REG - Burberry Group PLC - Interim Results <Origin Href="QuoteRef">BRBY.L</Origin> - Part 3

BurberryAnnouncement

09/11/2016 07:06

- Part 3: For the preceding part double click  ID:nRSI6790Ob 

instrument category             Classification               Measurement                         Fair value measurement hierarchy(2)  
 Cash and cash equivalents                 Loans and receivables        Amortised cost                      N/A                                  
 Trade and other receivables               Loans and receivables        Amortised cost                      N/A                                  
 Trade and other payables                  Other financial liabilities  Amortised cost                      N/A                                  
 Borrowings                                Other financial liabilities  Amortised cost                      N/A                                  
 Deferred consideration                    Other financial liabilities  Fair value through profit and loss  2/3                                  
 Put option over non-controlling interest  Derivative instrument        Fair value through profit and loss  3                                    
 Forward foreign exchange contracts(1)     Derivative instrument        Fair value through profit and loss  2                                    
 Equity swap contracts                     Derivative instrument        Fair value through profit and loss  2                                    
 Onerous lease                             Other financial liabilities  Amortised cost                      N/A                                  
 
 
(1) Cash flow hedge accounting is applied to the extent that it is
achievable. 
 
(2) The fair value measurement hierarchy is only applicable for financial
instruments measured at fair value. 
 
The fair value of the Group's financial assets and liabilities held at
amortised cost approximate their carrying amount due to the short maturity of
these instruments with the exception of £12.7m (2015: £9.9m) held in
non-current other receivables relating to an interest-free loan provided to a
landlord in Korea. At 30 September 2016 the discounted fair value of the loan
is £16.5m (2015: £9.9m). 
 
The measurements for financial instruments carried at fair value are
categorised into different levels in the fair value hierarchy based on the
inputs to the valuation techniques used.  The different levels are defined as
follows: 
 
Level 1:  quoted prices (unadjusted) in active markets for identical assets or
liabilities that the Group can access at the measurement date. 
 
Level 2:  inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly. 
 
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 
 
17. Fair value disclosures for financial instruments (continued) 
 
Level 3:  includes unobservable inputs for the asset or liability. 
 
Observable inputs are those which are developed using market data, such as
publicly available information about actual events or transactions. The Group
has an established framework with respect to measurement of fair values,
including Level 3 fair values.  The Group regularly reviews any significant
inputs which are not derived from observable market data and considers, where
available, relevant third party information, to support the conclusion that
such valuations meet the requirements of IFRS.  The classification level in
the fair value hierarchy is also considered periodically.  Significant
valuation considerations are reported to the Audit Committee. 
 
The fair value of forward foreign exchange contracts and equity swap contracts
is based on a comparison of the contractual and market rates and, in the case
of forward foreign exchange contracts after discounting using the appropriate
yield curve, as at the balance sheet date.  All Level 2 fair value
measurements are calculated using inputs which are based on observable market
data. 
 
Further information on the calculation of deferred consideration is disclosed
in note 11. 
 
18.  Transactions with non-controlling interests 
 
During the period, the Group entered into two transactions with
non-controlling interests.  The impact of these transactions has been
presented in the financial statements of the Group in the following manner: 
 
                                 Burberry Middle East transaction  Burberry Shanghai transaction  Total   
                                 £m                                £m                             £m      
 Statement of changes in equity  44.6                              53.7                           98.3    
 Statement of cash flows         (15.1)                            (53.7)                         (68.8)  
 
 
A liability in relation to the remaining deferred consideration to be paid on
the Burberry Middle East transaction has also been recognised. Please refer to
note 11 for further details of the carrying value of the liability at 30
September 2016. 
 
Burberry Middle East LLC 
 
On 22 April 2016, the Group entered into an agreement to transfer the economic
right to the non-controlling interest in Burberry Middle East LLC to the Group
in consideration of contingent payments to be made to the minority shareholder
relating to an agreed percentage of the future revenue of Burberry Middle East
LLC and its subsidiaries, Burberry Al Kuwait General Trading Textiles and
Accessories Company WLL and Burberry Qatar WLL, over the period 2016 to 2023,
together with fixed payments of AED 120.0m (£22.6m), relating to profits of
Burberry Middle East LLC  up to 31 March 2016, to be paid over the period 2016
to 2019. 
 
In the judgement of management, the fixed payments of AED 120.0m are most
appropriately treated as part of the consideration for purchasing the
non-controlling interest in Burberry Middle East LLC. Therefore the
transaction has been accounted for as a purchase of the non-controlling
interest in Burberry Middle East LLC and its subsidiaries by the Group, for
fixed and contingent deferred consideration, with the exception of a 12%
interest in Burberry Qatar WLL which will continue to be held by another
minority shareholder. 
 
The present value of the fixed and contingent deferred consideration in total,
at the date of the transaction was estimated to be AED 236.0m (£44.6m).
Non-controlling interests with a book value of £25.5m were transferred to
retained earnings. Deferred consideration of AED 80.7m (£15.1m) was
subsequently settled in the period. 
 
Burberry (Shanghai) Trading Co., Ltd 
 
On 1 August 2016, the Group acquired the remaining 15% economic interest in
its business in China, which was held by Sparkle Roll Holdings Ltd, a
non-Group company, for consideration of CNY 470.9m (£53.7m), through the
exercise of a call option held by the Group. The transaction has been
accounted for as a purchase of the 15% non-controlling interest in Burberry
(Shanghai) Trading Co for consideration of £53.7m.  Non-controlling interests
with a book value of £27.7m were transferred to retained earnings. 
 
The Group had also granted a put option over the same 15% economic interest to
Sparkle Roll Holdings Ltd which was exercisable after 1 September 2020. The
net present value of the expected put option payment was held as a non-current
financial liability. Upon exercise of the call option by the Group, the put
option expired and as a result, the value of the liability at the date of
exercise, being £51.0m, was transferred directly to retained earnings. 
 
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 
 
19. Contingent Liabilities 
 
In a number of jurisdictions the Group is subject to claims against it and to
tax audits. These typically relate to valued added taxes, sales taxes, customs
duties, corporate taxes, transfer pricing, payroll taxes, various contractual
claims and other matters.  Included in these claims is a dispute with the
Spanish tax authorities regarding the tax treatment of interest paid during
the year ended 31 March 2005 arising in respect of debt that was put in place
after the Group had taken specialist external advice.  The Group is looking to
resolve this dispute by all reasonable means. Where appropriate, the estimated
cost of known obligations have been provided in these financial statements in
accordance with the Group's accounting policies but these matters are
inherently difficult to quantify.  While changes to the amounts that may be
payable could be material to the results or cash flows of the Group in the
period in which they are recognised the Group does not currently expect the
outcome of these contingent liabilities to have a material effect on the
Group's financial condition. 
 
STATEMENT OF DIRECTORS' RESPONSIBILITIES 
 
The directors' confirm that the condensed consolidated interim financial
statements have been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the European Union
and that the Interim Management Report and condensed consolidated interim
financial statements include a fair review of the information required by
Disclosure and Transparency Rules 4.2.7 and 4.2.8, namely: 
 
-     an indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed
consolidated interim financial statements, and a description of the principal
risks and uncertainties for the remaining six months of the financial year;
and 
 
-     material related party transactions in the first six months of the
financial year and any material changes in the related party transactions
described in the last Annual Report. 
 
The directors of Burberry Group plc are listed in the Burberry Group plc
Annual Report for the year ended 31 March 2016. 
 
A list of current directors is maintained on the Burberry Group plc website:
www.burberryplc.com. 
 
By order of the Board 
 
John Smith
Chief Operating Officer
8 November 2016 
 
Carol Fairweather
Chief Financial Officer
8 November 2016 
 
INDEPENDENT REVIEW REPORT TO BURBERRY GROUP PLC 
 
Report on the condensed consolidated interim financial statements 
 
Our conclusion 
 
We have reviewed Burberry Group plc's condensed consolidated interim financial
statements (the "interim financial statements") in the interim report of
Burberry Group plc for the 6 month period ended 30 September 2016. Based on
our review, nothing has come to our attention that causes us to believe that
the interim financial statements are not prepared, in all material respects,
in accordance with International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and the Disclosure Rules and
Transparency Rules of the United Kingdom's Financial Conduct Authority. 
 
What we have reviewed 
 
The interim financial statements comprise: 
 
-     the Condensed Group Balance Sheet as at 30 September 2016; 
 
-     the Condensed Group Income Statement and Statement of Comprehensive
Income for the period then ended; 
 
-     the Condensed Group Statement of Cash Flows for the period then ended; 
 
-     the Condensed Group Statement of Changes in Equity  for the period then
ended; and 
 
-     the explanatory notes to the interim financial statements. 
 
The interim financial statements included in the interim report have been
prepared in accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the Disclosure
Rules and Transparency Rules of the United Kingdom's Financial Conduct
Authority. 
 
As disclosed in note 2 to the interim financial statements, the financial
reporting framework that has been applied in the preparation of the full
annual financial statements of the Group is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union. 
 
Responsibilities for the condensed consolidated interim financial statements
and the review 
 
Our responsibilities and those of the directors 
 
The interim report, including the interim financial statements, is the
responsibility of, and has been approved by, the directors. The directors are
responsible for preparing the interim report in accordance with the Disclosure
Rules and Transparency Rules of the United Kingdom's Financial Conduct
Authority. 
 
Our responsibility is to express a conclusion on the interim financial
statements in the interim report based on our review. This report, including
the conclusion, has been prepared for and only for the company for the purpose
of complying with the Disclosure Rules and Transparency Rules of the United
Kingdom's Financial Conduct Authority and for no other purpose.  We do not, in
giving this conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing. 
 
What a review of interim financial statements involves 
 
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. 
 
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK and Ireland) and, consequently,
does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do
not express an audit opinion. 
 
We have read the other information contained in the interim report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements. 
 
PricewaterhouseCoopers LLP
Chartered Accountants
8 November 2016
London 
 
INDEPENDENT REVIEW REPORT TO BURBERRY GROUP PLC 
 
Notes: 
 
(a)           The maintenance and integrity of the Burberry Group plc website
is the responsibility of the directors; the work carried out by the auditors
does not involve consideration of these matters and, accordingly, the auditors
accept no responsibility for any changes that may have occurred to the interim
financial statements since they were initially presented on the website. 
 
(b)           Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other
jurisdictions. 
 
SHAREHOLDER INFORMATION 
 
General shareholder enquiries 
 
Enquiries relating to shareholding, such as the transfer of shares, change of
name or address, lost share certificates or dividend cheques, should be
referred to the Company's Registrar, Equiniti, using the details below: 
 
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA 
 
Telephone: 0871 384 2839. Lines are open 8.30am to 5.30pm, Monday to Friday. 
 
Please dial +44 121 415 7047 if calling from outside the UK or see
help.shareview.co.uk for additional information. 
 
American Depositary Receipts 
 
Burberry has a sponsored Level 1 American Depositary Receipt ('ADR') programme
to enable US investors to purchase ADRs in US Dollars. Each ADR represents one
Burberry ordinary share. 
 
For queries relating to ADRs in Burberry, please use the following contact
details: 
 
BNY Mellon Shareowner Services 
 
P.O. BOX 30170 
 
College Station, TX 77842-3170 
 
Telephone: Toll free within the US: +1 888 269 2377 
 
Telephone: International: +1 201 680 6825 
 
Email enquiries: shrrelations@cpushareownerservices.com 
 
Website: www.mybnymdr.com 
 
Dividends 
 
The interim dividend of 10.5p per share will be paid on 27 January 2017 to
shareholders on the register at the close of business on 23 December 2016. 
 
The ADR local payment date will be approximately five business days after the
proposed dividend payment date for ordinary shareholders. 
 
Dividends can be paid by BACS directly into a UK bank account, with the tax
voucher being sent to the shareholder's address. This is the easiest way for
shareholders to receive dividend payments and avoids the risk of lost or
out-of-date cheques. A dividend mandate form is available from Equiniti or at
www.shareview.co.uk. 
 
If you are a UK taxpayer, please note that from 6 April 2016 the Dividend Tax
Credit has been replaced by a tax-free Dividend Allowance of £5,000. Any
dividends received above this amount will be subject to taxation. Dividends
paid on shares held within pensions and Individual Savings Accounts ('ISAs')
will continue to be tax-free. Further information can be found at
www.gov.uk/tax-on-dividends. 
 
Dividends payable in foreign currencies 
 
Equiniti are able to pay dividends to shareholder bank accounts in over 30
currencies worldwide through the Overseas Payment Service. An administrative
fee will be deducted from each dividend payment. Further details can be
obtained from Equiniti or online at www.shareview.co.uk. 
 
Dividend Reinvestment Plan 
 
The Company's Dividend Reinvestment Plan ('DRIP') enables shareholders to use
their dividends to buy further Burberry shares. Full details of the DRIP can
be obtained from Equiniti. If shareholders would like their interim dividend
and future dividends to qualify for the DRIP, completed application forms must
be returned to Equiniti by 6 January 2017. 
 
Duplicate accounts 
 
Shareholders who have more than one account due to inconsistency in account
details may avoid duplicate mailings by contacting Equiniti and requesting the
amalgamation of their share accounts. 
 
Electronic Communication 
 
Shareholders may at any time choose to receive all shareholder documentation
in electronic form via the internet, rather than in paper format. Shareholders
who decide to register for this option will receive an email each time a
shareholder document is published on the internet. Shareholders who wish to
receive documentation in electronic form should register online at
www.shareview.co.uk. 
 
Equiniti offers a range of shareholder information and online at
www.shareview.co.uk. A textphone facility for those with hearing difficulties
is available by calling: 0371 384 2255. Lines are open 8.30am to 5.30pm,
Monday to Friday. Please call +44 121 415 7047 if calling from outside the
UK. 
 
Financial calendar 
 
 Interim results announcement      9 November 2016   
 Dividend record date              23 December 2016  
 Third quarter trading update      18 January 2017   
 Dividend payment date             27 January 2017   
 Second half trading update        April 2017        
 Preliminary results announcement  May 2017          
 Annual General Meeting            July 2017         
 
 
Preliminary results announcement 
 
May 2017 
 
Annual General Meeting 
 
July 2017 
 
Registered office 
 
Burberry Group plc
Horseferry House
Horseferry Road
London
SW1P 2AW 
 
Registered in England and Wales
Registered Number 03458224 
 
www.burberryplc.com 
 
SHAREHOLDER INFORMATION 
 
Share dealing 
 
Burberry Group plc shares can be traded through most banks, building societies
or stock brokers. Equiniti offers a telephone and internet dealing service.
Terms and conditions and details of the commission charges are available on
request. 
 
For telephone dealing please telephone 03456 037 037 between 8.00am and
4.30pm, Monday to Friday, and for internet dealing visit
www.shareview.co.uk/dealing. Shareholders will need their reference number
which can be found on their share certificate. 
 
ShareGift 
 
Shareholders with a small number of shares, the value of which makes it
uneconomic to sell, may wish to consider donating their shares to charity
through ShareGift, a donation scheme operated by The Orr Mackintosh
Foundation. A ShareGift donation form can be obtained from Equiniti. Further
information is available at www.sharegift.org or by telephone on 0207 930
3737. 
 
Share price information 
 
The latest Burberry Group plc share price is available on the Company's
website at www.burberryplc.com. 
 
Unauthorised brokers (boiler room scams) 
 
Shareholders are advised to be very wary of any unsolicited advice, offers to
buy shares at a discount or offers of free company reports. These are
typically from overseas-based 'brokers' who target UK shareholders offering to
sell them what often turn out to be worthless or high-risk shares in US or UK
investments. These operations are commonly known as boiler rooms. 
 
If you receive any unsolicited investment advice, get the correct name of the
person and organisation and check that they are properly authorised by the FCA
before getting involved by visiting www.fca.org.uk/register. 
 
If you deal with an unauthorised firm, you will not be eligible to receive
payment under the Financial Services Compensation Scheme if things go wrong. 
 
If you think you have been approached by an unauthorised firm you should
contact the FCA consumer helpline on 0800 111 6768. 
 
More detailed information can be found on the FCA website at
www.fca.org.uk/consumers/protect-yourself/unauthorised-firms. 
 
Website 
 
This Interim Report and other information about Burberry Group plc, including
share price information and details of results announcements, are available at
www.burberryplc.com. 
 
This information is provided by RNS
The company news service from the London Stock Exchange