10th Jun 2005 07:00
Burberry Group PLC10 June 2005 Burberry Group plc Financial results under IFRS 10 June 2005. Burberry Group plc reports on its unaudited financial results forthe year to 31 March 2005 and six months to 30 September 2004 underInternational Financial Reporting Standards (IFRS). For the year to 31 March 2005, primary differences under IFRS relative topreviously reported financial results under UK GAAP are highlighted below: • Turnover and gross profit unchanged. • EBITA (1) under IFRS of £161.3 million compared to £165.5 million under UK GAAP. The £4.2 million difference primarily relates to an increased charge under IFRS for share based remuneration payments. • Goodwill amortisation and exceptional gain reported under UK GAAP are not applicable under IFRS. • Net interest income of £5.6 million under IFRS compared to £4.9 million under UK GAAP. The £0.7 million difference primarily reflects foreign currency gains on intercompany loans, which under IFRS are recognised in the income statement and not taken directly to reserves. • Effective tax rate of 32.1% compared to 32.0% reported under UK GAAP (calculated on profit before taxation, goodwill amortisation and exceptional gain). • Profit after tax of £113.4 million under IFRS compared to £109.9 million reported under UK GAAP. • Diluted EPS of 22.4p under IFRS compared to diluted EPS (before goodwill amortisation and exceptional gain) of 23.0p reported under UK GAAP. • Shareholders' funds at 31 March 2005 of £478.4 million under IFRS compared to £454.6 million reported under UK GAAP, driven by balance sheet reclassifications and remeasurements under IFRS, including the reversal of £21.7 million provided for the proposed final dividend payment under UK GAAP. International Financial Reporting Standards are subject to ongoing amendments bythe International Accounting Standards board and some standards have yet to beendorsed by the European Commission. Further development of the interpretationof these standards could result in changes in the basis in accounting orpresentation of certain items and accordingly this financial information issubject to possible change. Group income statement - unaudited Year to 31 March 2005 Six months to September 2004 --------------- --------------- UK GAAP IFRS IFRS UK GAAP (3) IFRS IFRS 2005 adjustments 2005 2004 adjustments 2004 £m £m £m £m £m £m--------------------------- ------ ------ ------ ------ ------ ------TurnoverWholesale 371.9 - 371.9 111.0 - 111.0Retail 265.2 - 265.2 197.2 - 197.2Licence 78.4 - 78.4 39.3 - 39.3--------------------------- ------ ------ ------ ------ ------ ------Total turnover 715.5 - 715.5 347.5 - 347.5Cost of sales (291.3) - (291.3) (144.0) - (144.0)--------------------------- ------ ------ ------ ------ ------ ------Gross profit 424.2 - 424.2 203.5 - 203.5Net operating expenses (258.7) (4.2) (262.9) (124.7) (1.2) (125.9)--------------------------- ------ ------ ------ ------ ------ ------EBITA (1) 165.5 (4.2) 161.3 78.8 (1.2) 77.6Goodwill amortisation (6.8) 6.8 - (3.3) 3.3 -Exceptional gain (2) 0.8 (0.8) - 0.8 (0.8) ---------------------------- ------ ------ ------ ------ ------ ------Profit before interest andtaxation 159.5 1.8 161.3 76.3 1.3 77.6Net interest income 4.9 0.7 5.6 2.0 0.6 2.6--------------------------- ------ ------ ------ ------ ------ ------Profit before taxation 164.4 2.5 166.9 78.3 1.9 80.2Tax on profit (54.5) 1.0 (53.5) (26.0) 0.9 (25.1)--------------------------- ------ ------ ------ ------ ------ ------Attributable profit for theyear 109.9 3.5 113.4 52.3 2.8 55.1--------------------------- ------ ------ ------ ------ ------ ------Diluted EPS beforegoodwill amortisation andexceptional gain 23.0p n/a 10.8p n/aDiluted EPS 21.8p 22.4p 10.3p 10.9pBasic EPS 22.2p 22.9p 10.5p 11.1p--------------------------- ------ ------ ------ ------ ------ ------ Notes:(1) EBITA represents operating profit before interest, taxation, exceptionalgain and goodwill amortisation. Following the adoption of IFRS, the exceptionalgain and goodwill amortisation are no longer applicable.(2) The £0.8m pre-tax exceptional gain in the year to 31 March 2005 under UKGAAP relates to lapsed awards under the IPO Senior Executive Restricted SharePlan.(3) Amounts previously reported have been restated to reflect the impact ofadopting FRS 17 "Retirement Benefits". Management will discuss these results during a conference call at 8:00am today.The conference call can be accessed by dialling +44 (0) 20 7081 7194, password299766. This document, together with the appendices, will be available on theGroup's website at www.burberryplc.com. Enquiries: Burberry 020 7968 0577 Stacey Cartwright CFOMatt McEvoy Strategy and IRJohn Scaramuzza Strategy and IR Brunswick 020 7404 5959 Susan GilchristLaura CummingsRobert Gardener Certain statements made in this announcement are forward looking statements.Such statements are based on current expectations and are subject to a number ofrisks and uncertainties that could cause actual results to differ materiallyfrom any expected future results in forward looking statements. This announcement does not constitute an invitation to underwrite, subscribe foror otherwise acquire or dispose of any Burberry Group plc or GUS plc shares.Past performance is not a guide to future performance and persons needing adviceshould consult an independent financial adviser. Burberry Group plc Impact from adoption of IFRS Contents 1. Introduction 2. Explanation of adjustments under IFRS 3. Restated IFRS consolidated financial information - Consolidated income statement for the year to 31 March 2005 - Consolidated balance sheet as at 31 March 2005 - Consolidated income statement for the six months to 30 September 2004 - Consolidated balance sheet as at 30 September 2004 - Consolidated balance sheet as at 31 March 2004 Appendix 1 Basis of preparation Appendix 2 Detailed reconciliations from UK GAAP to IFRS Appendix 3 IFRS accounting policies 1 INTRODUCTION For all periods up to and including the year to 31 March 2005 Burberry hasprepared its financial statements in accordance with UK Generally AcceptedAccounting Principles (UK GAAP). For the year to 31 March 2006 Burberry isrequired to prepare consolidated financial statements in accordance withInternational Financial Reporting Standards (IFRS) as endorsed by the EuropeanCommission. The Group's transition date to IFRS is 1 April 2004. This has been determined inaccordance with IFRS 1 "First Time Adoption of International Financial ReportingStandards", being the start of the earliest period of comparative information. To explain the transition to IFRS, the unaudited financial performance andposition of the Group has been converted from UK GAAP to IFRS for the year to 31March 2005. An explanation of the principle adjustments required by Burberry onconversion to IFRS is set out in section 2, with summary financial informationpresented in section 3. The financial information presented includes: • The Group's consolidated income statements for the year to 31 March 2005 and six months to 30 September 2004; and • The Group's consolidated balance sheets at 31 March 2005, 30 September 2004 and 31 March 2004. The consolidated income statements and balance sheets have been prepared inaccordance with the "Basis of Preparation", see Appendix 1. Reconciliation schedules to assist the reader in understanding the nature andquantum of differences between UK GAAP and IFRS for the financial informationare included in Appendix 2. This document explains all material accounting policy changes from theaccounting policies adopted in the UK GAAP financial statements for the year to31 March 2005. A full set of IFRS accounting policies are included in Appendix3. The financial information presented in this document is unaudited. 2 EXPLANATION OF ADJUSTMENTS UNDER IFRS The format of the IFRS primary financial information contained within thisdocument is prepared in accordance with IAS 1 "Presentation of FinancialStatements", which differs from the UK GAAP format. On the income statement inparticular, there is no equivalent for 'exceptional items'. Under IFRS, theseamounts are included in operating expenses. Burberry will continue to discloseseparately material items of a one off nature and provide adjusted earnings pershare to assist shareholders. The IFRS changes set out below have no effect on cash flows. The significant differences between UK GAAP and IFRS which affect the Group areas follows: 2.1 Share based payments Under UK GAAP, the cost of equity-settled transactions were recognised in theyear of performance to which the scheme related. The charge was recognised basedon the fair market value of the share award at the date of grant, less anyconsideration receivable from the participating Burberry employee. Under IFRS equity-settled transaction charges are recognised from the date ofgrant over the vesting period of the shares. The total charge is determined withreference to the fair value of the equity instruments awarded at the date ofgrant. The fair value at the date of grant has been determined using theBlack-Scholes Option Pricing Model. Where awards are contingent upon future events an assessment of the likelihoodof these conditions being achieved is made at the time of the award. The impact on operating profit from the adoption of IFRS 2 is a charge of £5.1mfor the year to 31 March 2005. 2.2 Exceptional gainUnder UK GAAP an exceptional gain of £0.8m arises from the lapsing of awardsmade under the IPO Senior Executive Restricted Share Plan (the "IPO RSP"). IFRS no longer permits the use of exceptional items. It does however allowmaterial items to be separately identified. These items will typically bematerial, non-recurring items. 2.3 Intangible fixed assets a) Goodwill amortisationUnder UK GAAP, goodwill was capitalised and amortised over its estimated usefuleconomic life and a charge of £6.8m was recorded in the year to 31 March 2005. Under IFRS, goodwill has been assigned an indefinite life as at the date oftransition and it is no longer amortised. Burberry has elected to apply theexemption related to Business Combinations and has frozen its goodwill at itscarrying value as at 1 April 2004. All accumulated amortisation at this point intime has been reclassified against the cost of the goodwill. Impairment reviewswill be carried out on goodwill on an annual basis and any impairment chargewould be charged and if applicable reported as a material item. No impairment charge was required and accordingly no charge has been recorded inthe year to 31 March 2005. b) Computer software Under UK GAAP, computer software was included within tangible fixed assets.Under IFRS, computer software is considered to be an intangible fixed asset,unless it is an integral part of the related hardware. The period over which thecomputer software is amortised is not affected. Accordingly, a net reclassification of £1.8m as at 1 April 2004 and of £1.6m asat 31 March 2005 has been made between intangible fixed assets and property,plant and equipment. There is no impact on the income statement as a result ofthis reclassification. 2.4 Foreign exchange Under UK GAAP, any foreign exchange movements arising on the translation of netassets of foreign subsidiaries were recognised by charging or crediting theamounts directly to the profit and loss reserve account. In addition, anyexchange difference arising on intercompany loans was also taken directly to theprofit and loss reserve account where the loan formed part of the net investmentin the subsidiary. Under IFRS, any foreign exchange movements arising on the translation of foreignsubsidiaries is to be taken to a separate component of equity, the foreigncurrency translation reserve. Any exchange difference arising on an intercompanyloan should be taken through the income statement, unless the loan is deemed toform part of the direct investment in the subsidiary. In the year to 31 March 2005 these movements resulted in an unrealised foreignexchange gain of £0.7m. These amounts will vary from year to year as they aregenerated by exchange movements. It is Burberry's intention that where possiblefuture foreign exchange gains or losses arising on intercompany loans will becharged or credited directly to retained earnings. This could be achieved byrestructuring the foreign currency intercompany loan balances. 2.5 Deferred taxation Under UK GAAP, deferred tax was recognised for all timing differences (being thedifference between an entities taxable profits and its statutory results) whichare expected to reverse. Deferred tax under IAS 12 "Income Taxes" is recognised on all taxable temporarydifferences and all deductible temporary differences and unused tax losses, tothe extent that it is probable there are sufficient taxable profits available infuture periods. Temporary differences are the difference between the tax base ofan asset/liability and its carrying amount in the financial statements. The most significant difference between IFRS and UK GAAP, is that deferred taxis now recognised on the revaluation of fixed assets. On transition to IFRS anadditional deferred tax liability of £12.6m has been recorded as at 1 April 2004and a liability of £5.3m as at 31 March 2005. 2.6 Dividends Under UK GAAP, proposed dividends are recorded as a liability at the balancesheet date. Under IFRS, dividends proposed at the balance sheet date are onlyrecorded as a liability when the shareholders have approved their distribution,or for the interim dividend when approved by the Board. The final dividend proposed as at 31 March 2004 of £14.9m has been reversed inthe opening balance sheet and charged in the year to 31 March 2005. The finaldividend proposed as at 31 March 2005 of £21.7m has been reversed in the incomestatement and will be charged in the year to 31 March 2006. 2.6 Dividends (continued) The recognition of the charge in the income statement in relation to dividendsdoes not affect the timing of dividend payments or Burberry's dividend policy. 2.7 Non-current assets held for sale Under IFRS, any non-current asset whose carrying value will be recoveredprincipally through sale, and the sale of the asset is highly probable, shouldbe classified as non-current assets held for sale on the balance sheet. Theamounts reclassified from property, plant and equipment to non-current assetsheld for sale as at 31 March 2005 was £1.2m. 2.8 Revaluation reserve The Group has elected to adopt the exemption set out in IFRS 1 and to hold thetangible fixed assets at their historic cost or revalued amount on transition toIFRS. As a result of this, the balance on the revaluation reserve at the date oftransition has been reclassified to retained earnings. The amounts included inretained earnings in relation to the revaluation reserve will be separatelyidentified in the Annual Report as this amount is not considered to bedistributable until the relevant property is disposed of. 2.9 Earnings per share The calculation of basic earnings per share is based on attributable profit forthe period divided by the weighted average number of Ordinary Shares in issueduring the period. Diluted earnings per share is based on the weighted average number of OrdinaryShares in issue during the period. In addition, account is taken of any awardswhich will have dilutive effects when exercised (full vesting of all outstandingawards is assumed). Year to Six months to 31 March 30 September 2005 2004 £m £m------------------------------------------- ------- -------Attributable profit for the period 113.4 55.1------------------------------------------- ------- ------- The weighted average number of Ordinary Shares represents the weighted averagenumber of Burberry Group plc Ordinary Shares in issue throughout the period,excluding Ordinary Shares held in the Burberry Group's ESOPs. Year to Six months to 31 March 30 September 2005 2004 Million Million------------------------------------------- ------- -------Weighted average number ofOrdinary Shares in issue during the period 494.1 496.2Dilutive effect of the share incentive schemes 10.4 10.9------------------------------------------- ------- -------Diluted weighted average number ofOrdinary Shares in issue during the period 504.5 507.1------------------------------------------- ------- ------- Year to Six months to 31 March 30 September 2005 2004Earnings per share Pence Pence------------------------------------------- ------- -------Basic earnings per share 22.9 11.1------------------------------------------- ------- -------Diluted earnings per share 22.4 10.9------------------------------------------- ------- ------- 2.10 Financial instruments IAS 32 "Financial Instruments: Disclosures and Presentations" (IAS 32) and IAS39 "Financial Instruments: Recognition and Measurement" (IAS 39) address theaccounting for, and reporting of financial instruments. The Group has elected totake the option to defer the restatement of comparative information for IAS 32and IAS 39. IAS 39 sets out detailed accounting requirements in relation to financial assetsand liabilities. All derivative financial instruments are accounted for at fairmarket value whilst other financial instruments are accounted for either atamortised cost or at fair value depending on their classification. If certain key criteria are met financial instruments, financial assets andfinancial liabilities may be designated as forming hedge relationships as aresult of which changes in their value are offset in the income statement orcharged/credited to equity depending on the nature of the hedge relationship. From 1 April 2005, the Group will adopt IAS 32 and IAS 39 and subject to meetingcertain criteria will adopt hedge accounting for the majority of the Group'sforward currency contracts which are taken out to hedge the cost of foreigncurrency inventory. In addition when IAS 32 is adopted, redeemable preference shares will not betreated as equity as they will be considered to be a liability and the dividendspaid on these shares classified as an interest expense. GROUP INCOME STATEMENTFor the year to 31 March 2005 - unaudited UK GAAP IFRS IFRS (IFRS format) reclassifications remeasurements IFRS £m £m £m £m ----------------------------- ------- ------- ------- -------Turnover 715.5 - - 715.5Cost of sales (291.3) - - (291.3)----------------------------- ------- ------- ------- -------Gross profit 424.2 - - 424.2 Operating expenses (266.9) - 1.8 (265.1)Other operating income 2.2 - - 2.2----------------------------- ------- ------- ------- -------Operating profit 159.5 - 1.8 161.3----------------------------- ------- ------- ------- -------Operating profit beforegoodwill amortisation andexceptional gain 165.5 - (4.2) 161.3- Goodwill amortisation (6.8) - 6.8 -- Exceptional gain relatingto IPO employee share plans 0.8 - (0.8) ------------------------------ ------- ------- ------- -------Interest and similar income 5.5 - 0.7 6.2Interest expense and similarcharges (0.6) - - (0.6)----------------------------- ------- ------- ------- -------Profit before taxation 164.4 - 2.5 166.9Tax on profit (54.5) - 1.0 (53.5)----------------------------- ------- ------- ------- -------Attributable profit for theyear 109.9 - 3.5 113.4----------------------------- ------- ------- ------- ------- All the profit for the year is attributable to the equityholders of the company. ----------------------------- ------- ------- ------- -------Pence per shareEarnings- basic 22.2p 22.9p- diluted 21.8p 22.4p Earnings before exceptionalitems and goodwill- basic 23.4p n/a- diluted 23.0p n/a----------------------------- ------- ------- ------- ------- CONSOLIDATED BALANCE SHEETAs at 31 March 2005 - unaudited UK GAAP IFRS IFRS (IFRS format) reclassifications remeasurements IFRS £m £m £m £m ----------------------------- ------- ------- ------- -------ASSETSNon-current assetsIntangible assets 107.9 1.6 6.8 116.3Property, plant and equipment 166.1 (2.8) - 163.3Available-for-sale financialinstruments 0.1 - - 0.1Deferred taxation assets 18.4 13.3 (5.3) 26.4Trade and other receivables 1.2 - - 1.2Income tax recoverable 0.8 - - 0.8------------------------------ ------- ------- ------- ------- 294.5 12.1 1.5 308.1Current assetsStock 102.5 - - 102.5Trade and other receivables 112.2 - - 112.2Income tax recoverable 3.1 - - 3.1Cash and cash equivalents 169.9 - - 169.9------------------------------ ------- ------- ------- ------- 387.7 - - 387.7Non-current assets classified as held for sale - 1.2 - 1.2------------------------------ ------- ------- ------- ------- 387.7 1.2 - 388.9------------------------------ ------- ------- ------- ------- Total assets 682.2 13.3 1.5 697.0 LIABILITIESNon-current liabilitiesLong-term liabilities (14.8) - - (14.8)Deferred taxation liabilities - (13.0) - (13.0)Retirement benefit obligations (1.8) (0.3) - (2.1)Provisions (3.2) - - (3.2)------------------------------ ------- ------- ------- ------- (19.8) (13.3) - (33.1)Current liabilitiesTrade and other payables (182.6) - 22.3 (160.3)Income tax liabilities (25.2) - - (25.2)------------------------------ ------- ------- ------- ------- (207.8) - 22.3 (185.5)------------------------------ ------- ------- ------- -------Total liabilities (227.6) (13.3) 22.3 (218.6)------------------------------ ------- ------- ------- -------Net assets 454.6 - 23.8 478.4------------------------------ ------- ------- ------- -------EQUITYOrdinary share capital 1.1 - - 1.1Share premium account 136.1 - - 136.1Revaluation reserve 23.4 (23.4) - -Capital reserve 39.4 - (14.5) 24.9Translation reserve - 5.0 - 5.0Retained earnings 254.6 18.4 38.3 311.3------------------------------ ------- ------- ------- -------Total equity 454.6 - 23.8 478.4------------------------------ ------- ------- ------- ------- GROUP INCOME STATEMENTFor the 6 months to 30 September 2004 - unaudited UK GAAP (Restated*) IFRS IFRS (IFRS format) reclassifications remeasurements IFRS £m £m £m £m ----------------------------- ------- ------- ------- -------Turnover 347.5 - - 347.5Cost of sales (144.0) - - (144.0)----------------------------- ------- ------- ------- -------Gross profit 203.5 - - 203.5 Operating expenses (128.0) - 1.3 (126.7)Other operating income 0.8 - - 0.8----------------------------- ------- ------- ------- -------Operating profit 76.3 - 1.3 77.6----------------------------- ------- ------- ------- -------Operating profit beforegoodwill amortisation andexceptional gain 78.8 - (1.2) 77.6- Goodwill amortisation (3.3) - 3.3 -- Exceptional gain relatingto IPO employee share plans 0.8 - (0.8) ------------------------------ ------- ------- ------- -------Interest and similar income 2.2 - 0.8 3.0 Interest expense andsimilar charges (0.2) - (0.2) (0.4)----------------------------- ------- ------- ------- -------Profit before taxation 78.3 - 1.9 80.2Tax on profit (26.0) - 0.9 (25.1)----------------------------- ------- ------- ------- -------Attributable profit for theperiod 52.3 - 2.8 55.1----------------------------- ------- ------- ------- ------- All the profit for the year is attributable to the equityholders of the company ----------------------------- ------- ------- ------- -------Pence per shareEarnings- basic 10.5p 11.1p- diluted 10.3p 10.9p Earnings before exceptionalitems and goodwill- basic 11.1p n/a- diluted 10.8p n/a----------------------------- ------- ------- ------- ------- * Amounts previously reported have been restated to reflect the impact ofadopting FRS 17 "Retirement Benefits". CONSOLIDATED BALANCE SHEETAs at 30 September 2004 - unaudited UK GAAP (Restated*) IFRS IFRS (IFRS format) reclassifications remeasurements IFRS £m £m £m £m ----------------------------- ------- ------- ------- -------ASSETSNon-current assetsIntangible assets 110.5 1.7 3.3 115.5Property, plant and equipment 161.4 (4.5) - 156.9Available-for-sale financial instruments 0.1 - - 0.1Deferred taxation assets 22.3 11.3 (12.9) 20.7Trade and other receivables 1.1 - - 1.1Income tax recoverable 0.8 - - 0.8----------------------------- -------- -------- -------- -------- 296.2 8.5 (9.6) 295.1Current assetsStock 104.4 - - 104.4Trade and other receivables 143.4 - - 143.4Income tax recoverable 0.1 - - 0.1Cash and cash equivalents 143.5 - - 143.5----------------------------- -------- -------- -------- -------- 391.4 - - 391.4 Non-current assetsclassified as held for sale - 2.8 - 2.8----------------------------- -------- -------- -------- -------- 391.4 2.8 - 394.2----------------------------- -------- -------- -------- --------Total assets 687.6 11.3 (9.6) 689.3 LIABILITIESNon-current liabilitiesLong-term liabilities (14.5) - - (14.5)Deferred taxation liabilities - (10.8) - (10.8)Retirement benefit obligations (2.0) (0.5) - (2.5)Provisions (5.0) - - (5.0)----------------------------- -------- -------- -------- -------- (21.5) (11.3) - (32.8)Current liabilitiesTrade and other payables (156.1) - 10.8 (145.3)Income tax liabilities (29.4) - 3.3 (26.1)Bank overdrafts (0.5) - - (0.5)----------------------------- -------- -------- -------- -------- (186.0) - 14.1 (171.9)----------------------------- -------- -------- -------- --------Total liabilities (207.5) (11.3) 14.1 (204.7)----------------------------- -------- -------- -------- --------Net assets 480.1 - 4.5 484.6----------------------------- -------- -------- -------- -------- EQUITYOrdinary share capital 1.1 - - 1.1Share premium account 133.9 - - 133.9Revaluation reserve 23.8 (23.8) - -Capital reserve 41.4 - (15.7) 25.7Translation reserve - 9.6 - 9.6Retained earnings 279.9 14.2 20.2 314.3----------------------------- -------- -------- -------- --------Total equity 480.1 - 4.5 484.6----------------------------- -------- -------- -------- -------- * Amounts previously reported have been restated to reflect the impact ofadopting FRS 17 "Retirement Benefits". CONSOLIDATED BALANCE SHEETAs at 31 March 2004 - unaudited UK GAAP IFRS IFRS (IFRS format) reclassifications remeasurements IFRS £m £m £m £m ----------------------------- ------- ------- ------- -------ASSETSNon-current assetsIntangible assets 111.4 1.8 - 113.2Property, plant andequipment 149.8 (2.5) - 147.3 Available-for-sale financial instruments 0.1 - - 0.1Deferred taxation assets 22.1 11.2 (12.6) 20.7Trade and other receivables 1.5 - - 1.5Income tax recoverable 0.8 - - 0.8----------------------------- ------- ------- ------- ------- 285.7 10.5 (12.6) 283.6 Current assetsStock 89.5 - - 89.5Trade and other receivables 99.0 - - 99.0Income tax recoverable 2.8 - - 2.8Cash and cash equivalents 158.7 - - 158.7----------------------------- ------- ------- ------- ------- 350.0 - - 350.0 Non-current assetsclassified as held for sale - 0.7 - 0.7----------------------------- ------- ------- ------- ------- 350.0 0.7 - 350.7----------------------------- ------- ------- ------- ------- Total assets 635.7 11.2 (12.6) 634.3 LIABILITIESNon-current liabilitiesLong-term liabilities (35.4) - - (35.4)Deferred taxation liabilities - (10.7) - (10.7)Retirement benefit obligations (2.0) (0.5) - (2.5)Provisions (5.1) - - (5.1)----------------------------- ------- ------- ------- ------- (42.5) (11.2) - (53.7)Current liabilitiesTrade and other payables (138.3) - 15.4 (122.9)Income tax liabilities (24.7) - - (24.7)Bank overdrafts (0.8) - - (0.8)----------------------------- ------- ------- ------- ------- (163.8) - 15.4 (148.4)----------------------------- ------- ------- ------- -------Total liabilities (206.3) (11.2) 15.4 (202.1)----------------------------- ------- ------- ------- -------Net assets 429.4 - 2.8 432.2----------------------------- ------- ------- ------- ------- EQUITYOrdinary share capital 1.1 - - 1.1Share premium account 124.7 - - 124.7Revaluation reserve 23.5 (23.5) - -Capital reserve 42.9 (17.8) 25.1Retained earnings 237.2 23.5 20.6 281.3----------------------------- ------- ------- ------- -------Total equity 429.4 - 2.8 432.2----------------------------- ------- ------- ------- ------- The financial information presented in this document has been prepared on thebasis of all International Financial Reporting Standards (IFRS), including theInternational Accounting Standards (IAS), and interpretations issued by theInternational Accounting Standards Board (IASB) and its committees, and asinterpreted by any regulatory bodies applicable to the Group published by 31March 2005. These are subject to ongoing amendments by the IASB and subsequentendorsement by the European Commission and are therefore subject to possiblechange. It is possible, therefore, that changes to this information may berequired before it is published as comparative information in the interimresults for the 6 months to 30 September 2005 and the Annual Report for the yearto 31 March 2006. In preparing this financial information, the Group has assumed that the EuropeanCommission will endorse the amendment to IAS 19 "Employee Benefits - ActuarialGains and Losses, Group Plans and Disclosures". In addition, Burberry hasdecided to adopt early IFRS 5 "Non-current Assets Held for Sale and DiscontinuedOperations". The format of the IFRS primary financial information contained within thisdocument, is prepared in accordance with IAS 1 "Presentation of FinancialStatements". The format of the primary financial information is a particulararea where changes may occur as further interpretative guidance is issued andbest practice develops. FIRST TIME ADOPTION EXEMPTIONS (IFRS 1) IFRS 1 requires the Group to determine its accounting policies for the year to31 March 2006 and to apply these policies to the opening balance sheet (1 April2004) and throughout all periods presented in its first IFRS financialstatements. The Group's full set of IFRS accounting policies have been included as aseparate appendix, see Appendix 3. The general principal that should be applied on first-time adoption of IFRS isthat the standards in force at the first reporting date (that is, for Burberry,31 March 2006) should be applied retrospectively. However, IFRS 1 contains anumber of exemptions which companies are permitted to apply. These exemptionsand the Group's choices have been set out below: a) Business combinations completed before the transition to IFRS IFRS 1 allows the first time adopter of IFRS to elect not to apply IFRS 3"Business Combinations" retrospectively to business combinations which tookplace before the date of transition (1 April 2004). The Group has elected to use this exemption and has not restated any businesscombinations which took place prior to this transition date. b) Fair value or revaluation to be treated as deemed cost Certain items of property, plant and equipment are carried under UK GAAP atamounts based upon valuations. The Group has applied the exemption which permitsa first time adopter to use a previous GAAP revaluation of an item of property,plant and equipment as deemed cost. Consequently, there is no adjustment to theprevious carrying value under UK GAAP. c) Employee benefits Under IFRS 1 an entity may elect to recognise immediately all actuarial gainsand losses on transition even if the corridor approach is adopted for futureactuarial gains and losses. This exemption does not apply to Burberry as theobligation recognised under UK GAAP will not change on transition to IFRS. The Group has previously recognised all cumulative actuarial gains and losses inrelation to employee benefit schemes under UK GAAP in the statement of totalrecognised gains and losses. Under IFRS the Group will continue to recognise allactuarial gains and losses in relation to employee benefit schemes in thestatement of recognised income and expenses. d) Cumulative translation differences IFRS 1 allows an exemption for first-time adopters from calculating thecumulative translation differences on the historical retranslation of the netassets of foreign subsidiaries. The Group has elected to use this exemption and has set the foreign currencytranslation reserve to zero as at the date of transition to IFRS. From the date of transition, IFRS requires amounts taken to reserves arising onthe retranslation of foreign subsidiaries to be recorded in a separate foreigncurrency transaction reserve. e) Share-based payment transactions A first-time adopter of IFRS is not required to apply IFRS 2 "Share-basedPayments" to equity instrument which were granted on or before 7 November 2002.However, certain disclosures are still required to be made regarding theseequity instruments. The Group has elected not to use this exemption, has previously disclosed thefair values of awards in its UK GAAP accounts for the year to 31 March 2005, andaccordingly has applied IFRS 2 for all share based payments. f) Financial instruments The Group has elected to take the option to defer the restatement of thecomparative information for IAS 32 "Financial Instruments: Disclosures andPresentation" and IAS 39 "Financial Instruments, Recognition and Measurements".The financial instruments continue to be accounted for in accordance with UKGAAP for the year to 31 March 2005. For the year to 31 March 2006, the adjustment to record financial instruments inaccordance with IFRS will be accounted for as a change in accounting policy. Itis the Group's intention to apply hedge accounting where the requirements of IAS32 and IAS 39 are met. GROUP INCOME STATEMENTFor the year to 31 March 2005 - unaudited UK GAAP IAS 21 IAS 12 IFRS 3 IFRS 2 (IFRS Foreign Deferred tax Business IAS 10 Share based format) exchange remeasurement combinations Dividends payments Other IFRS £m £m £m £m £m £m £m £m----------------------- -------- ------- ------- ------- ------- ------- ------- -------Turnover 715.5 - - - - - - 715.5Cost of sales (291.3) - - - - - - (291.3)----------------------- -------- ------- ------- ------- ------- ------- ------- -------Gross profit 424.2 - - - - - - 424.2 Operating expenses (266.9) - - 6.8 - (5.1) 0.1 (265.1)Other operating income 2.2 - - - - - - 2.2----------------------- -------- ------- ------- ------- ------- ------- ------- -------Operating profit 159.5 - - 6.8 - (5.1) 0.1 161.3----------------------- -------- ------- ------- ------- ------- ------- ------- -------Operating profit beforegoodwill amortisationand exceptional gain 165.5 - - - - (4.3) 0.1 161.3- Goodwill amortisation (6.8) - - 6.8 - - - -- Exceptional gain relating to IPOemployee share plans 0.8 - - - - (0.8) - ------------------------ -------- ------- ------- ------- ------- ------- ------- -------Interest andsimilar income 5.5 0.7 - - - - - 6.2Interest expense andsimilar charges (0.6) - - - - - - (0.6)----------------------- -------- ------- ------- ------- ------- ------- ------- -------Profit before taxation 164.4 0.7 - 6.8 - (5.1) 0.1 166.9Tax on profit (54.5) (0.2) 1.2 - - - - (53.5)----------------------- -------- ------- ------- ------- ------- ------- ------- -------Attributable profit/(loss) for the year 109.9 0.5 1.2 6.8 - (5.1) 0.1 113.4----------------------- -------- ------- ------- ------- ------- ------- ------- ------- CONSOLIDATED BALANCE SHEETAs at 31 March 2005 - unaudited IAS 38 IAS 12 In- IFRS 5 Deferred IAS 12 IFRS 3 IFRS 2 tangible Assets IFRS 1 tax Deferred Bus- Share UK GAAP asset held Re- IAS 21 asset tax iness IAS 10 based (IFRS reclass- for valuation Foreign reclass- remeasure- combin- Divi- pay- format)ification resale reserve exchange ification ment ations dends ments Other IFRS £m £m £m £m £m £m £m £m £m £m £m £m ------- ------ ----- ------ ------ ------ ----- ----- ---- ----- ----- -----ASSETSNon-currentassetsIntangibleassets 107.9 1.6 - - - - - 6.8 - - - 116.3Property,plant andequipment 166.1 (1.6) (1.2) - - - - - - - - 163.3 Available-for-sale financialinstruments 0.1 - - - - - - - - - - 0.1Deferredtaxationassets 18.4 - - - - 13.3 (5.3) - - - - 26.4Trade andotherreceivables 1.2 - - - - - - - - - - 1.2Income taxrecoverable 0.8 - - - - - - - - - - 0.8 ------- ------ ----- ------ ------ ------ ----- ----- ---- ----- ----- ----- 294.5 - (1.2) - - 13.3 (5.3) 6.8 - - - 308.1 CurrentassetsStock 102.5 - - - - - - - - - - 102.5Trade andotherreceivables 112.2 - - - - - - - - - - 112.2Income taxrecoverable 3.1 - - - - - - - - - - 3.1Cash and cashequivalents 169.9 - - - - - - - - - - 169.9 ------- ------ ----- ------ ------ ------ ----- ----- ---- ----- ----- ----- 387.7 - - - - - - - - - - 387.7Non-currentassetsclassified asheld for sale - - 1.2 - - - - - - - - 1.2 ------- ------ ----- ------ ------ ------ ----- ----- ---- ----- ----- ----- 387.7 - 1.2 - - - - - - - - 388.9 ------- ------ ----- ------ ------ ------ ----- ----- ---- ----- ----- -----Total assets 682.2 - - - - 13.3 (5.3) 6.8 - - - 697.0LIABILITIESNon-currentliabilitiesLong-termliabilities (14.8) - - - - - - - - - - (14.8)Deferredtaxation liabilities - - - - - (13.0) - - - - - (13.0)Retirementbenefitobligations (1.8) - - - - (0.3) - - - - - (2.1)Provisions (3.2) - - - - - - - - - - (3.2) ------- ------ ----- ------ ------ ------ ----- ----- ---- ----- ----- ----- (19.8) - - - - (13.3) - - - - - (33.1)CurrentliabilitiesTrade andother payables (182.6) - - - - - - - 21.7 0.7 (0.1) (160.3) Income taxliabilities (25.2) - - - - - - - - - - (25.2) ------- ------ ----- ------ ------ ------ ----- ----- ---- ----- ----- ----- (207.8) - - - - - - - 21.7 0.7 (0.1) (185.5) ------- ------ ----- ------ ------ ------ ----- ----- ---- ----- ----- -----Totalliabilities (227.6) - - - - (13.3) - - 21.7 0.7 (0.1) (218.6) ------- ------ ----- ------ ------ ------ ----- ----- ---- ----- ----- -----Net assets 454.6 - - - - - (5.3) 6.8 21.7 0.7 (0.1) 478.4 ------- ------ ----- ------ ------ ------ ----- ----- ---- ----- ----- -----EQUITYOrdinary sharecapital 1.1 - - - - - - - - - - 1.1Share premiumaccount 136.1 - - - - - - - - - - 136.1Revaluationreserve 23.4 - - (23.4) - - - - - - - - Capitalreserve 39.4 - - - - - - - - (14.5) - 24.9 Translationreserve - - - - 5.0 - - - - - - 5.0Retainedearnings 254.6 - - 23.4 (5.0) - (5.3) 6.8 21.7 15.2 (0.1) 311.3 ------- ------ ----- ------ ------ ------ ----- ----- ---- ----- ----- -----Total equity 454.6 - - - - - (5.3) 6.8 21.7 0.7 (0.1) 478.4 ------- ------ ----- ------ ------ ------ ----- ----- ---- ----- ----- ----- GROUP INCOME STATEMENTFor the 6 months to 30 September 2004 - unaudited UK GAAP (Restated*) IAS 21 IAS 12 IFRS 3 IFRS 2 (IFRS Foreign Deferred tax Business IAS 10 Share based format) exchange remeasurement combinations Dividends payments Other IFRS £m £m £m £m £m £m £m £m----------------------- -------- ------- ------- ------- ------- ------- ------- -------Turnover 347.5 - - - - - - 347.5Cost of sales (144.0) - - - - - - (144.0)----------------------- -------- ------- ------- ------- ------- ------- ------- -------Gross profit 203.5 - - - - - - 203.5 Operating expenses (128.0) - - 3.3 - (2.1) 0.1 (126.7)Other operating income 0.8 - - - - - - 0.8----------------------- -------- ------- ------- ------- ------- ------- ------- -------Operating profit 76.3 - - 3.3 - (2.1) 0.1 77.6----------------------- -------- ------- ------- ------- ------- ------- ------- -------Operating profit beforegoodwill amortisationand exceptional gain 78.8 - - - - (1.3) 0.1 77.6- Goodwill amortisation (3.3) - - 3.3 - - - -- Exceptional gain relating to IPOemployee share plans 0.8 - - - - (0.8) - ------------------------ -------- ------- ------- ------- ------- ------- ------- -------Interest and similar income 2.2 0.8 - - - - - 3.0Interest expense andsimilar charges (0.2) (0.2) - - - - - (0.4)----------------------- -------- ------- ------- ------- ------- ------- ------- -------Profit before taxation 78.3 0.6 - 3.3 - (2.1) 0.1 80.2Tax on profit (26.0) (0.3) 1.2 - - - - (25.1)----------------------- -------- ------- ------- ------- ------- ------- ------- -------Attributable profit/(loss) for the period 52.3 0.3 1.2 3.3 - (2.1) 0.1 55.1----------------------- -------- ------- ------- ------- ------- ------- ------- ------- * Amounts previously reported have been restated to reflect the impact ofadopting FRS 17 "Retirement Benefits". CONSOLIDATED BALANCE SHEETAs at 30 September 2004 - unaudited IAS 38 IAS 12 In- IFRS 5 Deferred IAS 12 IFRS 3 IFRS 2 UK GAAP tangible Assets IFRS 1 tax Deferred Bus- Share (Restated) asset held Re- IAS 21 asset tax iness IAS 10 basedRelated Shares:
Burberry