Preliminary Results
Burberry Group PLC
22 May 2003
PART 1
Burberry Group plc
Preliminary Results Announcement
22 May 2003. Burberry Group plc reports preliminary results for its financial
year ended 31 March 2003.
Financial Highlights
• Total revenues increased by 19% (12% underlying*)
- Retail sales up 46% (25% underlying)
- Wholesale sales increased 6%
- Licensing revenue up 9%
• Gross profit margin increased from 50.3% to 56.0%
• EBITA** increased by 29% to £116.7 million
• EBITA margin expanded from 18.1% to 19.7%
• Diluted EPS before goodwill and IPO-related items of 14.9p
• Strong cash generation reflects profitability and working capital improvements
• Final dividend of 2.0p per ordinary share recommended (3.0p for full year)
*Underlying figures are calculated at constant exchange rates and exclude the
incremental impact in the current year of the Asia acquisitions. Burberry
acquired the operations of its primary distributors in Asia outside of Japan in
January 2002 and July 2002 (the 'Asia acquisitions').
**EBITA represents operating profit before interest, taxation, exceptional items
and goodwill amortisation.
Strategic Highlights
• Opened 12 new and refurbished stores, including New York flagship
• Product development efforts led by accessories growth
• Integration of Asia acquisitions proceeding smoothly
• Strong progress in Spain repositioning
• Excellent US performance
Year ended 31 March 2003 Year ended 31 March 2002
£m £m
Turnover 593.6 499.2
As reported
Operating profit 88.3 85.4
Profit before tax 85.1 84.8
Basic earnings per share (pence) 10.5p 11.3p
Diluted earnings per share (pence) 10.3p 11.1p
Before IPO-related items
EBITA 116.7 90.3
Profit before interest and tax 110.3 85.4
Profit before tax 109.4 84.8
Diluted earnings per share (pence) 13.7p 11.1p
Diluted earnings per share before goodwill amortisation
(pence) 14.9p 12.1p
IPO-related items include a £22.0 million exceptional charge related to employee
share ownership plans and a £2.3 million pre-IPO foreign exchange loss before
attributable tax relief of £7.0 million.
John Peace, Chairman of Burberry, commenting on the preliminary results: 'This
has been a remarkable year for Burberry. We began life as a public company in
July 2002 with the successful completion of our IPO during very difficult stock
market conditions. And we have ended the year with an excellent set of financial
results, well ahead of market expectations at the time of the IPO. These and
other achievements reflect the strength of the Burberry brand, which has been
reshaped over the last five years into an uniquely positioned international
luxury brand. Behind this are a strong management team, a clear strategy and
many opportunities for further growth.'
Rose Marie Bravo, Chief Executive, stated: 'Our strategic initiatives across
product categories, selected distribution channels and targeted regions have
proven effective as evidenced by our strong performance. The dedication of
Burberry's management and staff, the support of our wholesale customers and the
efforts of our licensee partners underlie these achievements. As we begin the
new financial year, we remain confident in these strategies while approaching
the uncertain trading environment with appropriate caution.'
Management will discuss these results during a presentation to research analysts
and institutions at 1:00pm today at The Lincoln Centre, 18 Lincoln's Inn Fields
London WC2A 3ED (telephone 020 7404 5959). The presentation will also be
broadcast live on the Internet at www.burberryplc.com and can be accessed by
telephone at +44 (0) 20 7162 0181. Replay until 11 June:
UK +44 (0) 8288 4459/passcode 212092#;
US +1 334 323 6222/ passcode 212092#.
Enquiries:
Burberry
Mike Metcalf COO and CFO 020 7968 0411
Matt McEvoy Strategy and IR 020 7968 0411
Brunswick
Susan Gilchrist 020 7404 5959
Charlotte Elston 020 7404 5959
Performance Overview
The year to March 2003 was marked by significant progress for Burberry. Over the
course of the year, the business completed an initial public offering, advanced
its strategic agenda and maintained its financial momentum, exceeding the
expectations set at the time of the IPO.
Financial highlights. Total turnover in the year advanced to £593.6 million from
£499.2 million in the comparative period, representing a 19% increase (21% at
constant exchange rates), or 12% on an underlying basis (i.e. at constant
exchange rates and excluding the incremental impact in the current year of the
Asia acquisitions). EBITA before IPO-related items rose 29% to £116.7 million.
EBITA margin expanded from 18.1% to 19.7%. Diluted earnings per share before
amortisation of goodwill and IPO- related items were 14.9 pence. Net cash inflow
before dividends, IPO-related and financing activities increased 64% to
£47.1million.
Strategic developments. Burberry continued to implement its strategic
initiatives across product categories, channels of distribution and geographic
regions. The results of which are demonstrated by the strong performance in both
accessories and apparel, by the success of new stores and by enhanced control
and brand coherence throughout the Company's markets globally.
Products. With the appointment of a new Creative Director in May 2001, the
apparel and accessories collections have evolved with a singular vision that is
distinctly informed by Burberry's British heritage and history of design
innovation. In addition to strong consumer response, the collections have
attracted significant editorial recognition in the fashion and lifestyle media.
This financial year saw the accessories share of the Company's revenue mix
expand to 29%, compared to 25% in the previous period. This was accomplished
through continued emphasis on product development in categories where the brand
is underrepresented, including handbags and luggage, as well as enhancing the
design quotient of existing classifications. Womenswear maintained its momentum
led by new sportswear and outerwear designs as well as reinterpretations of
Burberry icons such as the trench coat and emerging iconic classics including
quilted jackets and kilt-inspired skirts. Achieving solid growth, menswear
results were driven by renewed attention to essential classification categories
and increased emphasis on tailored clothing and furnishings. Burberry's product
licensing partners also contributed to this success with important developments
in childrenswear, eyewear, fragrances and recently launched watches.
Channels. Burberry's distribution initiatives continue to focus on expansion of
the directly operated store network while enhancing the brand's presence within
key wholesale accounts. Total retail sales increased by 46% in the year to
£228.4 million boosted by the contribution from the Asia acquisitions. On an
underlying basis, retail sales increased by 25%, driven by sales from newly
opened stores and by gains at existing stores. The Company opened 12 new and
refurbished locations during the year, including Burberry stores in the US (4),
Europe (3) and Asia (1), as well as four outlet stores. The opening of a 24,000
square foot New York City flagship marked a milestone in Burberry's retail
strategy. Located on East 57th Street between Madison and Fifth Avenues, one of
the world's pre-eminent luxury crossroads, this store is the most complete
expression of the Burberry brand to date. Burberry also added 46 in-store
concessions as part of the Korean acquisition. In total, retail selling space
increased by approximately 37% in 2002/03, or 18% excluding the Korea
acquisition. Burberry plans to increase retail selling space by approximately
10% in 2003 with the opening of eight stores, including a store in Milan -
Burberry's first store in Italy.
Wholesale continued its solid progress as the Company intensified efforts with
and increased sales to existing and new customers. Total wholesale sales
advanced 6% (5% underlying) to £306.9 million during the year. On an underlying
basis, Autumn/Winter wholesale sales were largely unchanged from the prior year.
The Company achieved high single digit volume growth for Spring/Summer 2003
merchandise. Highlights include the additional seven points of distribution
established by wholesale customers in China, new co-staffing and concession
arrangements with the leading department store group in Spain and the expansion
of the shop-in-shop concept with a particular emphasis on key accounts in the US
market.
Licensing revenues in the year increased by 9% (14% at constant exchange rates),
led by strong growth in Japanese royalties reflecting volume gains of
approximately 10%, driven by growth across the broad spectrum of new and
traditional product categories and businesses, and increases in certain royalty
rates. Volume gains moderated in the second half of the year reflecting both the
strong performance in the comparable period of the prior year and a generally
softer economic environment. Through initiatives such as the establishment of
Burberry's own executive team in Japan during 2002/03, the Company continues to
enhance coordination and to orchestrate joint activities with licensee partners
to capitalize on the opportunities in this important market. Licensing revenue
during the year also benefited from strong sales gains by global product
licensees, including children's apparel, eyewear and fragrances.
Regions. With an ongoing focus on a consistent brand image and enhanced product
coherence, Burberry achieved good strategic and financial progress across its
targeted geographic regions. The Company experienced strong revenue growth in
the US, accompanied by more moderate underlying gains in Europe. Reported growth
in Asia was dominated by the impact of the Asia acquisitions.
The US market continued its strong performance, achieving a 27% increase in
revenue for the year. This growth reflects strong gains across both existing and
new directly operated retail stores as well as through wholesale channels. This
region continues to represent an important growth market for the brand.
The brand's repositioning in the important Spanish market progressed, led by the
opening of the 12,000 square foot Barcelona store - the first Burberry store in
this market. The store is a critical component of the Company's strategy to
evolve and elevate the brand in Spain in keeping with Burberry's international
luxury positioning. Burberry also initiated additional activities in conjunction
with the Company's primary wholesale customer in Spain to enhance the
repositioning process.
With the acquisition of Burberry's Korean distributor in July 2002, Burberry
took direct control of its primary markets in non-Japan Asia. Integration of the
Asia acquisitions proceeded smoothly during the year as regional management
teams were augmented and the businesses continued to achieve solid growth
through store additions and wholesale expansion.
Outlook. Management remains confident in Burberry's long term growth strategies,
while acknowledging the challenging operating environment.
• Since March, retail results have been impacted by external events and while
underlying revenue has shown continued growth, comparable store performance
has been modestly negative.
• High single-digit sales growth for the wholesale business is anticipated for
Autumn/Winter 2003 (based on the initial order book) but the Company
anticipates that the current environment may affect the Spring 2004 season
where initial orders are taken in the quarter to September 2003.
• In Licensing, Burberry's Japanese partners anticipate modest volume gains over
2003, although this must be set against a most demanding comparative
performance.
While the luxury goods industry is subject to exceptional short-term
uncertainty, management expects, assuming trading conditions improve by Autumn,
to meet current consensus profit expectations for the year to March 2004.
Certain statements made in this announcement are forward looking statements.
Such statements are based on current expectations and are subject to a number of
risks and uncertainties that could cause actual results to differ materially
from any expected future results in forward looking statements.
This announcement does not constitute an invitation to underwrite, subscribe for
or otherwise acquire or dispose of any Burberry Group plc shares. Past
performance is not a guide to future performance and persons needing advice
should consult an independent financial adviser.
Financial Review
Group results
Year ended 31 Year ended 31
March 2003 March 2002
Results before
IPO-related % of turnover IPO-related
items items Total £m % of turnover
£m £m £m
Turnover
Wholesale 306.9 51.7% - 306.9 288.8 57.9%
Retail 228.4 38.5% - 228.4 156.9 31.4%
License 58.3 9.8% - 58.3 53.5 10.7%
Total turnover 593.6 100.0% - 593.6 499.2 100.0%
Cost of sales (261.3) (44.0%) - (261.3) (248.1) (49.7%)
Gross profit 332.3 56.0% - 332.3 251.1 50.3%
Net operating (215.6) (36.3%) - (215.6) (160.8) (32.2%)
expenses
EBITA 116.7 19.7% - 116.7 90.3 18.1%
Goodwill (6.4) (1.1%) - (6.4) (4.9) (1.0%)
amortisation
Employee share
ownership plans - - (22.0) (22.0) - -
Profit before 110.3 18.6% (22.0) 88.3 85.4 17.1%
interest and tax
Net interest and (0.9) (0.2%) - (0.9) (0.5) (0.1)%
similar expense
Currency loss on -
GUS loans (pre - - (2.3) (2.3) (0.1)
flotation)
Profit on ordinary 109.4 18.4% (24.3) 85.1 84.8 17.0%
activities before
taxation
Tax on profit on (39.9) 7.0 (32.9) (28.3)
ordinary
activities
Profit on ordinary 69.5 11.7% (17.3) 52.2 56.5 11.3%
activities after
taxation
Diluted EPS before 14.9 (3.4) 11.5 12.1
goodwill
amortisation
Diluted EPS 13.7 (3.4) 10.3 11.1
Burberry Group turnover is composed of revenue from three channels of
distribution: wholesale, retail and licensing operations. Wholesale revenue
arises from the sale of men's and women's apparel and accessories to wholesale
customers worldwide, principally leading and prestige department stores and
speciality retailers. Retail revenue is derived from sales through the Company's
directly operated store network. At 31 March 2003, the Company operated 132
retail locations consisting of 47 Burberry stores, 62 concessions (including the
46 concessions added in July 2002 as part of the acquisition of the operations
of Burberry's Korean distributor) and 23 outlet stores. License revenue consists
of royalties receivable from Japanese and product licensing partners.
Comparison of the year ended 31 March 2003 to the year ended 31 March 2002
Burberry Group recently completed three significant transactions which affect
the comparability of results for the year ended 31 March 2003 relative to the
year ended 31 March 2002. On 31 December 2001, the Company purchased the
operations and certain assets of important distributors in Asia, which largely
operated as wholesale businesses. On 1 July 2002, the Company purchased the
operations and certain net assets of its distributor in Korea, which largely
operated as a retail business consisting of 46 concessions and an outlet store
at acquisition date. These acquisitions are together referred to as the 'Asia
acquisitions'. In determining 'underlying' performance, current year financial
results are adjusted to reflect the business configuration of the previous year
(i.e. excluding the incremental impact in the current year of the Asia
acquisitions), and applicable exchange rates across the business are adjusted to
reflect prior financial year rates. On 17 July 2002, Burberry Group completed a
reorganisation in connection with its initial public offering and admission to
the London Stock Exchange (the 'IPO').
Turnover
Total turnover advanced to £593.6 million from £499.2 million in the comparative
period, representing an increase of 19% (21% at constant exchange rates), or 12%
on an underlying basis (i.e. excluding a £11.4 million reduction attributable to
exchange rate and other factors and excluding the £43.4 million incremental
contribution from the Asia acquisitions).
Total retail sales increased by 46% in the year to £228.4 million, boosted by
the contribution from four Burberry stores, 49 concessions and one outlet added
as part of the Asia acquisitions. On an underlying basis, retail sales increased
by 25%, driven by sales from newly opened stores and by gains at existing
stores. During the year, the Company opened twelve new and refurbished stores,
including Burberry stores in the US (4), Europe (3) and Asia (1), as well as
four outlet stores. Total retail selling space expanded approximately 37%
(including the 19% attributable to the Korea acquisition) to approximately
360,000 square feet at year end.
Total wholesale sales advanced 6% (5% underlying) to £306.9 million during the
year. On an underlying basis, Autumn/Winter wholesale sales, which are
predominantly shipped in the first half of the financial year, were largely
unchanged from the prior year. The Company achieved high single digit volume
growth for Spring/Summer merchandise, for which shipments are concentrated in
the second half of the year.
Licensing revenues in the year increased by 9% (14% at constant exchange rates),
primarily driven by strong growth in Japanese royalties reflecting volume gains
of approximately 10% and increases in certain royalty rates. In this market,
volume gains moderated in the second half of the year reflecting both the strong
performance in the comparable period of the prior year and a generally softer
economic environment. Licensing revenue during the year also benefited from
strong sales gains by global product licensees.
On a regional basis, the Company experienced strong revenue growth in the US,
driven by both wholesale and retail operations, accompanied by more moderate
underlying gains in Europe. Reported growth in Asia was dominated by the impact
of the Asia acquisitions.
Operating profit
Gross profit as a percentage of turnover expanded to 56.0% in the year from
50.3% in the comparative period. This increase was driven by two primary
factors: the impact of the Asia acquisitions and an overall improvement in gross
margin driven by the increased proportion of accessories in the product mix, the
strong growth of retail operations and other factors.
Operating expenses as a percentage of turnover rose to 36.3% from 32.2% in the
comparative period, reflecting expansion and investment across the business. The
Asia acquisitions were the primary factor contributing to the increase in the
expense ratio. The underlying growth of retail operations, including pre-trading
costs associated with store development, also contributed to the increase. A
number of additional factors, including a £2.1 million impairment charge arising
with respect to specific retail assets and the Company's continued investment in
infrastructure, are also reflected in the increase.
Overall EBITA increased by 29% to £116.7 million, or 19.7% of turnover relative
to 18.1% in the earlier period. On an underlying basis, EBITA increased by £15.2
million; the Asia acquisitions contributed an incremental £15.6 million in the
year, while exchange rate movements reduced reported results by £4.4 million.
Profit before interest and tax and IPO-related items and after goodwill
amortisation increased 29% to £110.3 million, or 18.6% of turnover.
Goodwill amortisation increased to £6.4 million from £4.9 million in the
comparative period primarily as a result of additional goodwill arising from the
Asia acquisitions.
Net interest expense
Net interest and similar expense (excluding IPO-related charges) was £0.9
million in the year to March 2003. Although the Company has maintained net cash
deposits in the period since the IPO, net interest expense was incurred as a
result of differential interest rates on borrowings and cash balances. These
borrowings were repaid during the second half of the year such that modest net
interest income was generated toward year end.
IPO-related items
In connection with the IPO, the Company incurred a £22.0 million exceptional
charge in the first half of the year largely related to its employee share
ownership plans. This included £18.5 million arising in respect of the
management Restricted Share Plan (the RSP); this charge does not represent a
cash outflow to Burberry Group since the RSP will be satisfied through the issue
of new shares; it does not give rise to a reduction in net assets as there is a
compensating increase in the capital reserve account within Shareholders' Funds.
As no further awards will be made under the RSP, the consolidated profit and
loss account will not be affected in future periods (except in respect of
reserve movements and the number of shares in issue for the purpose of
calculating earnings per share).
During the first half of the year, the Company also incurred a £2.3 million
foreign exchange loss on borrowings held on behalf of the GUS group. These
borrowings were eliminated as part of the reorganisation prior to the IPO.
Profit before taxation
Burberry Group reported profit before taxation (after IPO-related charges) of
£85.1 million for the year ended 31 March 2003 (2002: £84.8 million).
Profit after taxation
Burberry Group incurred a 34.7% tax rate on profit before goodwill amortisation
and exceptional items for the full financial year. The rate is greater than that
indicated at the interim announcement due to the higher than anticipated value
of items not deductible for tax purposes and, less significantly, an adverse
prior year adjustment. The Company continues to anticipate an effective tax rate
on the order of 33% in future periods. The tax charge of £32.9 million is net of
£7.0 million of tax relief attributable to IPO-related items.
Excluding IPO-related items, profit after taxation would have been £69.5 million
during the period.
Diluted earnings per ordinary share excluding goodwill amortisation and IPO-
related items were 14.9 pence for the year (2002: 12.1 pence). The Company had
498.1 million and 506.2 million ordinary shares in issue on average for the
purposes of calculating basic and diluted earnings per share respectively. 1.8
million ordinary shares held by the Company's Employee Share Ownership Trusts
are excluded for the purposes of the earnings per share calculations.
Liquidity and Capital Resources
Historically, the Company's principal uses of funds have been to support
acquisitions, capital expenditures and working capital growth in connection with
the expansion of its business. Principal sources of funds have been cash flow
from operations and financing from GUS Group, the former 100% Shareholder. In
the future, Burberry expects to finance operations and capital expenditures with
cash generated from operating activities and, as necessary, the use of its
credit facility.
The table below sets out the principal components of cash flow for the financial
years ended 31 March 2003 and 31 March 2002 and ending net cash balances:
Year ended 31 Year ended 31
March 2003 March 2002
£m £m
Operating profit before interest, taxation, goodwill 116.7 90.3
amortisation and IPO-related items
Depreciation and related charges 19.0 14.0
Loss on disposal of fixed assets and similar items 1.5 0.2
Decrease/(Increase) in stocks 5.2 (7.0)
Increase in debtors (2.4) (5.2)
Increase/(decrease) in creditors 25.0 (2.2)
Net cash inflow from operating activities 165.0 90.1
Returns on investments and servicing of finance (0.5) (0.4)
Taxation paid (30.6) (17.6)
Net purchases of fixed assets (55.5) (38.9)
Acquisition-related payments (26.8) (4.5)
Purchase of own shares (4.5) -
Net cash inflow before dividends, IPO-related and financing 47.1 28.7
activities
Net funds at year end 79.6 N/A
Net cash inflow from operating activities increased to £165.0 million in the
year ended 31 March 2003 from £90.1 million in the comparative period. The
increase in depreciation charges reflects the larger fixed asset base associated
with expansion of the business and the £2.1 million non-cash impairment charge
related to certain retail assets. The 29% increase in operating profit before
interest, taxation, goodwill amortisation and IPO-related items was augmented by
greater working capital efficiency. Underlying stock levels declined moderately
despite the turnover gain in 2002/03. This improvement was a result of strong
trading performance, improved stock management, as well as the reduction of
certain stockholdings acquired prior to the financial year in order to secure
costing objectives. The relatively small increase in trade debtors partially
reflects earlier shipments to wholesale customers within the final quarter
relative to the previous year. The increase in creditors in 2002/03 reflects
most importantly the growth in revenues; in addition, certain trading accruals
have accumulated where payment will occur in 2003/04.
Net cash outflow from purchases of fixed assets included £55.5 million cash
spent on fixed assets, primarily related to investment in Burberry Group's
retail operations. The increase over 2001/02 largely reflected increased levels
of investment in the store portfolio relative to the earlier period.
Net cash outflow for acquisition purposes in the period was £26.8 million in
2002/03. £24.3 million is attributable to the initial purchase cost of the
operations and certain assets of Burberry Group's Korea distributor. The balance
relates to deferred payments with respect to previous transactions.
During 2002/03 the Company invested £4.5 million in its own shares as a
contribution to funding Burberry Group's Employee Share Option Trust.
IPO-related activities prior to the flotation also affected the Company's net
cash flow for the year to 31 March 2003. Their net effect was to leave the
Company with net cash balances of approximately £10 million immediately
following the flotation. At 31 March 2003 the Company had net funds of £79.6
million.
The Company paid an interim dividend of 1.0 pence per share on 5 February 2003.
A final dividend of 2.0 pence per share (£10.0 million in total) is recommended
and would be payable in August 2003. The total dividend for 2002/03 would be 3.0
pence per share.
In line with its risk management policy, Burberry has continued to hedge its
principal foreign currency transaction exposures, arising in respect of Yen
denominated royalty income and Euro denominated product purchases and sales. On
the basis of forward foreign exchange contract rates secured with respect to the
year to 31 March 2004, Burberry expects that the average Yen/Sterling exchange
rate applicable to its license revenue for that financial year will be
approximately 5% below that of 2002/03.
In May 2003, Burberry amended the terms of it credit facility provided by GUS
plc. Under the amended agreement, the amount available under the facility has
been reduced to £75m and the maturity has been extended to July 2006. Certain
other terms have also been amended, all of which the Company believes to be
consistent with standard commercial arrangements.
The financial information reproduced below does not constitute full statutory
accounts as referred to in Section 240 of the Companies Act 1985. Statutory
accounts for the year ended 31 March 2002 have been delivered to the Registrar
of Companies and Statutory accounts for the year ended 31 March 2003 will be
delivered to the Registrar of Companies in accordance with the Companies Act
1985. The company's auditors have issued unqualified reports under Section 235
of the Companies Act 1985 on these Statutory accounts.
Group profit and loss account
Year ended 31 March 2003
Before goodwill Goodwill
amortisation, amortisation,
exceptional items exceptional items Year ended 31
and pre flotation and pre flotation March 2002
dividend dividend Total Total
Note £m £m £m £m
Turnover
Continuing operations 575.4 - 575.4 499.2
Acquisition during the 28 18.2 - 18.2 -
year
Total turnover from 3 593.6 - 593.6 499.2
continuing operations
Cost of sales (261.3) - (261.3) (248.1)
Gross profit 332.3 - 332.3 251.1
Net operating expenses: 4,6
- distribution,
administration and other
income (215.6) (22.0) (237.6) (160.8)
- goodwill 5 - (6.4) (6.4) (4.9)
amortisation
Net operating expenses (215.6) (28.4) (244.0) (165.7)
Continuing operations 113.1 (27.3) 85.8 85.4
Acquisition during the 28 3.6 (1.1) 2.5 -
year
Total operating profit 116.7 (28.4) 88.3 85.4
Interest and similar 8 1.8 - 1.8 5.0
income
Interest expense 9 (2.7) - (2.7) (5.5)
Foreign currency loss on 9 (2.3) - (2.3)
loans with GUS group (pre (0.1)
flotation)
Interest expense and (5.0) - (5.0) (5.6)
similar charges
Profit on ordinary 3,5 113.5 (28.4) 85.1 84.8
activities before taxation
Tax on profit on ordinary 10 (39.4) 6.5 (32.9) (28.3)
activities
Profit on ordinary 74.1 (21.9) 52.2 56.5
activities after taxation
Equity dividend - to GUS 12 - (219.0) (219.0) -
group (pre flotation )
Equity dividend - interim 12 (5.0) - (5.0) -
paid
Equity dividend - final 12 (10.0) - (10.0) -
proposed
Retained profit/(loss) for 24 59.1 (240.9) (181.8) 56.5
the year
Pence per share
Earnings
- basic 13 14.9p (4.4p) 10.5p 11.3p
- diluted 13 14.6p (4.3p) 10.3p 11.1p
Earnings before goodwill
amortisation and
exceptional items
- basic 13 14.9p 12.3p
- diluted 13 14.6p 12.1p
Statement of total recognised gains and losses
Year ended 31 March
2003 2002
Note £m £m
Retained (loss)/profit for the year 24 (181.8) 56.5
Currency translation differences 1.1 (1.3)
Tax impact of currency translation differences (0.4) -
Net impact of currency translation differences 24 0.7 (1.3)
Total recognised gains and losses for the year (181.1) 55.2
Note of historical cost profits and losses
Year ended 31 March
2003 2002
£m £m
Reported profit on ordinary activities before taxation 85.1 84.8
Realisation of property revaluation gain of previous years - 0.2
Difference between actual and historical cost depreciation charge 0.2 0.5
Historical cost profit on ordinary activities before taxation 85.3 85.5
Tax on profit on ordinary activities (32.9) (28.3)
Dividend - to GUS group (pre flotation) (219.0) -
Dividend - interim paid (5.0) -
Dividend - final proposed (10.0) -
Historical cost retained (loss)/profit for the year after taxation and dividends (181.6) 57.2
Reconciliation of movement in Shareholders' Funds/GUS investment in Burberry Group
Year ended 31 March
2003 2003 2002 2002
(proforma)* (proforma)*
£m £m £m £m
Profit on ordinary activities after taxation 52.2 52.2 56.5 56.5
Dividend - to GUS group pre flotation (219.0) (219.0) - -
Dividend - interim paid (5.0) (5.0) - -
Dividend - final proposed (10.0) (10.0) - -
Retained (loss)/ profit for the year (181.8) (181.8) 56.5 56.5
Currency translation differences 0.7 10.0 (1.3) (1.3)
Pre flotation
Issue of preference share capital 0.8 0.8 - -
Issue of ordinary share capital 486.7 486.7 - -
Deemed distribution arising on reorganisation (704.1) (704.1) - -
Capital reserve arising on reorganisation 6.6 6.6 - -
Movement of GUS group balances - 433.3 - (12.5)
On and post flotation
Issue of ordinary share capital 250.5 250.5 - -
Repayment of GUS group balances - (250.5) - -
Waiver of GUS group balances 37.6 37.6 - -
Capital reserve arising on Restricted Share Plan 18.5 18.5 - -
Net addition to Shareholders' Funds/ GUS investment (84.5) 107.6 55.2 42.7
in Burberry Group
Opening Shareholders' Funds/GUS investment in 474.5 282.4 419.3 239.7
Burberry Group
Closing Shareholders' Funds/GUS investment in 390.0 390.0 474.5 282.4
Burberry Group
*See Note 1 - Basis of preparation
Balance sheet
Group Company
At 31 March At 31 March
2003 2002 2002 2003 2002
(proforma)*
Note £m £m £m £m £m
Fixed assets
Intangible assets 14 123.7 95.8 95.8 - -
Tangible fixed assets 15 161.4 124.4 124.4 - -
Investments 16 3.4 0.1 0.1 971.3 169.5
288.5 220.3 220.3 971.3 169.5
Current assets
Stock 17 83.8 82.3 82.3 - -
Debtors 18 122.0 406.5 99.4 169.2 243.3
Cash and short term deposits 19 86.6 30.2 30.2 - -
292.4 519.0 211.9 169.2 243.3
Creditors - amounts falling due within one 20 (151.1) (240.9) (125.9) (62.8) (3.8)
year
Net current assets 141.3 278.1 86.0 106.4 239.5
Total assets less current liabilities 429.8 498.4 306.3 1,077.7 409.0
Creditors - amounts falling due after more 21 (35.2) (23.1) (23.1) (98.6) -
than one year
Provisions for liabilities and charges 22 (4.6) (0.8) (0.8) - -
Net assets 390.0 474.5 282.4 979.1 409.0
Capital and Reserves
Called up share capital 23 1.1 - 1.1 -
Share premium account 24 122.2 89.4 122.2 89.4
Revaluation reserve 24 25.2 25.5 - -
Capital reserve 24 47.1 23.3 - -
Other reserve 24 704.1 - 704.1 -
Profit and loss account 24 (509.7) 336.3 151.7 319.6
Equity Shareholders' Funds 389.2 474.5 978.3 409.0
Non-Equity Shareholders' Funds 23 0.8 - 0.8 -
Total Shareholders' Funds 390.0 474.5 979.1 409.0
GUS investment in Burberry Group - - 282.4 - -
*See Note 1 - Basis of preparation
Approved by the Board on 21 May 2003 and signed on its behalf by:
John Peace Michael Metcalf
Chairman Chief Operating and Financial Officer
Group cash flow statement
Year ended 31 March
2003 2002
Note £m £m
Operating activities
Operating profit after goodwill amortisation and exceptional items 88.3 85.4
Exceptional items 22.0 -
Goodwill amortisation 6.4 4.9
Operating profit before goodwill amortisation and exceptional items 116.7 90.3
Depreciation, impairment and trademark amortisation charges 19.0 14.0
Loss on disposal of fixed assets and similar non-cash charges 1.5 0.2
Decrease/(increase) in stocks 5.2 (7.0)
Increase in debtors (2.4) (5.2)
Increase/(decrease) in creditors 25.0 (2.2)
Net cash inflow from operating activities 165.0 90.1
Returns on investments and servicing of finance
Interest received 0.8 0.5
Interest paid (1.4) (0.9)
Dividend received from investment 0.1 -
Net cash outflow from returns on investments and servicing of finance (0.5) (0.4)
Taxation paid (30.6) (17.6)
Capital expenditure and financial investment
Purchase of tangible and intangible fixed assets (55.7) (39.4)
Sale of tangible fixed assets 0.2 0.5
Purchase of own shares (excluding shares issued to ESOT) (4.5) -
Net cash outflow from capital expenditure and financial investment (60.0) (38.9)
Acquisitions
Deferred consideration for purchase of businesses (2.5) -
Purchase of businesses in year 28 (24.3) (4.5)
Net cash outflow from acquisitions (26.8) (4.5)
Net cash inflow before dividends, IPO-related and financing activities 47.1 28.7
Dividends
Equity dividends paid (including £219m to GUS group pre flotation) (224.0) -
Deemed distribution arising on reorganisation (net of capital reserve) (697.5) -
Net cash (outflow)/inflow before management of liquid resources and (874.4) 28.7
financing
Management of liquid resources
Increase in short-term deposits with banks 25 (47.3) (2.4)
Financing
Issue of ordinary share capital on flotation (net of shares issued to 23 249.5 -
ESOT)
Issue of ordinary shares to GUS group (pre flotation) 23 486.7 -
Issue of preference shares to GUS group (pre flotation) 23 0.8 -
Decrease in external borrowings 25 (7.9) (2.6)
Funds received/ (paid) on GUS group balances (pre flotation) 446.1 (12.7)
Settlement of GUS group balances (on flotation) (250.5) -
Decrease/(increase) in net balances due from GUS group 25 195.6 (12.7)
Net cash inflow/(outflow) from financing 924.7 (15.3)
Increase in cash during the year 25 3.0 11.0
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