairment (reversal) relating to inventory 6 (16) (22)
Impairment (reversal) relating to receivables 6 (1) (5)
COVID-19-related rent concessions 6 (18) (54)
COVID-19 related government grant income 6 (2) (9)
Other adjusting items:
Gain on disposal of property 6 - (18)
Restructuring costs 6 11 30
Revaluation of deferred consideration liability 6 1 -
Total adjusting operating items (20) (125)
Adjusting financing items
Finance charge on deferred consideration liability 6 1 1
Total adjusting financing items 1 1
Note 53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
Analysis of adjusting operating items:
Included in Cost of sales (Impairment (reversal) relating to inventory) (16) (22)
Included in Operating expenses 4 (4) (103)
Total (20) (125)
6. Adjusting items
53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
Total adjusting operating items (pre-tax) (20) (125)
Tax charge on adjusting operating items 5 22
Total adjusting operating items (post-tax) (15) (103)
Impact of COVID-19
COVID-19 continued to impact 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.
As at the beginning of the last financial year, the Group had balances
relating to COVID-19 impairment charges that had previously been charged as
adjusting items in prior years, as they were considered to be material and
one-off in nature. £246 million COVID-19 impairment charges were recognised
at 28 March 2020 . The charges related to impairments of retail cash
generating units (£157 million), intangible assets (£10 million) and
receivables (£11 million) and to inventory provisions (£68 million).
At 2 April 2022, 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
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. 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 53 weeks to 2 April 2022, the impairment provisions remaining have
been reassessed, using management's latest expectations, with a charge of
£5 million recorded (last year: £47 million net reversal). A related tax
credit of £1 million (last year: charge of £5 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
not have been included in this adjusting item. Refer to notes 12 and 13 for
details of impairment of retail cash generating units.
Impairment of inventory
During the 53 weeks to 2 April 2022, 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 £16 million (last year: £22 million) have been
recorded and presented as an adjusting item. A related tax charge of £4
million (last year: £5 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 53 weeks to 2 April 2022, 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 2 April 2022 compared to the previous
year end. As a result of this reassessment, management has revised the
expected credit loss rates, with a reversal of £1 million recorded as an
adjusting item (last year: £5 million), resulting from the reduction in
credit loss rate assumption. A related tax charge of £nil (last year: £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. Refer to note 15 for details of impairment of receivables.
COVID-19-related rent concessions
Eligible rent forgiveness amounts have been treated as negative variable lease
payments, resulting in a credit of £18 million (last year: £54 million) for
the 53 weeks to 2 April 2022 being recorded in net operating expenses. This
income has been presented as an adjusting item, as set out above. A related
tax charge of £4 million (last year: £10 million) has also been recognised
in the current year.
COVID-19-related grant income
The Group has recorded grant income of £2 million (last year: £9 million)
within selling and distribution costs in net operating expenses for the 53
weeks to 2 April 2022, relating to government support for the retention of
employees, 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 £1 million (last year: £2 million)
has also been recognised in the current year.
Other adjusting items
Restructuring costs
Restructuring costs of £11 million (last year: £30 million) were incurred in
the current year, arising primarily as a result of the organisational
efficiency programme announced in July 2020 that included the creation of
three new business units to enhance product focus, increase agility and
elevate quality and, to further streamline of office-based functions and
facilities. The costs for the 53 weeks to 2 April 2022 principally relate to
redundancies and consulting costs and are recorded in operating expenses. They
are presented as an adjusting item, in accordance with the Group's accounting
policy, as the anticipated cost of the restructuring programme is considered
material and discrete in nature. A related tax credit of £3 million (last
year: £6 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 of the non-controlling interest in Burberry Middle East LLC to the Group
in exchange for consideration of contingent payments to be made to the
minority shareholder over the period to 2023.
A charge of £1 million in relation to the revaluation of this balance has
been recognised in net operating expenses for the 53 weeks to 2 April 2022
(last year: £nil). A financing charge of £1 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 53 weeks to 2 April
2022 (last year: £1 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 years
Gain on disposal of property
During the 52 weeks to 27 March 2021, the Group completed the sale of an owned
property in France for cash proceeds of £27 million resulting in a net gain
on disposal of £23 million, recorded within administrative expenses in net
operating expenses. A profit of £18 million was presented as an adjusting
item, after deducting incremental costs of £4 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 £5 million was also recognised in the year.
7. Financing
Note 53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
Bank interest income - amortised cost - 1
Other finance income - amortised cost 1 -
Finance income - amortised cost 1 1
Bank interest income - fair value through profit and loss 2 2
Finance income 3 3
Interest expense on lease liabilities 19 (27) (25)
Interest expense on overdrafts - -
Interest expense on borrowings (4) (5)
Bank charges (2) (1)
Other finance expense (1) (2)
Finance expense (34) (33)
Finance charge on deferred consideration liability 6 (1) (1)
Net finance expense (32) (31)
8. Taxation
Analysis of charge for the year recognised in the Group Income Statement:
53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
Current tax
UK corporation tax
Current tax on income for the 53 weeks to 2 April 2022 at 19% (last year: 19%) 114 48
Double taxation relief (7) (7)
Adjustments in respect of prior years(1) 25 (23)
132 18
Foreign tax
Current tax on income for the year 28 51
Adjustments in respect of prior years(1) (15) 19
Total current tax 145 88
Deferred tax
UK deferred tax
Origination and reversal of temporary differences (3) 23
Impact of changes to tax rates (4) -
Adjustments in respect of prior years(1) 1 9
(6) 32
Foreign deferred tax
Origination and reversal of temporary differences (27) (7)
Impact of changes to tax rates - -
Adjustments in respect of prior years(1) 2 1
Total deferred tax (31) 26
Total tax charge on profit 114 114
1. Adjustments in respect of prior years relate mainly to tax
return adjustments and a net increase in provisions for tax contingencies and
tax accruals.
Analysis of charge for the year recognised in Other Comprehensive Income and
directly in Equity:
53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
Current tax
Recognised in Other Comprehensive Income
Current tax (credit)/charge on exchange differences on loans (foreign currency - (2)
translation reserve)
Current tax charge on net investment hedges deferred in Equity (hedging 1 -
reserve)
Total current tax recognised in Other Comprehensive Income 1 (2)
Deferred tax
Recognised in Other Comprehensive Income
Deferred tax credit on net investment hedges deferred in Equity (hedging (1) -
reserve)
Total deferred tax recognised in Other Comprehensive Income (1) -
Recognised in Equity
Deferred tax (credit)/charge on share options (retained earnings) - (1)
Total deferred tax recognised directly in Equity - (1)
The tax rate applicable on profit varied from the standard rate of corporation
tax in the UK due to the following factors:
53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
Profit before taxation 511 490
Tax at 19% (last year: 19%) on profit before taxation 97 93
Rate adjustments relating to overseas profits 3 18
Permanent differences 6 (1)
Tax on dividends not creditable 2 1
Current year tax losses not recognised - -
Prior year temporary differences and tax losses recognised (3) (3)
Adjustments in respect of prior years 13 6
Adjustments to deferred tax relating to changes in tax rates (4) -
Total taxation charge 114 114
Total taxation recognised in the Group Income Statement arises on the
following items:
53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
Tax on adjusted profit before taxation 109 92
Tax on adjusting items 5 22
Total taxation charge 114 114
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 £20 million to an increase of £20 million relative to the
current tax liabilities recognised at 2 April 2022. This would have an impact
of approximately (4%) to 4% on the Group's effective tax rate.
9. 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.
53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
Attributable profit for the year before adjusting items(1) 382 273
Effect of adjusting items(1) (after taxation) 14 103
Attributable profit for the year 396 376
1. Refer to note 6 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.
53 weeks to 52 weeks to
2 April
27 March
2022
2021
Millions
Millions
Weighted average number of ordinary shares in issue during the year 402.5 404.1
Dilutive effect of the employee share incentive schemes 2.3 1.0
Diluted weighted average number of ordinary shares in issue during the year 404.8 405.1
10. Dividends paid to owners of the Company
53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
Prior year final dividend paid 42.5p per share (last year: nil) 172 -
Interim dividend paid 11.6p per share (last year: nil) 47 -
Total 219 -
A final dividend in respect of the 53 weeks to 2 April 2022 of 35.4p (last
year: 42.5p) per share, amounting to £140 million, has been proposed for
approval by the shareholders at the Annual General Meeting subsequent to the
balance sheet date. The final dividend has not been recognised as a liability
at the year end and will be paid on 5 August 2022 to the shareholders on the
register at the close of business on 1 July 2022. The ex-dividend date is 30
June 2022 and the final day for dividend reinvestment plan ('DRIP') elections
is 15 July 2022.
11. Intangible assets
Cost Goodwill Trademarks, licences and other intangible Computer Intangible assets in the course of Total
assets
software
construction
£m
£m
£m
£m
£m
As at 28 March 2020 116 13 198 65 392
Effect of foreign exchange rate changes (5) - (2) - (7)
Additions - 1 25 11 37
Disposals - - (15) - (15)
Reclassifications from assets in the course of construction - - 31 (31) -
As at 27 March 2021 111 14 237 45 407
Effect of foreign exchange rate changes 4 - 1 - 5
Additions - - 12 25 37
Disposals - (1) (7) - (8)
Reclassifications from assets in the course of construction - - 15 (15) -
As at 2 April 2022 115 13 258 55 441
Accumulated amortisation and impairment
As at 28 March 2020 7 6 121 12 146
Effect of foreign exchange rate changes (1) - (2) - (3)
Charge for the year - 1 32 - 33
Disposals - - (15) - (15)
Impairment charge on assets - - 1 8 9
As at 27 March 2021 6 7 137 20 170
Effect of foreign exchange rate changes - - 1 (1) -
Charge for the year - 1 38 - 39
Disposals - (1) (7) - (8)
Impairment charge on assets - - - - -
As at 2 April 2022 6 7 169 19 201
Net book value
As at 2 April 2022 109 6 89 36 240
As at 27 March 2021 105 7 100 25 237
During the 52 weeks to 27 March 2021 an impairment charge of £8 million was
recognised in relation to computer software assets under construction and £1
million was recognised in relation to computer software assets following a
review of supply chain strategy and future software requirements. No such
charge was incurred in the 53 weeks to 2 April 2022.
Impairment testing of goodwill
The carrying value of the goodwill allocated to cash generating units:
53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
China 50 47
Korea 26 26
Retail and Wholesale segment(1) 19 19
Other 14 13
Total 109 105
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 29 March 2025 and a
longer-term growth rate of 4% to 27 March 2027. A terminal value has been
included in the value-in-use calculation based on the cash flows for the year
ending 27 March 2027 incorporating the assumption that growth beyond 27 March
2027 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 10% 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 13%, 12% and 10% respectively (last year: China 14%, Korea 12%,
and the Retail and Wholesale segment 10%).
The other goodwill balance of £14 million (last year: £13 million) consists
of amounts relating to seven cash generating units none of which have goodwill
balances individually exceeding £7 million as at 2 April 2022 (last year: £6
million).
12. Property, plant and equipment
Cost Freehold land and buildings Leasehold improvements Fixtures, Assets in the course of construction Total
£m
£m
fittings and
£m
£m
equipment
£m
As at 28 March 2020 147 497 373 24 1,041
Effect of foreign exchange rate changes (12) (30) (22) (1) (65)
Additions - 44 11 15 70
Disposals (6) (27) (45) - (78)
Reclassifications from assets in the course of construction - 9 12 (21) -
As at 27 March 2021 129 493 329 17 968
Effect of foreign exchange rate changes 6 17 9 1 33
Additions - 68 23 45 136
Disposals - (37) (18) (2) (57)
Reclassifications from assets in the course of construction - 9 5 (14) -
Reclassifications to assets held for sale (19) - - - (19)
As at 2 April 2022 116 550 348 47 1,061
Accumulated depreciation and impairment
As at 28 March 2020 59 363 323 1 746
Effect of foreign exchange rate changes (6) (22) (20) - (48)
Charge for the year 4 45 22 - 71
Disposals (2) (27) (45) - (74)
Impairment charge on assets 1 2 - - 3
Impairment reversal on assets - (8) (2) - (10)
As at 27 March 2021 56 353 278 1 688
Effect of foreign exchange rate changes 3 14 8 - 25
Charge for the year 3 58 25 - 86
Disposals - (37) (18) - (55)
Impairment charge on assets - 1 1 - 2
Impairment reversal on assets - (1) - - (1)
Reclassifications to assets held for sale (6) - - - (6)
As at 2 April 2022 56 388 294 1 739
Net book value
As at 2 April 2022 60 162 54 46 322
As at 27 March 2021 73 140 51 16 280
During the 53 weeks to 2 April 2022, 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 2 April 2022. 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 29 March 2025, 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 9.9% and 18.4% (last
year: between 9.6% and 14.1%) 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 since 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 52 weeks to 27 March 2021 a net impairment
reversal of £47 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. This net reversal reflected improved
trading expectations compared to those assumed at 28 March 2020. During the 53
weeks to 2 April 2022, 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
charge of £5 million, which has also been presented as an adjusting item in
the current year. A net impairment reversal of £1 million was recorded
against property, plant and equipment (last year: net impairment reversal of
£9 million) and a charge of £6 million was recorded against right-of-use
assets (last year: net impairment reversal of £38 million). Refer to note 13
for further details of right-of-use assets. Refer to note 6 for details of
adjusting items.
A net charge of £3 million (last year: £nil) 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 £2 million (last year: charge of £nil) was recorded
against property, plant and equipment and a net charge of £1 million (last
year: charge of £nil) was recorded against right-of-use assets.
The net impairment charge recorded in property, plant and equipment related to
13 retail cash generating units (last year: net impairment reversal related to
25 retail cash generating units) for which the total recoverable amount at the
balance sheet date is £7 million (last year: £33 million).
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 10% from the estimate used to determine the
impairment charge or reversal. We have also considered retail cash generating
units with no indicators of impairment but with a significant asset balance.
It is estimated that a 10% decrease/increase in revenue assumptions for the 52
weeks to 01 April 2023, with no change to subsequent forecast revenue growth
rate assumptions, would result in a less than £10 million increase / less
than £10 million decrease in the impairment charge of retail store assets in
the 53 weeks to 2 April 2022.
An impairment charge of £nil (last year: £1 million) was recognised in
relation to non-retail property, plant and equipment. Refer to note 6 for
details of adjusting items. As a result the total net impairment charge for
property, plant and equipment was £1 million (last year: net impairment
reversal of £7 million).
As of 2 April 2022 the Group had three freehold properties that met the
criteria to be classified as held for sale. These assets were required to be
recorded at the lower of carrying value or fair value less any costs to sell.
As the fair value less any costs to sell exceeded the carrying value for each,
the related assets and liabilities were recorded at their carrying value.
The sale of these properties is expected to complete within the next 12
months.
13. Right-of-use assets
Net book value Property right-
of-use assets
£m
As at 28 March 2020 834
Effect of foreign exchange rate changes (39)
Additions 127
Remeasurements(1) 34
Depreciation for the year (172)
Impairment charge on assets (15)
Impairment reversal on assets 49
As at 27 March 2021 818
Effect of foreign exchange rate changes 9
Additions 227
Remeasurements(1) 21
Depreciation for the year (188)
Impairment charge on assets (10)
Impairment reversal on assets 3
As at 2 April 2022 880
1. Remeasurements of lease liabilities include COVID-19-related rent
forgiveness of £18 million (last year: £54 million) which have been
recognised as a credit in the Income Statement at 2 April 2022 (refer to note
19).
As a result of the assessment of retail cash generating units for impairment,
a net impairment charge of £7 million (last year: net impairment reversal of
£34 million) was recorded for impairment of right-of-use assets. Refer to
note 12 for further details of impairment assessment of retail cash generating
units. This net impairment charge comprises £6 million relating to the impact
of COVID-19 on the value-in-use of retail cash generating units (last year:
£38 million reversal) and £1 million relating to other trading impacts was
recognised during the year (last year: £nil). The charge relating to COVID-19
has been presented as an adjusting item (refer to note 6).
The net impairment charge recorded in right-of-use assets relates to 12 retail
cash generating units (last year: net impairment reversal related to 27 retail
cash generating units) for which the total recoverable amount at the balance
sheet date is £26 million (last year: £200 million).
In the prior year, an impairment charge of £4 million was recognised in
relation to vacant office premises as part of restructuring costs in adjusting
items.
As a result, the net impairment charge for right-of-use assets was, in total,
£7 million (last year: net impairment reversal of £34 million).
14. Deferred taxation
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax liabilities
and there is an intention to settle on a net basis, and to the same fiscal
authority. The assets and liabilities presented in the Balance Sheet, after
offset, are shown in the table below:
53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
Deferred tax assets 175 137
Deferred tax liabilities (1) (1)
Net amount 174 136
The movement in the deferred tax account is as follows: 53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
At start of year 136 171
Effect of foreign exchange rate changes 6 (10)
Credited/(charged) to the Income Statement 31 (26)
Credited to Other Comprehensive Income 1 -
Credited to Equity - 1
At end of year 174 136
The movement in the net deferred tax balances during the year is as follows:
Deferred tax balances
Capital allowances Unrealised inventory profit and other inventory provisions Share schemes Derivative Instruments Unused tax losses Leases Other(1) Total
£m
£m
£m
£m
£m
£m
£m £m
As at 28 March 2020 20 72 2 (1) 5 53 20 171
Effect of foreign exchange rate changes (2) (5) - - - (1) (2) (10)
(Charged)/credited to the Income Statement (1) (5) 1 - (4) (17) - (26)
Credited to Equity - - 1 - - - - 1
As at 27 March 2021 17 62 4 (1) 1 35 18 136
Effect of foreign exchange rate changes - 4 - - - 1 1 6
Credited/(charged) to the Income Statement 2 31 1 - 2 (4) (1) 31
Credited to Other Comprehensive Income - - - 1 - - - 1
As at 2 April 2022 19 97 5 - 3 32 18 174
1. Deferred balances within 'Other' category in the analysis above include
temporary differences arising on other provisions and accruals of £18m (last
year: £18m) and property provisions of £nil (last year: £nil).
Deferred tax assets are recognised for tax losses carried forward to the
extent that the realisation of the related benefit through the future taxable
profits is probable. The Group did not recognise deferred tax assets of £47
million (last year: £51 million) in respect of losses and temporary timing
differences amounting to £185 million (last year: £197 million) that can be
set off against future taxable income. There is a time limit for the recovery
of £6m of these potential assets (last year: £7 million) which ranges from
one to seven years (last year: two to eight years).
Included within other temporary differences above is a deferred tax liability
of £1 million (last year: £1 million) relating to unremitted overseas
earnings. No deferred tax liability is provided in respect of any future
remittance of earnings of foreign subsidiaries where the Group is able to
control the remittance of earnings and it is probable that such earnings will
not be remitted in the foreseeable future, or where no liability would arise
on the remittance. The aggregate amount of temporary differences in respect of
unremitted earnings is £287 million (last year: £288 million).
15. Trade and other receivables
53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
Non-current
Other financial receivables(1) 42 41
Other non-financial receivables(2) 1 1
Prepayments 2 3
Total non-current trade and other receivables 45 45
Current
Trade receivables 151 155
Provision for expected credit losses (7) (8)
Net trade receivables 144 147
Other financial receivables(1) 36 33
Other non-financial receivables(2) 63 48
Prepayments 32 40
Accrued income 8 9
Total current trade and other receivables 283 277
Total trade and other receivables 328 322
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 COVID-19 related government grant receivables.
Included in total trade and other receivables are non-financial assets of £98
million (last year: £92 million).
16. Inventories
53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
Raw materials 12 12
Work in progress 1 1
Finished goods 413 389
Total inventories 426 402
53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
Total inventories, gross 509 519
Provisions (83) (117)
Total inventories, net 426 402
Inventory provisions of £83m (last year: £117m) are recorded, representing
16.3% (last year: 22.5%) 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 £786 million (last year: £652 million).
As at 28 March 2020, £68 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, £14 million of the provision has been utilised (last year:
£4 million), where inventory previously provided for had been sold below cost
in the current year and is recognised in cost of sales. An additional £16
million has been released upon re-assessment of the provision (last year: £22
million), 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 6 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 £17 million in the next 12 months. This
would result in a potential range of inventory provisions of 13.1% to 19.8% as
a percentage of the gross value of inventory as at 2 April 2022.
The net movement in inventory provisions included in cost of sales for the 53
weeks to 2 April 2022 was a release of £1 million (last year: release of £11
million). The total reversal of inventory provisions during the current year,
which is included in the net movement, was £43 million (last year: reversal
of £67 million). Both these amounts include the reversal of £16 million
(last year: £22 million), referred to above, which has been presented as an
adjusting item.
17. Cash and cash equivalents
53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
Cash and cash equivalents held at amortised cost 124 190
Cash at bank and in hand
Short-term deposits 73 159
197 349
Cash and cash equivalents held at fair value through profit and loss 1,025 912
Short-term deposits
Total 1,222 1,261
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 2 April 2022 and 27 March 2021, no impairment losses were identified on
cash and cash equivalents held at amortised cost.
18. Trade and other payables
53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
Non-current
Other payables(1) 5 8
Deferred income and non-financial accruals 18 14
Contract liabilities 64 70
Deferred consideration(2) 4 7
Total non-current trade and other payables 91 99
Current
Trade payables 181 129
Other taxes and social security costs 60 52
Other payables(1) 6 13
Accruals 204 169
Deferred income and non-financial accruals 13 7
Contract liabilities 13 13
Deferred consideration(2) 4 10
Total current trade and other payables 481 393
Total trade and other payables 572 492
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. In the 53 weeks to 2 April 2022
payments of £3 million were made in relation to Burberry Middle East LLC
(last year: £3 million) and £9 million was paid to the previous owners of
Burberry Manifattura S.R.L.
Included in total trade and other payables are non-financial liabilities of
£168 million (last year: £157 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.
53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
Retail contract liabilities 7 6
Licensing contract liabilities 70 77
Total contract liabilities 77 83
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.
53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
Retail revenue relating to contract liabilities 4 2
Deferred revenue from Beauty licence 7 7
Revenue recognised that was included in contract liabilities at the start of 11 9
the year
19. Lease liabilities
Property lease liabilities
£m
Balance as at 28 March 2020 1,125
Effect of foreign exchange rate changes (53)
Created during the year 125
Amounts paid(1) (177)
Discount unwind 25
Remeasurements(2) (21)
Transfers (4)
Balance as at 27 March 2021 1,020
Effect of foreign exchange rate changes 16
Created during the year 222
Amounts paid(1) (229)
Discount unwind 27
Remeasurements(2) 2
Balance as at 2 April 2022 1,058
53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
Analysis of total lease liabilities:
Non-current 849 810
Current 209 210
Total 1,058 1,020
1. The amounts paid of £229 million (last year: £177 million) includes
£202 million (last year: £151 million) arising as a result of a financing
cash outflow and £27 million (last year: £25 million) arising as a result of
an operating cash outflow.
2. Remeasurements include COVID-19-related rent forgiveness of £16 million
(last year: £54 million) and other remeasurements of £20 million (last year:
£33 million). COVID-19-related rent forgiveness has been recognised as a
credit in the Income Statement at 2 April 2022. This credit is included as an
adjusting item. Refer to note 6. Other remeasurements relate to changes in the
lease liabilities that arises as a result of management's reassessment of the
lease term, based on existing break or extension options in the contract.
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 16 years
(last year: few months to 17 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 £423
million (last year: £425 million) in relation to the next available extension
option which are assessed as not reasonably certain to be exercised and £157
million (last year: £125 million) in relation to break options which are
expected to be exercised. During the 53 weeks to 2 April 2022, significant
judgements regarding breaks and options in relation to individually material
leases resulted in approximately £35 million in undiscounted future cash
flows not being included in the initial right-of-use assets and lease
liabilities.
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 33% (last year: 37%)
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.
The Group's accounting policy for leases is set out in note 2. Details of
income statement charges and income from leases are set out in note 5. The
right-of-use asset categories on which depreciation is incurred are presented
in note 13. Interest expense incurred on lease liabilities is presented in
note 7.
Total cash outflows in relation to leases in the 53 weeks ended 2 April 2022
are £376 million (last year: £312 million). This relates to payments of
£202 million on lease principal (last year: £152 million), £27 million on
lease interest (last year: £25 million), £124 million on variable lease
payments (last year: £115 million), and £23 million other lease payments
principally relating to short-term leases and leases in holdover (last year:
£20 million).
20. Provisions for other liabilities and charges
Property obligations Other Total
£m
£m
£m
Balance as at 28 March 2020 36 6 42
Effect of foreign exchange rate changes (2) - (2)
Created during the year 9 11 20
Discount unwind 1 - 1
Utilised during the year (1) (1) (2)
Released during the year (1) (2) (3)
Balance as at 27 March 2021 42 14 56
Effect of foreign exchange rate changes 1 - 1
Created during the year 9 8 17
Discount unwind 1 - 1
Utilised during the year (3) (2) (5)
Released during the year (1) (5) (6)
Balance as at 2 April 2022 49 15 64
The net charge in the year for property obligations is £8 million (last year:
£8 million), relating to additional property reinstatements costs. The net
charge in the year for other provisions of £3 million (last year: £9
million) relates to expected future outflows for property disputes, employee
matters and tax compliance.
53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
Analysis of total provisions:
Non-current 36 32
Current 28 24
Total 64 56
The non-current provisions relate to property reinstatement costs which are
expected to be utilised within 16 years (last year: 17 years).
21. Bank overdrafts
Included within bank overdrafts is £45 million (last year: £45 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 2 April 2022, the Group held bank overdrafts of £nil (last
year: £nil) 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
On 21 September 2020, Burberry Group plc issued medium term notes with a face
value of £300 million and 1.125% coupon 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. The fair
value of the bond at 2 April 2022 is £298m (last year: £297m), all movements
on the bond are non-cash.
On 26 July 2021, the Group entered into a new £300 million multi-currency
sustainability linked revolving credit facility (RCF) with a syndicate of
banks, replacing the previous £300 million RCF that had been in place since
2014. In March 2020, the Group drew down on the RCF in full, and it was repaid
in full in June 2020. There were no drawdowns or repayments of the RCF
during the current year and at 2 April 2022, there were £nil outstanding
drawings.
The Group is in compliance with the financial and other covenants within the
facilities and has been in compliance throughout the financial period.
On 14 May 2020, Burberry Limited issued commercial paper with a face value of
£300 million, issued at a discount with zero coupon, and a maturity of 17
March 2021. The commercial paper was issued under a £300 million facility the
Group agreed under the UK Government sponsored COVID Corporate Finance
Facility (CCFF). An increase to the Group's CCFF of £300 million to £600
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.
23. Share capital and reserves
Allotted, called up and fully paid share capital Number £m
Ordinary shares of 0.05p (as at 27 March 2021: 0.05p) each
As at 28 March 2020 404,705,886 -
Allotted on exercise of options during the year 158,473 -
As at 27 March 2021 404,864,359 -
Allotted on exercise of options during the year 242,942 -
As at 2 April 2022 405,107,301 -
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 53 weeks to 2 April 2022, the Company entered into agreements to
purchase £150 million of its own shares excluding stamp duty, as part of a
share buy-back programme (last year: £nil). 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, as the amounts paid
reduce the profits available for distribution by the Company. 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 53 weeks to 2 April 2022, no treasury
shares were cancelled (last year: no treasury shares were cancelled).
As at 2 April 2022 the Company held 8.4 million treasury shares (last year:
nil), with a market value of £140 million based on the share price at the
reporting date (last year: £nil).
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 2 April 2022, the amount of own shares held by ESOP trusts
and offset against retained earnings is £11 million (last year: £13
million). As at 2 April 2022, the ESOP trusts held 0.6 million shares (last
year: 0.8 million) in the Company, with a market value of £10 million (last
year: £15 million). In the 53 weeks to 2 April 2022 the ESOP trusts and the
Company have waived their entitlement to dividends.
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.
Capital Hedging reserves Foreign currency translation Total
reserve
reserve
£m
£m
£m
Cash flow Net investment hedge
hedges
£m
£m
Balance as at 28 March 2020 41 - 5 245 291
Other comprehensive income:
Cash flow hedges - losses deferred in equity - (1) - - (1)
Cash flow hedges - losses transferred to cost of sales - 1 - - 1
Foreign currency translation differences - - - (51) (51)
Tax on other comprehensive income - - - 2 2
Total comprehensive loss for the year - - - (49) (49)
Balance as at 27 March 2021 41 - 5 196 242
Other comprehensive income:
Cash flow hedges - losses deferred in equity - (1) - - (1)
Foreign currency translation differences - - - 22 22
Total comprehensive loss for the year - (1) - 22 21
Balance as at 2 April 2022 41 (1) 5 218 263
As at 2 April 2022 the amount held in the hedging reserve relating to matured
net investment hedges is £5 million net of tax (last year: £5 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
2 April
27 March
2022
2021
£m
£m
Capital commitments contracted but not provided for:
Property, plant and equipment 29 25
Intangible assets 2 3
Total 31 28
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:
53 weeks to 52 weeks to
2 April
27 March
2022
2021
£m
£m
Salaries, short-term benefits and social security costs(1) 8 8
Termination benefits - 1
Share‑based compensation (all awards and options settled in shares) 1 1
Total 9 10
1. Pension cash allowance is included within salaries, short-term benefits
and social security costs
There were no other material related party transactions in the year.
26. Subsidiary undertakings and investments
In accordance with Section 409 of the Companies Act 2006 a full list of
related undertakings as at 2 April 2022, including their country of
incorporation and percentage share ownership, is disclosed below. Unless
otherwise stated, all undertakings are indirectly owned by Burberry Group plc
and operate in the country of incorporation. All the subsidiary undertakings
have been consolidated as at 2 April 2022.
Company name Country/territory Interest Holding (%) Registered Office
of incorporation
Burberry Pacific Pty Ltd Australia Ordinary shares 100 1
Burberry (Austria) GmbH Austria Ordinary shares 100 2
Sandringham Bahrain SPC W.L.L.(2) Bahrain Ordinary shares 100 3
Burberry Antwerp NV Belgium Ordinary shares 100 4
Burberry Brasil Comércio de Artigos de Vestuário e Acessórios Ltda Brazil Quota 100 5
Burberry Canada Inc Canada Common shares 100 6
Burberry (Shanghai) Trading Co., Ltd China Equity interest 100 7
Burberry Czech Rep s.r.o. Czech Republic Ordinary shares 100 8
Burberry France SASU France Ordinary shares 100 9
Burberry (Deutschland) GmbH Germany Ordinary shares 100 10
Burberry Asia Holdings Limited Hong Kong S.A.R., China Ordinary shares 100 11
Burberry Asia Limited Hong Kong S.A.R., China Ordinary shares 100 11
Burberry China Holdings Limited Hong Kong S.A.R., China Ordinary shares 100 11
Burberry Hungary Kereskedelmi Korlátolt Felelősségű Társaság Hungary Ordinary shares 100 12
Burberry India Private Limited India Ordinary shares 51 13
Burberry Ireland Investments Unlimited Company Ireland Ordinary A shares 100 14
Ordinary B shares 100
Burberry Ireland Limited Ireland Ordinary shares 100 15
Burberry Italy (Rome) S.R.L. Italy Quota 100 16
Burberry Italy S.R.L.(1) Italy Quota 100 16
Burberry Manifattura S.R.L. Italy Quota 100 17
Burberry Japan K.K. Japan Ordinary shares 100 18
Burberry Kuwait General Trading Textiles and Accessories Company \With Limited Kuwait Parts 49 19
Liability(3)
Burberry Macau Limited Macau S.A.R., China Quota 100 20
Burberry (Malaysia) Sdn. Bhd. Malaysia Ordinary shares 100 21
Horseferry México S.A. de C.V. Mexico Ordinary (fixed) shares 100 22
Ordinary (variable) shares 100
Horseferry México Servicios Administrativos, S.A. Mexico Ordinary (fixed) shares 100 22
de C.V.
Burberry Netherlands B.V. Netherlands Ordinary shares 100 23
Burberry New Zealand Limited New Zealand Ordinary shares 100 24
Burberry Qatar W.L.L(3) Qatar Ordinary shares 49 25
Burberry Korea Limited Republic of Korea Common stock 100 26
Burberry Retail LLC Russian Federation Participatory share 100 27
Burberry Saudi Company Limited Kingdom of Saudi Arabia Ordinary shares 100 28
Burberry (Singapore) Distribution Company PTE Ltd Singapore Ordinary shares 100 29
Burberry (Spain) Retail S.L. Spain Ordinary shares 100 30
Burberry Latin America Holdings S.L. Spain Ordinary shares 100 31
Burberry (Suisse) SA(1) Switzerland Ordinary shares 100 32
Burberry (Taiwan) Co., Ltd Taiwan Area, China Common shares 100 33
Burberry (Thailand) Limited Thailand Common shares 100 34
Company name Country of Interest Holding (%) Registered Office
incorporation
Burberry Turkey Giyim Toptan Ve Perakende Satış Limited Şirketi Turkey Ordinary shares 100 35
Burberry FZ-LLC United Arab Emirates Ordinary shares 100 36
Burberry Middle East LLC(3) United Arab Emirates Ordinary shares 49 37
Burberry (Espana) Holdings Limited United Kingdom Ordinary shares 100 38
Burberry (No. 7) Unlimited United Kingdom Ordinary shares 100 38
Burberry (UK) Limited United Kingdom Ordinary shares 100 38
Burberry Beauty Limited(1,4) United Kingdom Ordinary shares 100 38
Burberry Distribution Limited(,4) United Kingdom Ordinary shares 100 38
Burberry Europe Holdings Limited(1) United Kingdom Ordinary shares 100 38
Burberry Finance Limited United Kingdom Ordinary shares 100 38
Burberry Haymarket Limited(1) United Kingdom Ordinary shares 100 38
Burberry Holdings Limited United Kingdom Ordinary shares 100 38
Burberry International Holdings Limited(1) United Kingdom Ordinary shares 100 38
Burberry Latin America Limited United Kingdom Ordinary shares 100 38
Burberry Limited United Kingdom Ordinary shares 100 38
Burberry London Limited United Kingdom Ordinary shares 100 38
Burberry Treasury Limited(,4) United Kingdom Ordinary shares 100 38
Burberrys Limited(1) United Kingdom Ordinary shares 100 38
Hampstead (UK) Limited(1, 4) United Kingdom Ordinary shares 100 38
Sweet Street Developments Limited United Kingdom Ordinary shares 100 38
The Scotch House Limited(1) United Kingdom Ordinary shares 100 38
Thomas Burberry Holdings Limited(1) United Kingdom Ordinary shares 100 38
Thomas Burberry Limited(1) United Kingdom Ordinary shares 100 38
Woodrow-Universal Limited(1) United Kingdom Ordinary shares 100 38
Woodrow-Universal Pension Trustee Limited(1) United Kingdom Ordinary shares 100 38
Burberry (Wholesale) Limited United States Class X common stock 100 39
Class Y common stock 100
Burberry Limited United States Class X common stock 100 39
Class Y common stock 100
Burberry North America, Inc. United States Common stock 100 40
Burberry Warehousing Corporation(,5) United States Common stock 100 40
Castleford Industries, Ltd. (5) United States Series A common stock 100 40
Castleford Tailors, Ltd. (5) United States Common stock 100 40
1. Held directly by Burberry Group plc.
2. The Group has an indirect holding of 100% of the issued share capital
through a nominee.
3. The Group has a 100% share of profits of Burberry Middle East LLC as well
as a 100% and 88% share of profits in Burberry Middle East LLC's subsidiaries
in Kuwait and Qatar respectively. The Group has the power to control these
companies under the agreements relating to Burberry Middle East LLC.
4. An application for voluntary strike off was made on 25 March 2022.
5. Certificate of dissolution was filed on 28 March 2022.
Ref Registered office address
1 Level 5, 343 George Street, Sydney NSW 2000, Australia
2 Kohlmarkt 2, 1010 Wien, Austria
3 Building 1A, Road 365, Manama Center 316, Unit 8, Moda Mall, Manama, Bahrain
4 Boulevard de Waterloo 16, Brussel, Belgium
5 City of São Paulo, State of São Paulo, at Rua do Rocio, 350, 3rd Pavement of
Condominium Atrium IX, suites No. 31 and No. 32, 28th subdistrict, Vila
Olímpia, CEP 04552-000, Brazil
6 100 King Street West, 1 First Canadian Place, Suite 1600, Toronto ON M5X 1G5,
Canada
7 60th Floor (Actual Floor No.53), Wheelock Square, 1717 Nanjing West Road,
Shanghai 200040, China
8 Praha 1, Pařížská 11/67, PSČ 11000, Czech Republic
9 56A rue du Faubourg Saint-Honoré, 75008, Paris, France
10 Königsallee 50, 40212, Düsseldorf, Germany
11 Suites 2201-02 & 11-14, 22/F Devon House, Taikoo Place, 979 King's Road,
Quarry Bay, Hong Kong
12 1124 Budapest, Csörsz utca 49-51, Hungary
13 3 A-1 Taj Apartment, Rao Tula Ram Marg, New Delhi, 110022, India
14 Suite 9, Bunkilla Plaza, Bracetown Business Park, Clonee, Co. Meath., D15
XR27, Ireland
15 Suite 9, Bunkilla Plaza, Bracetown Office Park, Clonee, Co. Meath., D15 XR27,
Ireland
16 Via Manzoni n.20, 20121, Milan
17 Via delle Fonti n.10, 50018 Scandicci
18 5-14 Ginza 2-chome, Chuo-ku, Tokyo, Japan
19 Hawali, Street 276, Block 8, Plot 9301, Office No 12, Floor 7, Kuwait
20 Avenida Dr. Sun Yat Sen, One Central Building, 1st floor, Shops 125-127, Macau
21 Level 21, Suite 21.01, The Gardens South Tower, Mid Valley City, Lingkaran
Syed Putra, 59200 Kuala Lumpur, Wilayah Persekutuan, Malaysia
22 Edgar Allan Poe 85-B, Col. Polanco, Delg. Miguel Hidalgo, Mexico City, 11560,
Mexico
23 Pieter Cornelisz. Hooftstraat 48 H, -50, 1071BZ Amsterdam, Netherlands
24 Level 20, HSBC Tower, 188 Quay Street, Auckland, 1010, New Zealand
25 First Floor, Building No. 660, Street no. 364, Al Waab, Zone No.54, Al Marikh,
Al Rayyan Municipality, Qatar
26 (Cheongdam-dong) 459, Dosan-daero, Gangnam-gu, Seoul, Republic of Korea
27 Ulitsa Petrovka, 16, floor 3, Premise I, rooms 47-53, 127051, Moscow, Russian
Federation
28 Riyadh, Al Olaya District, Akaria Plaza, First Floor, P.O.Box 359, 11411,
Kingdom of Saudi Arabia
29 391B Orchard Road, #15-02/03, Ngee Ann City, 238874, Singapore
30 Passeig de Gràcia, 56, 08007 Barcelona
31 Calle Valencia 640, 08026 Barcelona, Spain
32 Route de Chêne 30A, c/o L&S Trust Services SA, 1208 Genève, Switzerland
33 (105) 5F, No. 451, Changchun Rd., Taipei City, Taiwan
34 No. 989 Siam Piwat Tower, 12A Floor, Unit B1, B2, Rama I Road, Pathumwan
Sub-district, Pathumwan District,
Bangkok, Thailand
35 Reşitpaşa Mahallessi Eski Büyükdere Cad. Windowist Tower Sit. No: 26/1
Sariyer/Istanbul, Turkey
36 Dubai Design District, Premises: 301, 312, 313, 314 & 315, Floor: 03,
Building: 08, Dubai, United Arab Emirates
37 Owned by Dubai Design District, Building 8, Level 3, PO Box 333266, Dubai,
United Arab Emirates
38 Horseferry House, Horseferry Road, London, SW1P 2AW, United Kingdom
39 CT Corporation System, 28 Liberty St., New York, New York, 10005, United
States
40 The Corporation Trust Company, Corporation Trust Center 1209 Orange St,
Wilmington, New Castle, DE 19801,
United States
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.
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