TIDMBRBY
RNS Number : 0217S
Burberry Group PLC
11 November 2021
11 November 2021
Burberry Group plc
Interim results for 26 weeks ended 25 September 2021
Strong start to growth and acceleration phase
"We have made strong progress in the half. Full-price sales are
growing at a double-digit percentage, driving margin expansion and
strong free cash generation. We are seeing an acceleration in
performance in countries less impacted by travel restrictions and
we remain confident of achieving our medium-term goals. I would
like to thank Marco Gobbetti for his vision and leadership of
Burberry's transformation. We are very excited that Jonathan
Akeroyd is joining as our new CEO in April to build on the strong
foundations to accelerate growth and deliver further value for our
shareholders." - Gerry Murphy, Chair
-- H1 FY22 revenues back at pre COVID-19 levels (CER) with
adjusted operating profit ahead vs LLY*
o Within comparable store sales growth of 1% vs LLY*, full-price
gained 18%
o Full-price performance driving gross margin and adjusted
operating margin increases vs LLY*
-- Americas, Mainland China and South Korea delivered strong
double-digit growth vs LLY* while other regions were under pressure
from reduced tourist levels
-- Core product categories: leather saw double-digit growth in
full-price comparable sales vs LLY with outerwear strengthening in
the period
-- New store concept driving higher-spending customer
recruitment. We now have 15 stores in the new format with around 50
new concept stores planned globally by end FY22
-- Digital performing well with full-price sales almost doubling vs LLY*
-- Set industry-leading commitments around climate including
pledge to be Climate Positive by 2040 and support global
conservation efforts
-- Strong cash generation with cash conversion over 100%.
Interim dividend reinstated at 11.6p, 3% ahead of FY20 levels and
recommenced the share buyback with GBP150m planned
Period end 25 Sept 26 Sept % change
GBP million 2021 2020 Reported CER*
FX
--------------------------------- -------- -------- --------- -----
Revenue 1,213 878 +38% +45%
Retail comparable store sales
vs LY** +37% (25%)
Retail full-price comparable
store sales vs LLY** +18%
Adjusted operating profit** 196 51 3.8x 4.2x
Adjusted operating profit
margin** 16.2% 5.8%
Adjusted diluted EPS (pence)** 33.5 4.6 7.3x 8.1x
Reported*** operating profit 207 88 2.4x
Reported operating profit
margin 17.1% 10.0%
Reported diluted EPS (pence) 35.7p 12.2p 2.9x
Free cash flow** 104 (45)
Dividend (pence) 11.6p 0.0
--------------------------------- -------- -------- --------- -----
*LLY is compared with equivalent period in FY20 results at
CER
** See page 17 for definitions of alternative performance
measures
*** Reported refers to statutory measures directly from the
financial statements
Outlook
-- Maintaining our medium-term guidance for high single-digit
top line growth and meaningful margin accretion* and confirm that
we are comfortable with current year market expectations
*Guidance is quoted at constant exchange rates (CER) with the
base year in FY20
The financial information contained herein is unaudited.
All metrics and commentary in the Interim Review exclude
adjusting items unless stated otherwise.
Constant exchange rates (CER) removes the effect of changes in
exchange rates compared to the prior period. This takes into
account 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.
The following alternative performance measures are presented in
this announcement: CER, comparable sales, adjusted profit measures,
free cash flow, cash conversion, net debt and adjusted EBITDA. The
definitions of these alternative performance measures are set out
in the Appendix on page 17.
Certain financial data within this announcement have been
rounded.
Enquiries
Investors and analysts 020 3367 4458
Julian Easthope VP, Investor Relations julian.easthope@burberry.com
Media 020 3367 3764
Andrew Roberts VP, Corporate Relations andrew.roberts@burberry.com
-- There will be a live webcast presentation today at 9.30am (UK
time) for investors and analysts
-- The presentation can be viewed live on the Burberry website www.burberryplc.com
-- The supporting slides and an indexed replay will be available
on the website later in the day
-- Burberry will update on third quarter trading on 19 January 2022
Certain statements made in this announcement are forward-looking
statements. Such statements are based on current expectations and
are subject to a number of risks and uncertainties that could cause
actual results to differ materially from any expected future
results in forward-looking statements. Burberry Group plc
undertakes no obligation to update these forward-looking statements
and will not publicly release any revisions it may make to these
forward-looking statements that may result from events or
circumstances arising after the date of this document. Nothing in
this announcement should be construed as a profit forecast. All
persons, wherever located, should consult any additional
disclosures that Burberry Group plc may make in any regulatory
announcements or documents which it publishes. All persons,
wherever located, should take note of these disclosures. This
announcement does not constitute an invitation to underwrite,
subscribe for or otherwise acquire or dispose of any Burberry Group
plc shares, in the UK, or in the US, or under the US Securities Act
1933 or in any other jurisdiction.
Burberry is listed on the London Stock Exchange (BRBY.L) and is
a constituent of the FTSE 100 index. ADR symbol OTC:BURBY.
BURBERRY, the Equestrian Knight Device, the Burberry Check, and
the Thomas Burberry Monogram and Print are trademarks belonging to
Burberry.
www.burberryplc.com
Twitter: @BurberryCorp
LinkedIn: Burberry
GROUP H1 FY22 FINANCIAL HIGHLIGHTS
Revenue
-- Revenue GBP1,213m +45% CER, +38% reported
-- Retail comparable store sales +37% (Q1: +90%; Q2: +6%)
Adjusted profit
-- Adjusted operating profit GBP196m, 4.2x CER, 3.8x reported
-- Adjusted operating profit includes a GBP5m profit from the disposal of a property
-- Gross margin increased +130bps CER (+120bps reported). In
line with our elevation strategy, gross margin benefited from a
higher mix of full-price sales and product elevation driving higher
average prices
-- Operating expenses impacted by higher investment and cost normalisation as guided
-- Adjusted diluted EPS 33.5p, up 7.3x
Reported profit measures
-- Reported operating profit GBP207m, up 2.4x at reported rates
against H1 FY21 after adjusting items credit of GBP11m (H1 FY21:
GBP37m credit) largely due to COVID-19 related rent concessions
-- Diluted EPS 35.7p, 2.9x reported
Cash measures:
-- Free cash inflow of GBP104m (H1 FY21: GBP45m outflow) with cash conversion over 100%
-- Cash net of overdrafts and borrowings of GBP846m at 25
September 2021 (27 March 2021: GBP919m). The GBP73m cash outflow
reflects the higher than usual dividend payment in the half of
GBP172m, being a full year dividend paid in respect of the prior
year.
-- Interim dividend of 11.6p declared (H1 FY21: nil)
-- Share buyback of GBP150m to be completed in H2 2022
Summary income statement
Period ended 25 Sept 26 Sept % change % change
GBP million 2021 2020 Reported CER
FX
Revenue 1,213 878 38 45
Cost of sales* (372) (280)
-------------------------- -------- -------- ---------- ---------
Gross profit* 841 598 41 48
Gross margin %* 69.3% 68.1% +120bps +130bps
Operating expenses* (645) (547) 18 22
Opex as a % of sales* 53.2% 62.3%
-------------------------- -------- -------- ---------- ---------
Adjusted operating
profit* 196 51 3.8x 4.2x
Adjusted operating
margin %* 16.2% 5.8%
Adjusting operating
items 11 37
-------------------------- -------- -------- ---------- ---------
Operating profit 207 88 2.4x
Operating margin 17.1% 10.0%
Net finance (charge)(**) (16) (15)
-------------------------- -------- -------- ---------- ---------
Profit before taxation 191 73
Taxation (46) (25)
Attributable profit 145 48
Adjusted profit before
taxation* 180 36
Adjusted diluted EPS
(pence)* 33.5p 4.6p
Reported diluted EPS
(pence) 35.7p 12.2p
Weighted average number
of diluted ordinary
shares (millions) 406.3 404.7
Adjusted EBITDA* 341 180 1.9x
-------------------------- -------- -------- ---------- ---------
* Excludes adjusting items. **Includes adjusting finance charge
of nil (H1 FY21: nil).
BUSINESS AND FINANCIAL REVIEW
FY22 marks the first year of the growth and acceleration phase
of our strategy. In this chapter, our focus is on leveraging our
unique brand equity to deliver sustainable, high-quality growth,
while continuing our efforts to do well by doing right.
Despite a continuing challenging external environment, in H1
FY22 we drove a material enhancement in the quality of our revenue
streams. Our strategy to exit mainline and digital markdowns and
the deliberate tight management of our outlet business resulted in
a significant shift towards full-price sales. Within comparable
store sales growth of 1% vs LLY, full-price sales advanced 18%,
growing a double-digit percentage across Q1 and Q2. Regionally,
full-price sales almost doubled in the Americas, South Korea grew
almost 80%, and Mainland China was up over 40% even as
wide-reaching regional lockdowns and extreme weather impacted our
performance in August in particular.
The improved quality of our revenue streams has enhanced our
financial metrics, underpinning exceptional free cash conversion of
over 100% in the half and an improvement in gross margin of 130bp
at CER despite significant pressures from Brexit duties and channel
mix. We also saw an 11.2% point increase in the adjusted operating
margin CER vs LY and a 120bps increase against LLY.
Growth has been supported by strong, localised marketing
campaigns, particularly in markets less impacted by travel
restrictions. In the Americas, we launched a dedicated product
capsule designed by Peter Saville and hosted events like the
takeover of Miami's Goodtime Hotel to support our Summer Monogram
capsule. In South Korea, building on our efforts to strengthen the
brand over the last years, we signed a new brand ambassador, singer
and actor Cha Eun-woo, and introduced exciting customer activations
such as the immersive outerwear experience that went live on Jeju
Island today. In Mainland China, we drove engagement and
performance through a culturally relevant programme of activities,
including a dedicated capsule collection and campaign for Chinese
Valentine's Day, and a series of unexpected partnerships with local
Chinese artists for our summer monogram collection.
Our programme of brand activities has continued to generate
strong reach and engagement globally and we have found new ways to
excite our customers. We partnered with multiplayer game 'Blankos
Block Party' to create our first in -- game NFT and released a
limited -- edition Burberry 'Blanko' named Sharky B, plus a range
of accessories inspired by the Monogram capsule; all 750 units of
the NFT sold out within 30 seconds. For the launch of our Summer
Monogram capsule in July, we excited consumers with several
unexpected experiences, including an interactive augmented reality
brand filter on TikTok which generated 3.7bn views - an industry
and platform first.
In product, we made further progress in our core categories;
leather goods and outerwear. In leather, we continued to build
performance by strengthening our Women's handbags pillars,
delivering a programme of 70+ pop-ups for Olympia and expanding the
Lola family, as well as introducing our new shape, the Rhombi, as
part of our SS22 Runway collection. As a result, in H1 FY22,
leather delivered double-digit full-price sales growth vs LLY. In
outerwear, we have launched a dedicated campaign including a brand
film, strong storytelling on key social media platforms, including
a Tik Tok takeover, as well as activations across physical and
digital channels. We have innovated and elevated our DK fabric,
developing a new lightweight Gabardine, and applied it to more
casual styles to create a DK down, with details such as special
quilting techniques, cashmere linings and leather details.
At the same time, we continued to elevate the customer
experience. Our new store concept roll out is progressing well,
with 15 stores completed so far, and a total of around 50 new
concept stores planned globally by year end FY22. These stores are
resonating very well with our customers, attracting high-spending
clientele. We strengthened the integration between our offline and
online channels by launching regional pilots to enhance content
sharing tools for our sales associates. We enhanced product
discovery on our website by launching an 'Outerwear Hub' as part of
our outerwear campaign - a section of the Burberry.com website
dedicated to the collection. As a result, we have seen good
traction with full-price performance on our digital channels,
almost doubling our sales in H1 vs LLY and DD growth vs LY.
Guided by our purpose and values, we continued to drive positive
change for our environment, our people and our communities. We
remain on track to become carbon neutral and source 100% renewable
electricity across our own operations by the end of FY22. In June,
we pledged to become Climate Positive by 2040, setting a new
industry standard that goes beyond net zero. At COP 26 in Glasgow
this month, we announced our biodiversity strategy to protect,
restore and regenerate nature. This includes a significant
five-year investment in the LEAF Coalition, the largest ever
public-private initiative to finance the protection of tropical
forests, and a partnership with The Savory Institute to help
regenerate the world's grasslands and the livelihoods of their
inhabitants.
We continued to make strong progress against our D&I
ambition, widening the scope of our internal council, expanding
company-wide training and implementing focused action plans for
every function and region. As part of this, we hosted events and
workshops with partners, and provided resources for all colleagues
to drive allyship while celebrating key moments including Pride,
Black History Month and LGBT+ History Month. We also expanded our
strategic partnerships and are proud to be the lead sponsor of the
inaugural British Diversity Awards in March 2022. Meanwhile, our
Cultural Advisory Council of external leaders continues to help us
shape our strategy as all founding members renew their involvement
for a second term.
We also extended our support for our communities, expanding our
education programmes globally. and made a further donation to the
UNICEF COVID-19 Vaccines Appeal via the Burberry Foundation,
enabling more equitable distribution of the vaccine around the
world.
First half financial performance
-- H1 FY22 saw revenues recover back to FY20 levels at constant
exchange rates. We continue to execute on our strategy to elevate
the brand by exiting markdowns in mainline and digital stores
resulting in a mid single-digit headwind to the 1% comparable store
sales growth achieved in H1 FY21 against LLY and 37% vs LY. Total
sales increased 45% at CER and 38% reported to GBP1,213m. This was
driven by strong mainline and digital full-price sales - up 49%
against LY and in line with our plan of enhancing the quality of
sales in the business.
FY22 vs LY FY22 vs LLY
Q1 Q2 H1 Q1 Q2 H1
----- ---- ---- ---- ----- ----
Comparable store sales
growth 90% 6% 37% 1% flat 1%
Comparable full-price
sales growth 121% 10% 49% 26% 10% 18%
----- ---- ---- ---- ----- ----
-- Comparable store sales vs LLY were 1% ahead with the group
seeing similar trends in both Q1 FY22 and Q2 FY22. We saw
double-digit full-price comparable store sales growth in each month
during H1 FY22 vs LLY, except for August, caused by the COVID-19
related travel restrictions imposed in the APAC region. This was
especially impactful in Mainland China, reducing footfall
materially, leading to an adverse effect on revenues. We saw good
recovery in September.
-- In total, we saw 37% growth in retail comparable sales
compared with LY with 4% from space and 69% increase in wholesale
revenue. This led to a 45% increase in revenue at CER and 38%
reported revenue increase to GBP1,213m (H1 FY21 GBP878m).
-- Group adjusted operating profit increased more than fourfold
in the half at CER against the COVID-19 impacted prior year and is
now materially ahead of the equivalent period prior to COVID at
CER. Gross margin increased in the period by 130bps CER and 120bps
reported benefitting from the higher mix of full-price sales and
the product elevation that saw higher average prices in H1. These
benefits were more than enough to offset the headwinds from the
channel mix, Brexit duties and stock provisions. Operating expenses
excluding adjusted items increased by 22% against last year at CER,
in line with our guidance of higher investment and cost
normalisation post the end of the pandemic. This resulted in
operating expenses moving to 53% of sales at reported rates. The
cost savings programme delivered GBP20m of savings and we have now
achieved the GBP55m of annualised savings guided previously,
bringing cumulative savings to GBP205m and providing a completely
restructured cost base, which now forms the foundation for
commercial investment and the opportunity to deliver future margin
accretion.
-- Reported operating profit increased 2.4x including GBP11m of
adjusting credits compared with a GBP37m credit in H1 FY21. FX was
a GBP62m revenue headwind in H1 FY22 and GBP20m on adjusted
operating profit.
-- There was a GBP104m of free cash inflow in the half (H1 FY21
GBP45m outflow). Working capital absorbed GBP27m of cash (H1 FY21
GBP75m) with inventory increasing GBP31m (H1 FY21 GBP34m) in line
with normal patterns ahead of the festive season. Capital
expenditure amounted to GBP39m (H1 FY21 GBP61m). Overall, the group
saw a GBP73m cash outflow in H1 FY22 after the full year dividend
payment - in line with typical seasonal patterns.
Revenue analysis
Revenue by channel
Period ended 25 Sept 26 Sept % change
GBP million 2021 2020 Reported CER
FX
--------------------------- ----------- ----------- --------- ----
Retail 944 704 34 41
Retail comparable store
sales growth 37% (25%)
Wholesale 249 156 60 69
Licensing 20 18 10 13
----------- ----------- --------- ----
Revenue 1,213 878 +38 +45
--------------------------- ----------- ----------- --------- ----
Retail
-- Retail sales +41% at CER; +34% reported
-- Impact of space +4%
H1 FY22 comparable store sales increased +37% (Q1 FY22: +90%; Q2
FY22: +6%) against the COVID-19 impacted prior year half. Taking H1
FY20 as a base, comparable store sales growth was up 1% and was
similar over both quarters. We had a strong underlying performance
driven by our focus on full-price sales increasing 18% in the half
with 26% in Q1 FY22 and 10% in Q2 FY22 vs LLY.
Comparable store sales by region:
FY22 vs LY FY22 vs LLY
Q1 Q2 H1 Q1 Q2 H1
----- ---- ---- ----- ----- -----
Group 90% 6% 37% 1% flat 1%
Asia Pacific 27% -5% 9% 7% 3% 5%
EMEIA 146% 25% 58% -38% -25% -31%
Americas 341% 16% 92% 34% 42% 38%
----- ---- ---- ----- ----- -----
Asia Pacific H1 FY22 +5% (Q1 FY22: +7%; Q2 FY22: +3%) vs LLY
-- Asia Pacific growth saw a good underlying performance in
Mainland China and South Korea driven by new and younger customers
.
o Mainland China saw growth around 30% in the half vs LLY. Q2
was affected by travel restrictions in August, with July and
September comparable store sales growth at similar levels to Q1
o South Korea remained strong throughout the period with H1
comparable store sales up more than 40% vs LLY, with acceleration
in Q2
o South Asia Pacific fell materially, affected by continued
COVID-19 related travel restrictions with average store closures of
c.14% in the half. The region saw a deterioration in Q2 FY22
o Japan also fell, impacted by significantly lower tourist
arrivals caused by COVID-19 outbreaks, with a state of emergency
announced and travel restrictions following the Olympics
EMEIA H1 FY22 -31% (Q1 FY22: -38%; Q2 FY22: -25%) vs LLY
-- EMEIA improved QoQ in comparable store sales now that most of
the stores are fully open. However, trading remains more
challenging as compared with LLY due to limited tourist flows with
c.50% of annual sales typically from tourists and higher in our
second quarter prior to COVID-19. Encouragingly, local customers
were positive across the major territories with the region seeing a
sequential improvement QoQ in trading compared with LLY.
Americas H1 FY22 +38% (Q1 FY22: +34%; Q2 FY22: +42%) vs LLY
-- Americas saw a continued strong performance with H1 FY22 full-price sales almost doubling
o Q2 FY22 saw a sequential improvement in comparable store
sales, helped by a smaller markdown headwind
o The region continues to benefit from strong sales to new and
younger customers
Total group digital sales continue to see strong full-price
sales growth compared with LLY that almost doubled in the half and
up a double-digit percentage vs LY, although total sales have been
affected by reduced markdowns. Growth has slowed in the period as
revenue transferred to physical stores as lockdowns eased through
the half.
By product
-- Full-price sales saw growth against LLY for all major categories in the half and in Q2.
-- Outerwear saw improving momentum in the half with Q2
full-price sales increasing by 12%. Within this Jackets, Downs,
Coats and Quilts grew around 50% while rainwear remains more
challenging.
-- Leather saw a strong Q1 with the Olympia campaign, with total
full-price sales in the half up double-digits.
-- Menswear performed well in H1 FY22 with full-price sales up
14% due to good traction in jersey wear and trousers, with shoes an
especially strong performer. Womenswear was more challenging in the
half with full-price sales up modestly although it saw a good
performance in trousers and knitwear, but challenges in rainwear.
Across ready-to-wear our house codes continue to resonate strongly
and outperformed in the period.
Store footprint
The transformation of our distribution continued as we addressed
high priority programmes:
-- In H1 FY22 we opened 15 stores and closed 11 stores.
-- Key openings included 5 mainline stores in Mainland China
with 3 in the new format and our new concept store in Sloane
Street, London.
-- We are now operating 15 stores in the new design with 8 in
South Korea, 4 in Mainland China and one each in the Americas,
Japan and EMEIA. We continue to plan a target of around 50 stores
in the new format by the end of FY22. We have also made the
decision to accelerate the refurbishments of flagships to the new
concept.
Wholesale
Wholesale revenue increased 69% at CER in H1 FY22 and increased
3% CER vs LLY.
This was a little ahead of our original guidance due to a strong
order book.
All regions saw strong demand.
Licensing
Licensing revenue increased 13% at CER with sales starting to
recover.
Operating profit analysis
Adjusted operating profit
Period ended 25 Sept 26 Sept % change
2021 2020
GBP million
Reported CER
FX
-------- --------- -------
Revenue 1,213 878 38% 45%
Cost of sales* (372) (280)
Gross profit* 841 598 41% 48%
Gross margin %* 69.3% 68.1% 120bps 130bps
Operating expenses* (645) (547) 18% 22%
Opex as a % of sales* 53.2% 62.3%
--------------------------- -------- -------- --------- -------
Adjusted operating profit 196 51 3.8x 4.2x
Adjusted operating margin
% 16.2% 5.8%
--------------------------- -------- -------- --------- -------
*Excludes adjusting items
Adjusted operating profit increased 4.2x at CER and margin is
ahead of pre-COVID levels.
-- Gross margin increased 130bps at CER and 120bps reported.
-- Adjusted operating expenses increased by 22% against last year at CER.
Adjusted operating profit amounted to GBP196m including a GBP20m
FX headwind in H1 FY22.
Adjusting items(*)
Adjusting items were a credit of GBP11m (H1 FY21: GBP37m
credit).
Adjusting items* 25 Sept 26 Sept
Period ended 2021 2020
GBP million
--------
The impact of COVID-19
Inventory provisions (recognised
in cost of sales) 6 7
Rent concessions 9 26
Government grants 1 -
Store impairments - 23
Receivable impairments - 2
--------------------------------------- -------- --------
COVID-19 adjusting items 16 58
Restructuring costs (5) (22)
Revaluation of deferred consideration
liability - 1
Adjusting items 11 37
--------
The major adjusting items are as follows:
-- Impact of the COVID-19 pandemic: we saw a total credit of
GBP16m from COVID-19 related adjustments with GBP6m in cost of
sales as part of an inventory provision reversal, GBP9m of rent
concessions and GBP1m of Government grants.
-- Restructuring costs: incurred GBP5m bringing the combined
total of our cost programmes to GBP133m and cumulative cost savings
of GBP205m, achieving guidance.
Profit before tax*
After a net finance charge of GBP16m (H1 FY21 GBP15m), adjusted
profit before tax was GBP180m (H1 FY21 GBP36m) and reported profit
before tax was GBP191m (H1 FY21 GBP73m).
*For detail on adjusting items see note 4 of Condensed
Consolidated Interim Financial Statements
Taxation
The effective tax rate on H1 FY22 adjusted profit was 24.1% (H1
FY21: 50.9%, FY21: 25.4%). This was down from the 50.9% in H1 FY21
which was affected by the geographical mix of profits and the
impact of prior year adjustments on a relatively low profit base.
The effective tax rate on H1 FY22 reported profit before taxation
was also 24.1% (H1 FY21: 33.6%, FY21: 23.3%).
The effective tax rate on adjusted profit for FY22 is estimated
to be around 22% (FY21: 25.4%) due to the normalisation of trading
geographically post the COVID-19 outbreak.
Cash flow
Free cash inflow* was GBP104m in the half (H1 FY21 outflow of
GBP45m).
The major components were:
-- Cash generated from operating activities increased to GBP323m from GBP101m
o A working capital outflow of GBP27m (H1 FY21: GBP75m) due to
normal seasonal patterns.
-- Capital expenditure of GBP39m (H1 FY21: GBP61m).
Cash net of overdrafts at 25 September 2021 was GBP1,143m,
compared to GBP1,216m at 27 March 2021. At 25 September 2021
borrowings were GBP297m from the bond issue leaving cash net of
overdrafts and borrowings of GBP846m (27 March 2021: GBP919m). With
lease liabilities of GBP1,070m, net debt in the period was GBP224m
(27 March 2021: GBP101m). Net Debt / Adjusted EBITDA was 0.3x on a
rolling 12 months period, below our target range of 0.5x to 1.0x
hence the announcement of accelerated store investments and the
recommencement of the share buyback programme.
*For a definition of free cash flow and net debt see page
18.
Period ended 25 Sept 27 March
GBP million 2021 2021
Adjusted EBITDA - rolling
12 months 834 673
Cash net of overdrafts (1,143) (1,216)
Bond 297 297
Lease debt 1,070 1,020
-------- ---------
Net Debt 224 101
Net Debt/Adjusted EBITDA 0.3x 0.1x
-------- ---------
APPIX
Detailed guidance for FY22*
Item Financial impact
Markdown policy As guided, we will be exiting markdowns in digital
and mainline stores in FY22, leading to a mid
single-digit headwind against our comparable
store sales in FY22 vs LY with mid single-digit
impact in Q3 and low single-digit impact in
Q4
-----------------------------------------------------
Wholesale Full year wholesale is expected to be up mid
30% and H2 to increase by around 15%
-----------------------------------------------------
Impact of retail For the FY, space is expected to contribute
space on revenues low single-digit percentage with H2 also up
low single-digit percentage on a 52 week basis
-----------------------------------------------------
Gross margin To remain broadly unchanged YoY at CER
-----------------------------------------------------
Tax We expect the adjusted tax rate to be around
22%
-----------------------------------------------------
Cash flow Capex is expected to be in the region of GBP160m
including around 50 stores refurbished in the
new format. This is below previous guidance
of GBP180m to GBP190m due to efficiencies in
delivered projects and the phasing of investment
-----------------------------------------------------
Currency At 29 October spot rates, the impact of year-on-year
exchange rate movements is expected to be a
c.GBP100m headwind on revenue and c.GBP40m headwind
on adjusted operating profit
-----------------------------------------------------
Dividend We have resumed payment of the interim dividend
at 11.6p per share, an increase of 3% over H1
FY20
-----------------------------------------------------
Calendar Please note that FY22 is a 53 week calendar
year with an extra week in Q4. CER growth rates
will be adjusted to be on a 52 week basis.
-----------------------------------------------------
*Guidance assumes constant exchange rates, a stable economic
environment and current tax legislation
Exchange rates
Forecast effective rates Actual average exchange rates
for FY22
29 October 25 June 2021 H1 FY22 H1 FY21 FY21
GBP1= 2021
------------ ------------- ----------- ----------- --------
Euro 1.17 1.17 1.16 1.12 1.12
US Dollar 1.38 1.39 1.39 1.26 1.30
Chinese Renminbi 8.88 9.00 8.98 8.87 8.85
Hong Kong Dollar 10.75 10.82 10.79 9.79 10.08
Korean Won 1,602 1,577 1,583 1,525 1,514
------------ ------------- ----------- ----------- --------
Retail/wholesale revenue by destination
Period ended 25 Sept 26 Sept % change
GBP million 2021 2020 Reported FX CER
------------------- ----------- ----------- ------------ -----
Asia Pacific 522 439 19 23
EMEIA 361 251 44 49
Americas 310 170 83 100
Total 1,193 860 39 46
------------------- ----------- ----------- ------------
Retail/wholesale revenue by product division
Period ended 25 Sept 26 Sept % change
GBP million 2021 2020 Reported FX CER
-------------------------- ---------- ---------- ------------ ----
Accessories 435 301 44 52
Women's 330 242 36 43
Men's 347 258 35 41
Children's & other 81 59 39 47
Total 1,193 860 39 46
-------------------------- ---------- ---------- ------------
Store portfolio
Directly-operated stores
--------------------------------------- ----------
Stores Concessions Outlets Total Franchise
stores
------------------- ------- ------------ -------- ----------
At 27 March 2021 214 145 56 415 44
Additions 7 8 15 -
Closures (3) (8) (11) (2)
At 25 September
2021 218 145 56 419 42
------- ------------ --------
Store portfolio by region
Directly-operated stores
--------------------------------------- ----------
Stores Concessions Outlets Total Franchise
At 25 September stores
2021
------------------- ------- ------------ -------- ----------
Asia Pacific 102 93 22 217 7
EMEIA 54 43 18 115 35
Americas 62 9 16 87 -
Total 218 145 56 419 42
------- ------------ --------
Adjusted operating
profit*
Period ended % change
25 Sept 26 Sept Reported % change
GBP million 2021 2020 FX CER
Retail/wholesale 178 34 5.2x 5.8x
Licensing 18 17 8% 10%
-------------------- -------- -------- ---------- ---------
Adjusted operating
profit 196 51 3.8x 4.2x
Adjusted operating
margin 16.2% 5.8%
-------------------- -------- -------- ---------- ---------
*For additional detail on adjusting items see note 4 of
Condensed Consolidated Interim Financial Statements
Profit before tax reconciliation
Period ended 25 Sept 26 Sept % change % change
2021 2020 Reported CER
GBP million FX
Adjusted profit before
tax 180 36 5.0x 5.5x
Adjusting items*
Impact of COVID-19 16 58
Restructuring costs (5) (22)
Revaluation of deferred
consideration liability - 1
Profit before tax 191 73 2.6x
-------- -------- ----------
Alternative performance measures
Alternative performance measures (APMs) are non-GAAP measures.
The Board uses the following APMs to describe the Group's financial
performance and for internal budgeting, performance monitoring,
management remuneration target setting and for external reporting
purposes.
APM Description and purpose GAAP measure reconciled to
Constant This measure removes the Results at reported rates.
Exchange effect of changes in exchange
Rates (CER) rates compared to the prior
period. It 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 25 Sept 26 Sept
over equivalent time periods YoY% 2021 2020
and measured at constant ------------------ -------- --------
foreign exchange rates. Comparable sales 37%* (25%)
It also includes online Change in space 4% (4%)
sales. This measure is FX (7%) (1%)
used to strip out the impact ------------------ -------- --------
of permanent store openings Retail revenue 34% (30%)
and closings, or those
closures relating to refurbishments, *Includes full-price comp +49%
allowing a comparison of
equivalent store performance
against the prior period.
The measurement of comparable
sales has not excluded
stores temporarily closed
as a result of the COVID-19
outbreak.
Full-price sales:
Full-price comparable store
sales are sales from items
sold at full retail price
in our own mainline retail
network and online.
-------------------------------------- -----------------------------------------
Comparable The change in sales over Retail Revenue:
sales vs two years measured at constant %change 25 Sept
LLY foreign exchange rates. 2021
It also includes online ------------------ --------
sales. The measurement Comparable sales 1%
of comparable sales has Change in space (1%)
not excluded stores temporarily FX (6%)
closed as a result of the ------------------ --------
COVID-19 outbreak. This Retail revenue (6%)
measure reflects the two ------------------ --------
year comparable store growth
rates.
-------------------------------------- -----------------------------------------
Adjusted Adjusted profit measures Reported Profit:
Profit are presented to provide A reconciliation of reported profit
additional consideration before tax to adjusted profit before
of the underlying performance tax is included in the income statement
of the Group's ongoing on page 21. The Group's accounting
business. These measures policy for adjusted profit before
remove the impact of those tax is set out in note 2 to the
items which should be excluded financial statements.
to provide a consistent
and comparable view of
performance.
-------------------------------------- -----------------------------------------
Free Cash Free cash flow is defined Net cash generated from operating
Flow as net cash generated activities:
from operating activities Period ended 25 Sept 26 Sept
less capital expenditure GBPm 2021 2020
plus cash inflows from -------------------- -------- --------
disposal of fixed assets Net cash generated
and including cash outflows from operating
for lease principal payments activities 224 78
and other lease related Capex (39) (61)
items. Lease principal
and related
cash flows (89) (62)
Proceeds from 8 -
disposal
Free cash flow 104 (45)
Cash Conversion Cash conversion is defined Net cash generated from operating
as free cash flow pre-tax activities:
as a percentage of adjusted ---------------------------------------
profit before tax. It Period ended 25 Sept 26 Sept
provides a measure of GBPm 2021 2020
the Group's effectiveness ------------------- -------- --------
in converting its profit Free cash flow 104 (45)
into cash. Tax paid 84 10
------------------- -------- --------
Free cash flow
before tax 188 (35)
------------------- -------- --------
Adjusted profit
before tax 180 36
Cash conversion 104% n/a
----------------------------------- ----------------------------------------------
Net Debt Net debt is defined as Cash net of overdrafts:
the lease liability recognised Period ended 25 Sept 27 Mar
on the balance sheet plus GBPm 2021 2021
borrowings less cash net ------------------------ -------- --------
of overdrafts. Cash net of overdrafts 1,143 1,216
Lease liability (1,070) (1,020)
Borrowings (297) (297)
------------------------ -------- --------
Net debt (224) (101)
----------------------------------- ----------------------------------------------
Adjusted Adjusted EBITDA is defined Reconciliation from operating
EBITDA as operating profit, excluding profit to adjusted EBITDA:
adjusting operating items, Period ended 25 Sept 26 Sept
depreciation of property, GBPm 2021 2020
plant and equipment, depreciation ---------------------- -------- --------
of right of use assets Operating profit 207 88
and amortisation of intangible Adjusted operating
assets. Any depreciation items (11) (37)
or amortisation included Amortisation
in adjusting operating of intangible
items are not double-counted. assets 18 15
Depreciation
of property,
plant and equipment 38 31
Depreciation
of right-of-use
assets 89 83
---------------------- -------- --------
Adjusted EBITDA 341 180
----------------------------------- ----------------------------------------------
Related parties
Related party disclosures are given in note 20 of the Condensed
Consolidated Interim Financial Statements.
Principal Risks
As at H1 FY22, the principal risks and uncertainties that the
Group faces for the remaining 27 weeks of the financial year are
consistent with those previously reported. T here continues to be
uncertainty regarding further impacts of COVID-19, and
international responses to the pandemic. However, these do not
result in material changes to the Group risk profile . The
principal risks are summarised below:
Strategic and Financial Risks
Execution of Strategy: Focused execution of the strategy through
our four strategic pillars (Product, Communication, Distribution
and Digital) and their supporting enablers (Operational Excellence
and Inspired People) is key to sustainable long-term shareholder
value. Success depends on our ability to further cement our luxury
positioning, increasing the value and relevance of our brand to
luxury consumers globally. Inability to successfully execute the
projects that underpin these strategies could result in
under-delivery on the expected growth, productivity and efficiency
targets. This could have a significant impact on the value of the
business and market confidence.
Image and Reputation: The Group carefully safeguards its image
and reputation. Unfavourable incidents, unethical behaviour or
erroneous media coverage relating to the Group's senior executives,
products, practices or supply chain operations could damage the
Group's reputation and negatively impact the value of the
brand.
Global Chinese Consumer Spending: Global Chinese consumer
spending patterns may significantly change having an immediate
adverse impact on Group sales. Any significant change to Chinese
consumer spending habits globally due to changes in the economic,
regulatory, social or political environment in China, including a
further health emergency or a natural disaster, may adversely
impact the domestic consumer group's disposable income or
confidence.
Volatility in foreign exchange rates: Volatility in foreign
exchange rates could have a significant impact on the Group's
reported results. Burberry is exposed to uncertainty through
foreign exchange movements. Major events such as the COVID-19
pandemic continue to impact foreign exchange rates, which in turn
could cause significant change in our Group reported results.
Operational Risks
Cyber-attack: This may result in a system outage, impacting core
operations and/or results in a major data loss leading to
reputational damage and financial loss. A cyber risk-aware
workforce and the Group's technology environment are critical to
success. A robust control environment helps decrease the risks to
core business operations and/or major data loss.
People: Inability to attract, motivate, develop and retain our
people to perform to the best of their ability in order to meet our
strategic objectives.
Technology and IT Operations: IT operations fail to support
critical processes across the Group, including Retail and Digital,
as well as Group functions, such as Supply Chain and Finance.
Business Interruption: A major incident impacts countries where
the Group operates, has its main locations or where its suppliers
are located, and significantly interrupts the business. This could
be caused by a wide range of events at a country level, including
geopolitical tensions, natural catastrophe, pandemic or changes in
regulations, through to localised issues, such as fire, terrorism
or quality control failures.
Compliance Risks
Regulatory Risk and Ethical/Environmental Standards: The Group's
operations are subject to a broad spectrum of national and regional
laws as well as regulations in the various jurisdictions in which
we operate. These include product safety, trademarks, bribery and
corruption, competition, data, corporate governance, employment,
tax, trade compliance and employee and customer health and safety.
Changes to laws and regulations, or a major compliance breach,
could have a material impact on the business.
Sustained breaches of Burberry's intellectual property (IP)
rights or allegations of infringement by Burberry: Sustained
breaches of Burberry's IP rights or allegations of infringement by
Burberry pose risk to the brand. Counterfeiting, copyright, trade
mark and design infringement in the marketplace could reduce the
demand for genuine Burberry merchandise and impact the luxury
positioning of the brand.
Sustainability and Climate Change: The success of our business
over the long term will depend on the social and environmental
sustainability of our operations, the resilience of our supply
chain and our ability to manage any potential climate change
impacts on our business model and performance.
External Risks
COVID-19 impact: The timing of a return to sustained growth
following the COVID-19 pandemic continues to remain uncertain.
There remains a risk that the recovery from the spread of the
COVID-19 pandemic slows due to a resurgence of cases. In response
to COVID-19, we have continued to update planning scenarios based
on a range of assumptions and potential outcomes. This risk remains
of further significant impact on our future operations, cash flows
and viability beyond the range of assumptions that have been used
to develop the planning scenarios.
Macro-Economic and Political instability: The Group operates in
a wide range of markets and is exposed to changing economic,
regulatory, social and political developments that may impact
consumer demand, disrupt operations and impact profitability.
Adverse macroeconomic conditions or country-specific changes to the
operating or regulatory environment, natural disaster, global
health emergency or civil unrest may impact the
spending habits of key consumer groups and lead to increased operational costs.
Further impact from the UK's withdrawal from the EU: Various
scenarios could impact the Group's financial position, operating
model and people.
CONDENSED Group income statement - UNAUDITED
26 weeks 26 weeks 52 weeks
to 25 to 26 to 27
September September March
2021 2020 2021
Note GBPm GBPm GBPm
------------------------------------------------ ---- ---------- ---------- ---------
Revenue 3 1,212.6 877.7 2,343.9
Cost of sales (365.4) (273.3) (681.4)
------------------------------------------------ ---- ---------- ---------- ---------
Gross profit 847.2 604.4 1,662.5
Net operating expenses (639.7) (516.3) (1,141.4)
------------------------------------------------ ---- ---------- ---------- ---------
Operating profit 207.5 88.1 521.1
Financing
------------------------------------------------ ---- ---------- ---------- ---------
Finance income 1.1 1.5 3.1
Finance expense (17.1) (16.4) (33.3)
Other financing charge (0.3) (0.4) (0.7)
------------------------------------------------ ---- ---------- ---------- ---------
Net finance expense 5 (16.3) (15.3) (30.9)
------------------------------------------------ ---- ---------- ---------- ---------
Profit before taxation 191.2 72.8 490.2
Taxation 6 (46.0) (24.5) (114.3)
------------------------------------------------ ---- ---------- ---------- ---------
Profit for the period 145.2 48.3 375.9
------------------------------------------------ ---- ---------- ---------- ---------
Attributable to:
Owners of the Company 144.9 49.3 375.7
Non-controlling interest 0.3 (1.0) 0.2
------------------------------------------------ ---- ---------- ---------- ---------
Profit for the period 145.2 48.3 375.9
------------------------------------------------ ---- ---------- ---------- ---------
Earnings per share
Basic 7 35.8p 12.2p 93.0p
Diluted 7 35.7p 12.2p 92.7p
------------------------------------------------ ---- ---------- ---------- ---------
GBPm GBPm GBPm
Reconciliation of adjusted profit before
taxation:
Profit before taxation 191.2 72.8 490.2
Adjusting operating items:
Cost of sales 4 (6.5) (6.6) (22.3)
Net operating expenses 4 (5.0) (30.6) (102.9)
Adjusting financing items 4 0.3 0.4 0.7
------------------------------------------------ ---- ---------- ---------- ---------
Adjusted profit before taxation - non-GAAP
measure 180.0 36.0 365.7
------------------------------------------------ ---- ---------- ---------- ---------
Adjusted earnings per share - non-GAAP
measure
Basic 7 33.7p 4.6p 67.5p
Diluted 7 33.5p 4.6p 67.3p
------------------------------------------------ ---- ---------- ---------- ---------
Dividends per share
Proposed interim (not recognised as a liability
at period end) 8 11.6p - -
Final (not recognised as a liability at
27 March 2021) 8 N/A N/A 42.5p
------------------------------------------------ ---- ---------- ---------- ---------
CONDENSED Group statement of comprehensive income -
UNAUDITED
26 weeks 26 weeks 52 weeks
to 25 to 26 to 27
September September March
2021 2020 2021
GBPm GBPm GBPm
--------------------------------------------- ---------- ---------- --------
Profit for the period 145.2 48.3 375.9
Other comprehensive income(1) :
Cash flow hedges - 0.4 -
Foreign currency translation differences 4.0 4.3 (51.4)
Actuarial gains on post-employment benefit
plans - - 1.0
Tax on other comprehensive income:
Cash flow hedges - (0.1) -
Foreign currency translation differences (0.2) 0.3 2.4
Actuarial gains on post-employment benefit
plans - - (0.2)
---------------------------------------------- ---------- ---------- --------
Other comprehensive income for the period,
net of tax 3.8 4.9 (48.2)
---------------------------------------------- ---------- ---------- --------
Total comprehensive income for the period 149.0 53.2 327.7
---------------------------------------------- ---------- ---------- --------
Total comprehensive income attributable
to:
Owners of the Company 148.7 54.3 327.7
Non-controlling interest 0.3 (1.1) -
---------------------------------------------- ---------- ---------- --------
149.0 53.2 327.7
--------------------------------------------- ---------- ---------- --------
1. All items included in other comprehensive income, with the
exception of Actuarial gains on post-employment benefit plans, may
subsequently be reclassified to profit and loss in a future
period.
CONDENSED Group Balance Sheet - UNAUDITED
As at As at As at
25 September 26 September 27 March
2021 2020 2021
Note GBPm GBPm GBPm
--------------------------------------------- ---- -------------- -------------- ---------
ASSETS
Non-current assets
Intangible assets 9 233.5 253.4 237.0
Property, plant and equipment 10 277.1 295.4 280.4
Right-of-use assets 11 874.5 824.7 818.1
Investment properties - 2.6 2.4
Deferred tax assets 6 158.1 153.8 137.1
Trade and other receivables 12 47.4 49.6 45.0
1,590.6 1,579.5 1,520.0
--------------------------------------------- ---- -------------- -------------- ---------
Current assets
Inventories 13 434.2 485.4 402.1
Trade and other receivables 12 300.2 279.4 276.9
Derivative financial assets 1.2 5.0 2.2
Income tax receivables 56.1 73.9 39.7
Cash and cash equivalents 14 1,197.2 1,199.5 1,261.3
--------------------------------------------- ---- -------------- -------------- ---------
1,988.9 2,043.2 1,982.2
--------------------------------------------- ---- -------------- -------------- ---------
Total assets 3,579.5 3,622.7 3,502.2
--------------------------------------------- ---- -------------- -------------- ---------
LIABILITIES
Non-current liabilities
Trade and other payables 15 (94.4) (103.5) (99.4)
Lease liabilities (852.7) (867.2) (809.6)
Borrowings 18 (297.4) (296.7) (297.1)
Deferred tax liabilities 6 (0.8) (0.1) (0.8)
Retirement benefit obligations (1.0) (1.9) (1.0)
Provisions for other liabilities and charges 16 (32.7) (30.8) (31.8)
--------------------------------------------- ---- -------------- -------------- ---------
(1,279.0) (1,300.2) (1,239.7)
--------------------------------------------- ---- -------------- -------------- ---------
Current liabilities
Trade and other payables 15 (442.6) (410.1) (392.9)
Bank overdrafts 17 (54.2) (61.6) (45.4)
Lease liabilities (217.6) (224.8) (210.0)
Borrowings 18 - (299.1) -
Derivative financial liabilities (3.3) (1.9) (2.6)
Income tax liabilities (25.8) (29.2) (27.9)
Provisions for other liabilities and charges 16 (20.8) (18.9) (24.0)
(764.3) (1,045.6) (702.8)
--------------------------------------------- ---- -------------- -------------- ---------
Total liabilities (2,043.3) (2,345.8) (1,942.5)
--------------------------------------------- ---- -------------- -------------- ---------
Net assets 1,536.2 1,276.9 1,559.7
--------------------------------------------- ---- -------------- -------------- ---------
EQUITY
Capital and reserves attributable to owners
of the Company
Ordinary share capital 19 0.2 0.2 0.2
Share premium account 223.9 221.2 223.0
Capital reserve 41.2 41.1 41.1
Hedging reserve 4.7 5.0 4.7
Foreign currency translation reserve 200.1 249.9 196.4
Retained earnings 1,062.7 756.0 1,091.2
--------------------------------------------- ---- -------------- -------------- ---------
Equity attributable to owners of the Company 1,532.8 1,273.4 1,556.6
Non-controlling interest in equity 3.4 3.5 3.1
--------------------------------------------- ---- -------------- -------------- ---------
Total equity 1,536.2 1,276.9 1,559.7
--------------------------------------------- ---- -------------- -------------- ---------
CONDENSED Group STATEMENT OF CHANGES IN EQUITY - UNAUDITEd
Attributable to owners
of the Company
----------------------------------------
Ordinary Share
share premium Other Retained Non-controlling Total
capital account reserves earnings Total interest equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------- --- -------- -------- --------- --------- ------- --------------- -------
Balance as at 28 March 2020 0.2 220.8 291.0 702.2 1,214.2 4.6 1,218.8
----------------------------- --- -------- -------- --------- --------- ------- --------------- -------
Profit for the period - - - 49.3 49.3 (1.0) 48.3
Other comprehensive income:
Cash flow hedges - losses
deferred in equity - - (0.2) - (0.2) - (0.2)
Cash flow hedges - losses
transferred to income - - 0.6 - 0.6 - 0.6
Foreign currency translation
differences - - 4.4 - 4.4 (0.1) 4.3
Tax on other comprehensive
income - - 0.2 - 0.2 - 0.2
----------------------------- --- -------- -------- --------- --------- ------- --------------- -------
Total comprehensive income
for the period - - 5.0 49.3 54.3 (1.1) 53.2
----------------------------- --- -------- -------- --------- --------- ------- --------------- -------
Transactions with owners:
Employee share incentive
schemes
Equity share awards - - - 4.2 4.2 - 4.2
Tax on share awards - - - 0.3 0.3 - 0.3
Exercise of share options - 0.4 - - 0.4 - 0.4
----------------------------- --- -------- -------- --------- --------- ------- --------------- -------
Balance as at 26 September
2020 0.2 221.2 296.0 756.0 1,273.4 3.5 1,276.9
----------------------------- --- -------- -------- --------- --------- ------- --------------- -------
Balance as at 27 March 2021 0.2 223.0 242.2 1,091.2 1,556.6 3.1 1,559.7
----------------------------- --- -------- -------- --------- --------- ------- --------------- -------
Profit for the period - - - 144.9 144.9 0.3 145.2
Other comprehensive income:
Cash flow hedges - losses
deferred in equity - - (0.1) - (0.1) - (0.1)
Cash flow hedges - losses
transferred to income - - 0.1 - 0.1 - 0.1
Foreign currency translation
differences - - 4.0 - 4.0 - 4.0
Tax on other comprehensive
income - - (0.2) - (0.2) - (0.2)
----------------------------- --- -------- -------- --------- --------- ------- --------------- -------
Total comprehensive income
for the period - - 3.8 144.9 148.7 0.3 149.0
----------------------------- --- -------- -------- --------- --------- ------- --------------- -------
Transactions with owners:
Employee share incentive
schemes
Equity share awards - - - 5.8 5.8 - 5.8
Exercise of share options - 0.9 - - 0.9 - 0.9
Purchase of own shares
Held by ESOP trusts - - - (7.3) (7.3) - (7.3)
Dividends paid in the year 8 - - - (171.9) (171.9) - (171.9)
Balance as at 25 September
2021 0.2 223.9 246.0 1,062.7 1,532.8 3.4 1,536.2
----------------------------- --- -------- -------- --------- --------- ------- --------------- -------
Condensed group statement of cash flows - unaudited
Restated
26 weeks 26 weeks 52 weeks
to 25 to 26 to 27
September September March
2021 2020 2021
Note GBPm GBPm GBPm
-------------------------------------------------- ---- ---------- ---------- --------
Cash flows from operating activities
Operating profit 207.5 88.1 521.1
Amortisation of intangible assets 17.7 14.8 32.9
Depreciation of property, plant and equipment 38.0 30.7 71.4
Depreciation of right-of-use assets 89.6 83.5 172.4
COVID-19 related rent concessions (9.0) (26.3) (54.1)
Impairment charge of intangible assets 9 - 0.8 8.8
Net impairment charge/(reversal) of property,
plant and equipment 10 0.4 (3.2) (7.5)
Net impairment charge/(reversal) of right-of-use
assets 11 2.0 (15.5) (33.7)
Profit on disposal of property, plant and
equipment, intangible assets and investment
properties (5.1) - (22.7)
Loss/(gain) on disposal of right-of-use
assets 0.4 - (1.1)
Loss on derivative instruments 1.7 0.6 3.8
Charge in respect of employee share incentive
schemes 6.7 4.2 12.1
Payment from settlement of equity swap
contracts - (1.5) (1.5)
(Increase)/decrease in inventories (31.3) (34.3) 20.9
Increase in receivables (26.2) (23.1) (39.0)
Increase/(decrease) in payables and provisions 30.2 (17.8) (7.2)
-------------------------------------------------- ---- ---------- ---------- --------
Cash generated from operating activities 322.6 101.0 676.6
Interest received 0.9 1.4 2.9
Interest paid (15.3) (15.3) (30.1)
Taxation paid (84.3) (9.6) (58.0)
-------------------------------------------------- ---- ---------- ---------- --------
Net cash generated from operating activities 223.9 77.5 591.4
Cash flows from investing activities
Purchase of property, plant and equipment (25.7) (39.9) (72.9)
Purchase of intangible assets (13.7) (20.9) (41.9)
Proceeds from sale of property, plant and
equipment and investment properties 7.7 - 27.2
Initial direct costs of right-of-use assets (4.0) (0.4) (2.9)
Net cash outflow from investing activities (35.7) (61.2) (90.5)
Cash flows from financing activities
Dividends paid in the period (171.9) - -
Payment of deferred consideration for acquisition
of non-controlling interest 15 - (2.6) (2.6)
Proceeds from borrowings 18 - 595.1 595.1
Repayment of borrowings 18 - (300.0) (599.8)
Payment of lease principal (84.7) (61.7) (152.2)
Payment to acquire additional interest
in subsidiary from non-controlling interest - - (1.7)
Issue of ordinary share capital 0.9 0.4 2.2
Purchase of own shares by ESOP trusts (7.3) - (0.1)
Net cash (outflow)/ inflow from financing
activities (263.0) 231.2 (159.1)
Net (decrease)/increase in cash and cash
equivalents (74.8) 247.5 341.8
Effect of exchange rate changes 1.9 3.1 (13.2)
Cash and cash equivalents at beginning
of period 1,215.9 887.3 887.3
-------------------------------------------------- ---- ---------- ---------- --------
Cash and cash equivalents at end of period 1,143.0 1,137.9 1,215.9
-------------------------------------------------- ---- ---------- ---------- --------
Cash and cash equivalents as per the Balance
Sheet 14 1,197.2 1,199.5 1,261.3
Bank overdrafts 17 (54.2) (61.6) (45.4)
--------------------------------------------- ------- ------- -------
Cash net of overdrafts 1,143.0 1,137.9 1,215.9
--------------------------------------------- ------- ------- -------
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
1. Corporate information
Burberry Group plc and its subsidiaries (the Group) is a global
luxury goods manufacturer, retailer and wholesaler. The Group also
licenses third parties to manufacture and distribute products using
the 'Burberry' trademarks. All of the companies which comprise the
Group are controlled by Burberry Group plc (the Company) directly
or indirectly.
2. Accounting policies and Basis of preparatioN
Basis of preparation
These condensed consolidated interim financial statements are
unaudited but have been reviewed by the auditors and their report
to the Company is set out on page 42. They were approved by the
Board of Directors on 10 November 2021. These condensed
consolidated interim financial statements do not constitute
statutory accounts within the meaning of Section 434 of the
Companies Act 2006. Statutory accounts for the 52 weeks to 27 March
2021 were approved by the Board of Directors on 21 May 2021 and
have been filed with the Registrar of Companies. The report of the
auditors on the statutory accounts for the 52 weeks to 27 March
2021 was unqualified, did not contain an emphasis of matter
paragraph and did not contain a statement under Section 498 of the
Companies Act 2006.
A restatement of GBP14.6 million has been made to the condensed
Group Statement of Cash Flows for the 26 weeks to 26 September 2020
following the correction of the reporting of the movement in
capital accruals. The impact is to increase the purchase of
property plant and equipment and intangible assets within cash
flows from investing activities, with a corresponding reduction in
decrease in payables and provisions within cash flows from
operating activities.
These condensed consolidated interim financial statements for
the 26 weeks to 25 September 2021 have been prepared in accordance
with the Disclosure and Transparency Rules of the Financial
Services Authority and with IAS 34, 'Interim Financial Reporting'
as adopted by the UK. This report should be read in conjunction
with the Group's financial statements for the 52 weeks to 27 March
2021, which have been prepared in accordance with International
Financial Reporting Standards (IFRSs). The annual financial
statements of the Group for the 53 weeks to 2 April 2022 will be
prepared in accordance with UK adopted international accounting
standards.
Going concern
The impact of the COVID-19 pandemic on the global economy and
the operating activities of many businesses, including the luxury
market, has resulted in a volatile climate and continued
uncertainty. The further impact of this pandemic on the Group is
uncertain at the date of signing these financial statements.
In considering the appropriateness of adopting the going concern
basis in preparing the financial statements, the Directors have
assessed the potential cash generation of the Group and considered
a range of downside scenarios similar to scenarios considered for
the most recent annual assessment. This assessment covers the
period of a minimum of 12 months from the date of signing the
condensed consolidated interim financial statements. The Directors
have also considered the forecast for the period up to the
subsequent financial year end, March 2023, for any indicators that
the going concern basis of preparation is not appropriate.
The scenarios considered by the Directors include a severe but
plausible downside and a reverse stress test which determines how
much revenue could reduce by while still providing funding to cover
other principal risks.
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 25 September 2021, the Group
balance sheet reflects cash net of overdrafts and borrowings of
GBP846 million, while cash net of overdrafts is GBP1,143 million.
In addition the Group has access to a GBP300 million Revolving
Credit Facility (RCF), 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 RCF and the borrowings
raised via the bond issued in September 2020 are not subject to
covenants. Details of cash, overdrafts, borrowings and facilities
are set out in notes 14, 17 and 18 of these financial
statements.
In all the scenarios assessed, taking into account 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
condensed consolidated interim financial statements for the period
ended 25 September 2021.
Accounting policies
The accounting policies adopted in the preparation of the
condensed consolidated interim financial statements are consistent
with those followed in the preparation of the Group's annual
consolidated financial statements for the 52 weeks ended 27 March
2021, with the exception of the following:
IFRS 16 Leases
The extension of the COVID-19-Related Rent Concessions amendment
to IFRS 16 Leases to 30 June 2022 has been applied for the period
ended 25 September 2021.
The Group has not early adopted any standard, interpretation or
amendment that has been issued but is not yet effective. Several
amendments apply for the first time for the period ended 25
September 2021, but do not have an impact on the condensed
consolidated interim financial statements of the Group.
Key sources of estimation uncertainty
Preparation of the condensed consolidated interim 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 are consistent with those applied
in the Group's financial statements for the 52 weeks to 27 March
2021, as set out on pages 231 to 233 of those financial
statements.
For details of changes to significant estimates for impairment
of property, plant and equipment and right-of-use assets in the
current period, refer to note 10. There have been no changes to the
significant estimates relating to inventory provisioning or
uncertain tax positions in the period.
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's financial statements. Key judgements that have a
significant impact on the amounts recognised in the condensed
consolidated interim financial statements for the 26 weeks to 25
September 2021 include:
Impairment charge/reversals
Value-in-use estimates are used as part of impairment testing
for intangible assets, property, plant and equipment and
right-of-use assets. Value-in-use calculations require judgement
surrounding key inputs including the future revenues, the margins
achieved and the discount rates applied. Consideration is applied
to the key inputs noted with sensitivity analysis performed across
material asset balances to ensure the value-in-use estimate is
robust to changes in the underlying assumptions.
Other judgements are consistent with those applied in the
Group's financial statements for the 52 weeks to 27 March 2021.
Translation of the results of overseas businesses
The results of overseas subsidiaries are translated into the
Group's presentation currency of Sterling each month at the
weighted average exchange rate according to the phasing of the
Group's trading results. The weighted average exchange rate is
used, as it is considered to approximate the actual exchange rates
on the dates of the transactions. The assets and liabilities of
such undertakings are translated at period end exchange rates.
Differences arising on the retranslation of the opening net
investment in subsidiary companies, and on the translation of their
results, are taken directly to the foreign currency translation
reserve within equity.
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
------------------------------------------ ------------------------------------ ---
26 weeks 52 weeks As at
26 weeks to to As at 26 September As at
to 25 September 26 September 27 March 25 September 2020 27 March
2021 2020 2021 2021 2021
---------------------- ---------------- ------------- --------- ------------- ------------- -----------
Euro 1.16 1.12 1.12 1.17 1.09 1.17
US Dollar 1.39 1.26 1.30 1.37 1.27 1.38
Chinese Yuan Renminbi 8.98 8.87 8.85 8.84 8.67 9.02
Hong Kong Dollar 10.79 9.79 10.08 10.66 9.85 10.72
Korean Won 1,583 1,525 1,514 1,611 1,497 1,558
---------------------- ---------------- ------------- --------- ------------- ------------- -----------
Adjusted profit before taxation
In order to provide additional consideration of the underlying
performance of the Group's ongoing business, the Group's results
include a presentation of Adjusted operating profit and Adjusted
profit before taxation (adjusted PBT). Adjusted PBT is defined as
profit before taxation and before adjusting items. Adjusting items
are those items which, in the opinion of the Directors, should be
excluded in order to provide a consistent and comparable view of
the performance of the Group's ongoing business. Generally, this
will include those items that are largely one-off and material in
nature as well as income or expenses relating to acquisitions or
disposals of businesses or other transactions of a similar nature,
including the impact of changes in fair value of expected future
payments or receipts relating to these transactions. Adjusting
items are identified and presented on a consistent basis each year
and a reconciliation of adjusted PBT to profit before tax is
included in the financial statements. Adjusting items and their
related tax impacts, as well as adjusting taxation items, are added
back to/deducted from profit attributable to owners of the Company
to arrive at adjusted earnings per share. Refer to note 4 for
further details of adjusting items.
3. Segmental analysis
The Chief Operating Decision Maker has been identified as the
Board of Directors. The Board reviews the Group's internal
reporting in order to assess performance and allocate resources.
Management has determined the operating segments based on the
reports used by the Board. The Board considers the Group's business
through its two channels to market, being retail/wholesale and
licensing.
Retail/wholesale revenues are generated by the sale of luxury
goods through Burberry mainline stores, concessions, outlets and
digital commerce as well as Burberry franchisees, prestige
department stores globally and multi-brand specialty accounts. The
flow of global product between retail and wholesale channels and
across our regions is monitored and optimised at a corporate level
and implemented via the Group's inventory hubs situated in Europe
and the US.
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
------------------------------- ---------------------------- ----------------------------
26 weeks 26 weeks 26 weeks
to 25 26 weeks to 25 26 weeks to 25 26 weeks
September to 26 September September to 26 September September to 26 September
2021 2020 2021 2020 2021 2020
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- ----------- ------------------ ----------- --------------- ----------- ---------------
Retail 943.5 703.8 - - 943.5 703.8
Wholesale 249.1 155.8 - - 249.1 155.8
Licensing - - 20.0 18.4 20.0 18.4
------------------------- ----------- ------------------ ----------- --------------- ----------- ---------------
Total segment revenue 1,192.6 859.6 20.0 18.4 1,212.6 878.0
Inter-segment revenue(1) - - - (0.3) - (0.3)
------------------------- ----------- ------------------ ----------- --------------- ----------- ---------------
Revenue from external
customers 1,192.6 859.6 20.0 18.1 1,212.6 877.7
------------------------- ----------- ------------------ ----------- --------------- ----------- ---------------
Adjusted operating profit 178.0 34.2 18.0 16.7 196.0 50.9
------------------------- ----------- ------------------ ----------- --------------- ----------- ---------------
Adjusting items(2) 11.2 36.8
Finance income 1.1 1.5
Finance expense (17.1) (16.4)
------------------------- ----------- ------------------ ----------- --------------- ----------- ---------------
Profit before taxation 191.2 72.8
------------------------- ----------- ------------------ ----------- --------------- ----------- ---------------
Retail/Wholesale Licensing Total
---------------- --------- -------
52 weeks to 27 March 2021 GBPm GBPm GBPm
-------------------------------- ---------------- --------- -------
Retail 1,909.9 - 1,909.9
Wholesale 396.0 - 396.0
Licensing - 39.1 39.1
-------------------------------- ---------------- --------- -------
Total segment revenue 2,305.9 39.1 2,345.0
Inter-segment revenue(1) - (1.1) (1.1)
-------------------------------- ---------------- --------- -------
Revenue from external customers 2,305.9 38.0 2,343.9
-------------------------------- ---------------- --------- -------
Adjusted operating profit 361.4 34.5 395.9
-------------------------------- ---------------- --------- -------
Adjusting items(2) 124.5
Finance income 3.1
Finance expense (33.3)
-------------------------------- ---------------- --------- -------
Profit before taxation 490.2
-------------------------------- ---------------- --------- -------
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. Refer to note 4 for details of adjusting items.
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.
26 weeks 52 weeks
26 weeks to 26 September to 27
to 25 September 2020 March
2021 GBPm 2021
Revenue by product division GBPm GBPm
---------------------------- ---------------- ---------------- --------
Accessories 434.9 301.2 840.9
Women's 329.6 241.7 652.6
Men's 347.0 257.4 667.6
Children's/Other 81.1 59.3 144.8
---------------------------- ---------------- ---------------- --------
Retail/Wholesale 1,192.6 859.6 2,305.9
Licensing 20.0 18.1 38.0
---------------------------- ---------------- ---------------- --------
Total 1,212.6 877.7 2,343.9
---------------------------- ---------------- ---------------- --------
26 weeks 52 weeks
26 weeks to 26 September to 27
to 25 September 2020 March
2021 GBPm 2021
Revenue by destination GBPm GBPm
----------------------- ---------------- ---------------- --------
Asia Pacific 521.8 439.4 1,203.2
EMEIA(1) 360.9 250.7 628.0
Americas 309.9 169.5 474.7
Retail/Wholesale 1,192.6 859.6 2,305.9
Licensing 20.0 18.1 38.0
----------------------- ---------------- ---------------- --------
Total 1,212.6 877.7 2,343.9
----------------------- ---------------- ---------------- --------
1. EMEIA comprises Europe, Middle East, India and Africa.
Due to the seasonal nature of the business, Group revenue is
usually expected to be higher in the second half of the year than
in the first half. While some of the Group's operating costs are
also higher in the second half of the year, such as contingent
rentals and sales related employee costs, most of the operating
costs, in particular salaries and fixed rentals, are phased more
evenly across the year. As a result, adjusted operating profit is
expected to be higher in the second half of the financial year.
4. Adjusting items
52 weeks
26 weeks 26 weeks to 27
to 25 September to 26 September March
2021 2020 2021
GBPm GBPm GBPm
----------------------------------------------------- ---------------- ---------------- --------
Adjusting operating items
Impact of COVID-19:
Impairment reversal relating to retail cash
generating units - (23.0) (46.6)
Impairment reversal relating to inventory (6.5) (6.6) (22.3)
Impairment reversal relating to receivables - (2.6) (5.2)
COVID-19 related rent concessions (9.0) (26.3) (54.1)
Furlough grant income (1.3) - (8.5)
Other adjusting items:
Gain on disposal of property - - (18.7)
Restructuring costs 4.8 22.1 29.8
Revaluation of deferred consideration liability 0.5 (0.8) 0.4
Total adjusting operating items (11.5) (37.2) (125.2)
----------------------------------------------------- ---------------- ---------------- --------
Adjusting financing items
Finance charge on deferred consideration liability 0.3 0.4 0.7
Total adjusting financing items 0.3 0.4 0.7
----------------------------------------------------- ---------------- ---------------- --------
52 weeks
26 weeks 26 weeks to 27
to 25 September to 26 September March
2021 2020 2021
GBPm GBPm GBPm
----------------------------------------------- ---------------- ---------------- --------
Analysis of adjusting operating items:
Included in Cost of sales (Impairment reversal
relating to inventory) (6.5) (6.6) (22.3)
Included in Net operating expenses (5.0) (30.6) (102.9)
Total adjusting operating items (11.5) (37.2) (125.2)
----------------------------------------------- ---------------- ---------------- --------
52 weeks
26 weeks 26 weeks to 27
to 25 September to 26 September March
2021 2020 2021
GBPm GBPm GBPm
--------------------------------- ---------------- ---------------- --------
Total adjusting items (pre-tax) (11.2) ( 36.8) (124.5)
Tax on adjusting items 2.6 6. 2 21.5
Total adjusting items (post-tax) (8.6) (30.6) (103.0)
--------------------------------- ---------------- ---------------- --------
Impact of COVID-19
COVID-19 has impacted both business operations and financial
markets worldwide. COVID-19 has also had a significant impact on
the financial results of the Group during the current period and
previous financial year.
As at the beginning of the financial year ending 27 March 2021,
the Group had balances relating to COVID-19 impairment charges that
had previously been charged as adjusting items in prior periods, as
they were considered to be material and one-off in nature. GBP235.9
million COVID-19 impairment charges were recognised in relation to
impairments of retail cash generating units (GBP156.5 million),
receivables (GBP11.1 million) and to inventory provisions (GBP68.3
million).
At 25 September 2021, these impairments and provisions have been
reviewed and the assumptions updated where appropriate, to reflect
management's latest expectations. The impact of changes in
assumptions has been presented as an update to the adjusting item
charge. Further details regarding the approach applied to measure
these updates are set out below for each of the specific adjusting
items.
Other items, where they are considered one-off in nature and
directly related to the impact of COVID-19, have been presented as
adjusting items. Income recorded in the period following
application of the temporary COVID-19 Related Rent Concession
amendment to IFRS 16 has been presented as an adjusting item. This
is considered appropriate given that the amendment to IFRS 16 is
only applicable for a limited period of time and it is explicitly
related to COVID-19. Grant income recorded in the period, relating
to government furlough arrangements worldwide, has also been
presented as an adjusting item, as it is also explicitly related to
COVID-19, and the arrangements are expected to last for a limited
period of time. In aggregate these items give rise to a material
amount of income in the period. Further details of these adjusting
items are set out below.
All other financial impacts of COVID-19 are included in adjusted
operating profit. As a result, additional costs recorded in the
period, including masks, other personal protection equipment, hand
sanitisers, production inefficiencies due to social distancing,
operating costs of retail stores during closure and the cost of
voluntary payment of UK rates, have not been separately presented
as adjusting items. These additional costs are not considered to be
one-off in nature, and in some cases the discrete impact of
COVID-19 on these costs cannot be reliably measured. Hence it is
considered more appropriate to include these additional costs in
adjusted operating profit.
Impairment of retail cash generating units
During the 26 weeks to 25 September 2021, the impairment
provisions remaining have been reassessed, using management's
latest expectations, with no charge or reversal recorded (last half
year: GBP23.0 million net reversal; last full year: GBP46.6 million
net reversal). There was no related tax charge (last half year:
GBP4.9 million; last full year: GBP5.2 million) recognised in the
period.
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 10 and 11 for details of impairment of retail cash
generating units.
Impairment of inventory
During the 26 weeks to 25 September 2021, 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 GBP6.5 million (last half year: GBP6.6 million; last
full year GBP22.3 million) have been recorded and presented as an
adjusting item. A related tax charge of GBP1.4 million (last half
year: GBP1.1 million; last full year GBP4.8 million) has also been
recognised in the period. All other charges and reversals relating
to inventory provisions have been recorded in adjusted operating
profit. Refer to note 13 for details of inventory provisions.
Impairment of receivables
During the 26 weeks to 25 September 2021, the expected credit
loss rates have been reassessed, taking into account the experience
of losses incurred during the period and changes in market
conditions at 25 September 2021 compared to the previous year end.
As a result of this reassessment, management has made no changes to
the expected credit loss rates and there has been no adjustment
recorded. Last half year a reversal of GBP2.6 million (last full
year: GBP5.2 million), resulting from the reduction in credit loss
rate assumption, was recorded as an adjusting item. There was no
related tax charge (last half year: GBP0.6 million; last full year
GBP1.1 million) recognised in the period. All other charges and
reversals relating to impairment of receivables, arising from
changes in the value and aging of the receivables portfolio, have
been included in adjusted operating profit. Refer to note 12 for
details of impairment of receivables.
COVID-19-related rent concessions
Eligible rent forgiveness amounts have been treated as negative
variable lease payments, resulting in a credit of GBP9.0 million
(last half year: GBP26.3 million; last full year: GBP54.1 million)
for the 26 weeks to 25 September 2021 being recorded in net
operating expenses. This income has been presented as an adjusting
item, as set out above. A related tax charge of GBP1.9 million
(last half year: GBP4.3 million; last full year GBP9.6 million) has
also been recognised in the current period.
COVID-19-related furlough grant income
The Group has recorded grant income of GBP1.3 million (last half
year GBPnil; last full year GBP8.5 million) within selling and
distribution costs in net operating expenses for the 26 weeks to 25
September 2021, relating to government support for retention of
employees on furlough, as a result of COVID-19. These grants
related to income received from a number of government arrangements
worldwide. None of the income related to UK based employees. This
income has been presented as an adjusting item, as set out above. A
related tax charge of GBP0.3 million (last half year: GBPnil; last
full year GBP2.2 million) has also been recognised in the current
period.
Restructuring costs
Restructuring costs of GBP4.8 million (last half year: GBP22.1
million; last full year: GBP29.8 million) were incurred in the
current period, arising primarily as a result of the organisational
efficiency programme announced in July 2020 that included the
creation of three new business units to enhance product focus,
increase agility and elevate quality and the further streamline of
office-based functions and facilities. The costs for the 26 weeks
to 25 September 2021 principally relate to redundancies and
consulting costs and these costs 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 is considered material and discrete in nature. A
related tax credit of GBP1.0 million (last half year: GBP4.7
million; last full year: GBP6.0 million) has also been recognised
in the current period.
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 GBP0.5 million in relation to the revaluation of
this balance has been recognised in net operating expenses for the
26 weeks to 25 September 2021 (last half year: credit of GBP0.8
million; last full year: charge of GBP0.4 million). A financing
charge of GBP0.3 million in relation to the unwinding of the
discount on the non-current portion of the deferred consideration
liability has also been recognised for the 26 weeks to 25 September
2021 (last half year: GBP0.3 million; last full year: GBP0.6
million). These movements are unrealised.
On 19 September 2018, the Group acquired Burberry Manifattura
S.R.L. Consideration for the acquisition included a future
performance related deferred consideration payment which has been
made subsequent to the period end on 5 October 2021. Refer to note
23 for details of post balance sheet events. A financing charge of
GBP0.1 million in relation to the unwinding of the discount on the
non-current portion of the deferred consideration liability has
been recognised for the 26 weeks to 25 September 2021 (last half
year: GBP0.1 million; last full year: GBP0.1 million). This
movement is unrealised.
No tax has been recognised on either of these items, as the
future payments are not considered to be deductible for tax
purposes. These items are presented as adjusting items in
accordance with the Group's accounting policy, as they arise from
changes in the value of the liability for expected future payments
relating to the purchase of a non-controlling interest in the Group
and acquisition of a subsidiary respectively.
Adjusting items relating to prior periods
Gain on disposal of property
During the 52 weeks to 27 March 2021, the Group completed the
sale of an owned property in France for cash proceeds of GBP27.2
million resulting in a net gain on disposal of GBP23.0 million,
recorded within administrative expenses in net operating expenses.
A profit of GBP18.7 million was presented as an adjusting item,
after deducting incremental costs of GBP4.3 million relating to
employee profit sharing agreements. This charge was recognised as
an adjusting item, in accordance with the Group's accounting
policy, as this profit from asset disposal is considered to be
material and one-off in nature. A related tax charge of GBP4.6
million was also recognised in the year.
5. FiNANCING
52 weeks
26 weeks 26 weeks to 27
to 25 September to 26 September March
2021 2020 2021
GBPm GBPm GBPm
--------------------------------------------------- ---------------- ---------------- --------
Bank interest income - amortised cost 0.2 0.3 0.6
Other finance income - amortised cost 0.2 0.2 0.5
--------------------------------------------------- ---------------- ---------------- --------
Finance income - amortised cost 0.4 0.5 1.1
Bank interest income - fair value through profit
and loss 0.7 1.0 2.0
Finance income 1.1 1.5 3.1
Interest expense on lease liabilities (12.9) (12.4) (24.9)
Interest expense on overdrafts (0.1) (0.1) (0.2)
Interest expense on borrowings (2.0) (1.9) (4.7)
Bank charges (1.8) (0.8) (1.7)
Other finance expense (0.3) (1.2) (1.8)
--------------------------------------------------- ---------------- ---------------- --------
Finance expense (17.1) (16.4) (33.3)
--------------------------------------------------- ---------------- ---------------- --------
Finance charge on deferred consideration liability (0.3) (0.4) (0.7)
Net finance expense (16.3) (15.3) (30.9)
--------------------------------------------------- ---------------- ---------------- --------
6. Taxation
The interim tax charge has been calculated by applying the
estimated weighted average tax rate applicable to the Group's full
year forecast adjusted profit before tax to the actual adjusted
profit before tax in the interim period. Tax on prior year
adjustments and remeasurement of tax balances due to changes in tax
rates have been recorded as identified in the period. The resulting
effective tax rate on adjusted profit before tax in the period is
24.1% (last half year: 50.9%; last full year: 25.4%). Tax on
adjusting items has been recognised at the prevailing tax rates as
appropriate. The resulting effective tax rate on reported profit
before taxation is 24.1% (last half year: 33.6%; last full year:
23.3%). The effective tax rate on adjusted profit before tax for
the full year is estimated to be 22.0%.
52 weeks
26 weeks 26 weeks to 27
to 25 September to 26 September March
2021 2020 2021
GBPm GBPm GBPm
-------------------------------------------------- ---------------- ---------------- --------
Current Tax
-------------------------------------------------- ---------------- ---------------- --------
Current tax on income for the period 58.2 5.0 92.4
Adjustments in respect of prior years 6.6 2.0 (4.2)
-------------------------------------------------- ---------------- ---------------- --------
Total Current Tax 64.8 7.0 88.2
-------------------------------------------------- ---------------- ---------------- --------
Deferred Tax
-------------------------------------------------- ---------------- ---------------- --------
Origination and reversal of temporary differences (17.8) 10.6 15.8
Impact of changes to tax rates (3.4) - (0.3)
Adjustments in respect of prior years 2.4 6.9 10.6
Total Deferred Tax (18.8) 17.5 26.1
-------------------------------------------------- ---------------- ---------------- --------
Total tax charge on profit 46.0 24.5 114.3
-------------------------------------------------- ---------------- ---------------- --------
Total taxation recognised in the condensed group income
statement comprises:
26 weeks 52 weeks
26 weeks to 26 September to 27
to 25 September 2020 March
2021 GBPm 2021
GBPm GBPm
--------------------------------------- ---------------- ---------------- --------
Tax on adjusted profit before taxation 43.4 18.3 92.8
Tax on adjusting items (note 4) 2.6 6.2 21.5
Total taxation charge 46.0 24.5 114.3
--------------------------------------- ---------------- ---------------- --------
Deferred Taxation
The major deferred tax assets/(liabilities) recognised by the
Group and movements during the period are as follows:
Unrealised
inventory
profit
and other Unused
Capital inventory Share Derivative tax Net deferred
allowances provisions schemes instruments losses Leases Other tax asset
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- ----------- ----------- -------- ------------ ------- ------ ----- ------------
Balance as at 27
March 2021 16.7 61.6 3.9 (0.9) 1.1 35.0 18.9 136.3
Effect of foreign
exchange rates 0.1 0.8 - - - 0.2 0.2 1.3
Credited/(charged)
to the Income Statement 3.2 22.7 0.2 - - (4.9) (2.4) 18.8
Credited to equity - - - 0.9 - - - 0.9
Balance as at 25
September 2021 20.0 85.1 4.1 - 1.1 30.3 16.7 157.3
------------------------- ----------- ----------- -------- ------------ ------- ------ ----- ------------
An increase in the UK's main corporation tax rate from 19% to
25% was substantially enacted within the period to take effect from
1 April 2023. A remeasurement of those UK deferred tax assets and
liabilities which are forecast to be utilised after this date has
been recorded in the period, resulting in a GBP3.4 million credit
to the condensed group income statement.
7. Earnings per share
The calculation of basic earnings per share is based on profit
or loss attributable to owners of the Company for the period
divided by the weighted average number of ordinary shares in issue
during the period. Basic and diluted earnings per share based on
adjusted profit before taxation are also disclosed to indicate the
underlying profitability of the Group.
26 weeks 52 weeks
26 weeks to 26 September to 27
to 25 September 2020 March
2021 GBPm 2021
GBPm GBPm
---------------------------------------------- ---------------- ---------------- --------
Attributable profit for the period before
adjusting items(1) 136.3 18.6 272.7
Effect of adjusting items(1) (after taxation) 8.6 30.7 103.0
---------------------------------------------- ---------------- ---------------- --------
Attributable profit for the period 144.9 49.3 375.7
---------------------------------------------- ---------------- ---------------- --------
1. Refer to note 4 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 period, excluding ordinary shares held in the
Group's ESOP trusts and treasury shares held by the Company or its
subsidiaries.
Diluted earnings per share is based on the weighted average
number of ordinary shares in issue during the period. 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.
26 weeks 26 weeks 52 weeks
to 25 to 26 September to 27
September 2020 March
2021 Millions 2021
Millions Millions
------------------------------------------------ ---------- ---------------- ---------
Weighted average number of ordinary shares
in issue during the period 404.3 403.9 404.1
Dilutive effect of the employee share incentive
schemes 2.0 0.8 1.0
------------------------------------------------ ---------- ---------------- ---------
Diluted weighted average number of ordinary
shares in issue during the period 406.3 404.7 405.1
------------------------------------------------ ---------- ---------------- ---------
26 weeks 26 weeks 52 weeks
to 25 to 26 September to 27
September 2020 March
2021 Pence 2021
Pence Pence
----------------------------------------------- ---------- ---------------- --------
Earnings per share
Basic 35.8 12.2 93.0
Diluted 35.7 12.2 92.7
Adjusted earnings per share - non-GAAP measure
Basic 33.7 4.6 67.5
Diluted 33.5 4.6 67.3
----------------------------------------------- ---------- ---------------- --------
8. Dividends paid to owners of the Company
The interim dividend of 11.6p (last half year: nil) per share
has been approved by the Board of Directors after 25 September
2021. Accordingly, this dividend has not been recognised as a
liability at the period end.
The interim dividend will be paid on 28 January 2022 to
Shareholders on the Register at the close of business on 17
December 2021.
The ex-dividend date is 16 December 2021 and the final day for
dividend reinvestment plan ('DRIP') elections is 7 January
2022.
A dividend of 42.5p (last half year: nil) was paid during the
period to 25 September 2021 in relation to the year ended 27 March
2021.
9. Intangible assets
Goodwill at 25 September 2021 is GBP105.6 million (last half
year: GBP110.5 million; last full year: GBP105.2 million). There
were no additions to goodwill in the period (last half year:
GBPnil).
In the period there were additions to other intangible assets of
GBP13.7 million (last half year: GBP20.7 million) and disposals
with a net book value of GBPnil (last half year: GBPnil).
Capital commitments contracted but not provided for by the Group
amounted to GBP2.5 million (last half year: GBP4.6 million).
Impairment testing
Assets that have an indefinite useful economic life are not
subject to amortisation and are tested annually for impairment.
Goodwill is the only intangible asset category with an
indefinite useful economic life included within total intangible
assets at 25 September 2021. Management has performed a review for
indicators of impairment as at 25 September 2021 and concluded that
there are no indicators at this time. The annual impairment test
will be performed at 2 April 2022.
The impairment charge for other intangible assets for the 26
weeks to 25 September 2021 is GBPnil (last half year: GBP0.8
million).
10. Property, plant and equipment
In the period there were additions to property, plant and
equipment of GBP34.4 million (last half year: GBP28.8 million) and
disposals with a net book value of GBP0.2 million (last half year:
GBPnil).
The additions of GBP34.4 million (last half year: GBP28.8
million) includes GBP25.7 million (last half year: GBP39.9 million)
arising as a result of investing cash outflows and GBP8.7 million
(last half year: GBP11.1 million) movement in capital expenditure
accruals.
Capital commitments contracted but not provided for by the Group
amounted to GBP38.6 million (last half year: GBP23.9 million).
Impairment testing
During the current period, management reviewed their assumptions
relating to the impact of COVID-19 on the impairment of retail cash
generating units and reviewed these units for any indication of
impairment or impairment reversal. Where indicators of impairment
have been identified a full impairment analysis was carried out and
if 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. 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, and extrapolated beyond the current year to the lease
end dates using growth rates and inflation rates appropriate to
each store's location. The pre-tax discount rates used in these
calculations were between 10.2% and 17.5% (last half year: between
9.5% and 14.2%) based on the Group's weighted average cost of
capital adjusted for country-specific borrowing costs, tax rates
and risks.
During the 26 weeks to 25 September 2021, an impairment charge
of GBP2.2 million (last half year: net impairment reversal of
GBP23.0 million) was recorded as a result of a review of impairment
of retail store assets. A charge of GBP0.2 million was recorded
against property, plant and equipment (last half year: net
impairment charge of GBP1.5 million and a reversal of GBP5.5
million) and a charge of GBP2.0 million was recorded against
right-of-use assets (last half year: charge of GBP10.3 million and
a reversal of GBP29.3 million). Refer to note 11 for further
details of right-of-use assets. The net impairment reversal
relating to the change in assumptions of the impact of COVID-19 on
the impairment charge of GBP23.0 million recorded last year was
presented as an adjusting item. Refer to note 4 for details of
adjusting items.
Management has considered the potential impact of changes in
assumptions on the impairment recorded against the Group's retail
assets. Given the significant uncertainty regarding the impact of
COVID-19 on the Group's retail operations and on the global
economy, management have 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. It is estimated that a 10%
decrease/increase in revenue assumptions for the 53 weeks to 2
April 2022, with no change to subsequent forecast revenue growth
rate assumptions, would result in a GBP17 million increase / GBP10
million decrease in the impairment charge of retail store assets in
the 26 weeks to 25 September 2021.
The impairment charge recorded in property, plant and equipment
related to 3 retail cash generating units (last half year: net
impairment reversal related to 22 retail cash generating units-)
for which the total recoverable amount at the balance sheet date is
GBPnil. (last half year: GBP31.9 million).
In addition, an impairment charge of GBP0.2 million (last half
year: GBP0.8 million) was recognised in relation to non-retail
assets. As a result the total net impairment charge for property,
plant and equipment was GBP0.4 million (last half year: net
impairment reversal of GBP3.2 million).
11. RIGHT OF USE ASSETS
In the period there were additions to right-of-use assets of
GBP124.2million (last half year: GBP32.9 million). Depreciation of
right-of-use assets of GBP89.6 million (last half year: GBP83.5
million) is included within net operating expenses.
Impairment testing
As a result of the assessment of retail cash generating units
for impairment, an impairment charge of GBP2.0 million (last half
year: net impairment reversal of GBP19.0 million) was recorded for
impairment of right-of-use assets. Refer to note 10 for further
details of impairment assessment of retail cash generating
units.
In addition, an impairment charge of GBPnil (last half year:
impairment charge of GBP3.5 million) was recognised in relation to
vacant office premises.
12. Trade and other receivables
As at 25 As at 26 As at
September September 27 March
2021 2020 2021
GBPm GBPm GBPm
---------------------------------------------- ---------- ---------- ---------
Non-current
Other financial receivables(1) 43.5 43.6 40.9
Other non-financial receivables(2) 1.1 2.0 1.4
Prepayments 2.8 4.0 2.7
---------------------------------------------- ---------- ---------- ---------
Total non-current trade and other receivables 47.4 49.6 45.0
---------------------------------------------- ---------- ---------- ---------
Current
Trade receivables 153.7 171.3 154.8
Provision for expected credit losses (9.0) (13.4) (7.9)
---------------------------------------------- ---------- ---------- ---------
Net trade receivables 144.7 157.9 146.9
Other financial receivables(1) 32.3 31.8 33.1
Other non-financial receivables(2) 53.9 38.7 48.5
Prepayments 59.5 41.2 39.6
Accrued income 9.8 9.8 8.8
---------------------------------------------- ---------- ---------- ---------
Total current trade and other receivables 300.2 279.4 276.9
---------------------------------------------- ---------- ---------- ---------
Total trade and other receivables 347.6 329.0 321.9
---------------------------------------------- ---------- ---------- ---------
1. Other financial receivables include rental deposits and other
sundry debtors.
2. Other non-financial receivable relates to indirect taxes,
other taxes and duties and statutory employee furlough
receivables.
The net charge for impairment of financial receivables in the
period was GBP1.8 million (last half year: reversal of GBP2.2
million; last full year: charge of GBP4.1 million). None of this
net charge has been presented as an adjusting item (last half year:
GBP2.6 million; last full year: charge of GBP5.2 million). Refer to
note 4 for details of adjusting items.
13. Inventories
Inventory provisions of GBP110.3 million (last half year:
GBP158.8 million; last full year: GBP116.6 million) are recorded,
representing 20.2% (last half year: 24.6%; last full year 22.5%) of
the gross value of inventory. The provisions reflect management's
best estimate of the net realisable value of inventory, where this
is considered to be lower than the cost of the inventory.
As at 28 March 2020, GBP68.3 million of the provision was
included in cost of sales as a result of the estimated reduction in
net realisable value of inventory due to COVID-19 and was presented
as an adjusting item. In the current period, GBP4.5 million of the
provision (last half year: GBPnil; last full year: GBP3.9 million)
has been utilised, where inventory previously provided for had been
sold below cost in the current year and is recognised in cost of
sales.
An additional GBP6.5 million (last half year: GBP6.6 million;
last full year: GBP22.3 million) has been released upon
re-assessment of the provision, where inventory previously provided
for has been sold, or is now expected to be sold, for a higher net
realisable value than has been estimated last year as performance
during the current period has exceeded, and is expected to continue
to exceed, the assumptions made at 27 March 2021. This reversal is
presented as an adjusting item. Refer to note 4 for details of
adjusting items.
14. Cash and cash equivalents
As at 25 As at 26 As at
September September 27 March
2021 2020 2021
GBPm GBPm GBPm
--------------------------------------------- ---------- ---------- ---------
Cash and cash equivalents held at amortised
cost
Cash at bank and in hand 188.8 195.3 189.8
Short-term deposits 113.4 155.5 159.4
--------------------------------------------- ---------- ---------- ---------
302.2 350.8 349.2
Cash and cash equivalents held at fair value
through profit and loss
Short-term deposits 895.0 848.7 912.1
--------------------------------------------- ---------- ---------- ---------
Total 1,197.2 1,199.5 1,261.3
--------------------------------------------- ---------- ---------- ---------
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.
15. Trade and other payables
As at 25 As at 26 As at
September September 27 March
2021 2020 2021
GBPm GBPm GBPm
------------------------------------------- ---------- ---------- ---------
Non-current
Other payables(1) 8.4 8.4 7.9
Deferred income and non-financial accruals 14.9 8.0 14.2
Contract liabilities 67.2 73.8 70.4
Deferred consideration(2) 3.9 13.3 6.9
------------------------------------------- ---------- ---------- ---------
Total non-current trade and other payables 94.4 103.5 99.4
------------------------------------------- ---------- ---------- ---------
Current
Trade payables 143.7 121.7 129.3
Other taxes and social security costs 56.4 61.0 52.2
Other payables(1) 17.8 6.2 12.6
Accruals 191.0 200.9 169.1
Deferred income and non-financial accruals 7.5 4.6 6.6
Contract liabilities 12.5 13.5 13.4
Deferred consideration(2) 13.7 2.2 9.7
------------------------------------------- ---------- ---------- ---------
Total current trade and other payables 442.6 410.1 392.9
------------------------------------------- ---------- ---------- ---------
Total trade and other payables 537.0 513.6 492.3
------------------------------------------- ---------- ---------- ---------
1. Other payables are comprised of COVID-19 rent deferrals,
interest and employee related liabilities.
2. Deferred consideration relates to the acquisition of Burberry
Manifattura S.R.L. on 19 September 2018 and of the economic right
to the non-controlling interest in Burberry Middle East LLC on 22
April 2016. The change in the deferred consideration liability in
the period arises as a result of a financing cash outflow and
non-cash movements. There were no payments made in the 26 weeks to
25 September 2021 (last half year: GBP2.6 million; last full year:
GBP2.6 million). Refer to note 23 for further details on events
after the balance sheet date.
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, which are all considered current. 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 25 As at 26 As at
September September 27 March
2021 2020 2021
GBPm GBPm GBPm
------------------------------- ---------- ---------- ---------
Retail contract liabilities 6.0 7.0 6.8
Licensing contract liabilities 73.7 80.3 77.0
------------------------------- ---------- ---------- ---------
Total contract liabilities 79.7 87.3 83.8
------------------------------- ---------- ---------- ---------
16. Provisions for other liabilities and charges
Property Other
obligations costs Total
GBPm GBPm GBPm
---------------------------------------- ------------ ------------------- -----
Balance as at 27 March 2021 41.6 14.2 55.8
Effect of foreign exchange rate changes 0.1 0.1 0.2
Created during the period 1.7 0.2 1.9
Discount unwind 0.1 - 0.1
Utilised during the period (0.2) (0.7) (0.9)
Released during the period (0.2) (3.4) (3.6)
Balance as at 25 September 2021 43.1 10.4 53.5
---------------------------------------- ------------ ------------------- -----
Balance as at 26 September 2020 39.6 10.1 49.7
---------------------------------------- ------------ ------------------- -----
As at 25 As at 26 As at
September September 27 March
2021 2020 2021
GBPm GBPm GBPm
------------------------------ ---------- ---------- ---------
Analysis of total provisions:
Non-current 32.7 30.8 31.8
Current 20.8 18.9 24.0
------------------------------ ---------- ---------- ---------
Total 53.5 49.7 55.8
------------------------------ ---------- ---------- ---------
17. Bank overdrafts
Included within bank overdrafts is GBP54.2 million (last half
year: GBP60.7 million; last full year: GBP45.4 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 25 September 2021, the Group held
bank overdrafts of GBPnil (last half year: GBP0.9 million; last
full year: GBPnil) excluding balances on cash pooling
arrangements.
The fair value of overdrafts approximates the carrying amount
because of the short maturity of these instruments.
18. Borrowings
On 26 July 2021, the Group entered into a new GBP300 million
multi-currency sustainability linked revolving credit facility
(RCF) with a syndicate of banks replacing the previous GBP300
million RCF that had been in place since 2014. In March 2020, the
Group drew down on the original facility in full, the facility was
repaid in full in June 2020. At 25 September 2021, there were
GBPnil outstanding drawings. The Group is in compliance with the
financial and other covenants within the facility and has been in
compliance throughout the financial period.
On 14 May 2020, Burberry Limited issued commercial paper with a
face value of GBP300 million, issued at a discount with zero
coupon, and a maturity of 17 March 2021. The commercial paper was
issued under a GBP300 million facility the Group agreed under the
UK Government sponsored COVID Corporate Finance Facility (CCFF). An
increase to the Group's CCFF of GBP300 million to GBP600 million
was made available from 29 May 2020 however no further commercial
paper was issued. The CCFF was repaid in full on 10 February 2021
and the facility expired on 23 March 2021.
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
fair value of the bond at 25 September 2021 is GBP297.1 million
(last half year GBP296.7 million), all movements on the bond are
non-cash.
19. Share capital and reserves
Allotted, called up and fully paid share capital Number GBPm
-------------------------------------------------- ----------- ----
Ordinary shares of 0.05p (last year: 0.05p) each
-------------------------------------------------- ----------- ----
As at 28 March 2020 404,705,886 0.2
Allotted on exercise of options during the period 30,333 -
As at 26 September 2020 404,736,219 0.2
As at 27 March 2021 404,864,359 0.2
Allotted on exercise of options during the period 64,529 -
As at 25 September 2021 404,928,888 0.2
-------------------------------------------------- ----------- ----
Other reserves
Own shares purchased by the Company, as part of a share buy-back
programme, are classified as treasury shares and their cost offset
against retained earnings. When treasury shares are cancelled, a
transfer is made from retained earnings to the capital redemption
reserve, equivalent to the nominal value of the shares purchased
and subsequently cancelled. The cost of shares purchased by
employee share ownership trusts (ESOP trusts) are offset against
retained earnings, as the amounts paid reduce the profits available
for distribution by the Company.
As at 25 September 2021 the amount held against retained
earnings in relation to shares purchased by ESOP trusts was GBP14.5
million (last half year: GBP15.5 million). As at 25 September 2021,
the Company held no treasury shares (last half year: none) and ESOP
trusts held 0.8 million (last half year: 1.0 million) shares in the
Company, with a market value of GBP14.9 million (last half year:
GBP14.9 million). In the 26 weeks to 25 September 2021 the ESOP
trusts and the Company have waived their entitlement to dividends
of GBP0.2 million (last half year: GBPnil).
20. Related party transactions
The Group's significant related parties are disclosed in the
Annual Report for the 52 weeks to 27 March 2021. There were no
material changes to these related parties in the period. Other than
total compensation in respect of key management, no material
related party transactions have taken place during the current
period.
21. Fair value disclosure for financial instruments
The Group's principal financial instruments comprise derivative
instruments, cash and cash equivalents, borrowings (including
overdrafts), deferred consideration, trade and other receivables
and trade and other payables arising directly from operations.
The fair value of the Group's financial assets and liabilities
held at amortised cost approximate their carrying amount due to the
short maturity of these instruments with the exception of GBP13.2
million (last half year: GBP13.8 million) held in non-current other
receivables relating to an interest-free loan provided to a
landlord in Korea. At 25 September 2021, the discounted fair value
of the loan is GBP14.2 million (last half year: GBP16.0
million).
The fair value of the sustainability bond is considered to
approximate its book value due to the proximity of its date of
issue to the balance sheet date, refer to note 18.
The measurements for financial instruments carried at fair value
are categorised into different levels in the fair value hierarchy
based on the inputs to the valuation technique used. The different
levels are defined as follows:
Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities that the Group can access at the
measurement date.
Level 2: inputs other than quoted prices included within level 1
that are observable for the asset or liability, either directly or
indirectly.
Level 3: includes unobservable inputs for the asset or
liability.
Observable inputs are those which are developed using market
data, such as publicly available information about actual events or
transactions. The Group has an established framework with respect
to measurement of fair values, including level 3 fair values. The
Group regularly reviews any significant inputs which are not
derived from observable market data and considers, where available,
relevant third-party information to support the conclusion that
such valuations meet the requirements of IFRS. The classification
level in the fair value hierarchy is also considered periodically
and, if required, financial instruments are transferred on the date
of the event or change in circumstances that caused the
transfer.
The fair value of those cash and cash equivalents measured at
fair value through profit and loss, principally money market funds,
is derived from their net asset value which is based on the value
of the portfolio investment holdings at the balance sheet date.
This is considered to be a level 2 measurement.
The fair value of forward foreign exchange contracts and equity
swap contracts is considered to be a level 2 measurement, it is
based on a comparison of the contractual and market rates and, in
the case of forward foreign exchange contracts, after discounting
using the appropriate yield curve as at the balance sheet date.
The fair value of the contingent payment component of deferred
consideration is considered to be a level 3 measurement and is
derived using a present value calculation, incorporating observable
and non-observable inputs. This valuation technique has been
adopted as it most closely mirrors the contractual arrangement.
22. Contingent liabilities
The Group is subject to claims against it and to tax audits in a
number of jurisdictions which arise in the ordinary course of
business. These typically relate to Value Added Taxes, sales taxes,
customs duties, corporate taxes, transfer pricing, payroll taxes,
various contractual claims, legal proceedings and other matters.
Where appropriate, the estimated cost of known obligations have
been provided in these financial statements in accordance with the
Group's accounting policies. The Group does not expect the outcome
of current similar contingent liabilities to have a material effect
on the Group's financial condition.
23. Post Balance sheet Events
On 5 October 2021 the Group paid GBP8.9million to the former
owners of Burberry Manifattura. This was the final settlement of
the deferred consideration which was agreed as part of the
acquisition of the business in 2018. The balance was paid in full
as the conditions upon which the payment was due were met.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors confirm that the condensed consolidated interim
financial statements have been prepared in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the UK and that the Interim Management
Report and condensed consolidated interim financial statements
include a fair review of the information required by Disclosure and
Transparency Rules 4.2.7 and 4.2.8, namely:
- an indication of important events that have occurred during
the first 26 weeks of the financial year and their impact on the
condensed consolidated interim financial statements, and a
description of the principal risks and uncertainties for the
remaining 27 weeks of the financial year; and
- material related party transactions in the first 26 weeks of
the financial year and any material changes in the related party
transactions described in the last Annual Report.
The Directors of Burberry Group plc are consistent with those
listed in the Burberry Group plc Annual Report for the 52 weeks to
27 March 2021.
A list of current directors is maintained on the Burberry Group
plc website: www.burberryplc.com .
By order of the Board
Marco Gobbetti
Chief Executive Officer
10 November 2021
Julie Brown
Chief Operating and Financial Officer
10 November 2021
INDEPENT REVIEW REPORT TO BURBERRY GROUP PLC
Conclusion
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
26 week period ended 25 September 2021 which comprise the condensed
group income statement, the condensed group statement of
comprehensive income, the condensed group balance sheet, the
condensed group statement of changes in equity, the condensed group
statement of cash flows and the related explanatory notes 1 to
23.
We have read the other information contained in the half yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the 26 week period ended 25
September 2021 is not prepared, in all material respects, in
accordance with UK adopted International Accounting Standard 34 and
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements 2410 (UK and Ireland) "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of the
group will be prepared in accordance with UK adopted international
accounting standards. The condensed set of financial statements
included in this half-yearly financial report has been prepared in
accordance with UK adopted International Accounting Standard 34,
"Interim Financial Reporting".
Responsibilities of the directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statements in the half-yearly financial report. Our
conclusion is based on procedures that are less extensive than
audit procedures, as described in the Basis for Conclusion
paragraph of this report.
Use of our report
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
10 November 2021
, the news service of the London Stock Exchange. RNS is approved by
the Financial Conduct Authority to act as a Primary Information
Provider in the United Kingdom. Terms and conditions relating to
the use and distribution of this information may apply. For further
information, please contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR DKKBPDBDBCDD
(END) Dow Jones Newswires
November 11, 2021 02:00 ET (07:00 GMT)
Burberry (LSE:BRBY)
Gráfica de Acción Histórica
De Mar 2024 a Abr 2024
Burberry (LSE:BRBY)
Gráfica de Acción Histórica
De Abr 2023 a Abr 2024
