TIDMBRBY
RNS Number : 5940P
Burberry Group PLC
10 June 2020
10 June 2020
Burberry Group plc - Annual Financial Report
The following documents have today been made available to
shareholders of Burberry Group plc
(the "Company"):
1. Annual Report and Accounts for the financial year ended 28 March 2020;
2. Notice of the 2020 Annual General Meeting; and
3. Form of Proxy for the 2020 Annual General Meeting.
Pursuant to Listing Rule 9.6.1, each of these documents has been
submitted to the National Storage Mechanism and they will shortly
be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism .
The documents are also available on the Company's website at
burberryplc.com
The 2020 Annual General Meeting (the "AGM") will take place at
11.00am on Wednesday, 15 July 2020 at Horseferry House, Horseferry
Road, London, SW1P 2AW. Please note that due to restrictions
related to COVID-19 this is a closed meeting and shareholders will
not be able to attend. Shareholders are encouraged to vote in
advance either electronically or by submitting their Form of Proxy
appointing the Chairman of the Meeting as proxy. Shareholders are
also invited to submit questions in advance of the meeting as
detailed in the Notice of AGM. Questions should be received no
later than 11.00am on Monday, 11 July 2020. The total of the votes
cast by shareholders for or against or withheld on each resolution
to be put to the meeting will be published on burberryplc.com as
soon as possible after the meeting.
In compliance with Disclosure Guidance and Transparency Rule
("DTR") 6.3.5, the information in the Appendix below is extracted
from the Company's Annual Report and Accounts for the financial
year ended 28 March 2020 (the "2019/20 Annual Report and Accounts")
and should be read in conjunction with the Company's preliminary
announcement issued on 22 May 2020 (the "Preliminary
Announcement"), both of which can be viewed at burberryplc.com .
Together these constitute the material required by DTR 6.3.5 to be
communicated to the media in unedited full text through a
Regulatory Information Service. This material is not a substitute
for reading the 2019/20 Annual Report and Accounts in full. Page
numbers and cross-references in the extracted information below
refer to page numbers and cross-references in the 2019/20 Annual
Report and Accounts.
The information contained in this announcement and in the
Preliminary Announcement does not constitute the Company's
statutory accounts, but is derived from those statutory accounts.
The statutory accounts for the financial year ended 28 March 2020
have been approved by the Board and will be delivered to the
Registrar of Companies following the AGM.
Enquiries
Investors and analysts
Annabel Gleeson
VP, Investor Relations
annabel.gleeson@burberry.com
020 3367 4458
Media
Andrew Roberts
VP, Corporate Relations
andrew.roberts@burberry.com
020 3367 3764
APPIX: ADDITIONAL INFORMATION REQUIRED BY DTR 6.3.5
AUDIT REPORTS
The Preliminary Announcement includes a condensed set of
financial statements. Audited financial statements for the
financial year ended 28 March 2020 are contained in the 2019/20
Annual Report and Accounts. The Independent Auditors' Report on the
Company financial statements and the parent company financial
statements (the "Audit Report") is set out in full on pages 195 to
203 of the 2019/20 Annual Report and Accounts. The Audit Report is
unqualified and does not contain any statements under section
498(2) (regarding adequacy of accounting records and returns) or
under section 498(3) (regarding provision of necessary information
and explanations) of the Companies Act 2006.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The following information is extracted from page 194 of the
2019/20 Annual Report and Accounts.
The directors consider that the Annual Report, taken as a whole,
is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group and the Company's
position and performance, business model and strategy.
Each of the directors, whose names and functions are listed on
pages 124 to 127 confirm that, to the best of their knowledge:
- the Company financial statements, which have been prepared in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, comprising FRS 101
'Reduced Disclosure Framework', and applicable law), give a true
and fair view of the assets, liabilities, financial position and
profit of the Company;
- the Group financial statements, which have been prepared in
accordance with IFRSs as adopted by the European Union, give a true
and fair view of the assets, liabilities, financial position and
profit of the Group; and
- the Strategic Report includes a fair review of the development
and performance of the business and the position of the Group and
the Company, together with a description of the principal risks and
uncertainties that it faces.
PRINCIPAL RISKS
The following information is extracted from pages 92 to 111 of
the 2019/20 Annual Report and Accounts.
OUR APPROACH TO RISK
The Group's strategy takes into account risks, as well as
opportunities, which need to be actively managed. Effective risk
management is essential to executing our strategy, achieving
sustainable shareholder value, protecting the brand and ensuring
good governance.
The Board is ultimately responsible for determining the nature
and extent of the principal risks it is willing to take to achieve
our strategic objectives (the Board's risk appetite), and
challenging management's implementation of effective systems of
risk identification, assessment and mitigation.
The Audit Committee has been delegated the responsibility for
reviewing the effectiveness of the Group's internal controls and
risk management arrangements. Ongoing review of these controls is
provided through internal governance processes and the work of the
Group functions is overseen by the Executive Committee,
particularly the work of Group Risk and Internal Audit and the Risk
and Ethics Committees.
An integral part of our business, our risk management process is
co-ordinated by our Group Risk and Assurance team, reporting to our
Chief Operating and Financial Officer. Risk management activities
include identifying risks, undertaking risk assessments and
determining mitigating actions. These activities are reviewed by
our Internal Audit and other control functions, which provide
assurance to our Risk Committee, and ultimately to our Board, as
shown in the diagram on page 128.
RISK APPETITE
The Board reviews and validates the Group's risk appetite on an
annual basis. This is integrated into our wider risk management
framework to support better decision-making and prioritisation.
We will pursue growth and are prepared to accept a certain level
of risk to firmly establish our position in luxury fashion and
inspire our customers. We operate in a competitive, dynamic sector
with long-term growth potential. Within categories of risk, our
tolerance for risk may vary.
Complying with applicable laws and doing the right thing is part
of our culture and underpins our strategic ambition. In exploring
risks and opportunities, we prioritise the interests and safety of
our customers and employees, we seek to protect the long-term value
and reputation of the brand, maximising commercial benefits to
support responsible and sustainable global growth within our
defined risk tolerance.
OUR PRINCIPAL RISKS AND THE TREATMENT OF COVID-19 PANDEMIC
RISKS
The Board considers the principal risks to be the most
significant risks faced by the Group and those that are the most
material to our performance and that could threaten our business
model or the future long-term performance, solvency or liquidity of
Burberry. They do not comprise all the risks associated with our
business and are not set out in priority order. Additional risks
not known to management at present, or currently deemed to be less
material, may also have an adverse effect on our business.
COVID-19 was declared a global pandemic on 11 March 2020 by the
World Health Organization, with unprecedented restrictive measures
being been put in place worldwide to help prevent the spread of
COVID-19, ensure safety and wellbeing, protect health services and
try and stabilise the economy. Information on how the impact of
COVID-19 on Burberry has been addressed in the FY 2019/20 accounts
is as follows:
1. The impact on the fourth quarter of FY 2019/20 trading
performance is explained on pages 84-89. The high level of
uncertainty and the severity of the disruption has negatively
impacted the global economy resulting in downturns in consumer
confidence and demand across the luxury fashion industry. Burberry
saw a significant impact on our results in the final quarter of the
FY 2019/20 including one-off charges of GBP240.9m.
2. The continuing spread of COVID-19 and the associated
restrictions on public life are expected to significantly impact FY
2020/21 trading performance, however, the impact and timing of the
return to normality and growth is uncertain. The potential impact
on FY 2020/21 and beyond has been estimated by modelling various
sales, supply chain, cost and liquidity scenarios based on a range
of scientific and economic assumptions and considering various
mitigating activities to reduce the impact on cash and EBIT. This
work is summarised and explained on page 84.
3. Risk disclosures have been dealt with as follows:
-- The risk of prolonged COVID-19 disruption, beyond the range
of assumptions that have been used to develop the reasonably
expected outcomes, has been incorporated as a new principal risk
for the Group.
-- The impact on each of the other principal risks from the
pandemic is also explained in the detail for each risk.
The macro-economic risk includes the risk of a deep global
economic recession, which is considered to be one of the most
significant possible future impacts.
4. For the Viability Statement the risks of the pandemic and the
potential repercussions for the global economy on trading
performance have been incorporated in modelling a range of outcomes
together with revenue and cost sensitivities, and as part of the
stress testing of the liquidity needed to support the Group ' s
strategic plan. We have conducted reverse stress testing to
identify the theoretical loss of revenue and liquidity that the
Group could manage without impacting its viability.
Our risk framework is structured around the following categories
of risk: External, Strategic and Financial, Operational, Compliance
and Climate Change. Each principal risk is linked to one of these
categories and may impact one or more of our strategic
priorities.
We have reviewed and updated the descriptions and mitigating
actions of our principal risks and have added new emerging external
risks, including the further disruption caused by the COVID-19
pandemic, and any new strategic priorities that have been
announced. We reviewed whether the level of risk associated with
each of the principal risks is increasing or decreasing compared to
the previous financial year and noted new risks, which do not have
a basis for comparison.
Our risk management processes are designed to enable us to
identify risks that can be partially mitigated through insurance.
We focus our insurance resources on the most critical areas, or
where there is a legal requirement, and where we can get best value
for money for risk transfer.
EMERGING RISKS
Potential emerging risks are an area of focus. We undertake
horizon scanning in conjunction with our strategy team to monitor
any potential risks that could change our industry and/or our
business, looking at both the inherent risk and opportunity.
Emerging risks are new and evolving, and thus their full potential
impact is still uncertain. To manage this, we involve specialist
third parties where necessary to understand how our risk profile
could change over a longer time period. Our risk management
approach considers short term to be one year, medium term to be two
to five years and long term more than five years.
EMERGING RISKS
Macro Pandemics: impact of the COVID-19 pandemic may be
prolonged, leading to longer-term disruptions to
supply chain, shifts in consumer demand, and travel
restrictions
---------------------------------------------------------
Protectionism: countries protecting domestic production
may use tariffs and trade restrictions, which would
increase the cost of moving goods into key markets
---------------------------------------------------------
Changing regulatory environment: financial reporting
regulation may increase the risk of non-compliance
---------------------------------------------------------
Consumer Changing consumer preferences: increased expectations
around product and Company sustainability
---------------------------------------------------------
Significance of influential groups/individuals on
consumer spending patterns: for example, growing
influence of Gen Z on entire consumer base through
social media
---------------------------------------------------------
Industry Industry concentration: increase in concentration
on key consumer groups resulting in greater competition
for growth targets
---------------------------------------------------------
Emerging disrupter brands: trend for pop-up and
emerging brands increases as a market share and
attracts Burberry ' s consumer
---------------------------------------------------------
New technology: leading to changes in consumer spending
habits, for example virtual stores
---------------------------------------------------------
Circularity: new business models and increase in
product re-sale markets, including fashion rental
---------------------------------------------------------
Full supply chain traceability: requiring investment
in new technologies
---------------------------------------------------------
RISK MANAGEMENT PROCESS
BOARD AND BOARD COMMITTEES
Responsible Monitors risks through Board processes, Audit Committee
for regular including regular reviews of strategy, reviews effectiveness
oversight of management reports and deep dives of risk management
risk management, into selected risk areas. process with
annual strategic support from
risk review, Internal Audit.
and setting
the Group's
risk appetite.
----------------------------------------------------- ----------------------------
MANAGEMENT RISK COMMITTEE (CHAIRED BY CO&FO)
Reviews external Meets at least three times per Identifies
and internal year and reports key findings to changes to
environment the Audit Committee. principal risks
for emerging and the effectiveness
risks. Performs Cross-functional attendees, encompassing and adequacy
deep-dive reviews senior management from IT, Finance, of
of principal Legal, HR, Supply Chain and Retail. mitigating
risks. actions to
achieve agreed
Reviews risk risk tolerance
register updates levels.
from risk owners.
----------------------------------------------------- ----------------------------
GROUP RISK AND ETHICS COMMITTEE FUNCTIONS AND BUSINESS INTERNAL AUDIT
ASSURANCE TEAM RISK OWNERS AND COMPLIANCE
FUNCTIONS
---------------------- --------------------------- ------------------------ ----------------------------
-- Establishes -- Reviews and -- Carry out day-to-day -- Review risk
risk monitors ethical risk management management
management risks, as well activities. process
framework. as behavioural -- Identify and periodically.
-- Identifies and responsibility assess -- Compliance
emerging risks, practices across risk and implement functions provide
working with the Group. Approves mitigating actions. independent
the Strategy policies relating -- Assign owners assurance to
team. to such ethical to update risk management
-- Facilitates matters, including registers. and the Board
risk assessments the Group's Code on risk status
and updates of Conduct. (Health and
to risk mitigations. -- Performs deep-dive Safety, Legal,
-- Provides reviews and assesses Brand Protection,
resources results of investigations Quality, Asset
and training and corrective and Profit
to actions. Protection,
support risk -- Supports the Corporate Responsibility).
management process. Group in managing
-- Facilitates ethical and associated
strategic risk reputational
assessment as risks, including
part of the overseeing awareness
central planning and training across
process. the Group to reinforce
-- Prepares business ethics
Board and Risk and good practice.
Committee -- Monitors whistleblower
updates. activity and Burberry
Confidential.
--------------------------- ------------------------ ----------------------------
EXTERNAL RISKS
COVID-19 FURTHER IMPACT
The timing of a return to growth following the COVID-19 pandemic
is uncertain. There is a risk that the spread of the COVID-19
pandemic continues and/or the recovery is prolonged. In response
to COVID-19, we have prepared a number of planning scenarios
based on a range of assumptions and potential outcomes. The
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 modelled scenarios. In addition,
there could be impacts on impairment of retail assets, inventory
and carrying value of assets.
Risk movement and outlook
COVID-19 is a new principal risk this year. While the group
had considered the possibility of a range of incidents that
could disrupt a key business location, the likelihood of the
occurrence of a global pandemic causing disruption on the
scale of COVID-19 across the business had not been considered
as a stand-alone risk. Although there is continued uncertainty
about the timing of a return to growth, we remain confident
in our strategy to reposition Burberry firmly in luxury fashion
and are committed to the strategic vision for Burberry. Our
strategic initiatives have been shaped to the current situation
with focussed execution to ensure a successful recovery.
----------------------------------------------------------------------------------
LINK TO STRATEGY ACTIONS TAKEN BY MANAGEMENT
--------------------------------------- -----------------------------------------
The timeframe of implementing -- The Group Incident Management
the strategy has been impacted Team (GIMT) was set up to co-ordinate
by COVID-19, however the fundamentals the business response to the
and trajectory of our strategy COVID-19 outbreak. The
remain right. Group ' s response is being
managed through five key workstreams
led by the Executive Committee
and chaired by our CEO.
-- The health and safety of
our people is paramount. The
key focus of our response has
been on our people, our customers
and our communities. We have
prioritised their wellbeing
and communicated regularly with
all our
stakeholders.
-- We have devised a plan of
strategic initiatives to navigate
through this period of decreased
demand and capture opportunities
as consumer confidence and markets
rebound.
-- Burberry has significant
financial headroom in the form
of GBP0.9 billion cash balances
including GBP0.3 billion drawn
from the Revolving Credit Facility.
The Group has completed detailed
stress testing to understand
the extent to which the Group
could withstand a loss of sales
within the limits of its available
financial resources. Details
of this stress testing are set
out in the viability assessment
on page 117.
-- We closed sites across Asia,
EMEIA and the Americas, ahead
or in line with government restrictions
in order to prevent the spread
of COVID-19 and ensure our employees
' , our customers ' and our
communities ' safety and wellbeing.
This includes the closure of
our head
office in London as well as
internal manufacturing sites
across the UK and in Italy.
-- As part of our overarching
response we are monitoring the
regulatory landscape. We are
engaging regularly with government
and local authorities in each
of our core geographies to ensure
we have the right support for
our business and for our people.
-- We are managing cash and
costs to protect the Group '
s liquidity. A comprehensive
cost mitigation programme has
been established, which includes
delaying discretionary capital
expenditure to focus only on
that which is essential and
to strengthen the brand.
-- We keep product, inventory
and supply chain under constant
review to maintain supply chain
operations while optimising
buying commitments.
-- We have adapted our technology
for greater home working to
ensure all vital operations
and projects remain on track.
A dedicated support page and
helpline has been set up to
support
employees with any concerns
they have.
--------------------------------------- -----------------------------------------
RISK TOLERANCE
--------------------------------------- -----------------------------------------
Doing the right thing is part
of Burberry ' s culture and
underpins our strategic ambition.
Burberry has prioritised the
safety and wellbeing of our
people, our customers and our
communities. We have followed
all government and health authority
guidance and advice to reduce
the risk of spreading the virus
and have supported relief efforts
to reduce the impact of the
virus on peoples ' lives globally.
---------------------------------------
EXAMPLES OF RISKS
---------------------------------------
-- Further increase in the spread
of the pandemic results in the
loss of key employees and/or
impacts the health of our employees
and their ability to operate
effectively.
-- There is not sufficient liquidity
to manage operations and meet
liabilities as they fall due.
-- The Group ' s trading performance
and cash flows are significantly
impacted by further extended
periods of closures of Burberry
retail stores, manufacturing
facilities and distribution
centres imposed by governments.
-- Further impairment of retail
assets and inventory.
-- Continuing closure of retail
stores impacts our cash generation,
increases leverage and limits
our ability to source adequate
financing to continue to operate.
-- The rebound is delayed by
a resurgence in virus infections
particularly in Mainland China.
-- The continued outbreak impacts
the ability of
the Group to execute the strategic
plan and
maintain momentum in building
brand heat.
-- Closures of Burberry ' s
internal manufacturing
sites and global network of
storage and distribution hubs
significantly impacts the supply
chain and the speed we can rebound
when
government restrictions are
lifted.
-- Technology and IT infrastructure
is not able to
adapt to sustained working from
home requirements imposed by
governments.
--------------------------------------- -----------------------------------------
MACRO-ECONOMIC AND CIVIL UNREST
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.
Risk movement and outlook
The risk is deemed to have increased in the year and the outlook
is uncertain due to a number of significant macroeconomic
and political events such as the protests in Hong Kong S.A.R.
and is overlapped by the COVID-19 risk. External factors such
as global health emergencies and natural disasters are difficult
to predict.
-------------------------------------------------------------------------------
LINK TO STRATEGY ACTIONS TAKEN BY MANAGEMENT
--------------------------------------- --------------------------------------
Volatility in the external environment -- We have defined a strategy
could impact our overall financial that leverages our
performance and operations. brand appeal and global reach
across multiple
customer segments and regions
to mitigate
reliance on a particular customer
group, however, we recognise
the importance of
Mainland China and the Chinese
consumer to
the luxury industry, as explained
in the Global
Chinese Consumer Spending risk.
-- In the short term, we continue
to assess shifts
occurring in the industry and
with customers
to ensure our plans are dynamic
and responsive
to the market.
-- We monitor external macroeconomic
and
regulatory changes and perform
horizon
scanning supported by insights
from the
Treasury and Strategy teams
into
macroeconomic trends.
--------------------------------------- --------------------------------------
RISK TOLERANCE
--------------------------------------- --------------------------------------
We have a low tolerance for
risk in this area but recognise
external factors can be more
difficult to mitigate as they
are often outside of our control.
---------------------------------------
EXAMPLES OF RISKS
---------------------------------------
-- Unexpected shifts in domestic
or tourist demand from key customer
groups due to uncertainty in
the economic outlook for the
luxury sector caused by global
recession, socio-political tensions.
-- Global health emergencies
affecting particular countries
and regions.
-- Unexpected disruptions to
the supply chain.
--------------------------------------- --------------------------------------
UK'S WITHDRAWAL FROM THE EU
Various scenarios could impact the Group ' s financial position,
operating model and people.
Risk movement and outlook
This risk has increased due to elevated uncertainty over the
UK ' s withdrawal from the EU on 31 December 2020 given the
disruption to trade negotiations caused by the COVID-19 pandemic
and the limited time available to secure a comprehensive free
trade agreement.
-------------------------------------------------------------------------------------
LINK TO STRATEGY ACTIONS TAKEN BY MANAGEMENT
--------------------------------------- --------------------------------------------
Volatility arising from uncertainty -- Our steering committee continually
around the trading relationship monitors
between the UK and the EU following the evolving impact of the post-transition
the end of the transition period trading relationship between
may impact our overall financial the UK and the
and operating performance, as EU, and oversees our approach.
well as our ambitions with respect -- While the transition period
to supply chain Operational until 31 December
Excellence. 2020 offers temporary relief,
we are prepared
for a no-trade-deal scenario
at the end of 2020
across all business activities,
including supply
chain, trade compliance, intellectual
property
and people.
-- We engage with UK Government
departments
and other external stakeholders
to ensure they
are fully informed of our circumstances.
--------------------------------------- --------------------------------------------
RISK TOLERANCE
--------------------------------------- --------------------------------------------
We have a low tolerance for
risk arising from uncertainty
regarding the trading relationship
between the UK and the EU following
the end
of the transition period, which
may have a long-term impact.
---------------------------------------
EXAMPLES OF RISKS
---------------------------------------
-- Additional customs duty based
on the post-transition trading
relationship between the UK
and the EU, and cessation of
the UK ' s access to the EU
' s free trade agreements after
2020.
-- Disruption to business operations.
-- Impact on some current business
project road maps.
-- Extended supply chain lead
times could increase inventory
levels.
-- Uncertainty over the rights
of EU nationals and UK immigration
law could increase the risk
of being unable to recruit and
retain talent.
-- Exchange rate volatility
impacts Group revenues, margins,
profits and cash flow.
--------------------------------------- --------------------------------------------
STRATEGIC RISKS
EXECUTION OF STRATEGIC PLAN
Focused execution of the strategy through our four strategic
pillars (Product, Communication, Distribution and Digital)
is key to sustainable shareholder value. Success depends on
the value and relevance of our brand to luxury consumers around
the world and our ability to innovate.
Inability to execute the projects that underpin these strategies
successfully 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.
We operate in the global luxury market, where competition
is intensifying. Today ' s luxury consumers are increasingly
more demanding of luxury brands, seeking creativity, inspiration
and a meaningful connection, quality and innovation. Our ability
to make the right strategic investment decisions in response
to these changes is vital to our success.
Risk movement and outlook
We have reviewed the impact of the COVID-19 pandemic on the
luxury industry and consumer demand, and assessed the need
for changes to our strategic plan. Although the timeframe
of implementing the strategy has been impacted, the fundamentals
and trajectory of our strategy remain right.
---------------------------------------------------------------------------------
LINK TO STRATEGY ACTIONS TAKEN BY MANAGEMENT
--------------------------------------- ----------------------------------------
All strategic pillars. -- FY 2019/20 marked the end
of our multi-year strategy '
s first phase, which focused
on re-energising the brand,
optimising our distribution
networks and ensuring a smooth
creative
transition to reflect Riccardo
Tisci ' s vision for Burberry.
-- The strategy team and creative
business owners for each pillar
co-ordinate delivery of the
programme, monitor the risks
associated with each of the
major programmes, and track
progress and benefits.
-- We have increased our focus
on measuring progress in our
transformation. We have designed
a set of lead indicators to
assess progress in product,
communications, store
performance and service.
-- We continued to strengthen
consumers ' perception of our
brand, signalling luxury through
our campaigns and disruptive
media experiences.
-- We continued to deliver newness
and exceptional product, having
established our new product
architecture and strengthening
in leather.
-- We have made good headway
in transforming our distribution
channels by aligning our mainline
stores to the new creative vision,
and completing the transition
of our US wholesale to
luxury fashion.
-- On digital, we remained focus
on strengthening our relationship
with customers with unexpected
and innovative activations,
such as games and social drops.
-- Our Inspired People initiatives
include leading the Groupwide
Engagement Survey. This has
shown a marked increase in the
understanding of our strategic
goals and transformation plan
within the Group.
-- Within the business, we prioritised
building resilience in a period
characterised by exceptional
uncertainty by taking a series
of rapid actions across four
areas: protecting our people
and communities; tightly managing
cash and costs; securing our
product, inventory and supply
chain; and driving revenue.
-- We have devised a plan of
strategic initiatives set out
on page 30 to navigate through
this period of decreased demand
due to the COVID-19 pandemic
and capture opportunities as
consumer confidence and markets
rebound.
--------------------------------------- ----------------------------------------
RISK TOLERANCE
--------------------------------------- ----------------------------------------
We will pursue growth and accept
a certain level of risk to ignite
brand heat and continue our
transition to firmly establish
our position in luxury fashion.
We approve capital investment
in strategic projects and accept
moderate to high earnings volatility
in pursuit of innovation and
profitable growth, balancing
a reasonable return on capital
for a reasonable level of commercial
risk within the approved capital
allocation framework.
---------------------------------------
EXAMPLES OF RISKS
---------------------------------------
-- Firmly positioning the brand
in luxury fashion is
dependent on creating new and
high quality luxury products
that excite our global customers.
If we are unable to innovate
effectively and get these new
products into the market with
speed, our sales or margins
could be adversely affected.
-- Our development and deployment
of content
through communication channels
does not create sufficient brand
heat and engagement globally.
-- We do not achieve the required
organisational alignment and
enhance our capabilities and
culture to compete and grow
effectively and at the pace
required to deliver the targets.
-- Failure to sufficiently transform
operational
processes could undermine our
ability to
deliver the required cost savings
and
margin improvements.
-- Failure to deliver the technology
innovation
required to empower changes
in the Group's
business model and to deliver
the anticipated
benefits from key investment
strategies in
Digital, Retail and Group Operations.
-- A pause to delivery of the
strategy due to major external
factors reduces momentum in
building brand heat and reduced
consumer confidence.
-- Inability to capture demand
as consumers become more discerning
in their purchases amid overall
demand decreasing in a global
recession.
--------------------------------------- ----------------------------------------
IMAGE AND REPUTATION
The Group carefully safeguards its image and reputational
assets. 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.
As our customers continue to engage with the brand through
multiple channels including social media, a misleading perception
of the Group's values and performance could potentially lead
to a slowdown in sales.
Burberry's increasing reliance on influencers in its marketing
and on collaborations in product design exposes the Group
to increased reputational risk.
Risk movement and outlook
While internal enhancements have been made to further safeguard
Burberry ' s image and reputation, in the current environment
there is increased scrutiny of Burberry. The external environment
of collaborators and influencers is dynamic, which creates
risk. Therefore constant monitoring is required to ensure
that Burberry ' s image and reputation is protected.
--------------------------------------------------------------------------------
LINK TO STRATEGY ACTIONS TAKEN BY MANAGEMENT
---------------------------------------- --------------------------------------
All strategic pillars. -- Training and monitoring of
adherence by personnel to the
requirements in the Group's
Responsible Business Principles.
-- Codified incident management
policy, monitoring of social
networks and response procedures.
-- Oversight of mitigation of
reputational issues by the Ethics
and Risk Committees.
-- The Group has established
Corporate Responsibility (CR)
standards, which aim to ensure
compliance with labour, human
rights, health and safety and
environmental standards across
our operations and extended
supply chain.
-- Supplier audits and supplier
training programmes are examples
of the actions and programmes
that have been put in place
in day-to-day operations.
-- Strengthening our approval
processes and editorial controls
to ensure all product and content
is reviewed and signed off prior
to external release.
-- Onboarding of a Director
of Diversity and Inclusion;
development of a global Diversity
and Inclusion strategy, and
the creation of an External
Advisory Council comprised of
thought leaders across the diversity
and inclusion landscape to provide
insight and help raise
Burberry ' s consciousness and
understanding of social issues.
Creation of an Internal Diversity
and Inclusion Council to support
the implementation of the strategy.
-- Increasing awareness of and
training with respect to Burberry's
Model Well -- being Policy to
all people who engage with model
on Burberry's behalf, including
employees, freelancers, casting
agents, contractors and
external third parties to ensure
they adhere to the policy.
---------------------------------------- --------------------------------------
RISK TOLERANCE
---------------------------------------- --------------------------------------
Protecting the brand and its
reputation globally is at the
heart of everything we do. We
have a moderate risk appetite
in order to deliver our strategy
supported by processes to avoid
or mitigate any reputational/brand
risk where possible.
----------------------------------------
EXAMPLES OF RISKS
----------------------------------------
-- An unfavourable incident
relating to a senior executive,
erroneous media coverage or
negative discussions on social
networks could damage Burberry's
reputation.
-- A celebrity, influencer,
collaborator or model associated
with Burberry becoming involved
in a reputational incident could
potentially lead to pressure
on Burberry to distance the
brand from them and could reflect
poorly on Burberry, negatively
impacting Burberry's reputation.
-- Unfavourable or erroneous
media coverage or negative discussions
on social networks about the
Group's products, content or
practices could impact brand
reputation.
-- Unethical behaviour on the
part of individuals or entities
connected with the Group could
attract negative attention to
the brand.
-- If suppliers or partners
do not respect the Group's Responsible
Business Principles this could
reflect negatively on Burberry.
-- Failure of employees or those
acting on Burberry's behalf
to adhere to Burberry's Model
Well -- being Policy could result
in reputational or legal risk.
-- Failure to understand social
issues and respect cultural
sensitivities around product
could negatively impact Burberry's
reputation.
---------------------------------------- --------------------------------------
GLOBAL CHINESE CONSUMER SPING
Global Chinese consumer spending patterns significantly change
having an immediate adverse impact on Group sales. Any significant
change to Chinese consumer spending habits globally due to
changes in 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. Such changes could also lead
to Chinese consumers scaling back on travel, which could impact
the Group's global revenue and profits outside Mainline China,
which may not be compensated for by the repatriation of spend
in China.
Risk movement and outlook
The risk has increased since the prior year. Mainland China
is forecast by economists to be the only growing global economy
in FY 2020/21 and remains a key market for Burberry. While
our business in Mainland China has started to rebound to more
normal sales levels, the Group ' s trading performance could
be impacted if there is a recurrence of COVID-19 in Mainland
China or the recovery is delayed.
-------------------------------------------------------------------------------
LINK TO STRATEGY ACTIONS TAKEN BY MANAGEMENT
------------------------------------- ----------------------------------------
All strategic pillars. -- Burberry took prompt action
across Asia to comply with local
health guidelines and protect
our people, our customers and
our communities.
-- Scenario planning and analysis
was undertaken to understand
the long-term impact of the
global pandemic on Mainland
China, including a review of
the fixed and variable cost
strategy.
-- Prior to the outbreak of
COVID-19 there had been significant
focus on building brand heat
in Mainland China. A clear strategy
had been set, including building
new strategic social partnerships,
such as with Tencent, and strategic
locations and making customer
experiences, storytelling and
products more locally relevant.
This strategy will continue
assuming China continues to
rebound from COVID-19.
-- Development and execution
of Mainland China
strategy, including specific
product designed for Lunar New
Year and additional marketing
spend to support growth targets.
-- Investment in inventory and
technology to support Mainland
China digital across our own
platforms and those of our third-party
partner platforms.
-- Supporting investment and
growth strategies in other global
markets to reduce Burberry '
s exposure to an individual
country or group of customers.
------------------------------------- ----------------------------------------
RISK TOLERANCE
------------------------------------- ----------------------------------------
We accept a certain level of
concentration risk in relation
to consumer nationality to maximise
the greatest growth opportunities
and to achieve our objective
of firmly establishing our position
in luxury fashion.
-------------------------------------
EXAMPLES OF RISKS
-------------------------------------
-- Increasing nervousness with
investors about the dependency
on growth from global Chinese
consumers in FY 2020/21 and
the ability of the world ' s
economies to respond to the
impact of the pandemic. Mainland
China is the only global country
where economists have forecast
growth.
-- Slower recovery in Asia from
the global pandemic because
of reinfections.
-- Burberry ' s growth from
Asia does not meet the
expectations either in magnitude
or timing, especially in Mainland
China.
-- We suffer a major reputational
shock in Mainland China causing
brand fallout.
-- We are unable to recapture
our share of the spend in Mainland
China because of the strength
and success of our competitors,
for example, in marketing campaigns
and investment in brand heat.
-- We are unable to capture
additional consumer spend in
Mainland China to offset the
loss of revenue as a result
of disruptions in Hong Kong
S.A.R.
------------------------------------- ----------------------------------------
FOREIGN EXCHANGE
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 and the outcome of the UK '
s withdrawal from the EU may have a major impact on foreign
exchange rates, which in turn could cause significant change
in our Group reported results.
Risk movement and outlook
The risk is deemed to have increased substantially since the
prior year primarily as a result of COVID-19 and the UK '
s withdrawal from the European Union. Foreign exchange is
expected to remain volatile in FY 2020/21 as the actions taken
by governments globally in response to the COVID-19 pandemic
and other macro-economic and political factors, such as the
election in the USA, are absorbed.
----------------------------------------------------------------------------------
LINK TO STRATEGY ACTIONS TAKEN BY MANAGEMENT
--------------------------------------- -----------------------------------------
Volatility in foreign exchange -- Burberry seeks to hedge anticipated
rates could impact our overall foreign currency transactional
financial performance. cash flows using financial instruments.
These are mainly in Burberry's
centralised supply chain and
wholesale business. Burberry
does not hedge intragroup foreign
currency transactions at present.
-- Burberry monitors the desirability
of hedging the net assets of
non-pound sterling subsidiaries
when translated into pound sterling
for reporting purposes. We have
only entered into modest transactions
for this purpose in the current
and previous year.
-- Burberry monitors the overall
impact of unhedged exchange
movements and provides guidance
to shareholders if exchange
rates move on a quarterly basis.
--------------------------------------- -----------------------------------------
RISK TOLERANCE
--------------------------------------- -----------------------------------------
Burberry does not seek to manage
structural foreign exchange
risk relating to its overseas
retail operations.
---------------------------------------
EXAMPLES OF RISKS
---------------------------------------
-- Burberry operates on a global
basis and earns revenues, incurs
costs and makes investments
in a number of currencies. Burberry's
financial results are reported
in pound sterling. Most reported
revenues are earned in non-pound
sterling currencies, with a
significant proportion of costs
in pound sterling. Therefore,
changes in exchange rates, which
are driven by several factors,
such as global economic trends,
the COVID-19 pandemic and the
form of the UK's withdrawal
from the EU, could impact Burberry's
revenues, margins, profits and
cash flows.
-- Changes in exchange rates
driven by global economic trends
could reduce the attractiveness
of international shopping for
travelling tourists.
--------------------------------------- -----------------------------------------
OPERATIONAL RISKS
LOSS OF DATA OR CYBERATTACK
A cyberattack results 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
is critical to success. A robust control environment helps
decrease the risks to core business operations and/or major
data loss.
Risk movement and outlook
The impact and likelihood of this risk is assessed to have
increased as a result of the COVID-19 pandemic.
-------------------------------------------------------------------------------
LINK TO STRATEGY ACTIONS TAKEN BY MANAGEMENT
------------------------------------- ----------------------------------------
Having a cyber risk-aware workforce -- Governance provided through
and resilient technology landscape a cross-functional Cyber Security
is integral to delivering our Steering Group with Executive
business strategy. membership and sponsorship.
-- Continued investment in Information
Security
capabilities.
-- Second line assurance checks
reporting on control effectiveness
to Executive and IT management
through monthly scorecards.
-- 24/7/365 Security Monitoring
and Analytics
capability supported by robust
security incident
response processes.
-- Information Security Advisory
function to embed security in
new projects and initiatives.
-- Security Training and Awareness
and phishing
tests rolled out to employees
globally with
completion monitoring.
-- Implementation of solutions
to help detect personal and
sensitive data loss with improved
control over user access management.
-- Test responses to cybersecurity
incidents
through simulations.
-- Data Privacy Steering Committee,
a cross-functional group to
review data controls around
existing systems and assess
the potential data risks (from
both a legal and reputational
perspective) associated with
new IT, Marketing, Retail and
Digital initiatives across Burberry.
-- Ongoing collaboration between
the Data Protection office,
Legal, IT and Information Security
functions to ensure policies
are adhered to with respect
to the appropriate collection,
security, storage, retention
and
deletion of personal data.
------------------------------------- ----------------------------------------
RISK TOLERANCE
------------------------------------- ----------------------------------------
Protecting the brand and its
reputation globally is at the
heart of everything we do. We
adopt a strategy to avoid or
mitigate key reputational/brand
risks wherever possible.
-------------------------------------
EXAMPLES OF RISKS
-------------------------------------
-- Malware results in a loss
of system control
causing business disruption
and/or major
data loss.
-- Credential compromise of
customer or
employee accounts leading to
business
disruption and/or major data
loss.
-- Accidental personal data
loss or disclosure
leading to regulatory fines.
-- Attack on Burberry.com causing
business disruption and/or major
data loss.
-- Compromise or misconfiguration
of externally
facing assets causing business
disruption and/
or major data loss.
-- Fines due to failure to comply
with EU General Data Protection
Regulation (GDPR) and/or equivalent
applicable data protection
legislation globally.
------------------------------------- ----------------------------------------
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.
Risk movement and outlook
The risk is deemed to have increased since the prior year,
primarily in an environment of uncertainty and change as a
result of the UK ' s withdrawal from the EU and the COVID-19
pandemic. Global trading disruption has impacted our people
' s ability to meet planned business goals.
-------------------------------------------------------------------------------------------
LINK TO STRATEGY ACTIONS TAKEN BY MANAGEMENT
-------------------------------------------------- ---------------------------------------
Delivery of our strategy relies Leadership and Culture
on our ability to engage and -- The Leadership Development
inspire our people to deliver Programme ran for its second
outstanding results for the year, with two additional cohorts
Group. This is accomplished going through the programme
through: to engage and equip leaders.
-- strengthening capabilities The programme comprises 360
and enhancing our approach to feedback, coaching and a three-day
talent management throughout event. To date, the Executive
the Committee, senior leadership
organisation team and 150 leaders have completed
-- fostering an inclusive culture the programme.
where all employees feel connected -- A third global Employee Engagement
to their work Survey was carried out in July
-- empowering and equipping 2019, with results published
leaders to lead through change in September. We saw overall
-- simplifying how we work to engagement increase by 1%, with
enhance operational efficiency 87% of employees confirming
-- rewarding performance and that they were proud to work
creating a pay for performance at Burberry. Leaders are held
culture accountable for delivering against
-- engaging employees through agreed action plans.
our ongoing commitment to corporate -- Leaders were equipped with
responsibility regular strategy updates, including
-- driving positive change to talking points and regular leaders
promote sustainability across calls aimed at the director
the business plus population, to engage their
teams on the strategic direction
and build a sense of belonging
to the inclusive culture at
Burberry. The Engagement Survey
illustrated a positive shift
that ' senior leaders give employees
a clear picture of the direction
Burberry is headed ' (from 69%
in 2018 to 71% in 2019).
Talent and Careers
-- The identification of all
critical roles was completed
across the business and succession
planning for all Executive Committee,
Senior Leadership and key creative
and commercial roles was carried
out.
-- A framework for talent management
was defined and presented to
the Board of Directors; a new
VP of Talent joined the organisation
and will help embed the evolution
of our talent management approach.
-- Inclusive Leadership training
was delivered to 90% of all
people leaders, including Retail
Managers at Retail Conferences,
and is now being offered as
a part of our regular learning
curriculum.
-- A recruitment toolkit and
accompanying training was rolled
out for all hiring
managers, ensuring that we get
diverse and representative talent
with the right organisational
fit in a fair and consistent
manner.
Reward & Recognition
-- A simplified, more effective
performance management process
across the business has been
rolled out with a five-point
performance rating scale and
a new framework for quarterly
performance conversations between
all managers and their direct
reports.
-- A new set of reward plans
to drive increased sales and
ATV was rolled out for the retail
population in EMEIA and the
Americas; a
further rollout for Asia is
planned for the upcoming year.
-- A review of our compensation
plans for which over a third
of our workforce is eligible
has been conducted to ensure
alignment between the wider
workforce and the new Directors
'
Remuneration Report (which will
be proposed for approval at
the 2020 AGM).
Diversity and Inclusion and
Employee Relations
-- The onboarding of a new Director
of Diversity and Inclusion has
been completed as well as the
development of Burberry ' s
global Diversity and Inclusion
strategy, which was presented
to the Board of Directors in
March.
-- An External Advisory Council,
comprised of thought leaders
from across the diversity and
inclusion landscape, as well
as an Internal
Diversity and Inclusion Council,
comprising Burberry employees,
have been established to act
as a sounding board for the
implementation of the global
Diversity and Inclusion strategy.
-- The onboarding of a new VP
of Employee Relations has seen
the refinement of the Employee
Relations operating model and
a
revision of our core policies
and procedures.
-- The rollout of a new global
parental leave policy has seen
an increase in the amount of
paid leave globally for all
employees,
with all new parents receiving
18 weeks ' paid leave and four
weeks on reduced hours when
they return to work.
-- The celebration of global
events such as World Mental
Health Day, International
Women ' s Day and Black History
Month (in the USA) saw great
participation across our global
employee population.
Wellbeing
-- The rollout of the Smarter
Working programme, underpinned
by Microsoft technology platform
and a new flexible working policy,
has allowed employees to work
more flexibly.
-- 63 employees across the UK,
Hong Kong S.A.R. and the UAE
have now been trained as qualified
mental health first aiders,
with
further courses scheduled.
-- Our Employee Assistance Program
is now available to all employees
globally, offering a range of
services, including individual
counselling.
-------------------------------------------------- ---------------------------------------
RISK TOLERANCE
-------------------------------------------------- ---------------------------------------
We recognise the value and importance
of
successfully delivering our
Inspired People strategy and
therefore have a low tolerance
for risk in this area.
--------------------------------------------------
EXAMPLES OF RISKS
--------------------------------------------------
-- Loss of critical talent/knowledge/unmanageable
levels of attrition due to ongoing
transition period/change
fatigue and heightened by challenging
business conditions.
-- Failure to build the right
capabilities and behaviours
in our leadership population.
-- The long-term impact of the
UK ' s withdrawal from the EU
on the Group ' s EU workforce.
-- The impact of the downturn
in business performance related
to a macro event such as a global
health emergency.
-------------------------------------------------- ---------------------------------------
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.
Risk movement and outlook
The impact of this risk has increased, however, the likelihood
has reduced due to the progress made in upgrading legacy solutions,
which have increased resiliency and security.
-----------------------------------------------------------------------------
LINK TO STRATEGY ACTIONS TAKEN BY MANAGEMENT
------------------------------------ ---------------------------------------
All strategic pillars. -- Establishment of an IT Portfolio
Forum with
Executive representation to
support IT investment decisions
and oversee delivery of prioritised
IT programmes and initiatives.
-- IT function has been strengthened
with clear alignment between
the IT teams, the strategic
pillars, business functions
and operations.
-- Implementation of Controls
to help maintain the continuity
of the Group ' s IT systems,
including business continuity
and IT recovery plans, which
would be implemented in the
event of a major failure.
-- A tested Group incident management
framework is in place to report,
escalate and respond to high
-- impact events.
------------------------------------ ---------------------------------------
RISK TOLERANCE
------------------------------------ ---------------------------------------
We adopt a strategy to avoid
or mitigate key risks to the
disruption of IT operations
wherever possible.
------------------------------------
EXAMPLES OF RISKS
------------------------------------
-- Failure to provide technology
platforms that meet customer
demands and support innovation
could result in failure to deliver
the strategy and loss of revenue.
-- Failure to provide stable
and resilient technology platforms
that meet business demands across
retail and corporate sites could
result in failure to deliver
the strategy and negatively
impact operations due to poor
system performance and/or system
outages.
------------------------------------ ---------------------------------------
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 natural
catastrophe, pandemic or changes in regulations, through to
localised issues, such as fire, terrorism or quality control
failures.
Risk movement and outlook
The risk has been increased due to the ongoing COVID-19 pandemic
and the impact of longer term repercussions, a more uncertain
global economic environment and the potential for key suppliers
to face financial difficulty and ongoing political and regulatory
changes making it more difficult for the supply chain to source,
produce and ship products internationally.
------------------------------------------------------------------------------------
LINK TO STRATEGY ACTIONS TAKEN BY MANAGEMENT
----------------------------------------- -----------------------------------------
Our Product and Distribution -- We have policies and procedures
strategic pillars enable us in place designed to ensure
to operate effectively and efficiently, the health and safety of our
delivering Operational Excellence employees and to deal with major
through continuity of supply incidents, including business
of compliant products and services continuity and disaster recovery.
of the highest quality to our -- The Group continues to evolve
customers. its supply chain organisational
Ensuring our ability to continually design to develop its manufacturing
execute and operate key sites base, reducing dependence on
and factories to develop, manufacture, key sites and vendors.
distribute and sell our products -- A Group incident management
is a key strategic priority. framework is in place to ensure
that incidents are reported
and managed effectively. Across
the Group, our
Incident Management Teams managed
16 incidents in the year. The
two longest running incidents
were related to the Hong Kong
S.A.R. disruptions and the COVID-19
pandemic. In both cases, teams
worked to mitigate the
impact on our employees, customers
and the business. The remainder
of these incidents were localised
to fire and flood related issues
or
interruptions in the regular
running of stores, offices and
systems.
-- Our Group Incident Management
Team and Regional Incident Management
Teams all took part in training
and incident management exercises
involving large parts of the
Group, our customers and media
relations function. Our
plans as tested during the year
were found to be effective.
-- Our product suppliers and
vendors are subject to a quality
control programme, which includes
regular site inspections and
independent
product testing.
-- Robust security arrangements
are in place across our store
network to protect people and
products in case of security
incidents.
-- Business continuity plans
are in place for our 10 main
sites, including our three major
distribution centres and our
two UK factories. Business continuity
plans are being developed for
our third factory, Burberry
Manifattura in Italy.
-- The Group ' s key IT systems
are protected to prevent and
minimise any potential interruption.
This includes resilient design
and the provision of disaster
recovery services to continue
operating within pre-agreed
times in case of a major incident.
Our plans as tested during the
year were found to be effective.
-- Management regularly reviews
and manages business continuity
and disaster recovery risks,
recognising that these plans
cannot always ensure the uninterrupted
operation of the business, particularly
in the short term.
-- A comprehensive insurance
programme is in place to offset
the financial consequences of
insured events, including fires,
flood, natural catastrophes
and product liabilities.
----------------------------------------- -----------------------------------------
RISK TOLERANCE
----------------------------------------- -----------------------------------------
We have a low tolerance for
risk in this area, particularly
with respect to product safety
and quality.
-----------------------------------------
EXAMPLES OF RISKS
-----------------------------------------
-- Burberry operates three owned
factories and a global network
of storage and distribution
hubs. These face typical property
risks, such as fire, flood and
terrorism.
-- Burberry works with several
suppliers of luxury goods, which
could be difficult to replace
quickly. Their loss could interrupt
the delivery of core products
or a seasonal range.
-- A serious product quality
issue could
result in a product recall.
-- Socio-political tension,
like the gilets jaunes movement
in France, can significantly
impair local footfall and trade.
-- A global health emergency
impacts a key market, which
reduces consumption or significantly
impacts the supply chain.
----------------------------------------- -----------------------------------------
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, competition, data,
corporate governance, employment, tax 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.
Risk movement and outlook
The relative significance of this risk has increased because
of the changing regulatory environment despite the mitigating
steps we have taken to ensure compliance.
----------------------------------------------------------------------------------
LINK TO STRATEGY ACTIONS TAKEN BY MANAGEMENT
---------------------------------------- ----------------------------------------
Compliance with applicable laws -- The Group monitors and seeks
and regulations and behaving to continuously improve processes
in accordance with our values to gain assurance that its licensees,
as a business underlie all our suppliers, franchisees, distributors
strategic pillars. and agents comply with the Group
' s contractual terms and conditions,
its ethical and
business policies, and relevant
legislation.
-- Specialist teams at corporate
and regional level, supported
by third -- party specialists
where required, are responsible
for ensuring the Group's compliance
with applicable laws, ethical
and business policies and regulations,
and that
employees are aware of the polices,
laws and regulations relevant
to their roles.
-- Ethical trading, environmental
sustainability and community
investment matters reported
to the Ethics Committee, Risk
Committee and the Board.
-- Assurance processes are in
place to monitor compliance
in a number of key risk areas,
with results being reported
to our Risk Committee and Audit
Committee.
-- We have an established framework
of policies that aim to drive
best practice across our direct
and indirect operations, including
our Responsible Business Principles
and Global Environmental Policy.
Policies available at
Burberryplc.com, are owned by
senior leadership and are issued
to all supply chain partners.
Their implementation is monitored
on a regular basis.
-- We have established a Data
Privacy Steering Committee to
oversee compliance with applicable
data legislation.
-- International tax reform
is a key focus of attention
with significant developments
reported to the Audit Committee.
-- We have a wide range of global
programmes that tackle educational
inequality, foster community
cohesion and enhance social
and economic empowerment.
-- Rollout of annual mandatory
training to all employees and
to targeted functions
to ensure awareness and compliance
with our policies governing
anti-bribery and anti-corruption
(ABAC), Market Abuse Regulations,
annual conflict declarations,
criminal finances, anti-money
laundering and privacy.
-- Our culture and policies
encourage employees to speak
up and report any issues
without fear of retribution.
A global confidential employee
helpline is in place in almost
all countries where we have
retail or corporate locations,
and where it is legally permitted.
All calls and emails are logged
and independently reviewed and
followed up. During the year
158 cases were received and
the results and
themes are reviewed by the Ethics
Committee. No significant issues
were identified from these cases
during the year.
-- In accordance with our ABAC
policy, annual training is required
to be performed. This year the
annual e-learning module was
rolled out to all corporate
staff and manufacturing and
retail employees of manager
level and above, a total of
3,614 employees. The training
reached a 96% completion rate.
Any incidents or potential areas
of concern are investigated
by highly
experienced investigators in
our Asset and Profit Protection
team and ABAC risks are covered
as part of the scope of Internal
Audit reviews. During the year
there were no ABAC -- related
issues.
---------------------------------------- ----------------------------------------
RISK TOLERANCE
---------------------------------------- ----------------------------------------
In complying with laws and regulations,
including customer and employee
safety, and bribery and corruption,
we have a low tolerance for
risk.
----------------------------------------
EXAMPLES OF RISKS
----------------------------------------
-- Regulatory non-compliance.
-- Failure by the Group or associated
third parties to act in an ethical
manner consistent with our Code
of Conduct and our Responsibility
Agenda, for example with regard
to model well-being.
-- Non-compliance with labour,
human rights and environmental
standards across our own
operations and extended supply
chain could result in financial
penalties, disruption in production
and reputational damage to our
business.
-- Failure to comply with GDPR
and/or equivalent applicable
data protection legislation
globally.
-- Tax is a complex area where
laws and their interpretations
are changing regularly. Non-compliance
by Burberry and its associated
third parties in this area could
result in unexpected tax and
financial loss.
---------------------------------------- ----------------------------------------
INTELLECTUAL PROPERTY AND BRAND PROTECTION
Sustained breaches of Burberry ' s intellectual property (IP)
rights or allegations of infringement by Burberry pose risk
to the brand. Counterfeiting, copyright, trademark and design
infringement in the marketplace could reduce demand for genuine
Burberry merchandise.
Failure to implement appropriate brand protection controls
in connection with our commitment to stop destroying unsaleable
finished products could negatively impact the integrity and
the luxury positioning of the brand.
Risk movement and outlook
The likelihood of risk has increased in the past year for
several reasons, including the increased brand heat under
our new creative direction; the frequent launch of new designs
and motifs, which may not always be immediately protected,
and the potential increase of sales in the parallel market
in light of the COVID-19 pandemic.
---------------------------------------------------------------------------------
LINK TO STRATEGY ACTIONS TAKEN BY MANAGEMENT
----------------------------------------- --------------------------------------
Protecting the integrity of -- The Group ' s global Brand
the brand, safeguarding and Protection team is responsible
elevating its luxury position, for brand protection efforts
complying with applicable laws globally, online and offline.
and regulations and doing the Where infringements are identified
right thing underlie all our these are addressed through
strategic pillars. a mixture of criminal, civil
and administrative legal action
and negotiated settlements.
-- Trademarks, copyrights and
designs are registered globally
across all appropriate categories.
-- The Brand Protection team
partners closely with the design
and merchandising teams to ensure
that our products do not infringe
the rights of third parties
and to ensure that we have adequate
protections in place prior to
market entry.
-- The teams explore new and
emerging threats and ways to
combat threats.
-- The team partners regionally
with enforcement agencies and
our digital partners to minimise
the visibility of counterfeit
and parallel trade products
both online and offline.
-- We aim to disrupt the flow
of counterfeit products by enforcing
at source level.
-- Brand protection controls
have been implemented to safeguard
the brand in connection with
our commitment to stop destroying
unsaleable finished products.
----------------------------------------- --------------------------------------
RISK TOLERANCE
----------------------------------------- --------------------------------------
We have a low tolerance for
risk in protecting the integrity
of the brand, asserting our
IP rights while ensuring due
respect is given to the IP rights
of others.
-----------------------------------------
EXAMPLES OF RISKS
-----------------------------------------
-- Counterfeiting, parallel
trade, copyright, trademark
and design infringement in the
marketplace can reduce the demand
for genuine Burberry merchandise
and impact revenues.
-- Unauthorised use of trademarks
and other IP, as well as the
unauthorised sale of Burberry
products and distribution of
counterfeit products, damages
Burberry's brand image
and profits.
-- Brand heat as well as sophistication
in counterfeiters ' ability
to manufacture at pace have
increased infringements and
counterfeiting of our brand.
-- New branding may not immediately
be protected and we must rely
on national laws to secure IP
rights, which afford varying
degrees of protection and enforcement
opportunities depending on the
country.
-- Allegations from third parties
of IP infringement by Burberry
could negatively impact Burberry's
reputation, result in claims
and financial loss through withdrawing
infringing products.
-- Distribution outside of our
authorised network could negatively
impact the demand for Burberry
products and negatively impact
our luxury reputation.
----------------------------------------- --------------------------------------
CLIMATE CHANGE RISKS
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
the impact of any potential climate change on our business
model and performance.
As the global climate crisis becomes more critical we recognise
the importance of addressing long-term sustainability challenges
and the potential impacts of climate change on our business,
in reputational, operational and financial terms. Failure
to implement appropriate cross-functional action plans, incorporating
the recommendations of the Taskforce on Climate-related Financial
Disclosures (TCFD) and Science Based Targets initiative, could
hinder efforts to mitigate long-term risks and future-proof
our business.
Risk movement and outlook
The risk of climate change has increased and will continue
to increase incrementally year on year without significant
global effort, including our network of suppliers, and adaptation
across companies and countries.
-------------------------------------------------------------------------------------
LINK TO STRATEGY ACTIONS TAKEN BY MANAGEMENT
--------------------------------------- --------------------------------------------
Our commitment to being an industry Physical Risks
leader in responsible and sustainable -- To help identify future areas
luxury underpins our vision for focus to mitigate climate-related
to establish ourselves firmly physical risks we completed
in luxury fashion and deliver three scenario analysis workshops,
sustainable, long-term value. which assessed long-term environmental,
social and technological trends.
-- In the short term, we are
conducting specific analysis
of the acute risk of our locations
and operations.
-- We have assessed the climate
change risk in our finished
goods and raw material supply
chain by evaluating the exposure,
vulnerability
and readiness of the countries
we operate in and where our
key supply chain partners are
located.
-- In our own operations and
supply chain we continue to
use the WWF water risk assessment
tool and the Aqueduct Water
Risk Atlas to
identify current risks, anticipate
potential future strains on
water resources, and understand
emerging long-term risks.
-- We use science-based targets
to focus our efforts in order
to address GHG emissions along
our entire value chain. This
is described in our Responsibility
section (page 67).
-- We support a number of industry
initiatives that address climate
change impacts, including the
Ellen MacArthur Foundation '
s Make
Fashion Circular Initiative,
New Plastics Economy Global
Commitment, UN Fashion Industry
Charter for Climate Change,
The
Fashion Pact and the SFA.
-- We invest in programmes that
help to sustain our industry
and supplier communities, specifically
initiatives that tackle educational
inequality, support social and
economic development and community
cohesion.
-- In FY 2019/20, we established
a Regeneration Fund to support
insetting projects in the supply
chain that will reduce the carbon
impact of our raw materials
and improve biodiversity and
local
producer livelihoods.
-- We continuously engage and
educate employees around the
topic of climate change through
focused events, strategic communications
and volunteering opportunities.
Transitional Risks
-- Through our memberships with
various industry bodies, associations
(for example, The Climate Group)
and external assurance partners,
we contribute to consultations
and are kept informed of upcoming
environmental legislative changes.
-- Environmental sustainability
matters are reported to the
Sustainability Steering Group,
the Ethics Committee, the Risk
Committee and the Board.
-- Our longstanding responsibility
programmes, coupled with our
2022 Responsibility goals, are
driving continuous improvements
in moving beyond social and
environmental compliance.
-- We identify and explore scarce
resources while also developing
alternative materials through
research and development.
-- Our target is for 100% of
our products to have more than
one positive attribute by 2022.
-- We continue to increase our
sustainable product mix, by
including recycled content,
bio-based materials and more
sustainable cotton in our collections.
We have also worked directly
with cotton growers in the USA
to develop a fully traceable
organic cotton supply for the
future.
-- In FY 2019/20 we assessed
the potential impact of commodity
price changes over the medium
term.
-- In FY 2019/20 we introduced
our product sustainability messaging
to make customers aware of our
improved sustainability credentials.
We also increased sustainability
messaging in brand-related communications.
-- As part of scenario analysis
workshops we assessed long-term
technological trends that could
significantly impact our business
model.
-- Our IT Innovation team is
exploring new systems and ways
in which sustainability priorities
can be supported by advancements
in technology.
-- We continue to increase our
focus on zero-waste mindset
across the business and have
a clearly defined waste hierarchy.
We have
established a waste baseline
and are setting targets and
KPIs that will cover operational,
manufacturing and finished goods
waste as well as packaging.
Since FY 2018/19 we have publicly
committed to not destroying
unsaleable finished products.
-- Our climate goals are approved
by the Science Based Targets
initiative (SBTi) and in line
with the Paris Agreement goal
of reducing carbon levels to
keep the global temperature
increase under 1.5˚C.
-- In line with the increased
expectations of our stakeholders,
we are providing more transparency
in our corporate reporting,
as well as disclosing a number
of Environmental, Social and
Governance (ESG) investor indices.
--------------------------------------- --------------------------------------------
RISK TOLERANCE
--------------------------------------- --------------------------------------------
We have a low tolerance for
risk, when it comes to protecting
the human and environmental
resources we all depend on.
However, given the long-term
nature of some sustainability
risks and the level of uncertainty
associated with their occurrence
and impact, we accept that some
risks are inevitable. We therefore
focus on helping to minimise
global risks
while building resilience in
our operations
and supply chain.
---------------------------------------
EXAMPLES OF RISKS
---------------------------------------
Physical risks
Acute
-- Increased severity of extreme
weather events, from floods
to droughts, could cause disruption
in our supply chain, impact
our business model and affect
the sourcing of raw materials,
as well as the production and
distribution of finished goods.
Chronic
-- Our industry is sustained
by many agricultural
and manufacturing communities
around the world. Longer-term
shifts in climate patterns
and loss of biodiversity caused
by changes in
precipitation patterns, rising
mean temperatures and rising
sea levels could cause social,
economic and operational challenges.
-- Failure to address and mitigate
these risks
could result in resource availability
limitations
(for example cotton, leather
and cashmere)
and disruptions to key operations.
Transitional Risks
Policy and Legal
-- Increased regulation and
more stringent
environmental standards could
impact our business by affecting
production costs and
flexibility of operations.
Market
-- Resource scarcity, coupled
with increasing
demand and changes in customer
behaviour,
could affect the production,
availability, quality
and cost of raw materials.
Technology
-- Substitution and transition
costs associated
with implementing new technologies
that enable
sustainability and climate change
initiatives.
Reputation
-- Failure to meet consumer
demand regarding sustainability
could threaten our relationship
with customers, employees, regulators
and interest groups, which could
impact Group revenues.
--------------------------------------- --------------------------------------------
Gemma Parsons
Company Secretary
Burberry Group plc
This information is provided by RNS, 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.
END
ACSURVNRRBUNAAR
(END) Dow Jones Newswires
June 10, 2020 13:15 ET (17:15 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
