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 MORE TO FOLLOW This information is provided by RNS The company news service from the London Stock Exchange
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