REG - Burberry Group PLC - Burberry Preliminary Results
18/05/2023 07:00
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RNS Number : 7983Z Burberry Group PLC 18 May 2023
18 May 2023
BURBERRY GROUP PLC
PRELIMINARY RESULTS FOR 52 WEEKS ENDED 1 APRIL 2023
EXECUTING STRATEGY AND DELIVERING GROWTH
"I am very pleased with what we have achieved this year. We have delivered a
strong financial performance, supported by good progress in our core leather
goods and outerwear categories, with revenue accelerating in the fourth
quarter as growth rebounded in Mainland China. Having appointed Daniel Lee as
our new Chief Creative Officer, we have refocused our brand aesthetic and
brought his new creative vision to life with a campaign and runway show that
have been very well received. At the same time, we have reorganised our supply
chain, merchandising and digital teams under new leaders to drive our strategy
forward. While the external environment remains uncertain, I am confident we
can achieve our FY24 and medium-term targets as we focus on executing our plan
to realise Burberry's potential as the modern British luxury brand."
- Jonathan Akeroyd, Chief Executive Officer
Period ended 52 weeks ended 53 weeks ended YoY % change YoY % change
1 April 2023 2 April 2022 52 vs 53-week Reported FX 52 vs 52-week CER
£ million
Revenue 3,094 2,826 10 5
Retail comparable store sales* 7% 18%
Adjusted operating profit* 634 523 21 8
Adjusted operating profit margin* 20.5% 18.5% 200bps 60bps
Adjusted diluted EPS (pence)* 122.5 94.0 30 16
Reported operating profit 657 543 21
Reported operating profit margin 21.2% 19.2% 200bps
Reported diluted EPS (pence) 126.3 97.7 29
Free cash flow* 393 340 16
Proposed dividend (pence) 61.0 47.0 30
*See page 13 for definitions of alternative performance measures
· FY23 revenue advanced 5% at CER and 10% on a reported basis;
comparable store sales increased 7%
· Adjusted operating profit +8% at CER and +21% reported with margins
19.0% and 20.5% respectively
· Reported operating profit +21% with margin 21.2%
· Q4 comparable store sales accelerated to 16% as growth rebounded in
Mainland China +13%
o Group ex Mainland China +17%, EMEIA +27%, Asia Pacific +19%, Americas -7%
· Strong performance across core outerwear and leather goods categories
o Leather goods comparable store sales up 12% in FY23 and up 15% in Q4
o Outerwear comparable store sales up 7% in FY23 and 30% in Q4
· Excellent response to new brand aesthetic and Daniel Lee's first
campaign and debut runway show
· Reorganised supply chain, merchandising and digital operations under
new leaders to drive strategy, and recruited Kate Ferry as our new CFO
· Agreed to acquire a business from an Italian supplier to strengthen
technical outerwear capability
· Refurbished/opened 60 stores; c.30% of the full price network
updated; with a further 7 stores in April
· Continued to make progress across our social and environmental
agenda, including year-on-year reductions in scope 1, 2 and 3 carbon emissions
· Strong cash conversion at 87% - proposed dividend increased 30%.
Planned £400m share buyback to complete in FY24, in line with capital
allocation policy
Guidance
· Maintaining FY24 and medium-term targets while mindful of
macroeconomic and geopolitical environment
FY23 is a 52-week year. The comparative period is 53 weeks to 2 April 2022. We
have provided CER percentage changes on a 52-week basis while absolute figures
are on a reported basis compared with the 53(rd) week unless otherwise stated.
FY24 is a 52-week year.
All metrics and commentary in the 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 definitions of these
alternative performance measures are in the Appendix on page 13.
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
Media 020 3367 3764
Andrew Roberts SVP, Corporate Relations and Engagement andrew.roberts@burberry.com
· There will be a virtual presentation for investors and
analysts today at 9.30am (UK time) that can be viewed live on the Burberry
website www.burberryplc.com and can also be accessed live via a listen only
dial-in facility, click here
(https://secure.emincote.com/client/burberry/burberry047/vip_connect) to
register.
· 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 14
July 2023
· The AGM will be held on 12 July 2023
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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LinkedIn: Burberry
BUSINESS REVIEW
In November 2022, we set out the next phase of our strategy to realise
Burberry's potential as the modern British luxury brand with a medium-term
target to grow sales to £4bn at CER* and a longer-term ambition to reach
£5bn in revenue. The key elements of our plan to drive growth and
acceleration are to:
· Harness the power of the brand
· Bring all product categories to full potential
· Strengthen distribution
while continuing to simplify and streamline key processes, deliver on our bold
sustainability ambitions, ensure our people are supported and inspired to
deliver, and positively impact our communities.
Since then, we have made good progress on executing our plan while delivering
a strong financial performance supported by growth in our core leather goods
and outerwear product categories and revenue growth accelerating in the fourth
quarter as sales rebounded in Mainland China and South Asia Pacific tourist
destinations.
In February, we launched the first creative expression of our house values
under Daniel Lee, resetting our visual identity with a campaign that featured
talent including Skepta, Georgia May Jagger and Son Heung-Min. We followed
this with Daniel's debut runway show, set in a custom-built tent in Kennington
Park, London and featuring a new aesthetic across all key product categories.
The campaign and show were extremely well received by press, generating over
4,000 pieces of global media coverage with an estimated reach of c.4bn.
Our rainwear offer was boosted by the positive reception to Daniel's first
campaign, along with VIP dressing at the runway show, both celebrating the
iconic Burberry trench coat. As a result, we saw very strong acceleration in
heritage rainwear, with comparable store sales doubling in the quarter.
Leather goods outperformed in the year as we continued to see strength in
women's bags - especially in the Lola and Frances shapes as well as the launch
of the vintage Burberry Check line. We are excited to build on this with
Daniel's new offer launched at the show, which will be in store from
September.
We refurbished or opened 60 stores in the year with a further 7 completed in
April. We now have around 30% of our full price stores updated with around 40%
in Asia. We aim to update over 50% of stores by FY24 year end with plans on
track to complete the roll out of the portfolio by FY26. Financials of the
updated stores continue to show both store productivity and AUR up mid-teens
percentage against equivalent stores.
We made changes to our operating model to strengthen the alignment between our
commercial offering and our new creative vision and hired leaders in new roles
to drive the delivery of our medium-term targets. We integrated the
responsibility for global e-commerce, digital product and analytics as well as
a newly formed innovation function under a new Chief Digital, Customer and
Innovation Officer. We formalised the link between planning and merchandising
under a new Chief Merchandising Officer with additional responsibility over
global planning and pricing. We also brought our supply chain and product
development teams together under a new Chief Supply Chain and Industrial
Officer to drive greater connectivity, while ensuring end-to-end ownership for
delivery. In addition, we appointed Kate Ferry as our new Chief Financial
Officer who will join in July.
As part of our plan to bring all product categories to full potential, in
March, we entered into an agreement to acquire a business from longstanding
Italian supplier, Pattern SpA, which is anticipated to complete in FY24. With
this investment, we will secure capacity, build technical outerwear
capability, and further embed sustainability into our value chain.
We also continued to progress our decarbonisation agenda, achieving a 9%
reduction in our scope 1 and 2 carbon emissions and an 11% year-on-year
reduction in our scope 3 emissions versus FY22.
We are delighted to have started the new financial year with the appointment
in April of award-winning Chinese actor Chen Kun as our latest ambassador. In
addition to his successful acting career, Chen Kun is dedicated to promoting
arts and culture as well as using his influence for philanthropy, and we look
forward to collaborating with him for future brand events and campaigns.
*Base year FY22 exchange rates
GUIDANCE
We maintain our guidance of:
· High single-digit revenue CAGR from FY20 base and around 20%
adjusted operating profit margin at CER for FY24
· £4bn sales at FY22 CER in the medium-term
· Based on 21 April 2023 spot rates we expect a currency headwind
of c.£70m on revenue and c.£40m on adjusted operating profit in FY24
SUMMARY INCOME STATEMENT
Period ended 52 weeks ended 53 weeks ended YoY % change YoY % change
£ million 1 April 2 April 52 vs 53-week 52 vs 52-week
2023 2022 Reported FX CER
Revenue 3,094 2,826 10 5
Cost of sales* (912) (831) 10 8
Gross profit* 2,182 1,995 9 4
Gross margin* 70.5% 70.6% (10bps) (80bps)
Net operating expenses* (1,548) (1,472) 5 2
Net opex as a % of sales* 50.0% 52.1% (210bps) (140bps)
Adjusted operating profit* 634 523 21 8
Adjusted operating profit margin* 20.5% 18.5% 200bps 60bps
Adjusting operating items 23 20
Operating profit 657 543
Operating profit margin 21.2% 19.2%
Net finance charge(**) (23) (32) (30)
Profit before taxation 634 511 24
Taxation (142) (114)
Non-controlling interest (2) (1)
Attributable profit 490 396 24
Adjusted profit before taxation* 613 492 25 11
Adjusted diluted EPS (pence)* 122.5 94.0 30 16
Diluted EPS (pence) 126.3 97.7 29
Weighted average number of diluted ordinary shares (millions) 388.0 404.8 (4)
* 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 £2m (FY22: £1m)
FINANCIAL PERFORMANCE
Revenue by channel
Period ended 52 weeks ended 53 weeks ended YoY % change YoY % change
£ million 1 April 2 April 52 vs 53-week 52 vs 52-week CER
2023 2022 Reported FX
Retail 2,501 2,273 10 6
Comparable store sales growth 7% 18%
Wholesale 543 512 6 1
Licensing 50 41 23 22
Revenue 3,094 2,826 10 5
· FY23 Retail sales grew 6% at CER; 10% reported
· Impact of space -1%
· Comparable store sales grew 7%, directly affected by COVID-19
restrictions in Mainland China. Excluding Mainland China comparable store
sales grew by 17% in Q4, the strongest quarter in the year (Q1 +16%, Q2 + 15%,
Q3 +11% and FY +14%).
Comparable store sales growth by region
FY23 vs LY
Q1 Q2 H1 Q3 Q4 H2 FY
Group 1% 11% 5% 1% 16% 7% 7%
Asia Pacific (16%) 11% (4%) (7%) 19% 5% 2%
EMEIA 47% 25% 34% 19% 27% 22% 27%
Americas (4%) (3%) (3%) (1%) (7%) (3%) (3%)
Group ex Mainland China 16% 15% 15% 11% 17% 13% 14%
Asia Pacific saw volatile growth in the year due to COVID-19 related
disruption in Mainland China in Q1 and Q3 impacting full-year growth of 2%.
· Mainland China comparable store sales fell 11% in the year. The
significant disruption in Q1 and Q3 (comp store sales -35% and -23%
respectively) was only partially offset by Q2 (comp store sales -1%) and the
start of recovery in Q4 that saw 13% comparable store sales growth
· South Korea grew 7% in both the year and Q4, benefiting from over 50%
of the full price network updated by the year end
· Japan also saw strong comparable store sales growth up 27% in the
year and 30% in Q4
· South Asia Pacific rose over 35% in the year with a strong
performance in Q4 that increased more than 50%, boosted by returning Chinese
tourists
EMEIA had an excellent year with comparable store sales up 27% in FY23 and Q4.
· The region benefited from strong tourist growth that more than
doubled in the year with the share of mix from tourists increasing to over 40%
of total sales (less than 25% in FY22) with a strong performance from US,
Middle East, and Asia outside of Mainland China
· Continental Europe outperformed in the region with the UK broadly in
line with the region average
Americas fell 3% in the year with a deterioration to -7% in Q4.
· We continue to see higher AUR categories outperforming, especially
rainwear and leather, with pressure on the entry level items. Globally, the
Americas customer decreased low single digit in Q4 with the decline in locals
broadly offset by tourist spending as Americans transitioned to buying
Burberry in EMEIA
By product
· We maintained our focus on the core leather and outerwear categories
with both showing a good performance in the year
· Outerwear comparable store sales grew 7% in FY23 and 30% in Q4. The
strong traction at the end of the period was mainly from rainwear following
the brand refresh featuring the heritage range
· Leather goods comparable store sales grew 12% in the year and 15% in
Q4. This was driven by bags especially from the continued success of our Lola
campaign and the Frances shape, as well as men's leather goods
· Ready-to-wear excluding outerwear saw growth broadly in line with the
Group average for the year with, women's increasing double digits while men's
saw mid-single digit growth
Store footprint
The transformation of our distribution network continued during the year
· We opened 21 full price stores, closed 25 stores with one outlet
opened and two closed
· Including refurbishments, we increased the number of updated stores
by 60
· Key openings/refurbishments included Northpark Dallas in USA, Taipei
101 and Nanjing Deji Plaza in Mainland China
· As of 1 April, we have 107 stores in the new design: 79 in Asia
including 25 in South Korea and 26 in Mainland China, 21 in EMEIA and 7 in
Americas
· We completed 7 more in April and remain on track to complete the roll
out by FY26
· We remain pleased with the performance of updated stores that saw
both store productivity and AUR higher by mid-teens compared with equivalent
stores following their openings
Wholesale
· Wholesale revenue increased 1% at CER (6% at reported rates) with
good growth in EMEIA offsetting pressure in Asia travel retail
Licensing
· Licensing revenue grew 22% at CER and 23% at reported exchange rates
OPERATING PROFIT ANALYSIS
Adjusted operating profit
Period ended 52 weeks ended 53 weeks YoY % change YoY % change
£ million 1 April 2023 ended 52 vs 53-week Reported FX 52 vs 52-week CER
2 April 2022
Revenue 3,094 2,826 10 5
Cost of sales* (912) (831) 10 8
Gross profit* 2,182 1,995 9 4
Gross margin %* 70.5% 70.6% (10bps) (80bps)
Net operating expenses* (1,548) (1,472) 5 2
Net operating expenses as a % of sales* 50.0% 52.1% (210bps) (140bps)
Adjusted operating profit* 634 523 21 8
Adjusted operating profit margin %* 20.5% 18.5% 200bps 60bps
*Excludes adjusting items
Adjusted operating profit increased 8% at CER and 21% reported with the margin
up 60bps and 200bps respectively:
· Gross margin declined by 80bps at CER with benefits from price
increases more than offset by cost inflation. It fell 10bps at reported rates
· Adjusted net operating expenses rose by 2% at CER
· Adjusted operating profit came in at £634m including a £78m FX
tailwind in FY23
ADJUSTING ITEMS(*)
Adjusting items were a net credit of £21m (FY22: £19m net credit).
Period ended 52 weeks ended 53 weeks ended
£ million 1 April 2 April
2023
2022
The impact of COVID-19
Inventory provisions 1 16
Rent concessions 13 18
Store impairments 6 (5)
Government grants 2 2
Receivable impairments - 1
COVID-19 adjusting items** 22 32
Restructuring costs (16) (11)
Profit on sale of property 19 -
Revaluation of deferred consideration liability (2) (1)
Adjusting operating items 23 20
Adjusting financing items (2) (1)
Adjusting items 21 19
*For more details see note 7 of the Financial Statements
**Includes a £1m credit (FY22: £16m credit) that has been recognised through
COGS
The key adjusting items are as follows:
· Total credit of £22m from COVID-19 related adjustments with a £1m
inventory provision reversal that has now completed, £13m of rent
concessions, £2m of Government grants outside of the UK, and £6m reversal of
the store impairment provision
· £16m of restructuring costs
· Net £19m profit on the sale of a Boston, USA property
ADJUSTED PROFIT BEFORE TAX*
After an adjusted net finance charge of £21m (FY22: £31m), adjusted profit
before tax was £613m (FY22: £492m).
*For detail on adjusting items see note 7 of the Financial Statements
TAXATION*
The effective tax rate on adjusted profit was flat at 22.2% (FY22: 22.2%). The
reported tax rate on FY23 profit before taxation was 22.4% (FY22: 22.3%).
* For detail see note 9 of the Financial Statements
CASH FLOW
Represented statement of cash flows
The following table is a representation of the cash flows.
Period ended 52 weeks ended 53 weeks ended
£ million 1 April 2 April
2023
2022
Adjusted operating profit 634 523
Depreciation and amortisation 344 313
Working capital (76) 54
Other including adjusting items 10 19
Cash generated from operating activities 912 909
Payment of lease principal and related cash flows (210) (206)
Capital expenditure (179) (161)
Proceeds from disposal of non-current assets 32 8
Interest (22) (30)
Tax (140) (180)
Free cash flow 393 340
Free cash inflow* was £393m in the year (FY22: £340m).
The major components were:
· Cash generated from operating activities increased to £912m from
£909m
o A working capital outflow of £76m (FY22: £54m inflow)
· Capital expenditure of £179m (FY22: £161m)
· Tax cash of £140m, falling £40m compared to the prior year
which included one-off payments
Cash net of overdrafts on 1 April 2023 was £961m, compared to £1,177m on 2
April 2022. On 1 April 2023 borrowings were £298m from the bond issue leaving
cash net of overdrafts and borrowings of £663m (2 April 2022: £879m). With
lease liabilities of £1,123m, net debt in the period was £460m
(2 April 2022: £179m). Net Debt/Adjusted EBITDA was 0.5x, at the lower end
of our target range of 0.5x to 1.0x. The increase in leverage from 0.2x at the
FY22 year-end has primarily been driven by the share buyback programme.
Period ended 52 weeks ended 53 weeks ended
£ million 1 April 2 April
2023
2022
Adjusted EBITDA - rolling 12 months 975 836
Cash net of overdrafts (961) (1,177)
Bond 298 298
Lease debt 1,123 1,058
Net Debt* 460 179
Net Debt/Adjusted EBITDA 0.5x 0.2x
*For a definition of free cash flow and net debt see page 14.
APPENDIX
Detailed guidance for FY24
Item Financial impact
Impact of retail space on revenues Space is expected to be broadly stable in FY24.
Wholesale revenue Wholesale is expected to decline by a low double digit percentage in H1 FY24
and broadly stable for the year.
Tax We expect the adjusted effective tax rate to be around 27%.
Capex Capex is expected to be around £200m including over 50% of the store network
updated by end of the year.
Currency At 21 April 2023 spot rates, the impact of year-on-year exchange rate
movements is expected to be a c.£70m headwind on revenue and c.£40m headwind
on adjusted operating profit.
Dividend Final dividend per share proposed at 44.5p and with the interim of 16.5p gives
a combined full year dividend per share of 61.0p - 30% ahead of FY22.
Share buyback Planned £400m share buyback to be completed within FY24.
Note: Guidance based on CER at FY23 rates
Retail/wholesale revenue by destination*
Period ended 52 weeks ended 1 April 53 weeks ended 2 April % change
£ million 2023 2022 52 vs 53-week 52 vs 52-week
Reported FX CER
Asia Pacific (94% retail)* 1,297 1,276 2 (1)
EMEIA (68% retail)* 1,004 813 23 22
Americas (82% retail)* 743 696 7 (4)
Total 3,044 2,785 9 5
* Mix based on FY23
Retail/wholesale revenue by product division
Period ended 52 weeks 53 weeks ended 2 April % change
ended 1 April
£ million 2023 2022 52 vs 53-week 52 vs 52-week
Reported FX CER
Accessories 1,125 1,017 11 6
Women's 867 784 11 7
Men's 868 807 8 3
Children's & other 184 177 4 (1)
Total 3,044 2,785 9 5
Store portfolio
Directly operated stores
Stores Concessions Outlets Total Franchise stores
At 2 April 2022 218 143 57 418 38
Additions 13 8 1 22 3
Closures (12) (13) (2) (27) (6)
At 1 April 2023 219 138 56 413 35
Store portfolio by region*
Directly operated stores
Stores Concessions Outlets Total Franchise stores
At 1 April 2023
Asia Pacific 107 96 23 226 8
EMEIA 51 33 18 102 27
Americas 61 9 15 85 -
Total 219 138 56 413 35
*Excludes the impact of pop up stores
Adjusted operating profit* 52 weeks 53 weeks ended 2 April % change % change
Period ended ended 1 April 2022 52 vs 53-week 52 vs 52-week
£ millions 2023 Reported FX CER
Retail/wholesale 587 486 21 7
Licensing 47 37 26 24
Adjusted operating profit 634 523 21 8
Adjusted operating profit margin 20.5% 18.5% 200bps 60bps
*For additional detail on adjusting items see note 7 of the Financial
Statements
Exchange rates
Spot rates Average effective exchange rates
21 April FY23 FY22
£1= 2023
Euro 1.13 1.16 1.18
US Dollar 1.24 1.20 1.36
Chinese Yuan Renminbi 8.57 8.27 8.73
Hong Kong Dollar 9.75 9.43 10.63
Korean Won 1,653 1,577 1,596
Profit before tax reconciliation
Period ended 52 weeks ended 53 weeks ended % change % change
£ million 1 April 2 April 52 vs 53-week 52 vs 52-week
2023 2022 Reported FX CER
Adjusted profit before tax 613 492 25 11
Adjusting items*
COVID-19 related items 22 32
Restructuring costs (16) (11)
Profit on sale of property 19 -
Revaluation of deferred consideration liability (2) (1)
Adjusting financing items (2) (1)
Profit before tax 634 511 24
*For additional detail on adjusting items see note 7 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 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 52 weeks ended 1 April 53 weeks ended 2 April
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% 2023 2022
Comparable sales 7% 18%
Change in space (1%) 2%
CER retail 6% 20%
53(rd) week (2%) 2%
FX 6% (3%)
Retail revenue 10% 19%
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.
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 52 weeks ended 53 weeks ended
£m 1 April 2023 2 April 2022
Net cash generated from operating activities 750 699
Capex (179) (161)
Lease principal and related cash flows (210) (206)
Proceeds from disposal of non-current assets 32 8
Free cash flow 393 340
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 52 weeks 53 weeks ended
£m ended 2 April 2022
1April 2023
Free cash flow 393 340
Tax paid 140 180
Free cash flow before tax 533 520
Adjusted profit before tax 613 492
Cash conversion 87% 106%
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 As at As at
£m 1 April 2 April
2023 2022
Cash net of overdrafts 961 1,177
Lease liability (1,123) (1,058)
Borrowings (298) (298)
Net debt (460) (179)
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 52 weeks ended 53 weeks ended
Adjusted EBITDA is shown for the calculation of Net Debt/EBITDA for our
leverage ratios.
£m 1 April 2 April
2023 2022
Operating profit 657 543
Adjusting operating items (23) (20)
Amortisation of intangible assets 37 39
Depreciation of property, plant and equipment 95 86
Depreciation of right-of-use assets* 209 188
Adjusted EBITDA 975 836
*Excludes £3m depreciation on right-of-use assets included in adjusting items
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 52 weeks 53 weeks ended
£m ended 2 April 2022
1 April 2023
Free cash flow 393 340
Tax paid 140 180
Free cash flow before tax 533 520
Adjusted profit before tax 613 492
Cash conversion 87% 106%
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 As at As at
£m 1 April 2 April
2023 2022
Cash net of overdrafts 961 1,177
Lease liability (1,123) (1,058)
Borrowings (298) (298)
Net debt (460) (179)
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
leverage ratios.
Reconciliation from operating profit to adjusted EBITDA:
Period ended 52 weeks ended 53 weeks ended
£m 1 April 2 April
2023 2022
Operating profit 657 543
Adjusting operating items (23) (20)
Amortisation of intangible assets 37 39
Depreciation of property, plant and equipment 95 86
Depreciation of right-of-use assets* 209 188
Adjusted EBITDA 975 836
*Excludes £3m depreciation on right-of-use assets included in adjusting items
Group Income Statement
Note 52 weeks to 53 weeks to
1 April
2 April
2023
2022
£m
£m
Revenue 4 3,094 2,826
Cost of sales (911) (815)
Gross profit 2,183 2,011
Operating expenses (1,572) (1,498)
Other operating income 46 30
Net operating expenses 5 (1,526) (1,468)
Operating profit 657 543
Financing
Finance income 21 3
Finance expense (42) (34)
Other financing charge (2) (1)
Net finance expense 8 (23) (32)
Profit before taxation 6 634 511
Taxation 9 (142) (114)
Profit for the year 492 397
Attributable to:
Owners of the Company 490 396
Non-controlling interest 2 1
Profit for the year 492 397
Earnings per share
Basic 10 126.9p 98.2p
Diluted 10 126.3p 97.7p
£m
Reconciliation of adjusted profit before taxation:
Profit before taxation 634 511
Adjusting operating items:
Cost of sales (income) 6 (1) (16)
Net operating expenses (income) 6 (22) (4)
Adjusting financing items 6 2 1
Adjusted profit before taxation - non-GAAP measure 613 492
Adjusted earnings per share - non-GAAP measure
Basic 10 123.1p 94.5p
Diluted 10 122.5p 94.0p
Dividends per share
Interim 11 16.5p 11.6p
Proposed final (not recognised as a liability at 1 April/2 April) 11 44.5p 35.4p
Group Statement of Comprehensive Income
Note 52 weeks to 53 weeks to
1 April
2 April
2023
2022
£m
£m
Profit for the year 492 397
Other comprehensive income1:
Cash flow hedges 23 1 (1)
Foreign currency translation differences 14 22
Tax on other comprehensive income (1) -
Other comprehensive income for the year, net of tax 14 21
Total comprehensive income for the year 506 418
Total comprehensive income attributable to:
Owners of the Company 504 417
Non-controlling interest 2 1
506 418
1. All items included in other comprehensive income may subsequently be
reclassified to profit and loss in a future period.
Group Balance Sheet
Note As at As at
1 April
2 April
2023
2022
£m
£m
ASSETS
Non-current assets
Intangible assets 12 248 240
Property, plant and equipment 13 376 322
Right-of-use assets 14 950 880
Deferred tax assets 197 175
Trade and other receivables 15 52 45
1,823 1,662
Current assets
Inventories 16 447 426
Trade and other receivables 15 307 283
Derivative financial assets 7 5
Income tax receivables 9 76 86
Cash and cash equivalents 17 1,026 1,222
Assets held for sale 13 - 13
1,863 2,035
Total assets 3,686 3,697
LIABILITIES
Non-current liabilities
Trade and other payables 18 (76) (91)
Lease liabilities 19 (902) (849)
Borrowings 22 (298) (298)
Deferred tax liabilities (1) (1)
Retirement benefit obligations (1) (1)
Provisions for other liabilities and charges 20 (40) (36)
(1,318) (1,276)
Current liabilities
Trade and other payables 18 (477) (481)
Bank overdrafts 21 (65) (45)
Lease liabilities 19 (221) (209)
Derivative financial liabilities (1) (2)
Income tax liabilities (43) (39)
Provisions for other liabilities and charges 20 (22) (28)
(829) (804)
Total liabilities (2,147) (2,080)
Net assets 1,539 1,617
EQUITY
Capital and reserves attributable to owners of the Company
Ordinary share capital 23 - -
Share premium account 230 227
Capital reserve 23 41 41
Hedging reserve 23 4 4
Foreign currency translation reserve 23 232 218
Retained earnings 1,026 1,123
Equity attributable to owners of the Company 1,533 1,613
Non-controlling interest in equity 6 4
Total equity 1,539 1,617
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 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
Profit for the year - - - 490 490 2 492
Other comprehensive income:
Cash flow hedges - - 1 - 1 - 1
Foreign currency translation differences 23 - - 14 - 14 - 14
Tax on other comprehensive income - - (1) - (1) - (1)
Total comprehensive income for the year - - 14 490 504 2 506
Transactions with owners:
Employee share incentive schemes
Equity share awards - - - 19 19 - 19
Tax on share awards - - - 2 2 - 2
Exercise of share options - 3 - - 3 - 3
Purchase of own shares
Share buyback - - - (404) (404) - (404)
Held by ESOP trusts - - - (1) (1) - (1)
Dividends paid in the year - - - (203) (203) - (203)
Balance as at 1 April 2023 - 230 277 1,026 1,533 6 1,539
Group Statement of Cash Flows
Note 52 weeks to 53 weeks to
1 April
2 April
2023
2022
£m
£m
Cash flows from operating activities
Profit before tax 634 511
Adjustments to reconcile profit before tax to net cash flows:
Amortisation of intangible assets 12 37 39
Depreciation of property, plant and equipment 13 95 86
Depreciation of right-of-use assets 14 212 188
COVID-19-related rent concessions (13) (18)
Net impairment charge of property, plant and equipment 13 2 1
Net impairment charge of right-of-use assets 14 2 7
Gain on disposal of property, plant and equipment (19) (3)
Gain on modification of right-of-use assets (2) -
Gain on derivative instruments (2) (4)
Charge in respect of employee share incentive schemes 19 16
Net finance expense 23 32
Working capital changes:
Increase in inventories (10) (22)
Increase in receivables (17) (5)
(Decrease)/increase in payables and provisions (49) 81
Cash generated from operating activities 912 909
Interest received 18 2
Interest paid (40) (32)
Taxation paid (140) (180)
Net cash generated from operating activities 750 699
Cash flows from investing activities
Purchase of property, plant and equipment (136) (124)
Purchase of intangible assets (43) (37)
Proceeds from sale of property, plant and equipment 32 8
Initial direct costs of right-of-use assets - (4)
Payment in respect of acquisition of subsidiary - (7)
Net cash outflow from investing activities (147) (164)
Cash flows from financing activities
Dividends paid in the year 11 (203) (219)
Payment of deferred consideration for acquisition of non-controlling interest 18 (6) (3)
Payment of lease principal 19 (210) (202)
Issue of ordinary share capital 3 4
Purchase of own shares through share buyback 23 (400) (150)
Purchase of own shares through share buyback - stamp duty and fees 23 (4) (3)
Purchase of own shares by ESOP trusts (1) (8)
Net cash outflow from financing activities (821) (581)
Net decrease in cash net of overdrafts (218) (46)
Effect of exchange rate changes 2 7
Cash net of overdrafts at beginning of year 1,177 1,216
Cash net of overdrafts 961 1,177
Note As at As at
1 April
2 April
2023
2022
£m
£m
Cash and cash equivalents 17 1,026 1,222
Bank overdrafts 21 (65) (45)
Cash net of overdrafts 961 1,177
1. Basis of preparation
The financial information included in this announcement has been prepared in
accordance with the recognition and measurement criteria of UK-adopted
International Accounting Standards, however, this announcement does not itself
contain sufficient information to comply with these standards. The financial
information has been prepared using accounting policies and methods of
computation consistent with those applied in the financial statements for the
53 weeks to 2 April 2022. The Company's full financial statements will be
prepared in compliance with UK-adopted International Accounting Standards.
Statutory accounts for the 53 weeks to 2 April 2022 have been filed with the
Registrar of Companies, and those for 2023 will be delivered in due course.
The reports of the auditors on those statutory accounts for the 53 weeks to 2
April 2022 and 52 weeks to 1 April 2023 were unqualified 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. Financial ratios
are calculated using unrounded numbers. The Group Income Statement for the
current and prior period has been updated to provide separate disclosure on
amounts of other operating income and operating expenses that make up total
net operating expenses. The Group Statement of Cash Flows for the current and
prior period has also been updated to start the reconciliation of net
operating cash flows from profit before tax rather than operating profit.
Going concern
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 28 September 2024.
The scenarios considered by the Directors include a severe but plausible
downside scenario reflecting the Group's base plan adjusted for severe but
plausible impacts from the Group's principal risks. These scenarios were
informed by a comprehensive review of the macroeconomic scenarios using
third-party projections of 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 16% downgrade to revenues in FY 2023/24 and 16% over the period to
28 September 2024, 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 scenario modelled the following risks
occurring simultaneously:
• A more severe and prolonged reduction in the GDP growth assumptions in
the Eurozone and Americas compared to the central planning scenario
• A significant reduction to our global consumer demand arising from a
change in consumer preference
• A significant reputational incident such as negative sentiment
propagated through social media
• The impact of a business interruption event over three months and
consequent two-week interruption in one of our geographies arising from the
supply chain impact
• The impact of a one-month interruption to one of our channels
following a technology vulnerability
• The occurrence of a one-time physical risk relating to climate change
in FY 2023/24 and the materialisation of a severe but plausible ongoing market
risk relating to climate change in line with a scenario reflecting a 2°C
global temperature increase compared to pre-industrial levels
• The payment of a settlement arising from a regulatory or
compliance-related matter
• A short-term impact of a 10% weakening in a key non-sterling currency
for the Group before it is recovered through price adjustment
Further mitigating actions within management control would be taken under each
scenario, including working capital reduction measures and limiting capital
expenditure, but these were not incorporated into the downside modelling.
The Directors have also considered the Group's current liquidity and available
facilities. As at 1 April 2023, the Group balance sheet reflects cash net of
overdrafts of £961 million. In addition, the Group has access to a £300
million revolving credit facility, which is currently undrawn and not relied
upon for the purpose of this going concern assessment. The Group is in
compliance with the covenants for the revolving credit facility and the
borrowings raised via the sustainability bond are not subject to covenants.
Details of cash, overdrafts, borrowings and facilities are set out in notes
17, 21 and 22 respectively of these financial statements.
In all the scenarios assessed, taking into account current liquidity and
available resources and before the inclusion of any mitigating actions within
management control, the Group was able to maintain sufficient liquidity to
continue trading. On the basis of the assessment performed, the Directors
consider it is appropriate to continue to adopt the going concern basis in
preparing the consolidated financial statements for the 52 weeks ended 1 April
2023.
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 3 April 2022 that have had a material
impact on the financial statements of the Group.
Standards not yet adopted
Certain new accounting standards and interpretations have been published that
are not mandatory for the 52 weeks to 1 April 2023 and have not been early
adopted by the Group. These standards are not expected to have a material
impact on the entity in the current or future reporting periods and on
foreseeable future transactions.
Key sources of estimation uncertainty
Preparation of the consolidated financial statements in conformity with IFRS
requires that management make certain estimates and assumptions that affect
the measurement of reported revenues, expenses, assets and liabilities and the
disclosure of contingent liabilities.
If in the future such estimates and assumptions, which are based on
management's best estimates at the date of the financial statements, deviate
from actual circumstances, the original estimates and assumptions will be
updated as appropriate in the period in which the circumstances change.
Estimates are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be
reasonable under the circumstances. The key areas where the estimates and
assumptions applied have a significant risk of causing a material adjustment
to the carrying value of assets and liabilities within the next financial
year are discussed below.
Impairment, or reversals of impairment, of property, plant and equipment and right-of-use assets
Property, plant and equipment and right-of-use assets are reviewed for
impairment if events or changes in circumstances indicate that the carrying
amount may not be recoverable. When a review for impairment is conducted, the
recoverable amount of an asset or a cash generating unit is determined based
on value in use calculations prepared using management's best estimates and
assumptions at the time. Refer to notes 13 and 14 for further details of
retail property, plant and equipment, right-of-use assets and impairment
reviews carried out in the period and for sensitivities relating to this key
source of estimation uncertainty.
Inventory provisioning
The Group manufactures and sells luxury goods and is subject to changing
consumer demands and fashion trends. The recoverability of the cost of
inventories is assessed every reporting period, by considering the expected
net realisable value of inventory compared to its carrying value. Where the
net realisable value is lower than the carrying value, a provision is
recorded. When calculating inventory provisions, management considers the
nature and condition of the inventory, as well as applying assumptions in
respect of anticipated saleability of finished goods and future usage of raw
materials. 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, the Group 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 9 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 1 April 2023, 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. Key judgements that have a significant impact on the amounts
recognised in the Group financial statements for the 52 weeks to 1 April 2023
and the 53 weeks to 2 April 2022 are as follows:
Where the Group is a lessee, judgement is required in determining the lease
term at initial recognition, and throughout the lease term, 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. Translation of the results of overseas business
The results of overseas subsidiaries are translated into the Group's
presentation currency of sterling each month at the average exchange rate for
the month, weighted according to the phasing of the Group's trading results.
The 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 recognised
in other comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of a foreign
operation are treated as assets and liabilities of the foreign operation and
translated at the closing rate.
The principal exchange rates used were as follows:
Average rate Closing rate
52 weeks to 53 weeks to As at As at
1 April
2 April
1 April 2023
2 April 2022
2023
2022
Euro 1.16 1.18 1.14 1.19
US Dollar 1.20 1.36 1.24 1.31
Chinese Yuan Renminbi 8.27 8.73 8.51 8.34
Hong Kong Dollar 9.43 10.63 9.73 10.26
Korean Won 1,577 1,596 1,613 1,592
3. Adjusted profit before taxation
In order to provide additional understanding 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/or material in nature as
well as income or expenses relating to acquisitions or disposals of businesses
or other transactions of a similar nature, including the impact of changes in
fair value of expected future payments or receipts relating to these
transactions. Adjusting items are identified and presented on a consistent
basis each year and a reconciliation of adjusted PBT to profit before tax is
included in the financial statements. Adjusting items and their related tax
impacts, as well as adjusting taxation items, are added back to/deducted from
profit attributable to owners of the Company to arrive at adjusted earnings
per share. Refer to note 7 for further details of adjusting items.
4. Segmental analysis
The Chief Operating Decision Maker has been identified as the Board of
Directors. The Board reviews the Group's internal reporting in order to
assess performance and allocate resources. Management has determined the
operating segments based on the reports used by the Board. The Board
considers the Group's business through its two channels to market, being
retail/wholesale and licensing.
Retail/wholesale revenues are generated by the sale of luxury goods through
Burberry mainline stores, concessions, outlets and digital commerce as well as
Burberry franchisees, prestige department stores globally and multi-brand
speciality 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 and principal
distribution centres 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
52 weeks to 53 weeks to 52 weeks to 53 weeks to 52 weeks to 53 weeks to
1 April
2 April
1 April
2 April
1 April
2 April
2023
2022
2023
2022
2023
2022
£m
£m
£m
£m
£m
£m
Retail 2,501 2,273 - - 2,501 2,273
Wholesale 543 512 - - 543 512
Licensing - - 51 42 51 42
Total segment revenue 3,044 2,785 51 42 3,095 2,827
Inter-segment revenue1 - - (1) (1) (1) (1)
Revenue from external customers 3,044 2,785 50 41 3,094 2,826
Depreciation and amortisation2 (341) (313) - - (341) (313)
Net impairment charge of property, plant and equipment3 (2) (2) - - (2) (2)
Net impairment charge of right-of-use assets4 (5) (1) - - (5) (1)
Other non-cash items:
Share-based payments (19) (16) - - (19) (16)
Adjusted operating profit 587 486 47 37 634 523
Adjusting items5 21 19
Finance income 21 3
Finance expense (42) (34)
Profit before taxation 634 511
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. Depreciation and amortisation for the 52 weeks to 1 April 2023 is
presented excluding £3 million (last year: £nil) arising as a result of the
Group's restructuring programme, which has been presented as an adjusting item
(refer to note 7).
3. Net impairment charge of property, plant and equipment for the 53 weeks
to 2 April 2022 was presented excluding a net reversal of £1 million relating
to charges as a result of the impact of COVID-19, which was presented as an
adjusting item (refer to note 7).
4. Net impairment charge of right-of-use assets for the 52 weeks to 1 April
2023 is presented excluding a reversal of £6 million (last year: charge of
£6 million) relating to charges as a result of the impact of COVID-19 and a
net charge of £3 million (last year: charge of £nil) arising as a result of
the Group's restructuring programmes, which have been presented as adjusting
items (refer to note 7).
5. Adjusting items relate to the Retail and Wholesale segment. Refer to note
7 for details of adjusting items.
Retail/Wholesale Licensing Total
52 weeks to 53 weeks to 52 weeks to 53 weeks to 52 weeks to 53 weeks to
1 April
2 April
1 April
2 April
1 April
2 April
2023
2022
2023
2022
2023
2022
£m
£m
£m
£m
£m
£m
Additions to non-current assets 350 400 - - 350 400
Total segment assets 2,273 2,099 5 6 2,278 2,105
Goodwill 109 109
Cash and cash equivalents 1,026 1,222
Taxation 273 261
Total assets per Balance Sheet 3,686 3,697
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 52 weeks to 53 weeks to
1 April
2 April
2023
2022
£m
£m
Accessories 1,125 1,017
Women's 867 784
Men's 868 807
Children's/Other 184 177
Retail/Wholesale 3,044 2,785
Licensing 50 41
Total 3,094 2,826
Revenue by destination 52 weeks to 53 weeks to
1 April
2 April
2023
2022
£m
£m
Asia Pacific 1,297 1,276
EMEIA1 1,004 813
Americas 743 696
Retail/Wholesale 3,044 2,785
Licensing 50 41
Total 3,094 2,826
1. EMEIA comprises Europe, Middle East, India and Africa.
Entity-wide disclosures
Revenue derived from external customers in the UK totalled £257 million for
the 52 weeks to 1 April 2023 (last year: £210 million).
Revenue derived from external customers in foreign countries totalled £2,837
million for the 52 weeks to 1 April 2023 (last year: £2,616 million). This
amount includes £661 million of external revenues derived from customers
in the USA (last year: £626 million) and £683 million of external revenues
derived from customers in Mainland China (last year: £765 million).
The total of non-current assets, other than financial instruments, and
deferred tax assets located in the UK is £485 million (last year: £439
million). The remaining £1,094 million of non-current assets are located in
other countries (last year: £1,005 million), with £318 million located in
the US (last year: £263 million) and £235 million located in Mainland China
(last year: £214 million).
5. Net operating expenses
Note 52 weeks to 53 weeks to
1 April
2 April
2023
20221
£m
£m
Other operating income (12) (10)
Selling and distribution costs 1,207 1,115
Administrative expenses 353 367
1,548 1,472
Adjusting operating income 7 (34) (20)
Adjusting operating expenses 7 12 16
(22) (4)
Net operating expenses 1,526 1,468
1. Balances for the 53 weeks to 2 April 2022 have been restated to align
with the current year allocation of other operating income. Other operating
income has been decreased by £8 million with an offsetting increase of £2
million in selling and distribution costs and decrease of £10 million in
administrative expenses. This is largely to present gains on foreign exchange,
which were previously presented as other operating income, net within
expenses. There is no impact on total net operating expenses.
6. Profit before taxation
Note 52 weeks to 53 weeks to
1 April
2 April
2023
£m 2022
£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 76 68
Within administrative expenses 17 16
Depreciation of right-of-use assets
Within selling and distribution costs 191 171
Within administrative expenses1 18 17
Amortisation of intangible assets
Within selling and distribution costs 1 2
Within administrative expenses 36 37
Gain on disposal of property, plant and equipment2 - (3)
Gain on modification of right-of-use assets (2) -
Net impairment charge of property, plant and equipment3 13 2 2
Net impairment charge of right-of-use assets4 14 5 1
Employee costs5 565 537
Other lease expense
Property lease variable lease expense 19 125 122
Property lease in holdover expense 19 20 17
Non-property short-term lease expense 19 11 5
Net exchange loss/(gain) on revaluation of monetary assets and liabilities 10 (10)
Net (gain)/loss on derivatives - fair value through profit and loss (9) 9
Receivables net impairment charge6 2 1
1. Depreciation of right-of-use assets within administrative expenses for
the 52 weeks to 1 April 2023 is presented excluding £3 million (last year:
£nil) arising as a result of the Group's restructuring programme, which has
been presented as an adjusting item (refer to note 7).
2. Gain on disposal of property, plant and equipment for the 52 weeks to 1
April 2023 is presented excluding £19 million relating to the gain on sale of
a property in the US, which has been presented as an adjusting item (refer to
note 7).
3. Net impairment charge of property, plant and equipment for the 53 weeks
to 2 April 2022 was presented excluding a net reversal of £1 million relating
to charges as a result of the impact of COVID-19, which was presented as an
adjusting item (refer to note 7).
4. Net impairment charge of right-of-use assets for the 52 weeks to 1 April
2023 is presented excluding a reversal of £6 million (last year: charge of
£6 million) relating to charges as a result of the impact of COVID-19 and a
net charge of £3 million (last year: charge of £nil) arising as a result of
the Group's restructuring programme, which have been presented as adjusting
items (refer to note 7).
5. Employee costs for the 52 weeks to 1 April 2023 are presented excluding a
charge of £10 million (last year: £10 million) arising as a result of the
Group's restructuring programme, which has been presented as an adjusting item
(refer to note 7).
6. Receivables net impairment charge for the 53 weeks to 2 April 2022 is
presented excluding a reversal of £1 million relating to charges as a result
of the impact of COVID-19, which was presented as an adjusting item (refer to
note 7).
Note 52 weeks to 53 weeks to
1 April
2 April
2023
2022
£m
£m
Adjusting items
Adjusting operating items
Impact of COVID-19:
Impairment (reversal)/charge relating to retail cash generating units 7 (6) 5
Impairment reversal relating to inventory 7 (1) (16)
Impairment reversal relating to receivables 7 - (1)
COVID-19-related rent concessions 7 (13) (18)
COVID-19-related government grant income 7 (2) (2)
Other adjusting items:
Gain on disposal of property 7 (19) -
Restructuring costs 7 16 11
Revaluation of deferred consideration liability 7 2 1
Total adjusting operating items (23) (20)
Adjusting financing items
Finance charge on adjusting items 7 2 1
Total adjusting financing items 2 1
Note 52 weeks to 53 weeks to
1 April
2 April
2023
2022
£m
£m
Analysis of adjusting operating items:
Included in Cost of sales (Impairment reversal relating to inventory) (1) (16)
Included in Operating expenses 5 12 16
Included in Other operating income 5 (34) (20)
Total (23) (20)
7. Adjusting items
52 weeks to 53 weeks to
1 April
2 April
2023
2022
£m
£m
Total adjusting operating items (pre-tax) (23) (20)
Total adjusting financing items (pre-tax) 2 1
Tax charge on adjusting operating items 6 5
Total adjusting operating items (post-tax) (15) (14)
Impact of COVID-19
At 1 April 2023, impairments and provisions recorded as adjusting items in
prior periods as a result of the impact of COVID-19 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.
Impairment of retail cash generating units
During the 52 weeks to 1 April 2023, the impairment provisions remaining have
been reassessed, using management's latest expectations, with a reversal of
£6 million recorded (last year: charge of £5 million). A related tax charge
of £1 million (last year: credit of £1 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 13 and 14 for details of
impairment of retail cash generating units.
Impairment of inventory
During the 52 weeks to 1 April 2023, 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 £1 million (last year: £16 million) have been
recorded and presented as an adjusting item. No related tax charge (last year:
£4 million) has 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, a reversal of £1 million was recorded as
an adjusting item relating to the one-off impact of COVID-19 on expected
credit losses. No amounts were recorded during the 52 weeks to 1 April 2023.
COVID-19-related rent concessions
Eligible rent forgiveness amounts have been treated as negative variable lease
payments, resulting in a credit of £13 million (last year: £18 million) for
the 52 weeks to 1 April 2023 being recorded within other operating income.
This income has continued to be presented as an adjusting item given that it
is explicitly related to COVID-19. The amendment to IFRS 16 expired on 30 June
2022; however the Group continues to apply the same accounting treatment
applying the principles of IFRS 9. A related tax charge of £3 million (last
year: £4 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: £2 million)
within other operating income for the 52 weeks to 1 April 2023, relating to
government support to alleviate the impact of COVID-19. This income has been
presented as an adjusting item as it is explicitly related to COVID-19, and
the arrangements are expected to last for a limited period of time. A related
tax charge of £1 million (last year: £1 million) has also been recognised in
the current year.
Other adjusting items
Gain on disposal of property
During the 52 weeks to 1 April 2023, the Group completed the sale of an owned
property in the US for cash proceeds of £22 million resulting in a net gain
on disposal of £19 million, recorded within other operating income. The net
gain on disposal was recognised as an adjusting item, in accordance with the
Group's accounting policy, as it is considered to be material and one-off in
nature. A related tax charge of £5 million was also recognised in the year.
Restructuring costs
Restructuring costs of £16 million (last year: £11 million) were incurred in
the current year, arising primarily as a result of the organisational
efficiency programme announced in July 2020, and completed in the current
year, that included the creation of three new business units to enhance
product focus, increase agility and elevate quality, and to further streamline
office-based functions and facilities. The costs for the 52 weeks to 1 April
2023 principally relate to impairment charges on non-retail assets and
redundancies 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 £4 million (last year: £3
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 £2 million in relation to the revaluation of this balance has
been recognised in operating expenses for the 52 weeks to 1 April 2023 (last
year: £1 million). This movement is unrealised. No tax has been recognised on
this item, as the future payments are not considered to be deductible for tax
purposes. This item is presented as an adjusting item in accordance with the
Group's accounting policy, as it arises 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.
8. Financing
Note 52 weeks to 53 weeks to
1 April
2 April
2023
2022
£m
£m
Finance income - amortised cost 3 1
Bank interest income - fair value through profit and loss 18 2
Finance income 21 3
Interest expense on lease liabilities1 19 (31) (27)
Interest expense on overdrafts (2) -
Interest expense on borrowings (4) (4)
Bank charges (1) (2)
Other finance expense (4) (1)
Finance expense (42) (34)
Finance charge on adjusting items 7 (2) (1)
Net finance expense (23) (32)
1. Interest expense on lease liabilities of £31 million excludes £2
million arising as a result of the Group's restructuring programme, which has
been presented as an adjusting item (refer to note 7).
9. Taxation
Analysis of charge for the year recognised in the Group Income Statement:
52 weeks to 53 weeks to
1 April
2 April
2023
2022
£m
£m
Current tax
UK corporation tax
Current tax on income for the 52 weeks to 1 April 2023 at 19% (last year: 19%) 116 114
Double taxation relief (5) (7)
Adjustments in respect of prior years1 12 25
123 132
Foreign tax
Current tax on income for the year 34 28
Adjustments in respect of prior years1 3 (15)
37 13
Total current tax 160 145
Deferred tax
UK deferred tax
Origination and reversal of temporary differences 4 (3)
Impact of changes to tax rates - (4)
Adjustments in respect of prior years1 - 1
4 (6)
Foreign deferred tax
Origination and reversal of temporary differences (26) (27)
Adjustments in respect of prior years1 4 2
(22) (25)
Total deferred tax (18) (31)
Total tax charge on profit 142 114
1. Adjustments in respect of prior years relate mainly to adjustments to
estimates of prior period tax liabilities and a net increase in provisions for
uncertain tax positions and tax accruals.
Analysis of charge for the year recognised in other comprehensive income and
directly in equity:
52 weeks to 53 weeks to
1 April
2 April
2023
2022
£m
£m
Current tax
Recognised in other comprehensive income:
Current tax charge on exchange differences on loans (foreign currency 1 -
translation reserve)
Current tax charge on net investment hedges deferred in equity (hedging - 1
reserve)
Total current tax recognised in other comprehensive income 1 1
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 on share options (retained earnings) (2) -
Total deferred tax recognised directly in equity (2) -
The tax rate applicable on profit varied from the standard rate of corporation
tax in the UK due to the following factors:
52 weeks to 53 weeks to
1 April
2 April
2023
2022
£m
£m
Profit before taxation 634 511
Tax at 19% (last year: 19%) on profit before taxation 120 97
Rate adjustments relating to overseas profits 1 3
Permanent differences 4 6
Tax on dividends not creditable - 2
Prior year temporary differences and tax losses recognised (3) (3)
Adjustments in respect of prior years 19 13
Adjustments to deferred tax relating to changes in tax rates 1 (4)
Total taxation charge 142 114
Total taxation recognised in the Group Income Statement arises on the
following items:
52 weeks to 53 weeks to
1 April
2 April
2023
2022
£m
£m
Tax on adjusted profit before taxation 136 109
Tax on adjusting items 6 5
Total taxation charge 142 114
Factors affecting future tax charges
Uncertain tax positions
The Group operates in numerous tax jurisdictions around the world and is
subject to factors that may affect future tax charges including transfer
pricing, tax rate changes, tax legislation changes, tax authority
interpretation, expiry of statutes of limitation, tax litigation, and
resolution of tax audits and disputes.
At any given time, the Group has open years outstanding in various countries
and is involved in tax audits and disputes, some of which may take several
years to resolve. Provisions are based on best estimates and management's
judgements concerning the likely ultimate outcome of any audit or dispute.
Management considers the specific circumstances of each tax position and takes
external advice, where appropriate, to assess the range of potential outcomes
and estimate additional tax that may be due.
At 1 April 2023 the Group had recognised provisions of £86 million in respect
of uncertain tax positions (increasing from £64 million in 2022), being
provisions of £103 million net of expected reimbursements of £17 million
(last year: £69 million net of expected reimbursements of £5 million). The
majority of these provisions relate to the tax impact of intra-group
transactions between the UK and the various jurisdictions in which the Group
operates, as would be expected for a Group operating internationally.
The Group believes that it has made adequate provision in respect of
additional tax liabilities that may arise from open years, tax audits and
disputes. However, the actual liability for any particular issue may be higher
or lower than the amount provided, resulting in a negative or positive effect
on the tax charge in any given year. A reduction in the tax charge may also
arise for other reasons such as an expiry of the relevant statute of
limitations. Depending on the final outcome of tax audits which are currently
in progress, statute of limitations expiry, and other factors, an impact on
the tax charge could arise. The tax impact of intra-group transactions is a
complex area and resolution of matters can take many years. Given the inherent
uncertainty, it is difficult to predict the timing of when these matters will
be resolved and the quantum of the ultimate resolution. Management estimate
that the outcome across all matters under dispute or in negotiation between
governments could be in the range of a decrease of £32 million, to an
increase of £27 million, in the uncertain tax position over the next 12
months.
Legislative changes
The UK corporation tax rate increased from 19% to 25% on 1 April 2023;
consequently we expect an increase in the Group's effective tax rate to around
27% for FY 2023/24.
The OECD Pillar Two GloBE Rules introduce a global minimum corporate tax rate
of 15% applicable to multinational enterprise groups with global revenue over
€750 million. All participating OECD members are required to incorporate
these rules into national legislation. The Group will be subject to the Pillar
Two Model Rules from FY 2024/25 but does not meet the threshold for
application of the Pillar One transfer pricing rules. It is not expected that
there will be a material impact on the effective tax rate for the Group.
10. Earnings per share
The calculation of basic earnings per share is based on profit or loss
attributable to owners of the Company for the year divided by the weighted
average number of ordinary shares in issue during the year. Basic and diluted
earnings per share based on adjusted profit before taxation are also disclosed
to indicate the underlying profitability of the Group.
52 weeks to 53 weeks to
1 April
2 April
2023
2022
£m
£m
Attributable profit for the year before adjusting items1 475 382
Effect of adjusting items1 (after taxation) 15 14
Attributable profit for the year 490 396
1. Refer to note 7 for details of adjusting items.
The weighted average number of ordinary shares represents the weighted average
number of Burberry Group plc ordinary shares in issue throughout the year,
excluding ordinary shares held in the Group's ESOP trusts and treasury shares
held by the Company or its subsidiaries. This includes the effect of the
cancellation of 21.1 million shares during the period as a result of the share
buyback programmes. Refer to note 23 for additional information on the share
buybacks.
Diluted earnings per share is based on the weighted average number of ordinary
shares in issue during the year. In addition, account is taken of any options
and awards made under the employee share incentive schemes, which will have a
dilutive effect when exercised.
52 weeks to 53 weeks to
1 April
2 April
2023
2022
Millions
Millions
Weighted average number of ordinary shares in issue during the year 386.1 402.5
Dilutive effect of the employee share incentive schemes 1.9 2.3
Diluted weighted average number of ordinary shares in issue during the year 388.0 404.8
11. Dividends paid to owners of the Company
52 weeks to 53 weeks to
1 April
2 April
2023
2022
£m
£m
Prior year final dividend paid 35.4p per share (last year: 42.5p) 140 172
Interim dividend paid 16.5p per share (last year: 11.6p) 63 47
Total 203 219
A final dividend in respect of the 52 weeks to 1 April 2023 of 44.5p (last
year: 35.4p) per share, amounting to £167 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 4 August 2023 to the shareholders on the
register at the close of business on 30 June 2023. The ex-dividend date is 29
June 2023 and the final day for dividend reinvestment plan (DRIP) elections is
14 July 2023.
12. Intangible assets
Cost Goodwill Trademarks, licences and other intangible Computer Intangible assets in the course of Total
£m
assets
software
construction
£m
£m
£m
£m
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
Effect of foreign exchange rate changes - - 1 - 1
Additions - 1 13 32 46
Disposals - - (42) - (42)
Reclassifications from assets in the course of construction - - 18 (18) -
As at 1 April 2023 115 14 248 69 446
Accumulated amortisation and impairment
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)
As at 2 April 2022 6 7 169 19 201
Effect of foreign exchange rate changes - - 2 - 2
Charge for the year - 1 36 - 37
Disposals - - (42) - (42)
As at 1 April 2023 6 8 165 19 198
Net book value
As at 1 April 2023 109 6 83 50 248
As at 2 April 2022 109 6 89 36 240
Impairment testing of goodwill
The carrying value of the goodwill allocated to cash generating units:
As at As at
1 April
2 April
2023
2022
£m
£m
Mainland China 50 50
Korea 26 26
Retail and Wholesale segment1 19 19
Other 14 14
Total 109 109
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 lowest 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 operating profit 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 28 March 2026 and a
longer-term growth rate of 5% to 1 April 2028. A terminal value has been
included in the value-in-use calculation based on the cash flows for the year
ending 1 April 2028, incorporating the assumption that growth beyond 1 April
2028 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 Mainland China, Korea and the Retail and
Wholesale segment, management has considered the potential impact of
reasonably possible changes in assumptions on the recoverable amount of
goodwill. The sensitivities include applying a 10% reduction in revenue and
gross profit and the associated impact on operating profit margin from
management's base cash flow projections, considering the macroeconomic and
political uncertainty risk on the Group's retail operations and on the global
economy. Under this scenario, the estimated recoverable amount of goodwill in
Mainland China, Korea and the Retail and Wholesale segment still exceeded the
carrying value.
The pre-tax discount rates for Mainland China, Korea and the Retail and
Wholesale segment were 12%, 12% and 12% respectively (last year: Mainland
China 13%, Korea 12%, and the Retail and Wholesale segment 10%). No reasonably
possible change in these pre-tax discount rates would result in the carrying
value to exceed the estimated recoverable amount of goodwill.
The other goodwill balance of £14 million (last year: £14 million) consists
of amounts relating to seven cash generating units, none of which have
goodwill balances individually exceeding £7 million as at 1 April 2023 (last
year: £7 million).
13. Property, plant and equipment
Cost Freehold land Leasehold improvements Fixtures, Assets in the course of construction Total
and buildings
£m
fittings and
£m
£m
£m
equipment
£m
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
Effect of foreign exchange rate changes 6 6 9 1 22
Additions - 56 25 66 147
Disposals (1) (53) (27) (1) (82)
Reclassifications from assets in the course of construction - 26 11 (37) -
As at 1 April 2023 121 585 366 76 1,148
Accumulated depreciation and impairment
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
Effect of foreign exchange rate changes 4 6 8 - 18
Charge for the year 3 64 28 - 95
Disposals (1) (53) (27) (1) (82)
Impairment charge on assets - 2 - - 2
As at 1 April 2023 62 407 303 - 772
Net book value
As at 1 April 2023 59 178 63 76 376
As at 2 April 2022 60 162 54 46 322
During the 52 weeks to 1 April 2023, 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 1 April 2023. 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 28 March 2026, 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 11.1% and 13.7% (last
year: between 9.9% and 18.4%) 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. A
review for any other indicators of impairment charges or reversals across the
retail portfolio was also carried out.
During the 52 weeks to 1 April 2023, impairments previously charged as an
adjusting item related to the impact of COVID-19 were reassessed. This
resulted in an impairment reversal of £6 million (last year: net charge of
£5 million), which has been presented as an adjusting item in the current
year. The reversal is recorded against right-of-use assets (last year: net
reversal of £1 million recorded against property, plant and equipment and a
net charge of £6 million recorded against right-of-use assets). Refer to note
14 for further details of right-of-use assets. Refer to note 7 for details of
adjusting items.
A net charge of £7 million (last year: £3 million) was recorded within net
operating expenses as a result of the annual review of impairment for all
other retail store assets. A charge of £2 million (last year: £2 million)
was recorded against property, plant and equipment and a net charge of £5
million (last year: charge of £1 million) was recorded against right-of-use
assets.
The net impairment charge recorded in property, plant and equipment related to
two retail cash generating units (last year: 13 retail cash generating units)
for which the total recoverable amount at the balance sheet date is £1
million (last year: £7 million).
Management has considered the potential impact of changes in assumptions on
the impairment recorded against the Group's retail assets. Given the
macroeconomic and political uncertainty risk 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 30 March 2024 , 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 52 weeks to 1 April 2023.
At 2 April 2022 the Group had three freehold properties that met the criteria
to be classified as held for sale. The sale of these properties was completed
during the 52 weeks to 1 April 2023 resulting in a net gain on disposal of
£19 million.
14. Right-of-use assets
Net book value Property right-
of-use assets
£m
As at 27 March 2021 818
Effect of foreign exchange rate changes 9
Additions 227
Remeasurements1 21
Depreciation for the year (188)
Impairment charge on right-of-use assets (10)
Impairment reversal on right-of-use assets 3
As at 2 April 2022 880
Effect of foreign exchange rate changes 14
Additions 157
Remeasurements 113
Depreciation for the year (212)
Impairment charge on right-of-use assets (10)
Impairment reversal on right-of-use assets 8
As at 1 April 2023 950
As a result of the assessment of retail cash generating units for impairment,
a net impairment reversal of £1 million (last year: £7 million) was
recorded for impairment of right-of-use assets. Refer to note 13 for further
details of impairment assessment of retail cash generating units. This net
impairment reversal comprises a £6 million reversal arising from the change
in assumption due to the impact of COVID-19 on the value-in-use of retail cash
generating units (last year: charge of £6 million) and an impairment charge
of £5 million relating to other trading impacts which was recognised during
the year (last year: £1 million). The reversal relating to COVID-19 has been
presented as an adjusting item (refer to note 7).
The net impairment reversal recorded in right-of-use assets relates to three
retail cash generating units (last year: 12 retail cash generating units) for
which the total recoverable amount at the balance sheet date is £17 million
(last year: £26 million).
A net impairment charge of £3 million (last year: £nil) was recognised in
relation to non-retail right-of-use assets arising as a result of the Group's
restructuring programmes and has been presented as an adjusting item (refer to
note 7).
As a result, the net impairment charge for right-of-use assets was, in total,
£2 million (last year: £7 million).
15. Trade and other receivables
As at As at
1 April
2 April
2023
2022
£m
£m
Non-current
Other financial receivables1 45 42
Other non-financial receivables2 2 1
Prepayments 5 2
Total non-current trade and other receivables 52 45
Current
Trade receivables 184 151
Provision for expected credit losses (7) (7)
Net trade receivables 177 144
Other financial receivables1 25 36
Other non-financial receivables2 59 63
Prepayments 32 32
Accrued income 14 8
Total current trade and other receivables 307 283
Total trade and other receivables 359 328
1. Other financial receivables include rental deposits and other sundry
debtors.
2. Other non-financial receivables relates primarily to indirect taxes and
other taxes and duties.
Included in total trade and other receivables are non-financial assets of £98
million (last year: £98 million).
16. Inventories
As at As at
1 April
2 April
2023
2022
£m
£m
Raw materials 15 12
Work in progress 1 1
Finished goods 431 413
Total inventories 447 426
As at As at
1 April
2 April
2023
2022
£m
£m
Total inventories, gross 504 509
Provisions (57) (83)
Total inventories, net 447 426
Inventory provisions of £57 million (last year: £83 million) are recorded,
representing 11.4% (last year: 16.3%) of the gross value of inventory. The
provisions reflect management's best estimate of the net realisable value of
inventory, where this is considered to be lower than the cost of the
inventory.
The cost of inventories recognised as an expense and included in cost of sales
amounted to £874 million (last year: £786 million).
During the 52 weeks to 1 April 2023, £1 million (last year: £16 million) has
been released upon re-assessment of the provision related to the impact of
COVID-19 where inventory previously provided for has been sold, or is now
expected to be sold, for a higher net realisable value than had been estimated
last year as performance during the current year has exceeded, and is expected
to continue to exceed, the assumptions made at last year end. This reversal is
presented as an adjusting item. Refer to note 7 for details of adjusting
items. All other charges and reversals relating to inventory provisions have
been included in adjusted operating profit.
Taking into account factors impacting the inventory provisioning 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 £9 million in the next 12 months. This
would result in a potential range of inventory provisions of 9.6% to 13.1% as
a percentage of the gross value of inventory as at 1 April 2023.
The net movement in inventory provisions included in cost of sales for the 52
weeks to 1 April 2023 was a release of £1 million (last year: release of £1
million). The total reversal of inventory provisions during the current year,
which is included in the net movement, was £22 million (last year: reversal
of £43 million). Both these amounts include the reversal of £1 million (last
year: £16 million), referred to above, which has been presented as an
adjusting item.
17. Cash and cash equivalents
As at As at
1 April
2 April
2023
2022
£m
£m
Cash and cash equivalents held at amortised cost 152 124
Cash at bank and in hand
Short-term deposits 77 73
229 197
Cash and cash equivalents held at fair value through profit and loss 797 1,025
Short-term deposits
Total 1,026 1,222
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 1 April 2023 and 2 April 2022, no impairment losses were identified on
cash and cash equivalents held at amortised cost.
18. Trade and other payables
As at As at
1 April
2 April
2023
2022
£m
£m
Non-current
Other payables1 - 5
Deferred income and non-financial accruals 19 18
Contract liabilities 57 64
Deferred consideration2 - 4
Total non-current trade and other payables 76 91
Current
Trade payables 186 181
Other taxes and social security costs 50 60
Other payables1 10 6
Accruals 199 204
Deferred income and non-financial accruals 14 13
Contract liabilities 13 13
Deferred consideration2 5 4
Total current trade and other payables 477 481
Total trade and other payables 553 572
1. Other payables comprise interest and employee-related liabilities.
2. Deferred consideration relates to acquisition 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 52 weeks to
1 April 2023 payments of £6 million were made in relation to Burberry Middle
East LLC (last year: £3 million) and no payment was made to the previous
owners of Burberry Manifattura S.R.L (last year: £9 million).
Included in total trade and other payables are non-financial liabilities of
£153 million (last year: £168 million).
18. Trade and other payables
Contract liabilities
Retail contract liabilities relate to unredeemed balances on issued gift cards
and similar products, and advanced payments received for sales which have not
yet been delivered to the customer. Licensing contract liabilities relate to
deferred revenue arising from the upfront payment for the Beauty licence which
is being recognised in revenue over the term of the licence on a straight-line
basis, reflecting access to the trademark over the licence period to 2032.
As at As at
1 April
2 April
2023
2022
£m
£m
Retail contract liabilities 6 7
Licensing contract liabilities 64 70
Total contract liabilities 70 77
The amount of revenue recognised in the year relating to contract liabilities
at the start of the year is set out in the following table. All revenue in the
year relates to performance obligations satisfied in the year. All contract
liabilities at the end of the year relate to unsatisfied performance
obligations.
52 weeks to 53 weeks to
1 April
2 April
2023
2022
£m
£m
Retail revenue relating to contract liabilities 4 4
Deferred revenue from Beauty licence 6 7
Revenue recognised that was included in contract liabilities at the start of 10 11
the year
19. Lease liabilities
Property lease liabilities
£m
Balance as at 27 March 2021 1,020
Effect of foreign exchange rate changes 16
Created during the year 222
Amounts paid1 (229)
Discount unwind 27
Remeasurements2 2
Balance as at 2 April 2022 1,058
Effect of foreign exchange rate changes 20
Created during the year 157
Amounts paid1 (243)
Discount unwind 33
Remeasurements2 98
Balance as at 1 April 2023 1,123
As at As at
1 April
2 April
2023
2022
£m
£m
Analysis of total lease liabilities:
Non-current 902 849
Current 221 209
Total 1,123 1,058
1. The amount paid of £243 million (last year: £229 million) includes
£210 million (last year: £202 million) arising as a result of a financing
cash outflow and £33 million (last year: £27 million) arising as a result of
an operating cash outflow.
2. Remeasurements include COVID-19-related rent forgiveness of £13 million
(last year: £18 million) and other remeasurements of £111 million (last
year: £20 million). COVID-19-related rent forgiveness has been recognised as
a credit in the Income Statement at 1 April 2023. This credit is included as
an adjusting item. Refer to note 7. Other remeasurements relate largely to
changes in the lease liabilities that arise as a result of management's
reassessment of the lease term based on existing break or extension options in
the contract, as well as those linked to an inflation index or rate review.
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 15 years
(last year: few months to 16 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 assess 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 option not included in the lease term, and
therefore not included in lease liabilities are approximately £399 million
(last year: £423 million) in relation to the next available extension option
and are assessed as not reasonably certain to be exercised. Potential future
undiscounted lease payments related to periods following the exercise date of
a break option not included in the lease term, and therefore not included in
lease liabilities, are approximately £130 million (last year: £157 million)
in relation to break options which are expected to be exercised. During the
52 weeks to 1 April 2023, significant judgements regarding breaks and options
in relation to individually material leases resulted in approximately £38
million (last year: £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 and 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 18% (last year: 20%) of the Group's lease
liabilities are subject to inflation linked reviews and 30% (last year: 33%)
are subject to rent reviews. Rental changes linked to inflation or rent
reviews typically occur on an annual basis.
Many of the retail property leases also incur payments based on a percentage
of revenue achieved at the location. Changes in future variable lease payments
will typically reflect changes in the Group's retail revenues, including the
impact of regional mix. The Group expects the relative proportions of fixed
and variable lease payments to remain broadly consistent in future years.
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 leases, would be the
Group's usage of leased equipment to a greater or lesser extent.
Details of income statement charges and income from leases are set out in note
6. The right-of-use asset categories on which depreciation is incurred are
presented in note 14. Interest expense incurred on lease liabilities is
presented in note 8.
Total cash outflows in relation to leases in the 52 weeks ended 1 April 2023
are £396 million (last year: £376 million). This relates to payments of
£210 million on lease principal (last year: £202 million), £33 million on
lease interest (last year: £27 million), £122 million on variable lease
payments (last year: £124 million), and £31 million on other lease payments
principally relating to short-term leases and leases in holdover (last year:
£23 million).
20. Provisions for other liabilities and charges
Property obligations Other Total
£m
£m
£m
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
Effect of foreign exchange rate changes - 2 2
Created during the year 7 5 12
Utilised during the year (3) (1) (4)
Released during the year (4) (8) (12)
Balance as at 1 April 2023 49 13 62
The net charge in the year for property obligations is £3 million (last year:
£8 million), relating to additional property reinstatement costs. The net
credit in the year for other provisions of £3 million (last year: net charge
of £3 million) includes charges of £5 million (last year: £8 million)
relating to expected future outflows for property disputes, employee matters
and tax compliance, and reversals of £8 million (last year: £5 million)
relating to employee matters and other property matters.
As at As at
1 April 2023
2 April 2022
£m
£m
Analysis of total provisions:
Non-current 40 36
Current 22 28
Total 62 64
The non-current provisions relate to property reinstatement costs which are
expected to be utilised within 15 years (last year: 16 years).
21. Bank overdrafts
Included within bank overdrafts is £65 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 1 April 2023 and 2 April 2022, the Group held no bank
overdrafts excluding balances on cash pooling arrangements.
The fair value of overdrafts approximates 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
carrying value of the bond at 1 April 2023 is £298 million (last year: £298
million); all movements on the bond are non-cash. The fair value of the bond
at 1 April 2023 is £273 million (last year: £285 million).
On 26 July 2021, the Group entered into a £300 million multi-currency
sustainability-linked revolving credit facility (RCF) with a syndicate of
banks, maturing on 26 July 2026. There were no drawdowns or repayments of the
RCF during the current or previous year, and at 1 April 2023 there were no
outstanding drawings.
The Group is in compliance with the financial and other covenants within the
facilities above and has been in compliance throughout the financial period.
23. Share capital and reserves
Allotted, called up and fully paid share capital Number £m
Ordinary shares of 0.05p (as at 2 April 2022: 0.05p) each
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 -
Allotted on exercise of options during the year 236,123 -
Cancellation of shares (21,075,496) -
As at 1 April 2023 384,267,928 -
The Company has a general authority from shareholders, renewed at each Annual
General Meeting, to repurchase a maximum of 10% of its issued share capital.
During the 52 weeks to 1 April 2023, the Company entered into agreements to
purchase £400 million of its own shares, excluding stamp duty and fees,
through two share buyback programmes of £200 million each (last year: one
share buyback programme of £150 million). Both programmes were completed
during the year.
The cost of own shares purchased by the Company, as part of a share buyback
programme, is offset against retained earnings, as the amounts paid reduce the
profits available for distribution by the Company. When shares are cancelled,
a transfer is made from retained earnings to the capital reserve, equivalent
to the nominal value of the shares purchased and subsequently cancelled.
In the 52 weeks to 1 April 2023, 21.1 million shares were cancelled (last
year: none).
As at 1 April 2023 the Company held 6.1 million treasury shares (last year:
8.4 million), with a market value of £157 million (last year: £140 million)
based on the share price at the reporting date. The treasury shares held by
the Company are related to the share buyback programme completed during the 53
weeks to 2 April 2022. During the 52 weeks to 1 April 2023, 2.3 million
treasury shares were transferred to ESOP trusts (last year: none). During the
52 weeks to 1 April 2023, no treasury shares were cancelled (last year: none).
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 1 April 2023, the cost of own shares held by ESOP trusts
and offset against retained earnings is £42 million (last year: £11
million). As at 1 April 2023, the ESOP trusts held 2.3 million shares (last
year: 0.6 million) in the Company, with a market value of £60 million (last
year: £10 million). In the 52 weeks to 1 April 2023 the ESOP trusts and the
Company have waived their entitlement to dividends.
Other reserves in the Statement of Changes in Equity consist 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 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 income for the year - (1) - 22 21
Balance as at 2 April 2022 41 (1) 5 218 263
Other comprehensive income:
Cash flow hedges - gains deferred in equity - 1 - - 1
Foreign currency translation differences - - - 14 14
Tax on other comprehensive income - (1) - - (1)
Total comprehensive income for the year - - - 14 14
Balance as at 1 April 2023 41 (1) 5 232 277
As at 1 April 2023 the amount held in the hedging reserve relating to matured
net investment hedges is £5 million net of tax (last year: £5 million).
24. Commitments
Capital commitments
Contracted capital commitments represent contracts entered into by the year
end for future work in respect of major capital expenditure projects relating
to property, plant and equipment and intangible assets, which are not
recorded on the Group's Balance Sheet and are as follows:
As at As at
1 April
2 April
2023
2022
£m
£m
Capital commitments contracted but not provided for:
Property, plant and equipment 38 29
Intangible assets 3 2
Total 41 31
Other commitments
On 28 March 2023, Burberry announced it had entered into an agreement to
acquire a business from Italian technical outerwear supplier Pattern SpA for
an agreed purchase price of €21 million (£18 million), subject to closing
conditions and working capital adjustments. The acquisition is expected to
complete in FY 2023/24.
25. Related party transactions
Transactions between the Company and its subsidiaries, which are related
parties of the Company, have been eliminated on consolidation and are not
disclosed in this note. Total compensation in respect of key management,
who are defined as the Board of Directors and certain members of senior
management, is considered to be a related party transaction.
The total compensation in respect of key management for the year was as
follows:
52 weeks to 53 weeks to
1 April
2 April
2023
2022
£m
£m
Salaries, short-term benefits and social security costs1 9 8
Share‑based compensation (all awards and options settled in shares) 4 1
Total 13 9
1. Pension cash allowance is included within salaries, short-term benefits
and social security costs
The Group donates each year to the Burberry Foundation, an independent charity
which meets the criteria to be reported as a related party in accordance with
IFRS. Charitable donations to the Burberry Foundation for the 52 weeks to 1
April 2023 were £2 million (last year: £1 million).
There were no other material related party transactions in the year.
26. 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
has 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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