TIDMBRBY
RNS Number : 7983Z
Burberry Group PLC
18 May 2023
18 May 2023
BURBERRY GROUP PLC
PRELIMINARY RESULTS FOR 52 WEEKSED 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 53 weeks YoY % change YoY % change
ended ended 52 vs 53-week 52 vs 52-week
GBP million 1 April 2 April Reported CER
2023 2022 FX
--------- ---------
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 GBP400m 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 andrew.roberts@burberry.com
Engagement
----------------- ------------------------------ -----------------------------
-- 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 ww w.burberryplc.com and can also be accessed live
via a listen only dial-in facility, click here 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
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 GBP4bn at CER* and a
longer-term ambition to reach GBP5bn 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
-- GBP4bn sales at FY22 CER in the medium-term
-- Based on 21 April 2023 spot rates we expect a currency
headwind of c.GBP70m on revenue and c.GBP40m on adjusted operating
profit in FY24
SUMMARY INCOME STATEMENT
Period ended 52 weeks 53 weeks YoY % change YoY % change
GBP million ended ended 52 vs 53-week 52 vs 52-week
1 April 2 April Reported CER
2023 2022 FX
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 GBP2m (FY22: GBP1m)
FINANCIAL PERFORMANCE
Revenue by channel
52 weeks 53 weeks YoY % change YoY % change
ended ended 52 vs 53-week 52 vs 52-week
Period ended 1 April 2 April Reported CER
GBP million 2023 2022 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 53 weeks YoY % change YoY % change
GBP million ended ended 52 vs 53-week 52 vs 52-week
1 April 2 April 2022 Reported FX CER
2023
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 GBP634m including a GBP78m FX tailwind in FY23
ADJUSTING ITEMS(*)
Adjusting items were a net credit of GBP21m (FY22: GBP19m net
credit).
Period ended 52 weeks ended 53 weeks ended
GBP 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 GBP1m credit (FY22: GBP16m credit) that has been
recognised through COGS
The key adjusting items are as follows:
-- Total credit of GBP22m from COVID-19 related adjustments with
a GBP1m inventory provision reversal that has now completed, GBP13m
of rent concessions, GBP2m of Government grants outside of the UK,
and GBP6m reversal of the store impairment provision
-- GBP16m of restructuring costs
-- Net GBP19m profit on the sale of a Boston, USA property
ADJUSTED PROFIT BEFORE TAX*
After an adjusted net finance charge of GBP21m (FY22: GBP31m),
adjusted profit before tax was GBP613m (FY22: GBP492m).
*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
GBP 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 GBP393m in the year (FY22: GBP340m).
The major components were:
-- Cash generated from operating activities increased to GBP912m from GBP909m
o A working capital outflow of GBP76m (FY22: GBP54m inflow)
-- Capital expenditure of GBP179m (FY22: GBP161m)
-- Tax cash of GBP140m, falling GBP40m compared to the prior
year which included one-off payments
Cash net of overdrafts on 1 April 2023 was GBP961m, compared to
GBP1,177m on 2 April 2022. On 1 April 2023 borrowings were GBP298m
from the bond issue leaving cash net of overdrafts and borrowings
of GBP663m (2 April 2022: GBP879m). With lease liabilities of
GBP1,123m, net debt in the period was GBP460m (2 April 2022:
GBP179m). 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
GBP 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
.
APPIX
Detailed guidance for FY24
Item Financial impact
Impact of retail Space is expected to be broadly stable in FY24.
space on revenues
--------------------------------------------------------
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 GBP200m 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.GBP70m headwind on revenue and c.GBP40m 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 GBP400m share buyback to be completed
within FY24.
--------------------------------------------------------
Note: Guidance based on CER at FY23 rates
Retail/wholesale revenue by destination*
Period ended 52 weeks 53 weeks % change
ended 1 ended 2
April April
GBP million 2023 2022 52 vs 53-week 52 vs 52-week
Reported CER
FX
---------------------------- --------- --------- -------------- --------------
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 % change
ended 1 ended 2
April April
GBP million 2023 2022 52 vs 53-week 52 vs 52-week
Reported CER
FX
----------------------- ----------- ------------ ---------------- --------------
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
At 1 April 2023 stores
------------------- --------- ------------ --------- ----------
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 % change % change
Period ended ended 1 April ended 2 52 vs 53-week 52 vs 52-week
GBP millions 2023 April Reported CER
2022 FX
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
GBP1= 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 53 weeks % change % change
GBP million ended ended 52 vs 53-week 52 vs 52-week
1 April 2 April Reported CER
2023 2022 FX
Adjusted profit before
tax 613 492 25 11
Adjusting items*
COVID-19 related items 22 32
Restructuring costs (16) (11)
Profit on sale of 19 -
property
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 This measure removes the Results at reported rates
Exchange effect of changes in exchange
Rates (CER) rates and the 53(rd) 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 The year-on-year change Retail Revenue:
sales in sales from stores trading Period ended 52 weeks 53 weeks
over equivalent time periods YoY% ended 1 ended 2
and measured at constant April April
foreign exchange rates. 2023 2022
It also includes online ---------------- --------- ---------
sales. This measure is Comparable
used to strip out the sales 7% 18%
impact of permanent store Change in
openings and closings, space (1%) 2%
or those closures relating ---------------- --------- ---------
to refurbishments, allowing CER retail 6% 20%
a comparison of equivalent ---------------- --------- ---------
store performance against 53(rd) week (2%) 2%
the prior period. The FX 6% (3%)
measurement of comparable ---------------- --------- ---------
sales has not excluded Retail revenue 10% 19%
stores temporarily closed ---------------- --------- ---------
as a result of the COVID-19
outbreak.
------------------------------- ----------------------------------------
Adjusted Adjusted profit measures Reported Profit:
Profit are presented to provide A reconciliation of reported
additional consideration profit before tax to adjusted
of the underlying performance profit before tax and the Group's
of the Group's ongoing accounting policy for adjusted
business. These measures profit before tax are set out
remove the impact of those in the financial statements.
items which should be
excluded to provide a
consistent and comparable
view of performance.
------------------------------- ----------------------------------------
Free Cash Flow Free cash flow is defined as net cash Net cash generated from operating activities:
generated from operating activities less Period ended 52 weeks 53 weeks
capital expenditure GBPm ended ended
plus cash inflows from disposal of fixed 1 April 2 April
assets and including cash outflows for 2023 2022
lease principal -------------------- --------- ---------
payments and other lease related items. 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 Net cash generated from operating
flow pre-tax/adjusted profit before tax. activities:
It provides --------------------------------------------
a measure of the Group's effectiveness Period ended 52 weeks 53 weeks
in converting its profit into cash. GBPm ended ended
1 April 2023 2 April
2022
----------------- -------------- ---------
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 Cash net of overdrafts:
liability recognised on the balance Period ended As at As at
sheet plus borrowings GBPm 1 April 2 April
less cash net of overdrafts. 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 Reconciliation from operating profit to adjusted EBITDA:
profit, excluding adjusting operating Period ended 52 weeks 53 weeks
items, depreciation GBPm ended ended
of property, plant and equipment, 1 April 2 April
depreciation of right of use assets and 2023 2022
amortisation of ---------------------- --------- ---------
intangible assets. Any depreciation or Operating profit 657 543
amortisation included in adjusting Adjusting operating
operating items items (23) (20)
are not double counted. Adjusted EBITDA Amortisation
is shown for the calculation of Net of intangible
Debt/EBITDA for assets 37 39
our leverage ratios. Depreciation
of property,
plant and equipment 95 86
Depreciation
of right-of-use
assets* 209 188
---------------------- --------- ---------
Adjusted EBITDA 975 836
*Excludes GBP3m depreciation on
right-of-use assets included in
adjusting items
----------------------------------------- ---------------------------------------------------------
Group Income Statement
52 weeks 53 weeks
to to
1 April 2 April
2023 2022
Note GBPm GBPm
--------------------------------------------------- ---- -------- --------
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
--------------------------------------------------- ---- -------- --------
GBPm
--------------------------------------------------- ---- -------- --------
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
52 weeks 53 weeks
to to
1 April 2 April
2023 2022
Note GBPm GBPm
--------------------------------------------- ---- -------- --------
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
As at As at
1 April 2 April
2023 2022
Note GBPm GBPm
--------------------------------------------- ---- -------- --------
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
-----------------------------
Ordinary Share
share premium Other Retained Non-controlling Total
capital account reserves earnings Total interest equity
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------------- ---- -------- -------- --------- --------- ----- --------------- -------
Balance as at 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
52 weeks 53 weeks
to to
1 April 2 April
2023 2022
Note GBPm GBPm
---------------------------------------------------- ---- -------- --------
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
---------------------------------------------------- ---- -------- --------
As at As at
1 April 2 April
2023 2022
Note GBPm GBPm
-------------------------- ---- -------- --------
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 GBPm.
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 2degC 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 GBP961 million. In
addition, the Group has access to a GBP300 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 53 weeks
to to As at As at
1 April 2 April 1 April 2 April
2023 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 53 weeks 52 weeks 53 weeks 52 weeks 53 weeks
to to to to to to
1 April 2 April 1 April 2 April 1 April 2 April
2023 2022 2023 2022 2023 2022
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------- -------- -------- -------- -------- -------- --------
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 GBP3 million (last year: GBPnil)
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 GBP1 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 GBP6 million
(last year: charge of GBP6 million) relating to charges as a result
of the impact of COVID-19 and a net charge of GBP3 million (last
year: charge of GBPnil) 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 53 weeks 52 weeks 53 weeks 52 weeks 53 weeks
to to to to to to
1 April 2 April 1 April 2 April 1 April 2 April
2023 2022 2023 2022 2023 2022
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- -------- -------- -------- -------- -------- --------
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.
52 weeks 53 weeks
to to
1 April 2 April
2023 2022
Revenue by product division GBPm GBPm
---------------------------- -------- --------
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
---------------------------- -------- --------
52 weeks 53 weeks
to to
1 April 2 April
2023 2022
Revenue by destination GBPm GBPm
----------------------- -------- --------
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
GBP257 million for the 52 weeks to 1 April 2023 (last year: GBP210
million).
Revenue derived from external customers in foreign countries
totalled GBP2,837 million for the 52 weeks to 1 April 2023 (last
year: GBP2,616 million). This amount includes GBP661 million of
external revenues derived from customers in the USA (last year:
GBP626 million) and GBP683 million of external revenues derived
from customers in Mainland China (last year: GBP765 million).
The total of non-current assets, other than financial
instruments, and deferred tax assets located in the UK is GBP485
million (last year: GBP439 million). The remaining GBP1,094 million
of non-current assets are located in other countries (last year:
GBP1,005 million), with GBP318 million located in the US (last
year: GBP263 million) and GBP235 million located in Mainland China
(last year: GBP214 million).
5. Net operating expenses
52 weeks 53 weeks
to to
1 April 2 April
2023 20221
Note GBPm GBPm
------------------------------- ---- -------- --------
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 GBP8 million
with an offsetting increase of GBP2 million in selling and
distribution costs and decrease of GBP10 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
52 weeks 53 weeks
to to
1 April 2 April
2023 2022
Note GBPm GBPm
--------------------------------------------------- ---- -------- --------
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
GBP3 million (last year: GBPnil) 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 GBP19 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 GBP1 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 GBP6 million
(last year: charge of GBP6 million) relating to charges as a result
of the impact of COVID-19 and a net charge of GBP3 million (last
year: charge of GBPnil) 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 GBP10 million (last year: GBP10 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 GBP1 million relating to
charges as a result of the impact of COVID-19, which was presented
as an adjusting item (refer to note 7).
52 weeks 53 weeks
to to
1 April 2 April
2023 2022
Note GBPm GBPm
-------------------------------------------------- ---- -------- --------
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
-------------------------------------------------- ---- -------- --------
52 weeks 53 weeks
to to
1 April 2 April
2023 2022
Note GBPm GBPm
----------------------------------------------- ---- -------- --------
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 53 weeks
to to
1 April 2 April
2023 2022
GBPm GBPm
------------------------------------------- -------- --------
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 GBP6 million recorded (last year:
charge of GBP5 million). A related tax charge of GBP1 million (last
year: credit of GBP1 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 GBP1 million (last year: GBP16 million) have been
recorded and presented as an adjusting item. No related tax charge
(last year: GBP4 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 GBP1 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 GBP13 million
(last year: GBP18 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 GBP3 million (last year: GBP4 million) has also been recognised
in the current year.
COVID-19-related grant income
The Group has recorded grant income of GBP2 million (last year:
GBP2 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 GBP1 million (last year: GBP1 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 GBP22
million resulting in a net gain on disposal of GBP19 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 GBP5 million was also recognised
in the year.
Restructuring costs
Restructuring costs of GBP16 million (last year: GBP11 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 GBP4 million (last year: GBP3 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 GBP2 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: GBP1 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
52 weeks 53 weeks
to to
1 April 2 April
2023 2022
Note GBPm GBPm
------------------------------------------------- ---- -------- --------
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 GBP31 million
excludes GBP2 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 53 weeks
to to
1 April 2 April
2023 2022
GBPm GBPm
-------------------------------------------------- -------- --------
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 53 weeks
to to
1 April 2 April
2023 2022
GBPm GBPm
--------------------------------------------------------- -------- --------
Current tax
Recognised in other comprehensive income:
Current tax charge on exchange differences on loans
(foreign currency translation reserve) 1 -
Current tax charge on net investment hedges deferred
in equity (hedging reserve) - 1
--------------------------------------------------------- -------- --------
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 reserve) - (1)
--------------------------------------------------------- -------- --------
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 53 weeks
to to
1 April 2 April
2023 2022
GBPm GBPm
----------------------------------------------------------- -------- --------
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 53 weeks
to to
1 April 2 April
2023 2022
GBPm GBPm
--------------------------------------- -------- --------
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 GBP86
million in respect of uncertain tax positions (increasing from
GBP64 million in 2022), being provisions of GBP103 million net of
expected reimbursements of GBP17 million (last year: GBP69 million
net of expected reimbursements of GBP5 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 GBP32 million, to an increase of GBP27 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 EUR750 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 53 weeks
to to
1 April 2 April
2023 2022
GBPm GBPm
-------------------------------------------------- -------- --------
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 53 weeks
to 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 53 weeks
to to
1 April 2 April
2023 2022
GBPm GBPm
----------------------------------------------------- -------- --------
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 GBP167 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
Intangible
Trademarks, assets
licences in the
and other course
intangible Computer of
Goodwill assets software construction Total
Cost GBPm GBPm GBPm GBPm GBPm
---------------------------------------- -------- ----------- --------- ------------- -----
As at 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
GBPm GBPm
------------------------------- -------- --------
Mainland China 50 50
Korea 26 26
Retail and Wholesale segment 1 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 GBP14 million (last year: GBP14
million) consists of amounts relating to seven cash generating
units, none of which have goodwill balances individually exceeding
GBP7 million as at 1 April 2023 (last year: GBP7 million).
13. Property, plant and equipment
Fixtures,
Freehold land fittings and Assets in the course of
and buildings Leasehold improvements equipment construction Total
Cost GBPm GBPm GBPm GBPm GBPm
---------------------------- -------------- ---------------------- ------------- -------------------------- -----
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 GBP6 million
(last year: net charge of GBP5 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 GBP1
million recorded against property, plant and equipment and a net
charge of GBP6 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 GBP7 million (last year: GBP3 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
GBP2 million (last year: GBP2 million) was recorded against
property, plant and equipment and a net charge of GBP5 million
(last year: charge of GBP1 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 GBP1 million (last year: GBP7
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 GBP10 million
increase/less than GBP10 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 GBP19 million.
14. Right-of-use assets
Property
right-
of-use
assets
Net book value GBPm
------------------------------------------- --------
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 GBP1 million (last
year: GBP7 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 GBP6 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 GBP6 million)
and an impairment charge of GBP5 million relating to other trading
impacts which was recognised during the year (last year: GBP1
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 GBP17 million (last year: GBP26
million).
A net impairment charge of GBP3 million (last year: GBPnil) 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, GBP2 million (last year: GBP7 million).
15. Trade and other receivables
As at As at
1 April 2 April
2023 2022
GBPm GBPm
---------------------------------------------- -------- --------
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 GBP98 million (last year: GBP98 million).
16. Inventories
As at As at
1 April 2 April
2023 2022
GBPm GBPm
------------------ -------- --------
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
GBPm GBPm
------------------------- -------- --------
Total inventories, gross 504 509
Provisions (57) (83)
------------------------- -------- --------
Total inventories, net 447 426
------------------------- -------- --------
Inventory provisions of GBP57 million (last year: GBP83 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 GBP874 million (last year: GBP786
million).
During the 52 weeks to 1 April 2023, GBP1 million (last year:
GBP16 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
GBP9 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 GBP1
million (last year: release of GBP1 million). The total reversal of
inventory provisions during the current year, which is included in
the net movement, was GBP22 million (last year: reversal of GBP43
million). Both these amounts include the reversal of GBP1 million
(last year: GBP16 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
GBPm GBPm
----------------------------------------------------- -------- --------
Cash and cash equivalents held at amortised cost
Cash at bank and in hand 152 124
Short-term deposits 77 73
----------------------------------------------------- -------- --------
229 197
Cash and cash equivalents held at fair value through
profit and loss
Short-term deposits 797 1,025
----------------------------------------------------- -------- --------
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
GBPm GBPm
------------------------------------------- -------- --------
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 GBP6 million were made in relation to Burberry Middle
East LLC (last year: GBP3 million) and no payment was made to the
previous owners of Burberry Manifattura S.R.L (last year: GBP9
million).
Included in total trade and other payables are non-financial
liabilities of GBP153 million (last year: GBP168 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
GBPm GBPm
------------------------------- -------- --------
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 53 weeks
to to
1 April 2 April
2023 2022
GBPm GBPm
------------------------------------------------------------- -------- --------
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 the year 10 11
------------------------------------------------------------- -------- --------
19. Lease liabilities
Property
lease liabilities
GBPm
---------------------------------------- ------------------
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
GBPm GBPm
------------------------------------- -------- --------
Analysis of total lease liabilities:
Non-current 902 849
Current 221 209
------------------------------------- -------- --------
Total 1,123 1,058
------------------------------------- -------- --------
1. The amount paid of GBP243 million (last year: GBP229 million)
includes GBP210 million (last year: GBP202 million) arising as a
result of a financing cash outflow and GBP33 million (last year:
GBP27 million) arising as a result of an operating cash
outflow.
2. Remeasurements include COVID-19-related rent forgiveness of
GBP13 million (last year: GBP18 million) and other remeasurements
of GBP111 million (last year: GBP20 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 GBP399 million (last year: GBP423 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
GBP130 million (last year: GBP157 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 GBP38 million (last year: GBP35 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 GBP396 million (last year: GBP376 million). This
relates to payments of GBP210 million on lease principal (last
year: GBP202 million), GBP33 million on lease interest (last year:
GBP27 million), GBP122 million on variable lease payments (last
year: GBP124 million), and GBP31 million on other lease payments
principally relating to short-term leases and leases in holdover
(last year: GBP23 million).
20. Provisions for other liabilities and charges
Property
obligations Other Total
GBPm GBPm GBPm
---------------------------------------- ------------ ----- -----
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 GBP3
million (last year: GBP8 million), relating to additional property
reinstatement costs. The net credit in the year for other
provisions of GBP3 million (last year: net charge of GBP3 million)
includes charges of GBP5 million (last year: GBP8 million) relating
to expected future outflows for property disputes, employee matters
and tax compliance, and reversals of GBP8 million (last year: GBP5
million) relating to employee matters and other property
matters.
As at As at
1 April 2 April
2023 2022
GBPm GBPm
------------------------------ -------- --------
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 GBP65 million (last year:
GBP45 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 GBP300 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 GBP298 million (last
year: GBP298 million); all movements on the bond are non-cash. The
fair value of the bond at 1 April 2023 is GBP273 million (last
year: GBP285 million).
On 26 July 2021, the Group entered into a GBP300 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 GBPm
----------------------------------------------------- ------------ ----
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 GBP400 million of its
own shares, excluding stamp duty and fees, through two share
buyback programmes of GBP200 million each (last year: one share
buyback programme of GBP150 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 GBP157 million
(last year: GBP140 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 GBP42 million (last year: GBP11 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 GBP60 million (last year: GBP10
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.
Hedging reserves
----------------------------------- -------- ------------------------- ------------ -----
Foreign
currency
Capital Cash flow Net investment translation
reserve hedges hedge reserve Total
GBPm GBPm GBPm GBPm GBPm
----------------------------------- -------- --------- -------------- ------------ -----
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 GBP5 million net of
tax (last year: GBP5 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
GBPm GBPm
----------------------------------------------------- -------- --------
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 EUR21 million
(GBP18 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 53 weeks
to to
1 April 2 April
2023 2022
GBPm GBPm
-------------------------------------------------- -------- --------
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 GBP2
million (last year: GBP1 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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END
FR BIGDUUXBDGXR
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May 18, 2023 02:00 ET (06:00 GMT)
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