Burberry Annual Report 2015-16
Burberry Annual Report 2015-16
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annual report
2015/16
Table of
contents
Strategic Report
Introduction
64
Board of Directors
10
Chairmans Letter
68
12
83
16
Financial Statements
21
Business Model
114
22
Operating Model
23
Channel Mix
24
Regional Mix
25
Product Mix
26
Market Overview
Core Strategies
30
32
34
36
38
Optimise Channels
40
42
44
56
Principal Risks
Financial
Highlights
2,515m
421m
2016
2,515
2016
421
2015
2,523
2015
456
2014
2,330
2014
461
2013
1,999
2013
428
2012
1,857
2012
376
69.9p
660m
2016
69.9
2016
2015
76.9
2015
660
552
2014
75.4
2014
403
2013
70.0
2013
297
2012
61.6
2012
338
37.0p
138m
2016
37.0
2016
2015
35.2
2015
156
2014
32.0
2014
154
2013
29.0
2013
176
2012
25.0
2012
153
Adjusted profit before tax and adjusted diluted EPS is defined in note 2 of the financial statements.
138
Strategic Report
10
Chairmans letter
29
Core Strategies
12
50
16
56
Principal Risks
19
Strategic Report
Strategic Report
Introduction
This is Burberrys Strategic Report for the financial year ending 31 March 2016.
TheReport sets out information on the Burberry brand, business operations, strategy,
culture and its activities aimed at driving positive environmental and social impact.
The following messages from Sir John Peace and Christopher Bailey highlight
Burberrysperformance during the year and the outlook for the Company.
Chairmans
Letter
The Burberry brand remains strong.
Future strategy
The Burberry brand has never been stronger. We have
authentic, distinctive products with enormous future
potential. Burberry remainsa growth business, but
following many years of out performance and investment
in the brand and in the business, we are experiencing
fundamental change in our industry and our consumer.
To stay ahead of these changes, we have been accelerating
our productivity and efficiency agenda, particularly looking
at our ways of working. We have also been addressing how
to optimise future organic revenue growth opportunities
and have identified significant growth opportunities across
our existing channels, products and regions. The Board
firmly believes that these initiatives will also create future
value for ourshareholders.
10
Looking ahead
Looking ahead to 2016/17, we are planning on the basis
thatthe challenging macro-economic environment will
continue to impact the luxurysector.
11
Christopher Bailey
Chief Creative andChief Executive Officer
Brand first
At the heart of this is our emphasis on and investment
in our brand, which continued to resonate strongly with
customers around the world.
A key highlight in the year was our announcement in
November that we will move to one Burberry label during
2016, phasing out our Prorsum, London and Brit lines
while retaining our breadth of price points and attitudes
from casual to high fashion. Together with our ongoing
streamlining of assortments, this is an important step in
ensuring an ever-more coherent brand expression globally,
while making the shopping experience simpler and more
intuitive for our customer, better reflecting the way they
shop and think about the brand today.
12
Customer centric
Within our third theme, Customer Centric, we made further
progress in developing and enhancing our retail practices
to meet the needs of a fast-evolving customer in an
increasingly digital world.
13
Looking ahead
While the scale and duration of current trading challenges
is unclear, the outlook for the luxury sector as a whole
is subdued. In this context, we will continue to respond
dynamically to near-term realities as they unfold. However,
as a growth business, we will always keep near-term
responsiveness in balance with the longer-term horizon.
And we see many opportunities ahead. We are on the path
to becoming a more productive business, but we have
further to go and more benefits to realise, not least in retail.
We have authentic, distinctive products, with significant
future potential to unlock through greater focus and clarity
in our assortments and marketing. We have tremendous
brand momentum and positioning globally, but still with
scope for greater consistency including in some of our
key markets. And we have a real competitive advantage
in our digital mindset as we enter an increasingly
omnichannel world.
14
16
17
Strategic Report
Strategic Report
Burberry group
overview
19
Four key themes underpin the Companys strategic agenda, shaping and
connecting its global activities. These key themes are set out below.
Brand first
The business is led by the brand, with decisions taken
in its best long-term interests.
British heritage with rich cultural and
Authentic
historical associations.
and resources.
team-orientated approach, empowering a highly
Aconnected
organisation.
21
Operating
model
The business is structured by channel, region and
product division, supported by corporate functions.
Business Model
Design
Develop
Make
Sell
Function
Design and
Creative Media
Marketing, Architecture,
Customer Insight
Product
Accessories,Womens,Mens,Children,Beauty
Region
22
Channel
mix
Burberry sells its products through retail (online and offline) and
wholesale channels. For 2015/16, retail accounted for 73% of revenue
and wholesale for 25%. Burberry also has licensing agreements globally,
leveraging the local and technical expertise of its licence partners.
Revenue by channel
Growth is presented underlying and is calculated at constant exchange rates
Licensing
42m
-33%
Wholesale
635m
-2%
Retail
1,838m
+1%
Retail
Includes 215 mainline stores, 214 concessions
within department stores, digital commerce
and 58 outlets
1% underlying growth
Comparable sales down 1% but up
3% excluding Hong Kong and Macau
18 mainline store openings, including
in flagship cities such as Tokyo, Seoul
and New York
Wholesale
Includes sales to department stores, multibrand specialty accounts, travel retail and
franchisees who operate 62 Burberry stores,
and Beauty to around 80 distributors globally
Revenue down 2% underlying. Excluding
Beauty, down 6% underlying
Beauty wholesale revenue of 191m,
up 8% underlying
Licensing
Includes income from Burberrys licensees,
approximately 60% from Japan with the
balance from global product licences
(eyewear and watches) and the European
wholesale childrens licence
Underlying revenue was down 33%
24m of royalty income from Japan
Global product licences (watches*
and eyewear) delivered double-digit
percentage increase
23
regional
mix
Burberry operates in three regions. For 2015/16, Asia Pacific
represented 38% of retail/wholesale revenue, Europe, Middle East,
India and Africa (EMEIA) 35% and Americas 27%.
Asia Pacific
933m
Mainline stores: 63
Concession stores: 143
Americas
661m
Mainline stores: 77
Concession stores: 9
EMEIA
879m
Mainline stores: 75
Concession stores: 62
Americas
Revenue down 2% underlying
Retail accounted for nearly 70% of revenue
Comparable sales unchanged year-on-year
Digital as a percentage of retail sales in the
Americas was more than twice the global
average and showed good growth
EMEIA
Revenue up 5% underlying
Retail accounted for two-thirds of revenue
Comparable sales increased by a mid
single-digit percentage
About half of mainline retail sales were
made to travelling luxury customers
24
Asia Pacific
Revenue down 2% underlying
Retail accounted for over 85% of revenue
Comparable sales declined by a mid
single-digit percentage
Hong Kong was impacted by a significantly
lower footfall
product
mix
Burberry has a diversified product offering across apparel, accessories
and beauty. For 2015/16, accessories represented 36% of retail/wholesale
revenue, womens 30%, mens 22%, childrens 4% and Beauty 8%.
Beauty
203m
Childrens
+8%
91m
+15%
Accessories
902m
+1%
Mens
548m
-2%
Womens
729m
-2%
Accessories
1% underlying revenue growth
Launched the Scarf Bar (both online
and instore) in September 2015
Scarves in mainline retail outperformed
other accessories
The new season runway rucksack saw
good growth
Womens
Revenue declined by 2% underlying
Outerwear hit by unseasonably warm
weather. Lightweight cashmere
trench coats outperformed
New fashion category, dresses, saw
good growth
Childrens
15% underlying revenue growth
Helped by the transition of European
childrenswear to direct operation,
following the licence expiry
Taken direct control of ten childrenswear
stores in Japan
Mens
Revenue down 2% underlying
Outerwear is about 40% of menswear
25
Beauty
8% underlying revenue growth
Building pillar fragrance of My Burberry
with brand extensions
Successful launch of new male fragrance
pillar, Mr. Burberry, in April 2016
MARKET
OVERVIEW
Macro environment
Economic
In the 2015 calendar year, the global economy grew
by 3.1%, a slight deceleration versus 2014. Notable factors
over the year were the slowdown of the Chinese economy,
increased geopolitical concerns in the Middle East
and Russia, and uncertainty in the Eurozone. In addition,
commodity prices fell significantly during the year, notably
oil, leading to low inflation in EMEIA and the US.
26
Products
For the sector, accessories was the fastest growing
product category, at 3% growth, with strong momentum
from shoes and leather goods. The apparel category grew
by 2%, with similar trends across both mens and womens.
Within mens, the outerwear and cashmere categories
outperformed, however, outerwear in Q4 was significantly
impacted by the unseasonably warm weather. Within
womens, denim and outerwear were the key growth
drivers. Beauty grew by 1% driven by increasing
Chinese and Middle Eastern demand.
Outlook
Industry analysts forecast that the luxury sector will
grow by low single-digit percentage in the medium term
at constant exchange rates, driven by the continued
growth of the Chinese consumer. Japan is expected to
remain strong with both tourists and locals driving luxury
consumption. The outlook in Hong Kong continues to be
uncertain. Long term, the luxury market should benefit from
evolving global demographics, continued urbanisation,
increased centralisation of wealth in global destination
key cities, improving macro and socio-economic trends,
strong luxury consumer travel flows and the continued
increasing penetration of digital commerce.
Note:
References are to calendar years, unless otherwise stated.
* Bain & Company and Fondazione Altagamma 2015
Luxury Goods Worldwide Market Report (October 2015).
** Mainland China excludes Hong Kong, Taiwan and Macau.
27
Strategic Report
Strategic Report
Core Strategies
29
Product;
including targeting omni-channel excellence;
Retail,
and
including changing the Groups ways
Process,
of working.
30
31
Key performance
indicators
The Company assesses its performance against a wide range of measures.
These key performance indicators (KPIs) help management measure
progress against the Companys core strategies.
Financial measures
The Board believes it is important to ensure alignment between executive managements strategic focus and the long-term
interests of shareholders. Certain elements of executive remuneration are based on performance against the following
measures: revenue growth, adjusted PBT growth and adjusted retail/wholesale return on invested capital, which are linked
to core strategies as shown. For details of the Groups remuneration policy, see pages 83 to 105.
KPI
Performance
Revenue growth*
This measures the appeal of the Burberry brand
to customers, however its products are sold.
Measure
2016
2015
2,523
+11%
2014
2,330
+17%
2013
1,999
+8%
2012
1,857
+23%
Retail
Strategic link
All core strategies
32
m Underlying
growth
2,515
-1%
Wholesale
Licensing
2016
m Underlying
growth
421
-10%
2015
456
+7%*
2014
461
+8%*
2013
428
+13%*
2012
376
+24%*
2016
%
+14.8
2015
+17.9
2014
+19.6
2013
+19.0
2012
+20.0
KPI
Performance
Measure
%
-1
2016
2015
+9
2014
+12
2013
+5
2012
+14
Strategic link
Optimise Channels,
Pursue Operational Excellence
Adjusted retail/wholesale
operating margin#
This measures how the business balances
operational leverage and disciplined cost
control, with thoughtful investment for future
growth, building the long-term value of
the brand.
2016
%
15.4
2015
16.3
2014
17.5
2013
17.8
2012
16.4
Strategic link
Optimise Channels,
Pursue Operational Excellence
Adjusted diluted EPS growth#
Growth in EPS reflects the increase in
profitability of the business and is a key
valuation metric for Burberrys shareholders.
Strategic link
All core strategies
Pence
Reported
growth
-9%
2016
69.9
2015
76.9
+2%
2014
75.4
+8%
2013
70.0
+14%
2012
61.6
+26%
Non-financial measures
Non-financial measures have a useful role alongside financial measures to inform decision making and to evaluate Group
performance. Burberry is evolving the way it evaluates performance in areas such as people, corporate responsibility and
customers, and will aim to disclose non-financial measures in the future. For detail on Burberrys efforts to drive positive
social and environmental impact globally see pages 44 to 46, and for progress against 2017 environmental targets,
see page 108.
Note:
For definition of underlying growth see page 50.
* At constant exchange rates.
# For definition of Adjusted see page 50.
~ For a reconciliation of Return on Invested Capital see the Five Year Summary.
For details of Adjusted retail/wholesale operating margin see page 53.
For details of Adjusted diluted EPS growth see page 50.
33
INSPIRE WITH
THE BRAND
Speak to consumers with one equally authentic and inspiring
brand voice, wherever they encounter the brand.
remained central to the expression of the brand,
Music
with live performances at Burberry shows featuring
Celebrating Heritage
Over the year, Burberry celebrated its heritage of
craftsmanship and innovation in key flagship markets
with city-wide events and extensive marketing and
social media campaigns.
Runway Shows
Burberry runway shows continued to inspire with critically
acclaimed collections, innovative digital partnerships and
live musical performances. The global reach of the shows
was further extended with live-streaming on new digital
channels. Over the year, show content received over
700 million views across ten global platforms.
34
Marketing Innovation
Burberrys digital mindset is a fundamental and
integral part of the brand and way of thinking across
the organisation. Burberry again finished the year as
one of the most followed luxury platforms on social media,
with a 30% increase in followers for the year reaching over
40 million across all the brands social platforms.
Technology partnerships
To generate further excitement and connect audiences
with the Festive campaign, Burberry partnered with
Google, creating an interactive film experience using
real-time video technology. The Burberry Booth enabled
customers to star in the Burberry Festive Film alongside
the cast members in a personalised edit which was
shareable on YouTube, via Twitter or by email.
Festive
Burberry launched its global festive campaign with
the Burberry Festive Film, paying tribute to the
BAFTA-winning British film, Billy Elliot, and featuring
a cast of actors, musician and models. The Festive
film was viewed over 37 million times across YouTube,
Facebook, LINE and Youku.
External recognition
Burberry was recognised externally for both its
creative, digital and commercial leadership in the
sector. Key accolades include the following:
Campaigns
Burberry became the first brand to shoot and publish
its advertising campaign live through Snapchat.
The campaign was shot in October by Mario Testino,
providing viewers with unprecedented access to the
creative process behind a campaign.
35
REALISE PRODUCT
POTENTIAL
Reinforce Burberrys outerwear leadership while continuing to realise
the brands potential across all apparel and accessory categories.
Beauty
Continuously linking Beauty and fashion, Burberry
developed increasingly personalised and interactive
ways to engage customers globally. Beauty delivered
8% underlying growth in the year.
Outerwear
Following the successful Heritage relaunch last year,
Burberry introduced new colours and lengths to the
British-made heritage trench coat range, together with
a new monogramming offer. Lightweight cashmere
trench coats were also introduced in 14 colours.
Scarf Bar
Celebrating the British-made icon, the Scarf Bar initiative
was launched both online and in-store in September.
The service offers over 30 colours across both signature
and lightweight cashmere fabrications, all available for
monogramming online and in-store via iPads. The launch
was supported with new visual merchandising in-store
and online, and a dedicated personalised marketing
strategy, including online scarf styling tutorials. In mainline
retail, scarves outperformed other accessories, posting
double-digit percentage sales growth.
Fashion
Burberry responded to demand for womens fashion
product with dresses and ponchos delivering strong
growth for the year.
36
37
OPTIMISE
CHANNELS
Optimise all routes to market, both online and offline, owned and third-party,
with a clear emphasis on enhancing retail productivity and service.
further improve the user experience, Burberry
To
continued to invest in Burberry.com. The improved
Store investment
Burberry focused on strengthening its store network
through openings in key locations, as well as
the optimisation of the existing portfolio through
relocations, renovations and some closures.
Investing in digital
Burberrys digital first approach runs throughout the
organisation. Focusing on offering a seamless and
personalised experience wherever customers encounter
the brand, Burberry refined how online and in-store
innovations worked together. Digital outperformed
during the year, delivering strong growth in all regions.
38
Unlock market
opportunity
Fully realise Burberrys opportunities among key consumer groups
and geographic markets developed, young and newly opened.
Burberry is continually evolving its footprint and positioning
in both developed and younger markets. Future opportunities
for the brand in China and Japan are an important part of this,
along with other areas of geographic focus including the travel
retail strategy and continued elevation of the business in the US.
Key focus areas for 2015/16:
Engaging the Chinese luxury consumer
Burberry continued to focus on engaging and improving the
service offering to the Chinese luxury customer both in China
and while shopping abroad, helping to drive brand recognition
and desirability consistent with core luxury peers. In Mainland
China, which accounts for about half of the retail spend of
Burberrys Chinese customers, growth for the year was
weighted towards the second half. Conversion improved as
Burberry invested in sales associate training to improve
service in-store.
with the luxury sector trend, comparative sales
Consistent
in the Hong Kong market decreased by over 20% in the year
as footfall continued to decline. However, all stores in this
important market remained profitable as Burberry focused
on ongoing initiatives to drive conversion, marketing,
product and customer service, while evolving the store
portfolio and controlling costs.
PURSUE OPERATIONAL
EXCELLENCE
Drive greater efficiency and productivity through the business.
Planning
In the year, Burberry fully implemented the global product
buying and allocation activities with the roll-out of a store
profiling initiate to provide a more customer-centric
product range by store. This was incorporated into the
Brand Buy to provide greater product consistency
across Burberrys retail stores based on key design
inspiration, optimising product assortments and core
product replenishment whilst also allowing a degree
of flexibility to reflect local customer needs.
Organisational efficiency
Decisive action during the year resulted in around
25 million of savings against planned spend, from
areas including travel, hiring and other expenses. In
addition to these tactical measures, Burberry continued
to strategically assess all dimensions of its cost base
for the future.
42
BUILD OUR
CULTURE
Build and nurture a culture that strengthens
our brand through its purpose and values, globally.
employee performance across retail, offices,
Exceptional
manufacturing and distribution was recognised through
44
45
External recognition
Burberry was recognised externally for its sustainability
performance and desirability as an employer.
46
47
Strategic Report
Strategic Report
Performance
The following pages set out the highlights of the Group financial performance
during the year to 31 March 2016 and the outlook for the coming financial
year. The principal risks facing the Group during the year, including the
nature and extent of these risks, are also set out in this section.
49
Group Financial
Review
Total revenue
(2015: 2,523m)
Capital expenditure
(2015: 156m)
2,515m
138m
421m
660m
69.9p
37.0p
Year to 31 March
2016
million
2015
% change
reported FX
underlying
2,514.7
(752.0)
1,762.7
(1,344.9)
417.8
2.8
420.6
(5.0)
2,523.2
(757.7)
1,765.5
(1,310.3)
455.2
0.6
455.8
(11.2)
(3)
(8)
(8)
415.6
(101.0)
(5.1)
444.6
(103.5)
(4.8)
(7)
Attributable profit
309.5
336.3
69.9
69.4
446.1
76.9
75.1
447.8
Revenue
Cost of sales
Gross margin
Operating expenses#
Adjusted operating profit
Net finance credit#
Adjusted profit before taxation
Adjusting items
(1)
(11)
(10)
(9)
(8)
Underlying performance is presented as, in the opinion of the Directors, it provides additional understanding of the ongoing performance of the Group. Underlying
performance is calculated before adjusting items and 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 on foreign currency procurement and sales through the
Groups UK supply chain.
Adjusted measures exclude adjusting items. Details of adjusting items are contained in note 6 of the financial statements.
# Excludes adjusting items, which are:
A charge of 14.9m in reported operating expenses being the amortisation of the fragrance and beauty licence intangible asset (2015: 14.9m).
Put option liability finance income of 9.9m in reported net finance income relating to the third party 15% economic interest in the Chinese business
(2015: income of 3.7m).
~ EPS is presented on a diluted basis.
50
Revenue analysis
Revenue by channel
million
Year to 31 March
2016
Retail
Wholesale
Licensing
Revenue
1,837.7
634.6
42.4
2,514.7
Retail
73% of revenue (2015: 71%); with 215 mainline stores,
214 concessions within department stores, digital
commerce and 58 outlets.
2015
1,807.4
648.1
67.7
2,523.2
% change
reported FX
underlying
2
(2)
(37)
1
(2)
(33)
(1)
Asia Pacific
With retail accounting for over 85% of revenue in the
region, Asia Pacific saw a mid single-digit percentage
decline in comparable sales during the year.
51
Americas
Comparable sales in the Americas were unchanged
year-on-year, with retail accounting for nearly 70% of
regional revenue. Together, Canada, Brazil and Mexico,
which contributed over 15% of Americas total retail
revenue, delivered double-digit percentage comparable
growth during the year, as customers shopped in their
home markets. In the US, domestic demand was uneven
throughout the period and tourist spend was weak. Digital
as a percentage of sales in the Americas was more than
twice the global average and showed good growth.
Americas
Wholesale in the Americas accounts for about 35% of
Group wholesale revenue (equivalent to about 7% of
Group retail/wholesale revenue). Revenue was down by
a mid single-digit percentage in the year, largely reflecting
a more difficult consumer environment for department
store customers in the United States, leading to
cautious ordering.
Beauty
Beauty wholesale revenue of 191m grew by 8%
underlying, driven in part by the sell-in of Mr. Burberry,
our new male fragrance pillar, which launched in April
2016. Make-up doubled year-on-year off a small base,
boosted by our partnership with Sephora globally, both
in-store and online.
Licensing
2% of revenue (2015: 3%); of which nearly 60%
is from Japan, with the balance mainly from global
product licences (eyewear and watches).
Beauty up 8% underlying.
52
million
380.9
36.9
417.8
16.6%
Retail/wholesale
Licensing
Adjusted operating profit
Adjusted operating margin
2015
% change
reported FX
underlying
399.2
56.0
455.2
18.0%
(5)
(34)
(8)
(8)
(29)
(11)
Adjusted retail/wholesale operating profit decreased by 8% underlying. With the Japanese Burberry licences expiring
as planned, total adjusted operating profit declined by 11% underlying.
Adjusted retail/wholesale operating profit
Year to 31 March
2016
million
2015
% change
reported FX
Revenue
2,472.3
2,455.5
Cost of sales
Gross margin
Gross margin
Operating expenses
Adjusted operating profit
Operating expenses as % of revenue
Adjusted operating margin
(752.0)
1,720.3
69.6%
(1,339.4)
380.9
54.2%
15.4%
(757.7)
1,697.8
69.2%
(1,298.6)
399.2
52.9%
16.3%
1
1
(3)
(5)
In addition:
The performance-related pay charge was about
65m lower year-on-year as the business did not
achieve its targets.
million
Year to 31 March
2016
2015
Revenue
Cost of sales
Gross margin
Gross margin
Operating expenses
Operating profit
Operating margin
42.4
42.4
100%
(5.5)
36.9
87.0%
% change
reported FX
67.7
67.7
100%
(11.7)
56.0
82.7%
53
(37)
(37)
53
(34)
Adjusting items
million
Amortisation of fragrance and beauty
licence intangible
China put option liability finance income
Net cash
Cash generated from operating activities in FY 2016 was
503m (2015: 568m). Reflecting lower than expected
revenue growth in the second half, inventory was 487m,
up 10% at constant exchange rates, with most of the
increase being current season. Capital expenditure was
below guidance at 138m (2015: 156m), reflecting some
phasing and tight control over project spend. Other major
outflows were dividends of 158m and tax of 95m.
Year to 31 March
2016
2015
(14.9)
9.9
(5.0)
(14.9)
3.7
(11.2)
Outlook
Retail In FY 2017, net new space is expected to contribute
low single-digit percentage growth to total retail revenue.
Around 15 mainline store openings are planned, with a
similar number of closures.
Taxation
The tax rate on adjusted profit in FY 2016 was 24.7%
(2015: 23.4%), higher than guided due to a change in the
transfer pricing approach by an overseas tax authority.
54
of about 20m.
In addition, to deliver the savings, about 20-30m of oneoff costs in FY 2017 are expected, which will be excluded
from adjusted profit.
At 31 March 2015
Additions
Closures
At 31 March 2016
Directly-operated stores
Stores
Concessions
Outlets
Total
Franchise
stores
214
18
(17)
215
213
25
(24)
214
57
1
58
484
44
(41)
487
67
6
(11)
62
Directly-operated stores
Stores
Concessions
Outlets
Total
Franchise
stores
63
75
77
143
62
9
14
24
20
220
161
106
8
47
7
215
214
58
487
62
55
PRINCIPAL
RISKs
Effective management of risk is essential to the execution of the
Groups strategies, the achievement of sustainable shareholder value,
the protection of the brand and ensuring good governance.
provided for the purposes of deciding
information
whether to approve those significant matters which
56
57
Risk
Business impact
Mitigation
Strategic link
All core strategies
Strategic link
Optimise Channels, Unlock Market Opportunity
Inability of the
organisation to
successfully deliver
the productivity and
efficiency agenda
without compromising
business as usual.
58
Risk
Business impact
Mitigation
Strategic link
All Core Strategies
Sustained breaches of
the Groups intellectual
property rights and
unauthorised sale of
Burberry products.
Strategic link
Inspire with the Brand, Realise Product Potential,
Optimise Channels, Unlock Market Opportunity
Chinese consumer
spending patterns
significantly change
adversely impacting
the Groups revenues.
Strategic link
Inspire with the Brand, Optimise Channels,
Unlock Market Opportunity,
Pursue Operational Excellence
Volatility in foreign
exchange rates could
have a significant
impact on the Groups
reported results.
Strategic link
All Core Strategies
59
Risk
Business impact
Mitigation
Strategic link
All Core Strategies
Strategic link
All Core Strategies
Strategic link
Inspire with the Brand
Over-reliance
on key vendors.
Strategic link
Inspire with the Brand, Realise Product Potential
60
Risk
Business impact
Mitigation
The Groups IT
systems and operational
infrastructure are critical
to its operation and
the delivery of products
and services to its
consumers. Increasingly,
technology is evolving to
stream major events and
to communicate through
social media.
Strategic link
All Core Strategies
Strategic link
Inspire with the Brand, Optimise Channels,
Unlock Market Opportunity,
Pursue Operational Excellence
61
Board and
Governance
64
Board of Directors
83
68
Board of
Directors
Chairman
Sir John Peace (67)
Chairman
Sir John Peace became Chairman of the Board in June
2002 and is also Chairman of the Nomination Committee.
He is Chairman of Standard Chartered PLC. Previously he
was Chairman of Experian plc from 2006 to 2014 and Group
Chief Executive of GUS plc from 2000 to 2006. Sir John
isLord-Lieutenant of Nottinghamshire and was knighted
in2011 for services to business and the voluntary sector.
Non-executive directors
Fabiola Arredondo (49)*
Non-executive director
Fabiola Arredondo was appointed as a non-executive
director in March 2015. Fabiola is currently the Managing
Partner of Siempre Holdings, a private investment firm
based in Connecticut, US. She is also a non-executive
director of Rodale Inc., NPR Inc. (National Public Radio),
and a trustee ofSesame Workshop. Prior to Siempre
Holdings, Fabiola held senior operating roles at Yahoo!
Inc, the BBC and Bertelsmann AG. She has also previously
served as a nonexecutive director of Experian plc,
Saks Incorporated, Intelsat Inc., BOC Group plc,
and Bankinter S.A.
Executive directors
Christopher Bailey (45)
Chief Creative and Chief Executive Officer
Christopher Bailey became Chief Creative and Chief
Executive Officer in May 2014, having previously served
as Chief Creative Officer since 2009. Christopher joined as
Design Director in May 2001. Prior to working at Burberry,
Christopher was the Senior Designer of Womenswear
at Gucci in Milan from 1996 to 2001. From 1994 to 1996
hewas the Womenswear Designer at Donna Karan.
64
65
Back row:
Ian Carter, Carol Fairweather, Matthew Key, John Smith, Philip Bowman, Dame Carolyn McCall
Front row:
Jeremy Darroch, Stephanie George, Sir John Peace, Christopher Bailey, Fabiola Arredondo
Corporate
Governance report
Dear Shareholder,
Governance
This report sets out the Boards approach and work during
the financial year 2015/16 and, together with the Directors
Remuneration Report on pages 83 to 105, includes details
of how the Company has applied and complied with the
principles and provisions of the UK Corporate Governance
Code (the Code). The directors consider that the Company
has complied with the provisions of the Code throughout
the year.
Our Board
The Board currently consists of 11 members the
Chairman, the Chief Creative and Chief Executive Officer,
the Chief Operating Officer, the Chief Financial Officer and
seven independent non-executive directors. A list of directors
and their biographies is set out on pages 64 and 65.
Board
Nomination
Committee
Remuneration
Committee
Audit
Committee
Risk
Committee
Senior
Leadership Team
69
Global Ethics
Committee
Board effectiveness
Strategy and
Business Focus
CC & CEOs regular updates on current trading, the business and operations.
Annual strategy session (two days) and the acceleration of the Groups productivity and efficiency agenda.
Received briefings on key areas of the business, the external economic environment and the luxury sector.
Consideration of the Groups capital structure, balance sheet strategy and returns to shareholders.
Year-end review of the business/sector outlook and consideration of the 2016/17 budget in the context
of the three-year plan.
Review of the interim and preliminary results announcements, Annual Report and Accounts.
Review of risk assessments, internal control framework, business controls and consideration of risk appetite.
Consideration of the Groups viability statement and the viability assessment and stress testing underpinning
the statement.
Strategic risks and impact on the three-year plan.
Review of audit plan for the year, reappointment of auditors and non-audit fees.
Review of the Groups ongoing business process transformation programme aimed at simplifying the Groups
operating processes including the upgrades of the Groups IT systems.
Review of IT general controls and cyber security plans and activities.
Consideration of the internal audit of Group Treasury, various treasury matters and amendments to the
Treasury Policy.
Consideration of Group tax matters including the Groups approach to tax risk.
Governance and
Engagement
Consideration of new UK Corporate Governance Code requirements relating to the Groups internal control and
risk management arrangements and new requirement to report on the Groups longer-term solvency and viability.
Consideration of the UK Corporate Governance Code and other regulatory requirements for the Annual Report.
Preparation for, and review of Notice of AGM.
Discussed regular updates from Investor Relations on share price, performance metrics, register activity and
investor and analyst sentiment.
Engaged with investors throughout the year and responded to retail shareholder questions at the AGM.
Considered progress against the Board Succession Plan, Committee roles and composition.
Assessed the outcome of the Board/Committee effectiveness review.
Consideration of director indemnification and Directors and Officers insurance renewal.
Consideration of director conflicts of interest.
People, culture
and values
In depth review of ways of working as part of the Groups productivity and efficiency agenda.
CC & CEOs regular updates on key brand moments and culture.
Consideration of regular updates from the management Ethics Committee.
Consideration of the Groups charitable activities, including the Burberry Foundation.
70
Key Themes
Board
composition
and ongoing
NED support
2015/16 Review
Actions
Board/
Committee
focus
Board/
Committee
effectiveness
2014/15 Review
Views
71
Chairmans performance
The Senior Independent Director met with the nonexecutive directors, without the Chairman present,
to review the Chairmans performance. The results of
this review were then discussed with the Chairman.
The feedback was that the Chairman does an excellent
job. Particularly, he encourages an open and transparent
style around the Board table, is actively engaged in the
key strategic issues facing the business and facilitates
Board focus on the key issues.
Directors performance
The Chairman held discussions with each of the
directors to discuss their individual performance and to
raise any top-of-mind issues they may have including in
relation to any matters relating to the Board/Committee
effectiveness review. This assessment is used as the
basis for recommending the re-election of directors
by shareholders.
The table below gives details of directors attendance at Board and Committee meetings during the year ended 31 March 2016.
Board
Audit
Nomination
Remuneration
6/6
6/6
6/6
6/6
6/6
6/6
6/6
6/6
6/6
6/6
3/3
3/3
3/3
3/3
3/3
3/3
3/3
3/3
3/3
3/3
3/3
3/3
3/3
3/3
3/3
3/3
3/3
3/3
3/3
3/3
3/3
3/3
John Smith
6/6
David Tyler 1
4/6
2/3
1/3
2/3
1 David Tyler stepped down from the Board and its Committees on 31 December 2015.
Time allocation
Each of the non-executive directors has a letter of
appointment which sets out the terms and conditions
of his or her directorship. The Chairman and the nonexecutive directors are expected to devote such time as
is necessary for the proper performance of their duties.
This is expected to be approximately 20 days each year
for basic duties. The Chairman and Senior Independent
Director are expected to spend additional time over and
above this to discharge their added responsibilities.
External directorships
The Boards executive directors are permitted to hold only
one non-executive directorship of a FTSE 100 company.
Details of the directors other directorships can be found
in their biographies on pages 64 and 65.
72
Board tenure
0 5 years
5 10 years
10 years or above
Male
Female
73
Re-election of directors
At the Annual General Meeting in 2015, all continuing
directors offered themselves for re-election. Each director
was re-elected and no director received less than 96%
in favour of the votes cast. At the Annual General Meeting
in 2016, all of the directors will again retire and all will offer
themselves for re-election or, in the case of the newly
appointed directors, for election.
75
Internal audit
All Internal Audit activity is conducted by the Internal Audit
team under the leadership of the Vice President of Internal
Audit, who reports to the Chief Financial Officer but has
an independent reporting line to the Chairman of the Audit
Committee. Internal Audit adopts a risk-based approach
to developing the annual audit plan which involves
undertaking a mapping exercise between the Principal
Risks, the potential impact on the achievement of
the Groups strategic objectives if those risks were to
materialise and the extent to which other sources of
assurance exist and can be relied upon to mitigate the
Principal Risks. The output of this, together with a number
of other factors, helps to identify areas of focus for the
annual audit plan. Internal Audit stays abreast of any
changes to the Groups risk profile on an ongoing basis
and will reflect this through changes to the audit plan
as necessary during the year. Any proposed changes
to the plan are discussed with the Chief Operating Officer
and the Chief Financial Officer and reported to the
Audit Committee.
Financial reporting
Management is responsible for establishing and
maintaining adequate internal controls over financial
reporting. These controls are designed to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements
for external reporting purposes.
76
Philip Bowman
Chairman, Audit Committee
77
Appointment date
21 June 2002
Fabiola Arredondo
10 March 2015
Ian Carter
18 May 2007
Jeremy Darroch
5 February 2014
Stephanie George
19 May 2006
Matthew Key
26 September 2013
1 September 2014
David Tyler1
21 June 2002
The Audit Committee met three times during the year. The
attendance record of Committee members is recorded in
the table on page 72. In addition to the scheduled meetings
the Chairman of the Committee meets separately with
representatives of the Auditor, the Chief Financial Officer,
the Vice President Financial Controller, the Vice President
Internal Audit and the Vice President Group Risk Officer
on a regular basis, including prior to each meeting. In
addition, he meets with other members of management
on an ad hoc basis as required to fulfil his duties.
Key Committee roles
andresponsibilities
Financial Reports:
The integrity of the Groups
financial statements and
formal announcements of
the Groups performance.
Internal Audit:
Review of the annual internal audit
programme and the consideration of
findings of any internal investigations
and managements response.
of the Annual Report and Accounts, annual financial statements, preliminary announcement,
Review
and interim announcement. On behalf of the Board the consideration of whether the processes and
procedures in place ensure that the Annual Report and Accounts, taken as a whole, is fair, balanced
and understandable and provides the information necessary for shareholders to assess the Groups
position and performance, business model and strategy.
Assessment of the Groups viability and the appropriateness of the going concern basis for reporting.
of the report of the external auditors on the financial statements for the year, and on
Consideration
the year end audit.
Ensuring compliance with relevant regulations for financial reporting and the Code.
of the Groups statement in the Corporate Governance Report on internal controls and
Rriskeview
management.
Review of financial and operational control frameworks.
Review of IT and cyber security control frameworks.
Review of business risk assessments.
Treasury Policy review and compliance.
Risk Committee and Ethics Committee updates.
Health and safety reviews.
Whistleblowing reports.
Anti-Bribery and Corruption Policy compliance.
Consideration of the result of internal audits and management responses to the findings.
Approval of the internal audit plan for 2016/17.
and approval of the proposed audit fee and terms of engagement for the Groups external
Review
auditors, PricewaterhouseCoopers LLP (PwC), for the 2015/16 financial year (see below).
and approval of the audit plan for the year presented by the Groups auditors. Consideration
Rofeview
the key areas of risk and the audit approach applied to these areas, the proposed areas of coverage
of the audit, changes of scope and areas of risk in the current year plan and the resource plan.
eview of all non-audit services provided by the Groups auditors during the period and the fees
R
relating to the services provided (see page 80).
78
Significant matters
The significant matters considered by the Committee during the year are set out below.
Significant matters for the
year ended 31 March 2016
The Committee reviewed and challenged the appropriateness of the key inputs used in the
calculation of the fair value of this option. The Committee also considered the sensitivity of
the fair value to reasonable changes in inputs and disclosures made in relation to the valuation,
including disclosure of the potential impact of the call option being exercised ahead of the put
option on the liability arising. Further details of the valuation of the put option, which is valued
at 45.8m at the year end, are set out in note 19 of the financial statements. The Committee
concluded that the fair value of the put option, the disclosure of the valuation methodology
and of the impact of the judgements applied were appropriate in the financial statements
for the year.
The Committee considered the Groups current provisioning policy, the historic loss rates
incurred on inventory held at the balance sheet date and the nature and condition of current
inventory. Due to the more challenging trading conditions in the luxury sector during the year,
the Committee requested management to review the assumptions applied in estimating
the recoverable value of the inventory. The Committee concluded the carrying value of the
inventory was appropriate. The Committee also reviewed managements evolution of their
provisioning methodology for Beauty inventory, which had been requested by the Committee
in the previous year, and concluded that the evolution in methodology was appropriate.
Movements in inventory provisioning are set out in note 16 of the financial statements.
The Senior Vice President Group Tax, who reports to the Committee at each meeting,
presented a detailed update of the Groups tax strategy, developments relating to discussions
with tax authorities and the status of ongoing tax audits. The Committee reviewed and
challenged the appropriateness of assumptions and judgements applied in order to estimate
the amount of assets and liabilities to be recognised in relation to uncertain income tax and
deferred tax positions. The Committee concluded that the assets and liabilities recognised
and disclosures contained in the financial statements for the period were appropriate. Details
of movements in tax balances are set out in notes 9 and 14 of the financial statements and
further disclosure of tax contingent liabilities is given in note 29.
The Committee considered the Annual Report and Interim Report, on behalf of the Board, to
ensure that they were fair, balanced and understandable, in accordance with requirements of
the UK Corporate Governance Code. As part of this review, the Committee reviewed the report
from the Strategic Report Drafting Team, highlighting key considerations. The Committee
considered comments arising from the review of accounts by the executive directors.
Other matters.
At the May and November meetings, the Committee also considered managements papers
on the following subjects:
79
External auditors
The Committee oversees the work undertaken by
PricewaterhouseCoopers LLP (PwC). During the year
the Committee met with the external auditors without
members of management being present.
Non-audit services
The Committee recognises that the independence of
the external auditors is an essential part of the audit
framework and the assurance that it provides. The
Committee has adopted a policy which sets out a
framework for determining whether it is appropriate
to engage the Groups auditors for non-audit services.
Key considerations set out in the policy include
whether the services:
80
Members
Appointment date
21 June 2002
Fabiola Arredondo
10 March 2015
Philip Bowman
21 June 2002
Ian Carter
18 May 2007
Jeremy Darroch
5 February 2014
Stephanie George
23 March 2007
Matthew Key
26 September 2013
1 September 2014
David Tyler 1
23 March 2007
81
Share capital
Further information about the Companys share capital,
including substantial shareholdings, can be found in
the Directors Report on page 107.
82
Directors
Remuneration Report
Dear Shareholder,
The role of the Remuneration Committee continues to be to ensure that remuneration for the executive directors and other
senior executives enables them to be completely focused on driving the Companys performance and delivering our key
strategies in a responsible way. It is also our responsibility to ensure that remuneration received by the executive directors
is aligned with the levels of performance achieved and the value delivered to you as shareholders.
As reported by the Chairman and the Chief Creative and Chief Executive Officer in their introductory letters to this years
Annual Report, 2015/16 has been a challenging year for the luxury sector globally, resulting in Group Revenue of 2,514.7m
and Group Adjusted Profit Before Tax (PBT) of 420.6m. As we have announced, with the outlook for demand in luxury
uncertain and underlying cost pressures persisting for the sector, we are accelerating our productivity and efficiency
agenda, especially looking at our ways of working. We are also addressing how to optimise future organic revenue growth
opportunities, the resulting investment plans and our capital structure. Please see page 30 for further information.
Remuneration for 2015/16
Against this backdrop of a challenging external environment, the senior executive team has remained focused on the
management of the business and the execution of our key strategies. We continue to drive the business to ensure Burberry
is best placed forlong-term, sustainable growth and value creation. Our financial outcomes reflect these economic
challenges and, given the stretching nature of the performance targets we had set at the beginning of our financial year,
the level of remuneration received by the executive directors for the 2015/16 year is lower than in 2014/15. In particular,
the points I would draw your attention to are as follows:
Group Adjusted PBT achieved was below the threshold target set by the Remuneration Committee at the start
2015/16
ofthe year and so no annual bonus will be paid to the executive directors;
relatively subdued growth in Group Adjusted PBT over the three-year period ending in 2015/16 means that awards
the
granted in 2013 based on this performance measure Co-Investment Plan (CIP) awards and 50% of Restricted Share
Plan (RSP) awards will not vest. The remaining 50% of 2013 RSP awards based on Total Shareholder Return (TSR)
relative to our peers will also not vest;
Committee has reviewed progress for the year against the performance criteria on Christopher Baileys 2014
the
exceptional share award and has determined that achievement for 2015/16 was 50% of maximum. Section 5 of this
report includes detailed commentary on progress towards the objectives for this second year of the performance
period; and
the uncertain external environment and the reflection of these economic challenges in our financial outcomes,
Given
Christopher Bailey has requested that the vesting date of the first tranche of his 2013 exceptional share award be deferred
for a further 12 months, from July 2016 to July 2017. Ahead of the new vesting date in July 2017, the Committee and
Christopher Bailey will again assess the extent to which vesting would be appropriate.
Remuneration Policy Operation
The Remuneration Committee is pleased to confirm that all remuneration payments to executive directors made during the
year have been in line with Burberrys directors remuneration policy (remuneration policy) approved by shareholders at the
2014 Annual General Meeting (AGM). The Committee is satisfied that the remuneration policy has proved fit-for-purpose,
reflecting the long-term performance of the Company, and remains appropriate for the year ahead. We have chosen to include
the full remuneration policy in this report to help you to better interpret the Annual Report on Remuneration.
We will be seeking shareholder approval for a new remuneration policy at the 2017 AGM, when the existing policy reaches
the end of its three year-life. The Committee will be reviewing our remuneration arrangements in detail ahead of this,
toensure the new policy will serve Burberry well for a further three-year period. We will look to consult with our largest
shareholders regarding the new remuneration policy towards the end of the year.
83
84
Summary contents
The remuneration report is set out in the following sections:
1. Directors remuneration policy
2. Directors remuneration in 2015/16 (Annual Report on Remuneration)
3. Outstanding share interests
4. Directors remuneration in 2016/17
5. Further information on Christopher Baileys 2014 exceptional performance-based award of 500,000 shares
6. Payments made in the year to former directors
7. Payments for loss of office
8. Remuneration Committee in 2015/16
9. Seven-year performance graph and Chief Executive Officer remuneration
1. Directors remuneration policy
Burberrys directors remuneration policy was approved by shareholders at the 2014 Annual General Meeting (AGM) and
took effect from the date of the 2014 AGM, 11 July 2014. Since the policy has a maximum life of three years and has not
changed since its introduction, we are not seeking approval for it this year and it is set out in this report for reference only.
The Committee intends that this policy should apply until the 2017 AGM. The charts illustrating indicative levels of total
remuneration for the executive directors have not been included this year, and the full original version of the remuneration
policy can be found in the 2013/14 Annual Report, available on the Companys website.
The Committee believes the Groups remuneration should be strongly linked to performance and internationally competitive,
taking into account the global markets in which it operates and from which it recruits. The remuneration policy is based
onthe following principles.
Linked to the success and strategy of the business: the overall remuneration framework should provide a balance
between key short-term and long-term business objectives. Variable pay for executive directors includes (1) an annual
cash bonus based on the financial performance of Burberry (currently Adjusted Profit Before Tax (Adjusted PBT*) is the
sole performance measure), and (2) long-term share-based incentives linked primarily to the financial performance of the
Company but having regard to the delivery of objectives set in accordance with the Companys long-term strategic themes.
Shareholder value: remuneration should provide close alignment with long-term value creation for shareholders through
theselection of appropriate performance measures and targets, be tied to the future success of the Company, emphasise
variable pay and deliver a significant proportion of remuneration in shares, some of which are expected to be retained in
accordance with the Groups executive shareholding policy.
Competitive in the global talent market: total remuneration should be sufficient to attract, motivate and retain exceptional
talent within the global luxury goods and digital sectors. Total remuneration for executive directors and other senior
executives is therefore benchmarked against Burberrys main global competitors for talent and comparable UK companies.
The Committee recognises that, for each executive, the relative importance of each of these reference groups may be
different depending on the skills and experience required to undertake the specific role. Benefits are based on competitive
market practice for each executive depending on individual circumstances.
* Adjusted Profit Before Tax is defined in note 2 of the Financial Statements and all references to Adjusted PBT in this report refer to this definition.
85
Operation
Executive directors
Base salary
To recognise the
responsibilities,
experience and ability
ofour talent in a
competitive global
environment, keeping
ourpeople focused on,
and passionate about,
thebrand.
Annual bonus
To reward executive
directors for achieving
annual financial targets
linked to the strategic
plan agreed by
theBoard.
225% of salary
Performance measure(s):
25% at threshold
50% at target
100% at maximum
86
Purpose
Burberry Executive
Share Plan (ESP)
To focus executives
on, and reward them for,
sustainable long-term
performance and
successful execution
ofthe Groups
long-termstrategy.
To help maintain the
stability of the top
executive team, and align
executives interests with
those of shareholders.
Operation
All-employee
shareplans
To encourage employee
share ownership at
alllevels.
87
Purpose
Other benefits
andallowances
To promote the
well-being of employees,
allowing them to focus
on the business.
Operation
Benefit levels are reviewed on an annual basis and the costto the
Company of providing benefits can vary due toa number of factors.
Benefits for executive directors may include, but are notlimited to:
Outstanding
exceptional share
awards (prior
commitments)
To allow payment of
outstanding awards,
made under prior
commitments to
Christopher Bailey.
Further details are contained in the remuneration report for the year
of grant and will be included in the remuneration report for the final
year of the performance period.
Malus provision: None.
1,350,000 shares
500,000 shares
88
Purpose
Operation
Non-executive directors
Chairman fees
To attract and retain a
high-calibre chairman
by offering a marketcompetitive fee.
Non-executive
directors (NEDs) fees
To attract and retain
high-calibre nonexecutive directors
byoffering marketcompetitive fees.
89
Christopher Bailey
Carol Fairweather
John Smith
Date employment
commenced
30 April 2014
11 July 2013
6 February 2013
7 May 2001
12 June 2006
4 March 2013
6 months
6 months
12 months
12 months
12 months
12 months
90
RSP awards: For an executive considered to be a good leaver (including leaving the Company on retirement, redundancy,
ill health, as a result of death in service or as decided by the Committee), outstanding awards will be prorated for time and
vest subject to performance. Upon a change in control of the Company, outstanding awards will vest subject to performance
at the point of change in control. For an executive whose employment is terminated for any other reason (such as leaving to
join a competitor company) during the performance period, RSP awards will lapse in full. The Committee retains discretion
to vary the approach and the extent to which RSP awards vest for leavers, as outlined below.
ESP awards: For an executive considered to be a good leaver (including leaving the Company on retirement, redundancy,
ill health, as a result of death in service or as decided by the Committee), outstanding awards will be prorated for time and
vest subject to performance on the original vesting date. Upon a change in control of the Company, outstanding awards will
be prorated for time and vest subject to performance at the point of change in control. For an executive whose employment
is terminated for any other reason (such as leaving to join a competitor company) during the performance period, ESP awards
will lapse in full. The Committee retains discretion to vary the approach and the extent to which awards vest for leavers,
asoutlined below.
Other: Reasonable disbursements (for example, legal or professional fees, relocation costs) will be paid.
Discretion: In the Committees experience, directors leave for a wide variety of reasons and individual circumstances,
which do not all fall within the good leaver categories outlined above. The Committee therefore retains discretion
toapprove payments to individuals based on individual circumstances and performance while in office. In applying any
suchdiscretion, the Committee will make any decisions by considering the best interests of shareholders and those
oftheremaining employees including directors. Where awards are subject to performance conditions, these would be
tested at the end of the relevant period(s) and any award which is allowed to vest would be prorated for time in office.
Christopher Bailey
The Company has agreed specific arrangements with Christopher Bailey in relation to termination of his employment
insubstitution for the first two bullets of the standard terms described in the previous section (Salary, benefits and
allowances and Annual bonus paid in cash). These specific arrangements are described below.
The Company may terminate Christopher Baileys service agreement without cause by giving 12 months written notice.
TheCompany may terminate the service agreement immediately, in its sole discretion, by written notice and electing to
payto Christopher Bailey either (1) a lump sum representing his salary in lieu of the unexpired notice period within 14 days
oftermination or (2) in monthly instalments of 1/12 of his annual salary and 1/12 of his annual allowance of 440,000 in
lieuofthe unexpired notice period or until Christopher Bailey commences any new employment or engagement if earlier.
Christopher Bailey must use his reasonable endeavours to seek alternative employment during the balance of his unexpired
notice period. The Company will also pay Christopher Bailey a bonus for the year in which employment terminated subject
to achievement of the performance targets and other requirements of the bonus arrangements for that year, prorated to
actual service in the bonus year. The bonus would be paid on the usual bonus payment date.
Christopher Bailey may terminate his service agreement at any time for Good Reason, provided he has requested that the
Company remedy the relevant breach within 14 days of notification and the Company has failed to do so. Good Reason
means the Company is guilty of serious and continued non-observance or breach of the terms of the service agreement
orof any applicable substantial laws which are detrimental to Christopher Bailey. On termination for Good Reason
Christopher Bailey is entitled to a lump sum payment representing his salary in lieu of notice. The Company will also pay
Christopher Bailey a bonus for the year in which employment terminated subject to achievement of the performance targets
and other requirements of the bonus arrangements for that year, prorated to actual service in the bonus year. The bonus
would be paid on the usual bonus payment date.
91
The Company may terminate the service agreement on health grounds by giving Christopher Bailey not less than six months
notice once Christopher Baileys entitlement to Company sick pay has been exhausted or he has been incapacitated
formore than 26 weeks (whether or not continuous) in any period of 52 weeks. The Company may, in its sole discretion,
terminate the employment by making a payment of 130% of his salary, and pay the allowance in lieu of notice within 14 days
of termination. The Company will also pay Christopher Bailey a bonus for the year in which employment terminated subject
to achievement of the performance targets and other requirements of the bonus arrangements for that year, prorated to
actual service in that year. The bonus would be paid on the usual bonus payment date.
If Christopher Bailey dies during his employment with the Company, the Company will pay his estate his salary to the
termination date and a bonus calculated as for an ill health termination described above.
Upon termination of the service agreement, Christopher Baileys entitlements (if any) under the relevant share plans
inwhichhe participates will be determined in accordance with the rules of those plans, as described above.
Non-executive directors
The non-executive directors serve under Letters of Appointment with the Company. Non-executive directors may continue
to serve subject to the annual re-election by shareholders at each Annual General Meeting of the Company, subject to
sixmonths notice by either party. There are no provisions for compensation for loss of office, or payments in lieu of notice
in the Letters of Appointment.
1.4. Development of directors remuneration policy
In developing and reviewing the directors remuneration policy, the Committee is mindful of the views of shareholders and
issensitive of the relativities of arrangements for senior executives to those for employees more generally.
The Committee proactively seeks feedback from shareholders when considering any significant changes to remuneration
forexecutive directors. The Committee also listens to and takes into consideration investor views more generally throughout
the year. The Company will be consulting with its largest shareholders later in the summer of 2016 regarding 2016 ESP
awards (in particular the performance measure targets that will be applied) and later in the year regarding the 2017
remuneration policy.
Base salary increases awarded to executives are determined within the broader context of Company-wide salary increases.
Given the scale, geographic spread and the diversity of roles of the Companys employees, the Committee does not proactively
consult with employees specifically on the remuneration policy for directors. Employees are free to communicate their views
internally on any topic including by using the Burberry internal social media platform or using the employee confidential
helpline. In addition, many of the Companys employees are shareholders, through the Sharesave and Free Share plans,
andthey, like other shareholders, are able to express their views on directors remuneration at each general meeting.
92
Benefits/
allowances
000
Bonus
000
CIP
000
RSP
000
Total LTI
000
Pension
000
Total
000
Christopher Bailey
Year to 31 March 2016
Year to 31 March 2015
1,100
1,008
464
424
0
1,782
0
3,991
0
3,991
330
303
1,894
7,508
Carol Fairweather
Year to 31 March 2016
Year to 31 March 2015
500
488
33
32
0
608
0
410
0
0
0
410
150
146
683
1,684
John Smith
Year to 31 March 2016
Year to 31 March 2015
592
588
43
41
0
719
178
176
813
1,524
89
41
27
157
400
400
4
4
404
404
Fabiola Arredondo
Year to 31 March 2016
Year to 31 March 2015
80
7
86
17
166
24
Philip Bowman
Year to 31 March 2016
Year to 31 March 2015
135
135
14
2
149
137
Ian Carter
Year to 31 March 2016
Year to 31 March 2015
115
115
81
134
196
249
Jeremy Darroch
Year to 31 March 2016
Year to 31 March 2015
80
78
80
78
Stephanie George
Year to 31 March 2016
Year to 31 March 2015
80
80
103
74
183
154
Matthew Key
Year to 31 March 2016
Year to 31 March 2015
80
80
5
3
85
83
80
47
3
3
83
50
David Tyler
Year to 31 March 2016
Year to 31 March 2015
60
80
60
80
Executive directors
Notes:
Fees for David Tyler for the 2015/16 year relate to the period 1 April 2015 to 31 December 2015, when he stepped down from the Board.
The amounts shown for 2012 CIP awards vesting for Christopher Bailey and Carol Fairweather (for year to 31 March 2015) shown in the 2014/15 report assumed
a share price of 17.93, based on the average share price over the three months to 31 March 2015, and payments 208,578 and 21,406 respectively in lieu
of dividends (because these awards had yet to vest). These awards vested on the 18 July 2015 at a share price of 16.01 and Christopher Bailey and Carol
Fairweather received payments in lieu of dividends of 226,215 and 23,217 respectively the relevant amounts shown in the table above reflect these details.
A mounts for shares under Burberrys SAYE will be included in the single figure of total remuneration for the year in which they are exercised. No SAYE share
awards were exercised by executive directors during the 2015/16 year.
No shares were awarded under the Burberry SIP or Free Share plans to executive directors in the 2015/16 year.
No payment has been made to a past director during the 2015/16 year.
93
The table below details the benefits/allowances received by the directors during the 2015/16 year:
2015/16 benefits/
allowances
(000)
Cash
allowance
Car
allowance
Clothing
allowance
Private
medical
insurance
Life
assurance
Long-term
disability
insurance
440
10
17
15
15
14
4
3
5
1
5
5
3
3
Executive directors
Christopher Bailey
Carol Fairweather
John Smith
Expenses
Tax on
expenses
Total
000
464
33
43
Non-executive directors
Sir John Peace
Fabiola Arredondo
Philip Bowman
Ian Carter
Jeremy Darroch
12
12
2
40
8
38
2
34
6
31
4
86
14
81
Stephanie George
Matthew Key
Dame Carolyn McCall
David Tyler
12
50
3
1
41
2
1
103
5
2
Notes:
Cash allowances for Fabiola Arredondo, Ian Carter and Stephanie George are attendance allowances of 2,000 for each meeting attended outside of their
country of residence.
The reimbursement of certain expenses incurred by non-executive directors in the performance of their duties is deemed by HM Revenue & Customs to be
subject to UK Income Tax. The tables above include figures for Benefits/allowances, including costs in respect of air travel and other incidental costs incurred
in attending regular Board meetings. Any tax liabilities arising on the reimbursement of these costs will be settled by the Company. Amounts disclosed have
been estimated and have been grossed up at a tax rate of 45%. Note that expenses for FabiolaArredondo, Ian Carter and Stephanie George include travel
expenses from the USA.
94
Maximum bonus
opportunity
(% of salary)
200%
150%
150%
2015/16
2015/16
2015/16
2015/16 Level of 2015/16
Adjusted PBT bonus payment bonus payment bonus payment
Adjusted PBT
(000)
(% of salary)
achieved* (m) (% of maximum)
target (m)
Target: 445
409.8
0%
0%
0%
0%
0
0
0
* The bonus outcome is calculated using the average exchange rates of the year on which the targets were based, as set out in the performance condition to
awards (at the start of the performance period). The level of Adjusted PBT achieved is therefore different (lower this year) than the reported 2015/16 Adjusted
PBT due to the adjustments made by the Committee to reflect constant exchange rates.
2013
Level of
CIP Adjusted
2013
Adjusted PBT
PBT growth
CIP award
2015/16
targets over growth achieved
(no. of
CIP vesting
matching shares) three years (p.a.) over three years# (% of maximum)
165,161
21,677
Threshold: 5%
Maximum: 10%
0.6% p.a.
0%
0%
2015/16
CIP vesting
(000)
0
0
# The CIP outcome is calculated using the average exchange rates of the year on which the targets were based, as set out in the performance condition to awards
(at the start of the performance period).
John Smith became an executive director on 4 March 2013 and so did not receive a CIP award in 2013, as 2013 CIP awards
were based on 2012 annual bonus outcome.
95
Carol Fairweather
John Smith
2013
RSP award
(no. of
shares)
Performance
measure
Vesting
schedule
243,542
Level of
performance
2015/16
achieved over
RSP vesting
#
three years (% of maximum)
0.6% p.a.
2015/16
RSP vesting
(000)
0%
0%
0%
# The RSP outcome is calculated using the average exchange rates of the year on which the targets were based, as set out in the performance condition to awards
(at the start of the performance period).
* The vesting outcome based on TSR is calculated by Willis Towers Watson. The TSR peer group for the 2013 awards comprised: Coach, Compagnie Financire
Richemont, Este Lauder, Fossil, Geox, Herms International, Hugo Boss, Inditex, Kate Spade (formerly Fifth & Pacific), Kering (formerly PPR), Luxottica Group,
LVMH Mot Hennessy Louis Vuitton, Nike, Nordstrom, Polo Ralph Lauren, Swatch, Tiffany & Co, and Tods. Saks was acquired by Hudson Bay during the period
and so has been removed from the comparator group.
2.6. Change in the Chief Executive Officers remuneration relative to all employees
The table below sets out the year-on-year change (2015/16 vs. 2014/15) in Christopher Baileys base salary, benefits and
bonus received. As Christopher Bailey was appointed to the role of Chief Executive Officer on 1 May 2014, the year-on-year
change reported compares his salary, benefits and bonus received for the full 2014/15 year (including April 2014 when he
was Chief Creative Officer) to that received in 2015/16. The year-on-year change (2015/16 vs. 2014/15) of salary, benefits
and annual bonus received for a comparator group of UK-based employees is also shown.
Salary
Benefits
Bonus
0%
0%
-100%
Employees*
2.0%
0%
-100%
* The comparator group includes employees in senior corporate roles based in the UK. This group has been chosen as these employees have a remuneration
package with a similar structure to the CEO (including salary, benefits/allowances and annual bonus) and being UK-based, most closely reflects the economic
environment encountered by the CC & CEO. For the comparator group of employees, the salary and bonus year-on-year changes include the annual salary
review but exclude any additional changes made in the year (to salary or bonus levels), for example on promotion. In 2015/16, the bonus outturn based
on Adjusted PBT performance was 0% of maximum, compared to 81% of maximum in 2014/15. The 0% increase for benefits for the comparator group of
employees reflects no change to benefits policies or levels during the year. It does not reflect any changes to the level of benefits an individual may have received
as a result of a change in role, for example on promotion. For all employees, the average salary increase was 2.0% (including annual salary review but excluding
any additional changes). A meaningful year-on-year change for benefits and bonus for all Group employees cannot be provided due to the variation in structure
of these pay elements across roles and regions.
2015/16
2014/15
m
% change
157.7
8.8%
144.9
m
% change
396.4
-15.3%
468.1
10,181
-1.2%
10,309
% change
96
Growth in
Adjusted PBT
over three years
(50%)
Director
31/3/2018
Christopher
Bailey
Carol Fairweather
John Smith
Straight-line
vesting between
Growth in
Group revenue
over three years
(25%)
Basis of
Number of
award shares awarded
Face value
at grant2
350% of salary
241,581
3,850,000
250% of salary
78,435
1,250,000
250% of salary
92,867
1,480,000
97
Director
Type of award
Date of grant
Conditional
(with
performance)
Conditional Unconditional
but
(continued
employment) unexercised
Number
of shares
owned
Total
Christopher Bailey5
RSP1
RSP1
CIP2
CIP2
ESP3
NCO4
NCO4
SAYE/SIP
SAYE/SIP
Total
17-Jun-13
12-Jun-14
14-Jun-13
12-Jun-14
22-Jul-15
14-Jun-13
12-Jun-14
20-Jun-13
18-Jul-15
243,542
74,610
165,161
147,491
241,581
500,000
1,372,385
1,000,000
1,229
1,099
1,002,328
561,589
2,936,302
Carol Fairweather 6
RSP
RSP1
CIP2
CIP2
ESP3
SAYE/SIP
SAYE/SIP
Total
14-Jun-13
12-Jun-14
14-Jun-13
12-Jun-14
22-Jul-15
20-Jun-13
18-Jul-15
25,830
50,870
21,677
30,545
78,435
207,357
737
659
1,396
67,963
276,716
John Smith
RSP1
RSP1
CIP2
ESP3
SAYE/SIP
SAYE/SIP
Total
14-Jun-13
12-Jun-14
12-Jun-14
22-Jul-15
20-Jun-13
20-Jun-14
63,653
40,154
43,367
92,867
240,041
737
740
1,477
36,235
277,753
195,738
195,738
Fabiola Arredondo
7,500
7,500
Philip Bowman
75,000
75,000
Ian Carter
35,909
35,909
Jeremy Darroch
1,000
1,000
Stephanie George
41,600
41,600
Matthew Key
2,420
2,420
1,144
1,144
30,000
30,000
Former directors
David Tyler
1 RSP awards are awarded as nil-cost options and are subject to the same performance conditions as outlined on page 96, and vest 50% after 3 years, 25% after
4 years and 25% after 5 years from date of grant.
2 CIP awards are awarded as nil-cost options and are subject to the same performance conditions as outlined on page 95.
3 ESP awards are awarded as nil-cost options and are subject to the same performance conditions as outlined on page 97.
4 NCO denotes a Nil-Cost Option award.
5 Christopher Bailey exercised the following awards during the year:
235,151 shares under CIP (granted 18 July 2012). The market value of Burberry shares on the date of exercise (22 July 2015) was 1559p; 350,000 shares under
NCO (granted 8 December 2010). The market value of Burberry shares on the date of exercise (22 July 2015) was 1559p.
6 Carol Fairweather exercised the following awards during the year:
24,134 shares under CIP (granted 18 July 2012). The market value of Burberry shares on the date of exercise (22 July 2015) was 1559p; 6,250 shares under RSP
(granted 25 June 2008). The market value of Burberry shares on the date of exercise (22 July 2015) was 1559p; 6,525 shares under RSP (granted 10 June 2010).
The market value of Burberry shares on the date of exercise (22 July 2015) was 1559p.
98
Shareholding guidelines
To ensure continued alignment with the interests of shareholders, in 2014 the Board increased the minimum shareholding
requirement for directors and senior executives to the following levels:
Performance measure(s)
Base salary
Director
Maximum level
Christopher Bailey
1,100,000
(0% increase)
500,000
(0% increase)
592,000
(0% increase)
Carol Fairweather
John Smith
Annual bonus
99
Christopher Bailey
Carol Fairweather
John Smith
200% of salary
150% of salary
150% of salary
Christopher Bailey
Carol Fairweather
John Smith
Award levels to be
determined
in conjunction
with targets
Definition
Weighting
(% of award)
50%
Group Revenue
25%
3-year average
25%
The proposed targets for all three performance measures will be carefully calibrated in light of a number of factors, including,
most importantly, our strategy and performance goals, latest three-year projections and broker earnings estimates for
Burberry and its competitors. The Committee will ensure the targets are stretching and incentivise management to continue
to deliver superior returns to shareholders. As detailed in the introductory letter, the Committee is reviewing both the quantum
of awards and the performance targets ahead of granting the 2016 ESP awards. Due to the timing of work on the productivity
and efficiency agenda, the Committee was not in a position to determine and disclose the 2016 ESP award levels and targets
ahead of publication of this report. The Committee therefore decided to delay the grant of awards from the normal date in July
to November 2016 to allow time to engage with larger shareholders on the proposed awards and targets. Once determined,
the final awards and targets will be disclosed on our website.
ESP awards will vest 50% after 3 years and 50% after 4 years (from the date of grant). The Committee also applies an
additional holding period on ESP awards granted to executive directors. To increase long-term alignment with shareholders,
while executives are employed by Burberry, no ESP shares may be sold except to cover any tax liabilities arising out of the
award until five years from the date of grant.
100
400
80
20
35
35
2
Chairman1
Non-Executive Director
Senior Independent Director
Audit Committee Chair
Remuneration Committee Chair
Attendance allowance2
1 The Chairman is not eligible for committee chairmanship fees or attendance allowances.
2 Non-executive directors receive an attendance allowance for each meeting attended outside of their country of residence.
3 Expenses incurred in the normal course of business are reimbursed and, as these are considered by HMRC to be taxable benefits, the tax due on these will also
be met by the Company.
5. Further information on Christopher Baileys 2014 exceptional performance-based award of 500,000 shares
The vesting of the exceptional performance-based award of 500,000 shares that was granted to Christopher Bailey upon
hisappointment to the Chief Creative and Chief Executive Officer role will be determined by reference to the following
keyperformance criteria:
the strategic development of the business measured against the strategic plan approved by the Board from time to time;
Companys financial performance, in assessing which, the Remuneration Committee will have reference to the profit
the
before tax condition applied to awards made in 2014 under the Burberry Group Co-Investment Plan. This performance
condition requires growth in Adjusted PBT over three years of between 5% at threshold and 10% p.a. at maximum.
101
The Committee assesses progress towards achieving these objectives each financial year and prior to each vesting date
willdetermine the extent to which the objectives were achieved over the three, four or five year performance period, having
regard tothe level of performance achieved in each relevant financial year. By way of a reminder, the Committee determined
that overall there was an 85% performance achievement in the 2014/15 year. At the end of 2015/16 the Committee reviewed
performance in relation to the award of 500,000 shares granted to the Chief Creative and Chief Executive Officer, in the
context of the following.
development
Strategic
In 2015/16 Burberry saw significant progress across the four key strategic themes:
Brand First
Continued to drive digital innovation through partnerships with leading media brands (including DreamWorks,
Snapchat and LINE), leveraging Burberrys new mobile platform, and continuing to blur the physical and digital
consumer touch points, including the online/offline inventory merge in the US and UK
Initiated and substantially progressed complex process to move to single Burberry label for SS17
Awarded genius status and top fashion brand by digital consultant L2
Famous for Product
Continued to renew Burberrys Heritage proposition with launch of Scarf Bar and colour and style option additions
to the trench offering
Accessories outperformed in year boosted by Banner bag and hit runway rucksack
Achieved major milestone in make-up development with the global Sephora launch on Sephora.com, and subsequent
roll out to select stores including Paris flagship
Customer Centric
In retail, continued to invest in customer relationships (loyalty and conversion) through the extension of the
Customer Value Management tool to over 380 stores globally, and expansion of the Burberry Private Client team
Revolutionised runway show format with announcement of see now/wear now September show
Achieved the final stage of the global brand integration with the Japan licence exit in 2015, including launch of
heritage marketing campaign in-market to educate local consumer, opening Shinjuku flagship store, and doubling
retail sales year-over-year
Productive and Responsible
Realised 25 million discretionary spend savings in response to sudden change in operating environment
Continued to reinforce Burberrys distinctive culture by becoming a principal partner of The Living Wage Foundation
and accredited as a UK Living Wage employer, as well as gaining inclusion into the Dow Jones Sustainability Index,
which recognises Burberry as among worlds top performing apparel companies for sustainability
Professional social network LinkedIn named Burberry as the UKs 12th most sought after employer
performance
Financial
Underlying Group Adjusted PBT annual change of -10% in a challenging global environment.
Underlying Group revenue annual change of -1% in a challenging global environment.
contribution
Personal
In the context of a challenging external environment, Christopher ensured the senior executive team remained focused
on the management of the business and the execution of our key strategies. He also ensured the senior executives were
retained and motivated to continue to drive the business so that it is best placed for long-term, sustainable growth and
value creation. Christopher also initiated and led the teams work on accelerating our productivity and efficiency agenda
and addressing how to optimise future organic revenue growth opportunities.
value
Shareholder
Share price has decreased by -8.1% since Christophers appointment to the CEO role (from closing price on 30 April 2014
to31 March 2016) and dividends for 2015/16 are 37.0 pence per share. This is an increase of 5% on 2014/15.
Overall Total Shareholder Return (TSR) of -1.5% for Burberry for the two years to 31 March 2016, which compares to an
average TSR of -10.8% for our core luxury peers* and -0.1% for the FTSE 100.
* Boss, Coach, Ferragamo, Hermes, Kering, LVMH, Prada, Ralph Lauren, Richemont, Swatch, Tiffany, Tods.
102
After careful review the Committee reached the conclusion that overall there was a 50% performance achievement in the
2015/16 year. This outcome reflects that the annual change in Group Adjusted PBT was -10% and Group revenue was
-1% (underlying year-on-year), while 2015/16 shareholder return was lower than in 2014/15. In the context of the slowdown
in the luxury sector, the Committee considered that both the strategic development of the business and Christophers
personal performance during the 2015/16 year continued to be excellent.
The outcomes for each year to date are as follows (as a % of maximum): 2015/16: 50%; 2014/15: 85%.
6. Payments made in the year to former directors (audited)
No payment has been made to a former director during the 2015/16 year.
7. Payments for loss of office (audited)
There were no payments made for loss of office during the 2015/16 year.
8. Remuneration Committee in 2015/16
Committee membership
The following directors served as members of the Committee throughout the financial year ending 31 March 2016:
Ian Carter (Chairman)
Fabiola Arredondo
Philip Bowman
Jeremy Darroch
Stephanie George
Matthew Key
Dame Carolyn McCall
David Tyler (until 31 December 2015)
Advisers to the Committee during 2015/16
At the invitation of the Committee, except where their own remuneration was being discussed, the following people
attendedmeetings and provided advice to the Committee: Sir John Peace (Chairman), Christopher Bailey (Chief Creative
and Chief Executive Officer), Carol Fairweather (Chief Financial Officer), John Smith (Chief Operating Officer), Leanne Wood
(Chief People and Corporate Affairs Officer), Anne-Soline Thorndike (Senior Vice President Reward and Recognition),
NigelJones (Vice President Group Financial Controller), Catherine Sukmonowski (Company Secretary) and
MichaelMahony (former Chief Corporate Affairs Officer).
During the 2015/16 financial year, the Committee received external advice from Willis Towers Watson, as detailed in the table
below. Willis Towers Watson has been the appointed independent adviser to the Committee since 2011 and was selected
at that time following a formal tender process. Willis Towers Watson is a member of the Remuneration Consultants Group,
which is responsible for the development and maintenance of the voluntary Code of Conduct that clearly sets out the role
of executive remuneration consultants and the professional standards by which they advise their clients and, as such,
the Committee is satisfied that their advice is objective and independent.
Linklaters LLP provided advice to the Committee in relation to compliance with legislation, namely the regulations governing
the disclosure of directors remuneration in the Directors Remuneration Report.
103
Services provided
totheCommittee
Votes against
Votes withheld
2015 AGM:
To approve theDirectors
Remuneration Report for the year
ended 31March 2015 (advisory)
293,615,258
(92.27%)
24,597,147
(7.73%)
18,133,355
Not applicable
2014 AGM:
To approve theDirectors
Remuneration Policy
271,305,305
(83.92%)
51,981,069
(16.08%)
11,037,131
Not applicable
Vote
104
FTSE 100
700
600
500
400
300
200
100
0
2009
2010
2011
2012
2013
2014
2015
2016
Angela Ahrendts (AA, CEO to 30 April 2014), Christopher Bailey (CB, CC & CEO from 1 May 2014)
2009/10 (AA) 2010/11 (AA) 2011/12 (AA) 2012/13 (AA) 2013/14 (AA) 2014/15 (AA) 2014/15 (CB) 2015/16 (CB)
Total remuneration (000)
7,362
16,003
9,574
10,901
8,007
157
7,508
Bonus (% of maximum)
100%
100%
100%
75%
70%
81%
0%
CIP (% of maximum)
100%
100%
100%
100%
75%
0%
RSP (% of maximum)
42.5%
100%
0%
15%
50%
EPP* (% of maximum)
1,894
* The EPP was the Burberry Exceptional Performance Share Plan, a one-off long-term incentive plan under which performance-based awards were granted
in2007 only. Details of this plan can be found in the relevant historical directors remuneration reports.
Approval
This report has been approved by the Board and signed on its behalf by:
Ian Carter
Chairman, Remuneration Committee
17 May 2016
105
DIRECTORS
REPORT
The directors present their Annual Report and the audited
consolidated financial statements of the Company for the
year to 31 March 2016.
Political donations
The Company made no political donations during the
year in line with its policy (2015: nil). In keeping with the
Companys approach in prior years, shareholder approval
is being sought at the forthcoming Annual General Meeting,
as a precautionary measure, for the Company and its
subsidiaries to make donations and/or incur expenditure
which may be construed as political by the wide definition
of that term included in the relevant legislation. Further
details are provided in the Notice of this years Annual
General Meeting.
Strategic Report
Burberry Group plc is required by the Companies Act
2006 to prepare a Strategic Report that includes a fair
review of the Companys business, the development and
the performance of the Companys business during the
year, of the position of the Company at the end of the
financial year to 31 March 2016 and a description of the
principal risks and uncertainties faced by the Company.
The Strategic Report can be found on pages 7 to 61.
The Corporate Governance Report is set out on pages
68 to 82, is incorporated by reference and shall be
deemed to form part of this report.
Financial instruments
The Groups financial risk management objectives
and policies are set out within note 25 of the financial
statements. Note 25 also details the Groups exposure
to foreign exchange, share price, interest, credit, capital
and liquidity risks. This note is incorporated by reference
and deemed to form part of this report.
Going concern
The going concern statements for the Group and
Company are set out on pages 126 and 176 of the financial
statements and are incorporated by reference and shall be
deemed to be part of this report.
Independent auditors
In accordance with section 418(2) of the Companies Act
2006, each of the Companys directors in office as at the
date of this report confirms that:
far as the director is aware, there is no relevant
so
audit information of which the Companys auditors
are unaware; and
Directors
The names and biographical details of the directors as at
the date of this report are set out on pages 64 and 65 and
are incorporated by reference into this report.
106
Share capital
Details of the issued share capital, together with details
ofmovements in the issued share capital of Burberry
Groupplc during the year are shown in note 22 which
is incorporated by reference and deemed to be part of
thisreport.
The Company has one class of ordinary share which
carries no right to fixed income. Each share carries the
right to one vote at general meetings of the Company.
The ordinary shares are listed on the Official List and
traded on the London Stock Exchange. As at 31 March
2016, the Company had 445,037,254 ordinary shares in
issue. TheCompany does not hold any shares in treasury.
Dividends
The directors recommend that a final dividend of 26.8p
per ordinary share (2015: 25.50p) in respect of the year to
31 March 2016 be paid on 5 August 2016 to those persons
on the Register of Members as at 8 July 2016.
An interim dividend of 10.20p per ordinary share was
paid to shareholders on 22 January 2016 (2015: 9.70p).
This will make a total dividend of 37.0p per ordinary share
in respect of the financial year to 31 March 2016. The
aggregate dividends paid and recommended in respect
of the year to 31 March 2016 total 163.7m (2015: 155.2m).
Substantial shareholdings
As at 31 March 2016, the Company had been notified under
Rule 5 of the Disclosure and Transparency Rules of the
following major interests in its issued ordinary share capital:
BlackRock, Inc.
The Capital Group Companies, Inc
Thornburg Investment Management
FMR LLC
Schroders plc
Ameriprise Financial, Inc.
JP Morgan Chase & Co
Massachusetts Financial
ServicesCompany
Number of
ordinary shares
% of total
voting rights
26,983,661
26,868,502
21,910,655
21,867,513
21,666,352
21,664,800
21,578,580
20,073,645
6.06
6.04
4.94
4.98
4.99
4.97
4.99
4.61
Process
Burberry is committed
toensuring its future
resilience byintegrating
sustainability decisions
across the business
andcollaborating
withsuppliers.
Progress
Raw materials
Improve the environmental and social impacts of how we source:
Cotton
Cashmere
Reduce the environmental impact of:
Leather
PVC
On plan^
Behind plan
On plan^
Packaging
100% of point of sale packaging to be sustainably sourced (where alternatives
are available)
On plan
Internal Manufacturing
Reduce the energy use from Burberrys two UK manufacturing sites by 25%*
Behind plan^
Suppliers
Work with key suppliers to assist them in reducing their energy use by up to 20%*
Behind plan^
Mills
Work with key mills to assist them to reduce their water consumption by up to 20%*
Behind plan^
Transport
Reduce carbon emissions from the transport of Burberry products by 10%*
Distribution centres
Reduce energy use in Burberrys five third-party distribution centres by 10%*
Property
Burberry continues
toexpand its global
footprint in existing
andnew markets to
enable the growth
ofthebusiness,
andiscommitted to
minimising the impact
ofthis expansion.
On plan^
On plan^
On plan
Achieved^
Behind plan
Sustainable consumables
60% of office consumables to be sustainably sourced (where available)
Behind plan
Renewable energy
All Burberry controlled stores and offices to be powered either by on site or green
tariff renewable energy (where available)
Behind plan
Build certifications
All new builds will be sustainable build certified LEED (silver), BREEAM (very good)
or Greenmark (silver)
Sustainable construction materials
30% of wood by spend is either recycled materials or sourced from certified
supplychains
On plan
Achieved^
Achieved
LED lighting
75% of lighting is LED or energy efficient in new concept stores
Achieved
108
For those targets that are Behind plan, action plans are in
place to drive further progress. For additional information
on performance against the above targets and related
action plans see www.burberryplc.com.
Ethical Trading
The following indicators illustrate Burberrys ethical
trading activities during the year.
Number of audits and assessments
2,013,350^
1,956,313
40,274,835^ 42,203,278
40,227,239
Total emissions
(Scope 1 & 2) (Kg CO2e)
42,288,185^ 44,406,889
42,183,532
Renewable energy
produced on site (KWH)
2015/16
Current
reporting Comparison Comparison
year FY16
year FY15
year FY14
2,203,611
Intensity measurement
(Kg CO2e per 1,000
sales revenue)
548
17^
18
18
1,247,270
548
2014/15
541
2013/14
713
1,266,062
217
Note:
Burberry applies an operational control approach to defining its organisational
boundaries. Data is reported for sites where it is considered that Burberry
has the ability to influence energy management. Data is not reported for
sites where Burberry has a physical presence, but does not influence the
energy management for those sites, such as a concession within a department
store. Overall, the emissions inventory reported equates to 95% of our
sq.ft (net selling space). The Company uses the Greenhouse Gas Protocol
(using a location based approach to reporting Scope 2 emissions) to estimate
emissions and applies conversion factors from DEFRA and IEA guidance.
All material sources of emissions are reported. Refrigerant gases and
fuels consumed in Company vehicles were deemed not material and are
not reported. Burberry has updated greenhouse gas data for 2013/14 and
2014/15 to account for improvements in data availability and estimation
methods. A further restatement to 2014/15 Scope 1 emissions has been
made to account for natural gas consumption at two locations that were
not previously reported. Further detail is available within Burberrys basis
of reporting at www.burberryplc.com.
2015/16
217
2014/15
205
2013/14
142
10%
Rejected
20%
30%
40%
50%
60%
70%
80%
90%
100%
Satisfactory
109
Employment policies
Diversity and inclusion
The Group takes a very inclusive approach to diversity.
As a global business, Burberry values people of all cultures,
nationalities, races, religions and ethnicities, regardless
of characteristics such as gender, gender identity and/or
expression, age, disability or sexual orientation. Burberry
is passionate about attracting, developing and rewarding
the most talented and skilled individuals, regardless of
background. The Group encourages its employees to work
across functions, geographies and cultures to enhance
understanding and create a connected global community.
As the Group continues to grow globally, it is building
on its long-term commitment to diversity and inclusion
embracing the cultures of all the countries where we do
business. Burberry is committed to making the necessary
adjustments to support the employment of people with
disabilities and provide training and development to ensure
they have the opportunity to achieve their potential.
110
Catherine Sukmonowski
Company Secretary
17 May 2016
Burberry Group plc
Registered Office:
Horseferry House
Horseferry Road
London
SW1P 2AW
Registered in England and Wales
Registered number: 03458224
111
Financial
Statements
114
174
113
Statement
Statement ofof Directors
Directors Responsibilities
Responsibilities
The directors are responsible for preparing the Annual Report, which includes the Strategic Report; the Directors Report;
the Directors Remuneration Report; and the financial statements in accordance with applicable laws and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have
prepared the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted
by the European Union, and the parent Company financial statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and applicable law) including Financial Reporting Standard 101
Reduced Disclosure Framework. Under company law the directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the
Group for that period. In preparing these financial statements the directors are required to:
Carol Fairweather
Chief Financial Officer
114
114
Independent
Independent Auditors
Auditors Report
Report to
to the
the Members
Members ofof Burberry
Burberry Group
Group plc
plc
have been prepared in accordance with the requirements of the Companies Act 2006 and Article 4 of the IAS Regulation.
What we have audited
The financial statements, included within the Burberry Group plc Annual Report 2015/16 (the Annual Report), comprise:
Of the Groups 82 reporting units we identified six reporting units which, in our view, require a full scope audit of their financial
information, either due to their size or their risk characteristics.
These reporting units are located in the UK, China, Hong Kong and Korea and two are located in the US. We used local teams
in these countries to perform those full scope audits relating to the relevant reporting units.
All six reporting units were visited by the Group audit team during the course of the year in order to attend local management
meetings and, for financially significant reporting units, review working papers. Throughout the year, the Group audit team held
regular meetings with these components to direct and supervise the work of these local teams and to ensure that we had a full
and comprehensive understanding of the results of their work particularly insofar as it related to the identified areas of focus.
The six components where we performed full scope audits represented 76% (2015: 78%) of Group revenue and 89% (2015: 92%)
of profit before taxation.
Areas of
Focus
Inventory provisioning.
Completeness and valuation of provisions for tax exposures.
China put option liability valuation.
Impairment of fragrance and beauty licence intangible asset.
Impairment of property, plant and equipment and onerous lease provisions.
Presentation of results and non-GAAP measures.
115
115
Independent
Independent Auditors
Auditors Report
Report toto the
the Members
Members ofof Burberry
Burberry Group
Group plc
plc
116
116
Independent
Independent Auditors
Auditors Report
Report to
to the
the Members
Members ofof Burberry
Burberry Group
Group plc
plc
Area of focus
China put option liability valuation
We have focused on this area due to the size of the Beauty licence
intangible and the inherent judgement involved in forming a valuation
of the intangible, particularly regarding future sales and profit
forecasts in this developing part of the business.
We also considered the related disclosures and are satisfied that the
financial statements adequately disclose the potential risk of future
impairment if the performance of the Beauty business does not meet
managements expectations.
117
117
Independent
Independent Auditors
Auditors Report
Report toto the
the Members
Members ofof Burberry
Burberry Group
Group plc
plc
Area of focus
Presentation of results and non-GAAP measures
Consistent with prior years, the Group has identified two adjusting
items, being Amortisation of the fragrance and beauty licence
intangible and Put option liability finance (income)/charge.
How we determined it
Burberry is a profit orientated entity and hence profit before taxation has been selected as the benchmark.
Component materiality
For each component in our audit scope, we allocated a materiality that is less than our overall Group
materiality. The range of materiality allocated across components was between 3.5 million and
17 million. Certain components were audited to a local statutory audit materiality that was also
less than our overall Group materiality.
118
118
Independent
Independent Auditors
Auditors Report
Report to
to the
the Members
Members ofof Burberry
Burberry Group
Group plc
plc
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above 1 million
(2015: 0.75 million) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Going concern
Under the Listing Rules we are required to review the directors statement, set out on page 126, in relation to going concern.
We have nothing to report having performed our review.
Under ISAs (UK & Ireland) we are required to report to you if we have anything material to add or to draw attention to in relation
to the directors statement about whether they considered it appropriate to adopt the going concern basis in preparing the
financial statements. We have nothing material to add or to draw attention to.
As noted in the directors statement, the directors have concluded that it is appropriate to adopt the going concern basis in
preparing the financial statements. The going concern basis presumes that the Group has adequate resources to remain in
operation, and that the directors intend it to do so, for at least one year from the date the financial statements were signed.
As part of our audit we have concluded that the directors use of the going concern basis is appropriate. However, because
not all future events or conditions can be predicted, these statements are not a guarantee as to the Groups ability to continue
as a going concern.
Other required reporting
Consistency of other information
Companies Act 2006 opinion
In our opinion, the information given in the Strategic Report and the Directors Report for the financial year for which the
financial statements are prepared is consistent with the financial statements.
ISAs (UK & Ireland) reporting
Under ISAs (UK & Ireland) we are required to report to you if, in our opinion:
Information in the Annual Report is:
materially inconsistent with the information in the audited financial statements; or
apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group acquired in the
course of performing our audit; or
We have no
exceptions to report
arising from this
responsibility.
otherwise misleading.
The statement given by the directors on page 114, in accordance with provision C.1.1 of the UK Corporate Governance
Code (the Code), that they consider the Annual Report taken as a whole to be fair, balanced and understandable and
provides the information necessary for members to assess the Groups position and performance, business model and
strategy is materially inconsistent with our knowledge of the Group acquired in the course of performing our audit.
We have no
exceptions to report
arising from this
responsibility.
The section of the Annual Report on page 79, as required by provision C.3.8 of the Code, describing the work of the
Audit Committee does not appropriately address matters communicated by us to the Audit Committee.
We have no
exceptions to report
arising from this
responsibility.
The directors assessment of the prospects of the Group and of the principal risks that would threaten the solvency or liquidity
of the Group
Under ISAs (UK & Ireland) we are required to report to you if we have anything material to add or to draw attention to in
relation to:
The directors confirmation on page 57 of the Annual Report, in accordance with provision C.2.1 of the Code, that they
have carried out a robust assessment of the principal risks facing the Group, including those that would threaten its
business model, future performance, solvency or liquidity.
We have nothing
material to add or
to draw attention to.
The disclosures in the Annual Report that describe those risks and explain how they are being managed or mitigated.
We have nothing
material to add or
to draw attention to.
The directors explanation on page 57 of the Annual Report, in accordance with provision C.2.2 of the Code, as to how
they have assessed the prospects of the Group, over what period they have done so and why they consider that period
to be appropriate, and their statement as to whether they have a reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related
disclosures drawing attention to any necessary qualifications or assumptions.
We have nothing
material to add or
to draw attention to.
Under the Listing Rules we are required to review the directors statement that they have carried out a robust assessment of
the principal risks facing the Group and the directors statement in relation to the longer-term viability of the Group. Our review
was substantially less in scope than an audit and only consisted of making inquiries and considering the directors process
supporting their statements; checking that the statements are in alignment with the relevant provisions of the Code; and
considering whether the statements are consistent with the knowledge acquired by us in the course of performing our audit.
We have nothing to report having performed our review.
119
119
Independent
Independent Auditors
Auditors Report
Report toto the
the Members
Members ofof Burberry
Burberry Group
Group plc
plc
Paul Cragg
Senior Statutory Auditor,
for and on behalf of PricewaterhouseCoopers LLP,
Chartered Accountants and Statutory Auditors,
London, 17 May 2016
120
120
Group
Group Income
Income Statement
Statement
Year to
31 March
2016
m
Year to
31 March
2015
m
2,514.7
(752.0)
1,762.7
(1,359.8)
402.9
2,523.2
(757.7)
1,765.5
(1,325.2)
440.3
5.1
(2.3)
9.9
12.7
415.6
(101.0)
314.6
4.4
(3.8)
3.7
4.3
444.6
(103.5)
341.1
309.5
5.1
314.6
336.3
4.8
341.1
70.0p
69.4p
76.4p
75.1p
415.6
444.6
6
6
14.9
(9.9)
420.6
14.9
(3.7)
455.8
10
10
70.5p
69.9p
78.3p
76.9p
11
11
10.2p
26.8p
9.7p
25.5p
Note
Continuing operations
Revenue
Cost of sales
Gross profit
Net operating expenses
Operating profit
Financing
Finance income
Finance expense
Other financing income
Net finance income
Profit before taxation
Taxation
Profit for the year
8
5
9
Attributable to:
Owners of the Company
Non-controlling interest
Profit for the year
Earnings per share
Basic
Diluted
10
10
121
121
Group
Group Statement
Statement ofof Comprehensive
Comprehensive Income
Income
Note
Profit for the year
Other comprehensive income1:
Cash flow hedges
Net investment hedges
Foreign currency translation differences
Tax on other comprehensive income:
Cash flow hedges
Net investment hedges
Foreign currency translation differences
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
22
1 All items included in other comprehensive income may subsequently be reclassified to profit and loss in a future period.
122
122
Year to
31 March
2016
m
314.6
Year to
31 March
2015
m
341.1
10.8
(0.8)
20.4
(7.4)
52.0
(2.2)
0.6
(1.9)
26.9
341.5
1.5
(4.4)
41.7
382.8
335.5
6.0
341.5
372.5
10.3
382.8
Group
Group Balance
Balance Sheet
Sheet
As at
31 March
2016
m
As at
31 March
2015
m
189.6
426.2
2.4
134.4
66.5
0.3
819.4
193.5
436.5
2.2
145.0
60.5
1.5
839.2
486.7
285.4
8.0
3.0
711.8
1,494.9
2,314.3
436.6
260.3
8.4
11.3
617.4
1,334.0
2,173.2
(114.7)
(0.6)
(0.7)
(38.4)
(154.4)
(117.1)
(0.9)
(0.7)
(22.2)
(140.9)
21
17
19
20
(51.5)
(2.3)
(387.2)
(17.6)
(80.4)
(539.0)
(693.4)
1,620.9
(65.2)
(12.5)
(406.0)
(10.3)
(86.8)
(580.8)
(721.7)
1,451.5
22
0.2
209.8
41.1
8.1
164.9
1,140.9
1,565.0
55.9
1,620.9
0.2
207.6
45.3
(0.3)
147.3
1,000.8
1,400.9
50.6
1,451.5
Note
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Investment properties
Deferred tax assets
Trade and other receivables
Derivative financial assets
12
13
14
15
17
Current assets
Inventories
Trade and other receivables
Derivative financial assets
Income tax receivables
Cash and cash equivalents
16
15
17
18
Total assets
LIABILITIES
Non-current liabilities
Trade and other payables
Deferred tax liabilities
Retirement benefit obligations
Provisions for other liabilities and charges
19
14
20
Current liabilities
Bank overdrafts and borrowings
Derivative financial liabilities
Trade and other payables
Provisions for other liabilities and charges
Income tax liabilities
Total liabilities
Net assets
EQUITY
Capital and reserves attributable to owners of the Company
Ordinary share capital
Share premium account
Capital reserve
Hedging reserve
Foreign currency translation reserve
Retained earnings
Equity attributable to owners of the Company
Non-controlling interest in equity
Total equity
22
22
22
The consolidated financial statements of Burberry Group plc (registered number 03458224) on pages 121 to 169 were
approved by the Board on 17 May 2016 and signed on its behalf by:
Carol Fairweather
Chief Financial Officer
123
123
Group
Group Statement
Statement ofof Changes
Changes in
in Equity
Equity
Note
Balance as at 31 March 2014
Profit for the year
Other comprehensive income:
Cash flow hedges
Foreign currency translation differences
Tax on other comprehensive income
Total comprehensive income for the year
Transfer between reserves
Transactions with owners:
Employee share incentive schemes
Value of share options granted
Value of share options transferred to liabilities
Tax on share options granted
Exercise of share options
Purchase of own shares by ESOP trusts
Acquisition of additional interest in subsidiary from
non-controlling interest
Capital contribution by non-controlling interest
Dividends paid in the year
Balance as at 31 March 2015
Profit for the year
Other comprehensive income:
Cash flow hedges
Net investment hedge
Foreign currency translation differences
Tax on other comprehensive income
Total comprehensive income for the year
Disposal of subsidiaries
Transfer between reserves
Transactions with owners:
Employee share incentive schemes
Value of share options granted
Value of share options transferred to liabilities
Tax on share options granted
Exercise of share options
Purchase of own shares by ESOP trusts
Dividends paid in the year
Balance as at 31 March 2016
Ordinary
share
capital
m
0.2
22
Attributable to owners
of the Company
Share
premium
Other Retained
account reserves earnings
m
m
m
204.8
150.3
810.1
336.3
Total
m
1,165.4
336.3
Noncontrolling
Total
interest equity
m
m
42.6 1,208.0
4.8
341.1
(7.4)
46.5
(2.9)
36.2
5.8
336.3
(5.8)
(7.4)
46.5
(2.9)
372.5
5.5
10.3
(7.4)
52.0
(2.9)
382.8
2.8
21.0
(0.8)
5.2
(19.2)
21.0
(0.8)
5.2
2.8
(19.2)
21.0
(0.8)
5.2
2.8
(19.2)
0.2
207.6
192.3
(1.1)
(144.9)
1,000.8
309.5
(1.1)
(144.9)
1,400.9
309.5
10.8
(0.8)
19.5
(3.5)
26.0
(6.2)
2.0
309.5
6.2
(2.0)
10.8
(0.8)
19.5
(3.5)
335.5
0.2
2.2
209.8
214.1
(0.3)
(0.2)
(4.5)
(10.9)
(157.7)
1,140.9
(0.3)
(0.2)
(4.5)
2.2
(10.9)
(157.7)
1,565.0
22
124
124
(2.3)
(3.4)
0.4
0.4
(0.4) (145.3)
50.6 1,451.5
5.1
314.6
0.9
6.0
10.8
(0.8)
20.4
(3.5)
341.5
(0.3)
(0.2)
(4.5)
2.2
(10.9)
(0.7) (158.4)
55.9 1,620.9
Group
Group Statement
Statement ofof Cash
Cash Flows
Flows
Note
Cash flows from operating activities
Operating profit
Depreciation
Amortisation
Net impairment charges
Loss on disposal of property, plant and equipment and intangible assets
Loss/(gain) on derivative instruments
(Credit)/charge in respect of employee share incentive schemes
Payment from settlement of equity swap contracts
Increase in inventories
Increase in receivables
Increase in payables and provisions
Cash generated from operating activities
Interest received
Interest paid
Taxation paid
Net cash generated from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from sale of property, plant and equipment
Proceeds from sale of intangible assets
Net cash outflow from investing activities
Cash flows from financing activities
Dividends paid in the year
Dividends paid to non-controlling interest
Capital contributions by non-controlling interest
Payment to acquire additional interest in subsidiary from non-controlling interest
Issue of ordinary share capital
Purchase of own shares by ESOP trusts
Net cash outflow from financing activities
11
Year to
31 March
2016
m
Year to
31 March
2015
m
402.9
111.9
35.2
26.5
1.2
3.1
(0.3)
(1.6)
(49.3)
(31.7)
5.1
503.0
4.8
(1.7)
(94.8)
411.3
440.3
104.0
34.6
4.1
2.1
(2.0)
21.0
(0.2)
(15.1)
(43.8)
23.1
568.1
3.8
(2.6)
(114.4)
454.9
(107.3)
(30.7)
0.5
(137.5)
(127.8)
(27.9)
1.3
(154.4)
(157.7)
(0.7)
2.2
(10.9)
(167.1)
(144.9)
(0.4)
0.4
(3.4)
2.8
(19.2)
(164.7)
106.7
1.4
552.2
660.3
135.8
13.9
402.5
552.2
As at
31 March
2016
m
711.8
(51.5)
660.3
As at
31 March
2015
m
617.4
(65.2)
552.2
Note
18
21
125
125
Notes
Notes toto the
the Financial
Financial Statements
Statements
1. Basis of preparation
Burberry Group plc and its subsidiaries (the Group) is a global luxury goods manufacturer, retailer and wholesaler. The Group
also licences third parties to manufacture and distribute products using the Burberry trade marks. All of the companies which
comprise the Group are controlled by Burberry Group plc (the Company) directly or indirectly.
The consolidated financial statements of the Group have been prepared in accordance with the European Union endorsed
International Financial Reporting Standards (IFRSs), IFRS Interpretations Committee (IFRS IC) interpretations and parts of the
Companies Act 2006 applicable to companies reporting under IFRS. These consolidated financial statements have been prepared
under the historical cost convention, except as modified by the revaluation of financial assets and financial liabilities at fair value
through profit or loss.
Taking into account reasonable possible changes in trading performance, and after making enquiries, the directors consider it
appropriate to continue to adopt the going concern basis in preparing the financial statements for the year ended 31 March 2016.
There have been no new standards, amendments or interpretations issued and made effective for the financial period
commencing 1 April 2015 that have had a material impact on the financial statements of the Group.
As at 31 March 2016, the following new and revised standards, amendments and interpretations, which may be relevant to the
Groups results, were issued but not yet effective:
IFRS 9 Financial instruments
This standard addresses the classification, measurement and recognition of financial assets and financial liabilities. IFRS 9 replaces the
guidance in IAS 39 Financial instruments: Recognition and measurement that relates to the classification and measurement of financial
instruments. The new standard retains but simplifies the mixed measurement model and establishes three primary measurement categories
for financial assets: amortised cost; fair value through OCI; and fair value through P&L. The standard is effective for annual periods beginning
on or after 1 January 2018, however it is not currently endorsed by the European Union. Any potential impact of this new standard will be
quantified closer to the date of adoption.
IFRS 15 Revenue from contracts with customers
This standard deals with revenue recognition and replaces both IAS 18 Revenue and IAS 11 Construction contracts, providing a single revenue
standard to be applied across all industries. Under the new standard, revenue is recognised when a customer obtains control of a good or
service. IFRS 15 establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows
arising from an entitys contracts with customers. The standard is effective for annual periods beginning on or after 1 January 2018, however
it is not currently endorsed by the European Union. Adopting this new standard may result in a delay in the timing of the recognition of a portion
of the Groups wholesale revenue however it is not anticipated that this will have a material impact on the overall Group result. There will also be
additional disclosure requirements.
IFRS 16 Leases
This standard sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors.
It replaces IAS 17 Leases and IFRIC 4 Determining whether an arrangement contains a lease. The most significant changes are in relation
to lessee accounting. Under the new standard, the concept of assessing a lease contract as either operating or financing is replaced by a
single lessee accounting model. Under this new model, substantially all lease contracts will result in a lessee acquiring a right-to-use asset and
obtaining financing. The lessee will be required to recognise a corresponding asset and liability. The asset will be depreciated over the term of
the lease and the interest on the financing liability will be charged over the same period. The standard is effective for annual periods beginning
on or after 1 January 2019, however it is not currently endorsed by the European Union. Adopting this new standard will result in a fundamental
change to the Groups balance sheet, with right-to-use assets and accompanying financing liabilities for the Groups retail stores, warehouses
and offices being recognised for the first time. The Income Statement will also be impacted, with rent expense relating to operating leases being
replaced by a depreciation charge arising from the right-to-use assets and interest charges arising from lease financing. The full impact
of these changes will be quantified closer to the date of adoption.
Basis of consolidation
The Groups annual financial statements comprise those of Burberry Group plc (the Company) and its subsidiaries, presented
as a single economic entity. The results of the subsidiaries are prepared for the same reporting year as the Company, using
consistent accounting policies across the Group.
126
126
Notes
Notes toto the
the Financial
Financial Statements
Statements
127
127
Notes
Notes toto the
the Financial
Financial Statements
Statements
128
128
Notes
Notes toto the
the Financial
Financial Statements
Statements
129
129
Notes
Notes toto the
the Financial
Financial Statements
Statements
Useful life
Not depreciated
Up to 50 years
Over the unexpired term of the lease
Up to 10 years
Up to 10 years
Up to 5 years
Up to 5 years
Up to 7 years
Not depreciated
130
130
Notes
Notes toto the
the Financial
Financial Statements
Statements
131
131
Notes
Notes toto the
the Financial
Financial Statements
Statements
132
132
Notes
Notes toto the
the Financial
Financial Statements
Statements
Note
18
15
19
21
19
17
17
20
Classification
Loans and receivables
Loans and receivables
Other financial liabilities
Other financial liabilities
Derivative instrument
Derivative instrument
Derivative instrument
Other financial liabilities
Measurement
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Fair value through profit and loss
Fair value through profit and loss
Fair value through profit and loss
Amortised cost
Fair value
measurement
hierarchy2
N/A
N/A
N/A
N/A
3
2
2
N/A
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. Significant valuation
issues are reported to the Audit Committee.
The fair value of forward foreign exchange contracts and equity swap contracts is based on a comparison of the contractual
and market rates and, in the case of forward foreign exchange contracts, after discounting using the appropriate yield
curve as at the balance sheet date. All Level 2 fair value measurements are calculated using inputs which are based on
observable market data.
The fair value of the put option liability over non-controlling interest 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.
The Groups primary categories of financial instruments are listed below:
Cash and cash equivalents
On the Balance Sheet, cash and cash equivalents comprise cash and short-term deposits with a maturity date of three
months or less, held with banks and liquidity funds. In the Statement of Cash Flows, cash and cash equivalents also include
bank overdrafts, which are recorded under current liabilities on the Balance Sheet.
133
133
Notes
Notes toto the
the Financial
Financial Statements
Statements
134
134
Notes
Notes toto the
the Financial
Financial Statements
Statements
Euro
US Dollar
Chinese Yuan Renminbi
Hong Kong Dollar
Korean Won
Average rate
Year to
Year to
31 March
31 March
2016
2015
1.36
1.28
1.50
1.60
9.57
9.94
11.67
12.42
1,740
1,709
Closing rate
As at
As at
31 March
31 March
2016
2015
1.26
1.38
1.44
1.48
9.29
9.21
11.16
11.51
1,640
1,646
The average exchange rate achieved by the Group on its Yen royalty income, taking into account its use of Yen forward
foreign exchange contracts executed on a monthly basis approximately 12 months in advance of royalty receipts, was
Yen 177.1: 1 in the year to 31 March 2016 (2015: Yen 164.2: 1).
135
135
Notes
Notes toto the
the Financial
Financial Statements
Statements
Retail
Wholesale
Licensing
Total segment revenue
Inter-segment revenue1
Revenue from external customers
Retail/Wholesale
Year to
Year to
31 March
31 March
2016
2015
m
m
1,837.7
1,807.4
634.6
648.1
2,472.3
2,455.5
2,472.3
2,455.5
Licensing
Year to
Year to
31 March
31 March
2016
2015
m
m
44.7
70.1
44.7
70.1
(2.3)
(2.4)
42.4
67.7
Total
Year to
Year to
31 March
31 March
2016
2015
m
m
1,837.7
1,807.4
634.6
648.1
44.7
70.1
2,517.0
2,525.6
(2.3)
(2.4)
2,514.7
2,523.2
132.2
26.5
123.8
4.1
132.2
26.5
123.8
4.1
(0.3)
17.8
3.2
(0.3)
21.0
380.9
399.2
36.9
56.0
417.8
(5.0)
5.1
(2.3)
415.6
455.2
(11.2)
4.4
(3.8)
444.6
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 Amortisation of 14.9m relating to the fragrance and beauty licence intangible asset is presented as an adjusting item and excluded from the segmental analysis.
3 Refer to note 6 for details of adjusting items.
136
136
Notes
Notes toto the
the Financial
Financial Statements
Statements
Licensing
Year to
Year to
31 March
31 March
2016
2015
m
m
Total
Year to
31 March
2016
m
146.2
Year to
31 March
2015
m
157.1
1,369.0
88.8
711.8
137.4
7.3
2,314.3
1,303.2
88.8
617.4
156.3
7.5
2,173.2
Year to
31 March
2016
m
901.7
729.0
548.4
90.7
202.5
2,472.3
42.4
2,514.7
Year to
31 March
2015
m
892.5
743.0
557.5
77.7
184.8
2,455.5
67.7
2,523.2
Revenue by destination
Asia Pacific
EMEIA1
Americas
Retail/Wholesale
Licensing
Total
Year to
31 March
2016
m
932.9
878.5
660.9
2,472.3
42.4
2,514.7
Year to
31 March
2015
m
938.1
869.0
648.4
2,455.5
67.7
2,523.2
1,365.5
1,300.6
3.5
2.6
Entity-wide disclosures
Revenue derived from external customers in the UK totalled 250.2m for the year to 31 March 2016 (2015: 233.3m).
Revenue derived from external customers in foreign countries totalled 2,264.5m for the year to 31 March 2016 (2015: 2,289.9m).
This amount includes 562.1m of external revenues derived from customers in the USA (2015: 551.6m) and 350.9m of
external revenues derived from customers in China (2015: 346.2m).
The total of non-current assets other than financial instruments and deferred tax assets located in the UK is 194.6m
(2015: 197.7m). The remaining 452.6m of non-current assets are located in other countries (2015: 455.4m), with
153.1m located in the USA (2015: 174.9m) and 82.0m located in China (2015: 87.8m).
137
137
Notes
Notes toto the
the Financial
Financial Statements
Statements
Note
Selling and distribution costs
Administrative expenses
Adjusting items
Amortisation of the fragrance and beauty licence intangible asset
Total
Year to
31 March
2016
m
816.7
528.2
Year to
31 March
2015
m
762.9
547.4
14.9
1,359.8
14.9
1,325.2
Year to
31 March
2016
m
Year to
31 March
2015
m
1.4
98.7
11.8
1.0
88.8
14.2
1.8
18.5
1.2
26.5
396.4
1.7
18.0
2.1
4.1
468.1
235.3
86.1
(1.6)
5.8
3.1
190.9
87.5
(1.4)
(1.4)
0.1
14.9
(9.9)
14.9
(3.7)
Note
Adjusted profit before taxation is stated after charging/(crediting):
Depreciation of property, plant and equipment
Within cost of sales
Within selling and distribution costs
Within administrative expenses
Amortisation of intangible assets
Within selling and distribution costs
Within administrative expenses
Loss on disposal of property, plant and equipment and intangible assets
Net impairment charge
Employee costs
Operating lease rentals
Minimum lease payments1
Contingent rents
Net exchange gain on revaluation of monetary assets and liabilities
Net exchange loss/(gain) on derivatives held for trading for the year
Trade receivables net impairment charge
Adjusting items
Amortisation of the fragrance and beauty licence intangible asset
Put option liability finance income
13
6
6
1 Included within minimum lease payments are amounts of 20.1m (2015: 6.5m) relating to net charges for onerous lease provisions (refer to note 20).
6. Adjusting items
Amortisation of the fragrance and beauty licence intangible asset
During the year ended 31 March 2013, an intangible asset of 70.9m was recognised on the Balance Sheet, relating to the present
value of the anticipated incremental income to be earned by the Group as a result of selling Beauty products through retail and
wholesale channels rather than under licence, following the termination of the existing licence relationship with Interparfums SA.
This asset is amortised on a straight-line basis over the period 1 April 2013 to 31 December 2017. The amortisation is presented
as an adjusting item, which is consistent with the treatment of the cost recognised on termination of the licence relationship in the
year ended 31 March 2013. The amortisation expense recognised for the year ended 31 March 2016 is 14.9m (2015: 14.9m)
(refer to note 12). A related tax credit of 2.8m (2015: 3.1m) has also been recognised in the current period.
138
138
Notes
Notes toto the
the Financial
Financial Statements
Statements
Audit services in respect of the financial statements of the Company and consolidation
Audit services in respect of the financial statements of subsidiary companies
Audit related assurance services
Services relating to taxation
Compliance services
Advisory services
Other non-audit related services
Total
Year to
31 March
2016
m
0.4
1.8
0.1
Year to
31 March
2015
m
0.4
1.5
0.1
0.2
0.1
2.6
0.1
0.3
0.2
2.6
8. Financing
Note
Bank interest income
Other finance income
Finance income
Interest expense on bank loans and overdrafts
Bank charges
Other finance expense
Finance expense
Other financing income put option liability
Net finance income
139
139
Year to
31 March
2016
m
4.6
0.5
5.1
(1.5)
(0.7)
(0.1)
(2.3)
9.9
12.7
Year to
31 March
2015
m
3.7
0.7
4.4
(1.8)
(1.8)
(0.2)
(3.8)
3.7
4.3
Notes
Notes toto the
the Financial
Financial Statements
Statements
9. Taxation
Analysis of charge for the year recognised in the Group Income Statement:
Year to
31 March
2016
m
Year to
31 March
2015
m
52.8
(0.8)
(3.1)
48.9
58.8
(0.7)
(2.4)
55.7
49.1
(2.0)
96.0
60.9
6.9
123.5
9.9
1.3
(0.7)
10.5
2.1
0.9
3.0
(13.1)
7.6
5.0
101.0
(21.3)
(1.7)
(20.0)
103.5
Year to
31 March
2016
m
Year to
31 March
2015
m
1.9
1.9
4.4
4.4
Recognised in equity
Current tax credit on share options (retained earnings)
Total current tax recognised directly in equity
(2.0)
(2.0)
(5.6)
(5.6)
Deferred tax
Recognised in other comprehensive income
Deferred tax charge/(credit) on cash flow hedges deferred in equity (hedging reserve)
Deferred tax charge/(credit) on cash flow hedges transferred to income (hedging reserve)
Deferred tax credit on net investment hedges deferred in equity (hedging reserve)
Deferred tax credit on net investment hedges transferred to income (hedging reserve)
Total deferred tax recognised in other comprehensive income
1.5
0.7
(0.1)
(0.5)
1.6
(1.3)
(0.2)
(1.5)
6.5
6.5
0.4
0.4
Current tax
UK corporation tax
Current tax on income for the year to 31 March 2016 at 20% (2015: 21%)
Double taxation relief
Adjustments in respect of prior years
Foreign tax
Current tax on income for the year
Adjustments in respect of prior years
Total current tax
Deferred tax
UK deferred tax
Origination and reversal of temporary differences
Impact of changes to tax rates
Adjustments in respect of prior years
Foreign deferred tax
Origination and reversal of temporary differences
Adjustments in respect of prior years
Total deferred tax
Total tax charge on profit
Analysis of charge for the year recognised in other comprehensive income and directly in equity:
Current tax
Recognised in other comprehensive income
Current tax charge on exchange differences on loans (foreign currency translation reserve)
Total current tax recognised in other comprehensive income
Recognised in equity
Deferred tax charge on share options (retained earnings)
Total deferred tax recognised directly in equity
140
140
Notes
Notes toto the
the Financial
Financial Statements
Statements
9. Taxation (continued)
The tax rate applicable on profit varied from the standard rate of corporation tax in the UK due to the following factors:
Year to
31 March
2016
m
415.6
Year to
31 March
2015
m
444.6
83.1
3.4
5.5
1.6
4.7
(0.4)
1.8
1.3
101.0
93.4
1.8
5.6
2.4
(3.4)
3.7
103.5
Year to
31 March
2016
m
103.8
(2.8)
101.0
Year to
31 March
2015
m
106.6
(3.1)
103.5
Year to
31 March
2015
m
344.4
(8.1)
336.3
The weighted average number of ordinary shares represents the weighted average number of Burberry Group plc ordinary
shares in issue throughout the year, excluding ordinary shares held in the Groups ESOP trusts.
Diluted earnings per share is based on the weighted average number of ordinary shares in issue during the year. In addition,
account is taken of any options and awards made under the employee share incentive schemes, which will have a dilutive
effect when exercised. Refer to note 26 for additional information on the terms and conditions of the employee share
incentive schemes.
141
141
Year to
31 March
2016
Millions
441.9
4.2
446.1
Year to
31 March
2015
Millions
440.0
7.8
447.8
Notes
Notes toto the
the Financial
Financial Statements
Statements
Prior year final dividend paid 25.5p per share (2015: 23.2p)
Interim dividend paid 10.2p per share (2015: 9.7p)
Total
Year to
31 March
2015
m
102.1
42.8
144.9
A final dividend in respect of the year to 31 March 2016 of 26.8p (2015: 25.5p) per share, amounting to 118.5m, has been
proposed for approval by the shareholders at the Annual General Meeting subsequent to the balance sheet date. The final
dividend to Burberry Group plc shareholders has not been recognised as a liability at the year end and will be paid on
5 August 2016 to shareholders on the register at the close of business on 8 July 2016.
12. Intangible assets
Cost
As at 31 March 2014
Effect of foreign exchange rate changes
Additions
Disposals
Reclassifications from assets in the course
of construction
Goodwill
m
Trade marks,
licences and
other intangible
assets
m
Computer
software
m
Intangible assets
in the course of
construction
m
Total
m
80.2
98.9
98.5
9.3
286.9
8.6
(1.1)
0.8
8.3
1.8
(12.6)
16.6
(0.1)
8.9
(0.8)
27.3
(13.5)
5.2
(5.2)
88.8
87.0
121.0
12.2
309.0
0.5
0.2
0.7
Additions
0.6
9.0
21.6
31.2
Disposals
(0.2)
(7.3)
(7.5)
As at 31 March 2015
10.8
(10.8)
88.8
87.9
133.7
23.0
333.4
As at 31 March 2014
32.3
59.2
91.5
(0.7)
1.1
0.4
16.4
18.2
34.6
As at 31 March 2016
Accumulated amortisation and impairment
0.2
0.2
Disposals
(11.1)
(0.1)
(11.2)
As at 31 March 2015
37.1
78.4
115.5
0.3
0.3
0.6
16.0
19.2
35.2
Disposals
(0.2)
(7.3)
(7.5)
As at 31 March 2016
53.2
90.6
143.8
88.8
34.7
43.1
23.0
189.6
As at 31 March 2015
88.8
49.9
42.6
12.2
193.5
142
142
Notes
Notes toto the
the Financial
Financial Statements
Statements
As at
31 March
2015
m
China1
45.4
45.8
Korea
25.1
25.1
Other
18.3
17.9
Total
88.8
88.8
1 The goodwill reported for China does not include any goodwill attributable to the non-controlling interest.
The Group tests goodwill for impairment annually or where there is an indication that goodwill might be impaired. The
recoverable amount of all cash generating units has been determined on a value-in-use basis. Value-in-use calculations
for each cash generating unit are based on projected three year pre-tax discounted cash flows together with a discounted
terminal value. The cash flows have been discounted at pre-tax rates reflecting the Groups weighted average cost of
capital adjusted for country-specific tax rates and risks. Where the cash generating unit has a non-controlling interest
which was recognised at a value equal to its proportionate interest in the net identifiable assets of the acquired subsidiary
at the acquisition date, the carrying amount of the goodwill has been grossed up, to include the goodwill attributable to the
non-controlling interest, for the purpose of impairment testing the goodwill attributable to the cash generating unit. The key
assumptions contained in the value-in-use calculations include the future revenues, the margins achieved, the assumed
life of the business and the discount rates applied.
The value-in-use calculations have been prepared using managements approved financial plans for the three years ending
31 March 2019. These plans contain managements best view of the expected performance for the year ending 31 March
2017 and the expected growth rates for the two years ending 31 March 2018 and 31 March 2019. The plans are based on
the performance achieved in the current year and managements knowledge of the market environment and future business
plans. A terminal value has been included in the value-in-use calculation based on the cash flows for the year ending
31 March 2019 incorporating the assumption that there is no growth beyond 31 March 2019.
For the material goodwill balances of China and Korea, a sensitivity analysis has been performed on the value-in-use
calculations by assuming no growth beyond the year ending 31 March 2017. This sensitivity analysis indicated significant
headroom between the recoverable amount under this scenario and the carrying value of goodwill and therefore management
considered no further detailed sensitivity analysis was required.
The pre-tax discount rates for China and Korea were 16.1% and 13.6% respectively (2015: 16.8%; 14.3%).
The other goodwill balance of 18.3m (2015: 17.9m) consists of amounts relating to eight cash generating units, none of
which have goodwill balances exceeding 10m as at 31 March 2016.
No impairment has been recognised in respect of the carrying value of the goodwill balance in the year as, for each cash
generating unit, the recoverable amount of goodwill exceeds its carrying value.
143
143
Notes
Notes toto the
the Financial
Financial Statements
Statements
Cost
As at 31 March 2014
Effect of foreign exchange rate changes
Additions
Disposals
Reclassification from assets in the course
of construction
Reclassification2
As at 31 March 2015
Effect of foreign exchange rate changes
Additions
Disposals
Reclassification from assets in the course
of construction
As at 31 March 2016
Accumulated depreciation and impairment
As at 31 March 2014
Effect of foreign exchange rate changes
Charge for the year
Disposals
Net impairment charge on assets
Reclassification2
As at 31 March 2015
Effect of foreign exchange rate changes
Charge for the year
Disposals
Net impairment charge on assets
As at 31 March 2016
Net book value
As at 31 March 2016
As at 31 March 2015
Freehold land
and buildings
m
96.3
3.3
7.0
Leasehold
improvements
m
329.6
23.2
48.7
(18.3)
Fixtures,
fittings and
equipment1
m
404.4
3.7
48.1
(20.7)
Assets in the
course of
construction
m
19.0
1.0
26.0
(1.0)
Total
m
849.3
31.2
129.8
(40.0)
1.1
8.1
8.0
(17.2)
29.8
137.5
6.2
15.3
(29.8)
361.5
11.7
49.5
(12.6)
443.5
15.3
41.7
(26.7)
27.8
(0.5)
8.5
(0.5)
970.3
32.7
115.0
(39.8)
159.0
8.2
418.3
17.7
491.5
(25.9)
9.4
1,078.2
36.7
(0.5)
2.8
9.2
48.2
2.8
3.3
2.3
56.6
157.6
11.5
37.5
(18.0)
1.9
(9.2)
181.3
4.9
45.9
(12.4)
13.7
233.4
256.6
2.4
63.7
(20.4)
2.0
304.3
10.7
62.7
(26.2)
10.5
362.0
450.9
13.4
104.0
(38.4)
3.9
533.8
18.4
111.9
(38.6)
26.5
652.0
102.4
89.3
184.9
180.2
129.5
139.2
9.4
27.8
426.2
436.5
1 Included in fixtures, fittings and equipment are finance lease assets with a net book value of 1.7m (2015: 2.3m).
2 During the year ended 31 March 2015, 20.6m of assets were reclassified from leasehold improvements to freehold land and buildings as this was more representative
of the nature of the assets.
During the year to 31 March 2016, a net impairment charge of 45.3m (2015: 10.8m) was recorded as a result of the annual
review of impairment of retail store assets. A charge of 24.2m (2015: 3.9m) was recognised against property, plant and
equipment, nil (2015: 0.2m) was charged against intangible assets and 21.1m (2015: 6.7m) was charged in relation to onerous
lease provisions. Refer to note 12 and note 20 for further details of intangible assets and onerous lease provisions respectively.
Where indicators of impairment were identified, the impairment review compared the value-in-use of the cash generating units
to the carrying values at 31 March 2016. The pre-tax cash flow projections were based on financial plans of expected revenues
and costs of each retail cash generating unit, as approved by management, and extrapolated beyond the budget year to the
lease exit dates using growth rates and inflation rates appropriate to each stores location. The pre-tax discount rates used
in these calculations were between 11.4% and 19.7% (2015: between 12.1% and 18.3%), based on the Groups weighted
average cost of capital adjusted for country-specific tax rates and risks. Where the value-in-use was less than the carrying
value of the cash generating unit, an impairment of property, plant and equipment was recorded. Where the value-in-use
was negative, onerous lease provisions were assessed in relation to the future contracted minimum lease payments. Potential
alternative uses for property, such as subletting of leasehold or sale of freehold, were considered in estimating both the value
for impairment charges and onerous lease provisions.
144
144
Notes
Notes toto the
the Financial
Financial Statements
Statements
As at
31 March
2016
m
134.4
(0.6)
133.8
As at
31 March
2015
m
145.0
(0.9)
144.1
Year to
31 March
2016
m
144.1
2.8
(5.0)
(1.6)
(6.5)
133.8
Year to
31 March
2015
m
115.0
8.0
20.0
1.5
(0.4)
144.1
The movement in deferred tax assets and liabilities during the year, without taking into consideration the off-setting of balances
within the same tax jurisdiction, is as follows:
Deferred tax liabilities
Capital
allowances
m
15.1
0.1
Unrealised
inventory
profit and other
inventory
provisions
m
(3.6)
(0.1)
(13.0)
2.2
0.2
2.6
(1.1)
0.4
0.2
2.8
(0.9)
As at 31 March 2014
Effect of foreign exchange rate changes
(Credited)/charged to the Income Statement
As at 31 March 2015
Effect of foreign exchange rate changes
As at 31 March 2016
145
145
Other
m
(7.2)
(0.3)
Total
m
5.6
(0.3)
0.2
9.1
1.6
(1.1)
4.2
0.2
(0.6)
(0.4)
1.1
1.0
(0.4)
4.0
1.5
Notes
Notes toto the
the Financial
Financial Statements
Statements
Capital
allowances
m
20.2
(1.6)
Unrealised
inventory profit
and other
inventory
provisions
m
30.1
3.6
(11.1)
7.5
(0.4)
6.6
40.3
1.8
(3.5)
(0.4)
21.8
1.5
1.3
4.4
11.5
4.8
46.9
(6.0)
(6.5)
9.3
(2.0)
(0.7)
As at 31 March 2014
Effect of foreign exchange rate changes
Share
Derivative
schemes instruments
m
m
25.5
(0.2)
0.2
Unused
tax
losses
m
2.7
(0.3)
Other1
m
42.3
5.8
Total
m
120.6
7.7
3.4
5.8
0.7
23.5
71.6
0.9
18.9
1.5
(0.4)
148.3
3.0
0.4
6.9
(8.6)
63.9
(5.0)
(2.0)
(6.5)
137.8
1 Deferred tax balances within the Other category in the analysis above include temporary differences arising on property provisions of 8.5m (2015: 2.4m), accrued
intercompany expenses of 23.0m (2015: 38.4m) and other provisions and accruals of 32.4m (2015: 30.8m).
Deferred tax assets are recognised for tax losses carried forward to the extent that the realisation of the related benefit through
the future taxable profits is probable. The Group did not recognise deferred tax assets of 62.3m (2015: 53.2m) in respect
of losses and temporary timing differences amounting to 215.1m (2015: 190.6m) that can be set off against future taxable
income. There is a time limit for the recovery of 24.8m of these potential assets (2015: 16.8m) which ranges from three to
ten years (2015: four to nine years).
Included within other temporary differences above is a deferred tax liability of 1.2m (2015: nil) relating to unremitted overseas
earnings. No deferred tax liability is provided in respect of any future remittance of earnings of foreign subsidiaries where the
Group is able to control the remittance of earnings and it is probable that such earnings will not be remitted in the foreseeable
future, or where no liability would arise on the remittance. The aggregate amount of temporary differences in respect of
unremitted earnings is 270m (2015: 250m).
146
146
Notes
Notes toto the
the Financial
Financial Statements
Statements
Non-current
Deposits and other financial receivables
Other non-financial receivables
Prepayments
Total non-current trade and other receivables
Current
Trade receivables
Provision for doubtful debts
Net trade receivables
Other financial receivables
Other non-financial receivables
Prepayments
Accrued income
Total current trade and other receivables
Total trade and other receivables
As at
31 March
2016
m
As at
31 March
2015
m
37.5
2.8
26.2
66.5
39.6
2.7
18.2
60.5
205.1
(7.2)
197.9
20.9
27.5
35.4
3.7
285.4
351.9
193.6
(4.6)
189.0
16.3
23.9
28.1
3.0
260.3
320.8
Included in total trade and other receivables are non-financial assets of 91.9m (2015: 72.9m).
The individually impaired receivables relate to balances with trading parties which have passed their payment due dates or
where uncertainty exists over recoverability. As at 31 March 2016, trade receivables of 18.2m (2015: 13.6m) were impaired.
The amount of the provision against these receivables was 7.2m as at 31 March 2016 (2015: 4.6m). It was assessed that a
portion of the receivables is expected to be recovered. The ageing of the impaired trade receivables is as follows:
As at
31 March
2016
m
3.7
11.5
1.5
1.5
18.2
Current
Less than one month overdue
One to three months overdue
Over three months overdue
147
147
As at
31 March
2015
m
0.1
8.8
1.5
3.2
13.6
Notes
Notes toto the
the Financial
Financial Statements
Statements
As at
31 March
2016
m
4.3
4.1
0.9
9.3
As at
31 March
2015
m
4.5
2.3
0.7
7.5
Year to
31 March
2016
m
4.6
3.1
(0.5)
7.2
Year to
31 March
2015
m
5.3
0.1
(0.8)
4.6
As at 1 April
Increase in provision for doubtful debts
Receivables written off during the year as uncollectable
As at 31 March
As at 31 March 2016 there were 1.5m impaired receivables within other receivables (2015: nil).
The carrying amounts of the Groups non-derivative financial assets excluding cash and cash equivalents by customer
geographical location are:
Asia Pacific
EMEIA
Americas
Year to
31 March
2016
m
99.3
89.1
71.6
260.0
Year to
31 March
2015
m
105.0
78.2
64.7
247.9
As at
31 March
2016
m
38.3
1.3
447.1
486.7
As at
31 March
2015
m
29.2
2.2
405.2
436.6
16. Inventories
Raw materials
Work in progress
Finished goods
Total inventories
The cost of inventories recognised as an expense and included in cost of sales amounted to 723.3m (2015: 730.1m).
The net movement in inventory provisions included in cost of sales for the year ended 31 March 2016 was a cost of
24.9m (2015: 31.3m).
The cost of finished goods physically destroyed in the year is 18.8m (2015: 19.7m).
148
148
Notes
Notes toto the
the Financial
Financial Statements
Statements
As at
31 March
2016
m
7.8
0.5
8.3
As at
31 March
2015
m
6.6
0.5
2.8
9.9
0.3
8.0
1.5
8.4
As at
31 March
2016
m
(1.3)
(0.1)
(0.8)
(0.1)
(2.3)
As at
31 March
2015
m
(10.7)
(1.8)
(12.5)
(2.3)
(12.5)
As at
31 March
2015
m
218.4
197.4
13.8
1 Forward foreign exchange contracts classified as held for trading are used for cash management purposes. At 31 March 2016 all such contracts had maturities of no
greater than three months from the balance sheet date.
149
149
Notes
Notes toto the
the Financial
Financial Statements
Statements
Carrying amount
m
As at 31 March 2016
Forward exchange contracts used for hedging:
Outflow
Inflow
Contractual maturities
Contractual
1 to 6
cash flows
months
m
m
6 to 12
months
m
5.7
(124.2)
130.2
6.0
(45.7)
50.4
4.7
(78.5)
79.8
1.3
(4.1)
(216.0)
211.7
(4.3)
(167.8)
165.2
(2.6)
(48.2)
46.5
(1.7)
As at 31 March 2015
Forward exchange contracts used for hedging:
Outflow
Inflow
The contractual maturity profile of non-current financial liabilities is shown in note 25. For further details of cash flow hedging
and net investment hedging refer to note 25 Market Risk.
18. Cash and cash equivalents
As at
31 March
2016
m
282.1
429.7
711.8
As at
31 March
2015
m
252.3
365.1
617.4
As at
31 March
2016
m
As at
31 March
2015
m
45.8
3.0
65.9
114.7
54.4
3.7
59.0
117.1
167.2
58.3
3.9
132.4
25.4
387.2
501.9
159.8
61.0
4.5
164.0
16.7
406.0
523.1
Non-current
Put option liability over non-controlling interest
Other payables
Deferred income and non-financial accruals
Total non-current trade and other payables
Current
Trade payables
Other taxes and social security costs
Other payables
Accruals
Deferred income and non-financial accruals
Total current trade and other payables
Total trade and other payables
Included in total trade and other payables are non-financial liabilities of 149.6m (2015: 136.7m).
150
150
Notes
Notes toto the
the Financial
Financial Statements
Statements
151
151
Notes
Notes toto the
the Financial
Financial Statements
Statements
Property
obligations
m
22.9
0.7
12.3
0.2
(5.4)
(1.3)
29.4
1.0
30.8
0.1
(5.8)
(3.7)
51.8
Restructuring
costs
m
1.5
(0.1)
(0.6)
0.8
(0.1)
(0.7)
Other
costs
m
2.2
(0.1)
0.6
(0.2)
(0.2)
2.3
0.1
2.2
(0.2)
(0.2)
4.2
Total
m
26.6
0.5
12.9
0.2
(6.2)
(1.5)
32.5
1.1
33.0
0.1
(6.1)
(4.6)
56.0
Within property obligations are amounts of 27.0m (2015: 12.1m) relating to onerous lease obligations. See note 13 for details
relating to impairment of assets and onerous lease provisions for retail cash generating units.
The net charge in the year for onerous lease obligations is 20.1m (2015: 6.5m). This includes amounts of 21.1m
(2015: 6.7m) relating to retail stores (refer to note 13) and a credit of 1.0m (2015: 0.2m) relating to other properties.
As at
31 March
2016
m
As at
31 March
2015
m
38.4
17.6
56.0
22.2
10.3
32.5
The non-current provisions relate to provisions for onerous leases and property reinstatement costs which are expected
to be utilised within 20 years (2015: 21 years).
21. Bank overdrafts and borrowings
Included within bank overdrafts is 44.9m (2015: 60.9m) representing balances on cash pooling arrangements in the Group.
The Group has a number of uncommitted overdraft and borrowing facilities agreed with third-party banks. At 31 March 2016,
the Group held bank overdrafts of 6.6m (2015: 4.3m) excluding balances on cash pooling arrangements.
On 25 November 2014, the Group entered into a 300m multi-currency revolving credit facility with a syndicate of
third-party banks. This replaced the previous facility which would have matured on 30 June 2016. At 31 March 2016, there
were nil outstanding drawings (2015: nil). During the year the Group exercised an option to extend the maturity of the
facility to November 2020, after receiving consent from all members of the syndicate. The agreement contains another
option, exercisable in 2016, which allows the Group to extend for an additional one year, at the consent of the syndicate.
The Group is in compliance with the financial and other covenants within this facility and has been in compliance
throughout the financial year.
The fair value of borrowings and overdrafts approximate the carrying amount because of the short maturity of
these instruments.
152
152
Notes
Notes toto the
the Financial
Financial Statements
Statements
Number
443,642,290
1,101,777
444,744,067
293,187
445,037,254
0.2
0.2
0.2
The Company has a general authority from shareholders, renewed at each Annual General Meeting, to repurchase a maximum
of 10% of its issued share capital. During the year to 31 March 2016, no ordinary shares were repurchased by the Company
under this authority (2015: nil).
The cost of purchasing own shares held by the Group has been offset against retained earnings, as the amounts paid reduce
the profits available for distribution by the Company. As at 31 March 2016 the amounts offset against this reserve are 39.9m
(2015: 57.0m). As at 31 March 2016, the ESOP trusts held 3.1m shares (2015: 4.1m) in the Company, with a market value of
42.7m (2015: 71.9m). In the year to 31 March 2016 the ESOP trusts have waived their entitlement to dividends of 1.2m
(2015: 1.2m).
During the year profits of 2.0m (2015: 5.3m) have been transferred to capital reserves due to statutory requirements of
subsidiaries. Due to the disposal and merger of subsidiaries, 6.2m (2015: nil) has been transferred from capital reserves to
retained earnings. The capital reserve consists of non-distributable reserves and the capital redemption reserve arising on the
purchase of own shares.
Other Reserves in the statement of changes in equity consists of the capital reserve, the foreign currency translation reserve,
and the hedging reserves. The hedging reserves consist of the cash flow hedge reserve and the net investment hedge reserve.
Hedging reserves
153
153
Foreign
currency
translation
reserve
m
104.7
Total
m
150.3
Capital
reserve
m
40.0
Cash flow
hedges
m
1.5
Net
investment
hedge
m
4.1
(6.1)
(6.1)
5.3
(1.3)
1.5
(5.9)
46.5
(4.4)
42.1
0.5
(1.3)
46.5
(2.9)
36.2
5.8
45.3
(4.4)
4.1
147.3
192.3
7.3
7.3
(6.2)
2.0
41.1
3.5
(2.2)
8.6
4.2
(0.8)
0.6
(0.2)
3.9
19.5
(1.9)
17.6
164.9
3.5
(0.8)
19.5
(3.5)
26.0
(6.2)
2.0
214.1
Notes
Notes toto the
the Financial
Financial Statements
Statements
As at
31 March
2016
m
As at
31 March
2015
m
206.2
461.3
188.9
856.4
205.4
513.1
264.4
982.9
The financial commitments for operating lease amounts calculated as a percentage of revenue (revenue leases) have been
based on the minimum payment that is required under the terms of the relevant lease excluding any contingent payments.
Under certain revenue based leases, there are no minimums and therefore no financial commitment is included in the table
above. As a result, the amounts charged to the Income Statement may be materially higher than the financial commitment
at the prior year end.
The total of future minimum payments to be received under non-cancellable leases on investment properties and subleases
on land and buildings is as follows:
Leases
As at
31 March
2016
m
As at
31 March
2015
m
0.7
2.1
2.8
0.7
2.6
3.3
Subleases
As at
As at
31 March
31 March
2016
2015
m
m
2.3
3.4
5.7
2.1
5.6
7.7
As at
31 March
2016
m
As at
31 March
2015
m
15.2
1.6
16.8
36.3
1.0
37.3
Contracted capital commitments represent contracts entered into by the year end and future work in respect of major
capital expenditure projects where activity has commenced by the year end relating to property, plant and equipment and
intangible assets.
154
154
Notes
Notes toto the
the Financial
Financial Statements
Statements
Sterling
US Dollar
Euro
Chinese Yuan Renminbi1
Other currencies
Total
As at 31 March 2016
Monetary Monetary
assets
liabilities
m
m
0.2
(0.6)
41.4
(11.0)
44.5
(36.4)
0.4
(47.5)
5.2
(2.6)
91.7
(98.1)
1 The balance includes the put option over the non-controlling interest (refer to note 19).
155
155
Net
m
(0.4)
30.4
8.1
(47.1)
2.6
(6.4)
As at 31 March 2015
Monetary
Monetary
assets
liabilities
m
m
0.9
(0.9)
33.4
(13.0)
50.6
(63.0)
0.1
(58.0)
2.3
(3.0)
87.3
(137.9)
Net
m
20.4
(12.4)
(57.9)
(0.7)
(50.6)
Notes
Notes toto the
the Financial
Financial Statements
Statements
156
156
Notes
Notes toto the
the Financial
Financial Statements
Statements
In more than one year, but not more than two years
In more than two years, but not more than three years
In more than three years, but not more than four years
In more than four years, but not more than five years
In more than five years
Total financial liabilities
As at
31 March
2015
m
5.9
2.3
0.8
0.8
109.5
119.3
Other non-current financial liabilities relate to other payables, onerous lease provisions and the put option liability over
non-controlling interests.
Capital risk
The Board reviews the Groups capital allocation policy annually. The capital allocation framework prioritises the investment
needs of the business and regular dividend payments. It then considers additional returns to shareholders, balancing capital
efficiency with financial flexibility in what is a cyclical sector. At 31 March 2016, the Group had net cash of 660.3m
(2015: 552.2m) and total equity excluding non-controlling interests of 1,565.0m (2015: 1,400.9m).
In the current period, having reached its target dividend pay-out ratio of 50%, the Group now intends to move to a progressive
dividend policy going forward, looking to maintain or grow the dividend in pence per share over time.
Furthermore, having considered the future cash generation, growth, productivity and investment plans, taking into
consideration the current challenging external environment and relevant financial parameters, the Group has decided
to commence a share buyback programme of up to 150m starting in the year ending 31 March 2017. Additional capital
returns to shareholders in the future periods will be kept under regular review reflecting the factors discussed above.
26. Employee costs
Staff costs, including the cost of directors, incurred during the year are as shown below. Directors remuneration, which is
separately disclosed in the Directors Remuneration Report on pages 83 to 105 and forms part of these financial statements,
includes the notional gains arising on the exercise of share options and awards but excludes the charge in respect of these
share options and awards recognised in the Group Income Statement.
Year to
31 March
2016
m
349.3
34.9
(0.3)
12.5
396.4
157
157
Year to
31 March
2015
m
384.8
44.3
21.0
18.0
468.1
Notes
Notes toto the
the Financial
Financial Statements
Statements
EMEIA1
Americas
Asia Pacific
Total
Year to
31 March
2015
5,113
2,048
3,148
10,309
158
158
Five-year grant
16.22
13.64
5 years
2.71%
32.1%
1.42%
Notes
Notes toto the
the Financial
Financial Statements
Statements
Outstanding at 1 April
Granted during the year
Lapsed and forfeited during the year
Withdrawn during the year
Exercised during the year
Outstanding at 31 March
Exercisable at 31 March
Weighted
average
exercise
price
1,066.0p
1,216.0p
1,157.0p
1,167.3p
931.1p
1,175.0p
1,049.0p
Year to
31 March
2016
1,161,489
471,453
(172,524)
(97,331)
(209,446)
1,153,641
4,297
Year to
31 March
2015
958,090
704,230
(156,786)
(47,131)
(296,914)
1,161,489
1,667
The weighted average share price at the respective exercise dates in the year was 13.18 (2015: 15.39).
Share options outstanding at the end of the year have the following expiry dates and exercise prices:
Exercise
price
557.0p
1,049.0p
1,049.0p
1,104.0p
1,104.0p
1,220.0p
1,220.0p
1,216.0p
1,216.0p
1,364.0p
1,364.0p
Option term
30 June 2010 28 February 2016
24 June 2011 28 February 2015
24 June 2011 28 February 2017
22 June 2012 28 February 2016
22 June 2012 28 February 2018
20 June 2013 28 February 2017
20 June 2013 28 February 2019
20 June 2014 28 February 2018
20 June 2014 28 February 2020
18 June 2015 28 February 2019
18 June 2015 28 February 2021
Total
Number of
shares under
option as at
31 March
2016
826
35,445
3,471
11,035
167,118
11,974
479,716
31,737
387,987
24,332
1,153,641
Number of
shares under
option as at
31 March
2015
26,124
1,667
36,033
209,687
13,455
220,296
15,166
603,642
35,419
1,161,489
15.64
nil
Equivalent to vesting period
27.8%
0.98%
159
159
Notes
Notes toto the
the Financial
Financial Statements
Statements
Outstanding at 1 April
Granted during the year
Lapsed and forfeited during the year
Exercised during the year
Outstanding at 31 March
Exercisable at 31 March
Year to
31 March
2015
458,410
212,940
(89,280)
(81,030)
501,040
64,180
The weighted average share price at the respective exercise dates in the year was 15.28 (2015: 15.06).
Share awards outstanding at the end of the year have the following terms:
Number of
awards as at
31 March
2016
2,500
2,650
5,800
3,880
19,560
18,090
29,220
30
51,510
67,050
61,980
83,310
77,640
111,000
534,220
Number of
awards as at
31 March
2015
2,700
2,850
6,000
3,880
26,160
22,590
47,460
64,710
59,490
83,880
72,720
108,600
501,040
1 No date has been specified when awards lapse. The cessation date of the trust in which the awards are held is 18 July 2082.
The Burberry Group plc Executive Share Plan 2014 (the ESP)
The ESP was set up in the year ended 31 March 2015, to replace the previous two long-term incentive plans the Burberry
Co-Investment Plan and the Burberry Senior Executive Restricted Share Plan (the RSP). The ESP aims to reward executives
and senior management for sustainable long-term performance and successful execution of the Groups long-term strategy.
Under the ESP, participants are awarded shares, structured as nil-cost options, up to a maximum value of four times base salary
per annum. Awards may be subject to a combination of non-market performance conditions, including compound annual Group
adjusted PBT growth; compound annual Group revenue growth; and average retail/wholesale adjusted return on invested capital
(ROIC). Performance conditions will be measured over a three-year period from the last reporting period prior to the grant date.
Each performance condition will stipulate a threshold and maximum target. The portion of the scheme relating to each performance
target will vest 25% if the threshold target is met, and then on a straight-line basis up to 100% if the maximum target is met.
Dependent on the performance of the vesting conditions, 50% of the award will vest on the third anniversary of the grant date,
and the remaining 50% of the award will vest on the fourth anniversary of the grant date.
Awards made to the Senior Leadership Team will be subject to all three non-market performance conditions and will be
measured 50% based on annual adjusted PBT growth; 25% based on annual revenue growth; and 25% based on ROIC.
Awards made to Senior Management will be subject to two non-market performance conditions and will be measured
75% based on annual adjusted PBT growth and 25% based on annual revenue growth.
Awards made to Management will not be subject to performance conditions apart from continued service during the
vesting period.
160
160
Notes
Notes toto the
the Financial
Financial Statements
Statements
Options granted
Fair
value
Participant group
22 July 2015
1,505,556
15.59
Senior Leadership
Team
22 July 2015
1,503,478
15.59
Senior Management
Performance conditions
Threshold
Maximum
3%
3%
15.3%
3%
3%
N/A
11%
11%
17.8%
11%
11%
N/A
3%
3%
15.3%
11%
11%
17.8%
22 July 2015
18 November
2015
261,478
15.59
133,328
12.82
Management
Senior Leadership
Team
18 November
2015
1,138
12.82
Senior Management
3%
3%
11%
11%
18 November
2015
3,950
12.82
Management
Continued service
N/A
N/A
The fair values for the above grants have been determined by applying the Black-Scholes option pricing model. The key factors
used in determining the fair value were as follows:
22 July 2015
15.59
nil
Equivalent to
vesting period
27.8%
1.01%
18 November 2015
12.82
nil
Equivalent to
vesting period
32.6%
0.90%
Obligations under this plan will be met either by market purchase shares via the ESOP trust or by the issue of ordinary shares
of the Company.
Movements in the number of share awards outstanding are as follows:
Year to
31 March
2016
3,408,928
(170,448)
3,238,480
Outstanding at 1 April
Granted during the year
Lapsed and forfeited during the year
Outstanding at 31 March
Exercisable at 31 March
Share awards outstanding at the end of the year have the following terms:
Number of
awards as at
31 March
2016
3,100,064
138,416
3,238,480
161
161
Notes
Notes toto the
the Financial
Financial Statements
Statements
Threshold
10%
5%
N/A
5%
5%
N/A
Maximum
15%
15%
N/A
15%
15%
N/A
Obligations under this plan will be met either by market purchase shares via the ESOP trust or by the issue of ordinary shares
of the Company.
162
162
Notes
Notes toto the
the Financial
Financial Statements
Statements
(1,959,768)
(763,014)
5,190,300
401,183
Outstanding at 1 April
Granted during the year
Lapsed and forfeited during the year
Exercised during the year
Outstanding at 31 March
Exercisable at 31 March
Year to
31 March
2015
7,675,508
2,481,329
(505,036)
(1,738,719)
7,913,082
301,555
The weighted average share price at the respective exercise dates in the year was 15.12 (2015: 15.15).
Share awards outstanding at the end of the year have the following terms:
Number of
awards as at
31 March
2016
4,463
2,124
6,612
15,817
67,092
122,342
1,500
230,262
15,522
305,939
34,101
1,966,666
243,542
22,656
2,151,662
5,190,300
163
163
Number of
awards as at
31 March
2015
5,411
5,101
2,124
8,764
30,492
106,867
398,554
3,000
438,626
27,514
1,989,090
127,006
2,124,852
243,542
22,656
2,379,483
7,913,082
Notes
Notes toto the
the Financial
Financial Statements
Statements
(318,647)
(897,959)
1,560,519
55,643
Outstanding at 1 April
Granted during the year
Lapsed and forfeited during the year
Exercised during the year
Outstanding at 31 March
Exercisable at 31 March
Year to
31 March
2015
3,348,510
849,617
(92,441)
(1,328,561)
2,777,125
34,119
The weighted average share price at the respective exercise dates in the year was 15.31 (2015: 14.85).
Share awards outstanding at the end of the year have the following terms:
Number of
awards as at
31 March
2016
55,643
714,365
790,511
1,560,519
164
164
Number of
awards as at
31 March
2015
34,119
1,203,247
724,250
815,509
2,777,125
Notes
Notes toto the
the Financial
Financial Statements
Statements
1,000,000
Outstanding at 1 April
Granted during the year
Outstanding at 31 March
Exercisable at 31 March
Year to
31 March
2015
1,000,000
1,000,000
500,000
Outstanding at 1 April
Granted during the year
Outstanding at 31 March
Exercisable at 31 March
165
165
Year to
31 March
2015
500,000
500,000
Notes
Notes toto the
the Financial
Financial Statements
Statements
12.82
nil
Equivalent to vesting period
24.4%
0.79%
73,000
73,000
Outstanding at 1 April
Granted during the year
Outstanding at 31 March
Exercisable at 31 March
12.82
nil
Equivalent to vesting period
23.3%
0.68%
570,151
570,151
Outstanding at 1 April
Granted during the year
Outstanding at 31 March
Exercisable at 31 March
166
166
Notes
Notes toto the
the Financial
Financial Statements
Statements
Year to
31 March
2015
m
17.6
0.1
9.5
27.2
Country of
incorporation
Australia
Austria
Bahrain
Belgium
Brazil
Canada
China
Czech Republic
France
Germany
Hong Kong
Hong Kong
Hong Kong
Hungary
India
Ireland
Ireland
Italy
Italy
Japan
Kuwait
Macau
Malaysia
Mexico
Mexico
Netherlands
Qatar
Republic of Korea
Russian Federation
Kingdom of Saudi
Arabia
Singapore
Spain
167
167
Interest
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Common stock
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary A shares
Ordinary B shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary quota
Ordinary shares
Ordinary (fixed) shares
Ordinary (variable) shares
Ordinary shares
Ordinary shares
Ordinary shares
Participatory share
Ordinary shares
Ordinary shares
Ordinary shares
Holding (%)
100
100
100
100
100
100
100
100
100
100
100
100
100
100
51
100
100
100
100
100
100
49
100
100
100
100
100
100
49
100
100
75
100
100
Notes
Notes toto the
the Financial
Financial Statements
Statements
Country of
incorporation
Spain
Switzerland
Taiwan
Thailand
United Arab Emirates
United Arab Emirates
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Burberrys Limited1
Hampstead (UK) Limited1
Sweet Street Developments Limited
Temple Works Limited
The Scotch House Limited1
Thomas Burberry Holdings Limited1
Thomas Burberry Limited1
Woodrow-Universal Limited1
Woodrow-Universal Pension Trustee Limited1
Worldwide Debt Collections Limited
Burberry (Wholesale) Limited
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United States
Burberry Limited
United States
United States
United States
United States
United States
United States
Interest
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary A shares
Ordinary B shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary A shares
Ordinary B shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Class X common stock
Class Y common stock
Class X common stock
Class Y common stock
Common stock
Common stock
Common stock
Series A common stock
Series B common stock
Common stock
Holding (%)
100
100
100
100
100
49
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
168
168
Notes
Notes toto the
the Financial
Financial Statements
Statements
169
169
Five
Five Year
Year Summary
Summary
Year to 31 March
Revenue by channel
Retail
Wholesale
Retail/Wholesale
Licensing
Total revenue
2012
m
1,270.3
478.3
1,748.6
108.6
1,857.2
Profit by channel
Retail/Wholesale
Licensing
Adjusted operating profit1
Continuing operations
2013
2014
2015
m
m
m
1,416.6
1,622.6
1,807.4
472.7
628.0
648.1
1,889.3
2,250.6
2,455.5
109.4
79.2
67.7
1,998.7
2,329.8
2,523.2
2016
m
1,837.7
634.6
2,472.3
42.4
2,514.7
m
286.9
90.0
376.9
m
335.6
92.5
428.1
m
393.5
66.8
460.3
m
399.2
56.0
455.2
m
380.9
36.9
417.8
%
68.1
51.7
16.4
82.9
%
70.6
52.8
17.8
84.6
%
70.2
52.7
17.5
84.3
%
69.2
52.9
16.3
82.7
%
69.6
54.2
15.4
87.0
m
376.9
(0.7)
376.2
(10.2)
366.0
(100.6)
(0.3)
(1.8)
263.3
m
428.1
(0.3)
427.8
(77.1)
350.7
(91.5)
(4.9)
254.3
m
460.3
0.7
461.0
(16.6)
444.4
(112.1)
(9.8)
322.5
m
455.2
0.6
455.8
(11.2)
444.6
(103.5)
(4.8)
336.3
m
417.8
2.8
420.6
(5.0)
415.6
(101.0)
(5.1)
309.5
m
689.4
582.5
410.5
66.2
m
652.5
661.6
434.5
m
729.1
618.2
464.2
72.6
5.2
m
745.3
680.7
463.3
m
816.1
684.0
520.8
78.4
151.3
m
870.3
811.5
568.8
m
892.5
743.0
557.5
77.7
184.8
m
938.1
869.0
648.4
m
901.7
729.0
548.4
90.7
202.5
m
932.9
878.5
660.9
+23%
+24%
20.0%
14%
16.4%
+26%
+8%
+13%
19.0%
5%
17.8%
+14%
+17%
+8%
19.6%
12%
17.5%
+8%
+11%
+7%
17.9%
9%
16.3%
+2%
-1%
-10%
14.8%
-1%
15.4%
-9%
2012
pence
per share
61.6
59.3
444.3
22.0
2013
pence
per share
70.0
57.0
446.5
26.0
2014
pence
per share
75.4
72.1
447.3
29.8
2015
pence
per share
76.9
75.1
447.8
32.9
2016
pence
per share
69.9
69.4
446.1
35.7
Segmental analysis
Retail/Wholesale gross margin
Retail/Wholesale adjusted operating expenses as a percentage of sales1
Retail/Wholesale adjusted operating margin1
Licensing operating margin
Financial KPIs
Total revenue growth4
Adjusted PBT growth1,4
Adjusted retail/wholesale return on invested capital (ROIC)1
Comparable store sales growth
Adjusted retail/wholesale operating margin1
Adjusted diluted EPS growth1
Year to 31 March
Earnings and dividends
Adjusted earnings per share diluted1
Earnings per share diluted
Diluted weighted average number of ordinary shares (millions)
Dividend per share (on a paid basis)
1 Excludes the impact of adjusting items.
2 The Accessories revenue for the year ended 31 March 2013 has been restated to exclude Beauty retail sales.
3 EMEIA comprises Europe, Middle East, India and Africa. As a result of an internal reorganisation, the Europe and Rest of World divisions were integrated to form
EMEIA, effective from 1 April 2013. The results for the years ended 31 March 2012 and 31 March 2013 have been re-presented to reflect this organisational change.
4 Growth rate is year-on-year underlying change, i.e. at constant exchange rates.
170
170
Five
Five Year
Year Summary
Summary
Year to 31 March
Net Cash Flow
Adjusted operating profit1
Discontinued operations
Restructuring spend
Depreciation and amortisation1
Employee share scheme costs
Proceeds/(payment) on equity swap contracts
Increase in inventories
Increase in receivables
Increase in payables and provisions
Other non-cash items
Cash flow from operations
Capital expenditure
Payment to terminate licence relationship
Proceeds from sale of assets held for sale
Capital contributions from JV partners
Acquisitions
Net interest
Tax paid
Free cash flow
Dividends
ESOP trust purchases/other
Exchange difference
Total movement in net cash
2012
m
376.9
2.5
(8.6)
87.6
31.8
(61.8)
(17.4)
70.1
1.4
482.5
(153.1)
4.9
(23.5)
(0.6)
(108.2)
202.0
(99.2)
(60.0)
(2.4)
40.4
2013
m
428.1
(1.0)
111.2
24.9
(39.2)
(32.0)
17.6
13.4
523.0
(175.9)
(144.1)
0.1
0.4
(1.0)
0.9
(99.0)
104.4
(113.5)
(45.4)
12.8
(41.7)
2014
m
460.3
(0.7)
123.7
25.4
15.7
(68.2)
(73.8)
42.3
10.8
535.5
(154.0)
0.7
(2.6)
0.8
(111.1)
269.3
(130.7)
(18.8)
(13.9)
105.9
2015
m
455.2
123.7
21.0
(0.2)
(15.1)
(43.8)
19.7
7.6
568.1
(155.7)
0.4
(3.4)
1.2
(114.4)
296.2
(145.3)
(15.1)
13.9
149.7
2016
m
417.8
132.2
(0.3)
(1.6)
(49.3)
(31.7)
9.1
26.8
503.0
(138.0)
3.1
(94.8)
273.3
(158.4)
(8.2)
1.4
108.1
Net cash
338.3
296.6
402.5
552.2
660.3
As at 31 March
Balance Sheet
Intangible assets
Property, plant and equipment
Inventories
Trade and other receivables
Trade and other payables
Taxation (including deferred taxation)
Net cash
Other net assets
Net assets
2012
m
133.1
328.8
311.1
167.5
(429.3)
39.1
338.3
2.8
891.4
2013
m
210.2
409.1
351.0
199.5
(447.8)
45.3
296.6
(11.1)
1,052.8
2014
m
195.4
398.4
419.8
273.7
(507.2)
47.4
402.5
(22.0)
1,208.0
2015
m
193.5
436.5
436.6
320.8
(523.1)
68.6
552.2
(33.6)
1,451.5
2016
m
189.6
426.2
486.7
351.9
(501.9)
56.4
660.3
(48.3)
1,620.9
2012
m
286.9
26.7%
210.3
2013
m
335.6
25.8%
249.0
2014
m
393.5
24.7%
296.3
2015
m
399.2
23.4%
305.8
2016
m
380.9
24.7%
286.7
884.4
(338.3)
560.0
1,048.6
(296.6)
713.0
1,202.2
(402.5)
782.5
1,448.9
(552.2)
922.0
1,617.4
(660.3)
1,076.0
57.8
3.5
1,167.4
1,049.3
20.0%
(70.9)
55.0
1.9
1,451.0
1,309.2
19.0%
(56.0)
51.3
1.5
1,579.0
1,515.0
19.6%
(41.1)
54.4
0.8
1,832.8
1,705.9
17.9%
(26.1)
45.8
2,052.8
1,942.8
14.8%
2 Assumed lease assets and assumed lease debt are calculated as a factor of five times lease payments, excluding the impact of charges relating to onerous
lease provisions.
3 Assumed lease assets as at 31 March 2015 has been restated to remove the impact of charges relating to onerous lease provisions.
171
171
Independent
Independent Auditors
Auditors Report
Report toto the
the Members
Members ofof Burberry
Burberry Group
Group plc
plc
give a true and fair view of the state of the Companys affairs as at 31 March 2016;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
What we have audited
The financial statements, included within the Burberry Group plc Annual Report 2015/16 (the Annual Report), comprise:
we have not received all the information and explanations we require for our audit; or
accounting records have not been kept by the Company, or returns adequate for our audit have not been
adequate
received from branches not visited by us; or
financial statements and the part of the Directors Remuneration Report to be audited are not in agreement with
the
the accounting records and returns.
We have no exceptions to report arising from this responsibility.
172
172
Independent
Independent Auditors
Auditors Report
Report to
to the
the Members
Members ofof Burberry
Burberry Group
Group plc
plc
Directors remuneration
Directors remuneration report Companies Act 2006 opinion
In our opinion, the part of the Directors Remuneration Report to be audited has been properly prepared in accordance with
the Companies Act 2006.
Other Companies Act 2006 reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion, certain disclosures of directors remuneration
specified by law are not made. We have no exceptions to report arising from this responsibility.
Responsibilities for the financial statements and the audit
Our responsibilities and those of the directors
As explained more fully in the Directors Responsibilities Statement set out on page 114, the directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and ISAs
(UK & Ireland). Those standards require us to comply with the Auditing Practices Boards Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the Companys members as a body in accordance
with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept
or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it
may come save where expressly agreed by our prior consent in writing.
What an audit of financial statements involves
We conducted our audit in accordance with ISAs (UK & Ireland). An audit involves obtaining evidence about the amounts
and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free
from material misstatement, whether caused by fraud or error. This includes an assessment of:
the accounting policies are appropriate to the Companys circumstances and have been consistently applied
whether
and adequately disclosed;
Paul Cragg
Senior Statutory Auditor,
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
17 May 2016
173
173
Company
Company Balance
Balance Sheet
Sheet
As at
31 March
2016
m
As at
31 March
2015
m
1,712.7
1,712.7
2,237.3
2,237.3
E
E
497.2
57.1
0.3
0.2
0.2
555.0
303.6
163.3
1.5
1.3
0.8
470.5
(59.6)
(0.1)
495.3
2,208.0
(58.8)
411.7
2,649.0
(801.5)
(1.0)
1,405.5
(1,536.0)
(1.4)
1,111.6
0.2
209.8
0.9
4.6
1,190.0
1,405.5
0.2
207.6
0.9
4.1
898.8
1,111.6
Note
Fixed assets
Investments in subsidiaries
Current assets
Trade and other receivables amounts falling due after more than one year
Trade and other receivables amounts falling due within one year
Derivative assets maturing after more than one year
Derivative assets maturing within one year
Cash at bank and in hand
Equity
Called up share capital
Share premium account
Capital reserve
Hedging reserve
Profit and loss account
Total Equity
The financial statements on pages 174 to 181 were approved by the Board on 17 May 2016 and signed on its behalf by:
Carol Fairweather
Chief Financial Officer
174
174
Company
Company Statement
Statement ofof Changes
Changes in
in Equity
Equity
Note
Balance as at 31 March 2014
Profit for the financial year
Total comprehensive income for the year
Employee share incentive schemes
Value of share options granted
Exercise of share options
Purchase of own shares by ESOP trusts
Dividends paid in the year
Balance as at 31 March 2015
Profit for the financial year
Other comprehensive income:
Tax on net investment hedges transferred to income
Total comprehensive income for the year
Employee share incentive schemes
Value of share options granted
Exercise of share options
Purchase of own shares by ESOP trusts
Dividends paid in the year
Balance as at 31 March 2016
Ordinary
share
capital
m
0.2
Share
premium
account
m
204.8
Capital
reserve
m
0.9
Hedging
reserve
m
4.1
Retained
earnings
m
781.1
260.8
260.8
Total
equity
m
991.1
260.8
260.8
0.2
2.8
207.6
0.9
4.1
21.0
(19.2)
(144.9)
898.8
460.1
21.0
2.8
(19.2)
(144.9)
1,111.6
460.1
0.5
0.5
460.1
0.5
460.6
0.2
2.2
209.8
0.9
4.6
(0.3)
(10.9)
(157.7)
1,190.0
(0.3)
2.2
(10.9)
(157.7)
1,405.5
175
175
Notes
Notes toto the
the Company
Company Financial
Financial Statements
Statements
A. Basis of preparation
Burberry Group plc (the Company) is the parent Company of the Burberry Group. Burberry Group plc is listed on the
London Stock Exchange and its principal business is investment. The Company is incorporated and domiciled in the
UK. The address of its registered office is Horseferry House, Horseferry Road, London, SW1P 2AW. The Company is the
sponsoring entity of The Burberry Group plc ESOP Trust and The Burberry Group plc SIP Trust (collectively known as the
ESOP trusts). These financial statements have been prepared by including the ESOP trusts within the financial statements
of the Company. The purpose of the ESOP trusts is to purchase shares of the Company in order to satisfy Group share
based payment arrangements.
Burberry Group plc and its subsidiaries (the Group) is a global luxury goods manufacturer, wholesaler and retailer. The Group
also licenses third parties to manufacture and distribute products using the Burberry trade marks. All of the companies
which comprise the Group are controlled by the Company directly or indirectly.
The financial statements of the Company have been prepared in accordance with Financial Reporting Standard 101 Reduced
Disclosure Framework (FRS 101). The financial statements have been prepared on a going concern basis under the historical
cost convention, as modified by derivative financial asset and derivative financial liabilities measured at fair value through profit
or loss, and in accordance with the Companies Act 2006. Profit for the year on ordinary activities, but before dividends payable,
was 460.1m (2015: 260.8m). As permitted by Section 408 of the Companies Act 2006, the Company has not presented its
own profit and loss account.
The preparation of the financial statements in conformity with FRS 101 requires the use of certain critical accounting estimates.
It also requires management to exercise judgement in applying the Companys accounting policies (see note C).
Financial Reporting Standard 101 reduced disclosure exemptions
The change in basis of preparation has enabled the Company to take advantage of the applicable disclosure exemptions
permitted by FRS 101 in the financial statements, which are summarised below:
Standard
IFRS 7, Financial Instruments: Disclosures
IFRS 13, Fair Value Measurement
Disclosure exemption
Full exemption
para 91-99 disclosure of valuation techniques and inputs used for fair value measurement
of assets and liabilities
IAS 1, Presentation of the Financial Statements para 10(d) statement of cash flows
para 10(f) a statement of financial position as at the beginning of the preceding period when
an entity applies an accounting policy retrospectively or makes a retrospective statement
of items in its financial statements, or when it reclassifies items in its financial statements
176
176
Notes
Notes toto the
the Company
Company Financial
Financial Statements
Statements
177
177
Notes
Notes toto the
the Company
Company Financial
Financial Statements
Statements
178
178
Notes
Notes toto the
the Company
Company Financial
Financial Statements
Statements
179
179
Notes
Notes toto the
the Company
Company Financial
Financial Statements
Statements
D. Investments in subsidiaries
Cost
As at 1 April 2015
Additions
Disposal of subsidiaries
Impairment charge
As at 31 March 2016
m
2,237.3
26.0
(76.4)
(474.2)
1,712.7
During the year the Company liquidated 76.4m (2015: nil) direct and indirect non-operating subsidiaries as part of a wider
corporate restructuring exercise, resulting in impairments of 469.8m (2015: nil). These disposals and impairments are offset
by distributions made by these subsidiaries.
The directors consider that the carrying value of the investments is supported by their underlying net assets. The subsidiary
undertakings and investments of the Burberry Group are listed in note 28 of the Group financial statements.
E. Trade and other receivables
As at
31 March
2016
m
496.4
0.8
497.2
As at
31 March
2015
m
302.7
0.9
303.6
56.7
0.4
57.1
554.3
163.1
0.2
163.3
466.9
Included in amounts owed by Group companies are loans of 553.1m (2015: 414.8m) which are interest bearing.
The interest rate earned is based on relevant national LIBOR equivalents plus 0.5% to 0.9%. These loans are unsecured
and repayable between 1 March 2017 and 17 June 2021. The remaining receivable of nil (2015: 51.0m) is unsecured,
interest free and repayable on demand.
F. Creditors
As at
31 March
2016
m
801.5
801.5
As at
31 March
2015
m
1,536.0
1,536.0
59.4
0.2
59.6
861.1
58.6
0.2
58.8
1,594.8
Amounts owed to Group companies falling due after more than one year are interest bearing. The interest rate earned is
based on LIBOR plus 0.5% to 0.9%. These loans are unsecured and repayable between 17 June 2019 and 17 June 2020.
All amounts owed to Group companies falling due within one year are unsecured, interest free and repayable on demand.
180
180
Notes
Notes toto the
the Company
Company Financial
Financial Statements
Statements
Number
444,744,067
293,187
445,037,254
0.2
0.2
The Company has a general authority from shareholders, renewed at each Annual General Meeting, to repurchase a maximum
of 10% of its issued share capital. During the year to 31 March 2016, no ordinary shares were repurchased by the Company
under this authority (2015: nil).
The cost of purchasing own shares held by the Group has been offset against retained earnings, as the amounts paid reduce
the profits available for distribution by the Company. As at 31 March 2016 the amounts offset against this reserve are 39.9m
(2015: 57.0m). As at 31 March 2016, the ESOP trusts held 3.1m shares (2015: 4.1m) in the Company, with a market value
of 42.7m (2015: 71.9m). In the year to 31 March 2016 the ESOP trusts have waived their entitlement to dividends of
1.2m (2015: 1.2m).
The capital reserve consists of the capital redemption reserve arising on the purchase of own shares.
H. Dividends
Year to
31 March
2016
m
112.5
45.2
157.7
Prior year final dividend paid 25.5p per share (2015: 23.2p)
Interim dividend paid 10.2p per share (2015: 9.7p)
Total
Year to
31 March
2015
m
102.1
42.8
144.9
A final dividend in respect of the year to 31 March 2016 of 26.8p (2015: 25.5p) per share, amounting to 118.5m, has been
proposed for approval by the shareholders at the Annual General Meeting subsequent to the balance sheet date. The final
dividend has not been recognised as a liability at the year end and will be paid on 5 August 2016 to shareholders on the
register at the close of business on 8 July 2016.
I. Financial guarantees
On 25 November 2014, the Group entered into a 300m multi-currency revolving credit facility with a syndicate of third-party
banks. This replaced the previous facility which would have matured on 30 June 2016. At 31 March 2016, there were
nil outstanding drawings (2015: nil). During the year the Group exercised an option to extend the maturity of the facility
to November 2020, after receiving consent from all members of the syndicate. The agreement contains another option,
exercisable in 2016, which allows the Group to extend for an additional one year, at the consent of the syndicate.
The companies acting as guarantor to the facility consist of Burberry Group plc, Burberry Limited, Burberry Asia Limited,
Burberry (Wholesale) Limited (US) and Burberry Limited (US). The fair value of this financial guarantee as at 31 March 2016
is nil (2015: nil).
A potential liability may arise in the future if one of the Group members defaults on the loan facility. Each guarantor,
including Burberry Group plc, would be liable to cover the amounts outstanding, including principal and interest elements.
J. Audit fees
The Company has incurred audit fees of 0.1m for the current year which are borne by Burberry Limited (2015: 0.1m).
181
181
Shareholder Information
Shareholder
Information
Dividends
An interim dividend for the financial year ended 31 March 2016
of 10.2p per ordinary share was paid on 22 January 2016.
Afinal dividend of 26.8p per share has been proposed and,
subject to approval at the Annual General Meeting on
14July 2016, will be paid according to the following timetable:
Please dial +44 121 415 7047 if calling from outside the
UK or see help.shareview.co.uk for additional information.
American Depositary Receipts
Burberry has a sponsored Level 1 American Depositary
Receipt (ADR) programme to enable US investors to
purchase ADRs in US Dollars. Each ADR represents
oneBurberry ordinary share.
Duplicate accounts
Shareholders who have more than one account due to
inconsistency in account details may avoid duplicate
mailings by contacting Equiniti and requesting the
amalgamation of their share accounts.
182
Shareholder Information
ShareGift
Shareholders with a small number of shares, the value
ofwhich makes them uneconomic to sell, may wish to
consider donating their shares to charity through ShareGift,
a donation scheme operated by The Orr Mackintosh
Foundation. A ShareGift donation form can be obtained
from Equiniti. Further information is available at
www.sharegift.org or by telephone on 0207 930 3737.
Electronic communication
Shareholders may at any time choose to receive all
shareholder documentation in electronic form via the
internet, rather than in paper format. Shareholders who
decide to register for this option will receive an email
each time a shareholder document is published
on the internet. Shareholders who wish to receive
documentation in electronic form should register
online at www.shareview.co.uk.
13 July 2016
14 July 2016
October 2016
November 2016
January 2017
April 2017
May 2017
Registered office
Burberry Group plc
Horseferry House
Horseferry Road
London
SW1P 2AW
Share dealing
Burberry Group plc shares can be traded through most
banks, building societies or stock brokers. Equiniti offers
atelephone and internet dealing service. Terms and
conditions and details of the commission charges are
available on request.
Website
This Annual Report and other information about
Burberry Group plc, including share price information
and details of results announcements, are available
at www.burberryplc.com.
183
The cover and accounts section of this report (pages 113-184) are printed on Colorplan. This
product is made from virgin ECF pulp, which is produced from sawmill residues, forest thinnings,
and roundwood from managed sustainable forests. The main section (pages 1-112) are printed
on Oxygen Offset which is made from 100% de-inked pulp recycled fibre. Printed in the UK
technology. Both the
by Pureprint who are a Carbon Neutral Company using their
manufacturing mills and printer are registered to the Environmental Management System
ISO14001 and are Forest Stewardship Council (FSC) chain-of-custody certified.
Disclaimer
The purpose of this document is to provide information to the members of Burberry Group plc. This document contains certain statements that are forwardlookingstatements. They appear in a number of places throughout this document and include statements regarding our intentions, beliefs or current expectations
andthose of our officers, directors and employees concerning, amongst other things, our results of operations, financial condition, liquidity, prospects, growth,
strategies and the business we operate. By their nature, these statements involve uncertainty since future events and circumstances can cause results and
developments to differ materially from those anticipated. The forward-looking statements reflect knowledge and information available at the date of preparation
ofthis document and unless otherwise required by applicable law the Company undertakes no obligation to update or revise these forward-looking statements.
Nothing in this document should be construed as a profit forecast. The Company and its directors accept no liability to third parties in respect of this document
save as would arise under English law. This document does not constitute an invitation to underwrite, subscribe for or otherwise acquire or dispose of any
BurberryGroup plc shares, in the UK, or in the USA, or under the USA Securities Act 1933 or any other jurisdiction.
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