REG - Burberry Group PLC - Preliminary Results <Origin Href="QuoteRef">BRBY.L</Origin> - Part 3
15/07/2015 18:29
- Part 3: For the preceding part double click ID:nRST7103Nb
option liability over non-controlling interest 54.4 51.3
Other payables 3.7 4.4
Deferred income and non-financial accruals 59.0 51.7
Total non-current trade and other payables 117.1 107.4
Current
Trade payables 159.8 174.3
Other taxes and social security costs 61.0 66.6
Other payables 4.5 5.7
Accruals 164.0 140.1
Deferred income and non-financial accruals 16.7 13.1
Total current trade and other payables 406.0 399.8
Total trade and other payables 523.1 507.2
1 As at 31 March 2014, £18.1m was reclassified from current deferred income
and non-financial accruals to other taxes and social security costs, as this
was more reflective of the nature of these liabilities.
Included in total trade and other payables are non-financial liabilities of
£136.7m (2014: £131.4m).
Put option liability over non-controlling interest
Following the acquisition of the Burberry retail and distribution business in
China, Sparkle Roll Holdings Limited, a non-Group company, retains a 15%
economic interest in the Group's business in China. Put and call options exist
over this interest stake which are exercisable after 1 September 2015 in the
case of the call option, and after 1 September 2020 in the case of the put
option. The net present value of the put option liability has been recognised
as a non-current financial liability under IAS 39. The present value of any
payment under the call option would be different should Burberry decide to
exercise the call option.
The value of the put option liability is £54.4m at 31 March 2015 (2014:
£51.3m). The movement in the liability for the period includes a decrease of
£3.7m relating to unrealised fair value movements, as described in note 7,
offset by the impact of translation of the put liability to the Group's
presentational currency.
The key inputs applied in arriving at the value of the put option liability
are the future performance of the Group's business in China; the average
historical Burberry Group plc multiple; and the risk adjusted discount rate
for China, taking into account the risk-free rate in China. The future
performance of the business is estimated by using management's business plans
together with long-term observable growth forecasts.
The carrying value of the put option liability is dependent on assumptions
applied in determining these key inputs, and is subject to change in the event
that there is a change in any of those assumptions. The valuation is updated
at every reporting period or more often if a significant change to any input
is observed.
A 10% increase/decrease in the future performance of the Group's business in
China at the put option exercise date would result in a £5.4m
increase/decrease in the carrying value of the put option liability at 31
March 2015 (2014: £5.1m), and a corresponding £5.4m loss/gain in the profit
before taxation for the year ended 31 March 2015 (2014: £5.1m).
A 1% increase/decrease in the risk adjusted discount rate for China would
result in a £2.9m decrease/£3.0m increase in the carrying value of the put
option liability at 31 March 2015 (2014: £3.0m decrease/£3.1m increase), and a
corresponding £2.9m gain/£3.0m loss in the profit before taxation for the year
ended 31 March 2015 (2014: £3.0m gain/£3.1m loss).
Ultimately, the put option liability is subject to a contractual cap of £200m.
The undiscounted value of the put option liability at 31 March 2015 is £109.0m
(2014: £115.3m).
Notes to the Financial Information
18. Provisions for other liabilities and charges
Property obligations Restructuring costs Other Total
£m £m costs £m
£m
Balance as at 31 March 2013 25.8 1.9 5.0 32.7
Effect of foreign exchange rate changes (1.6) - - (1.6)
Created during the year 6.3 - 0.2 6.5
Discount unwind 0.2 - - 0.2
Utilised during the year (3.4) (0.4) (0.9) (4.7)
Released during the year (4.4) - (2.1) (6.5)
Balance as at 31 March 2014 22.9 1.5 2.2 26.6
Effect of foreign exchange rate changes 0.7 (0.1) (0.1) 0.5
Created during the year 12.3 - 0.6 12.9
Discount unwind 0.2 - - 0.2
Utilised during the year (5.4) (0.6) (0.2) (6.2)
Released during the year (1.3) - (0.2) (1.5)
Balance as at 31 March 2015 29.4 0.8 2.3 32.5
As at As at
31 March 31 March
2015 2014
£m £m
Analysis of total provisions:
Non-current 22.2 15.9
Current 10.3 10.7
Total 32.5 26.6
The non-current provisions relate to provisions for onerous leases and
property reinstatement costs which are expected to be utilised within 21 years
(2014: 22 years).
19. Bank overdrafts and borrowings
Included within bank overdrafts is £60.9m (2014: £140.9m) representing
balances on cash pooling arrangements in the Group.
The Group has a number of uncommitted overdraft and borrowing facilities
agreed with third-party banks. At 31 March 2015, the Group held bank
overdrafts of £4.3m (2014: £2.1m) excluding balances on cash pooling
arrangements.
On 25 November 2014, the Group entered into a £300m multi-currency revolving
credit facility with a syndicate of third-party banks. This replaced the
previous facility which would have matured on 30 June 2016. At 31 March 2015,
there were £nil outstanding drawings (2014: £nil). The facility matures in
November 2019. The agreement contains two options which allow the Group to
extend for an additional one year which are exercisable in 2015 and 2016, at
the consent of the syndicate.
The fair value of borrowings and overdrafts approximate to the carrying amount
because of the short maturity of these instruments.
Notes to the Financial Information
20. Share capital and reserves
Allotted, called up and fully paid share capital Number £m
Ordinary shares of 0.05p (2014: 0.05p) each
As at 31 March 2013 442,160,331 0.2
Allotted on exercise of options during the year 1,481,959 -
As at 31 March 2014 443,642,290 0.2
Allotted on exercise of options during the year 1,101,777 -
As at 31 March 2015 444,744,067 0.2
The Company has a general authority from shareholders, renewed at each Annual
General Meeting, to repurchase a maximum of 10% of its issued share capital.
During the year to 31 March 2015, no ordinary shares were repurchased by the
Company under this authority (2014: nil).
The cost of own shares held by the Group has been offset against retained
earnings, as the amounts paid reduce the profits available for distribution by
the Company. As at 31 March 2015 the amounts offset against this reserve are
£57.0m (2014: £69.7m). As at 31 March 2015, the ESOP trusts held 4.1m shares
(2014: 5.2m) in the Company, with a market value of £71.9m (2014: £72.5m). In
the year to 31 March 2015 the Burberry Group plc ESOP trust has waived its
entitlement to dividends of £1.2m (2014: £1.3m).
During the year profits of £5.3m (2014: £3.0m) have been transferred to
capital reserves due to statutory requirements of subsidiaries. The capital
reserve consists of non-distributable reserves and the capital redemption
reserve arising on the purchase of own shares.
Other Reserves
Capital Hedging Foreign currency translation reserve Total
reserve reserve £m £m
£m £m
Balance as at 31 March 2013 37.0 9.3 151.0 197.3
Other comprehensive income:
Cash flow hedges - gains deferred in equity - 4.2 - 4.2
Cash flow hedges - gains transferred to income - (9.2) - (9.2)
Foreign currency translation differences - - (50.9) (50.9)
Tax on other comprehensive income - 1.3 4.6 5.9
Total comprehensive expense for the year - (3.7) (46.3) (50.0)
Transfer between reserves 3.0 - - 3.0
Balance as at 31 March 2014 40.0 5.6 104.7 150.3
Other comprehensive income:
Cash flow hedges - losses deferred in equity - (6.1) - (6.1)
Cash flow hedges - gains transferred to income - (1.3) - (1.3)
Foreign currency translation differences - - 46.5 46.5
Tax on other comprehensive income - 1.5 (4.4) (2.9)
Total comprehensive expense for the year - (5.9) 42.1 36.2
Transfer between reserves 5.3 - 0.5 5.8
Balance as at 31 March 2015 45.3 (0.3) 147.3 192.3
Notes to the Financial Information
21. Capital commitments
As at As at
31 March 31 March
2015 2014
£m £m
Capital commitments contracted but not provided for:
Property, plant and equipment 36.3 26.1
Intangible assets 1.0 2.2
Total 37.3 28.3
Contracted capital commitments represent contracts entered into by the year
end and future work in respect of major capital expenditure projects where
activity has commenced by the year end relating to property, plant and
equipment
and intangible assets.
22. Related party transactions
Transactions between the Company and its subsidiaries, which are related
parties of the Company, have been eliminated on consolidation and are not
disclosed in this note. Total compensation in respect of key management, who
are defined as the Board of Directors and certain members of senior
management, is considered to be a related party transaction.
The total compensation in respect of key management for the year was as
follows:
Year to Year to
31 March 31 March
2015 2014
£m £m
Salaries and short-term benefits 17.6 15.0
Post-employment benefits 0.1 0.2
Share based compensation 9.5 3.0
Total 27.2 18.2
There were no other material related party transactions in the period.
23. Contingent Liabilities
In a number of jurisdictions the Group is subject to tax audits and claims
against it covering, inter alia, valued added taxes, sales taxes, customs
duties, corporate taxes and payroll taxes. 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.
This information is provided by RNS
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