Final Results

Burberry Group PLC 24 May 2004 PART 1 Burberry Group plc 2003/04 Preliminary Results 24 May 2004. Burberry Group plc reports preliminary results for its financial year ended 31 March 2004. Financial Highlights • Total revenues increased by 15% on an underlying* basis, 14% reported - Retail sales up 15% underlying, 13% reported - Wholesale sales increased 14% underlying, 14% reported - Licensing revenue up 18% underlying, 15% reported • Gross profit margin increased from 56.0% to 57.9% • EBITA** margin expanded from 19.7% to 20.9% • EBITA increased by 21% to £141.2 million • 28% increase in diluted EPS (before goodwill amortisation, exceptional gain and IPO related charges) to 19.1p • Strong cash generation reflects profitability and working capital efficiencies • 50% increase in final dividend to 3.0p per ordinary share (4.5p for full year) *Underlying figures are calculated at constant exchange rates and exclude the impact of the July 2002 acquisition of the operations of Burberry's distributor in Korea (the 'Korea acquisition'). **EBITA represents operating profit before interest, taxation, exceptional items and goodwill amortisation. Strategic Highlights • Elevated design content and cohesion across product ranges • Launched iconic Burberry Brit fragrance to strong consumer response • Opened 9 new directly operated stores with important additions in all regions • Strengthened wholesale distribution across markets • Extended reach in emerging markets with franchise store and concession openings in China, Russia and the Middle East • Enhanced brand management activities in Japan Summary of Results Year ended Year ended 31 March 2003 31 March 2004 _____________ _____________________________________ Before IPO related IPO related As As reported charges charges (1) reported £m £m £m £m _____________ _____________________________________ Turnover 675.8 593.6 - 593.6 Operating profit before goodwill amortisation 141.2 116.7 - 116.7 and exceptional gain (EBITA) Exceptional gain 2.2 (2) - - - IPO related charges - - (22.0) (22.0) Operating profit 136.6 110.3 (22.0) 88.3 Profit after tax 91.5 69.5 (17.3) 52.2 Diluted EPS before goodwill amortisation, 19.1p 14.9p (3.4p) 11.5p exceptional gain and IPO related charges Diluted EPS 18.1p 13.7p (3.4p) 10.3p ____________________________________________________________________________________________________________ (1) The charge of £22.0m for IPO related items consists of the exceptional charge in connection with the grant of awards under the Restricted Share Plan and associated national insurance liability, together with the cost of gift of shares to employees under the All Employee Share Plan and other IPO costs. (2) The £2.2 million exceptional gain relates to lapsed awards and the reversal of associated charges with respect to the Restricted Share Plan. John Peace, Chairman of Burberry, commenting on the preliminary results: '2003/ 04 marks another successful year for Burberry. The strength of the business in the context of this year's challenging trading environment highlights the vibrancy of the Burberry brand and the dedication and talents of its management team.' Rose Marie Bravo, Chief Executive, stated: 'This has been a terrific year for Burberry. The Group achieved 28% EPS growth on a 14% revenue gain backed by double digit growth in each of our businesses. With a favourable response to date to our autumn/winter 2004 merchandise, we look ahead to the current financial year with confidence. My thanks go to the management team which continues to deliver on our goals both strategically and financially.' Management will discuss these results during a presentation to analysts and institutional investors at 1:30pm today in London at the Merrill Lynch Financial Centre, The Auditorium. The presentation will also be broadcast live on the Internet at www.burberryplc.com and can be accessed by telephone at 0845 245 3471 (UK) and 706 634 5500 (US). The webcast and telephone call will be available for replay. Telephone replay: +44 (0) 1452 55 00 00, Replay Access Number 1417840#. Enquiries: Burberry 020 7968 0577 Stacey Cartwright CFO Matt McEvoy Strategy and IR John Scaramuzza Strategy and IR Brunswick 020 7404 5959 Susan Gilchrist Sophie Fitton 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. Chief Executive's Review Burberry's performance for the year to March 2004 was excellent. The business delivered strong results and continued strategic progress notwithstanding the many challenges stemming from geopolitical conflict, health risks and macroeconomic factors. Diluted EPS (before goodwill amortisation, exceptional gain and IPO related charges) increased 28% on a 14% revenue gain while management successfully strengthened the product line, refined and expanded distribution and continued to develop targeted regions. This performance reflects the sustained efforts of the talented management team and the balance of Burberry's business across products, channels and regions. Strategic Progress Key strategic highlights include: Products. Burberry's product design, development and merchandising teams produced exciting achievements during the year. • The brand's transformation from a traditional rainwear manufacturer to a style and luxury leader continued at pace. Under the direction of Creative Director Christopher Bailey, the Group achieved greater cohesion across the women's, men's and accessory product lines and further developed Burberry's distinctive design vocabulary including colour, pattern and thematic detail. The successful linking of the brand's history to the present is well demonstrated by the selection of Burberry Prorsum's Autumn/Winter 2004 women's collection as one of the 10 best of the season by Women's Wear Daily, a leading fashion industry publication. • Womenswear led category development for the year. Its strong performance was driven by the continued creation of an outstanding fashion offering in combination with a range of modern classic lifestyle products, including outerwear, designed for a multi-generational customer base. Burberry's pink trench coat, introduced last autumn in support of breast cancer research, received particularly wide recognition and preceded the prominence of the colour pink and the trench coat revival throughout the industry during the following spring. This product successfully raised awareness for an important social cause, raised funds to support critical research and highlights both Burberry's heritage and design innovation. • The planned diversification of Burberry's accessories offering from classically to contemporary styled products progressed with important successes in the year. In handbags, Burberry introduced the contemporary-styled leather Shackle collection to favourable consumer response. Candy check, a pink adaptation of Burberry's iconic pattern, was successfully offered across a range of handbags and other accessories. Channels. The Group continued to execute its core retail, wholesale and licensing strategies. • Investment in retail growth continued on plan. The Group opened nine new stores in the year, including Burberry stores in the US (3), Europe (1) and Asia (4), as well as one outlet store, and four concessions, resulting in a 12% selling space increase. The Milan store opening was a retail highlight of the year. Located in the centre of this fashion capital, the store, Burberry's first in Italy, presents the complete revitalised Burberry brand to the global fashion community and this important local market. The store has had a positive impact on the wholesale business in Italy. • In wholesale, Burberry continued to concentrate on key accounts, add doors selectively in developed markets and utilise the channel as a primary means to address emerging markets. Among key accounts in developed markets, Burberry continued to improve in-store positioning, add floor space and enhance merchandising. In European markets, Burberry capitalised on the brand's increased visibility by selectively adding high-profile fashion retailers to its account base. And in emerging markets, the Group worked with its wholesale partners to build local brand recognition and sales. In China, for example, where sales grew substantially in the year, Burberry worked with local partners to open six additional points of sale (for a current total of 28 stores and concessions) during the year. Through a local partner, the Group opened the first Burberry store in Russia (Moscow) in February 2004. • In licensing, Burberry Brit for women was the year's highlight. Among the most successful fragrance introductions of the year, Burberry Brit was launched worldwide following its autumn 2003 introduction in the US and UK. Burberry Brit's extensive media campaign, global distribution and success among a broad range of consumers accrued important perception and awareness benefits to the Burberry brand broadly. Regions. Burberry continued to increase the brand's penetration across targeted regions, extending its global reach. On a constant currency basis, the Group achieved solid growth across the US (26%), Europe (10%) and Asia Pacific (17%). • In the US, the Group added stores in Houston, Las Vegas and Tyson's Corner (Virginia) and continued to work with leading wholesale customers to build Burberry's presence in this substantial and under penetrated market. Important renovations, including the Manhasset store expansion, were also completed during the year. The US achieved strong sales gains throughout the year. • Europe's performance varied by market. The UK remained soft throughout the year with improving trends late in the period. Benefiting from the ongoing initiatives to upgrade distribution in Continental Europe, the Group generally achieved strong gains across the region. Continuing to build the brand's presence in Italy, Burberry finalised plans to open a store in Rome in autumn 2004. In Spain, sales growth resumed, reflecting the successful repositioning efforts in that market. • Burberry opened stores in Hong Kong, Kuala Lumpur, Melbourne and Singapore, underscoring the brand's opportunities in Asia outside of Japan. In addition to the impact of these new stores, regional growth was boosted by a rapid rebound in the Hong Kong market following the external shocks early in the year (a rebound in part fuelled by visitors from China) as well as strong demand within China. Korea was adversely affected by a difficult economic and consumer credit environment throughout the year. • In Japan, Burberry continued its long-term brand enhancement activities. During the year, the Group assumed the role of directly managing and monitoring the non-apparel licensees in this market. Over the past 18 months, several licenses have either expired or been cancelled and the Group is selectively working with existing licensees to upgrade products and distribution. In April 2004, the Group's partners in Japan opened a Burberry store featuring the brand's Prorsum and international London collections in Tokyo's fashionable Omotesando district. This new store, and the extensive media campaign which accompanied the opening, is an important component of Burberry's brand management activities in this market. Continuing to Build the Management Team The continued development of the depth and breadth of Burberry's international management team is an important Group objective. This year Burberry welcomed two new members to the senior team. Stacey Cartwright, joined in March as CFO and Brian Blake joins Burberry as President and COO in June. Mike Metcalf, the Group's former COO & CFO, and Tom O'Neill, outgoing President Worldwide, chose to pursue new career opportunities. We thank Mike and Tom for their contributions to the Group and wish them well in their new leadership roles. Financial Highlights Burberry achieved strong financial performance during the year. Turnover increased by 14%, 15% underlying, to £675.8 million. The EBITA* margin expanded from 19.7% to 20.9%, driven by strong gross margin gains. Over the past three years, Burberry's EBITA margin has increased from 18.1% to 20.9%. For the 2003/ 04 financial year, EBITA increased by 21% to £141.2 million and diluted EPS (before goodwill amortisation, exceptional gain and IPO related charges) grew 28% to 19.1p. Looking Ahead to 2004/05 In line with the ongoing execution of its core growth strategies, Burberry's plans for the 2004/05 financial year include: • An approximate 8% increase in net retail selling area through the addition of seven stores and concessions and expansion/renovation of existing stores • High single digit wholesale sales growth driven primarily by increased sales to existing customers. Orders received to date indicate a high single digit percentage increase in sales for the Autumn/Winter 2004 season. While solid sales growth continues in most major markets, the Group's expectations for the Spanish market are cautious. • More moderate licensing revenue growth relative to 2003/04 - Revenues from Japan will benefit from an increase in certain royalty rates and a reduction in management fees payable; volumes are expected to be broadly static, affected by Burberry's actions to upgrade brand positioning in this market - Global licensees are expected to continue to produce strong gains, although at a more moderate rate; Burberry Brit for men will launch later in the year • Operating margin broadly consistent with the 2003/04 financial year • Capital expenditures are expected to total £40 to £50 million *EBITA represents operating profit before interest, taxation, exceptional items and goodwill amortisation. Financial Review Group Results Year to 31 March 2003 __________________________________________________________ Results before Year to Percentage IPO Percentage IPO 31 March of related of related 2004 turnover items turnover items (1) Total £m % £m % £m £m ________________________________________________________________________________________________________________________ Turnover Wholesale 351.4 52.0% 306.9 51.7% - 306.9 Retail 257.4 38.1% 228.4 38.5% - 228.4 Licence 67.0 9.9% 58.3 9.8% - 58.3 ________________________________________________________________________________________________________________________ Total turnover 675.8 100.0% 593.6 100.0% - 593.6 Cost of sales (284.2) 42.1% (261.3) (44.0)% - (261.3) ________________________________________________________________________________________________________________________ Gross profit 391.6 57.9% 332.3 56.0% - 332.3 Net operating (250.4) (37.0%) (215.6) (36.3%) - (215.6) expenses before goodwill amortisation ________________________________________________________________________________________________________________________ EBITA 141.2 20.9% 116.7 19.7% - 116.7 Goodwill (6.8) (1.0%) (6.4) (1.1%) - (6.4) amortisation Employee share - - - - (22.0) (22.0) ownership plans at IPO Exceptional 2.2 0.3% - - - - gain (2) ________________________________________________________________________________________________________________________ Profit 136.6 20.2% 110.3 18.6% (22.0) 88.3 before interest and tax Net interest 2.2 0.3% (0.9) (0.2%) - (0.9) income/(expense) Currency loss on - - - - (2.3) (2.3) GUS loans (pre-flotation) ________________________________________________________________________________________________________________________ Profit on 138.8 20.5% 109.4 18.4% (24.3) 85.1 ordinary activities before taxation Tax on profit on (47.3) - (39.9) - 7.0 (32.9) ordinary activities ________________________________________________________________________________________________________________________ Profit on 91.5 13.5% 69.5 11.7% (17.3) 52.2 ordinary activities after taxation ________________________________________________________________________________________________________________________ Diluted EPS 19.1p 14.9p (3.4)p 11.5p before goodwill amortisation, exceptional gain and IPO related charges Diluted EPS 18.1p 13.7p (3.4)p 10.3p ________________________________________________________________________________________________________________________ Diluted 505.9 506.2 506.2 506.2 weighted average number of Ordinary Shares (millions) ________________________________________________________________________________________________________________________ (1) IPO related items in the year ended 31 March 2003 included 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. (2) The £2.2 million pre-tax exceptional gain in the year ended 31 March 2004 relates to lapsed awards and the reversal of associated charges with respect to the Restricted Share Plan. 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 Group's directly operated store network. At 31 March 2004, the Company operated 145 retail locations consisting of 54 Burberry stores, 67 concessions and 24 outlet stores. Licence revenue consists of royalties receivable from Japanese and product licensing partners. Comparison of the year ended 31 March 2004 to the year ended 31 March 2003 Burberry Group has completed two transactions that affect the comparability of results for the year ended 31 March 2004 relative to the year ended 31 March 2003. On 1 July 2002, the Group purchased the operations and certain assets of its distributor in Korea, which largely operated as a retail business consisting primarily of 46 concessions at acquisition date (the 'Korea acquisition'). 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'). In determining 'underlying' performance, financial results are adjusted to exclude the impact of the Korea acquisition, and to reflect prior financial year exchange rates. Turnover Total turnover advanced to £675.8 million from £593.6 million in the comparative period, an increase of 14%, or 15% on an underlying basis (i.e. excluding an £11.3 million reduction attributable to exchange rate movements and excluding the incremental contribution from the Korea acquisition). At constant exchange rates, turnover increased by 16%. Total retail sales increased by 13% in the year to £257.4 million. On an underlying basis, retail sales increased by 15%, driven by sales from newly opened stores with a modest contribution from existing stores. Sales gains at existing stores accelerated in most markets late in the year. The US market achieved strong gains throughout the year. In Asia, the Hong Kong market quickly rebounded from the external shocks early in the financial year, while Southeast Asia, boosted by new stores, achieved significant gains in the second half. Korea was adversely affected by a volatile macro environment throughout the year. A slow first half in Continental Europe was more than offset by vigorous growth in the second half of the year. The soft UK market saw improving trends late in the year. During the year, the Group opened nine new stores, including Burberry stores in the US (3), Europe (1) and Asia (4), as well as one outlet store and four concessions. Burberry also completed several store renovations and expansions in the year. Total retail selling space expanded 12% to approximately 410,000 square feet at year end. Total wholesale sales advanced 14% (14% underlying) to £351.4 million during the year. The Group achieved double-digit sales gains for both the autumn/winter and spring/summer seasons, driven by solid gains across the US, Europe and Asia. Burberry achieved particularly strong increases in the US, Continental Europe and emerging markets, including China. Sales growth resumed in Spain, reflecting the successful repositioning efforts in that market Licensing revenues in the year increased by 15%, 18% underlying, to £67.0 million. The majority of the increase was driven by royalty gains in Japan which reflected increases in certain royalty rates and a reduction in management fees payable with respect to specific licenses. Volumes in Japan were limited to modest gains, partially as a result of Burberry's brand enhancement activities in this market. The licensing revenue increase also reflected outstanding sales gains at global product licenses, particularly fragrance, which benefited from the highly successful Burberry Brit launch. Operating Profit Gross profit as a percentage of turnover expanded to 57.9% in the year from 56.0% in the comparative period. This increase was driven primarily by improved stock management, complemented by pricing and sourcing gains. Operating expenses as a percentage of turnover rose to 37.0% from 36.3% in the comparative period. This increase primarily reflects continued investment in people and infrastructure in connection with future growth of the business. As a result of these factors, EBITA increased by 21% to £141.2 million, or 20.9% of turnover relative to 19.7% in the earlier period. Exchange rate movements reduced reported EBITA by £3.8 million. Goodwill amortisation increased to £6.8 million from £6.4 million in the comparative period as a result of a full year of amortisation expense associated with the Korean acquisition, partially offset by exchange rate movements. In 2003/04, the Group experienced a £2.2 million exceptional gain relating to lapsed awards and the reversal of associated charges with respect to the employee share ownership plans. Profit before interest and tax and IPO related items increased 23.8% to £136.6 million, or 20.2% of turnover from 18.6% in the comparative period. Net interest income/expense Net interest income was £2.2 million in the year to March 2004 compared to net expense of £0.9 million (excluding IPO related charges) in the prior period. The improvement reflects strong cash generation in the current period. Prior year IPO related charges In connection with the initial public offering, the Group incurred a £22.0 million exceptional charge in the year to March 2003 largely relating to its employee share ownership plans. During the year to March 2003, the Group also incurred a £2.3m foreign exchange loss on borrowings held on behalf of the GUS group; these borrowings were eliminated as part of the reorganisation prior to the flotation. Profit before taxation As a result of the above factors, Burberry reported profit before taxation of £138.8 million in the year to March 2004 compared to £109.4 million (excluding IPO related charges) in the prior period. Profit after taxation The Group reported a 32.6% tax rate (2002/03: 34.7%) on profit before goodwill amortisation for the full financial year resulting in a £47.3 million tax charge. The rate continues to be above the UK statutory tax rate primarily as a result of the Group's operations in higher tax rate jurisdictions. Profit after tax (before IPO related charges in the prior year) for the period increased 32% to £91.5 million. Diluted earnings per share before goodwill amortisation, exceptional gain and IPO related charges increased 28% to 19.1p in the year compared to 14.9p (excluding IPO related charges) in the prior period. In the year to March 2004, the Group had 495.6 million (2002/03: 498.1 million) Ordinary Shares in issue on average for the purposes of calculating basic earnings per share and 505.9 million (2002/03: 506.2 million) Ordinary Shares in issue on average for the purposes of calculating diluted earnings per share. An average of 4.6 million Ordinary Shares held by the Group's Employee Share Ownership Trusts are excluded for the purposes of the basic and diluted earnings per share calculations. Liquidity and Capital Resources Summary Group Balance Sheet As at 31 March 2004 As at 31 March 2003 £m £m ___________________________________________________________________________________________________________ Fixed assets Intangible assets 111.4 123.7 Tangible fixed assets 149.8 161.4 Investments 8.8 3.4 ___________________________________________________________________________________________________________ 270.0 288.5 Current assets Stock 89.5 83.8 Debtors 120.8 122.0 Cash and short term deposits 158.7 86.6 ___________________________________________________________________________________________________________ 369.0 292.4 Creditors - amounts falling due within one year (161.2) (151.1) ___________________________________________________________________________________________________________ Net current assets 207.8 141.3 ___________________________________________________________________________________________________________ Total assets less current liabilities 477.8 429.8 Creditors - amounts falling due after more than one year (35.4) (35.2) Provisions for liabilities and charges (5.3) (4.6) ___________________________________________________________________________________________________________ Net assets 437.1 390.0 ___________________________________________________________________________________________________________ Total Shareholders' Funds 437.1 390.0 ___________________________________________________________________________________________________________ Cash Flow and Net Funds Year to 31 March 2004 Year to 31 March 2003 £m £m ___________________________________________________________________________________________________________ Operating profit before interest, taxation, goodwill 141.2 116.7 amortisation and exceptional/IPO-related items Depreciation and related charges 28.5 19.0 Loss on disposal of fixed assets and similar items 1.7 1.5 (Increase)/decrease in stocks (7.5) 5.2 Increase in debtors (1.5) (2.4) Increase in creditors 23.2 25.0 ___________________________________________________________________________________________________________ Net cash inflow from operating activities 185.6 165.0 ___________________________________________________________________________________________________________ Returns on investments and servicing of finance 2.2 (0.5) Taxation paid (49.5) (30.6) Net purchase of fixed assets (28.8) (55.5) Acquisition related payments (2.5) (26.8) Net purchase of own shares (6.6) (4.5) ___________________________________________________________________________________________________________ Net cash inflow before dividends, IPO related and financing 100.4 47.1 activities ___________________________________________________________________________________________________________ Net funds at end of year 157.9 79.6 ___________________________________________________________________________________________________________ Burberry's principal uses of funds have been to support capital expenditures, acquisitions, and working capital growth in connection with the expansion of its business. Since its IPO in July 2002, the Group expects to finance operations, capital expenditures and acquisitions with cash generated from operating activities and, as necessary, the use of its credit facility. Net cash inflow from operating activities increased to £185.6 million in the year ended 31 March 2004 from £165.0 million in the comparative period. The increase in depreciation and related charges primarily reflects the larger fixed asset base associated with expansion of the business. The 21% increase in operating profit before interest, taxation, goodwill amortisation and exceptional/IPO related items was augmented by working capital efficiencies. Stock levels increased moderately relative to turnover in 2003/04. The small modest decrease in trade debtors reflects improved credit management. The increase in creditors was in line with the increase in turnover. Net fixed asset purchases of £28.8 million primarily reflects continued investment in the Group's retail and wholesale operations. The decrease compared to 2002/03 largely reflects differences in the actual timing of cash outlays and types of retail investments between the two periods. Capital expenditures are expected to total £40-50 million in the 2004/05 financial year. Net cash outflow for acquisition purposes in the period was £2.5 million in 2003 /04, relating to deferred payments with respect to previous transactions. In 2002/03, this amount largely related to the Korea acquisition. During 2003/04 the Company invested £6.6 million net in its own shares as a contribution to funding the Group's employee share ownership trusts. The Company paid an interim dividend of 1.5p per share on 4 February 2004. A final dividend of 3.0p per share is proposed and would be payable in August 2004. As a result, the total dividend for 2003/04 would increase by 50% to 4.5p per share (£22.3 million aggregate amount). 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 2005, Burberry expects that the average Yen/Sterling exchange rate applicable to its licence revenue for that financial year will be broadly consistent with that of 2003/04. Burberry maintains a £75 million credit facility which matures in July 2006. International Financial Reporting Standards It will become mandatory for the consolidated financial statements of all EU listed companies to be reported under International Financial Reporting Standards (IFRS) for periods commencing after 1 January 2005. The areas of greatest impact for the Group have been identified and work is underway to ensure the required compliance with IFRS for the year ending 31 March 2006. An impact assessment has identified that changes in accounting treatment for property, pensions, share-based payments, deferred tax, financial instruments and segmental disclosure may have the greatest impact for the Group. Group profit and loss account Year to 31 Year to 31 March 2004 March 2003 Note £m £m _______________________________________________________________________________________________________________ Turnover 3 675.8 593.6 Cost of sales (284.2) (261.3) _______________________________________________________________________________________________________________ Gross profit 391.6 332.3 Net operating expenses (255.0) (244.0) _______________________________________________________________________________________________________________ Operating profit 4 136.6 88.3 _______________________________________________________________________________________________________________ Operating profit before goodwill amortisation and exceptional items 141.2 116.7 - goodwill amortisation 5 (6.8) (6.4) - exceptional credit/(charge) relating to IPO employee share plans 6 2.2 (22.0) _______________________________________________________________________________________________________________ Interest and similar income 8 2.3 1.8 _______________________________________________________________________________________________________________ Interest expense 9 (0.1) (2.7) Foreign currency loss on loans with GUS group (pre-flotation) 9 - (2.3) _______________________________________________________________________________________________________________ Interest expense and similar charges (0.1) (5.0) _______________________________________________________________________________________________________________ Profit on ordinary activities before taxation 3, 5 138.8 85.1 Tax on profit on ordinary activities* 10 (47.3) (32.9) _______________________________________________________________________________________________________________ Profit on ordinary activities after taxation 91.5 52.2 Equity dividend - to GUS group (pre-flotation) 12 - (219.0) - interim paid 12 (7.4) (5.0) - final proposed 12 (14.9) (10.0) _______________________________________________________________________________________________________________ Retained profit/(loss) for the year 24 69.2 (181.8) _______________________________________________________________________________________________________________ Pence per share Earnings - basic 13 18.5p 10.5p - diluted 13 18.1p 10.3p Earnings before goodwill amortisation and exceptional items - basic 13 19.5p 14.9p - diluted 13 19.1p 14.6p Dividends - dividends per share - interim 12 1.5p 1.0p - dividends per share - final 12 3.0p 2.0p _______________________________________________________________________________________________________________ All the Group's operations in both years are continuing. *Tax on profit on ordinary activities includes tax charged on goodwill amortisation and exceptional items of £0.5m in the year to 31 March 2004 (2003: credit £6.5m). Statement of total recognised gains and losses Year to 31 Year to 31 March 2004 March 2003 Note £m £m _______________________________________________________________________________________________________________ Retained profit/(loss) for the year 24 69.2 (181.8) _______________________________________________________________________________________________________________ Currency translation differences (22.4) 1.1 Tax impact of currency translation differences (1.4) (0.4) _______________________________________________________________________________________________________________ Net impact of currency translation differences 24 (23.8) 0.7 _______________________________________________________________________________________________________________ Total recognised gains and losses for the year 45.4 (181.1) _______________________________________________________________________________________________________________ Note of historical cost profits and losses Year to 31 Year to 31 March 2004 March 2003 £m £m _______________________________________________________________________________________________________________ Reported profit on ordinary activities before taxation 138.8 85.1 Difference between actual and historical cost depreciation charge 0.6 0.2 _______________________________________________________________________________________________________________ Historical cost profit on ordinary activities before taxation 139.4 85.3 Tax on profit on ordinary activities (47.3) (32.9) Dividend - to GUS group (pre-flotation) - (219.0) - interim paid (7.4) (5.0) - final proposed (14.9) (10.0) _______________________________________________________________________________________________________________ Historical cost retained profit/(loss) for the year after taxation and dividends 69.8 (181.6) _______________________________________________________________________________________________________________ Reconciliation of movement in Group Shareholders' Funds Year to 31 Year to 31 March 2004 March 2003 £m £m _______________________________________________________________________________________________________________ Profit on ordinary activities after taxation 91.5 52.2 Dividend - to GUS group (pre-flotation) - (219.0) - interim paid (7.4) (5.0) - final proposed (14.9) (10.0) _______________________________________________________________________________________________________________ Retained profit/(loss) for the year 69.2 (181.8) Net impact of currency translation differences (23.8) 0.7 Pre-flotation Issue of preference share capital - 0.8 Issue of Ordinary Share capital - 486.7 Deemed distribution arising on reorganisation - (704.1) Capital reserve arising on reorganisation - 6.6 On and post-flotation Issue of Ordinary Share capital 2.5 250.5 Waiver of GUS group balances - 37.6 Movement in capital reserve arising on Restricted Share Plan (0.8) 18.5 _______________________________________________________________________________________________________________ Net change in Shareholders' Funds 47.1 (84.5) Opening Shareholders' Funds (2003: GUS investment in Burberry Group) 390.0 474.5 _______________________________________________________________________________________________________________ Closing Shareholders' Funds 437.1 390.0 _______________________________________________________________________________________________________________ Balance sheets Group Company _____________________ _____________________ As at 31 As at 31 As at 31 As at 31 _____________________ ______________________ March 2004 March 2003 March 2004 March 2003 Note £m £m £m £m ______________________________________________________________________________________ _______________________ Fixed assets Intangible assets 14 111.4 123.7 - - Tangible fixed assets 15 149.8 161.4 - - Investments 16 8.8 3.4 1,056.0 971.3 ______________________________________________________________________________________ _______________________ 270.0 288.5 1,056.0 971.3 Current assets Stock 17 89.5 83.8 - - Debtors 18 120.8 122.0 668.0 169.2 Cash and short term deposits 19 158.7 86.6 0.1 - ______________________________________________________________________________________ _______________________ 369.0 292.4 668.1 169.2 Creditors - amounts falling due within one year 20 (161.2) (151.1) (56.3) (62.8) ______________________________________________________________________________________ _______________________ Net current assets 207.8 141.3 611.8 106.4 ______________________________________________________________________________________ _______________________ Total assets less current liabilities 477.8 429.8 1,667.8 1,077.7 Creditors - amounts falling due after more than one year 21 (35.4) (35.2) (713.4) (98.6) Provisions for liabilities and charges 22 (5.3) (4.6) - - ______________________________________________________________________________________ _______________________ Net assets 437.1 390.0 954.4 979.1 ______________________________________________________________________________________ _______________________ Capital and reserves Called up share capital 23 1.1 1.1 1.1 1.1 Share premium account 24 124.7 122.2 124.7 122.2 Revaluation reserve 24 23.5 25.2 - - Capital reserve 24 42.9 47.1 - - Other reserve 24 - 704.1 - 704.1 Profit and loss account 24 244.9 (509.7) 828.6 151.7 ______________________________________________________________________________________ _______________________ Equity Shareholders' Funds 436.3 389.2 953.6 978.3 Non-Equity Shareholders' Funds 23 0.8 0.8 0.8 0.8 ______________________________________________________________________________________ _______________________ Total Shareholders' Funds 437.1 390.0 954.4 979.1 ______________________________________________________________________________________ _______________________ Approved by the Board on 23 May 2004 and signed on its behalf by: John Peace Stacey Cartwright Chairman Chief Financial Officer Group cash flow statement Year to 31 Year to 31 March 2004 March 2003 Note £m £m ________________________________________________________________________________________________________________ Operating activities Operating profit after goodwill amortisation and exceptional items 136.6 88.3 Exceptional (credit)/charge (2.2) 22.0 Goodwill amortisation 6.8 6.4 ________________________________________________________________________________________________________________ Operating profit before goodwill amortisation and exceptional items 141.2 116.7 Depreciation, impairment and trademark amortisation charges 28.5 19.0 Loss on disposal of fixed assets and non-cash charges 1.7 1.5 (Increase)/decrease in stocks (7.5) 5.2 Increase in debtors (1.5) (2.4) Increase in creditors 23.2 25.0 ________________________________________________________________________________________________________________ Net cash inflow from operating activities 185.6 165.0 ________________________________________________________________________________________________________________ Returns on investments and servicing of finance Interest received 2.3 0.8 Interest paid (0.1) (1.4) Dividend received from investment - 0.1 ________________________________________________________________________________________________________________ Net cash inflow/(outflow) from returns on investments and servicing of finance 2.2 (0.5) ________________________________________________________________________________________________________________ Taxation paid (49.5) (30.6) ________________________________________________________________________________________________________________ Capital expenditure and financial investment Purchase of tangible and intangible fixed assets (28.8) (55.7) Sale of tangible fixed assets - 0.2 Purchase of own shares (7.0) (4.5) Sale of own shares by ESOP 0.4 - ________________________________________________________________________________________________________________ Net cash outflow from capital expenditure and financial investment (35.4) (60.0) ________________________________________________________________________________________________________________ Acquisitions Deferred consideration for purchase of businesses (2.5) (2.5) Purchase of businesses in year - (24.3) ________________________________________________________________________________________________________________ Net cash outflow from acquisitions (2.5) (26.8) ________________________________________________________________________________________________________________ Net cash inflow before dividends, IPO related and financing activities 100.4 47.1 Dividends Equity dividends paid (including in the year ended 31 March 2003 £219m to GUS group pre-flotation) (17.3) (224.0) Deemed distribution arising on reorganisation (net of capital reserve) - (697.5) ________________________________________________________________________________________________________________ Net cash inflow/(outflow) before management of liquid resources and financing 83.1 (874.4) ________________________________________________________________________________________________________________ Management of liquid resources Increase in short term deposits with banks 26 (53.4) (47.3) ________________________________________________________________________________________________________________ Financing Issue of Ordinary Share capital 0.9 249.5 Issue of Ordinary Shares to GUS group (pre-flotation) - 486.7 Issue of preference shares to GUS group (pre-flotation) - 0.8 Decrease in external borrowings 26 - (7.9) ________________________________________________________________________________________________________________ Funds received on GUS group balances (pre-flotation) - 446.1 Settlement of GUS group balances (on flotation) - (250.5) Funds on deposit with GUS group companies (post-flotation) (15.8) - ________________________________________________________________________________________________________________ (Increase)/decrease in net balances due from GUS group 26 (15.8) 195.6 ________________________________________________________________________________________________________________ Net cash (outflow)/inflow from financing (14.9) 924.7 ________________________________________________________________________________________________________________ Increase in cash during the year 25, 26 14.8 3.0 ________________________________________________________________________________________________________________ This information is provided by RNS The company news service from the London Stock Exchange MORE TO FOLLOW FR USVRRSARVURR

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