Burberry Group Annual Report 2010

FY2010 Annual Report · Burberry Group
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Burberry
AN ICONIC BRITISH LUXURY
BRAND ESTABLISHED IN 1856
LEVERAGES ITS RICH HERITAGE,
PROVEN STRATEGIES AND
TALENTED TEAM, TO ASSURE
SUSTAINABLE, PROFITABLE
GROWTH ON A GLOBAL SCALE.

CONTENTS

Financial highlights
Chairman’s letter
Chief Executive Ofﬁcer’s letter
Executive team
Strategy
Burberry Group overview
Business and ﬁnancial review
Risks
Corporate responsibility
Board of Directors
Directors’ Report
Corporate governance
Directors’ Remuneration Report
Statement of directors’ responsibilities
Independent auditors’ report to the members of Burberry Group plc
Group income statement
Group statement of comprehensive income
Group balance sheet
Group statement of changes in equity
Group statement of cash ﬂows
Notes to the ﬁnancial statements

4
8
10
12
15
31
38
48
52
60
62
65
70
80
81
82
83
84
85
86
87
125 Five year summary
127
128 Company balance sheet
129 Notes to the Company ﬁnancial statements
134 Shareholder information
136 Executive team

Independent auditors’ report to the members of Burberry Group plc

1

FINANCIAL HIGHLIGHTS

Delivering RECORD PROFITS

Total revenue 
(Year to March)

£1,280m

3
4
7

0
5
8

5
9
9

2
0
2
,
1

0
8
2
,
1

Revenue by channel
in 2009/10

06

07

08

09

10

Retail

Wholesale

Licensing

58%

34%

8%

Retail revenue 
(Year to March)

£749m

9
1
3

0
1
4

4
8
4

0
3
6

9
4
7

Wholesale revenue 
(Year to March)

£434m

3
4
3

4
5
3

6
2
4

9
8
4

4
3
4

06

07

08

09

10

06

07

08

09

10

4

Adjusted operating proﬁt 
(Year to March)

£220m

6
.
5
6
1

1
.
5
8
1

2
.
6
0
2

8
.
0
8
1

9
.
9
1
2

Net cash/(debt)
(As of 31 March)

£262m

5
.
2
1

)

8
.
2

(

6
.
7

)

2
.
4
6

(

0
.
2
6
2

Adjusted operating proﬁt is stated before exceptional items

06

07

08

09

10

06

07

08

09

10

Adjusted diluted earnings 
per share
(Year to March)

35.1p

1
.
4
2

1
.
9
2

6
.
1
3

2
.
0
3

1
.
5
3

Dividend per share
(Year to March)

14.0p

0
.
8

5
.
0
1

0
.
2
1

0
.
2
1

0
.
4
1

Adjusted diluted EPS is stated before exceptional items

06

07

08

09

10

06

07

08

09

10

More information at www.burberryplc.com

5

CHAIRMAN’S LETTER

In April 2009, Burberry’s ﬁnancial year began in the midst 
of the weakest and most uncertain consumer spending
environment in decades. Within this context, management
planned a challenging agenda for the year ahead. 
On one hand, goals were set with respect to defensive
measures, including expense reduction and working capital
management. On the other, in keeping with the perceived
opportunities and ambitions of both management and 
the Board, the commitment to invest in the vitality of the
Burberry brand and development of the business was
maintained. Although balancing the short and long term 
is a fundamental task of management, the combination 
of a unique environment and the outstanding prospects 
for Burberry offered a particularly complex assignment
requiring a broad range of executive skill and expertise.

8

By most measures – strategic, operational and ﬁnancial –
performance was strong. Strategically, important action was
taken in the continued effort to address legacy issues with
respect to brand integrity. This included upgrading wholesale
distribution and restructuring the Group’s operations in
Spain. At the same time, management projected the brand
into the future by establishing a clear leadership position
among luxury brands in the digital arena. Operationally, 
the team executed a £50m cost efﬁciency programme.
These are a few highlights of the year’s strategic and
operational achievements which this annual report 
outlines more completely in the pages that follow.

Much of this progress was reﬂected in the ﬁnancial results. 
In a contracting luxury market, Burberry achieved revenue
of £1.3bn, a 1% increase at constant exchange rates, 
7% reported. Operating proﬁt increased 22% to £220m,
while diluted EPS increased 16% to 35.1p – both 
of these on an adjusted basis. After-tax return on 
capital remained strong at 28% on an adjusted basis. 
In light of these results, the Board has recommended 
a 17% increase in the full year dividend to 14.0p.

In other developments, John Smith, Chief Executive of
BBC Worldwide, joined the Group’s Board of Directors 
in December. John’s understanding of brands in
combination with his media expertise will contribute 
to Burberry’s future advancement.

Relative to luxury peers both public and private, Burberry’s
performance was among the best in the sector during
2009/10. While the results demonstrate the efforts of many
talented individuals, their ability to work closely as a team
under these extraordinary conditions may be more the
determining factor. I congratulate everyone at Burberry 
for their teamwork throughout the year. Looking forward, 
I remain conﬁdent that Burberry possesses the brand,
strategy and team to continue to prosper in the 
years ahead.

John Peace
Chairman

CHIEF EXECUTIVE OFFICER’S LETTER

driver of Group performance. Management believed
compromising on investment in Burberry’s consumer-
facing elements would restrict both current and future
performance. In line with this, we undertook several
key initiatives in the year:

– Burberry continued to build sector-leading digital

marketing expertise, enhancing the Group’s ability
to develop compelling content and distribute it
effectively. A highlight in the year was the launch 
of artofthetrench.com, a social media website
which introduces the iconic trench coat to the
digital generation and is attracting a new, 
younger customer to the brand.

– We marked the 25th anniversary of London

Fashion Week, by relocating the women’s Spring
2010 runway show to London from Milan in
September. This geographical reconnection of
Burberry with its British heritage brought extensive
press and editorial coverage. Burberry’s reputation
as a digital leader was further enhanced with the
Autumn 2010 show, which, in addition to 
live streaming over the internet, was broadcast 
in 3D in ﬁve cities around the globe and allowed
consumers to purchase runway items directly for
expedited delivery – both ﬁrsts in the luxury sector.

– The relabelling of the casual component of the

women’s and men’s apparel lines as Burberry Brit
brought greater clarity to the brand’s segmentation.
This separation from the more sartorial Burberry
London portion of the lines allows the businesses to
offer more complete assortments in each of these
segments and target distribution more effectively. 

– Burberry stores are among the best vehicles 
to communicate the full brand message to
consumers. Management selectively added stores
in high-potential urban markets and upgraded
important stores in prominent locations, as well 
as opening the ﬁrst standalone test stores for the
Burberry Brit and London lines. In the ongoing
effort to improve the customer experience, the
Group extended the roll-out of the Burberry
Experience, a comprehensive sales and service
programme, to all stores worldwide.

– As part of the ongoing strengthening of the

important wholesale operations, we opened new
headquarters with state-of-the-art showrooms 
in New York City and Tokyo.

• Emphasising proﬁtability over revenue growth.

Historically, Burberry has pursued strong revenue
growth while maintaining proﬁtability. In 2009/10, the
dramatically slowed consumer environment pressured
both gross margin and expense structure with a

In a highly uncertain consumer spending environment,
management and the Board began the ﬁnancial year
planning to stay the strategic course. At the highest level,
the Group’s primary objectives are the continued elevation
and building of the Burberry brand, and ensuring the
Company remains ﬁrmly on a path of sustained, proﬁtable
growth over the long term. During the two and a half years
prior to the ﬁnancial crisis, Burberry’s strategies had proven
effective at delivering on these objectives. As we moved
into 2009/10, our analysis indicated that the fundamentals
which had driven expansion of the luxury sector historically
were likely to remain relevant. We also believed that
Burberry was relatively well positioned for progress under
most economic recovery scenarios. In this context, 
we elected to stay the course.

At the same time, management tailored execution in
keeping with existing market conditions. This is captured
by the following three themes:

• Maintaining investment in consumer-facing elements.
Through investment prior to the crisis, the brand had
achieved strong momentum, which had been a clear

10

leveraged adverse effect on income. Moderating its
growth orientation in the near term, management entered
the year emphasising proﬁtability over revenue growth. 

– To maximise gross margin, merchant teams

continued to reduce assortment sizes across
categories. This resulted in more focused
collections leading to enhanced sourcing
efﬁciencies, more consistent in-store presentation
and improved sell-through rates. The teams also
revised mark-down policies to capitalise on 
the less seasonal elements of the collections.
Retail/wholesale gross margin increased from
52.1% in 2008/09 to 59.7% in 2009/10.

– Management successfully executed the £50m 

cost efﬁciency programme announced in 2008/09.
Approximately half of the gains were driven by
supply chain and corporate process efﬁciencies
with cost reductions accounting for the remainder.

–

Leveraging the investment in systems and planning
expertise, the Group improved inventory
management in the year. Inventory levels were
reduced 36% year over year.

– The Group also undertook the restructuring of 
the business in Spain against a backdrop of
deteriorating performance and the poor state of
Spain’s economy. While difﬁcult, the closing of that
operation in favour of integrating this market with
the global Burberry business is in the long-term
best interests of the brand.

• Prepared to respond to a changing environment.

Recognising that the trading environment was likely 
to be volatile, management monitored conditions
carefully to respond quickly to new opportunities 
and emerging risks.

– Although starting the year with a conservative

inventory plan, we prepared to respond to changes
in demand. As the tone of business improved,
management capitalised on supply chain
investment and restructuring during the past three
years to speed deliveries of future season product.
In addition, the April Showers capsule collection
was designed and delivered to stores through an
expedited 12-week cycle – this was similarly
enabled by supply chain and systems investments
over the past several years.

– With an improving pace of business, the team 

used the Group’s strong ﬁnancial position to complete
additional attractive real estate transactions, against a
conservative plan. In total, Burberry added net 21
stores with 9% space expansion. 

– The challenging consumer conditions in Japan

afforded the Group the opportunity to amend its
largest licence agreement in this market. With the
amendment, Burberry has greatly enhanced its
long-term strategic options in Japan.

Through these efforts and execution of Burberry’s remaining
core strategies, the team achieved strong ﬁnancial results.
Total revenue grew 7% to £1.3bn. Retail performed well,
increasing revenue 19% on a 7% comparable store sales
gain. Driven by Spain, wholesale declined 11%. Licensing
increased 18% with a decline in Japan offset by growth in
global product licences and favourable exchange rate
movements. Adjusted operating proﬁt reached a record
£220m, on a 25% retail/wholesale increase. The Group
generated £254m of cash, resulting in a £262m year end
cash balance.

With the changed operating environment, management
also conducted a full review of Burberry’s strategic plan
during the year. We continue to see opportunities across
the product portfolio – whether the heritage menswear
business, the young childrenswear division, or quickly
developing shoe category. While emerging markets such
as China offer great excitement, excellent potential remains
in all geographic regions. Penetration of these markets will
be enabled by retail enhancements, new store formats and
wholesale advances. Ongoing efﬁciency improvements are
also expected to contribute to proﬁt growth.

In renewing our plan to be a great brand, we also updated
our aspirations to be a great company. Internally, we
continue work to establish Burberry as the leading
employer in the luxury sector. During the year, we formed
the Leadership Council, a forum to develop the next
generation of Burberry’s leadership. We also reinforced
mechanisms to enhance communication and celebrate our
successes as a team. Externally, the Burberry Foundation
continued its work to empower the creativity of young
people, while our commitments to ethical trading and
preserving the environment continued to progress.

Looking forward, Burberry is well prepared to achieve its
goals in the years ahead. With a strong balance of analytics
and intuition, senior management has added expertise and
grown as an integrated team during the past three years.
Our teams globally are fully united under our brand. And 
we thank the extended team – suppliers, large customers,
licensing and franchise partners – for their continued
support. Together we look forward to reasserting Burberry’s
growth agenda while continuing to invest in the future of 
the brand.

Angela Ahrendts
Chief Executive Ofﬁcer

1 1

EXECUTIVE TEAM

12

13

STRATEGY

Brand and Business

From its founding in 1856 when Thomas Burberry
constructed his ﬁrst outerwear garments for the sportsmen
of Basingstoke, England, Burberry has become a leading
luxury brand with a global business.

The Burberry brand is deﬁned by its:

• Authentic British heritage

• Unique democratic positioning within the luxury arena

•

Founding principles of quality, function and modern
classic style, rooted in the integrity of its outerwear

• Globally recognised icon portfolio: the trench coat,

trademark check and Prorsum horse logo

The Group management and their teams are challenged
with the responsibility of maintaining the integrity and vitality
of this extraordinary brand while continuing to develop a
business which remains relevant to ever-evolving markets
and consumer tastes. The following pages outline Burberry’s
strategy under each of its ﬁve key strategic themes.

Our strategic themes

Leveraging the franchise

Intensifying non-apparel development

Today, the business built upon this brand is distinguished by:

Accelerating retail-led growth

• Multi-category competency: womenswear, menswear,
non-apparel and childrenswear – with innovative
outerwear as the foundation

• Channel expertise in retail (including e-commerce),

wholesale and licensing

• Global reach: operations in markets throughout the

world, with a balance across major geographic regions

• A uniﬁed, passionate and seasoned management team

Investing in under-penetrated markets

Pursuing operational excellence

15

STRATEGY CONTINUED

leveraging the franchise

Through more coordinated use of brand assets and greater integration of its global organisation, Burberry has 
the opportunity to enhance consumer responsiveness and operate more efﬁciently and effectively. This potential
lies both in the front and back-of-house operations. 

Key highlights in 2009/10 include:

• Capitalising on operational improvements.

• Accelerating brand momentum. Continued

investment in the Burberry brand is fundamental to its
long-term success. Strategies to enhance and elevate
the brand span all consumer-facing platforms, both
physical and virtual. 2009/10 included the return of the
Burberry womenswear show to London Fashion Week
to mark its 25th year anniversary, an event that
garnered extensive editorial coverage and served as a
geographical reconnection of the brand with its British
heritage. In stores, the Group continued to roll out 
the Burberry Experience, a comprehensive sales and
service programme. During the year, the brand was
featured on the covers of 270 leading publications and
once again included on Interbrand’s list of the Top 100
Global Brands 2009. 

• Reﬁning product segmentation. With the relabelling
of the casual component of the women’s and men’s
apparel lines as Burberry Brit, management brought
greater clarity to the brand’s segmentation. This
separation from the more sartorial Burberry London 
line allows the businesses to offer more complete
assortments in each segment and to target 
customers and distribution more effectively.

Investment in operational improvements has allowed
greater speed and responsiveness in delivering
products to consumers, pointing the way to a further
evolution of the Burberry business model that will
provide fresh merchandise to stores and online with
greater frequency. April Showers is one example of 
this in practice. In mid-January 2010, following a 
strong holiday season, the merchant and design 
teams developed a capsule collection to supplement
the main Spring 2010 offering, which was then
delivered to stores at the end of April. 

• Licence amendment. In October 2009, the Group
announced an amendment to its apparel licence in
Japan which better positions Burberry to optimise its
presence in Japan and the high-growth Asian region
over the medium term. 

• Spanish restructuring. 2009/10 also saw the
restructuring of the Group’s business in Spain.
Deteriorating performance during the previous two
years in combination with the poor state of Spain’s
economy had resulted in a local operation that was 
no longer viable. While difﬁcult, the closing of that
operation in favour of integrating the market with 
global Burberry is in the long-term best interests 
of the brand.

16

STRATEGY CONTINUED

leveraging the franchise continued

Core Values
The core purpose of the Burberry brand is to protect,
explore and inspire. These three values are at the heart 
of Burberry, its culture and behaviour as a company. 
The work of the Burberry Foundation and further progress
in corporate responsibility demonstrates these values 
in practice. 

• Burberry Foundation. Dedicated to helping young
people realise their dreams and potential through 
the power of their creativity, the Burberry Foundation
provides a strategic platform for the Group’s engagement
in community initiatives and facilitates charitable giving in
regions where the majority of employees live and work. 
In 2009/10, partially funded by the sale of iconic rainwear
and scarves, Burberry donated approximately £1m to 
the Foundation, supporting 14 innovative charities in
eight cities around the world. 

• Corporate responsibility. The Group continued its

efforts to improve corporate responsibility performance
and to inspire employees with respect to issues of
ethical trading, environmental responsibility and
community investment. 2009/10 initiatives included 
a 30% increase in factory visits by Burberry
representatives and a reduction in CO2 emissions 
per unit of turnover from Group facilities. 

Leading digital 
Through the integrated efforts of its Marketing, 
Creative Media and IT teams, Burberry has built 
sector leading expertise in the digital media arena. 

• Live streaming. The live streaming of the Spring 

2010 show invited consumers globally to share the full
experience of a Burberry fashion show for the ﬁrst time.
The brand broke new ground by live streaming in 3D
the Autumn 2010 show to ﬁve locations around the
world. The webcast also allowed consumers to
purchase runway items for expedited delivery – 
another ﬁrst for the luxury sector. 

• Social media. The brand has established a leading

presence across social media platforms, creating new
communities of interest. Burberry is the leading luxury
brand on Facebook with over one million fans. During
the year, the Group also launched artofthetrench.com,
a social media website which introduces the iconic
trench coat to the digital generation and is attracting
the new, younger luxury customer to the brand.

KPI: Total revenue growth measures the appeal of the brand 
to consumers, be it through Burberry stores, or those of its department
stores or specialty retail customers.

Total revenue growth
(Year to March)

£1,280m
in 2009/10 +1%

Retail

Wholesale

Licensing

%
3
+

3
4
7

%
5
1
+
0
5
8

%
8
1
+
5
9
9

%
7
+

2
0
2
1

,

%
1
+

0
8
2
1

,

06

07

08

09

10

Growth rate is year-on-year underlying change i.e. at constant exchange rates

In 2009/10, in challenging and volatile markets, Burberry’s revenue was
£1,280m – a 1% underlying increase on the previous year. Revenue in the
ﬁrst half declined by 5% underlying, but grew by 6% in the second half,
driven by Burberry’s retail stores. 

18

 
 
 
 
 
 
 
 
STRATEGY CONTINUED

Intensifying non-apparel 
development

Intensify, focus on and invest in under-penetrated non-apparel categories to further leverage Burberry’s unique
positioning, design and merchandising expertise and iconic branding through investment in product development,
marketing and supply chain. 

Non-apparel continues to be a key driver of growth 
for the Group. For the third consecutive year, it was 
the fastest-growing product area within Burberry, 
and continues to offer scope for further gains across 
a number of under-penetrated categories.

• Soft accessories. With an intensiﬁed and extended

assortment, soft accessories led non-apparel growth.
The Burberry snood was the hit of the Autumn/Winter
season, garnering favourable editorial comment around
the world. 

• Large leather goods. The core of Burberry’s non-

• Shoes. Shoes continue to present signiﬁcant

expansion opportunities. Investment continued in the
year with added design and product development.

•

Japan non-apparel joint venture. Established to build
the brand’s non-apparel business in Japan, the world’s
largest accessories market, the joint venture became
fully operational during the year. The team refurbished
Tokyo’s Omotesando store and opened nine
concessions in prestige department stores. 

apparel offering, large leather goods drove non-apparel
growth in the year. In line with the continued consumer
shift towards a more classic aesthetic, new
reinterpretations of Burberry’s heritage icons were a
key factor in handbags.

• Menswear. The Group continues to see opportunity in
the further expansion of men’s non-apparel. Accessory
assortments were broadened and upgraded during the
year, with small leather goods and belts performing well
at retail.

KPI: Growth in non-apparel revenue measures the success of
Burberry’s initiatives to expand in this category, which includes handbags,
small leather goods, scarves, shoes, belts and jewellery. 

Growth in non-apparel revenue 
(Year to March)

£420m
in 2009/10 +10%

%
0

9
8
1

%
5
1
 +
1
1
2

%
9
3
+

0
9
2

%
2
1
+

6
6
3

%
0
1
+

0
2
4

06

07

08

09

10

Revenue is retail and wholesale only. Growth rate is year-on-year underlying change
i.e. at constant exchange rates

In 2009/10, non-apparel revenue increased by 10% underlying, compared
to 1% for Burberry as a whole. Non-apparel accounted for 36% of retail
and wholesale revenue, compared to 33% last year. Handbags, which 
are core to non-apparel, contributed about half of sales.

20

 
 
 
 
 
 
 
STRATEGY CONTINUED

Accelerating retail-led growth

Shift company culture and processes from a static wholesale model to a dynamic retail model. Retail-led 
growth refers not only to the operation of Burberry’s own stores, but also to a fundamental shift in the 
Group’s operating structure.

• Digital integration and e-commerce development.
The Group is committed to creating a seamless 
link between the physical and digital presence of 
the Burberry brand, responding to the direction of
retailing as an increasingly multichannel proposition. 
In e-commerce, Burberry achieved 60% growth in the
year, and plans continued investment in this channel.
The brand is also bringing this commitment to digital
technology in-store. E-commerce enabled tablets 
were added to mainline stores during 2009/10. 

• Global buy. Execution of the global buy, a common

product assortment across Burberry stores,
contributed to enhanced sourcing efﬁciencies, more
consistent in-store presentation and improved sell-
through rates.

2009/10 saw progress in several areas:

• New store openings. While new store development
was planned conservatively, reﬂecting wider market
conditions, the Group added 21 mainline stores during
the year, including Burberry’s ﬁrst ﬂagship store in Asia
at Singapore’s Ion Orchard. The Group also added
locations in existing markets, including Paris and New
York to intensify Burberry’s presence in these high
potential metropolitan areas. 

• Upgrading existing stores. 28 stores and

concessions were renovated over the period, in line
with efforts to ensure greater consistency of brand
expression and customer experience.

• Enhancing service. Burberry is committed to

achieving industry-leading standards of customer
service in its stores. The roll-out of the Burberry
Experience sales and service programme in the US
and Europe was completed during the year, and is well
advanced in Asia. In addition, to further improve service
to top customers, the Group launched a pilot initiative
aimed at better meeting the speciﬁc requirements of
these clients.

KPI: Growth in retail revenue includes comparable store sales 
growth (measuring growth in productivity of existing stores), plus sales
from new space.

KPI: Number of stores measures the reach of Burberry 
directly-operated stores around the world.

Growth in retail revenue (% growth)
(Year to March) 

%
1
1

%
4
2

%
0
2

%
4
1

%
5
1

15%

in 2009/10 

Comparable stores

New space

06

07

08

09

10

Growth rate is year-on-year underlying change i.e. at constant exchange rates.
Comparable store sales growth is deﬁned as the annual percentage increase in sales 
from stores that have been opened for more than 12 months, adjusted for 
closures and refurbishments.

In 2009/10, comparable store sales growth increased by 7% (H1: 2%;
H2: 10%), driven by product innovation, digital marketing and improved
customer service. The balance of revenue growth was driven by new
space, which increased 9% on average during the year.

22

As at March

440

in 2009/10

Mainline

Concessions

Outlets

0
6
2

2
9
2

8
6
3

9
1
4

0
4
4

06

07

08

09

10

The number of stores directly operated by Burberry increased by 21 in
2009/10, including a net 12 mainline stores and a net nine concessions
around the world. 

STRATEGY CONTINUED

Investing in under-penetrated markets

Focus on and invest in under-penetrated markets. For Burberry, these consist of both developed markets like the United
States and emerging markets including China, India and the Middle East. All distribution channels (retail, wholesale and
licensing) are used to optimise these opportunities. 

• Other emerging markets. A new joint venture in India
was announced in November 2009, combining the
strengths of the Burberry brand and organisation with
the expertise of a local partner to address this young,
exciting luxury market. In conjunction with local
partners, the Group also opened the ﬁrst Burberry
stores in Bahrain and Lebanon in the year. 

• Americas. The Group continues to see strong growth
potential in the Americas across both wholesale and
retail channels. As part of strengthening its wholesale
operations, Burberry opened a new regional
headquarters with state-of-the-art showrooms. In retail,
management opened six stores, including the ﬁrst
standalone test stores for the Burberry Brit and London
lines. The Group also intensiﬁed efforts in Latin America
with a dedicated on the ground management team,
and the April 2010 opening of Burberry’s ﬁrst directly
operated store in the region in Brasilia. 

• China. At year end, Burberry operated 50 stores in 

the mainland China market through a franchise partner.
A net 13 new stores were added in the year – including
the ﬁrst standalone children’s store in this market. 

KPI: Number of stores in Emerging Markets measures the reach 
of the Burberry brand in these high potential countries. 

As at March

111

in 2009/10

8
5

8
5

9
7

1
9

1
1
1

06

07

08

09

10

Emerging Markets include: China, the Middle East, Eastern Europe, Russia, Brazil, 
India and other parts of South East Asia, South Africa and South America

Burberry added a net 20 stores in Emerging Markets, of which 13 stores
were in China and six were in the Middle East. Of the total, 97 are
operated under franchise, 12 by the Burberry Middle East joint venture,
and two by the Burberry India joint venture. 

In North America, which Burberry has also identiﬁed as an under-
penetrated market, underlying retail and wholesale revenue increased 
by 2% in 2009/10, with an improved performance in the second half 
(up 10%). 

24

STRATEGY CONTINUED

Pursuing operational excellence

Burberry continues to pursue its goal to be recognised as much for operational expertise as for product 
and marketing excellence.

Efforts to drive operational excellence have driven
signiﬁcant improvements across central functions, 
the supply chain and IT:

• Fully executed global cost efﬁciency programme.

Management successfully executed the £50m 
cost efﬁciency programme announced in 2008/09.
Approximately half of the gains were driven by 
supply chain and corporate process efﬁciencies. 
Cost reductions, including rationalisation of internal
manufacturing, showroom closures and intensive
expense and headcount management, accounted 
for the remainder.

• Further progress in planning. Building on the

investment made in 2008/09, Burberry continued to
develop a more sophisticated global planning and
inventory management function. Through enhanced
sales forecasting and monitoring, combined with more
disciplined procurement, inventory levels were reduced
36% year over year.

• Flexing the supply chain. In response to the

quickening pace of customer demand in the year’s
second half, management accelerated product
deliveries and added an unplanned capsule collection
for April selling. These actions were enabled by
investment in the supply chain during the previous 
two years. 

• Finalising global infrastructure implementation. The
Group moved toward completing SAP implementation
in the year. The new system was deployed in the US
operations in April 2009 and in most of Asia in May
2010. The Europe distribution hub was also converted
in April 2010. Presently, approximately 90% of
Burberry’s stores are converted. 

KPI: Retail and wholesale gross margin measures, among other things,
how efﬁciently Burberry sources its products.

KPI: Adjusted retail and wholesale operating proﬁt margin measures
how Burberry’s initiatives and its investment to improve its business
processes, including sourcing, IT and logistics are impacting 
its proﬁt margin.

Retail/wholesale gross margin
(Year to March)

59.7%

in 2009/10

%
1
.

5
5

%
9
6
5

.

%
5
8
5

.

%
1
.

2
5

%
7
9
5

.

Adjusted retail/wholesale operating 
proﬁt margin
(Year to March)

11.6%

in 2009/10

%
5
4
1

.

%
6
4
1

.

%
9
4
1

.

%
8
9

.

%
6
1
1

.

06

07

08

09

10

06

07

08

09

10

Gross margin in retail and wholesale increased by 760 basis points in
2009/10. This was achieved by a combination of an increase in the
proportion of full price sales and supply chain improvements.

Adjusted operating proﬁt margin is stated before exceptional items

Burberry’s adjusted retail and wholesale operating proﬁt margin increased
from 9.8% to 11.6%, largely due to gross margin beneﬁts and savings
from the global cost efﬁciency programme.

26

BURBERRY GROUP OVERVIEW

Our global reach 

Burberry is a global luxury brand with a distinctive British heritage, core outerwear base and one of the most
recognised icons in the world. Burberry designs, sources and markets apparel and accessories, selling through 
a diversiﬁed network of retail, digital commerce, wholesale and licensing channels worldwide.

The business is managed by channel, region and product, supported by corporate functions.

Sector

Channels

Global luxury goods market
(Year to December) 
(estimated retail value €bn)

€150bn

in 2009

5
4
1

0
6
1

0
7
1

5
6
1

0
5
1

Revenue by channel 
in 2009/10

Retail

Wholesale

Licensing

58%

34%

8%

Retail: includes 131 mainline stores, 262 concessions within department stores 
and 47 outlets, as well as digital commerce in 27 countries

Wholesale: includes sales to prestige department stores and specialty retailers
worldwide, as well as sales to its franchisees who operate 97 Burberry stores, 
mainly in Emerging Markets 

Licensing: royalty income primarily received from Burberry’s licensees in Japan, 
its global licensees for fragrance, eyewear and timepieces, and from small menswear
and European childrenswear licensees

Balanced channel mix
Burberry sells its products to the end consumer through
both the retail (including digital commerce) and wholesale
channels. For 2009/10, retail accounted for 58% of
revenue and wholesale 34%. 

Burberry also has selective licensing agreements in Japan
and globally, leveraging the local and technical expertise 
of its licence partners.

06

07

08

09

10

Company and industry estimates

Burberry operates in the global luxury sector which, for
Burberry’s relevant categories, is estimated to be an
approximately €150bn global market.

Since 2004, the global luxury goods market had grown 
by around 8% per annum prior to the economic downturn
in late 2008. In 2009, it is estimated that the global luxury
market declined by around 9%, as consumer conﬁdence
and spending fell. Industry analysts expect the sector to
show some recovery in 2010, although not as high as the
8% seen prior to 2008. 

Burberry competes with a variety of luxury goods
companies. Some are large international conglomerates,
owning many luxury brands; others are focused on a 
single brand locally; while others are small, more localised
operations. Burberry’s relevant peer group differs 
by product category – non-apparel, womenswear,
menswear and childrenswear.

30

BURBERRY GROUP OVERVIEW CONTINUED

Our global reach continued

Regions

Retail/wholesale revenue by region 
in 2009/10

27%

Americas

44%

Europe*

24%

Asia Pacific

5%

Rest of World

*including Spain

Broad geographic portfolio
In 2009/10, Europe including Spain accounted for 44% of sales, Americas 27% and Asia Paciﬁc 24%. Emerging Markets,
which spans across all regions and includes China, India, Russia, Eastern Europe and the Middle East, contributed 10% 
to retail and wholesale revenue.

Americas: includes US, Canada, Central and South America
Asia Pacific: includes China

32

products

Retail/wholesale revenue by product
in 2009/10

Product pyramid

Non-apparel

Womenswear

Menswear

Childrenswear

36%

35%

24%

5%

Diversified offering
The Burberry brand has broad consumer appeal. The
business is balanced between non-apparel (36% of
2009/10 revenue), womenswear (35%), menswear (24%)
and the smaller but high potential childrenswear division
(5%). Outerwear, which is the core of the apparel offer at
over half of sales, is the category in which Burberry is top-
of-mind among consumers. Burberry continues to grow
outerwear by continued product innovation. Another key
strategy is to grow non-apparel where revenue increased
by 10% underlying in 2009/10. Burberry is planning further
growth in all areas of the business over the next few years. 

Prorsum

Burberry London

Burberry Brit

Product pyramid
Within the Burberry offering, there is a product hierarchy
deﬁning components – each with unique branding and 
a distinctive identity.

At the top is Prorsum, the most fashion forward collection
centred around runway shows each year. Prorsum, the
Latin word for ‘moves forward’, provides the design
inspiration for other ranges. 

In the middle of the pyramid is Burberry London – or what
a Burberry customer wears on weekdays for work, i.e.
tailored ready to wear. 

At the base of the pyramid is Burberry Brit – what a
Burberry customer wears on the weekend, i.e. casual wear. 

Ranges at Burberry are balanced appropriately across 
the pyramid to drive sales and proﬁtability. Outerwear goes
across all three levels as Burberry continues to innovate
and diversify this core category. A clearer delineation
between Burberry London and Burberry Brit was
introduced from Spring/Summer 2010 as the ranges 
were relabelled. Burberry London uses Beat check and
tonal check branding strategies, whereas Burberry Brit
uses innovative and more contemporary versions of the
core iconic check.

33

BURBERRY GROUP OVERVIEW CONTINUED

Diversified business model 

Corporate

Key RESOURCES

Burberry’s channel, product and regional teams are
supported by core corporate functions which effectively
and efﬁciently sustain the business, as well as develop
the brand in a cohesive manner around the world.

At the front end, these include: 

• Design – including product design, store design, 

visual merchandising and creative media. 
Everything the consumer sees is developed centrally
under Chief Creative Ofﬁcer, Christopher Bailey

• Marketing – including integrated advertising, PR and
communications functions, which together focus on
building and elevating brand awareness through
traditional and digital media

• Digital commerce – a newly-formed team, driving digital
commerce globally to accelerate the brand’s digital
leadership position in the luxury sector and help unlock
the huge opportunities in this high-growth channel

• Merchandising and planning – this team assorts,

procures, and analyses our global collections in alignment
with brand initiatives and commercial opportunities

At the back end, these include: 

• Supply chain – responsible for sourcing, quality

assurance, logistics and customer operations worldwide

• Corporate resources – consists of service and
productivity, client services, customer services,
commercial services, human resources, facilities 
and showrooms, asset and proﬁt protection

•

IT – covering global infrastructure, systems 
and support

• Strategy – including licensing, new business

development and corporate strategy 

•

Finance and corporate support – including all ﬁnance
functions, investor relations, business integration, legal
and corporate responsibility, corporate planning and
pricing, audit and risk

In order to drive growth by pursuing its ﬁve key
strategies, Burberry must continue to invest in 
its key resources of:

People 
Burberry employs more than 5,700 people worldwide. 
The team has been strengthened considerably over the
past few years to drive delivery of the ﬁve strategic themes
and support and sustain continued growth. Burberry is
committed to attracting, retaining and developing world
class talent. As the business grows and the demand for
expertise and ability across the organisation increases,
Burberry is ensuring that it develops a robust ‘pipeline’ 
of talent throughout the Group. 2009/10 saw an increased
level of internal promotions and redeployments within 
the Group to create stronger cross-functional teams.

Brand
With over 150 years of history, rooted in its authentic
British heritage and the integrity of its outerwear, Burberry
continues to strive to elevate and extend the brand. The
brand has broad consumer appeal across genders and
generations; a unique demographic positioning within the
luxury arena; and broad global reach. Burberry continues
to invest in the brand by continually promoting design
innovation, reinventing its icons and reinforcing the brand
with professional merchandising and compelling marketing
campaigns. It is actively embracing digital and social media
to extend the reach and appeal of the brand, especially to
the luxury customer of the future.

Infrastructure
An effective and efﬁcient infrastructure is required to
support Burberry’s growth objectives. During the past
several years, the Group has invested substantial capital 
to restructure IT systems, modernise the supply chain,
including sourcing, logistics and distribution facilities, 
and close inefﬁcient operations. Burberry aims to be
recognised as much for its operational expertise as for 
its product and marketing excellence. 

More information at www.burberryplc.com

34

KPIs

The following key performance indicators (KPIs) are reviewed by the Board and the executive team to assess
Burberry’s progress against its ﬁve strategic initiatives. Although the trends in each of the KPIs below will obviously
be inﬂuenced by more than one of the strategic initiatives, the following information provides investors with a clear
scorecard for Burberry’s performance. 

KPI (year to March)

Total revenue growth (%) – see page 18

Growth in non-apparel revenue (%) – see page 20

Growth in retail revenue (%) – see page 22

Number of stores – see page 22

Number of stores in Emerging Markets – see page 24

2010

+1%

+10%

+15%

440

111

2009

+7%

+12%

+14%

419

91

Retail and wholesale gross margin (%) – see page 26

59.7%

52.1%

Adjusted retail and wholesale operating profit margin (%) – see page 26 11.6%

Adjusted diluted earnings per share growth (%) – see below

+16%

9.8%

(4%)

2008

2007

+18%

+39%

+20%

368

79

58.5%

14.9%

+9%

+15%

+15%

+24%

292

58

56.9%

14.6%

+21%

2006

+3%

0%

+11%

260

58

55.2%

14.5%

+9%

KPI: Growth in adjusted diluted EPS is a key valuation
metric for Burberry’s shareholders.

EPS growth 
Adjusted diluted earnings per share

35.1p

in 2009/10

%
9
+

1
.
4
2

%
1
2
+
1
.
9
2

%
9
+

6
.
1
3

%
4
-

2
.
0
3

%
6
1
+
1
.
5
3

Total shareholder return
As explained on page 71 in the Directors’ Remuneration
Report, Burberry also monitors Total Shareholder Return
(TSR). This measures the growth in value of a shareholding
assuming dividends are reinvested to purchase additional
units of stock.

Corporate responsibility
Burberry also recognises its responsibility to key
stakeholders in managing its business. The progress
Burberry has made this year in respect of its supply chain,
people management and employee communications,
community involvement and environmental matters is
reported on pages 52 to 57.

06

07

08

09

10

Adjusted diluted EPS is stated before exceptional items

Adjusted diluted EPS rose 16% to 35.1p in 2009/10
reﬂecting 22% growth in adjusted operating proﬁt, 
partially offset by a net interest charge of £5.1m and 
a higher tax rate. 

35

BUSINESS AND FINANCIAL REVIEW

Group financial highlights

• Revenue of £1,280m, up 7% reported, up 1%
underlying, with a stronger performance in the 
second half (up 6% underlying). Exchange rates
beneﬁted revenue by £65m in the full year

• Retail sales up 15% underlying, contributing 

58% of Group sales (2009: 52%)

• Adjusted retail/wholesale operating margin up 

to 11.6% (2009: 9.8%), as gross margin recovered 
by 760 basis points and operating expenses were 
48.1% of sales as guided, reﬂecting mix shift to retail

• Adjusted proﬁt before tax up 23% to £214.8m

(2009: £174.6m), including an exchange rate beneﬁt 
of £16.2m

• Tax rate on adjusted proﬁt before tax 

of 27.4% (2009: 23.8%), in line with guidance

• Adjusted diluted earnings per share up 

16% to 35.1p (2009: 30.2p)

• Full year dividend per share increased by 

17% to 14.0p (2009: 12.0p), reafﬁrming 40% 
dividend payout ratio

• Net cash of £262.0m (2009: £7.6m), driven 

by 36% reduction in inventory and tight working 
capital management

£ million

Revenue
Cost of sales

Gross margin
Adjusted operating expenses

Adjusted operating proﬁt
Exceptional items*

Operating proﬁt/(loss)
Net finance charge

Proﬁt/(loss) before taxation
Taxation
Minority interests

Attributable profit/(loss)

Adjusted EPS (pence) 
EPS (pence)
Weighted average number of ordinary shares (millions)

* See Exceptional items on page 44 for full details

Year to 31 March

% change

2010

2009

reported

underlying

7
11

21
(20)

22

1

13

1,279.9
(475.9)

804.0
(584.1)

219.9
(48.8)

171.1
(5.1)

166.0
(83.8)
(0.8)

81.4

35.1
18.4
441.9

1,201.5
(535.7)

665.8
(485.0)

180.8
(190.7)

(9.9)
(6.2)

(16.1)
11.0
(0.9)

(6.0)

30.2
(1.4)
438.1

EPS is calculated on a diluted basis. Underlying change is calculated at constant exchange rates. ‘Adjusted’ refers to profitability measures (pre and post tax) calculated excluding:

– Restructuring costs of £48.8m in 2010 (2009: £54.9m) relating to the Spanish restructuring and the Group’s cost efficiency programme
– Impairment charges of £129.6m in 2009 relating to Spanish goodwill (£116.2m) and stores (£13.4m)
– Credit of £1.7m in 2009 representing negative goodwill on the formation of the Burberry Middle East joint venture
– Impact of deferred tax write-off in 2010 (£39.6m, comprising £27.3m of prior years’ assets and £12.3m of 2009/10 tax losses not recognised) 

and one-off tax credits in 2009 (£32.6m)

– Net charge of £7.9m in 2009 relating to the relocation of global headquarters  

38

revenue analysis

Revenue by channel 

£ million

Retail
Wholesale
Licensing

Total

Retail 
58% of revenue (2009: 52%); generated from 131 
mainline stores, 262 concessions within department
stores, 47 outlets and digital commerce in 27 countries

Retail sales increased by 15% on an underlying basis 
(19% reported). Comparable store sales increased by 
7%, with new space, including Burberry Middle East,
contributing the balance.

Comparable store sales growth increased from +2% in 
the ﬁrst half to +10% in the second half, as the luxury
market improved. Strong full price sell-through of both
Autumn/Winter 2009 and Spring/Summer 2010 ranges
was aided by product innovation, improved planning and
earlier deliveries into stores to meet higher than anticipated
consumer demand. Digital media drove trafﬁc to the 
stores, while the Burberry Experience sales and service
programme helped conversion rates. Non-apparel 
and childrenswear grew strongly and outerwear 
performed well. 

There was double-digit comparable store sales growth 
in Europe and Asia Paciﬁc. Retail stores in London
continued to beneﬁt from favourable currency movements
and increased tourism. Italy, the second largest European
retail market, also performed well. In Hong Kong, mainland
Chinese tourism increased and the Ocean Centre store
was refurbished. Korea, the largest retail market in Asia
Paciﬁc, sustained good growth rates for a second year,
helped by favourable currency movements. Taiwan and
Malaysia also performed well. 

Year to 31 March

% change

2010

748.8
433.6
97.5

2009

629.7
489.2
82.6

1,279.9

1,201.5

reported

underlying

19%
(11%)
18%

7%

15%
(15%)
(6%)

1%

Comparable store sales in the Americas were down 
by a double-digit percentage in the ﬁrst half but up 
mid single-digit in the second half, as footfall improved,
especially in the fourth quarter. The New York ﬂagship 
store was refurbished during the year, using the new
concept and high productivity ﬁxtures and ﬁttings. 

During the year, Burberry further improved the quality of 
its store portfolio – closing nine mainline stores (mainly in
Europe and Spain) and opening 21. Eight new stores were
opened in Asia Paciﬁc, with the ﬁrst ﬂagship in Singapore
and a second childrenswear store in Hong Kong. Six
stores were opened in the Americas, including two in
Toronto (an example of clustering investment in major
cities), as well as test standalone Burberry London and
Burberry Brit stores on Madison Avenue, New York. In
Europe, new stores were opened in Amsterdam, Venice
and Paris. A net nine concessions were opened, mainly 
in Korea. 

Net selling space at 31 March 2010 was roughly 890,000
square feet, with an average increase of 9% year-on-year
(H1: +12%; H2: +6%, mainly reﬂecting the impact in the
second half of store closures undertaken as part of the
global cost efﬁciency programme). 

39

BUSINESS AND FINANCIAL REVIEW CONTINUED

Wholesale 
34% of revenue (2009: 41%); generated from sales 
to prestige department stores, multi-brand specialty
accounts, Emerging Market franchisees and Travel Retail 

Wholesale revenue in the year declined by 11% 
reported, down 15% underlying (H1: -23%; H2: -6%). 

Sales of the global collection in the year were down a low
single-digit percentage, improving to up mid single-digit
percentage in the second half, led by Emerging Markets,
the Americas and Travel Retail. These trends exclude the
impact of Burberry’s own actions, such as the closure 
of Thomas Burberry, continued signiﬁcant weakness in
Spain (which has been selling a domestic collection 
unique to that market) and the rationalisation of certain
specialty accounts in Europe which did not meet brand
requirements. Although European specialty accounts 
are a proﬁtable channel, a further reduction of 10% or 
so is expected in 2010/11. 

Burberry continues to gain share in wholesale in the
Americas, which is still only 7% of total Group sales. This 
is driven by increasing sell-through and sales productivity
of existing space, as well as additional real estate for all
product divisions. As a result, the Autumn/Winter 2010
order book is showing growth well in excess of 20%.

The number of franchise stores, mainly in Emerging
Markets, increased from 81 to 97 during the year, with 
the majority of openings in China (a net 13) and the Middle
East. Comparable store sales growth was consistently
strong in Turkey and China (up by well over 20%), but 
more volatile in Russia and Eastern Europe. 

Licensing 
8% of revenue (2009: 7%); of which approximately two-
thirds from Japan (split roughly two-thirds apparel and
one-third from various short-term non-apparel licences)
and the balance from global product licences (fragrance,
eyewear and timepieces), childrenswear and the ﬁnal
menswear licences

Total licensing revenue in the year declined by 6% on an
underlying basis, in line with guidance. Revenue was up
18% reported, reﬂecting the strength of the Yen, which 
is largely hedged 12 months forward.

There was a mid single-digit decrease in underlying
Japanese royalty income, reﬂecting continued weakness 
in the department store channel. The recent amendment 
to the apparel licence increased royalty payments in
2009/10 by £4m compared to plan, with a further step-up
in payment in 2011/12. The length of the licence was 
also reduced by ﬁve years, now expiring in June 2015.

Global product licences ended the year broadly ﬂat,
reﬂecting destocking by customers. However, product
innovation continued with the launch of Burberry Sport
fragrance, eyewear and watches. The non-renewal 
of menswear licences continued, reducing licensing
revenue by about 3%, as Burberry moves to one 
cohesive global menswear collection. 

40

Retail/wholesale revenue by product category 

Year to 31 March

% change

£ million

Non-apparel
Womenswear
Menswear
Childrenswear

2010

419.6
415.5
288.5
58.8

2009

366.3
412.8
298.4
41.4

Total retail/wholesale

1,182.4

1,118.9

reported

underlying

15%
1%
(3%)
42%

6%

10%
(3%)
(7%)
37%

2%

With the non-renewal of the ﬁnal menswear licences,
Spring/Summer 2011 will be Burberry’s ﬁrst fully cohesive
global menswear collection. This will enable Burberry, 
over time, to gain share in menswear where it is 
under-represented. 

Childrenswear 
5% of revenue (2009: 4%) 
Childrenswear grew by 37% on an underlying basis. About
80% of retail sales are apparel, including outerwear, with
the balance being non-apparel, especially soft accessories.
With the relocation of childrenswear from Spain to London,
the recently strengthened team is fully sharing the expertise
of the other global product divisions and back ofﬁce
functions. In the second half, childrenswear reached 7% of
Asia Paciﬁc retail sales and about 15% of Burberry Middle
East retail sales. Burberry aims to drive childrenswear to
10% of total Group sales over time. 

Non-apparel 
36% of revenue (2009: 33%)
Revenue in non-apparel, now the largest product category,
increased by 10% underlying, with good growth across all
product categories. Large leather goods accounted for half
of non-apparel retail sales and grew by 30% in retail, with
particular strength in Asia. Further design and product
development expertise beneﬁted shoes. 

Womenswear 
35% of revenue (2009: 37%)
Womenswear declined by 3% on an underlying basis, 
with growth in retail more than offset by destocking in 
the wholesale channel. Outerwear, which was more than
60% of retail sales, again performed well, driven by range
intensiﬁcation in both Burberry London and Burberry Brit,
higher full price sales and increased awareness driven by
artofthetrench.com. Within Burberry Brit, denim and sport
grew strongly from a small base. 

Menswear 
24% of revenue (2009: 26%)
Menswear revenue declined by 7% underlying, also
reﬂecting growth in retail more than offset by wholesale
destocking. Outerwear, which was 40% of retail sales,
beneﬁted from continued innovation in styles, ﬁt and 
fabric. In retail, the relabelling of Burberry Brit contributed 
to good volume and value growth in all product categories,
especially in Asia. 

41

BUSINESS AND FINANCIAL REVIEW CONTINUED

Operating profit analysis 

Total operating proﬁt 

£ million

Retail/wholesale
Licensing

Adjusted operating proﬁt
Adjusted operating margin %
Exceptional items

Operating proﬁt/(loss)

Adjusted operating proﬁt in the year increased to £219.9m,
including a £16.2m beneﬁt from exchange rates. The
adjusted operating margin improved to 17.2%, reﬂecting 
a higher retail/wholesale margin. 

Retail/wholesale adjusted operating proﬁt

£ million

Revenue
Cost of sales

Gross margin
Gross margin %
Operating expenses

Adjusted operating profit

Operating expenses as % of sales
Adjusted operating margin %

Year to 31 March

% change

2010

137.7
82.2

219.9

17.2%
(48.8)

171.1

2009

110.1
70.7

180.8

15.0%

(190.7)

(9.9)

reported

underlying

25
16

22

29
(12)

13

Year to 31 March 

% change

2010

2009

reported

1,182.4
(475.9)

1,118.9
(535.7)

706.5

59.7%

(568.8)

137.7

48.1%
11.6%

583.2

52.1%

(473.1)

110.1

42.3%
9.8%

6
11

21

(20)

25

In 2009/10, retail/wholesale adjusted operating proﬁt 
grew by 25% on sales up 6%. Adjusted operating margin
improved to 11.6%, as gross margin increased signiﬁcantly
to 59.7%, surpassing the level of 2007/08 (58.5%).
Operating expenses at 48.1% of sales were in line with
guidance. With retail increasing to 58% of sales in 2009/10

(52% in the prior year), this channel shift beneﬁted 
the gross margin percentage but adversely impacted 
the operating expense to sales ratio and the 
operating margin. 

Excluding Spain, retail/wholesale adjusted operating
margin in 2009/10 was 12.7%. 

42

Gross margin
At 59.7%, retail/wholesale gross margin increased by 760
basis points in the year, with a signiﬁcant recovery starting
in the second quarter (H1: down 30 basis points; H2: up
1,400 basis points). The most important factor was a higher
percentage of sales at full price, with improved sell-through
of in-season ranges (strong product offer and improved
consumer demand), lower initial procurement and less
clearance activity in both mainline and outlet stores. 

The gross margin also beneﬁted from savings from 
the global cost efﬁciency programme of about £20m
(equivalent to nearly 200 basis points), the switch from
wholesale to retail which is a higher gross margin channel
(contributing around 100 basis points) and favourable
exchange rates in the ﬁrst half.

Excluding Spain, the retail/wholesale gross margin 
in 2009/10 was 61.0%.

For 2010/11, Burberry expects a further, but more 
modest, increase in the gross margin, driven largely by
higher full price sell-throughs, improved planning and
buying and further sourcing beneﬁts. 

Licensing operating proﬁt 

Operating expenses 
In 2009/10, operating expenses increased by £96m or 580
basis points as a percentage of sales to 48.1% as guided.
Savings of approaching £30m were realised from the global
cost efﬁciency programme. These were more than offset by
increased bonus and share scheme costs (around £30m in
2009/10, following a near £20m reduction in 2008/09), the
impact of exchange rates (about £20m negative), with the
balance being the switch from wholesale to retail (a higher
cost channel) and the investment in new stores, ventures
and initiatives. 

Excluding Spain, retail/wholesale operating expenses 
as a percentage of sales in 2009/10 were 48.3%.

For 2010/11, Burberry expects retail/wholesale operating
expenses as a percentage of sales to be around 50%
excluding Spain. This reﬂects mid single-digit inﬂation in the
business on a comparable basis and a forecast additional
£10-15m of share scheme costs. Investment through the
income statement will also be accelerated to fund revenue 
growth, new stores, new ventures and product and
corporate initiatives. 

£ million

Revenue
Cost of sales

Gross margin
Gross margin %
Operating expenses

Operating proﬁt
Operating margin %

As discussed earlier, licensing revenue declined by 6% 
on an underlying basis, up 18% reported. Exchange 
rates beneﬁted both revenue and gross margin by 
£19.7m. With operating expenses returning to more
normal levels, operating margin was 84.3% in the year. 

Year to 31 March 

2010

97.5
–

97.5
100%

(15.3)

82.2
84.3%

Year to 
31 March 2010

underlying

77.8
–

77.8

(15.6)

62.2

2009

82.6
–

82.6
100%

(11.9)

70.7
85.6%

43

BUSINESS AND FINANCIAL REVIEW CONTINUED

Outlook 
In 2010/11, while mindful of economic uncertainties,
Burberry plans to optimise the brand and business
momentum and capitalise on its strong ﬁnancial position.
Investment in growth initiatives is planned to accelerate,
while further actions will be taken to enhance the brand. 

• Capital expenditure is planned at around £130m in

2010/11 (2009/10: £70m), with the increase roughly
equally split between: 

–

catch-up spend on refurbishments previously 
put on hold 

– more new stores, with the increase largely outside

traditional regions 

–

investment to support digital commerce (both
content and technology) and further supply 
chain improvements

• Start-up losses are planned to increase by 

about £5m as Burberry builds its presence in new
geographical regions, including Brazil, Mexico, 
India and the Japanese non-apparel joint venture.

•

Increased investment through the income statement 
is planned in areas such as

– digital commerce, to build a global platform for
online sales and enhance digital marketing and
content capabilities 

–

sales and service, including the addition of client
services for VIP customers in thirty stores this year

– product divisions, for expertise in emerging growth
categories including childrenswear, shoes, denim
and men’s accessories

• Brand enhancing initiatives will reduce proﬁts 
by between £5-10m, as licences are stopped 
and inappropriate wholesale accounts and 
outlets closed. 

Exceptional items

£ million

Restructuring costs
Goodwill impairment charge
Store impairments
Negative goodwill
Relocation of headquarters

Year to 31 March

2010

(48.8)
–
–
–
–

(48.8)

2009

(54.9)
(116.2)
(13.4)
1.7
(7.9)

(190.7)

During 2009/10, Burberry incurred a £48.8m restructuring
charge, of which £3.4m related to the global cost efﬁciency
programme announced in January 2009 and the balance
from the Spanish restructuring announced in February
2010. A further charge of about £15m relating to Spain 
is expected in 2010/11.

Cash spent on restructuring in 2009/10 was £27m 
(£21m on the cost efﬁciency programme; £6m in Spain),
with about a further £30m expected in Spain in 2010/11. 

Taxation 
In the year to 31 March 2010, Burberry had a tax charge 
of £84m, comprising:

• A tax charge of £59m on adjusted proﬁt before tax 

of £215m, giving a tax rate of 27.4% (2009: 23.8%). 
The year-on-year increase is due mainly to the prior
year rate being abnormally low, reﬂecting the
geographical mix of proﬁts

• A tax credit of £15m relating to the exceptional 

items detailed above

•

The £40m write-off of deferred tax assets in Spain
(comprising £27m of prior years’ assets and £13m 
of 2009/10 tax losses not recognised). Burberry does
not expect to generate sufﬁcient proﬁt in Spain in the
short to medium term to utilise these assets 

The tax rate on adjusted proﬁt for 2010/11 is expected 
to be about 28%.

Cash ﬂow 
Net cash at 31 March 2010 was £262m, a signiﬁcant
increase from the £8m at 31 March 2009, driven
predominantly by very tight management of working
capital. Inventory was reduced by 36% to £167m at 
31 March 2010 (2009: £263m), even after a 9% increase
in average retail selling space. Trade debtors fell as
wholesale revenue declined in the year. Major outﬂows
were £70m of capital expenditure, of £53m of dividends,
£51m of tax and £27m of restructuring costs.

44

Spain
The restructuring in Spain will lead to a trading loss 
of about £10m in 2010/11, compared to breakeven in
2009/10. As announced in February 2010, Burberry is
restructuring its Spanish operations. The global collection will
be introduced from Spring/Summer 2011 across all channels
in Spain. The local collection will cease after Autumn/Winter
2010, necessitating the closure of the Barcelona facility, with
the loss of approximately 300 jobs. Burberry is currently
working with its customers to determine the appropriate
distribution strategy for the global collection. The ﬁnancial
implications of this restructuring are set out below.

In the year to 31 March 2010, sales of the affected
business were £95m (including all wholesale activity and
concessions but excluding three mainline stores and ﬁve
outlets which will be reported in Europe). These activities
were break even in the year, as the second half beneﬁted
from earlier wholesale shipments and aggressive control 
of discretionary expenses following the announcement 
of the restructuring. 

In the transition year to 31 March 2011, Burberry estimates
that this revenue will decline by about half and trading
losses will increase to around £10m, as both retail and
wholesale move from the domestic to global collection, 
as the number of points of sale decreases and the local
cost base is phased out.

In the year to 31 March 2012, a further contraction in
revenue is expected, but the business will generate a
modest proﬁt as it becomes part of the Europe region,
supported by global product and back ofﬁce teams. 

In 2010/11 Burberry intends to disclose this business
separately to aid investors’ understanding of the ongoing
global business. The Spanish losses will be excluded 
from adjusted proﬁt before tax. 

The following guidance for retail, wholesale and licensing 
is consistent with that given in April 2010.

Retail
In the year to March 2011, Burberry plans an increase 
of around 10% in average retail selling space, weighted
towards the second half. At this stage, no further change
to the store portfolio in Spain is assumed. Between 20-30
mainline store openings are planned, biased towards the
Americas and Asia Paciﬁc.

Wholesale
In the six months to 30 September 2010, Burberry projects
wholesale revenue at constant exchange rates to increase by
a high teens percentage excluding Spain. Signiﬁcant growth
is expected in all regions except Europe, where continued
rationalisation of small specialty accounts is planned.

Including Spain, where a further material contraction in 
the sales of the domestic collection is expected, underlying
wholesale revenue is projected to increase by around 10%.

Licensing 
In the year to March 2011, Burberry expects licensing
revenue at constant exchange rates to decline by between
5-10%. The Yen hedge rate for 2010/11 will give only a
marginal beneﬁt to reported numbers compared to 2009/10.

In line with the amended licence agreement, royalty income
from Japanese apparel is expected to be broadly ﬂat year-
on-year. Growth from the global product licences will be
led by fragrances and watches. However, these will be
more than offset by the non-renewal of both the Japanese
leather goods licence and the ﬁnal menswear licences. 

45

BUSINESS AND FINANCIAL REVIEW CONTINUED

Store portfolio 

At 31 March 2009
Additions
Closures
Transfers

At 31 March 2010

Store portfolio by region 

At 31 March 2010

Europe
Spain
Americas#
Asia Pacific
Rest of World

Total

# Three franchise stores in the Americas are in Mexico

Retail/wholesale revenue by destination

£ million

Europe
Spain
Americas#
Asia Pacific
Rest of World#

Directly-operated stores

Mainline stores

Concessions

Outlets

119
18
(9)
3

131

253
25
(16)
–

262

47
2
(2)
–

47

Directly-operated stores

Mainline stores

Concessions

Outlets

32
3
62
21
13

131

26
128
–
108
–

262

2010

408.1
107.1
324.8
282.7
59.7

15
5
22
4
1

47

2009

379.8
144.5
308.9
240.0
45.7

Total retail/wholesale

1,182.4

1,118.9

# Central and South America revenue has been reclassified from Rest of World to the Americas (2010: £7m; 2009: £4m)

46

Total

419
45
(27)
3

440

Total

73
136
84
133
14

440

Franchise stores

81
21
(2)
(3)

97

Franchise stores

14
–
3
66
14

97

reported

underlying

7%
(26%)
5%
18%
31%

6%

3%
(29%)
2%
13%
27%

2%

Year to 31 March

% change

RISKS

The management of the business and the execution
of the Group’s growth strategies are subject to a
number of risks. The risks set out below represent
the principal risks and uncertainties which may
adversely affect the management of the Group 
and the execution of its growth strategies
The steps the Group takes to address these risks, where
they are matters within its control, are also described. Such
steps may mitigate but not eliminate these risks. Some of
the risks relate to external factors which are outside the
Group’s control. The order of the risks is in no way an
indication of their relative importance, and each of the risks
should be considered independently. If more than one of
the events contemplated by the risks set out below occurs,
it is possible that the combined overall effect of such
events may be compounded.

Risks are formally reviewed by the Group Risk Committee
(the ‘Committee’) who meet at least three times a year. 
The membership of the Committee comprises the Chief
Executive Ofﬁcer, Executive Vice President – Chief Financial
Ofﬁcer, Executive Vice President of Corporate Resources,
Chief Operations Ofﬁcer, Senior Vice President Commercial
Affairs and General Counsel and the Director of Audit and
Risk Assurance. At the invitation of the Committee, the
Director of Intellectual Property, Director of Corporate
Responsibility, Head of Risk Management and
representatives from other assurance teams regularly
attend Committee meetings. The assessment of the
Group’s risks and the processes in place for management
and mitigation of these risks are reviewed by the Audit
Committee on a regular basis. Key business risks are also
considered by the Audit Committee and are considered
generally as part of the Group’s strategic development 
and ongoing business review processes.

The global economic downturn affected consumers’
purchases of discretionary luxury items which has
adversely affected Burberry’s sales in certain markets
In common with all Burberry’s competitors, the global
economic downturn affected the level of consumer
spending on discretionary luxury items. During a recession,
when disposable incomes are lower, a global downturn 
will adversely affect Burberry’s sales in certain markets.

A signiﬁcant proportion of the Group’s sales are 
generated by customers (in particular Middle Eastern,
Russian, Japanese, Chinese and other Asian customers)
who purchase products while travelling either overseas 
or domestically. As a result, shifts in travel patterns 
or a decline in travel volumes could materially affect 
trading results.

48

Following a further review of Burberry’s Spanish business,
the Group announced the planned restructuring of its
Spanish Operations consistent with its strategy of aligning
Burberry in Spain with its global business model.

Changes to the political regime or tax and ﬁscal
regulations in the countries in which the Group
operates could have an adverse impact on the 
Group’s operations or revenues
The Group operates in many countries including the
emerging markets. These countries have a variety of 
legal and regulatory systems which may be changed
retrospectively or prospectively and which may not be
enforced in a predictable or consistent manner, particularly
in times when public sector debt is high and tax revenues
are falling. Furthermore, some of these countries have 
not had stable governments historically and have been
subject to political instability.

When the Group enters a new market, governance
processes are in place to monitor the implementation
programme, which includes oversight by the Group’s legal,
company secretariat, tax and audit and risk assurance
departments. The Group uses the services of professional
consultants to advise on legal and regulatory issues and 
to monitor ongoing developments.

If Burberry loses key management or is unable 
to attract and retain the talent required for its 
business, its operating results could suffer
Burberry’s performance depends largely on its senior
managers and design teams. The resignation of key
individuals or the inability to recruit individuals with the
relevant talent and experience to enable future business
growth could adversely impact Burberry’s performance. 

To mitigate these issues the Remuneration Committee
regularly benchmarks the Group’s incentive arrangements
against Burberry’s global competitors and considers 
the framework in place to recruit, incentivise and retain 
key individuals. In addition, there are regular ongoing
recruitment, talent review and succession planning
programmes overseen by the Executive Vice President 
of Corporate Resources and Chief Executive Ofﬁcer to
ensure that the Group strengthens and develops its senior
management team by identifying, developing and nurturing
high-potential talent. During the year, the Group introduced
a Leadership Council to identify and develop high-potential
individuals within the organisation.

The cumulative change and signiﬁcant growth 
within the business places a signiﬁcant pressure 
on resources and its IT systems
The combination of the continued development of the
Group’s IT infrastructure, the focus on maximising the
beneﬁts of digital media, combined with the ongoing
development of the global supply chain and the
implementation of a number of other signiﬁcant projects
combine to exert signiﬁcant pressure on the business.
Governance processes are in place for each major
programme to monitor and manage the progress of 
these initiatives and these are supplemented by monthly
operational meetings with senior management to review
operational performance. The senior management team
has been strengthened and organisational structures
realigned to further support these key initiatives and
external consultants are used to complement internal 
skills where required.

There is a risk of over-reliance on key trading partners
In a number of key product categories Burberry is reliant
on a small number of suppliers. During the year, the Group
continued to strengthen its supply chain management
team to enable the further evolution and development 
of the manufacturing base and also to mitigate the risk
associated with over-reliance on a number of key product
suppliers. Where suitable alternatives exist, the Group has
reduced volumes with such suppliers and continues to
look for suitable additional alternatives where necessary.

The Group has a number of key customers whose
business represents a substantial portion of sales. 
The Group dedicates resources to these customers 
and maintains close relationships with such customers 
to understand and respond to their needs.

The Group closely manages its relationships with key
suppliers and customers which includes monitoring 
their ﬁnancial and non-ﬁnancial performance.

A substantial proportion of the Group’s revenue 
and proﬁts is reliant upon business in Japan and 
key global licensees
A signiﬁcant source of proﬁt is derived from the royalties
received from licensees, speciﬁcally the Group’s licensees
in Japan and the fragrance licensee InterParfums S.A.
Burberry relies upon licensees to, among other things,
maintain operational and ﬁnancial control over their
businesses. Should these licensees fail to effectively
manage their operations, the Group’s royalty income 
would decline. Failure to manage these key relationships
effectively could have a material impact on the sales,
proﬁtability and reputation of the Group.

The Group regularly implements royalty reviews and audits
of licensees, but cannot guarantee that they will reveal any
non-compliance with the terms of the relevant licence.

To minimise the risks in Japan, Burberry has its own 
ofﬁces and operations in Tokyo and closely monitors its
relationships with licensees. During the year, the Group
amended the terms of its apparel licence with Sanyo
Shokai and Mitsui in Japan. The amendment, together 
with the non-apparel joint venture formed with Sanyo
Shokai and Mitsui in November 2008, better positions 
the Group to optimise its presence in Japan and the 
high-growth Asian region.

Burberry may be unable to control its wholesale 
and licence distribution channels satisfactorily
The Group relies upon the ability to control its distribution
networks and licensees to ensure that products are sold 
in environments consistent with the Group’s luxury 
image. An action by any signiﬁcant wholesale customer 
or licensee, such as presenting Burberry products in 
a manner inconsistent with our preferred positioning, 
would be damaging to our brand image. If, due to
regulatory, legal or other constraints, the Group is in any
way unable to control its wholesale distribution networks
and licensees, the Burberry brand image, and therefore
results and proﬁtability, may be adversely affected. 

The Group relies upon its licensees, suppliers,
franchisees, distributors and agents to comply 
with relevant legislation
The Group expects its licensees, suppliers, franchisees,
distributors and agents to comply with employment and
other laws relating to their country of operation and to
operate to good ethical standards. The Group, however, 
is unable to guarantee that this is the case, although 
it continually monitors and improves its processes to 
gain assurance that its licensees, suppliers, franchisees,
distributors and agents comply with its terms 
and conditions and relevant local legislation and 
good practice.

Burberry could suffer if its supply chain is unable 
to produce and deliver goods at a competitive 
price, on time and to its speciﬁcation
If Burberry’s suppliers fail to ship product on time, or
product quality does not achieve Burberry’s standards, 
this could result in the Group missing delivery dates to its
customers, potentially resulting in cancelled orders or price
reductions. Further, such a failure could affect wholesale
customers’ conﬁdence which could adversely affect
subsequent seasons’ sales.

49

Burberry is dependent on the strength of its trade
marks and other intellectual property rights
Burberry’s trade marks and other proprietary rights are
fundamentally important to the success and competitive
position of the business and are intrinsic to maintaining
brand value. Unauthorised use of the ‘Burberry’ name, the
Burberry Check and the Prorsum horse trade marks, in
particular, as well as the distribution of counterfeit products
damage the Burberry brand image and proﬁts. If a 
third-party registers one of the Group’s trade marks, or
similar trade marks, in a country where the Group does not
currently trade, this would create a barrier to commencing
trade under those marks in that country. In addition, if 
a third-party publishes harmful material using our trade
marks, Burberry’s brand image could suffer. The Group 
has a dedicated team operating internationally to register,
protect and enforce its trade marks and other intellectual
property rights. Where infringements are identiﬁed, the
Group resolves these through a mixture of criminal and 
civil legal action and negotiated settlement. 

Nevertheless, it is not possible to guarantee that the
actions taken to establish and protect the Group’s trade
marks and other proprietary rights will be adequate to
prevent imitation of Burberry’s products by others. Trade
marks and intellectual property rights, while subject to
international treaties, are largely driven by national law 
and the protection of intellectual property rights varies 
from one jurisdiction to another. 

The Group cannot therefore necessarily be as effective 
in all jurisdictions in addressing counterfeit products. In
many territories the Group is dependent upon the vigilance
and responsiveness of law enforcement bodies whose
priorities may differ from the Group’s. They are also 
subject to budgetary constraints and prioritise their 
actions accordingly. Whilst the Group works closely 
with customs and other law enforcement bodies, 
ultimately the Group cannot direct their actions.

RISKS CONTINUED

Burberry continues to evolve its supply chain strategy,
reﬁning its selection of suppliers to maintain and enhance
product quality whilst improving sourcing efﬁciencies. 
The Group continues to rationalise its distribution network
to minimise unnecessary costs and to improve delivery
timeliness and accuracy.

The Group’s planning and pricing function has continued 
to improve inventory management processes and effective
product ﬂow, facilitated by improved reporting and 
visibility provided from the new IT infrastructure. Further
opportunities exist to improve inventory management
processes and these will help ensure that the Group
continues to produce merchandise of the right quality, 
in accordance with its ethical policy and delivered in
accordance with its requirements.

During the year, the Group announced the restructuring 
of its Spanish operations consistent with its strategy of
aligning Burberry in Spain with its global business model.

The inability to anticipate and respond to changes 
in consumer demand and product category trends 
on a timely basis could adversely impact sales
The Group’s business depends, in part, on the ability 
to shape, stimulate and anticipate consumer demand by
producing innovative, fashionable and functional products.
Categories are cyclical, so it is critical the Group builds
responsive product teams to exploit trending categories,
launch new categories and balance core apparel and 
non-apparel categories.

The Group has evolved its product hierarchy and design
calendar to enable continued brand momentum, product
refreshment and replenishment to be more responsive 
to fashion and consumer trends and to respond more
efﬁciently to changing circumstances.

Burberry continues to protect its classic core market 
by adding innovation to further stimulate sales to current
customers, while attracting new customers to the brand.
The Group balances and plans all categories and brand
icons through a strict product hierarchy. To continue brand
momentum, and to protect market share in apparel and
non-apparel categories, the Group features outerwear and
the Burberry Check icons as part of its marketing initiatives.

In response to high demand, the Group introduced the
April Showers capsule range in April 2010 to fulﬁl
consumer demand and drive brand momentum.

50

In key emerging markets, including China and the
Middle East, Burberry is largely dependent upon
third-party operators with the associated lack of direct
control and transparency and as the Group moves into
increasingly higher risk locations the operating and
reputational risk increases
In a number of key emerging markets, Burberry operates
through third-party franchisees. In particular, a third-party
retail operation has been developed in China. The Group
largely depends upon the expertise of these franchisees
given its relative lack of experience in this region. During
the year, the Group has strengthened its emerging markets
team, and where appropriate has its own staff based 
within these operations who work closely with franchisees
to further develop operational models to enable greater
control and visibility.

The Group has established joint ventures in Japan, 
the Middle East (excluding Saudi Arabia) and India to
collaborate with experienced operators in high-growth,
under-penetrated markets and improve its ability to 
ensure the operations are managed in accordance 
with the Group’s global standards.

Burberry is exposed to foreign currency ﬂuctuations
Burberry derives a signiﬁcant percentage of its proﬁts from
its Japanese licensing arrangements. As a consequence,
the Group is exposed to a signiﬁcant risk associated with
the Yen to Sterling exchange rate. In addition, the Group 
is continuing to expand its operations in the United States
and Europe as part of its strategy to accelerate retail
expansion in key under-penetrated markets. As the
Group’s presence in the United States and Europe
increases, it is exposed to an increased risk associated
with the US Dollar to Sterling exchange rate and Euro 
to Sterling exchange rate.

The Group manages a signiﬁcant proportion of the foreign
currency exposures by the use of forward exchange
contracts. Currency ﬂuctuations affecting the Yen, Euro,
US Dollar and other currencies will nevertheless affect
results and proﬁtability.

Burberry’s operating results are subject to 
seasonal ﬂuctuations
Burberry’s business, particularly with respect to apparel,
broadly operates on a seasonal basis (Spring/Summer 
and Autumn/Winter) and the Group has experienced, and
expects to continue to experience, substantial seasonal
ﬂuctuations in sales and operating results. In particular,
results vary based on the weather because of the large
proportion of outerwear products Burberry offers and the
effect of the weather on retail markets generally. As a result
of these ﬂuctuations, comparisons of sales and operating
results between different periods within a single ﬁnancial
year are not necessarily meaningful. In addition, these
comparisons cannot be relied on as indicators of the
Group’s future performance.

Burberry faces increasingly intense competition
Competition in the luxury goods sector has intensiﬁed 
in recent years and Burberry is faced with increasing
competition in many of our product categories and
markets. The Group competes with international luxury
goods groups who control a number of luxury brands 
and may have greater ﬁnancial resources and bargaining
power with suppliers, wholesale accounts and landlords. 
If Burberry is unable to compete successfully, operating
results and growth may be adversely impacted.

A signiﬁcant incident such as a natural catastrophe,
global pandemic or terrorist attack affecting one or
more of the Group’s key locations could signiﬁcantly
impact the operation of our businesses
In such circumstances, the uninterrupted operation of the
business cannot be ensured, particularly in the short term.
Business continuity plans are in place to mitigate but 
not eliminate the operational risks.

51

CORPORATE RESPONSIBILITY

operating responsibly

Since its foundation in 1856, Burberry has sought to achieve the very highest quality standards. This focus is an
integral part of the brand and informs ongoing efforts to ensure that Burberry is recognised as much for operational
excellence as it is for its luxury products. Putting Corporate Responsibility at the heart of Burberry’s business
practices is a key part of this philosophy, and speaks to the heritage and longevity of the brand as well as its
pioneering spirit.

For more information on Burberry’s Corporate
Responsibility (‘CR’) policies including its Ethical Trading
Policy, performance and case studies, please visit the
Corporate Responsibility section of www.burberryplc.com.

Corporate Responsibility Governance 
Michael Mahony, Senior Vice President Commercial Affairs
& General Counsel is accountable for CR matters on behalf
of Burberry and the Board. He chairs the CR Committee
which formally reports to the Group Risk Committee. 
The CR Committee held three meetings during the year. 

Two supplementary committees, the Global Sustainability
and Supply Chain Risk Committees are responsible for
these speciﬁc topics. Both committees generate formal
reports for the CR Committee. 

In 2009/10, the Group strengthened its CR team to 
a total of 13 members. The global team, which 
is based in London, New York, Hong Kong and Tokyo, 
leads Burberry’s supply chain, labour, environmental
excellence and community investment initiatives in
partnership with its stakeholders.

Ethical trading: supply chain 
Monitoring the supply chain
Burberry believes that its products should only be made 
in factories that comply with local labour and environmental
laws and by workers who work fair but not excessive
hours; are provided with a safe and hygienic work
environment; and who can exercise their right to freedom
of association and collective bargaining. 

All Burberry suppliers are governed by its Ethical Trading
Policy that sets clear expectations regarding issues like
living wage, child labour and regular employment. Seven
Burberry team members are charged with ensuring the
implementation of the policy throughout the supply chain
as their sole responsibility. 

This policy is based upon internationally accepted 
codes, International Labour Organisation conventions 
and is published in full in the Corporate Responsibility 
section of www.burberryplc.com.

Burberry strongly believes that to be a great brand it
must also be a great company. This belief is reﬂected in its
continued pursuit to improve Corporate Responsibility
performance and to inspire employees around issues of
ethics, social and environmental responsibility and
community investment. 

The following section describes Burberry’s current
approach to tackling these challenging issues, including
some of our achievements in 2009/10.

Highlights of the Year 

•

•

30% increase in visits to product suppliers’ factories
over prior year to 634 

Launched Sustainability Leaders Initiative across 
the business 

• Continued to reduce our CO2 emissions from 

the Group’s buildings by a further 9% per £1,000 
of turnover

• Committed to purchasing 29% of all our UK electricity
from Combined Heat and Power and renewable
sources in 2010 calendar year

One of Burberry’s five strategic themes is pursuing
operational excellence. Operational excellence in CR 
has five key areas of focus: 

• Healthy business partnerships: based on shared values

and high ethical standards

• Excellent products and service: quality, craftsmanship,

heritage and service standards 

• Environmental excellence: operating efﬁciently with

minimum waste and maximum control 

• Excellence in people management: attracting 

and retaining talented employees 

• Contributing to society: investing and engaging 
in the communities where Burberry operates 

More information at www.burberryplc.com

52

With periodic assistance from third-party auditors the team
regularly visits factories to assess their performance related 
to Burberry’s Ethical Trading P olicy and develops factory
improvement plans based on their ﬁndings. Follow-up visits are
conducted to ensure that the plans have been implemented.

In 2009, the Company launched its Corporate
Responsibility Handbook. The Handbook, distributed to all
suppliers by the Burberry Chief Operations Ofﬁcer, provides
additional detail and guidance to assist suppliers with
integrating our policies into their management systems. 

Complementing these audits are worker hotlines installed
in select factories, which act as both a whistleblowing
mechanism and counselling line.

Product and supply chain standards – upstream
Burberry strives to achieve the highest quality standards 
in all components and stages of its supply chain process.

The majority of Burberry’s products are manufactured
in Europe through third-party suppliers. All new Burberry
suppliers, regardless of location, must be approved by 
the Corporate Responsibility team prior to production
taking place. 

Burberry understands that it cannot solve supply chain
issues on its own and that a participative and collaborative
approach is needed. Burberry will continue to maintain an
open dialogue with its suppliers, peer companies, other
brands, NGOs and trade unions to bring collective action
to bear across the supply chain. 

As part of Burberry’s ongoing desire to reduce duplicative
audits, we have developed partnerships with companies that
produce in the same factories. Using the Fair Factory
Clearinghouse (FFC) database tool, Burberry is now able 
to share and access credible information on factory social
compliance which replaces the need for additional audits and
allows for further investments in capacity building and training. 

Burberry is a founding member of the BSR Luxury Brands
working group. The group was established to explore
common approaches to collectively address material
Corporate Responsibility issues speciﬁc to the luxury sector
like the use of exotic skins. The Group is currently developing
an animal welfare policy for working group members.

Supplier ownership
Working closely with Burberry teams, suppliers are
demonstrating their increasing commitment to compliance
by actively participating in capacity building programmes
such as management system development, productivity
enhancement and worker rights training. These
programmes improve worker-management relationships,
improve production processes and empower workers and
management to resolve problems jointly. 

Burberry recognises that its responsibility does not end 
at the ﬁrst tier supplier and subcontractor level of the
supply chain. The Company has been working to address
issues deeper in the supply chain including raw materials
like leather, fur and cotton. 

Leather 
Burberry joined the BLC Leather Working Group in order to
have a clearer understanding of the environmental impact
of tanneries, investigate the possibility of hide traceability
and collaborate with other brands and tanneries to improve
environmental standards within the leather industry.
Burberry supports the working group’s efforts to ensure 
the preservation of the Amazon Biome (rainforest).

Fur
There has been, and will continue to be, occasions where
consumer tastes demand the use of fur. Burberry believes
that any materials derived from animals should be
produced without inﬂicting cruelty or threatening the
environment. Burberry will not use fur if there is any
concern that it has been produced using the unacceptable
treatment of the animals. For this reason, Burberry does
not source such materials from China. Fur is carefully
sourced, safeguarding the correct ethical standards and
traceability. Fur is principally sourced from SAGA furs
which is known for upholding high standards of ethical
treatment of animals and shares the Group’s concerns
about animal welfare. The farms that supply fur are open 
to third-party inspections at any time and have been visited
by the Burberry CR team.

Uzbek cotton
Following the deeply concerning reports relating to alleged
forced child labour in the Uzbekistan cotton industry,
Burberry has taken steps to exclude Uzbek cotton from 
its supply chain. In progress is a cotton traceability project
related to Uzbek cotton and other raw materials.

53

CORPORATE RESPONSIBILITY CONTINUED

2009/10 supply chain achievements 

•

Factory visits: 634 factory visits; a 30% increase 
on last year 

• Stakeholder engagement: Actively participated in the
BLC Leather Working Group and the Responsible
Cotton Network 

• Capacity building: Developed Corporate Responsibility

Handbook for vendors 

• Worker hotline: Expanded conﬁdential worker hotline 

to Japan and Italy

Burberry established a Global Sustainability Committee 
in 2009 which meets quarterly. On the committee every
region or function of the business is represented by a
nominated Sustainability Leader.

Burberry regularly communicates its revised Global
Environmental Policy to all vendors and integrates
environmental best practices directly into our Non-Stock
Procurement procedures and contractual negotiations. 

2009/10 environmental performance results

Energy: 

• Raw Materials Traceability: Agreed and signed contract

• Reduced CO2 emissions from the Group’s buildings 

to launch a 2010 traceability project

by 9% per £1,000 of turnover 

Number of CR visits/audits
(Year to March)

634

4
1
3

7
8
4

4
3
6

• Committed to purchasing 29% of the Group’s UK
electricity from CHP and renewable sources in the
2010 calendar year to drive demand for renewables 
in the UK

•

•

Installed ‘Solar Control Window Film’ in the new Burberry
Americas headquarters at 444 Madison, New York, with
a projected annual savings of close to 300,000 kWh

Implemented an automated PC shut-down 
system on the Burberry network worldwide 
to save energy overnight

Packaging:

•

Launched a new Established range of consumer
packaging made from an FSC accredited sustainable
source and 100% elemental chlorine free

Logistics transport emissions: 

• Continued to pursue a programme to divert freight to
sea from air driving reductions in carbon emissions

Business travel

• Reduced air travel for UK employees by 10% per
£1,000 of turnover, through utilisation of virtual
meetings via video conferencing facilities globally

Waste

• Renewed focus on increasing recycling globally. 
In the UK, recycling has increased to 47% of the 
total waste produced 

• Developed a closed loop textile recycling system in 

the UK. The Group’s global recycling partner converts
sample and raw material waste into car door insulation

06

07

08

09

10

Environmental performance
Burberry is committed to reducing its environmental
footprint throughout its global operations. Environmental
sustainability is a key responsibility and Burberry can play
an important role in ensuring that its environmental impact 
is minimised in the countries where it sources materials
and products through to the markets where products 
are sold. 

Strong environmental performance is important to Burberry
employees, customers and future generations and is good
for business as it ultimately improves efﬁciency and leads
to cost savings. Burberry’s most critical environmental
sustainability impact areas include carbon emissions
(linked to energy use, travel and distribution network), 
solid waste and packaging materials (linked to shipping,
marketing and sales). 

54

Digitalisation:

• Converted lookbooks from paper to digital – used by
buying teams and wholesale customers to choose
products. This is estimated to save 32 tonnes of 
paper and £70,000 annually

• Digitised visual merchandising props ordering process

for regional teams

Information technology:

•

Launched an online environmental data management
system to cover 100% of Burberry’s global sites

6
.
2
2

6
.
2
2

6
.
0
2

Global building energy CO2
(Year to March)
(CO2 kg per £1,000 of turnover)
Restatement of 2008 and 2009 data to include 
additional sites in the Americas and Asia.
Most current published conversion factors,
revised September 2009, used throughout.

20.6CO2

06

07

08

09

10

Primary transport shipped by sea (%)
(Year to March) 
(Based on a sea vs. air freight comparison; road data 
has been excluded to give an accurate representation 
of progress to divert freight from air to sea.)

20%

%
7
1

%
0
2

06

07

08

09

10

Air travel CO2
(Year to March)
(CO2 kg per £1,000 of turnover-based 
on UK employees)

1.4CO2

8
.
1

5
.
1

4
.
1

06

07

08

09

10

The data in these graphs comes from a combination of
automated and manual internal processes. The majority 
is based on actual data, supplemented, when necessary,
by approximations. 

Excellence in people 

Organisational effectiveness
The Burberry Human Resources team continue to drive
people excellence with the focus being to recruit, retain
and develop world class employees around the world, to
deliver extraordinary results in the service of the Brand.

A commitment to diversity and respect for all is a key
foundation underlying the Burberry culture and its success
as a global luxury brand.

• Burberry’s global nature is reﬂected not only through 

its geographic footprint, but also through its workforce.
In the global headquaters at Horseferry House,
Burberry employs nationals of 39 different countries
from the ﬁve continents.

• Women make up a large part of the workforce in all

parts of the organisation, from its manufacturing sites
through to its headquarters (70% women). Burberry
was acknowledged for this diversity at the 2010
Opportunity Now Awards where the Company won 
the ‘Female FTSE 100 Award’ as well as the ‘FTSE
Executive Women Award’. 

The Burberry brand captures the energy of youth and is
underpinned by its values – protect, explore and inspire.
Burberry’s workforce encompasses the digital generation
and experienced craftsmen and women. In the 2009 Long
Service Awards, the Company recognised service up 
to 45 years.

55

CORPORATE RESPONSIBILITY CONTINUED

2009/10 results

• Recruitment: Successful implementation and roll out 

of Burberry’s global careers website has attracted over
20,000 applications for roles in the Company this year.

• Organisational development: Continued evolution and
development of the organisation has enabled the
Group to continue to ensure its infrastructure and
capability is able to deliver both the growth agenda in
line with the key strategic themes and the business
efﬁciencies Burberry is committed to. 

In February 2010, Burberry announced the proposed
restructuring of its Spanish operations in order to align
Spain to its global business model and introduce the
Burberry global collection. Burberry agreed a redundancy
plan with the Works Council and unions, with the resultant
loss of just under 300 jobs. All employees leaving the
Company are being offered outplacement support.

As part of the global cost efﬁciency programme, Burberry
France undertook a limited collective dismissal process.
This restructure aligned Burberry France with the European
Shared Services organisation model and affected the IT
and Finance functions. The Group continues to embed this
new organisation structure into Burberry France.

•

Leadership development: Design, development and
delivery of a new leadership programme targeting 100
high-potential managers identiﬁed in all areas of the
business and regions. This leadership programme is
developing an internal pipeline of world-class talent to
provide future leaders for the business. Leadership
capabilities are developed through mentoring, personal
development plans, one to one coaching, worldwide
events and workshops, and international mobility.

• Meeting structures: At the outset of 2009/10, Burberry
established a robust meeting structure to improve
meeting effectiveness and enhance internal
communications and alignment:

– Executive Operations Committee: Oversight of 

overall performance of Burberry and major cross
business issues

– Monthly Management Reviews: Review of operational

performance, outlook and budgets

– Management Update Forum: Discussion of 

product, corporate and regional performance 
by senior leadership 

– Global Quarterly Update: Communication of key
strategies as well as product, corporate and 
regional performance to the whole Company

56

Health and safety
As a core priority, Burberry continues to ensure a healthy
and safe environment for all employees and customers. 
To assure the Board that this is the case, there is a formal
health and safety audit process and programme that
ensures all Burberry manufacturing sites and distribution
centres are audited at least annually with major ofﬁces 
and retail locations audited at least once every three 
years. All audits were completed successfully with no
problems reported.

During the year, there have been a number of visits by
regional enforcement bodies all with successful outcomes
and no required changes to systems or processes.

To further strengthen this area, a Corporate Health and
Safety Manager was appointed whose role will be to
further develop the Global management system and
related training programmes, incident management and
key performance indicators in the coming year. The most
signiﬁcant of which will be an integrated Health and
Wellbeing Policy linking a number of key departments such
as Human Resources, Talent Development, Facilities and
the external Occupational Health Provider. 

The Burberry Experience
Following the success of the Burberry Experience sales
and service pilot training programme during 2008/09, an
enhanced programme has been rolled out to mainline
stores and concessions this year. Led by the Service and
Productivity teams at Corporate and in the Regions, more
than 1,800 retail store employees have been trained this
year. The training programme has been designed for and
delivered to all retail staff to ensure that the customer
experience is in line with Burberry’s brand standards and
luxury positioning. 

The evaluation of the effectiveness of the training 
is ongoing, and has shown positive results and
improvements in levels of service being delivered to our
customers globally. The training continues to be enhanced
and extended to improve leadership skills and productivity.
The Burberry Experience will continue to be rolled out to
new markets where Burberry operates globally. 

Community investment

Ongoing investment in the communities where the majority
of employees live and work remains a key element of the
Burberry Corporate Responsibility strategy. 

The Burberry Foundation
A key extension of the tradition of philanthropy at the
Company, the Burberry Foundation (UK registered charity
no. 1123102) provides a strategic platform for Burberry’s
community engagement and builds charitable giving in
its regions. 

Established in 2008, the Foundation is a philanthropic
organisation dedicated to helping young people realise their
dreams and potential through the power of their creativity.
The Foundation’s goals are to help young people to:

•

gain conﬁdence in their daily lives and develop 
self-esteem 

• build connections to their families, friends, partners

and society at large 

• develop the ability to reach for opportunities in school,

work and life

The Burberry Foundation’s grant making is focused 
on supporting innovative programmes and building
sustainable partnerships that leverage the Company’s
assets and combine ﬁnancial support with the knowledge,
creativity and dedication of Burberry employees. 

The Foundation receives donations from Burberry and
other benefactors to award strategic grants and make
targeted donations of in-kind gifts. In 2009/10, the Group’s
donations to the Burberry Foundation amounted to
£800,000 in cash and more than £150,000 in-kind. These
contributions enabled the Foundation to support charities
in Boston, Chicago, Hong Kong, London, Los Angeles,
New York, San Francisco and Seoul.

For a list of charities supported by the Burberry
Foundation, or for further information, please see
www.burberryfoundation.org.

Employee engagement 
Burberry employees are encouraged to further support 
the Foundation’s grant recipients through the Company’s
employee engagement programme, which allows staff to
take up to four hours per month of paid leave to volunteer
with any one of the Foundation’s charity partners around
the world. 

In 2009/10, employees volunteered more than 3,500 hours
of time, a tenfold increase on 2008/09, lending their
personal talents and business skills to help young people. 

A signiﬁcant part of Burberry’s employee engagement
efforts this past year was dedicated to job training
programmes for young people in London and New York
City. These programmes brought 60 students to corporate
ofﬁces and retail stores for job training and hands-on work
experience ranging from two to ten weeks. 

More information at www.burberryfoundation.org

In-kind donations
Burberry donates products to the Burberry Foundation 
for distribution to charities in its grants portfolio. Donations
range from one-off gifts of fabric or materials for an art 
or design course, to a large-scale annual Christmas Coat
Donation programme which saw approximately 1,500
coats distributed to charities globally. 

Corporate donations
An ongoing part of doing business is to selectively support
customer and supplier-related events and charitable
causes. Each regional ofﬁce has a discretionary charity
budget which is managed and approved locally. 

Disaster relief
In response to the catastrophic earthquake in Haiti on 
12 January 2010, Burberry and its employees donated
over £149,250 to British and International Red Cross
agencies around the globe to assist with its relief and
reconstruction efforts. 

In 2009/10, corporate contributions totalled over £1.4 million.

2
.
0

6
.
0

2
.
1

4
.
1

Community donations (£m)
(Year to March) 
Direct donations are contributions made by the 
Company. Indirect donations are donations from 
third parties that have been facilitated 
by Burberry.

£1.4m

Indirect donations

Direct donations

06

07

08

09

10

57

BOARD OF DIRECTORS

Back row from left to right: Ian Carter, Stacey Cartwright, Stephanie George, Philip Bowman, John Smith
Front row from left to right: David Tyler, Angela Ahrendts, John Peace

60

John Peace (61)†‡
Chairman 
John Peace has been Chairman of the Board since June
2002 and is also Chairman of the Nomination Committee.
He is Chairman of the Board of Standard Chartered plc
and of Experian plc. Previously he was Group Chief
Executive of GUS plc from 2000 until 2006. John was
appointed a non-executive director of First American
Corporation in March 2009. 

Executive Directors 

Angela Ahrendts (49)†
Chief Executive Officer 
Angela Ahrendts became Chief Executive Ofﬁcer in July
2006, having served as an executive director since January
2006. Angela previously held various senior appointments,
including the position of Executive Vice President, at Liz
Claiborne Inc between 1998 and 2006. She was also
Executive Vice President of Henri Bendel from 1996 to
1998 and President of Donna Karan International from
1989 to 1996. 

Stacey Cartwright (46)
Executive Vice President, Chief Financial Officer 
Stacey Cartwright joined as Chief Financial Ofﬁcer 
on 1 March 2004 and was appointed Executive Vice
President, Chief Financial Ofﬁcer in June 2008. She 
had previously been Chief Financial Ofﬁcer at Egg plc
between 1999 and 2003, and from 1988 to 1999 
she held various ﬁnance-related positions at Granada
Group plc. 

Non-Executive Directors 

Philip Bowman (57)*†‡
Senior Independent Director 
Philip Bowman was appointed as a non-executive director
in June 2002 and is the Senior Independent Director and
Chairman of the Audit Committee. He was appointed Chief
Executive of Smiths Group plc in December 2007 and is 
a non-executive director of Berry Bros & Rudd Limited and
Better Capital Limited. He previously held the positions 
of Chief Executive at Scottish Power plc from early 2006
until mid 2007 and Chief Executive at Allied Domecq plc
between 1999 and 2005. His earlier career included 
ﬁve years as a director of Bass plc. He was previously
Chairman of Liberty plc and Coral Eurobet plc and 
a non-executive director of Scottish & Newcastle plc 
and British Sky Broadcasting Group plc.

Ian Carter (48)*†‡
Non-Executive Director
Ian Carter was appointed as a non-executive director 
in April 2007. He is currently President of Hilton Hotels
Corporation Global Operations. He was previously CEO of
Hilton International Company and Executive Vice President
of Hilton Hotels Corporation, and was a director of Hilton
Group plc until the acquisition of Hilton International by
Hilton Hotels Corporation in February 2006. He previously
served as an Ofﬁcer and President of Black & Decker
Corporation between 2001 and 2004. 

Stephanie George (53)*†‡
Non-Executive Director
Stephanie George was appointed as a non-executive
director in March 2006. She is currently Executive Vice
President of Time Inc., with responsibility for the publishing
divisions and overall management of People, In Style,
Entertainment Weekly, Real Simple, Essence and the Time
Inc. Media Group. Before this, Stephanie spent 12 years at
Fairchild Publications, ﬁrst as publisher of W magazine and
then as President, Women’s Wear Daily Media Worldwide.
Stephanie also sits on the Board of Lincoln Center. 

John Smith (52)*†‡
Non-Executive Director
John Smith was appointed as a non-executive director on 
1 December 2009. He is currently Chief Executive of BBC
Worldwide. John joined the BBC in 1989, where he held 
the positions of Chief Operating Ofﬁcer, Director of Finance,
Property & Business Affairs and Finance Director. John
joined BBC Worldwide in July 2004 and was appointed
Chief Executive in March 2005. He previously served 
as a non-executive director of Severn Trent Water plc
between 2003 and 2008.

David Tyler (57)*†‡
Non-Executive Director
David Tyler became a non-executive director in June 
2002, having been a director of the Company since 
1997. He was appointed Chairman of the Remuneration
Committee in March 2007. David was Group Finance
Director of GUS plc from 1997 until its demerger in October
2006. He is currently Chairman of J Sainsbury plc and
Logica plc and a non-executive director of Experian plc.
Earlier in his career, David worked at Unilever plc, County
NatWest Limited and Christie’s International plc. He has 
an MA in Economics from Cambridge, is a fellow of the
Chartered Institute of Management Accountants and a
Member of the Association of Corporate Treasurers. 

Key to membership of committees 
* Audit Committee 
† Nomination Committee 
‡ Remuneration Committee 

61

DIRECTORS’ REPORT 

The directors present their Annual Report together with the 
audited financial statements for the year to 31 March 2010.  

Business review  
Burberry Group plc is required to set out in this report a fair 
review of the business of the Group during the year to 31 March 
2010 and of the position of the Group at the end of the financial 
year and a description of the principal risks and uncertainties 
facing the Group (known as a ‘business review’). The purpose  
of the business review is to enable shareholders to assess how 
the directors have performed their duty under section 172 of  
the Companies Act 2006 (duty to promote the success of the 
company). The Strategy and Group Overview sections on pages 
15 to 35 and the Business and Financial Review on pages 38  
to 46 report on the activities and results for the year and give  
an indication of the Company’s future developments. The 
Corporate Responsibility Report is set out on pages 52 to 57.  
A description of the principal risks and uncertainties facing the 
Group is included on pages 48 to 51. The sections of the Annual 
Report referred to above, fulfil the requirements of the Business 
Review and are incorporated by reference and shall be deemed 
to form part of this report.  

Principal activities  
Burberry Group plc is a holding company. The Group designs, 
sources, and markets luxury men’s, women’s and children’s 
clothing and non-apparel accessories globally through a 
diversified network of retail, wholesale, franchise and digital 
commerce channels worldwide. Burberry also licences third 
parties to manufacture and distribute products using the 
‘Burberry’ trademarks.  

Revenue and profit 
Revenue during the period amounted to £1,279.9m (2009: 
£1,201.5m). The attributable profit for the year was £81.4m  
(2009: loss of £6.0m).  

Dividends  
The directors recommend that a final dividend of 10.5p per 
ordinary share (2009: 8.65p) in respect of the year to 31 March 
2010 be paid on 5 August 2010 to those persons on the 
Register of Members as at 9 July 2010. 

An interim dividend of 3.5p per ordinary share was paid to 
shareholders on 4 February 2010. This will make a total dividend 
of 14.0p per ordinary share in respect of the financial year to  
31 March 2010. The aggregate dividends paid and recommended 
in respect of the year to 31 March 2010 total £60.8m.  

Directors  
The names and biographical details of the directors holding 
office at the date of this report are set out on page 61 and are 
incorporated by reference into this report.  

At the 2010 Annual General Meeting, John Peace and Ian Carter 
will retire by rotation in accordance with Article 80 of the Articles of 
Association and, being eligible, will offer themselves for re-election.  

In accordance with the Company’s Articles of Association, as John 
Smith was appointed by the directors since the last Annual General 
Meeting, he will retire and a resolution proposing his election will be 
put forward at the forthcoming Annual General Meeting. 

The separate circular to shareholders incorporating the Notice  
of this year’s Annual General Meeting sets out why the Board 
believes these directors should be elected and re-elected. 
Details of the directors’ service agreements and letters of 
appointment are given in the Directors’ Remuneration Report  
on pages 70 to 79.  

Directors’ share interests  
Interests of the directors holding office at 31 March 2010 in  
the shares of the Company are shown within the Directors’ 
Remuneration Report on page 79. There were no changes to  
the beneficial interests of the directors between the period  
31 March 2010 and 25 May 2010.  

Directors’ insurance and indemnities 
The Company maintains directors’ and officers’ liability insurance 
which gives appropriate cover for any legal action brought 
against its directors. In accordance with section 236 of the 
Companies Act 2006, qualifying third-party indemnity provisions 
are in place for the directors and Company Secretary in respect 
of liabilities incurred as a result of their office, to the extent 
permitted by law. 

Share capital  
Details of the authorised and issued share capital, together with 
details of movements in the issued share capital of Burberry 
Group plc during the year are shown in note 21 which is 
incorporated by reference and deemed to be part of this report.  

The Company has one class of ordinary share which carries no 
right to fixed income. Each share carries the right to one vote at 
general meetings of the Company. The ordinary shares are listed 
on the Official List and traded on the London Stock Exchange. 
As at 31 March 2010, the Company had 435,024,782 ordinary 
shares in issue, of which 77,215 were held as treasury shares. 

In order to retain maximum flexibility, the Company proposes  
to renew the authority granted by ordinary shareholders at the 
Annual General Meeting in 2009, to repurchase up to just under 
10% of its issued share capital. Further details are provided in 
the separate circular to shareholders incorporating the Notice  
of this year’s Annual General Meeting.  

At the Annual General Meeting in 2009, shareholders approved 
resolutions to allot shares up to an aggregate nominal value of 
£72,000 and to give directors authority to allot shares for cash 
other than pro rata to existing shareholders. Furthermore, 
shareholders granted the directors authority to allot shares up to 
an aggregate nominal value of £144,000 for use in a rights issue 
only. Resolutions will be proposed at this year’s Annual General 
Meeting to renew these authorities.  

No person has any special rights of control over the Company’s 
share capital and all issued shares are fully paid.  

There are no specific restrictions on the size of holding nor on 
the transfer of shares which are both governed by the general 
provisions of the Articles of Association and prevailing legislation. 
The directors are not aware of any agreements between holders 
of the Company’s shares that may result in restrictions on the 
transfer of securities or voting rights.  

62  Burberry Group PLC annual report 2009/10 

DIRECTORS’ Report CONTINUED 

The directors have no current plans to issue shares other than  
in connection with employee share schemes.  

Details of employee share schemes are set out in note 26.  
The Burberry Group plc ESOP Trust has waived all dividends 
payable by the Company in respect of the ordinary shares held 
by it. In addition, the Burberry Group plc SIP Trust has waived  
all dividends payable by the Company in respect of the 
unappropriated ordinary shares held by it.  

The total dividends waived in the year to 31 March 2010 were  
in aggregate £0.2m (2009: £0.3m).  

With regard to the appointment and replacement of directors, 
the Company is governed by its Articles of Association, the 
Combined Code, the Companies Act 2006 and related 
legislation. The Articles of Association may be amended  
by special resolution of the shareholders.  

Substantial shareholdings 
As at 25 May 2010, the Company had been notified under  
Rule 5 of the Disclosure and Transparency Rules of the following 
major interests in its issued ordinary share capital: 

Blackrock Inc  

Massachusetts Financial 
Services Company  

Ameriprise Financial, Inc 

Schroders plc  

JPMorgan Chase & Co  

Capital Research and 
Management Company  

FMR Corp  

Legal and General 
Group plc  

Number of ordinary 
shares 
39,186,967 

% of total 
voting rights 
9.03% 

25,720,195 
21,771,730 

21,666,352 

21,578,580 

20,645,893 

18,315,823 

5.94% 
5.01% 

4.99% 

4.99% 

4.77% 

4.16% 

17,296,785 

3.99% 

Interests in own shares  
Details of the Company’s interests in its own shares are set out 
in note 21 to the financial statements.  

Charitable donations  
During the year to 31 March 2010, the Group donated £1.4m  
(2009: £1.1m) for the benefit of charitable causes. These donations 
principally comprised cash. Further information regarding the 
charitable donations made during the year are contained in the 
Corporate Responsibility Report on pages 52 to 57. 

Political donations  
The Company made no political donations during the year in line 
with its policy. In keeping with the Company’s approach in prior 
years, shareholder approval is being sought at the forthcoming 
Annual General Meeting, as a precautionary measure, for the 
Company and its subsidiaries to make donations and/or incur 
expenditure which may be construed as ‘political’ by the wide 
definition of that term included in the relevant legislation. Further 
details are provided in the separate circular to shareholders 
incorporating the Notice of this year’s Annual General Meeting.  

Employment policies  
Equal opportunities  
The Group is committed to ensuring the consistent profitable 
growth of its business and a policy of equal opportunity in 
employment is integral to this commitment. The aims of the 
Group’s policy are to ensure that the most capable job 
applicants are recruited and the most competent employees  
in the Group progress. All employees will receive fair and equal 
treatment irrespective of sex, race, ethnic origin, nationality, 
marital status, age, religion, disability and sexual orientation.  
In the situation where an employee becomes disabled, the 
Group will endeavour to assist the employee by adapting the  
job if appropriate or by offering a transfer to another position.  

Health and safety  
The Group has a health and safety policy approved by the Board 
and a Global Health and Safety Committee which is chaired by 
the Executive Vice President – Chief Financial Officer. Each 
region has a local Committee which reports into the Global 
Committee. There have been a number of internal and external 
audits carried out to provide assurance. There has been no 
enforcement action following a routine visit by inspectors. 

Further information regarding the Group’s employment policies are 
provided in the Corporate Responsibility Report on pages 52 to 57.  

Employee involvement  
Employee communication  
The Group believes that employee communication is important 
in building strong relationships with, and in motivating and 
retaining, employees. The Group makes use of various methods 
and channels, all of which are implemented globally, including, 
face-to-face briefings, open discussion forums with senior 
management, email and a corporate intranet to ensure that 
matters of interest and importance are conveyed to employees 
quickly and effectively. In addition, quarterly updates which 
highlight the Group’s performance and its ongoing strategic 
initiatives are webcast globally. Furthermore, development of 
content such as videos and digital webpages to communicate 
key initiatives, events and other brand messages has further 
enhanced communication internally.  

Employee share ownership  
The Group recognises the importance of good relationships with 
employees of all levels and runs incentive schemes and share 
ownership schemes for the benefit of employees. Further details 
of these schemes are set out in the Directors’ Remuneration 
Report on pages 70 to 79.  

The Group again intends to invite Employees in the UK, Germany, 
Hong Kong, Italy, Korea, Singapore, Spain and Taiwan to take 
part in the Sharesave Scheme. The Group also intends to  
re-introduce the grant of free share awards or cash based awards  
to all employees during the financial year 2010/11. 

Further details on the Group’s approach to employee involvement 
and communications are provided in the Corporate Responsibility 
Report on pages 52 to 57. 

Burberry Group PLC annual report 2009/10  63 

 
 
 
DIRECTORS’ Report CONTINUED 

Financial instruments  
The Group’s financial risk management objectives and policies 
are set out within note 25 to the financial statements on pages 
112 to 114. Note 25 also details the Group’s exposure to foreign 
exchange, price, interest, credit and liquidity risks. These notes 
are incorporated by reference and are deemed to form part of 
this report.  

Creditor payment policy  
For all trade creditors, it is policy to:  

•  agree and confirm the terms of payment at the 
commencement of business with that supplier  

•  pay in accordance with contractual and other legal obligations  

•  continually review the payment procedures and liaise with 

suppliers as a means of eliminating difficulties and 
maintaining a good working relationship  

The Company had no trade creditors at 31 March 2010 (2009: £nil).  

Significant contracts – change of control  
Pursuant to the Companies Act 2006, the directors disclose that 
in the event of a change of control in the Company, the Group’s 
£200m Revolving Credit Facility (dated 16 March 2009) and the 
Group’s Bi-lateral Multicurrency Revolving Credit Facilities 
totalling £60m (dated 13 June 2008) could become repayable.  

In circumstances of change of control of the Company, Angela 
Ahrendts may terminate her employment. Her entitlement in 
respect of remuneration is set out on page 73 of the Directors’ 
Remuneration Report where Burberry terminates her service 
agreement in circumstances where the Remuneration 
Committee determines that Angela Ahrendts’ performance  
does not meet the financial expectations of the Board  
or shareholders.  

In circumstances where the Company’s shares cease to be 
listed, Stacey Cartwright may terminate her employment on 
three months’ notice and would be entitled to her base salary  
for a period of nine months following termination.  

Details of the service agreements of the executive directors are 
set out on page 72 of the Directors’ Remuneration Report.  

The provisions of the Company’s employee share plans may 
cause options and awards granted under such plans to vest 
upon a change of control.  

Essential contracts  
The Group has a number of contractual arrangements with 
suppliers (both of goods and services), wholesale customers, 
licensees who manufacture and distribute products using the 
Burberry trademarks, and franchisees. In addition, the Group 
occupies leasehold premises for the purpose of conducting  
its business. Whilst these arrangements are important to the 
business of the Group, individually none of them are essential  
to the business of the Group.  

Auditors  
In accordance with section 418(2) of the Companies Act 2006, 
each of the Company’s directors in office as at the date of this 
report confirms that:  

•  so far as the director is aware, there is no relevant audit 

information of which the Company’s auditors are unaware  

•  he or she has taken all the steps that he or she ought to have 
taken as a director in order to make himself or herself aware 
of any relevant audit information and to establish that the 
Company’s auditors are aware of that information  

The Group’s auditors are PricewaterhouseCoopers LLP.  
A resolution to re-appoint PricewaterhouseCoopers LLP as 
auditors to the Company will be proposed at the forthcoming 
Annual General Meeting.  

Note 5 in the financial statements states the auditors’ fees both 
for audit and non-audit work.  

Going concern  
The Group’s business activities, together with the factors likely 
to affect its future development, performance and position are 
set out in the Business and Financial Review on pages 38 to 46, 
along with details of the Group’s cash flows, liquidity position 
and borrowing facilities. Financial risk management objectives, 
details of financial instruments and hedging activities, and 
exposures to credit risk and liquidity risk are described in  
note 25, pages 112 to 114. 

The directors have reviewed the Group’s forecasts and 
projections. These include the assumptions around the Group’s 
products and markets, expenditure commitments, expected 
cash flows and borrowing facilities. Taking into account 
reasonably possible changes in trading performance, and after 
making enquiries, the directors have a reasonable expectation 
that the Group has adequate resources to continue in 
operational existence for the forseeable future. Accordingly  
they consider it appropriate to adopt the going concern  
basis in preparing the annual report and accounts. 

Annual General Meeting  
The Annual General Meeting of the Company will be held at the 
offices of Slaughter and May, One Bunhill Row, London, EC1Y 
8YY commencing at 9.30am on Thursday, 15 July 2010. The 
Notice of this year’s Annual General Meeting is included in the 
separate circular to shareholders. The Notice is available to view 
under the ‘Shareholder Information’ section of the Company’s 
website www.burberryplc.com.  

By order of the Board  

Michael Mahony  
General Counsel and Secretary  
25 May 2010 

Registered Office:  
Horseferry House  
Horseferry Road  
London SW1P 2AW  

Registered Number:  
03458224 

64  Burberry Group PLC annual report 2009/10 

CORPORATE GOVERNANCE  

Corporate Governance Statement  
The Board remains committed to high standards of corporate 
governance which it considers to be central to the effective 
management of the business and to maintaining the confidence  
of investors. The Group complies with the laws and endeavours  
to observe the customs and culture in the countries in which it 
operates and does business. The Group expects all directors and 
employees to drive to achieve the highest standards and to act 
with respect and integrity. The Board monitors and keeps under 
review the Company’s corporate governance framework.  

In accordance with the Listing Rules of the UK Listing Authority, 
the Company confirms that throughout the financial year ended  
31 March 2010 and as at the date of this Annual Report it 
complied in full with the relevant provisions set out in section 1 of 
the UK Combined Code on Corporate Governance (‘the Code’). 
This report, together with the Directors’ Remuneration Report on 
pages 70 to 79, provide details of how the Company has applied  
the principles and complies with the provisions of the Code.  

The Board  
The Board is collectively responsible for promoting the success  
of the Company. The Board provides leadership for the Group 
and concentrates its efforts on strategy, performance, governance 
and internal control. As at the date of this report, the Board has 
eight members: the Chairman, the Chief Executive Officer,  
the Executive Vice President-Chief Financial Officer and five 
independent non-executive directors. The names and biographical 
details of each of the directors and details of their membership  
of the Board’s committees are set out on page 61.  

The Board has a formal schedule of matters reserved to it for 
decision and approval which include, but are not limited to:  

• 

the Group’s business strategy  

•  annual budget and operating plans  

•  major capital expenditure, acquisitions or divestments  

• 

• 

the systems of corporate governance, internal control and  
risk management  

the approval of the interim and annual financial statements  

•  any interim dividend and the recommendation of the  

final dividend  

The Board held six scheduled meetings during the year and also 
held one ad hoc meeting. The Group’s strategy was regularly 
reviewed. All directors participate in discussions relating to the 
Group’s strategy, financial and trading performance and risk 
management. The Board considers that it met sufficiently often  
to enable the directors to discharge their duties effectively.  

The table below gives details of directors’ attendance at Board 
and Committee meetings during the financial year ended  
31 March 2010.  

John Peace  
Angela Ahrendts 

Philip Bowman 

Ian Carter 

Stacey Cartwright 

Stephanie George 

David Tyler 
John Smith(1) 

Board 

Scheduled 

Ad hoc 

 Audit
Committee 

Remuneration 
Committee 

Nomination 
Committee 

6/6 
6/6 

5/6 

6/6 

6/6 

6/6 

6/6 

2/2 

1/1 
1/1 

0/1 

1/1 

1/1 

1/1 

1/1 

– 

– 
– 

3/3 

3/3 

– 

3/3 

3/3 

– 

4/4 
– 

4/4 

4/4 

– 

4/4 

4/4 

1/1 

2/2 
2/2 

1/2 

2/2 

– 

2/2 

2/2 

1/1 

(1) John Smith was appointed a non-executive director on 1 December 2009 and was appointed to each of the Audit, Nomination and Remuneration Committees on 2 February 2010.  

He has attended all Board and Committee meetings held since his appointment. 

Burberry Group PLC annual report 2009/10  65 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CORPORATE GOVERNANCE CONTINUED 

At the request of any non-executive director, the Chairman will 
arrange meetings consisting of only the non-executive directors 
to allow the opportunity for any concerns to be expressed. 
During the year, the Chairman maintained regular contact  
and met with the Senior Independent Director and other  
non-executive directors.  

The Board is chaired by John Peace. The Chairman is 
responsible for leading the Board and for its effectiveness. 
Angela Ahrendts is the Chief Executive Officer and is responsible 
for the execution of strategy and the day-to-day management of 
the Group, supported by the Executive Operations Committee. 
The division of the roles and responsibilities of the Chairman and 
Chief Executive Officer are formally set out in writing and agreed 
by the Board.  

Board balance and independence 
John Peace, Philip Bowman, Ian Carter, Stephanie George, 
John Smith and David Tyler are, in the opinion of the Board, 
independent of management and free from any business 
relationship which could materially interfere with the exercise  
of their independent judgement. During the year under review, 
the majority of the Board (excluding the Chairman) comprised 
independent non-executive directors.  

The Senior Independent Director, Philip Bowman, supports the 
Chairman in his role and leads the non-executive directors in the 
oversight of the Chairman and Chief Executive Officer. The Senior 
Independent Director has a specific responsibility to be available to 
shareholders if they have concerns which the normal channels have 
failed to resolve or where such contact is inappropriate.  

Board appointments  
Board nominations are recommended to the Board by the 
Nomination Committee under its terms of reference. All directors 
are subject to election by shareholders at the Annual General 
Meeting following their appointment and thereafter to re-election 
at least once every three years in line with the Company’s 
Articles of Association and provision A.7.1. of the Code. The 
biographical details of those directors seeking election and  
re-election at the forthcoming Annual General Meeting can be 
found on page 61 of this Annual Report.  

Information and professional development  
On appointment, directors receive a full, formal and tailored 
induction, including meetings with members of the management 
team and briefings on particular issues. In addition, directors are 
furnished with an induction pack of information, which includes 
key Group policies, guidance notes and information on 
corporate governance matters.  

As an ongoing process, directors are briefed and provided with 
information concerning major developments affecting their roles 
and responsibilities. In particular, the directors’ knowledge of the 
Group’s worldwide operations is regularly updated by arranging 
presentations from senior management throughout the Group.  

The Chairman works closely with the Company Secretary to 
ensure that the Board is supplied in a timely manner with 
information in a form and of a quality appropriate to enable it to 
effectively discharge its duties. Where there are occasions when 
directors are unable to attend a meeting they have the opportunity 
to review meeting papers and submit comments to the relevant 
Chairman. Directors are also supplied with a monthly management 
report, which provides information on operational and financial 
performance and the Group’s business plans.  

All directors are able to consult with the Company Secretary. 
The appointment and removal of the Company Secretary is a 
matter reserved for the Board as a whole. Directors may obtain, 
in the furtherance of their duties, independent professional 
advice, if necessary, at the Group’s expense. In addition, all 
directors have direct access to the advice and services of the 
Company Secretary and all senior management.  

Board performance evaluation  
The Board undertakes a formal and rigorous review of its 
performance and that of its committees each financial year. In 
2009/10, the evaluation was led by the Chairman and involved the 
completion of a detailed questionnaire. The review considered the 
outcomes of previous evaluations, the current composition and 
responsibilities of the Board and each of its committees, together 
with the frequency and structure of meetings. In addition, the 
review considered the contribution and effectiveness of the 
executive and non-executive directors. Feedback from the review 
was considered and it was concluded that the Board and its 
committees operate efficiently and effectively. 

As a result of the review in 2008/09, it was agreed that the 
Board would dedicate more time to meeting with senior 
management. In October 2009, the Board Strategy meeting was 
attended by senior management from around the world who 
presented at the meeting. 

The evaluation of the Chairman, which was led by the Senior 
Independent Director, was undertaken at a formal meeting of  
the non-executive directors. The review concluded that the 
Chairman continues to provide effective leadership and that  
he committed sufficient time to the performance of his duties.  
The major commitments of the Chairman are detailed in his 
biography on page 61. 

The Board has agreed that the evaluation of its performance will 
be undertaken using an external facilitator in 2010/11. 

Conflicts of interest  
The Board has authority to approve directors’ conflicts and potential 
conflicts of interest and has adopted a policy and procedures to 
manage and, where appropriate, to approve such conflicts. 

66  Burberry Group PLC annual report 2009/10 

CORPORATE GOVERNANCE CONTINUED 

A review of situational conflicts which have been authorised is 
undertaken by the Board annually. Following the review for 
2009/10, the Board concluded that there is currently no 
compromise to the independence of any director arising from  
an external appointment or any outside commercial interest.  

Committees  
The Board is supported by a number of committees including 
the following principal committees: Audit Committee, 
Remuneration Committee and Nomination Committee. All the 
non-executive directors are members of each of the principal 
committees of the Board.  

The terms of reference of each of the principal committees are 
available on request and can be viewed on the Company’s 
website www.burberryplc.com.  

The committees, if they consider it necessary, can engage with 
third-party consultants and independent professional advisors  
and can call upon other resources of the Group to assist them  
in developing their respective roles. In addition to the relevant 
committee members and the Company Secretary, external advisors 
and, on occasion, other directors attend committee meetings but 
only at the invitation of the chairmen of the committees.  

Audit Committee  
The Audit Committee comprises five independent  
non-executive directors:  

Philip Bowman (Chairman)  
Ian Carter  
Stephanie George  
John Smith (appointed 2 February 2010) 
David Tyler  

The main roles and responsibilities of the Audit Committee are 
set out in written terms of reference.  

The Audit Committee is responsible for:  

• 

• 

reviewing financial statements and formal announcements 
relating to the Group’s performance  

reviewing the Group’s internal financial controls and risk 
management systems  

The Board is satisfied, in accordance with the provisions of the 
Code, that at least one member of the Audit Committee has 
recent and relevant financial experience, given the nature of the 
senior management positions held by Philip Bowman, David 
Tyler and John Smith (see biographical details on page 61).  

The Audit Committee met three times during the year. The 
attendance record of Committee members is recorded in the 
table on page 65. At the invitation of the Chairman of the Audit 
Committee, the Chairman of the Board, the Chief Executive 
Officer, the Executive Vice President-Chief Financial Officer, the 
Director of Audit and Risk Assurance, the Senior Vice President 
Group Finance, the Director of Tax and the external auditors 
regularly attend meetings. The Audit Committee is responsible 
for reviewing and monitoring the effectiveness of the Group’s 
internal control procedures and risk management systems. 
During the year, the Committee reviewed the Group’s internal 
audit plan and approved the internal audit plan for the financial 
year to 31 March 2011. In addition, the Committee reviewed the 
adequacy of the ‘whistle-blowing’ arrangements in place to 
enable employees to raise, in confidence, any concerns they 
may have. The Committee is satisfied that such arrangements 
remain appropriate.  

During the financial year, the Audit Committee reviewed the 
effectiveness of the external audit process and the qualification, 
expertise, resources and independence of the external auditors. 
The Committee also reviewed the proposed audit fee and terms 
of engagement for the financial year to 31 March 2010 and has 
recommended to the Board that it propose to shareholders that 
PricewaterhouseCoopers LLP be re-appointed as the Group’s 
external auditors.  

The Committee recognises that the independence of the 
auditors is an essential part of the audit framework and the 
assurance that it provides. The Committee monitors the types  
of non-audit work that are undertaken by the external auditors  
to ensure that their objectivity and independence is not 
compromised. Any proposed non-audit assignments require 
prior approval and the Committee receives a report at each 
meeting providing details of non-audit assignments carried out 
by the external auditors in addition to their normal work.  

•  monitoring and reviewing the effectiveness of the Group’s 

internal audit function  

Details of the fees paid to the external auditors during the 
financial year can be found in note 5 in the financial statements.  

•  assessing the independence, objectivity and effectiveness  

of the external auditors  

•  developing and implementing policies on the engagement  
of the external auditors for the supply of non-audit services  

•  making recommendations for the appointment, re-

appointment and removal of the external auditors and 
approving their remuneration and terms of engagement  

• 

reviewing arrangements by which employees may, in 
confidence, raise concerns about possible improprieties  
in matters of financial reporting and other matters  

Remuneration Committee  
The report of the Remuneration Committee is set out on pages 
70 to 79.  

Nomination Committee  
The Nomination Committee comprises:  

John Peace (Chairman)  
Angela Ahrendts  
Philip Bowman  
Ian Carter  
Stephanie George  
John Smith (appointed 2 February 2010) 
David Tyler  

Burberry Group PLC annual report 2009/10  67 

 
 
CORPORATE GOVERNANCE CONTINUED 

The Nomination Committee is responsible for reviewing the 
balance and composition of the Board and its committees and  
for identifying and recommending appointments or renewal of 
appointments to the Board. These regular reviews ensure that  
the Group and the Board are able to draw from a complementary 
balance of skills and experience and that there is in place an 
appropriate plan for orderly succession to the Board. The 
procedure for appointments is set out in its terms of reference.  

During the year under review, the Nomination Committee 
considered and reviewed the structure of the Board and its 
committees, the Group’s succession planning arrangements 
and Board Performance Evaluation. These arrangements will  
be kept under review by the Committee.  

The Nomination Committee met twice during the year under 
review. The table on page 65 gives details of directors’ 
attendance at these meetings. 

An external consultancy was used in connection with the 
appointment of John Smith as a non-executive director.  

The terms and conditions of appointment of non-executive 
directors are available for inspection at Horseferry House, 
Horseferry Road, London SW1P 2AW and will be made available 
for 15 minutes before the Annual General Meeting and during 
the meeting itself. 

Corporate Responsibility  
Details of the Group’s approach to Corporate Responsibility are 
given on pages 52 to 57.  

Accountability and audit  
The Board acknowledges that it should present a balanced  
and understandable assessment of the Group’s position and 
prospects. In this context, reference should be made to the 
Statement of Directors’ Responsibilities on page 80, which 
includes a statement in compliance with the Code regarding  
the Group’s status as a going concern, and to the Report of the 
Auditors on page 81 which includes a statement by the auditors 
about their reporting responsibilities. The Board recognises that 
its responsibility to present a balanced and understandable 
assessment extends to interim and other price-sensitive public 
reports and reports to regulators as well as to information 
required to be presented by law.  

Internal control  
The Board acknowledges that it is responsible for the Group’s 
system of internal control and the Audit Committee reviews its 
effectiveness. Such a system is designed to manage rather than 
eliminate the risk of failure to achieve business objectives and can 
provide only reasonable and not absolute assurance against 
material misstatement or loss. The Audit Committee has reviewed 
the effectiveness of the key procedures, which have been 
established to provide internal control. As part of the process that 
the Board has in place to review the effectiveness of the internal 
control system, there are procedures designed to capture and 
evaluate failings and weaknesses, and in the case of those 
categorised by the Board as ‘significant’, procedures exist to 
ensure that necessary action is taken to remedy the failings.  

In accordance with the revised guidance for directors on internal 
control (‘the Revised Turnbull Guidance’), the Board confirms 
that there is an ongoing process for identifying, evaluating and 
managing the significant risks faced by the Group. These include 
those relating to social, environmental and ethical matters.  
This process was in place throughout the year under review and 
up to the date of approval of the Annual Report and Accounts. 
The process is regularly reviewed by the Audit Committee which 
reports its findings for consideration by the Board, and is in 
accordance with the Revised Turnbull Guidance. The key 
procedures operating within the Group are as follows:  

Risk assessment  
The Group’s business objectives are incorporated into the 
annual budgeting and planning cycle. Progress towards the 
achievement of such objectives is monitored by a variety of 
financial measures and non-financial performance indicators.  

The Group Risk Committee of executive management meets 
formally at least three times a year to re-evaluate risk and to 
consider the work of the Internal Audit and Risk Assurance and 
other assurance teams. During the year, the Committee met  
on three occasions. The Director of Audit and Risk Assurance 
attends these meetings.  

The Board acknowledges that it is responsible for considering 
operational, financial, compliance and other risks to the business 
and has delegated responsibility for reviewing the risk 
management procedures to the Audit Committee.  

Control environment and control activities  
The Group consists of a number of businesses, each with its 
own management structure which forms part of the overall 
management structure of the Group. The senior executives  
of these units report to the executive directors.  

The Group has established procedures for the delegation of 
authorities for matters that are considered significant, either 
because of their value or the impact on the Group, to ensure 
that approval is considered at an appropriate level.  

The Group’s trading units operate within a framework of policies 
and procedures which are either already laid down or are being 
established in organisation or authority manuals. Policies and 
procedures cover key issues such as authorisation levels, 
compliance with legislation and physical security.  

The Group has implemented various strategies to deal with the 
risk factors that have been identified. Such strategies include a 
framework of internal control and the use of third-party services 
to assist in monitoring specific issues. In addition, other 
approaches are taken, such as insurance.  

Information and communication  
The Group has a comprehensive system of budgetary control, 
focused on monthly performance reporting which is at an 
appropriately detailed level. A summary of results supported  
by commentary and performance measures is provided to the 
Board each month. The performance measures are subject  
to review to ensure that they provide relevant and reliable 
indications of business performance.  

68  Burberry Group PLC annual report 2009/10 

CORPORATE GOVERNANCE CONTINUED 

Annual General Meeting  
In accordance with the provisions of the Code, the Notice of the 
2009 Annual General Meeting was sent to shareholders at least 
20 working days before the Meeting. A poll vote was taken on 
each of the resolutions put before shareholders. All directors 
attended the 2009 Annual General Meeting and the Chairman  
of the Board and the chairmen of each of the committees were 
available to answer shareholders’ questions.  

Voting at the 2010 Annual General Meeting will be by way of 
poll. The results of the voting at the Annual General Meeting will 
be announced and details of the votes will be available to view 
on the Company’s website www.burberryplc.com as soon as 
possible after the meeting.  

It is the intention that all directors, including the chairmen of the 
Audit, Remuneration and Nomination Committees, will attend 
the forthcoming Annual General Meeting and will be available to 
answer shareholders’ questions.  

A summary of the key business risks and relevant control 
measures is submitted by the executive directors at each Audit 
Committee meeting. The Audit Committee meets with both 
external and internal auditors.  

Monitoring  
A range of procedures is used to monitor the effective 
application of internal control within the Group. These include 
management review, management confirmations of compliance 
with standards and procedures as well as internal audit and 
other specialist reviews. The Internal Audit department is 
responsible for reporting to the Audit Committee on the 
effectiveness of internal control systems.  

Relations with shareholders  
The Board recognises the importance of maintaining good 
communications with its shareholders and does this through the 
Annual Report, preliminary and interim announcements, interim 
management statements, the Annual General Meeting and 
through the additional processes described below.  

The Chief Executive Officer and Executive Vice President – Chief 
Financial Officer make presentations to institutional shareholders 
and analysts immediately following the release of the preliminary 
and interim results; these presentations are made available on 
the Company’s website www.burberryplc.com.  

The Company communicates with its institutional investors 
frequently and regularly through a combination of formal 
meetings, participation at investor conferences and informal 
briefings with management. The Board is kept abreast of the 
views of major shareholders by briefings from the Director of 
Investor Relations. During the year, the Board obtained an 
independent insight into the views of major shareholders through 
research undertaken by Makinson Cowell, an external capital 
markets advisory firm. The outcomes of that research were 
presented and reviewed by the Board. In addition, analysts’ 
notes and brokers’ briefings are also used to achieve a wide 
understanding of investors’ views.  

The non-executive directors, including the Senior Independent 
Director, are available to meet with major shareholders to discuss 
issues of importance to them, should a meeting be requested.  

Burberry Group PLC annual report 2009/10  69 

 
 
 
DIRECTORS’ REMUNERATION REPORT 

Dear Shareholder 

During the year the Remuneration Committee has focused upon ensuring that in difficult economic conditions, executive and senior 
management remuneration remains aligned with the achievement of sustained performance for shareholders. No salary increases were 
awarded in 2009/10 and no annual bonuses were paid in 2009/10. Reflecting the difficulty in setting annual performance targets  
in this environment, the Remuneration Committee introduced a relative earnings measure in the annual bonus plan for 2009/10 to 
ensure that maximum bonus levels would only be achieved if both absolute earnings targets and relative earnings targets compared  
to the results of competitors were met in full. In addition, an exceptional Restricted Share Plan award was made in 2009 to maintain 
executive focus on short-term actions that are expected to have longer-term benefits to the business. 

During the year the Remuneration Committee kept under close review the performance of Burberry against the financial and total 
shareholder return targets in the annual bonus plan, the Restricted Share Plan and Exceptional Performance Share Plan. The 
Remuneration Committee intend to keep this under review in 2010/11 given the need to ensure the retention and motivation  
of a valued, high-performing executive team, and to maintain a fair reward to both shareholders and employees. 

The Remuneration Committee has recently agreed to the re-introduction of the grant of free share awards to all employees, whether 
based in the UK or overseas. We believe that this will encourage share ownership as well as giving all employees a stake in the  
success of Burberry. 

David Tyler 
Chairman of the Remuneration Committee 

Directors’ Remuneration Report 
This report has been prepared on behalf of the Board by the Remuneration Committee. It has been prepared in accordance with  
the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (the ‘Regulations’) issued under  
the Companies Act 2006 (the ‘Act’) and meets the relevant requirements of the Financial Services Authority’s Listing Rules. 

The Remuneration Committee 
The following directors served as members of the Remuneration Committee (the ‘Committee’) throughout the financial year ending  
31 March 2010: 

David Tyler (Chairman) 
Philip Bowman 
Ian Carter  
Stephanie George  
John Peace 

John Smith was appointed a member of the Committee on 2 February 2010. 

The Committee is responsible for setting the remuneration of the executive directors and the Chairman of the Board and monitors the 
level and structure of senior executive pay. The remuneration of the non-executive directors is a matter for the Board as a whole. No 
director is involved in any discussions as to his/her own remuneration. During the year under review, the Committee met four times. 
Details of attendance at those meetings is set out in the Corporate Governance Report on pages 65 to 69. 

At the invitation of the Committee, except where their own remuneration was being discussed, Angela Ahrendts (Chief Executive Officer), 
Reg Sindall (Executive Vice President – Corporate Resources) and Michael Mahony (Senior Vice President – Commercial Affairs and General 
Counsel) attended Committee meetings during the period under review and provided advice that materially assisted the Committee. 

The Committee has appointed Kepler Associates (‘Kepler’) to assist with its considerations. Kepler provide advice on the ongoing 
operation of employee and executive share plans together with advice on executive remuneration; they do not provide any other 
services to the Company. In addition, advice has been provided during the year by Towers Watson. 

The terms of reference of the Committee are available on the Group’s website www.burberryplc.com. 

70  Burberry Group plc annual report 2009/10 

DIRECTORS’ REMUNERATION REPORT CONTINUED 

Remuneration policy 
The Committee believes the Group’s remuneration should be competitive and strongly linked to performance, taking into account  
the global markets in which it operates. The Group’s remuneration policy is based on the following principles: 

•  Remuneration should be closely aligned with shareholders’ interests through thoughtful selection of performance measures, 

emphasis on variable pay and delivery of remuneration in shares, some of which are expected to be retained in accordance with  
the Group’s shareholding policy 

•  The overall remuneration framework should provide a balance between short and long-term business objectives. Variable pay for 
executive directors includes (1) an annual cash bonus based on profit before tax (‘PBT’), and (2) long-term share-based incentives 
linked primarily to increases in shareholder value and growth in profit. Furthermore, the Burberry Co-Investment Plan (the ‘Co-
Investment Plan’) encourages executive directors and other senior executives to invest their annual cash bonus into shares over  
a further three-year period  

•  Total remuneration should be sufficient to attract, motivate and retain exceptional talent within the global luxury brands sector. Total 

remuneration for executive directors and other senior executives is therefore benchmarked against Burberry’s main global competitors 
and comparable UK companies. The Committee recognises that for each executive the relative importance of each of these benchmarks 
may be different. Benefits are based on competitive market practice for each executive, depending on individual circumstances  

The Committee reviews the Group’s remuneration policy on a regular basis, taking into account the performance and growth of the 
business and the global luxury goods sector. The Committee also considers the Group’s policy against regulatory developments, 
shareholder expectations and market practice. 

During the year the Committee considered the key elements of remuneration policy for all employees worldwide, including the invitation 
to participate in the Sharesave Scheme and the reintroduction and grant of free shares awards. 

Performance graph 
The following graph shows the Total Shareholder Return (‘TSR’) for Burberry Group plc compared to the companies in the FTSE 100 
Index assuming £100 was invested on 31 March 2005. Burberry became a member of the FTSE 100 Index on 10 September 2009  
and prior to that had a market capitalisation close to that of companies at the lower end of the FTSE 100 Index. 

Value of £100 invested on 31 March 2005

Burberry

FTSE 100

£

200

150

100

50

0

March

2005

2006

2007

2008

2009

2010

Burberry Group plc annual report 2009/10  71 

 
 
 
 
DIRECTORS’ REMUNERATION REPORT CONTINUED 

Elements of remuneration 
Remuneration is structured such that for executive directors and other senior executives, performance-related elements represent the 
majority of total potential remuneration. The Group implements its remuneration policy through the provision of the following elements: 

Base salary 
The Group aims to provide salaries which are competitive with those of comparable roles at global companies of a similar size and 
global reach within the luxury goods sector and to a lesser extent comparable UK companies. These companies are representative of 
Burberry’s competitors for executive talent. When making salary determinations, the Committee takes into account not only competitive 
information but also each executive’s individual performance and overall contribution to the business during the year. 

Annual bonus 
Each year the Committee sets bonus targets by reference to internal and external expectations. Bonuses are currently based on 
profitability and performance against Group strategic and individual objectives and overall contribution to the business. The Committee 
believes that linking incentives to profitability helps to reinforce the Group’s strategy and long-term growth objectives. Targets are 
rigorously calibrated by Kepler using benchmarks that include broker earnings estimates for Burberry and its competitors, targets for 
profitability consistent with median/upper quartile shareholder returns, latest projections for the then current year, budget, strategic plan, 
long-term financial goals, etc. Actual bonus awards are subject to the discretion of the Committee. 

Share schemes and long-term incentive arrangements 
The Group has a number of share schemes and long-term incentive arrangements in place: 

•  The Burberry Co-Investment Plan (the ‘Co-Investment Plan’)  

•  The Burberry Exceptional Performance Share Plan (the ‘EPP’)  

•  The Burberry Senior Executive Restricted Share Plan 2004 (the ‘RSP’)  

•  The Burberry Executive Share Option Scheme 2002 (the ‘Executive Share Option Scheme’)  

•  The Burberry Approved Savings-Related Share Option Scheme (the ‘Sharesave Scheme’)  

Further information regarding these schemes can be found on pages 75 to 78 and also in note 26. 

Benefits and allowances 
Benefits for executive directors include private medical insurance, life assurance and long-term disability insurance. Executive directors 
also receive car and clothing allowances. 

Service agreements 
Angela Ahrendts 
Angela Ahrendts relocated from the US to the UK and commenced her employment with Burberry as an executive director on 9 January 2006 
under a service agreement dated 10 October 2005. She was appointed Chief Executive Officer on 1 July 2006. 

If Burberry terminates Angela Ahrendts’ service agreement in circumstances where there is not poor performance she would be entitled 
to 12 months’ salary and 75% of her annual maximum bonus opportunity. She would also receive her pension contribution for a further 
12 months together with overseas allowances and, if applicable, relocation expenses. 

If Burberry terminates the service agreement in circumstances where there is not poor performance as described below, any unvested 
Matching Share awards under the Co-Investment Plan will vest on a time apportioned basis. 

If Burberry terminates the agreement without cause but in circumstances where the Committee determines that Angela Ahrendts’ 
performance or that of the Group does not meet the financial expectations of the Board or shareholders, her entitlements in respect  
of salary and bonus will be reduced so that she will receive 12 months’ salary and 37.5% of her maximum bonus opportunity.  
Angela Ahrendts may terminate the service agreement on six months’ notice. 

Stacey Cartwright 
Stacey Cartwright is employed by Burberry as Executive Vice President, Chief Financial Officer under a service agreement dated  
17 November 2003. Her term of appointment commenced on 1 March 2004. 

Burberry may terminate Stacey Cartwright’s appointment by giving 12 months’ notice. In such circumstances she will be entitled to payment 
of salary and other benefits for a period of 12 months. Stacey Cartwright may terminate the service agreement on six months’ notice.  

72  Burberry Group plc annual report 2009/10 

 
DIRECTORS’ REMUNERATION REPORT CONTINUED 

Audited information 
Directors’ remuneration 
Executive directors’ remuneration 
The remuneration of the executive directors of Burberry Group plc in the period 1 April 2008 to 31 March 2010 is detailed below. 

Aggregate emoluments for director 

Angela Ahrendts 
Year to 31 March 2010 

Year to 31 March 2009 

Stacey Cartwright  

Year to 31 March 2010 

Year to 31 March 2009 

Total 

Year to 31 March 2010 

Year to 31 March 2009 

Salary
£’000 

Allowances  
paid in cash  
£’000   

Bonus   
£’000   

Benefits 
£’000 

Aggregate
emoluments
£’000 

910 

910 

520 

520 

1,430 

1,430 

387   

401   

155(1) 
155   

542   

556   

1,820(2) 
522(3) 

780(4) 
–   

2,600   

522   

45 

54 

10 

7 

55 

61 

3,162 

1,887 

1,465 

682 

4,627 

2,569 

(1)  Allowances for Stacey Cartwright include a portion of her annual pension contribution which she elects to receive as a cash supplement, further details of which are contained in 

the section below entitled ‘Executive directors’ pension entitlements’. 

(2)  Angela Ahrendts is eligible to receive an annual bonus not exceeding 200% of annual salary. 

(3)  Angela Ahrendts did not receive an annual bonus in respect of the financial year to 31 March 2009. She received a personal achievement bonus of US$750,000 in accordance 
with the terms of her service agreement entered into upon her recruitment in 2005; the personal achievement bonus was converted using the US$/GB£ exchange rate at the  
time of payment. 

(4)  Stacey Cartwright is eligible to receive an annual bonus not exceeding 150% of annual salary.  

Executive directors’ pension entitlements 
Angela Ahrendts 
The Group makes an annual contribution equal to 30% of Angela Ahrendts’ base salary to the Burberry Defined Contribution Pension 
Plan. For the year to 31 March 2010, the value of the Group’s contribution was £273,000 (2009: £273,000). 

Stacey Cartwright 
Stacey Cartwright is entitled to an annual pension contribution equal to 30% of base salary. She has elected that a portion be paid as  
a cash supplement. For the year to 31 March 2010, the cash supplement was £123,420 (2009: £123,420). The contribution paid into 
her personal pension plan was £32,580 in the year to 31 March 2010 (2009: £32,580). 

Burberry Group plc annual report 2009/10  73 

 
 
 
DIRECTORS’ REMUNERATION REPORT CONTINUED 

Chairman and non-executive directors’ remuneration 
The Chairman’s remuneration is reviewed by the Committee. The fees for the non-executive directors are reviewed by the Board.  
The structure of remuneration for the Chairman and non-executive directors is set by reference to market practice within the limits  
set by the Articles of Association and were last reviewed in 2007. The Chairman and non-executive directors are not eligible for 
performance-related bonuses or share awards and no pension contributions are made on their behalf. 

The table below sets out the fee structure for the Chairman and non-executive directors as at 31 March 2010. 

Chairman(1) 
Senior independent director(2) 
Board member 

Audit Committee chairmanship fees 

Remuneration Committee chairmanship fees 
Attendance allowance(3) 

Fee level £’000 

290 

70 

55 

20 

15 

2 

(1)  The Chairman is not eligible for Committee Chairmanship fees or attendance allowances. 

(2)  The Senior independent director is eligible for Committee Chairmanship fees and attendance allowances. 

(3)  Non-executive directors receive an attendance allowance for each meeting attended outside their country of residence. 

The non-executive directors serve under Letters of Appointment as detailed in the table below. Non-executive directors are appointed 
for an initial three-year term, after which they may continue to serve subject to the Board’s discretion and re-election by shareholders in 
accordance with the Company’s Articles of Association, subject to six months’ notice by either party. Fees paid to the Chairman and 
non-executive directors during the year are set out in the table below. 

John Peace 

Philip Bowman 

Ian Carter 

Stephanie George 

John Smith 

David Tyler 

Total 

Letter of 
appointment 
dated 

20 June 2002 

11 June 2002 

16 April 2007 

23 January 2006 

27 November 2009 

20 June 2002 

Year to 31 March 2010 
£’000 

Year to 31 March 2009
£’000 

Allowances 

– 

– 

4 

12 

– 

– 

16 

Fees 

290 

90 

55 

55 

18 

70 

578 

Total 

290 

90 

59 

67 

18 

70 

594 

Total 

290 

90 

55 

65 

– 

70 

570 

74  Burberry Group plc annual report 2009/10 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DIRECTORS’ REMUNERATION REPORT CONTINUED 

Share schemes and long-term incentive arrangements 
The Burberry Co-Investment Plan (the ‘Co-Investment Plan’) 
The Group encourages executive directors and other senior executives to hold shares in Burberry Group plc. To facilitate this, executive 
directors and other senior executives may, at the invitation of the Committee, defer receipt of all or part of their annual bonus and invest 
it in Burberry shares, with up to a 2:1 match based on Group performance during the year. The Matching Share awards do not vest for 
three years and are forfeited if the executive leaves due to resignation within that period. To further link pay and performance, and to 
align remuneration with shareholders’ interests, the vesting of Matching Share awards granted after 31 March 2009 will be subject to 
the achievement of secondary performance conditions linked to growth in profit before tax. 

No awards were made under the Co-Investment Plan during the financial year to 31 March 2010. The interests of the executive 
directors in share awards granted under this scheme as at 31 March 2010 were as follows. 

Number of Invested Shares 

Number of Matching Shares(2) 

Date of
grant 

As at 
31 March 
2009 

Purchased
during the
year 

Released  
during the  
year   

As at 
31 March
2010 

As at
31 March
2009 

Awarded
during the
year 

Angela Ahrendts  20/06/2007 

82,061 

Total 

03/06/2008  135,434 

  217,495 

Stacey Cartwright  21/07/2005 

20/06/2007 

03/06/2008 

38,295 
37,637 

60,228 

– 

– 

–    

82,061 

  280,123 

–     135,434 

  416,086 

–     217,495 

  696,209 

– 
–  38,295(1) 
–    
– 

– 
37,637 

  104,580 
  128,479 

Exercised       
during the       
year       
–  280,123(3,5,6) 
– 

As at
31 March
2010 

Vesting date 

–  02/03/2010 

–       416,086  03/06/2011 

–  280,123       416,086 
–  104,580(4,7)  
–  128,479(3,5,8) 
– 

–  21/07/2008 
–  02/03/2010 

– 

–    

60,228 

  185,036 

–       185,036  03/06/2011 

Total 

  136,160 

–  38,295    

97,865 

  418,095 

–  233,059       185,036 

(1)  Upon vesting of the Matching Share awards, the Invested Shares are no longer subject to restriction. 

(2)  The Matching Share awards are awarded on a gross basis and are taxed at the point of exercise. 

(3)  The market value of Burberry shares on the date of exercise (2 March 2010) was 637p. 

(4)  The market value of Burberry shares on the date of exercise (27 November 2009) was 572.5p. 

(5)  The exercise of Matching Share awards granted on 20 June 2007 took place on 2 March 2010. Upon exercise, sufficient shares were sold to meet the tax liability arising,  

the Invested Shares and the remaining Matching Shares may not be sold or transferred before the third anniversary of the date of the grant. 

(6)  A cash payment of £141,462, being the amount equivalent to the value of the dividends which would have been received as beneficial owner of the Matching Shares during  

the deferred period, was paid upon exercise. 

(7)  A cash payment of £49,152, being the amount equivalent to the value of the dividends which would have been received as beneficial owner of the Matching Shares during  

the deferred period, was paid upon exercise. 

(8)  A cash payment of £64,882, being the amount equivalent to the value of the dividends which would have been received as beneficial owner of the Matching Shares during  

the deferred period, was paid upon exercise. 

Burberry Group plc annual report 2009/10  75 

 
 
 
 
 
 
 
 
 
 
 
 
DIRECTORS’ REMUNERATION REPORT CONTINUED 

The Burberry Exceptional Performance Share Plan (the ‘EPP’) 
The EPP is a one-off long-term incentive plan introduced in 2007, the purpose of which was to incentivise senior management to 
achieve stretching goals and to help provide exceptional reward for exceptional performance. Awards granted under the EPP are based 
50% on relative Total Shareholder Return (‘TSR’) performance and 50% on growth in profits over the three and four-year performance 
periods to 2010 and 2011. Awards do not vest unless Burberry’s TSR exceeds the median of the comparator group or growth in profit 
before tax (‘PBT’) exceeds 50% over the four-year performance period to 2010 or 75% over the five-year performance period to 2011. 
For the performance period to 2010, maximum vesting requires Burberry’s TSR to outperform the median of its peers by at least 8% p.a. 
and would require PBT growth of at least 75%. For the performance period to 2011, maximum vesting requires Burberry’s TSR to 
outperform the median of its peers by at least 7% p.a. and would require PBT growth of at least 100%. Of the shares which vest based 
on the achievement of the performance conditions, 50% vest on the third anniversary of the date of grant based on performance to 
2010 and the remaining 50% vest on the fourth anniversary of the date of grant based on performance to 2011. 

The TSR group for this award comprised Bulgari, Coach, Compagnie Financière Richemont, Estée Lauder, Fossil, Geox, Hermès 
International, Hugo Boss, Inditex, Liz Claiborne, Luxottica Group, LVMH Moët Hennessy Louis Vuitton, Nike, Nordstrom, Polo Ralph 
Lauren, PPR, Saks, Swatch, Tiffany & Co, and Tod’s. 

The interests of the executive directors in ordinary shares subject to awards under this plan as at 31 March 2010 were as follows: 

Number of ordinary shares 

Vesting period(1) 

Angela Ahrendts 
Stacey Cartwright 

Date of 
grant 

26/07/2007 

26/07/2007 

As at 
31 March 
2009 

850,000 
350,000 

Lapsed
during the
year 

Exercised
during the
year 

– 
– 

– 
– 

As at
31 March
2010 

850,000 
350,000 

(1)  Subject to performance testing  

From 

To 

Expiry date 

26/07/2010 

26/07/2011 

25/07/2012 

26/07/2010 

26/07/2011 

25/07/2012 

The Burberry Senior Executive Restricted Share Plan 2004 (the ‘RSP’) 
Under the RSP which was introduced in 2004, executives may be awarded shares up to a maximum value of two times base salary. 
The vesting of awards granted under the RSP is based 50% on Burberry’s three-year Total Shareholder Return (‘TSR’) relative to its 
peers and 50% on three-year growth in profit before tax (‘PBT’). 

Awards granted between 2004 and 2007 vest in full only if Burberry achieves at least upper quartile TSR relative to its global peers and 
at least 15% per annum PBT growth. A proportion of an award (12.5%) may vest if TSR performance exceeds the median of the peer 
group or if PBT growth exceeds 5% per annum over three years. Of the shares which meet the performance criteria, 50% vests after 
three years. The remaining 50% vests in two equal tranches on the fourth and fifth anniversaries of the date of grant. 

Awards granted in 2009 will vest in full only if Burberry achieves at least upper quartile TSR relative to its global peers and at least 10% 
per annum PBT growth. A proportion of an award (12.5%) may vest if TSR performance exceeds the median of the peer group or if PBT 
growth exceeds 3% per annum over three years. Of the shares which meet the performance criteria, 50% vests after three years. The 
remaining 50% vests in two equal tranches on the fourth and fifth anniversaries of the date of grant. The Committee believes that these 
performance conditions were as challenging, given the significant changes in the economic environment, as those set when the RSP 
was adopted in 2004. 

The Committee chose TSR relative to a group of Burberry’s peers because it felt that this is an objective measure of the Group’s 
success and aligns with shareholder interests. Growth in PBT was chosen as it continues to be the primary measure used by 
management and the Committee believes strong growth in pre-tax profit is key to delivering superior shareholder returns. 

The TSR group for awards granted in 2009 and 2007 comprised Bulgari, Coach, Compagnie Financière Richemont, Estée Lauder, 
Fossil, Geox, Hermès International, Hugo Boss, Inditex, Liz Claiborne, Luxottica Group, LVMH Moët Hennessy Louis Vuitton, Nike, 
Nordstrom, Polo Ralph Lauren, PPR, Saks, Swatch, Tiffany & Co, and Tod’s. 

In 2006, the peer group included Christian Dior, IT Holding, Movado and Waterford Wedgewood, following review by the Committee, 
these companies were replaced by Geox, Inditex, Luxottica Group and Nike in 2007. In 2004 and 2005, the peer group included 
Barneys New York, Neiman-Marcus and Tommy Hilfiger. When those companies ceased to be listed, Estee Lauder, Fossil, Liz 
Claiborne and Nordstrom were added to the peer group in 2006. 

76  Burberry Group plc annual report 2009/10 

 
 
 
 
 
 
 
 
DIRECTORS’ REMUNERATION REPORT CONTINUED 

The interests of the executive directors in ordinary shares subject to awards under this plan as at 31 March 2010 were as follows: 

Date of 
grant 

As at 
31 March 
2009 

Number of ordinary shares 
Lapsed  
during the  
year(3) 

Exercised      
during the      
year       

Granted   
during the   
year(2) 

Angela Ahrendts  11/06/2007  255,987 
– 

01/06/2009 

–   
450,000   

Total 

  255,987 

450,000   

Stacey Cartwright  02/08/2004 

37,129 

21/07/2005 

10/08/2006 

27/11/2006 

11/06/2007 

01/06/2009 

60,044 

94,837 

23,709 

74,098 

Vesting period(1) 

From 

To  Expiry date 

  11/06/2010  11/06/2012  10/06/2017 
  01/06/2012  01/06/2014  31/05/2019 

As at
31 March
2010 

255,987 
450,000 

705,987 

– 

– 

  02/08/2007  02/08/2009  01/08/2014 

  21/07/2008  02/03/2010  20/07/2015 

10,077 

  10/08/2009  10/08/2011  09/08/2016 

2,520 

  27/11/2009  27/11/2011  26/11/2016 

74,098 

  11/06/2010  11/06/2012  10/06/2017 

–   
–   

–   

–   

–   

54,532   

13,633   

–   

–   

–       
–       

–       
37,129(4)    
60,044(4,5,6) 
30,228(4,5,7) 
7,556(4,5,8) 
–       

–   

–   

–   

–   

–   

– 

265,000   

–       

265,000 

  01/06/2012  01/06/2014  31/05/2019 

Total 

  289,817 

265,000   

68,165    134,957       

351,695 

(1)  Subject to performance testing. 

(2)  The market value of Burberry shares on the date of grant (1 June 2009) was 395.25p. 

(3)  Following the calculation of the achievement of the performance conditions attaching to the awards granted on 10 August 2006 and 27 November 2006, 57.5% of these  

awards lapsed. 

(4)  The market value of Burberry shares on the date of exercise (27 November 2009) was 572.5p. 

(5)  The market value of Burberry shares on the date of exercise (2 March 2010) was 637p. 

(6)  The first and second tranches of the award (totalling 45,033 shares) granted on 21 July 2005 were exercised on 27 November 2009. The final tranche of the award  

(15,011 shares) was exercised on 2 March 2010; upon exercise sufficient shares were sold to meet the tax liability arising and the remaining shares may not be sold or  
transferred before the fifth anniversary of the date of grant. 

(7)  The first tranche of the award (20,152 shares) granted on 10 August 2006 was exercised on 27 November 2009. The second tranche of the award (10,076 shares) was exercised 
on 2 March 2010; upon exercise sufficient shares were sold to meet the tax liability arising and the remaining shares may not be sold or transferred before the fourth anniversary  
of the date of grant. 

(8)  The first tranche of the award (5,038 shares) granted on 27 November 2006 was exercised on 27 November 2009. The second tranche of the award (2,518 shares) was exercised 
on 2 March 2010; upon exercise sufficient shares were sold to meet the tax liability arising and the remaining shares may not be sold or transferred before the fourth anniversary  
of the date of grant. 

On 31 January 2006, Angela Ahrendts was granted a one-off award under the terms of her service agreement. The rules applicable to 
the award were the same as for the RSP other than in respect of the time of vesting. The interests of Angela Ahrendts in shares subject 
to this award as at 31 March 2010 were as follows: 

Date of 
grant 

As at
31 March
2009 

Number of ordinary shares 
Exercised     
during    
the year(1, 2) 

Lapsed
during the
year 

As at
31 March
2010 

Angela Ahrendts 

31/01/2006 

158,898 

–  158,898     

– 

(1)  The market value of Burberry shares on the date of exercise (2 March 2010) was 637p. 

Vesting period 

From 

To 

01/12/2008 

02/03/2010 

(2)  The exercise of the final tranche of the award took place on 2 March 2010. Upon exercise, sufficient shares were sold to meet the tax liability arising, the remaining shares may  

not be sold or transferred before 1 December 2010. 

The Burberry Senior Executive Share Option Scheme 2002 (the ‘Executive Share Option Scheme’) 
The interests of executive directors in options granted under this scheme as at 31 March 2010 were as follows: 

Number of ordinary shares under option 

Exercise period 

Date of 
grant 

As at 
31 March 
2009 

Lapsed 
during
the year 

Exercised
during the
year 

As at 
31 March 
2010 

Exercise
price (p) 

From 

To 

Stacey Cartwright 

02/08/2004 

185,185 

– 

185,185 

– 

378.0 

02/08/2005 

01/08/2014 

(1)  The market value of Burberry shares on the date of exercise (27 November 2009) was 572.5p. 

Burberry Group plc annual report 2009/10  77 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DIRECTORS’ REMUNERATION REPORT CONTINUED 

The Burberry Approved Savings-Related Share Option Scheme (the ‘Sharesave Scheme’) 
In order to encourage employee share ownership at all levels, the Group offers a Sharesave Scheme. The Sharesave Scheme offers 
executive directors and eligible employees an opportunity to enter into a long-term savings contract to save a portion of their salary 
which can be used to purchase Burberry shares at up to a 20% discount to the market price at the date of invitation. Where it is not 
possible to offer a Sharesave Scheme in countries due to regulatory issues, or where the number of employees based in that country 
would make its introduction financially unviable, the Group offers a cash-based scheme as an alternative. 

The interests of the executive directors in options granted under the Sharesave Scheme are shown in the table below: 

Number of ordinary shares 

  Exercise period 

Date of 
grant 

As at  
31 March 
2009 

Granted 
during the 
year 

Lapsed
during the
year 

Angela Ahrendts 

23/06/2006 

Stacey Cartwright  23/06/2006 

2,667 

2,667 

– 

– 

30/06/2009 

– 

2,827 

– 

– 

– 

Exercised  
during the  
year   
2,667(1) 
2,667(2) 
– 

As at 
31 March
2010 

– 

– 

2,827 

Exercise
price (p) 

350.5 

350.5 

321.0 

From 

To 

01/09/2009  28/02/2010 

01/09/2009  28/02/2010 

01/09/2012  28/02/2013 

(1)  The market value of Burberry shares on the date of exercise (8 December 2009) was 564p. 

(2)  The market value of Burberry shares on the date of exercise (1 December 2009) was 583p. 

(3)  The market value of Burberry shares on the date of grant (30 June 2009) was 423p. 

Dilution limits 
The Group’s share schemes contain limits that govern the quantum of awards that may be granted and the amount of newly issued 
shares that may be used to satisfy such awards. These limits are in line with the guidance of the Association of British Insurers in that no 
more than 10% of the Group’s issued share capital may be allocated under the Group’s relevant schemes over a rolling ten-year period. 

Shareholding policy 
The Committee believes that share ownership provides an effective way to align the interests of executives with those of shareholders. The 
Group introduced a Shareholding Policy in 2007. Certain senior executives are expected to achieve an interest in Burberry shares equivalent 
to at least one times base salary over the five-year period to 2012. Executives are expected to retain a proportion of the shares acquired on 
the exercise of options and awards until such guidelines are met. The Chief Executive Officer and Chief Financial Officer are expected to 
hold an interest in shares with a value equivalent to at least three times and one and a half times base salary respectively by 2012. As at  
31 March 2010, both the Chief Executive Officer and the Chief Financial Officer have complied with the policy. 

As part of the Group’s Shareholding Policy, the Chairman and non-executive directors are expected to acquire shares with a market 
value of a minimum of £6,000 for each year of their appointment. The Chairman and non-executive directors have complied with  
this policy. 

Gains made by directors on share options and awards 
The table below shows notional gains made by individual directors from the exercise of share options and awards during the year to  
31 March 2010. The gains are calculated by reference to the market value of Burberry’s shares on the date of exercise. 

Angela Ahrendts 

Stacey Cartwright 

Number of ordinary shares 

Exercised
 during the year 

Retained as at 
31 March 2010 

441,688 

555,868 

214,444 

257,432 

Notional gain in
 the year to
31 March 2010
£’000 

£2,759 

£2,574 

The changes to the personal tax regime in the United Kingdom in April 2010 created a significantly different tax position for the executive 
directors. The Company therefore brought forward the vesting of certain share awards which vest in 2010 in respect of which no further 
performance tests needed to be satisfied. The cost to the Company was minimal. 

78  Burberry Group plc annual report 2009/10 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DIRECTORS’ REMUNERATION REPORT CONTINUED 

Directors’ interests 
The beneficial interests of the directors in the ordinary shares of Burberry Group plc (in addition to interests in options and share awards) 
are shown below: 

Angela Ahrendts 
Stacey Cartwright 

John Peace 

Philip Bowman 

Ian Carter 

Stephanie George 

John Smith 

David Tyler 

Holdings of    
ordinary    
shares as at    
31 March    
2010    
431,939(1) 
404,439(1) 
175,738   

65,000   

26,690   

3,700   

1,011   

Holding of   
ordinary   
shares as at   
31 March   
2009    
411,031(1) 
147,007(1) 
175,738   

65,000   

17,990   

–   

–   

60,000   

60,000   

(1)  Includes Invested Shares under the Co-Investment Plan. 

(2)  The market price of an ordinary share on 31 March 2010 (the last dealing day in the financial year) was 714.5p. The highest and lowest market prices of an ordinary share in the 

year were 308p and 742p respectively. 

As potential beneficiaries under the Burberry Group plc ESOP Trust (the ‘Trust’) Angela Ahrendts and Stacey Cartwright are deemed to 
have an interest in the Company’s ordinary shares held by the Trust. The Trust held 228,492 ordinary shares as at 31 March 2010. 
There have been no further changes in the above interests between 31 March 2010 and 25 May 2010. 

There are no other non-beneficial interests. 

Audit statement  
In their audit opinion on page 81, PricewaterhouseCoopers LLP refer to their audit of the disclosures required by Schedule 8 to the 
Regulations. These comprise the following disclosures in this Directors’ Remuneration Report: the disclosures under the headings 
‘Executive directors’ remuneration’, ‘Executive directors’ pension entitlements’, ‘Chairman and non-executive directors’ remuneration’, 
‘The Burberry Co-Investment Plan’, ‘The Burberry Exceptional Performance Share Plan’, ‘The Burberry Senior Executive Restricted 
Share Plan 2004’, ‘The Burberry Executive Share Option Scheme 2002’ and ‘The Burberry Approved Savings-Related Share Option 
Scheme’ and the disclosures under the heading, ‘Directors’ Interests’ on pages 73 to 79.  

Approved by the Board and signed on its behalf by:  

David Tyler 
Chairman of the Remuneration Committee  
25 May 2010 

Burberry Group plc annual report 2009/10  79 

 
 
 
STATEMENT OF DIRECTORS’ RESPONSIBILITIES 

The directors are responsible for preparing the Annual Report, the Directors’ Remuneration Report and the Group and the parent 
Company financial statements in accordance with applicable law and regulations.  

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared 
the Group financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union 
(EU), and the parent Company financial statements in accordance with applicable law and United Kingdom Accounting Standards 
(United Kingdom Generally Accepted Accounting Practice). Under company law the directors must not approve the financial statements 
unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss 
of the Group for that period. 

In preparing these financial statements, the directors are required to: 

•  select suitable accounting policies and then apply them consistently; 

•  make judgements and estimates that are reasonable and prudent; 

•  state whether IFRSs as adopted by the EU and applicable UK Accounting Standards have been followed, subject to any material 

departures disclosed and explained in the Group and parent Company financial statements respectively; and 

•  prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue  

in business. 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s 
transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them 
to ensure that the financial statements and the Directors’ Remuneration Report comply with the Companies Act 2006 and, as regards 
the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company 
and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. 

The directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom governing 
the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 

Each of the directors, whose names and functions are listed on page 61 confirms that, to the best of their knowledge: 

• 

• 

the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view 
of the assets, liabilities, financial position and profit or loss of the Group; and 

the Directors’ Report contained on page 62 includes a fair review of the development and performance of the business and the 
position of the Group together with a description of the principal risks and uncertainties that the Group faces which are contained  
on pages 48 to 51. 

80  Burberry Group PLC annual report 2009/10 

 
 
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF 
BURBERRY GROUP PLC 

We have audited the Group financial statements of Burberry Group plc for the year ended 31 March 2010 which comprise the Group 
Income Statement, Group Statement of Comprehensive Income, Group Balance Sheet, Group Statement of Changes in Equity, Group 
Statement of Cash Flows and the related notes. The financial reporting framework that has been applied in their preparation is 
applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. 

Respective responsibilities of directors and auditors 
As explained more fully in the Statement of Directors’ Responsibilities set out on page 80, the directors are responsible for the 
preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the Group 
financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards 
require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.  

This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 
3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility 
for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly 
agreed by our prior consent in writing. 

Scope of the audit of the financial statements 
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable 
assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an 
assessment of whether the accounting policies are appropriate to the Group’s circumstances and have been consistently applied  
and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation  
of the financial statements.  

Opinion on financial statements 
In our opinion the Group financial statements: 

•  give a true and fair view of the state of the Group’s affairs as at 31 March 2010 and of its profit and cash flows for the year  

then ended; 

•  have been properly prepared in accordance with IFRSs as adopted by the European Union; and 

•  have been prepared in accordance with the requirements of the Companies Act 2006 and Article 4 of the IAS Regulation.  

Opinion on other matters prescribed by the Companies Act 2006 
In our opinion: 

• 

• 

the information given in the Directors’ Report for the financial year for which the Group financial statements are prepared is 
consistent with the Group financial statements; and 

the information given in the Corporate Governance Statement with respect to internal control and risk management systems  
and about share capital structure is consistent with the financial statements.  

Matters on which we are required to report by exception 
We have nothing to report in respect of the following: 

Under the Companies Act 2006 we are required to report to you if, in our opinion: 

•  certain disclosures of directors’ remuneration specified by law are not made; or 

•  we have not received all the information and explanations we require for our audit; or 

•  a Corporate Governance Statement has not been prepared by the parent Company. 

Under the Listing Rules we are required to review: 

• 

• 

the directors’ statement, set out on page 64, in relation to going concern; and 

the parts of the Corporate Governance Statement relating to the Company’s compliance with the nine provisions of the June 2008 
Combined Code specified for our review. 

Other matters 
We have reported separately on the parent Company financial statements of Burberry Group plc for the year ended 31 March 2010  
and on the information in the Directors’ Remuneration Report that is described as having been audited. 

Kim Green (Senior Statutory Auditor) 
For and on behalf of PricewaterhouseCoopers LLP 

Chartered Accountants and Statutory Auditors 
London, 25 May 2010

Burberry Group PLC annual report 2009/10  81 

 
 
 
GROUP INCOME STATEMENT 

 Revenue 
 Cost of sales 

 Gross profit 

 Net operating expenses 

 Operating profit/(loss)  

 Financing 

 Interest receivable and similar income 

 Interest payable and similar charges 

 Net finance charge 

 Profit/(loss) before taxation 

 Taxation 

 Profit/(loss) for the year 

 Attributable to: 

 Equity holders of the Company 

 Minority interest 

 Profit/(loss) for the year 

 Earnings/(loss) per share  

 – basic 

 – diluted 

 Operating profit/(loss) 

 Exceptional items: 

 – restructuring costs 

 – goodwill impairment charge 

 – store impairments and onerous lease provisions 

 – negative goodwill 

 – relocation of headquarters 

 Adjusted operating profit 

 Adjusted earnings per share 

 – basic 

 – diluted 

 Dividends per share 

 – interim  

 – proposed final (not recognised as a liability at 31 March) 

82  Burberry Group PLC annual report 2009/10 

Year to 
31 March 
2010 
£m 

1,279.9 

(475.9) 

804.0 

(632.9) 

171.1 

Year to
31 March
2009
£m 

1,201.5 

(535.7)

665.8 

(675.7)

(9.9)

1.1 

(6.2) 

(5.1) 

166.0 

(83.8) 

82.2 

81.4 

0.8 

82.2 

18.8p 

18.4p 

£m 
171.1 

48.8 

– 

– 

– 

– 

219.9 

7.2 

(13.4)

(6.2)

(16.1)

11.0 

(5.1)

(6.0)

0.9 

(5.1)

(1.4p)

(1.4p)

£m 
(9.9)

54.9 

116.2 

13.4 

(1.7)

7.9 

180.8 

35.9p 

35.1p 

30.6p 

30.2p 

3.50p 

10.50p 

3.35p 

8.65p 

Note 

3 

4 

6 

6 

6 

5 

7 

8 

8 

4 

4 

4 

4 

4 

8 

8 

9 

9 

 
 
 
 
 
  
   
 
   
 
 
  
   
 
   
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
  
   
 
   
 
  
   
 
   
   
 
   
 
 
GROUP STATEMENT OF COMPREHENSIVE INCOME 

Profit/(loss) for the period 

Other comprehensive income: 

– cash flow hedges 

– foreign currency translation differences 

Tax on other comprehensive income: 

– cash flow hedges 

– foreign currency translation differences 

Other comprehensive (expense)/income for the period, net of tax 

Total comprehensive income for the period 

Total comprehensive income attributable to:  

Equity holders of the Company 

Minority interest 

Note 

21 

Year to 
 31 March 
2010 
£m 

82.2 

Year to
31 March 
 2009
£m 

(5.1)

17.3 

(6.7)

(5.0)

(6.6)

(1.0)

81.2 

79.8 

1.4 

81.2 

(10.7)

116.8 

3.1 

(4.3)

104.9 

99.8 

98.8 

1.0 

99.8 

Burberry Group PLC annual report 2009/10  83 

 
 
 
 
   
 
 
   
 
 
 
 
 
 
   
 
   
 
 
 
 
 
 
 
GROUP BALANCE SHEET 

ASSETS 
Non-current assets 
Intangible assets 
Property, plant and equipment 
Deferred tax assets 
Trade and other receivables 
Derivative financial assets 

Current assets 
Inventories 
Trade and other receivables 
Derivative financial assets 
Income tax receivables 
Cash and cash equivalents 

Total assets 

LIABILITIES 
Non-current liabilities 
Trade and other payables 
Deferred tax liabilities 
Derivative financial liabilities 
Retirement benefit obligations 
Provisions for other liabilities and charges 

Current liabilities 
Bank overdrafts and borrowings 
Derivative financial liabilities 
Trade and other payables 
Provisions for other liabilities and charges 
Income tax liabilities 

Total liabilities 

Net assets 

EQUITY 
Capital and reserves attributable to the Company’s equity holders 
Ordinary share capital 
Share premium account 
Capital reserve 
Hedging reserve 
Foreign currency translation reserve 
Retained earnings 

Minority interests in equity 
Total equity 

As at 
31 March  
2010 
£m  

As at
31 March 
2009
£m 

Note 

10 
11 
12 
13 
15 

14 
13 
15 

16 

17 
12 
15 
18 
19 

20 
15 
17 
19 

21 

21 
21 
21 

64.6 
256.1 
39.2 
11.0 
1.7 

372.6 

166.9 
128.4 
2.6 
0.7 
468.4 

57.5 
258.6 
57.7 
9.5 
– 

383.3 

262.6 
187.2 
23.2 
17.1 
252.3 

767.0 
1,139.6 

742.4 
1,125.7 

(26.5) 
(1.6) 
(0.2) 
(0.5) 
(5.5) 
(34.3) 

(206.4) 
(9.0) 
(200.2) 
(34.4) 
(51.8) 
(501.8) 
(536.1) 

603.5 

0.2 
186.1 
27.2 
(1.1) 
136.3 
241.4 
590.1 
13.4 
603.5 

(23.8)
(2.3)
(0.4)
(0.6)
(7.9)
(35.0)

(244.7)
(57.1)
(162.4)
(33.5)
(49.1)
(546.8)
(581.8)

543.9 

0.2 
175.9 
27.2 
(13.4)
150.2 
199.2 
539.3 
4.6 
543.9 

The consolidated financial statements of Burberry Group plc (registered number 03458224) on pages 82 to 124 were approved by the 
Board on 25 May 2010 and signed on its behalf by: 

John Peace 
Chairman 

Stacey Cartwright 
Executive Vice President, Chief Financial Officer

84  Burberry Group PLC annual report 2009/10 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GROUP STATEMENT OF CHANGES IN EQUITY 

Attributable to owners  
of the Company 

Ordinary 
Share 
capital
£m 

Share 
premium 
account
£m 

Note 

Other 
reserves
£m 

Retained 
earnings
£m 

Total 
£m 

Minority 
interest
£m 

21 

21 

Balance as at 1 April 2008 

Profit/(loss) for the period 

Other comprehensive income: 

Cash flow hedges 

Foreign currency translation differences 

Tax on other comprehensive income 

Total comprehensive income/(expense)  
for the period 

Transfer between reserves 

Transactions with owners: 

Employee share option schemes 

– value of share options granted 

– tax on share options granted 

– exercise of share options 

Purchase of own shares 

Sale of own shares by ESOPs 

Capital contribution by minority interest 

Dividends paid in the period 

Balance as at 31 March 2009 

Profit for the period 

Other comprehensive income: 

Cash flow hedges 

Foreign currency translation differences 

Tax on other comprehensive income 

Total comprehensive income/(expense)  
for the period 

Transactions with owners: 

Employee share option schemes 

– value of share options granted 

– tax on share options granted 

– exercise of share options 

Purchase of own shares 

Treasury shares 

Sale of own shares by ESOPs 

Capital contribution by minority interest 

Dividends paid in the period 

Balance as at 31 March 2010 

Total 
equity
£m 

495.3 

(5.1)

(10.7)

116.8 

(1.2)

99.8 

– 

4.5 

(2.4)

– 

(5.4)

0.2 

3.6 

(51.7)

543.9 

82.2 

17.3 

(6.7)

(11.6)

– 

0.9 

– 

0.1 

– 

1.0 

– 

– 

– 

– 

– 

– 

3.6 

– 

4.6 

0.8 

– 

0.6 

– 

0.2 

174.3 

58.6 

262.2 

495.3 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

1.6 

– 

– 

– 

– 

– 

(6.0) 

(6.0) 

(10.7)

116.7 

(1.2)

104.8 

0.6 

– 

– 

– 

(10.7) 

116.7 

(1.2) 

(6.0) 

(0.6) 

98.8 

– 

– 

– 

– 

– 

– 

– 

– 

4.5 

(2.4) 

(1.6) 

(5.4) 

0.2 

– 

4.5 

(2.4) 

– 

(5.4) 

0.2 

– 

(51.7) 

(51.7) 

0.2 

175.9 

164.0 

199.2 

539.3 

– 

81.4 

81.4 

17.3 

(7.3)

(11.6)

– 

– 

– 

17.3 

(7.3) 

(11.6) 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

10.2 

– 

– 

– 

– 

– 

(1.6)

81.4 

79.8 

1.4 

81.2 

– 

– 

– 

– 

– 

– 

– 

– 

18.1 

18.1 

9.3 

(8.3) 

(7.5) 

(0.4) 

2.1 

– 

9.3 

1.9 

(7.5) 

(0.4) 

2.1 

– 

(52.5) 

(52.5) 

– 

– 

– 

– 

– 

– 

7.4 

– 

18.1 

9.3 

1.9 

(7.5)

(0.4)

2.1 

7.4 

(52.5)

0.2 

186.1 

162.4 

241.4 

590.1 

13.4 

603.5 

Burberry Group PLC annual report 2009/10  85 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GROUP STATEMENT OF CASH FLOWS 

Cash flows from operating activities 
Operating profit/(loss) 
Depreciation 
Amortisation 
Net impairment charges 
Negative goodwill 
Loss on disposal of property, plant and equipment and intangible assets 
Fair value (gains)/losses on derivative instruments  
Charges in respect of employee share incentive schemes 
Decrease in inventories 
Decrease in receivables 
Increase in payables 
Cash generated from operating activities 
Interest received 
Interest paid 
Taxation paid 
Net cash inflow from operating activities 

Cash flows from investing activities 
Purchase of tangible and intangible fixed assets 
Proceeds from sale of property, plant and equipment 
Capital contributions by minority interests 
Business combinations, net of cash acquired 
Net cash outflow from investing activities 

Cash flows from financing activities 
Dividends paid in the year  
Issue of ordinary share capital  
Sale of own shares by ESOPs 
Purchase of own shares by ESOPs 
Repayments of borrowings 
Proceeds from borrowings 
Derivatives matured during the year and remaining in equity 
Net cash outflow from financing activities 

Net increase/(decrease) in cash and cash equivalents  
Effect of exchange rate changes  
Cash and cash equivalents at beginning of period 
Cash and cash equivalents at end of period 

ANALYSIS OF NET CASH 

Cash and cash equivalents as per the balance sheet 
Bank overdrafts 
Cash and cash equivalents per the statement of cash flows 
Drawn down borrowings 
Effect of exchange rate changes on foreign currency borrowings 
Bank and other borrowings 
Net cash 

86  Burberry Group PLC annual report 2009/10 

Year to 
31 March 
 2010 
£m 

Year to
31 March
 2009
£m 

Note 

171.1 
46.1 
6.2 
7.7 
– 
4.2 
(11.9) 
18.1 
87.4 
56.2 
40.5 
425.6 
1.1 
(6.1) 
(51.3) 
369.3 

(69.9) 
– 
7.4 
(2.0) 
(64.5) 

(52.5) 
1.9 
2.1 
(7.5) 
(39.7) 
1.2 
0.2 
(94.3) 

210.5 
(0.3) 
53.0 
263.2 

(9.9)
44.8 
4.8 
126.8 
(1.7)
2.0 
10.7 
4.5 
55.7 
2.1 
2.2 
242.0 
7.7 
(13.6)
(26.3)
209.8 

(89.9)
0.1 
– 
(0.3)
(90.1)

(51.7)
– 
0.2 
(5.4)
(109.0)
35.5 
5.7 
(124.7)

(5.0)
13.2 
44.8 
53.0 

27 

9 

Note 

16
20 

20 

As at 
31 March 
 2010 
£m 

468.4 
(205.2) 
263.2 
(1.2) 
– 
(1.2) 
262.0 

As at
31 March
 2009
£m 

252.3
(199.3)
53.0 
(35.5)
(9.9)
(45.4)
7.6 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS 

1.  Basis of preparation 

Burberry Group (the Group) is a global luxury goods manufacturer, wholesaler and retailer. Licensing activity is also carried out, 
principally in Japan. All of the companies which comprise the Group are owned by Burberry Group plc (the Company) directly  
or indirectly.  

The consolidated financial statements of the Group have been prepared in accordance with EU endorsed International Financial 
Reporting Standards (IFRS), IFRIC interpretations and parts of the Companies Act 2006 applicable to companies reporting under IFRS. 
These consolidated financial statements have been prepared under the historical cost convention, except as modified by the revaluation 
of financial assets and financial liabilities at fair value through profit or loss. 

The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year 
beginning 1 April 2009: 

IFRS 8 Operating segments 

Requires a ‘management approach’, under which segment information is presented on the same basis as that used for internal 
reporting purposes and regularly reviewed by the Board of Directors, in its capacity as the Chief Operating Decision Maker, in order  
to allocate resources to the segment and assess its performance. In order to comply with the requirements of this new standard,  
the Group has amended its segmental reporting information, restating comparative information as appropriate. 

IAS 1 (Revised) – Presentation of financial statements 

Requires the presentation of items of income and expenses (that is ‘non-owner changes in equity’) in either a single performance 
statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income) 
and requires such items to be presented separately from owner changes in equity in the statement of changes in equity. The Group has 
elected to present this information in the format of two performance statements – an income statement and a statement of 
comprehensive income, in line with the revised disclosure requirements. 

IFRS 7 (Amendment) Financial instruments: Disclosures 

The amendment requires enhanced disclosures about fair value measurement and liquidity risk, including disclosure of fair value 
measurements by level of a fair value measurement hierarchy. The Group has amended the current year disclosures to reflect these 
additional requirements. 

The new standards, amendments and interpretations issued and effective for the financial period commencing on or after 1 April 2009 
which have not had a material impact on the financial statements of the Group include: 

IAS 23 (Revised) Borrowing costs 

IFRS 2 (Amendment) Share-based payments 

IAS 1 (Amendment) Presentation of financial statements 

IAS 39 (Amendment) Financial instruments: Recognition and measurement  

IFRS 1 (Amendment) First time adoption of IFRS and IAS 27 (Amendment) Consolidated and separate financial statements 

IFRIC 14 (IAS 19) The limit on a defined benefit asset, minimum funding requirements and their interaction 

IFRIC 16 Hedges of a net investment in foreign operations  

As at 31 March 2010, the following new and revised standards, amendments and interpretations, which are expected to be relevant  
to the Group’s results, were issued but not yet effective: 

IFRS 3 (Revised) Business combinations 

The standard will continue to apply the acquisition method to business combinations, but with certain significant changes. All payments 
to purchase a business will be recorded at fair value at the acquisition date, with some contingent payments subsequently remeasured 
at fair value through income. Goodwill and non-controlling (minority) interests may be calculated on a gross or net basis. All transaction 
costs will be expensed. The amendments took effect for annual periods beginning on or after 1 July 2009, and will be applied by the 
Group to all business combinations with effect from 1 April 2010. 

IAS 38 (Amendment) Intangible assets 

The amendment clarifies guidance in measuring the fair value of an intangible asset acquired in a business combination and it permits 
the grouping of intangible assets as a single asset if each asset has similar useful economic lives. The Group will apply the amendment 
from 1 April 2010, in line with the adoption of IFRS 3 (revised). No material financial impact is anticipated. 

IAS 36 (Amendment) Impairment of assets 

The amendment clarifies that the largest cash-generating unit (or group of units) to which goodwill should be allocated for the purposes 
of impairment testing is an operating segment, as defined in IFRS 8. The amendment is effective from annual periods beginning on or 
after 1 January 2010, and will be applied by the Group with effect from 1 April 2010. No material financial impact is anticipated. 

Burberry Group PLC annual report 2009/10  87 

 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

1.  Basis of preparation (continued) 

IFRS 5 (Amendment) Non-current assets held for sale and discontinued operations 

The amendment clarifies that IFRS 5 specifies the disclosures required in respect of non-current assets (or disposal groups) classified  
as held for sale or discontinued operations. The amendment will take effect for annual periods beginning on or after 1 January 2010 
and will be applied by the Group with effect from 1 April 2010.  

IAS 27 (Revised) Consolidated and separate financial statements 

The revised standard requires that all changes in a parent’s ownership interest in a subsidiary that do not result in a loss in control are 
to be accounted for as equity transactions. Where control is lost, any remaining interest in the entity is remeasured to fair value, with  
a gain or loss recognised in the income statement. The revised standard is effective from 1 July 2009 and will be applied by the  
Group with effect from 1 April 2010. No material financial impact is anticipated. 

IAS 39 (Amendment) Financial instruments: Recognition and measurement 

The amendment clarifies that gains or losses on cash flow hedges should be reclassified from equity to profit and loss in the period  
in which the hedged forecast cash flow affects profit and loss. The amendment will take effect for annual periods beginning on or after 
1 January 2010, and will be applied by the Group with effect from 1 April 2010. No material financial impact is anticipated. 

Basis of consolidation 
The Group’s annual financial statements comprise those of the parent Company and its subsidiaries, presented as a single economic 
entity. The results of the subsidiaries are prepared for the same reporting year as the parent Company, using consistent accounting 
policies.  

Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date  
on which control is transferred out of the Group. Where there is a loss of control of a subsidiary, the consolidated financial statements 
include the results for the portion of the reporting period during which Burberry Group plc had control. The effects of intra-group 
transactions are eliminated in preparing the Group financial statements.  

Key sources of estimation and judgement  
Preparation of the consolidated financial statements in conformity with IFRS requires that management make certain judgements, 
estimates and assumptions that affect the reported revenues, expenses, assets and liabilities and the disclosure of contingent liabilities. 
If in the future such estimates and assumptions, which are based on management’s best judgement at the date of the financial 
statements, deviate from actual circumstances, the original estimate and assumptions will be modified as appropriate in the period  
in which the circumstances change. 

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations  
of future events that are believed to be reasonable under the circumstances. Such estimates include, but are not limited to, impairment 
of trade and other receivables, goodwill and asset impairment, inventory provisioning, provisions for onerous leases, restructuring 
provisions and income and deferred taxes. These are discussed below: 

Impairment of trade and other receivables 
A provision for impairment of trade and other receivables is established where management estimate that the Group will not be able  
to collect all amounts due according to the original terms of receivables. 

Impairment of goodwill 
The Group is required to test whether goodwill has suffered any impairment. The recoverable amounts of cash generating units have 
been determined based on value-in-use calculations. The use of this method requires the estimation of future cash flows expected  
to arise from the continuing operation of the cash generating unit and the choice of a suitable discount rate in order to calculate  
the present value. 

Impairment of property, plant and equipment 
Property, plant and equipment are reviewed for impairment if events or changes in circumstances indicate that the carrying amount  
may not be recoverable. When a review for impairment is conducted, the recoverable amount of an asset or a cash generating unit  
is determined based on value-in-use calculations prepared on the basis of management’s assumptions and estimates. 

Inventory provisioning 
The Group manufactures and sells luxury goods and is subject to changing consumer demands and fashion trends. As a result,  
it is necessary to consider the recoverability of the cost of inventories and the associated provisioning required. Inventory provisioning  
is based on the age and condition of inventory, as well as anticipated saleability.

88  Burberry Group PLC annual report 2009/10 

NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

1.  Basis of preparation (continued) 

Provisions for onerous leases 
Provisions for onerous leases, measured net of expected rentals, are recognised when the leased property becomes vacant and is  
no longer used in the operations of the business. Provisions for dilapidation costs are recognised on a lease-by-lease basis. 

Provision for restructuring 
Provisions for restructuring costs are recognised when the Group has a detailed formal plan for the restructuring that has been 
communicated to affected parties. 

Income and deferred taxes 
The Group is subject to income taxes in numerous jurisdictions. Judgement is required in determining the provision for income taxes  
in each territory. There are many transactions and calculations during the ordinary course of business for which the ultimate tax 
determination is uncertain. The Group recognises liabilities for anticipated tax issues based on estimates of whether additional taxes  
will be due. Where the final outcome of these matters is different from the amounts which were initially recorded, such differences  
will impact the income tax and deferred tax provisions and assets in the period in which such determination is made. 

2.  Accounting policies 

The consolidated financial information of Burberry Group plc and all its subsidiaries have been prepared in accordance with IFRS.  
The principal accounting policies of the Group are: 

a)  Revenue 
Revenue, which is stated excluding Value Added Tax and other sales related taxes, is the amount receivable for goods supplied  
(less returns, trade discounts and allowances) and royalties receivable. 

Wholesale sales are recognised when goods are despatched to trade customers, as this reflects the transfer of risks and rewards of 
ownership, with provisions made for expected returns and allowances. Retail sales, returns and allowances are reflected at the dates  
of transactions with customers. Provisions for returns on retail and wholesale sales are calculated based on historical return levels. 
Royalties receivable from licensees are accrued as earned on the basis of the terms of the relevant royalty agreement, which is typically 
on the basis of production volumes. 

b)  Segment reporting 
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker.  
The Chief Operating Decision Maker, who is responsible for allocating resources and assessing performance, has been identified as  
the Board of Directors. 

c)  Business combinations 
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is 
measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, 
plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a 
business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. 
The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as 
goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised 
directly in the Income Statement. 

d)  Share schemes 
The cost of the share incentives received by employees (including executive directors) is measured with reference to the fair value of  
the equity instruments awarded at the date of grant. The Black-Scholes option pricing model is used to determine the fair value of the 
award made. The impact of performance conditions is not considered in determining the fair value on the date of grant, except for 
conditions linked to the price of Burberry Group plc shares i.e. market conditions. Vesting conditions which relate to non-market 
conditions are allowed for in the assumptions used for the number of options expected to vest. The estimate of the number of options 
expected to vest is revised at each balance sheet date.  

The cost of the share based incentives is recognised as an expense over the vesting period of the awards, with a corresponding 
increase in equity. 

The proceeds received from the exercise of the equity instruments awarded, net of any directly attributable transaction costs,  
are credited to share capital and share premium.  

e)  Operating leases 
Burberry Group is a lessee of property. Gross rental expenditure in respect of operating leases is recognised on a straight line basis  
over the period of the leases. Certain rental expenses are determined on the basis of revenue achieved in specific retail locations and 
are accrued for on that basis. 

Amounts paid to acquire the rights to a lease (lease premiums) are written off in equal annual instalments over the life of the lease 
contract. Lease incentives, typically rent free periods and capital contributions, are recognised over the term of the lease to the first 
break clause.  

Burberry Group PLC annual report 2009/10  89 

 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

2.  Accounting policies (continued) 

f)  Dividend distribution 
Dividend distributions to Burberry Group plc’s shareholders are recognised as a liability in the period in which the dividends are 
approved by the shareholders. Interim dividends are recognised when paid. 

g)  Pension costs 
Defined benefit schemes 
Eligible employees of the Group participate in defined benefit schemes in France and Taiwan.  

Where arrangements are funded, assets are held in independently administrated trusts. 

The liability recognised in the Balance Sheet in respect of defined benefit schemes represents the Group’s share of the present value of the 
defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognised past-
service costs. The defined benefit obligation is calculated annually by independent actuaries using the Projected Unit Credit method. 

The cost of providing defined benefit schemes to participating employees is charged to the Income Statement over the anticipated 
period of employment. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are 
recognised directly in equity. 

Defined contribution schemes 
Eligible employees also participate in defined contribution pension schemes, the principal one being in the UK with its assets held in an 
independently administered fund. The cost of providing these benefits to participating employees is recognised in the Income Statement 
and comprises the amount of contributions payable to the schemes in respect of the year. 

h)  Intangible fixed assets 
Goodwill 
Goodwill is the excess of purchase consideration over the fair value of identifiable net assets acquired. Goodwill on acquisition is 
recorded as an intangible fixed asset. Fair values are attributed to the identifiable assets, liabilities and contingent liabilities that existed  
at the date of acquisition, reflecting their condition at that date. Adjustments are also made to align the accounting policies of acquired 
businesses with those of the Group.  

Goodwill is assigned an indefinite useful economic life. Impairment reviews are performed annually, or more frequently if events or 
changes in circumstances indicate that the carrying value may not be recoverable. 

Trade marks and trading licences 
The cost of securing and renewing trade marks and other intellectual property is capitalised as an intangible fixed asset and amortised 
by equal annual instalments over its useful economic life, typically ten years. The useful economic life of trade marks and other 
intellectual property is determined on a case-by-case basis, in accordance with the terms of the underlying agreement. 

Computer software 
The cost of acquiring computer software (including licences and separately identifiable external development costs) is capitalised as an 
intangible asset at purchase price, plus any directly attributable cost of preparing that asset for its intended use. Software costs are 
amortised by equal annual instalments over their estimated useful economic lives, which are up to five years. 

i)  Property, plant and equipment 
Property, plant and equipment is stated at cost or deemed cost, based on historical revalued amounts, less accumulated depreciation 
and provision to reflect any impairment in value. Cost includes the original purchase price of the asset and costs attributable to bringing 
the asset to its working condition for its intended use. 

Depreciation 
Depreciation of property, plant and equipment is calculated to write off the cost or deemed cost, less residual value, of the assets in 
equal annual instalments over their estimated useful lives at the following rates: 

Land 

Freehold buildings 

Leaseholds – less than 50 years expired  

Plant, machinery, fixtures and fittings 

Retail fixtures and fittings 

Office equipment 

Computer equipment 

Not depreciated 

Up to 50 years 

Over the unexpired term of the lease 

3 – 8 years 

2 – 5 years 

5 years 

Up to 5 years 

Profit/loss on disposal of property, plant and equipment 
Profits and losses on the disposal of property, plant and equipment represent the difference between the net proceeds and net book 
value at the date of sale. Disposals are accounted for when the relevant transaction becomes unconditional. 

90  Burberry Group PLC annual report 2009/10 

NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

2.  Accounting policies (continued) 

Impairment of non-financial assets 

j) 
Assets that have an indefinite useful economic life are not subject to amortisation and are tested annually for impairment. Assets that are 
subject to amortisation or depreciation are reviewed for impairment whenever events or changes in circumstance indicate that the carrying 
amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount exceeds its recoverable 
amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value-in-use. For the purposes of assessing 
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).  

k)  Inventories 
Inventories and work in progress are valued on a first-in-first-out basis at the lower of cost (including an appropriate proportion of 
production overhead) and net realisable value. Provision is made to reduce cost to no more than net realisable value having regard  
to the age and condition of inventory, as well as its anticipated saleability. 

l)  Taxation 
The tax expense represents the sum of the tax currently payable and deferred tax. 

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the Income 
Statement because it excludes items of income or expense which are taxable or deductible in other years and it further excludes  
items which are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates which have been  
enacted or substantially enacted by the balance sheet date. 

Deferred tax liabilities are provided in full on temporary differences arising between the tax bases of assets and liabilities and their 
carrying amounts in the consolidated financial statements. However, if the temporary difference arises from initial recognition of an  
asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor 
taxable profit or loss, it is exempt from deferred tax. Deferred tax is determined using tax rates (and laws) that have been enacted or 
substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or  
the deferred tax liability is settled. Deferred tax assets and liabilities are not discounted. 

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the 
temporary differences can be utilised.  

Deferred tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the 
temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. 

m) Provisions 
Provisions are recognised when there is a present legal or constructive obligation as a result of past events, for which it is probable that 
an outflow of economic benefit will be required to settle the obligation, and where the amount of the obligation can be reliably estimated. 
When the effect of the time value of money is material, provision amounts are calculated on the present value of the expenditures 
expected to be required to settle the obligation. The present value is calculated using forward market interest rates, as measured at  
the balance sheet reporting date, which have been adjusted for risks reflected in future cash flow estimates. 

n)  Share capital 
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity 
as a deduction, net of tax, from the proceeds. 

Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid, including any 
directly attributable incremental costs is deducted from equity attributable to the Company’s equity holders until the shares are 
cancelled, reissued or disposed of. Where such shares are subsequently sold or reissued, any consideration received, net of any  
directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s 
equity holders. 

o)  Financial instruments 
A financial instrument is initially recognised at fair value on the Balance Sheet when the entity becomes a party to the contractual 
provisions of the instrument. A financial asset is no longer recognised when the contractual rights to the cash flow expire or substantially 
all risks and rewards of the asset are transferred. A financial liability is no longer recognised when the obligation specified in the contract 
is discharged, cancelled or expires.  

The Group’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, borrowings 
and derivative financial instruments. 

All financial liabilities are stated at amortised cost using the effective interest rate method except for derivatives, which are classified  
as held for trading (except where they qualify for hedge accounting) and are held at fair value. Financial liabilities held at amortised  
cost include trade payables, accruals and borrowings. 

Burberry Group PLC annual report 2009/10  91 

 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

2.  Accounting policies (continued) 

The Group classifies its investments in the following categories: financial assets at fair value through the profit or loss and loans and 
receivables. Loans and receivables include trade and other receivables and cash and other equivalents. Derivatives are classified as  
held for trading unless in a hedging relationship and are held at fair value. 

Cash and cash equivalents 
Cash and cash equivalents comprise cash and short-term deposits with an original maturity date of three months or less, held with 
banks and liquidity funds. Bank overdrafts are recorded under current liabilities on the Balance Sheet. 

Trade and other receivables 
Trade and other receivables arise when the Group provides money, goods or services directly to a third party with no intention of  
trading the receivable. They are included in current assets, except for maturities greater than twelve months after the balance sheet 
date. Receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate 
method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence 
that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is 
recognised in the Income Statement. 

Trade and other payables 
Trade and other payables arise when the Group acquires money, goods or services directly from a supplier. They are included in current 
liabilities, except for maturities greater than twelve months after the balance sheet date. Payables are recognised initially at fair value and 
subsequently measured at amortised cost using the effective interest method. 

Borrowings 
Borrowings are recognised initially at fair value, inclusive of transaction costs incurred. Borrowings are subsequently stated at amortised 
cost and the difference between the proceeds (net of transaction costs) and the redemption value is recognised in the Income 
Statement over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities  
unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date. 

Derivative instruments 
The Group uses derivative financial instruments to hedge its exposure to fluctuations in foreign exchange rates arising on certain trading 
transactions. The principal derivative instruments used are forward foreign exchange contracts taken out to hedge highly probable  
cash flows in relation to future sales, royalty receivables and product purchases. To manage interest rate risk the Group manages its 
proportion of fixed and floating rate borrowings to within limits approved by the Board using interest rate swap derivatives. It designates 
foreign currency borrowings in a net investment hedge of the assets of overseas subsidiaries. 

The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its 
risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment, both at 
hedge inception and on an ongoing basis, of whether the hedging instruments that are used in hedging transactions are highly effective 
in offsetting changes in fair values or cash flows of hedged items. 

Derivatives are initially recognised at fair value at the trade date and are subsequently remeasured at their fair value. The method of 
recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of 
the item being hedged. The Group designates certain derivatives as either: (1) hedges of the fair value of recognised assets and liabilities 
or a firm commitment (fair value hedge); or (2) hedges of highly probable forecast transactions (cash flow hedges); or (3) classified as 
held for trading. 

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the Income Statement 
immediately, together with any changes in the fair value of the hedged item that is attributable to the hedged risk. 

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are deferred in 
equity. The gain or loss relating to the ineffective portion of the gain or loss is recognised immediately in the Income Statement. Amounts 
deferred in equity are recycled in the Income Statement in the periods when the hedged item affects the Income Statement. If it is 
expected that all or a portion of a loss deferred in equity will not be recovered in one or more future periods, or the hedged transaction 
is no longer expected to occur, the amount that is not expected to be recovered is reclassified to the Income Statement. If a derivative 
instrument is not designated as a hedge, the subsequent change to the fair value is recognised in the Income Statement within 
operating expenses. 

Where the Group hedges net investments in foreign operations through foreign currency borrowings, the gains or losses on the 
retranslation of the borrowings are recognised in equity. 

92  Burberry Group PLC annual report 2009/10 

NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

2.  Accounting policies (continued) 

p)  Foreign currency translation  
Functional and presentation currency 
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic 
environment in which the entity operates (the functional currency). 

Transactions in foreign currencies 
Transactions denominated in foreign currencies within each entity in the Group are translated into the functional currency at the 
exchange rate ruling at the monthly average exchange rate. Monetary assets and liabilities denominated in foreign currencies, which  
are held at the year end, are translated into the functional currency at the exchange rate ruling at the balance sheet date. Exchange 
differences on monetary items are recognised in the Income Statement in the period in which they arise, except where these exchange 
differences form part of a net investment in overseas subsidiaries of the Group, in which case such differences are taken directly  
to the foreign currency translation reserve within equity.  

Translation of the results of overseas businesses 
The results of overseas subsidiaries are translated into the Group’s presentation currency of Sterling each month at the weighted 
average exchange rate for the month according to the phasing of the Group’s trading results. The weighted average exchange rate  
is used, as it is considered to approximate the actual exchange rates on the date of the transactions. The assets and liabilities of such 
undertakings are translated at the year end exchange rates. Differences arising on the retranslation of the opening net investment in 
subsidiary companies, and on the translation of their results, are taken directly to the foreign currency translation reserve within equity.  

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign 
operation and translated at the closing rate. 

The principal exchange rates used were as follows: 

Euro 

US Dollar 

Hong Kong Dollar 

Korean Won 

           Average rate 

           Closing rate 

Year to
31 March 
2010 

Year to 
31 March  
2009 

As at 
31 March 
2010 

1.14 

1.60 

12.55 

1,917 

1.12 

1.42 

12.79 

1,967 

1.12 

1.52 

11.79 

1,718 

As at
31 March 
2009 

1.08 

1.43 

11.10 

1,967 

The average exchange rate achieved by the Group on its Yen royalty income, taking into account its use of Yen forward foreign 
exchange contracts on a monthly basis approximately twelve months in advance of royalty receipts, was Yen 154.0: £1 in the year to  
31 March 2010 (2009: Yen 213.1: £1). 

q)  Adjusted operating profit and exceptional items 
Exceptional items are those items that are largely one-off and material in nature. These items are added back/deducted from operating 
profit/loss to arrive at adjusted operating profit/loss which is disclosed in order to provide a clear and consistent presentation of the 
underlying performance of the Group’s ongoing business.  

Burberry Group PLC annual report 2009/10  93 

 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

3.  Segmental analysis 

The Chief Operating Decision Maker has been identified as the Board of Directors. The Board reviews the Group’s internal reporting in 
order to assess performance and allocate resources. Management has determined the operating segments based on the reports used 
by the Board. 

The Board considers Burberry’s business through its two channels to market, being Retail/Wholesale and Licensing. Retail/Wholesale 
revenues are generated by the sale of luxury goods through Burberry mainline stores, concessions, outlets and digital commerce as well 
as Burberry franchisees and prestige department stores globally.  

The flow of global product between Retail and Wholesale channels and across our regions is monitored and optimised at a corporate level 
and implemented via the Group’s inventory hubs situated in Asia, Europe and the US. Licensing revenues are generated through the receipt 
of royalties from Burberry’s partners in Japan and global licensees of fragrances, eyewear, timepieces and European childrenswear. 

The Board assesses channel performance based on a measure of adjusted operating profit. This measurement basis excludes the 
effects of non-recurring events and exceptional items. The measure of earnings for each operating segment that is reviewed by the 
Board includes an allocation of corporate and central costs. Interest income and expenditure and taxation are not included in the result 
for each operating segment that is reviewed by the Board. Comparative information has been restated on the adoption of IFRS 8.  

Licensing 

Total 

Retail / Wholesale 
Year to 
31 March
2010

Year to 
31 March
2009
(restated)
£m 

£m 

Total segment revenue 
Inter-segment revenue(1) 

1,182.4 

1,118.9 

– 

– 

Revenue from external customers 

1,182.4 

1,118.9 

Depreciation and amortisation 

Net impairment charges 

Other non-cash expenses 

– Share based payments 

Adjusted operating profit (reportable segments) 
Exceptional items(2) 
Net finance charge 

Profit/(loss) before taxation 

52.3 

6.1 

13.6 

137.7 

45.1 

126.8 

3.4 

110.1 

Year to 
31 March
2010

£m 

117.3 

(19.8)

97.5 

– 

– 

4.5 

82.2 

Year to 
31 March
2009
(restated)
£m 

107.5 

(24.9)

82.6 

– 

– 

1.1 

70.7 

Capital expenditure 

Total segment assets 

Goodwill 

Cash and cash equivalents 

Taxation 

Total assets per balance sheet 

73.2 

589.1 

95.4 

750.6 

– 

7.3 

– 

14.9 

Year to  
31 March 
2010 

£m 

1,299.7 

(19.8) 

Year to 
31 March
2009
(restated)
£m 

1,226.4 

(24.9)

1,279.9 

1,201.5 

52.3 

6.1 

18.1 

219.9 

(48.8) 

(5.1) 

166.0 

73.2 

596.4 

34.9 

468.4 

39.9 

45.1 

126.8 

4.5 

180.8 

(190.7)

(6.2)

(16.1)

95.4 

765.5 

33.1 

252.3 

74.8 

1,139.6 

1,125.7 

(1) 

Inter-segment transfers or transactions are entered into under the normal commercial terms and conditions that would be available to unrelated third parties. 

(2)  Refer to note 4 for details of exceptional items. 

Revenue by product 

Womenswear 

Menswear 

Non-apparel 

Childrenswear 

Retail/Wholesale 

Licensing 

Total 

94  Burberry Group PLC annual report 2009/10 

Year to 
31 March  
2010 
£m 

Year to
31 March
2009
£m 

415.5 

288.5 

419.6 

58.8 

412.8 

298.4 

366.3 

41.4 

1,182.4 

1,118.9 

97.5 

82.6 

1,279.9 

1,201.5 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

3.  Segmental analysis (continued) 

Revenue by destination 

Europe 

Spain 

Americas 

Asia Pacific 

Rest of the world 

Retail/Wholesale 

Licensing 

Total 

Year to 
31 March 
2010 

£m 

408.1 

107.1 

324.8 

282.7 

59.7 

1,182.4 

97.5 

1,279.9 

Year to 
31 March
2009
(restated)
£m 

379.8 

144.5 

308.9 

240.0 

45.7 

1,118.9 

82.6 

1,201.5 

Revenue to external customers originating in the UK totalled £350.0m for the year to 31 March 2010 (2009: £321.8m). 

Revenue to external customers originating in foreign countries totalled £929.9m for the year to 31 March 2010 (2009: £879.7m). This 
amount includes £307.6m of external revenues originating in the US (2009: £301.2m) and £117.8m originating  
in Spain (2009: £163.9m). 

The total of non-current assets other than financial instruments, deferred tax assets, employment benefit assets and rights arising under 
insurance contracts, located in the UK is £64.6m (2009: £63.5m) and the total of these non-current assets located in other countries  
is £266.9m (2009: £261.9m). 

4.  Net operating expenses 

Selling and distribution costs  

Administrative expenses 

Loss on disposal of property, plant and equipment  

Property rental income under operating leases 

Exceptional items 

Restructuring costs 

Goodwill impairment 

Store impairments and onerous lease provisions 

Negative goodwill 

Relocation of headquarters 

Total 

Year to 
31 March 
2010 
£m 

306.5 

273.5 

4.2 

(0.1)

48.8 

– 

– 

– 

– 

632.9 

Year to 
31 March
2009
£m 

241.5 

241.8 

1.8 

(0.1)

54.9 

116.2 

13.4 

(1.7)

7.9 

675.7 

Exceptional items 
In the year to 31 March 2010, the Group announced the restructuring of its Spanish operations. Charges of £45.4m have been 
recognised in respect of this restructure. A further £3.4m of charges have been recognised in respect of the cost efficiency  
programme announced in the year to 31 March 2009. 

In the year to 31 March 2009, the Group impaired the entire goodwill relating to the Spanish business and the store assets at  
certain retail locations in the US and Europe.  

In the year to 31 March 2009, negative goodwill of £1.7m arose on the formation of Burberry Middle East LLC.  

In 2008, the Group relocated its global headquarters. In the year to 31 March 2009, the Group increased the provision for onerous 
leases in relation to this relocation by £7.9m. 

Burberry Group PLC annual report 2009/10  95 

 
 
 
 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

5.  Profit/(loss) before taxation 

Profit/(loss) before taxation is stated after charging/(crediting):  

Depreciation of property, plant and equipment 

– within cost of sales 

– within distribution costs  

– within administrative expenses 

Amortisation of intangible assets 

Loss on disposal of property, plant and equipment and intangible assets 

Goodwill impairment charge 

Net impairment charge relating to certain retail assets  

Employee costs (note 26) 

Operating lease rentals  

– minimum lease payments 

– contingent rents 

Auditor’s remuneration  

Net exchange gain included in the income statement 

Net (gain)/loss on derivatives held for trading 

Trade receivables net impairment charge 

Cost of goods consumed in cost of sales 

Exceptional items 

Restructuring costs 

Goodwill impairment 

Store impairments and onerous lease provision 

Negative goodwill 

Relocation of headquarters 

Auditor’s remuneration is further analysed as follows: 

Audit services in respect of the accounts of the Company 

Audit services in respect of the accounts of subsidiary companies 

Other audit services supplied pursuant to legislation 

Services relating to taxation 

– compliance services 

– advisory services 

Total 

Year to  
31 March  
2010  
£m 

Year to 
31 March 
2009 
£m 

0.7 

5.5 

39.9 

6.2 

4.2 

1.4 

4.7 

1.2 

4.6 

34.8 

4.5 

1.8 

– 

– 

240.5 

202.7 

71.1 

44.2 

2.8 

(4.0) 

(5.6) 

2.8 

60.9 

37.0 

3.1 

(9.5)

1.3 

3.4 

460.7 

519.4 

48.8 

– 

– 

– 

– 

54.9 

116.2 

13.4 

(1.7)

7.9 

Year to 
 31 March 
2010  
£m 

Year to
 31 March
2009 
£m 

0.1 

1.6 

0.3 

0.4 

0.4 

2.8 

0.1 

1.6 

0.2 

0.9 

0.3 

3.1 

All work performed by the external auditors is controlled by an authorisation policy agreed by the Audit Committee. The overriding 
principle precludes the auditors from engaging in non-audit services that would compromise their independence. Non-audit services  
are provided by the auditors where they are best placed to provide the service due to their previous experience or market leadership  
in a particular area. Included in services relating to taxation above is £0.2m (2009: £0.3m) which arose in relation to advice on expatriate 
tax matters. 

96  Burberry Group PLC annual report 2009/10 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

6.  Net finance charge 

Bank interest income 

Other interest income 

Interest receivable and similar income 

Interest expense on bank loans and overdrafts 

Loss on derivatives held for trading 

Loss on interest rate swap transferred from equity 

Other interest expense 

Interest payable and similar charges 

Net finance charge 

7.  Taxation 

Analysis of charge for the year recognised in the Group Income Statement 

Current tax 

UK corporation tax 

Current tax on income for the year to 31 March 2010 at 28% (2009: 28%)  

Double taxation relief 

Adjustments in respect of prior years 

Foreign tax 

Current tax on income for the year 

Adjustments in respect of prior years 

Total current tax 

Deferred tax 

UK deferred tax 

Origination and reversal of temporary differences 

Adjustments in respect of prior years 

Foreign deferred tax 

Origination and reversal of temporary differences 

Effects of changes in tax rates 

Adjustments in respect of prior years 

Total deferred tax 

Total tax charge/(credit) on profit/(loss)  

Year to 
 31 March 
2010 
£m 

Year to
 31 March
2009 
£m 

1.1 

– 

1.1 

(4.5)

– 

(1.4)

(0.3)

(6.2)

(5.1)

7.1 

0.1 

7.2 

(12.4)

(1.0)

– 

– 

(13.4)

(6.2)

Year to 
 31 March 
2010 
£m 

Year to
31 March
2009
£m 

52.2 

(2.4)

(7.1)

42.7 

23.1 

5.2 

71.0 

(0.7)

2.7 

2.0 

12.1 

– 

(1.3)

12.8 

83.8 

22.0 

(3.0)

(8.5)

10.5 

8.3 

(1.9)

16.9 

(2.4)

1.8 

(0.6)

(27.7)

(0.6)

1.0 

(27.9)

(11.0)

Burberry Group PLC annual report 2009/10  97 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

7.  Taxation (continued) 

Analysis of charge for the year recognised in equity 

Current tax 

Current tax credit on share options (retained earnings) 

Current tax charge on exchange differences on loans (foreign currency translation reserve) 

Total current tax recognised in equity 

Deferred tax 

Deferred tax charge/(credit) on cash flow hedges deferred in equity (hedging reserve) 

Deferred tax charge on cash flow hedges transferred to income (hedging reserve) 

Deferred tax (credit)/charge on share options (retained earnings) 

Deferred tax charge on exchange differences on loans (foreign currency translation reserve) 

Total deferred tax recognised in equity 

Year to 
31 March 
2010 
£m 

Year to
31 March
2009
£m 

(2.2) 

– 

(2.2) 

0.1 

4.9 

(7.1) 

6.6 

4.5 

(0.4)

3.9 

3.5 

(7.8)

4.7 

2.8 

0.4 

0.1 

The tax rate applicable on profit/(loss) varied from the standard rate of corporation tax in the UK due to the following factors: 

Tax at 28% (2009: 28%) on profit/(loss) before taxation 

Rate adjustments relating to overseas profits  

Permanent differences 

Current year tax losses not recognised 

Deferred tax assets brought forward and written off 

Adjustments in respect of prior years 

Adjustments to deferred tax relating to changes in tax rates 

Total taxation charge/(credit) 

Total taxation recognised in the Group Income Statement arises on: 

Adjusted profit before tax 

Exceptional items 

Exceptional tax charge/(credit) 

Total taxation charge/(credit) 

Year to 
31 March 
2010 
£m 

Year to
31 March
2009
£m 

46.5 

(8.3) 

6.5 

12.3 

27.3 

(0.5) 

– 

83.8 

(4.5)

(4.2)

2.6 

3.3 

– 

(7.6)

(0.6)

(11.0)

Year to 
 31 March 
2010  
£m 

Year to
31 March
2009
£m 

58.8 

(2.3) 

27.3 

83.8 

41.6 

(20.0)

(32.6)

(11.0)

In the year to 31 March 2010, the exceptional tax charge of £27.3m relates to the write down of deferred tax assets on tax losses 
incurred in Spain in prior years which are deemed no longer to be recoverable. 

In the year to 31 March 2009, an exceptional tax credit of £5.0m was recognised in relation to the overpayment of tax in prior years  
and a credit of £27.6m was recognised arising on a reorganisation within the Group. 

98  Burberry Group PLC annual report 2009/10 

 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

8.  Earnings per share  

The calculation of basic earnings per share is based on attributable profit or loss for the year divided by the weighted average number  
of ordinary shares in issue during the year. Basic and diluted earnings per share based on adjusted operating profit and the underlying 
effective tax rate are also disclosed to indicate the underlying profitability of the Group.  

Attributable profit for the year before exceptional items(1) 
Effect of exceptional items(1) (after taxation) 

Attributable profit/(loss) for the year 

(1)  Refer to note 4 for details of exceptional items. 

Year to 
31 March 
2010 
£m 

155.2 

(73.8)

81.4 

Year to
31 March 
2009
£m 

132.1 

(138.1)

(6.0)

The weighted average number of ordinary shares represents the weighted average number of Burberry Group plc ordinary shares  
in issue throughout the year, excluding ordinary shares held in the Group’s employee share option plan trusts (ESOP trusts). 

Diluted earnings per share is based on the weighted average number of ordinary shares in issue during the year. In addition, account  
is taken of any options and awards made under the share incentive schemes, which will have a dilutive effect when exercised. 

Weighted average number of ordinary shares in issue during the year 

Dilutive effect of the share incentive schemes 

Diluted weighted average number of ordinary shares in issue during the year 

Adjusted basic earnings per share  
Effect of exceptional items(1) 

Basic earnings/(loss) per share  

Adjusted diluted earnings per share  
Effect of exceptional items(1) 

Diluted earnings/(loss) per share  

(1)  Refer to note 4 for details of exceptional items. 

9.  Dividends 

Prior year final dividend paid 8.65p per share (2009: 8.65p) 

Interim dividend paid 3.50p per share (2009: 3.35p) 

Total  

Year to 
31 March 
2010 
Millions 

432.6 

9.3 

441.9 

Year to 
31 March 
2010 
Pence 

35.9 

(17.1)

18.8 

Year to 
31 March 
2010 
Pence 

35.1 

(16.7)

18.4 

Year to 
31 March 
2010 
£m 

37.4 

15.1 

52.5 

Year to
31 March
2009
Millions 

431.3 

6.8 

438.1 

Year to
31 March
2009
Pence 

30.6 

(32.0)

(1.4)

Year to
31 March
2009
Pence 

30.2 

(31.6)

(1.4)

Year to
31 March
2009
£m 

37.2 

14.5 

51.7 

A final dividend in respect of the year to 31 March 2010 of 10.50p (2009: 8.65p) per share, amounting to £45.7m (2009: £37.4m),  
has been proposed for approval by the shareholders at the Annual General Meeting subsequent to the balance sheet date. The final 
dividend has not been recognised as a liability at the year end and will be paid on 5 August 2010 to shareholders on the register at the 
close of business on 9 July 2010. 

Burberry Group PLC annual report 2009/10  99 

 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

10.  Intangible assets 

Cost 

As at 1 April 2008 

Effect of foreign exchange rate changes 

Additions 

Impairment charge 

As at 31 March 2009 

Effect of foreign exchange rate changes 

Additions 

Business combination (note 27) 

Disposals 

Impairment charge 

Reclassification from assets under construction (note 11) 

As at 31 March 2010 

Accumulated amortisation 

As at 1 April 2008 

Effect of foreign exchange rate changes 
Charge for the year(1) 

As at 31 March 2009 

Effect of foreign exchange rate changes 

Charge for the year 

Disposals 

As at 31 March 2010 

Net book value 

As at 31 March 2010 

As at 31 March 2009 

Trade marks,
 trading licences 
and other
£m 

Computer 
 software 
£m 

Goodwill
£m 

130.1 

17.9 

1.3 

(116.2)

33.1 

2.6 

– 

0.6 

– 

(1.4)

– 

34.9 

– 

– 

– 

– 

– 

– 

– 

– 

15.7 

2.3 

0.1 

– 

18.1 

(0.6)

0.2 

– 

(0.6)

– 

– 

17.1 

5.8 

0.9 

1.3 

8.0 

(0.3)

1.4 

(0.1)

9.0 

34.9 

33.1 

8.1 

10.1 

Total
£m 

164.6 

21.0 

8.6 

(116.2)

78.0 

2.1 

7.4 

0.6 

(1.7)

(1.4)

5.2 

90.2 

14.2 

1.5 

4.8 

20.5 

(0.3)

6.2 

(0.8)

25.6 

64.6 

57.5 

18.8 

0.8 

7.2 

– 

26.8 

0.1 

7.2 

– 

(1.1) 

– 

5.2 

38.2 

8.4 

0.6 

3.5 

12.5 

– 

4.8 

(0.7) 

16.6 

21.6 

14.3 

(1)   Included in the amortisation charge for the year ended 31 March 2009 is £0.3m of restructuring costs reported as an exceptional item. 

Impairment testing of goodwill 

The carrying value of the goodwill allocated to cash generating units: 

Korea 

Other 

Total 

As at 
 31 March  
2010  
£m 

As at
 31 March 
2009 
£m 

23.6 

11.3 

34.9 

21.0 

12.1 

33.1 

On 30 August 2008, the Group terminated its franchise agreement in Guam, thereby settling a pre-existing arrangement. A new 
company, Burberry Guam Inc., was incorporated which acquired the retailing businesses from the terminated franchisee. Based on 
management’s current estimates, the recoverable amount of goodwill in respect of Burberry Guam Inc. does not exceed its carrying 
value. Consequently, the net book value of £1.4m was written off in full during the year to 31 March 2010. 

No impairment has been recognised in respect of the carrying value of the remaining goodwill balance as the recoverable amount  
of goodwill for each cash generating unit exceeds its carrying value. The recoverable amount of all cash generating units have been 
determined on a value-in-use basis. The value-in-use calculations were performed using pre-tax cash flow projections for 2010/11 based  
on financial plans approved by management. No growth has been assumed in the cash flow projections beyond the current period. These 
cash flows were discounted at pre-tax rates reflecting the Group’s weighted average cost of capital adjusted for country-specific tax rates 
and risks. The cash flows in the Korean value-in-use calculation were discounted at a pre-tax rate of 16.3% (2009: 16.0%).  

At 31 March 2009, an impairment provision of £116.2m was recognised in respect of the carrying value of goodwill in the Spanish business. 

100  Burberry Group PLC annual report 2009/10 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

11.  Property, plant and equipment 

Cost 

As at 1 April 2008 

Effect of foreign exchange rate changes 

Additions 

Disposals 

Reclassification from assets under construction 

Acquisition of subsidiary 

As at 31 March 2009 

Effect of foreign exchange rate changes 

Additions 

Disposals 

Reclassification from assets under construction 

Business combination (note 27) 

As at 31 March 2010 

Accumulated depreciation 

As at 1 April 2008 

Effect of foreign exchange rate changes 
Charge for the year(1) 
Net impairment charge on certain retail assets 

Disposals 

As at 31 March 2009 

Effect of foreign exchange rate changes 

Charge for the year 

Net impairment charge on assets 

Disposals 

As at 31 March 2010 

Net book value 

As at 31 March 2010 

As at 31 March 2009 

Freehold land 
and buildings
£m 

Leasehold
improvements
£m 

Fixtures, 
fittings and  
equipment 
£m 

Assets in the 
course of 
construction 
£m 

Total
£m 

323.1 

80.7 

88.1 

(11.0)

– 

1.6 

482.5 

(14.0)

65.8 

(32.7)

(5.2)

0.8 

497.2 

145.6 

31.6 

44.8 

10.6 

(8.7)

223.9 

(5.8)

46.1 

6.3 

(29.4)

241.1 

8.5 

3.0 

11.5 

(0.1)

(3.7)

0.9 

20.1 

(0.6)

9.9 

(1.4)

(18.4)

– 

9.6 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

76.9 

20.1 

0.1 

– 

– 

– 

97.1 

(4.5)

– 

(0.4)

– 

– 

90.7 

31.1 

38.0 

(3.2)

3.6 

0.7 

160.9 

(6.1)

17.3 

(7.7)

4.8 

– 

147.0 

26.5 

38.5 

(7.7) 

0.1 

– 

204.4 

(2.8) 

38.6 

(23.2) 

8.4 

0.8 

92.2 

169.2 

226.2 

28.1 

9.4 

12.6 

5.2 

(1.9)

53.4 

(1.9)

14.8 

2.3 

(6.1)

62.5 

93.5 

16.0 

30.2 

5.4 

(6.8) 

138.3 

(2.5) 

28.9 

4.0 

(23.2) 

145.5 

24.0 

6.2 

2.0 

– 

– 

32.2 

(1.4)

2.4 

– 

(0.1)

33.1 

59.1 

64.9 

106.7 

107.5 

80.7 

66.1 

9.6 

20.1 

256.1 

258.6 

(1)   Accelerated depreciation of £4.2m and £0.2m loss on disposal of assets are included within restructuring costs as an exceptional item for the year ended 31 March 2009. 

During the year to 31 March 2010, a net impairment charge of £4.7m (2009: £10.6m) was identified as part of the annual impairment 
review. Of the total charge, £3.9m (2009: £5.4m) relates to certain retail stores in the US, £0.8m (2009: £4.0m) relates to certain retail 
stores in Europe and £nil (2009: £1.2m) relates to certain retail stores in Spain.  

A further impairment charge of £1.6m in respect of the write off of certain Spanish assets has been included within restructuring  
costs as an exceptional item in the year to 31 March 2010. 

The impairment review compared the value-in-use of the assets to the carrying values at 31 March 2010. The pre-tax cash flow 
projections were based on financial plans approved by management and extrapolated beyond the budget year to the lease exit dates 
using growth rates and inflation rates appropriate to each country’s economic conditions. The pre-tax discount rates used in these 
calculations were between 11.6% and 17.3% (2009: between 11.3% and 16.1%), based on the Group’s weighted average  
cost of capital adjusted for the country-specific tax rates and risk. 

Burberry Group PLC annual report 2009/10  101 

 
 
 
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

12.  Deferred taxation 

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax 
liabilities and there is an intention to settle on a net basis, and to the same fiscal authority. The offset amounts are shown in the  
table below: 

Deferred tax assets 

Deferred tax liabilities 

Net amount 

The movement in the deferred tax account is as follows: 

As at 1 April 

Effect of foreign exchange rate changes 

(Charged)/credited to the income statement 

Charged to equity 

As at 31 March 

As at 
31 March  
2010 
£m 

39.2 

(1.6) 

37.6 

As at
31 March 
2009
£m 

57.7 

(2.3)

55.4 

As at 
31 March  
2010 
£m 

Year to 
31 March 
2009 
£m 

55.4 

(0.5) 

(12.8) 

(4.5) 

37.6 

25.2 

2.4 

27.9 

(0.1)

55.4 

The movement in deferred tax assets and liabilities during the year, without taking into consideration the off-setting of balances within 
the same tax jurisdiction, is as follows: 

Deferred tax liabilities 

As at 1 April 2008 

Effect of foreign exchange rate changes 

Charged/(credited) to the income statement 

As at 31 March 2009 

Effect of foreign exchange rate changes 

Charged/(credited) to the income statement 

As at 31 March 2010 

Unrealised 
inventory 
profit 
and other 
inventory 
provisions
£m 

Accelerated 
capital 
allowances
£m 

12.6 

4.1 

7.9 

24.6 

(1.7)

(7.1)

15.8 

(2.0)

(0.6)

(3.5)

(6.1)

0.2 

1.5 

(4.4)

Derivative 
instruments
£m 

Unused tax 
losses
£m 

0.1 

– 

– 

0.1 

– 

(0.1)

– 

(0.3)

(0.1)

(2.6)

(3.0)

0.2 

(1.6)

(4.4)

Other 
£m  

(1.7) 

(0.4) 

11.8 

9.7 

0.3 

(10.9) 

(0.9) 

Total
£m 

8.7 

3.0 

13.6 

25.3 

(1.0)

(18.2)

6.1 

102  Burberry Group PLC annual report 2009/10 

 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

12.  Deferred taxation (continued) 

Deferred tax assets 

Unrealised
inventory 
profit
 and other
inventory
 provisions
£m 

Accelerated
capital
allowances
£m 

2.9 

0.5 

(1.4)

– 

2.0 

(0.1)

3.2 

– 

5.1 

13.0 

3.2 

14.4 

– 

30.6 

(0.5)

(13.3)

– 

16.8 

Share 
schemes
£m 

10.1 

0.1 

(3.3)

(2.8)

4.1 

– 

0.6 

7.1 

11.8 

As at 1 April 2008 

Effect of foreign exchange  
rate changes 

(Charged)/credited to the  
income statement 

(Charged)/credited to equity 

As at 31 March 2009 

Effect of foreign exchange  
rate changes 

(Charged)/credited to the  
income statement 

(Charged)/credited to equity 

As at 31 March 2010 

Derivative
instruments
£m 

Unused tax 
losses 
£m 

Other 
£m 

5.3 

Total
£m 

33.9 

1.5 

5.4 

– 

0.1 

21.4 

10.4 

41.5 

– 

21.5 

0.6 

(15.2) 

– 

6.9 

(0.4)

16.8 

(1.5)

(6.3)

(6.6)

2.4 

(0.1)

80.7 

(1.5)

(31.0)

(4.5)

43.7 

2.6 

– 

– 

3.1 

5.7 

– 

– 

(5.0)

0.7 

Deferred tax assets are recognised for tax losses carried forward to the extent that the realisation of the related benefit through the 
future taxable profits is probable. The Group did not recognise deferred tax assets of £45.7m (2009: £7.1m) in respect of losses and 
temporary timing differences amounting to £151.1m (2009: £23.1m) that can be set off against future taxable income. There is a time 
limit for the recovery of £41.3m of these potential assets (2009: £2.2m) which ranges from five to fifteen years. 

Deferred tax liabilities have not been recognised for tax that may be payable if earnings of certain subsidiaries were remitted to the UK. 
Such amounts are either reinvested for the foreseeable future or can be remitted free of tax. Unremitted earnings totalled £219.1m 
(2009: £180.7m).  

Burberry Group PLC annual report 2009/10  103 

 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

13.  Trade and other receivables 

Non-current  

Deposits and prepayments  

Total non-current trade and other receivables 

Current  

Trade receivables  

Provision for doubtful debts 

Net trade receivables 

Other receivables 

Prepayments and accrued income 

Total current trade and other receivables 

Total trade and other receivables 

As at  
31 March  
2010 
£m 

As at 
31 March 
2009
£m 

11.0 

11.0 

109.1 

(16.8) 

92.3 

15.3 

20.8 

128.4 

139.4 

9.5 

9.5 

154.1 

(7.6)

146.5 

13.7 

27.0 

187.2 

196.7 

£6.8m of the non-current receivable balance (2009: £7.5m) is due within five years from the balance sheet date, with the remainder  
due at various stages after this. The entire balance is non-interest bearing. 

As at 31 March 2010, trade receivables of £24.0m (2009: £8.3m) were impaired. The amount of the provision against these receivables 
was £16.8m as of 31 March 2010 (2009: £7.6m). It was assessed that a portion of the receivables is expected to be recovered.  
The individually impaired receivables relate to balances with trading parties which have passed their payment due dates and where 
uncertainty exists over recoverability. Individually impaired receivables of £6.8m relate to the restructuring of the Spanish operations  
and are included in exceptional items (note 4). The ageing of the impaired receivables is as follows: 

Current 

Less than one month overdue 

One to three months overdue 

Over three months overdue 

As at  
31 March  
2010 
£m 

As at 
31 March 
2009
£m 

8.3 

6.1 

3.5 

6.1 

24.0 

– 

1.6 

1.4 

5.3 

8.3 

As at 31 March 2010, trade receivables of £3.8m (2009: £13.2m) were overdue but not impaired. The ageing of these overdue 
receivables is as follows: 

Less than one month overdue 

One to three months overdue 

Over three months overdue 

Movement on the provision for doubtful debts is as follows: 

As at 1 April 

Increase in provision for doubtful debts 

Receivables written off during the year as uncollectable 

Unused provision reversed 

As at 31 March 

104  Burberry Group PLC annual report 2009/10 

As at  
31 March  
2010 
£m 

As at 
31 March 
2009
£m 

3.5 

0.3 

– 

3.8 

5.9 

4.7 

2.6 

13.2 

Year to  
31 March  
2010 
£m 

Year to 
31 March 
2009
£m 

7.6 

11.3 

(0.4) 

(1.7) 

16.8 

5.0 

4.2 

(0.8)

(0.8)

7.6 

 
 
 
 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

13.  Trade and other receivables (continued) 

Within the other classes of trade and other receivables there are £0.1m (2009: £0.8m) impaired receivables. The maximum exposure  
to credit risk at the reporting date with respect to trade receivables is the carrying amount on the Balance Sheet. The Group does not 
hold any collateral as security. 

The carrying amounts of the Group’s trade and other receivables are denominated in the following currencies: 

Sterling 

US Dollar 

Euro 

Other currencies 

Year to 
31 March 
2010 
£m 

Year to 
31 March 
2009
£m 

56.2 

23.8 

27.3 

32.1 

66.6 

33.0 

66.0 

31.1 

139.4 

196.7 

The nominal value less impairment provision of trade and other receivables is assumed to approximate its fair value because of the short 
maturity of these instruments. 

14.  Inventories 

Raw materials 

Work in progress 

Finished goods 

Total inventories 

As at 
31 March 
2010 
£m 

7.1 

2.7 

157.1 

166.9 

As at 
31 March 
2009
£m 

12.9 

3.2 

246.5 

262.6 

The cost of inventories recognised as an expense and included in cost of sales amounted to £460.7m (2009: £519.4m). 

The Group reversed £2.6m (2009: £nil) of a previous inventory writedown in the year to 31 March 2010. The cost of inventories 
physically destroyed in the year is £1.5m (2009: £0.7m). 

15.  Derivative financial instruments 

The Group Income Statement is affected by transactions denominated in foreign currency. To reduce exposure to currency fluctuations, 
the Group has a policy of hedging foreign currency denominated transactions by entering into forward foreign exchange contracts. 
These transactions are recorded as cash flow hedges. 

Cash flow hedges 
The Group’s foreign currency denominated transactions arise principally from royalty income, sales and purchases. The Group manages 
these exposures by the use of forward foreign exchange contracts.  

Derivative financial assets 

Forward foreign exchange contracts – cash flow hedges 

Forward foreign exchange contracts – held for trading 

Equity swap contracts – held for trading 

Total position 

Comprising of: 
Total non-current position 
Total current position 

Total cash flow hedge gains of £1.7m (2009: £20.1m) are expected to be recognised within 

twelve

 months. 

As at 
31 March 
2010 
£m 

As at 
31 March 
2009
£m 

1.7 

0.1 

2.5 

4.3 

1.7 

2.6 

20.1 

3.1 

– 

23.2 

– 

23.2 

Burberry Group PLC annual report 2009/10  105 

 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

15.  Derivative financial instruments (continued) 

Derivative financial liabilities 

Forward foreign exchange contracts – cash flow hedges 

Interest rate swap contracts – cash flow hedges 

Total cash flow hedges at end of year 

Forward foreign exchange contracts – held for trading 

Equity swap contracts – held for trading 

Total position 

Comprising of: 

Total non-current position 

Total current position 

As at  
31 March  
2010 
£m 

As at 
31 March 
2009
£m 

(9.2) 

– 

(9.2) 

– 

– 

(9.2) 

(0.2) 

(9.0) 

(35.8)

(1.6)

(37.4)

(18.5)

(1.6)

(57.5)

(0.4)

(57.1)

Total cash flow hedge losses of £9.0m (2009: £37.0m) are expected to be recognised within twelve months. 

The current portion of the financial instruments matures at various dates within one month to one year from the balance sheet date.  

Net derivative financial instruments 

– book value 

– fair value 

As at  
31 March  
2010 
£m 

(4.9) 

(4.9) 

As at 
31 March 
2009
£m 

(34.3)

(34.3)

The fair value of forward foreign exchange contracts is based on a comparison of the contractual and market rates after discounting 
using the appropriate yield curves as at 31 March each year. All fair value measurements are calculated using inputs which are based  
on observable market data (Level 2). 

Additional information 

Notional principal amounts of the outstanding forward foreign exchange contracts 

Notional principal amounts of the outstanding interest rate swap contracts 

Notional principal amounts of the outstanding equity swap contracts 

Ineffective portion of cash flow hedges released from equity to the income statement during the year  

Movement on the non-designated hedges for the year recognised within net operating costs  
in the income statement 

Movement on the non-designated hedges for the year recognised within net finance charge  
in the income statement (note 6) 

Movement on interest rate swaps for the year recognised within net finance charge  
in the income statement (note 6) 

As at  
31 March  
2010 
£m 

313.5 

As at 
31 March
2009
£m 

626.6 

– 

3.5 

0.1 

5.6 

– 

(1.4) 

45.4 

4.8 

(4.4)

(1.3)

1.0 

– 

During the year, £0.1m (2009: £4.4m) of cash flow hedges were considered to be ineffective and were recognised immediately in the 
Income Statement within net operating costs. This arose from changes to ‘highly probable’ forecast transactions during the year. 

106  Burberry Group PLC annual report 2009/10 

 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

16.  Cash and cash equivalents 

Cash at bank and in hand 

Short-term deposits  

Total  

As at 
31 March 
2010 
£m 

267.1 

201.3 

468.4 

As at 
31 March
2009
£m 

249.6 

2.7 

252.3 

The fair value of short-term deposits approximates the carrying amount because of the short maturity of the instruments.  

17.  Trade and other payables 

Non-current 

Other creditors, accruals and deferred income 

Total non-current trade and other payables 

Current  

Trade creditors 

Other taxes and social security costs 

Other creditors 

Accruals and deferred income 

Total current trade and other payables 

Total trade and other payables 

The maturity of non-current trade and other payables, all of which do not bear interest, is as follows: 

Between one and two years 

Between two and three years 

Between three and four years 

Between four and five years 

Over five years 

Total  

The fair value of trade and other payables approximate their carrying amounts and are unsecured. 

As at 
31 March 
2010 
£m 

As at 
31 March
2009
£m 

26.5 

26.5 

62.1 

6.2 

17.7 

114.2 

200.2 

226.7 

23.8 

23.8 

54.8 

7.8 

16.4 

83.4 

162.4 

186.2 

As at 
31 March 
2010 
£m 

As at 
31 March 
2009
£m 

3.7 

2.4 

2.2 

3.7 

14.5 

26.5 

2.2 

0.9 

2.0 

2.5 

16.2 

23.8 

Burberry Group PLC annual report 2009/10  107 

 
 
 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

18.  Retirement benefit obligations 

The Group provides post-retirement arrangements for its employees in the UK and its overseas operations, which are either defined 
benefit or defined contribution in nature. Where arrangements are funded, assets are held in independently administered trusts.  

The Balance Sheet obligations in respect of the Group’s post-retirement arrangements, assessed in accordance with IAS 19, were: 

Defined benefit schemes 

Retirement Indemnities France 

Burberry (Taiwan) Co Ltd retirement scheme 

Total obligation 

As at  
 31 March 
2010 
£m 

As at 
 31 March
2009
£m 

0.2 

0.3 

0.5 

0.3 

0.3 

0.6 

No prepayments or obligations exist in respect of defined contribution schemes at 31 March 2010 (2009: £nil).  

The pension costs charged to the Group Income Statement in relation to defined contribution schemes were: 

Europe 

Americas 

Asia Pacific 

Total pension costs 

Year to 
 31 March  
2010 
£m 

Year to
 31 March 
2009
£m 

3.6 

1.2 

0.5 

5.3 

2.7 

1.4 

0.2 

4.3 

Costs charged to the Group Income Statement in relation to defined benefit schemes during the year to 31 March 2010 were £nil 
(2009: £nil). 

Defined benefit schemes 
Retirement Indemnities France 
Burberry France SASU offers lump sum benefits at retirement to all employees that are employed by the Company based on the length 
of service and salary. There are no assets held by Group companies in relation to this commitment. 

Burberry (Taiwan) Co Ltd retirement scheme 
Burberry (Taiwan) Co Ltd offers lump sum benefits at retirement to employees transferred from one of the previous operators based on 
the length of service up to date of transfer (i.e. 1 August 2005) and salary at retirement. There are no assets held by Group companies in 
relation to this commitment. From 1 August 2005, all employees of the Company joined the defined contribution scheme operated 
under local labour ordinance. 

Defined contribution schemes 
The Group participates in a number of defined contribution schemes. The details of the main plans are:  

Burberry stakeholder plan UK 
This plan was introduced on 1 April 2006 when the Experian (formerly GUS) money purchase pension plan UK closed for Burberry 
employees. All UK employees are eligible to participate in this scheme. The assets of this scheme are held separately in an 
independently administered fund.  

Burberry money purchase plan US 
The Group administers a money purchase plan in the US (a 401(k) scheme), which covers all eligible full-time employees who have 
reached the age of 21 and have completed one full year of service. The assets of the scheme are held separately from those of the 
Group in an independently administered fund.  

Burberry Asia Limited retirement scheme 
The Group administers a money purchase plan in Hong Kong, which covers all eligible full-time employees. The assets of the scheme 
are held separately from those of the Group in an independently administered fund.  

108  Burberry Group PLC annual report 2009/10 

 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

19.  Provisions for other liabilities and charges 

Balance as at 1 April 2008 

Created during the year 

Utilised during the year 

Balance as at 31 March 2009 

Effect of foreign exchange rate changes 

Created during the year 

Utilised during the year 

Released during the year 

Balance as at 31 March 2010 

(1)  Restructuring costs are included in exceptional items (note 4). 

Analysis of total provisions: 

Non-current 

Current 

Total  

Property 
obligations 
£m 

Restructuring   
costs(1) 
£m   

3.7 

10.7 

(0.5) 

13.9 

0.1 

2.2 

(4.0) 

(2.5) 

9.7 

– 

27.5 

– 

27.5 

(1.2)

36.9 

(28.7)

(4.3)

30.2 

Total
£m 

3.7 

38.2 

(0.5)

41.4 

(1.1)

39.1 

(32.7)

(6.8)

39.9 

As at 
31 March 
2010 
£m 

As at 
31 March
2009
£m 

5.5 

34.4 

39.9 

7.9 

33.5 

41.4 

The non-current provisions relate to provisions for onerous leases which are expected to be utilised within nine years. Onerous leases of 
£1.2m are included within restructuring costs of which £0.6m are non-current. The remaining restructuring provision of £29.6m 
represents a current liability. 

20.  Bank overdrafts and borrowings 

Unsecured: 

Bank overdrafts 

Bank borrowings 

Other borrowings 

Total  

As at 
31 March 
2010 
£m 

As at 
31 March
2009
£m 

205.2 

0.7 

0.5 

206.4 

199.3 

45.4 

– 

244.7 

Included within bank overdrafts is £205.0m (2009: £199.2m) representing balances on cash pooling arrangements in the Group.  

On 13 June 2008, bilateral multi-currency revolving credit facilities, totalling £60m were agreed with two banks. At 31 March 2010, there 
were no outstanding drawings (2009: £nil). Interest is charged on each of these facilities at LIBOR plus 0.95% on drawings less than 
50% of the loan principal and at LIBOR plus 1.05% on drawings over 50% of the loan principal. The facilities mature on 13 June 2011.  

On 16 March 2009, a £200m multi-currency revolving credit facility was agreed with a syndicate of third party banks. At 31 March 2010, 
there were no outstanding drawings (2009: £45.4m). Interest is charged on this facility at LIBOR plus 2.00%. The facility matures on  
30 June 2012. The undrawn facility at 31 March 2010 was £200m (2009: £154.6m). 

Refer to note H on page 133 for details of the guarantees associated with these facilities. 

Bank borrowings relate to a bilateral bank loan totalling £0.7m due to mature on 28 July 2010. Interest is charged on this loan at the 
Japanese short-term prime rate plus 0.5%. 

Other borrowings relate to a loan provided by a minority interest partner totalling £0.5m due to mature on 8 November 2010. Interest  
is charged on this loan at the Japanese short-term prime rate plus 0.5%. 

The fair value of borrowings and overdrafts approximate to the carrying amount because of the short maturity of these instruments. 

Burberry Group PLC annual report 2009/10  109 

 
 
 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

21.  Share capital and reserves 

Authorised share capital 

1,999,999,998,000 (2009: 1,999,999,998,000) ordinary shares of 0.05p (2009: 0.05p) each 

Total 

Allotted, called up and fully paid share capital 

Ordinary shares of 0.05p (2009: 0.05p) each 
As at 1 April 2009 
Allotted on exercise of options during the year 

As at 31 March 2010 

As at  
31 March 
2010 
£m 

1,000.0 

1,000.0 

Number 

433,137,430 

1,887,352 

435,024,782 

As at 
31 March 
2009
£m 

1,000.0 

1,000.0 

£m 

0.2 

– 

0.2 

77,215 of the 0.05p ordinary shares in issue are held as treasury shares.  

A share repurchase programme commenced in January 2005 and since then a total of 79,063,397 ordinary shares have been 
repurchased and subsequently cancelled. This represents 15.8% of the original issued share capital at a total cost of £351.8m.  
The nominal value of the shares was £39,532 and has been transferred to a capital redemption reserve and the retained earnings have 
been reduced by £351.8m since this date. During the year to 31 March 2010, no ordinary shares were repurchased and subsequently 
cancelled by the Company. 

The cost of own shares held in the Burberry Group ESOP Trusts has been offset against the profit and loss account, as the amounts 
paid reduce the profits available for distribution by the Burberry Group and the Company. As at 31 March 2010 the amounts offset 
against this reserve are £2.0m (2009: £4.5m). In the year to 31 March 2010 the Burberry Group plc ESOP trust has waived its 
entitlement to dividends of £0.2m (2009: £0.3m). 

During the year no profits (2009: £0.6m) have been transferred to capital reserves due to statutory requirements of subsidiaries.  
The capital reserve consists of non-distributable reserves and the capital redemption reserve arising on the purchase of own shares. 

Balance as at 1 April 2008 

Other comprehensive income: 

Cash flow hedges – losses deferred in equity 

Cash flow hedges – losses transferred to income 

Foreign currency translation differences 

Tax on other comprehensive income 

Total comprehensive income for the year 

Transfer between reserves 

Balance as at 31 March 2009 

Other comprehensive income: 

Cash flow hedges – gains deferred in equity 

Cash flow hedges – losses transferred to income 

Foreign currency translation differences 

Tax on other comprehensive income 

Total comprehensive income for the year 

Balance as at 31 March 2010 

Other reserves 
Foreign 
currency 
translation 
reserve
£m 

37.8 

– 

– 

116.7 

(4.3)

112.4 

– 

150.2 

– 

– 

(7.3)

(6.6)

(13.9)

136.3 

Capital  
reserve 
£m 

26.6 

– 

– 

– 

– 

– 

0.6 

27.2 

– 

– 

– 

– 

– 

Total 
£m 

58.6 

(27.4)

16.7 

116.7 

(1.2)

104.8 

0.6 

164.0 

0.4 

16.9 

(7.3)

(11.6)

(1.6)

27.2 

162.4 

Hedging
reserve
£m 

(5.8)

(27.4)

16.7 

– 

3.1 

(7.6)

– 

(13.4)

0.4 

16.9 

– 

(5.0)

12.3 

(1.1)

110  Burberry Group PLC annual report 2009/10 

 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

22.  Financial commitments 

Burberry Group has commitments relating to future minimum lease payments under non-cancellable operating leases on land and 
buildings as follows: 

Amounts falling due: 

Within one year 

Between two and five years 

After five years 

Total  

As at 
31 March 
2010 
£m 

As at 
31 March 
2009
£m 

70.7 

215.8 

188.0 

474.5 

47.0 

133.7 

115.9 

296.6 

The financial commitments for operating lease amounts calculated as a percentage of revenue (‘revenue leases’) have been based on 
the minimum payment that is required under the terms of the relevant lease. Under certain revenue leases, there are no minimums and 
therefore no financial commitment is included in the table above. As a result, the amounts charged to the Income Statement may be 
materially higher than the financial commitment at the prior year end.  

Where rental agreements include a contingent rental, this contingent rent is generally calculated as a percentage of revenue. Escalation 
clauses increase the rental to either open market rent, a stipulated amount in the rental agreement, or by an inflationary index 
percentage. There are no significant restrictions imposed by these lease agreements.  

The total of future minimum sublease payments to be received under non-cancellable subleases is as follows: 

Amounts falling due: 

Within one year 

Between two and five years 

After five years 

Total  

23.  Capital commitments 

Capital commitments contracted but not provided for: 

– property, plant and equipment 

– intangible assets 

Total  

Land and buildings 
As at 
31 March 
2010 
£m 

As at 
31 March 
2009
£m 

0.2 

1.7 

0.6 

2.5 

– 

– 

– 

– 

As at 
31 March 
2010 
£m 

As at 
31 March 
2009
£m 

2.7 

0.7 

3.4 

1.2 

0.5 

1.7 

Contracted capital commitments represent contracts entered into by the year end and future work in respect of major capital 
expenditure projects where activity has commenced by the year end relating to property, plant and equipment and intangible assets. 

Burberry Group PLC annual report 2009/10  111 

 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

24.  Contingent liabilities 

Under the GUS Group UK tax payment arrangements, the Group was jointly and severally liable for any GUS liability attributable to the 
period of Burberry Group’s membership of this payment scheme. Burberry Group’s membership of this scheme was terminated with 
effect from 31 March 2002.  

25.  Financial risk management 

Other than derivatives, the Group’s principal financial instruments, comprise cash and short-term deposits, external borrowings,  
trade receivables and payables, arising directly from operations.  

The Group’s activities expose it to a variety of financial risks: market risks (including foreign exchange risk, price risk and interest rate 
risk), credit risk, liquidity risk and capital risk. 

Risk management is carried out by Group Treasury to reduce financial risk and to ensure sufficient liquidity is available to meet 
foreseeable needs and to invest in cash assets safely and profitably. This is done in close co-operation with the Group’s operating units. 
Group Treasury does not operate as a profit centre and transacts only in relation to the underlying business requirements. The policies 
of the Group Treasury department are reviewed and approved by the Board of Directors. The Group uses derivative instruments to 
hedge certain risk exposures. 

Market risk 
Foreign exchange risk 
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures.  

The Group’s Income Statement is affected by transactions denominated in foreign currency. To reduce exposure to currency 
fluctuations, the Group has a policy of hedging foreign currency denominated transactions by entering into forward foreign exchange 
contracts (see note 15). The Group’s accounting policy in relation to derivative instruments is set out in note 2. 

The Group’s Treasury risk management policy is to hedge anticipated cash flows in each major foreign currency that qualify as  
‘highly probable’ forecast transactions for hedge accounting purposes. 

The Group monitors the desirability of hedging the net assets of the overseas subsidiaries when translated into Sterling for  
reporting purposes. It has not entered into any specific transactions for this purpose.  

At 31 March 2010, the Group has performed sensitivity analysis to determine the effect of non-Sterling currencies 
strengthening/weakening by 20% (2009: 20%) against Sterling with all other variables held constant. The effect of translating foreign 
currency denominated net debt, receivables, payables and financial instruments at fair value through profit or loss would have 
decreased/increased post-tax profit for the year by £0.8m (2009: increased/decreased £7.0m). The effect of translating forward foreign 
exchange contracts designated as cash flow hedges and Sterling denominated loans held in overseas subsidiaries would have 
decreased/increased equity by £12.5m (2009: £20.0m). 

The following table shows the extent to which Burberry Group has monetary assets and liabilities at the year end in currencies other 
than the local currency of operation, after accounting for the effect of any specific forward foreign exchange contracts used to manage 
currency exposure. Monetary assets and liabilities refer to cash, deposits, borrowings and amounts to be received or paid in cash. 
Foreign exchange differences on retranslation of these assets and liabilities are recognised in the Income Statement. 

Net foreign currency monetary assets/(liabilities) held in currencies other than the local currency of operation: 

Sterling 

US Dollar 

Euro 

Other currencies 

Total  

Year to  
31 March  
2010  
£m 

Year to 
31 March 
2009 
£m 

0.9 

0.7 

(1.9) 

– 

(0.3) 

0.2 

(47.8)

(0.8)

(0.5)

(48.9)

112  Burberry Group PLC annual report 2009/10 

 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

25.  Financial risk management (continued) 

Price risk 
The Group is exposed to employer’s national insurance liability due to the implementation of various employee share incentive schemes. 

To reduce exposure to fluctuations in the employer’s national insurance liability due to movements in the Group’s share price, the Group 
has a policy of entering into equity swaps at the time of granting share options and awards. The Group does not seek hedge accounting 
treatment for equity swaps. The Group monitors its exposure to fluctuations in the employer’s national insurance liability on an ongoing 
basis to ensure it remains immaterial. 

Cash flow interest rate risk 
The Group’s exposure to market risk for changes in interest rates relates primarily to cash, short-term deposits and external borrowings. 

The external borrowings are linked to the LIBOR rate, while cash and short-term borrowings are affected by local market rates around 
the Group. The borrowings at variable rates expose the Group to cash flow interest rate risk. To manage interest rate risk Burberry 
Group manages its proportion of fixed and floating rate borrowings to within limits approved by the Board using interest rate swap 
derivatives. The Group entered into an interest rate swap, with a notional principal of US $65m, to convert floating rate borrowings into 
fixed rate borrowings, at a fixed interest rate of 3.545%. The interest rate swap was closed out during the current year in line with the 
Group’s treasury policy. 

The interest rate risk profile of Burberry Group’s fixed and floating rate financial liabilities by currency is as follows: 

Sterling 

US dollar 

Other currencies 

Total financial liabilities 

As at 31 March 2010 

As at 31 March 2009 

Floating rate financial 
liabilities
£m 

Fixed rate financial 
liabilities
£m 

Floating rate financial 
liabilities 
£m 

Fixed rate financial 
liabilities
£m 

– 

– 

1.4 

1.4 

– 

– 

– 

– 

0.1 

– 

– 

0.1 

– 

45.4 

– 

45.4 

The floating rate financial liabilities at 31 March 2010 and 2009 exclude cash pool overdraft balances of £205.0m (2009: £199.2m).  
No interest is payable on all other non-derivative financial liabilities. 

At 31 March 2010, if interest rates on Sterling denominated borrowings had been 200 basis points higher/lower (2009: 200 basis points) 
with all other variables held constant, post-tax profit for the year would have been £0.1m (2009: £1.7m) lower/higher, as a result of 
higher/lower interest expense on floating rate borrowings. 

The Group has no other significant floating rate foreign currency borrowings and therefore is not exposed to movements in foreign 
currency interest rates. 

Credit risk 
The Group has no significant concentrations of credit risk. It has policies in place to ensure that wholesale sales of products are made to 
customers with an appropriate credit history. Sales to retail customers are made in cash or via major credit cards. In addition, receivables 
balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant and default rates have 
historically been very low. An ageing of overdue receivables is included in note 13. The maximum credit risk exposure of the Group’s 
financial assets at the end of the period is represented by the amounts reported under the corresponding balance sheet headings. 

With respect to credit risk arising from other financial assets, which comprise cash and short-term deposits and certain derivative 
instruments, the Group’s exposure to credit risk arises from the default of the counterparty with a maximum exposure equal to the 
carrying value of these instruments. The Group has policies that limit the amount of credit exposure to any financial institution.  

The Group has deposited €0.2m (2009: €2.5m) and CHF 0.3m (2009: CHF 0.3m) which is held as collateral at a number of European banks. 

Burberry Group PLC annual report 2009/10  113 

 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

25.  Financial risk management (continued) 

Liquidity risk 
The Group’s financial risk management policy aims to ensure that sufficient cash is maintained to meet foreseeable needs and close out 
market positions. Due to the dynamic nature of the underlying business, Group Treasury aims to maintain flexibility in funding by keeping 
committed credit lines available. For further details of this, see note 20.  

All short-term trade creditors, accruals, bank overdrafts and borrowings mature within one year or less. The maturity profile of the 
carrying amount of non-current financial liabilities, is as follows: 

As at 31 March 2010 

In more than one year, but not more than two years 

In more than two years, but not more than three years 

In more than three years, but not more than four years 

In more than four years, but not more than five years 

In more than five years 

Total financial liabilities 

As at 31 March 2009 

In more than one year, but not more than two years 
In more than two years, but not more than three years 

In more than three years, but not more than four years 

In more than four years, but not more than five years 

In more than five years 

Total financial liabilities 

Non-current 
portion of 
derivative 
financial 
liabilities
£m 

Other  
non-current 
financial 
liabilities 
£m 

Total
£m 

3.4 

0.9 

0.7 

0.6 

0.3 

5.9 

£m 

1.3 
0.3 

0.4 

0.5 

7.9 

3.2 

0.9 

0.7 

0.6 

0.3 

5.7 

£m 

0.9 
0.3 

0.4 

0.5 

7.9 

10.0 

10.4 

0.2 

– 

– 

– 

– 

0.2 

£m 

0.4 
– 

– 

– 

– 

0.4 

Other non-current financial liabilities principally relate to lease liabilities of £5.5m (2009: £6.6m) and property-related accruals of £nil 
(2009: £0.9m).  

The Group is in compliance with the financial and other covenants within its committed bank credit facilities. 

Capital risk 
The Group’s objectives when managing capital (defined as net cash plus equity) are to safeguard the Group’s ability to continue as a 
going concern in order to provide returns to shareholders and benefits for other stakeholders, while maintaining a strong credit rating 
and headroom and optimising return to shareholders through an appropriate balance of debt and equity funding. The Group manages 
its capital structure and makes adjustments to it in light of changes to economic conditions and the strategic objectives of the Group. 

26.  Employee costs  

Staff costs, including directors’ emoluments, incurred during the year are as shown below. The directors’ emoluments, which are 
separately disclosed in the Directors’ Remuneration Report on pages 70 to 79, include gains arising on the exercise of share options  
and awards and which form part of these financial statements. 

Wages and salaries 

Social security costs 

Share based compensation (all awards and options settled in shares) 

Other pension costs (note 18) 

Total  

Year to  
31 March  
2010  
£m 

190.0 

27.1 

18.1 

5.3 

240.5 

Year to 
31 March 
2009 
£m 

170.1 

23.8 

4.5 

4.3 

202.7 

114  Burberry Group PLC annual report 2009/10 

 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

26.  Employee costs (continued) 

The average number of full-time equivalent employees (including executive directors) during the year was as follows: 

EMEA 

Spain 

Americas 

Asia Pacific 

Rest of the World 

Total  

Number of employees 
Year to 
31 March 
2010 

Year to 
31 March 
2009 

2,285 

892 

1,285 

1,056 

90 

5,608 

2,334 

1,211 

1,616 

999 

48 

6,208 

Share options granted to directors and employees 
The share option and award schemes have been valued using the Black-Scholes option pricing model. The Senior Executive Restricted 
Share Plan and the Exceptional Performance Share Plan, both of which have market-based performance conditions attached, have 
been valued using the Black-Scholes option pricing model with a discount applied to this value, based on information obtained by 
running a Monte Carlo simulation model on the scheme.  

Where applicable, equity swaps have been entered into to cover future employer’s national insurance liability (or overseas equivalent) 
that may arise in respect of these schemes. 

Savings-Related Share Option Scheme  
In the financial year ended 31 March 2007, a Savings-Related Share Option Scheme (Sharesave) offering Burberry Group plc ordinary 
shares was introduced for employees. 

On 30 June 2009, further options were granted under this scheme with a three-year and five-year vesting period offered to employees. 
The contract commencement date of the grant was 1 September 2009. These options are ordinarily exercisable from 1 September 
2012 and 1 September 2014 for the three-year and five-year schemes respectively, with vesting dependent on continued employment, 
as well as a saving obligation over the vesting period. The exercise price for these options is calculated at a 20% discount to market 
price over the three dealing days preceding the invitation date. Three day averages are calculated by taking middle market quotations  
of a Burberry Group plc share from the London Stock Exchange.  

The fair value of the options granted in the year has been calculated using a risk-free rate of 2.1%, expected volatility of 44.7% and an 
expected dividend yield of 2.7%. The fair value per option for the grant was determined as £2.02. The Burberry share price at the 
contract commencement date was £4.89. 

Expected volatility was determined by calculating the historic annualised standard deviation of the market price of the shares over a 
period of time, prior to the grant, equivalent to the life of the option. 

Movements in the number of Sharesave share options in Burberry Group plc shares outstanding and their weighted average exercise 
prices are as follows: 

Outstanding at 1 April  

Granted during the year 

Lapsed during the year 

Withdrawn during the year 

Exercised during the year 

Outstanding at 31 March 

Exercisable at 31 March 

Weighted 
average 
exercise 
price 

401.8p 

321.0p 

395.0p 

411.1p 

350.0p 

383.5p 

350.5p 

Number  
of shares  
under  
option as at  
31 March 
2010 

1,007,438 

410,974 

(153,315) 

(91,692) 

(372,468) 

800,937 

130 

Weighted 
average 
exercise 
price 

409.1p 

399.0p 

427.6p 

– 

350.5p 

401.8p 

– 

Number 
of shares 
under 
option as at 
31 March
2009 

989,717 

273,308 

(253,219)

– 

(2,368)

1,007,438 

– 

Burberry Group PLC annual report 2009/10  115 

 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

26.  Employee costs (continued) 

Sharesave options in Burberry Group plc shares outstanding at the end of the year have the following expiry dates and exercise prices: 

Option term 

23 June 2006 – 28 February 2010 

30 March 2007 – 30 September 2010 

24 August 2007 – 28 February 2011 

28 September 2007 – 31 March 2011 

26 June 2008 – 28 February 2012 

30 June 2009 – 28 February 2013  

30 June 2009 – 28 February 2015 

Total 

Exercise
price 

350.5p 

384.5p 

505.0p 

505.0p 

399.0p 

321.0p 

321.0p 

Number  
of shares  
under  
option as at 
31 March  
2010 

130 

28,289 

108,077 

68,872 

200,796 

332,678 

62,095 

Number 
of shares 
under 
option as at
31 March 
2009 

438,267 

84,060 

152,171 

86,911 

246,029 

– 

– 

800,937 

1,007,438 

Burberry Senior Executive Restricted Share Plan 2004 (the RSP)  
In June and November 2009, further awards of 5,459,100 and 16,795 ordinary shares respectively were made to executive directors 
and management under the RSP (2009: 1,522,064).  

In accordance with the rules of the RSP the awards vest in three stages: 50% are exercisable after three years, 25% are exercisable 
after four years and 25% are exercisable after five years, subject to the achievement of two performance conditions. Vesting of RSP 
shares is based 50% on Burberry’s three year Total Shareholder Return (TSR) relative to peers and 50% on three year growth in profit 
before taxation (PBT).  

Awards vest in full only if Burberry achieves at least upper quartile TSR compared to its global peers and at least 10% per annum PBT 
growth. A proportion of an award (25%) may vest if TSR performance exceeds the median of the peer group or if PBT growth exceeds 
3% per annum over three years. The vesting of these awards is also dependent on continued employment over the vesting period. The 
exercise price of these share options is £nil. 

Obligations under this plan will be met by the issue of ordinary shares of the Company. 

Movements in the number of share awards outstanding are as follows: 

Outstanding at 1 April  

Granted during the year 

Lapsed during the year 

Exercised during the year 

Outstanding at 31 March 

Exercisable at 31 March 

The weighted average share price at the respective exercise dates in the year was £5.73. 

Number  
of awards  
as at 
31 March 
2010 

6,478,852 

5,475,895 

Number 
of awards 
as at
31 March
2009 

6,747,078 

1,522,064 

(1,377,582) 

(1,315,138)

(1,265,689) 

(475,152)

9,311,476 

6,478,852 

146,813 

277,738 

116  Burberry Group PLC annual report 2009/10 

 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

26.  Employee costs (continued) 

Share awards outstanding at the end of the year have the following terms: 

Term of the award 

2 August 2004 – 1 August 2014  

21 July 2005 – 20 July 2015 

31 January 2006 – 30 January 2016 

10 August 2006 – 9 August 2016 

1 September 2006 – 31 August 2016 

27 November 2006 – 26 November 2016 

11 June 2007 – 10 June 2017 

21 November 2007 – 20 November 2017 

25 June 2008 – 24 June 2018 

1 June 2009 – 31 May 2019 

8 June 2009 – 7 June 2019 

30 June 2009 – 29 June 2019 

20 November 2009 – 19 November 2019 

Total 

Number 
of awards 
as at 
31 March 
2010 

2,021 

87,557 

95,339 

Number 
of awards 
as at 
31 March 
2009 

330,860 

350,301 

254,237 

268,666 

1,820,819 

10,000 

13,773 

20,000 

48,709 

1,782,458 

1,868,126 

298,541 

1,357,402 

5,376,924 

1,500 

5,500 

11,795 

298,541 

1,487,259 

– 

– 

– 

– 

9,311,476 

6,478,852 

For the following grants made during the year ended 31 March 2010, the fair value for the restricted shares with the PBT performance 
condition was determined by applying the Black-Scholes option pricing model. A discount was applied to the restricted shares with the TSR 
performance condition, by applying the Monte Carlo model. The fair value for these restricted shares was determined as shown below: 

Fair value for the restricted shares 

PBT performance condition 

TSR performance condition 

1 June 2009 

8 June 2009 

30 June 2009 

20 November 2009 

£3.81 

£2.06 

£4.01 

£2.17 

£4.08 

£2.21 

£5.69 

£3.08 

The key factors used in determining the fair value of the awards were as follows: 

Weighted average share price at grant date 

Exercise price 

Life of award 

Expected volatility 

Risk free interest rate 

1 June 2009 

8 June 2009 

30 June 2009 

20 November 2009 

£3.81 

£nil 

£4.01 

£nil 

£4.08 

£nil 

£5.69 

£nil 

Equivalent to 
vesting period 

Equivalent to 
vesting period 

Equivalent to 
vesting period 

Equivalent to 
vesting period 

46.8% 

3.94% 

46.9% 

3.97% 

47.1% 

3.76% 

47.8% 

3.91% 

Expected volatility was determined by calculating the historic annualised standard deviation of the market price of the shares over a 
period of time, prior to the grant, equivalent to the life of the option. 

Burberry Restricted Share Reinvestment Plan  
On 21 July 2005 awards in respect of a total of 782,500 ordinary shares were made to senior management under the Restricted Share 
Reinvestment Plan.  

The awards vested in two stages: 50% were exercisable after three years and the remaining 50% became exercisable after four years. 
The vesting of these share awards was dependent on the employee continuing to hold the original IPO RSP shares which were awarded 
and which vested on 11 July 2005. The vesting of these share awards was also dependent on continued employment over the vesting 
period. The exercise price of these share awards was £nil. 

Burberry Group PLC annual report 2009/10  117 

 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

26.  Employee costs (continued) 

Movements in the number of share awards outstanding are as follows: 

Outstanding at 1 April  

Exercised during the year 

Outstanding at 31 March 

Exercisable at 31 March 

The weighted average share price at the respective exercise dates in the year was £4.94. 

Term for the outstanding amount of shares is: 

Term of the award 

21 July 2005 – 21 July 2015 

Total 

Number  
of awards  
as at 
 31 March 
2010 

278,750 

(278,750) 

– 

– 

Number 
of awards 
as at
 31 March
2009 

567,500 

(288,750)

278,750 

– 

Number  
of awards  
as at 
 31 March 
2010 

– 

– 

Number 
 of awards
 as at
 31 March
2009 

278,750 

278,750 

The Burberry Senior Executive IPO Share Option Scheme (the IPO Option Scheme) 
On 11 July 2002, options in respect of a total of 5,955,198 ordinary shares were made to executive directors and senior management 
under the IPO Option Scheme. Participants were granted options with an exercise price equal to the price on flotation, £2.30 per 
ordinary share. 

The options vested in three stages: 33% were exercisable after one year, 33% were exercisable after two years and the remaining  
33% were exercisable after three years. Obligations under this scheme will be met by the issue of ordinary shares of the Company.  

Movements in the number of share options outstanding and their weighted average exercise price are as follows: 

Outstanding at 1 April  

Exercised during the year 

Outstanding at 31 March 

Exercisable at 31 March 

Weighted 
average 
exercise
 price 

230.0p 

230.0p 

230.0p 

230.0p 

Number 
of shares 
under 
option as at 
31 March
2010 

392,086 

(267,086)

125,000 

125,000 

Share options outstanding at the end of the year have the following terms and exercise prices: 

Option term 

11 July 2002 – 11 July 2012 

Total 

Exercise 
price 

230.0p 

230.0p 

Weighted 
average  
exercise  
price 

230.0p 

– 

230.0p 

230.0p 

Number  
of shares  
under  
option as at  
31 March  
2010 

125,000 

125,000 

Number 
of shares 
under 
option as at
31 March
2009 

392,086 

– 

392,086 

392,086 

Number 
of shares 
under 
option as at 
31 March 
2009 

392,086 

392,086 

118  Burberry Group PLC annual report 2009/10 

 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

26.  Employee costs (continued) 

The Burberry Group plc Executive Share Option Scheme 2002 
During previous financial years, options were granted to executive directors and senior management in respect of ordinary shares in the 
Company under the Executive Share Option Scheme. 

The options vested in three stages: 33% were exercisable after one year, 33% were exercisable after two years and the remaining 33% 
were exercisable after three years. The vesting of these share options was dependent on continued employment over the vesting period. 

Movements in the number of share options outstanding and their weighted average exercise prices are as follows: 

Outstanding at 1 April  

Exercised during the year 

Outstanding at 31 March 

Exercisable at 31 March 

Weighted 
average 
exercise 
price 

325.2p 

331.7p 

307.6p 

307.6p 

Number  
of shares  
under  
option as at  
31 March 
2010 

837,762 

(611,472) 

226,290 

226,290 

The weighted average share price at the respective exercise dates in the year was £5.82. 

Share options outstanding at the end of the year have the following terms and exercise prices: 

Option term 

13 June 2003 – 12 June 2013 

2 August 2004 – 1 August 2014 

Total 

Exercise  
price 

258.0p 

378.0p 

Weighted 
average 
exercise 
price 

321.1p 

258.0p 

325.2p 

325.2p 

Number 
of shares 
under 
option as at 
 31 March 
2010 

132,752 

93,538 

226,290 

Number 
of shares 
under 
option as at 
31 March
2009 

891,928 

(54,166)

837,762 

837,762 

Number 
of shares 
under 
option as at
 31 March
2009 

368,583 

469,179 

837,762 

All Employee Share Plan 
In previous financial years all employees were offered awards of ordinary shares in the Company at a nil exercise price under an All 
Employee Share Plan. All awards vested after three years and the vesting of these share awards was dependent on continued 
employment over the vesting period. 

These ordinary shares are held in two trusts, being the Burberry Group Share Incentive Plan Trust and the Burberry Group plc ESOP Trust.  

Movements in the number of share awards outstanding are as follows: 

Outstanding at 1 April  

Lapsed during the year 

Exercised during the year 

Outstanding at 31 March 

Exercisable at 31 March 

Number 
of awards 
as at 
31 March 
2010 

141,830 

– 

(60,727)

81,103 

81,103 

Number 
of awards 
as at
31 March
2009 

360,200 

(27,560)

(190,810)

141,830 

141,830 

Burberry Group PLC annual report 2009/10  119 

 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

26.  Employee costs (continued) 

Share awards outstanding at the end of the year have the following terms: 

Term of the award 
12 July 2002 – 18 July 2082(1) 
30 August 2003 – 18 July 2082(1) 
20 August 2004 – 18 July 2082(1) 
1 September 2005 – 18 July 2082(1) 

Total 

Number  
of awards  
as at  
31 March  
2010 

13,850 

15,900 

24,650 

26,703 

81,103 

Number 
of awards 
as at 
31 March 
2009 

20,650 

26,300 

52,800 

42,080 

141,830 

(1)  No date has been specified when awards lapse. The cessation date of the trust in which the awards are held is 18 July 2082. 

The Burberry Co-Investment Plan  
In previous financial years executive directors and certain senior management were able to defer receipt of all or part of their annual bonus 
and invest it in ordinary shares in the Company with up to a 2:1 match based on individual and Group performance during the year.  
The matching share awards do not vest for three years and are forfeited if the executive leaves due to resignation within that period.  
The exercise price of these share awards is £nil. No awards were made during the year to 31 March 2010 (2009: 1,726,131). 

Movements in the number of share awards outstanding are as follows: 

Outstanding at 1 April 

Granted during the year 

Lapsed during the year 

Exercised during the year 

Outstanding at 31 March 

Exercisable at 31 March 

The weighted average share price at the respective exercise dates in the year was £6.25. 

Share awards outstanding at the end of the year have the following terms: 

Term of the award 

29 July 2004 – 28 July 2009  

21 July 2005 – 20 July 2010 

20 June 2007 – 19 June 2012 

3 June 2008 – 2 June 2013 

Total 

Number  
of awards  
as at 
 31 March 
2010 

3,215,009 

– 

(4,343) 

(1,336,640) 

Number 
of awards 
as at
 31 March
2009 

1,729,589 

1,726,131 

(26,867)

(213,844)

1,874,026 

3,215,009 

– 

339,721 

Number  
of awards  
as at  
31 March  
2010 

– 

– 

Number 
of awards 
as at 
31 March 
2009 

39,173 

300,548 

147,895 

1,726,131 

1,149,157 

1,726,131 

1,874,026 

3,215,009 

120  Burberry Group PLC annual report 2009/10 

 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

26.  Employee costs (continued) 

The Burberry Exceptional Performance Share Plan  
In 2007, awards in respect of a total of 4,210,000 ordinary shares were made to executive directors and senior management under  
the Exceptional Performance Share Plan which was introduced as a one-off long-term incentive plan.  

The awards vest in two stages: 50% are exercisable after three years and 50% are exercisable after four years. The vesting of these 
share awards is dependent on two performance conditions. The award is based 50% on relative Total Shareholder Return (TSR) and 
50% on growth in profits over the three and four year performance periods to 2010 and 2011. No awards vest unless Burberry’s TSR 
exceeds the median of the comparator group or growth in profit before tax and amortisation of goodwill per share (PBT) exceeds 50% 
over the four year performance period to 2010 or 75% over the five year performance period to 2011. The vesting of these share 
awards is also dependent on continued employment over the vesting period. The exercise price of these share awards is £nil. 

Movements in the number of share awards outstanding are as follows: 

Outstanding at 1 April 

Lapsed during the year 

Outstanding at 31 March 

Exercisable at 31 March 

Share awards outstanding at the end of the year have the following terms: 

Term of the award 

26 July 2007 – 25 July 2012 

21 November 2007 – 25 July 2012 

Total 

Number 
of awards 
 as at 
 31 March 
2010 

Number 
of awards 
as at
 31 March
2009 

3,935,000 

4,210,000 

– 

(275,000)

3,935,000 

3,935,000 

– 

– 

Number 
of awards 
as at 
31 March 
2010 

Number 
of awards 
as at 
31 March 
2009 

3,850,000 

3,850,000 

85,000 

85,000 

3,935,000 

3,935,000 

Burberry Group PLC annual report 2009/10  121 

 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

27.  Business combinations 

On 1 October 2009 the Group formed Burberry India Private Limited (Burberry India), a company registered in India, with a third party 
company registered in India, Genesis Colors Private Limited. Burberry India will manage all Burberry retail and wholesale distribution 
within the Indian market.  

Burberry has a 51% interest in the issued share capital of the company, the majority of the voting rights and the power to appoint the 
majority of the directors. Burberry India has been consolidated as a subsidiary as at 31 March 2010. The minority interest in the 
consolidated net assets of this company has been identified as a separate component of equity.  

On 28 January 2010, the Group terminated its franchisee agreement in India and Burberry India acquired the Burberry retailing business 
from the terminated franchisee. This business contributed revenues of £0.4m and a loss of £0.3m to the Group for the period from 
acquisition to 31 March 2010. 

If the business combination had occurred on 1 April 2009, the acquisition would have contributed £2.1m to revenue and an operating 
loss of £1.0m for the full year to 31 March 2010. 

Details of the net assets acquired and goodwill are as follows: 

Cash paid 

Total purchase consideration 

Fair value of net identifiable assets acquired  

Goodwill 

£m 

2.0 

2.0 

1.4 

0.6 

The goodwill arising on the acquisition, which is included in intangible assets, is attributable to the acquisition of the Indian business 
assets and the benefits expected from further expansion in this region.  

The assets and liabilities arising from the acquisition are as follows: 

Inventories 

Property, plant and equipment 

Receivables 

Net identifiable assets acquired 

Net identifiable assets acquired attributable to minority interest 

Outflow of cash to acquire business, net of cash acquired: 

Cash consideration 

Direct costs relating to acquisition 

Cash outflow on acquisition 

Acquiree’s  
carrying  
amount 
£m 

Fair value 
£m 

0.7 

1.0 

0.3 

2.0 

0.4 

0.8 

0.2 

1.4 

0.7 

£m 

2.0 

– 

2.0 

122  Burberry Group PLC annual report 2009/10 

 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

28.  Related party transactions 

Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on 
consolidation and are not disclosed in this note. The related party transactions relate to total compensation paid to key management, 
who are defined as the Board of Directors and certain members of senior management, and a loan from a minority interest partner.  

The total compensation paid to key management during the year was as follows: 

Salaries and short-term benefits 

Post-employment benefits 

Share based compensation 

Total  

Year to 
31 March 
2010 
£m 

Year to
31 March
2009
£m 

8.6 

0.3 

4.0 

12.9 

4.7 

0.4 

1.8 

6.9 

The aggregate cost to the Group of the exercise of share options and awards to key management in the year to 31 March 2010 was 
£5.2m (2009: £1.5m). 

During the year, Mitsui & Co Limited, a minority interest partner in Japan, provided a subsidiary company with a loan totalling £0.5m.  
The loan is due to mature on 8 November 2010. Interest is charged on this loan at the Japanese short-term prime rate plus 0.5%. 

Burberry Group PLC annual report 2009/10  123 

 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 

29.  Principal subsidiaries 

Company 

EMEA 

Burberry Limited  

Burberry Italy Retail Limited  
The Scotch House Limited(1) 
Woodrow-Universal Limited(1) 
Burberry France SASU 
Burberry (Suisse) SA(1) 
Burberry Italy SRL(1) 
Burberry (Deutschland) GmbH 

Burberry (Austria) GmbH 

Burberry Antwerp N.V. 

Burberry Czech Rep s.r.o.  

Burberry Hungary kft. 

Burberry Ireland Limited  

Burberry Netherlands BV 

Country of incorporation  Nature of business 

UK 

UK 

UK 

UK 

France 

Switzerland 

Italy 

Germany 

Austria 

Belgium 

Czech Republic 

Hungary 

Ireland 

Netherlands 

Luxury goods retailer, wholesaler and licensor 

Luxury goods retailer 

Luxury goods brand and licensor 

Textile manufacturer 

Luxury goods retailer and wholesaler 

Luxury goods retailer 

Luxury goods wholesaler 

Luxury goods retailer and wholesaler 

Luxury goods retailer 

Luxury goods retailer 

Luxury goods retailer 

Luxury goods retailer 

Luxury goods retailer 

Luxury goods retailer 

Burberry Middle East LLC (49%) 

United Arab Emirates 

Luxury goods retailer and wholesaler 

Burberry India Private Limited (51%) 

India 

Luxury goods retailer and wholesaler 

Spain 

Burberry (Spain) S.A. 

Burberry (Spain) Retail SL 

Americas 

Burberry Limited 

Burberry (Wholesale) Limited 

Burberry Canada Inc 

Asia Pacific 

Burberry Asia Limited 

Spain 

Spain 

USA 

USA 

Canada 

Luxury goods retailer and wholesaler 

Luxury goods retailer 

Luxury goods retailer 

Luxury goods wholesaler 

Luxury goods retailer 

Hong Kong 

Luxury goods retailer and wholesaler 

Burberry (Singapore) Distribution Company Pte Ltd  Singapore 

Luxury goods retailer and wholesaler 

Burberry Pacific Pty Ltd 

Burberry Korea Limited 

Burberry (Taiwan) Co Ltd 

Burberry (Malaysia) Sdn. Bhd 

Burberry Japan K.K. 

Burberry International K.K. (51%) 

Burberry Guam, Inc 

(1)  Held directly by Burberry Group plc. 

Australia 

Luxury goods retailer and wholesaler 

Republic of Korea 

Luxury goods retailer and wholesaler 

Taiwan 

Malaysia 

Japan 

Japan 

Guam 

Luxury goods retailer 

Luxury goods retailer 

Luxury goods retailer, wholesaler and licensor 

Luxury goods retailer 

Luxury goods retailer 

In accordance with Section 410(2)(a) of the Companies Act 2006, the above information is provided solely in relation to principal subsidiaries. 

As at 31 March 2010, all principal subsidiary undertakings are wholly owned except where indicated differently above and operate in  
the country in which they are incorporated with the exception of Burberry Italy Retail Limited, which operates principally in Italy. All the 
subsidiary undertakings have been consolidated as at 31 March 2010. Burberry has a 59% share in profits of Burberry Middle East LLC 
and has the power to appoint the majority of directors. Non-operating intermediate holding and financing companies are excluded from 
the list above. 

Details of all Burberry subsidiaries will be annexed to the next Annual Return of Burberry Group plc to be filed at Companies House. 

124  Burberry Group PLC annual report 2009/10 

 
 
 
 
 
 
 
 
 
 
 
FIVE YEAR SUMMARY  

Year to 31 March 
Revenue by channel 

Retail 

Wholesale 

Licensing 

Total 

Revenue by product 

Womenswear 

Menswear 

Non-apparel 

Childrenswear 

Retail/Wholesale 

Licensing 

Total 

Revenue by destination 

Europe  

Spain 
Americas(1) 
Asia Pacific 
Rest of World(1) 

Retail/Wholesale 

Licensing 

Total 

Profit by channel 

Retail/Wholesale 

Licensing 
Adjusted operating profit(2) 

Net interest income/(expense) 
Restructuring costs 

Goodwill impairment 

Store impairments and onerous lease provisions 

Negative goodwill 

Relocation of headquarters 

Project Atlas costs 

Treorchy closure costs 

Profit/(loss) on ordinary activities before taxation 

Tax on profit/(loss) on ordinary activities 

Profit/(loss) on ordinary activities after taxation 

Margin analysis 

Gross margin as percentage of revenue 
Retail/Wholesale adjusted operating profit(2) as a percentage 
of Retail/Wholesale revenue 
Licensing adjusted operating profit(2) as a percentage of 
Licensing revenue 
Total adjusted operating profit(2) as a percentage of revenue 

2006
£m 

318.5 

343.3 

81.1 

742.9 

£m 

249.3 

206.2 

189.2 

17.1 

661.8 

81.1 

742.9 

£m 

191.5 

134.1 

177.9 

144.6 

13.7 

661.8 

81.1 

742.9 

£m 

96.2 

69.4 

165.6 

2.5 

– 

– 

– 

– 

– 

(11.1)

– 

157.0 

(50.6)

106.4 

% 

60.0 

14.5 

85.6 

22.3 

2007
£m 

410.1 

354.1 

86.1 

850.3 

£m 

305.5 

227.0 

211.2 

20.5 

764.2 

86.1 

850.3 

£m 

229.8 

151.8 

196.5 

167.5 

18.6 

764.2 

86.1 

850.3 

£m 

111.7 

73.4 

185.1 

(0.7)

– 

– 

– 

– 

– 

(21.6)

(6.5)

156.3 

(46.1)

110.2 

% 

61.3 

14.6 

85.2 

21.8 

2008 
£m 

484.4 

426.2 

84.8 

995.4 

£m 

345.2 

247.8 

289.7 

27.9 

910.6 

84.8 

995.4 

£m 

291.8 

161.6 

234.8 

189.1 

33.3 

910.6 

84.8 

995.4 

£m 

135.6 

70.6 

206.2 

(6.0) 

– 

– 

– 

– 

15.1 

(19.6) 

– 

195.7 

(60.5) 

135.2 

% 

62.1 

14.9 

83.3 

20.7 

2009
 £m 

629.7 

489.2 

82.6 

2010
£m 

748.8 

433.6 

97.5 

1,201.5 

1,279.9 

£m 

412.8 

298.4 

366.3 

41.4 

£m 

415.5 

288.5 

419.6 

58.8 

1,118.9 

1,182.4 

82.6 

97.5 

1,201.5 

1,279.9 

£m 

379.8 

144.5 

308.9 

240.0 

45.7 

£m 

408.1 

107.1 

324.8 

282.7 

59.7 

1,118.9 

1,182.4 

82.6 

97.5 

1,201.5 

1,279.9 

£m 

110.1 

70.7 

180.8 

(6.2)

(54.9)

(116.2)

(13.4)

1.7 

(7.9)

– 

– 

(16.1)

11.0 

(5.1)

% 

55.4 

9.8 

85.6 

15.0 

£m 

137.7 

82.2 

219.9 

(5.1)

(48.8)

– 

– 

– 

– 

– 

– 

166.0 

(83.8)

82.2 

% 

62.8 

11.6 

84.3 

17.2 

(1)  Revenue amounts reported for 2009 have been restated on the adoption of IFRS 8 (note 3).  

(2)  Adjusted for exceptional items. 

Burberry Group PLC annual report 2009/10  125 

 
 
 
FIVE YEAR SUMMARY CONTINUED 

Year to 31 March 
Earnings and dividends 

Earnings per share – basic 
Adjusted earnings per share – basic(1) 
Earnings per share – diluted 
Adjusted earnings per share – diluted(1) 
Dividend per share (on a paid basis) 

Diluted weighted average number of ordinary shares in issue 
during the year (millions) 
Dividend cover (on a paid basis) (2)  

As at 31 March  
Balance sheet 

Fixed assets and other intangible assets 

Working capital (excluding cash and borrowings) 

Other long-term liabilities 

Net operating assets 

Goodwill  

Deferred consideration for acquisitions 

Cash at bank, net of overdraft and borrowings 

Taxation (including deferred taxation) 

Net assets 

Year to 31 March  
Cash flow 

Adjusted operating profit(1) 
Restructuring costs 

Goodwill impairment  

Store impairments and onerous lease provisions 

Negative goodwill 

Relocation of headquarters 

Project Atlas costs 

Treorchy closure costs 

Operating profit/(loss) 

Depreciation, impairment, amortisation and negative goodwill

Loss/(profit) on disposal of fixed assets and similar 
non-cash charges 

Fair value (gains)/losses on derivative instruments 

Charges in respect of employee share incentive schemes 

(Increase)/decrease in inventories 

(Increase)/decrease in receivables 

Increase/(decrease) in payables 

Net cash inflow from operations before capital expenditure 

Purchase of tangible and intangible fixed assets 

Proceeds from sale of property, plant and equipment 

Net cash inflow from operations adjusted for capital 
expenditure  

(1)  Adjusted for exceptional items. 

(2)  Based on adjusted diluted earnings per share. 

2006
pence
per share 

2007
pence
per share 

2008
pence 
per share 

2009 
pence  
per share 

2010
pence 
per share 

22.9 

24.7 

22.3 

24.1 

7.0 

477.6 

3.4 

2006
£m 

181.2 

121.7 

(19.2)

283.7 

121.2 

(11.5)

12.5 

(19.3)

386.6 

2006
£m 

165.6 

– 

– 

– 

– 

– 

(11.1)

– 

154.5 

24.9 

(1.6)

– 

7.4 

(17.8)

2.2 

(21.2)

148.4 

(30.7)

3.6 

25.2 

29.7 

24.7 

29.1 

8.4 

446.1 

3.5 

2007
£m 

179.5 

136.1 

(12.2)

303.4 

116.9 

(10.0)

(2.8)

(10.6)

396.9 

2007
£m 

185.1 

– 

– 

– 

– 

– 

(21.6)

(6.5)

157.0 

26.7 

1.1 

– 

10.8 

(33.4)

(33.8)

32.8 

161.2 

(34.3)

0.1 

31.3 

32.4 

30.5 

31.6 

11.0 

442.8 

2.9 

2008
£m 

197.8 

260.0 

(13.7)

444.1 

130.1 

– 

(64.2)

(14.7)

495.3 

2008
£m 

206.2 

– 

– 

– 

– 

15.1 

(19.6)

– 

201.7 

32.2 

(19.1)

(0.5)

14.3 

(122.6)

(29.1)

28.8 

105.7 

(48.5)

28.3 

(1.4) 

30.6 

(1.4) 

30.2 

12.0 

18.8 

35.9 

18.4 

35.1 

12.2 

438.1 

2.5 

441.9 

2.9 

2009 
£m 

283.0 

221.2 

(24.4) 

479.8 

33.1 

– 

7.6 

23.4 

543.9 

2009 
£m 

180.8 

(54.9) 

(116.2) 

(13.4) 

1.7 

(7.9) 

– 

– 

(9.9) 

174.7 

2.0 

10.7 

4.5 

55.7 

2.1 

2.2 

242.0 

(89.9) 

0.1 

2010
£m 

285.8 

61.3 

(27.0)

320.1 

34.9 

– 

262.0 

(13.5)

603.5 

2010
£m 

219.9 

(48.8)

– 

– 

– 

– 

– 

– 

171.1 

60.0 

4.2 

(11.9)

18.1 

87.4 

56.2 

40.5 

425.6 

(69.9)

– 

121.3 

127.0 

85.5 

152.2 

355.7 

126  Burberry Group PLC annual report 2009/10 

 
 
 
INDEPENDENT AUDITORS’ REPORT  
TO THE MEMBERS OF BURBERRY GROUP PLC 

We have audited the parent Company financial statements of Burberry Group plc for the year ended 31 March 2010 which comprise 
the parent Company Balance Sheet and the related notes. The financial reporting framework that has been applied in their preparation 
is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). 

Respective responsibilities of directors and auditors 
As explained more fully in the Statement of Directors’ Responsibilities set out on page 80, the directors are responsible for the 
preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial 
statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to 
comply with the Auditing Practices Board’s Ethical Standards for Auditors.  

This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3  
of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility 
for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly 
agreed by our prior consent in writing. 

Scope of the audit of the financial statements 
An audit involves obtaining evidence about the amounts and disclosures in the financial statements to give reasonable assurance that 
the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether 
the accounting policies are appropriate to the Company’s circumstances and have been consistently applied and adequately disclosed; 
the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements.  

Opinion on financial statements 
In our opinion the parent Company financial statements: 

•  Give a true and fair view of the state of the Company’s affairs as at 31 March 2010; 
•  Have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and 
•  Have been prepared in accordance with the requirements of the Companies Act 2006.  

Opinion on other matters prescribed by the Companies Act 2006 
In our opinion: 

•  The part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 

2006; and 

•  The information given in the Directors’ Report for the financial year for which the parent Company financial statements are prepared  

is consistent with the parent Company financial statements. 

Matters on which we are required to report by exception 
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our 
opinion: 

•  Adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received 

from branches not visited by us; or 

•  The parent Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement  

with the accounting records and returns; or 

•  Certain disclosures of directors’ remuneration specified by law are not made; or 
•  We have not received all the information and explanations we require for our audit. 

Other matter 
We have reported separately on the Group financial statements of Burberry Group plc for the year ended 31 March 2010. 

Kim Green (Senior Statutory Auditor) 
For and on behalf of PricewaterhouseCoopers LLP 

Chartered Accountants and Statutory Auditors 
London, 25 May 2010

Burberry Group PLC annual report 2009/10  127 

 
 
 
 
 
COMPANY BALANCE SHEET 

Fixed assets 
Derivative assets 

Investments in Group companies 

Current assets 

Debtors receivable within one year 

Debtors receivable after one year 

Derivative assets  

Cash and cash equivalents 

Current liabilities 

Creditors payable within one year 

Derivative liabilities 

Net current liabilities 

Total assets less current liabilities 

Non current liabilities 

Creditors payable after one year 

Net assets 

EQUITY 

Share capital 

Share premium 

Capital reserve 

Hedging reserve 

Profit and loss account 

Total equity 

Note 

C 

D 

D 

E 

As at 
31 March  
2010 
£m 

1.7 

1,975.0 

1,976.7 

As at
31 March
2009
£m 

– 

1,613.6 

1,613.6 

1,007.3 

743.5 

0.8 

0.8 

3.1 

1.5 

– 

0.4 

1,012.0 

745.4 

F 

(2,246.5) 

(1,731.8)

– 

(1,234.5) 

742.2 

(0.2) 

742.0 

0.2 

186.1 

0.9 

4.1 

550.7 

742.0 

F 

G 

G 

G 

G 

G 

G 

(1.6)

(988.0)

625.6 

– 

625.6 

0.2 

175.9 

0.9 

3.9 

444.7 

625.6 

The financial statements on pages 128 to 133 were approved by the Board on 25 May 2010 and signed on its behalf by: 

John Peace 
Chairman 

Stacey Cartwright 
Executive Vice President, Chief Financial Officer 

128  Burberry Group PLC annual report 2009/10 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE COMPANY FINANCIAL STATEMENTS 

A. Basis of preparation 

Burberry Group plc (‘the Company’) is the parent Company of the Burberry Group. Burberry Group plc is listed on the London Stock 
Exchange and its principal business is investment.  

Burberry Group is a global luxury goods manufacturer, wholesaler and retailer. Retail/Wholesale revenues are generated by the sale of 
luxury goods through Burberry mainline stores, concessions and outlets as well as Burberry franchisees and prestige department stores 
globally. Licensing revenues are generated through the receipt of royalties from Burberry’s licensees in Japan and global licensees of 
fragrances, eyewear, timepieces and European childrenswear. All of the companies, which comprise Burberry Group, are owned by  
the Company either directly or indirectly.  

These financial statements have been prepared on a going concern basis under the historical cost convention, with the exception of 
financial instruments which are included in the financial statements at fair value, and in accordance with applicable accounting standards 
in the United Kingdom and the Companies Act 2006.  

B. Accounting policies 

The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been 
consistently applied to all the years presented, unless otherwise stated.  

Share schemes 
Employees in Burberry Group (including executive directors) receive certain share incentives, relating to Burberry Group plc shares. 

The cost of the share incentives is measured with reference to the fair value of the equity instruments awarded at the date of grant.  
The Black-Scholes option pricing model is used to determine the fair value of the award made. The impact of performance conditions is 
not considered in determining the fair value on the date of grant, except for conditions linked to the price of Burberry Group plc shares 
i.e. market conditions. Vesting conditions which relate to non-market conditions are allowed for in the assumptions about the number  
of options expected to vest. The estimate of the number of options expected to vest is revised at each balance sheet date. 

The cost of the share based incentives are recharged and recognised as an expense over the vesting period of the awards by the entity 
which employs the relevant participants. A corresponding increase in equity is recognised. 

The proceeds received from the exercise of the equity instruments awarded, net of any directly attributable transaction costs,  
are credited to share capital and share premium. 

Full disclosures are presented in note 26 of the consolidated financial statements of the Burberry Group. 

Dividend distribution 
Dividend distributions to Burberry Group plc’s shareholders are recognised as a liability in the period in which the dividends are 
approved by the shareholders in the case of final dividends or when they are paid in respect of interim dividends. 

Investments in Group companies 
Investments in Group companies are stated at cost, less any provisions to reflect impairment in value. 

Loans to Group companies are considered to be part of the net investment in the subsidiary and any foreign exchange gain or losses 
made on these loans are recognised in the profit and loss account. 

Impairment of assets 
Assets that have an indefinite useful economic life are not subject to amortisation and are tested annually for impairment. Assets that are 
subject to amortisation are reviewed for impairment whenever events or changes in circumstance indicate that the carrying amount may 
not be recoverable. An impairment loss is recognised for the amount by which the carrying amount exceeds its recoverable amount. 
The recoverable amount is the higher of an asset’s net realisable value and value in use. For the purpose of assessing impairment, 
assets are grouped at the lowest levels for which there are separately identifiable cash flows (income-generating units).  

Deferred tax 
Deferred taxation is recognised as a liability or asset if transactions have occurred at the balance sheet date that give rise to an 
obligation to pay more taxation in future, or a right to pay less taxation in future. An asset is not recognised to the extent that the 
realisation of economic benefits in the future is uncertain. Deferred tax assets and liabilities are not discounted. 

Share capital 
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity 
as a deduction, net of tax, from the proceeds. 

Burberry Group PLC annual report 2009/10  129 

 
 
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED  

B. Accounting policies (continued) 

Where the Company purchases its own equity share capital (treasury shares), the consideration paid, including any directly attributable 
incremental costs, is deducted from equity attributable to the Company’s equity holders until the shares are cancelled, reissued or 
disposed of. Where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable 
incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders. 

Financial instruments 
Financial instruments are reported and measured in accordance with FRS 25 and FRS 26 respectively. The Company used the 
exemption not to present FRS 25 disclosures in the notes to the entity financial statements as full equivalent disclosures are presented 
within the consolidated financial statements.  

Foreign currency transactions 
Transactions denominated in foreign currencies are translated into Sterling at the exchange rate ruling at the date of the transaction. 
Monetary assets and liabilities denominated in foreign currencies, which are held at the year end, are translated into Sterling at the 
exchange rate ruling at the balance sheet date. Exchange differences on monetary items are recognised in the profit and loss account  
in the period in which they arise.  

Cash flow statement 
The Company is exempt from the requirement to prepare a cash flow statement under FRS 1 (revised 1996) ‘Cash flow statements’,  
as it is a part of Burberry Group and the cash flow for the Group is included in the consolidated financial statements of Burberry Group. 

Related party transactions 
FRS 8, ‘Related Party Disclosures’ requires the disclosure of the details of material transactions and balances between the reporting 
entity and related parties. The Company has taken advantage of the exemption under the terms of FRS 8, not to disclose details of 
transactions with entities that are part of Burberry Group. 

C. Investments in Group companies 

Cost 

As at 1 April 2008 

Additions 

Impairment 

As at 31 March 2009 

Additions 

Impairment reversal 

Disposals 

As at 31 March 2010 

£m 

1,197.4 

557.2 

(141.0)

1,613.6 

496.8 

139.2 

(274.6)

1,975.0 

The principal subsidiaries of the Burberry Group are listed in note 

29

 of the Group financial statements.  

During the year, previously recognised impairments on certain subsidiary companies totalling £139.2m were reversed through the  
profit and loss account in accordance with Financial Reporting Standard 11 ‘Impairment of Fixed Assets and Goodwill’.  

Burberry Group sold its investment in a subsidiary company at its pre-impairment book value of £272.0m. Accordingly, the impairment 
loss of £137.5m previously recognised in respect of this investment was reversed immediately prior to disposal.  

130  Burberry Group PLC annual report 2009/10 

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED  

D. Debtors 

Amounts receivable from Group companies 
Provision in respect of amounts receivable from Group companies 

Net amounts receivable from Group companies 

Prepayments and other debtors 

Total debtors receivable within one year 

Prepayments 

Total debtors receivable after one year 

Total debtors 

As at 
31 March 
2010 
£m 

1,011.5 
(4.9)

1,006.6 

0.7 

1,007.3 

0.8 

0.8 

1,008.1 

As at 
31 March
 2009
£m 

742.7 
– 

742.7 

0.8 

743.5 

1.5 

1.5 

745.0 

Included in amounts receivable from Group companies are loans of £88.3m (2009: £93.1m) which are interest bearing. The interest rate 
earned is based on relevant national LIBOR equivalents. 

The maturity of debtors due after one year is as follows: 

Between one and two years 
Between two and three years 

Between three and four years 

Total debtors 

E. Cash and cash equivalents 

Cash and cash equivalents 

Cash at bank and in hand earns interest based on the relevant LIBOR equivalents.  

F. Creditors  

Unsecured: 

Trading balances payable to Group companies 

Loan balances payable to Group companies 

Accruals and deferred income 

Total creditors payable within one year 

Accruals 

Total creditors payable after one year 

Total creditors 

As at 
31 March 
2010 
£m 

As at 
31 March
 2009
£m 

0.6 
0.2 

– 

0.8 

0.7 
0.6 

0.2 

1.5 

As at 
31 March 
2010 
£m 

3.1 

As at 
31 March
 2009
£m 

0.4 

As at 
31 March 
2010 
£m 

114.7 

2,128.9 

2.9 

As at 
31 March
 2009
£m 

65.4 

1,664.8 

1.6 

2,246.5 

1,731.8 

0.2 

0.2 

– 

– 

2,246.7 

1,731.8 

Burberry Group PLC annual report 2009/10  131 

 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED  

G. Equity 

Authorised share capital 

1,999,999,998,000 (2009: 1,999,999,998,000) ordinary shares of 0.05p (2009: 0.05p) each 

Total 

Allotted, called up and fully paid share capital 

Ordinary shares of 0.05p (2009: 0.05p) each 

As at 1 April 2009 

Allotted on exercise of options during the year 

As at 31 March 2010 

77,215 of the 0.05p ordinary shares in issue are held as treasury shares. 

Reconciliation of movement in Company shareholders’ funds 

As at 1 April 2008 

Retained profit for the year before 
dividends paid 

Dividends paid 

Total recognised loss for the year 

Employee share option scheme 

– value of share options granted 

– exercise of share options 

Cash flow hedge loss deferred in equity 

Purchase of shares by ESOP trusts 

Sale of shares by ESOP trusts 

Share  
capital 
£m 

0.2 

Share
 premium 
£m 

174.3 

Capital 
reserve
£m 

0.9 

– 
– 

– 

– 

– 

– 

– 

– 

– 
– 

– 

– 

1.6 

– 

– 

– 

– 
– 

– 

– 

– 

– 

– 

– 

Profit and loss 
account
£m 

470.0 

27.1 
(51.7)

(24.6)

4.5 

– 

– 

(5.4)

0.2 

As at 31 March 2009 

0.2 

175.9 

0.9 

444.7 

Retained profit for the year before 
dividends paid 

Dividends paid 

Total recognised 

gain

 for the year 

Employee share option scheme 

– value of share options granted 

– exercise of share options 

Cash flow hedge gain deferred in equity 

Purchase of shares by ESOP trusts 

Sale of shares by ESOP trusts 

Treasury shares 

As at 31 March 2010 

– 
– 

– 

– 

– 

– 

– 

– 

– 

– 
– 

– 

– 

10.2 

– 

– 

– 

– 

– 
– 

– 

– 

– 

– 

– 

– 

– 

146.2 
(52.5)

93.7 

18.1 

– 

– 

(7.5)

2.1 

(0.4)

As at 
31 March 
2010 
£m 

As at 
31 March 
2009
£m 

1,000.0 

1,000.0 

1,000.0 

1,000.0 

Number 

433,137,430 

1,887,352 

435,024,782 

Hedging  
reserve 
£m 

(0.1) 

– 
– 

– 

– 

– 

4.0 

– 

– 

3.9 

– 
– 

– 

– 

– 

0.2 

– 

– 

– 

£m 

0.2 

– 

0.2 

Total 
equity
£m 

645.3 

27.1 
(51.7)

(24.6)

4.5 

1.6 

4.0 

(5.4)

0.2 

625.6 

146.2 
(52.5)

93.7 

18.1 

10.2 

0.2 

(7.5)

2.1 

(0.4)

0.2 

186.1 

0.9 

550.7 

4.1 

742.0 

Profit on ordinary activities, but before dividends payable, was £146.2m (2009: profit of £27.1m). As permitted by section 408 of the 
Companies Act 2006, the Company has not presented its own profit and loss account. Dividend disclosures are provided in note 9  
of the Group accounts. Audit fee disclosure is provided in note 5 and is borne by a subsidiary. 

132  Burberry Group PLC annual report 2009/10 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED  

G. Equity (continued) 

A share repurchase programme commenced in January 2005 and since then a total of 79,063,397 ordinary shares have been 
repurchased and subsequently cancelled. This represents 15.8% of the original issued share capital at a total cost of £351.8m.  
The nominal value of the shares was £39,532 and has been transferred to a capital redemption reserve and the retained earnings have 
been reduced by £351.8m since this date. During the year to 31 March 2010, no ordinary shares were repurchased and subsequently 
cancelled by the Company. 

The cost of own shares held in the Burberry Group ESOP Trusts has been offset against the profit and loss account, as the amounts 
paid reduce the profits available for distribution by the Company. As at 31 March 2010 the amounts offset against this reserve are 
£2.0m (2009: £4.5m). In the year to 31 March 2010 the Burberry Group plc ESOP trust has waived its entitlement to dividends of £0.2m 
(2009: £0.3m). 

The capital reserve consists of non-distributable reserves and the capital redemption reserve arising on the purchase of own shares. 

H. Financial guarantees 

Burberry Group plc, together with Burberry Limited, Burberry Treasury Limited, Burberry Spain SA, Burberry Asia Limited, Burberry 
(Wholesale) Limited (US) and Burberry Limited (US) make up the Guarantor Group for a £200m multi-currency revolving facility 
agreement which commenced 16 March 2009 and matures 30 June 2012. The facility was co-ordinated by Lloyds Bank plc (Co-
ordinator and Agent) and the mandated lead arrangers were Lloyds TSB Bank plc and Societe General S.A. both of which had a £40m 
commitment. The remaining commitment was provided by Royal Bank of Scotland plc, Abbey National Treasury Services plc, Unicredit 
SpA and Caixa D’Estalvis I Pensions De Barcelona, each with a £30m commitment. Interest is currently charged on this loan at LIBOR 
plus 2.00% per annum. 

The same Guarantor Group supports the £60m multi-currency revolving credit facility provided by HSBC Bank plc, £30m, and Lloyds TSB 
Bank plc, £30m, which commenced on 13 June 2008 and matures on 13 June 2011. Interest is charged on each of these facilities at 
LIBOR plus 0.95% on drawings less than 50% of the loan principal and at LIBOR plus 1.05% on drawings over 50% of the loan principal. 

The fair value of the financial guarantee as at 31 March 2010 is £nil (2009: £nil). 

A potential liability may arise in the future if one of the Group members defaults on the loan facility. Each guarantor, including  
Burberry Group plc would be liable to cover the amounts outstanding, including principal and interest elements. 

I.  Employee costs 

The Company had no employees during the year to 31 March 2010 (2009: nil). 

Burberry Group PLC annual report 2009/10  133 

 
 
SHAREHOLDER INFORMATION 

Shareholder enquiries 
Enquiries relating to shareholdings, such as the transfer of 
shares, change of name or address, lost share certificates  
or dividend cheques, should be referred to the Company’s 
Registrar, Equiniti, using the details below: 

Equiniti 
Aspect House 
Spencer Road 
Lancing  
West Sussex BN99 6DA 
Tel: 0871 384 2839 
Tel: +44 121 415 7047 (from outside the UK) 

Company website 
This Annual Report and other information about Burberry, 
including share price information and details of results 
announcements, are available on the Group’s website at 
www.burberryplc.com. 

Electronic communication 
Shareholders may at any time choose to receive all shareholder 
documentation in electronic form via the internet, rather than in 
paper format. Shareholders who decide to register for this 
option will receive an email each time a shareholder document  
is published on the internet. Shareholders who wish to receive 
documentation in electronic form should register online at 
www.shareview.co.uk. 

Equiniti offers a range of shareholder information and services 
online at www.shareview.co.uk. A textphone facility for those 
with hearing difficulties is available by calling: 0871 384 2266  
(or +44 121 415 7028 from outside the UK).  

Duplicate accounts 
Shareholders who have more than one account due to 
inconsistency in account details may avoid duplicate mailings  
by contacting Equiniti and requesting the amalgamation of their 
share accounts.  

American Depositary Receipts (ADRs) 
Burberry established a sponsored Level 1 American Depositary 
Receipt (ADR) program to enable US investors to purchase ADRs 
in US Dollars. Each ADR represents two Burberry ordinary shares.  

For queries relating to ADRs in Burberry, please use the 
following contact details: 

Deutsche Bank Trust Company Americas 
c/o American Stock Transfer & Trust Company 
Peck Slip Station 
PO Box 2050 
New York, NY 10272-2050 

Email enquiries 
DB@amstock.com 
Tel: toll free within the US: +1 800 301 3517 
Tel: International: +1 (718) 921 8137 

Financial calendar  
First quarter trading update  

Annual General Meeting   

First half trading update  

Interim results announcement  

Third quarter trading update  

Second half trading update  

Preliminary results announcement  

13 July 2010 

15 July 2010 

13 October 2010 

16 November 2010 

January 2011 

April 2011 

May 2011 

Dividends 
The interim dividend for the financial year ended 31 March 2010 
of 3.5p per ordinary share was paid on 4 February 2010. A final 
dividend of 10.5p per share has been proposed and, subject to 
approval at the Annual General Meeting on 15 July 2010, will be 
paid on 5 August 2010 to shareholders on the register at the 
close of business on 9 July 2010.  

Dividends can be paid by BACS directly into a UK bank 
account, with the tax voucher being sent to the shareholders 
address. A dividend mandate form is available from Equiniti or  
at www.shareview.co.uk.  

Record date 

9 July 2010 

Final date for return of DRIP mandate forms  

22 July 2010 

Payment date and DRIP purchase   

Interim dividend payable 

5 August 2010 

Expected
February 2011 

Dividend Reinvestment Plan  
Burberry’s Dividend Reinvestment Plan (DRIP) enables 
shareholders to use their dividends to buy further shares in the 
Company. Full details of the DRIP can be obtained from Equiniti. 
If you would like your final and future dividends to qualify for the 
DRIP, completed application forms must be returned to Equiniti 
by 22 July 2010. 

Dividends payable in foreign currencies  
Equiniti are able to pay dividends to shareholders in over 30 
countries worldwide through the Overseas Payment Service.  
An administrative fee will be deducted from each dividend 
payment. Further details can be obtained from Equiniti or  
online at www.shareview.co.uk. 

The ADR local payment date will be approximately five business days 
after the proposed dividend payment date for ordinary shareholders. 

134  Burberry Group PLC annual report 2009/10 

 
 
Shareholder information CONTINUED 

Annual General Meeting 
Burberry’s Annual General Meeting will be held at the offices of 
Slaughter and May at: 

One Bunhill Row 
London 
EC1Y 8YY 

on Thursday, 15 July 2010 at 9.30 am. 

The Notice of Meeting, together with details of the business to 
be conducted at the meeting, is available on the Company’s 
website www.burberryplc.com. 

The voting results for the 2010 Annual General Meeting, 
including proxy votes and votes withheld, will be accessible on 
the Company’s website at www.burberryplc.com, shortly after 
the meeting.  

Share price information  
The latest Burberry share price is available on the Group’s 
website at www.burberryplc.com. 

Share dealing 
Burberry Group plc shares can be traded through most banks, 
building societies or stock brokers. Equiniti offers a telephone 
and internet dealing service. Terms and conditions and details  
of the commission charges are available on request.  

For telephone dealing please telephone 08456 037 037 between 
8.00am and 4.30pm, Monday to Friday, and for internet dealing 
visit www.shareview.co.uk/dealing. Shareholders will need their 
reference number which can be found on their share certificate.  

ShareGift  
Shareholders with a small number of shares, the value of which 
makes them uneconomic to sell, may wish to consider donating 
their shares to charity through ShareGift, a donation scheme 
operated by The Orr Mackintosh Foundation (registered charity 
1052686). A ShareGift donation form can be obtained from 
Equiniti Limited. Further information is available at 
www.sharegift.org or by telephone on +44 (0) 20 7930 3737.  

Unauthorised brokers (boiler room scams)  
Shareholders are advised to be very wary of any unsolicited 
advice, offers to buy shares at a discount or offers of free 
company reports. These are typically from overseas-based 
‘brokers’ who target UK shareholders offering to sell them  
what often turn out to be worthless or high-risk shares in US  
or UK investments.  

More detailed information can be found on the FSA website,  
at www.moneymadeclear.org.uk.  

If you receive unsolicited investment advice:  

•  make sure you get the correct name of the person  

and organisation  

•  check that they are properly authorised by the FSA before getting 

involved. You can check this by visiting the FSA Register 

•  the FSA also maintains a list of unauthorised overseas firms 
who are targeting, or have targeted, UK investors. This list  
can be found at 
www.fsa.gov.uk/pages/doing/regulated/law/alerts/ 
unauthorised.shtml 

•  any approach from such organisations should be reported to 
the FSA using the online form so that this list can be kept up 
to date and any other appropriate action can be considered  

•  inform the Registrar 

Registered office  
Burberry Group plc  
Horseferry House  
Horseferry Road  
London SW1P 2AW  
www.burberryplc.com 

Registered in England and Wales  
Registered Number 03458224 

Burberry Group PLC annual report 2009/10  135 

 
 
 
EXECUTIVE TEAM

Executive directors 

Angela Ahrendts
Chief Executive Officer

Stacey Cartwright
Executive Vice President
Chief Financial Officer

Senior management

Christopher Bailey
Chief Creative Officer

John Douglas 
Senior Vice President 
Information Technology

Carol Fairweather
Senior Vice President
Group Finance

Emilio Foa
Senior Vice President
Emerging Markets

Joy Frommer
President, Europe

Stephen Gilbert
Senior Vice President
Retail Development

Andy Janowski
Chief Operations Officer

William Kim 
Senior Vice President
Digital Commerce

Andrew Maag
Senior Vice President
Menswear

136

Michael Mahony
Senior Vice President
Commercial Affairs and General Counsel

Sarah Manley
Senior Vice President
Marketing and Communications

Matt McEvoy
Senior Vice President
Strategy and Licensing

Pascal Perrier 
President, Asia Pacific

Paul Price
Senior Vice President
Non-Apparel

Reg Sindall
Executive Vice President
Corporate Resources

Michele Smith
Senior Vice President
Womenswear

Mark Taylor
Senior Vice President
Human Resources

Eugenia Ulasewicz
President, Americas