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ANNUAL REPORT 2020/21
INHERENT
IN EVERY
BURBERRY
GARMENT IS
FREEDOM
Thomas Burberry
CONTENTS
Strategic
Report
2
6
10
14
16
18
20
24
45
48
55
56
60
Highlights
Chairman’s Letter
Chief Executive Officer’s
Letter
Purpose
Business Model
Investment Case
Luxury Market Environment
Strategy
Key Performance Indicators
Group Financial Highlights
Capital Allocation Framework
Supporting Our Stakeholders
During COVID-19
Environmental, Social
and Governance
67
74
83
92
Our People
Our Communities
The Environment
Sustainability Bond
94
Non-Financial Information
Statement
96
Stakeholder Engagement
104 Board Engagement
106 Risk and Viability Report
133
Task force on Climate-
Related Financial Disclosures
(TCFD)
138 Risk Management Activities
in FY 2020/21
140 Our Viability Statement
Corporate Governance
Statement
146 Board Leadership and
Company Purpose
146 Chairman’s
Introduction
148 Board of Directors
152
153
155
Executive Committee
Corporate Governance
Report
Principal areas of focus
for the Board during
FY 2020/21
Financial
Statements
210
211
Statement of
Directors’ Responsibilities
Independent Auditor’s
Report to the Members
of Burberry Group plc
224 Group Income Statement
225 Group Statement of
Comprehensive Income
226 Group Balance Sheet
227 Group Statement of Changes
in Equity
162 Division of Responsibilities
228 Group Statement
162 Governance Structure
and Division of
Responsibilities
166
Composition, Succession
and Evaluation
166 Board Evaluation
168 Report of the
of Cash Flows
229 Notes to the
Financial Statements
287 Five-Year Summary
290 Company Balance Sheet
291
Company Statement
of Changes in Equity
Nomination Committee
292 Notes to the Company
Financial Statements
300 Shareholder Information
173
Audit, Risk and
Internal Control
173
Report of the Audit
Committee
180 Remuneration
180 Directors’
Remuneration Report
204 Directors’ Report
1
Strategic Report | At a Glance
FINANCIAL AND
OPERATIONAL HIGHLIGHTS
Revenue by region1,2,3
Americas
£475m, -15% at CER
Number of stores: 86
Europe, Middle East, India and
Asia Pacific
Africa (EMEIA)
£628m, -35% at CER
Number of stores: 120
£1,203m, +16% at CER
Number of stores: 209
Total revenue by channel
Retail/wholesale revenue by destination
Revenue by product2
Retail/wholesale revenue by product division
Period ending
£m
Retail
Wholesale
Licensing
27 March
28 March
2021
1,910
396
38
2020
2,110
476
47
Period ending
£m
Accessories
Women’s
Men’s
Children’s, Beauty and other
27 March
28 March
2021
841
653
668
144
2020
948
796
715
127
1. All references to revenue growth on page 2 are presented at Constant Exchange Rates (CER).
See page 49 for reconciliation to total revenue.
2. Retail/wholesale revenue.
3. For more detail on performance see Group Financial Highlights on pages 48 to 54.
2
Strategic Report | At a Glance
Revenue
Cash (net of overdrafts)*
2021
2020
2019
2018
2017
£2,344m
£2,633m
£2,720m
£2,733m
£2,766m
2021
2020
2019
2018
2017
Adjusted operating profit
Operating profit
2021
2020
£396m
£433m
2020
Pro forma
£404m
£189m
Pro forma
£160m
£887m
£837m
£892m
£809m
£1,216m
£521m
2021
2020
2020
2019
£438m
£467m
2018
£459m
2017
Adjusted diluted EPS
Diluted EPS
£437m
£410m
£394m
92.7p
81.7p
68.4p
64.9p
29.8p
Pro forma
29.0p
2021
2020
2020
2019
2018
2017
2019
2018
2017
2021
2020
2020
Pro forma
2019
2018
2017
Dividend per share
11.3p
2021
2020
2019
2018
2017
67.3p
78.7p
77.9p
82.1p
82.1p
77.4p
42.5p
42.5p
41.3p
Alternative performance measures, including adjusting measures,
are defined on page 53. Pro forma FY 2019/20 results are
included to better indicate the impact of adoption of IFRS 16
Leases in FY 2019/20. These pro forma results are estimations
of the results for FY 2019/20 if the previous accounting
standard for leases, IAS 17 Leases, had been applied.
38.9p
(March 2020: £300m).
* The Group also had borrowings at March 2021 of £297m
3
Strategic Report | At a Glance
Environmental, Social and Governance (ESG) highlights
As a purposeful, values-driven brand, we are committed to being a force for good in the world. We champion diversity,
equity and inclusion and prioritise the wellbeing of our people. We support our communities, in particular young people,
providing them with the skills, confidence and opportunities to succeed. We are building a more sustainable future for
luxury by reducing our environmental impacts and helping transform our industry. Below are some of our achievements
in these areas over the past year. Read more about this on pages 60 to 91.
PEOPLE
• Rolled out a new global Diversity and Inclusion strategy and policy
• Launched an industry-leading global Parental Leave policy
• Maintained a leading position in the FTSE 100 for women in leadership for the third straight year, according
to the 2020 Hampton-Alexander Review report
• Included in the 2021 Bloomberg Gender-Equality Index for the first time, scoring 10 percentage points
more than the company average
• The first luxury company to partner with organisations including the Business Disability Forum, Investing
in Ethnicity and the Stonewall Diversity Champions Programme, and one of the first of our peers to join
The Valuable 500
COMMUNITIES
• Manufactured and donated Personal Protective Equipment (PPE) to medical and care professionals
• Contributed to COVID-19 vaccine development and distribution through early donations to the
University of Oxford’s emergency vaccine research and UNICEF’s COVID-19 Vaccines Appeal
• Supported charities, including FareShare, The Trussell Trust and The Felix Project, helping tackle
food poverty across the UK
• Partnered with Marcus Rashford MBE and charities supporting youth in the UK, USA and Asia
• Expanded creative arts scholarships, supporting underrepresented students
ENVIRONMENT
• Reduced our market-based emissions by 92% since 2016
• Currently source 93%^ of our electricity from renewable sources
• Reduced our scope 1 and 2 emissions by 84% compared to FY 2016/17 and reduced our scope 3 emissions
from purchased goods and services by nearly 8,700 tonnes
• Launched ReBurberry Edit, a selection of key pieces from the Spring/Summer 2020 collection, crafted
from the latest sustainable materials
• Launched dedicated in-store aftercare spaces and piloted Trench Refresh and Leather Restore services
• Launched ReBurberry Fabric programme with the British Fashion Council, donating more than 7,000 metres
of leftover fabrics to fashion students across 33 schools
^ See page 65
4
Strategic Report | Chairman’s Letter
CHAIRMAN’S
LETTER
“WE WILL CONTINUE TO BE
GUIDED BY THE SAME
COMMITMENT TO DOING WELL
BY DOING RIGHT BY ALL OUR
STAKEHOLDERS.”
6
Strategic Report | Chairman’s Letter
Dear Shareholder,
More than a year has passed since the beginning of the
• We repaid, early and with interest, the £300 million we
secured in 2020 under the UK government sponsored
COVID-19 pandemic. Like the rest of the world, everyone
COVID Corporate Financing Facility (CCFF) and
at Burberry has experienced great upheaval as we have
committed to pay our UK business rates in full. We
had to adapt to living and doing business differently.
believed this was the right thing to do in the context
As the crisis continues to evolve, ensuring the safety
of our improving trading and overall financial stability
of our colleagues and our customers while meeting the
• That stability was bolstered by our issuance in
challenges presented by the global health emergency
September 2020 of the luxury industry’s first
remains our top priority.
Sustainability Bond, which will help fund our drive
towards more energy-efficient buildings and more
Over the past year, under the stewardship of
sustainable raw materials and packaging over the
Marco Gobbetti, we relied on our purpose, Creativity
next five years
Opens Spaces, to guide us in completing the first phase
of our brand transformation, whilst at the same time
Our values in action
acting responsibly in everything we do.
In the past year, we helped address some immediate
Responding to COVID-19
challenges faced by our communities. As well as
donating food and PPE, Burberry also made a financial
To respond to the upheaval caused by the pandemic,
contribution to UNICEF’s COVID-19 Vaccines Appeal.
we looked hard at our cost base, reducing investment
in non-urgent areas whilst protecting our people and
In parallel, we continued to make progress on our
our business.
Responsibility agenda, further reducing our
environmental impacts and supporting our
This allowed us to take the following actions:
communities, in particular young people, as they
explore their creative dreams.
• We maintained base pay for all employees who
were unable to fulfil their roles because of store
Harnessing creativity, passion and a commitment to
or site closures
excellence, our colleagues adapted to new ways of
• We did not rely on government employment
working over the past year. This ensured that Burberry
support in the UK, home to more than a third of
could continue to delight and inspire our customers with
our global workforce
exciting new products and innovative experiences,
• Our senior leaders took a 20% pay cut from
despite the disrupted global context.
April through June 2020
• The Board of Directors also took a voluntary 20%
reduction in their base salary and fees from April
through June 2020, with the equivalent cash amount
donated to The Burberry Foundation COVID-19
Community Fund. This fund was established in 2020
to allow our employees to support communities
challenged by the pandemic through procuring and
distributing PPE, helping food banks and healthcare
charities around the world. Burberry also made direct
donations to fund vaccine research and charities
alleviating food poverty
7
Strategic Report | Chairman’s Letter
“HARNESSING CREATIVITY,
PASSION AND A COMMITMENT TO
EXCELLENCE, OUR COLLEAGUES
ADAPTED TO NEW WAYS OF
WORKING OVER THE PAST YEAR.”
Channelling our heritage of exploration and discovery,
Board changes
with digital storytelling and innovative online customer
On behalf of the Board, I would like to thank Jeremy
service, we offered moments of escapism when our
Darroch, who retired from the Board in July 2020,
customers couldn’t travel. We stayed connected by
for his service and wise counsel and wish him well in
employing technology and used our online platforms to
his future endeavours. It is my pleasure to welcome
strengthen existing relationships and build new ones.
Antoine de Saint-Affrique, who joined the Board as an
Dividend
independent Non-Executive Director in January 2021.
Antoine brings to our Board global experience in driving
With a view to protecting liquidity and sustaining
business expansion, innovation and sustainability, which
investment in the long-term value of the Burberry brand,
will be invaluable to Burberry as we continue to
the Directors elected not to declare a final dividend for
progress our strategy.
the year to 28 March 2020. However, in light of recovery
in demand in key markets in Asia and North America,
I would especially like to thank Marco, the entire
strong operating performance globally and exemplary
Burberry management team and our exceptional people
cost control, the Directors are pleased to recommend
everywhere for their energy, creativity and resilience
a final dividend of 42.5p per ordinary share for
during this extraordinary time. I am also very grateful to
FY 2020/21.
Challenges ahead
my fellow Board members for their unfaltering support
and flexibility over the past year. Their wisdom and
dedication continue to be an invaluable asset to our
Looking ahead, beyond the uncertainty surrounding the
Company. Finally, on behalf of everyone at Burberry,
continuing effects of the pandemic, challenges remain.
I would like to thank our shareholders for their
As well as the potential impact of geopolitical tensions
steadfast and continuing support.
on trade, there are a number of operational issues to
address resulting from the UK’s withdrawal from the
As you will read in the following sections, our leadership,
European Union and its Single Market. We are also
our people, our business and our brand are all in great
concerned about the longer-term impact of the UK
shape to realise the full potential of Burberry in the
government’s decision to end the Value Added Tax Retail
coming years. We will continue to be guided by the same
Export Scheme (VAT RES), particularly once tourists
commitment to doing well by doing right by all our
return. Cancellation of the scheme, which allowed
stakeholders that we have witnessed in the last year,
non-EU residents to reclaim VAT on items purchased in
and of which the Board and I are very proud.
the UK, is likely to encourage international consumers to
divert their spending to other key European shopping
Gerry Murphy
destinations, all of which continue to offer VAT refunds.
Chairman
8
Strategic Report | Chief Executive Officer’s Letter
CHIEF EXECUTIVE
OFFICER’S LETTER
“WE HAVE
TRANSFORMED OUR
BUSINESS AND BUILT
A NEW BURBERRY,
ANCHORED FIRMLY
IN LUXURY.”
10
Strategic Report | Chief Executive Officer’s Letter
Dear Shareholder,
Since last year’s report, the COVID-19 pandemic has
• Adjusted operating profit was £396 million, down 8%
at CER, due to the impact of the reduction in revenue,
continued to impact livelihoods and industries globally,
but partially offset by strong cost management
often to devastating effect. Yet, with each passing day,
• Reported operating profit was £521 million, up 176%
hope grows that brighter days are ahead thanks to the
including income from adjusting items of £125 million,
brilliance and dedication of members of the scientific and
compared to charges of £244 million in the previous
medical communities. I would like to extend my gratitude
year. The adjusting items credits mainly related to
to them for their heroic efforts.
partial reversals of the charges from the previous year
and the benefit of short term rent rebates negotiated
Having donated to University of Oxford’s emergency
as a result of store closures
vaccine research and UNICEF’s COVID-19 Vaccines
• Adjusted diluted earnings per share (EPS) was 67.3p,
Appeal, the development and distribution of vaccines
down 14% at CER
have special resonance for everyone at Burberry.
• Reported diluted EPS was 92.7p, up 211%
We have witnessed first-hand the incredible feats
that can be achieved when individuals and communities
A new Burberry
come together, united by a common goal.
Over the past three years, our goal has been to re-
energise our brand, renew our product and elevate the
In the last 12 months, our teams have faced the
customer experience, while maintaining broadly stable
challenges posed by the global health crisis with
sales and adjusted operating margin. Even with the
similar energy and resolve, guided by our purpose.
challenges presented by the pandemic, in this first
From manufacturing and donating PPE to healthcare
phase we achieved our objectives. We have transformed
professionals, to leveraging technology to inspire and
our business and built a new Burberry, anchored firmly
excite our customers, time and again our people
in luxury.
have shown the creativity to open spaces that
defines Burberry.
We have completely refreshed our brand image with
strong, coherent codes. We have renewed all
Lockdowns and measures to curb the spread of the
touchpoints, focusing on social-first and video-led
virus led to a significant decline in luxury spending in
content and creating unexpected, authentic and
FY 2020/21. Despite reductions in operating hours and
culturally relevant experiences. We have elevated our
an average 18% of our global store network being closed
position in every market, amplifying our visibility through
in the year, we adapted swiftly to the circumstances and
influencers and key opinion leaders, and increasing our
delivered a strong set of results, ending the financial
share of editorial coverage in impactful titles.
year with good full-price sales growth.
FY 2020/21 performance
With Riccardo Tisci, our Chief Creative Officer, we have
elevated our ready-to-wear offer across runway and
As a consequence, we delivered FY 2020/21 results that
mainline and diversified our outerwear, transitioning to
demonstrated our resilience and adaptability in
a higher share of technical and eco-fabrics. Importantly,
responding to the COVID-19 pandemic:
we have built a genuine luxury fashion leather goods
• Revenue was £2.3 billion, down 11% at reported rates
different customers’ preferences, and raised the bar
and 10% at constant exchange rates (CER) due to the
in terms of quality.
business, with a range of shapes that cater to
impact of store closures and reduced tourism. After
a very challenging first quarter, revenue performance
showed a strong recovery in the second half of the year
11
Strategic Report | Chief Executive Officer’s Letter
“IN THIS NEXT CHAPTER, WE WILL
LEVERAGE OUR UNIQUE BRAND
EQUITY TO DELIVER SUSTAINABLE,
HIGH-QUALITY GROWTH, WHILE
CONTINUING TO BE A FORCE FOR
GOOD IN THE WORLD.”
We have also aligned our distribution to our new
We built flexibility into budgets and resources so that
positioning. We have upgraded our stores’ look and
as regions started to recover we were ready to capture
feel and introduced a new store concept. We have
opportunities where and when they arose. Consequently,
transformed the in-store experience and launched
our performance was strong in all rebounding luxury
industry-leading digital innovations that embody our
markets, including Mainland China and the USA. All our
values of creativity and forward thinking.
efforts were underpinned by financial discipline.
As a result, we have attracted a new luxury customer with
At the same time, inspired by Thomas Burberry, we
strength across key regions for luxury market growth.
focused on making a positive difference.
Managing through COVID-19
Throughout the year, we prioritised the health and
The progress we made enabled us to adapt to COVID-19.
wellbeing of our people. We implemented rigorous
In FY 2020/21, supported by the strong foundations we
safety measures across all our sites, while providing
have built, we drove performance through new product
resources to support our teams and flexibility,
and engaging communications, and shifting our focus to
acknowledging many have additional caregiving
rebounding economies and digital channels.
responsibilities. We harnessed technology to stay
connected and maintain a sense of community.
We continued to inspire and excite customers with
emotive campaigns and brand activations rooted in our
We made significant progress on our commitment to build
heritage and history of adventure and exploration, and
a more diverse, equitable and inclusive organisation, rolling
adopting a highly-localised approach in each market.
out our global Diversity and Inclusion strategy to attract
We reimagined how we showcase our collections digitally
and retain diverse talent, foster an open and inclusive
and in doing so made the experience truly inclusive.
culture and drive education and awareness. We became the
first luxury company to partner with the Business Disability
We delivered strong growth in our core categories,
Forum, Investing in Ethnicity and the Stonewall Diversity
leather goods and outerwear. We also leveraged our
Champions Programme, and we joined the Valuable 500.
digital capabilities to bridge online and offline, created
We continued our support for London Youth and The
a new paradigm with our Social Retail store in Shenzhen,
Prince’s Trust Women Supporting Women initiative,
and enabled our customers to book video appointments
providing resources and development opportunities for
with our Sales Associates and browse products as if
young women. Our commitment to gender equality
they were in store.
was recognised by our inclusion in the 2021 Bloomberg
Gender-Equality Index and a leading position in the final
report from the Hampton-Alexander Review for women in
leadership in the FTSE 100, for the third consecutive year.
12
Strategic Report | Chief Executive Officer’s Letter
In addition to PPE, through separate donations from
excite highly influential luxury consumers. We will focus
The Burberry Foundation COVID-19 Community Fund
on our core luxury categories, drawing on the strong
and Burberry, we provided hundreds of thousands of
offer we have built while maintaining our focus on our
meals and essential healthcare and social services to
anchors of outerwear and leather goods. We will
those in need. I am especially proud of our partnership
continue to enhance the way we connect with our
with Marcus Rashford MBE and charities supporting
customers to create a truly omnichannel luxury
young people from disadvantaged backgrounds in
experience, while focusing on local consumers in our key
the UK, USA and Asia.
markets. We will supercharge digital, maintaining our
leadership and we will continue to focus on full price.
We also maintained our focus on driving positive change
and building a more sustainable future through our
All the while, we will exert operational leverage, while
Responsibility agenda. In particular, we made significant
also reinvesting in critical areas for future growth.
progress towards decarbonising our own operations,
We will enable the delivery of our strategy, including
while continuing to work with suppliers to reduce our
through an agile supply chain that delivers exceptional
indirect carbon emissions. All our stores in Mainland
quality and service, consumer technology that allows
China are now carbon neutral and we are on track in
us to enhance the customer experience, attracting and
FY 2021/22 to use 100% renewable electricity and have
retaining diverse, world-class talent and maintaining
a carbon neutral footprint across all our operations
operational efficiency.
globally. As the Chairman mentioned, we issued our
first-in-luxury Sustainability Bond to support our
Throughout, we will retain our focus on social and
ambitions in the this space.
The next chapter
environmental responsibility. This is the purest
expression of our purpose and values and we are
committed to continuing to build not only a financially
The luxury industry is still facing significant challenges
stronger Burberry but also a better company. We will
due to the pandemic but there is growing confidence
create the conditions for creativity to thrive by
that it will return to 3-4% annual growth in the medium
championing diversity, equity and inclusion and
to long term as international travel flows start to
supporting the wellbeing of our people. We will
recover from 2022 onwards.
support our communities, in particular young people,
providing more of them with the skills, confidence
Having successfully executed Burberry’s transformation
and opportunities to succeed. Lastly, we will create
and established a strong foundation, we are well
a more sustainable future for luxury by further
positioned to embark on growth and acceleration. In
reducing our environmental impacts and helping
this next chapter, we will leverage our unique brand
transform our industry.
equity to deliver sustainable, high-quality growth, while
continuing to be a force for good in the world.
I would like to thank our teams worldwide for their
passion, energy and commitment. Being creatively
Burberry is a unique, powerful brand, with deep roots
driven, forward thinking, open and caring, and proud
that set us apart from our peers, grounded in our rich
of our heritage are hallmarks of our organisation at
heritage and the principles of our founder Thomas
its best and this year my colleagues demonstrated
Burberry. We want to be recognised by consumers for
these values consistently. Having witnessed their
being a purposeful, values-driven brand, committed to
resourcefulness and creativity first hand, I have every
doing the right thing; an authentic luxury outerwear
confidence that through their imagination, inventiveness
pioneer, bringing a uniquely British perspective; a true
and ingenuity, we will continue to push boundaries, open
luxury fashion house, with a relentless focus on quality
new opportunities and realise our vision for Burberry.
and craft; and a beacon of creativity, imagination
and innovation.
To achieve our objectives, we will build brand advocacy
and community through distinctive and meaningful
storytelling, formats and experiences that inspire and
Marco Gobbetti
Chief Executive Officer
13
Strategic Report | Purpose
CREATIVITY
OPENS SPACES
Thomas Burberry
Founder
14
Strategic Report | Purpose
At Burberry, we believe creativity opens spaces.
Creativity Opens Spaces is a reference to Thomas
Our purpose is to unlock the power of imagination
Burberry’s Open Spaces manifesto. Published
to push boundaries and open new possibilities for
posthumously around 1930, it set out our founder’s
our people, our customers and our communities.
vision for the brand. The phrase “open spaces” had
a dual meaning. Firstly, it referred to the tiny pockets
This is the core belief that has guided Burberry since
of air found within the weave of gabardine, the fabric he
it was founded in 1856 and is central to how we operate
invented, which revolutionised rainwear. It also recalled
as a company today. From outfitting polar explorers to
the freedom his products gave to the pioneering men
enhancing the shopping experience through Augmented
and women who wore Burberry clothing, including
Reality (AR), our purpose underpins the choices we
explorer Sir Ernest Shackleton and aviator Betty
make at Burberry and informs our long-term goals.
Kirby-Green, and the open spaces they traversed.
We have reinterpreted this phrase to speak to our
desire to open new spaces and opportunities.
Our values
Our purpose is supported by four values, which are intrinsic to Burberry and express who we are when we are at
our best. These values encapsulate what we expect from ourselves and each other.
CREATIVELY DRIVEN
• Finding beauty in every detail
• Putting passion and creativity in
everything we do
• Committed to excellence
• Challenging the ordinary to pursue
the extraordinary
OPEN AND CARING
• Harnessing strength in diversity
• United to achieve common goals
• Responsible, guided by our conscience
• Upholding a legacy of respect and inclusivity
PROUD OF OUR HERITAGE
• Inspired by our past, as we create our future
FORWARD THINKING
• An open space for imagination
• Globally minded, learning from others
• Free to explore, push boundaries, pioneer
• Championing contrasts from royals to rebels
• Unafraid to stand out
• Representing Britain on the global stage
• Our creativity drives us forward
15
Strategic Report | Business Model
BUSINESS MODEL
Burberry is a global luxury brand, headquartered in London.
We make luxury clothing, leather goods, accessories, fragrance and
beauty products that marry the finest craftsmanship and design
with cutting-edge technology. Creativity has fuelled Burberry
throughout our brand’s 165-year history and our shared conviction
in its power is central to how we operate as a company.
RESOURCES
People
Financial
Our people are the heartbeat of our organisation.
Burberry is listed on the London Stock Exchange and is a
Representing 115 nationalities across 33 countries,
member of the FTSE 100 index. We invest appropriately
they enrich our brand with their diverse range of skills
in our business to generate growth, deliver shareholder
and experiences. We offer them space to express their
value and ensure the long-term future of our brand.
creativity as well as opportunities to develop personally
and professionally. We provide them with a range of
Manufacturing
tools and resources to help them thrive.
We manufacture our products at Burberry-owned sites
Customers
as well as via a network of global suppliers. We weave
gabardine at our mill in Keighley and make our iconic
Our customers are critical to our success and we
Heritage Trench Coats at our factory in Castleford,
invest in our relationship with them to understand
both in Yorkshire, UK. We own a centre of excellence for
their needs and desires. We aim to inspire and
leather goods in Scandicci, Italy, covering all activities
excite our customers with luxury products that are
from prototyping to the coordination of production.
beautifully designed and made to last. We strive to
provide outstanding customer service and we place
Stores
the highest importance on our customers’ safety,
We serve our customers through a network of
welfare and respect, from their enjoyment of our
directly operated and franchised stores as well as
products to their engagement with our brand.
online. We strive to provide a seamless omnichannel
Brand
experience, aligned with our brand vision, and
outstanding service that is tailored to meet our
Our brand is unique, grounded in our heritage and the
customers’ needs and desires.
principles of our founder Thomas Burberry. We want to
be recognised for being purposeful and values-driven;
committed to doing the right thing; an outerwear pioneer
with a uniquely British perspective; a true luxury fashion
house, with a relentless focus on quality and craft, and a
beacon of creativity, imagination and innovation. We are
protective of our brand and we safeguard Burberry’s
intellectual property (IP) across the world.
16
Strategic Report | Business Model
WHAT WE DO
VALUE ADDED
Design
Customers
We design luxury goods that are beautifully made and
We inspire and excite our customers with beautiful
built to stand the test of time. Our design, strategy,
luxury products of the highest quality. We create
marketing and responsibility functions work together
opportunities for them to engage with the Burberry
from the earliest stages of product development.
community through meaningful experiences, online
Working collaboratively ensures our products remain
and offline.
relevant to our customers and true to Burberry’s
purpose. It also ensures sustainability remains
People
front of mind.
Source
We provide opportunities for our people to develop
personally and professionally so they can enjoy
rewarding careers with us. We foster a culture where
We source the finest materials to craft our luxury
everyone feels they belong, has a voice and can reach
products. We work closely with our network of
their full potential.
global suppliers to ensure our high standards are
met, both in terms of quality and sustainability.
Communities
We innovate to bring our brand vision to life to
Helping others, giving back and driving positive change
inspire and excite our customers, while reducing our
are central to our culture. We contribute to local
impact on the environment.
Make
economies where we operate and support the
communities around us through direct partnerships
and with organisations making a positive impact.
Our highly skilled craftspeople make our products at
Burberry-owned manufacturing sites in the UK and
Shareholders
Italy, as well as via a network of global suppliers, a large
Our framework for long-term value creation centres
proportion of which are in Europe. We invest in quality,
around three major pillars: revenue growth, operating
driving improvements throughout our supply chain, while
margin accretion and capital efficiency. As the business
focusing on reducing, reusing and recycling the waste we
fulfils its potential, our shareholders benefit from return
create. We continually look for innovative solutions to
on investment and long-term shareholder value.
help us move towards a circular business model.
Sell
The Environment
We are committed to driving positive change and
We sell our products through a network of directly
achieving sustainable growth by being a force for good.
operated and franchised stores, as well as via wholesale
We actively work to reduce our environmental footprint
partners and online. For certain product categories,
and at the same time seek to transform our industry
such as beauty and eyewear, we use the product and
by pushing boundaries, setting leading standards and
distribution expertise of licensing partners. Our creative,
pioneering innovative solutions to create real
marketing and communications teams aim to inspire and
system change.
excite our customers with distinctive and meaningful
content and outstanding luxury experiences.
17
Strategic Report | Investment Case
INVESTMENT CASE
Our vision is to be the leading British luxury brand, delivering sustainable,
high-quality growth and value for our stakeholders and communities.
STRATEGY1
1. COMMUNICATIONS
We will inspire customers and
2. PRODUCT
We will leverage the strong
3. DIRECT TO CONSUMER
We will continue to transform
strengthen the emotional
luxury offer we have built,
our direct-to-consumer
connection with purposeful,
maintaining focus and
channels to create a luxury,
authentic luxury storytelling,
innovation around our anchors
truly omnichannel experience
while leveraging our strong
of outerwear and leather
that will both attract
network of communities
goods. We will further elevate
customers to the brand
and influencers to amplify
our ready-to-wear collections
and ensure their ongoing
our brand.
by developing a strong
position in everyday
luxury pieces.
engagement with us.
ENABLERS
• Agile supply chain
• World-class talent
• Secure, integrated and consumer-led technology
• Operational efficiency
ESG
We are committed to continuing to build not only a financially stronger Burberry but also a better company. We will
fuel the creativity of our people by championing diversity, equality and inclusion, and supporting their wellbeing.
We will empower young people in our communities, providing more of them with the skills, confidence and
opportunities to succeed. We will create a more sustainable future for luxury by further reducing our
environmental impacts and helping transform our industry.
Read about ESG on pages 60 to 91, our Sustainability Bond on 92 to 93 and visit Burberryplc.com for
more information.
1. Read more about our strategy on pages 24 to 43.
18
Strategic Report | Investment Case
Our framework for long-term value creation centres around three major pillars: revenue growth, adjusted operating
profit margin accretion and capital efficiency.
REVENUE
GROWTH
ADJUSTED
OPERATING
PROFIT MARGIN
ACCRETION
CAPITAL
EFFICIENCY
Burberry operates in the luxury
Burberry generated an adjusted
Burberry has a capital allocation
goods sector, where industry
operating profit margin of 16.9%,
framework, which prioritises the
growth tends to deliver ahead of
an increase of 50bps from
use of cash, while maintaining an
overall annual global Gross
FY 2019/20. In the medium
appropriate capital structure for the
Domestic Product (GDP) growth.
term, our ambition is to deliver
business. This is set out in further
Our ambition, in the medium term,
meaningful adjusted operating profit
detail on page 55. Our uses of cash
is to drive towards high single-digit
margin improvements (at constant
are summarised below.
top-line growth (from FY 2019/20
currency). There are two significant
base at constant currency), driven
factors underpinning our ambition:
by over performance of full-price
sales. Revenue growth will be
enabled by our strategy, leveraging
Operating leverage
Leverage the fixed and semi-fixed
the strong product offer we have
cost components of our
established over the past few years,
operating expenses.
maintaining our focus on outerwear
and leather goods and accelerating
and strengthening our position in
all key markets.
Cost-efficiency
programmes
Our current cost-saving
programmes have delivered
£185 million annualised cost savings
Reinvest
Reinvest for organic growth.
Dividend
Pay a progressive dividend.
Strategic investment
Invest in strategic initiatives.
Capital returned
Return excess cash to shareholders.
in FY 2020/21. This was achieved by
Underpinned by retaining a solid
investment grade credit rating.
driving simplification and
efficiency throughout our
organisation, including optimising
back-office functions, generating
procurement savings, and through
technology initiatives that increase
our business agility.
19
Strategic Report | Luxury Market Environment
LUXURY MARKET
ENVIRONMENT
FY 2020/21 was an unusual year as the COVID-19 pandemic continued
to have a significant impact on the market for personal luxury goods.
The luxury sector
In 2020, the personal luxury market decreased for the
In the rest of Asia, sales declined by double digits
in 2020. South Korea showed good resilience and strong
first time in more than 10 years (-23% year on year
appetite for luxury consumption, while consumers in
compared to +4% in 2019, with a total market size of
€217 billion).1 The crisis had a significant impact on
profits, with an estimated 60% year-on-year decline
in Earnings Before Interest and Taxes (EBIT)1 for the
personal luxury market as a whole.
In this environment, performance polarised further
between strong luxury brands, which have been
Japan withheld spending as a result of the crisis,
focusing on timeless, long-term investment pieces
when purchasing luxury goods.
Americas
In the Americas, the personal luxury market contracted
in 2020 in line with global trends at -27% year on year.1
Despite local lockdowns and political uncertainty, there
recovering more quickly, and premium brands. Regional
were positive signs of a restart in the second half
performances have varied significantly with staggered
of 2020 following government stimulus packages,
recoveries across markets influenced by national
with consumption moving from city centres and
lockdowns, economic recovery policies and consumer
megacities to second-tier cities and suburban areas.
confidence. This has amplified the need for brands to
Reduced footfall due to COVID-19 has taken its toll on
adapt and pivot quickly, so they can shift resources
department stores in the USA, with several players
across regions and encourage innovation to engage
announcing bankruptcies.
local consumers shopping domestically.
Luxury geographies
Asia
Despite initial decline in the early months of 2020,
the industry in Mainland China rebounded with +45%
year-on-year growth (compared to +26% in 2019).1 It
was the only market that registered growth in 2020. The
Europe and the Middle East
In 2020, Europe was the region most severely impacted
by the COVID-19 crisis in terms of luxury goods sales,
registering a decline of 36% year on year, compared to
1% growth in 2019.1 Even if local consumption in the
region was resilient, driven by affluent areas and a
significant shift towards online purchases, lack of
recovery was supported by a robust local economy and
tourism had a significant impact on overall regional
strong consumption across channels, categories, price
performance. Looking ahead, recovery in this region is
points and generations. Global travel restrictions meant
expected to be prolonged and uneven. Luxury goods
that Mainland China saw a repatriation of spend, which
sales in the Middle East was less impacted by the
accelerated domestic growth throughout the year.
COVID-19 pandemic, due to a shorter lockdown and
However, overall sales to Chinese luxury customers
repatriation of spend.
globally declined in 2020, as the increase in domestic
purchases did not fully offset the decline in tourist spend
abroad. Hong Kong S.A.R. and Macau S.A.R. were the
worst performing geographies globally.
1. Source: Bain Altagamma 2020
20
Strategic Report | Luxury Market Environment
Products
Apparel
Channels
Retail
The apparel category decreased by 30% year on year
Retail channels were severely affected in 2020, driven
in 2020 across the industry (compared to 1% growth
in 2019)1, with menswear and womenswear experiencing
the same levels of decline. Apparel was the category
by emporary store closures, and, as a result, contracted
by 23% year on year.1 Mono-brand stores contracted by
22%, in line with the overall market, as online sales and
hardest hit by the impact of the COVID-19 pandemic.
omnichannel purchase journeys grew in share and value.
Mirroring consumers’ at-home lockdown lifestyles,
Among other retail channels, travel retail was hit hardest
formal apparel registered the biggest decline, while
(-70% year on year). Meanwhile, outlets contracted by
the leisurewear and streetwear categories were
15% year on year, while marginally increasing their
more resilient.
Leather goods
channel share.
Wholesale
Despite its negative sales performance (-18% year on
year for the industry, compared to 7% growth in 2019)1,
the leather goods category drove the luxury rebound
With digital being more prominent in FY 2020/21 and
in-store footfall declining as a result of store closures,
direct-to-consumer channels are becoming increasingly
with entry-level items, such as wallets and smaller bags,
relevant. As a result, wholesale channels saw the hardest
as well as iconic pieces. The rebound was supported by
contraction in 2020 at -40% year on year and
customers shopping online and high-spending customers,
experienced strong polarisation.
particularly in Asia, investing in iconic pieces.
Digital
Shoes and jewellery
The footwear market also contracted in 2020 at -12%
year on year (compared to +9% in 2019)1. Customers
shied away from formal and classic styles, while casual
Online channels grew by 50% in 2020 (compared to 22%
growth in 2019),1 reaching a channel share of 23%, which
was double that of 2019. Sales growth was particularly
significant on brands’ own websites, increasing by
shoes and sneakers performed slightly better. Lifestyle
80% in 2020. The online sales spike was particularly
changes saw sneakers driving the market uptick in the
prominent in China, where growth was one-and-a-half
second half of 2020.
times greater than the average global online market
increase, followed by Europe and the USA. In terms of
The jewellery sector also experienced a relatively small
product categories, accessories, shoes and beauty
contraction compared to the overall market, with a 15%
decline year on year (compared to 9% growth in 2019)1.
This was largely due to sustained growth in Asia, mainly
represented the lion’s share of growth, driven by the
convenience of purchasing these products online. In this
environment, as online influence and digitally enabled
in China, and an acceleration in online purchases.
purchases grow in share and value, bridging online and
High-end jewellery and iconic pieces at entry prices
offline is key, making omnichannel a key priority for
have been driving the recovery for this category.
luxury players.
21
Strategic Report | Luxury Market Environment
Key themes
While the COVID-19 pandemic severely disrupted and
3. Consumer
Prior to the pandemic, millennials and Gen Z, the
hampered luxury market growth, it also accelerated four
youngest customers, were already expected to
key trends, which are reshaping the industry and likely to
lead growth for luxury. In light of COVID-19, these
remain influential beyond the pandemic.
demographics have become even more influential as
1. China
they have led the recovery to date. Millennials and
Gen Z show a higher level of resilience, continuing to
Local Chinese consumer sentiment remained strong
make luxury purchases despite economic uncertainty.
due to the country’s swift rebound following the virus
Customers from older generations are more cautious
outbreak. China remains on path towards becoming the
and considered with their spending. As their spending
biggest luxury market by 2025, with an estimated
power increases in the coming years, and with their
26-28% global share (versus 20% in 2020). It is
ability to influence older generations, young customers
expected that Chinese luxury consumers will account
are now expected to drive 180% of growth between 2019
for just below 50% of the total market by 2025. While
and 2025, and to reach a 65-70% share of the luxury
international tourist flows are not expected to recover to
market by 2025. These consumers will continue to shape
pre-COVID-19 levels before 2022, further expansion of
the themes for luxury as they value brands with a clear
domestic store networks is expected in Tier 1 and Tier 2
viewpoint, which are able to communicate with them in
cities, as well as in domestic travel destinations and
an authentic and meaningful way. It is paramount for
duty-free locations.
luxury brands to articulate their brand message and
establish a dialogue to attract, excite and retain
2. Digital and omnichannel journeys
this demographic.
The global health emergency changed customer habits,
accelerating the growth of online sales. As a result,
In 2020, leather goods proved to be the most resilient
the share of digital sales within the luxury market is
luxury category, driven by both entry-price items and
expected to reach up to 30% by 2025 (compared to 12%
in 2019).1 Even as stores reopen, online will remain a key
channel for convenience and efficiency, with consumers
more expensive iconic pieces. While high-spending
customers continued to shop during the pandemic,
they focused on investing in classic items from brands
pushing brands to innovate and leverage growth
famous for that particular style or product.
opportunities in this channel. As online touchpoints
influenced more than 85% of consumer purchase
Changes in lifestyle during the pandemic accelerated
journeys in 2020 (compared to 75% in 2019), and
the trend toward casualisation, with customers over-
omnichannel journeys are growing in share and value,
indexing on loungewear and sneakers. These categories
seamless integration between online and offline
are expected to drive growth in FY 2021/22.
channels is a key priority for brands.
Despite the acceleration of digital, offline retail will
their supply chain and improve agility, to establish
remain integral to the luxury journey. Customers
deeper partnerships and optimise product flows to
will expect stores to be experience driven, to
track inventory, adapt supply and optimise assortment.
There is a heightened importance for brands to secure
incorporate a sense of community, and to offer
opportunities to strengthen consumers’ emotional
connections with brands.
1. Source: Bain Altagamma 2020
2. Source: McKinsey, March 2021
22
Strategic Report | Luxury Market Environment
4. ESG
Sustainability will remain an important factor in
Market outlook
Although a return to pre-COVID-19 levels is not
customers’ purchasing decisions after the pandemic,
expected in 2021, the industry anticipates double-digit
with transparency, fair labour practices and use of
year-on-year growth in 2021 (+23%), albeit from a low
natural and organic materials as key focus points.
base. Recoveries will be partial and varied by region, with
The Black Lives Matter movement gaining greater
China, digital retail and young customers key engines for
awareness following protests in June 2020, combined
market recovery and future growth. Travel flows are also
with the pandemic, have intensified the significance of
expected to partially recover in 2021, to circa 40% of
social issues in influencing consumers’ brand choices
when buying luxury goods. This is particularly relevant
for younger consumers, who expect brands to have a
pre-COVID-19 levels, with a more significant recovery
expected from 2022.2
clear social agenda that includes both external activities
While the pandemic is still ongoing and will continue
and internal diversity and inclusion best practices, and to
to affect the luxury market in the short term, in the
embed these in their brand marketing.
longer term the luxury market is expected to return
to healthy levels of growth (3-4% Compound Annual
Growth Rate (CAGR), 2019-2025). Chinese, digital and
young customers will be the key drivers of this growth,
with millennials and Gen Z continuing to set the
agenda for luxury.
23
Strategic Report | Strategy
STRATEGY
In the last three years, we have transformed our business and
built a new Burberry, anchored firmly in luxury. We have
revitalised our brand image, renewed our product offer and
elevated our customer experience, while making further progress
on our ambitious social and environmental agenda. In spite of
COVID-19, we completed our objectives for the period and
delivered a strong set of results in FY 2020/21.
Read more about some of the achievements in
the year:
Social Retail in
Shenzhen, China
A digital experience
The Trench Coat
Bolstering leather goods
Helping to shape the future
See pages 28 to 31
See pages 32 to 35
See page 38
See page 40
See page 43
Strategic progress in FY 2020/21
FY 2020/21 was the third year of our journey to
transform Burberry and firmly establish our position in
luxury. Over the first two years, we set the foundation
for our transformation by re-energising the brand and
evolving our communication, renewing our product offer,
and aligning our distribution to our strategic positioning,
while maintaining sales and adjusted operating margin
broadly stable throughout the transition period. While
FY 2020/21 has been an unusual year due to COVID-19,
the foundations we built in the first two years enabled
us to continue making progress and to deliver strong
results, as demonstrated by our growth and momentum
in full-price sales, and traction with core product
categories. The pandemic has had a significant impact
on the global economy and our network, resulting in an
average of 18% of our stores being closed in the year.
Despite these challenges, we continued to drive the
business through new product launches and inspiring
communications, and shifted our focus to rebounding
economies and digital channels. Our actions were
underpinned by the resilience and engagement of
our teams, who adapted swiftly during the year.
24
Strategic Report | Strategy
Our journey
These actions prepared our business to capitalise on opportunities as they arose across different geographies.
We had a strong set of initiatives in place to continue to excite and inspire our customers and maintain brand heat,
which has remained strong.
FY 2017/18 – FY 2019/20
FY 2019/20 – FY 2020/21
FY 2021/22 AND BEYOND
Building the foundation
Strengthen foundation
Growth acceleration
• Reposition to luxury
• Further progress and
• Accelerate revenue growth
• Establish new product offer
resilient performance
• Expand margins
• Reset distribution
despite COVID-19 pandemic
• Deliver positive change
• Maintain stable revenue
• Improved full-price sales
and profit
• Average Unit Retail (AUR)
increase
• Growth in leather goods
and outerwear
25
Strategic Report | Strategy
Product
We have made good strategic progress in developing
lookbook, a celebration of our Burberry community.
Instead of professional models, London-based Burberry
and enhancing our product strategy while managing our
employees were shot in looks from the collection outside
product flows. Despite the COVID-19 pandemic, we
their homes. In December 2020, we unveiled our mural
continued to record excellent traction with our new
dedicated to Burberry Ambassador Marcus Rashford
collections during FY 2020/21.
MBE in Manchester.
Our new collections have resonated strongly with
Throughout the year, we maintained an engaging
consumers, supporting double-digit growth in full-price
calendar and drumbeat of brand activations across the
sales to both new and repeat customers. Within full
globe. We continued to see strong brand traction, with
price, our strategic pillars, leather goods and outerwear,
positive engagement rate results across our social media
have returned to growth and delivered mid and high
platforms, particularly in China, and attracted a sizeable
single-digit growth for FY 2020/21, respectively. Strong
share of new and younger customers to our brand.
performance in leather goods has been supported by our
new established shapes, including the Pocket Bag, which
was the focus of our first bag campaign and programme
Localised plans
Over FY 2020/21, markets rebounded at different paces.
of leather goods activations and pop-ups earlier in the
As a result, we focused on a localised customer-centric
year, and the Olympia, our newest distinctive shape.
approach for each region, capturing recovery
Across outerwear, we have focused on elevating and
opportunities as they arose and shifting resources, such
diversifying our offer, transitioning to a higher share of
as product and budget, as required. In terms of brand
technical and eco-fabrics. By successfully driving the
activity, we continued to root our communications in
performance of our strategic pillars, we have also
strong coherent codes, signalling our luxury positioning
shifted our AUR, delivering high single-digit growth
through emotive campaigns and brand activations, and
compared to FY 2019/20, further demonstrating the
adopting a highly localised approach in every market.
strength of our brand.
In China, where luxury demand rebounded quickly, we
Despite some disruptions in our supply chain due
focused on dedicated content, engaging customers
to COVID-19, which resulted in higher operational
through physical and digital activations. This included
complexity, we succeeded in managing our inventory,
the launch of our Social Retail store in Shenzhen and
delivering our product, transporting inventory between
a pop-up series focused on key product categories.
markets and effectively managing order fulfilment.
We also launched our first bespoke campaign film for
Brand
We continued to invest in brand heat and visibility,
the Lunar New Year in January 2021, which had an
exceptional response from local consumers and
increased the number of new fans to our WeChat
adapting our plans to respond to the challenges imposed
page in a single month by circa 15 times compared to
by local lockdowns. We identified innovative ways to
our 2020 monthly average. In Korea, we tapped into
create content and deliver our campaigns, in many cases
regional consumer passion points by collaborating
digitally. For the Thomas Burberry Summer Monogram
with local taste makers and drove engagement with
capsule, we leveraged our digital expertise to create our
consumers offline through pop-ups and elevated
first computer-generated campaign. This also featured
in-store installations.
self-portraits captured at home by Kendall Jenner,
ensuring no travel needed to take place. In July 2020,
we introduced our Spring/Summer 2021 pre-collection
26
Strategic Report | Strategy
In the Americas we focused on generating brand heat
and visibility through the delivery of locally relevant
Distribution
We continued to elevate the brand experience across our
content, including styling key cultural influencers, such
full-price channels and strategically leveraged digital to
as Beyoncé and Billie Eilish. This localised approach
support both offline and online sales. Within Mainline,
enabled us to drive recovery effectively and resulted
despite significant store closures during the year, our
in double-digit growth in full-price sales in recovering
physical network remains a critical channel. As such, in
economies such as Mainland China, Korea and the USA.
FY 2020/21, we continued to invest in stores and
Digital
We relied upon digital innovation to mitigate the impact
of reduced traffic in our store networks during localised
counted 17 new openings. We also completed 21
refurbishments, bringing the cumulative number of
refurbished stores to 85.
lockdowns. This approach drove a strong double-digit
increase in full-price digital sales, and doubled turnover
Enablers
Our performance has been underpinned by strong cost
on Burberry.com. Our teams acted quickly to ensure we
and cash discipline, and we have taken swift mitigating
continued to deliver luxury experiences for our
actions to contain costs and protect our financial
customers. In a matter of weeks, Burberry.com was
position. In terms of liquidity, we diversified our
upgraded to include an in-store appointments booking
borrowings into longer-term financing, with the issuance
feature, as well as online shopping assistance. A new
of our first Sustainability Bond in September 2020. The
functionality allowing our UK- and USA-based
liquidity provided by the bond has been supported by
customers to book video appointments with our Sales
cost savings of Opex reductions this year, ahead of our
Associates and browse products as if they were in store
original guidance. Read more about our capital allocation
was also added. Amplifying our appointment strategy
framework on page 55 and Financial Review on pages 48
has already proven to be a commercial success.
to 54. Finally, we continue to place a strong focus on our
We have continued to add layers of digital discovery for
progress on our commitments. Read more about ESG on
our customers. Read more about this on pages 32 to 35.
pages 60 to 91.
People and Responsibility agendas, making good
Our strong foundations and the efforts of the last year
have enabled us to make further progress in our strategy
and deliver a resilient performance in FY 2020/21,
despite the COVID-19 pandemic. As a result we are now
successfully through the transformation with:
• A strong product offer, with leather and outerwear
categories back to growth, supported by year-on-year
growth in AUR across mainline and digital
• A new young fashion-forward luxury customer, which
is a result of increased brand traction evident
particularly on social media
27
Strategic Report | Strategy in action
OPENING NEW SPACES:
SOCIAL RETAIL IN
SHENZHEN, CHINA
A new luxury shopping experience that blends
the social and physical worlds.
In July 2020, we set a new paradigm for luxury shopping
The 5,800-square-foot store is made up of a series
with the opening of our first Social Retail store in
of spaces for customers to explore. Each has its
Shenzhen, China. Created in collaboration with Chinese
own concept and personality and offers a unique,
technology giant Tencent, the space takes moments
interactive experience. Through a dedicated WeChat
from social media and embeds them into the in-store
mini-programme, customers can unlock exclusive
journey to create a new, digitally-immersive retail
content and personalised experiences and share them
experience. At once celebrating our heritage of
with their communities.
exploration and our forward-thinking approach, the
store is a place of discovery, designed to inspire and
Thomas Burberry was an inventor and a dreamer.
entertain our customers, where they can interact with
The social retail store reflects Burberry’s pioneering
our brand and product in new and exciting ways.
history of firsts, and our ambition to continue to
push boundaries through innovation and creativity.
It is a unique space to test and learn, and to trial
innovation that we are expanding to the rest of the
Burberry network.
WeChat mini-programme
The dedicated WeChat mini-programme acts as a
bespoke digital companion, encouraging visitors to
interact with the space and share their experiences
online. The more a customer engages with the physical
space through the mini-programme, the richer their
experience becomes. For example, customers can
unlock exclusive content and access features such as
store tours and a scanner to read Quick Response (QR)
codes on product swing tags. Scanning a QR code
unlocks additional content and storytelling. Spaces
dedicated to particular product categories also have
their own QR codes. By scanning these codes, content
is streamed to digital screens, further enhancing the
in-store experience.
The WeChat mini-programme also provides a platform
for client services, including appointment bookings,
events and table reservations at Thomas’s Cafe, our
in-store restaurant and community space.
28
Strategic Report | Strategy in action
Social currency
Within the mini-programme, customers can earn
Thomas’s Cafe
Named after Thomas Burberry, Thomas’s Cafe is a
rewards through the Burberry social currency feature,
dedicated space for the Burberry community. The
unlocking exclusive content and personalised
interior of the café takes inspiration from the creative
experiences. Each customer is given a playful animal
codes introduced by Riccardo Tisci, including high-gloss
character that evolves as they engage in store and
tones of beige, layered curtains and chamfered
online, with new characters and outfits to discover.
mirroring. Animals are also referenced throughout and
Some examples of these characters can be seen above.
can be seen in prints on the wall, as well as in the
Rewards range from exclusive café menu items at
bespoke tableware. The café menu celebrates English
Thomas’s Cafe to mini-programme content.
and Chinese tea culture with playful and modern fusion
Immersive experience
The store, which is fronted by an interactive digital
elements. The menu also evolves as customers engage
with the WeChat mini-programme and their social
currency advances, unlocking new items. Designed as a
window, comprises 10 rooms decorated in hues of
dynamic space, it can be repurposed into a community
beige, pistachio, pink and blue. Within these, there
space for activities, including talks, workshops,
are areas that celebrate the Burberry house codes,
exhibitions and live performances.
including the Trench Coat, the Thomas Burberry
Monogram, Nature and the Burberry Animal Kingdom.
The Trench Experience is an exclusive space, which
customers can unlock as they build their social currency.
An homage to Thomas Burberry’s vision, the room is a
digitally immersive journey through nature, bringing
Burberry’s heritage of exploration to life and creating
unique and personal content for the customer to share
on social media.
30
Strategic Report | Strategy in action
A digital experience
Digital innovation is a cornerstone of our strategy and
demonstrate styling options. Shoppers could also
our ambition is to remain the digital pioneer in luxury,
schedule video calls with Sales Associates, who could
building on our robust foundations and credentials in this
take them through collections in a way that was tailored
area. It was our strong digital infrastructure that enabled
to their needs.
us to continue to generate excitement around our new
collections despite the challenges imposed by the
In some regions, we also employed AR tools to enable
COVID-19 pandemic. In order to safeguard our people
customers to picture Burberry products in their own
and our communities, we transformed our shows and
environment. Not only was this a practical solution when
presentations into digital events and enhanced the online
visiting a store was not a possibility, but it also offered
Burberry retail experience. In doing so, we brought our
an additional dimension to the inspiration element of
brand to audiences all over the world.
the customer journey.
Shopping online
The Burberry World area on Burberry.com provides
Digital continued to be a driver of growth during the
visitors with background information on our products, our
year, with lockdowns and COVID-19 restrictions
purpose and our approach to the environment and social
accelerating the shift online. As well as increasingly
responsibility. Content highlights this year included A
being the first step in our customers’ inspiration
New Awakening, a short film directed by Derek Tsang, to
journey, Burberry.com offered a virtual shopping
mark Chinese New Year, and images of the mural series
experience for customers unable to visit stores shut
created as part of the Burberry Supports Youth initiative,
temporarily due to the pandemic.
which showcases next-generation artists in Manchester,
We provided the same exemplary service that is a
hallmark of shopping in our stores through virtual
Virtual events
England, and Chengdu, China.
conversations with our Sales Associates, who were on
To bring the physical shopping experience to our
hand to assist with styling and sizing advice. We also
customers wherever was convenient to them, in
enhanced Burberry.com with engagement-building tools,
FY 2020/21, we focused on virtual event formats.
including virtual events and exclusive digital content,
These included invitations to customers to participate
and we increased personalisation.
in virtual product launches and styling sessions. In the
third quarter of FY 2020/21, our digital pop-ups and
To create a bespoke experience, we invited customers to
local activations on Burberry.com helped drive high
connect with a local Burberry Sales Associate via a chat
double-digit full-price growth in the channel and we
function. By doing so, the Sales Associate could share
saw triple-digit full-price growth in Mainland China
photographs of a specific product or pair pieces to
in the period.
32
Strategic Report | Strategy in action
Digital runway shows
Our ambition is to inspire and excite highly influential
In the rest of the world, we became the first luxury
luxury consumers, fostering a strong Burberry
brand to partner with the livestreaming platform
community. When the COVID-19 pandemic made
Twitch. Erykah Badu, Rosalía, Steve Lacy and
it impossible to host runway shows in person, we
Bella Hadid started the event with a pre-show
harnessed our creativity to reinvent this key
conversation. During the show, we used Twitch’s
inspiration moment. We pushed boundaries to create
Squad Stream function to enable our virtual guests
online experiences that gave front row seats to the
to view the collection from multiple perspectives
Burberry community around the world.
and share their impressions via the chat function
in real time.
Spring/Summer 2021 womenswear show
For our Spring Summer 2021 collection, In Bloom, we
Autumn/Winter 2021 menswear presentation
teamed up with influential livestreaming platforms to
For our Autumn/Winter 2021 collection, Escapes,
broadcast the show online and reach a wide audience.
we streamed the presentation from our
Regent Street store.
We invited internationally acclaimed artist Anne
Imhof to collaborate on the show experience, creating
Riccardo Tisci’s first Burberry collection focused
a unique event set in a forest that played with rules
on menswear, the presentation celebrated the
and rebellion. The collection’s inspiration was a
relationship between humanity and nature, and
modern mythology, a contemporary fairy tale in the
referenced Burberry’s heritage of exploration.
deep ocean, a love story blooming between a mermaid
and a shark, darkly romantic and unexpected. Like
The store was reconfigured as a meandering terrain.
waves crashing uncontrolled against the shore, the
Models followed different paths, reflecting the myriad
performance featured bodies, ebbing and flowing,
of directions creativity and exploration can take.
models and performers as one. Artist and musician
Eliza Douglas provided a unique real-time soundtrack,
Video camera operators offered alternative
further exploring the boundaries between art, fashion
perspectives on each of the looks, from detailed
and live performance.
closeups to wide-angle views. We shared the
presentation online and afterwards posted images
In China, the show was featured on Tmall as part of
of the collection on Burberry.com. In doing so, we
Alibaba’s Super Brand Day. In advance of the event,
replicated the sense of intimacy that a presentation
our branded activity on Tmall included a livestream
creates for a wide audience and built a sense of
with a brand ambassador and broadcasting video
community among viewers who could share their
collaborations with dancers from the hit show “Street
reactions to looks via chat functions.
Dance of China”. In the three days before the show,
our on-site activity gained over 20 million comments,
likes and shares. On the day, the show was watched
live by 28 million viewers on the platform, while
Burberry’s Tmall store saw a record high in daily
transaction volume.
35
Strategic Report | Strategy
STRATEGY OUTLOOK
Having successfully executed Burberry’s transformation and
established a strong foundation, in this next chapter, we will
leverage our unique brand to deliver sustainable, high-quality
growth, while continuing to be a force for good in the world.
To achieve our objectives, we will build brand advocacy and community through distinctive and meaningful storytelling,
formats and experiences that inspire and excite highly influential luxury consumers. We will focus on our core
categories, drawing on the strong offer we have built while maintaining our focus on our anchors of outerwear and
leather goods. We will continue to enhance the way we connect with our customers to create a truly omnichannel
luxury experience, while focusing on local consumers in our key markets. We will supercharge digital, maintaining our
leadership and we will continue to focus on full price.
Plans in place to drive performance
1. COMMUNICATIONS
2. PRODUCT
3. DIRECT TO
CONSUMER
ENABLERS
• Agile supply chain
• World-class talent
• Secure, integrated and consumer-led technology
• Operational efficiency
36
Strategic Report | Strategy
1. Communications
Now more than ever, consumers, particularly younger
Enablers
Successful delivery of these plans will be underpinned by
ones, are seeking emotional connections with brands.
strong operational and people enablers:
Our ambition is to excite and inspire the Fashion
Vanguard, fostering a strong Burberry community.
• An agile supply chain that delivers exceptional quality
We will strengthen the emotional connection with
and service
purposeful, authentic luxury storytelling, while leveraging
• Investments in consumer-led technology to enhance
our strong network of communities and influencers to
the customer experience
amplify our brand. Above all, we will maintain a firm
• Attracting and retaining a diverse world-class team,
focus on our purpose in order to differentiate Burberry
fostering a strong culture of inclusion and belonging
from its peers.
• Driving operational efficiency
2. Product
Our vision is to leverage the strong luxury offer we have
Driving positive change
Throughout our plans, our focus on ESG topics will
built over the past few years, maintaining focus and
remain core. Drawing on our heritage of exploration and
innovation around our anchors of outerwear and leather
discovery, we will push boundaries, set leading standards
goods. Within leather goods, having transformed our
and pioneer innovative solutions to create real system
women’s architecture, we will continue to deliver
change. This is the purest expression of our purpose and
newness and relevance while establishing key shapes
values and we are committed to building not only a
within the men’s offer. In outerwear, we will build desire
financially stronger Burberry but also a better company.
through fabric innovation as well as elevation of product.
Today our customers, people, communities and investors
We will further elevate our ready-to-wear collections by
rightly expect more. Building on the progress we have
developing a strong position in everyday luxury pieces.
made so far, we will be accelerating our investment in
Additionally, we will increase our focus on shoes, which
ESG-related initiatives and raising our ambitions by:
is a strong category for customer recruitment.
3. Direct to consumer
In the last three years we have elevated our store
• Creating the conditions for creativity to thrive by
championing diversity and inclusion and ensuring the
wellbeing of our people
network so that it is aligned to our luxury positioning. In
• Supporting our communities, particularly young
this phase we will continue to transform our direct-to-
people, by providing them with the skills, confidence
consumer channels to create a luxury truly omnichannel
and opportunities to succeed
experience that will both attract customers to the brand
• Creating a more sustainable future for luxury by
and ensure their ongoing engagement with us. In the
reducing our environmental impacts and helping
next phase we will focus on five key actions:
transform our industry
1. Rolling out our new store concept
2. Focusing on local customers
3. Accelerating store performance
We believe that by fostering the creativity that has
driven our brand since its inception, we will deliver
sustainable high-quality growth and value for our
4. Taking a lead in omnichannel, building on our
stakeholders and communities. Our plan will deliver
pioneering Social Retail concept
5. Supercharge digital sales
significant value creation in three ways:
• Revenue acceleration, with high single-digit growth in
the medium term, from a FY 2019/20 base, driven by
out-performance of full-price sales
• Meaningful margin expansion, while investing in
growth and significant free cash generation
• Positive change for our people, our communities and
the environment
37
Strategic Report | Strategy in action
The Burberry Trench Coat
With over 100 years of history, the Burberry Trench
The lining of our heritage Trench Coat features the
Coat is a global fashion icon. Its fabric speaks to our
Burberry Check trade mark. It was first used to line
heritage of technical innovation and its design to
our raincoats in the 1920s, but it was the 1960s that
timelessness, while its seasonal adaptations reflect
saw it become the unmistakable Burberry signature
the spirit of the moment and Burberry’s enduring
we know today. The Burberry Check remains our
relevance. It remains at the core of the brand and we
iconic house code with a new vision for the future,
continue to reinterpret it with fresh iterations.
elevated, reworked and reconstructed throughout our
Quintessentially British, the Burberry Trench Coat
be emblematic of our history, our craftsmanship and
collections. No matter the incarnation, it will always
epitomises the seamless fusion of form and function.
enduring British style.
Lightweight gabardine, which was invented by
Thomas Burberry in 1879, is pliant and comfortable
Burberry Trench Coats go on to live their own lives
to wear, while providing protection from the
once in the hands of our customers and participate in
elements. Aspects of the Trench Coat’s design reflect
myriad adventures. We offer Trench Coat reproofing
its history. During the First World War, for instance,
and repair services to reflect our customers’
its epaulettes were used to display an officer’s rank,
attachment to their unique pieces of living fashion
and its belt’s metal D-rings served as a place to
history and our commitment to sustainability.
attach equipment. These features are still part of our
Heritage Trench Coat.
While instantly recognisable, every Burberry Trench
Coat has a personality all of its own, too. Our
Every Trench Coat produced by Burberry in
customers incorporate their flair into how they style
Castleford, Yorkshire, is rich with stories, with its
their pieces, while our Trench Bespoke service takes
design telling tales of our heritage of exploration and
personalisation to the next level. Available at our
technical innovation. The knowledge and skill of our
London flagship store, using innovative customisation
craftspeople are woven into every finished piece, too.
tools, our customers can adapt our iconic silhouettes
It takes one year for our specialist tailors to master
with a choice of motifs and details, including
the stitching of the Trench Coat’s collar. The most
monograms and vintage Burberry Check linings.
intricate part of the coat’s construction, more than
180 stitches are sewn by hand to create a fluid curve
At once timeless and of its time, the Burberry Trench
to ensure the collar sits perfectly on the neck.
Coat is part of the fabric of our customers’ lives.
Through their exploits, it will continue to be woven
through histories yet to be recounted.
38
Strategic Report | Strategy in action
Bolstering leather goods
Building our leather goods business has been a key
Sharing our brand story
element of our strategy. In the past three years, we
Burberry’s heritage is rich with stories of adventurers
have completely transformed the category with a
and exploration, and our leather goods speak to
range of distinctive shapes, including the TB, Lola,
creative freedom and the timeless appeal of quality
Pocket and Title, that cater to different customer
products made to last.
preferences. We have also raised the bar in terms of
quality thanks to the integration of our leather goods
To share these aspects of our brand story with our
centre of excellence, Burberry Manifattura, in Italy.
customers, we launched a series of immersive
travelling pop-up shops in June 2020. The pop-ups
The introduction of the Olympia bag in spring 2021
started their journeys in China before making their
added a new storyline to our signature bag selection.
way to the Americas and EMEIA. Featuring large-
Combining a sleek practical design with a distinctive
scale models of brightly coloured animals, the
look, the slim structured shoulder bag is
whimsical and interactive custom-built installations
manufactured in Italy in three proportions and
travelled from location to location showcasing our
multiple finishes.
leather goods. The installations’ structures could be
reused and reconfigured, meaning they could be
During the year, our collections resonated well
scaled up or down depending on location, so reducing
with new and younger clientele, as well as repeat
waste. Each pop-up was digitally augmented,
customers, while our communications around leather
incorporating creatures, which could be brought to
goods have continued to build excitement around the
life by customers on their phones through an
category. FY 2020/21 was punctuated by three
immersive AR experience.
stand-out leather goods moments:
Bringing leather goods to life
Building brand heat
When our customers could not visit Burberry retail
Our ambition is to excite and inspire the Fashion
spaces in person, we gave our leather goods an
Vanguard, who are highly influential luxury
additional dimension with AR. Using our smartphone
consumers. Among activations fuelling brand heat
app, customers could place our Spring/Summer 2021
among this customer group was the launch of a
Pocket Bag collection (pictured on the right) in their
limited-edition version of our Pocket Bag, which we
surroundings. This meant they could explore the
created exclusively for followers of Chinese influencer
bags in more detail, see them at scale against other
Mr. Bags in June 2020. A fashion blogger with over
real-life objects and get a realistic idea of dimensions
nine million followers, many young luxury customers
before purchasing.
consult Mr. Bags before planning a luxury bag
purchase. We crafted 100 beige-and-red colourway
As a nod to our Spring/Summer 2021 collection,
Pocket Bags, which, when made available on
we created a playful experience, which enabled
Mr. Bags’ WeChat, sold out within one minute.
customers to design their own 3D shell sculptures
incorporating their chosen Pocket Bag.
40
Strategic Report | Strategy in action
Helping to shape the future
Thomas Burberry was passionate about social reform
UK
and supporting local communities. We continue his
In London, Burberry is working with London Youth,
legacy today by helping those in need, in particular
which supports a network of over 600 community
young people, and working with organisations that
youth organisations and creates thousands of
provide them with the skills, confidence and
engaging opportunities for young people each year.
opportunities to succeed.
Fifteen youth centres jointly selected by Burberry
and London Youth will receive grants to ensure their
In 2020, Burberry joined forces with English
programmes can continue to make a positive impact
international footballer Marcus Rashford MBE and
in some of London’s most deprived communities.
charities supporting young people across the world.
In Manchester, Burberry is supporting Norbrook
Like Thomas Burberry, Marcus Rashford is a pioneer,
Youth Club and Woodhouse Park Lifestyle Centre,
an innovator, a free-thinking trailblazer who
which are both youth centres that played a
harnesses his own achievements as a way to give
pivotal role in Marcus Rashford’s childhood.
back and nurture the next generation. During the
Youth volunteers from the two clubs will be coming
COVID-19 pandemic, he focused on ensuring children
together as part of the partnership to help charities
who would usually rely on school meals would not go
in the Wythenshawe area where the clubs are based
hungry. As well as successfully campaigning for the
and Marcus Rashford grew up.
extension of holiday food provision to support
vulnerable children in the UK, he raised £20 million in
USA
financial and food donations for FareShare, a food
Alongside these, Burberry is contributing to Wide
distribution charity.
Rainbow, a non-profit based in New York City
providing access to the arts and arts education in
In support of his efforts to end child food poverty, in
neighbourhoods across the United States with
November, we expanded our support for FareShare,
little to no resources. The donation will provide art
with whom we have a longstanding relationship,
supplies, food deliveries and music education to
helping fund an additional 200,000 meals
young people in these communities as well as fund
across 11,000 charities and community groups
the creation of art murals to invigorate schools and
across the UK.
shelters in New York and Los Angeles.
We also pledged to support UK youth organisations in
Around the world
Manchester, London and charities with a global reach.
Burberry is also partnering with the International
Programmes range from education to supporting
Youth Foundation to contribute to the Global Youth
young creatives and artists, and helping
Resiliency Fund. This will enable young entrepreneurs
entrepreneurs to tackle some of the world’s
and community leaders, especially in Asia, to develop
significant challenges. These initiatives will positively
solutions to challenges including closing nutrition
affect the lives of tens of thousands of young people
gaps and unlocking access to livelihoods.
across the world.
To further support the voices of tomorrow, we
featured Marcus Rashford in our 2020 festive
campaign. He featured in still imagery sporting
signature house codes, including the iconic
Trench Coat and Burberry Check puffer jacket.
43
Strategic Report | Key Performance Indicators
KEY PERFORMANCE
INDICATORS
Key Performance Indicators (KPIs) help management
measure progress against our strategy.
Non-financial measures
We have developed non-financial measures to assess our performance against our ongoing employee objectives and 2022
responsibility targets, with progress regularly monitored by our Board. For further details on ESG activities and progress
against 2022 targets, see pages 62 to 65. The Group has considered the new non-financial reporting requirements under
sections 414CA and 414CB of the Companies Act 2006 and has included details in the Annual Report.
Objective
Employees
Create an environment where all our employees are
Measure
Performance
Employee engagement
FY 2020/21 performance:
actively engaged in delivering outstanding results
score as measured by Glint
for the business
Ensure our policies, processes, practices and
Number of women globally
average employee engagement
score of 75%1
FY 2020/21 performance:
resources promote equal gender representation in
in Director and above roles,
women account for 52% of
our leadership population
divided by the total number
the leadership population
of Director and above roles
Responsibility
Product
Drive positive change through 100% of our products
% of products with
FY 2020/21 performance: 82%^
by increasing demand for more sustainable raw
materials and supporting our supply chain partners
in going beyond social and environmental compliance
to improve resource efficiency and worker wellbeing
Company
more than one positive
attribute2
of products with more than one
positive attribute and 94%^ of
products with at least one
positive attribute3
Become carbon neutral in our own operational
energy use by 2022 and meet our approved
Absolute market-based
CO2 emissions
Carbon neutral in our own
operational energy use: 92%
Science Based Targets:
• Reduce absolute scope 1 and 2 Greenhouse Gas
(GHG) emissions 95% by 2022 from a FY 2016/17
base year
• Reduce absolute scope 3 GHG emissions by 30%
by 2030 from a FY 2016/17 base year
reduction compared to
FY 2016/17
To date, in line with our Science
Based Targets, we have reduced
our total scope 1 and 2 emissions
by 84% compared to FY 2016/17
and reduced our scope 3 emissions
from purchased goods and
services by nearly 8,700 tonnes
Communities
Positively impact 1 million people3 by supporting
programmes led by The Burberry Foundation. The three
pillars of our Communities strategy focus on projects
that tackle educational inequality and build cultural
capital; foster community cohesion and employability
skills; and support social and economic development
Number of individuals
FY 2020/21 performance:
positively impacted
680,170^ people positively
impacted since the launch of
partnerships in FY 2016/17
1. Employee engagement score as measured by Glint employee engagement index. Engagement index based on completed survey
responses only.
2. Positive product attributes: we have defined key positive attributes relating to a range of social and environmental programmes,
which drive improvements in the raw material and manufacturing stages of our supply chain.
3. Positively impact people: we support The Burberry Foundation and its partners in addressing key community needs within our
industry’s footprint (see pages 64 to 65). This is giving rise to different impacts, depending on geographies and community needs.
Impacts are assessed and reported at regular intervals over the course of five years.
45
Strategic Report | Key Performance Indicators
Financial measures
We believe it is vital to ensure alignment between our strategic focus and the long-term interests of shareholders.
As a result, the short-term element of executive remuneration is linked to adjusted operating profit performance
and long-term awards are subject to revenue and adjusted group Return on Invested Capital (ROIC) underpins.
More information is set out in our Directors’ Remuneration Report on pages 180 to 203.
Revenue
growth*
Comparable
sales growth*
Adjusted operating
profit growth*
Adjusted operating
profit margin
Adjusted diluted
EPS growth
Adjusted Group
ROIC
KPI
This measures the appeal of
the Burberry brand to
customers through all of
our sales channels.
Financial ambition over
time: high single-digit KPI
top-line growth.*
This measures the growth in
productivity of existing stores.
It is calculated as the annual
percentage increase in sales
from retail stores that have been
open for more than 12 months.
It is adjusted for permanent
closures and refurbishments,
and includes all digital revenue.
Financial ambition over time:
high single-digit top-line growth.*
This measure tracks our
ongoing operating profitability
and reflects the combination of
revenue growth and cost
management.
Financial ambition over time:
adjusted operating profit
growth ahead of revenue
growth.*
Measure
CER growth %
CER growth %
CER growth %
%
Reported growth %
%
-2
-1
-1
-4
-10
+1 +3 +2
-3
-9
m
6
6
7
2
£
,
m
3
3
7
2
£
,
m
0
2
7
2
£
,
m
3
3
6
2
£
,
m
m
4
4
4
4
3
3
,
,
2
2
£
£
-21 +5
m
7
6
4
£
m
9
5
4
£
0
-8
-1
-8
16.6 17.1 16.1
15.3
16.4
16.9
+11 +6
-5
-4
-14
20.0 17.0
m
3
3
4
£
m
m
6
6
9
9
3
3
£
£
m
8
3
4
£
m
4
0
4
£
a
m
r
o
f
o
r
P
17
18
19
20
21
17
18
19
20
21
17
18
19
20
20
21
17
18
19
20
20
21
17
18
19
20
20
21
20
21
Performance
FY 2020/21 revenue
declined by 10% at CER, as
a result of the impact of
COVID-19 on trading,
especially during H1, when
many of the Group’s stores
were closed. Revenue
growth improved in H2,
returning to year-on-year
growth in Q4.
FY 2020/21 comparable sales
declined 9% in the year as a
result of the impact of COVID-19
on trading.
Adjusted operating profit in
FY 2020/21 was down 8% at
CER. This was as a result of
the impact of COVID-19 on
revenue, partially offset by an
improvement in gross margin
and a reduction in adjusted
operating costs as a result of
strong cost management and
delivery of restructuring
programmes.
* At CER
Details of alternative performance measures are shown on page 53. Pro forma is an estimation of the FY 2019/20 results when
applying the previous accounting standard, IAS 17: Leases, consistent with FY 2018/19. The calculation of Adjusted Group ROIC is
set out on page 289.
46
This measures how we drive
Growth in adjusted diluted EPS
Adjusted Group ROIC measures
operational leverage and disciplined
reflects the increase in profitability
the efficient use of capital on
cost control, with thoughtful
of the business, improvement in the
investments. It is calculated as the
investment for future growth building
tax rate and share repurchase
post-tax adjusted Group operating
the long-term value of the brand.
accretion.
profit divided by average adjusted
operating assets over the period.
Financial ambition over time:
Financial ambition over time:
meaningful adjusted operating
adjusted EPS growth ahead of
Financial ambition over time:
margin expansion.*
revenue growth.*
ROIC significantly ahead of Weighted
Average Cost of Capital (WACC).
18.0
13.5
9.0
4.5
0.0
a
m
r
o
f
o
r
P
0
p
1
.
2
8
p
1
.
2
8
p
4
.
7
7
p
7
.
8
7
p
p
3
3
.
.
7
7
6
6
p
9
.
7
7
a
m
r
o
f
o
r
P
20
16
12
8
4
0
Adjusted operating profit margin
Adjusted diluted EPS was down 14%
Adjusted Group ROIC decreased from
improved by 50bps with the impact
year on year. In addition to decline in
20% to 17% in FY 2020/21, mainly
of reduction in revenue more than
operating profits, finance charge
due to the decrease in adjusted
offset by improved gross margin
increased due to interest on
operating profit and the increase in
and savings in operating costs.
borrowings and reduced interest
effective tax rate. Average operating
rates on investments. The effective
assets increased by 3%.
tax rate on adjusted profit increased
from 22.3% to 25.4%, mainly due to
geographical shift in profits to higher
tax jurisdictions.
Strategic Report | Key Performance Indicators
Revenue
growth*
Comparable
sales growth*
Adjusted operating
profit growth*
Adjusted operating
profit margin
Adjusted diluted
EPS growth
Adjusted Group
ROIC
KPI
This measures the appeal of
This measures the growth in
This measure tracks our
the Burberry brand to
productivity of existing stores.
ongoing operating profitability
customers through all of
It is calculated as the annual
and reflects the combination of
our sales channels.
percentage increase in sales
revenue growth and cost
from retail stores that have been
management.
Financial ambition over
open for more than 12 months.
time: high single-digit KPI
It is adjusted for permanent
Financial ambition over time:
top-line growth.*
closures and refurbishments,
and includes all digital revenue.
adjusted operating profit
growth ahead of revenue
Financial ambition over time:
high single-digit top-line growth.*
growth.*
This measures how we drive
operational leverage and disciplined
cost control, with thoughtful
investment for future growth building
the long-term value of the brand.
Growth in adjusted diluted EPS
reflects the increase in profitability
of the business, improvement in the
tax rate and share repurchase
accretion.
Financial ambition over time:
meaningful adjusted operating
margin expansion.*
Financial ambition over time:
adjusted EPS growth ahead of
revenue growth.*
Adjusted Group ROIC measures
the efficient use of capital on
investments. It is calculated as the
post-tax adjusted Group operating
profit divided by average adjusted
operating assets over the period.
Financial ambition over time:
ROIC significantly ahead of Weighted
Average Cost of Capital (WACC).
Measure
CER growth %
CER growth %
CER growth %
%
Reported growth %
%
-2
-1
-1
-4
-10
+1 +3 +2
-3
-9
-21 +5
0
-8
-1
-8
16.6 17.1 16.1
15.3
16.4
16.9
+11 +6
p
1
.
2
8
p
4
7
7
.
18.0
13.5
9.0
4.5
0.0
a
m
r
o
f
o
r
P
0
p
1
.
2
8
-5
-4
-14
20.0 17.0
.
p
7
8
7
p
p
3
3
.
.
7
7
6
6
p
9
7
7
.
a
m
r
o
f
o
r
P
20
16
12
8
4
0
17
18
19
20
21
17
18
19
20
21
17
18
19
20
20
21
17
18
19
20
20
21
17
18
19
20
20
21
20
21
Adjusted operating profit margin
improved by 50bps with the impact
of reduction in revenue more than
offset by improved gross margin
and savings in operating costs.
Adjusted diluted EPS was down 14%
year on year. In addition to decline in
operating profits, finance charge
increased due to interest on
borrowings and reduced interest
rates on investments. The effective
tax rate on adjusted profit increased
from 22.3% to 25.4%, mainly due to
geographical shift in profits to higher
tax jurisdictions.
Adjusted Group ROIC decreased from
20% to 17% in FY 2020/21, mainly
due to the decrease in adjusted
operating profit and the increase in
effective tax rate. Average operating
assets increased by 3%.
Adjusted profit before tax has been removed as a KPI, as adjusted operating profit is management’s profit KPI
performance measure. Adjusted profit before tax is no longer used as a performance measure for remuneration
arrangements for Executive Directors on any new awards. Following the adoption of IFRS 16 in FY 2019/20, the
KPI for ROIC has been modified to reflect the impact of IFRS 16 and to use Group operating profit. This is
better aligned with other KPIs. Remuneration targets for incentive arrangements also use measures based on
operating profit. This KPI will be added to each year from FY 2019/20 until a five-year history is recorded.
47
m
6
6
7
,
2
£
m
3
3
7
,
2
£
m
0
2
7
,
2
£
m
3
3
6
,
2
£
m
m
4
4
4
4
3
3
,
,
2
2
£
£
especially during H1, when
many of the Group’s stores
were closed. Revenue
growth improved in H2,
returning to year-on-year
growth in Q4.
m
9
5
4
£
m
7
6
4
£
m
8
3
4
£
m
3
3
4
£
m
m
6
6
9
9
3
3
£
£
m
4
0
4
£
a
m
r
o
f
o
r
P
the impact of COVID-19 on
revenue, partially offset by an
improvement in gross margin
and a reduction in adjusted
operating costs as a result of
strong cost management and
delivery of restructuring
programmes.
Performance
FY 2020/21 revenue
FY 2020/21 comparable sales
Adjusted operating profit in
declined by 10% at CER, as
declined 9% in the year as a
FY 2020/21 was down 8% at
a result of the impact of
result of the impact of COVID-19
CER. This was as a result of
COVID-19 on trading,
on trading.
Strategic Report | Financial Review
GROUP FINANCIAL
HIGHLIGHTS
Revenue
• Revenue £2,344m -10% CER, -11% reported
Reported profit measures
• Operating profit £521m, up 176% after adjusting items
• Retail comparable store sales -9% (H1: -25%;
of £125m credit (FY20: £244m charge)
H2: +5%), returning to growth in H2 FY21
• Diluted EPS 92.7p, up 211% reported
Adjusted profit
• Adjusted operating profit £396m, -8% CER,
-9% reported
Cash measures
• Full year dividend declared at FY19 levels of 42.5p
(FY20: 11.3p) with the progressive policy reinstated
• Gross margin before adjusting items up 270bps at
• Free cash flow of £349m (FY20: £66m) due to strong
CER and 260bps at reported rates, benefitting from
cash management
full-price and other mix effects and reduced inventory
• Cash net of overdrafts and borrowing of £919m at
provisioning charges
27 March 2021 (28 March 2020: £587m). Cash net of
• Operating expenses before adjusting items -7%
overdrafts amounted to £1.2bn with borrowings of
at both CER and reported rates, benefitting from
£297m. The £300m Revolving Credit Facility (RCF) is
cost management and delivery of restructuring
currently undrawn, and the UK Government sponsored
programmes
COVID Corporate Financing Facility (CCFF) was repaid
• Adjusted diluted EPS 67.3p, -14% at both CER
in February 2021
and reported
Summary income statement
Period ended
£ million
Revenue
Cost of sales*
Gross profit*
Gross margin*
Operating expenses*
Opex as a % of sales*
Adjusted operating profit*
Adjusted operating margin*
Adjusting operating items
Operating profit
Operating margin
Net finance (charge)**
Profit before taxation
Taxation
Attributable profit
Adjusted profit before taxation*
Adjusted diluted EPS (pence)*
Diluted EPS (pence)
Weighted average number of diluted ordinary shares (millions)
27 March
2021
28 March
2020
% change
Reported FX % change CER
2,633
(859)
1,774
(11)
(18)
(8)
67.4% +260bps
(7)
(10)
+270bps
(7)
(1,341)
51.0%
433
16.4%
(244)
189
7.2%
(20)
169
(47)
122
414
78.7
29.8
409.0
(9)
+50bps
(8)
+50bps
176
190
(12)
(14)
211
(11)
(14)
2,344
(704)
1,640
70.0%
(1,244)
53.1%
396
16.9%
125
521
22.2%
(31)
490
(114)
376
366
67.3
92.7
405.1
* Excludes adjusting items. All items below adjusting operating items on a reported basis
For detail, see Note 6.
** Includes adjusting finance charge of £1m (FY20: £1m).
48
Strategic Report | Financial Review
Revenue analysis
Revenue by channel
Period ended
£ million
Retail
Retail comparable store sales growth
Wholesale
Licensing
Revenue
27 March
2021
28 March
2020
Reported FX
% change
1,910
(9%)
396
38
2,344
2,110
(3%)
476
47
2,633
(9)
(17)
(19)
(11)
CER
(9)
(17)
(20)
(10)
* Q4 FY21 comparable store sales growth compared with Q4 FY19.
Retail
• Retail sales fell 9% at constant and reported
• South Asia Pacific (SAP) declined by a double digit
percentage, affected by limited tourist traffic and
exchange rates
airport store closures
• Comparable store sales declined 9% (H1: -25%;
• Japan also fell, impacted by a lack of international
H2: +5%). Underlying performance was strong with
travel
full price sales growth of 7% offset by store closures
and a significant reduction in tourist traffic due to
EMEIA fell by 44% year on year
COVID-19, together with the planned reduction in
markdown activity in the second half of the year.
• EMEIA has been especially impacted by travel trends
Overall, markdowns had a low single digit percentage
and store closures
adverse impact on FY21 sales growth
• Continental Europe saw a decline broadly in line with
• Comparable store sales grew 32% in the fourth
the regional average; however, local spend returned to
quarter (-5% against Q4 FY19) as we began to
growth from the second quarter
anniversary the impact from the pandemic and
• The UK remained challenged with London performance
with a sequential acceleration in sales in Asia Pacific
weak given high tourist exposure
and Americas whilst EMEIA remained impacted
• Middle East returned to growth in the second half of
by lockdowns
the year driven by strong local demand and improved
• Nil impact from space on FY21 revenue
tourist flows
Comparable store sales by region:
Asia Pacific grew by 18% year on year
Americas declined by 9% year on year
• Americas saw a robust performance in full-price sales
• Asia Pacific saw the best regional performance in the
from Q2 FY21, increasing 17% in the year
year, led by Mainland China and Korea
• Within this, the US was particularly strong driven by
• Mainland China saw strong double digit growth with
attracting new younger customers to the brand
comparable store sales accelerating in the fourth
quarter to 53% against FY19 driven by a successful
Digital performed well in the year with double digit
Lunar New Year campaign
percentage growth driven by the Americas and
• Korea also delivered strong double digit percentage
Mainland China.
growth with a significant improvement in comparable
store sales in the last quarter of the year
49
Strategic Report | Financial Review
By product
• Key openings included 13 in Mainland China including
• Full-price sales grew across all product categories
our first Social Retail store in Shenzhen Bay
in FY21 and in the fourth quarter against Q4 FY19
• Cumulative 34 stores closed to date of the 38 planned
• Product performance was impacted by the pandemic
closures from the non-strategic store rationalisation
with a shift towards casualisation and evergreen items
programme
• Outerwear was driven by strong performance in Coats
• A cumulative 85 stores are now new or refurbished
and Jackets, Quilts and Downs with exceptional
and aligned to our new creative vision, an increase of
performance in Mainland China and Korea
21 in the year
• Within Ready-to-wear, Tops and Bottoms continued
• In support of our goal to be net-zero by 2040, we
to outperform with a strong performance in Shirts and
finance or refinance buildings that have achieved
Jersey within Men’s and Knitwear within Women’s
one of the following certifications:
• Leather goods remained a key focus in FY21 with the
• Leadership in Energy and Environmental Design
new bag pillars performing well. The new shapes
(LEED): Platinum or Gold level
continue to account for more than 60% of our
• Building Research Establishment Environmental
women’s leather bag sales
Assessment Method (BREEAM): Excellent or
• Digital full-price sales saw high double digit
Outstanding level
percentage growth across all categories with a
particularly strong performance in Accessories driven
by leather goods and shoes
Store footprint
Wholesale
Wholesale revenue declined 17% at CER and
reported exchange rates with a return to growth in
the second half of the year with sales up 8% at reported
The transformation of our distribution continued as we
exchange rates.
addressed high priority programmes:
• In FY21 we opened 17 stores and closed 23 stores
Licensing
Licensing revenue fell 19% at reported exchange rates
due to lower sales from the COVID-19 fallout.
Operating profit analysis
Adjusted operating profit
Period ended
£ million
Revenue
Cost of sales*
Gross profit*
Gross margin %*
Operating expenses*
Opex as a % of sales*
Adjusted operating profit*
Adjusted operating margin %*
* excludes adjusting items
27 March
2021
2,344
(704)
1,640
70.0%
(1,244)
53.1%
396
16.9%
28 March
2020
2,633
(859)
1,774
67.4%
(1,341)
51.0%
433
16.4%
% change
Reported FX
(11)
(18)
(8)
+260bps
(7)
CER
(10)
+270bps
(7)
(9)
+50bps
(8)
+50bps
Adjusted operating profit declined 9% and margin increased by 50bps at reported exchange rates.
• Gross margin increased 270bps at CER (260bps reported). Business performance accounted for around two thirds
of the gross margin improvement benefitting from full price, channel and regional (predominantly Mainland China)
mix. The gross margin benefited from COVID provisions taken in the PY by around 80 bps
• Adjusted operating expenses fell by 7% against last year, benefitting from strong cost management and delivery of
the restructuring programmes. The 2017 cost savings programme has delivered savings of £150m since inception
including an incremental £25m in FY21
• In July 2020 we announced a cost reduction programme to deliver the planned £55m savings with £45m of
associated costs. This programme remains on track and we achieved the targeted £35m of savings in FY21 with an
associated cost of £22m that was presented as an adjusting item. We expect the remaining £20m benefit from the
cost reduction programme will be achieved in FY22, with further costs of £23m to be incurred
50
Strategic Report | Financial Review
Adjusted operating profit amounted to £396m including a £3m FX headwind in FY21.
Adjusting items*
Adjusting items were a credit of £124m (FY20: £245m charge).
Adjusting items*
Period ended
£ million
The impact of COVID-19
Inventory provisions
Rent concessions
Store impairments
Government grants
Receivable impairments
Assets under the course of construction impairment
Related other sundry items
COVID-19 adjusting items**
Restructuring costs
Profit on sale of property
BME deferred consideration income
Disposal of beauty business
Adjusting operating items
Adjusting financing items
Adjusting items
27 March
2021
28 March
2020
22
54
47
9
5
–
–
137
(30)
18
–
–
125
(1)
124
(68)
–
(157)
–
(11)
(10)
5
(241)
(10)
–
2
5
(244)
(1)
(245)
* For more details see note 6 of the Financial Statements.
** COVID-19 adjusting item includes a £22m credit (FY20: £68m charge) that has been recognised through COGS relating to
inventory provisions.
The major adjusting items are as follows:
Taxation*
The effective tax rate on adjusted profit increased to
• Impact of the COVID-19 pandemic: the majority of
25.4% (FY20: 22.3%). This was higher than normal
adjusting items relate to rent concessions across
due to COVID-19 impacting the geographical shift in
our retail network and impairment reversals to the
profits towards higher tax jurisdictions. The reported
carrying value of stores and inventory due to
tax rate on FY21 profit before taxation was 23.3%
positive trading in FY21. In addition, COVID-19
(FY20: 27.9%).
related government grants were also treated as
an adjusting item
* For detail see note 9 of the Financial Statements.
• Restructuring costs: £22m related to the
organisational changes announced in July 2020 and
Total Tax Contribution
the final charge of £8m relating to the cost-efficiency
The Group makes a significant economic contribution
programme announced in 2017
to the countries where it operates through taxation,
• Profit on sale of property: relates to the sale of a
either borne by the Group or collected on behalf of
property in France
Adjusted profit before tax*
After an adjusted net finance charge of £30m
and paid to the relevant tax authorities. In FY 2021,
the total taxes borne and collected by the Group
amounted to £335 million. In the UK, where the Group is
headquartered and has significant operations, Burberry
(FY20 £19m), adjusted profit before tax was
paid business taxes of £58 million and collected a
£366m (FY20 £414m).
further £14 million of taxes on behalf of the UK
Exchequer. For further information see burberryplc.com.
* For detail on adjusting items see note 6 of the
Financial Statements.
51
Strategic Report | Financial Review
Cash flow
Represented statement of cash flows
The following table is a representation of the cash flows, excluding the impact of adjusting items, to highlight the
underlying movements.
Period ended
£ million
Adjusted operating profit
Depreciation and amortisation
Working capital
Other
Cash inflow from operations
Payment of lease principal and related cash flows
Capital expenditure
Proceeds from disposal of non-current assets
Interest
Tax
Free cash flow
27 March
2021
28 March
2020
396
277
(25)
29
677
(155)
(115)
27
(27)
(58)
349
433
331
(66)
(73)
625
(244)
(149)
3
(19)
(150)
66
Free cash flow was £349m (FY20 of £66m) and cash
Progressive dividend policy reinstated with the full year
conversion was 111% (2020: 52%) reflecting strong cash
dividend declared at FY19 levels of 42.5p.
discipline. We had the following key flows:
* For a definition of net debt see page 54.
• Working capital saw a £25m outflow. Within this,
inventories reduced 16% in gross terms due to
disciplined inventory control, generating an inflow
Outlook
In our next chapter we will focus on delivering growth
of £21m in the year (FY20 inflow of £27m), with
whilst continuing to enhance the quality of our business.
significantly lower payables outflow more than
Taking FY20 as the base year, we expect revenue to
offsetting higher receivables outflow compared to
grow at a high single digit percentage compound annual
prior year
growth rate at FY21 CER in the medium term. This will
• Lease related payments fell £89m including benefit
be underpinned by the continued outperformance of
of £54m of COVID-19 related rent concessions
full-price sales. We will continue to strengthen brand
• Capital expenditure reduced to £115m (2020: £149m)
equity by exiting markdowns in mainline stores in FY22.
as projects were impacted by the pandemic
This is a headwind against our comparable store sales
• Tax paid reduced to £58m against the prior year in
growth amounting to a mid-single digit percentage in
which payments were elevated mostly due to the
the full year.
accelerated collection by HMRC in the UK
In FY22 adjusted operating margin progression will
Cash net of overdrafts at 27 March 2021 was £1.2bn
be impacted by operating expense normalisation and
(28 March 2020: £0.9bn). We repaid the RCF in
increased investment to accelerate growth, with more
June 2020 and in September issued a £0.3bn
meaningful margin accretion thereafter.
Sustainability Bond after obtaining a public investment
grade credit rating. For short term security, we
We are focused on and continue to invest in our
borrowed £0.3bn under the Government backed CCFF
sustainability and social goals by becoming carbon
during the year, repaying this early in February 2021.
neutral by 2022, championing diversity and inclusion
and positively impacting one million people in the
Our net debt* including reported lease liabilities was
communities in which we operate.
£101m (28 March 2020: £538m). Net Debt / adjusted
EBITDA was 0.1x on a rolling 12 months period
(28 March 2020 0.7x), significantly below our target
range of 0.5x to 1.0x.
52
Strategic Report | Financial Review
Store portfolio*
At 28 March 2020
Additions
Closures
At 27 March 2021
Store portfolio by region*
At 27 March 2021
Asia Pacific
EMEIA
Americas
Total
Directly-operated stores
Stores
Concessions
Outlets
218
11
(15)
214
149
1
(5)
145
54
5
(3)
56
Directly-operated stores
Stores
Concessions
Outlets
97
56
61
214
90
46
9
145
22
18
16
56
Total
421
17
(23)
415
Total
209
120
86
415
Franchise
stores
44
–
–
44
Franchise
stores
7
37
–
44
* Excludes the impact of pop up stores.
Alternative performance measures
Alternative performance measures (APMs) are non-GAAP measures. The Board uses the following APMs to describe
the Group’s financial performance and for internal budgeting, performance monitoring, management remuneration
target setting and for external reporting purposes.
APM
Description and purpose
GAAP measure reconciled to
Constant
This measure removes the effect of changes
Results at reported rates
Exchange Rates
in exchange rates compared to the prior
(CER)
period. It incorporates both the impact of
the movement in exchange rates on the
translation of overseas subsidiaries’
results and also on foreign currency
procurement and sales through the
Comparable
Group’s UK supply chain.
The year-on-year change in sales from stores
sales
trading over equivalent time periods and
measured at constant foreign exchange
rates. It also includes online sales. This
measure is used to strip out the impact of
permanent store openings and closings, or
those closures relating to refurbishments,
allowing a comparison of equivalent store
performance against the prior period. The
measurement of comparable sales has not
excluded stores temporarily closed as a
result of the COVID-19 outbreak.
Full price sales:
Net sales of Group’s directly operated
mainline comparable stores excluding
Markdown sales.
Retail Revenue:
Period ended
YoY%
Comparable sales*
Change in space
FX
Retail revenue
* Includes full-price comp +7%.
27 March
2021
28 March
2020
(9%)*
–
–
(9%)
(3%)
(1%)
1%
(3%)
53
Strategic Report | Financial Review
APM
Description and purpose
GAAP measure reconciled to
Q4 FY21 vs Q4
The change in sales over two years measured
Retail Revenue:
FY19 comparable
at constant foreign exchange rates. It also
sales
includes online sales. The measurement of
comparable sales has not excluded stores
temporarily closed as a result of the
COVID-19 outbreak. This measure
reflects the two year aggregation of the
growth rates.
%change
Reported growth
Comparable sales
Change in space
CER retail
FX
Adjusted Profit Adjusted profit measures are presented
Reported Profit:
Q4 FY21 vs Q4
FY19
(2%)
(5%)
5
0
(2%)
to provide additional consideration of the
A reconciliation of reported profit before tax to
underlying performance of the Group’s
adjusted profit before tax is included in the income
ongoing business. These measures remove
statement on page 224. The Group’s accounting
the impact of those items which should be
policy for adjusted profit before tax is set out in
excluded to provide a consistent and
note 2 to the financial statements.
comparable view of performance.
Free Cash Flow Free cash flow is defined as net cash
generated from operating activities less
capital expenditure plus cash inflows from
disposal of fixed assets and including cash
outflows for lease principal payments and
other lease related items.
Cash Conversion Cash conversion is defined as free cash flow
pre tax/adjusted profit before tax. It provides
a measure of the Group’s effectiveness in
converting its profit into cash.
Net Debt
Net debt is defined as the lease liability
recognised on the balance sheet plus
borrowings less cash net of overdrafts.
Net cash generated from operating activities:
Period ended
£m
27 March
2021
Net cash generated from
592
operating activities
Capex
Lease principal and
related cash flows
Proceeds from disposal of
non-current assets
Free cash flow
(115)
(155)
27
349
28 March
2020
456
(149)
(244)
3
66
Net cash generated from operating activities:
Period ended
£m
27 March
2021
28 March
2020
Free cash flow
Tax paid
Free cash flow before tax
Adjusted profit before tax
Cash conversion
349
58
407
366
111%
66
150
216
414
52%
Cash net of overdrafts:
Period ended
£m
Cash net of overdrafts
Lease liability
Borrowings
Net debt
27 March
2021
28 March
2020
1,216
(1,020)
(297)
(101)
887
(1,125)
(300)
(538)
Adjusted
EBITDA
Adjusted EBITDA is defined as operating
Reconciliation from operating profit to adjusted
profit, excluding adjusting operating items,
depreciation of property, plant and
equipment, depreciation of right of use
assets and amortisation of intangible assets.
Any depreciation or amortisation included in
adjusting operating items are not double-
counted. Adjusted EBITDA is shown for the
calculation of Net Debt/EBITDA for our
gearing ratios.
EBITDA:
Period ended
£m
Operating profit
Adjusted operating items
Amortisation of intangible
assets
Depreciation of property,
plant and equipment
Depreciation of right-of-
use assets
Adjusted EBITDA
27 March
2021
28 March
2020
521
(125)
33
72
172
189
244
26
84
221
673
764
54
Strategic Report | Capital Allocation Framework
CAPITAL ALLOCATION
FRAMEWORK
Burberry’s capital allocation framework is used to prioritise the use of cash generated by the Group. The framework
addresses the investment needs of the business, regular dividend payments and additional returns to shareholders.
The framework also seeks to maintain an appropriate capital structure for the business and a strong balance sheet
with a solid investment-grade credit rating.
Net Debt/Adjusted Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) was 0.1x in
FY 2020/21 (FY 2019/20: 0.7x) on a rolling 12 months period, significantly below our target range of 0.5x to 1.0x.
In September 2020, we went through a formal process to attain a credit rating and Moody’s rated us as Baa2 (stable).
The diagram below summarises the key priorities.
REINVEST FOR
PROGRESSIVE
STRATEGIC
RETURN EXCESS CASH
ORGANIC GROWTH
DIVIDEND POLICY
INVESTMENTS
TO SHAREHOLDERS
1
2
3
4
Capital spend across
Maintain or grow the
Investment in
Review future
store portfolio, including
dividend in pence
inorganic
cash generation to reflect
new space, refreshes
terms year on year.
structural changes
Burberry’s growth,
and refurbishments;
IT infrastructure,
Deliver regular
cash returns to
to our business
activities that
productivity and investment
plans, while taking into
including digital; and the
shareholders.
typically tend to
consideration the external
be infrequent.
environment.
supply chain. Spend
includes investment in
ESG initiatives, for
example, spend incurred
in meeting our
Sustainability Bond use
of proceeds
commitments set out
on pages 92 to 93.
Maintain a strong balance sheet with a solid investment-grade credit rating.
• Review the principal risks of the Group and relevant financial parameters, both historical and projected,
including liquidity, net debt and measures covering balance sheet strength
• These risks and financial parameters are considered by the Board when assessing the viability of the Group,
as set out on pages 140 to 142
Capital structure metrics
Cash
Lease liability
Borrowings
Net debt
FY 2020/21
£1,216m
(£1,020m)
(£297m)
(£101m)
FY 2019/20
£887m
(£1,125m)
(£300m)
(£538m)
The material impact of COVID-19 on our business has required Burberry to protect liquidity during the pandemic. As a
result, a final dividend was not declared in respect of FY 2019/20. During the year we reinvested £115 million into the
business as capital expenditure.
55
Strategic Report | Supporting our Stakeholders during COVID-19
SUPPORTING OUR
STAKEHOLDERS
DURING COVID-19
Ensuring the safety and wellbeing of our colleagues and customers is
fundamental to how we do business at Burberry. In response to the
pandemic, we implemented rigorous safety measures across our
sites and provided additional resources to support our teams.
We also contributed to the relief efforts through donations and
volunteering, as well as expanding our support for young people.
People
The safety and wellbeing of our people remained our
Customers
As the COVID-19 crisis unfolded across the world, it was
highest priority in 2020/21.
clear that mutual support and innovative thinking would
be the cornerstones of our response, both as a business
We closed sites where we were required to under
and a member of the broader global community. We
lockdowns, most notably across the EMEIA region.
leveraged our digital capabilities to stay connected with
Where our sites could stay open, we were scrupulous
our customers by bringing innovative shopping
about putting in place robust measures and ensuring
experiences to them virtually (read more on page 32).
they were adhered to so work could be conducted in a
Our event formats evolved over the financial year to
safe and secure environment. In line with government
include customer participation in virtual product
and health authority guidelines, these included staggered
launches and styling sessions. We redesigned
start and break times to manage social distancing, as
Burberry.com so customers can now explore individual
well as temperature checks and installing additional
products as well as styled looks. We introduced a new
sanitising stations.
chat function so that our online retail teams can help
with styling, sizing and recommendations. This helped
Alongside regular virtual check-ins, during FY 2020/21
our teams to stay connected with their clients and
we came together in less formal ways to share advice on
continue to provide the very best customer service.
working remotely and maintaining wellbeing. This helped
our teams to remain connected during this period of
Where our stores were able to remain open we quickly
uncertainty.
implemented safety measures, including social
distancing, sanitising stations and appointment
Flexibility has been key to meeting the challenges posed
bookings, in line with local government and health
by the pandemic. Outside our normal sick pay schemes,
authority guidelines.
we provided paid leave for colleagues absent due to
being ill with COVID-19 or self-isolating and unable to
perform their work from home. Burberry teams around
Communities
Inspired by Thomas Burberry, we contributed to the
the world also volunteered their time generously,
relief efforts. Early in the year, we retooled our factory in
mobilising to help local communities and charities by
Castleford, Yorkshire to manufacture non-surgical
preparing care packages, delivering meals, stocking food
gowns and we sourced surgical masks through our global
banks and supporting vulnerable neighbours.
supply chain. This amounted to more than 160,000
pieces of PPE that we donated to the UK government
and healthcare charities. We are grateful to the many
colleagues who volunteered to support this initiative
during the national lockdowns in the UK.
56
Strategic Report | Supporting our Stakeholders during COVID-19
In addition, we manufactured a further four million
• The Careggi University Hospital, for the procurement
masks and 50,000 gowns at cost for the UK National
and distribution of surgical-grade masks following an
Health Service.
urgent appeal for PPE by the hospital, which is located
in Florence, Italy
We contributed to the COVID-19 vaccine development
• Oxfam Hong Kong, for the procurement and
and distribution through early donations to the
distribution of non-surgical masks to go to
University of Oxford’s emergency vaccine research and
vulnerable communities struggling to afford the
UNICEF’s COVID-19 Vaccines Appeal.
rising costs of these items, including the
underprivileged and the elderly
We continued our support of registered charities,
• City Harvest and the California Association of Food
including FareShare, The Trussell Trust and The Felix
Banks, to support communities struggling
Project, which are dedicated to tackling food poverty
economically as a result of the pandemic in New York
across the UK. With pressure mounting on food supplies,
City and California, respectively
the charities expanded their efforts to help those
• International Federation of Red Cross and Red
struggling as a result of the outbreak. This included
Crescent Charities (IFCR), to support relief efforts
setting up community produce hubs, delivering food to
in Brazil through the provision of PPE, essential
young people reliant on free school meals and providing
healthcare and social services for local communities
more pre-packed food parcels to help food banks cope
impacted by the pandemic
with increased demand. Burberry’s donation to The Felix
• Médecins Sans Frontières, to aid the procurement of
Project funded the delivery of food equating to
PPE for hospitals in both South Sudan and Somalia
495,000 meals across London, going to those who could
not access basic nutrition.
To support creatives, artists and photographers facing
greater uncertainty during the COVID-19 pandemic, we
commissioned works interpreting our iconic product to
showcase on our Instagram news feed. We launched this
initiative as a way to celebrate and support members of
the creative community. In a twist on our heritage of
discovery and exploration, we also asked artists to
respond to the theme of “Inside Nature” and offer their
take on an outdoor world from within.
The Burberry Foundation
The Burberry Foundation (UK registered charity
number 1154448) launched an emergency relief appeal in
April 2020 to help those working on the front line of the
COVID-19 pandemic and support communities in
need around the world. We launched branded face masks
in August 2020, donating the proceeds directly to
the Burberry Foundation COVID-19 Community Fund. All
monies raised by the fund were directed to support relief
efforts globally, from procuring and distributing surgical
masks, gowns and other protective equipment to
providing funding to food banks and healthcare charities.
The Burberry Foundation COVID-19 Community Fund
released funds to support many organisations, including:
• UNICEF’s COVID-19 Vaccines Appeal, to help ensure
millions of people from vulnerable communities around
the world have equal access to vaccines
• Soong Ching Ling Foundation, to provide poverty relief
plans and services for both the mental and physical
health of those impacted by the pandemic in Beijing
and Wuhan in Mainland China
57
More information on COVID-19 can be found
in the following sections:
Chairman’s letter
CEO’s letter
Strategy
ESG
Stakeholder Engagement
Risk and Viability Report
Corporate Governance
Report
Directors’ Remuneration
Report
See page 6
See page 10
See page 24
See page 60
See page 96
See page 106
See page 146
See page 180
IN THIS
REVOLUTIONARY AGE,
FEW PEOPLE CAN
AFFORD TO BE
CARELESS ABOUT
THEIR CLOTHES
Thomas Burberry
(1835-1926)
58
Strategic Report | Environmental, Social and Governance
ENVIRONMENTAL,
SOCIAL AND GOVERNANCE
At Burberry, our purpose underpins the choices we make
In September 2020, we launched luxury’s first
as an organisation. Enshrined in the statement Creativity
Sustainability Bond to support our goals (see pages 92
Opens Spaces, our purpose is the shared belief that
to 93). We are committed to continuing to invest in
through creativity, we can push boundaries and explore
ESG-related initiatives and raising our ambitions to build
new possibilities for our people, our customers and our
a more sustainable and inclusive future. Pages 60 to 91
communities. Being creatively driven, forward thinking,
in this report provide information on our areas of focus
open and caring, and proud of our heritage are hallmarks
in FY 2020/21. Further information can be found in the
of our organisation at its best. These values have
Corporate Governance Report on pages 146 to 207 and
remained at the core of our brand since Thomas
on Burberryplc.com, which is continually updated with
Burberry founded the Company in 1856.
the latest ESG information and disclosures.
Our commitment to ESG-related matters is the
purest expression of our purpose and values. We are
Recognition
In FY 2020/21, we were recognised for our efforts
committed to building not only a financially stronger
around ESG, with highlights including:
Burberry but also a better company that is a force
for good in the world.
• Dow Jones Sustainability Index: inclusion in the World
and Europe Indices for the sixth consecutive year
Disclosure plays a key role in driving meaningful change.
• FTSE4Good Index: constituent
By learning from others and sharing our progress, we
• Responsibility100 Index: ranked fifth in the FTSE 100
can help drive accountability, for ourselves and for
• Sustainalytics: negligible risk rating, ranked first in our
our industry.
industry (textiles and apparel) and sub-industry
In FY 2020/21, we focused on three areas:
• CDP: A List and achieved the Supplier Engagement
(luxury apparel)
• Creating the conditions for creativity to thrive by
• Included in the Bloomberg Gender-Equality Index 2021
championing diversity and inclusion and ensuring the
• Maintained leading position in FTSE 100 for women in
wellbeing of our people
leadership, as recognised by the final report from the
• Supporting our communities, and particularly young
Hampton-Alexander Review for FTSE 100 companies
Leader Award
people, by providing them with the skills, confidence
and opportunities to succeed
• Creating a more sustainable future for luxury by
reducing our environmental impacts and helping
transform our industry
As we near the end of our latest five-year Responsibility
agenda, we continue to focus our efforts on driving
positive change and building a more sustainable future.
An overview of our Responsibility agenda and targets is
on pages 64 to 65, and more information on these can
be found from pages 74 to 91.
60
Strategic Report | Environmental, Social and Governance
In FY 2020/21 we focused on three areas:
OUR PEOPLE
Fostering creativity
OUR COMMUNITIES
Empowering youth
THE ENVIRONMENT
Building a sustainable future
GOVERNANCE:
STAKEHOLDERS
BOARD
CEO
Nomination
Committee
Remuneration
Committee
Audit
Committee
Sustainability Steering
Committee
Chair – CEO
Attended by Chief
Operations & Financial
Officer (CO&FO)
Risk Committee
Chair – CO&FO
Ethics
Committee
Task Force on
Climate-related
Financial Disclosures
(TCFD) Working Group
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Strategic Report | Environmental, Social and Governance
Contributing to the Sustainable
Development Goals (SDGs)
Burberry’s commitment to sustainability is longstanding,
grounded in the belief that for our future growth we
often work with our peers, sector experts and
non-governmental organisations (NGOs) to achieve
our ambitions.
need to actively address the challenges facing the
Our ESG activity is aligned to the Paris Climate
fashion and luxury industry and the world in which we
Agreement and informed by the United Nations SDGs.
operate. We are dedicated to reducing our environmental
Below are some of the ways we contribute towards
footprint and enabling social progress. Recognising the
these goals:
power of working collaboratively to drive real change, we
Sustainable
Development Goal
Burberry’s ongoing contribution
FY 2020/21 highlights
SDG 1.
Principal Partner of the Living Wage
• The Burberry Foundation COVID-19
No poverty
Foundation and steering group member of the
Community Fund
Global Living Wage Initiative
• The Burberry Foundation programme in
Afghanistan focused on improving the
livelihoods of cashmere goat
herding communities
SDG 2. No
Donations to food charities as part of our
• Donations to FareShare, The Felix
hunger
COVID-19 response
Project and The Trussell Trust
SDG 3. Good
Holistic Global Wellbeing programme, including
• Global Parental Leave Policy with
health and
Mental Health training and Employee
equalised leave for all new parents, Time
wellbeing
Assistance Programme (EAP)
to Change Pledge, funding for University
of Oxford and AstraZeneca COVID-19
vaccine research
SDG 4. Quality
Burberry Inspire UK and New York
• Donated ReBurberry Fabrics to fashion
education
students with the British Fashion
Council
• Supported new youth engagement
programmes, including partnerships
with London Youth, the International
Youth Foundation’s Global Youth
Resiliency Fund and Wide Rainbow
SDG 5. Gender
A skilled and balanced Board, met targets set
• Launched global Diversity and Inclusion
equality
by the Hampton-Alexander Review report for
Policy and strategy
FTSE 100 companies and recognised in the
• Global Parental Leave Policy is equal for
Bloomberg Gender-Equality Index, endorse the
colleagues around the world
UN Women’s Empowerment Principles
SDG 6. Clean
Supply chain water conservation and
• Launched water resilience assessments
water and
sanitation
reduction programme
across the supply chain
SDG 7.
Member of RE100, committed to using 100%
• Renewables currently power 93% of our
Affordable and
renewable electricity by 2022 and encouraging
electricity needs worldwide
clean energy
our suppliers to do the same. Our target is to
• Apparel Impact Institute (Aii) energy
be Net Zero by 2040 and carbon neutral in our
efficiency programme in Italy
own operational energy use by 2022
SDG 8. Decent
UK Living Wage Accreditation and steering
• Maintained pay for all our people
work and
economic
growth
group member of the Global Living
impacted by COVID-19 and provided full
Wage Initiative, The Burberry Foundation
pay during COVID-19-linked absences
programme in Afghanistan, partnership with
• Did not avail of the UK government’s
Year Up in New York
furlough scheme
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Strategic Report | Environmental, Social and Governance
Sustainable
Development Goal
Burberry’s ongoing contribution
FY 2020/21 highlights
SDG 9. Industry,
Core partner of the
• Design innovation, such as 3D model
innovation and
Ellen MacArthur Foundation’s
sampling for products
infrastructure
Make Fashion Circular initiative
• Artificial Intelligence utilised for
product ordering
SDG 10. Reduced
Burberry and The Burberry Foundation
• Launched global Diversity and Inclusion
inequalities
partnerships, including with Oxfam and
Policy
PUR Projet in Afghanistan, Oxfam Italy,
• Included in Bloomberg’s Gender-Equality
Teach First, The Careers & Enterprise
Index 2021 and joined The Valuable 500,
Company and MyKindaFuture, Burberry
Business Disability Forum
Inspire, The Royal College of Art,
• Signatory of the UN Women’s Empowerment
London Youth, Year Up, initiatives to
Principles
support global disability efforts and
LGBTQ+ community as part of the
Diversity and Inclusion strategy,
Cultural Advisory Committee and
Global Living Wage Initiative
SDG 11. Sustainable
LEED and BREEAM compliance in
• Launched luxury’s first Sustainability Bond,
cities and
communities
construction, underpinning the
sustainability and efficiency of our
buildings
which includes green buildings criteria
SDG 12. Responsible
Ellen MacArthur Foundation’s New
• Signature oak paper is made from a
consumption and
Plastics Economy Global Commitment,
minimum of 40% upcycled coffee cups that
production
Sustainable Fibre Alliance (SFA), The
would have otherwise gone to landfill
ZDHC Foundation board member,
• Launched new traceability and sustainable
Canopy, Leather Working Group, Elvis
raw materials targets
& Kresse and Progetto Quid
SDG 13. Climate
Goal to be Net Zero by 2040,
• Carbon-neutral runway shows and events
action
RE100 member, and 100% renewable
since 2019
electricity goal by 2022,
Science Based Targets
• Progress against 100% renewable electricity
commitment (93% achieved in FY 2020/21)
• Advancing our climate change risk reporting
as a signatory of the TCFD
SDG 14. Life below
Signatory to the Ellen MacArthur
• Member of the corporate engagement
water
Foundation’s New Plastics Economy
programme of the Science Based Targets
Global Commitment and CEO is a
for Nature initiative
steering committee member of The
Fashion Pact
SDG 15. Life on land Stretching sustainable materials
• Partnered with PUR Projet to launch a
targets, The Burberry Regeneration
programme aimed at supporting
Fund and our work on sustainable
regenerative agricultural practices
cashmere with the Sustainable Fibre
• Member of the corporate engagement
Alliance (SFA)
programme of the Science Based Targets
for Nature initiative
SDG 16. Peace,
Code of Conduct, Responsible Business
• Celebrated Pride and continue longstanding
justice and strong
Principles, Human Rights Policy and
support for LGBTQ+ communities
institutions
being a signatory to the UN Global
Compact
SDG 17.
Stakeholder engagement
• Supported COVID-19 relief efforts
Partnerships
for the goals
• Signatories of the WWF open letter to
leaders
• Supported the International Labour
Organization’s Call to Action and the UN
Global Compact’s “Recover Better” initiative
63
Strategic Report | Responsibility Strategy
RESPONSIBILITY AGENDA 2017 – 2022
Our goals
P O S I T I V E LY IMPACT 1 MILLION PEOPLE
Support economic
and social empowerment
in remote communities
Tackle educational
inequality and build
cultural capital
Foster community
cohesion and
employability skills
Invent new
approaches
to waste
100% of
energy from
renewable
sources
B
E
C
A
R
B
O
N
N
E
U
T
R
A
L
A
N
D
R
E
V
A
L
U
E
W
A
S
T
E
S
T
C
U
D
O
R
L P
H A
G
U
O
R
H
E T
G
L
Drive energy and
water reduction
and efficiency in our
value chain
Stimulate demand
for sustainable
raw materials
N
SITIV E C H A
O
E P
R I V
D
Drive
resource
efficiency
Advance wellbeing
and livelihoods in
our supply chain
The headings within the Communities pillar have been updated compared to prior year reporting to reflect additional community
programmes (launched after 2017) that fall within the scope of this pillar. The three pillars highlight the overall impact objectives of
the 1 million people goal. Within the product pillar, we have updated the wording to reflect key areas within our product positive
attributes programme.
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Strategic Report | Responsibility Strategy
In 2017, we launched our current Responsibility agenda, comprising a series of
ambitious targets to 2022 across our Product, Company and Communities.
The strategy, developed in collaboration with global innovators and key
stakeholders, aims to address the most material social and environmental
impacts along our value chain.
Our progress
Product
Company
Communities1
• Goal: To have 100% of product
• Goal: To achieve carbon
• Goal: To positively impact
with more than one positive
neutrality in our own operational
1 million people by 2022
attribute by 2022, where
energy use by reducing absolute
• Progress: 680,170^ positively
positive attributes relate to
emissions, improving energy
impacted since the start of the
social and/or environmental
efficiency and switching to
launch of the partnerships in
improvements, achieved at
renewable electricity sources,
FY 2016/17
either raw material sourcing or
before offsetting any remaining
• Goal: Tackling educational
product manufacturing stage
emissions
inequality and building cultural
• Progress: 82% of products
• Progress: 92% reduction in
capital
with more than one positive
market-based emissions since
• Progress: 130,360 in
attribute and 94% with at
base year FY 2016/17
FY 2020/21
least one^
• Goal: To achieve 100%
• Goal: Fostering community
• Goal: To procure 100% of our
renewable electricity by 2022,
cohesion and employability
cotton more sustainably
by 2022 by using a portfolio
driving this through
close collaboration
skills
• Progress: 42,810 in
approach. This includes
with our procurement and
FY 2020/21
working with partners and
retail teams and engagement
• Goal: Supporting economic and
exploring new sources,
including organic and
regenerative cotton
with landlords
• Progress: 93%^
social empowerment
• Progress: 73,189 in
• Goal: To reduce and revalue
FY 2020/21
• Progress: 78%
waste and achieve zero
• Goal: To source 100% of
operational waste to landfill
leather from tanneries with
across key sites. We already
environmental, traceability and
reuse, repair, repurpose,
social compliance certifications
donate or recycle unsaleable
by 2022
• Progress: 80%
products and we will continue
to expand these efforts
• Progress: Zero operational
waste sent to landfill from key
sites^
External assurance of corporate responsibility disclosures
Burberry has appointed PricewaterhouseCoopers LLP (PwC) to provide limited assurance over selected company,
product and community information for FY 2020/21. Information forming part of the assurance scope is denoted
with a ^ on pages 4, 45 and 64 to 93. The assurance statement and Burberry’s basis of reporting are available
on Burberryplc.com.
1. The wording of the three sub-goals underneath the overarching goal “to positively impact 1 million people by 2022”
has been updated to reflect additional community programmes (launched after 2017) that fall within scope of the
pillar. The three sub-goals highlight the overall impact objectives of the 1 million people goal.
65
Strategic Report | Our People
OUR PEOPLE
At Burberry, we are committed to being an open, inclusive and caring employer.
We are united by our shared belief that through imagination, we can push
boundaries and open new opportunities for our people, our customers and our
communities. We embed our values across everything we do.
Our people are the heartbeat of our organisation.
Representing 115 nationalities across 33 countries, we
Engagement
Surveyed in May 2020 when the world was grappling
take a holistic approach to helping them thrive, providing
with the onset of the COVID-19 pandemic, 86% of
them with a range of tools and resources backed up by
respondents to our Employee Engagement Survey
inclusive policies and support for their overall wellbeing.
said they felt Burberry was doing a good job of helping
our people feel connected to one another while
We offer all our people space to express their creativity
working remotely.
as well as opportunities to develop personally and
professionally. We continue to foster a culture where
To ensure feedback remained up-to-date, we replaced
everyone feels they belong, has a voice and can reach
our annual questionnaire with shorter, more frequent
their full potential.
surveys designed to empower leaders with data relevant
to their area of focus throughout the year. Leaders now
We know that inclusion and empowerment at all levels
have access to personalised portals complete with
lay a strong foundation for our colleagues to feel more
suggested action points. We have seen a positive
engaged and committed and be more creative and
response to this new format across the business.
effective in driving results for the business. We have
Over FY 2020/21, engagement levels have remained
codified key behaviours aligned to our values so they
high, with scores matching pre-pandemic levels.
are embedded across the organisation.
The COVID-19 pandemic highlighted how real-time
FY 2020/21 was an unsettling time for many of our
responses to feedback could have an immediate impact
people due to the COVID-19 pandemic. Throughout the
on wellbeing. When we surveyed our people in May about
year, we prioritised their safety and wellbeing, listening
their experiences of moving to remote working, a number
to their concerns, seeking guidance from experts and
of our colleagues identified areas where they could be
ensuring we continued to act with their welfare in mind.
better supported, such as access to additional screens or
As part of measures to ensure the health, safety and
week of receiving this feedback, our IT teams were able
wellbeing of everyone at Burberry, we introduced more
to order equipment and improve working conditions for
suitable desk chairs. Based on this information, within a
flexible work arrangements, recognising that many of our
our teams.
teams have additional caring responsibilities, particularly
those with children. Where our people were in need of
further support, we provided additional paid leave.
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Strategic Report | Our People
Alongside this support, our teams managed to maintain
In 2020, we continued to open conversations around
a sense of community using a variety of communication
mental health. We did this by offering opportunities
tools, including the Burberry World community intranet.
and resources to talk about what wellbeing means to
From Friday night DJ sessions, to calligraphy classes,
Burberry as a company and sharing tools to help our
baking lessons, guided meditation and workout sessions,
colleagues, particularly in stressful periods. This included
a variety of initiatives, many led by enthusiastic
an online Mental Health Awareness course to raise
colleagues, helped to maintain a sense of cohesion and
awareness around common mental health challenges.
continuity during a time of upheaval.
In 2020, Burberry also became a signatory of the Time
Onboarding new team members
At Burberry, we want all our people to feel welcomed
creating a more open and understanding culture within
the workplace. We also have a longstanding partnership
to Change pledge, reaffirming our commitment to
into our community from their first day. Our digital
with the Samaritans.
onboarding experience immerses new starters in the
brand, introduces our purpose and values and provides
an opportunity to connect with Burberry wherever they
Learning and development
We base our learning strategy around providing “just-in-
are in the world. New starters are onboarded online
time” resources to allow people to develop at their
through virtual sessions and a dedicated platform.
moment of need, ensuring our people can quickly and
The site immediately immerses those joining Burberry in
easily find content that will help. We provide tools and
the past, present and future ambitions of the Company.
resources through our B-Learning site and encourage
There are also new starter groups on Microsoft Yammer,
our people to think creatively about how to solve
helping people create communities and build networks as
problems and make things happen.
they join. On our Burberry World intranet, new starters
are directed to a dedicated wellbeing space.
This ranges from launching Burberry’s “4Cs of Remote
Leadership”, which are defined as clarity, communication,
Colleague recognition
In 2021, we transformed our annual Icon Awards into a
collaboration and connections, to publishing an
interactive magazine, creating opportunities to share
fully virtual celebration to connect, reinforce our values,
best practice with peers from across the business. In
celebrate collective achievements and recognise our top
addition, we offered Energy Model workshops to all line
talent. For the first time, nominations were anonymous
managers to help them initiate conversations with their
to remove bias and make the awards more inclusive.
teams about managing energy levels.
Wellbeing
Wellbeing helps our people create open spaces in their
The COVID-19 pandemic has accelerated changes in
consumer behaviour and historical data is not as reliable
lives to care for themselves and each other. In line with
as it was for mapping present or near-future retail
our values, we believe in creating an environment where
patterns. Upskilling our people so that they are equipped
people can bring their best selves to work, share how
with cutting-edge data skills is crucial to help future-
they feel and speak openly about their own health
proof our business. To this end, Burberry was the first
and wellbeing.
British retailer to complete a two-year data upskilling
programme alongside Decoded, a firm specialising in
data skills training. Our people could enrol in our
in-house Data Academy, and take courses in improving
their data skills and techniques.
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Strategic Report | Our People
Career development
Regular feedback and meaningful performance and
Diversity and Inclusion
We believe diversity, equity and inclusion are essential to
career conversations with managers guide meaningful
fulfilling our purpose and are core to our values.
development. These conversations take place quarterly
as part of our annual performance management cycle. In
Our global Diversity and Inclusion strategy is focused on
addition, the My Career site on Burberry World provides
valuing and embracing differences and creating an
our people with career-related tools, resources and
environment where everyone feels they belong, has a
information to help build a successful career at Burberry.
voice, and can reach their full potential. When we do, our
people are more engaged, committed and effective in
We have two specific programmes dedicated to
driving results, we are more successful as an
leadership development. The New Manager Development
organisation, and we make a more meaningful
Programme (NMDP) focuses on the principles of good
contribution to the world around us.
leadership for people managers. Consisting of four
in-depth workshops, it equips managers with information
We define diversity as the unique perspectives and
on refining a management style, driving success within
differences we bring to Burberry and share across the
teams, fostering a high-performance culture and
world. We define inclusion as creating a culture that
managing through change. This also includes equipping
champions these differences and nurtures a sense
leaders to be inclusive managers with the capability
of belonging.
required to foster an open and inclusive environment
for their team and our people.
The Board is responsible for ensuring that, as an
organisation, we live by our purpose and values. We see
In 2021, we refreshed and relaunched our Executive
diversity as a strength and uphold a legacy of inclusivity
Development Programme (EDP), to align closely with
and respect. Supported by the Executive Committee,
our purpose and values. Each module of the programme
our CEO ensures that we create a diverse and inclusive
focuses on one of our values. Some of the modules
culture. To help achieve our diversity and inclusion goals,
build on our existing allyship training to strengthen
our dedicated global Diversity and Inclusion team works
understanding and reaffirm our commitment to
with our people across all parts of the business with a
fostering an inclusive culture, while ensuring we all take
focus on the four strategic pillars of our Diversity and
accountability for diversifying our workplace. This is
Inclusion strategy.
accompanied by three months of executive coaching and
access to insights that give the cohort as detailed a
1. Attracting and retaining diverse top talent
picture of their abilities in different areas as possible.
2. Fostering an open and inclusive culture
3. Educating and raising awareness
Later in 2021, we will roll out a refreshed approach to
4. Implementing a global approach
mentorship with a view to supporting our people to
develop and succeed in their careers at Burberry, as well
The global Diversity and Inclusion Policy sets out our
as piloting a reverse mentoring programme.
commitment to being a world-class employer, where
all of our people can develop their full potential in an
inclusive environment that encourages and fosters
diverse capabilities, skill sets and mindful allies.
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Strategic Report | Our People
Diversity and Inclusion strategy pillars
1. Attracting and retaining diverse talent
2. Fostering an inclusive culture
Creating an environment where everyone feels a sense of
During FY 2020/21 we began piloting anonymous
belonging and receives support for their overall wellbeing
screening, which involves removing identifying details,
is vital to achieving our goals. During FY 2020/21, the
such as names and universities, from applications.
Diversity and Inclusion team hosted Open Forums
The trial aims to test if such an initiative can lead to
globally, starting in the Americas region and then
greater diversity on our candidate shortlists. We are
continuing around the world within each market and
also taking steps to ensure every stage of our broader
function, creating an open space where our people
recruitment process is more inclusive. We have
could share their experiences and offer their
introduced a “gender decoder”, which analyses the
perspectives on making Burberry and the wider
language used in job advertisements to ensure they
fashion industry more inclusive.
are gender neutral. We are including diversity data
monitoring forms in candidate applications. Disclosure is
We introduced a Diversity and Inclusion mailbox on our
on a voluntary basis and data is treated as confidential.
Company intranet, Burberry World, alongside the rollout
As of January 2021, all members of our Talent
ensuring the Diversity and Inclusion team can listen to
of our Diversity and Inclusion strategy, with the aim of
Acquisition team had completed unconscious bias in
and learn from our people.
recruitment training. We have committed to rolling
out additional training for all hiring managers in 2021.
We continued to celebrate cultural moments, including
We use standardised interview questions to ensure
International Women’s Day, Pride Month, Black History
all candidates have an equitable experience.
Month and LGBT History Month, both locally and
To support these actions, we have created a global
such as The Prince’s Trust and Stonewall, we have
diversity dashboard, which displays data holistically
created a global platform to speak about diversity and
and simplifies the process of assessing and measuring
inclusion through these cultural moments, while also
the progress we are making in terms of colleague
continuing to celebrate annual events such as
globally. Through partnering with local associations,
diversity. Our people are able to upload their personal
Christmas, Diwali and Eid.
diversity data within certain parameters, including
gender, disability and religion, through our Connect
As well as reinforcing our existing commitments, we
system. This collated information then populates
have communicated our efforts around areas where
the diversity dashboard, providing key insights to be
we are still early on in our progress, such as disability
shared with our Board bi-annually and our Executive
inclusion. We marked International Day of Persons with
Committee quarterly.
Disabilities as an important moment to recognise how
diversity of thought, experience and voice opens spaces
Increased representation is at the centre of our
for new ideas to thrive. Burberry was among the first of
talent initiatives and we aim to diversify the talent
its peers to join the Valuable 500 and the Business
pipeline in the industry. In 2020, Burberry expanded its
Disability Forum.
creative arts scholarships programme globally to
support the next generation of creative leaders from
3. Education and awareness
underrepresented communities. The scholarships will
As we continue to progress our Diversity and Inclusion
provide more equitable access to creative arts
strategy, providing resources and continuing to raise
programmes at some of the world’s most esteemed
awareness is important for our people and communities,
creative institutions, including The New School’s
and impacts all areas of the organisation. In 2019, all our
Parsons School of Design in New York City, Institut
managers and above, including all store managers
Français de la Mode in Paris and Central Saint Martins in
globally, completed inclusive leadership training, and we
London. The expansion of the creative arts scholarships,
continue to build on our programmes. Our unconscious
together with Burberry and The Burberry Foundation’s
bias training has been translated into nine languages and
existing commitment to its scholarship programme at
is mandatory for all employees, with a specialised version
the Royal College of Art in London, will enable over 50
also provided for all Talent Acquisition partners. In
students to benefit from education programmes in the
FY 2021/22, we are rolling out allyship training across
arts over the next five years and beyond.
Burberry. All our Directors and above have completed
the programme and we aim for all managers to have
completed this training by the end of the financial year.
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Strategic Report | Our People
Set up in FY 2019/20, Burberry’s Internal Diversity and
Inclusion Council was involved in reviewing our global
Gender equality at Burberry
We are firmly committed to achieving gender equality
Diversity and Inclusion strategy. The Council met
across our organisation globally. We have reviewed and
remotely 12 times over FY 2020/21. Our external
implemented policies, programmes and practices to
Cultural Advisory Council, which comprises six external
support this ambition. Burberry maintained a leading
experts and thought leaders from a variety of disciplines,
position in the FTSE 100 for women in leadership for a
convened for the first time in FY 2019/20 and met
third consecutive year, as recognised in the Hampton-
remotely four times over FY 2020/21. In response to the
Alexander Review report, and was included in the
Black Lives Matter movement, and the introduction of
Bloomberg 2021 Gender-Equality Index for the first
Burberry’s first Diversity and Inclusion strategy, the
time, scoring 10 percentage points more than the
Council held livestream talks on topics including
company average.
education, the history of racism, mentoring, role models,
the importance of leadership and what organisations can
We believe designing more inclusive and equitable
do to encourage change. The Council also participated in
policies is key to driving change. Many of our people at
a joint meeting with the Internal Diversity and Inclusion
Burberry balance professional responsibilities with being
Council in November 2020.
caregivers, parents and family members. We aim to
support all our people in developing flexible working
We collaborate with our partners to share resources as
arrangements, so they feel equipped to create the
well. Working with the Stonewall charity, for instance,
balance that is most beneficial to them. In April 2020,
in December 2020 we introduced an update to our
we launched a Global Parental Leave Policy offering all
grooming guidelines for retail colleagues, which focused
our people 18 weeks of parental leave at full pay and the
on gender identity and uniform allocations.
opportunity to work 80% of their normal hours at full
pay for a further four weeks on their return.
The Diversity and Inclusion team works hand in hand
with our marketing teams to respond to queries. We also
Equitable pay is a fundamental commitment at Burberry
created a leadership guide about how to hold meaningful
and central to our drive to attract and retain the
conversations around diversity and inclusion, which was
best talent. Our reward philosophy is to provide
rolled out in July 2020.
competitive remuneration packages to all our people
in line with their level and expertise. This is closely
4. Implementing a global approach
aligned to our performance management processes,
While our ambition is to foster an inclusive culture
focusing on recognising and rewarding our people for
globally, we recognise that one size does not fit all. In
excellent performance.
order to drive meaningful, targeted change, we ensure
our actions are locally relevant and aligned to our global
framework and programmes. This approach will drive
local accountability and impact, providing a balance
between our global strategy and local action plans to
help drive success.
In 2020, all key markets and functions started to develop
detailed action plans based on the global strategy pillars.
Incorporating input from our people, these plans cover
local needs and opportunities for change, applying a local
understanding of the diversity and inclusion landscape
while supporting our overarching global priorities. Each
plan is sponsored by one of our senior leaders, has input
from our Internal Diversity and Inclusion Council and is
regularly monitored to track progress.
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Strategic Report | Our People
Gender equality at Burberry
As of 31 March 2021, the representation of women and men at Burberry is:
Board
Total
Number of women Percentage of women
Number of men
Percentage of men
Executive Committee
Leadership (Director and above)
All workforce
11
287
9,373
3
152
6,282
27%
53%
67%
8
135
3,091
73%
47%
33%
Disability inclusion
As an inclusive employer, ensuring all our people can
These standards were designed to eliminate LGBTI
discrimination in the workplace and beyond. To further
thrive and work in an open and supportive environment
our commitment to this work in our own business and
is important to us. Our inclusive hiring practices include
our wider communities, Burberry supported charitable
giving full and fair consideration to applications from
organisations operating across the LGBTQ+ community:
people with disabilities. We ensure support is in place
UK Black Pride, Stonewall, Global Butterflies and
for people with disabilities throughout their career with
longstanding charity partner, the Albert Kennedy Trust.
Burberry, including for those who have become disabled
during their time with us. As reinforced by our global
Diversity and Inclusion Policy, we have no tolerance for
Being creative allies
By recognising and acknowledging the unique
discrimination at Burberry. Our training programmes
experiences and challenges faced by individuals, we can
are designed to be more accessible for those with visible
create more supportive workplaces. To supplement our
and invisible disabilities, including considerations such
own allyship training, we were one of the first companies
as “alt text”, which is written text accompanying
to sign up to the BBC’s Creative Allies initiative, which
imagery, varying levels of interactivity and adjustments
unites organisations across creative industries to
to font size and contrast. Details of our inclusive
promote the concept of allyship.
hiring approach, Diversity and Inclusion strategy
and development programmes can be found on
pages 69 to 72.
Supporting our communities
We believe it is important to champion our communities
and help build a society where everyone is respected and
Burberry works with two partner organisations to help
valued. In the financial year, we united in solidarity with
make our sites, policies and processes more inclusive of
those standing up against hate and discrimination and
people with both visible and invisible disabilities. We are
we accelerated our efforts to drive meaningful and
the first luxury company to partner with the Business
lasting change. We held open forums to encourage
Disability Forum, a non-profit member organisation
dialogue, shared educational resources for continued
bringing businesses, people with disabilities and
learning and provided additional counselling and support
policymakers together to help make a difference.
for our people. We also introduced training to reinforce
the importance of meaningful allyship.
In addition, we are among the first luxury companies
to join the Valuable 500, the largest network of
Burberry also works with The Prince’s Trust Women
global CEOs committed to disability inclusion in
Supporting Women initiative, a longstanding charity
business, encompassing 55 different sectors and over
partner, enabling hundreds of women to access virtual
12 million colleagues. In partnership with the network,
speed interviews with employers, online courses to
our initial steps include building out our internal
develop employability skills and education support
global disability audit framework to identify where
through the Change a Girl’s Life campaign. We partner
we can take the most impactful action on accessibility
with Investing in Ethnicity on increasing representation
for our retail stores.
Supporting LGBTQ+ inclusion
During Pride in June 2020, we reaffirmed our long-
in business, and engage with the wider industry on
furthering diversity and inclusion in the British luxury
and fashion sector as one of the founding members of
the British Fashion Council’s Diversity and Inclusion
standing support for the global LGBTQ+ community,
steering group.
forging new partnerships and continuing support for
organisations dedicated to driving meaningful change.
Burberry was one of the earliest adopters of the UN
Standards of Conduct for Business, becoming a
signatory ahead of its launch in Europe in 2017.
72
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Strategic Report | Our Communities
OUR COMMUNITIES
Burberry’s history of supporting others is rooted in the altruism of our
founder, Thomas Burberry. Throughout his life, he used his success as a way
to contribute to society. We continue his legacy today, championing our
communities, in particular young people, and working with organisations
making a positive impact around the world.
Since 2017, as part of our current Communities strategy,
Inspired by our work with Marcus Rashford MBE during
we have collaborated with external expert organisations
our festive campaign, the Burberry Foundation deepened
to identify ways to support local communities across our
the impact of the initial donation by supporting London
value chain and deliver our key ambition to positively
Youth to respond to the challenges created by the
impact 1 million people by 2022.
COVID-19 pandemic, focusing on food, education and
mental health support.
In addition to fulfilling our strategic goals, we regularly
review the effectiveness of our programmes, ensuring
the initiatives we develop are impactful and provide the
best resources and support. From the outset of the
Positively impacting 1 million people
by 2022
Burberry donates a percentage of adjusted Group
COVID-19 pandemic, we have worked closely with our
profit before tax to charitable initiatives each year.
partners to adapt our programmes to ensure support is
Independent of Burberry Group plc, the majority of our
directed to where it can most benefit our communities.
philanthropic work is carried out through The Burberry
Foundation (UK registered charity number 1154468).
Although in-person activities were limited this year due
to social distancing restrictions, our people made a
The Burberry Foundation’s mission is to use the power
positive impact in their local communities through virtual
of creativity to drive positive change in global
volunteering and online fundraising projects. The shift to
communities and build a more sustainable future
virtual volunteering allowed our people to harness their
through innovation. Working with leading organisations
professional skills to aid our charity partners from home.
to support communities sustaining the luxury industry
The type of virtual activities delivered include content
makes a significant contribution towards our goal of
creation and live events for youth engagement
positively impacting 1 million people by 2022. Since the
programmes, digital mentoring, team fundraising events,
launch of this target 680,170^ people have been
career coaching and skills-based support sessions for
positively impacted.
charity partners.
During the year, we launched a partnership with London
on projects that tackle educational inequality and build
Youth, which supports a network of over 600 community
cultural capital; foster community cohesion and
youth organisations and creates thousands of engaging
employability skills, and support social and
The three pillars of our Communities strategy focus
opportunities for young people each year. Fifteen youth
economic development.
centres jointly selected by Burberry and London Youth
received donations to ensure their programmes could
Our people can also contribute to our commitments in
continue to make a positive impact in some of London’s
this arena by spending up to three working days a year
most deprived communities across key areas, including
supporting their local communities through corporate
food provision, access to digital resources and activities
and The Burberry Foundation volunteering opportunities.
to help young people stay connected with others in order
In FY 2020/21, over 1,500 Burberry employees
to improve their mental wellbeing. The donations helped
participated in volunteering and fundraising activities
frontline youth organisations playing a vital role in young
and collectively contributed over 6,000 hours to
people’s lives to continue their services and keep their
charitable causes.
doors open.
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Strategic Report | Our Communities
We regularly monitor programme impacts as part of
Monitoring partners include the Office of Research,
quarterly and annual assessments, and beneficiary
Evaluation and Program Support (REPS) of the
numbers are externally assured. The programmes
City University of New York, The Policy Institute at
under each community pillar are monitored and
King’s College London, ARCO (Action-Research for
evaluated by independent organisations to assess
Co-development) at the University of Florence, and
outcomes and impacts and are adapted where required.
Amin Consulting Group.
Impact framework – Positively impact 1 million people
Tackling educational
inequality and building
cultural capital
Fostering community
Supporting social
cohesion and
employability skills
and economic
empowerment
Benefiting 130,360 people
Benefiting 42,810 people
Benefiting 73,189 people
in FY 2020/2021
in FY 2020/2021
Contributing to SDGs:
Contributing to SDGs:
4 and 10
4, 8, 10 and 12
in FY 2020/2021
Contributing to SDGs:
1, 5 and 8
Highlights
Highlights
Highlights
• 70% of the students
• 96% of beneficiaries*
• 95% of herders*
interviewed about their
experience of in-person
activities linked their
participation in the
stated they have better
demonstrated gender
knowledge of the services in
awareness after training,
the community
compared to 79% in the
• 100% of apprentices
baseline study
programme to an increased
developed new technical
• 28% of herders engaged in
sense of self-confidence
skills for employment
the community-owned
• 88% of the students
• 91% of apprentices entered
cashmere groups are
interviewed noted increased
into employment in
women
creativity of one form or
manufacturing, creative
• 136% increase in the volume
another after taking part in
industries or the “Makers
of cashmere collected by
the programme
Movement”
herders*
• 98% of teachers* felt that
their careers guidance and
advice improved as a result
of their engagement in the
programme
Note: Percentages presented above relate to a sample selection of people surveyed from these programmes.
* Denotes the results of a sample of direct beneficiaries surveyed.
Tackling educational inequality and
building cultural capital
At Burberry, we believe diversity of thought, experience
charities Teach First, The Careers & Enterprise
Company and MyKindaFuture, with the goal of opening
up opportunities to young people from disadvantaged
and voice opens spaces for new ideas to thrive, fuelling
communities in Yorkshire, where our iconic Burberry
creativity and enabling us to fulfil our purpose. Part of
Trench Coat is manufactured, and London, where we
the work of The Burberry Foundation is to open career
have our head office.
pathways within the creative industries and unlock
opportunities for young people who may not otherwise
With these programmes, we aim to inspire young people
have had access to or felt equipped to pursue a career
by expanding their career horizons and developing core
in this arena. Over the past four years, The Burberry
employability skills.
Foundation has partnered with leading education
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Strategic Report | Our Communities
During FY 2020/21, 130,360 students and teachers
economic migration. The global COVID-19 pandemic
engaged in a variety of activities, including teacher
has further exacerbated the situation. In the penultimate
training, careers talks, podcasts and inspiration sessions,
year of The Burberry Foundation and Oxfam’s five-year
online creative challenges and learning modules. Many of
collaboration, the programme helped foster
the activities were virtual.
Burberry Inspire
community cohesion and social inclusion among
communities. The programme helps to improve
community members’ understanding of and ability to
Burberry Inspire, which first launched in Yorkshire
access services in the local area, while also facilitating
in 2018 and expanded to New York City in 2020,
integration into the community.
measures the impact that enhancing cultural capital has
on young people’s lives by connecting eminent arts
During FY 2020/21, the programme ran school
organisations with schools. Both programmes are
mentoring schemes both online and in person in seven
independently evaluated by our research partners, REPS
Tuscan schools. It provided training for teachers on
of the City University of New York and the Policy
introducing a new style of inclusive teaching to their
Institute at King’s College London, to study the impact
classes. The Burberry Foundation also partnered with
of the immersive arts and creative education programme
four local community centres to help them to expand
on students’ development for the purpose of supporting
their day-to-day services. During FY 2020/21, the
longer-term adaptation within schools.
community centres were able to continue running
The global pandemic resulted in school activities turning
engagement helped to provide students with educational
to online platforms, which offered a unique opportunity
support during the pandemic. In the summer months, the
for our Burberry Inspire programme partners in the UK
community centres took to the outdoors to ensure young
and the USA to widen their reach by collaborating
people could continue to interact and socialise after
after-school clubs by switching to a digital format. This
together and allowing students to interact with partner
months of social isolation.
schools abroad. An example of this was the first
collaboration between American Ballet Theatre and
The network of community facilitators as part of the
Northern Ballet on student choreography direction,
programme enabled Oxfam to reach the most vulnerable
resulting in the creation of four dance films performed
community members within the year. Twelve facilitators
by the companies’ dancers. The organisations worked
provided vital support over the phone, online and in
with students online, enhancing their communication,
person where possible. A new community help desk was
leadership, creative-thinking and problem-solving skills.
set up during the year, specifically focusing on young
In total 15 schools participated in the programme and
people, providing careers advice and employability
7,485 students benefited during FY 2020/21.
services. Overall, 37,035 community members benefited
from these activities in FY 2020/21.
• 70% of the students interviewed about their
experience of in-person activities linked their
Oxfam Italy
participation in the programme to an increased sense
• 96% of beneficiaries* stated they have better
of self-confidence
knowledge of the services in the community
• 88% of the students interviewed noted increased
• 96% of beneficiaries* stated they feel able to access
creativity of one form or another after taking part in
services in the community
the programme
• 100% of community centre operators state the
• 98% of teachers* felt that their careers guidance and
community centre was able to attract a wider and
advice improved as a result of their engagement in the
more varied audience
programme
Fostering community cohesion and
employability skills
The Florentine area of Italy, which has a long tradition of
creativity and craftsmanship, is renowned for its
production of garments and luxury leather goods. It is a
key manufacturing location for Burberry and is where
Burberry Manifattura, our leather goods centre of
excellence, is located. In recent years, the region has
faced challenges from youth unemployment and
* Denotes the results of a sample of direct
beneficiaries surveyed.
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Strategic Report | Our Communities
The Burberry Foundation also has two programmes
focusing on employability through engagement with the
circular economy. Their aim is to support the
Supporting social and economic
empowerment
As the world’s third-largest producer of cashmere fibre,
communities that sustain the luxury industry while also
Afghanistan is a key sourcing region for the luxury
tackling the industry’s systemic waste issue. Our
fashion industry, despite the country’s ongoing armed
programme partners are two innovative social
conflict and extreme poverty. Launched in FY 2017/18,
enterprises, Elvis & Kresse and Progetto Quid. Elvis &
the programme, developed in partnership between The
Kresse is a B Corporation dedicated to giving raw
Burberry Foundation, Oxfam and PUR Projet, aims to
materials a new life and is committed to transforming
improve the livelihoods of Afghan cashmere herding
perceptions of waste and inspiring people to protect the
communities by helping them to develop a more
environment. Progetto Quid addresses the challenge of
sustainable and inclusive cashmere industry in the
excess fabric in the fashion industry while also providing
country. Key measures of success for the programme
disadvantaged people with training opportunities,
include cashmere and other livestock production per
apprenticeship programmes and direct employment. The
herder, as well as the price-adjusted income per goat.
programmes provide opportunities for vulnerable and/or
In addition, other metrics are monitored in relation to
under-skilled people to learn a new craft and develop
improved levels of gender awareness and awareness
workplace skills, which will help secure long-term
of improved animal husbandry and cashmere
employment either within the creative industries or
harvesting practices.
within other sectors.
One aspect of this initiative is a training programme
In addition, Progetto Quid goes beyond employability
developed to help raise herders’ awareness of cashmere
skills by addressing the welfare needs of highly
harvesting best practice and herding techniques to
vulnerable people. It provides the security of a stable
enhance their income. Training on sustainable pasture
environment and support in procuring official
management and responsible farming techniques aims to
documentation, both fundamental to ensuring vulnerable
prevent overgrazing and desertification. This helps to
individuals have an identity and a place within society.
build the awareness communities need to cope with the
future impacts of climate change. Through the medium
During FY 2020/21, 48 people benefited from
of a radio drama and public service announcements,
employability programmes through engaging with the
information is shared to help herding communities
circular economy.
Elvis & Kresse
improve their livestock management practices and, for
goat herders, the quality of their cashmere. Educational
public service announcements are also broadcast, which
• 100% of beneficiaries* had an improved knowledge
provide key information on goat health.
of leather manufacturing and the circular economy
• 91% of apprentices entered employment in
Since opening in FY 2018/19, a goat breeding facility has
manufacturing, creative industries or the
hosted more than 210 superior quality cashmere goats
“Makers Movement”
Progetto Quid
and resulted in the breeding of more than 500 new
goats. Thirty-nine elite bucks, which produce higher-
quality cashmere, have been distributed to herders in
• 100% of beneficiaries improved employability related
villages to pilot a breeding programme with the aim of
skills, including communication and problem solving
improving the genetic variety of goats at village level.
• 100% of beneficiaries improved their proficiency in the
The programme has also established community-owned
Italian language
producer groups for collective gathering and selling of
• 17% of beneficiaries obtained documentation to
cashmere, enabling herders to bargain for better prices
prolong their permits as legal residents and workers
for their cashmere. Since the start of the programme,
in Italy
the midline impact assessment has shown that
production of cashmere and of meat has increased for
the herders involved in the programme.
* Denotes the results of a sample of direct
beneficiaries surveyed.
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Strategic Report | Our Communities
Through its holistic approach and complementary
Our people worldwide are offered three working days a
activities, the programme contributes to five of the UN’s
year to volunteer in their local communities. During
SDGs: SDG 1 – No poverty, SDG 8 – Decent work and
FY 2020/21, employees dedicated approximately 6,000
economic growth, SDG 9 – Industry innovation and
hours. Employees can also apply for match-funding for
infrastructure, SDG 17 – Partnership for the goals, and
team fundraising activities.
SDG 5 – Gender equality. Women are empowered to
participate in cashmere harvesting and to have a
Our in-kind donations range from one-off gifts of
leadership position within the community-owned
non-trade mark fabric and materials to assist young
producer groups. Currently 28% of the herders engaged
people on creative courses, such as our ReBurberry
in the community-owned groups are women. Since the
fabric, to donations of smart business clothing to
start of the programme, levels of gender awareness
support vulnerable people enrolled in employability
have increased among the direct beneficiary community,
programmes. In FY 2020/21, we donated over 14,000
from 79% at the start of the programme in 2017 to over
items of business clothing to selected charities to
95% in 2020.
enhance their employability programmes and help
provide their clients with an extra boost of confidence
Vets, who travel round on motorcycles, have received
as they prepare to enter or re-enter the job market.
additional training through the programme. Supporting
the herding communities, they have treated and
Charitable spend
vaccinated over 233,741 cashmere goats and 264,203
other livestock. The support provided to local vets and
provision of medicine for livestock has been a successful
aspect of the programme. Beneficiaries in Herat and
Balkh credited this element of the programme with
making goat herding more profitable.
Collaborating across the supply chain, the programme
has started to establish stronger links within the global
apparel industry. Communicating the work of the
programme with other brands, cashmere sellers and
spinners is not only helping to align the industry to a
common goal, but also providing valuable insight for
Afghan producers into the specific quality requirements
of potential business partners. With this knowledge,
Community investment1
Campaign-related charitable donations2
Charitable donations3
33%
51%
16%
herders can produce more desirable and better-quality
1. Long-term community investments, including our annual
cashmere, which can be sold at better and fairer prices.
donation to The Burberry Foundation
Oxfam and PUR Projet in Afghanistan
donations
• 28% of herders engaged in the community-owned
3. One-off donations, including exceptional COVID-19 relief
2. Sponsorship of events and other campaign-related charitable
cashmere groups are women
donations
• 136% increase in the volume of cashmere collected
reported by herders*
• 95% of herders* demonstrated gender awareness
after training, compared to 79% in the baseline study
Community investment allocation
Since 2010, Burberry has had a policy to donate 1% of
Group adjusted profits before tax (PBT) to charitable
causes. In FY 2020/21, this, together with exceptional
donations made to the COVID-19 relief efforts,
amounted to 1.13% of adjusted PBT to charitable causes.
* Denotes the results of a sample of direct
beneficiaries surveyed.
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Strategic Report | Our Communities
Human rights statement
We respect and uphold human rights wherever we
operate and are aware that risks can arise in relation to
For each assessment, key findings and mitigation plans
were reviewed by external experts.
our own workforce, our supply chain, our communities
In FY 2020/21, our Human Rights Impact Assessment
and customers. Burberry’s Human Rights Policy sets out
highlighted increased risk in relation to the COVID-19
our procedures to uphold human rights across these
pandemic, particularly in relation to workers’ health
stakeholder groups, and the mechanisms we use to
and wellbeing.
identify and address any instances of potential
infringement. The policy was developed with reference to
During ethical trade audits and as part of our broader
the International Bill of Human Rights and follows the
Responsibility programme, we conduct interviews with
UN Guiding Principles on Business and Human Rights for
workers to better understand their needs and
the implementation of the UN’s Protect, Respect and
perceptions, while gathering insights into the direct and
Remedy framework. Responsibility for the policy lies with
indirect impacts of our business and developing focused
Burberry’s CEO. To ensure compliance with the policy,
mitigation plans where required. We also provide
we assess human rights impacts and monitor labour
grievance mechanisms for our global employees, as well
conditions across our own operations and extended
as confidential hotlines run by NGOs for workers in our
supply chain on a regular basis through our ethical
supply chain. Currently, more than 16,000 workers
trading programme, which is delivered by an established
across 34 factories in our third-party supply chain are
global team of ethical trading experts. Details of the
provided with improved access to remedy and
programme and a full copy of our Human Rights Policy
confidential support, including advice and information on
can be found on Burberryplc.com.
workers’ rights and wellbeing. The effectiveness of these
hotlines is regularly reviewed. During FY 2020/21,
We conduct a Human Rights Impact Assessment every
Burberry-sponsored hotlines received 529 calls and
two years as part of our broader Human Rights due
their resolutions have been monitored closely by our
diligence process to confirm potential areas of risk,
Responsibility team. Supporting our human rights
capture any emerging risks in relation to new operations
commitment is our Modern Slavery Statement. This is
and projects, and review and develop mitigation plans as
published in line with the UK Modern Slavery Act and
required. We have completed four impact assessments
can be found on Burberryplc.com.
since 2014 and our latest assessment took place within
FY 2020/21.
The Human Rights Impact Assessment process involves
mapping our own operations and those of our extended
supply chain, and assessing them in terms of their
potential impact on human rights as set out in the
Universal Declaration of Human Rights.
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Strategic Report | The Environment
THE ENVIRONMENT
Creativity is the thread that connects Burberry’s past with its future. Guided
by our purpose, we are creating the next generation of sustainable luxury for
our customers and helping transform our industry.
We recognise that the long-term success of our business
Our Responsibility team of more than 30 in-house
depends on investing in the environmental sustainability
sustainability experts has been working on our
of our operations, the resilience of our supply chains and
environmental and social programmes for more than
our management of climate change impacts. Our future
15 years. The ambitious targets that underpin our
depends on it.
mission are set out in our latest five-year
Responsibility agenda through 2022.
We are actively working to reduce our environmental
footprint and meaningfully support our global
We are on track to achieve 100% renewable electricity,
communities, while seeking to transform our industry.
a carbon neutral footprint across our own operational
Drawing on our heritage of exploration and guided by
energy use, and for every luxury product we offer our
our purpose, we are pushing boundaries, setting leading
customers to have more than one positive environmental
standards and pioneering innovative solutions to create
or social attribute.
real system change.
Expanding on our existing goals, we are transitioning
towards a Net-Zero future and ensuring that we
consciously craft our collections.
A NET-ZERO FUTURE
Industry-leading climate change initiatives
• Net-Zero by 2040
• Carbon neutral across our own operational use by 2022
• Use 100% renewable electricity by 2022
• Science Based Targets across scope 1, 2 and 3 emissions
• Balance emissions through The Burberry Regeneration Fund
CONSCIOUSLY CRAFTED
100% of products with more than one positive attribute
COLLECTIONS
by 2022
• Measuring the positive impact our collections have on the
environment and people
Sustainable materials
• Ensuring all key materials are 100% traceable by 2025
• Ambitious targets to source more sustainable cotton, leather
and wool, as well as recycled polyester and nylon
• Sustainable packaging
Caring for our supply chain
• Respecting and safeguarding the rights of everyone in our
supply chain
Restore and repair
• Specialist aftercare services to extend the life of products
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Strategic Report | The Environment
Collaborating to achieve a more sustainable future
Responsibility governance
We recognised the power of working collaboratively to
Our Responsibility agenda is front of mind for senior
drive real change. We work with our peers, NGOs and
leaders across our teams, ensuring that we are making
governments to unlock sustainable solutions that can
decisions with consideration for their departments’
help activate and scale change in our industry.
environmental and social impacts. Progress is reviewed
Our Responsibility agenda contributes to a range of the
times per year, chaired by our CEO.
United Nations SDGs. Our contribution towards these
goals is outlined on pages 62 to 65.
Progress is shared regularly with the Ethics Committee,
In September 2020, we were the first among our
external advisory forums, comprising independent
Risk Committee and the Board, and reviewed by our
by the Sustainability Steering Committee at least three
luxury peers to issue a Sustainability Bond, enlisting
external experts.
the support of investors to finance ambitious
sustainability projects. More detail on this can be
The implementation of our strategy is overseen by our
found on pages 92 to 93.
Responsibility team of more than 30 in-house
sustainability experts.
Our people play an important role in delivering our
Responsibility strategy, from driving energy efficiency
and reductions across our operations to working closely
with our supply chain partners to minimise our impact
when we source raw materials and create our products.
We are a member of several leading forums, where we share our experiences and collaborate with others to
adopt more sustainable ways of working, as well as learn from innovators within and outside our industry.
These include:
A4S Accounting for
Sustainability
Canopy
Leather Working Group
Race to Zero
RE100
Science Based Target
Network
Sustainable Fibre Alliance
Textile Exchange
The Ellen MacArthur
Foundation’s Make Fashion
Circular initiative
The Fashion Pact
The Living Wage
Foundation and The Global
Living Wage Initiative
The ZDHC Foundation
UN Fashion Industry
Charter for Climate Action
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Strategic Report | The Environment
A Net-Zero future
We are proud of our climate change initiatives, which
Balancing emissions
Rather than only purchasing offsets to cancel out our
are continually evolving as we find new ways to address
impact, we also invest in insetting projects, reducing our
the challenges posed by the climate emergency.
emissions and storing carbon at source in our own
We aim to be Net-Zero by 2040 and achieve carbon
supply chain.
neutrality in our own operational energy use by 2022. We
Through The Burberry Regeneration Fund, we support
are on track to achieve this by reducing absolute
a portfolio of carbon insetting and verified carbon
emissions, improving energy efficiency and switching to
offsetting projects, which enable us to store carbon,
renewable electricity sources, before offsetting any
promote biodiversity, facilitate the restoration
remaining emissions. All our events, including shows and
of ecosystems and support the livelihoods of
presentations, have been certified carbon neutral
local producers.
since 2019. We have reduced our market-based
emissions by 92% since 2016.
For our inaugural pilot project, we have partnered with
PUR Projet to design and implement regenerative
Underpinning our ambition to achieve a Net-Zero future,
agricultural practices with wool producers in our supply
we have Science Based Targets across our scope 1 and 2
chain in Australia. The project will work at farm level to
emissions (in our own operations and indirect emissions
improve carbon capture in soils, improve watershed and
from our energy use), aligned to the Paris Agreement
soil health, and promote biodiverse habitats.
1.5°C pathway and scope 3 emissions (across our
extended supply chain). We aim to:
Promoting renewables
• Reduce our absolute scope 1 and 2 GHG emissions
and currently source 93%^ of our electricity from
by 95% by 2022
renewable sources. We are on track to achieve our
This target focuses on emissions from our direct
target of using 100% renewable electricity in our own
We are passionate advocates of renewable energy use
operations, including electricity and gas consumption
operations by 2022.
in our stores, offices, internal manufacturing and
distribution sites. This target is consistent with
We are an active member of RE100 and have been
reductions required to keep global warming to 1.5°C,
recognised in the 2020 CDP A List and Supplier
the most ambitious goal of the Paris Agreement.
Engagement Leaderboard for our success in stimulating
• Reduce our absolute scope 3 GHG emissions by 30%
supply chain. We continued to promote the use of
by 2030
renewables in our supply chain by creating a bespoke
This target relates to indirect emissions in our
renewable energy guide for our Italian suppliers.
demand for renewable energy throughout our global
extended supply chain, which includes impacts from
the sourcing of raw materials and the manufacturing
Influencing suppliers
of finished goods.
Ensuring our supply chain partners share our ambition
for a Net-Zero future is crucial to achieving meaningful
Both targets are set against a 2016 base year.
change at scale. In January 2021, we launched a
To date, in line with our Science Based Targets, we have
Institute (Aii) to establish a platform for Italian
reduced our scope 1 and 2 emissions by 84% compared
manufacturers to coordinate, fund and scale
to FY 2016/17 and reduced our scope 3 emissions from
environmental programmes with measurable impact.
purchased goods and services by nearly 8,700 tonnes.
Working alongside two fellow luxury brand partners,
programme in partnership with the Apparel Impact
the initiative demonstrates a shared ambition to
pursue a collective mission to make fashion’s supply
chains more sustainable.
We support UN Climate Change’s efforts in the fashion
industry. On the Manufacturing and Energy Working
Group, we contributed to the development of online
climate action training for the fashion industry’s
supply chain.
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Strategic Report | The Environment
Global GHG emissions
Current reporting year 20/21
Reporting year 19/20
Reporting year 18/19
Global
UK and offshore
only
Global
UK and offshore
only
Global
UK and offshore
only
Total energy including: purchase
of electricity, the operation of any
facility, combustion of fuel for
facilities and vehicles / kWh
Combustion of fuel and operation
of facilities (Scope 1) / tCO2e
Combustion of fuel use from
owned or leased transport
(Scope 1) / tCO2e
Electricity purchased and used for
operations (Scope 2) / tCO2e
Total emissions location based
(scope 1 & 2) / tCO2e
Electricity purchased and used for
operations (Scope 2, market-
based) / tCO2e
Total emissions (Scope 1 & 2,
market-based) / tCO2e
Total emissions offset by Verified
Emissions Reduction Certificates /
tCO2e
Location-based tCO2e per
£1,000,000 sales revenue
% of energy from renewable
63,293,411^ 20,826,276
70,316,810 23,432,093 77,307,069
21,293,761
2,089^
1,478
2,061
1,581
2,155
1,487
66
0
78
5
85
2
20,582^
2,934
22,661
3,400
25,298
3,793
22,737^
4,412
24,800
4,986
27,539
5,281
1,879^
0
3,122
0
12,086
60
4,034^
1,478
5,261
1,586
14,327
1,549
2,089^
1,478
1,072
9.7^
n/a
9.4
815
n/a
377
10.1
0
n/a
sources
76%^
61%
82%
81%
58%
78%
Note: Burberry applies an operational control approach to defining its organisational boundaries. Data is reported for sites where it is
considered that Burberry has the ability to influence energy management. Data is not reported for sites where Burberry has a physical
presence, but does not influence the energy management for those sites, such as a concession within a department store. Overall, the
emissions inventory reported equates to 98% of our net selling space square footage. The Company uses the Greenhouse Gas Protocol
(using a location and market-based approach to reporting scope 2 emissions) to estimate emissions and applies conversion factors
from Defra, IEA and RE-DISS. All material sources of emissions are reported. Refrigerant gases were deemed not material and are not
reported. Market-based emissions for the UK relating to electricity purchased and used for operations (Scope 2) is stated as 0 due to
100% of UK electricity being procured from renewable sources. Combustion of fuel use from owned or leased transport is reported
from FY 2018/19 onwards. Burberry has updated GHG data for FY 2019/20 and FY 2018/19 to account for updated emission factors
and improvements in data availability and estimation methods. GHG emissions data reported is based on the period 1 April 2020 to
31 March 2021. For the avoidance of doubt, the company’s financial accounting period is from 31 March 2020 to 27 March 2021.
However, references to FY 2020/21 for the selected KPIs included in the Responsibility section of Burberry’s Annual Report 2020/21
refer to the period 1 April 2020 to 31 March 2021.
Principle measures taken for increasing operational energy efficiency
At Burberry, to achieve our climate-related goals we focus on energy efficiency first and foremost. To manage our operational energy
efficiency we set annual energy reductions targets to drive behaviour change. We drive energy efficiency across our stores by instilling
good practice behaviour and installing more efficient lighting systems at our new and refurbished stores. We then reinvest savings into
renewable energy procurement, before finally offsetting any remaining emissions.
Further information about Burberry’s basis of reporting is available on Burberryplc.com.
^ Please see page 65 for details on external assurance.
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Strategic Report | The Environment
Consciously crafted collections
Measuring positive change
To reach our goal of ensuring 100% of our products have a positive
social or environmental impact, we focus on driving improvements
at the raw material sourcing and product manufacturing stages.
These positive attributes can range from the amount of organic
content or recycled fibres used in materials or the delivery against
carbon emission reductions at production facilities, to workers
being paid the living wage or being supported through wellbeing
programmes. In FY 2020/21, 94% of Burberry products had at
least one positive attribute and 82% had more than one^.
Some of the steps we take along our supply chain to ensure we are
driving positive change include:
1. THOUGHTFUL
DESIGN
2. SUSTAINABLE
MATERIALS
3. CARING FOR OUR
SUPPLY CHAIN
4. CHANGING
INDUSTRY USE OF
WATER AND
CHEMICALS
5. MINIMISING
WASTE
6. SUSTAINABLE
PACKAGING
7. RESTORE AND
REPAIR
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Strategic Report | The Environment
1. Thoughtful design
By designing with our sustainability ambitions in mind,
Spotlight on sustainable materials
• Cotton: We source 78% of our cotton* more
we can ensure that our products are consciously crafted,
sustainably by using a portfolio approach and are
minimising our environmental impact and creating
exploring new sources, including organic and
opportunities for our global communities.
regenerative cotton. This year, we formalised our
ambition around organic cotton, with a target to
We are engaging our creative community through
source 100% certified organic cotton by 2025.
training on circular design and have hosted a range
Certified organic cotton is traced through the supply
of product disassembly workshops to help teams
chain and has many environmental and social benefits,
better understand how the lives of our products can
promoting soil health, supporting biodiversity and
be extended.
safeguarding farmers
• Cashmere: As part of our longstanding partnership
As a core partner of the Ellen MacArthur Foundation’s
with the SFA, in FY 2020/21 we participated in a pilot
Make Fashion Circular initiative, we helped shape the
project with our cashmere scarf supplier, Johnstons of
vision for circular fashion and have contributed to its
Elgin, which will result in fully traceable and SFA-
Circular Design Guide for Fashion, a valuable resource
certified cashmere fibre being used in our products
for the fashion and textiles industry.
• Leather: We source 80% of our leather* from
2. Sustainable materials
Our collections feature high-quality and sustainably
tanneries with environmental, traceability and social
compliance certifications, with a target to extend this
across 100% of our leather by 2022. In line with our
sourced materials. Through our use of these materials
support for the TCFD, we have assessed our leather
and engagement with suppliers, we also stimulate wider
supply chain and modelled the impact that climate
demand across our industry for materials that are less
change risks could have on our operations and supply
impactful on the environment.
chain across various temperature increase scenarios.
We have a series of ambitious targets to achieve
disclosures on pages 133 to 137
For more information, please see our TCFD
this aim:
• Viscose: We collaborate with Canopy, an NGO working
to protect the world’s forests, species and climate by
• Ensure all key materials are 100% traceable
collaborating with business leaders, scientists and
by 2025, supported by our use of certified materials
decision-makers. We use Canopy’s Hot Button Report,
where the country of origin is verified and disclosed.
a fibre sourcing analysis tool, and are working directly
We will achieve traceability to a minimum of country
with suppliers and producers to ensure we only source
level for key raw materials
viscose from responsible sources
• Source 100% certified recycled nylon* and recycled
polyester* by 2025, where nylon or polyester is the
product’s main material
• Source 100% certified wool* by 2025, supporting
certifications that uphold the highest animal welfare
standards
• Source 100% certified organic cotton by 2025,
which holds environmental and social benefits and is
traced through our supply chain via a chain of custody.
This builds on our target to source 100% of our cotton
more sustainably by 2022
• Source 100% of our leather* from certified
tanneries by 2022, with environmental, traceability
and social compliance certificates
* Denotes where the material referenced is referring to the
product’s main material.
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Strategic Report | The Environment
3. Caring for our supply chain
We are open, caring and committed to respecting and
safeguarding the rights of everyone in our supply chain.
4. Changing our industry’s use of water
and chemicals
We are mindful of how we use water throughout our
In order to ensure we are having a positive impact on the
supply chain. We track and promote management
people touched by our global business, we work closely
practices and technologies that facilitate water recycling
with our supply chain partners to promote ways of
and use water-efficient materials. CDP rated Burberry
working that reflect our values.
A- for water security in 2020.
We continually assess human rights risks and labour
We prohibit the use and release of unwanted chemicals.
conditions across our supply chain as part of our ethical
As a Board member of The ZDHC Foundation, we
trading programme, which has been in place since 2004.
guide luxury peers, third party suppliers and external
We require all our suppliers to meet international labour
chemical experts to devise innovative solutions to ensure
standards and local laws and agree to our Responsible
effective chemical management across the fashion and
Business Principles. Measures including announced and
textiles industry.
unannounced audits, training and improvement
programmes, and interviews with people working in our
As a Board member of The ZDHC Foundation, we
supply chain, to help us to ensure our third-party
steer luxury peers, third-party suppliers and external
suppliers are aligned to our expectations.
chemical experts to devise innovative solutions to
address this issue.
We believe that everyone should have access to fair and
responsible employment. To support this, we are an
accredited UK Living Wage employer, a Principal Partner
of the Living Wage Foundation and are on the steering
group of the Global Living Wage Initiative, which aims to
provide a global living wage standard.
We make clear to all our suppliers that any form of
modern slavery, including forced, bonded or involuntary
prison labour, is not permitted. We provide training on
identifying risks of modern slavery to our employees and
partners to support this. More information can be found
in our Modern Slavery Statement on Burberryplc.com.
During the financial year, we supported our supply chain
partners through the challenges presented by the
COVID-19 pandemic. We implemented an Infection
Control Management Policy to support our partners in
providing safe working environments. We also conducted
training with the support of external providers on how to
operate a COVID-19-safe environment.
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Strategic Report | The Environment
5. Minimising waste
We seek to minimise waste at all stages of our value
6. Sustainable packaging
All Burberry retail bags and boxes are reusable and
chain. We follow clearly defined waste hierarchy
recyclable, and certified by the FSC.
principles. Where we have unsaleable goods, we reuse,
repurpose, donate or recycle them.
Our signature oak paper is made from a minimum of
40% upcycled coffee cups that would have otherwise
In FY 2020/21, we launched reusable, customisable
gone to landfill. Since February 2019, 66 million cups
accessories pop-ups. Modular installations with
have been upcycled into Burberry packaging. Our
interchangeable parts, the pop-ups build on Burberry’s
products are transported on recyclable hangers and in
legacy of innovation and creativity. In each location, the
garment bags made from 100% recycled polyester.
reusable building blocks were assembled in a unique way
to create a beautiful set-up that adapted to fit each
Eliminating unnecessary single-use plastic packaging is a
space. The travelling pop-ups made their way
priority for us. As a signatory of the 2025 New Plastics
across 39 different locations.
Economy Global Commitment, we have pledged to
eliminate unnecessary and problematic plastic; use 100%
We launched ReBurberry Fabric, a pilot programme in
reusable and recyclable plastic; and use at least 20%
partnership with The British Fashion Council, to donate
recycled content across all own-branded plastic
leftover fabrics to fashion students. During the year, we
packaging by 2025.
donated 7,125 metres of fabric, benefiting 33 schools.
We also partner with Alta Scuola di Pelletteria Italiana,
7. Restore and repair
We know that the enduring quality of Burberry pieces
a leather school, and San Patrignano, an organisation
means their appeal and value is long-lasting. This, along
supporting marginalised young people. In 2020, the
with our mission to build a more sustainable future, led
school trained San Patrignano residents in leather
us to launch a luxury aftercare service to extend the life
goods disassembly and repurposing using excess
of our products.
Burberry materials.
For the first time, we have also launched dedicated
We continue to donate products and raw materials to
aftercare spaces in stores in London and Paris. Building
various charities, design schools and colleges globally,
on our existing repair service, we piloted a new Trench
including the Royal College of Art, the Manchester
Refresh programme in London, inviting clients to a
Fashion Institute and the British Fashion Council. We
Trench diagnostic session with one of our in-house
have also funded a two-year research project with The
experts. As part of this offering, we introduced a new
Hong Kong Research Institute of Textiles and Apparel
reproofing solution for our gabardine Trench Coats that
(HKRITA) to design a post-consumer leather goods
is kinder to the environment, and expanded our repair
recycling system.
and replacement capabilities. We also launched a pilot
of our Leather Restore service globally, offering
complimentary leather conditioning to extend the life
of Burberry bags.
91
Strategic Report | Sustainability Bond
SUSTAINABILITY
BOND USE OF PROCEEDS
REPORT
Burberry is committed to using its position and influence to
The Sustainability Steering Committee was established
drive social and environmental improvements and foster
in 2019 to review and oversee the Group’s strategy on
sustainable innovation in the value chain, from the sourcing
environmental and social issues related to our supply
of raw materials to the manufacturing of finished products
chain. The Sustainability Steering Committee convenes
and distribution through our stores and wholesalers. We
at least three times a year and is chaired by the CEO,
are also committed to enlisting the support of investors in
who is accountable for ensuring oversight of climate-
delivering these ambitions by linking Burberry’s
related risks and opportunities of the Group. The
sustainability strategy to its funding requirements.
CO&FO, the Chief Supply Chain Officer and the Vice
President of Corporate Responsibility are permanent
Burberry issued a debut five-year, sterling Sustainability
members of the Sustainability Steering Committee.
Bond on 21 September 2020 for £300 million at 1.125%
(the “Sustainability Bond”). As part of the Sustainability
Bond Framework1 (the “Framework”), a commitment was
made to publish a use of proceeds report within one year
In addition to the Sustainability Steering Committee,
sustainability matters are regularly discussed at the
Ethics and Risk committees and updates are shared
of the issuance of the bond and annually thereafter.
with the Board.
This report constitutes Burberry’s first use of proceeds
Burberry’s Sustainability Bond Committee (the
report to investors and covers the allocation of proceeds
“Committee”) includes representatives from Corporate
from the Sustainability Bond by category per the
Responsibility, Group Treasury, and other parties
Eligibility Criteria as defined in the Framework.
nominated as subject matter experts. The Committee
Eligibility criteria and oversight
The categories of our Eligibility Criteria are as follows:
has considered the Eligibility Criteria in the Framework
and reviewed the spend on projects eligible for financing
under the Sustainability Bond and has allocated the
proceeds accordingly.
• Green buildings
• Environmentally sustainable management of living
natural resources and land use
Allocation of proceeds
The proceeds of the Sustainability Bond have been
• Pollution prevention and control (including waste
allocated across the three categories outlined in the
prevention, waste reduction and waste recycling)
Framework. In accordance with the Framework, these
eligible projects and spend have been completed within
Burberry’s 2022 Responsibility targets are owned by
the three-year period preceding the issuance of the
senior leadership across all regions and key functions
Sustainability Bond in September 2020.
and progress is reviewed by the Sustainability
Steering Committee.
The allocation across categories is summarised below:
Categories of spend
Green buildings
Sep 2017
– Mar 2020
£m
Apr 2020
– Mar 2021
£m
Cumulative
total
£m
UN SDG
4.6
4.1
8.7
Environmentally sustainable management of living natural resources
42.4
17.8
60.2
and land use
Pollution prevention and control
23.1
11.1
34.2
Total
70.1
33.0
103.1^
1. The Sustainability Bond documentation and Framework can be found at: www.burberryplc.com/en/investors/debt.html
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Strategic Report | Sustainability Bond
Unallocated proceeds
The unallocated proceeds under the bond are
Pollution prevention and control
Burberry is passionate about driving positive change and
£193.6 million. The cash is kept on deposit in line with
building a more sustainable future. Our sustainable
Burberry’s Treasury Policy.
Project examples
Green buildings
packaging materials commitment aims to minimise the
amount of packaging used and, where packaging is
unavoidable, to maximise use of recycled, reusable and
recyclable materials in line with circular economy
Projects include the financing or refinancing of
principles. This commitment applies to all Burberry
properties which have achieved one of the following
customer-facing and transit packaging.
certifications:
• Leadership in Energy and Environmental Design
we will minimise and phase out the use of unnecessary
(LEED): Platinum or Gold level
single-use plastics by redesigning packaging, using
• Building Research Establishment Environmental
recyclable alternative materials and/or enabling reuse
Assessment Method (BREEAM): Excellent or
schemes. Where plastic packaging is used, it must be
Outstanding level
made from recyclable plastic with a minimum of 20%
As signatories of the 2025 Global Plastics Commitment,
recycled content.
For existing buildings, certification has been received
within the last three years.
We have allocated proceeds against packaging
procurement where recycled content is more than 20%.
Environmentally sustainable management of living
natural resources and land use
As part of Burberry’s Responsibility strategy, where
cotton is the product’s main material, Burberry has set
External assurance of corporate
responsibility disclosures
Burberry has appointed PricewaterhouseCoopers LLP
a goal to procure 100% of its cotton more sustainably
(PwC) to provide limited assurance over the allocation of
by 2022 by using a portfolio approach.
use of proceeds. Information forming part of the
assurance scope is denoted with a ^. The assurance
Burberry continues to promote more sustainable farming
statement is available on Burberryplc.com.
practices among its suppliers and also remains
committed to driving demand for organic cotton.
In addition, we support Cotton 2040, a cross-industry
partnership convened by Forum for the Future to
address long-term resilience in cotton supply chains.
93
Strategic Report | Non-Financial Information Statement
NON-FINANCIAL
INFORMATION STATEMENT
This section of the Strategic Report constitutes Burberry’s Non-Financial Information Statement, produced to comply
with sections 414CA and 414CB of the Companies Act 2006.
The information listed is incorporated by cross reference.
Reporting
requirement
Policies and standards which govern our approach
Information necessary to understand our business and
its impact, policy due diligence and outcomes
Environmental
• Chemical Management Standards
• ESG section, pages 60 to 91
matters
• Global Environmental Policy
• Make Fashion Circular Initiative
• ESG and Responsibility section on
Burberryplc.com
• New Plastics Economy Global Commitment
• Task Force on Climate-related Financial
• UN Climate Change Fashion Industry
Disclosures (TCFD) section, pages 133 to 137
Charter for Climate Action
• Responsible Sourcing Policy
• Science Based Targets
• Task Force on Climate-related Financial
Disclosures (TCFD) reporting
People
• Global Health and Safety Policy
• Directors’ Report, page 204
• Global Diversity and Inclusion Policy
• Company, Responsibly and People sections of
• Our Culture and Values
Burberryplc.com
• Responsible Business Principles
• ESG section, pages 60 to 91
• Gender Pay Gap Report and Global Parental Leave
Policy on Burberryplc.com
• Purpose, pages 14 to 15
• Stakeholder Engagement, pages 96 to 103
Respect for
• Data Privacy Policy
• ESG section, pages 60 to 91
human rights
• Ethical Trading Code of Conduct
• Responsibility section on Burberryplc.com
• Human Rights Policy
• Human Rights Statement page 80
• Infection Control Management Policy
• Information and Cybersecurity Policy
• Model Wellbeing Policy
• Transparency in the Supply Chains and
Modern Slavery Statement
Social matters • Responsible Business Principles
• ESG section, pages 60 to 91
• Ethical Trading Code of Conduct
• Responsibility section on Burberryplc.com
• Local Stakeholder Engagement Policy
• Volunteering and Match Funding
Anti-
• Anti-Bribery and Corruption Policy
• Reflecting the needs of our stakeholders,
corruption
• Anti-Money Laundering and Counter
customers and our people, pages 96 to 98
and anti-
bribery
Additional
disclosure
Terrorist Financing Policy
• Responsibility section of Burberryplc.com
• Fraud Risk Management Policy
• Business Model, pages 16 to 17
• Key Performance Indicators, pages 45 to 47
• Principal Risks, pages 106 to 107
• Purpose, pages 14 to 15
94
Strategic Report | Stakeholder Engagement
STAKEHOLDER
ENGAGEMENT
The Board is aware of its obligations both collectively
SECTION 172(1) STATEMENT AND STATEMENT OF
and individually to promote the success of the Company
ENGAGEMENT WITH EMPLOYEES AND OTHER
for the benefit for its stakeholders as a whole. Having an
overall understanding of our stakeholders’ perspectives
STAKEHOLDERS
In accordance with the Companies Act 2006 (the Act) as
and values, and considering them in our decision-making
amended by the Companies (Miscellaneous Reporting)
and planning, is crucial to Burberry’s continued success
Regulations 2018, the Directors provide this statement
and we value their broad range of perspectives.
to describe how they have engaged with and had regard
Comprehensive engagement allows us to make informed
their duty to promote the success of the Company, under
to the interests of our key stakeholders when performing
decisions, while taking into account the consequences of
section 172 of the Act.
our actions on the different stakeholder groups.
The Board is mindful of all of Burberry’s stakeholders
impact they have on our strategy, reputation and the
when making decisions of strategic importance.
Group’s long-term success, consideration has been given
Papers submitted to the Board for approval take into
to them throughout the FY 2020/21 Annual Report and
account the impact of the proposals on relevant
the table on page 104 identifies where they are discussed.
Reflecting the importance of our stakeholders and the
stakeholder groups.
We take care to work with and communicate with all
major stakeholders:
• People
• Customers
• Shareholders
• Communities
• Partners
• Governments
More information on how we have supported some of our
stakeholders during the COVID-19 pandemic can be
found on pages 56 to 57.
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Strategic Report | Stakeholder Engagement
PEOPLE
We believe in fostering a sense of belonging among our
Board engagement
Global Workforce Advisory Forum: the Board has
people and ensuring they are active participants in our
established a Global Workforce Advisory Forum. The
drive to fulfil our purpose. Our people are Burberry’s
purpose of the forum is to ensure meaningful two-way
greatest asset, and it is vital that we continue to attract
communication between the Board and the workforce in
and retain the best talent. With our people adapting to
order to develop a greater understanding of their views
the COVID-19 pandemic by working remotely, it is
when making decisions in the boardroom. The Global
particularly important to ensure their perspectives
Workforce Advisory Forum is made up of representatives
are heard and that they continue to feel part of the
from a variety of roles globally and during FY 2020/21
broader organisation.
What matters
• Career development
• Operational efficiency
it met twice to discuss a wide range of topics. These
included colleague views on the Group’s response to the
pandemic, changes to reward programmes made
in 2020, and culture and how to speak up. Gerry Murphy,
our Chairman, and Orna NíChionna, Non-Executive
Director and Chair of the Remuneration Committee,
• Wellbeing and flexible working
represented the Board at both meetings and shared
• Fostering a diverse and inclusive culture
insights from the Forum meetings with the Board.
These insights were particularly helpful to the Board in
formulating the 2020 Directors’ Remuneration Policy
and in their consideration of the Group’s response to
We have increased our Employee Engagement Surveys
the pandemic.
from once annually to three per year. Despite the impact
of the pandemic, 89% of our people felt they had clear
Employee Engagement Survey: the Board reviewed the
areas of focus and 86% agreed Burberry was doing a
results of the Employee Engagement Survey, and an
good job of keeping them connected to one another. We
overview of key trends for 2020. The Board gave
use insights from these surveys to action changes and
particular focus to both the dimensions and
improvements across the Group.
demographics within the findings and discussed
proposed actions and areas of opportunity.
We communicate daily with our teams across the
business to keep them informed and engaged. Written
Direct interaction: Burberry’s various colleague
communications, videos and podcasts are made available
platforms allow the Board to interact with our people on
via Burberry World, our global intranet. For example, we
a global scale. During the year, Non-Executive Directors
communicated extensively with our Sales Associates
Fabiola Arredondo, Ron Frasch and Orna NíChionna
during the year, providing regular operational updates
collaborated to produce a short film reflecting on
and training around our creative transition and new
the Company’s history and entrenched values. In
products. Major events, such as embedding Burberry’s
March 2021, as part of our International Women’s Day
purpose and moving our internal Icon Awards ceremony
celebrations, Fabiola and Orna, alongside fellow Non-
online, allowed for more inclusive, global engagement,
Executive Directors Debra Lee and Dame Carolyn McCall
with those events garnering over 6,000 views.
participated in a webcast reflecting on the experiences
that have helped shape their careers and the importance
We are committed to ensuring our people are growing
of representation, allyship and mentoring.
and developing personally and professionally. To foster a
culture of forward-thinking, we want to equip all of our
people to be set up for success. We encourage creative
thinking around problem solving and making things
happen, and provide tools and resources through our
B-Learning site.
More information on Burberry’s progress towards a
more diverse and inclusive workplace can be found on
pages 69 to 72.
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CUSTOMERS
As the ultimate user of our products, our customers
Providing exceptional customer service and assistance
is vital for any luxury brand. We look at ways to
continue to look for quality products that reflect their
improve the assistance we offer to customers on an
personal style. They increasingly look to feel part of a
ongoing basis, including ensuring they are able to
community and seek out brands with a strong purpose.
contact us at their convenience through their
What matters
• Product innovation and newness
preferred medium, including phone, email, social media
and Burberry.com chat. At present, we offer customer
service assistance in 14 languages.
• Customer service and brand experience
Burberry’s commitment to sustainability is longstanding,
• Addressing evolving customer habits and
grounded in the belief that for our future growth, we
changes in buying patterns
• Environmental impact
need to actively address the challenges facing our
industry and the world in which we live. Our customers
are increasingly interested in sustainably sourced
materials. For instance, in April 2020, we launched
the “ReBurberry Edit”, comprising 26 styles from the
We aim to offer our customers a holistic, omnichannel
Spring/Summer 2020 collection, all made from the
experience, where they can engage with our brand,
latest innovations in sustainable material science.
our product, our communications and our people.
This was communicated across brand channels and
We continue to harness insights to develop our
through media engagement.
understanding of luxury goods customers and
enhance our customer proposition, ensuring we offer
inspiration and opportunities to engage with Burberry
across our platforms.
Board engagement
Customer experience: as customers themselves, the
Board regularly engages with the business across all
of our channels. Insights are regularly discussed
In the midst of the pandemic, we used digital innovation
with management.
to mitigate the impact of reduced traffic in our store
network. Our teams acted quickly to ensure we
Customer insights: most of Burberry’s engagement with
continued to deliver a luxury experience for our
customers is at the operational level. The Board receives
customers. In a matter of weeks, Burberry.com was set
regular updates from the CEO and members of the
up to allow customers to book in-store appointments
senior management team on sales performance and
and gain online shopping assistance. For the UK and the
brand heat. Updates are also shared in relation to
USA we introduced video appointments with our Sales
evolving relationships with customers as we respond to
Associates who could browse products on behalf of their
market conditions and trends. These updates assist the
clients as if they were in store (see page 27). More
Board in developing and maintaining its understanding of
information about Burberry’s response to the COVID-19
customer trends, as well as potential issues and how
pandemic and its impact on our customers can be found
these could be addressed. During the year, the Board
on pages 56 to 57.
gave particular time and focus to ensure that the
Company continued to engage with its customers safely.
In July 2020, we opened our first Social Retail store in
Shenzhen, China, aiming to blend seamlessly the physical
and social worlds by offering a digitally immersive retail
experience (see pages 28 to 32). Later in 2020, we
brought our Spring/Summer 2021 show outdoors,
partnering with several livestreaming platforms around
the world to broadcast the event.
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SHAREHOLDERS
As well as ongoing interest in our financial performance
The Board and management regularly receive and
respond to queries from shareholders on a wide range of
and growth, our shareholders are increasingly attentive
ESG topics, including sustainability, climate change,
to ESG topics. For that reason, we included an ESG
recycling and waste, and human capital management.
section in this report and built a dedicated space on
Burberryplc.com to share information about Burberry’s
In May 2020 the Board took the decision not to pay a
actions in this area.
What matters
• Capital gain through share price appreciation
final dividend in respect of FY 2019/20 given the
uncertainty in outlook due to the impact of COVID-19 on
the business and the global economy. This was a hard
decision for the Board and involved balancing the
interests of our shareholders, our people, our customers
and capital return via dividend
and our suppliers with the longer-term interests of the
• Profitability and business growth potential
Company. The Board concluded that it was prudent to
• Quality of governance
• ESG
conserve capital in order to protect the business.
The Board is pleased that the strong performance
during FY 2020/21 has enabled the Group to resume
paying a dividend.
We value our shareholders and investors and want to
The Board also undertook a comprehensive review of
ensure they understand our business, our strategy, the
funding and in September 2020 approved the issuance
luxury market environment and our governance
of a £300 million Sustainability Bond, which introduced
arrangements. We foster an open and transparent
long-term financing into the Company’s capital
relationship with each individual investing in Burberry to
structure. The proceeds of the Bond will be used to
enable them to make effective investment decisions.
finance and/or refinance eligible sustainable projects
reinforcing Burberry’s longstanding commitment to
The Board also benefits from the views of the
sustainability.
investment community in their decision-making and we
therefore encourage multichannel engagement through
Communications: under Burberry’s corporate governance
our Investor Relations team, Company Secretariat,
framework the Board reviews and approves Burberry’s
Board and Executive Team, as well as other areas of the
material communications to investors, such as the
business. Investors are invited to virtually attend our
trading updates and results announcements, the
trading and results announcements, which include a
Annual Report and Accounts and the Notice of Annual
dedicated question-and-answer session. All investor
General Meeting (AGM). In light of COVID-19, during
announcements are made available on our website
FY 2020/21 the Board approved issuing additional
including webcasts, slides and transcripts.
market announcements to inform shareholders of the
Company’s response to the pandemic and the impact
During FY 2020/21, our Investor Relations team
on performance.
participated in over 200 investor meetings and events.
This engagement included presentations to institutional
AGM: the AGM is an important opportunity for
shareholders and analysts following the release of the
the Board to share directly with shareholders the
Group’s half- and full-year results as well as meetings
performance and strategic direction of the Company.
with the Group’s 20 largest investors.
As a result of the COVID-19 pandemic, it was not
Board engagement
The Board receives monthly updates from the Investor
were able to ask questions in advance of the meeting,
which were grouped into themes and answered during
Relations team, providing an overview of market
a webcast following the meeting. Shareholders were
sentiment, share price performance and any meetings
strongly encouraged to submit their proxy votes and
held with investors. In addition to the meetings
circa 80% of total voting rights were voted and all
possible to hold an open AGM in 2020. Shareholders
undertaken by management throughout the year, various
resolutions passed.
Non-Executive Directors, including the Chairman and
Chair of our Remuneration Committee, have engaged
Due to the continued uncertainty surrounding COVID-19
with shareholders in relation to governance and
restrictions that may be in place at the time of the AGM,
remuneration topics, totalling over 70 meetings.
we are proposing to hold the AGM with the minimal
quorum present while providing shareholders with a
In 2020, consultation with shareholders in advance of
virtual meeting platform where they will be able to watch
proposing the 2020 Directors’ Remuneration Policy
the proceedings of the meeting and have the opportunity
resulted in 94.91% of votes in favour of the resolution
to submit questions to the Board.
at the Annual General Meeting (AGM).
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COMMUNITIES
At Burberry, we have a longstanding commitment
Board engagement
Strategy updates: the Board receives regular updates on
to supporting our communities, through various
the implementation of The Burberry Foundation’s
programmes and initiatives designed to drive
five-year strategy, which aims to positively impact
positive change.
What matters
• Positively impacting the communities living
and working around us
1 million people by 2022 by supporting community
programmes, making financial contributions and
encouraging employee volunteering.
Sustainability Steering Committee: Burberry’s
Sustainability Steering Committee, which was
• Employment within our communities
established in 2019, meets at least three times a year
• Increased focus on ESG
to oversee the Group’s strategy on environmental and
social issues. The Sustainability Steering Committee is
chaired by Burberry’s CEO, who is accountable for
ensuring oversight of climate-related risks and
As the COVID-19 pandemic continued to affect our
opportunities. It is also attended by the CO&FO, who
communities, we worked closely with teams, partners
is also a member of the Leadership Network for the
and the Board to determine how we could best provide
Accounting for Sustainability initiative.
support. The Group’s response is being managed
through five key workstreams chaired by the CEO and
Supporting communities: the Board understands the
supported by the Board. As COVID-19 continues to
importance of sustainability in the fashion industry and
impact us all, we maintain our commitment to
receives updates on the sustainability initiatives and
supporting our communities through our broader relief
projects undertaken by the Group. More information
efforts and via The Burberry Foundation COVID-19
on ESG can be found on pages 60 to 91. Further
Community Fund.
information on Burberry’s progress in meeting the
recommendations of the TCFD can be found on
We support The Burberry Foundation (UK registered
pages 133 to 137.
charity number 1154468) in creating long-term
partnerships that drive positive change in our
The Burberry Foundation: the work of The Burberry
communities and help build a more sustainable future
Foundation is key to Burberry’s Responsibility agenda.
through innovation. Each year, we donate a percentage
In FY 2020/21, the Board agreed to donate £3.5 million
of Group adjusted profits before tax to charitable
of Group adjusted profits before tax to social and
causes, which include long-term community programmes
community causes worldwide, which include disaster
led by The Burberry Foundation and emergency efforts
relief, scholarships and long-term community
as they arise, such as disaster relief. Alongside
programmes led by The Burberry Foundation. The Board
contributions, employees are encouraged and supported
also approved incremental charitable donations in
in volunteering for charities and donating up to three
response to the COVID-19 pandemic including donating
working days a year to supporting their communities.
PPE to the UK National Health Service and healthcare
Burberry supports match-funding towards team-based
charities; supporting vaccine research and the equitable
fundraising activities. Read more about this on
distribution of the COVID-19 vaccine to some of the
pages 74 to 79.
world’s most vulnerable people; and charities tackling
In addition, we have continued to support our
food poverty.
programmes, including Burberry Inspire and our creative
The Burberry Foundation COVID-19 Community Fund:
arts scholarships, to ensure that future generations
all members of the Board took a voluntary salary/fee cut
of talent, particularly from underrepresented
of 20% for the first quarter and the Company paid an
communities, have the support they need to enter
equivalent of that amount to The Burberry Foundation
the creative industries.
COVID-19 Community Fund, with our top management
team also taking a 20% reduction in their salaries. The
Burberry Foundation COVID-19 Community Fund was
established for our employees to support communities
in need globally. More details on the fund can be found
on page 57.
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Strategic Report | Stakeholder Engagement
PARTNERS
We work with companies, NGOs, civil society groups, our
Board engagement
Environmental impact on operations: throughout the
suppliers and retail third parties. We believe in an open
year, the Board receives updates on sustainability-
and collaborative business approach and we take pride in
related matters, including those related to climate
sharing knowledge and expertise to find solutions and
change. These were supported by insights from
opportunities for innovation.
independent sustainability strategy consultants.
What matters
• Aligning with new customer behaviour,
The TCFD Working Group, which was established to
assess and implement the required governance and
strategy for climate-related risks and opportunities,
especially around e-commerce
and the metrics and targets used to assess and manage
• Increased focus on ESG
• COVID-19 relief support
these, reports to the Risk Committee, which is chaired
by Julie Brown, our CO&FO. The Audit Committee
• Driving collaboration and contributing to the
discussed the work of the TCFD Working Group,
United Nations SDGs
including progress against the four pillars of governance,
strategy, risk management and metrics and targets.
Ethical trading: the Board approved the Transparency in
Our ESG work contributes to a range of the United
Supply Chains and Modern Slavery Statement, which
Nations SDGs. We feel Burberry is uniquely placed to
widened the scope of the ethical trading programme to
make a positive difference. We recognise the power of
include packaging, visual merchandising and recycling
working in collaboration to drive real change in the
facilities. More information on the Human Rights
industry. We are focused on working together with
Statement can be found on page 80 and our Modern
industry peers, business partners and other key
Slavery Act Statement can be found on Burberryplc.com.
stakeholder groups to find long-term solutions and
promote wider industry change. We pursue our ESG
goals through strategic partnerships with NGOs,
industry peers, initiatives and other businesses. For
example, this financial year we continued our support of
registered charities, including FareShare, The Trussell
Trust and The Felix Project, which are dedicated to
tackling food poverty across the UK. Read more about
our COVID-19 efforts on pages 56 to 57 and our
collaboration with Marcus Rashford MBE on page 43.
We nurture close relationships with members of our
supply chain, including wholesalers, licensees and supply
chain partners, on an ongoing basis to drive social and
environmental improvements, focusing on every step in
our sourcing and manufacturing processes.
To ensure a seamless customer experience across
all consumer touchpoints, we collaborate with other
companies to create the best experiences for our
customers. For example, in FY 2020/21, the digital
experience became more prominent where stores
were unable to remain open and we collaborated with
technology companies to enhance our customers’ online
experience (read more on pages 32 to 35). We also
continued to nurture close relationships with our
wholesale and licensing partners through monthly and
weekly updates to understand their product needs and
ongoing preferences.
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GOVERNMENTS
Governments influence long-term retail environments,
Board engagement
Preparing for and post UK withdrawal from the EU: the
environmental priorities, employment laws, trade and
Board receives regular updates and individual Board
other business matters, which are all key areas for
members have liaised directly with the UK government
Burberry. We therefore regularly engage with
on key issues in relation to the UK’s withdrawal from the
governments in the countries where we operate to
EU. Such topics include the VAT Retail Export Scheme,
understand their concerns so we can seek solutions
access to skills and talent and general challenges
to shared environmental, social, economic and
relating to cross-border movement.
governance issues.
What matters
• Industry/product policies such as taxes,
The Board agreed to repay early and with interest the
£300m funding secured in 2020 under the UK
Government sponsored COVID Corporate Financing
Facility (CCFF) and committed to pay our UK business
restrictions, trade and regulations
rates in full. More information on the Group’s response
• Employment
• Increased focus on ESG
to COVID-19 is set out on pages 56 and 57.
As part of the global response to the outbreak of
COVID-19, Burberry dedicated resources to supporting
those impacted by the disease and preventing further
infection. We addressed immediate medical needs by
leveraging our global supply chain, retooling our
Castleford manufacturing site to make PPE. The British
government called on Burberry to extend our support,
which we offered to do at cost. We also supported
communities by funding food supplies for vulnerable
individuals through partnerships with food distribution
charities. We also worked towards a longer-term
solution to the global pandemic by helping to fund
University of Oxford’s COVID-19 research. The research
resulted in a vaccine developed with AstraZeneca which
is now being used as part of vaccination programmes in
several countries.
As part of our ongoing efforts to protect our brand, we
connect with governments around the world as they
influence long-term retail environments, environmental
priorities, trade, IP, quality and payment and other
business matters, which are all key areas for Burberry.
We, therefore, regularly engage with governments in
the countries where we operate to understand their
challenges so we can seek solutions to shared
environmental, social, economic and governance issues.
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BOARD ENGAGEMENT
The table below sets out where further information can be found on how the Board has exercised its duties in
accordance with Section 172 of the Act.
SECTION 172 RESPONSIBILITIES
a. Long-term results – the
Strategic Report:
Corporate Governance Report:
likely consequences of any
Business Model (pages 16 to 17)
Report of the Audit Committee
decision in the long term
Chairman’s Letter (pages 6 to 8)
(pages 173 to 179)
CEO’s Letter (pages 10 to 13)
Capital Allocation Framework (page 55)
Investment Case (pages 18 to 19)
Key Performance Indicators (pages 45 to 47)
Risk and Viability Report (pages 106 to 142)
b. Our workforce – the
Strategic Report:
Corporate Governance Report:
interests of the Group’s
Business Model (pages 16 to 17)
Chairman’s Letter (pages 146 to 147)
employees
Purpose (pages 14 to 15)
Division of Responsibilities (page 162)
Operational Risks (pages 119 to 125)
Directors’ Remuneration Report
ESG (pages 60 to 91)
(pages 180 to 203)
Stakeholder Engagement (pages 96 to 103)
2020 Directors’ Remuneration Policy
(pages 161 to 171 in the Annual Report
2019/20)
Report of the Audit Committee
(pages 173 to 179)
Remuneration (pages 180 to 203)
Burberryplc.com:
Gender Pay Gap Report,
ESG, People and Responsibility
c. Our business
Strategic Report:
relationships – the
Business Model (pages 16 to 17)
importance of developing
ESG (pages 60 to 91)
the Group’s business
Stakeholder Engagement (pages 96 to 103)
relationships with suppliers,
customers and others
d. The communities and our
Strategic Report:
environment – the impact
ESG (pages 60 to 91)
Burberryplc.com:
ESG and Responsibility
of the Group’s operations
Climate Change Risks (pages 129 to 131)
on the community and the
Task Force on Climate-related Financial
environment
Disclosures (TCFD) (pages 133 to 137)
e. Our reputation/our desire
Strategic Report:
to maintain our reputation
ESG (pages 60 to 91)
Corporate Governance Report:
Board roles (page 162)
for high standards of
The Environment (pages 83 to 91)
Other Governance Disclosures and Tax
business conduct
Human Rights Statement (page 80)
Governance Framework (page 160)
Compliance Risks (pages 126 to 131)
Burberryplc.com:
Non-Financial Information Statement (page 94)
Modern Slavery Statement
f. Fairness between our
Strategic Report:
Corporate Governance Report:
shareholders – our aim is to
Stakeholder Engagement (pages 96 to 106)
Engagement with Shareholders
act fairly between members
of the Company
(page 185)
Directors’ Remuneration Report
(pages 180 to 203)
Board Roles (page 162)
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RISK AND
VIABILITY REPORT
Our approach to risk
The Group’s strategy takes into account risks, as well as
Risk appetite
The Board reviews and validates the Group’s risk
opportunities, which need to be actively managed.
appetite on an annual basis. This is integrated into our
Effective risk management is essential to executing our
wider risk management framework to support better
strategy, achieving sustainable shareholder value,
decision-making and prioritisation.
protecting the brand and ensuring good governance.
We will pursue growth and accept a certain level of
The Board is ultimately responsible for determining the
risk to ignite brand heat commensurate with our
nature and extent of the principal risks it is willing to
position in luxury fashion. We approve capital
take to achieve our strategic objectives (the Board’s risk
investment in strategic projects and accept a moderate
appetite), and challenging management’s implementation
to high risk in pursuit of innovation and profitable
of effective systems of risk identification, assessment
growth, balancing a reasonable return on capital with
and mitigation.
The Audit Committee has been delegated the
a reasonable level of commercial risk within the
approved capital allocation framework.
responsibility for reviewing the effectiveness of the
Complying with applicable laws and doing the right thing
Group’s internal controls and risk management
is part of our culture and underpins our strategic
arrangements. Ongoing review of these controls is
ambition. In exploring risks and opportunities, we
provided through internal governance processes. The
prioritise the interests and safety of our customers and
Ethics Committee reports to the Risk Committee, which
our people. We seek to protect the long-term value and
oversees the Group’s risk. Reports from both of these
reputation of the brand, maximising commercial benefits
committees are presented to the Audit Committee.
to support responsible and sustainable global growth
within our defined risk tolerance.
An integral part of our business, our risk management
process is coordinated by our Group Risk and Assurance
team, reporting to our CO&FO. Risk management
Our principal risks
The Board considers the principal risks to be the most
activities include identifying risks, undertaking risk
significant risks faced by the Group, including those that
assessments and determining mitigating actions.
are the most material to our performance and that could
These activities are reviewed by Internal Audit and
threaten our business model or the future long-term
other control functions, which provide assurance to our
performance, solvency or liquidity of Burberry. They do
Risk Committee, and ultimately to our Board, as
not comprise all the risks associated with our business
described on page 109.
and are not set out in priority order. Additional risks
not known to management, or currently deemed to
be less material, may also have an adverse effect on
our business.
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COVID-19 was declared a global pandemic on
We have reviewed and updated the descriptions and
11 March 2020 by the World Health Organization (WHO).
mitigating actions of our principal risks and emerging
Unprecedented restrictive measures were put in place
risks. We reviewed whether the level of risk associated
worldwide to help prevent the spread of the disease to
with each of the principal risks is increasing or decreasing
ensure safety and wellbeing, protect health services and
compared to the previous financial year and noted new
attempt to stabilise economies. A new Group principal
risks, which do not have a basis for comparison.
risk was added last year to consider the risk of prolonged
COVID-19 disruption beyond the range of assumptions
Our risk management processes are designed to enable
that have been used to develop the reasonably expected
us to identify risks that can be partially mitigated
outcomes. The global pandemic has continued to create
through insurance. We focus our insurance resources
uncertainty in FY 2020/21, however, as vaccination
on the most critical areas or where there is a legal
rollouts progress, the outlook is more optimistic. The
requirement, and where we can get best value for
impact on each of the other principal risks from the
money for risk transfer.
pandemic is also explained in the detail for each risk.
Our risk framework is structured around the following
categories of risk: External, Strategic and Financial,
Operational, Compliance and Climate Change. Each
principal risk is linked to one of these categories and
may impact one or more of our strategic priorities.
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Emerging risks
Potential emerging risks are an area of focus for us and we therefore undertake horizon scanning in conjunction with
our strategy team to monitor any potential risks that could change our industry and/or our business, looking at both
the inherent risk and opportunity. Emerging risks are new and evolving, therefore their full potential impact is still
uncertain. To manage this, we involve specialist third parties where necessary to understand how our risk profile could
change over a longer time period. Our risk management approach considers short term to be one year, medium term
to be two to five years and long term more than five years.
MACRO
Protectionism – countries protecting domestic production may use tariffs and trade restrictions,
which would increase the cost of moving goods into key markets
Changing regulatory environment – financial reporting and governance regulations (for example,
the UK government’s consultation paper on restoring trust in audit and corporate governance)
may introduce new requirements and increase the risk of non-compliance
CONSUMER
Changing consumer preferences – expectations around product and Company sustainability
continue to increase
Significance of influential groups/third parties on consumer spending patterns – increased
reliance on third parties to produce content to influence consumer spending (for example, social
media influencers), which also increases risk of damage to brand image
INDUSTRY
Industry concentration – increase in concentration on key consumer groups resulting in greater
competition for growth targets
New technology – leading to changes in consumer spending habits and expectations around
product availability (for example, virtual stores and buying product directly from runway shows)
Circularity – new business models and increase in product re-sale markets, including
fashion rental
Full supply chain traceability – requiring investment in new technologies
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RISK MANAGEMENT PROCESS
Board and Board Committees
• Responsible for regular oversight of risk management,
Ethics Committee
• Reviews and monitors ethical risks, as well as
behavioural and responsibility practices across the
annual strategic risk review, and setting the Group’s
Group. Approves policies relating to such ethical
risk appetite
matters, including the Group’s Code of Conduct
• Monitor risks through Board processes, including
• Performs deep-dive reviews and assesses results of
regular reviews of strategy, management reports
investigations and corrective actions
and deep dives into selected risk areas
• Supports the Group in managing ethical and
• Audit Committee reviews effectiveness of risk
associated reputational risks, including overseeing
management process with support from Internal Audit
awareness and training across the Group to reinforce
Risk Committee (chaired by CO&FO)
• Reviews external and internal environment for
emerging risks and performs deep-dive reviews
of principal risks
• Reviews risk register updates from risk owners
business ethics and good practice
• Monitors whistleblower activity and
Burberry Confidential
Functions and business risk owners
• Carry out day-to-day risk management activities
• Meets at least three times per year and reports key
• Identify and assess risk and implement
findings to the Audit Committee
mitigating actions
• Cross-functional attendees, encompassing senior
• Assign owners to update risk registers
management from IT, Finance, Legal, HR, Supply
Chain and Retail
• Identifies changes to principal risks and the
Internal Audit and compliance functions
• Review risk management process periodically
effectiveness and adequacy of mitigating actions
• Compliance functions provide independent assurance
to achieve agreed risk tolerance levels
to management and the Board on risk status (Health
and Safety, Legal, Brand Protection, Quality, Asset
and Profit Protection, and Corporate Responsibility)
Group Risk and Assurance team
• Establishes risk management framework
• Identifies emerging risks, working with the
Strategy team
• Facilitates risk assessments and updates to
risk mitigation
• Provides resources and training to support risk
management process
• Facilitates strategic risk assessment as part of the
central planning process
• Prepares Board and Risk Committee updates
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EXTERNAL RISKS
COVID-19 impact
The timing of a return to sustained growth following the COVID-19 pandemic remains uncertain. There is a risk
that the recovery from the spread of the COVID-19 pandemic slows due to a resurgence of cases. In response
to COVID-19, we have continued to update planning scenarios based on a range of assumptions and potential
outcomes. This risk remains of further significant impact on our future operations, cash flows and viability
beyond the range of assumptions that have been used to develop the planning scenarios. In addition, there
could be impacts on impairment of retail assets, inventory and carrying value of other assets.
Risk movement and outlook
COVID-19 was a new principal risk in FY 2019/20. While the Group had considered the possibility of a range of
incidents that could disrupt a key business location, the likelihood of the occurrence of a global pandemic causing
disruption on the scale of COVID-19 across the business had not been considered as a stand-alone risk previously.
Although there remains uncertainty about the recovery from the pandemic, the ongoing successful rollout of
vaccination programmes is a positive indicator the risk of further impact from COVID-19 is reducing. We remain
confident in our ability to execute our strategic plans to accelerate growth as a British luxury brand.
Link to strategy
Actions taken by management
The time frame of implementing the strategy has been
• The Group Incident Management Team (GIMT) was
impacted by COVID-19, however the fundamentals and
set up to coordinate Burberry’s response to the
trajectory of our strategy remain right.
COVID-19 outbreak. The Group’s response is being
Risk tolerance
managed through five key work streams led by the
Executive Committee and chaired by our CEO
Doing the right thing is part of Burberry’s culture and
• The health and safety of our people remains our
underpins our strategic ambition. Burberry has
priority and our response has concentrated on our
prioritised the safety and wellbeing of our people, our
people, customers and communities. We have
customers and our communities. We have followed
prioritised their wellbeing and communicated
government and health authority guidance and advice
regularly with all our stakeholders
to reduce the risk of spreading the virus and have
• We have executed a plan of strategic initiatives to
supported relief efforts to reduce the impact of the
navigate through this period of decreased luxury
virus on people’s lives globally.
industry demand and capture opportunities as
consumer confidence and markets rebound
• Burberry has significant financial headroom in
the form of £0.9 billion cash balances, excluding
£0.3 billion of proceeds from the Sustainability Bond
and a further £0.3 billion undrawn from the RCF.
The Group has completed detailed stress testing to
understand the extent to which the Group could
withstand a loss of sales within the limits of its
available financial resources. Details of this stress
testing are set out in the Viability Assessment on
pages 140 to 142
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COVID-19 impact continued
Examples of risks
Actions taken by management continued
• Further increase in the spread of the pandemic
• We closed sites across Asia, EMEIA and the Americas
results in the loss of key employees and/or impacts
ahead of or in line with local government restrictions
the health of our employees and their ability to
in order to prevent the spread of COVID-19 and
operate effectively
ensure our people’s, our customers’ and our
• There is not sufficient liquidity to manage operations
communities’ safety and wellbeing. This includes
and meet liabilities as they fall due
the closure of our head office in London, as well
• The Group’s trading performance and cash flows
as internal manufacturing sites across the UK
are significantly impacted by further extended
and in Italy
periods of closures of Burberry retail stores,
• As part of our overarching response, we are
manufacturing facilities and distribution centres
monitoring the regulatory landscape. We are
imposed by governments
engaging regularly with government and local
• Further impairment of retail assets and inventory
authorities in each of our core geographies to ensure
• Continuing closure of retail stores impacts our cash
we have the right support for our business and for
generation, increases leverage and limits our ability to
our people
source adequate financing to continue to operate
• We continue to manage cash and costs to protect the
• The rebound is delayed by a resurgence in virus
Group’s liquidity. A comprehensive cost mitigation
infections, particularly in Mainland China
programme has been delivered, which includes
• The continued outbreak impacts the ability of the
delaying discretionary capital expenditure to focus on
Group to execute the strategic plan and maintain
essential spending and to strengthen the brand
momentum in building brand heat
• We keep product, inventory and supply chain under
• Closures of Burberry’s internal manufacturing sites
constant review to maintain supply chain operations
and global network of storage and distribution hubs
while optimising buying commitments
significantly impact the supply chain and the speed
• We have adapted our technology for greater home
with which we can rebound when government
working to ensure all vital operations and projects
restrictions are lifted
remain on track
• Technology and IT infrastructure is not able to adapt
to sustained working from home requirements
imposed by governments
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Macroeconomic and political instability
The Group operates in a wide range of markets and is exposed to changing economic, regulatory, social and
political developments that may impact consumer demand, disrupt operations and impact profitability. Adverse
macroeconomic conditions or country-specific changes to the operating or regulatory environment, natural
disaster, global health emergency or civil unrest may impact the spending habits of key consumer groups and
lead to increased operational costs.
Risk movement and outlook
The risk is deemed to have remained flat since it elevated significantly last year. The outlook remains uncertain as we
continue to navigate through a number of significant macroeconomic and political events, such as governmental
responses to the economic damage caused by the pandemic and continuing geo-political tensions. External factors,
such as global health emergencies and natural disasters, are difficult to predict.
Link to strategy
Actions taken by management
Volatility in the external environment could impact our
• We have defined a strategy that leverages our brand
overall financial performance and operations.
appeal and global reach across multiple customer
Risk tolerance
segments and regions to mitigate reliance on a
particular customer group, however, we recognise
We have a low tolerance for risk in this area but
the importance of Mainland China and the Chinese
recognise external factors can be more difficult to
consumer for the luxury industry, as explained in
mitigate as they are often outside of our control.
the global Chinese consumer spending risk
Examples of risks
• In the short term, we continue to assess shifts
occurring in the industry and with customers to
• Unexpected shifts in domestic or tourist demand
ensure our plans are dynamic and responsive to
from key customer groups due to uncertainty in the
the market
economic outlook for the luxury sector caused by
• We monitor external macroeconomic and regulatory
global recession, socio-political tensions
changes and perform horizon scanning supported by
• Global health emergencies affecting particular
insights from the treasury and strategy teams into
countries and regions
macroeconomic trends
• Unexpected disruptions to the supply chain
• Increased customs and duty charges could result
from government trade and tax disputes
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Further impact from the UK’s withdrawal from the EU
Various scenarios could impact the Group’s financial position, operating model and people.
Risk movement and outlook
The UK’s withdrawal from the EU on 31 December 2020 has crystallised with some supply chain disruption realised.
There is expected to be continued disruption as actions are implemented throughout the next year to mitigate the
negative impacts of duty costs and border friction. However, the risk has reduced since last year.
Link to strategy
Actions taken by management
Volatility arising from uncertainty around the trading
• Our steering committee continually monitors the
relationship between the UK and EU following the end
evolving impact of the post-transition trading
of the transition period may impact our overall financial
relationship between the UK and EU, and oversees
and operating performance, as well as our ambitions
our approach
under supply chain Operational Excellence.
• While the business has experienced some short-term
Risk tolerance
disruption, ongoing mitigation reduced the risk to all
business activities, including supply chain, trade
We have a low tolerance for risk arising from
compliance, IP and people
uncertainty regarding the trading relationship between
• We engage with UK government departments and
the UK and EU following the end of the transition
other external stakeholders to ensure they are fully
period, which may have a long-term impact.
informed of our circumstances
Examples of risks
• Additional customs duty based on the post-transition
trading relationship between the UK and EU, and
cessation of the UK’s access to the EU’s free trade
agreements after 2020
• Disruption to business operations
• Impact on some current business project roadmaps
• Extended supply chain lead times could increase
inventory levels
• Uncertainty over the rights of EU nationals and
UK immigration law could increase the risk of being
unable to recruit and retain talent
• Exchange rate volatility impacts Group revenues,
margins, profits and cash flow
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STRATEGIC RISKS
Execution of strategic plan
Focused execution of the strategy through our four strategic pillars (Product, Communication, Distribution
and Digital) and their supporting enablers (Operational Excellence and Inspired People) is key to sustainable
long-term shareholder value. Success depends on our ability to cement our luxury positioning, increasing the
value and relevance of our brand to luxury consumers globally.
Inability to successfully execute the projects that underpin these strategies could result in under-delivery on
the expected growth, productivity and efficiency targets. This could have a significant impact on the value of
the business and market confidence.
We operate in the global luxury market, which has been significantly impacted by the COVID-19 crisis, resulting
in a high degree of uncertainty, and intensifying competition among luxury players. Additionally, today’s luxury
consumers are increasingly more demanding of luxury brands, seeking inspiration, an authentic and meaningful
relationship with brands, quality and a clear standpoint on environmental and social issues.
Our ability to make the right strategic investment decisions and to rapidly pivot our plans in response to
changes in the market environment and consumer preferences is vital to our success.
Risk movement and outlook
We have reviewed the impact of the COVID-19 pandemic on the luxury industry and consumer demand, and assessed
the need for changes to our strategic plan. Although the fundamentals and trajectory of our strategy have not
changed, we have adapted our execution and time frame to effectively respond to the challenges posed by the
COVID-19 crisis.
Link to strategy
All strategic pillars.
Risk tolerance
Actions taken by management
• FY 2020/21 marked the end of the first phase of our
strategy, which focused on building the foundations,
re-energising the brand, aligning our distribution to
We are pursuing growth and accept a certain level
our new luxury positioning and establishing a new
of risk to fuel the brand heat that comes with our
product offering. In consideration of the challenges
position in luxury fashion. We approve capital
posed by the COVID-19 pandemic and impact to
investment in strategic projects and accept a moderate
luxury, we prioritised building resilience by taking a
to high risk in pursuit of innovation and profitable
series of rapid actions across four areas: protecting
growth, balancing a reasonable return on capital with
our people and communities, tightly managing cash
a reasonable level of commercial risk within the
and costs, securing our product, inventory and supply
approved capital allocation framework.
chain, and driving revenue as economies rebounded
• We continued to focus on our strategic priorities, and
effectively adapted our plans to capitalise on
opportunities as they arose across geographies
• We continued to strengthen consumers’ perception
of our brand, investing in brand heat and visibility,
signalling luxury through our campaigns and
disruptive media experiences
• We built on positive momentum with our collections,
delivering newness and exceptional product,
strengthening our position in leather goods, and
managing product flows despite supply
chain challenges
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Execution of strategic plan continued
Examples of risks
Actions taken by management continued
• A pause to delivery of the strategy due to major
• We planned and implemented localised and bespoke
external factors hampering brand heat and consumer
plans for each region, and increased our focus on the
engagement with our brand
local consumers, shifting resources as required to
• Failure to deliver and invest in strategy plans and
focus on growth opportunities in rebounding markets
capture market opportunities in countries where
while optimising revenues in markets most affected
economies are rebounding
by the pandemic
• Inability to capture demand as the luxury market
• In digital, we innovated and identified new ways to
polarises further and consumers become more
connect with our customers, especially those who
discerning in their purchases
could not visit our stores during the pandemic,
• Failure to create sufficient brand heat and
strengthening our digital luxury experiences and
engagement globally through our content
e-commerce capabilities
and marketing activations across
• Our Inspired People initiatives include replacing our
communication channels
annual questionnaire with shorter, more frequent
• Failure to provide newness and high-quality products
surveys. This has shown a marked increase in the
that excite global luxury consumers, and to bring
understanding of our strategic goals and
these to the market at speed without sacrificing
transformation plan within the Group
luxury quality
• Coordinated by the Strategy team, business owners
• Inability to achieve the required organisational
for each pillar have ownership of the plan and
alignment and enhance our capabilities and culture to
responsibility to deliver its objectives. They monitor
compete and grow effectively at the pace required to
the risk associated with each of the major
deliver the targets
programmes and track progress and benefits based
• Failure to sufficiently transform operational
on a set of lead indicators in order to assess progress
processes undermining our ability to deliver the
in product, communications, stores and digital
required cost savings and margin improvements
channel performance
• Failure to deliver the technology innovation required
• Looking ahead, we devised a plan to strengthen our
to empower changes in the Group’s business model
foundations, adapt to the COVID-19 environment,
and to deliver the anticipated benefits from key
and sustain the momentum we have built for our
investment strategies in Digital, Retail and
brand and product. Details of the strategic initiatives
Group Operations
forming our plan can be found on pages 24 to 43
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Image and reputation
The Group carefully safeguards its image and reputation. Unfavourable incidents, unethical behaviour or
erroneous media coverage relating to the Group’s senior executives, products, practices or supply chain
operations could damage the Group’s reputation and negatively impact the value of the brand.
As our customers continue to engage with the brand through multiple channels, including social media, a
misleading perception of the Group’s values and performance could potentially lead to a slowdown in sales as
well as loss of customers. Burberry’s increasing reliance on influencers in its marketing could potentially expose
the Group to increased reputational risk.
Risk movement and outlook
While internal enhancements have been made to further safeguard Burberry’s image and reputation, in the current
environment there is increased scrutiny of Burberry and a heightened risk of an escalation in geopolitical tensions.
The external environment of collaborators and influencers creates risk. Therefore constant monitoring is required to
ensure that Burberry’s image and reputation are protected.
Link to strategy
All strategic pillars.
Risk tolerance
Actions taken by management
• Training and monitoring of adherence by
personnel to the requirements in the Group’s
Responsible Business Principles
Protecting the brand and its reputation globally is at the heart
• Review process in place for any engagements
of everything we do. We have a moderate risk appetite in order
with collaborators, influencers or celebrities
to deliver our strategy supported by processes to avoid or
• Codified incident management policy,
mitigate any reputational/brand risk where possible.
monitoring of social networks and
response procedures
Examples of risks
• Oversight of mitigation of reputational issues
• An unfavourable incident relating to a senior executive,
by the Ethics and Risk Committees
erroneous media coverage or negative discussions on social
• The Group has established Corporate
networks could damage Burberry’s reputation
Responsibility standards, which aim to ensure
• An organisation, association, celebrity, influencer,
compliance with labour, human rights, health
collaborator or model associated with Burberry becoming
and safety and environmental standards
involved in a reputational incident could potentially lead to
across our operations and extended
pressure on Burberry to distance the brand from them and
supply chain
could reflect poorly on Burberry, negatively impacting
• Supplier audits and supplier training
Burberry’s reputation
programmes are in place to ensure compliance
• Unfavourable or erroneous media coverage or negative
in day-to-day operations
discussions on social networks about the Group’s products,
• Uphold our approval processes and editorial
content or practices could impact brand reputation
controls to ensure all product and content
• Unethical behaviour on the part of individuals or entities
is reviewed and signed off prior to
connected with the Group could attract negative attention
external release
to the brand
• Development of a global Diversity and
• If suppliers or partners do not respect the Group’s
Inclusion strategy and creation of an Internal
Responsible Business Principles this could reflect negatively
Diversity and Inclusion Council to support the
on Burberry
implementation of the strategy
• Alleged infringement or appropriation of third-party rights
• Increasing awareness of and training with
in connection with the production of content and design of
respect to Burberry’s Model Wellbeing Policy
product could negatively impact the reputation of the brand
to all people who engage with models on
• Failure of our people or those acting on Burberry’s behalf to
Burberry’s behalf, including employees,
adhere to Burberry’s Model Wellbeing Policy could result in
freelancers, casting agents, contractors and
reputational or legal risk
external third parties to ensure they adhere
• Failure to understand social issues and respect cultural
to the policy
sensitivities around product and marketing content could
• Undertaking of marketing risk analysis/risk
negatively impact Burberry’s reputation
register and implementation of mitigation
• Development of due diligence policy in
connection with retention of talent
and partners
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Global Chinese consumer spending
Global Chinese consumer spending patterns may significantly change having an immediate adverse impact on
Group sales. Any significant change to Chinese consumer spending habits globally due to changes in the
economic, regulatory, social or political environment in China, including a further health emergency or a natural
disaster, may adversely impact the domestic consumer group’s disposable income or confidence. Such changes
could also lead to Chinese consumers scaling back on travel, which could impact the Group’s global revenue and
profits outside Mainland China, which may not be fully compensated by the repatriation of spend in China.
Risk movement and outlook
The risk has increased since the prior year. Due to the continued reliance on Chinese consumers, the Group is
exposed to changes in their spending patterns which may result from shifts in the economic, social or geopolitical
environment. While our business in Mainland China has rebounded from COVID-19, the Group’s trading
performance could be impacted if there are further waves of the pandemic in Mainland China, or an escalation
in geopolitical tensions.
Link to strategy
All strategic pillars.
Risk tolerance
Actions taken by management
• Development and execution of Mainland China
strategy, including specific product designed for
Lunar New Year and additional marketing spend to
We accept a certain level of concentration risk in
support growth targets
relation to consumer nationality to maximise the
• Prior to the outbreak of COVID-19 there had been
greatest growth opportunities and to ignite brand heat
significant focus on building brand heat in Mainland
commensurate with our position in luxury fashion.
China. A clear strategy had been set, including
Examples of risks
building new strategic social partnerships, strategic
locations and making customer experiences,
• We suffer a major reputational shock in Mainland
storytelling and products more locally relevant. This
China causing brand fallout
strategy will continue assuming China continues to
• Burberry’s growth from Asia does not meet the
rebound from COVID-19
expectations either in magnitude or timing, especially
• Investment in inventory and technology to support
in Mainland China
Mainland China digital across our own platforms and
• Slower recovery in Asia from the global pandemic
those of our third-party partner platforms
because of reinfections
• Supporting investment and growth strategies in
• We are unable to recapture our share of the spend in
other global markets to reduce Burberry’s exposure
Mainland China because of the strength and success
to an individual country or group of customers
of our competitors, for example, in marketing
campaigns and investment in brand heat
• We are unable to capture additional consumer spend
in Mainland China to offset the loss of revenue as a
result of disruptions in Hong Kong S.A.R.
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Foreign exchange
Volatility in foreign exchange rates could have a significant impact on the Group’s reported results. Burberry is
exposed to uncertainty through foreign exchange movements. Major events such as the COVID-19 pandemic
continue to impact foreign exchange rates, which in turn could cause significant change in our Group reported
results.
Risk movement and outlook
The risk has not changed since the prior year. In light of the macroeconomic environment, geopolitical risks remain
heightened and foreign exchange rates remain volatile.
Link to strategy
Actions taken by management
Volatility in foreign exchange rates could impact our
• Burberry seeks to hedge anticipated foreign currency
overall financial performance.
transactional cash flows using financial instruments.
Risk tolerance
These are mainly in Burberry’s centralised supply
chain and wholesale business. Burberry does not
Burberry does not seek to manage structural foreign
hedge intra-group foreign currency transactions
exchange risk relating to its overseas retail operations.
at present
Examples of risks
• Burberry monitors the desirability of hedging the net
assets of non-pound sterling subsidiaries when
• Burberry operates on a global basis and earns
translated into pound sterling for reporting purposes.
revenues, incurs costs and makes investments in a
We have only entered into modest transactions for
number of currencies. Burberry’s financial results are
this purpose in the current and previous year
reported in pound sterling. Most reported revenues
• Burberry monitors the overall impact of unhedged
are earned in non-pound sterling currencies, with a
exchange movements and provides guidance to
significant proportion of costs in pound sterling.
shareholders if exchange rates move on a
Therefore, changes in exchange rates, which are
quarterly basis
driven by several factors, such as global economic
trends and the COVID-19 pandemic, could impact
Burberry’s revenues, margins, profits and cash flows
• Changes in exchange rates driven by global economic
trends could reduce the attractiveness of
international shopping for travelling tourists
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OPERATIONAL RISKS
Loss of data or cyberattack
A cyberattack results in a system outage, impacting core operations and/or results in a major data loss leading
to reputational damage and financial loss. A cyber risk-aware workforce and the Group’s technology
environment are critical to success. A robust control environment helps decrease the risks to core business
operations and/or major data loss.
Risk movement and outlook
The impact and likelihood of this risk is assessed to have not changed since last year.
Link to strategy
Actions taken by management
Having a cyber risk-aware workforce and resilient
• Governance provided through a cross-functional
technology landscape is integral to delivering our
Cyber Security Steering Group with Executive
strategy.
Risk tolerance
membership and sponsorship
• Continued investment in information security
capabilities
Protecting the brand and its reputation globally is at
• Improved security for remote working
the heart of everything we do. We adopt a strategy to
• Second line assurance checks reporting on control
avoid or mitigate key reputational/brand risks
effectiveness to Executive and IT management
wherever possible.
Examples of risks
through monthly scorecards
• 24/7/365 security monitoring and analytics capability
supported by security incident response processes
• Malware results in a loss of system control causing
• Information Security Advisory function to embed
business disruption and/or major data loss
security in new projects and initiatives
• Credential compromise of customer or employee
• Security training and awareness and phishing
accounts leading to business disruption and/or major
tests rolled out to employees globally with
data loss
completion monitoring
• Accidental personal data loss or disclosure leading to
• Implementation of solutions to help detect personal
regulatory fines
and sensitive data loss with improved control over
• Attack on Burberry.com causing business disruption
user access management
and/or major data loss
• Test responses to cybersecurity incidents
• Compromise or misconfiguration of externally
through simulations
facing assets causing business disruption and/or
• Data Privacy Steering Committee, a cross-functional
major data loss
group to review data controls around existing
• Fines due to failure to comply with EU General Data
systems and assess the potential data risks (from
Protection Regulation (GDPR) and/or equivalent
both a legal and reputational perspective) associated
applicable data protection legislation globally
with new IT, Marketing, Retail and Digital initiatives
across Burberry
• Ongoing collaboration between the Data Protection
office, Legal, IT and Information Security functions
to ensure policies are adhered to in respect to the
appropriate collection, security, storage, retention
and deletion of personal data
• In line with other organisations, Burberry encounters
information security incidents from time to time and
has policies, processes and technologies in place to
detect and respond to these as appropriate
• Burberry is independently audited against appropriate
information security standards with results being
submitted to the Risk and Audit Committee
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People
Inability to attract, motivate, develop and retain our people to perform to the best of their ability in order to
meet our strategic objectives.
Risk movement and outlook
There is no change to risk for this year. We continue to navigate uncertainty caused by the pandemic and changes
as a result of the UK’s withdrawal from the EU. Global trading disruption continues to impact our people’s ability
to meet planned business goals. However, we have experienced reduced levels of attrition, likely due in part to
external factors, and we anticipate that risk levels will diminish in the next fiscal year, assuming the impact of
the pandemic reduces.
Link to strategy
Actions taken by management
Delivery of our strategy relies on our ability to
engage and inspire our people to deliver
Leadership and culture
• All line leaders have a leadership objective and Diversity
outstanding results for the Group. This is
and Inclusion objectives included in their goals. Executive
accomplished through:
Committee members have overall accountability for
• strengthening capabilities and enhancing our
attracting and retaining diverse talent and fostering an
approach to talent management throughout
inclusive culture
the organisation
• Values integrated across the colleague life cycle with a
• fostering an inclusive culture where all
focus on moments that matter (for example, onboarding,
employees feel connected to their work
leadership development programmes, recognition, policies
• empowering and equipping leaders to lead
and talent processes)
through change
• Over the course of this year, we have enhanced our ability to
• simplifying how we work to enhance
source in-the-moment feedback from our colleagues, with
operational efficiency
three surveys completed with our new provider, Glint.
• rewarding performance and creating a pay for
Results shared with the Board in October 2020
performance culture
demonstrated that employees remained very engaged, had a
• engaging employees through our ongoing
strong connection with the brand and were ambassadors for
commitment to corporate responsibility
the future of Burberry. Leaders are held accountable for
• driving positive change to promote
delivering against agreed action plans following the
sustainability across the business
Employee Engagement Survey, with actions led at a central
Risk tolerance
• Leaders are equipped with regular strategy updates,
We recognise the value and importance of
including talking points on key topics and regular leaders
successfully delivering our Inspired People
calls for the director-plus population, to engage their teams
strategy and therefore have a low tolerance for
on our strategic priorities. The annual engagement survey
level for pulse surveys
risk in this area.
illustrated a positive shift in confidence in leaders from
69% in 2018 to 71% in 2019 and 75% in 2020
• Leadership Development Programmes were reimagined
for the COVID-19 environment. Four cohorts (with 25
colleagues per cohort) participated in the New Manager
Development Programme, which was designed to engage
and equip people managers across the organisation. The
programme is underpinned by Insights Discovery, a self-
awareness tool, which enables line leaders to develop their
management brand, decision-making preferences and
strengths. Our Executive Development Programme has
been overhauled and will be re-launched in the first quarter
of FY 2021/22
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People continued
Examples of risks
• Loss of critical talent/knowledge/
unmanageable levels of attrition due to change
Actions taken by management continued
Talent and careers
• Scaled learning opportunities for all our people through
fatigue heightened by challenging business
enhanced self-directed digital content
conditions
• Introduced global digital onboarding programme to elevate
• Failure to build the right capabilities and
colleague experience and embed our purpose and values
behaviours in our leadership population
• Designed and deployed new Talent Management approach
• The long-term impact of the UK’s withdrawal
to identify and engage high-potential talent and support
from the EU on the Group’s EU workforce
succession planning
• The impact of the downturn in business
• Enhanced the performance management process through
performance related to a macro event, such as
refined processes and systems, elevation of support
a global health emergency
material, and increased communications and leader
touchpoints
• Introduced standardised interview questions to ensure an
equitable experience, piloting anonymous screening of CVs,
and including diversity data monitoring forms in candidate
applications for voluntary and confidential disclosure
Reward and recognition
• Implemented the 2020 Directors’ Remuneration Policy,
which received strong shareholder support
• Simplified our retail commission and incentive schemes
to drive consistency and efficiencies, and ultimately
business results
• Introduced a new simplified long-term incentive plan, the
Burberry Share Plan (BSP), to drive performance through
retention and motivation of key talent
• Took positive decisions in response to COVID-19, including
maintaining base salaries for retail colleagues affected by
store closures, adjusting commission and incentive targets
and a discretionary payment under the annual bonus plan
to approximately 3,500 colleagues below the Board to
recognise individual performance and contribution to
the business
• Deployed a reimagined year-end global recognition
experience, which brought together all our people to
reinforce our values, celebrate our collective achievements
and recognise top performers
Diversity and Inclusion and employee relations
• The launch of a new Global Parental Leave Policy has seen
an increase in the amount of paid leave globally for all
employees, with all new parents receiving 18 weeks’ paid
leave and four weeks on reduced hours when they return
to work
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People continued
Actions taken by management continued
• The celebration of global events such as World Mental Health
Day, International Women’s Day and Black History Month (in
the USA and the UK) saw great participation across our
global employee population
• Deployed Diversity and Inclusion strategy and created
regional and functional Diversity and Inclusion action plans
• Deployed global training to embed Diversity and Inclusion
agenda. This includes allyship training, which we expect all
our people to complete by the end of 2021; mandatory
unconscious bias training for all our people; training for all
line managers as part of our annual reward review to ensure
all reward decisions made by managers are fair and balanced,
and specialised training for our Talent Acquisition team to
mitigate bias in recruitment
• Deployed a global Diversity and Inclusion Policy providing
clear accountability and behaviours for all employees
including contractors and third-party partners
• Creation of a Diversity and Inclusion calendar to ensure all
diversity events globally are captured and celebrated, feeding
into our Diversity and Inclusion strategy for building a truly
open and inclusive workplace
• Deployed a diversity monitoring dashboard to monitor our
Diversity and Inclusion targets
• Onboarded a diversity recruiter focused on senior level
roles globally
• All new starters now experience our global Diversity and
Inclusion strategy as part of their onboarding process
Wellbeing
• Launched a new dedicated wellbeing home page on Burberry
World to provide information, tools and resources to help
our people make small positive changes in their everyday
lives and bring their best selves to work
• Launch of new Mental Health digital learning to develop
awareness, identify signals and support the
destigmatisation and normalisation of talking about
mental health
• Launched four interactive energy sessions to help our people
take responsibility for their own mental and physical health
and speak openly about health and wellbeing
• Provided a selection of health and wellbeing webinars to
support employees in their daily lives: “Balancing Work and
Life”, “Connecting Mind and Body”, “Female Health” and
“Menopause Health”
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IT operations
IT operations fail to support critical processes across the Group, including Retail and Digital, as well as Group
functions, such as Supply Chain and Finance.
Risk movement and outlook
The impact of this risk has remained the same. Progress has been maintained on key system upgrades increasing
both resiliency and security, however, the likelihood has increased due to the organisational pressures of COVID-19
across IT functions and key technology partners. Continued focus on key risks and essential investment will be
maintained to further mitigate this risk.
Link to strategy
All strategic pillars.
Risk tolerance
Actions taken by management
• IT Portfolio Forum in place with Executive
representation to support IT investment decisions
and oversee delivery of prioritised IT programmes
We adopt a strategy to avoid or mitigate key risks to
and initiatives
the disruption of IT operations wherever possible.
• IT function has been strengthened with clear
alignment between the IT teams, the strategic pillars,
Examples of risks
business functions and operations
• Failure to provide technology platforms that meet
• Implementation of controls to help maintain the
customer demands and support innovation could
continuity of the Group’s IT systems, including
result in failure to deliver the strategy and loss
business continuity and IT recovery plans, which
of revenue
would be implemented in the event of a major failure
• Failure to provide stable and resilient technology
• A tested Group incident management framework
platforms that meet business demands across retail
is in place to report, escalate and respond to
and corporate sites could result in failure to deliver
high-impact events
the strategy and negatively impact operations due to
• Further evolution of the IT operating model with a
poor system performance and/or system outages
newly created Business Systems Platform function
to elevate the performance and security of core
systems, supported by a business-wide
steering community
• Core “re-platforming” objectives for critical IT
systems have been delivered both for Digital and
Enterprise Resource Planning, addressing key
operational and security risks
• Elevated focus on “key risks” to support decision-
making on operating budgets and investment in line
with the financial needs of the organisation relating
to the COVID-19 pandemic
• Adjustment of external technology partner network
and refocused delivery in line with current risk
appetite and strategic priorities
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Business interruption
A major incident impacts countries where the Group operates, has its main locations or where its suppliers are
located, and significantly interrupts the business. This could be caused by a wide range of events at a country
level, including geopolitical tensions, natural catastrophe, pandemic or changes in regulations, through to
localised issues, such as fire, terrorism or quality control failures.
Risk movement and outlook
The risk level of business disruption has remained the same as last year. There are proven procedures in place to
manage COVID-19 impacts, new ways of working to manage the UK’s withdrawal from the EU, and measures to
increase flexibility in the distribution network, for example, enabling digital shipping from our stores in the USA.
However, there is an increased risk of disruption to the supply chain as a result of geopolitical tensions. We expect
this risk to maintain a similar level into FY 2021/22. Even though vaccination programmes for COVID-19 are being
rolled out in various countries, the long-term impact of a more uncertain global economic environment, the potential
for key suppliers to face financial difficulties, and ongoing political and regulatory changes are still uncertain.
Link to strategy
Actions taken by management
Our Product and Distribution
• We have policies and procedures in place designed to ensure the health
strategic pillars enable us to operate
and safety of our employees and to deal with major incidents, including
effectively and efficiently. We
business continuity and disaster recovery
harness Operational Excellence to
• The Group continues to evolve its supply chain organisational design to
ensure continuity of supply of
develop its manufacturing base, reducing dependence on key sites
compliant products and services of
and vendors
the highest quality to our customers.
• A Group incident management framework is in place to ensure that
Our ability to continually execute and
incidents are reported and managed effectively. Across the Group, our
operate key sites and factories to
Incident Management Teams managed over 20 incidents in the year.
develop, manufacture, distribute
The two longest running events were related to the COVID-19 pandemic
and sell our products is a key
and the civil rights marches in the USA. In both cases, teams worked to
strategic priority.
mitigate the impact on our employees, customers and the business.
The remainder of these incidents were localised to fire, flood or weather
Risk tolerance
related issues or interruptions in the regular running of stores, offices
We have a low tolerance for risk in
and systems
this area, particularly in respect of
• Our GIMT and Regional Incident Management Teams all take part in
product safety and quality.
training and incident management exercises involving large parts of the
Group, our customers and media relations function. Our plans were
Examples of risks
tested through actual live events, like the COVID-19 pandemic and union
• Burberry operates three owned
strikes, and were found to be effective
factories and a global network of
• Our product suppliers and vendors are subject to a quality control
storage and distribution hubs.
programme, which includes regular site inspections and independent
These face typical property risks,
product testing
such as fire, flood and terrorism
• Robust security arrangements are in place across our store network
• Burberry works with several
to protect people and products in case of security incidents
suppliers of luxury goods, which
• Business continuity plans are in place for our eight main sites, including
could be difficult to replace
our three major distribution centres and our two UK factories. Business
quickly. Their loss could interrupt
continuity plans are being developed for our third factory, Burberry
the delivery of core products or a
Manifattura in Italy
seasonal range
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Business interruption continued
Examples of risks continued
Actions taken by management continued
• A serious product quality issue
• The Group’s key IT systems are protected to prevent and minimise any
could result in a product recall
potential interruption. This includes resilient design and the provision of
• Socio-political tension, like the
disaster recovery services to continue operating within pre-agreed times
Black Lives Matter movement in
in case of a major incident. Our plans as tested during the year were
the USA and UK, can significantly
found to be effective
impair local footfall and trade
• Management regularly reviews and manages business continuity and
• A global health emergency impacts
disaster recovery risks, recognising that these plans cannot always
a key market, which reduces
ensure the uninterrupted operation of the business, particularly in the
consumption or significantly
short term
impacts the supply chain
• A comprehensive insurance programme is in place to offset the financial
• Geopolitical tensions lead to trade
consequences of insured events, including fires, flood, natural
disruption between key countries
catastrophes and product liabilities
resulting in an inability to move
product between countries
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Strategic Report | Risk and Viability Report
COMPLIANCE RISKS
Regulatory risk and ethical/environmental standards
The Group’s operations are subject to a broad spectrum of national and regional laws as well as regulations in
the various jurisdictions in which we operate.
These include product safety, trade marks, bribery and corruption, competition, data, corporate governance,
employment, tax, trade compliance and employee and customer health and safety. Changes to laws and
regulations, or a major compliance breach, could have a material impact on the business.
Risk movement and outlook
The relative significance of this risk has increased because of the changing regulatory environment despite the
proactive and mitigating steps we have taken to ensure compliance.
Link to strategy
Actions taken by management
Compliance with applicable laws and
• The Group monitors and seeks to continuously improve
regulations and behaving in accordance with
processes to gain assurance that its licensees, suppliers,
our values as a business underpin all our
franchisees, distributors and agents comply with the Group’s
strategic pillars.
Risk tolerance
contractual terms and conditions, its ethical and business
policies, and relevant legislation
• Specialist teams at corporate and regional level, supported by
In complying with laws and regulations,
third-party specialists where required, are responsible for
including customer and employee safety,
ensuring the Group’s compliance with applicable laws, ethical
environmental and ethical legislation relevant
and business policies and regulations, and that employees are
to our operations and supply chain, as well as
aware of the policies, laws and regulations relevant to their
bribery and corruption, we have a low
roles
tolerance for risk.
• Ethical trading, environmental sustainability and community
investment matters reported to the Ethics Committee, Risk
Examples of risks
Committee and the Board
• Regulatory non-compliance
• Annual independent and internal assurance processes are in
• Failure by the Group or associated third
place to monitor compliance in a number of key risks, with
parties to act in an ethical manner
results reported to our Ethics Committee, Risk Committee and
consistent with our Code of Conduct,
Audit Committee
Responsible Business Principles and our
• We have an established framework of policies that aim to drive
Responsibility agenda with regard to model
best practice across our direct and indirect operations,
wellbeing, for example
including our Responsible Business Principles and Global
• Non-compliance with labour, human rights
Environmental Policy. Policies (available on Burberryplc.com)
and environmental standards across our
are owned by senior leadership and are issued to supply chain
own operations and extended supply chain
partners and form part of our contractual agreements with
could result in financial penalties, disruption
supply chain partners. Implementation of these policies is
in production and reputational damage to
monitored on a regular basis
our business
• In FY 2020/21 we updated and consolidated our Code of
• Failure to comply with GDPR and/or
Conduct for our people and third parties into one
equivalent applicable data protection
comprehensive document
legislation globally
• We have established a Data Privacy Steering Committee to
oversee compliance with applicable data legislation
• International tax reform is a key focus of attention with
significant developments reported to the Audit Committee
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Regulatory risk and ethical/environmental standards continued
Examples of risks continued
Actions taken by management continued
• Tax is a complex area where laws and their
• We have a wide range of programmes to support the
interpretations change regularly. Non-compliance by
communities we operate in, as well as those of our
Burberry and its associated third parties in this area
supply chain and the wider luxury industry.
could result in unexpected tax and financial loss
Community programmes focus on tackling
educational inequality and building cultural capital,
supporting social and economic development in
remote communities and fostering community
cohesion and employability skills
• Launch of annual mandatory training to employees
and to targeted functions to ensure awareness and
compliance with our policies governing anti-bribery
and anti-corruption, Market Abuse Regulations,
annual conflict declarations, criminal finances,
anti-money laundering and privacy
• Our culture and policies encourage employees to
speak up and report any issues without fear of
retribution. A global confidential employee helpline is
in place in almost all countries where we have retail or
corporate locations, and where it is legally permitted.
All calls and emails are logged and independently
reviewed and followed up. During the year, 158 cases
were received and the results and themes are
reviewed by the Ethics Committee. No significant
issues were identified from these cases during
FY 2020/21
• During FY 2020/21, our Responsibility team provided
training on the Modern Slavery Act to 158 members
of our internal supply chain, sourcing, internal
manufacturing and product teams. We have also
focused on raising awareness among our key finished
goods vendors
• In accordance with our Anti-Bribery and Corruption
Policy, annual training is required to be performed.
This year the annual e-learning module was rolled out
to all 2,859 corporate, manufacturing and retail
colleagues of manager level and above. The training
reached a 99% completion rate. Any incidents or
potential areas of concern are investigated by highly
experienced investigators in our Asset and Profit
Protection team and ABAC risks are covered as part
of the scope of Internal Audit reviews. During the
year there were no ABAC-related issues
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Strategic Report | Risk and Viability Report
Intellectual property and brand protection
Sustained breaches of Burberry’s IP rights or allegations of infringement by Burberry pose risk to the brand.
Counterfeiting, copyright, trade mark and design infringement in the marketplace could reduce the demand for
genuine Burberry merchandise and impact the luxury positioning of the brand.
Failure to implement appropriate brand protection controls in connection with our commitment to stop
destroying unsaleable finished products could negatively impact the integrity and the luxury positioning
of the brand.
Risk movement and outlook
The likelihood of risk remains the same since the last report in light of continued brand heat under our creative
direction; the frequent launch of new designs and motifs, which may not always be immediately protected, and the
potential increase of sales in the parallel market.
Link to strategy
Actions taken by management
Protecting the integrity of the brand, safeguarding and
• The Group’s global Brand Protection team is
elevating its luxury position, complying with applicable
responsible for brand protection efforts globally,
laws and regulations and doing the right thing underpin
online and offline. Where infringements are
all our strategic pillars.
identified these are addressed through a mixture
of criminal, civil and administrative legal action and
Risk tolerance
negotiated settlements
We have a low tolerance for risk in protecting the
• Trade marks, copyrights and designs are registered
integrity of the brand, asserting our IP rights and
globally across all appropriate categories
ensuring due respect is given to the IP rights of others.
• The Brand Protection team partners closely with the
Examples of risks
design teams to ensure that our products do not
infringe the rights of third parties and to ensure
• Counterfeiting, copyright, trade mark and design
that we have adequate protections in place prior to
infringement in the marketplace can reduce the
market entry
demand for genuine Burberry merchandise and
• The team explores new and emerging threats and
impact revenues
ways to combat threats
• Unauthorised use of trade marks and other IP, as well
• The team partners regionally with enforcement
as the unauthorised sale of Burberry products and
agencies and digital platforms to minimise the
distribution of counterfeit products, damages
visibility of counterfeit and infringing products both
Burberry’s brand image and profits
online and offline
• Brand heat as well as sophistication in counterfeiters’
• We aim to disrupt the flow of counterfeit products by
ability to manufacture at pace have increased
enforcing at source level
infringements and counterfeiting of our brand
• Brand protection controls have been implemented
• New branding may not immediately be protected and
to safeguard the brand in connection with our
we must rely on national laws to secure IP rights,
commitment to stop destroying unsaleable
which afford varying degrees of protection and
finished products
enforcement opportunities depending on the country
• Increased cancellation actions by third parties in
response to claims of infringement as well as increase
in bad faith filings in China
• Allegations from third parties of IP infringement by
Burberry could negatively impact Burberry’s
reputation, result in claims and financial loss through
withdrawing infringing products
• Distribution outside of our authorised network and
parallel trade could negatively impact the demand
for Burberry products and negatively impact our
luxury reputation
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Climate change
The success of our business over the long term will depend on the social and environmental sustainability of
our operations, the resilience of our supply chain and our ability to manage any potential climate change
impacts on our business model and performance.
As the global climate crisis becomes more critical, we recognise the importance of addressing long-term
sustainability challenges and potential impacts of climate change on our business in reputational, operational
and financial terms. Failure to implement appropriate cross-functional action plans and strategies,
incorporating the recommendations of the TCFD and Science Based Target initiative (SBTi), could hinder
efforts to mitigate long-term risks and future-proof our business.
Risk movement and outlook
The risk of climate change continues to be an increasing area of scrutiny globally and will continue to increase
incrementally year on year without significant science-based global mitigation efforts, from government, business
and their value chains and collaboration from wider industry and civil society. The Group’s ability to mitigate this risk
has remained flat.
Link to strategy
Actions taken by management
Our commitment to being an industry leader in
responsible and sustainable luxury underpins our vision
Physical risks
• Building on our work in FY 2018/19 and FY 2019/20,
to establish ourselves firmly in luxury fashion and
during FY 2020/21 we developed a quantitative
deliver sustainable, long-term value.
scenario-based analysis of climate-related risks that
Our commitment to be Net-Zero by 2040 and our
could impact the value chains of Burberry’s key
science-based targets across scopes 1, 2 and 3
commodities. For more information see
emissions form part of our response to climate change
pages 133 to 137
and our strategy to future-proof our business.
• To understand the key climate-related risks to
Risk tolerance
Burberry, the cross-functional TCFD working group
undertook a risk assessment across Burberry’s
We have a low tolerance for risk when it comes to
business to identify the key risks and vulnerabilities
protecting the human and environmental resources on
for our key commodities, both in terms of physical
which we all depend. However, given the long-term
and transitional risks. Multi-hazard risk maps were
nature of some sustainability risks and the level of
used to evaluate which hazards (such as drought,
uncertainty associated with their occurrence and
heat stress and flooding) and vulnerabilities (including
impact, we accept that some risks are inevitable. We
property damage and decreased productivity) had the
therefore focus on helping to minimise global risks while
most material impacts
building resilience in our operations and supply chain.
• In the short term, we are conducting specific analysis
Examples of risks
Physical risks
Acute
of the acute risk of our locations and operations
• We developed a quantitative scenario-based analysis
of material climate-related risks for the supply chains
of Burberry’s key commodities. The scenario analysis
• Increased severity of extreme weather events, from
was based on 2°C and 4°C scenarios, which reflect a
floods to droughts, could cause disruption in our
“best” and “extreme worst” case, and for which there
supply chain, impact our business model and affect
is sufficient quantity and quality of data available
the sourcing of raw materials, as well as the
• In our own operations and supply chain we continue
production and distribution of finished goods
to use the WWF water risk assessment tool and the
Aqueduct Water Risk Atlas to identify current risks,
anticipate potential future strains on water resources
and understand emerging long-term risks
• We use our Net-Zero target and science-based
targets to focus our efforts in order to address
our GHG emissions along our entire value chain
(see page 86)
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Strategic Report | Risk and Viability Report
Climate change continued
Examples of risks continued
Physical risks continued
Chronic
Actions taken by management continued
• We support a number of industry initiatives that
address climate change impacts, including the British
• Our industry is sustained by many agricultural and
Retail Consortium’s Net Zero commitment, RE100,
manufacturing communities around the world.
Ellen MacArthur Foundation’s Make Fashion Circular
Longer-term shifts in climate patterns and loss
Initiative, New Plastics Economy Global Commitment,
of biodiversity caused by changes in precipitation
UN Fashion Industry Charter for Climate Change,
patterns, rising mean temperatures and rising
The Fashion Pact, Accounting for Sustainability
sea levels could cause social, economic and
and SFA
operational challenges
• We invest in programmes that help to sustain our
• Failure to address and mitigate these risks could
industry and supplier communities, specifically
result in resource availability limitations (for example,
initiatives that support social economic development
cotton, leather and cashmere) and disruptions to key
in remote communities and promote more sustainable
business and supply chain operations
herding practices in the cashmere industry, working
Transitional risks
Policy and legal
with SFA, PUR Projet and Oxfam. In addition, we
also support programmes that build employability
skills in the circular economy, with partners including
• Increased regulation and more stringent
Elvis & Kresse and Progetto Quid
environmental standards could impact our business
• We have a Regeneration Fund to support nature-
by affecting operational and production costs and
based compensation and insetting projects in the
flexibility of operations
Market
supply chain that will reduce the carbon impact of key
raw materials our industry depends on, and improve
• Resource scarcity, coupled with increasing demand
biodiversity and local producer livelihoods
and changes in customer behaviour, could affect
• We continuously engage and educate employees
the production, availability, quality and cost of
around the topic of climate change through focused
raw materials
Technology
events, strategic communications, volunteering
opportunities and through our network of
• Substitution and transition costs associated with
Responsibility Champions
implementing new low impact technologies
Reputation
• Failure to meet consumer demand for sustainable
Transitional risks
• As part of the quantitative scenario-based analysis of
products and services could threaten our relationship
climate-related risks conducted in FY 2020/21, we
with customers, employees, regulators and interest
modelled the impact of transitional risks such as
groups, which could impact Group revenues
the introduction of mandatory, globally applied
carbon taxes
• Through our memberships with various industry
bodies, associations and external assurance partners,
we contribute to consultations and keep informed of
upcoming environmental legislative changes
• Environmental sustainability matters are reported to
the Sustainability Steering Committee, the Ethics
Committee, the Risk Committee and the Board
• Our longstanding responsibility programmes, coupled
with our Responsibility goals, are driving continuous
improvements in moving beyond social and
environmental compliance
• We identify and explore scarce resources while also
developing alternative materials through research
and development. For example, in FY 2020/21 we
worked in partnership with HKRITA to develop a
system to recycle post-consumer leather goods
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Strategic Report | Risk and Viability Report
Climate change continued
Actions taken by management continued
• Our target is for 100% of our products to have more
than one positive attribute by 2022
• We continue to increase our sustainable product mix,
by including recycled content, bio-based materials
and more sustainable cotton in our collections. During
FY 2020/21 we established new raw material
sourcing and traceability targets. Full details can be
found in the ESG section on pages 60 to 91
• In FY 2020/21 we expanded our product sustainability
messaging to make customers aware of improved
sustainability credentials, through the ReBurberry
Edit and BConscious label. This includes dedicated
sustainability labelling across all key product
categories. The labels provide customers with an
insight into the industry-leading environment and
social credentials of the Burberry programme.
The pistachio-coloured sustainability labels indicate
how a product meets a range of externally assured
stringent criteria. Defined as “positive attributes”,
these include the amount of organic content or
recycled natural fibres used in materials
• As part of the scenario analysis, we assessed
long-term technological trends that could
significantly impact our business model
• Our IT Innovation team is exploring new systems and
ways in which sustainability priorities can be
supported by advancements in technology
• We continue to increase our focus on a zero-waste
mindset across the business and have a clearly
defined waste hierarchy. We have established a waste
baseline and are setting targets and KPIs that will
cover operational, manufacturing and finished goods
waste as well as packaging. Since FY 2018/19 we
have publicly committed to not destroy unsaleable
finished products
• Our climate goals are approved by the SBTi. We also
advanced our climate change commitments during
the year by committing to be Net-Zero by 2040
• In line with the increased expectations of our
stakeholders, we are providing greater transparency
in our corporate reporting, as well as participating in
a number of ESG investor indices, including the 2020
Dow Jones Sustainability Index and the CDP A List,
and achieved Gold Class Distinction in S&P Global’s
Sustainability Yearbook in 2021
131
Strategic Report | Task force on Climate-Related Financial Disclosures (TCFD)
TASK FORCE ON CLIMATE-
RELATED FINANCIAL
DISCLOSURES
The climate crisis is accelerating, and Burberry’s objective is
to help reduce global warming levels to those defined by the
Paris Agreement of 2°C or less, by mid-century.
We believe this means achieving a Net-Zero emissions
the CO&FO, who is also the Co-Chair of the Prince’s
world by 2040, a decade ahead of the Paris Agreement.
Trust CFO Leadership Network for the Accounting for
To achieve the goals of the Paris Agreement, we
Sustainability initiative, the Chief Supply Chain Officer,
recognise the importance of disclosing climate-related
the Chief People Officer, the Head of Ready to Wear,
risks and opportunities in line with the recommendations
Senior Vice President Strategy, Vice President
of the TCFD.
Corporate Responsibility and Vice President
Corporate Relations.
The success of our business over the long term will
depend on the social and environmental sustainability of
The cross-functional TCFD working group, which
our operations, the resilience of our supply chain and our
includes members from the Risk Management,
ability to manage the impact of any potential climate
Finance and Responsibility teams, has defined the risk
change on our business model and performance.
management methodology and approach for identifying
and assessing climate-related risks. The TCFD working
Our longstanding commitment to sustainability is
group reports to the Risk Committee, which is chaired
evidenced by our issuance of a Sustainability Bond,
by the CO&FO. In addition, our Enterprise Risk
the proceeds of which will be used to finance eligible
Management process enables us to identify, assess and
sustainable projects, as well as our inclusion in the
manage all risks, both existing and emerging, that may
CDP 2020 A List, a group of companies leading the
impact our strategic objectives. When sustainability and
way to a more sustainable future.
climate-related risks are assessed, existing mitigating
In implementing the recommendations set by the
relevant and appropriate, additional activities and
TCFD, we have provided a summary of the actions we
controls are implemented. Progress against these
have taken to review the key risks and opportunities
mitigating activities is assessed by the Risk Committee,
arising from climate change, and the potential impacts
and is subject to independent and objective review by
activities and controls are highlighted, and, where
on our business.
Governance
The Board takes overall accountability for the
management of all risks and opportunities, including
Internal Audit as part of the annual audit plan. The Audit
Committee reviewed the work performed by the TCFD
working group, including progress against the four
TCFD pillars and proposed disclosure.
climate change. Our CEO is responsible for oversight of
The remuneration of the Executive Directors is partly
our climate change agenda. The Board receives updates
linked to our progress in building a more sustainable
on sustainability-related matters at least once a year,
future. More details of this are set out in the Directors’
including those related to climate change.
Remuneration Report on pages 180 to 203.
The Group’s strategy on environmental and climate-
related impacts is governed by the Sustainability
Steering Committee, which convenes three times per
year to review progress, and is chaired by the CEO, who
is also on the steering committee of the Fashion Pact.
The Sustainability Steering Committee is attended by
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Strategic Report | Task force on Climate-Related Financial Disclosures (TCFD)
Strategy and risk management
Climate change has been identified as a principal risk to
We have implemented a number of initiatives to help
inform our longer-term strategy. These are discussed
Burberry, which has the potential to impact our business
further in the ESG section (pages 60 to 91). We have
in the short, medium and long term. The physical risks
also initiated conversations with key raw material
and opportunities that we face from climate change
commodity partners to gain deeper insights into the
include water scarcity and raw material availability.
most material climate change risks for each commodity
The transitional risks and opportunities include changing
in order to understand how we can mitigate these risks
consumer preferences and future policy and regulation.
and build innovative solutions.
The process for assessing and identifying climate-
During FY 2020/21, we developed a quantitative
related risks is the same for all principal risks and is
scenario-based analysis of climate-related risks that
described on pages 106 to 107.
For each principal risk we have a risk management
could impact the value chains of Burberry’s key
commodities: leather, cotton and cashmere.
framework detailing the controls we have in place and
The cross-functional TCFD working group used our
those responsible for managing both the overall risk
climate change scenario analysis performed in
and the relevant mitigating controls. We monitor risks
FY 2019/20 and FY 2018/19 to model the risks of
throughout the year to identify changes in the risk
climate change focused on our key commodities.
profile. Management of climate-related risks is
This included aligning our qualitative climate scenarios
distributed throughout the organisation depending on
with industry reference scenarios using Representative
where the risk resides. For example, climate risks in
Concentration Pathways (RCPs), which are used by
relation to raw materials in the supply chain are
climate scenario scientists to model the potential
managed by our procurement team responsible for
physical changes in the climate between now and 2100.
buying commodities.
Complementing the RCPs, we also used Shared
Socioeconomic Pathways (SSPs) data, which is employed
In September 2020, Burberry issued a £300 million,
to model the potential socioeconomic changes needed to
five-year Sustainability Bond. This was the first
tackle climate change between now and 2100.
sustainability labelled bond issued by a luxury company
and diversifies Burberry’s sources of funding, introducing
To understand the key climate-related risks to Burberry,
long-term financing into the Company’s capital
the cross-functional TCFD working group undertook a
structure. The proceeds will be used to finance and/or
risk assessment across Burberry’s business to identify
refinance eligible sustainable projects as described by
the key risks and vulnerabilities for our key commodities,
Burberry’s Sustainability Bond Framework, inextricably
both in terms of physical and transitional risks.
linking Burberry’s medium-term financing to sustainable
Multi-hazard risk maps were used to evaluate which
projects and driving our climate change agenda.
hazards (such as drought, heat stress and flooding) and
vulnerabilities (including property damage and decreased
productivity) had the most material impacts.
134
Strategic Report | Task force on Climate-Related Financial Disclosures (TCFD)
Risks and impacts aligned with TCFD recommendations
Raw Materials Cultivation
Manufacturing
Distribution
Customer
End of Life
and Processing
and Packaging
and Retail
Estimated share of carbon emissions
45-50%
15-20%
20-25%
0-5%
0-5%
Long-term shifts in precipitation patterns, rising temperatures and sea levels, and increased
severity of weather-related events, such as flooding and drought.
Physical risks
Changes in availability and cost
of raw materials
Decreases in productivity and disruption to processes
Damage to property and assets
Transitional risks
Occur when moving towards a low-carbon economy.
Increased compliance costs and reporting obligations
Increased costs from introduction of carbon taxes
Substitution and transition costs to lower emissions technology
Shifts in consumer preferences
135
Strategic Report | Task force on Climate-Related Financial Disclosures (TCFD)
Risks and impacts aligned with TCFD
recommendations
Based on our scenario analysis, we developed a
We will update our scenario modelling as more climate
data becomes available. In addition, we will assess the
risks and opportunities presented by potential shifts in
quantitative analysis of the impact from climate-related
consumer preferences.
risks on Burberry’s supply chain for the key commodities.
The analysis included an assessment of the impact of
The results of our scenario analysis will be used to
the most material physical and transitional risks in two
ensure the necessary mitigating controls are in place,
distinct scenarios: 2°C and 4°C pathways to the
support Burberry’s risk management activities and
year 2050.
inform future business strategies.
The 2°C and 4°C scenarios are constructed on the basis
Our approach and commitment to sustainability has
that average global temperatures will have increased by
been recognised by inclusion in the Dow Jones
2°C and 4°C by the year 2100. As informed by our
Sustainability Index for the sixth consecutive year,
Net-Zero targets, Burberry believes the world should
achieving our highest ever score in 2020. In addition,
seek to limit global temperatures to 1.5°C above
Burberry received Gold Class Distinction in the S&P
pre-industrial levels.
Global Sustainability Yearbook in 2021.
However, we have modelled scenarios based on 2°C and
4°C scenarios, which reflect a “best” and “extreme
Metrics and targets
We have been measuring and reporting our energy
worst” case, for which there is sufficient quantity and
consumption and carbon emissions since FY 2012/13 and
quality of data available. We have chosen to model our
water consumption since FY 2016/17, which are assured
scenarios to 2050 as this represents a medium-term
by PwC.
period, in which we are broadly able to influence current
or upcoming decisions around strategies, capital
We align our reporting against climate-related metrics
allocations, costs, and revenues.
to recognised standards, including the GHG Protocol. In
addition, we have Company targets, which cover absolute
Our analysis on the key commodities illustrates that,
energy and carbon reductions, renewable energy
without action, both scenarios present financial risks to
procurement and delivery of products with positive
Burberry. These financial risks predominantly result
attributes (covering social and environmental metrics).
from increased cost of raw materials, decreased
productivity, and the potential impact of carbon taxes in
Further information on our non-financial KPIs can be
the 2°C scenario. However, we have also identified that
found on page 45. Performance is measured against
the financial impact of physical hazards causing damage
the aforementioned targets and metrics, and, where
to property and assets is limited over this time period.
appropriate, senior leadership team members have direct
accountability against meeting Company targets.
With respect to transitional risks, our climate targets
are one of the ways we mitigate the risk of future policy
and regulation, including carbon taxes. In FY 2020/21,
93%^ of our electricity consumption was powered by
renewable sources. We are on track to meet our 2022
target to have 100% of renewable electricity sourced in
our direct operations.
136
Strategic Report | Task force on Climate-Related Financial Disclosures (TCFD)
Two of our GHG reduction targets are recognised as
We have revised our ambitions beyond 2022 to meet a
science-based: to reduce absolute scope 1 and 2 GHG
Net-Zero 2040 goal, which will include a transition road
emissions by 95% by 2022 and to reduce absolute
map for reducing GHG emissions. We recognise that
scope 3 GHG emissions by 30% by 2030, both from
meeting our climate-related targets is dependent on
a FY 2016/17 base year.
collective action and focus. Foremost are countries
implementing their Paris commitments and increasing
• Scope 1 and 2 target focuses on GHG emissions from
them to more ambitious levels. Improving the market
our direct operations (including electricity and gas
conditions for clean energy supply, such as the rate of
consumption at our stores, offices, internal
installation of renewable electricity in many countries,
manufacturing and distribution sites)
reducing costs and the availability of purchase power
• Scope 3 target relates to indirect GHG emissions
agreements will help shift the rate of decarbonisation
in our extended supply chain (such as from the
at scale. We believe we have a role in helping to shape
sourcing of raw materials and manufacturing of
the policy and regulation required and are working
finished goods)
collaboratively with partners, suppliers and other
organisations to achieve our ambition, including the
This year we also increased our commitments to
United Nations Global Compact, the Fashion Pact,
sustainable raw materials and have set 2025 targets to
The UN Fashion Charter, RE100 and the Prince’s
source 100% organic cotton, 100% certified leather and
Trust Accounting for Sustainability project.
100% recycled nylon and polyester.
Our Sustainability Bond (see pages 92 to 93) requires
Groups (Accounts and Reports) Regulations 2008 as
annual reporting on how proceeds have been allocated to
amended by the Companies Act 2006 (Strategic Report
eligible sustainable projects, any unallocated proceeds,
and Directors’ Report) Regulations 2013, our GHG
In line with the Large and Medium sized Companies and
and an impact review.
emissions are set out on page 86. Each year PwC
provides limited assurance over environmental metrics,
In addition, we monitor the percentage of low-carbon
including carbon emissions data.
products, which comprise recycled or bio-based content,
as well as those which are manufactured in facilities
proactively reducing their emissions impact. When
defining metrics and targets we consider them in
two ways:
Mitigation metrics
Monitoring metrics
% reduction in absolute
energy consumption
% of energy procured from
renewable sources
% reduction in location-
based tCO2e versus base
year (FY 2016/17)
% reduction in market-
based tCO2e versus base
year (FY 2016/17)
% of low-carbon products
tC02e reductions in scope 3
emissions
To date, in line with our Science Based Targets, we have
reduced our scope 1 and 2 emissions by 84% compared
to FY 2016/17 and reduced our scope 3 emissions from
purchased goods and services by nearly 8,700 tonnes.
137
Strategic Report | Risk Management Activities in FY 2020/21
RISK MANAGEMENT
ACTIVITIES IN FY 2020/21
The Board and its Committees undertook a number of risk management activities throughout the year.
Identification of risks
Management actions and deep dives
Monitoring of risks
We identify and review risk through two processes:
Compliance functions provide independent assurance to
management, the Audit Committee and the Board on the
• A “bottom-up” process undertaken across the
effectiveness of management actions.
Group’s business areas and functions to identify and
manage risks in their areas
Our Internal Audit function periodically reviews the risk
• A “top-down” process overseen by the Risk
management process. Third-party reviews have been
Committee to identify key risks to our
performed on cybersecurity and health and safety.
strategic priorities
During the year, the key risks identified through these
strategic pillar undertake regular reviews of progress
two processes were mapped against each other and
towards our strategy with the Executive Committee and
were reviewed and revised to reflect changes in the
the Board. Additionally, we have undertaken a number of
business and the external environment.
“deep dives” at Board and Audit Committee level into
Our Strategy team and the business owners for each
the management of the risks being examined:
The Group principal risks were then regrouped to
produce a revised schedule of principal risks, which were
• COVID-19: the GIMT continued to coordinate the
discussed at our Risk Committee and presented to the
business response to the COVID-19 outbreak
Audit Committee in May 2021.
• Strategy: an exercise was performed with the
Emerging risks
Potential emerging risks have always been an area of
Executive Committee to identify the risks to
delivering the new strategic objectives. This was
reviewed and presented to the Board
focus, however, an exercise has been performed to
• Climate change: presentation to the Risk and
identify and disclose these.
Strategic risk
An exercise was performed with the Executive
Audit Committees on climate-related risks and
opportunities, as well as committing to implementing
the recommendations of the TCFD
• Digital: Board presentation on Digital strategy and
Committee to identify the risks to delivering the
technology risk presented by the senior digital
strategic objectives. This was reviewed and presented to
leadership team
the Board.
• Image and reputation: a deep dive analysing the
threats to the Group’s image and reputation
Risk appetite
The Group’s risk appetite and tolerance levels were
• Risk appetite: the Board performed its annual review
and discussion of the Group Risk Appetite statement
presented to the Board and approved in March 2021.
in March 2021
These will be used to set tolerance limits and target
• IT/Cyber: report to each Audit Committee on IT
risks for each of the principal risks and refine
and cybersecurity
mitigation plans.
138
Strategic Report | Risk Management Activities in FY 2020/21
Identification of risks
Management actions and deep dives
• Compliance and legal: regular reports on compliance
matters and risks to the Ethics and Risk Committees,
including updates on IP, legal matters, health and
safety, data privacy and compliance with GDPR
• Talent management: annual discussion on
succession planning at the Nomination
Committee meeting
• Operational: presentations to the Board on inventory
and the supply chain, regular reports on quality risks
• Financial: presentation to the Audit Committee on
the Group’s Tax Policy
• Change programmes: presentation to the Board on
the Group’s major transformation programmes
across IT and HR
• The UK’s withdrawal from the EU: the Group has
engaged proactively with key external stakeholders
and established a cross-functional internal steering
committee to implement operational actions as a
result of the UK’s withdrawal from the EU in
December 2020
139
Strategic Report | Our Viability Statement
OUR VIABILITY
STATEMENT
Corporate planning process
Burberry’s annual corporate planning process consists of
The Group’s strategy is set out on pages 24 to 43. Key
strategic focus areas to respond to the current industry
preparing a long-term strategic plan, forecasting the
backdrop are:
current year business performance and preparing a
detailed budget for the following year. These plans form
• Brand: a strong luxury positioning is paramount during
the basis for assessing the longer-term prospects of the
this period. Burberry will continue to strengthen its
Group. Our strategic planning process includes detailed
luxury positioning, including prioritising investment in
reviews of the budget, forecasts and long-term plan by
inspiration. In this environment, consumers are likely
our CEO and CO&FO in conjunction with our regional
to become increasingly discerning in their purchases,
and functional management teams, followed by a
orientating towards strong brands, and market
presentation and discussion of the strategic plan at the
performance is likely to polarise further between
Board. Delivery against the plan is monitored through
luxury and mass and accessible fashion. Diminished
our monthly reporting on actual performance, the
demand in certain markets is also likely to increase
annual budget process and subsequent forecast
competition and reinforce the importance of investing
updates (see pages 36 to 37).
in brand and inspiration
• Localisation: the COVID-19 outbreak has resulted in
The key assumptions considered in our strategic plan
reduced travel and disparate economic growth by
are future sales performance by product, channel and
region. This continues to make a localised approach
geography, expenditure plans, cash generation, and
more important. In line with this, we will continue to
that there is no material long-term impairment to the
adopt tailored and bespoke localised plans to ensure
Burberry brand. We also consider the Group’s projected
we optimise revenue opportunities in all markets
liquidity, balance sheet strength and the potential impact
• Direct to consumer and digital: the COVID-19 crisis
of the plan on shareholder returns. Where appropriate,
had a continuous impact on luxury distribution
we have made adjustments to our planning process and
throughout 2020 and is likely to continue to
key assumptions as a result of the impact of COVID-19
impact 2021. With wholesale facing short-term
as detailed below.
challenges, the crisis has demonstrated the
importance of a direct-to-consumer approach,
Assessment of prospects and impact of
COVID-19
In early 2020, the COVID-19 outbreak severely impacted
particularly digital. In this respect Burberry is well
positioned. In FY 2020/21, we generated over 80% of
our sales through the retail channel and we continue to
communities worldwide, which affected the luxury
demonstrate leadership in digital
market and our business. We remain confident in our
• Product, inventory and supply chain: in the short
ability to consolidate our position in luxury fashion and
term, we expect a greater consumer shift towards
remain committed to the strategic vision for Burberry.
leather goods offering, casualwear and entry price
Our strategic initiatives have been shaped to the current
points. Again, Burberry is well positioned in this
pandemic situation with focused execution to ensure a
respect having transformed its product offer, including
continuing successful recovery.
its leather goods assortment. We have been improving
supply chain agility and amending our seasonal
calendar to optimise sell through of our current and
future collections
140
Strategic Report | Our Viability Statement
• Balance sheet and liquidity: managing the COVID-19
crisis required very tight control of cost and cash
management. We have prepared and delivered cost
and cash mitigation plans during the year and will
continue to closely monitor costs and cash as we
navigate out of the pandemic. Our objective is to
manage the business efficiently and flexibly,
maintaining control and preserving the long-term
value of the Burberry brand while ensuring we
secure the financial headroom required to fuel
• It is sufficient to almost cover all currently approved
capital expenditure projects
• As the Group has little contracted income, and as
most current business development projects will
be completed in the three-year period, projections
beyond this period will contain long-term
growth assumptions
Scenarios
A range of scenarios have been developed. These
growth as market opportunities arise. The business
scenarios were informed by a comprehensive review
is expected to remain strongly cash generative
of the macroeconomic scenarios using third-party
creating further optionality for investment or
projections of scientific, epidemiological and
increased returns to shareholders
macroeconomic data for the luxury fashion industry:
We remain confident in our strategic direction.
• The Group central planning scenario reflects a
Our priorities as we navigate through this period of
balanced projection with a continued focus on
uncertainty will be to focus our investment on market
growing markets, maintaining momentum built in
and channel opportunities as countries recover from the
FY 2020/21 as part of the customer strategy, with
pandemic and to maintain sufficient liquidity to manage
growth in FY 2022/23 and FY 2023/24
the business.
• As a sensitivity, this central planning scenario has
been flexed to reflect a 26%, 15% and 9% downgrade
Viability assessment approach
In light of the continued uncertainty of the impact of
to revenues in FY 2021/22, FY 2022/23 and
FY 2023/24 respectively, as well as the associated
COVID-19 on our business, we have prepared a number
consequences for EBITDA and cash. Management
of planning scenarios based on a range of assumptions
consider this represents a severe but plausible
and potential outcomes. In assessing the viability of the
downside scenario appropriate for assessing going
Group, the Board has carried out a robust assessment of
concern and viability. This was designed to test an
the principal risks of the Group, including those arising
even more challenging trading environment as a
from the COVID-19 virus, as set out in the Risk Report
result of COVID-19 together with the potential
on pages 106 to 131, and the principal risks and
impacts of one or more of the Group’s other principal
uncertainties as set out on page 106 to 107. The
risks, as described below
Directors have considered the potential impact of the
• For the purposes of the reverse stress test, we have
risks on the viability of the Group.
Basis of assessment
The assessment of viability has been made with
considered the plausibility of a scenario that erodes
the remaining cash headroom by reference to the
lowest cash level in the annual business cycle. This
test identified that even under the severe but
reference to the Group’s current position and
plausible downside, at the point of the lowest cash
expected performance over a three-year period to
level and prior to any other mitigating actions, the
March 2024. This is considered appropriate for use
Group can withstand an additional one-off revenue
by the Directors because:
impact of circa £500 million before the Group runs
• It aligns with the Group’s approach to
long-range planning
out of cash
141
Strategic Report | Our Viability Statement
The severe but plausible downside modelled the following
risks occurring simultaneously:
Funding
In assessing the viability of the Group, the Directors
have also considered the Group’s current liquidity and
• A significant impact on revenue in FY 2020/21
available facilities (set out in note 28 of the Financial
compared to the central planning scenario caused by
Statements), financial risk management objectives and
the impact of a reputational incident such as negative
hedging activities (set out in note 28). In our central
sentiment propagated through social media
planning and severe but plausible downside scenarios,
• A longer-term decrease in revenue during the
the Group maintained the necessary liquidity levels.
three-year period caused by a resurgence of the
On 21 September 2020, the Group issued a five-year
pandemic and store reclosures
£300 million 1.125% unsecured sterling Sustainability
• The impact of prolonged recovery of travel to
Bond. The Group also has access to a £300 million
2019 levels
RCF, currently undrawn and not relied upon in the
In modelling the reverse stress test we have also
considered wider sensitivities as a result of one, or a
combination of, the other Group principal risks occurring:
viability assessment.
Conclusion
Based on this assessment, our Directors have a
reasonable expectation that the Group will be able to
• Foreign exchange volatility impacted by changes to
continue in operation and meet its liabilities over the
macroeconomic forces
period to March 2024. In making this statement, the
• The impact of one or more of the principal risks arising
Directors have assumed there is no material long-term
from one-off events, represented by a £100 million
impairment to the Burberry brand.
reduction in annual profit and cash, for example
business or supply chain interruptions within Burberry
The Strategic Report up to and including page 142 was
and its vendors as the business recovers from the
approved for issue by the Board on 12 May 2021 and
pandemic or a cyberattack resulting in significant
signed on its behalf by:
loss of data
This approach provides the Board reasonable comfort
Chief Executive Officer
Marco Gobbetti
that the Group’s going concern and viability positions
have been assessed to a severity level, which more than
accommodates the current assessment of the shape
and scale of the economic impact of the COVID-19
pandemic and the impact of one or more of the
Group’s principal risks.
142
Strategic Report | Our Viability Statement
CORPORATE GOVERNANCE
STATEMENT
146 Board Leadership and Company
166
Composition, Succession and Evaluation
Purpose
146 Chairman’s Introduction
148 Board of Directors
166 Board Evaluation
168 Report of the Nomination
Committee
Executive Committee
173
Audit, Risk and Internal Control
Corporate Governance Report
173
Report of the Audit Committee
152
153
155
180 Remuneration
180 Directors’ Remuneration Report
204 Directors’ Report
Principal areas of focus for the
Board during FY 2020/21
162 Division of Responsibilities
162 Governance Structure and
Division of Responsibilities
144
Corporate Governance Statement | Board Leadership and Company Purpose
CHAIRMAN’S INTRODUCTION
“COVID-19 IMPACTED THE
WAY THE BOARD AND
BOARD COMMITTEES
WORKED THROUGHOUT
FY 2020/21. WE ADAPTED
OUR PROCESSES TO
ENSURE THAT WE COULD
CONTINUE TO OPERATE
EFFECTIVELY”
Gerry Murphy
Chairman
Dear Shareholder,
On behalf of the Board I am pleased to present the
Stakeholder engagement
The Board recognises its duties and responsibilities to
Corporate Governance Report for the year ended
our shareholders and other stakeholders and, during
27 March 2021. This report describes Burberry’s
FY 2020/21, continued to partner closely with
Corporate Governance structures and procedures,
management to safeguard our colleagues, customers,
and summarises the work of the Board and its
communities and our business. More detail regarding the
Committees to illustrate how we have discharged
actions the Board has taken to support our stakeholders
our responsibilities this year.
and consider their interests in its strategic planning and
decision-making processes is set out on pages 96 to 104.
As Chair, I am responsible for leading and ensuring an
effective Board. COVID-19 impacted the way the Board
The Global Workforce Advisory Forum met twice during
and Board Committees worked throughout FY 2020/21.
FY 2020/21. I attended both meetings together with
We adapted our processes to ensure that we could
Orna NíChionna, Chair of our Remuneration Committee.
continue to operate effectively. All of our meetings were
At the first meeting we sought feedback and advice on
held virtually and we made changes to the timing and
Burberry’s response to the pandemic in terms of
length of meetings to accommodate the various time
executing our strategy, helping customers and
zones of our Board members globally. In addition to our
supporting colleagues and communities. The second
formal Board and Committee meetings, the Board was
meeting focused mainly on remuneration topics which
updated regularly by management on the Group’s
are discussed in more detail on page 184 of the
dynamic and agile response to the pandemic. I would like
Directors’ Remuneration Report. The Board very much
to pay tribute to my Board colleagues for their flexibility
appreciates the honest conversations, constructive
and outstanding support throughout the year and I am
feedback and valuable insights received from colleagues
particularly grateful to those who, due to their location,
across the world through the Forum.
attended meetings at very unsociable hours.
146
Corporate Governance Statement | Board Leadership and Company Purpose
Purpose, values and culture
At Burberry, we believe that creativity opens spaces. Our
Board effectiveness
The Board undertook an externally facilitated review of
purpose is to unlock the power of imagination to push
its effectiveness during the year led by Independent
boundaries and open new possibilities for our people, our
Audit. The process undertaken and the findings of the
customers and our communities. We aspire to be
review can be found on pages 166 and 167 together with
creatively driven, open and caring, proud of our heritage
an update on our progress in addressing the actions
and forward thinking. Our purpose and values inform our
identified following the FY 2019/20 review.
strategy, decision-making and our relationships with
stakeholders, and help shape our culture.
During the year, we acted decisively to embed our
Compliance with the UK Corporate
Governance Code
Burberry complied with the requirements of the UK
purpose and values in decision-making and both internal
Corporate Governance Code during FY 2020/21 with
and external communications. As part of this drive, we
the exception of Provision 38 which refers to Executive
have evolved critical stages of our people’s experience at
Directors’ pensions compared to wider workforce. As
Burberry, for example, by creating a new onboarding
explained in the Directors’ Remuneration Report, this
programme, which introduces our purpose and values.
will be addressed by aligning the pension contribution
We have also integrated these values into our
levels for our current Executive Directors with the
performance assessment process.
maximum rate available to the majority of our UK
workforce by 1 January 2023.
Board changes during FY 2020/21
Board succession planning has continued to be an
As a Board, we have adapted to reflect the changing
important area of focus during FY 2020/21. In
times we have all experienced. We would like to thank
July 2020, Jeremy Darroch retired from the Board at
our people, shareholders and customers for their
the conclusion of our 2020 AGM following six years’
continued support during this unprecedented year. As we
service. During his tenure, Jeremy was Senior
look forward to the future, I believe that your Board has
Independent Director and Chair of the Audit Committee
the right balance of skills and expertise to continue to
and his contributions and insights were valued greatly.
support and challenge management as we strive to
Dame Carolyn McCall was appointed as Senior
deliver the next chapter of Burberry’s strategic goals
Independent Director with effect from 15 July 2020.
and vision to be the leading British luxury brand.
Following a recruitment process led by the Nomination
Gerry Murphy
Committee, we appointed Antoine de Saint-Affrique to
Chairman
the Board on 1 January 2021. Antoine’s international
business experience, strong understanding of consumers
and focus on sustainability will be hugely valuable to the
Board. Information on his induction process can be found
within the Nomination Committee Report on page 165.
147
Corporate Governance Statement | Board Leadership and Company Purpose
BOARD OF DIRECTORS
As a Board we have
collective responsibility
for the long-term
success of Burberry
and are accountable to
Burberry’s stakeholders.
Committee Key
Chair
Dr Gerry Murphy
(65)
Chairman
Appointed:
17 May 2018
Nationality: Irish
Committees: N
Marco Gobbetti
(62)
Chief Executive
Officer
Appointed:
5 July 2017
Nationality: Italian
Key Skills
Key Skills
Marco has spent more than two
R
N
A
Remuneration Committee
Gerry brings to the Board
decades working in a variety of
Nomination Committee
experience of managing business
executive positions for prestigious
Audit Committee
transformations and has substantial
international fashion brands, with a
international business and senior
focus on leather goods. He has an
management experience. With his
outstanding track record of
in-depth understanding of UK
delivering growth in the luxury
corporate governance requirements
industry and has a clear vision for
and his extensive experience in the
the luxury sector and how it will
retail sector, Gerry provides the
evolve. While working at Celine, he
Board with highly relevant and
revamped the entire product
valuable leadership as Burberry
offering and significantly increased
continues to focus on delivering
profits. In the last three years, he
long-term sustainable value for all
has led the transformation of every
our stakeholders.
Experience
aspect of our business and built
a new Burberry. His extensive
experience and understanding of
Gerry has been Chairman of Tate &
luxury continue to be highly relevant
Lyle plc since 2017 and was
to Burberry as we drive forward our
Chairman of The Blackstone Group
strategy to accelerate growth and
International from 2009 to 2019
deliver significant high-quality value
and a partner in the firm’s private
creation.
equity investment unit from 2008
to 2017. From 2003 to 2008, Gerry
Experience
was CEO of Kingfisher plc. He
Marco joined Burberry from the
previously served as CEO of Carlton
French luxury leather group Celine,
Communications plc (now ITV)
where he was Chairman and CEO
from 2000 to 2003; Exel plc
from 2008 to 2016. Marco
from 1995 to 2000; Greencore
previously served as Chairman and
Group plc from 1991 to 1995; and
CEO of Givenchy and was CEO of
spent his earlier career with Grand
Moschino from 1993 to 2004. In his
Metropolitan plc (now Diageo plc).
early career Marco worked as
Gerry has served as a Non-
marketing and sales director at
Executive Director on the Boards of
Bottega Veneta, before joining
British American Tobacco plc
luxury leather specialist Valextra
from 2009 to 2017; Merlin
as managing director.
Entertainments plc from 2009
to 2015; Reckitt Benckiser plc
from 2005 to 2008; Abbey National
plc in 2004, and Novar plc
from 1997 to 2003.
148
Corporate Governance Statement | Board Leadership and Company Purpose
Julie Brown (59)
Chief Operating
and Financial
Officer
Appointed:
18 January 2017
Nationality: British
Key Skills
Dame Carolyn
McCall (59)
Senior
Independent
Director
Appointed:
1 September 2014
Nationality: British
Fabiola
Arredondo (54)
Independent
Non-Executive
Director
Appointed:
10 March 2015
Nationality: American
Julie has spent more than eight
Committees: A N
Committees: R N
years in Chief Financial Officer
positions in the FTSE 100 and has a
Key Skills
Key Skills
strong track record of leading change
Carolyn has an impressive track
Fabiola built and led a major division
and delivering sustainable, long-term
record in media and is known for her
of Yahoo! Inc. and brings directly
value for shareholders. Her extensive
experience in running international
relevant international strategic
experience in financial, commercial
businesses. While at easyJet plc
and operational experience in
and strategic roles and leading major
Carolyn transformed the company
the internet and media sectors.
transformational programmes
into one of the biggest airlines in
Through her deep engagement at
continues to be highly relevant to
Europe. Carolyn’s clear strategic
the World Wildlife Fund, Fabiola
Burberry in the next phase of our
acumen and strong track record of
also has considerable experience of
strategy. Julie is committed to
driving operational excellence and
overseeing sustainability initiatives.
implementing initiatives that support
managing change makes her an
Her digital and consumer
our sustainability goals and is a
important member of the Board
background, coupled with her
passionate champion of diversity and
as Burberry strives to deliver
extensive international Non-
women in business.
long-term sustainable value for
Executive Directorship experience
all our stakeholders.
make Fabiola an important member
Experience
Julie joined Burberry from Smith &
Experience
of the Board.
Nephew where she was the Group
Carolyn joined ITV plc in 2018 as
Experience
CFO from 2013-2017. Prior to this,
CEO. From 2010 to 2017 she was
Fabiola is currently the Managing
she was Interim Group CFO of
CEO of easyJet plc and held a
Partner of Siempre Holdings, a
AstraZeneca. During her 25 years with
number of roles at the Guardian
private investment firm based in the
the firm, she held a number of
Media Group plc, including CEO
USA. She is also a Non-Executive
positions across three continents,
from 2006 to 2010. She has also
Director at Campbell Soup Company
covering Group and Business Finance,
previously served as a Non-
and Fair Isaac Corporation, which
Strategy and Commercial positions,
Executive Director of Lloyds TSB,
are both listed on the New York
including time as a Regional and
Tesco plc and New Look Group plc.
Stock Exchange. Fabiola is also
Country President. She gained
In 2008, Carolyn was awarded an
currently a National Council Member
extensive mergers and acquisition and
OBE for her services to women in
of the World Wildlife Fund and
transformational experience through
business and in 2016 a damehood
Member of the Council on Foreign
the merger of Astra and Zeneca and in
for her services to the
Relations. She has previously served
her role at Smith & Nephew. Julie is
aviation industry.
also a Non-Executive Director and
Audit Chair of Roche Holding Limited.
She is Ambassador for the Prince’s
Trust Women Supporting Women
initiative and co-Chair of The Prince’s
Accounting for Sustainability Project’s
CFO Leadership Network. Julie is also
a member of the Mayor of London’s
Business Advisory Board and Patron
of Oxford University Women in
Business. She is a Fellow of the
Institute of Chartered Accountancy
and the Institute of Tax, after
qualifying with KPMG.
149
as a Non-Executive Director at
FTSE 100 companies Experian plc
and BOC Group plc (now Linde
Group), Saks Incorporated (now
Hudson’s Bay Company) and Ibex 35
company Bankinter S.A. She has
also held Non-Executive
Directorships at National Public
Radio, Rodale Inc., Intelsat Inc.,
Sesame Workshop and the World
Wildlife Fund UK and USA. Fabiola
also held senior operating roles at
Yahoo! Inc., the BBC and
Bertelsmann AG.
Corporate Governance Statement | Board Leadership and Company Purpose
Ron Frasch (72)
Independent
Non-Executive
Director
Appointed:
1 September 2017
Nationality: American
Matthew Key (58)
Independent
Non-Executive
Director
Appointed:
1 September 2013
Nationality: British
Committees: A N R
Committees: A N R
Orna NíChionna
(65)
Independent
Non-Executive
Director
Appointed:
3 January 2018
Nationality: Irish
Committees: R N
Key Skills
Key Skills
Ron has spent over 30 years
Matthew has significant strategic,
Key Skills
working in the retail industry. He
regulatory and operational
Orna has strong UK plc and
has clear strategic acumen, strong
experience in the e-commerce and
international business experience,
leadership skills and wide-ranging
technology sectors. He brings to the
especially in the consumer and retail
experience of working with luxury
Board significant experience of
markets. She also brings to the
fashion brands. While working at
managing dynamic and fast-moving
Board significant financial, strategic
Saks he was the instrumental
international companies and has an
and governance experience. Orna is
driving force behind developing the
extensive understanding of the
a committed environmentalist and
company’s private-label collections.
consumer market. Matthew’s
was Chair of the Soil Association
Ron’s wealth of fashion experience
significant financial experience
(which campaigns for organic food
and his well-established
remains important to the Board, as
and farming) for six years. Her
merchandising skills will continue to
reflected in his appointment as
passion for the environment is an
play a pivotal role as Burberry
Chair of the Audit Committee.
asset to Burberry as we continue to
continues to grow and we
strengthen our performance in the
Experience
drive positive change and build a
more sustainable future through our
luxury fashion market.
Matthew is Chair of Dallaglio
ongoing Responsibility agenda.
Rugbyworks. Matthew is also
Experience
currently a Non-Executive Director
Experience
Ron is currently CEO of Ron Frasch
of BT Group plc, a member of BT’s
Orna is currently Senior
Associates LLC. He is also a
Nomination and Remuneration
Independent Director at Saga plc,
Non-Executive Director of
Committees and is Chair of its Audit
Deputy Chairman at the National
Crocs Inc, Aztech Mountain and
and Risk Committee. Matthew
Trust and Chair of Founders
MacKenzie Childs. Between 2004
served as a member of the advisory
Intelligence. She has previously
to 2007, Ron served as Vice
Board of Samsung Europe
served on the Boards of Bupa,
Chairman of Saks Fifth Avenue Inc.
between 2015 and 2017. From 2007
HMV, Northern Foods and Bank of
and from 2007 to 2013 he was
to 2014, he held various positions at
Ireland UK, and until recently was
President, with responsibility for
Telefonica, including Chairman and
Senior Independent Director and
fashion buying, merchandise
CEO of Telefonica Europe plc, and
Chair of the Remuneration
planning, store planning, stores, and
Chairman and CEO of Telefonica
Committee at Royal Mail plc. In
visual. Prior to Saks, Ron spent four
Digital, the global innovation arm of
addition, Orna spent 18 years at
years as President and CEO of
Telefonica. Matthew is a qualified
McKinsey & Company, where she
Bergdorf Goodman. He has also
chartered accountant having
co-led its European Retail Practice,
served as President of the Americas
qualified with Arthur Young (now
and has been an advisor to Apax
for an Italian licensing company of
EY). In his early career, he held
Partners LLP.
luxury fashion brands.
various financial positions at Grand
Metropolitan plc (now part of
Diageo plc), Kingfisher plc, Coca-
Cola and Schweppes.
150
Corporate Governance Statement | Board Leadership and Company Purpose
Debra Lee (66)
Independent
Non-Executive
Director
Appointed:
Sam Fischer (53)
Independent
Non-Executive
Director
Appointed:
1 October 2019
Nationality: American
1 November 2019
Nationality: Australian
Committees: A N
Committees: N R
Antoine de
Saint-Affrique
(56)
Independent
Non-Executive
Director
Appointed: 1 January 2021
Nationality: French
Committees: A N
Key Skills
Key Skills
Debra is one of the most influential
Sam has first-hand knowledge of
Key Skills
female voices in the entertainment
leading iconic heritage premium
Antoine has a wealth of experience
industry and has a great
brands, which is a huge asset to
in driving business expansion,
understanding of the American
Burberry as we grow our business
innovation, leadership and
consumer and culture. She served
in key Asian markets.
sustainability. As CEO of Barry
as the Chairman and CEO of BET
Networks, the leading provider of
Experience
Callebaut, Antoine has brought the
company’s sustainability agenda to
entertainment for the African-
Sam is currently President, Asia
the heart of its strategy, setting
American audience and consumers
Pacific and Global Travel, Diageo plc
ambitious targets that address the
of black culture globally.
and is also a member of its Global
largest sustainability challenges in
Executive Committee. Since joining
the chocolate supply chain. He also
Experience
Diageo in 2007, Sam has held
gained extensive experience of
Debra, CEO and founder of Leading
several senior roles, including
managing leading consumer brands
Women Defined, Inc., is currently a
Managing Director of Greater China
at Unilever. This strong
Non-Executive Director at AT&T,
and Managing Director for South
understanding of the consumer
Inc., and a Non-Executive Director
East Asia. Prior to Diageo, Sam held
market and focus on sustainability
and member of the Nominating and
a number of commercial and general
make him an invaluable asset to
Corporate Governance Committees
management roles at Colgate-
Burberry.
at Marriott International, Inc. Debra
Palmolive between 1991 to 2006,
is also a Non-Executive Director of
culminating in a role as Managing
Experience
The Proctor & Gamble Company and
Director of Central Europe.
Antoine is CEO of Barry Callebaut, a
a member of both its Governance
and Public Responsibility, and
Compensation and Leadership
Development Committees.
From 2006 to 2018, Debra served
as Chairman and Chief Executive
Officer at Black Entertainment
Television LLC, a division of Viacom,
Inc. Debra also served as a Non-
Executive Director of Twitter, Inc.
from May 2016 to July 2019.
Swiss listed company, which is the
world’s largest supplier of chocolate
and cocoa products. Prior to joining
Barry Callebaut in 2015, Antoine
held a number of senior executive
positions at Unilever plc, including
President of Unilever Foods and
member of Unilever’s Group
Executive Committee, Executive
Vice President for Unilever Skin
Category and Executive Vice
President for Unilever’s Central and
Eastern Europe region. From 2009
Gemma Parsons
Company
Secretary
Appointed:
1 October 2018
roles include Company Secretary of
to 2020, he served as a Non-
The Berkeley Group Holdings plc,
Executive Director of Essilor
Deputy Company Secretary at TSB
International, which prior to its
Banking Group plc and Deputy
merger with Luxottica Group Spa,
Company Secretary of Smith &
was listed on Euronext Paris and
Nephew plc. She is a member of the
included in the CAC40 index.
Experience
Chartered Governance Institute’s
Gemma is a fellow of the Chartered
Company Secretaries’ Forum and of
Governance Institute and has more
the Association of General Counsel
Directors serving for part of
than twenty five years’ company
and Company Secretaries of FTSE
secretarial experience. Her previous
100 companies.
FY 2020/21
Jeremy Darroch stepped down from
the Board on 15 July 2020.
151
Corporate Governance Statement | Board Leadership and Company Purpose
EXECUTIVE COMMITTEE
Marco Gobbetti
Chief Executive Officer
Gianluca Flore
President of Americas and Global
Retail Excellence
Julie Brown
Chief Operating and Financial
Officer
Jérôme Le Bleis
Chief Supply Chain Officer
Adrian Ward-Rees
Head of Ready to Wear
Leonie Brantberg
Senior Vice President Strategy
Edward Rash
General Counsel
Mark McClennon
Chief Information Officer
Erica Bourne
Chief People Officer
Rod Manley
Chief Marketing Officer
Gavin Haig
Chief Commercial Officer
Adrian Ward-Rees and Leonie Brantberg joined the
Executive Committee on 27 August 2020.
Judy Collinson, Chief Merchandising Officer, was a
member of the Executive Committee until
1 October 2020.
Marco Gentile, President of Europe, Middle East, India
and Africa, was a member of the Executive Committee
until 31 July 2020.
152
Corporate Governance Statement | Board Leadership and Company Purpose
CORPORATE
GOVERNANCE REPORT
UK Corporate Governance Code compliance
The 2018 UK Corporate Governance Code (the Code)
sets out the framework of governance for premium
More information on the Company’s governance
structure can be found on page 163.
listed companies within the UK. The Code is published by
the Financial Reporting Council (FRC) and can be found
Stakeholder engagement
The Code introduced an increased emphasis on
on its website www.frc.org.uk. It enhances governance
stakeholder engagement. In addition to the Global
practices in relation to board leadership and company
Workforce Advisory Forum, the Board recognises the
purpose, division of responsibilities, composition,
importance of regular, open and constructive dialogue
succession and evaluation, audit, risk and internal control
with shareholders throughout the year.
and remuneration. As a premium listed company, we
describe in the Annual Report Burberry’s corporate
Our Investor Relations team participated in over 200
governance from two points of view: the first dealing
investor meetings and events during the financial year.
generally with the application of the Code’s main
Meetings were also held with a combination of our
principles, and the second dealing specifically with
Chairman, the Chair of the Remuneration Committee,
non-compliance with any of the Code’s provisions.
Executive Directors and other members of senior
management, totalling over 70 meetings. This
Together with the Directors’ Remuneration Report on
engagement included presentations to institutional
pages 180 to 203, this report sets out the Board’s
shareholders and analysts following the release of the
approach to governance and the work undertaken during
Group’s half- and full-year results (available on the
FY 2020/21. We have complied with the provisions of the
Group’s website Burberryplc.com), as well as meetings
Code during FY 2020/21 with the exception of Provision
with the Group’s 20 largest investors. Topics discussed
38 to align Executive Directors’ pension payments with
in investor meetings included, but were not limited to
the wider workforce. This will be addressed by aligning
governance topics including the 2020 Directors
the pension arrangements for our current Executive
Remuneration Policy, luxury sector growth dynamics,
Directors with the maximum rate available to the
the Group’s strategic plans, progress against our
majority of the UK workforce by 1 January 2023, as set
strategy, the impact of COVID-19 on our business
out on page 186 of the Directors’ Remuneration Report.
and management actions to minimise its impact.
Any new Executive Directors would immediately align
with the majority of the UK workforce. Further
Our Investor Relations and Company Secretariat
information on how the Company has applied the
departments act as the centre for ongoing communication
principles of the Code is set out in this Corporate
with shareholders, investors and analysts. The Board
Governance Statement. Key highlights of the Company’s
receives regular updates about the views of the Group’s
compliance with the Code along with cross references to
major shareholders and stakeholders from these
other sections of the Annual Report are detailed below.
departments as well as via direct contact.
Governance structure and division of
responsibilities
The Board (supported by its Committees) is collectively
Diversity
At Burberry, we believe diversity, equity and inclusion are
essential to fulfilling our purpose and are core to our
responsible for how Burberry is directed and controlled.
values. Attracting and retaining diverse talent and
Its responsibilities include: promoting Burberry’s
fostering an inclusive culture enables us to be more
long-term success; setting its strategic aims and values;
creative in everything we do and to open spaces for our
supporting leadership to put them into effect;
people, customers and communities. Further information
supervising and constructively challenging leadership on
on diversity and inclusion is set out on pages 69 to 72.
the operational running of the business; ensuring a
framework of prudent and effective controls; and
Information regarding how the Board engages with all
reporting to shareholders on the Board’s stewardship.
our stakeholders is set out on pages 96 to 104.
153
Corporate Governance Statement | Board Leadership and Company Purpose
PRINCIPAL AREAS OF
FOCUS FOR THE BOARD
DURING FY 2020/21
The table below gives details of Directors’ attendance at
The Board met formally six times during the financial
Board and Committee meetings during the year ended
year, including an in-depth two-day session on strategy.
27 March 2021. This is expressed as the number of
In addition, the Board met informally on a number of
meetings attended out of the number that each Director
occasions to discuss the evolving COVID-19 pandemic
was eligible to attend.
Board
Audit Nomination Remuneration
Gerry Murphy
Marco Gobbetti
Julie Brown
Dame Carolyn
McCall
Debra Lee
Fabiola Arredondo
Sam Fischer
Matthew Key
Orna NíChionna
Ron Frasch1
Antoine de
Saint-Affrique2
Jeremy Darroch3
6/6
6/6
6/6
6/6
6/6
6/6
6/6
6/6
6/6
5/6
2/2
–
–
–
4/4
4/4
–
–
4/4
–
3/4
2/2
2/2
1/1
3/3
–
–
3/3
3/3
3/3
3/3
3/3
3/3
2/3
3/3
–
–
–
–
–
–
6/6
6/6
6/6
6/6
5/6
–
–
1. Ron Frasch was unable to attend the March Board and
Committee meetings due to jury service.
2. Antoine de Saint-Affrique joined the Board on 1 January 2021.
3. Jeremy Darroch stepped down from the Board on 15 July 2020.
and the actions being taken to minimise the impact on
the Group’s people and business. All meetings were held
virtually given the travel restrictions in place as a result
of the COVID-19 pandemic. Throughout the year,
Directors also devoted time to meet with investors,
interview candidates for both executive and non-
executive roles and attended shows, town halls, brand
events and meetings of the Global Workforce Advisory
Forum virtually.
The Board and Committee agendas were shaped to
ensure that discussion was focused on our key strategies
and responsibilities, as well as reviews of significant
issues arising during the year, such as the global
COVID-19 pandemic. The Group’s ongoing performance
against the strategic priorities is reviewed at each
scheduled meeting.
155
Corporate Governance Statement | Board Leadership and Company Purpose
Principal areas of focus for the Board during FY 2020/21
Topic
Activity
Outcome
Relevant stakeholders and
s.172 duties considered
Strategy
Strategic
• Reviewing strategy to take stock
• Providing feedback,
Relevant stakeholders:
review
of progress and prioritise areas of
questions and challenge
Customers
focus within the long-term
throughout the process
Shareholders
strategic plan
• Support for the
People
• Assessing changes in the luxury
programmes undertaken
Partners
market context in light of COVID-19
and implications on the strategic
pillars and enablers
• Reviewing the supply chain
priorities and plan for delivering
product strategy
• Reviewing the Distribution strategy
Communities
s.172 duties:
Long-term results; workforce;
environment; reputation; and
business relationships
Major projects
Withdrawal
• Considering the short-term
• Providing feedback and
Relevant stakeholders:
from the EU
disruption and structural
support for
Shareholders
implications for the Company
management’s approach
Communities
following the implementation of the
EU-UK Trade and Cooperation
Agreement, including the
mitigating actions being taken
Customers
Partners
Governments
s.172 duties:
Long-term results; workforce;
reputation; and
business relationships
COVID-19
pandemic
• Assessing the impact of the
• Refer to pages 56 and 57
Relevant stakeholders:
COVID-19 pandemic on the
for further detail
People
Company’s people, finances and
future plans
• Considering and approving
Burberry’s response to the
pandemic across all areas of
the business
Shareholders
Communities
Customers
Partners
Governments
s.172 duties:
Long-term results; workforce;
environment; reputation; and
business relationships
156
Corporate Governance Statement | Board Leadership and Company Purpose
Topic
Activity
Outcome
Relevant stakeholders and
s.172 duties considered
Finance
Budget and
• Approving the FY 2020/21 baseline
• Approval of Sustainability
Relevant stakeholders:
capital
allocation
business plan
Bond
Shareholders
• Considering capital structure,
• Decision not to pay
Customers
distributions and liquidity in the
dividend for FY 2019/20
People
context of COVID-19
• Support in principle for
• Scrutinising financial performance
the FY 2021/22 budget
s.172 duties:
• Reviewing the quarterly financial
• Prior year (March and
Long-term results; workforce;
results
May 2020) baseline
and fairness between our
• Reviewing FY 2021/22 budget
business plan delivered
shareholders
scenarios and three-year forward
plan
• Reviewing and approving capital
expenditure projects
Governance
Purpose
• Considering the approach to
• Endorsing management’s
Relevant stakeholders:
embedding our purpose and values
approach
People
Shareholders
Customers
Communities
s.172 duties:
Long-term results; workforce;
and reputation
Board
• Progress update against
• Refer to pages 166 and
Relevant stakeholders:
evaluation
FY 2019/20 areas of focus
167 covering the Board
People
• Discussing the results of the
evaluation for further
Shareholders
FY 2020/21 Board evaluation and
detail
Customers
reflecting on the effectiveness of
the Board and its Committees
s.172 duties:
Long-term results; workforce;
and reputation
157
Corporate Governance Statement | Board Leadership and Company Purpose
Topic
Activity
Outcome
Relevant stakeholders and
s.172 duties considered
Risk
Risk appetite
• Considering the Board’s appetite
• Approval of the Group’s
Relevant stakeholders:
for risk
risk appetite
People
• Considering emerging and principal
• Refer to the Risk and
Shareholders
risks including changes to the risk
Viability Report on
Communities
profile
pages 106 to 142 for
Customers
• Reviewing strategic execution risks
further detail
resulting from COVID-19 and the
UK’s withdrawal from the EU
s.172 duties:
Long-term results; and
reputation
Risk deep dives • Reviewing China market context
• Support for the
Relevant stakeholders:
• Risk reviews of cybersecurity and
programme to be
People
fraud risk and the impact of
climate-related risks and
opportunities by the Audit
Committee
undertaken
Shareholders
s.172 duties:
Long-term results; and
reputation
People, culture and values
Culture and
• Discussing the results of the
• Support for
Relevant stakeholders:
engagement
Employee Engagement Survey,
management’s action
People
including trends, and receiving
planning activity
Shareholders
feedback following Global
• Agreeing a dashboard to
Communities
Workforce Advisory Forum
support the Board’s
Customers
meetings
monitoring of Company
Partners
• Reviewing ways of enhancing the
culture for use in
Governments
Board’s monitoring of Company
FY 2021/22
culture
s.172 duties:
Long-term results; workforce;
environment; reputation; and
business relationships
158
Corporate Governance Statement | Board Leadership and Company Purpose
Topic
Activity
Outcome
Relevant stakeholders and
s.172 duties considered
People, culture and values
Diversity and
• Discussing the Group’s Diversity
• Providing feedback
Relevant stakeholders:
Inclusion
and Inclusion strategy and receiving
and support for
People
progress updates on the agreed
management’s approach
Shareholders
commitments
• Support for updated
Communities
• Reviewing the Code of Conduct to
Code of Conduct
Customers
ensure alignment with the
(subsequently approved
Partners
Company’s purpose, values and
in May 2021)
Governments
culture
s.172 duties:
Long-term results; workforce;
environment; reputation; and
business relationships
Responsibility
• Discussing the Community
• Approval in July 2020 to
Relevant stakeholders:
Investment strategy for FY 2020/21
donate £3.5 million of
People
• Considering the strategies
FY 2019/20 adjusted
Shareholders
implemented to minimise the
profit before tax to social
Communities
impact of COVID-19 on our people
and community causes
Customers
and communities
worldwide during
Partners
• Reviewing and approving the
FY 2020/21
Governments
Company’s Modern Slavery
• Endorsing the Group’s
Statement
response to the
s.172 duties:
COVID-19 pandemic
Long-term results; workforce;
environment; reputation; and
business relationships
Shareholder engagement
Shareholder
• Reviewing updates from the
• Inclusion of shareholder
Relevant stakeholders:
feedback,
including
Investor Relations team on share
themes within the
Shareholders
price performance, register activity
Board’s strategic and/or
activist themes
and analyst sentiment
other considerations
s.172 duties:
• Discussing specific issues raised by
shareholders
Long-term results; workforce;
environment; reputation; and
business relationships
159
Corporate Governance Statement | Board Leadership and Company Purpose
Managing conflicts of interest
All Directors have a duty under the Companies Act 2006
Tax governance framework
Our CO&FO is responsible for the Group Tax strategy,
to avoid a situation in which they have, or could have, a
the effectiveness of corporate tax processes and
direct or indirect conflict of interest or possible conflict
transparency of disclosures. The Group Tax strategy is
of interest with the Company and/or the Group.
implemented by the global tax and trade compliance
teams with the assistance of the finance leadership
Under the Company’s Articles of Association, the Board
team. Compliance with the Group Tax strategy is
has the authority to approve situational conflicts of
reviewed on an ongoing basis as part of the regular
interest. It has adopted procedures to manage and,
financial planning cycle. The Group’s tax status is
where appropriate, approve such conflicts.
reported regularly to the Audit Committee. The Audit
Authorisations granted by the Board are recorded by the
Committee is responsible for reviewing the Group Tax
Company Secretary in a register and are noted by the
strategy at least once a year and significant tax matters
Board at its next meeting. A review of situational
as they arise.
conflicts that have been authorised is undertaken by
the Board annually.
Share capital
Following the last review, the Board concluded that the
including substantial shareholdings, can be found in the
potential conflicts had been appropriately authorised, no
Directors’ Report on page 204.
Further information about the Company’s share capital,
circumstances existed which would necessitate that
any prior authorisation be revoked or amended, and the
authorisation process continued to operate effectively.
Productivity
The Company continues to demonstrate and develop
improving levels of productivity, owing to strong human
capital, training and development programmes, and
focus on elevating the customer experience throughout
our distribution and retail networks. Further information
about these aspects of the business is provided on
pages 26, 27, 32 and 68.
Other governance disclosures
The Group is committed to acting with integrity and
transparency on all tax matters and complying fully with
the letter and spirit of the relevant tax law. The Group
will only engage in responsible tax planning aligned with
our commercial and economic activity. We will not use
tax structures or undertake artificial transactions, the
sole purpose of which is to create a contrived tax result.
For example, we exclude transactions with parties based
in tax haven jurisdictions when the transactions are not
in the ordinary course of Group trading business or
which could be perceived as artificially transferring value
to low tax jurisdictions. We are also committed to
engaging in open and constructive relationships with
tax authorities in the territories in which we operate.
The Group Tax strategy directs our tax planning,
reporting and compliance activities and is aligned with
the Group’s strategic objectives. Further information
regarding the Group Tax strategy is provided on
Burberryplc.com.
160
Corporate Governance Statement | Division of responsibilities
GOVERNANCE STRUCTURE
AND DIVISION OF
RESPONSIBILITIES
The Board is responsible for supporting management in
All Directors are appointed to the Board for an initial
its strategic aims, which enable the Company to continue
fixed three-year term, subject to annual re-election by
to perform successfully and sustainably for our
shareholders at the Company’s AGM. In accordance
shareholders and wider stakeholders. The Board is
with the Code, at the 2021 AGM the Chairman and all
supported in its activities by the Audit Committee, the
Directors will retire and offer themselves for re-election.
Nomination Committee and the Remuneration
Antoine de Saint-Affrique, having joined the Board on
Committee. The terms of reference for each of these
1 January 2021, will offer himself for election.
Committees can be viewed in the Corporate Governance
section of Burberryplc.com. The table on page 163
To ensure the Board performs effectively, there is a
demonstrates our governance structure.
clear division of responsibilities between the leadership
of the Board and the executive leadership of the
The Committees may engage third-party consultants
business as set out below.
and independent professional advisors. They may also
call upon other Group resources to assist them in
Our Chairman
discharging their respective responsibilities. In addition
• Chairing Board meetings, Nomination Committee
to the Committee members and the Company Secretary,
meetings and the AGM, and setting the Board agenda
external advisors and, on occasion, other Directors and
• Ensuring there is effective communication between
members of our senior management team attend
the Board, management, shareholders and the Group’s
Committee meetings at the invitation of the Chair of the
wider stakeholders, while promoting a culture of
relevant Committee.
openness and constructive debate
• Ensuring Directors receive accurate, timely and clear
Board roles
Our Board currently consists of 11 members, the
information
• Overseeing the annual Board evaluation and
Chairman, CEO, CO&FO, and eight Independent Non-
addressing any subsequent actions
Executive Directors who are experienced and influential
• Promoting the highest standards of corporate
individuals, drawn from a wide range of industries and
governance
backgrounds with the right skills to promote the
• Ensuring the views of stakeholders are taken into
long-term sustainable success of the Group. The Board
account when making decisions
has determined that all Non-Executive Directors are
• A full description of the Chairman’s role and
independent and the Chairman was also considered to
responsibilities can be found in the Corporate
be independent on appointment.
Governance section of the Group’s website
Burberryplc.com
Directors’ biographies, tenures, key skills and external
appointments are set out on pages 148 to 151.
162
Corporate Governance Statement | Division of responsibilities
Board
The Board is responsible for promoting Burberry’s
The Board is also responsible for oversight of the
long-term success. This is achieved through
Group’s governance, internal control and risk
effective governance and keeping the interests of
management, including the Group’s risk appetite.
stakeholders at the fore when making decisions.
A full schedule of matters reserved for the Board’s
The Board provides leadership by establishing the
decision is available in the Corporate Governance
Group’s purpose and values and setting the Group’s
section of Burberryplc.com.
strategy, ensuring alignment with our culture and
overseeing its implementation by management.
The Board has established Committees to assist
with exercising its authority.
Audit
Committee
Chaired by
Matthew Key
Remuneration
Committee
Chaired by
Orna NíChionna
Nomination
Committee
Chaired by
Gerry Murphy
Responsible for monitoring the
Determines the policy for
Reviews the composition of
integrity of Financial
Executive Director
the Board, ensuring plans are
Statements and reviewing the
remuneration and sets the
in place for orderly succession
Group’s internal financial
remuneration for the
for both Board and senior
controls and risk management
Chairman, Executive Directors
leadership positions, keeping in
systems, the Internal Audit
and senior management.
mind the importance of
function, and the Group’s
diversity in all its forms and
relationship with the external
Oversight of wider employee
balancing skills and experience
auditor. The Audit Committee
reward policies.
when making appointments.
is supported by the Ethics
Committee and the Risk
Committee.
The Audit Committee Report
can be read on pages 173
to 179.
The Directors’ Remuneration
The Nomination Committee
Report can be read on
pages 180 to 203.
Report can be read on
pages 168 to 171.
CEO and Executive Committee
The Board delegates the day-to-day responsibility
direction of the Group for consideration and
for running the Group to the CEO, who is
approval by the Board. The Executive Committee
responsible for all commercial, operational, risk and
assists the CEO to implement the strategy as
financial elements. The CEO is also responsible for
approved by the Board.
management and development of the strategic
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Corporate Governance Statement | Division of responsibilities
Our Senior Independent Director
Our CO&FO
• Acting as a sounding board for the Chairman
• Supporting the CEO in developing the Group’s
• Acting as an intermediary for the other Directors,
strategy and its implementation
where necessary
• Overseeing the global Finance and Business Services
• Chairing meetings in the absence of the Chairman
functions and developing the Group’s capital allocation
• Being available to shareholders and stakeholders if
framework
they have any concerns which they have been unable
• Responsible for establishing financial planning and
to resolve through normal channels
maintaining adequate internal controls over financial
• Together with the Non-Executive Directors, assessing
reporting
the performance of the Chairman on an annual basis
• Representing the Group to external stakeholders
• Leading the search and appointment process and
• Responsible for the oversight of the following key
recommendation to the Board of a new Chairman,
functions: Investor Relations, Internal Audit and Risk
if necessary
Management, Business Continuity, Burberry Business
• A full description of the Senior Independent Director’s
Services, Finance, IT, Tax, Treasury and Trade
role and responsibilities can be found in the Corporate
Compliance
Governance section of the Group’s website
Burberryplc.com
Our Company Secretary
• Providing advice and support to the Chairman and all
Our Non-Executive Directors
Directors
• Providing effective and constructive challenge to the
• Ensuring the Board receives high-quality information
Board and scrutinising the performance of
and resources in a timely manner so that the Board
management
can operate effectively at meetings
• Assisting in the development and approval of the
• Assisting in setting the agenda for Board and
Group’s strategy
Committee meetings
• Reviewing Group financial information and ensuring
• Advising and keeping the Board up to date with all
there are effective systems of governance, risk
matters of Corporate Governance
management and internal controls in place
• Facilitating the induction programme for new
• Ensuring there is regular, open and constructive
Directors and, together with the Chairman, assessing
dialogue with shareholders
ongoing training needs for all Directors
Our CEO
• Day-to-day management of the Group
External directorships
Our Board’s Executive Directors are permitted to hold
• Responsible for all commercial, operational, risk and
one external non-executive directorship. Details of the
financial elements of the Group
Directors’ other directorships can be found in their
• Developing the Group’s strategic direction and
biographies on pages 148 to 151.
implementing the agreed strategy
• Ensuring effective communication and information
flows to the Board and the Chairman
Time allocation
Each of our Non-Executive Directors has a letter of
• Representing the Group to external stakeholders
appointment, which sets out the terms and conditions of
• Responsible for the oversight of the following key
his or her directorship. The Non-Executive Directors are
functions: Design, Marketing, Digital, Merchandising,
expected to devote the time necessary to perform their
Supply Chain, Corporate Affairs, Human Resources,
duties properly. This is expected to be approximately 20
Responsibility, Strategy and Global Commercial
days each year for basic duties.
• Responsible for oversight of climate change agenda
• A full description of the CEO’s role and responsibilities
The Chairman and Senior Independent Director are
can be found in the Corporate Governance section of
expected to spend additional time over and above this to
the Group’s website Burberryplc.com
carry out their extra responsibilities. The Chairman,
Senior Independent Director and CEO also have clearly
defined responsibilities, which delineate the scope of
their roles. A full description of these roles can be found
in the Corporate Governance section of the Group’s
website Burberryplc.com. The Board has noted changes
to Non-Executive Directors’ external appointments
during the year and confirms that they were not
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Corporate Governance Statement | Division of responsibilities
perceived to impact their independence or
Details of the induction programme implemented for
responsibilities to the Company. The Board considers
Antoine de Saint-Affrique are set out below. Due to
that the Chairman and all Non-Executive Directors have
the current travel restrictions all meetings were
fulfilled their required time commitments during
held virtually.
FY 2020/21.
Information flow and professional
development
Our Chairman works closely with the Company Secretary
• One-to-one meetings with senior executives to
understand their roles at Burberry
• Meetings with external advisors, for example, our
external auditor Ernst & Young LLP (EY)
in the planning of agendas and scheduling of Board and
• Assignment of a Board “buddy” to provide additional
Committee meetings. Together, they ensure that
support while the Director gets to know Burberry
information is made available to Board members on a
and understand our ways of working
timely basis and is of a quality appropriate to enable the
Board to effectively carry out its duties.
Visits to key stores and sites will be arranged once
restrictions are lifted providing the opportunity for
The Board is kept up to date on legal, regulatory,
Antoine to meet colleagues in person and familiarise
compliance and governance matters through advice and
himself with our product and our brand.
regular papers from the General Counsel, the Company
Secretary and other advisors.
The Board has direct access to the advice and services
of the Company Secretary. The appointment and
In addition, Executive Committee members and other
removal of the Company Secretary is a matter reserved
senior managers are invited, as appropriate, to Board
for the Board as a whole. To carry out their duties,
and strategy meetings to make presentations on their
Directors may also obtain independent professional
areas of responsibility. Regular attendees at Committee
advice, if necessary, at the Group’s expense.
meetings included the CEO, the Chief People Officer and
the Company Secretary.
Induction, training and business
engagement
The Company Secretary assists the Chairman in
designing and facilitating a formal induction programme
for new Directors and their ongoing training. Each newly
appointed Director receives a formal and tailored
induction programme to enable them to function
effectively as quickly as possible, while building a deep
understanding of the business. Each induction typically
consists of meetings with both Executive and Non-
Executive Directors and briefings from senior managers
across our key business areas and operations. In
addition, Non-Executive Directors are provided with
opportunities to visit key stores, markets and facilities.
This includes visits to our various operating facilities in
the UK. The Chairman considers the training needs of
individual Directors on an ongoing basis. Following the
initial induction for Non-Executive Directors, an
understanding of the business is developed through
ongoing meetings and engagements as appropriate.
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Corporate Governance Statement | Composition, Succession and Evaluation
BOARD EVALUATION
Evaluating our performance in FY 2020/21
The Board undertakes a formal review of its
The following areas for development and action have
been agreed by the Board and progress will be monitored
performance and that of its Committees each financial
during the year:
year and the evaluation is externally facilitated every
three years.
Purpose,
• Continued focus on clearly
ambition and
articulating Burberry’s purpose,
This year’s self-assessment of the Board’s and
branding
ambition and brand vision in a
Committees’ effectiveness was conducted in conjunction
coherent and consistent manner
with Independent Audit Limited, which has no other
connection with the Company. The process included a
briefing with the Chairman, Audit and Remuneration
Committee Chairs and the Company Secretary.
Following these briefing sessions, online questionnaires
were adapted for Burberry using Thinking Board,
Independent Audit’s online questionnaire tool. Views
were sought on a number of topics including Board
composition, purpose and values, strategy, risk
management, financial reporting and controls and
across all corporate
communications, both internal
and external
Talent and
• Continued focus on management
succession
development and developing further
planning
bench strength as part of the
executive succession planning
programme, particularly at Executive
Committee and level below
environmental, social and governance considerations.
Strategy
• Re-energising the Board’s focus on
The questionnaires were completed confidentially by
Directors and members of the senior management team
who regularly attend Committee meetings. Independent
Audit collated and analysed the responses which were
reported without attribution.
Detailed reports were received by the Chairman and
Chairs of the Audit, Nomination and Remuneration
Committees and were discussed by the full Board in
March 2021. In discussion, the Board concluded that the
Board and its Committees continue to operate
effectively within a transparent and trusting
environment. The Board considered itself to have a good
breadth of skills and experience to enable it to effectively
support and challenge the business. The Board also felt
it had adapted well to the challenges brought about by
the COVID-19 pandemic.
emerging technology, including
understanding the risks and
opportunities new technology brings
• Considering ways to deepen the
Board’s understanding of the
competitive environment, including
independent expert views of the
performance of Burberry and key
competitors in navigating industry
and consumer megatrends
Environmental,
• Increasing the Board’s oversight of
Social and
environmental and social matters to
Governance
reflect the increasing importance of
these topics to the Group and
society as a whole, with particular
focus on diversity and inclusion and
sustainability
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Corporate Governance Statement | Composition, Succession and Evaluation
Directors’ performance
Separate to the Board’s evaluation, the Chairman held
Chairman’s performance
In addition to the Board and Committee evaluation,
discussions with each of the Directors to discuss their
the Senior Independent Director met with each
individual performances. This allowed them the
Director to discuss the Chairman’s performance.
opportunity to raise any issues or concerns they may
The results were analysed by the Senior Independent
have had, including in relation to the management of the
Director and subsequently discussed with the Chairman.
Company or Board/Committee effectiveness. No such
The Directors expressed unanimous support that the
issues or concerns were raised in FY 2020/21. These
Chairman continued to perform effectively. His
discussions, together with the Nomination Committee’s
understanding of the business and leadership of
considerations of independence, time commitments and
the Board during the pandemic were
tenure, are used as the basis for recommending the
particularly commended.
re-election of Directors by shareholders.
The Board is satisfied that all its Non-Executive
Directors bring robust, independent oversight and
continue to remain independent.
Progress update on focus areas identified following the FY 2019/20 Board evaluation
Action
Progress
Purpose, culture, values and behaviours
• Continued focus on embedding Burberry’s
The Board received updates in May and October 2020 in relation
culture, values and behaviours
to the launch of Burberry’s purpose and values and the internal
and external proof points, which reinforce the messaging
• Considering ways to enhance the Board’s
A dashboard has been created to bring together a number of
monitoring of corporate culture
relevant metrics to enhance and support the Board’s monitoring of
the Company’s culture which will be implemented in FY 2021/22
People
• Continued focus on executive succession planning,
The Chief People Officer has continued to lead work to evolve
including in relation to key person risks
the approach to identifying and developing high-potential talent.
This involved the launch of a new assessment framework with
the Executive Committee and the evolution of the leadership
development programmes and experiences to incorporate
purpose and values
• Increasing the Board’s interaction with
The COVID-19 environment meant face-to-face interaction was
executives and high performers
difficult during FY 2020/21. However, opportunities were taken
where possible to involve executives and high performers in
Board and Committee presentations
Strategy
• Increased Board focus on operating performance
The Board received updates on key risk factors and trends and
and the risk implications of strategic decisions
the risks associated with the strategic plans. In addition, the
Board discussed the strategic implications of the UK’s
withdrawal from the EU and the actions being taken to mitigate
the risks
• Improving the Board’s understanding of key
The Board received updates on key competitors and markets as
competitors and markets
part of the strategy meetings
Board processes
• Review Board agendas and materials in order to
New guidelines have been implemented to enable more time for
maximise the time available for discussion and
discussion and debate at meetings
debate at meetings
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Corporate Governance Statement | Composition, Succession and Evaluation
REPORT OF THE
NOMINATION COMMITTEE
“SUCCESSION PLANNING
FOR THE BOARD AND
SENIOR LEADERSHIP
POSITIONS IS A KEY
FOCUS FOR THE
COMMITTEE.”
Gerry Murphy
Chair, Nomination Committee
Nomination Committee membership
All Non-Executive Directors serve as members of the
Full details of the Committee’s role and responsibilities
are set out in its terms of reference, which are available
Committee under the leadership of Gerry Murphy as
on the Company’s website, Burberryplc.com.
Chair. With the exception of Jeremy Darroch, who
stepped down from the Board on 15 July 2020, and
Antoine de Saint-Affrique, who was appointed to the
Board on 1 January 2021, all Non-Executive Directors
Areas of focus in FY 2020/21
The following matters were considered during the year:
served as members of the Committee throughout the
• Reviewing the composition, size, skills and diversity of
year ended 27 March 2021.
the Board and its Committees
Meetings and attendance
The Committee met virtually three times during the year
• Agreeing the recruitment process for Non-Executive
Directors and recommending the appointment of
Antoine de Saint-Affrique to the Board
and, with the exception of one meeting, all members
• Considering the independence and time commitments
attended all meetings. If Directors are unable to attend a
of Non-Executive Directors
meeting, they are given the opportunity to discuss the
• Reviewing talent and succession planning for senior
agenda items with the Committee Chair in advance of
management
the meeting. In addition to Committee members, meetings
• Updating the Board composition and diversity
are regularly attended by the Company Secretary,
principles
Chief Executive Officer and Chief People Officer.
• Recommending that the Board support the election or
re-election of all Directors at the 2021 AGM
• Reviewing the Committee’s terms of reference and
overall effectiveness
Role of the Committee
The Committee’s role includes reviewing the composition
of the Board and ensuring there is a formal, rigorous and
transparent procedure for the appointment of new
Directors. It also assists with succession planning for
senior leadership positions.
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Corporate Governance Statement | Composition, Succession and Evaluation
A highly skilled and balanced Board
Women
0-3 years
3-6 years
6+ years
Tenure
45%
27%
27%
Gender
Men
55%
46%
Nationality
British
American
Irish
French
Australian
Italian
27.5%
27.5%
18%
9%
9%
9%
Board skills
Key skills
Retail, sales and
Luxury goods
marketing
Operational
excellence
Digital and
Sustainability
media
90%
10 Directors
45%
5 Directors
90%
10 Directors
45%
5 Directors
45%
5 Directors
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Corporate Governance Statement | Composition, Succession and Evaluation
Board succession planning
We believe that diverse Boards with appropriate
The Committee considers the importance of diversity
when suggesting new appointments to the Board,
competencies and values are better Boards. Board
particularly with regard to gender, ethnicity and social
succession planning is focused on ensuring the Board
backgrounds. In accordance with the Board’s
has the right mix of skills, experience, diversity and
composition and diversity principles, we are committed
tenure. In line with the Board’s composition and diversity
to ensuring women make up at least one-third of our
principles, all new Board appointments will be made on
Board and at least one Board member is from an ethnic
merit and will:
minority background while continuing to ensure
candidates are selected based on their merit and
• Have experience and insights relevant to the Group’s
wide-ranging experience, backgrounds, knowledge,
strategic priorities
insights and skills.
• Be compatible with Burberry’s culture and values and
embrace its purpose
More information on diversity and inclusion can be found
• Promote diversity, including in terms of
on pages 69 to 72.
gender, social and ethnic backgrounds, cognitive
and personal strengths
Board and Committee changes
During the year, the Committee continued to focus on
Diversity
We believe that a diverse workforce not only encourages
the evolution of the Board, identifying a need for an
additional Non-Executive Director who would deepen
better performance, but also creates a more inclusive
the Board’s collective experience in managing global
working environment with more engaged colleagues.
consumer companies and enhance the Board’s
We champion the development of everyone at Burberry
understanding of sustainability matters. The Committee
and ensure that our people of all backgrounds are
developed a candidate profile, which was in line with the
treated equally.
Board’s composition and diversity principles and would
complement the needs of the business and the Board as
As for Board-level diversity, we are proud that Burberry
a whole. The specialist search firm MWM Consulting was
exceeded the targets set by the Hampton-Alexander
engaged to assist and advise the Committee with its
Review. At the end of the review period 45.5% of Board
search. MWM Consulting was not engaged by the
members were women and 50.4% of the combined
Company for any other purpose during FY 2020/21.
Executive Committee and Direct Reports were women
as detailed in the final report of the Hampton-Alexander
Having considered the shortlist of candidates and
Review. A table setting out the representation of women
interviewed the preferred candidates, the Committee
in the workplace is on page 72. We are supportive of the
recommended the appointment of Antoine de Saint-
Parker Review, which aims to encourage greater ethnic
Affrique to the Board for approval. The Committee
diversity on UK boards, and are pleased to report that
further recommended that, on appointment to the
we are in line with the Parker Review report’s
Board, Antoine be appointed as a member of the
recommendation.
Audit and Nomination Committees.
Further information on Antoine de Saint-Affrique’s
induction programme can be found on page 165 and his
biographical details are on page 151.
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Corporate Governance Statement | Composition, Succession and Evaluation
Annual re-election of Directors
As required by the Code, Directors offer themselves
for annual re-election. The Committee considered the
annual re-election of Directors at the AGM based on
Director performance, independence, time commitments
and tenure. As part of this process, the Committee also
assessed the external commitments of each Board
member to ensure they have the time to properly
fulfil their responsibilities as Directors of Burberry.
The Committee recommended that all Directors stand
for re-election or election at this year’s AGM.
Senior management talent and
succession planning
Talent and succession planning has continued to be a key
area of focus for the Committee. During the year, the
Committee received updates from the CEO, supported
by the Chief People Officer, on a new talent management
framework and the evolution of our leadership
development programmes to better reflect Burberry’s
purpose and values. The Committee also reviewed the
talent pipelines for the Executive Committee and
other key roles.
Board and Committee effectiveness
As part of the annual Board evaluation, all members of
the Nomination Committee participated in an evaluation
of the Committee’s performance. The evaluation
concluded that the Committee operates well and
continues to provide effective support to the Board.
Further details of the evaluation can be found on
pages 166 to 167.
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Corporate Governance Statement | Audit, Risk and Internal Control
REPORT OF THE AUDIT
COMMITTEE
“DURING FY 2020/21,
MONITORING AND
ASSESSING THE IMPACT
OF COVID-19 CONTINUED
TO BE A KEY AREA OF
FOCUS FOR THE
COMMITTEE.”
Matthew Key
Chair, Audit Committee
Dear Shareholder,
I am pleased to present the FY 2020/21 report of the
The Committee reviewed and challenged management’s
approach, analysis and recommendations, seeking
Audit Committee. The purpose of this report is to
assistance from the Group Internal Audit team to
describe how we carried out our responsibilities
provide assurance and taking into account input from
during the year.
the external auditor in order to conclude on the
appropriateness of the treatment in the Financial
The role of the Audit Committee is to monitor and
Statements. All matters reviewed were concluded to
review the integrity of financial information and to
the satisfaction of the Committee.
provide assurance to the Board that the Group’s internal
controls and risk management processes are appropriate
In addition we continued to focus on the Group’s risk
and regularly reviewed. We also oversee the work of the
management with in-depth reviews of the finance
external auditor, approve their remuneration and
and HR transformation programmes, fraud risk and
recommend their appointment. In addition to the
the store investment appraisal methodology.
disclosure requirements relating to Audit Committees
under the Code, the Committee’s report sets out areas
We have also monitored the transition of the
of significant and particular focus for the Committee.
Group external audit to Ernst & Young LLP (EY)
who have commenced their first year as the
During FY 2020/21, monitoring and assessing the impact
Company’s external auditor. Details of how the
of COVID-19 continued to be a key area of focus for the
Audit Committee has monitored EY’s first year of
Committee. Further information is provided in the
audit are available on page 177.
significant matters set out in the table on pages 175 to
176. The Committee received papers from management
During the year, the Group received a letter from the
detailing its approach and recommendations with
Conduct Committee of the FRC, relating to their review
respect to relevant estimates and financial judgements.
of the Group’s 2019/20 Annual Report. The letter did
not raise any questions or queries but did note some
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Corporate Governance Statement | Audit, Risk and Internal Control
suggestions for improvement to disclosures, for future
reporting. The Directors and the Committee have
Audit Committee membership
Matthew Key, Debra Lee, Ron Frasch and Dame Carolyn
considered the suggestions made in the letter and
McCall served as members of the Committee throughout
have made enhancements to disclosures in this year’s
the year ended 27 March 2021. Antoine de Saint-
Annual Report in all the areas suggested. The review of
Affrique was appointed as a member of the Committee
the FY 2019/20 Annual Report by the FRC does not
on 1 January 2021.
provide any additional assurance regarding its accuracy
and the FRC does not accept any liability in relation
The Committee met formally four times during the year
to their review.
and, with the exception of one meeting, all members
attended all scheduled meetings (see table on page 155).
The Committee confirms that, during FY 2020/21, the
Where members were unable to attend, they provided
Group complied with the mandatory audit processes
feedback to the Chair on the matters to be discussed in
and Audit Committee responsibilities provisions of the
advance of the meetings. In addition to the scheduled
Competition and Markets Authority Statutory Audit
meetings, Committee members also attended additional
Services Order 2014. This report describes the work of
ad hoc meetings as required.
the Committee in discharging its responsibilities.
The Chair of the Committee met separately with
The Committee has an open and constructive
representatives of the external auditor, senior members
relationship with management. I thank the management
of the finance function and the Senior Vice President,
team on behalf of the Committee for its assistance
Internal Audit and Risk on a regular basis, including prior
during the year. I am confident that the Committee
to each meeting. In addition, he met with members of
has carried out its duties in the year effectively and
the Group Internal Audit team and other members of
to a high standard.
management on an ad hoc basis as required to fulfil
Matthew Key
Chair, Audit Committee
his duties.
Regular attendees at Committee meetings include: the
Chairman of the Board; CEO; CO&FO; Chief People
Officer; Company Secretary; Senior Vice President,
Internal Audit and Risk; Senior Vice President, Group
Finance; Vice President, Group Financial Controller;
General Counsel, and representatives of the external
auditor. At the end of each meeting the Committee held
closed meetings with the external auditor and with the
Senior Vice President, Internal Audit and Risk without
management being present.
The Board is satisfied that Matthew Key has recent and
relevant financial experience, and that all other
Committee members have past employment experience
in either finance or accounting roles, or broad consumer
experience and knowledge of financial reporting and/or
international businesses. As a whole, the Board is
satisfied that the Audit Committee has competence
relevant to the business sector. The biographies set out
on pages 148 to 151 provide details of each member’s
background and experience.
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Corporate Governance Statement | Audit, Risk and Internal Control
Role of Committee
The main roles and responsibilities of the Committee are
• Internal Audit: review of the annual Internal Audit
programme and the consideration of findings of any
set out in written terms of reference, which are available
internal investigations and management’s response.
on the Company’s website, Burberryplc.com. The
Approving the appointment of the Senior Vice
Committee reviews its terms of reference annually
President, Internal Audit and Risk
and, in light of its key responsibilities, the Committee
• External auditor: recommending the appointment
considered the following items of usual business during
of the external auditor, approving their remuneration
the financial year:
and overseeing their work. Reviewing reports received
from the external auditor. Review of effectiveness of
• Financial reports: the integrity of the Group’s Financial
the external auditor
Statements and formal announcements of the Group’s
• Ethics update: the Committee received and considered
performance
reports from management on the Group’s
• Risk and internal controls: the Group’s internal
whistleblowing arrangements and health and safety
financial, operational and compliance controls and risk
• TCFD: reviewing the requirements of the Task Force
identification and management processes. Review of
for Climate-related Financial Disclosures and the
Group policies for identifying and assessing risks and
scenario analysis undertaken to assess the impact of
arrangements for employees to raise concerns (in
climate-related risks to Burberry’s key commodities:
confidence) about possible improprieties
leather, cotton and cashmere
• Viability: consideration of the Group’s Viability
Statement as set out on pages 140 to 142.
Significant matters for the
year ended 27 March 2021 How the Audit Committee addressed these matters
Impairment assessment
The Committee considered management’s assessment of the recoverability of the
of goodwill
carrying value of goodwill. Given the current uncertainty over future performance, which
will depend on the path of recovery from COVID-19, the Committee considered
management’s estimate of the value in use of those cash generating units containing
goodwill under a range of potential outcomes over the next few years. The Committee
also reviewed management’s proposed disclosures regarding impairment assessments
of goodwill. The Committee approved management’s view that, as the estimated
recoverable amount of goodwill exceeded the carrying value, no impairment was
measured. The results of the impairment assessment of goodwill are set out in note 12
of the Financial Statements.
Impairment assessment
The Committee considered management’s assessment of the recoverability of the
of property, plant and
carrying value of assets held in retail cash generating units, including property, plant
equipment and right-of-
and equipment and right-of-use assets relating to store leases. The Committee
use assets held in retail
considered the approach applied by management to update assessments of previously
cash generating units
impaired cash generating units and their review for potential indicators of impairment
for other retail cash generating units. Given the current uncertainty over future store
performance, which will depend on the path of recovery from COVID-19, the Committee
reviewed management’s proposed disclosures relating to sensitivities of estimates to
take account of these uncertainties. The results of the impairment assessment of
assets held in retail cash generating units, together with related sensitivities, are set
out in note 13 of the Financial Statements.
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Corporate Governance Statement | Audit, Risk and Internal Control
Significant matters for the
year ended 27 March 2021 How the Audit Committee addressed these matters
The recoverability of the
The Committee considered the Group’s current provisioning policy, the expected loss
cost of inventory and the
rates on inventory held at the balance sheet date and the nature and condition of
resulting amount of
current inventory. In particular, the Committee considered management’s assumptions
provisioning required
regarding the usage of inventory relating to the recent seasons, which have been most
impacted by COVID-19. The review included analysis of actual inventory usage
compared to assumptions made at March and September 2020 and the resulting
revision to assumptions regarding expected exit routes for the remaining surplus
inventory held at the balance sheet date. Movements in inventory provisioning and the
related sensitivities are set out in note 17 of the Financial Statements.
Income and deferred taxes The Committee reviewed the Group Tax strategy, developments relating to discussions
with tax authorities, the status of any ongoing tax audits, and their impact on the
Financial Statements. The Committee reviewed and challenged the appropriateness of
assumptions and estimates applied in order to estimate the amount of assets and
liabilities to be recognised in relation to uncertain income tax and deferred tax positions
and the disclosure of any significant estimates applied to tax balances. The Committee
concluded that the assets and liabilities recognised and disclosures contained in the
Financial Statements for the period were appropriate. Details of movements in tax
balances are set out in notes 9 and 15 of the Financial Statements and further
disclosure of tax contingent liabilities is given in note 33.
Fair, balanced and
The Committee considered the Annual Report and Interim Report, on behalf of the
understandable reporting
Board, to ensure that they were fair, balanced and understandable, in accordance with
the requirements of the UK Corporate Governance Code. The Committee paid particular
attention to the approach taken by management to separate presentation of any items
relating to the impact of COVID-19 including impairments of assets or reversal of
previous impairments which were separately presented and the recognition of income
directly relating to COVID-19, together with the disclosure of the basis of the treatment
applied. The Committee reviewed the report from the Strategic Report drafting team,
comments arising from the review of the Financial Statements by the Executive
Directors and comments raised by the Group’s auditors. The Committee also considered
the use of alternative performance measures by the Group, including the
appropriateness of their current use and their disclosure in the Financial Statements
and Strategic Report. The Committee concluded that their current use was fair,
balanced and understandable.
Other matters
At the May and November meetings, the Committee also considered management’s
papers on other subjects, including the recognition and measurement of adjusting
items for restructuring costs, significant judgements relating to lease term and
impairment of receivables.
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Corporate Governance Statement | Audit, Risk and Internal Control
External auditor
Following a competitive tender carried out in 2018 and
• Any threats to independence and objectivity resulting
from the provision of such services; any safeguards in
their appointment at the Annual General Meeting on
place to eliminate or reduce these threats to a level
15 July 2020, EY commenced their first year of audit in
where they would not compromise the auditor’s
FY 2020/21. The Audit Committee oversees the work
independence and objectivity; the nature of the
undertaken by EY and in FY 2020/21 the Committee
non-audit services; and whether the skills and
monitored activities including reviewing:
experience of the audit firm make it the most suitable
supplier of the non-audit service
• The audit plan, including scope and materiality
• The value of non-audit services that can be billed by
• The approach to risk assessment
• The approach to auditing controls
• Reports at interim and full year
the external auditor is restricted by a cap, which is set
at 70% of the average audit fees for the preceding
three years as defined by the FRC
During the year, the Committee met with the external
During FY 2020/21 the non-audit services provided by
auditor without members of management being present.
Burberry’s external auditor did not exceed this cap.
Appointment and fees
One of the Committee’s primary responsibilities is to
Proposed fees above £50,000 are approved by the Chair
of the Audit Committee. Non-audit services with a value
make a recommendation on the appointment,
below £50,000 and which are in line with the Group’s
reappointment and removal of the external auditor.
policy have been pre-approved by the Audit Committee.
Every year, the Committee assesses the qualifications,
Compliance with the policy of engaging the Group’s
expertise, resources and independence of the external
auditor for non-audit services and pre-approving
auditor, and the effectiveness of the previous audit
non-audit fees is reviewed and monitored by the Senior
process. Over the course of the year, the Committee
Vice President, Internal Audit and Risk. These fees must
reviewed the audit process and the quality and
be activity based and not success related. At the half
experience of the audit partners engaged in the audit to
year and year end, the Audit Committee reviews all
satisfy itself that it received the highest quality audit
non-audit services provided by the auditor during the
possible. To support its assessment, a survey was sent
period, and the fees relating to these services.
to the Audit Committee Chair, key members of the
Finance team and other members of the senior
During the year, the Group spent £0.1 million on
management team as part of the year-end processes
non-audit services provided by EY (6% of the average
seeking feedback on the effectiveness of the external
of Group audit fees incurred over the last three years).
audit process. The survey results concluded that the
The rationale for using the external auditor to perform
external audit process was considered to be effective. A
these services was to reduce complexity. Further details
further review of the external audit process will be
can be found in note 7 to the Financial Statements.
conducted later in the year following completion of EY’s
first audit. The Committee also reviewed the proposed
audit fee and terms of engagement for FY 2020/21.
Evaluation of internal controls
Our Board is ultimately responsible for the Group’s
Details of the fees paid to the external auditor during
internal controls and risk management procedures.
the financial year can be found in note 7 to the Financial
It discharges its duties in this area by:
Statements.
Non-audit services
The Committee recognises that the independence of the
emerging risks it is willing to accept to achieve the
Group’s strategic objectives (the Board’s risk appetite)
external auditor is an essential part of the audit
• Challenging management’s implementation of
framework and the assurance that it provides. In line
effective processes of risk identification, assessment
• Determining the nature and extent of the principal and
with the Revised Ethical Standard issued by the FRC in
and mitigation
December 2019, the Committee has adopted a policy,
which sets out a framework for determining whether it is
Our Audit Committee is responsible for reviewing the
appropriate to engage the Group’s auditor for non-audit
effectiveness of the Group’s internal controls and risk
services and pre-approving non-audit fees.
management procedures. Details of the Group’s risk
The overall objective is to ensure that the provision of
mitigation of each principal risk together with the
management processes and the management and
non-audit services does not impair the external auditor’s
independence or objectivity. This includes, but is not
limited to, assessing:
177
Corporate Governance Statement | Audit, Risk and Internal Control
Group’s Viability Statement can be found in our Risk and
The Group operates a “three lines of defence” model,
Viability Report on pages 106 to 142.
which helps to achieve effective risk management and
internal control across the organisation.
Ongoing review of these controls is provided through
internal governance processes and the work of the
• First line of defence: management owns and manages
Group is overseen by executive management, particularly
risk and is also responsible for implementing corrective
the work of the Group Internal Audit team and the Risk
actions to address process and control deficiencies
Committee. Regular reports on these activities are
• Second line of defence: to help ensure the first line is
provided to the Audit Committee as reflected in the
properly designed, established and operating
standing items on the Audit Committee agenda.
effectively, management has also established various
risk management and compliance functions to help
The Board, through the Audit Committee, has conducted
build and/or monitor the first line of defence. These
a robust assessment of our principal and emerging risks
include, but are not limited to, functions such as Group
and internal control framework. It has considered the
Risk Management, Legal, Brand Protection, Company
effectiveness of the internal controls in operation across
Secretariat, Group Finance Compliance, Health and
the Group for the year covered by the Annual Report and
Safety, Data Protection, Asset and Profit Protection,
Accounts and up to the date of its approval by the
and Business Continuity
Board. This review covered the material controls,
• Third line of defence: Group Internal Audit provides
including financial, operational and compliance, as well as
the Audit Committee and management with
risk management processes. No significant control
independent and objective assurance on the
weaknesses were identified. The internal controls are
effectiveness of governance, risk management and
designed to manage rather than eliminate the risk of not
internal controls. This includes the way in which the
achieving business objectives and can only provide
first and second lines of defence achieve risk
reasonable and not absolute assurance against material
management and control objectives
misstatement or loss.
The process followed by the Board, through the Audit
Internal Audit
The Group Internal Audit function is managed under
Committee, in regularly reviewing the system of internal
the leadership of our Senior Vice President, Internal
controls and risk management processes complies with
Audit and Risk, who reports to the CO&FO but has an
the Guidance on Risk Management, Internal Control and
independent reporting line to the Chair of the
Related Financial and Business Reporting issued by the
Audit Committee.
FRC. It also accords with the provisions of the Code.
The scope of Internal Audit work is considered for each
Control environment
Our business model is based primarily on central design,
operating company and Group function. This takes
account of risk assessments, input from senior
supply chain and distribution operations to supply
management and the Audit Committee and previous
products to global markets via retail, wholesale and
audit findings. For example, in FY 2020/21, there was
digital channels. This is reflected in our internal control
an emphasis on assurance over the significant financial
framework, which includes centralised direction,
estimates made in response to COVID-19 and the
resource allocation, oversight and risk management of
re-positioning on the Group’s major business
the key activities of marketing, inventory management,
transformation and IT implementation programmes
as well as brand and technology development. We have
across Finance, Supply Chain, HR and Digital. There
also established procedures for the delegation of
was also a continued focus on assessing the maturity of
authorities to ensure that approval for matters that are
controls over cybersecurity and IT operations, and the
considered significant is provided at an appropriate level.
core financial controls operated from Burberry Business
In addition, we have policies and procedures in place that
Services. Changes to the Group’s risk profile are
are designed to support risk management across the
considered on an ongoing basis and amendments are
Group. These include policies relating to treasury and the
made to the audit plan as necessary during the year.
conduct of employees and third parties with whom we do
Any proposed changes to the plan are discussed with
business, including prohibiting bribery and corruption.
the CO&FO and reported to the Audit Committee.
These authorities, policies and procedures are kept
The effectiveness of Group Internal Audit is assessed
under regular review.
every five years with the latest review having been
reported last year.
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Corporate Governance Statement | Audit, Risk and Internal Control
Ongoing visibility of the internal control environment is
Our financial reporting process is supported by
provided through Internal Audit reports to management
transactional and consolidation finance systems.
and the Audit Committee. These reports are graded to
Reviews of financial controls are carried out by senior
reflect an overall assessment of the control environment
members of the finance team. The results of these
under review, and the significance of any control
reviews are considered by the Audit Committee as part
weaknesses identified.
of its monitoring of the performance of controls
governing financial reporting.
Remedial actions to address findings are identified and
agreed with management. The Audit Committee places
The Audit Committee reviews the application of financial
high emphasis on actions being taken as a result of
reporting standards and any significant accounting
internal audits and regular reports are provided to the
judgements made by management. These matters are
Audit Committee on the status of any overdue actions.
also discussed with the external auditor.
Financial reporting
Management is responsible for establishing and
Impact of COVID-19
We have assessed financial reporting controls impacted
maintaining adequate internal controls over financial
by remote working arrangements due to COVID-19 to
reporting. These are designed to provide reasonable
identify potential vulnerabilities in processes and to
assurance regarding the reliability of financial reporting
determine key controls needed to operate during this
and the preparation of Financial Statements for external
period. Where required, controls have been adapted to
reporting purposes.
reflect new ways of working, existing technology and IT
infrastructure has been enhanced to support remote
We have comprehensive planning, budgeting,
execution and contingency plans have been developed,
forecasting and monthly reporting processes in place.
including back-up support for employees impacted by
A summary of financial results, supported by
illness or remote working.
commentary and performance measures, is provided
to the Board each month.
Fair, balanced and understandable
As a whole, the Annual Report and Accounts are
In relation to the preparation of Group Financial
required to be fair, balanced and understandable and
Statements, the controls in place include:
to provide the information necessary for shareholders
to assess the Group’s position, performance, business
• A centre of expertise responsible for reviewing new
model and strategy. On behalf of the Board, the Audit
developments in reporting requirements and
Committee considered whether the fair, balanced and
standards to ensure that these are reflected in Group
understandable statement could properly be given on
accounting policies
behalf of the Directors. The processes followed to
• A global finance structure consisting of colleagues
provide the Committee with assurance were considered
with the appropriate expertise to ensure that Group
and the Committee provided a recommendation to the
policies and procedures are correctly applied. Effective
Board that the fair, balanced and understandable
management and control of the finance structure is
statement could be given on behalf of the Directors.
achieved through our finance leadership team,
Based on this recommendation, the Board is
consisting of key finance colleagues from the regions,
satisfied that it has met this obligation. A summary
Burberry Business Services and London headquarters
of the Directors’ responsibilities in relation to the
Financial Statements is set out on page 210. The
Independent Auditors’ Report on pages 211 to 223
includes a statement concerning the auditor’s
reporting responsibilities.
179
Corporate Governance Statement | Directors’ Remuneration Report
DIRECTORS’
REMUNERATION REPORT
Chair’s statement
See page 180
At a glance: remuneration
See page 186
approach for FY 2020/21 and
FY 2021/22
Annual Report on Remuneration
See page 188
Orna NíChionna
Chair, Remuneration Committee
Dear Shareholder,
I am pleased to present to you the Directors’
from home. We also set up rigorous health and safety
protocols across all our sites in line with government
Remuneration Report for the year ended 27 March 2021,
guidelines, so that those who needed to work there to
which has been approved by both the Remuneration
execute critical business processes, including many
Committee (the Committee) and the Board.
members of our creative teams, could do so without
being distracted from our purpose, Creativity
Rising to the challenges
Our latest financial year has seen a lot of change, both
Opens Spaces.
within the business and within society. It started a week
Throughout all this, our leadership team ensured that
after the UK had entered its first lockdown and most of
the execution of our strategy stayed on course. This
our stores had closed. Our first priority as a Board was
required us to continue to strengthen our culture and
to ensure that all of our people felt safe and supported,
reshape our head office organisation, to invest in our
and our leadership team worked intensively to achieve
digital capabilities, and to nurture our creativity to
that, quickly setting up systems and providing equipment
deliver excitement in our ranges and in our marketing.
to enable working from home and to allow our people to
Once our stores in China reopened, marketing resources
stay connected and maintain a sense of community. Our
were diverted from other markets to capture the sales
teams were very agile in reorganising our supply chains
potential there, with new approaches to digital
as stores opened and closed in different regions of the
marketing and customer engagement proving successful.
world and to meet the increased demand we saw online
We accelerated our shift in mix to full price and away
in most of our markets.
from markdown channels. By the end of the year,
these actions, guided by our purpose, meant that the
As the year progressed, and it became clear that
expectations we had for our sales and profits at the
disruption could continue for some time to come, our
start of the year were exceeded by a considerable
leadership teams devised new approaches to help our
margin and, in spite of COVID-19, we delivered a
people manage their wellbeing while continuing to work
strong set of results.
180
Corporate Governance Statement | Directors’ Remuneration Report
Supporting the response to COVID-19
Our colleagues were also anxious to play a part in the
Directors’ Remuneration Policy
Last year the Committee developed a new Remuneration
fight against COVID-19 and by May last year, when I
Policy designed to support our strategy to establish
wrote to you, I was proud to list the various initiatives
Burberry as a global luxury brand that can deliver
that were underway, including the manufacture of PPE
long-term sustainable value for shareholders. We
at our Castleford factory; the sourcing and distribution
consulted widely and refined it in response to comments
of PPE using our supply chain; Company donations to
from shareholders and proxy bodies. The Committee was
vaccine research at the University of Oxford; and the
very pleased with the strong level of support that the
setting up of a COVID-19 relief fund spearheaded by The
final Remuneration Policy received from shareholders at
Burberry Foundation. All members of the Board took a
the 2020 AGM.
voluntary salary/fee cut of 20% for the first quarter and
the Company paid an equivalent of that amount to The
Burberry Share Plan 2020 (BSP)
Burberry Foundation COVID-19 Community Fund, with
The key change under the new Remuneration Policy
our top management team also taking a 20% reduction
was the introduction of a restricted share plan, the BSP.
in their salaries.
Under the BSP Executive Directors receive awards with
a lower face value than under our previous performance
In total, during the financial year Burberry donated
share plan. The awards are subject to performance
more than 160,000 pieces of PPE and provided over
underpins, which play a different role to performance
four million masks and 50,000 gowns at cost. The
conditions in a “traditional” long-term incentive plan.
Burberry Foundation COVID-19 Community Fund
If the Company were to fail to meet one or more of the
provided support to relief efforts ranging from procuring
performance underpins over the relevant vesting period
and distributing masks, gowns and other PPE to
then the Committee would consider whether it would be
providing funding to food banks and healthcare charities.
appropriate to scale back the level of pay-out under
At the end of the year, in March 2021, the Community
the award to reflect this. The Committee would
Fund alongside Burberry Group plc released further
retain discretion to determine the appropriate level
funds to support the distribution of vaccines in
of scale-back.
developing countries.
Other changes to the Remuneration Policy
In summary, our leadership team has faced into a range
In addition to the introduction of the BSP, the
of competing challenges with skill and dedication,
Committee made some changes to reflect evolving
enabling us to be agile in our response to COVID-19 while
market practice and shareholder expectations. This
at the same time delivering our strategy. Morale has
included a reduction in pension arrangements for our
remained strong and our people have retained the deep
current Executive Directors so that they will be aligned
focus on creativity that is at the heart of our purpose,
with the maximum rate available to the majority of the
and so essential to our future growth. The organisation
UK workforce by 1 January 2023, and the introduction
is stronger and more purposeful than it has ever been
of post-employment shareholding guidelines in line with
and our brand has been strengthened. At the time of
current views of best practice.
writing, the UK is emerging from lockdown, but the
outlook around the world remains uncertain in the short
term, as political events add to the challenges of
steering the Company through the pandemic. I have
great confidence that our leadership team will surmount
the challenges that arise in this financial year, as they
have done so well to date.
181
Corporate Governance Statement | Directors’ Remuneration Report
“PERFORMANCE HAS BEEN STRONG
DURING FY 2020/21 IN SPITE OF
COVID-19 AND THE COMMITTEE
JUDGED IT WAS APPROPRIATE
TO PAY A BONUS TO REFLECT
THESE ACHIEVEMENTS.”
Orna NíChionna
Chair, Remuneration Committee
Approach to remuneration for FY 2020/21
Salary and Board fees
performance has been strong during FY 2020/21, in
spite of COVID-19, and this is due in large part to the
As previously noted, as part of Burberry’s response to
programmes our leadership team designed and executed
COVID-19, for three months from 1 April 2020 the
under considerable pressure from the pandemic. The
Executive Directors voluntarily reduced their base salary
Committee judged it was appropriate to pay a bonus
by 20%, with the equivalent cash amount being donated
of 50% of base salary (the maximum potential for
by the Company to The Burberry Foundation COVID-19
FY 2020/21) to reflect these achievements. Further
Community Fund. The Chairman and the Non-Executive
details on the annual bonus outcomes are set out on
Directors did likewise with their fees over the same
page 183 and on pages 189 to 191.
three-month period.
BSP awards
Annual bonus approach for FY 2020/21
The first awards under the BSP were made in
The maximum annual bonus for Executive Directors is
August 2020. As set out in my letter last year, the
normally 200% of base salary. However, at the start of
Committee is mindful of shareholder guidance that,
the year, taking into account the uncertainty caused by
where a company’s share price has fallen, this should be
the outbreak of COVID-19 and the challenges expected
taken into account when determining award levels. After
to follow, the Committee modified the operation of the
careful consideration, the Committee determined that it
annual bonus for FY 2020/21, limiting the maximum
would be appropriate to reduce the level of BSP awards
annual bonus to 25% of the maximum, i.e. 50% of base
in 2020. Accordingly the CEO and CO&FO were granted
salary. In addition to reducing the maximum, the
BSP awards of 150% and 140% of base salary,
Committee also modified the approach to determining
respectively. The normal maximum levels are 162.5%
outcomes. Following the end of the financial year, the
and 150% of base salary, respectively.
Committee determined the annual bonuses for
FY 2020/21 taking into account performance against
The 2020 BSP awards are subject to performance
strategic objectives set around the Company’s response
underpins of Revenue, ROIC and brand and sustainability,
to, and recovery from, COVID-19; our strategy to build a
which provide a “safeguard” to ensure that awards do
more sustainable future; overall business performance;
not pay out if the Company has under-performed and
and the shareholder experience. The Company’s
vesting is not justified. Further detail on the underpins
is provided on page 193.
182
Corporate Governance Statement | Directors’ Remuneration Report
Remuneration outcomes for FY 2020/21
Annual bonus for FY 2020/21
Single figure for FY 2020/21
The operation of the annual bonus for FY 2020/21 was
The chart below shows the breakdown of
modified given the uncertainty and challenges presented
the single figure total remuneration for the
by COVID-19. Following the end of the financial year, the
Executive Directors in respect of FY 2020/21
Committee reviewed the performance of the Company
(see page 188 for more detail).
and the Executive Directors. The key annual
performance highlights taken into account by the
Committee include:
• Adjusted operating profit of £396 million which was
significantly ahead of expectations at the start of the
year in spite of COVID-19
• Full-year revenue of £2,344 million
• Rigorous cash management throughout the
year resulting in free cash flow (pre-tax) of
£407 million and a closing cash level of £919 million
net of borrowings
• Absolute share price growth of c.43% for the
financial year, representing a strong recovery relative
to the FTSE 100
• Strong progress against our sustainability
goals, including the successful launch of a
Sustainability Bond
£2,245k
£1,405k
£180k
£570k
£106k
£363k
£1,495k
£936k
Marco
Gobbetti
Julie
Brown
Fixed pay
Bonus
ESP
Significant strategic progress during the year has
Alignment between Executive Directors and
supported Burberry’s recovery from the COVID-19
shareholders
pandemic and provided a strong platform to deliver
Executive Directors are subject to a shareholding
shareholder returns in the future. Taking into account
guideline of 300% of salary which drives long-term
the excellent progress made during a particularly
alignment with investors. The chart below illustrates
challenging year, the Committee determined that the
the value of holdings at the year end and the status
Executive Directors would receive bonuses of 50% of
against the guideline. Both Marco Gobbetti and
base salary (equivalent to 25% of the normal maximum
Julie Brown had met the shareholding guideline
opportunity of 200% of base salary). Further details of
(see page 195 for more detail).
the Committee’s assessment and the factors taken into
account are set out on pages 189 to 191.
2018 Executive Share Plan (ESP) awards
The 2018 ESP award was based on three performance
metrics, measured over the three-year period to
27 March 2021. Given the impact of the COVID-19
pandemic on performance during the year, growth in
Revenue and Adjusted PBT (CER) were both below
threshold and therefore there was no vesting on these
metrics. However, the three-year average Adjusted
Retail/Wholesale ROIC exceeded the threshold vesting
target. This performance will result in overall vesting of
the 2018 ESP award for the Executive Directors of 5.5%
of maximum. The ESP shares to be received by the
Executive Directors on vesting will be subject to a
post-vesting holding period. The Committee believes
that the ESP outcome appropriately reflects the broader
performance context and, as a result, no discretion was
exercised by the Committee in respect of the outcome of
the ESP awards.
183
Per cent
of salary
£4.33m
£2.79m
400%
300%
200%
100%
0%
Marco
Gobbetti
Julie
Brown
Shareholding
guideline
Corporate Governance Statement | Directors’ Remuneration Report
Approach to remuneration for FY 2021/22
Salary and Board fees
Broader employee reward
Our people are our biggest asset and they have been
The Executive Directors will not receive a salary increase
instrumental in making Burberry the luxury fashion
for FY 2021/22. Their salaries will therefore continue to
brand it is today. We strive to be an open, caring and
be £1,140,000 for the CEO and £725,500 for the
inclusive employer.
CO&FO. There will also be no increase in fees for the
Chairman or the Non-Executive Directors.
We regularly run Employee Engagement Surveys to gain
Annual bonus
insight into what keeps our people motivated and
inspired. In 2019 we established the Global Workforce
Following the modified approach for FY 2020/21 the
Advisory Forum, comprising a group drawn from a range
Committee is reverting to the normal annual bonus
of roles and locations around the world, in order for the
approach for FY 2021/22 as set out in the Remuneration
Board to have a direct channel to hear and discuss the
Policy approved by shareholders at the 2020 AGM.
views of the workforce as part of its decision-making
The Executive Directors will therefore be eligible for a
processes. During FY 2020/21, the Chairman and I have
maximum bonus of 200% of salary. The annual bonus
attended each Forum meeting.
will be based 75% on adjusted operating profit and
25% on performance against strategic objectives
At our February 2021 meeting, I presented the Forum
linked to progress against our strategy and our
members with a summary of the changes made to the
brand, sustainability targets and diversity, inclusion
Remuneration Policy and approved by shareholders at
and leadership goals (further details are provided
the 2020 AGM and I invited questions and comments.
on page 191).
BSP awards
We included details of how the revised approach applied
to Executive Directors and how it has been cascaded
throughout the organisation, including how BSP awards
The Committee intends to grant BSP awards for 2021
are structured below Board level. Members of the Forum
in line with the approach approved by shareholders last
shared their views and discussed the thought process of
year. Awards will vest in equal tranches after three, four
the Committee in detail. Members confirmed that the
and five years following the date of award, subject to a
new BSP had been well received by participants across
holding period to the fifth anniversary of award. As set
the Company. We also reflected on changes which had
out on page 182, the Committee scaled back the BSP
been made to the retail commission structure globally.
awards for 2020 taking into account the Company’s
This too had been warmly received, although we noted
share price at the time of grant. As the share price has
some anomalies that had arisen due to the pandemic and
increased since the 2020 grants, the Committee intends
which will be addressed. There was considerable praise
to grant BSP awards for 2021 at the normal levels of
for the new Global Parental Leave Policy. The Chairman
162.5% and 150% of base salary for the CEO and
and I have found it very valuable to take part in the
CO&FO, respectively.
Forum and to hear the views of the wider employee base.
We take these views into account when we consider
After careful consideration, the Committee has
changes to policy and incentive out-turns for
determined that the performance underpins that
Executive Directors.
applied to the 2020 BSP awards continue to reflect
a good overall balance of safeguarding the financial
stability of the business, delivery of the strategy and
elevation of the brand. Therefore, the 2021 BSP awards
will be subject to the same performance underpins.
The Committee has decided that it would be appropriate
to increase the level of the Revenue underpin to
£2,400 million and the level of the ROIC underpin to at
least 1% above the Group’s WACC (currently c.9%)
in the year of vesting. The approach to the brand and
sustainability underpin will be unchanged. Further
details are provided on page 194.
184
Corporate Governance Statement | Directors’ Remuneration Report
Our reward framework
Burberry’s remuneration framework has been designed
Burberry’s reward framework
to support our culture, values and purpose. The
Burberry’s reward framework, consisting of
framework, which consists of fixed pay, short-term
fixed pay, short-term incentives and long-term
incentives and long-term share awards, is cascaded
share awards, is cascaded across the Group.
across the Group.
We are committed to fair and responsible employment
and are proud to be a principal partner of The Living
Wage Foundation and an accredited UK Living Wage
employer. We are keen to encourage employee share
ownership and we operate two all-employee share plans,
which are due for renewal at the AGM in July. Annual
grants of free shares (or equivalent cash-based awards
where necessary) and the ability to purchase shares
under our Sharesave Scheme enable our people to
become shareholders in Burberry and share in the
long-term success of our strategy.
Engagement with shareholders
We have sought to have an open and transparent
dialogue with shareholders about executive remuneration
arrangements at Burberry. Our engagement with
shareholders at the start of the year helped inform the
FIXED PAY
Fixed pay consists of salary,
benefits and pension
SHORT-TERM INCENTIVES
All our people are eligible for
performance-related pay based
on short-term performance
LONG-TERM SHARE AWARDS
All our people are eligible to participate
new Remuneration Policy put to shareholders at
in Burberry share plans
the 2020 AGM and I am most grateful to shareholders
for their support on the Remuneration Policy last year. I
look forward to continuing the discussion and hope that
you will be willing to support the Directors’
Remuneration Report at the AGM in July.
Orna NíChionna
Chair, Remuneration Committee
185
Corporate Governance Statement | Directors’ Remuneration Report
AT A GLANCE:
REMUNERATION APPROACH FOR FY 2020/21 AND FY 2021/22
The Remuneration Policy was approved by shareholders at the AGM on 15 July 2020 and is set out in full in the
Directors’ Remuneration Report FY 2019/20, which can be found in the Annual Report FY 2019/20 at
Burberryplc.com.
Element
Approach for FY 2020/21
Approach for FY 2021/22
Salary
Salaries from 1 July 2020:
• CEO – £1,140,000
• CO&FO – £725,500
No increase in salaries from 1 July 2021.
Salaries from 1 July 2021 will remain:
• CEO – £1,140,000
The CEO and CO&FO agreed to waive 20% of
• CO&FO – £725,500
salary between April and June 2020 with the
equivalent cash amount donated by the
Company to The Burberry Foundation COVID-19
Community Fund.
Pension
CEO and CO&FO – pension reduced from 30%
CEO and CO&FO – 20% of base salary, with a
of base salary to 20% of base salary from
further reduction to align with the maximum
1 July 2020.
rate available to the majority of the UK
Any new appointment – in line with the
workforce from 1 January 2023.
maximum employer pension contribution
Any new appointment – no change for
available to the majority of the UK workforce
FY 2021/22.
(currently 6% of salary).
Benefits
Cash benefits allowance – CEO (£80,000) and
No change for FY 2021/22.
CO&FO (£30,000)
Non-cash benefits principally include private
medical, long-term disability insurance and
life assurance.
Annual bonus
In light of the uncertainty and challenges
The annual bonus will revert to its normal
following the outbreak of COVID-19, the
operation.
operation of the annual bonus was modified for
Maximum 200% of salary.
FY 2020/21.
Performance measures:
The annual bonus was limited to 25% of the
• 75% adjusted operating profit
normal maximum, i.e. 50% of salary.
• 25% strategic objectives
The Committee determined the annual bonus
Executives are required to invest 50% of any
taking into account performance against
net bonus into shares until shareholding
strategic objectives (response to and
guidelines are met.
recovery from COVID-19, and sustainability),
Malus and clawback provisions apply.
overall business performance and the
shareholder experience.
Executives are required to invest 50% of any
net bonus into shares until shareholding
guidelines are met.
Malus and clawback provisions apply.
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Element
Approach for FY 2020/21
Approach for FY 2021/22
BSP
The 2020 awards were scaled back in
Given the share price recovery, BSP awards will
recognition of the Company’s share price
revert to normal levels for the 2021 awards.
at grant:
• CEO – 150% of salary
• CO&FO – 140% of salary
Maximum annual award levels:
• CEO – 162.5% of salary
• CO&FO – 150% of salary
Awards vest one third after three years, one
Awards vest one third after three years, one
third after four years and one third after
third after four years and one third after
five years.
five years.
Awards subject to a holding period to fifth
Awards subject to a holding period to fifth
anniversary of award.
Malus and clawback provisions apply.
anniversary of award.
Malus and clawback provisions apply.
The performance underpins for the 2020
The performance underpins for the 2021 awards
awards are as follows:
are as follows:
• Revenue – the level of Total Revenue at CER
• Revenue – the level of Total Revenue at CER
for the financial year which precedes the year
for the financial year which precedes the year
of vesting being at least £2,000 million
of vesting being at least £2,400 million
• ROIC – the level of Group ROIC at reported
• ROIC – the level of Group ROIC at reported
exchange rates for the financial year which
exchange rates for the financial year which
precedes the year of vesting being ahead of
precedes the year of vesting being at least 1%
the Group’s WACC, currently c.9%
above the Group’s WACC (currently c.9%) in
• Brand and sustainability – reasonable
the year of vesting
progress having been achieved in respect of
• Brand and sustainability – reasonable
our strategy to elevate our brand and build a
progress having been achieved in respect of
more sustainable future
our strategy to elevate our brand and build a
more sustainable future
No change for FY 2021/22.
Shareholding
300% of salary
guidelines
Post-employment shareholding guideline
introduced whereby Executive Directors will
be expected to retain a shareholding of 300%
of salary (or actual shareholding if lower) for
two years after stepping down as an
Executive Director.
Details of the principles the Committee took into account when developing the Remuneration Policy, including
Provision 40 of the UK Corporate Governance Code, are set out on page 161 of the FY 2019/20 Annual Report.
The Committee considers that the Remuneration Policy operated as intended during FY 2020/21.
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Corporate Governance Statement | Directors’ Remuneration Report
ANNUAL REPORT ON REMUNERATION
FY 2020/21 total single figure remuneration for Executive Directors (audited)
The table below sets out the single figure of total remuneration received or receivable by the Executive Directors in
respect of FY 2020/21 (and the prior financial year). The subsequent sections detail additional information for each
element of remuneration.
Salary1
£’000
Allowances
and benefits2
£’000
Pension
£’000
Bonus
£’000
ESP3
£’000
All-employee
share plans4
£’000
Total
£’000
Total fixed
remuneration
£’000
Total variable
remuneration
£’000
Marco Gobbetti
Year to 27 March 2021
Year to 28 March 2020
Julie Brown
Year to 27 March 2021
Year to 28 March 2020
1,083
1,136
689
723
155
141
78
79
257
341
163
217
570
–
363
–
180
–
106
–
–
–
6
–
2,245
1,618
1,405
1,019
1,495
1,618
936
1,019
750
–
469
–
1. The Executive Directors voluntarily agreed to waive 20% of their salary for a three-month period between April and June 2020 with
the equivalent cash amount being donated by the Company to The Burberry Foundation COVID-19 Community Fund.
2. The cost of private medical insurance for the Executive Directors was overstated in FY 2019/20 due to an administrative error and
has been corrected in the allowances and benefits column for the year to 28 March 2020.
3. The values shown in the ESP column in respect of FY 2020/21 represent the vesting of the 2018 ESP award. The values have been
calculated by multiplying the number of shares which will vest based on the performance outcome set out on page 192 (9,489 for
Marco Gobbetti and 5,574 for Julie Brown) by the three-month average share price to the end of the financial year (£18.44), plus the
value of dividends on these shares (using a cumulative dividend per share of 53.8 pence). This average share price has been used as
the award does not vest until after the year end. The share price used to calculate the number of shares at grant (31 July 2018) was
£21.135. Therefore none of the 2018 ESP value disclosed in the single figure table is attributable to share price growth. The
Remuneration Committee did not exercise discretion in respect of the change in share price.
4. The value shown in the all-employee share plans column in respect of FY 2020/21 represents the gain realised by Julie Brown on the
exercise of a Sharesave option granted in 2017 and the vesting of the 2017 award of free shares granted under the Share Incentive
Plan (SIP).
Salary (audited)
The table below details annual salaries as at 27 March 2021 and those that will apply from 1 July 2021. Salaries will not
be increased from 1 July 2021. From 1 April 2020, the Executive Directors voluntarily agreed to waive 20% of their
salary for a three-month period between April and June 2020 with the equivalent cash amount being donated by the
Company to The Burberry Foundation COVID-19 Community Fund.
Marco Gobbetti
Julie Brown
As at
27 March
2021
As at
1 July
2021
£1,140,000
£1,140,000
£725,500
£725,500
% change
0%
0%
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Corporate Governance Statement | Directors’ Remuneration Report
Pension (audited)
Each Executive Director received an annual pension contribution or pension cash allowance of 30% of base salary up
to 30 June 2020 and 20% of base salary from 1 July 2020. No Director has a prospective entitlement to receive a
defined benefit pension.
In line with the approved Remuneration Policy, the pension allowance of each Executive Director will be further
reduced to align with the maximum employer pension contribution available to the majority of the UK workforce
(currently 6% of salary) from 1 January 2023 in line with best practice.
Allowances and benefits (audited)
The table below details the cash allowances and non-cash benefits received by the Executive Directors during
FY 2020/21 in accordance with the Remuneration Policy and as disclosed in the single figure table.
FY 2020/21 (£’000)
Marco Gobbetti
Julie Brown
Cash
allowance
80
30
Private
medical
insurance
14
30
Life
assurance
38
7
Long-term
disability
insurance
7
9
Tax advice
16
2
There were no changes to benefits policies during the year.
Annual bonus outcomes for FY 2020/21 (audited)
As disclosed last year, in light of the uncertainty and challenges following the outbreak of COVID-19, the operation
of the annual bonus for FY 2020/21 was modified. The maximum annual bonus was limited to 25% of the maximum,
i.e. 50% of base salary. The Committee has determined the annual bonuses for FY 2020/21 taking into account
performance against strategic objectives set around the Company’s response to, and recovery from, COVID-19, our
strategy to build a more sustainable future, overall business performance and the shareholder experience.
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Corporate Governance Statement | Directors’ Remuneration Report
The table below sets out the factors that the Committee took into account and performance against them:
Factor
Performance in FY 2020/21
Overall business
performance
• Adjusted operating profit of £396 million delivered with an adjusted operating margin
of 16.9%
• Full year revenue was £2,344 million
• Free cash flow pre-tax of £407 million
• Group ROIC of 17%
Strategic performance
• Successfully optimised the strategy against short-term, regional and channel shifts
in demand
• Rigorous cash management throughout the year leading to increased cash balances
• Successful launch of the innovative Sustainability Bond
Sustainability performance • 92% reduction in market-based emissions since base year FY 2016/17
• 82% of products with more than one positive attribute
• 680,170 people in the community positively impacted since 2017 by programmes led
by The Burberry Foundation
Shareholder experience
• Share price increased by 43% since the start of the financial year, compared to an
increase in the FTSE 100 of 26% over the same period
• Payment of final dividend for FY 2020/21
Response to COVID-19 in
• Successfully enabled remote working for our people and implemented initiatives to
the year
maintain cohesion including regular check-ins and encouraging flexible working
• Robust measures put in place to ensure work sites were safe and
secure environments
• Provided more than four million masks and 50,000 gowns at cost as part of the
Government contract
• Made a donation in March 2020 to fund research into the vaccine developed by the
University of Oxford and AstraZeneca
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Corporate Governance Statement | Directors’ Remuneration Report
After careful consideration of the factors set out on the previous page the Committee determined that the Executive
Directors would receive annual bonuses for FY 2020/21 of 50% of salary. The Committee considered that the financial
performance for the year had been strong in the context of the current economic environment and significantly
exceeded both internal and external expectations as at the start of the year. The Executive Directors also managed to
deliver the cost and liquidity management objectives, ending the year in a strong position from both a financing and
working capital perspective, while maintaining focus and making excellent progress against our sustainability strategy.
This performance was delivered at the same time as supporting our people and communities throughout the COVID-19
crisis and the Committee considered that the CEO and the CO&FO had demonstrated exceptional leadership during a
challenging year while consistently acting in a way which supports the Company’s purpose and values. The annual
bonuses are set out in the following table:
FY 2020/21 Annual bonus payment
(% of maximum)
FY 2020/21 Annual bonus payment
(£’000)
Marco Gobbetti
Julie Brown
25%
25%
£570
£363
Under the Remuneration Policy, the Executive Directors are required to invest 50% of any net bonus earned into
Burberry shares until their shareholding guideline of 300% of salary is met. Both Executive Directors already meet
their shareholding guideline and therefore this requirement will not apply.
Annual bonus for FY 2021/22
Following the modified approach for FY 2020/21, the Committee is reverting to the normal annual bonus approach for
FY 2021/22 as set out in the Remuneration Policy approved by shareholders at the 2020 AGM. Executive Directors
will therefore be eligible for a maximum bonus of 200% of base salary. The annual bonus for FY 2021/22 will be based
75% on adjusted operating profit performance and 25% on strategic objectives. The strategic objectives will include
the following measures:
• Strategy and brand (10%) – our long-term strategy is to elevate the value of our brand and diversify our channels to
market. When assessing performance in this area the Committee will consider key measures linked to our brand and
strategy progress, including digital revenue growth, full-price sales and leather and outerwear sales
• Sustainability (10%) – given the increasing importance of sustainability within our business as well as society, the
Committee has linked a portion of bonus to our progress against our long-term carbon reduction goals, specifically
our objectives to reduce scope 3 emissions by 30% by 2030 and to become Net-Zero by 2040
• Diversity, inclusion and leadership (5%) – underpinning our strategy is a robust approach to diversity, inclusion and
leadership. The Committee therefore considered that it was appropriate to base part of the bonus on measures
related to succession planning and diversity and inclusion goals as well as behaviours and values
For each strategic area the Committee will determine the pay-out in the round taking into account our progress in the
year against our long-term objectives in these areas. Details of the progress achieved and the Committee
determination of bonus outcomes will be provided in the FY 2021/22 Directors’ Remuneration Report.
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Corporate Governance Statement | Directors’ Remuneration Report
Long-term incentive plan awards
The following sets out details of:
• 2018 ESP awards vesting based on performance to FY 2020/21
• 2020 BSP awards granted during FY 2020/21
• 2021 BSP awards to be granted in FY 2021/22
2018 ESP awards vesting based on performance to FY 2020/21 (audited)
Marco Gobbetti and Julie Brown hold 2018 ESP awards, which will vest 50% on 31 July 2021 and 50% on 31 July 2022
based on performance over the period from 1 April 2018 to 27 March 2021. The table below sets out the targets and
actual performance achieved.
Outcome of 2018 ESP award
Annual growth in Adjusted PBT1,2
Annual growth in Revenue1,2
Average Adjusted Retail/Wholesale ROIC2
Final vesting outcome
Weighting
Threshold
(15% of max)
50%
25%
25%
0.0%
1.0%
13.5%
Maximum
7.5%
5.5%
17.0%
Actual
performance
Vesting
(% of max)
-6.2%
-5.0%
13.8%
0%
0%
22%
5.5%
1. The ESP outcome is calculated using the average exchange rates of the year on which the targets were based, as set out in the
performance conditions to awards.
2. Performance was measured on a like-for-like basis against the targets, taking into account three changes in accounting over the
period (the adoption of IFRS 15 and IFRS 16 and the move to retail calendar reporting). The adoption of IFRS 16 Leases has impacted
the reported measurement of ROIC and adjusted PBT. The adoption of IFRS 15 and retail calendar reporting has impacted the
measurement of Revenue. As a result performance for FY 2020/21 was measured on a pro forma basis reflecting results excluding
the impact of these changes.
Given the impact of COVID-19 on performance during the year, growth in Revenue and Adjusted PBT (CER) were both
below threshold and therefore there was no vesting on these metrics. However, the three-year average Adjusted
Retail/Wholesale ROIC exceeded the threshold vesting target. This performance will result in overall vesting of
the 2018 ESP award for the Executive Directors of 5.5%.
The Committee did not exercise any discretion in relation to the 2018 ESP outcome for Executive Directors.
In line with the Remuneration Policy, vested shares may not be sold until five years from grant (31 July 2023), other
than to meet tax liabilities.
2020 BSP awards granted during FY 2020/21 (audited)
After careful consideration, the Committee determined that it would be appropriate to reduce the level of BSP awards
in 2020 reflecting the share price at the time of award. Accordingly the CEO and CO&FO were granted BSP awards of
150% and 140% of base salary respectively, compared with normal maximum levels of 162.5% and 150% of base
salary respectively. The table below summarises the BSP share awards granted to the Executive Directors during
FY 2020/21.
Type of award
Basis of award
Shares awarded
Face value
at grant (£’000)
Performance
underpin period
Marco Gobbetti
Julie Brown
BSP share award
BSP share award
150% of salary
140% of salary
120,077
71,323
£1,710
£1,016
3, 4 and 5 financial
years starting
from FY 2020/21
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Corporate Governance Statement | Directors’ Remuneration Report
The BSP award was granted on 20 August 2020 and will vest one-third after three years, one-third after four years
and one-third after five years from the grant date, subject to the performance underpins outlined below. Each tranche
is subject to a holding period so that the total time horizon before any sale of shares (except to cover any tax liabilities
arising from the award) is five years for the entire award. Awards are granted in the form of conditional share awards.
The face value of each award is calculated using the three-day average price prior to the date of grant (£14.2408),
which was the price used to determine the number of shares awarded.
BSP awards granted in 2020 are subject to the following underpins:
• Revenue – the level of Total Revenue at CER for the financial year which precedes the year of vesting being at
least £2,000 million
• ROIC – the level of Group ROIC at reported exchange rates for the financial year which precedes the year of vesting
being ahead of the Group’s WACC, currently c.9%
• Brand and sustainability strategies – reasonable progress having been achieved over the vesting period in respect of
our strategy to elevate our brand and to build a more sustainable future:
• Brand – when assessing the brand underpin the Committee will consider performance against a range of relevant
brand KPIs. It is intended that this will include full-price sales, outerwear and leather goods sales and progress on
brand elevation but it may also include other relevant metrics. These metrics are all considered to be strongly
aligned with our strategy of elevating the brand to generate long-term value for shareholders
• Sustainability – when assessing the sustainability underpin the Committee will consider whether reasonable
progress has been delivered against our carbon reduction goals to reduce scope 3 emissions by 30% by 2030 and
to become Net-Zero by 2040
The Revenue and ROIC underpins were set at a time of considerable business and economic uncertainty. As described
on page 194 the Revenue and ROIC underpins have been increased for the 2021 BSP awards.
If the Company does not meet one or more of the performance underpins outlined above for the year of vesting then
the Committee would consider whether it was appropriate to scale back the level of pay-out under the BSP award.
The intention of the performance underpins is to provide a “safeguard” to ensure that the BSP awards do not pay out
if the Company has under-performed and vesting is not justified and the Committee will take this intention into
account when assessing the underpins.
In addition to the underpins described above, the Committee also retains the discretion to adjust the vesting outcome
if it is not considered to be reflective of underlying financial or non-financial performance of the business or the
performance of the individual, where underpins are no longer considered appropriate or where the vesting outcome is
not considered appropriate in the context of the experience of shareholders or other stakeholders.
Y1
Y2
Y3
Y4
Y5
One third vests after three years
Holding period
One third vests after four years
Holding period
One third vests after five years
The award
is subject
to a
combined
vesting and
holding
period of
five years
Underpins
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Corporate Governance Statement | Directors’ Remuneration Report
2021 BSP awards to be granted in FY 2021/22
Following the reduction made to the BSP award levels in 2020, and taking into account the recovery in the share price
since the 2020 grant date, the Committee intends to grant 2021 BSP awards to the Executive Directors at the normal
award levels as set out in the 2020 Remuneration Policy (162.5% of salary for Marco Gobbetti and 150% of salary for
Julie Brown). The awards will vest in equal tranches after three, four and five years following the date of grant, subject
to the performance underpins. Tranches will be subject to a holding period so that the total time horizon before any
sale of shares (except to cover any tax liabilities arising from the award) is five years for the entire award.
If the Company does not meet one or more of the performance underpins outlined below for the year of vesting then
the Committee would consider whether it was appropriate to scale back the level of pay-out under the BSP award.
The Committee would retain discretion to determine the appropriate level of scale-back. Having considered the
forecasts that are applicable and relevant to our sector, the Committee has determined to use the following
performance underpins for the 2021 awards:
• Revenue – the level of Total Revenue at CER for the financial year which precedes the year of vesting being at least
£2,400 million
• ROIC – the level of Group ROIC at reported exchange rates for the financial year which precedes the year of vesting
being at least 1% above the Group’s WACC (currently c.9%) in the year of vesting
• Brand and sustainability strategies – reasonable progress having been achieved over the vesting period in respect of
our strategy to elevate our brand and to build a more sustainable future:
• Brand – when assessing the brand underpin the Committee will consider performance against a range of relevant
brand KPIs. It is intended that this will include full-price sales, outerwear and leather goods sales and progress on
brand elevation but it may also include other relevant metrics. These metrics are all considered to be strongly
aligned with our strategy of elevating the brand to generate long-term value for shareholders
• Sustainability – when assessing the sustainability underpin the Committee will consider whether reasonable
progress has been delivered against our carbon reduction goals to reduce scope 3 emissions by 30% by 2030 and
to become Net-Zero by 2040
If the Company does not meet one or more of the performance underpins outlined above for the year of vesting then
the Committee would consider whether it was appropriate to scale back the level of pay-out under the BSP award.
The intention of the performance underpins is to provide a “safeguard” to ensure that the BSP awards do not pay out
if the Company has under-performed and vesting is not justified and the Committee will take this intention into
account when assessing the underpins.
In addition to the underpins described above, the Committee also retains the discretion to adjust the vesting outcome
if it is not considered to be reflective of underlying financial or non-financial performance of the business or the
performance of the individual, where underpins are no longer considered appropriate or where the vesting outcome is
not considered appropriate in the context of the experience of shareholders or other stakeholders.
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Share interests and shareholding guideline (audited)
Executive Directors are subject to a shareholding guideline of 300% of base salary. There is no specific timeline in
which shareholding guidelines must be achieved. However, there is an expectation that Executive Directors make
annual progress towards their guideline, regardless of any annual bonus paid or shares vesting. In line with the
Investment Association best practice guidance, our shareholding guideline permits any incentive shares that have
vested but are unexercised or that have not yet vested but are not subject to any further performance conditions to
count towards the shareholding requirement at 50% of their face value. Members of the Executive Committee are
also subject to a shareholding guideline.
The following table sets out the total beneficial interests of the Executive Directors (and their connected persons) in
ordinary shares of Burberry Group plc as at 27 March 2021, as well as their progress against the shareholding
guidelines. The table also summarises conditional interests in share or option awards, with further detail of the
underlying awards in the subsequent table.
Based on the three-month average share price to 27 March 2021 (our standard approach to assessing the guideline),
Marco Gobbetti and Julie Brown had both met the guideline.
Beneficially held shares
Share/option awards
Director
Number of shares
beneficially owned
as at 27 March
20211
As % of
salary2
Shareholding
guideline
(% of salary)
Marco Gobbetti
Julie Brown3
190,530 380%
151,169 384%
300%
300%
Guideline
met as at
27 March
2021
Yes
Yes
Vested but
unexercised
awards4
88,525
0
Unvested
– subject to
performance
measures (ESP)
Unvested
- subject to
performance
underpins (BSP)
Unvested
– subject to
continued
employment5
334,381
196,426
120,077
71,323
1,992
72
1. There have been no changes in the period up to and including 12 May 2021.
2. Based on the three-month average share price as at 27 March 2021 of £18.44.
3. Marco Gobbetti did not exercise any options during the year. On 11 June 2020, Julie Brown exercised nil-cost options over 73,000
shares and 3,952 shares, both granted to her on 30 January 2017, and retained these shares (post tax liabilities). The market value
of Burberry shares on the date of exercise was £15.56. On 1 February 2021, Julie exercised a nil-cost option over 3,953 shares
granted to her on 30 January 2017, and retained these shares (post tax liabilities). The market value of Burberry shares on the date
of exercise was £17.25. In addition, on 14 December 2020, Julie exercised a Sharesave option over 1,294 shares granted to her on
15 June 2017. The market value of Burberry shares on the date of exercise was £18.27.
4. In line with the shareholding guideline, only 50% of the face value of these shares count towards the Executive Director’s
shareholding guideline calculation.
5. This includes Sharesave options and shares held under the all-employee SIP. In line with the shareholding guideline, shares held
under the SIP count towards the Executive Director’s shareholding guideline calculation.
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Corporate Governance Statement | Directors’ Remuneration Report
The following table provides further underlying detail on the unvested awards at 27 March 2021 included in the table
on page 195.
Director
Type of award
Date of grant
Maximum
number
of shares/
options
Performance period
Vesting date(s)4
Marco
2018 ESP1
31 July 2018
172,532
3 years to 27 March 2021
50% on 31 July 2021/50% on
Gobbetti
2019 ESP2 31 July 2019
161,849
3 years to 2 April 2022
2020 BSP3 20 August 2020
120,077
3 years to 1 April 2023/4 years
31 July 2022
50% on 31 July 2022/50% on
31 July 2023
1/3 on 20 August 2023/ 1/3 on
to 30 March 2024/5 years to
20 August 2024/ 1/3 on
SAYE
SIP
SIP
SIP
2018 ESP1
1,920
15 June 2018
23
31 July 2018
31 July 2019
22
11 December 2020 27
31 July 2018
101,348
29 March 2025
N/A
N/A
N/A
N/A
3 years to 27 March 2021
2019 ESP2 31 July 2019
95,078
3 years to 2 April 2022
Julie
Brown
2020 BSP3 20 August 2020
71,323
3 years to 1 April 2023/4 years
20 August 2025
1 September 2023
31 July 2021
31 July 2022
11 December 2023
50% on 31 July 2021/50% on
31 July 2022
50% on 31 July 2022/50% on
31 July 2023
1/3 on 20 August 2023/ 1/3 on
to 30 March 2024/5 years to
20 August 2024/
SIP
SIP
SIP
31 July 2018
31 July 2019
23
22
29 March 2025
N/A
N/A
11 December 2020
27
N/A
1/3 on 20 August 2025
31 July 2021
31 July 2022
11 December 2023
1. The performance conditions and final vesting outcome for the 2018 ESP award are set out on page 192.
2. The performance conditions for the 2019 ESP award are set out in the Directors’ Remuneration Report FY 2019/20.
3. The performance underpins for the 2020 BSP award are set out on page 193.
4. ESP awards are structured as nil-cost options and vested awards may be exercised in the period until 10 years from grant. Vested
ESP and BSP awards may not be sold until five years from the date of grant, other than to meet tax liabilities.
Payments to past Directors
The second tranche of the 2016 ESP award granted to Carol Fairweather (who stepped down as CFO in 2017) vested
in respect of 3,140 shares on 30 January 2021. The value of those shares on that date was £53,976. (The first
tranche of her ESP award vested in respect of 3,140 shares on 30 January 2020.) Details of the 2016 ESP awards are
set out on page 134 of the FY 2018/19 Directors’ Remuneration Report. There were no other payments to past
Directors during the year.
Payments for loss of office
There were no payments for loss of office during the year.
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Corporate Governance Statement | Directors’ Remuneration Report
Director remuneration relative to employees
The table below summarises the change in each Director’s base salary/fee, benefits and bonus received for
FY 2020/21 compared to the prior year. The regulations require disclosure of the same data for employees of the
parent company. However, Burberry Group plc does not have any employees and therefore the table below includes
data in respect of the UK employee population for reference.
Year-on-year change (%)
Executive Directors
Marco Gobbetti
Julie Brown
Non-Executive Directors
Gerry Murphy
Fabiola Arredondo
Sam Fischer
Ron Frasch
Matthew Key
Debra Lee
Dame Carolyn McCall
Orna NíChionna
Antoine de Saint-Affrique
Former Non-Executive Directors
Jeremy Darroch
UK Employees
Salary
/fee
Allowances and
benefits
-4.6%
-4.6%
-5.0%
-5.0%
-5.0%
-5.0%
-3.5%
-5.0%
12.8%
-3.5%
N/A
-75.0%
0%
9.9%
-3.1%
-93.3%
-100%
-100%
-100%
-100%
-100%
-100%
-66.3%
N/A
N/A
0%
Bonus
N/A
N/A
–
–
–
–
–
–
–
–
N/A
–
-7.7%
1. The comparator group includes all UK employees. As noted above Burberry Group plc does not have any employees and therefore
this group has been chosen to align with the location of the Executive Directors and with the pay ratio reporting. For the comparator
group of employees, the year-on-year salary changes include the annual salary review from July 2020 but exclude any additional
changes made in the year, for example, on promotion. For benefits, there were no changes to benefit policies or levels during the
year. The change in the value of benefits shown for the Executive Directors reflects the market cost of the same benefits.
2. In order to provide a meaningful comparison the figures in the table above have been calculated on a full-year equivalent basis for
Directors appointed during FY 2019/20.
3. The change in fee for Dame Carolyn McCall reflects the time served in the role of the Senior Independent Director during
FY 2020/21.
4. The Executive Directors did not receive an annual bonus for FY 2019/20 and therefore it is not possible to calculate a percentage
change on bonus.
5. Antoine de Saint-Affrique was appointed during FY 2020/21 and therefore it is not possible to calculate a percentage change
for him.
The ratios set out in the table below compare the total remuneration of the CEO (as included in the single figure table
on page 188) to the remuneration of the median UK employee as well as the UK employees at the lower and upper
quartiles. The disclosure will build up over time to cover a rolling 10-year period.
Year
FY 2020/21
FY 2019/20
FY 2018/19
Method
Option A
Option A
Option A
25th percentile
pay ratio
(P25)
Median pay ratio
(P50)
75th percentile
pay ratio
(P75)
92:1
68:1
170:1
71:1
48:1
127:1
44:1
31:1
82:1
Notes regarding calculation
The ratios are calculated using option A in the disclosure regulations. The employees at the lower quartile, median and
upper quartile (P25, P50, and P75, respectively) were determined based on total remuneration using a valuation
methodology consistent with that used for the CEO in the single figure table on page 188. The employees were
identified based on all UK employees as at year end. This option was selected on the basis that it provided the most
accurate means of identifying the median, lower and upper quartile employees. The calculation is undertaken on a
full-time equivalent basis.
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Corporate Governance Statement | Directors’ Remuneration Report
The total remuneration in respect of FY 2020/21 for the employees identified at P25, P50 and P75 is £24k, £32k and
£51k respectively. The base salary in respect of FY 2020/21 for the employees identified at P25, P50 and P75 is £21k,
£27k and £45k respectively.
The Committee considers pay ratios as one of many reference points when considering remuneration. Throughout the
Group, pay is positioned to be fair and market competitive in the context of the talent market for the relevant role,
fairly reflecting local market data and other relevant benchmarks (such as the UK Living Wage). The Committee notes
the limited comparability of pay ratios across companies and sectors, given the diverse range of business models and
employee population profiles which exist across the market.
A significant proportion of the CEO’s total remuneration is delivered in variable remuneration, and particularly via
long-term share incentives, historically under the ESP and with effect from FY 2020/21 under the BSP. In order to
drive alignment with investors, the value ultimately received from ESP and BSP awards is linked to long-term share
price movement. As a result, the pay ratio is likely to be driven largely by the CEO’s incentive outcomes and may
therefore fluctuate significantly on a year-to-year basis.
The pay ratios for FY 2019/20 were lower than for FY 2018/19 reflecting the zero outcome on the CEO’s bonus for
FY 2019/20 and the lapse of the ESP 2017 award. The pay ratios for FY 2020/21 increased compared to FY 2019/20
primarily reflecting that the CEO received an annual bonus in respect of performance for FY 2020/21 and the partial
vesting of the ESP 2018 award. The Committee considers that the median pay ratio for FY 2020/21 and the recent
trends in the pay ratios are consistent with Burberry’s remuneration framework and reflect the variable nature of the
CEO’s total remuneration. The Committee believes the pay ratio is consistent with our pay policies in the UK.
Relative importance of spend on pay for FY 2020/21
The table below sets out the total payroll costs for all employees over FY 2020/21 compared to total dividends payable
for the year and amounts paid to buy back shares during the year. The average number of full-time equivalent
employees is also shown for context.
Relative importance of spend on pay
Dividends paid during the year (total)
Amounts paid to buy back shares during the year
Payroll costs for all employees
Average number of full-time equivalent employees
FY 2020/21
FY 2019/20
£m
% change
£m
% change
£m
% change
% change
–
-100%
–
-100%
512.8
7.3%
9,234
-6.7%
175.2
150.7
477.7
9,892
Service agreements
The table below sets out information on service agreements for the current Executive Directors. Executive Directors
are subject to annual re-election by shareholders at each AGM of the Company.
Marco Gobbetti
Julie Brown
Date of current service
agreement
Date employment
commenced
Notice period to and from the
Company
11 July 2016
11 July 2016
27 January 2017
18 January 2017
12 months
12 months
The Non-Executive Directors serve under Letters of Appointment with the Company. Non-Executive Directors may
continue to serve subject to annual re-election by shareholders at each AGM of the Company, subject to six months’
notice by either party.
External appointments
Executive Directors may take up non-executive roles at other companies with the prior agreement of the Board in
order to support their development and broaden their business experience. Julie Brown serves as a Non-Executive
Director of Roche Holding Limited and it was agreed that fees earned in connection with this appointment can be
retained by her. For the period 29 March 2020 to 27 March 2021, Julie’s fees for this appointment were
CHF 360,000 gross.
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Corporate Governance Statement | Directors’ Remuneration Report
Ten-year performance graph and Chief Executive Officer’s remuneration
The following graph shows the Total Shareholder Return (TSR) for Burberry Group plc compared to the FTSE 100
index assuming £100 was invested on 31 March 2011. The FTSE 100 index has been selected as the comparator
because Burberry is a constituent of the index. Data is presented on a spot basis and sourced from Datastream. The
table below shows the total remuneration earned by the incumbent Chief Executive Officer over the same 10-year
period, along with the percentage of maximum opportunity earned in relation to each type of incentive. The total
amounts are based on the same methodology as used for the single figure of total remuneration for FY 2020/21 on
page 188.
£
250
200
150
100
50
0
£198
(98% increase)
£167
(67% increase)
2011
2012
Burberry
2013
2014
FTSE 100
2015
2016
2017
2018
2019
2020
2021
FY1
2011/12
(AA)
2012/13
(AA)
2013/14
(AA)
2014/15
(AA)
2014/15
(CB)
2015/16
(CB)
2016/17
(CB)
2017/18
(CB)
2017/18
(MG)
2018/19
(MG)
2019/20
(MG)4
2020/21
(MG)
Total remuneration
9,574 10,901 8,007
157 7,508 1,894 3,508
1,091 6,330 4,078
1,618 2,245
(£’000)
Bonus
(% of maximum)
ESP
100% 75% 70%
–
–
–
(% of maximum)
Legacy incentive plans (no longer in operation):
CIP2
(% of maximum)
RSP
– 100% 100%
100%
–
–
(% of maximum)
Exceptional award3
(% of maximum)
–
–
–
–
–
–
–
–
81%
0%
0% 51% 51% 60%
0% 25%
–
–
–
5%
–
25%
0% 5.5%
75%
0%
0%
–
–
0% 19.3%
– 61.7% 59.9%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1. Angela Ahrendts (AA, CEO to 30 April 2014), Christopher Bailey (CB, Chief Creative Officer and CEO from 1 May 2014 to 4 July
2017), Marco Gobbetti (MG, CEO from 5 July 2017).
2. The CIP was the Burberry Co-Investment Plan, a long-term incentive plan under which the final performance-based awards were
granted in 2014. Details of this plan can be found in the relevant Directors’ Remuneration Reports.
3. The Exceptional award for Christopher Bailey relates to vesting of his 2014 exceptional share award as previously disclosed.
4. The cost of private medical insurance for the CEO was overstated in FY 2019/20 due to an administrative error and has been
corrected in the allowances and benefits column of the single figure table on page 188 for the year to 28 March 2020 and in the total
remuneration figure for FY 2019/20 above.
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Corporate Governance Statement | Directors’ Remuneration Report
Non-Executive Directors’ remuneration (audited)
The table below sets out the single figure of total remuneration received or receivable by the Non-Executive Directors
in respect of FY 2020/21 (and the prior financial year).
Non-Executive Directors
Gerry Murphy
Fabiola Arredondo
Sam Fischer
Ron Frasch
Matthew Key
Debra Lee
Dame Carolyn McCall
Orna NíChionna
Antoine de Saint-Affrique
Former Non-Executive Directors6
Jeremy Darroch
Notes
Year to 27 March 2021
Year to 28 March 2020
Year to 27 March 2021
Year to 28 March 2020
Year to 27 March 2021
Year to 28 March 20203
Year to 27 March 2021
Year to 28 March 2020
Year to 27 March 2021
Year to 28 March 2020
Year to 27 March 2021
Year to 28 March 20204
Year to 27 March 2021
Year to 28 March 2020
Year to 27 March 2021
Year to 28 March 2020
Year to 27 March 20215
Year to 27 March 20216
Year to 28 March 2020
Fees1
£’000
Benefits &
Allowances2
£’000
403
425
76
80
76
33
76
80
111
115
76
40
90
80
111
115
20
25
100
1
6
–
67
–
11
–
42
–
3
–
19
–
7
1
2
–
–
–
Total
£’000
404
431
76
147
76
44
76
122
111
118
76
59
90
87
112
117
20
25
100
1. Fees include the base fee and additional Committee fees in line with the 2020 Remuneration Policy. For FY 2020/21 the additional
fees for the role of the Senior Independent Director were split between Jeremy Darroch and Dame Carolyn McCall to reflect time
served in role. From 1 April 2020, the Chairman and Non-Executive Directors voluntarily agreed to waive 20% of their base fee for a
three-month period with the equivalent cash amount being donated by the Company to The Burberry Foundation COVID-19
Community Fund.
2. Allowances include the reimbursement of certain expenses incurred by the Non-Executive Directors in the performance of their
duties, which are deemed by HM Revenue & Customs (HMRC) to be subject to UK income tax. Any tax liabilities arising on the
reimbursement of these costs will be settled by the Company. Amounts disclosed have been estimated and have been grossed up at
the appropriate tax rate, where necessary. Attendance allowances were not paid during FY 2020/21 as Non-Executive Directors did
not travel outside their country of residence in order to attend Board and Committee meetings.
3. Fees for Sam Fischer in FY 2019/20 relate to the period from 1 November 2019 when he joined the Board.
4. Fees for Debra Lee in FY 2019/20 relate to the period from 1 October 2019 when she joined the Board.
5. Fees for Antoine de Saint-Affrique relate to the period from 1 January 2021 when he joined the Board.
6. Fees for Jeremy Darroch in FY 2020/21 relate to the period to 15 July 2020 when he stepped down from the Board.
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Corporate Governance Statement | Directors’ Remuneration Report
Summary of Chairman and Non-Executive Director fees for FY 2021/22
The fee structure for the Chairman and Non-Executive Directors for FY 2021/22 is set out in the table below. There
are no changes from the prior year.
Chairman
Non-Executive Director
Senior Independent Director
Audit Committee Chair
Remuneration Committee Chair
Attendance allowance
Fee level £’000
425
80
20
35
35
2
1. The Chairman is not eligible for Committee chairmanship fees or attendance allowances.
2. Non-Executive Directors receive an attendance allowance for each meeting attended outside their country of residence.
3. Expenses incurred in the normal course of business are reimbursed and, as these are considered by HMRC to be taxable benefits, the
tax due on these will also be met by the Company.
Chairman and Non-Executive Director shareholdings (audited)
The table below summarises the total interests of the Chairman and Non-Executive Directors (and their connected
persons) in ordinary shares of Burberry Group plc as at 27 March 2021 (or at the date of stepping down, if earlier).
The shareholding guideline for the Chairman and Non-Executive Directors is to hold shares with a market value of
£6,000 for each year of their appointment. As at 27 March 2021 (or at the date of stepping down, if earlier), all of the
Non-Executive Directors who have served more than one year since their appointment had fulfilled this guideline.
Non-Executive Directors
Gerry Murphy
Fabiola Arredondo
Sam Fischer
Ron Frasch
Matthew Key
Debra Lee
Dame Carolyn McCall
Orna NíChionna
Antoine de Saint-Affrique
Former Non-Executive Directors
Jeremy Darroch
There have been no changes in the period up to and including 12 May 2021.
Total number of
shares owned
5,000
30,000
3,000
1,738
5,900
970
2,704
3,067
1,100
3,000
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Corporate Governance Statement | Directors’ Remuneration Report
Remuneration Committee in FY 2020/21
Committee membership
Orna NíChionna, Fabiola Arredondo, Sam Fischer, Ron Frasch and Matthew Key served as members of the Committee
throughout the year ended 27 March 2021.
Committee remit
The Committee’s Terms of Reference are published on Burberryplc.com.
In addition to setting the remuneration of the Executive Directors, the Committee continues to directly oversee the
remuneration arrangements for the Executive Committee, the Company Secretary and other members of senior
management within its remit as determined from time to time.
Summary of meetings
The Committee typically meets four times a year. During FY 2020/21, the Committee met six times at scheduled
meetings and held other ad hoc discussions as required. Details of attendance at Committee meetings are set out on
page 155. If any Committee members are unable to attend a meeting, they are given the opportunity to discuss
any of the agenda items with the Committee Chair. The agenda items discussed at these six meetings are
summarised below.
May 2020
• Update on shareholder consultation
• Update on external environment from independent advisors
• FY 2019/20 incentive outcomes
• FY 2020/21 performance targets and incentive awards
• BSP 2020 awards, including underpins for Executive Directors
• FY 2020/21 senior executive remuneration
• Chairman fees for FY 2020/21
• Approval of Remuneration Policy and Directors’ Remuneration Report FY 2019/20
• New shareholding guideline policy
• Update on share plan dilution
• FY 2019/20 incentive outcomes below the Board
• FY 2020/21 incentive awards, including 2020 BSP awards for Executive Directors
• 2020 BSP awards for Executive Directors
• Update on external environment from independent advisors
July 2020
August 2020
November 2020
• Feedback on investor and proxy body feedback
• FY 2020/21 incentives performance update
• November 2020 BSP awards below Board
February 2021
• Output of Committee effectiveness review
• Update on external environment from independent advisors
• Incentives performance update
• FY 2020/21 annual bonus plan framework (below the Board)
• Overview of broader employee reward and proposed engagement with the Global Workforce
Advisory Forum
March 2021
• Remuneration Committee annual planner
• Update on external environment from independent advisors
• Incentives performance update
• FY 2020/21 annual bonus plan and BSP approach including brand and sustainability
underpins
• Approach to Directors’ Remuneration Report FY 2020/21
• Update on the policies and practices which exist for the broader workforce
• Gender Pay Gap Report FY 2019/20
• Feedback from the February 2021 meeting of the Global Workforce Advisory Forum
• Review Committee terms of reference
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Corporate Governance Statement | Directors’ Remuneration Report
Advisors to the Committee
At the invitation of the Committee, except where their own remuneration is being discussed, the following roles may
attend meetings and provide advice to the Committee: the Chairman, the CEO, the CO&FO, the Chief People Officer,
the VP Head of Reward, the General Counsel, and the Company Secretary.
Deloitte was appointed as an independent advisor to the Committee in 2017 following a tender process and continued
in that role during the year. Deloitte is a founding member of the Remuneration Consultants’ Group (RCG), which is
responsible for the development and maintenance of the voluntary Code of Conduct that clearly sets out the role of
executive remuneration consultants and the professional standards by which they advise their clients. Fees are
charged on a time and expenses basis and totalled £124,600 (plus VAT) during FY 2020/21. During the year Deloitte
also provided other consulting services (including programme management, operating model design, technology
implementation and analytics), tax compliance and advisory and transfer pricing services. The Committee is satisfied
that advice received from Deloitte during the year was objective and independent and that all individuals who provided
remuneration advice to the Committee have no connections with Burberry or its Directors that may impair their
independence. The Committee reviewed the potential for conflicts of interest and judged that there were appropriate
safeguards against such conflicts.
Linklaters LLP also provided advice to the Committee in relation to the operation of the Company’s share plans,
employment law considerations and compliance with legislation.
Remuneration voting results
The table below shows the results of the latest remuneration-related shareholder votes on the Directors’
Remuneration Report, the Directors’ Remuneration Policy and the Burberry Share Plan 2020 (at the 2020 AGM).
We have continued to engage with and listen to our shareholders during FY 2020/21 as part of our commitment to
build on the constructive dialogue we have established. The Committee and I would like to thank all of you who have
invested time with us, as it has helped to inform our thoughts on executive remuneration at Burberry going forward.
AGM voting results
Votes for
Votes against
Votes withheld
To approve the Directors’ Remuneration Report for the year ended
324,755,420
2,429,784
2,049,990
28 March 2020 – 2020 AGM
To approve the Directors’ Remuneration Policy – 2020 AGM
To approve the Burberry Share Plan 2020 – 2020 AGM
(99.26%)
305,504,279
(0.74%)
16,370,393
(94.91%)
314,211,094
(5.09%)
14,838,619
(95.49%)
(4.51%)
7,360,521
185,480
Approval
This report has been approved by the Board and signed on its behalf by:
Orna NíChionna
Chair, Remuneration Committee
12 May 2021
203
Corporate Governance Statement | Directors’ Report
DIRECTORS’ REPORT
The Directors present their Annual Report and the
Transparency Rules of the following major interests in
audited consolidated Financial Statements of the
its issued ordinary share capital:
Company for the year ended 27 March 2021. For the
purposes of the Companies Act 2006, the following are
incorporated by reference and shall be deemed to form
part of this Directors’ Report:
Number of
ordinary shares
% of total voting
rights1
BlackRock Inc.
Lindsell Train Limited
Massachusetts Financial
27,729,908
21,928,267
20,668,065
6.62
5.00
5.10
• Strategic Report on pages 2 to 142
Services Company
• Corporate Governance Statement, which includes the
1. As at the date in the notification to the Company.
Board, the Corporate Governance Report and the
Directors’ Remuneration Report, on pages 146 to 203
As at 12 May 2021, the Company had not received any
• Global GHG emissions disclosure on pages 85 to 86
further notifications under Rule 5 of the Disclosure
Guidance and Transparency Rules of major interests in
The Directors consider that the Annual Report and
its issued ordinary share capital.
Accounts, taken as a whole, provide a fair, balanced and
understandable assessment of the Group’s business
Interests in own shares
necessary for shareholders and wider stakeholders
Details of the Group’s interests in its own shares are set
to assess:
out in note 25 to the Financial Statements.
• development and performance during the year
Share buyback
• its position at the end of the financial year
The Company has not undertaken a share buyback in
• strategy
• likely developments
FY 2020/21.
• any principal risks and uncertainties
Transfer of shares
For the purposes of compliance with the Disclosure
or on the transfer of shares. The Directors are not aware
Guidance and Transparency Rules 4.1.5R(2) and 4.1.8R,
of any agreements between holders of the Company’s
the required content of the management report can be
shares that may result in restrictions on the transfer of
found in the Strategic Report together with sections of
securities or voting rights. The Directors have no current
the Annual Report incorporated by reference.
plans to issue shares other than in connection with
There are no specific restrictions on the size of holding
Share capital
Details of the issued share capital, together with details of
Voting
employee share schemes.
movement in the issued share capital of the Company
Each ordinary share of the Company carries one vote at
during the year, are shown in note 25 to the Financial
general meetings of the Company. Any ordinary shares
Statements. This is incorporated by reference and deemed
held in treasury have no voting rights. A shareholder
to be part of this report. The Company has one class of
entitled to attend, speak and vote at a general meeting
ordinary share, which carries no right to fixed income. Each
may exercise their right to vote in person, by proxy, or, in
share carries the right to one vote at general meetings of
relation to corporate members, by corporate representatives.
the Company. The ordinary shares are listed on the Official
To be valid, notification of the appointment of a proxy
List and traded on the London Stock Exchange. No person
must be received not less than 48 hours before the
has any special rights of control over the Company’s share
relevant general meeting at which the person named in
capital and all issued shares are fully paid.
the Form of Proxy proposes to vote. The Directors may
As at 27 March 2021, the Company had 404,864,359
48-hour period, no account be taken of any part of a day
ordinary shares in issue. The Company does not hold any
which is not a working day. Employees who participate in
shares in treasury. At the AGM in 2020, shareholders
the Share Incentive Plan (SIP) whose shares remain in
approved resolutions to allot shares up to an aggregate
the scheme’s trusts may give directions to the trustees
nominal value of £67,450, and to allot shares for cash
to vote on their behalf by way of a Form of Direction.
in their discretion determine that, in calculating the
other than pro rata to existing shareholders. In order to
retain maximum flexibility, resolutions will be proposed
Dividend
at this year’s AGM to renew these authorities.
Our capital allocation framework is used to prioritise the
Substantial Shareholdings
use of cash generated by the Group. The framework
addresses the needs of the business, regular dividend
As at 27 March 2021, the Company had been notified
payments and additional returns to shareholders. Given
under Rule 5 of the Disclosure Guidance and
the uncertainty caused by COVID-19, we believed it was
204
Corporate Governance Statement | Directors’ Report
prudent to protect the Company’s liquidity position,
Strategic Report on pages 140 to 142. The Risk and
hence an interim dividend was not declared for
Viability Report can be found on pages 106 to 142.
FY 2020/21 (FY 2019/20:11.3p).
Post-balance sheet events
The Directors recommend that a final dividend of 42.5p
In April 2021, the Group entered into agreements to sell
per ordinary share (FY 2019/20:0) in respect of the year
two freehold properties which are currently owned by the
ended 27 March 2021 be paid on 6 August 2021 to those
Group. One of the properties is held as an investment
persons on the Register of Members as at 2 July 2021.
property at 27 March 2021. The disposal of this property
is expected to complete in the first half of the next
The Burberry Group plc ESOP Trust has waived all
financial year. The other property is held in property, plant
dividends payable by the Company in respect of the
and equipment. Its disposal is expected to complete more
ordinary shares it holds.
Revenue and profit
than 12 months after the balance sheet date. These
disposals are expected to result in net cash proceeds
of approximately £17 million and profits on disposal of
Revenue from continuing business during the year
approximately £5 million in aggregate.
amounted to £2,343.9 million (2020: £2,633.1 million).
The adjusted operating profit for the year was
Significant contracts – change of control
£395.9 million (2020: £433.1 million).
Pursuant to the Companies Act 2006, the Directors
disclose that, in the event of a change of control, the
The profit for the year attributable to equity holders of
Company’s borrowings under the Group’s £300 million
the Company was £375.7 million (2020: £121.7 million)
RCF, dated 25 November 2014, could become repayable.
up 209% with the year on year increase predominantly
related to partial reversal of impairment of assets
On 3 April 2017, Burberry entered into an exclusive
recorded in the prior year.
licensing agreement with Coty pursuant to which Coty
develops, manufactures, markets, distributes and sells
On 12 March 2021, the Group issued a profit forecast
Burberry Beauty products. The agreement took effect in
(available on the Group’s website at https://www.
October 2017, from which time ongoing royalty payments
burberryplc.com/en/investors/results-reports.html).
have been payable to Burberry. Pursuant to the Companies
The profit forecast stated that the Group expected
Act 2006, the Directors disclose that a change in control of
revenue and adjusted operating profit to be ahead of
Burberry will, in limited circumstances, result in Coty having
consensus expectations. As at 12 March 2021, those
a right of termination of the licence agreement. A small
consensus expectations were that group revenue would
number of leases contain certain rights that may entitle
be £2,291m and adjusted operating profit would be
landlords to terminate or approve continuation of the
£328m at reported rates of exchange.
leases in the event that a Burberry subsidiary is transferred
Our estimated group revenue range used to guide the
Group plc; none of these are considered to be significant in
market on 12 March 2021 was £2,343m to £2,369m
terms of the potential impact on the business as a whole.
out of the Group or there is a change of control of Burberry
being -11% and -10% compared to group revenue of
£2,633m in FY 2019/20. Our estimated adjusted
There are no arrangements between the Company and its
operating profit range used to guide the market on
Directors or employees providing for compensation for loss of
12 March 2021 was £363m to £391m based on a range
office or employment that occurs specifically because of a
of adjusted operating profit margins of 15.5% to 16.5%
takeover, merger or amalgamation. There are provisions in the
as applied to the range of group revenues.
Company’s share plans which could result in options or awards
vesting or becoming exercisable on a change of control. For
Financial instruments and risks
further information on the change of control provisions in
The Group’s financial risk management objectives and
the Company’s share plans refer to the Directors’
policies are set out within note 28 of the Financial
Remuneration Policy, which was approved by shareholders
Statements. Note 28 also details the Group’s exposure
at the AGM on 15 July 2020. This is set out in full in the
to foreign exchange, share price, interest, credit, capital
Directors’ Remuneration Report FY 2019/20, which can be
and liquidity risks. This note is incorporated by reference
found in the Annual Report 2019/20 on Burberryplc.com.
and deemed to form part of this report.
Independent Auditor
Going concern and viability
In accordance with section 418(2) of the Companies
The going concern statements for the Group and the
Act 2006, each of the Company’s Directors in office at
Company are set out on pages 229 and 293 of the
the date of this report confirms that:
Financial Statements and are incorporated by reference
and shall be deemed to be part of this report. The
• So far as the Director is aware, there is no relevant
Directors’ assessment of the prospects and viability of
audit information of which the Company’s external
the Group over the next three years is set out in the
auditor is unaware
205
Corporate Governance Statement | Directors’ Report
• He or she has taken all the steps that he or she ought
Health and Safety
to have taken as a Director in order to make himself or
The Company has a global Health and Safety Policy
herself aware of any relevant audit information, and to
approved by the CEO on behalf of the Board. A safety-
establish that the Company’s external auditor is aware
first approach is firmly embedded in all operational
of that information
activities at Burberry and we have further strongly
reinforced this approach as we navigated through the
The Group’s current external auditor is Ernst & Young LLP
global pandemic. Governance of our health and safety
(EY) and note 7 of the Financial Statements states their
strategy is maintained through a Global Health and
fees both for audit and non-audit work. EY was appointed
Safety Committee, which is chaired by the General
as the external auditor of the Company at the 2020 AGM
Counsel. Health and safety issues are also considered
following an independent audit tender. A resolution to
by the Ethics Committee, Risk Committee and Audit
re-appoint EY as external auditor to the Company for
Committee. Each region has a local committee, which
FY 2021/22 will be proposed at the forthcoming AGM.
reports to the regional president. These committees
The Independent Auditor’s Report starting on page 211
assist with the implementation of our health and safety
sets out the information contained in the Annual Report,
strategy and help to ensure all local regulatory and
which has been audited by the external auditor.
Burberry standards are achieved and maintained.
Strategic direction on health and safety matters is
Employee share schemes and share ownership
provided by the Director of Health and Safety, who is
The Company is committed to employee share ownership.
supported by a global team. In line with industry best
Specifically, there are two all-employee share plans
practice, our health and safety goals and objectives are
available to employees at all levels of the organisation.
set each year to continually analyse our performance
Further details of these are set out in the Directors’
and support a process for continuous improvement.
Remuneration Report on page 185. Under its two
Our unannounced global assurance audit programme
all-employee share plans, during FY 2021/22 the Group
continues to measure health and safety performance
intends to grant awards of free shares (or equivalent
within our managed operations at a set frequency and
cash-based awards as appropriate) to all eligible
tracks improvement actions and risk reduction
employees globally and to invite eligible employees where
strategies through to closure.
possible to participate in the Sharesave Scheme. The
Group reviews the operation of these plans to ensure
Political donations
that they effectively support the Group’s strategy and
The Company did not make any political donations
encourage alignment by employees with the Group’s
during the year in line with its policy (FY 2019/20: £nil).
performance. Details of employee share schemes are set
In keeping with the Group’s approach in prior years,
out in note 29 to the Financial Statements.
shareholder approval is being sought at the forthcoming
Employee engagement
AGM, as a precautionary measure, for the Company and
its subsidiaries to make donations and/or incur
Burberry is an open and caring employer, which aims to
expenditure, which may be construed as political by the
offer our people, representing 115 nationalities across 33
wide definition of that term included in the relevant
countries, an optimal working environment where they
legislation. Further details are provided in the Notice
feel valued and appreciated. We continue to focus on
of Meeting (Notice).
evolving strategies for recruiting and developing talent
within the business that promote our cultural values and
Directors
ensure diverse representation across the business.
The names and biographical details of the Directors as
at the date of this report are set out on pages 148 to 151
Further details about our people and Diversity and
and are incorporated by reference into this report. With
Inclusion strategy can be found on pages 69 to 72.
regard to the appointment and resignation of Directors,
Stakeholder engagement
the Company follows the Code, and is governed by its
Articles of Association, the Companies Act 2006 and
An explanation of the steps taken by Directors to foster
related legislation. At the 2021 AGM, all Directors will
business relationships with partners, customers and
stand for election or re-election as appropriate. The
other stakeholders is set out on pages 96 to 104.
Notice sets out the contributions and reasons for the
Global GHG Emissions
election or re-election of each Director. The service
agreements of the Executive Directors and the letters
The Directors realise they have a responsibility to
of appointment of the Non-Executive Directors are
consider the impact on the environment and the likely
available for inspection at the Company’s registered
consequences of any business decisions in the long
office on request. Brief details of these are also included
term. Disclosure in line with the recommendations of
on page 198 of the Directors’ Remuneration Report. For
the Financial Stability Board’s TCFD is set out on pages
information on the Directors’ professional development
133 to 137.
see page 165.
206
Corporate Governance Statement | Directors’ Report
Directors’ share Interests
and legal and regulatory requirements. In particular, the
The interests of the Directors holding office as at
proposed amendments will enable and more clearly set
27 March 2021 in the shares of the Company are
out the process under which the Company may hold
shown within the Directors’ Remuneration Report
general meetings as hybrid meetings by enabling
on pages 195 to 201. There were no changes to the
shareholders to participate via electronic means or in
beneficial interests of the Directors between the
person. The amendments to facilitate such meetings are
period 27 March 2021 and 12 May 2021.
in line with best practice and are consistent with recent
changes that have been proposed by other listed
Directors’ powers and responsibilities
companies. A summary of the principal changes to the
Subject to the Company’s Articles of Association, the
Articles of Association are detailed in the Notice.
Companies Act 2006 and any directions given by special
resolution, the business of the Group will be managed by
Disclosures pursuant to Listing Rule 9.8.4
the Board who may exercise all the powers of the Group,
The following table contains information required by
including powers relating to the issue and/or buying back of
Listing Rule 9.8.4 where applicable. The remaining
shares by the Group (subject to any statutory restrictions
sections of listing rule 9.8.4 are not applicable.
or restrictions imposed by shareholders at the AGM).
Directors’ insurance and indemnities
The Company maintains Directors’ and Officers’ liability
insurance, which gives cover for legal actions brought
against its Directors and Officers. In accordance with
section 236 of the Companies Act 2006, qualifying
third-party indemnity provisions are in place for the
Directors in respect of liabilities incurred as a result of their
office, to the extent permitted by law. Both the insurance
and indemnities applied throughout the financial year ended
27 March 2021 and through to the date of this report.
Branches
In accordance with the Companies Act 2006, the Group
discloses below the subsidiary companies that have
branches outside the UK:
• Burberry Limited: Hong Kong and Republic of Korea
• Burberry Brasil Comércio de Artigos de Vestuário e
Acessórios Ltda: Brazil
• Burberry Saudi Company Limited: Kingdom of
Saudi Arabia
• Burberry Qatar W.L.L: Qatar
Listing Rule Description of Listing Rule
Reference
9.8.4 (2) Any unaudited
See ‘Revenue and
financial information
Profit’ paragraphs on
in a class 1 circular or
page 205 and Trading
a prospectus, or any
profit forecast or
Update dated
12 March 2021 on the
profit estimate
Group’s website
www.burberryplc.com/
en/investors/
results-reports.html
9.8.4 (5) Details of any
See pages 181, 182,
arrangements under
186, 188 and 200 of
which a director of
the Annual Report
the company has
waived or agreed to
waive any emoluments
from the company or
subsidiary undertaking
9.8.4 (12) Waivers of dividends
See ‘Dividends’
paragraph on
page 205
• Sandringham Bahrain SPC W.L.L: Bahrain
The Strategic Report from pages 2 to 142 and Directors’
• Burberry (Spain) Retail S.L: Portugal
Report from pages 204 to 207 have been approved by
• Burberry (Shanghai) Trading Co., Ltd: China
the Board on 12 May 2021 in accordance with the
Companies Act 2006.
Annual General Meeting
The AGM of the Company will be held on Wednesday, 14
By order of the Board
July 2021 at Horseferry House 2, 1a Page Street, London
Gemma Parsons
SW1P 2PQ. Due to the uncertainty surrounding
Company Secretary
COVID-19 and the restrictions on public gatherings that
may continue to be in place at the time of the AGM, the
12 May 2021
Board believes it is in the best interest of the Company
and its shareholders to hold the AGM with the minimal
Burberry Group plc
quorum present. As such, shareholders are strongly
Registered Office:
discouraged from physically attending the AGM.
Amendments to Articles of Association
Horseferry House
Horseferry Road
London
The Company will be seeking shareholder approval to
SW1P 2AW
adopt new Articles of Association, by the passing of a
special resolution at the upcoming AGM. The new Articles
Registered in England and Wales
of Association reflect changes in both market practice
Registered number: 03458224
207
FINANCIAL
STATEMENTS
Statement of Directors’ Responsibilities
287 Five‑Year Summary (Unaudited)
210
211
Independent Auditor’s Report to the
Members of Burberry Group plc
224 Group Income Statement
225 Group Statement of
Comprehensive Income
226 Group Balance Sheet
227 Group Statement of Changes in Equity
228 Group Statement of Cash Flows
229 Notes to the Financial Statements
290 Company Balance Sheet
291
Company Statement of Changes
in Equity
292 Notes to the Company Financial
Statements
300 Shareholder Information
208
Financial Statements | Statement of Directors’ Responsibilities
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the Annual Report, which includes the Strategic Report; the Directors’ Report;
the Directors’ Remuneration Report; and the financial statements in accordance with applicable laws and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the
directors have prepared the Group consolidated financial statements in accordance with international accounting
standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting
Standards adopted pursuant to Regulation (EC) No. 1606/2002 as it applies in the European Union and the parent
Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards, comprising FRS 101 ‘Reduced Disclosure Framework’ and applicable law). 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 Group and the Company and of the profit or loss of the Group for that year.
In preparing these financial statements the directors are required to:
• select suitable accounting policies and then apply them consistently;
• state whether applicable international accounting standards in conformity with the requirements of the Companies Act
2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No. 1606/2002 as it
applies in the European Union have been followed for the Group financial statements and United Kingdom Accounting
Standards, comprising FRS 101, have been followed for the Company financial statements, subject to any material
departures disclosed and explained in the Group and parent Company financial statements respectively;
• make judgements and accounting estimates that are reasonable and prudent; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group
and Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Group and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the
Group and Company 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.
The directors consider that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group and the Company’s position and performance, business
model and strategy.
Each of the directors, whose names and functions are listed on pages 148 to 151 confirm that, to the best of their knowledge:
• the Company financial statements, which have been prepared in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 ‘Reduced Disclosure Framework’,
and applicable law), give a true and fair view of the assets, liabilities, financial position and profit of the Company;
• the Group financial statements, which have been prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards
adopted pursuant to Regulation (EC) No. 1606/2002 as it applies in the European Union, give a true and fair view of
the assets, liabilities, financial position and profit of the Group; and
• the Strategic Report includes a fair review of the development and performance of the business and the position of
the Group and the Company, together with a description of the principal risks and uncertainties that it faces.
These statements were approved by the Board on 12 May 2021 and signed on its behalf by:
Marco Gobbetti
Chief Executive Officer
Julie Brown
Chief Operating and Financial Officer
210
210
Financial Statements | Independent Auditor’s Report to the Members of Burberry Group PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BURBERRY GROUP PLC
Opinion
In our opinion:
• Burberry Group plc’s Group financial statements and Company financial statements (the “financial statements”)
give a true and fair view of the state of the Group’s and of the Company’s affairs as at 27 March 2021 and of the
Group’s profit for the 52-week period then ended;
• the Group financial statements have been properly prepared in accordance with International Accounting Standards
in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards
adopted pursuant to Regulation (EC) No. 1606/2002 as it applies in the European Union;
• the Company financial statements have been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Burberry Group plc (the ‘Company’) and its subsidiaries (the ‘Group’) for
the 52 weeks ended 27 March 2021 which comprise:
Group
Balance sheet as at 27 March 2021
Company
Balance sheet as at 27 March 2021
Income statement for the 52-week period then ended
Statement of changes in equity for the 52-week
period then ended
Statement of comprehensive income for the 52-week period
Related notes A to M to the financial statements
then ended
including a summary of significant accounting policies
Statement of changes in equity for the 52-week period
then ended
Statement of cash flows for the 52-week period then ended
Related notes 1 to 34 to the financial statements, including a
summary of significant accounting policies
The financial reporting framework that has been applied in the preparation of the Group financial statements is
applicable law and International Accounting Standards in conformity with the requirements of the Companies Act
2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No. 1606/2002 as it
applies in the European Union. The financial reporting framework that has been applied in the preparation of the
Company financial statements is applicable law and United Kingdom Accounting Standards, including FRS 101
“Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the
financial statements section of our report. We are independent of the Group in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical
Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
211
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Financial Statements | Independent Auditor’s Report to the Members of Burberry Group PLC
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment
of the Group and Company’s ability to continue to adopt the going concern basis of accounting included:
• We assessed the risk around going concern at the interim half year review and again at the planning and year-end
phases of the audit.
• In conjunction with our walkthrough of the Group’s financial close process, we confirmed our understanding of
management’s going concern assessment process and also engaged with management early to assess the key
factors considered in their assessment.
• We checked the logic and arithmetical integrity of management’s going concern model which includes the cash
forecast for the going concern assessment period which covers the period to 1 October 2022.
• We considered the appropriateness of the methods used to calculate the cash forecasts and determined through
inspection and testing of the methodology and calculations that the methods utilised were appropriately
sophisticated to be able to make an assessment for the Group.
• We considered the mitigating factors included in the cash forecasts that are within control of the Group. This
includes review of the Group’s non-operating cash outflows and evaluating the Group’s ability to control these
outflows as mitigating actions if required.
• We verified the repayment date and availability of the sustainability bond by examination of executed
documentation. We also verified the revolving credit facility available to the Group by examination of executed
documentation and considered the level of EBITDA required to maintain the availability of this facility through the
going concern period based upon the required financial covenants included therein.
• We assessed the reasonableness of the cashflow forecast by analysing management’s historical forecasting
accuracy and understanding how the anticipated impact of COVID-19 has been modelled. We evaluated the key
assumptions underpinning the Group’s assessment by challenging the measurement and completeness of downside
scenarios modelled by management and how these compare with principal risks and uncertainties of the Group. We
searched for contrary evidence to challenge these assumptions, including sector forecasts, long-term growth rates
provided by our specialists, analyst expectations and competitor announcements.
• We considered whether the Group’s forecasts in the going concern assessment were consistent with other
forecasts used by the Group in its accounting estimates, including goodwill impairment, retail store impairment and
deferred tax asset recognition.
• We have performed reverse stress testing in order to identify what decline in revenue would lead to the Group
utilising all liquidity or breaching the financial covenant during the going concern period and we have considered the
plausibility of such factors.
• We reviewed the Group’s going concern disclosures included in the annual report in order to assess that the
disclosures were appropriate and in conformity with the reporting standards.
We observe that in management’s base case and severe but plausible downside scenarios, there is significant
headroom without taking the benefit of any identified mitigations.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the Group and Company’s ability to continue
as a going concern for the period to 1 October 2022.
In relation to the Group and Company’s reporting on how they have applied the UK Corporate Governance Code, we
have nothing material to add or draw attention to in relation to the directors’ statement in the financial statements
about whether the directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report. However, because not all future events or conditions can be predicted, this statement is not a
guarantee as to the Group or Company’s ability to continue as a going concern.
212
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Financial Statements | Independent Auditor’s Report to the Members of Burberry Group PLC
Overview of our audit approach
Audit scope
• We performed an audit of the complete financial information of eight components.
• The scope of work performed, together with additional procedures performed at the Group
level in relation to the consolidation, taxation and impairment, accounted for 84% of
adjusted profit before tax (on an absolute basis), 82% of revenue and 83% of total assets.
Key audit matters
• Inventory valuation
• Carrying value of retail store right-of-use assets and property, plant and equipment
• Uncertain tax positions
• Alternative performance measures
Materiality
• Overall Group materiality of £17.5m which represents 4.8% of Adjusted profit before tax.
First year audit
The 52-week period ended 27 March 2021 is our first as auditor of the Group. We
transition
commenced transition at the start of the audit professional engagement period on 29 March
2020 and shadowed the previous auditor over the 28 March 2020 year end audit in April and
May 2020. This included attendance at certain year end meetings and the Audit Committee
meetings. Subsequently, audit transition activities focused on the following areas:
Mobilisation of the global audit team:
• We held an onboarding and transition programme virtually, attended by the Group audit
team, and all full scope component audit teams. Over two days EY team members
attended sessions on Group audit strategy, audit risks, deployment of technologies,
division of responsibilities between teams and our approach to ensuring a consistent high
audit quality. We also met with key client audit stakeholders to better inform our
transition plan and audit strategy.
Establishing our audit base prior to reaching our interim review conclusion for the 26-week
period ended 26 September 2020:
• We evaluated all key accounting judgement papers and the Group’s accounting policies.
• We undertook reviews of the predecessor auditor files for key locations, where permitted
by local regulations, to consider working papers in relation to significant audit risk
matters, to identify and assess the judgements exercised over these risks and to assess
the nature, timing and extent of audit procedures performed in forming the prior year
auditor opinion. Where we were unable to review predecessor auditor files, we have
performed audit procedures over the opening balances.
• Prior to signing the interim review opinion, we had understood and walked through the key
processes at Group and at the full scope locations.
213
213
Financial Statements | Independent Auditor’s Report to the Members of Burberry Group PLC
An overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our
audit scope for each company within the Group. Taken together, this enables us to form an opinion on the
consolidated financial statements. We take into account size, risk profile, the organisation of the Group and
effectiveness of Group-wide controls, changes in the business environment and other factors such as recent Internal
Audit results when assessing the level of work to be performed at each component.
In assessing the risk of material misstatement to the Group financial statements, and to ensure we had adequate
quantitative coverage of significant accounts in the financial statements, we selected eight components covering
entities within the United Kingdom, China, Hong Kong S.A.R., Japan, Korea and the United States, which represent
the principal business units within the Group.
For all eight components selected (“full scope components”), which were primarily selected based on their size or risk
characteristics, or to ensure that, at an overall group level, we reduced and appropriately covered the residual risk of
error. We performed an audit of the complete financial information for full scope components. These reporting
components where we performed audit procedures accounted for 84% of the Group’s adjusted profit before tax (on
an absolute basis), 82% of the Group’s revenue and 83% of the Group’s total assets.
Of the remaining components that together represent 16% of the Group’s adjusted profit before tax (on an absolute
basis), none are individually greater than 5% of the Group’s adjusted profit before tax (on an absolute basis). For these
components, we performed other procedures, including analytical review, testing of consolidation journals and
intercompany eliminations and foreign currency translation recalculations to respond to any potential risks of material
misstatement to the Group financial statements.
The charts below illustrate the coverage obtained from the work performed by our audit teams.
Adjusted profit before tax
(on an absolute basis)
Adjusted profit before tax (on an
absolute basis)
Revenue
Revenue
Total assets
Total assets
16%
18%
17%
84%
82%
83%
Full scope components – 84%
Full scope components – 82%
Full scope components – 83%
Other procedures – 16%
Other procedures – 18%
Other procedures – 17%
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Financial Statements | Independent Auditor’s Report to the Members of Burberry Group PLC
Changes from the prior year
The approach to audit scope is similar to the prior year external audit with an increase in the scope for the Japan
component from a specific scope component to a full scope component.
Involvement with component teams
In establishing our overall approach to the Group audit, we determined the type of work that needed to be undertaken
at each of the components by us, as the primary audit engagement team, or by component auditors from other EY
global network firms operating under our instruction. Of the eight full scope components, audit procedures were
performed on four of these directly by the primary audit team.
During the current year audit cycle, visits to the component teams were not possible due to travel restrictions arising
from the COVID-19 pandemic. We performed alternative procedures, including virtual visits and live reviews of our
component audit teams’ working papers.
The Group audit team followed a programme that had been designed to ensure that the Group audit partner virtually
visited all full scope audit locations at least once in the year, meeting with both EY component teams and local
management. During the current year’s audit cycle, virtual visits were undertaken by the Group audit team to the
component teams in China, Hong Kong S.A.R., Japan, and Korea. These visits involved video calls with local
management, including members of finance and members of operations or store personnel depending on the
component. We held discussions on the audit approach with the component team and any issues arising from their
work. As the primary team, we perform the audit for the components in the United Kingdom and the United States.
We also virtually met with local management for these components.
The primary team interacted regularly with the component teams where appropriate during various stages of the
audit, reviewed key working papers and were responsible for the scope and direction of the audit process. This,
together with the additional procedures performed at Group level, gave us appropriate evidence for our opinion on the
Group financial statements.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the
overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion
thereon, and we do not provide a separate opinion on these matters.
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Financial Statements | Independent Auditor’s Report to the Members of Burberry Group PLC
Risk
Inventory valuation
Our response to the risk
The primary audit team and full scope components
Key observations communicated
to the Audit Committee
We are satisfied the finished
As described in the Audit Committee Report
performed the audit procedures over the Group’s
goods inventory provisions are
(page 173); Accounting policies (page 238);
inventory provisions.
and note 17 of the Consolidated Financial
reasonable and the Group’s
disclosures are appropriate.
Statements (page 262) management raises
Our procedures included, among others, obtaining an
We are also satisfied with the
a provision to reflect where the expected net
understanding of the inventory provisioning process
classification of the inventory
realisable value is lower than the carrying
and evaluating the design of internal controls over
provision charges and
value of finished goods inventory at the
these provisions. We also evaluated the
reversals.
balance sheet date. The Group has £116.6m
appropriateness of the Group’s inventory
of inventory provisions, representing 22.5%
provisioning policy.
of the gross value of total inventories of
£518.7m as at 27 March 2021.
We tested the integrity of the inventory provisioning
An incremental inventory provision was
as sales data and identification of problem inventory.
models by agreeing to underlying data inputs, such
recorded in the prior year in relation to the
impact of COVID-19. As described in note 17,
We assessed the exit route assumptions applied by
as at 28 March 2020 £68.3 million of the
management to determine whether these were
provision was included in cost of sales as a
consistent with prior periods and with the overall
result of the estimated reduction in net
sales profile of the Group and are consistent with
realisable value of inventory due to COVID-19
management experience with liquidating through
and was presented as an adjusting item. In
these channels.
the current year, £3.9 million of that provision
was utilised, where inventory previously
We understood the different loss rates applied
provided for had been sold below cost in the
across the provision and agreed these through to
current year and is recognised in cost of sales.
underlying sales data.
An additional £22.3 million was released upon
re-assessment of the provision, where
We challenged the assumptions in the underlying
inventory previously provided for has been
models by developing our own range of the provision.
sold, or is now expected to be sold, for a
We performed sensitivity analysis to both the
higher net realisable value than had been
allocation to exit routes and the loss rate applied.
estimated last year.
We considered other evidence such as forecast sales
The Group determines the inventory
and revenue trends to consider whether any
provision considering the aging of inventory
contradictory information existed that would
by season, identifying problem stock
suggest the provision was not consistent with the
inventory and considering historical loss
wider performance of the Group.
rates and future sales forecasts and the
expected channel by which the inventory will
We assessed the Group’s forecasts, including
be disposed of.
assumptions made regarding the continued impact
The provision is inherently judgemental as it
of COVID-19.
considers management’s assessment of
We recalculated the actual losses incurred in relation
future sales based on current forecasts, as
to the COVID-19 provision to validate the split of the
well as the expected sales channels or exit
provision between underlying trading and adjusting
routes for excess or problem stock. There is
items.
therefore the potential for management bias
in relation to its allocation of inventory to
We assessed the disclosures to the financial
sales channels.
statements and the requirement to disclose further
sensitivities where a reasonably possible change in a
Additionally, we have determined there is
key assumption would cause a material increase or
also a risk that any utilisation or reversal of
decrease in the provision amount.
the COVID-19 related provision is
inappropriately recorded through underlying
trading rather than as adjusting items.
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Financial Statements | Independent Auditor’s Report to the Members of Burberry Group PLC
Risk
Carrying value of retail store right-of-
Our response to the risk
Our procedures on the carrying value of retail
Key observations communicated
to the Audit Committee
We are satisfied that the
use assets and property, plant and
store right-of-use assets and property, plant
consideration of indicators
equipment
and equipment were performed centrally by the
of impairment, value-in-use
As described in the Audit Committee
primary team.
Report (page 173); Accounting policies
(page 238); and note 13 of the
We obtained an understanding of and
Consolidated Financial Statements
evaluated the design of controls over the
impairment model
methodology, significant
underlying assumptions and
judgements applied are
(page 257) management assess the
Group’s retail store impairment process.
reasonable and support
retail store right-of-use assets and
management’s conclusion to
property, plant and equipment for
We considered the appropriateness of the
recognise a net impairment
impairment charges and reversals of
Group’s policy for recognising impairment
reversal totalling £46.6
previous impairment charges.
charges and reversals.
million against the retail
store right-of-use assets
As described in notes 13 and 14, the
Management considered whether indicators of
and property, plant and
Group recognised an impairment charge
impairment reversals or impairment charges
equipment. We are also
of £156.5 million for impairment of
were present for the Group’s retail store
satisfied with the disclosure
retail store right-of-use assets and
portfolio based on the Group’s latest forecast.
and classification of the
property, plant and equipment due to
We assessed the completeness of factors
impairment charges and
the impact of COVID-19 during the 52
considered and assessed the accuracy of the
reversals.
weeks to 28 March 2020. Additionally, a
forecast information in conjunction with our
net impairment charge of £11.2 million
testing of the Group’s forecasts further
unrelated to COVID-19 was recorded
outlined below.
within net operating expenses as a
result of the annual review of
For the stores identified with indicators of
impairment of retail store assets.
impairment charges or reversals, the Group
prepared value-in-use impairment models.
During the 52 weeks to 27 March 2021,
Our procedures for testing these value-in-use
a net impairment reversal of £46.6
impairment models included, among others:
million has been recorded which relates
to the reversal of impairments related
i) assessing the methodology;
to COVID-19.
ii) testing the integrity of the model and data
inputs used back to source data, for example
There is judgement and estimation
agreeing the underlying store right-of-use assets
uncertainty involved in determining the
and property, plant and equipment values back to
store forecast cash flows to measure
the accounting records;
impairment charges and reversals, in
iii) involving our valuations specialists to conclude
particular, revenue growth, profit
on the appropriateness of the discount rate
margin and discount rate assumptions.
used;
iv) challenging assumptions used in cash flow
There is also uncertainty regarding the
forecasts and long-term growth assumptions
continued impact of COVID-19, which
against historical results and third party luxury
increases the estimation uncertainty in
sector forecasts; and
the Group’s forecasting of the future
v) performing sensitivity analyses on key
trading performance of stores.
assumptions.
We assessed the disclosures to the financial
statements and the requirement to disclose
further sensitivities where a reasonably
possible change in a key assumption would
cause a material change in the impairment
charge or reversal measured. We tested
management’s sensitivity analysis over the
revenue assumptions on the impairment
charges and reversals recorded.
217
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Financial Statements | Independent Auditor’s Report to the Members of Burberry Group PLC
Risk
Uncertain tax positions
Our response to the risk
The primary team obtained an understanding
Key observations communicated
to the Audit Committee
We are satisfied that
As described in the Audit Committee
and evaluated the design of controls over the
management’s judgements
Report (page 173); Accounting policies
Group’s tax provisioning process. We assessed
in relation to the extent of
(page 238); and note 9 of the
the appropriateness of the Group’s transfer
provisions for uncertain tax
Consolidated Financial Statements
pricing and uncertain tax provision policies.
positions are appropriate.
(page 253) the Group is subject to tax
We are also satisfied that
regulation in multiple jurisdictions and
Our procedures on the uncertain tax position
the tax disclosures are
the centralised operating structure of
provisions were performed centrally by the
appropriate.
the Group requires management to
primary team supported by overseas teams
exercise judgement in making
including professionals with specialised skills.
determinations as to the amount of tax
that is payable.
Procedures included:
The Group is subject to tax authority
i) enquiring with management to understand the
audits and has a number of open tax
Group’s cross-border transactions, the status of
enquiries in multiple jurisdictions at any
all significant matters, and any changes to
point in time.
management’s judgements in the year;
ii) reading correspondence with tax authorities
As a result, the Group has recognised a
and external advisors to inform our assessment
number of provisions against uncertain
of recorded estimates and evaluating the
tax positions, the valuation of which
completeness of the provisions recorded,
requires significant assumptions and
judgement. We focused on this area due
including meeting with external advisors where
appropriate;
to the complexity, subjectivity,
iii) independently assessing management’s
quantification of the provision and the
significant assumptions and judgements to
judgement around the trigger for
record or release provisions following tax audits,
recognition or release impacting the
settlements and the expiry of timeframes;
provision and the effective tax rate.
iv) testing the accuracy of the calculation of the
provisions by inspecting underlying
documentation with reference to applicable tax
laws; and
v) evaluating the adequacy of tax disclosures.
218
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Financial Statements | Independent Auditor’s Report to the Members of Burberry Group PLC
Risk
Alternative performance measures
Our response to the risk
The procedures performed by the primary
Key observations communicated
to the Audit Committee
We are satisfied
As described in the Audit Committee
team included, among others, review of the
management’s recognition
Report (page 173); Accounting policies
classification of all adjusting items to
of adjusting items, the
(page 243); and note 6 of the Consolidated
assess if the classification is in accordance
related presentation and
Financial Statements (page 248) the Group
with the Group’s accounting policy and FRC
accompanying disclosures
discloses certain items within the Group
guidance for such items and that the
are appropriate.
income statement as adjusting items when
application of the policy is consistent
such items, due to their size and nature,
across the Group and across reporting
need to be separately identified to give a
periods.
more meaningful comparison of underlying
performance.
We also considered the description of the
items within the financial statements to
There is a significant degree of
assess if they have been clearly presented
management judgement involved in the
and follow prevailing disclosure
classification of adjusting items. Given the
requirements.
importance of adjusted operating profit as
a key performance indicator there is a risk
Our procedures focused on the
that incorrect classification of adjusting
classification of the utilisation or release of
items could present a misleading view to
the COVID-19 related inventory provisions
users of the financial statements.
and the impairment charges or reversals
related to COVID-19 of retail store right-
Additionally, there is increased judgement
of-use assets and property, plant and
over which COVID-19 related items meet
equipment. We tested management’s
the definition of adjusting items per the
process to monitor and track these COVID-
Group’s accounting policy and FRC
19 related provisions.
guidance.
We also focused on the classification of
restructuring costs ensuring they met the
policy for recognition, being one-off in
nature and material. We assessed the
timing and communication of restructuring
projects to test that they are recorded in
the correct period and obtained underlying
support for significant costs incurred.
We reviewed the accounting policy for rent
concessions for compliance with the
amendments to IFRS 16. We challenged
management that these rental concessions
should be presented as an adjusting item,
consistent with the treatment of other
COVID-19 related charges.
The key audit matters set out above are consistent with those reported by Burberry Group plc’s previous external
auditor with the exception of the removal of key audit matters in relation to the implementation of IFRS 16 ‘Leases’
and the impact of COVID-19. In the current year, the ongoing accounting for IFRS 16 ‘Leases’ no longer has a
significant effect on the overall audit strategy, the allocation of resources and directing the efforts of the engagement
team. The prior year key audit matters in relation to the impact of COVID-19 have been incorporated into the key
audit matters above and conclusions relating to going concern.
219
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Financial Statements | Independent Auditor’s Report to the Members of Burberry Group PLC
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified
misstatements on the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to
influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining
the nature and extent of our audit procedures.
We determined materiality for the Group to be £17.5 million which is 4.8% of adjusted profit before tax. We
believe that adjusted profit before tax provides us with the best assessment of the requirements of the users of the
financial statements.
We determined materiality for the Company to be £20.5 million, which is 1% of total assets. The materiality of the
parent company is greater than the Group because the parent company is a holding company with significant net
assets. For any parent company balances that are consolidated into the Group financial statements, an allocation of
Group performance materiality was used.
Starting Basis
Profit before tax
Adjustments
Reversal of retail store cash generating units impairment
Reversal of inventory provisions
Reversal of receivables impairment
COVID-19 related rent concessions
Furlough grant income
Gain on disposal of property
Restructuring costs
Revaluation of deferred consideration liability
Finance charge on deferred consideration liability
Profit before tax and adjustments
Materiality
4.8% of adjusted profit before tax
£490.2m
(£46.6m)
(£22.3m)
(£5.2m)
(£54.1m)
(£8.5m)
(£18.7m)
£29.8m
£0.4m
£0.7m
£365.7m
£17.5m
During the course of our audit, we reassessed initial materiality with the primary change in the final materiality from
our original assessment at planning being to reflect the actual reported performance during the year.
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to
an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements
exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our
judgement was that performance materiality was 50% of our planning materiality, namely £8.75m. We have set
performance materiality at this percentage on the basis that this is our first year as auditors for the Group and
considering the heightened uncertainty around COVID-19.
Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement
accounts is undertaken based on a percentage of total performance materiality. The performance materiality set for
each component is based on the relative scale and risk of the component to the Group as a whole and our assessment
of the risk of misstatement at that component. In the current year, the range of performance materiality allocated to
components was £1.5m to £7.7m.
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of
£0.875m which is set at 5% of planning materiality, as well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds.
220
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Financial Statements | Independent Auditor’s Report to the Members of Burberry Group PLC
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above
and in light of other relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the annual report set out on pages 287 to 289, other
than the financial statements and our auditor’s report thereon. The directors are responsible for the other information
contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise
explicitly stated in this report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise
appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements,
we are required to determine whether there is a material misstatement in the financial statements themselves. If,
based on the work we have performed, we conclude that there is a material misstatement of the other information, we
are required to report that fact.
We have nothing to report in this regard.
Opinions 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.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Company and its environment obtained in the
course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us
to report to you if, in our opinion:
• adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been
received from branches not visited by us; or
• the 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.
Corporate Governance Statement
The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and
that part of the Corporate Governance Statement relating to the Group and Company’s compliance with the
provisions of the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained
during the audit:
• Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any
material uncertainties identified set out on page 205;
221
221
Financial Statements | Independent Auditor’s Report to the Members of Burberry Group PLC
• Directors’ explanation as to its assessment of the company’s prospects, the period this assessment covers and why
the period is appropriate set out on page 140;
• Directors’ statement on fair, balanced and understandable set out on page 210;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on
page 141;
• The section of the annual report that describes the review of effectiveness of risk management and internal control
systems set out on page 177 to page 178; and
• The section describing the work of the Audit Committee set out on page 175 to page 176.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 210, the directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group and Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the Group or the Company or to cease operations, or
have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Explanation as to what extent the audit was considered capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material
misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent to
which our procedures are capable of detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with
governance of the company and management.
Our approach was as follows:
• We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and
determined that the most significant frameworks which are directly relevant to specific assertions in the financial
statements are those that relate to the reporting framework (IFRS, FRS 101, the Companies Act 2006 and the UK
Corporate Governance Code) and the relevant tax laws and regulations in the jurisdictions in which the Group
operates. In addition, we concluded that there are certain significant laws and regulations which may have an effect
on the determination of the amounts and disclosures in the financial statements being the Listing Rules of the UK
Listing Authority, and those laws and regulations relating to health and safety and employee matters.
• We understood how the Group is complying with those frameworks by making enquiries of management, Internal
Audit, those responsible for legal and compliance procedures and the company secretary. We corroborated our
enquiries through our review of Board minutes and papers provided to the Audit Committee and observation in
Audit Committee meetings, as well as consideration of the results of our audit procedures across the Group.
222
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Financial Statements | Independent Auditor’s Report to the Members of Burberry Group PLC
• We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud
might occur and met with finance and operational management from various parts of the business to understand
where it considered there was susceptibility to fraud. We also considered performance targets and their influence
on efforts made by management to manage earnings or influence the perceptions of analysts. We engaged our
forensics specialists in assisting our assessment of the susceptibility of the Group’s financial statements to fraud.
We have determined there is a risk of fraud associated to inventory provisions and a risk of management override in
manual revenue journals that do not follow the expected process. We considered the programmes and controls that
the Group has established to address the risks identified, including the design of controls over each significant
revenue stream and inventory provisions. We also considered the controls that the Group has that otherwise
prevent, deter and detect fraud, and how senior management monitors those programmes and controls. We
performed audit procedures to address each identified fraud risk. These procedures were designed to provide
reasonable assurance that the financial statements were free from fraud or error.
• Based on this understanding we designed our audit procedures to identify non-compliance with laws and
regulations, including specific instructions to full scope component teams. Our procedures involved journal entry
testing, with a focus on manual consolidation journals and journals indicating large or unusual transactions based on
our understanding of the business; enquiries of legal counsel, Group management, Internal Audit, divisional
management at all full scope components; and focused testing, including in respect of management override
through manual revenue journals and specific searches derived from forensic investigations experience. We also
leveraged our data analytics platform in performing our work on the purchase to pay process to assist in identifying
higher risk transactions for testing.
• In addition, we completed procedures to conclude on the compliance of the disclosures in the annual report and
accounts with all applicable requirements. Any instances of non-compliance with laws and regulations were
communicated by/to components and considered in our audit approach, if applicable.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
Other matters we are required to address
• Following the recommendation from the Audit Committee we were appointed by the shareholders at the AGM on
15 July 2020 to audit the financial statements for the 52 weeks ending 27 March 2021 and subsequent financial
periods. We signed an engagement letter on 22 September 2020.
• The period of total uninterrupted engagement including previous renewals and reappointments is one year, as this is
the first audit year.
• The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the Company
and we remain independent of the Group and the Company in conducting the audit.
• The audit opinion is consistent with the additional report to the Audit Committee.
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
Michael Rudberg (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
13 May 2021
223
223
Financial Statements | Group Income Statement
GROUP INCOME STATEMENT
Revenue
Cost of sales
Gross profit
Net operating expenses
Operating profit
Financing
Finance income
Finance expense
Other financing charge
Net finance expense
Profit before taxation
Taxation
Profit for the year
Attributable to:
Owners of the Company
Non-controlling interest
Profit for the year
Earnings per share
Basic
Diluted
Reconciliation of adjusted profit before taxation:
Profit before taxation
Adjusting operating items:
Cost of sales
Net operating expenses
Adjusting financing items
Adjusted profit before taxation – non-GAAP measure
Adjusted earnings per share – non-GAAP measure
Basic
Diluted
Dividends per share
Interim
Proposed final (not recognised as a liability at 27 March/28 March)
224
224
52 weeks to
27 March
2021
£m
2,343.9
(681.4)
1,662.5
(1,141.4)
521.1
52 weeks to
28 March
2020
£m
2,633.1
(927.6)
1,705.5
(1,516.8)
188.7
3.1
(33.3)
(0.7)
(30.9)
490.2
(114.3)
375.9
375.7
0.2
375.9
7.6
(26.6)
(1.2)
(20.2)
168.5
(46.9)
121.6
121.7
(0.1)
121.6
93.0p
92.7p
29.8p
29.8p
£m
£m
490.2
168.5
(22.3)
(102.9)
0.7
365.7
68.3
176.1
1.2
414.1
67.5p
67.3p
78.9p
78.7p
–
42.5p
11.3p
–
Note
3
4
8
5
9
10
10
5
5
5
10
10
11
11
Financial Statements | Group Statement of Comprehensive Income
GROUP STATEMENT OF COMPREHENSIVE INCOME
Profit for the year
Other comprehensive income1:
Cash flow hedges
Net investment hedges
Foreign currency translation differences
Actuarial gains on post-employment benefit plans
Tax on other comprehensive income:
Cash flow hedges
Net investment hedges
Foreign currency translation differences
Actuarial gains on post-employment benefit plans
Other comprehensive (loss)/income for the year, net of tax
Total comprehensive income for the year
Total comprehensive income attributable to:
Owners of the Company
Non-controlling interest
Note
25
25
9
9
9
52 weeks to
27 March
2021
£m
375.9
52 weeks to
28 March
2020
£m
121.6
–
–
(51.4)
1.0
–
–
2.4
(0.2)
(48.2)
327.7
327.7
–
327.7
2.7
(1.2)
18.5
–
(0.5)
0.2
(0.9)
–
18.8
140.4
140.4
–
140.4
1. All items included in other comprehensive income, with the exception of Actuarial gains on post-employment benefit plans, may subsequently
be reclassified to profit and loss in a future period.
225
225
Financial Statements | Group Balance Sheet
GROUP BALANCE SHEET
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Investment properties
Deferred tax assets
Trade and other receivables
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
Lease liabilities
Borrowings
Deferred tax liabilities
Retirement benefit obligations
Provisions for other liabilities and charges
Current liabilities
Trade and other payables
Bank overdrafts
Lease liabilities
Derivative financial liabilities
Income tax liabilities
Provisions for other liabilities and charges
Total liabilities
Net assets
EQUITY
Capital and reserves attributable to owners of the Company
Ordinary share capital
Share premium account
Capital reserve
Hedging reserve
Foreign currency translation reserve
Retained earnings
Equity attributable to owners of the Company
Non-controlling interest in equity
Total equity
As at
27 March
2021
£m
As at
28 March
2020
£m
Note
12
13
14
15
16
17
16
18
19
20
21
24
15
22
20
23
21
18
22
25
25
25
25
237.0
280.4
818.1
2.4
137.1
45.0
1,520.0
402.1
276.9
2.2
39.7
1,261.3
1,982.2
3,502.2
(99.4)
(809.6)
(297.1)
(0.8)
(1.0)
(31.8)
(1,239.7)
(392.9)
(45.4)
(210.0)
(2.6)
(27.9)
(24.0)
(702.8)
(1,942.5)
1,559.7
0.2
223.0
41.1
4.7
196.4
1,091.2
1,556.6
3.1
1,559.7
247.0
294.9
834.0
2.5
171.5
53.7
1,603.6
450.5
252.1
6.7
50.4
928.9
1,688.6
3,292.2
(102.3)
(910.0)
(300.0)
(0.1)
(1.9)
(28.6)
(1,342.9)
(447.5)
(41.6)
(215.5)
(4.8)
(7.9)
(13.2)
(730.5)
(2,073.4)
1,218.8
0.2
220.8
41.1
4.7
245.2
702.2
1,214.2
4.6
1,218.8
The consolidated financial statements of Burberry Group plc (registered number 03458224) on pages 224 to 286
were approved and authorised for issue by the Board on 12 May 2021 and signed on its behalf by:
Marco Gobbetti
Chief Executive Officer
Julie Brown
Chief Operating and Financial Officer
226
226
Financial Statements | Group Statement of Changes In Equity
GROUP STATEMENT OF CHANGES IN EQUITY
Balance as at 30 March 2019
Adjustment on initial application of IFRS 16
Adjustment on initial application of IFRIC 23
Attributable to owners
of the Company
Note
Ordinary
share
capital
£m
0.2
Share
premium
account
£m
216.9
–
–
–
–
Other
reserves
£m
272.3
Retained
earnings
£m
Total
£m
965.6 1,455.0
Non-
controlling
Total
interest
equity
£m
£m
5.0 1,460.0
–
–
(57.1)
(4.4)
(57.1)
(4.4)
(0.4)
(57.5)
–
(4.4)
Adjusted balance as at 31 March 2019
0.2
216.9
272.3
904.1
1,393.5
4.6 1,398.1
Profit for the year
Other comprehensive income:
Cash flow hedges
Net investment hedges
Foreign currency translation differences
Tax on other comprehensive income
Total comprehensive income for the year
Transactions with owners:
Employee share incentive schemes
Value of share options granted
Value of share options transferred
25
25
25
25
to liabilities
Tax on share options granted
Exercise of share options
Purchase of own shares
Share buy-back
Dividends paid in the year
Balance as at 28 March 2020
Profit for the year
Other comprehensive income:
Foreign currency translation differences
25
Actuarial gains on post-employment benefit
plans
Tax on other comprehensive income
25
Total comprehensive income for the year
Transactions with owners:
Employee share incentive schemes
Value of share options granted
Tax on share options granted
Exercise of share options
Acquisition of additional interest
in subsidiary
Purchase of own shares
Held by ESOP trusts
32
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3.9
–
–
–
121.7
121.7
(0.1)
121.6
2.7
(1.2)
18.4
(1.2)
18.7
–
–
–
–
2.7
(1.2)
18.4
(1.2)
121.7
140.4
–
–
0.1
–
–
2.7
(1.2)
18.5
(1.2)
140.4
–
–
–
–
–
–
2.8
2.8
0.1
(0.6)
–
0.1
(0.6)
3.9
(150.7)
(150.7)
(175.2)
(175.2)
–
–
–
–
–
–
2.8
0.1
(0.6)
3.9
(150.7)
(175.2)
0.2
220.8
291.0
702.2 1,214.2
4.6 1,218.8
–
375.7
375.7
0.2
375.9
(51.2)
–
(51.2)
(0.2)
(51.4)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2.2
–
–
–
2.4
1.0
(0.2)
1.0
2.2
(48.8)
376.5
327.7
12.1
0.7
–
12.1
0.7
2.2
–
–
–
–
–
–
1.0
2.2
327.7
12.1
0.7
2.2
(0.2)
(0.2)
(1.5)
(1.7)
(0.1)
(0.1)
–
(0.1)
–
–
–
–
–
Balance as at 27 March 2021
0.2
223.0
242.2
1,091.2 1,556.6
3.1 1,559.7
227
227
Financial Statements | Group Statement of Cash Flows
GROUP STATEMENT OF CASH FLOWS
Cash flows from operating activities
Operating profit
Amortisation of intangible assets
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
COVID-19-related rent concessions
Impairment charge of intangible assets
Net impairment (reversal)/charge of property, plant and equipment
Net impairment (reversal)/charge of right-of-use assets
(Gain)/loss on disposal of property, plant and equipment and intangible assets
Gain on disposal of right-of-use assets
Gain on disposal of Beauty operations
Loss/(gain) on derivative instruments
Charge in respect of employee share incentive schemes
(Payment)/receipt from settlement of equity swap contracts
Decrease in inventories
Increase in receivables
Decrease in payables and provisions
Cash generated from operating activities
Interest received
Interest paid
Taxation paid
Net cash generated from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from sale of property, plant and equipment
Initial direct costs of right-of-use assets
Net cash outflow from investing activities
Cash flows from financing activities
Dividends paid in the year
Payment of deferred consideration for acquisition of non-controlling interest
Proceeds from borrowings
Repayment of borrowings
Payment of lease principal
Payment on termination of lease
Payment to acquire additional interest in subsidiary from
non-controlling interest
Issue of ordinary share capital
Purchase of own shares through share buy-back
Purchase of own shares by ESOP trusts
Net cash outflow from financing activities
Net increase in cash and cash equivalents
Effect of exchange rate changes
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Cash and cash equivalents as per the Balance Sheet
Bank overdrafts
Cash net of overdrafts
228
228
52 weeks to
27 March
2021
£m
52 weeks to
28 March
2020
£m
Note
12
13
14
1
12
13
14
11
20
24
24
32
25
Note
19
23
521.1
32.9
71.4
172.4
(54.1)
8.8
(7.5)
(33.7)
(22.7)
(1.1)
–
3.8
12.1
(1.5)
20.9
(39.0)
(7.2)
676.6
2.9
(30.1)
(58.0)
591.4
(72.9)
(41.9)
27.2
(2.9)
(90.5)
–
(2.6)
595.1
(599.8)
(152.2)
–
(1.7)
2.2
–
(0.1)
(159.1)
341.8
(13.2)
887.3
1,215.9
As at
27 March
2021
£m
1,261.3
(45.4)
1,215.9
188.7
26.4
83.3
221.1
–
11.6
26.4
140.3
0.7
(2.1)
(5.0)
(3.1)
2.8
0.2
27.4
(9.8)
(84.0)
624.9
7.2
(26.0)
(150.3)
455.8
(85.3)
(63.5)
3.0
(5.6)
(151.4)
(175.2)
(2.7)
300.0
–
(228.4)
(9.7)
–
3.8
(150.7)
–
(262.9)
41.5
8.5
837.3
887.3
As at
28 March
2020
£m
928.9
(41.6)
887.3
Financial Statements | Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
Burberry Group plc and its subsidiaries (the Group) is a global luxury goods manufacturer, retailer and wholesaler.
The Group also licenses third parties to manufacture and distribute products using the ‘Burberry’ trademarks. All of
the companies which comprise the Group are controlled by Burberry Group plc (the Company) directly or indirectly.
The consolidated financial statements of the Group have been prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting
Standards adopted pursuant to Regulation (EC) No. 1606/2002 as it applies in the European Union, IFRS
Interpretations Committee (IFRS IC) 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 certain financial assets and financial liabilities at fair value
through profit or loss.
Going concern
The impact of the COVID-19 pandemic on the global economy and the operating activities of many businesses,
including the luxury market, has resulted in a volatile climate and continued uncertainty. The further impact of this
pandemic on the Group is uncertain at the date of signing these financial statements. In considering the
appropriateness of adopting the going concern basis in preparing the financial statements, the directors have
assessed the potential cash generation of the Group and considered a range of downside scenarios. This assessment
covers from the date of signing the financial statements up to 1 October 2022 for any indicators that the going
concern basis of preparation is not appropriate.
The directors have assessed the potential cash generation of the Group against a range of projected scenarios
(including a severe but plausible downside). These scenarios were informed by a comprehensive review of the
macroeconomic scenarios using third party projections of scientific, epidemiological and macroeconomic data for the
luxury fashion industry:
• The Group central planning scenario reflects a balanced projection with a continued focus on growing markets,
maintaining momentum built in FY2020/21 as part of the customer strategy.
• As a sensitivity, this central planning scenario has been flexed to reflect a 26% downgrade to revenues in FY
2021/22, as well as the associated consequences for EBITDA and cash. Management consider this represents a
severe but plausible downside scenario appropriate for assessing going concern. This was designed to test an even
more challenging trading environment as a result of COVID-19 together with the potential impacts of one or more of
the Group's other principal risks.
The severe but plausible downside modelled the following risks occurring simultaneously:
• A significant impact on revenue in FY 2021/22 compared to the central planning scenario caused by the impact of a
reputational incident such as negative sentiment propagated through social media.
• A longer-term decrease in revenue caused by a resurgence of the pandemic and store re-closures.
• The impact of prolonged recovery of travel to 2019 levels.
In addition, the potential impact of other principal risks, including the impact of foreign exchange volatility, were
considered. The directors have also considered mitigating actions, which may be taken to reduce discretionary and
other operating cash outflows. The directors have also considered the Group’s current liquidity and available facilities.
Details of cash, overdrafts, borrowings and facilities are set out in notes 19, 23 and 24 respectively of these financial
statements, which includes access to a £300.0 million revolving credit facility, currently undrawn and not relied upon
in this going concern assessment.
In all the scenarios assessed, taking into account current liquidity and available facilities, the Group was able to
maintain sufficient liquidity to continue trading. On the basis of the assessment performed, the directors consider it is
appropriate to continue to adopt the going concern basis in preparing the consolidated financial statements for the 52
weeks ended 27 March 2021.
229
229
Financial Statements | Notes to the Financial Statements
1. Basis of preparation continued
New standards, amendments and interpretations adopted in the period
There have been no new standards or interpretations issued and made effective for the financial period commencing
29 March 2020 that have had a material impact on the financial statements of the Group. The following amendment
to IFRS 16 was adopted for the first time in the financial statements for the 52 weeks to 27 March 2021:
IFRS 16 Leases – COVID-19-Related Rent Concessions
The COVID-19-Related Rent Concessions amendment to IFRS 16 Leases was adopted by the IASB on 28 May 2020
and endorsed by the European Union on 12 October 2020. The amendment applies to accounting periods from 1 June
2020 but early application is permitted and the Group has elected to apply the amendment in the current year.
The amendment allows for a simplified approach to accounting for rent concessions occurring as a direct result of
COVID-19 and for which the following criteria are met:
• The revised consideration is substantially the same, or less than, the consideration prior to the change;
• The concessions affect only payments originally due on or before 30 June 2021; and
• There is no substantive change to other terms and conditions of the lease.
Lessees are not required to assess whether eligible rent concessions are lease modifications, allowing the lessee to
account for eligible rent concessions as if they were not lease modifications. During the period, the Group has agreed
rent concessions both in the form of rent forgiveness in which the landlord has agreed to forgive all or a portion of
rents due with no obligation to be repaid in the future, and rent deferrals in which the landlord has agreed to forego
rents in one period with a proportional increase in rents due in a future period.
The Group has chosen to account for eligible rent forgiveness as negative variable lease payments. The rent
concession has been recognised once a legally binding agreement is made between both parties by derecognising the
portion of the lease liability that has been forgiven and recognising the benefit in the Income Statement. As a result,
the Group has recognised £54.1 million in COVID-19-related rent concessions in the Income Statement within “net
operating expenses” in the current period. This has been presented as an adjusting item (refer to note 6). In the
Statement of Cash Flows, the forgiveness results in lower payments of lease principal. The negative variable lease
payments in the Income Statement is a non-cash item which is added back to calculate cash generated from
operating activities.
Rent deferrals do not change the total consideration due over the life of the lease. Deferred rent payments are
recognised as a payable until the period the original rent payment is due. As a result, the Group has recognised £4.3
million within other payables. Payments relating to rent deferrals are recognised as payments of lease principal when
the payment is made.
Standards not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for the 52 weeks
to 27 March 2021 and have not been early adopted by the Group. These standards are not expected to have a material
impact on the entity in the current or future reporting periods and on foreseeable future transactions.
230
230
Financial Statements | Notes to the Financial Statements
1. Basis of preparation continued
Basis of consolidation
The Group’s annual financial statements comprise those of Burberry Group plc (the Company) and its subsidiaries,
presented as a single economic entity. The results of the subsidiaries are prepared for the same reporting year as the
Company, using consistent accounting policies across the Group.
Subsidiaries are all entities (including special purpose entities) over which the Group has control. The Group controls
an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the entity. Subsidiaries are fully 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 the Group had control. Intra-Group
transactions, balances and unrealised profits on transactions between Group companies are eliminated in preparing
the Group financial statements. The Group treats transactions with non-controlling interests as transactions with
equity owners of the Group. For acquisitions of additional interests in subsidiaries from non-controlling interests, the
difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the
subsidiary is recorded in equity. Gains or losses on disposals of interests in subsidiaries to non-controlling interests
are also recorded in equity.
Key sources of estimation uncertainty
Preparation of the consolidated financial statements in conformity with IFRS requires that management make certain
estimates and assumptions that affect the measurement of 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 estimates at the date of the
financial statements, deviate from actual circumstances, the original estimates and assumptions will be updated as
appropriate in the period in which the circumstances change.
Estimates 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.
The COVID-19 pandemic (COVID-19) has had a major impact on the global economy throughout the current year.
While the adverse impact on the Group’s operations and financial position has significantly diminished during the
course of the financial year, at the date of signing these financial statements, there remains significant uncertainty
regarding the timing of any global recovery from COVID-19, and the return to previous levels of footfall in city centres,
travel and tourism in some locations. As a result, the impact of COVID-19 on the Group’s assets remains a significant
source of estimation uncertainty.
The key areas where the estimates and assumptions applied have a significant risk of causing a material adjustment to
the carrying value of assets and liabilities within the next financial year are discussed below. Further details of the
Group’s accounting policies in relation to these areas are provided in note 2.
Impairment, or reversals of impairment, of property, plant and equipment and right-of-use assets
Property, plant and equipment and right-of-use assets 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 using management’s best estimates and assumptions at the time.
231
231
Financial Statements | Notes to the Financial Statements
1. Basis of preparation continued
Key sources of estimation uncertainty continued
Impairment, or reversals of impairment, of property, plant and equipment and right-of-use assets continued
Last year end, management recorded impairments of retail property, plant and equipment and right-of-use assets,
based on the estimated impact of COVID-19 on the Group. At that time, the impact of COVID-19 was at its highest
and many of the Group’s retail stores worldwide were closed. Since last year end, the rate of recovery has exceeded
management estimates, indicating a potential impairment reversal. Therefore, management has updated their
assumptions as at 27 March 2021, reflecting their latest plans over the next three years to March 2024, followed by
longer-term growth rates of mid-single digits. This has resulted in net reversals of impairments.
Management has also reviewed the remaining retail property, plant and equipment and right-of-use assets, not
covered by the above reassessment, for any indications of impairment. No new impairments of property, plant and
equipment and right-of-use assets outside the scope of the reassessment of last year’s assumptions were identified.
Refer to notes 13 and 14 for further details of retail property, plant and equipment, right-of-use assets
and impairment reviews carried out in the period and for sensitivities relating to this key source of estimation
uncertainty.
Inventory provisioning
The Group manufactures and sells luxury goods and is subject to changing consumer demands and fashion trends.
The recoverability of the cost of inventories is assessed every reporting period, by considering the expected net
realisable value of inventory compared to its carrying value. Where the net realisable value is lower than the carrying
value, a provision is recorded. When calculating inventory provisions, management considers the nature and condition
of the inventory, as well as applying assumptions in respect of anticipated saleability of finished goods and future
usage of raw materials.
Last year end, management recorded provisions against inventory, based on the estimated impact of COVID-19 on the
Group. As noted above, performance during the current year has exceeded the estimates made at last year end and
hence management has updated their assumptions regarding future performance. This has resulted in a release of
inventory provisions, both relating to inventory sold during the current year, where this was for a higher net realisable
value than had been assumed, and relating to assumptions regarding the net realisable value of inventory held at
27 March 2021.
Management has also reviewed the remaining inventory, not covered by the above reassessment, and provisions have
been recorded where appropriate based on future trading expectations.
Refer to note 17 for further details of the carrying value of inventory and inventory provisions and for sensitivities
relating to this key source of estimation uncertainty.
Uncertain tax positions
In common with many multinational companies, Burberry faces tax audits in jurisdictions around the world in relation
to transfer pricing of goods and services between associated entities within the Group. These tax audits are often
subject to inter-government negotiations. The matters under discussion are often complex and can take many years
to resolve. Tax liabilities are recorded based on management’s estimate of either the most likely amount or the
expected value amount depending on which method is expected to better reflect the resolution of the uncertainty.
Given the inherent uncertainty in assessing tax outcomes, the Group could, in future periods, experience adjustments
to these tax liabilities that have a material positive or negative effect on the Group’s results for a particular period.
During the next year it is possible that some or all of the current disputes are resolved. Management estimates that
the outcome across all matters under dispute or in negotiation between governments could be in the range of a
decrease of £11 million to an increase of £15 million relative to the current tax liabilities recognised at 27 March 2021.
This would have an impact of approximately 3% to 4% on the Group’s effective tax rate.
232
232
Financial Statements | Notes to the Financial Statements
1. Basis of preparation continued
Key judgements in applying the Group’s accounting policies
Judgements are those decisions made when applying accounting policies which have a significant impact on the
amounts recognised in the Group financial statements. Further details of the Group’s accounting policies are provided
in note 2. Key judgements that have a significant impact on the amounts recognised in the Group financial statements
for the 52 weeks to 27 March 2021 and the 52 weeks to 28 March 2020 are as follows:
Where the Group is a lessee, judgement is required in determining the lease term at initial recognition where extension
or termination options exist. In such instances, all facts and circumstances that may create an economic incentive to
exercise an extension option, or not exercise a termination option, have been considered to determine the lease term.
Considerations include, but are not limited to, the period assessed by management when approving initial investment,
together with costs associated with any termination options or extension options. Extension periods (or periods after
termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not
terminated). Where the lease term has been extended by assuming an extension option will be recognised, this will
result in the initial right-of-use assets and lease liabilities at inception of the lease being greater than if the option
was not assumed to be exercised. Likewise, assuming a break option will be exercised will reduce the initial right-of-
use assets and lease liabilities. During the 52 weeks to 27 March 2021, significant judgements regarding breaks and
options in relation to individually material leases resulted in approximately £91.7 million in undiscounted future cash
flows not being included in the initial right-of-use assets and lease liabilities.
2. Accounting policies
The principal accounting policies of the Group are:
a) Revenue
The Group obtains revenue from contracts with customers relating to sales of luxury goods to retail and wholesale
customers. Retail purchases are paid at time of purchase while wholesale and licensing purchases are paid on short-
term credit terms. The Group also obtains revenue through licences issued to third parties to produce and sell goods
carrying ‘Burberry’ trademarks. Revenue is stated excluding Value Added Tax and other sales related taxes.
Retail and wholesale revenue
For retail and wholesale revenue, the primary performance obligation is the transfer of luxury goods to the customer.
For retail revenue this is considered to occur when control of the goods passes to the customer. For in-store retail
revenue, control transfers when the customer takes possession of the goods in store and pays for the goods. For
digital retail revenue, control is considered to transfer when the goods are delivered to the customer. The timing of
transfer of control of the goods in wholesale transactions depends upon the terms of trade in the contract. Principally
for wholesale revenue, revenue is recognised either when goods are collected by the customer from the Group’s
premises, or when the Group has delivered the goods to the location specified in the contract. Provision for returns
and other allowances are reflected in revenue when revenue from the customer is first recognised. Retail customers
typically have the right to return product within a limited time frame while wholesale customers typically have the
right to return damaged products. Returns are initially estimated based on historical levels and adjusted subsequently
as returns are incurred.
Some wholesale contracts may require the Group to make payments to the wholesale customer, for services directly
relating to the sale of the Group’s goods, such as the cost of staff handling the Group’s goods at the wholesaler.
Payments to the customer directly relating to the sale of goods to the customer are recognised as a reduction in
revenue, unless in exchange for a distinct good or service. These charges are recognised in revenue at the later of
when the sale of the related goods to the customer is recognised or when the customer is paid, or promised to be paid,
for the service. Payments to the customer relating to a service which is distinct from the sale of goods to the
customer are recognised in operating costs.
The Group sells gift cards and similar products to customers, which can be redeemed for goods, up to the value of the
card, at a future date. Revenue relating to gift cards is recognised when the card is redeemed, up to the value of the
redemption. Unredeemed amounts on gift cards are classified as contract liabilities. Typically, the Group does not
expect to have significant unredeemed amounts arising on its gift cards.
233
233
Financial Statements | Notes to the Financial Statements
2. Accounting policies continued
a) Revenue continued
Licensing revenue
The Group’s licences entitle the licensee to access the Group’s trademarks over the term of the licence. Hence
revenue from licensing is recognised over the term of access to the licence. Royalties payable under licence
agreements are usually based on production or sales volumes and are accrued in revenue as the subsequent
production or sale occurs. Any amounts received which have not been recognised in revenue are classified as
contract liabilities.
b) Segment reporting
As required by IFRS 8 Operating Segments, the segmental information presented in the financial statements is
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.
The Group has centralised activities for designing, making and sourcing, which ensure a global product offering is
sold through retail and wholesale channels worldwide. Resource allocation and performance is assessed across the
whole of the retail/wholesale channel globally. Hence the retail/wholesale channel has been determined to be an
operating segment.
Licensed products are manufactured and sold by third-party licensees. As a result, this channel is assessed discretely
by the Chief Operating Decision Maker and has been determined to be an operating segment.
The Group presents an analysis of its revenue by channel, by product division and by geographical destination.
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. Contingent payments are remeasured at fair value through the Income Statement.
All transaction costs are expensed to the Income Statement. 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 non-controlling interest. Non-controlling interests in subsidiaries are identified
separately from the Group’s equity, and are initially measured either at fair value or at a value equal to the non-
controlling interests’ share of the identifiable net assets acquired. The choice of the basis of measurement is an
accounting policy choice for each individual business combination. The excess of the cost of acquisition together with
the value of any non-controlling interest over the fair value 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 Group operates a number of equity-settled share-based compensation schemes, under which services are
received from employees (including executive directors) as consideration for equity instruments of the Company. The
cost of the share-based incentives is measured with reference to the fair value of the equity instruments awarded at
the date of grant, including share awards and options. Appropriate option pricing models, including Black-Scholes, are
used to determine the fair value of the option awards made. The fair value takes into account the impact of any
market performance conditions, but the impact of non-market performance conditions is not considered in
determining the fair value on the date of grant. Vesting conditions which relate to non-market conditions are allowed
for in the assumptions used for the number of share awards or options expected to vest. The estimate of the number
of share awards or options expected to vest is revised at each balance sheet date.
234
234
Financial Statements | Notes to the Financial Statements
2. Accounting policies continued
d) Share schemes continued
In some circumstances, employees may provide services in advance of the grant date. The grant date fair value is
estimated for the purposes of recognising the expense during the period between the service commencement period
and the grant date.
The cost of the share-based incentives is recognised as an expense over the vesting period of the share awards, or
options, with a corresponding increase in equity.
When share awards or options are exercised, they are settled either via issue of new shares in the Company, or
through shares held in an Employee Share Option Plan (ESOP) trust, depending on the terms and conditions of the
relevant scheme. The proceeds received from the exercises, net of any directly attributable transaction costs, are
credited to share capital and share premium accounts.
e) Leases
The Group is both a lessee and lessor of property, plant and equipment. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
An identified asset may be specifically or implicitly specified. Control exists when the lessee has both the right to
direct the use of the identified asset and the right to obtain substantially all of the economic benefits from that use.
Lessee accounting
The Group’s principal lease arrangements where the Group acts as the lessee are for property, most notably the
lease of retail stores, corporate offices and warehouses. Other leases are for office equipment, vehicles, and supply
chain equipment. Lease terms are negotiated on an individual basis and contain a wide range of different terms
and conditions.
The Group recognises all lease liabilities and the corresponding right-of-use assets on the Balance Sheet, with the
exception of certain short-term leases (12 months or less) and leases of low value assets, which are expensed as
incurred. Leases and the corresponding right-of-use assets are initially recognised when the Group obtains control of
the underlying asset. Leases for new assets are presented as additions to lease liabilities and right-of-use assets.
Lease liabilities are initially measured on a present value basis. Lease liabilities include the net present value of the
following lease payments:
• Fixed payments, less any incentives;
• Variable lease payments that are based on a future index or rate;
• Amounts expected to be payable by the lessee under residual value guarantees; and
• The cost of exercising a purchase option if the lessee is reasonably certain to exercise that option.
Where the lease contains an extension option or a termination option which is exercisable by the Group, as lessee,
an assessment is made as to whether the Group is reasonably certain to exercise the extension option, or not
exercise the termination option, considering all relevant facts and circumstances that create an economic incentive.
Considerations may include the contractual terms and conditions for the optional periods compared to market
rates, costs associated with the termination of the lease and the importance of the underlying asset to the
Group’s operations.
Variable lease payments dependent upon a future index or rate are measured using the amounts payable at the
commencement date until the index or rate is known. Variable lease payments not dependent on an index or rate,
including lease payments based on a percentage of turnover, are excluded from the calculation of lease liabilities.
Payments are discounted at the incremental borrowing rate of the lessee, unless the interest rate implicit in the lease
can be readily determined.
235
235
Financial Statements | Notes to the Financial Statements
2. Accounting policies continued
e) Leases continued
Lessee accounting continued
Right-of-use assets are classified as property or non-property. The Group has elected not to apply the short-term
exemption to the property class of right-of-use assets. Where the exemption is applied to the non-property class of
right-of-use assets, lease payments are expensed as incurred. The low value asset exemption has been applied to both
the property and non-property class of assets on a lease-by-lease basis where applicable.
In circumstances where the Group is in possession of a property but there is no executed agreement or other binding
obligation in relation to the property, rent is expensed until such time the obligation becomes binding, at which point,
a right-of-use asset and lease liability will be recognised prospectively. These lease costs are disclosed as lease in
holdover expenses. Refer to notes 5 and 21.
Right-of-use assets are measured at cost comprising the following:
• The amount of the initial measurement of the lease liability;
• Any lease payments made at or before the commencement date less any lease incentives received; and
• Any initial direct costs incurred in entering into the lease.
The Group recognises depreciation of right-of-use assets and interest on lease liabilities in the Income Statement
over the lease term. Repayments of lease liabilities are classified separately in the Statement of Cash Flows where the
cash payments for the principal portion of the lease liability are presented within financing activities, and cash
payments for the interest portion are presented within operating activities. Payments in relation to short-term leases
and leases of low value assets which are not included on the Balance Sheet are included within operating activities.
Modifications to lease agreements, extensions to existing lease agreements and changes to future lease payments
relating to existing terms in the contract, including market rent reassessments and index based changes, are
presented as remeasurements of the lease liabilities. The related right-of-use asset is also remeasured. If the
modification results in a reduction in scope of the lease, either through shortening the lease term or through disposing
of part of the underlying asset, a gain or loss on disposal may arise relating to the difference between the lease
liabilities and the right-of-use asset applicable to the reduction in scope.
Right-of-use assets are included in the review for impairment of property, plant and equipment and intangible
assets with finite economic lives, if there is an indication that the carrying amount of the cash generating unit may
not be recoverable.
Lessor accounting
The Group also acts as a lessor of properties. Each of these leases are classified as either a finance lease or an
operating lease. Leases in which substantially all of the risks and rewards incidental to ownership of an underlying
asset are transferred to the lessee by the lessor are classified as finance leases. Leases which are not finance leases
are classified as operating leases.
Gross rental income in respect of operating leases is recognised on a straight-line basis over the term of the leases.
f) Dividend distributions
Dividend distributions to Burberry Group plc’s shareholders are recognised as a liability in the period in which the
dividend becomes a committed obligation. Final dividends are recognised when they are approved by the shareholders.
Interim dividends are recognised when paid.
g) Pension costs
Eligible employees 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 as they fall due and comprises the amount of contributions to the schemes.
236
236
Financial Statements | Notes to the Financial Statements
2. Accounting policies continued
h) Intangible assets
Goodwill
Goodwill is the excess of the cost of acquisition together with the value of any non-controlling interest, over the fair
value of identifiable net assets acquired. Goodwill on acquisition is recorded as an intangible 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 life. Impairment reviews are performed annually, or more frequently if events
or changes in circumstances indicate that the carrying value may not be recoverable. Impairment losses recognised on
goodwill are not reversed in future periods.
Trademarks, licences and other intangible assets
The cost of securing and renewing trademarks and licences, and the cost of acquiring other intangible assets, is
capitalised at purchase price and amortised by equal annual instalments over the period in which benefits are expected
to accrue, typically ten years for trademarks, or the term of the licence. The useful life of trademarks and other
intangible assets is determined on a case-by-case basis, in accordance with the terms of the underlying agreement
and the nature of the asset.
Computer software
Computer software costs are capitalised during the development phase at the point at which there is sufficient
certainty that it will deliver future economic benefits to the Group. The cost of acquiring computer software (including
licences and separately identifiable 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 on a straight-line
basis over their estimated useful lives, which may be up to seven years.
i) Property, plant and equipment
Property, plant and equipment, with the exception of assets in the course of construction, is stated at cost or deemed
cost, based on historical revalued amounts prior to the adoption of IFRS, less accumulated depreciation and provision
to reflect any impairment in value. Assets in the course of construction are stated at cost less any provision for
impairment and transferred to completed assets when substantially all of the activities necessary for the asset to be
ready for use have occurred. 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:
Type of asset
Land
Category of property, plant and equipment
Freehold land and buildings
Freehold buildings
Freehold land and buildings
Useful life
Not depreciated
Up to 50 years
Long life leasehold improvements
Leasehold improvements
Over the unexpired term of the lease
Short life leasehold improvements
Leasehold improvements
Plant and machinery
Fixtures, fittings and equipment
Retail fixtures and fittings
Fixtures, fittings and equipment
Office fixtures and fittings
Fixtures, fittings and equipment
Computer equipment
Fixtures, fittings and equipment
Up to 10 years
Up to 15 years
Up to 5 years
Up to 5 years
Up to 7 years
Assets in the course of construction Assets in the course of construction
Not depreciated
Profit/loss on disposal of property, plant and equipment and intangible assets
Profits and losses on the disposal of property, plant and equipment and intangible assets 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.
237
237
Financial Statements | Notes to the Financial Statements
2. Accounting policies continued
j) Impairment of non-financial assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment.
Assets under construction are also tested annually. Assets that are subject to amortisation or depreciation are
reviewed for impairment whenever events or changes in circumstance indicate that the carrying value may not be
recoverable. An impairment loss is recognised for the amount by which the carrying value 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 being individual stores (cash generating units). Non-financial assets, other than goodwill, for which an
impairment has been previously recognised are reviewed for possible reversal of impairment at each reporting date.
k) Investment properties
Investment properties are freehold properties held to earn rentals and/or for capital appreciation. Investment
properties are stated at cost less accumulated depreciation and provision to reflect any impairment in value. Cost
includes the original purchase price plus any directly attributable transaction costs. Investment properties are
depreciated on a straight-line basis over an estimated useful life of up to 50 years.
l) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost consists of all costs of purchase, costs of
conversion, design costs and other costs incurred in bringing the inventories to their present location and condition.
The cost of inventories is determined using a first-in, first-out (FIFO) method, taking account of the fashion seasons
for which the inventory was offered. Where necessary, provision is made to reduce cost to no more than net realisable
value having regard to the nature and condition of inventory, as well as its anticipated utilisation and saleability.
m) Taxation
Tax expense represents the sum of the tax currently payable and deferred tax charge.
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 substantively enacted at the balance sheet date.
Deferred tax is recognised, using the liabilities method, 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, no deferred tax will be
recognised. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted at
the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax
liability is settled.
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.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when deferred tax assets and liabilities relate to income taxes levied by the same
taxation authority on either the same taxable entities or different taxable entities where there is an intention to settle
the balances on a net basis.
238
238
Financial Statements | Notes to the Financial Statements
2. Accounting policies continued
n) 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 benefits 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 based 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 specific to the future obligation.
Property obligations
A provision for the present value of future property reinstatement costs is recognised where there is an obligation to
return the leased property to its original condition at the end of a lease term. The reinstatement cost at the end of a
lease usually arises due to leasehold improvements and modifications carried out by the Group in order to customise
the property during tenure of the lease. As a result, the cost of the reinstatement provision is recognised as a
component of the cost of the leasehold improvements in property, plant and equipment when these are installed.
o) 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 owners of the Company
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 owners of the Company.
p) Financial instruments
Financial instruments are initially recognised at fair value plus directly attributable transaction costs on the Balance
Sheet when the entity becomes a party to the contractual provisions of the instrument. A financial asset is
derecognised when the contractual rights to the cash flow expire or substantially all risks and rewards of the asset
are transferred. A financial liability is derecognised when the obligation specified in the contract is discharged,
cancelled or expired.
At initial recognition, all financial liabilities are stated at fair value. Subsequent to initial recognition, all financial
liabilities are stated at amortised cost using the effective interest rate method except for derivatives which are held at
fair value and which are classified as fair value through profit and loss, except where they qualify for hedge accounting.
Financial assets are classified as either amortised cost or fair value through profit and loss depending on their cash
flow characteristics. Assets with cash flows that represent solely payments of principal and interest are measured at
amortised cost. The fair value of the Group’s financial assets and liabilities held at amortised cost mostly approximate
their carrying amount due to the short maturity of these instruments. Where the fair value of any financial asset or
liability held at amortised cost is materially different to the book value, the fair value is disclosed.
239
239
Financial Statements | Notes to the Financial Statements
2. Accounting policies continued
p) Financial instruments continued
The Group classifies its instruments in the following categories:
Financial instrument category
Cash and cash equivalents
Note
19
Classification
Amortised cost
Measurement
Amortised cost
Fair value
measurement
hierarchy2
N/A
Cash and cash equivalents
19 Fair value through profit and loss
Fair value through profit and loss
Trade and other receivables
16
Amortised cost
Amortised cost
Trade and other receivables
16 Fair value through profit and loss
Fair value through profit and loss
Trade and other payables
Borrowings
Leases
20
24
21
Other financial liabilities
Other financial liabilities
Lease liabilities
Amortised cost
Amortised cost
Amortised cost
Deferred consideration
20 Fair value through profit and loss
Fair value through profit and loss
Forward foreign exchange
18 Fair value through profit and loss
Fair value through profit and loss
contracts
Forward foreign exchange
contracts used for hedging1
Equity swap contracts
18 Fair value – hedging instrument
Fair value – hedging instrument3
18 Fair value through profit and loss
Fair value through profit and loss
1. Cash flow hedge and net investment hedge accounting is applied to the extent it is achievable.
2. The fair value measurement hierarchy is only applicable for financial instruments measured at fair value.
2
N/A
2
N/A
N/A
N/A
3
2
2
2
3. Forward foreign exchange contracts used for hedging are classified as Fair value – hedging instruments under IFRS 9, however IAS 39 hedge
accounting has been applied.
The measurements for financial instruments carried at fair value are categorised into different levels in the fair value
hierarchy based on the inputs to the valuation technique used. The different levels are defined as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the
measurement date.
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly.
Level 3: includes unobservable inputs for the asset or liability.
Observable inputs are those which are developed using market data, such as publicly available information about
actual events or transactions. The Group has an established framework with respect to measurement of fair values,
including Level 3 fair values. The Group regularly reviews any significant inputs which are not derived from observable
market data and considers, where available, relevant third-party information, to support the conclusion that such
valuations meet the requirements of IFRS. The classification level in the fair value hierarchy is also considered
periodically. Significant valuation issues are reported to the Audit Committee.
The fair value of those cash and cash equivalents measured at fair value through profit and loss, principally money
market funds, is derived from their net asset value which is based on the value of the portfolio investment holdings at
the balance sheet date. This is considered to be a Level 2 measurement.
The fair value of forward foreign exchange contracts, equity swap contracts and trade and other receivables,
principally cash settled equity swaps, is based on a comparison of the contractual and market rates and, in the case of
forward foreign exchange contracts, after discounting using the appropriate yield curve as at the balance sheet date.
All Level 2 fair value measurements are calculated using inputs which are based on observable market data.
The fair value of the contingent payment component of deferred consideration is considered to be a Level 3
measurement and is derived using a present value calculation, incorporating observable and non-observable inputs.
This valuation technique has been adopted as it most closely mirrors the contractual arrangement.
240
240
Financial Statements | Notes to the Financial Statements
2. Accounting policies continued
p) Financial instruments continued
The Group’s primary categories of financial instruments are listed below:
Cash and cash equivalents
Cash and short-term deposits on the Balance Sheet comprise cash at banks and on hand and short-term highly liquid
deposits with a maturity of three months or less, that are readily convertible to a known amount of cash and subject
to an insignificant risk of changes in value. In the Statement of Cash Flows, cash and cash equivalents also include
bank overdrafts, which are recorded under current liabilities on the Balance Sheet.
While cash at bank and in hand is classified as amortised cost, some short-term deposits are classified as fair value
through profit and loss.
Cash and cash equivalents held at amortised cost are subject to impairment testing each period end.
Trade and other receivables
Trade and other receivables are included in current assets, except for maturities greater than 12 months after the
balance sheet date. Most receivables are held with the objective to collect the contractual cash flows and are
therefore recognised initially at fair value and subsequently measured at amortised cost using the effective interest
rate method, less provision for impairment. A provision for the expected credit losses on trade receivables is
established at inception. This is modified when there is a change in the credit risk. The amount of the movement in the
provision is recognised in the Income Statement.
Cash settled equity swaps are classified as fair value through profit and loss.
Trade and other payables
Trade and other payables are included in current liabilities, except for maturities greater than 12 months after the
balance sheet date. Payables are recognised initially at fair value and subsequently measured at amortised cost using
the effective interest rate method.
Borrowings (including overdrafts)
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 rate method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the
liability for at least 12 months after the balance sheet date.
Deferred consideration
Deferred consideration is initially recognised at the present value of the expected future payments. It is subsequently
remeasured at fair value at each reporting period with the change in fair value relating to changes in expected future
payments recorded in the Income Statement as an operating expense or income. Changes in fair value relating to
unwinding of discounting to present value are recorded as a financing expense.
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, and product purchases. The Group also may
designate forward foreign exchange contracts or foreign currency borrowings as a net investment hedge of the assets
of overseas subsidiaries.
When hedge accounting is applied, the Group documents at the inception of the transaction the relationship between
the spot element of the 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.
241
241
Financial Statements | Notes to the Financial Statements
2. Accounting policies continued
p) Financial instruments continued
Derivative instruments continued
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); (2) hedges of
highly probable forecast transactions (cash flow hedges); (3) hedges of net investment of the assets of overseas
subsidiaries (net investment hedges); or (4) classified as fair value through profit and loss.
The forward elements of the hedging instrument are recognised in operating expenses.
Changes in the fair value relating to the spot element 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 relating to the spot element of derivatives that are designated and
qualify as cash flow hedges is deferred in other comprehensive income. The gain or loss relating to the ineffective
portion of the gain or loss is recognised immediately in the Income Statement. Amounts deferred in other
comprehensive income are recycled through the Income Statement in the periods when the hedged item affects the
Income Statement. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for
hedge accounting, any cumulative gain or loss existing in equity at the time remains in equity and is recognised when
the forecast transaction is ultimately recognised in the Income Statement. When a forecast transaction is no
longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the
Income Statement within ‘net exchange gain/(loss) on derivatives – fair value through profit and loss’. 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 or interest depending upon the nature of the instrument.
Where the Group hedges net investments in foreign operations through derivative instruments or foreign currency
borrowings, the gains or losses on the effective portion of the change in fair value of derivatives that are designated
and qualify as a hedge of a net investment, or the gains or losses on the retranslation of the borrowings are recognised
in other comprehensive income and are reclassified to the Income Statement when the foreign operation that is
hedged is disposed of.
q) Government grants
Government grants related to assets are recognised as deferred income when there is reasonable certainty that any
conditions attached to the grant will be met and the grant will be received. They are amortised to operating income
over the useful life of the asset. Government grants related to income are presented as operating income when it is
reasonably certain that any conditions attached will be met and that the grant will be received.
242
242
Financial Statements | Notes to the Financial Statements
2. Accounting policies continued
r) 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). The consolidated financial
statements are presented in Sterling which is the Company’s functional and the Group’s presentation 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 prevailing at the date of the transaction. 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 (closing rate). 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 hedging reserve.
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 closing 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.
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
Chinese Yuan Renminbi
Hong Kong Dollar
Korean Won
Average rate
52 weeks to
27 March
2021
1.12
52 weeks to
28 March
2020
1.14
Closing rate
As at
27 March
2021
1.17
As at
28 March
2020
1.12
1.30
8.85
10.08
1,514
1.27
8.88
9.89
1,504
1.38
9.02
10.72
1,558
1.24
8.75
9.64
1,512
s) Adjusted profit before taxation
In order to provide additional consideration of the underlying performance of the Group’s ongoing business, the
Group’s results include a presentation of Adjusted operating profit and Adjusted profit before taxation (‘adjusted
PBT’). Adjusted PBT is defined as profit before taxation and before adjusting items. Adjusting items are those items
which, in the opinion of the directors, should be excluded in order to provide a consistent and comparable view of the
performance of the Group’s ongoing business. Generally, this will include those items that are largely one-off and
material in nature as well as income or expenses relating to acquisitions or disposals of businesses or other
transactions of a similar nature, including the impact of changes in fair value of expected future payments or receipts
relating to these transactions. Adjusting items are identified and presented on a consistent basis each year and a
reconciliation of adjusted PBT to profit before tax is included in the financial statements. Adjusting items and their
related tax impacts, as well as adjusting taxation items, are added back to/deducted from profit attributable to
owners of the Company to arrive at adjusted earnings per share. Refer to note 6 for further details of adjusting items.
243
243
Financial Statements | Notes to the Financial Statements
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 the Group’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, prestige department stores globally and multi-brand
specialty accounts. 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 Europe
and the US.
Licensing revenues are generated through the receipt of royalties from global licensees of beauty products, eyewear
and from licences relating to the use of non-Burberry trademarks in Japan.
The Board assesses channel performance based on a measure of adjusted operating profit. This measurement basis
excludes the effects of adjusting 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 charges are not included in the result
for each operating segment that is reviewed by the Board.
Retail
Wholesale
Licensing
Total segment revenue
Inter-segment revenue1
Revenue from external
customers
Retail/Wholesale
Licensing
Total
52 weeks to
27 March
2021
£m
1,909.9
396.0
–
52 weeks to
28 March
2020
£m
2,110.2
475.8
–
2,305.9
2,586.0
–
–
52 weeks to
27 March
2021
£m
–
52 weeks to
28 March
2020
£m
–
–
39.1
39.1
(1.1)
–
48.5
48.5
(1.4)
52 weeks to
27 March
2021
£m
1,909.9
396.0
39.1
52 weeks to
28 March
2020
£m
2,110.2
475.8
48.5
2,345.0
2,634.5
(1.1)
(1.4)
2,305.9
2,586.0
38.0
47.1
2,343.9
2,633.1
Depreciation and amortisation
276.7
330.8
Impairment of intangible
assets2
Net impairment of property,
plant and equipment3
Net impairment of right-of-use
assets4
Other non-cash items:
Share-based payments
Adjusted operating profit
Adjusting items5
Finance income
Finance expense
Profit before taxation
8.8
0.8
–
12.1
1.6
(2.0)
12.8
2.8
–
–
–
–
–
–
–
–
–
–
361.4
389.8
34.5
43.3
276.7
330.8
8.8
0.8
–
12.1
395.9
124.5
3.1
(33.3)
490.2
1.6
(2.0)
12.8
2.8
433.1
(245.6)
7.6
(26.6)
168.5
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. Impairment of intangible assets for the 52 weeks to 28 March 2020 was presented excluding £10.0 million relating to charges as a result of
the impact of COVID-19, which was presented as an adjusting item (refer to note 6).
3. Net impairment charge relating to property, plant and equipment for the 52 weeks to 27 March 2021 is presented excluding a net reversal of
£8.8 million (last year: charge of £28.4 million) relating to reversals and charges as a result of the impact of COVID-19 and a charge of £0.5
million (last year: £nil) relating to restructuring costs. These have been presented as adjusting items (refer to note 6).
4. Net impairment of right-of-use assets for the 52 weeks to 27 March 2021 is presented excluding a net reversal of £37.8 million (last year:
charge of £128.1 million) relating to reversals and charges as a result of the impact of COVID-19 and a charge of £4.1 million (last year: credit
of £0.6 million) relating to restructuring costs, which have been presented as adjusting items (refer to note 6).
5. Adjusting items relate to the Retail and Wholesale segment. Refer to note 6 for details of adjusting items.
244
244
Financial Statements | Notes to the Financial Statements
3. Segmental analysis continued
Retail/Wholesale
Licensing
52 weeks to
27 March
2021
£m
52 weeks to
28 March
2020
£m
52 weeks to
27 March
2021
£m
52 weeks to
28 March
2020
£m
Total
52 weeks to
27 March
2021
£m
52 weeks to
28 March
2020
£m
Additions to non-current
assets
233.6
447.5
Total segment assets
1,952.2
2,020.9
–
6.7
Goodwill
Cash and cash equivalents
Taxation
Total assets per Balance
Sheet
Additional revenue analysis
–
233.6
447.5
11.2
1,958.9
105.2
1,261.3
176.8
2,032.1
109.3
928.9
221.9
3,502.2
3,292.2
All revenue is derived from contracts with customers. The Group derives retail and wholesale revenue from contracts
with customers from the transfer of goods and related services at a point in time. Licensing revenue is derived over
the period the licence agreement gives the customer access to the Group’s trademarks.
Revenue by product division
Accessories
Women’s
Men’s
Children’s/Other
Retail/Wholesale
Licensing
Total
Revenue by destination
Asia Pacific
EMEIA1
Americas
Retail/Wholesale
Licensing
Total
52 weeks to
27 March
2021
£m
840.9
652.6
667.6
144.8
2,305.9
38.0
2,343.9
52 weeks to
27 March
2021
£m
1,203.2
628.0
474.7
2,305.9
38.0
2,343.9
52 weeks to
28 March
2020
£m
947.5
796.5
714.8
127.2
2,586.0
47.1
2,633.1
52 weeks to
28 March
2020
£m
1,040.5
960.6
584.9
2,586.0
47.1
2,633.1
1. EMEIA comprises Europe, Middle East, India and Africa.
Entity-wide disclosures
Revenue derived from external customers in the UK totalled £145.2 million for the 52 weeks to 27 March 2021 (last
year: £319.6 million).
Revenue derived from external customers in foreign countries totalled £2,198.7 million for the 52 weeks to 27 March
2021 (last year: £2,313.5 million). This amount includes £407.9 million of external revenues derived from customers
in the US (last year: £491.9 million) and £751.9 million of external revenues derived from customers in China (last year:
£461.5 million).
The total of non-current assets, other than financial instruments, and deferred tax assets located in the UK is £477.2
million (last year: £490.8 million). The remaining £864.8 million of non-current assets are located in other countries
(last year: £894.4 million), with £223.4 million located in the US (last year: £232.5 million), £115.4 million located in
China (last year: £113.6 million), and £112.0 million located in Japan (last year: £115.4 million).
245
245
Financial Statements | Notes to the Financial Statements
4. Net operating expenses
Operating income
Selling and distribution costs
Administrative expenses
Adjusting operating income
Adjusting operating expenses
Net operating expenses
Note
5
5
52 weeks to
27 March
2021
£m
(15.6)
942.6
317.3
1,244.3
(81.3)
(21.6)
(102.9)
1,141.4
Restated
52 weeks to
28 March
2020
£m
(18.8)
1,075.9
283.6
1,340.7
(7.1)
183.2
176.1
1,516.8
As a result of more granular financial information, a prior year reclassification of £217.3 million from Administrative
expenses to Selling and distribution costs has been recognised. This reclassification related largely to people costs and
other indirect operating costs relating to marketing and supply chain activities which were historically considered to
be administrative in nature and are now disclosed as Selling and distribution costs based on the underlying nature of
the work being performed. This change has no impact elsewhere in these financial statements.
Operating income has also been separately disclosed in the current year. Historically, operating costs were presented
net of operating income. The comparative period has been re-presented for consistency. For the 52 weeks to 28
March 2020, £17.0 million in Operating income was reclassified from Selling and distribution costs and £1.8 million
from Administrative expenses.
246
246
Financial Statements | Notes to the Financial Statements
5. Profit before taxation
Adjusted profit before taxation is stated after charging/(crediting):
Depreciation of property, plant and equipment
52 weeks to
27 March
2021
£m
52 weeks to
28 March
2020
£m
Note
Within cost of sales
Within selling and distribution costs
Within administrative expenses
Depreciation of right-of-use assets
Within cost of sales
Within selling and distribution costs
Within administrative expenses
Amortisation of intangible assets
Within selling and distribution costs
Within administrative expenses
Loss on disposal of property, plant and equipment and intangible assets1
Gain on disposal of right-of-use assets
Net impairment charge/(reversal) relating to property, plant and equipment2
Net impairment charge relating to right-of-use assets3
Impairment of intangible assets4
Employee costs5
Other lease expense
Property lease variable lease expense
Property lease in holdover expense
Non-property short-term lease expense
Operating lease income
Income from lease of freehold property
Net exchange (gain)/loss on revaluation of monetary assets and liabilities
Net loss on derivatives – fair value through profit and loss
Receivables net impairment (reversal)/charge6
13
14
12
29
21
21
21
2.1
56.0
13.3
0.4
154.6
17.4
1.7
31.2
0.3
(1.1)
0.8
–
8.8
1.2
68.4
13.7
0.4
200.6
20.1
1.0
25.4
0.7
(2.1)
(2.0)
12.8
1.6
487.5
478.5
118.1
15.4
4.8
–
(5.4)
7.4
(0.9)
96.2
11.2
9.9
(0.7)
8.7
3.4
3.2
1. Loss on disposal of property, plant and equipment and intangible assets for the 52 weeks to 27 March 2021 is presented excluding £23.0
million (last year: £nil) relating to the gain on sale of property in France. This has been presented as an adjusting item (refer to note 6).
2. Net impairment charge relating to property, plant and equipment for the 52 weeks to 27 March 2021 is presented excluding a net reversal of
£8.8 million (last year: charge of £28.4 million) relating to charges as a result of the impact of COVID-19 and a charge of £0.5 million (last
year: £nil) relating to restructuring costs. These have been presented as adjusting items (refer to note 6).
3. Net impairment charge of right-of-use assets for the 52 weeks to 27 March 2021 is presented excluding a net reversal of £37.8 million (last
year: charge of £128.1 million) relating to charges as a result of the impact of COVID-19 and a charge of £4.1 million (last year: credit of £0.6
million) relating to restructuring costs, which have been presented as adjusting items (refer to note 6).
4. Impairment of intangible assets for the 52 weeks to 28 March 2020 was presented excluding £10.0 million relating to charges as a result of
the impact of COVID-19, which was presented as an adjusting item (refer to note 6).
5. Employee costs for the 52 weeks to 27 March 2021 are presented excluding a charge of £21.0 million (last year: £5.4 million) arising as a
result of the Group’s restructuring programmes and a charge of £4.3 million relating to employee profit sharing agreements on the sale of
property in France, which have been presented as adjusting items. During the 52 weeks to 28 March 2020 a credit of £6.2 million was
recognised as an adjusting item related to the reversal of accrued costs for share-based payments no longer expected to vest as a result of
COVID-19. Refer to note 6 for further details.
6. Receivables net impairment charge for the 52 weeks to 27 March 2021 is presented excluding a reversal of £5.2 million (last year: charge of
£11.1 million) relating to charges as a result of the impact of COVID-19, which has been presented as an adjusting item (refer to note 6).
247
247
Financial Statements | Notes to the Financial Statements
5. Profit before taxation continued
Adjusting items
Adjusting operating items
Impact of COVID-19:
Impairment (reversal)/charge relating to retail cash generating units
Impairment (reversal)/charge relating to inventory
Impairment charge relating to intangible assets
Impairment (reversal)/charge relating to receivables
Other impacts of COVID-19
COVID-19-related rent concessions
Furlough grant income
Other adjusting items:
Gain on disposal of property
Gain on disposal of Beauty operations
Restructuring costs
Revaluation of deferred consideration liability
Total adjusting operating items
Adjusting financing items
Finance charge on deferred consideration liability
Total adjusting financing items
Analysis of adjusting operating items:
Included in Operating expenses
Included in Cost of sales (Impairment (reversal)/charge relating to inventory)
Total
6. Adjusting items
Total adjusting items (pre-tax)
Tax on adjusting items
Total adjusting items (post-tax)
Impact of COVID-19
52 weeks to
27 March
2021
£m
52 weeks to
28 March
2020
£m
Note
6
6
6
6
6
6
6
6
6
6
6
6
Note
4
(46.6)
(22.3)
–
(5.2)
–
(54.1)
(8.5)
(18.7)
–
29.8
0.4
156.5
68.3
10.0
11.1
(5.0)
–
–
–
(5.0)
10.6
(2.1)
(125.2)
244.4
0.7
0.7
1.2
1.2
As at
27 March
2021
£m
(102.9)
(22.3)
(125.2)
As at
27 March
2021
£m
(124.5)
21.5
103.0
As at
28 March
2020
£m
176.1
68.3
244.4
As at
28 March
2020
£m
245.6
(45.4)
(200.2)
COVID-19 has impacted both business operations and financial markets worldwide. COVID-19 has also had a
significant impact on the financial results of the Group during the current and previous year. In the financial
statements for the year ended 28 March 2020, the Group recorded adjusting items relating to the impairment of the
carrying value of assets as a result of the expected impact of COVID-19 on the Group’s activities and future trading.
This resulted in charges of £245.9 million relating to impairments of retail cash generating units, intangible assets and
receivables and to inventory provisions. These charges were presented as adjusting items as they were considered to
be material and one-off in nature.
At 27 March 2021, these impairments and provisions have been reviewed and the assumptions updated where
appropriate, to reflect management’s latest expectations. The impact of changes in assumptions has been presented
as an update to the adjusting item charge. Further details regarding the approach applied to measure these updates
are set out below for each of the specific adjusting items.
248
248
Financial Statements | Notes to the Financial Statements
6. Adjusting items continued
Impact of COVID-19 continued
Other items, where they are considered one-off in nature and directly related to the impact of COVID-19, have been
presented as adjusting items. Income recorded in the year following application of the temporary COVID-19 Related
Rent Concession amendment to IFRS 16 has been presented as an adjusting item. This is considered appropriate given
that the amendment to IFRS 16 is only applicable for a limited period of time and it is explicitly related to COVID-19.
Grant income recorded in the year, relating to government furlough arrangements worldwide, has also been presented
as an adjusting item, as it is also explicitly related to COVID-19, and the arrangements are expected to last for a
limited period of time. In aggregate these items give rise to a material amount of income in the year. Further details of
these adjusting items are set out below.
All other financial impacts of COVID-19 are included in adjusted operating profit. As a result, additional costs recorded
in the year, including masks, other personal protection equipment, hand sanitisers, production inefficiencies due to
social distancing, operating costs of retail stores during closure and the cost of voluntary payment of UK rates, have
not been separately presented as adjusting items. These additional costs are not considered to be one-off in nature,
and in some cases the discrete impact of COVID-19 on these costs cannot be reliably measured. Hence it is considered
more appropriate to include these additional costs in adjusted operating profit.
Impairment of retail cash generating units
During the 52 weeks to 28 March 2020, an impairment charge of £156.5 million, recorded within selling and
distribution costs in net operating expenses for impairment of retail store assets due to the impact of COVID-19, was
presented as an adjusting item. It comprised a charge of £28.4 million, recorded against property, plant and
equipment, and a charge of £128.1 million, recorded against right-of-use assets. A related tax credit of £28.7 million
was also recognised in the year.
During the 52 weeks to 27 March 2021, the impairment provisions remaining have been reassessed, using
management’s latest expectations, and a net reversal of £46.6 million has been recorded and presented as an
adjusting item. This comprised a charge of £1.6 million and a reversal of £10.4 million against property, plant and
equipment and a charge of £11.0 million and a reversal of £48.8 million against right-of-use assets. A related tax
charge of £5.2 million has also been recognised in the year.
Any charges or reversals which did not arise from the reassessment of the original impairment adjusting item, had
they arisen, would have not have been included in this adjusting item. However, there were no other impairment
charges or reversals relating to retail cash generating units in the year. Refer to note 13 for details of impairment of
retail cash generating units.
Impairment of inventory
During the 52 weeks to 28 March 2020, inventory provisions of £68.3 million were recorded in cost of sales, due to the
impact of COVID-19. These charges related to current and recent seasons that under normal circumstances would be
expected to sell through with limited loss and were presented as an adjusting item. A related tax credit of £12.5 million
was also recognised in the year.
During the 52 weeks to 27 March 2021, reversals of inventory provisions, relating to inventory which had been
provided for as an adjusting item at the previous year end and has either been sold, or is now expected to be sold, at a
higher net realisable value than had been assumed when the provision had been initially estimated, of £22.3 million
have been recorded and presented as an adjusting item. A related tax charge of £4.8 million has also been recognised
in the year. All other charges and reversals relating to inventory provisions have been recorded in adjusted operating
profit. Refer to note 17 for details of inventory provisions.
249
249
Financial Statements | Notes to the Financial Statements
6. Adjusting items continued
Impact of COVID-19 continued
Impairment of receivables
During the 52 weeks to 28 March 2020, due to the global financial uncertainty arising from COVID-19, management
reassessed and increased the expected credit loss rates for trade and other receivables, resulting in a charge of
£11.1 million reported within selling and distributions costs in net operating expenses for impairment of receivables in
the year. This charge relating to the increase in expected credit loss rates was presented as an adjusting item.
A related tax credit of £2.1 million was also recognised in the year.
During the 52 weeks to 27 March 2021, the expected credit loss rates have been reassessed, taking into account the
experience of losses incurred during the year and changes in market conditions at 27 March 2021 compared to the
previous year end. As a result of this reassessment, management has reduced some of the expected credit loss rates.
The reversal of £5.2 million, resulting from the reduction in credit loss rate assumption, has also been recorded as an
adjusting item. A related tax charge of £1.1 million has also been recognised in the year. All other charges and reversals
relating to impairment of receivables, arising from changes in the value and aging of the receivables portfolio, have
been included in adjusted operating profit. Refer to note 28 for details of impairment of receivables.
COVID-19-related rent concessions
The Group has elected to apply the COVID-19-Related Rent Concessions amendment to IFRS 16 in the current year as
described in note 1. Eligible rent forgiveness amounts have been treated as negative variable lease payments, resulting
in a credit of £54.1 million for the 52 weeks to 27 March 2021 being recorded in net operating expenses. This income
has been presented as an adjusting item, as set out above. A related tax charge of £9.6 million has also been
recognised in the current year.
COVID-19-related furlough grant income
The Group has recorded grant income of £8.5 million within selling and distribution costs in net operating expenses
for the 52 weeks to 27 March 2021, relating to government support for retention of employees on furlough, as a result
of COVID-19. These grants related to income received from a number of government arrangements worldwide. None
of the income related to UK based employees. This income has been presented as an adjusting item, as set out above.
A related tax charge of £2.2 million has also been recognised in the current year.
Other adjusting items
Gain on disposal of property
On 22 December 2020, the Group completed the sale of an owned property in France for cash proceeds of £27.2
million resulting in a net gain on disposal of £23.0 million, recorded within administrative expenses in net operating
expenses. A profit of £18.7 million has been presented as an adjusting item, after deducting incremental costs of £4.3
million relating to employee profit sharing agreements. This charge was recognised as an adjusting item, in accordance
with the Group’s accounting policy, as this profit from asset disposal is considered to be material and one-off in
nature. A related tax charge of £4.6 million was also recognised in the year.
Restructuring costs
Restructuring costs of £8.2 million (last year: £10.6 million) were incurred in the current year, arising as a result of the
Group’s cost-efficiency programme announced in May 2016. These costs were recorded largely within administrative
expenses in net operating expenses and are presented as an adjusting item as they are considered material and
discrete in nature, being part of a restructuring programme running from May 2016 to March 2021. The costs in the
current year are principally attributable to redundancies and functional restructuring costs. A related tax credit of
£1.6 million (last year: £2.2 million) has also been recognised in the current year.
250
250
Financial Statements | Notes to the Financial Statements
6. Adjusting items continued
Other adjusting items continued
Restructuring costs continued
In July 2020, the Group announced organisational changes which include the creation of three new business units,
allowing the Group to pool expertise within each unit to enhance product focus, increase agility and elevate quality.
As part of these organisational changes, which include office space rationalisation, the Group will further streamline
office-based functions to help improve efficiency. Restructuring costs of £21.6 million were incurred in the current
year in relation to these organisational changes and it is anticipated that total restructuring costs of £45.0 million will
be incurred by the end of the programme. Overall, the programme remains on track to materially complete in FY2022.
The costs principally relate to redundancies and vacant property. These costs are recorded largely within
administrative expenses in net operating expenses. They are presented as an adjusting item, in accordance with the
Group’s accounting policy, as the costs of the restructuring are considered material and discrete in nature. A related
tax credit of £4.4 million has also been recognised in the current year.
Items relating to the deferred consideration liability
On 22 April 2016, the Group entered into an agreement to transfer the economic right to the non-controlling interest
in Burberry Middle East LLC to the Group in consideration of contingent payments to be made to the minority
shareholder over the period to 2023.
A charge of £0.4 million in relation to the revaluation of this balance has been recognised within administrative
expenses in net operating expenses for the 52 weeks to 27 March 2021 (last year: credit of £2.1 million). A financing
charge of £0.6 million in relation to the unwinding of the discount on the non-current portion of the deferred
consideration liability has also been recognised for the 52 weeks to 27 March 2021 (last year: £1.0 million). These
movements are unrealised.
On 19 September 2018, the Group acquired Burberry Manifattura S.R.L. Consideration for the acquisition included a
future performance related deferred consideration payment to be made in 2021. A financing charge of £0.1 million in
relation to the unwinding of the discount on the non-current portion of the deferred consideration liability has been
recognised for the 52 weeks to 27 March 2021 (last year: £0.2 million). These movements are unrealised.
No tax has been recognised on either of these items, as the future payments are not considered to be deductible
for tax purposes. These items are presented as adjusting items in accordance with the Group’s accounting policy,
as they arise from changes in the value of the liability for expected future payments relating to the purchase of a
non-controlling interest in the Group and acquisition of a subsidiary respectively.
Adjusting items relating to prior year
Impact of COVID-19
Impairment of intangible assets
During the 52 weeks to 28 March 2020, following changes to management’s investment plans, due to the potential
impact of COVID-19 on available resources, an impairment charge of £10.0 million was recorded in relation to
computer software assets under construction. Due to resulting delay in the development of this software,
management no longer expected to fully utilise the expenditure incurred to date. A related tax credit of £1.9 million
was also recognised in the year.
Other impacts of COVID-19
During the 52 weeks to 28 March 2020, a credit of £5.0 million, principally related to the reversal of accrued costs for
share-based payments no longer expected to vest as a result of the impact of COVID-19 on the expected performance
of the Group, was presented as an adjusting item. A related tax charge of £1.0 million was also recognised in the year.
Other adjusting items
Gain on disposal of Beauty operations
During the year ended 31 March 2018, the Group entered into two agreements with Coty Geneva SARL Versoix (Coty)
to grant Coty a licence to sell its fragrance and beauty products and to transfer the Group’s Beauty operations to
Coty. In the 52 weeks to 28 March 2020 a credit of £5.0 million was recorded relating to reassessments of provisions
for contract termination and consideration for assets transferred to Coty on completion and was presented as an
adjusting item. A related tax charge of £1.0 million was also recognised in the 52 weeks to 28 March 2020.
251
251
Financial Statements | Notes to the Financial Statements
7. Auditor remuneration
Fees incurred during the year in relation to audit and non-audit services are analysed below:
52 weeks to
27 March
2021
£m
0.4
52 weeks to
28 March
2020
£m
0.4
2.3
0.1
0.1
2.9
2.4
0.1
0.2
3.1
Note
52 weeks to
27 March
2021
£m
0.6
52 weeks to
28 March
2020
£m
2.1
0.5
1.1
2.0
3.1
0.6
2.7
4.9
7.6
21
(24.9)
(24.9)
(0.2)
(4.7)
(1.7)
(1.8)
(33.3)
(0.7)
(30.9)
(0.5)
(0.1)
(0.8)
(0.3)
(26.6)
(1.2)
(20.2)
Audit services in respect of the financial statements of the Company and consolidation
Audit services in respect of the financial statements of subsidiary companies
Audit-related assurance services
Other non-audit-related services
Total
8. Financing
Bank interest income – amortised cost
Other finance income – amortised cost
Finance income – amortised cost
Bank interest income – fair value through profit and loss
Finance income
Interest expense on lease liabilities
Interest expense on overdrafts
Interest expense on borrowings
Bank charges
Other finance expense
Finance expense
Finance charge on deferred consideration liability
6
Net finance expense
252
252
Financial Statements | Notes to the Financial Statements
9. Taxation
Analysis of charge for the year recognised in the Group Income Statement:
Current tax
UK corporation tax
Current tax on income for the 52 weeks to 27 March 2021 at 19% (last year: 19%)
Double taxation relief
Adjustments in respect of prior years1
Foreign tax
Current tax on income for the year
Adjustments in respect of prior years1
Total current tax
Deferred tax
UK deferred tax
Origination and reversal of temporary differences
Impact of changes to tax rates
Adjustments in respect of prior years1
Foreign deferred tax
Origination and reversal of temporary differences
Impact of changes to tax rates
Adjustments in respect of prior years1
Total deferred tax
Total tax charge on profit
52 weeks to
27 March
2021
£m
52 weeks to
28 March
2020
£m
48.3
(6.7)
(23.2)
18.4
50.8
19.0
88.2
22.5
–
9.4
31.9
(6.7)
(0.3)
1.2
26.1
114.3
58.7
(3.3)
0.2
55.6
27.4
(1.3)
81.7
(6.4)
(1.4)
(0.6)
(8.4)
(30.0)
–
3.6
(34.8)
46.9
1. Adjustments in respect of prior years relate mainly to a net increase in provisions for tax contingencies and tax accruals to tax
return adjustments.
Analysis of charge for the year recognised in other comprehensive income and directly in equity:
Current tax
Recognised in other comprehensive income
Current tax (credit)/charge on exchange differences on loans (foreign currency translation
reserve)
Current tax (credit)/charge on cash flow hedges deferred in equity (hedging reserve)
Current tax charge on cash flow hedges transferred to income (hedging reserve)
Current tax credit on net investment hedges deferred in equity (hedging reserve)
Total current tax recognised in other comprehensive income
Recognised in equity
Current tax credit on share options (retained earnings)
Total current tax recognised directly in equity
Deferred tax
Recognised in other comprehensive income
Deferred tax charge on actuarial gains on post-employment benefit plans
Total deferred tax recognised in other comprehensive income
Recognised in equity
Deferred tax (credit)/charge on share options (retained earnings)
Total deferred tax recognised directly in equity
253
253
52 weeks to
27 March
2021
£m
52 weeks to
28 March
2020
£m
(2.4)
(0.2)
0.2
–
(2.4)
(0.1)
(0.1)
0.2
0.2
(0.6)
(0.6)
0.9
0.3
0.2
(0.2)
1.2
(0.9)
(0.9)
–
–
1.5
1.5
Financial Statements | Notes to the Financial Statements
9. Taxation continued
The tax rate applicable on profit varied from the standard rate of corporation tax in the UK due to the
following factors:
Profit before taxation
Tax at 19% (last year: 19%) on profit before taxation
Rate adjustments relating to overseas profits
Permanent differences
Tax on dividends not creditable
Current year tax losses not recognised
Prior year temporary differences and tax losses recognised
Adjustments in respect of prior years
Adjustments to deferred tax relating to changes in tax rates
Total taxation charge
Total taxation recognised in the Group Income Statement arises on the following items:
Tax on adjusted profit before taxation
Tax on adjusting items
Total taxation charge
52 weeks to
27 March
2021
£m
490.2
52 weeks to
28 March
2020
£m
168.5
93.1
17.5
(1.0)
0.9
0.3
(2.6)
6.4
(0.3)
114.3
32.0
(2.2)
17.4
1.2
2.2
(4.2)
1.9
(1.4)
46.9
52 weeks to
27 March
2021
£m
92.8
21.5
114.3
52 weeks to
28 March
2020
£m
92.3
(45.4)
46.9
10. Earnings per share
The calculation of basic earnings per share is based on profit or loss attributable to owners of the Company 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 profit before taxation are also disclosed to indicate the underlying profitability
of the Group.
Attributable profit for the year before adjusting items1
Effect of adjusting items1 (after taxation)
Attributable profit for the year
1. Refer to note 6 for details of adjusting items.
52 weeks to
27 March
2021
£m
272.7
103.0
375.7
52 weeks to
28 March
2020
£m
321.9
(200.2)
121.7
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 ESOP trusts and treasury
shares held by the Company or its subsidiaries.
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 employee share incentive schemes, which will
have a dilutive effect when exercised. Refer to note 29 for additional information on the terms and conditions of the
employee share incentive schemes.
Weighted average number of ordinary shares in issue during the year
Dilutive effect of the employee share incentive schemes
Diluted weighted average number of ordinary shares in issue during the year
52 weeks to
27 March
2021
Millions
404.1
1.0
405.1
52 weeks to
28 March
2020
Millions
408.0
1.0
409.0
254
254
Financial Statements | Notes to the Financial Statements
11. Dividends paid to owners of the Company
Prior year final dividend paid £nil per share (prior year: 31.5p)
Interim dividend paid £nil per share (prior year: 11.3p)
Total
52 weeks to
27 March
2021
£m
–
–
–
52 weeks to
28 March
2020
£m
129.2
46.0
175.2
A final dividend in respect of the 52 weeks to 27 March 2021 of 42.5p (last year: £nil) per share, amounting to
£171.9 million, has been proposed for approval by the shareholders at the Annual General Meeting subsequent to the
balance sheet date. The final dividend to Burberry Group plc shareholders has not been recognised as a liability at the
year end and will be paid on 6 August 2021 to the shareholders on the register at the close of business on 2 July 2021.
The ex-dividend date is 1 July 2021 and the final day for dividend reinvestment plan (‘DRIP’) elections is 16 July 2021.
12. Intangible assets
Cost
As at 30 March 2019
Effect of foreign exchange rate changes
Additions
Reclassifications from assets in the course of
construction
As at 28 March 2020
Effect of foreign exchange rate changes
Additions
Disposals
Reclassifications from assets in the course of
construction
As at 27 March 2021
Accumulated amortisation and impairment
As at 30 March 2019
Effect of foreign exchange rate changes
Charge for the year
Impairment charge on assets
As at 28 March 2020
Effect of foreign exchange rate changes
Charge for the year
Disposals
Impairment charge on assets
As at 27 March 2021
Net book value
As at 27 March 2021
As at 28 March 2020
Trademarks,
licences and other
intangible
assets
£m
12.5
Computer
software
£m
153.3
Intangible assets
in the course of
construction
£m
46.9
Goodwill
£m
115.1
1.0
–
–
116.1
(4.8)
–
–
–
0.1
0.4
0.2
13.2
–
0.7
–
–
111.3
13.9
6.5
0.3
–
–
6.8
(0.7)
–
–
–
6.1
105.2
109.3
5.2
–
0.9
–
6.1
–
0.9
–
–
7.0
6.9
7.1
0.1
27.0
18.4
198.8
(2.3)
24.5
(14.7)
30.5
236.8
95.1
0.2
25.5
–
120.8
(2.1)
32.0
(14.7)
1.2
137.2
99.6
78.0
Total
£m
327.8
1.2
63.3
–
392.3
(7.1)
36.0
(14.7)
–
406.5
106.8
0.5
26.4
11.6
145.3
(2.8)
32.9
(14.7)
8.8
169.5
–
35.9
(18.6)
64.2
–
10.8
–
(30.5)
44.5
–
–
–
11.6
11.6
–
–
–
7.6
19.2
25.3
52.6
237.0
247.0
During the 52 weeks to 27 March 2021 an impairment charge of £7.6 million (last year: £11.6 million) was recognised in
relation to computer software assets under construction and £1.2 million (last year: £nil) was recognised in relation to
computer software assets following a review of supply chain strategy and future software requirements. During the
52 weeks to 28 March 2020, £10.0 million of the charge related to rescheduling of the development of a software
project following changes to management’s investment plans due to the impact of COVID-19 and was presented as an
adjusting item (refer to note 6).
255
255
Financial Statements | Notes to the Financial Statements
12. Intangible assets continued
Impairment testing of goodwill
The carrying value of the goodwill allocated to cash generating units:
China
Korea
Retail and Wholesale segment1
Other
Total
As at
27 March
2021
£m
46.8
26.5
18.8
13.1
105.2
As at
28 March
2020
£m
48.2
27.3
19.7
14.1
109.3
1. Goodwill which arose on acquisition of Burberry Manifattura S.R.L. has been allocated to the group of cash generating units which make
up the Group’s Retail and Wholesale operating segment cash generating unit. This reflects the level at which the goodwill is being monitored
by management.
The Group tests goodwill for impairment annually or when there is an indication that goodwill might be impaired.
The recoverable amount of all cash generating units has been determined on a value-in-use basis. Value-in-use
calculations for each cash generating unit are based on projected pre-tax discounted cash flows together with a
discounted terminal value. The cash flows have been discounted at pre-tax rates reflecting the Group’s weighted
average cost of capital adjusted for country-specific tax rates and risks. Where the cash generating unit has a
non-controlling interest which was recognised at a value equal to its proportionate interest in the net identifiable
assets of the acquired subsidiary at the acquisition date, the carrying amount of the goodwill has been grossed up,
to include the goodwill attributable to the non-controlling interest, for the purpose of impairment testing the goodwill
attributable to the cash generating unit. The key assumptions contained in the value-in-use calculations include the
future revenues, the margins achieved and the discount rates applied.
The value-in-use calculations have been prepared using management’s cost and revenue projections for the next three
years to 30 March 2024 and a longer-term growth rate of 4% to 28 March 2026. A terminal value has been included
in the value-in-use calculation based on the cash flows for the year ending 28 March 2026 incorporating the
assumption that growth beyond 28 March 2026 is equivalent to nominal inflation rates, assumed to be 2%, which are
not significant to the assessment.
The value-in-use estimates indicated that the recoverable amount of the cash generating unit exceeded the carrying
value for each of the cash generating units. As a result, no impairment has been recognised in respect of the carrying
value of goodwill in the year.
For the material goodwill balances of China, Korea and the Retail and Wholesale segment, sensitivity analyses have
been performed by management. The sensitivities include applying a 15% reduction in revenue and gross profit from
management’s base cash flow projections, considering the potential outcome from a more severe long-term impact of
COVID-19. Under this scenario, the estimated recoverable amount of goodwill in China, Korea and the Retail and
Wholesale segment still exceeded the carrying value.
The pre-tax discount rates for China, Korea and the Retail and Wholesale segment were 14.1%, 12.3% and 10.1%
respectively (last year: China 15.0%, Korea 13.4%, and the Retail and Wholesale segment 11.1%).
The other goodwill balance of £13.1 million (last year: £14.1 million) consists of amounts relating to seven cash
generating units none of which have goodwill balances individually exceeding £6.0 million as at 27 March 2021 (last
year: £7.0 million).
256
256
Financial Statements | Notes to the Financial Statements
13. Property, plant and equipment
Cost
As at 30 March 2019
Adjustment on initial application of IFRS 16
Adjusted balance as at 31 March 2019
Effect of foreign exchange rate changes
Additions
Disposals
Reclassifications from assets in the course of
construction
As at 28 March 2020
Effect of foreign exchange rate changes
Additions
Disposals
Reclassifications from assets in the course of
construction
As at 27 March 2021
Accumulated depreciation and impairment
As at 30 March 2019
Adjustment on initial application of IFRS 16
Adjusted balance as at 31 March 2019
Effect of foreign exchange rate changes
Charge for the year
Disposals
Net impairment (reversal)/charge on assets
As at 28 March 2020
Effect of foreign exchange rate changes
Charge for the year
Disposals
Impairment charge on assets
Impairment reversal on assets
As at 27 March 2021
Net book value
As at 27 March 2021
As at 28 March 2020
Freehold land
and buildings
£m
144.8
Leasehold
improvements
£m
450.6
Fixtures,
fittings and
equipment
£m
349.1
Assets in the
course of
construction
£m
27.0
–
450.6
9.1
50.9
(26.2)
12.4
496.8
(30.0)
44.0
(26.6)
8.5
492.7
313.6
–
313.6
6.8
47.7
(26.2)
20.7
362.6
(22.4)
45.9
(26.6)
1.5
(8.6)
(2.9)
346.2
7.5
23.1
(15.8)
11.8
372.8
(21.7)
11.3
(45.4)
12.2
329.2
297.4
(2.2)
295.2
6.5
31.5
(15.8)
5.7
323.1
(19.9)
21.6
(45.3)
0.6
(1.8)
–
27.0
(0.2)
21.6
(0.7)
(24.2)
23.5
(0.5)
15.0
(0.3)
(20.7)
17.0
–
–
–
–
–
–
0.5
0.5
–
–
–
–
–
352.4
278.3
0.5
Total
£m
971.5
(2.9)
968.6
22.1
95.6
(46.3)
–
1,040.0
(64.2)
70.3
(77.9)
–
968.2
664.6
(2.2)
662.4
15.6
83.3
(42.6)
26.4
745.1
(47.8)
71.4
(73.4)
2.9
(10.4)
687.8
140.3
134.2
50.9
49.7
16.5
23.0
280.4
294.9
–
144.8
5.7
–
(3.6)
–
146.9
(12.0)
–
(5.6)
–
129.3
53.6
–
53.6
2.3
4.1
(0.6)
(0.5)
58.9
(5.5)
3.9
(1.5)
0.8
–
56.6
72.7
88.0
During the 52 weeks to 27 March 2021, management carried out a review of retail cash generating units for any
indication of impairment or reversal of impairments previously recorded. Where indications of impairment charges or
reversals were identified, the impairment review compared the value-in-use of the cash generating units to their net
book values at 27 March 2021. The pre-tax cash flow projections used for this review were based on financial plans of
expected revenues and costs of each retail cash generating unit, approved by management, reflecting their latest
plans over the next three years to 30 March 2024, followed by longer-term growth rates of mid-single digits and
inflation rates appropriate to each store’s location. The pre-tax discount rates used in these calculations were
between 9.6% and 14.1% (last year: between 9.2% and 21.1%) based on the Group’s weighted average cost of capital
adjusted for country-specific borrowing costs, tax rates and risks for those countries in which a charge or reversal
was incurred. Where indicators of impairment have been identified and the value-in-use was less than the carrying
value of the cash generating unit, an impairment of property, plant and equipment and right-of-use asset was
recorded. Where the value-in-use was greater than the net book value, and the cash generating unit had been
previously impaired, the impairment was reversed, to the extent that could be supported by the value-in use and
allowing for any depreciation that would have been incurred during the period the impairment was recorded. The fair
value less cost to sell of the cash generating units was also considered, taking into account potential alternative uses
for property, such as subletting of leasehold or sale of freehold. A review for any other indicators of impairment
charges or reversals across the retail portfolio was also carried out.
257
257
Financial Statements | Notes to the Financial Statements
13. Property, plant and equipment continued
In the financial statements for the year ended 28 March 2020 a charge of £156.5 million was recorded, as an adjusting
item within net operating expenses, relating to the impairment of retail cash generating units as a result of the impact
of COVID-19. During the 52 weeks to 27 March 2021, where these impairments, previously charged as an adjusting
item, were reassessed and updated, any reversal or additional charge was also recorded as an adjusting item. This
resulted in a net impairment reversal of £46.6 million reflecting improved trading expectations compared to those
assumed at 28 March 2020 which has also been presented as an adjusting item in the current year. A charge of £1.6
million and a reversal of £10.4 million was recorded against property, plant and equipment (last year: net impairment
charge of £28.4 million) and a charge of £11.0 million and a reversal of £48.8 million was recorded against right-of-use
assets (last year: net impairment charge of £128.1 million). Refer to note 14 for further details of right-of-use assets.
Refer to note 6 for details of adjusting items.
A net charge of £nil (last year: £11.2 million) was recorded within net operating expenses as a result of the annual
review of impairment for all other retail store assets, excluding those impaired as a result of the impact of COVID-19.
A charge of £nil (last year: credit of £2.0 million) was recorded against property, plant and equipment and a charge of
£nil (last year: £13.2 million) was recorded against right-of-use assets.
Management has considered the potential impact of changes in assumptions on the impairment recorded against the
Group’s retail assets. Given the significant uncertainty regarding the impact of COVID-19 on the Group’s retail
operations and on the global economy, management has considered sensitivities to the impairment charge as a result
of changes to the estimate of future revenues achieved by the retail stores. The sensitivities applied are an increase or
decrease in revenue of 15% from the estimate used to determine the impairment charge or reversal. It is estimated
that a 15% decrease/increase in revenue assumptions for the 53 weeks to 02 April 2022, with no change to
subsequent forecast revenue growth rate assumptions, would result in a £54.2 million increase / £26.4 million
decrease in the impairment charge of retail store assets in the 52 weeks to 27 March 2021.
The net impairment reversal recorded in property, plant and equipment related to 25 retail cash generating units (last
year: net impairment charge related to 140 retail cash generating units) for which the total recoverable amount at the
balance sheet date is £32.6 million (last year: £59.9 million).
In addition, an impairment charge of £1.3 million (last year: £nil) was recognised in relation to non-retail property,
plant and equipment, of which £0.5 million was recognised as part of restructuring costs in adjusting items. Refer to
note 6 for details of adjusting items. As a result the total net impairment reversal for property, plant and equipment
was £7.5 million (last year: net impairment charge of £26.4 million).
258
258
Financial Statements | Notes to the Financial Statements
14. Right-of-use assets
Net book value
As at 30 March 2019
Adjustment on initial application of IFRS 16
Adjusted balance as at 31 March 2019
Effect of foreign exchange rate changes
Additions
Remeasurements
Depreciation for the year
Net impairment charge on assets
As at 28 March 2020
Effect of foreign exchange rate changes
Additions
Remeasurements1
Depreciation for the year
Impairment charge on assets
Impairment reversal on assets
As at 27 March 2021
Property right-
of-use assets
£m
–
Non-property right-
of-use assets
£m
–
877.4
877.4
22.9
277.9
16.5
(220.8)
(140.3)
833.6
(38.7)
127.3
34.2
(172.1)
(15.1)
48.8
818.0
0.7
0.7
–
–
–
(0.3)
–
0.4
–
–
–
(0.3)
–
–
0.1
Total
£m
–
878.1
878.1
22.9
277.9
16.5
(221.1)
(140.3)
834.0
(38.7)
127.3
34.2
(172.4)
(15.1)
48.8
818.1
1. Remeasurements of lease liabilities include COVID-19-related rent forgiveness of £54.1 million (last year: £nil) which have been recognised as
a credit in the Income Statement at 27 March 2021 (refer to note 21).
As a result of the assessment of retail cash generating units for impairment, an impairment charge of £11.0 million
and a reversal of £48.8 million, resulting in a net reversal of £37.8 million (last year: net impairment charge of
£141.3 million) was recorded for impairment of right-of-use assets. Refer to note 13 for further details of impairment
assessment of retail cash generating units. This net impairment reversal of £37.8 million relates to the impact of
COVID-19 on the value-in-use of retail cash generating units (last year: £128.1 million charge). No impairment charge
or reversal relating to other trading impacts was recognised during the year (last year: £13.2 million charge). The
charge relating to COVID-19 has been presented as an adjusting item (refer to note 6).
The net impairment reversal recorded in right-of-use assets relates to 27 retail cash generating units (last year: net
impairment charge related to 140 retail cash generating units) for which the total recoverable amount at the balance
sheet date is £199.6 million (last year: £344.7 million).
In addition, an impairment charge of £4.1 million (last year: impairment reversal of £1.0 million) was recognised in
relation to vacant office premises. This charge was recognised as part of restructuring costs in adjusting items (last
year: reversal of £0.6 million). Refer to note 6 for details of adjusting items.
As a result, the net impairment reversal for right-of-use assets was, in total, £33.7 million (last year: net impairment
charge of £140.3 million).
259
259
Financial Statements | Notes to the Financial Statements
15. 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
assets and liabilities presented in the Balance Sheet, including the impact of the offset amounts of £0.3 million as at
27 March 2021 (last year: £2.5 million), are shown in the table below:
Deferred tax assets
Deferred tax liabilities
Net amount
The movement in the deferred tax account is as follows:
At start of year
Adjustment on initial application of IFRS 16
Adjusted balance at start of year
Effect of foreign exchange rate changes
(Charged)/credited to the Income Statement
Credited/(charged) to equity
Charged to other comprehensive income
At end of year
As at
27 March
2021
£m
137.1
(0.8)
136.3
As at
28 March
2020
£m
171.5
(0.1)
171.4
52 weeks to
27 March
2021
£m
171.4
52 weeks to
28 March
2020
£m
119.7
–
171.4
(9.4)
(26.1)
0.6
(0.2)
136.3
16.4
136.1
2.0
34.8
(1.5)
–
171.4
The movement in deferred tax assets and liabilities during the year, without taking into consideration the offsetting of
balances within the same tax jurisdiction, is as follows:
Deferred tax liabilities
As at 30 March 2019
Credited to the Income Statement
As at 28 March 2020
Effect of foreign exchange rate changes
Charged/(credited) to the Income
Statement
As at 27 March 2021
Capital
allowances
£m
1.7
Unrealised
inventory profit
and other
inventory provisions
£m
(1.9)
Derivative
instruments
£m
0.9
(0.9)
0.8
–
0.7
1.5
(0.6)
(2.5)
0.1
(0.8)
(3.2)
–
0.9
–
–
0.9
Other
£m
5.8
(2.4)
3.4
(0.1)
(1.4)
1.9
Total
£m
6.5
(3.9)
2.6
–
(1.5)
1.1
260
260
Financial Statements | Notes to the Financial Statements
15. Deferred taxation continued
Deferred tax assets
As at 30 March 2019
Adjustment on initial application of
IFRS 16
Adjusted balance as at 31 March 2019
Effect of foreign exchange rate
changes
Credited/(charged) to the Income
Statement
Charged to equity
As at 28 March 2020
Effect of foreign exchange rate
changes
(Charged)/credited to the Income
Statement
Credited to equity
Charged to other comprehensive
income
As at 27 March 2021
Capital
allowances
£m
13.3
Unrealised inventory
profit and other
inventory provisions
£m
42.7
Share
schemes
£m
5.1
Unused tax
losses
£m
7.6
Leases
£m
–
Other1
£m
57.5
Total
£m
126.2
–
13.3
(0.4)
8.0
–
20.9
(2.2)
(0.5)
–
–
18.2
–
42.7
0.8
25.3
–
68.8
–
5.1
–
(1.3)
(1.5)
2.3
–
7.6
27.2
27.2
(10.8)
16.4
46.7
142.6
0.2
0.6
0.8
2.0
(3.4)
25.4
(23.1)
30.9
–
4.4
–
–
(1.5)
53.2
24.4
174.0
(5.3)
–
0.2
(0.3)
(1.8)
(9.4)
(5.1)
–
–
58.4
1.0
0.6
–
3.9
(3.5)
(17.9)
(1.6)
(27.6)
–
–
1.1
–
–
–
0.6
(0.2)
(0.2)
35.0
20.8
137.4
1. Deferred tax balances within the ‘Other’ category in the analysis above include temporary differences arising on other provisions and accruals
of £20.8 million (last year: £19.4 million) and property provisions of £nil (last year: £5.0 million).
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 £51.4 million
(last year: £61.9 million) in respect of losses and temporary differences amounting to £197.0 million (last year: £231.7
million) that can be set off against future taxable income. There is a time limit for the recovery of £7.0 million of these
potential assets (last year: £6.8 million) which ranges from two to eight years (last year: one to nine years).
Included within other temporary differences above is a deferred tax liability of £0.7 million (last year: £nil) relating to
unremitted overseas earnings. No deferred tax liability is provided in respect of any future remittance of earnings of
foreign subsidiaries where the Group is able to control the remittance of earnings and it is probable that such earnings
will not be remitted in the foreseeable future, or where no liability would arise on the remittance. The aggregate
amount of temporary differences in respect of unremitted earnings for which deferred tax liabilities have not been
recognised is £288.0 million (last year: £243.0 million).
261
261
Financial Statements | Notes to the Financial Statements
16. Trade and other receivables
Non-current
Other financial receivables1
Other non-financial receivables2
Prepayments
Total non-current trade and other receivables
Current
Trade receivables
Provision for expected credit losses
Net trade receivables
Other financial receivables1
Other non-financial receivables2
Prepayments
Accrued income
Total current trade and other receivables
Total trade and other receivables
As at
27 March
2021
£m
As at
28 March
2020
£m
40.9
1.4
2.7
45.0
154.8
(7.9)
146.9
33.1
48.5
39.6
8.8
276.9
321.9
46.9
4.1
2.7
53.7
123.5
(16.5)
107.0
31.9
67.4
35.0
10.8
252.1
305.8
1. Other financial receivables include rental deposits, cash settled equity swaps and other sundry debtors.
2. Other non-financial receivables relates to indirect taxes, other taxes and duties and statutory employee furlough receivables.
Included in total trade and other receivables are non-financial assets of £92.2 million (last year: £109.2 million).
The Group’s impairment policies and the calculation of any allowances for credit losses are detailed in note 28
credit risk.
17. Inventories
Raw materials
Work in progress
Finished goods
Total inventories
Total inventories, gross
Provisions
Total inventories, net
As at
27 March
2021
£m
12.2
0.8
389.1
402.1
As at
27 March
2021
£m
518.7
(116.6)
402.1
As at
28 March
2020
£m
13.3
1.5
435.7
450.5
As at
28 March
2020
£m
620.0
(169.5)
450.5
Inventory provisions of £116.6 million (last year: £169.5 million) are recorded, representing 22.5% (last year: 27.3%) of
the gross value of inventory. The provisions reflect management’s best estimate of the net realisable value of
inventory, where this is considered to be lower than the cost of the inventory.
The cost of inventories recognised as an expense and included in cost of sales amounted to £651.7 million (last year:
£893.1 million).
262
262
Financial Statements | Notes to the Financial Statements
17. Inventories continued
As at 28 March 2020, £68.3 million of the provision was included in cost of sales as a result of the estimated
reduction in net realisable value of inventory due to COVID-19 and was presented as an adjusting item. This provision
related to the current season and recent seasons that, under more normal circumstances, would be expected to sell
through with limited loss. In the current year, £3.9 million of the provision has been utilised, where inventory previously
provided for had been sold below cost in the current year and is recognised in cost of sales. An additional £22.3 million
has been released upon re-assessment of the provision, where inventory previously provided for has been sold, or is
now expected to be sold, for a higher net realisable value than has been estimated last year as performance during the
current year has exceeded, and is expected to continue to exceed, the assumptions made at last year end. This
reversal is presented as an adjusting item. Refer to note 6 for details of adjusting items. All other charges and
reversals relating to inventory provisions have been included in adjusted operating profit.
Taking into account the significant uncertainty regarding the outcome of COVID-19 and its impact on retail operations
and the global economy, as well as other factors impacting the net realisable value of inventory including trading
assumptions being higher or lower than expected, management considers that a reasonable potential range of
outcomes could result in an increase or decrease in inventory provisions of £24.0 million in the next 12 months. This
would result in a potential range of inventory provisions of 17.9% to 27.1% as a percentage of the gross value of
inventory as at 27 March 2021.
The net movement in inventory provisions included in cost of sales for the 52 weeks to 27 March 2021 was a release of
£10.5 million (last year: charge of £88.9 million). The total release of inventory provisions during the current year,
which is included in the net movement, was £67.1 million (last year: reversal of £16.2 million). Both these amounts
include the reversal of £22.3 million, referred to above, which has been presented as an adjusting item.
18. Derivative financial instruments
Master netting arrangements
The Group’s forward foreign exchange contracts are entered into under International Swaps and Derivatives
Association (‘ISDA’) master netting arrangements. In general, under such agreements the amounts owed by each
counterparty on a single day in respect of all transactions outstanding in the same currency are aggregated into a
single amount that is payable by one party to the other. In certain circumstances, such as when a default occurs, all
outstanding transactions under the agreement are terminated, the termination value is assessed and only a single net
amount is payable in settlement of all transactions. The ISDA agreements do not meet the criteria for offsetting in
the Balance Sheet as the Group’s right to offset is enforceable only on the occurrence of future events such as
default. The Group has amended the ISDA agreement with three banks to require it to net settle its forward foreign
exchange contracts. There were no derivatives subject to net settlement agreements and offset on the Balance Sheet
at 27 March 2021 (last year: nil). The Group’s Balance Sheet would not be materially different if it had offset its
forward foreign exchange contracts and cash settled equity swap contracts subject to the standard ISDA agreements.
Derivative financial assets
Forward foreign exchange contracts – fair value hedging instrument: cash flow hedges
Forward foreign exchange contracts – fair value through profit and loss1
Total position
Comprising:
Total current position
As at
27 March
2021
£m
–
2.2
2.2
2.2
As at
28 March
2020
£m
2.4
4.3
6.7
6.7
1. Forward foreign exchange contracts classified as fair value through profit and loss are used for cash management and hedging monetary
assets and liabilities. At 27 March 2021, all such contracts had maturities of no greater than two months from the balance sheet date (last
year: three months from the balance sheet date).
263
263
Financial Statements | Notes to the Financial Statements
18. Derivative financial instruments continued
Derivative financial liabilities
Forward foreign exchange contracts – fair value hedging instrument: cash flow hedges
Forward foreign exchange contracts – fair value through profit and loss1
Equity swap contracts – fair value through profit and loss2
Total position
Comprising:
Total current position
As at
27 March
2021
£m
(0.2)
(2.4)
–
(2.6)
(2.6)
As at
28 March
2020
£m
(1.5)
(1.1)
(2.2)
(4.8)
(4.8)
1. Forward foreign exchange contracts classified as fair value through profit and loss are used for cash management and hedging monetary
assets and liabilities. At 27 March 2021, all such contracts had maturities of no greater than one month from the balance sheet date (last
year: three months from the balance sheet date).
2. In September 2020 the Group entered into cash settled equity swaps, these instruments are reported as trade and other receivables.
Net derivative financial instruments
The notional principal amounts of the outstanding forward foreign exchange and equity swap contracts at year
end are:
Forward foreign exchange contracts – fair value hedging instrument: cash flow hedges
Forward foreign exchange contracts – fair value through profit and loss
Equity swap contracts – fair value through profit and loss
As at
27 March
2021
£m
24.2
393.8
–
As at
28 March
2020
£m
123.8
154.4
6.7
Effect of hedge accounting on the financial position and performance
The effects of the foreign currency cash flow hedging instruments on the Group’s financial position and performance
are as follows:
Foreign currency forwards
Carrying amount (assets)
Notional amount
Maturity date
Hedge ratio
Change in spot value of outstanding hedging instruments since start of year
Change in value of hedged item used to determine hedge effectiveness
Weighted average hedged rate of outstanding contracts (including forward points) – EUR
Carrying amount (liabilities)
Notional amount
Maturity date
Hedge ratio
Change in spot value of outstanding hedging instruments since start of year
Change in value of hedged item used to determine hedge effectiveness
Weighted average hedged rate of outstanding contracts (including forward points) – EUR
As at
27 March
2021
As at
28 March
2020
–
–
£2.4m
£49.7m
N/A
N/A
(£2.7m)
£2.7m
–
(£0.2m)
£24.2m
April 2020 –
Jan 2021
1:1
£1.6m
(£1.6m)
1.1677
(£1.5m)
£74.1m
Oct 2021 –
April 2020 –
Nov 2021
Oct 2020
1:1
£0.7m
(£0.7m)
1.1565
1:1
£1.5m
(£1.5m)
1.0930
The foreign currency forwards are denominated in the same currency as the highly probable future inventory
purchases (EUR and USD), therefore the hedge ratio is 1:1.
The contractual maturity profile of non-current financial liabilities is shown in note 28. For further details of cash flow
hedging and net investment hedging refer to note 28 market risk.
264
264
Financial Statements | Notes to the Financial Statements
19. Cash and cash equivalents
Cash and cash equivalents held at amortised cost
Cash at bank and in hand
Short-term deposits
Cash and cash equivalents held at fair value through profit and loss
Short-term deposits
Total
As at
27 March
2021
£m
189.8
159.4
349.2
912.1
1,261.3
As at
28 March
2020
£m
138.7
126.3
265.0
663.9
928.9
Cash and cash equivalents classified as fair value through profit and loss relate to deposits held in low volatility net
asset value money market funds. The cash is available immediately and, since the funds are managed to achieve low
volatility, no significant change in value is anticipated. The funds are monitored to ensure there are no significant
changes in value.
As at 27 March 2021 and 28 March 2020, no impairment losses were identified on cash and cash equivalents held at
amortised cost.
20. Trade and other payables
Non-current
Other payables1
Deferred income and non-financial accruals
Contract liabilities
Deferred consideration2
Total non-current trade and other payables
Current
Trade payables
Other taxes and social security costs
Other payables1
Accruals
Deferred income and non-financial accruals
Contract liabilities
Deferred consideration2
Total current trade and other payables
Total trade and other payables
As at
27 March
2021
£m
As at
28 March
2020
£m
7.9
14.2
70.4
6.9
99.4
129.3
52.2
12.6
169.1
6.6
13.4
9.7
392.9
492.3
7.1
4.1
77.0
14.1
102.3
197.3
48.1
3.9
175.2
6.0
12.7
4.3
447.5
549.8
1. Other payables are comprised of COVID-19 rent deferrals, interest and employee related liabilities.
2. Deferred consideration relates to the acquisition of Burberry Manifattura S.R.L. on 19 September 2018 and of the economic right to the non-
controlling interest in Burberry Middle East LLC on 22 April 2016. The change in the deferred consideration liability in the period arises as a
result of a financing cash outflow and non-cash movements. Payments of £2.6 million were made in the 52 weeks to 27 March 2021 (last
year: £2.7 million).
Included in total trade and other payables are non-financial liabilities of £156.8 million (last year: £147.9 million).
265
265
Financial Statements | Notes to the Financial Statements
20. Trade and other payables continued
Contract liabilities
Retail contract liabilities relate to unredeemed balances on issued gift cards and similar products, and advanced
payments received for sales which have not yet been delivered to the customer. Licensing contract liabilities relate to
deferred revenue arising from the upfront payment for the Beauty licence which is being recognised in revenue over
the term of the licence on a straight-line basis reflecting access to the trademark over the licence period to 2032.
Retail contract liabilities
Licensing contract liabilities
Total contract liabilities
As at
27 March
2021
£m
6.8
77.0
83.8
As at
28 March
2020
£m
6.1
83.6
89.7
The amount of revenue recognised in the year relating to contract liabilities at the start of the year is set out in the
following table. All revenue in the year relates to performance obligations satisfied in the year. All contract liabilities at
the end of the year relate to unsatisfied performance obligations.
Retail revenue relating to contract liabilities
Deferred revenue from Beauty licence
Revenue recognised that was included in contract liabilities at the start of the year
52 weeks to
27 March
2021
£m
2.4
6.6
9.0
52 weeks to
28 March
2020
£m
2.4
6.6
9.0
21. Lease liabilities
Balance as at 30 March 2019
Adjustment on initial application of IFRS 16
Adjusted balance as at 31 March 2019
Effect of foreign exchange rate changes
Created during the year
Amounts paid1
Discount unwind
Remeasurements
Balance as at 28 March 2020
Effect of foreign exchange rate changes
Created during the year
Amounts paid1
Discount unwind
Remeasurements2
Transfers3
Property lease
liabilities
£m
–
Non-property lease
liabilities
£m
–
1,044.3
1,044.3
31.9
272.3
(253.0)
24.9
4.7
1,125.1
(52.8)
124.4
(176.8)
24.9
(21.0)
(4.3)
0.7
0.7
–
–
(0.3)
–
–
0.4
–
–
(0.3)
–
–
–
Total
£m
–
1,045.0
1,045.0
31.9
272.3
(253.3)
24.9
4.7
1,125.5
(52.8)
124.4
(177.1)
24.9
(21.0)
(4.3)
Balance as at 27 March 2021
1,019.5
0.1
1,019.6
Analysis of total lease liabilities:
Non-current
Current
Total
As at
27 March
2021
£m
809.6
210.0
1,019.6
As at
28 March
2020
£m
910.0
215.5
1,125.5
1. The amounts paid of £177.1 million (last year: £253.3 million) includes £152.2 million (last year: £228.4 million) arising as a result of a
financing cash outflow and £24.9 million (last year: £24.9 million) arising as a result of an operating cash outflow.
2. Remeasurements include COVID-19-related rent forgiveness of £54.1 million (last year: £nil) which have been recognised as a credit in the
Income Statement at 27 March 2021. This credit is included as an adjusting item. Refer to note 6.
3. Transfers of £4.3 million relate to COVID-19-related rent deferrals which have been transferred to Other payables.
266
266
Financial Statements | Notes to the Financial Statements
21. Lease liabilities continued
The Group enters into property leases for retail properties, including stores, concessions, warehouse and storage
locations and office property. The remaining lease terms for these properties range from a few months to 17 years
(last year: few months to 18 years). Many of the leases include break options and/or extension options to provide
operational flexibility. Some of the leases for concessions have rolling lease terms or rolling break options.
Management assesses the lease term at inception based on the facts and circumstances applicable to each property
including the period over which the investment appraisal was initially considered.
Potential future undiscounted lease payments related to periods following the exercise date of an extension or break
option not included in the lease term, and therefore not included in lease liabilities, are approximately £425 million in
relation to the next available extension option which are assessed as not reasonably certain to be exercised and £125
million in relation to break options which are expected to be exercised.
Management reviews the retail lease portfolio on an ongoing basis, taking into account retail performance and future
trading expectations. Management may exercise extension options, negotiate lease extensions or modifications. In
other instances, management may exercise break options, negotiate lease reductions or decide not to negotiate a
lease extension at the end of the lease term. The most significant factor impacting future lease payments is changes
management choose to make to the store portfolio.
Future increases and decreases in rent linked to an inflation index or rate review are not included in the lease liability
until the change in cash flows takes effect. Approximately 20% (last year: 20%) of the Group’s lease liabilities are
subject to inflation linked reviews and 37% (last year: 33%) are subject to rent reviews. Rental changes linked to
inflation or rent reviews typically occur on an annual basis.
Many of the retail property leases also incur payments based on a percentage of revenue achieved at the location.
Changes in future variable lease payments will typically reflect changes in the Group’s retail revenues, including the
impact of regional mix.
The Group also enters into non-property leases for equipment, advertising fixtures and machinery. Generally,
these leases do not include break or extension options. The most significant impact to future cash flows relating to
leased equipment, which are primarily short-term, would be the Group’s usage of leased equipment to a greater or
lesser extent.
The Group’s accounting policy for leases is set out in note 2. Details of income statement charges and income from
leases are set out in note 5. The right-of-use asset categories on which depreciation is incurred are presented in note
14. Interest expense incurred on lease liabilities is presented in note 8. Commitments relating to off-balance sheet
leases are presented in note 26. The maturity of undiscounted future lease liabilities are set out in note 28.
Total cash outflows in relation to leases in the 52 weeks ended 27 March 2021 are £312.2 million (last year: £383.4
million). This relates to payments of £152.2 million on lease principal (last year: £228.4 million), £24.9 million on lease
interest (last year: £24.9 million), £114.9 million on variable lease payments (last year: £99.3 million), and £20.2 million
other lease payments principally relating to short-term leases and leases in holdover (last year: £30.8 million).
267
267
Financial Statements | Notes to the Financial Statements
22. Provisions for other liabilities and charges
Balance as at 30 March 2019
Adjustment on initial application of IFRS 16
Adjusted balance as at 31 March 2019
Effect of foreign exchange rate changes
Created during the year
Discount unwind
Utilised during the year
Released during the year
Balance as at 28 March 2020
Effect of foreign exchange rate changes
Created during the year
Discount unwind
Utilised during the year
Released during the year
Balance as at 27 March 2021
Property
obligations
£m
79.4
(48.0)
31.4
1.1
7.3
0.1
(3.1)
(1.3)
35.5
(2.3)
9.1
0.7
(0.7)
(0.7)
41.6
Other
costs
£m
5.9
–
5.9
0.1
3.9
–
(2.1)
(1.5)
6.3
(0.4)
10.7
–
(0.8)
(1.6)
14.2
Total
£m
85.3
(48.0)
37.3
1.2
11.2
0.1
(5.2)
(2.8)
41.8
(2.7)
19.8
0.7
(1.5)
(2.3)
55.8
The net charge in the year for property obligations is £8.4 million (last year: £6.0 million), relating to additional
property reinstatements costs. The net charge in the year for other costs of £9.1 million (last year: £2.4 million)
relates to expected future outflows for property disputes, employee matters and tax compliance.
Analysis of total provisions:
Non-current
Current
Total
As at
27 March
2021
£m
As at
28 March
2020
£m
31.8
24.0
55.8
28.6
13.2
41.8
The non-current provisions relate to property reinstatement costs which are expected to be utilised within 17 years
(last year: 18 years).
23. Bank overdrafts
Included within bank overdrafts is £45.4 million (last year: £40.9 million) representing balances on cash pooling
arrangements in the Group.
The Group has a number of committed and uncommitted arrangements agreed with third parties. At 27 March 2021,
the Group held bank overdrafts of £nil (last year: £0.7 million) excluding balances on cash pooling arrangements.
The fair value of overdrafts approximate the carrying amount because of the short maturity of these instruments.
268
268
Financial Statements | Notes to the Financial Statements
24. Borrowings
Non-current
Revolving credit facility
1.125% £300m medium term notes 2025
Current
Commercial paper issued under
CCFF program
Total borrowings
As at
28 March
2020
£m
300.0
–
–
300.0
Proceeds from
borrowings
£m
Repayment of
borrowings
£m
Non-cash
movements
£m
–
296.7
298.4
595.1
(300.0)
–
(299.8)
(599.8)
–
0.4
1.4
1.8
As at
27 March
2021
£m
–
297.1
–
297.1
On 25 November 2014, the Group entered into a £300.0 million multi-currency revolving credit facility with a
syndicate of banks. In March 2020, the Group drew down on this facility in full. On 9 June 2020 the Group repaid this
facility in full. On 18 June 2020 the Group extended the facility for 12 months, and it now matures in November 2022.
A waiver for the existing leverage covenant for the periods ending up to and including 25 September 2021 and a
restriction on shareholder distributions during the period of the waiver, which the Group can opt out of prior to 25
September 2021, was agreed. As a result of the intention to declare a final dividend, the Group will need to opt out of
the waiver prior to the Annual General Meeting in July 2021.
The Group is in compliance with the financial leverage and other covenants within this facility, taking into account the
waiver referred to above, and has been in compliance throughout the financial year. The Group expects to be in
compliance with the covenants, as required, when the waiver is opted out of before the Annual General Meeting.
On 14 May 2020, Burberry Limited issued commercial paper with a face value of £300.0 million, issued at a discount
with zero coupon, and a maturity of 17 March 2021. The commercial paper was issued under a £300.0 million facility
the Group agreed under the UK Government sponsored COVID Corporate Finance Facility (‘CCFF’). An increase
to the Group’s CCFF of £300.0 million to £600.0 million was made available from 29 May 2020 however no further
commercial paper was issued. The CCFF was repaid in full on 10 February 2021 and the facility expired on
23 March 2021.
On 21 September 2020, Burberry Group plc issued medium term notes with a face value of £300.0 million maturing
on 21 September 2025 (the sustainability bond). Proceeds from the sustainability bond will allow the Group to finance
projects which support the Group’s sustainability agenda. There are no financial penalties for not using the proceeds
as anticipated. Interest on the sustainability bond is payable semi-annually.
During the year ending 27 March 2021 the non-cash changes to bank borrowing amounted to £1.8 million
(last year: £nil).
25. Share capital and reserves
Allotted, called up and fully paid share capital
Ordinary shares of 0.05p (as at 28 March 2020: 0.05p) each
As at 30 March 2019
Allotted on exercise of options during the year
Cancellation of treasury shares
As at 28 March 2020
Allotted on exercise of options during the year
As at 27 March 2021
Number
411,456,001
434,790
(7,184,905)
404,705,886
158,473
404,864,359
£m
0.2
–
–
0.2
–
0.2
269
269
Financial Statements | Notes to the Financial Statements
25. Share capital and reserves continued
The Company has a general authority from shareholders, renewed at each Annual General Meeting, to repurchase a
maximum of 10% of its issued share capital. During the 52 weeks to 27 March 2021, the Company did not enter into
any share buy-back agreements (last year: £150.0 million). Own shares purchased by the Company, as part of a share
buy-back programme, are classified as treasury shares and their cost offset against retained earnings. When treasury
shares are cancelled, a transfer is made from retained earnings to the capital redemption reserve, equivalent to the
nominal value of the shares purchased and subsequently cancelled. In the 52 weeks to 27 March 2021, no treasury
shares were cancelled (last year: 7.2 million treasury shares with a nominal value of £3,600).
The cost of shares purchased by ESOP trusts are offset against retained earnings, as the amounts paid reduce the
profits available for distribution by the Company. As at 27 March 2021, the amount of own shares held by ESOP trusts
and offset against retained earnings is £12.9 million (last year: £19.5 million). As at 27 March 2021, the ESOP trusts
held 0.8 million shares (last year: 1.2 million) in the Company, with a market value of £15.0 million (last year: £15.7
million). In the 52 weeks to 27 March 2021 the ESOP trusts and the Company have waived their entitlement to
dividends of £nil (last year: £1.0 million).
The capital reserve consists of non-distributable reserves and the capital redemption reserve arising on the purchase
of own shares.
Other reserves in the Statement of Changes in Equity consists of the capital reserve, the foreign currency translation
reserve, and the hedging reserves. The hedging reserves consist of the cash flow hedge reserve and the net
investment hedge reserve.
Capital
reserve
£m
41.1
Hedging reserves
Cash flow
hedges
£m
(1.9)
Net investment
hedge
£m
5.4
Foreign currency
translation
reserve
£m
227.7
Balance as at 30 March 2019
Other comprehensive income:
Cash flow hedges – gains deferred in equity
Cash flow hedges – losses transferred
to income
Net investment hedges – losses deferred
in equity
Foreign currency translation differences
Tax on other comprehensive income
Total comprehensive income for the year
Balance as at 28 March 2020
Other comprehensive income:
Cash flow hedges – losses deferred in equity
Cash flow hedges – losses transferred to cost
of sales
Foreign currency translation differences
Tax on other comprehensive income
Total comprehensive loss for the year
Balance as at 27 March 2021
–
–
–
–
–
–
41.1
–
–
–
–
–
41.1
1.8
0.9
–
–
(0.5)
2.2
0.3
(0.9)
0.9
–
–
–
0.3
–
–
(1.2)
–
0.2
(1.0)
4.4
–
–
–
–
–
4.4
Total
£m
272.3
1.8
0.9
(1.2)
18.4
(1.2)
18.7
–
–
–
18.4
(0.9)
17.5
245.2
291.0
–
–
(51.2)
2.4
(48.8)
196.4
(0.9)
0.9
(51.2)
2.4
(48.8)
242.2
As at 27 March 2021 the amount held in the hedging reserve relating to matured net investment hedges is £4.4 million
net of tax (last year: £4.4 million).
270
270
Financial Statements | Notes to the Financial Statements
26. Financial commitments
The Group leases various retail stores, offices, warehouses and equipment under non-cancellable lease arrangements.
The liabilities for these leases are recorded on the Group’s Balance Sheet when the Group obtains control of the
underlying asset. The Group has additional commitments relating to leases where the Group has entered into an
obligation but does not yet have control of the underlying asset. The future lease payments to which the Group is
committed, over the expected lease term, but are not recorded on the Group’s Balance Sheet are as follows:
Amounts falling due:
Within 1 year
Between 2 and 5 years
After 5 years
Total
As at
27 March
2021
£m
As at
28 March
2020
£m
5.8
59.2
49.1
114.1
6.5
34.2
44.3
85.0
27. Capital commitments
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.
Capital commitments contracted but not provided for:
Property, plant and equipment
Intangible assets
Total
As at
27 March
2021
£m
As at
28 March
2020
£m
25.0
2.7
27.7
29.5
5.2
34.7
28. Financial risk management
The Group’s principal financial instruments comprise derivative instruments, cash and cash equivalents, borrowings
(including overdrafts), deferred consideration, trade and other receivables, and trade and other payables arising
directly from operations.
The Group’s activities expose it to a variety of financial risks: market risks (including foreign exchange risk and
interest rate risk), credit risk, liquidity risk and capital risk.
Risk management is carried out by the Group treasury department (Group Treasury) based on forecast business
requirements to reduce financial risk and to ensure sufficient liquidity is available to meet foreseeable needs and to
invest in cash and cash equivalents safely and profitably. Group Treasury does not operate as a profit centre and
transacts only in relation to the underlying business requirements. The policies of Group Treasury are reviewed and
approved by the Board of Directors. The Group uses derivative instruments to hedge certain risk exposures.
271
271
Financial Statements | Notes to the Financial Statements
28. Financial risk management continued
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 (refer to note 18). These transactions are recorded as cash flow hedges. The
Group’s foreign currency transactions arise principally from purchases and sales of inventory.
The Group’s treasury risk management policy is to hedge, prior to market opening, 70-90% of its anticipated foreign
currency exposure by currency, by season and where the net currency exposure is greater than £20.0 million.
Currently, the Group does not hedge intercompany foreign currency transactions. The Group uses forward exchange
contracts to hedge its currency risk, which have a maturity of less than 12 months.
The Group designates the spot component of foreign currency forwards in hedge relationships and applies a ratio of
1:1. The forward elements of the foreign currency forward are excluded from designation of the hedging instrument
and are separately accounted for as a cost of hedging and recognised in operating expenses on a discounted basis.
The Group determines the existence of an economic relationship between the hedging instrument and the hedged
item based on the currency, amount and timing of their respective cash flows. The Group assesses whether the
derivative designated in each hedging relationship is expected to be and has been effective in offsetting changes in
cash flows of the hedged item using the dollar offset method.
In these hedge relationships ineffectiveness may arise if the timing of the forecast transaction changes from what
was originally estimated, or if there are changes in the credit risk of the Group or the derivative counterparty. There
was no ineffectiveness in the 52 weeks ending 27 March 2021 (last year: no ineffectiveness).
The Group monitors the desirability of hedging the net assets of overseas subsidiaries when translated into Sterling
for reporting purposes. The Group uses forward foreign exchange contracts to hedge net assets of overseas
subsidiaries, relating to surplus cash whose remittance is foreseeable. There were no outstanding net investment
hedges as at 27 March 2021 (last year: no outstanding net investment hedges).
At 27 March 2021, the Group has performed a sensitivity analysis to determine the effect of Sterling
strengthening/weakening by 20% (last year: 20%) against other currencies with all other variables held constant. The
effect on translating foreign currency denominated net cash, trade, intercompany and other financial receivables and
payables and financial instruments at fair value through profit or loss would have been to increase/decrease operating
profit for the year by £2.9 million (last year: increase/decrease £3.1 million). The effect on translating forward foreign
exchange contracts designated as cash flow hedges would have been to decrease/increase equity by £1.4 million (last
year: decrease/increase £12.6 million) on a post-tax basis.
The following table shows the extent to which the 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,
overdrafts, borrowings and other amounts to be received or paid in cash. Amounts exclude intercompany balances
which eliminate on consolidation. Foreign exchange differences on retranslation of these assets and liabilities are
recognised in ‘Net operating expenses’.
Sterling
US Dollar
Euro
Chinese Yuan Renminbi
Other currencies
Total
Monetary
assets
£m
0.7
As at 27 March 2021
Monetary
liabilities
£m
(1.2)
1.8
23.6
3.9
7.0
37.0
(8.5)
(53.9)
(0.4)
(10.8)
(74.8)
272
272
Net
£m
(0.5)
(6.7)
(30.3)
3.5
(3.8)
(37.8)
As at 28 March 2020
Monetary
assets
£m
0.7
1.6
27.0
4.5
5.2
39.0
Monetary
liabilities
£m
(2.4)
(17.7)
(77.5)
(0.4)
(14.2)
(112.2)
Net
£m
(1.7)
(16.1)
(50.5)
4.1
(9.0)
(73.2)
Financial Statements | Notes to the Financial Statements
28. Financial risk management continued
Market risk continued
Interest rate risk
The Group’s exposure to market risk for changes in interest rates relates primarily to cash, borrowings, short-term
deposits and overdrafts.
The floating rate financial liabilities at 27 March 2021 are £45.4 million (last year: £341.6 million). This includes
borrowings of £nil (last year: £300.0 million), cash pool overdraft balances of £45.4 million (last year: £40.9 million)
and remaining overdrafts £nil (last year: £0.7 million). The fixed rate financial liabilities at 27 March 2021 are
borrowings of £297.1 million (last year: £nil). If interest rates on floating rate financial liabilities had been 100 basis
points higher/lower (last year: 100 basis points), excluding the impact on cash pool overdraft balances and with all
other variables held constant, post-tax profit for the year would have been £0.5 million (last year: £0.1 million)
lower/higher, as a result of higher/lower interest expense.
The floating rate financial assets as at 27 March 2021 comprise short-term deposits of £1,071.5 million (last year:
£790.2 million), interest bearing current accounts of £42.0 million (last year: £47.3 million) and cash pool asset
balances of £47.5 million (last year: £40.9 million). At 27 March 2021, if interest rates on floating rate financial assets
had been 100 basis points higher/lower (last year: 100 basis points), excluding the impact on cash pool asset balances
and with all other variables held constant, post-tax profit for the year would have been £7.4 million (last year: £5.1
million) higher/lower, as a result of higher/lower interest income.
Credit risk
Trade receivables
The Group has no significant concentrations of credit risk. The trade receivables balance is spread across a large
number of different customers with no single debtor representing more than 4% of the total balance due (last year:
4%). The Group has policies in place to ensure that wholesale sales are made to customers with an appropriate credit
history. Sales to retail customers are made in cash or via major credit cards. In some retail locations, where the
Group’s store is contained within a department store or mall, for example a concession, the sales proceeds may be
initially held by the operator of the wider location, giving rise to retail debtors. 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.
The Group applies the simplified approach when measuring the trade receivable expected credit losses. The approach
uses a lifetime expected loss allowance. To measure the expected credit losses trade receivables have been grouped
based on segment, geographical region and the days past due. The expected loss rates are reviewed annually, or when
there is a significant change in external factors potentially impacting credit risk, and are updated where
management’s expectations of credit losses change.
At 28 March 2020, management assessed the expected credit losses for trade receivables. Due to the global financial
uncertainty arising from COVID-19, management increased the expected credit loss rates for trade receivables based
on their judgement as to the impact of COVID-19 on the trade receivables portfolio. In addition, certain individual
customers (where there is objective evidence of credit impairment) were identified as having a significantly elevated
credit risk and were provided for on a specific basis. This resulted in a charge of £12.3 million for impairment
provisions recognised in profit and loss in the year, of which £9.1 million was considered to be related to the impact of
COVID-19, arising from the increase in expected credit loss rates, and was presented as an adjusting item.
During the 52 weeks to 27 March 2021, the expected credit loss rates have been reassessed, taking into account the
experience of losses incurred during the year and changes in market conditions at 27 March 2021 compared to the
previous year end. As a result of this reassessment, management has reduced some of the expected credit loss rates.
A reversal to the impairment provision of £3.2 million, resulting from the reduction in credit loss rate assumption, has
also been recorded as an adjusting item. The remaining reversal of £0.9 million, arising from changes in the value and
quality of the receivables portfolio, has been included in adjusted operating profit.
273
273
Financial Statements | Notes to the Financial Statements
28. Financial risk management continued
Credit risk continued
Receivables excluding trade receivables
The counterparty credit risk of other receivables is reviewed on a regular basis and the impairment is assessed
as follows:
At inception the receivable is recorded net of expected 12 month credit losses. If a significant change in the credit risk
occurs during the life time of the receivable, credit losses are recorded in the profit and loss account and the effective
interest is calculated using the gross carrying amount of the asset. If a loss event occurs, the effective interest is
calculated using the amortised cost of the asset net of any credit losses.
At 28 March 2020, management assessed that there was an increased credit risk relating to store rent deposits, as a
result of the potential impact of COVID-19 on the financial position of counterparties, and hence recorded a provision
of £2.0 million. The charge for this provision was presented as an adjusting item.
During the 52 weeks to 27 March 2021, management has reassessed the credit risk for these particular
counterparties and have concluded that the credit risk is now insignificant. As a result the provision of £2.0 million has
been reversed in full and the credit has also been recorded as an adjusting item.
During the year ended 31 March 2013 the Group entered into a retail leasing arrangement in the Republic of Korea. As
part of this arrangement, a KRW 27 billion (£19.3 million) 15-year interest-free loan was provided to the landlord. The
Group holds a registered mortgage over the leased property for the equivalent value of the loan which acts as
collateral. At 27 March 2021, the discounted fair value of the loan is £14.7 million (last year: £15.5 million). The book
value of the loan, recorded at amortised cost, is £13.5 million (last year: £13.4 million). Other than this arrangement,
the Group does not hold any other collateral as security. Management considers that the security provided by the
mortgage is sufficient risk mitigation and hence the credit loss relating to this receivable is not significant.
The expected credit loss allowance for receivables was determined as follows:
As at 27 March 2021
Trade receivables
Expected loss rate %
Gross carrying amount trade receivables
Loss allowance
Lease deposits
Expected loss rate %
Gross carrying amount lease deposits
Loss allowance
As at 28 March 2020
Trade receivables
Expected loss rate %
Gross carrying amount trade receivables
Loss allowance
Lease deposits
Expected loss rate %
Gross carrying amount lease deposits
Loss allowance
Current
£m
Less than
1 month
overdue
£m
Less than
2 months
overdue
£m
Less than
3 months
overdue
£m
Over
3 months
overdue
£m
15%
3.4
(0.5)
19%
2.0
(0.4)
62%
4.0
(2.5)
Total
£m
154.8
(7.9)
–
–
–
–
–
–
40.0
–
18%
7.1
(1.2)
18%
5.2
(1.0)
53%
8.8
(4.7)
123.5
(16.5)
–
–
–
–
–
–
–
–
40.0
(2.0)
6%
13.9
(0.9)
–
–
18%
22.9
(4.1)
3%
131.5
(3.6)
0%
40.0
–
7%
79.5
(5.5)
5%
40.0
(2.0)
274
274
Financial Statements | Notes to the Financial Statements
28. Financial risk management continued
Credit risk continued
Receivables excluding trade receivables continued
The closing loss allowances for receivables reconcile as follows:
As at 30 March 2019
Effect of foreign exchange rate changes
Impairment provision recognised in profit or loss during the year
Receivables written off during the year as uncollectable
Unused amount reversed
As at 28 March 2020
Effect of foreign exchange rate changes
Impairment provision recognised in profit or loss during the year
Receivables written off during the year as uncollectable
Unused amount reversed
As at 27 March 2021
Receivables
£m
4.8
–
14.7
(0.6)
(0.4)
18.5
(0.7)
3.4
(3.8)
(9.5)
7.9
In aggregate, as at 27 March 2021, the movement in the impairment provision on trade and other receivables and
recorded in the Income Statement was a reversal of £6.1 million, of which £4.1 million relates to contracts with
customers and £2.0 million relates to other receivables (last year: charge of £14.3 million of which £12.3 million related
to contracts with customers and £2.0 million related to other receivables). £5.2 million of this reversal is presented as
an adjusting item, being a partial reversal of the adjusting item charge of £11.1 million last year, relating to the one-off
impact of COVID-19 on expected credit losses. Refer to note 6.
The maximum exposure to credit risk at the reporting date with respect to trade and other receivables is
approximated by the carrying amount on the Balance Sheet.
The expected loss allowance for trade receivables at 27 March 2021 of £7.9 million is 5% of the amounts receivable
(last year: 13%). Due to the remaining uncertainty regarding the outcome of COVID-19 and its impact on the global
economy, management considers that this expected loss allowance, while representing management’s best estimate
of the future outcome, may be required to be updated in future periods depending on actual circumstances. However
any updates are not anticipated to result in a material change in the next 12 months.
Other financial assets
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 and only deposits funds with independently rated financial institutions with
a minimum rating of ‘A’ other than where required for operational purposes. A total of £7.3 million (last year: £7.4
million) was held with institutions with a rating below ‘A’ at 27 March 2021. These amounts are monitored on a weekly
basis and regularly reported to the Board.
The Group has deposited CHF 0.3 million (last year: CHF 0.3 million) and AED 0.3 million (last year: AED 0.3 million)
which is held as collateral at a number of European banks.
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, refer to notes 23 and 24.
All short-term trade and other payables, accruals, and bank overdrafts mature within one year or less. The carrying
value of all financial liabilities due in less than one year is equal to their contractual undiscounted cash flows, with the
exception of lease liabilities. The undiscounted contractual cash flows for lease liabilities due in less than one year is
£224.6 million (last year: £236.9 million).
275
275
Financial Statements | Notes to the Financial Statements
28. Financial risk management continued
Liquidity risk continued
The maturity profile of the contractual undiscounted cash flows of the Group’s non-current financial liabilities,
excluding derivatives used for hedging, is as follows:
In more than 1 year, but not more than 2 years
In more than 2 years, but not more than 3 years
In more than 3 years, but not more than 4 years
In more than 4 years, but not more than 5 years
In more than 5 years
Total financial liabilities
As at 27 March 2021
As at 28 March 2020
Lease
liabilities
£m
165.2
125.5
116.2
99.4
389.8
896.1
Other
£m
6.2
8.9
–
300.0
1.8
Total
£m
171.4
134.4
116.2
399.4
391.6
316.9
1,213.0
Lease
liabilities
£m
200.4
145.0
112.9
100.7
436.0
995.0
Other
£m
309.6
4.3
–
–
8.8
322.7
Total
£m
510.0
149.3
112.9
100.7
444.8
1,317.7
As at 27 March 2021, other non-current financial liabilities relate to borrowings of £297.1 million (refer to note 24) and
other payables (last year: borrowings of £300.0 million and other payables).
Capital risk
The Board reviews the Group’s capital allocation policy annually. The Group’s capital allocation framework defines its
priorities for uses of cash, underpinned by its principle to maintain a strong balance sheet with a solid investment
grade credit rating. The framework has four priorities for the use of cash generated from operations:
• re-investment in the business to drive organic growth;
• maintaining a progressive dividend policy;
• continuing to pursue selective strategic investment; and
• to the extent that there is surplus capital to these needs, provide additional returns to shareholders.
While the capital allocation policy will remain in place for the long-term, as a result of the impact of COVID-19 the
Board has taken action in the short-term to preserve its capital, reducing operating and capital expenditure and
suspending capital returns during the current year. The Board has also reviewed the Group’s access to other sources
of funding during the year and, following this review, issued new debt during the year. As a result of these actions,
together with strong cash generation of the Group, particularly in the second half of the year, the Board has decided
to recommend recommencing capital returns.
At 27 March 2021, the Group had net cash of £1,215.9 million (last year: £887.3 million), borrowings of £297.1 million
(last year: £300.0 million) and total equity excluding non-controlling interests of £1,556.6 million (last year: £1,214.2
million). The borrowings at 27 March 2021 relate to medium term notes with a face value of £300.0 million. The
borrowings at 28 March 2020, related to a revolving credit facility of £300.0 million which was fully drawn last year
and is undrawn at 27 March 2021. For further details refer to note 24. Potential additional sources of funding available
to the Group include additional bank facilities, longer-term debt and equity funding. The Group’s current capital
resources, together with the potential additional sources of funding, are considered sufficient to address the Group’s
capital risk.
276
276
Financial Statements | Notes to the Financial Statements
29. Employee costs
Staff costs, including the cost of directors, incurred during the year are as shown below. Directors’ remuneration,
which is separately disclosed in the Directors’ Remuneration Report on pages 180 to 203 and forms part of these
financial statements, includes, for those share options and awards where performance obligations have been met, the
notional gains arising on the future exercise but excludes the charge in respect of these share options and awards
recognised in the Group Income Statement.
Wages and salaries
Termination benefits
Social security costs
Share-based compensation (all awards and options settled in shares)
Other pension costs
Total
52 weeks to
27 March
2021
£m
419.3
52 weeks to
28 March
2020
£m
403.8
14.2
50.2
12.1
17.0
512.8
4.6
49.2
2.8
17.3
477.7
Employee costs include a charge of £21.0 million (last year: charge of £5.4 million) arising as a result of the Group’s
restructuring programmes and a charge of £4.3 million relating to employee profit sharing agreements on the sale of
property in France, which have been presented as adjusting items. During the 52 weeks to 28 March 2020 a credit of
£6.2 million was recognised as an adjusting item related to the reversal of accrued costs for share-based payments no
longer expected to vest as a result of COVID-19. Refer to note 6 for further details.
The average number of full-time equivalent employees (including executive directors) during the year was as follows:
EMEIA1
Americas
Asia Pacific
Total
1. EMEIA comprises Europe, Middle East, India and Africa.
Number of employees
52 weeks to
27 March
2021
4,819
52 weeks to
28 March
2020
5,199
1,410
3,005
9,234
1,730
2,963
9,892
Shares and share options granted to directors and employees
The Group operates a number of equity-settled share-based compensation schemes for its directors and employees.
Details of each of these schemes are set out in this note. The share option schemes have been valued using the Black-
Scholes option pricing model. The share awards have been valued using the closing price of an ordinary share at the
date of grant.
The key inputs used in the Black-Scholes pricing model to determine the fair value include the share price at the
commencement date; the exercise price attached to the option; the vesting period of the award; an appropriate risk-
free interest rate; a dividend yield discount for those schemes that do not accrue dividends during the course of the
vesting period; and an expected share price volatility, which is determined by calculating the historical annualised
standard deviation of the market price of Burberry Group plc shares over a period of time, prior to the grant,
equivalent to the vesting period of the option.
Where applicable, cash settled 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.
277
277
Financial Statements | Notes to the Financial Statements
29. Employee costs continued
Shares and share options granted to directors and employees continued
The Burberry Share Plan 2020 (‘the BSP’)
The BSP was approved by shareholders and adopted by the Company in the year ended 27 March 2021 to replace the
Burberry Group plc Executive Share Plan (‘ESP’) as the Group’s main long-term incentive plan.
Under the BSP, participants were awarded either conditional share awards or phantom awards, up to a maximum
value of three times base salary per annum. Awards may be subject to performance underpins. If the Company does
not meet one or more of the performance underpins over the relevant vesting period, the Remuneration Committee
would consider whether it is appropriate to scale back the level of pay-out under the BSP award. For the 2020 BSP
awards made to the executive directors, 1/3 of the award will vest on the third anniversary of the grant date, 1/3 of
the award will vest on the fourth anniversary of the grant date and the remaining balance of the award will vest on the
fifth anniversary of the grant date.
Awards made to senior employees will not be subject to performance conditions or underpins and will vest in full on
the third anniversary of the grant date, subject to continued employment.
During the year, the following grants were made under the BSP:
Date of grant
20 August 2020
Options granted
1,026,228
Fair
value
Participant group
£14.06 Management
Performance conditions/underpins
Continued service
20 August 2020
191,400
£14.06 Executive Directors Underpins: Total revenue
ROIC
Brand and sustainability
19 November 2020 7,197
£16.03 Management
Continued service
23 November 2020 268,831
£16.24 Senior Management Continued service
Targets
Threshold Maximum
N/A
N/A
£2,000m
WACC
Reasonable
progress
N/A
N/A
N/A
N/A
N/A
N/A
N/A
The annual BSP grant usually occurs in July, aligned with the timing of the Group’s performance review process. The
grant date for the 2020 BSP award was delayed until 20 August 2020.
The fair values for the above grants is equivalent to the closing price of an ordinary share on the grant date as follows:
Share price at contract commencement date
20 August 2020
£14.06
19 November 2020
£16.03
23 November 2020
£16.24
Obligations under this plan will be met either by market purchase shares via the ESOP trust or by the issue of ordinary
shares of the Company.
Movements in the number of BSP share awards outstanding are as follows:
Outstanding at start of year
Granted during the year
Lapsed and forfeited during the year
Outstanding at end of year
Exercisable at end of year
52 weeks to
27 March
2021
–
1,493,656
(69,566)
1,424,090
–
278
278
Financial Statements | Notes to the Financial Statements
29. Employee costs continued
Shares and share options granted to directors and employees continued
The Burberry Share Plan 2020 (‘the BSP’) continued
Share awards outstanding at the end of the year have the following terms:
Term of the award
20 August 2020 – 20 August 2025
20 August 2020 – 23 July 2023
19 November 2020 – 19 November 2023
23 November 2020 – 23 November 2022
Total
Number of
awards as at
27 March
2021
191,400
956,662
7,197
268,831
1,424,090
The Burberry Group plc Executive Share Plan (‘the ESP’)
The ESP was approved by the shareholders and adopted by the Company in the year ended 31 March 2015 with the
final grant made on 27 February 2020.
Under the ESP, participants were awarded shares, structured as either nil-cost options, conditional share awards or
phantom awards, up to a maximum value of normally four times base salary per annum. Awards may be subject to a
combination of non-market performance conditions, including compound annual Group adjusted PBT growth;
compound annual Group revenue growth; and average retail/wholesale adjusted return on invested capital (‘ROIC’).
Performance conditions will be measured over a three-year period from the last reporting period prior to the grant
date. Each performance condition will stipulate a threshold and maximum target. The portion of the scheme relating
to each performance target will vest 25% if the threshold target is met, and then on a straight-line basis up to 100%
if the maximum target is met. The portion of the scheme relating to each performance target for the Senior
Leadership Team for awards made in the prior year will vest 15% if the threshold target is met. Dependent on the
outcome of the performance conditions, 50% of the award will vest on the third anniversary of the grant date, and the
remaining 50% of the award will vest on the fourth anniversary of the grant date.
Awards made to the Senior Leadership Team are subject to all three non-market performance conditions and are
measured 50% based on annual Group adjusted PBT growth; 25% based on annual Group revenue growth; and 25%
based on adjusted retail/wholesale ROIC.
The non-market performance conditions for 2018 ESP awards which have not vested are as follows: awards made to
senior management are subject to two non-market performance conditions and will be measured 50% based on
annual adjusted Group PBT growth and 50% based on annual Group revenue growth. The non-market performance
conditions for 2019 ESP awards which have not vested are as follows: awards made to senior management are subject
to three non-market performance conditions and will be measured 50% based on annual adjusted Group PBT growth
and 25% based on annual Group revenue growth and 25% based on adjusted retail/wholesale ROIC.
Awards made to management will not be subject to performance conditions apart from continued service during the
vesting period.
279
279
Financial Statements | Notes to the Financial Statements
29. Employee costs continued
Shares and share options granted to directors and employees continued
The Burberry Group plc Executive Share Plan (‘the ESP’) continued
The threshold and maximum targets for the ESP awards that are still within the initial vesting period as at 27 March
2021 are:
Year of grant
FY17/18
Participant group
Management
Performance conditions
Continued service
FY18/19
FY18/19
Management
Continued service
Senior
3-year growth in Group adjusted PBT
Number of awards
outstanding as at
27 March 2021
63,101
131,354
Management
3-year growth in Group revenue
523,728
FY18/19
Senior Leadership
3-year growth in Group adjusted PBT
Team
3-year growth in Group revenue
3-year average retail/wholesale adjusted ROIC
FY19/20
Management
Continued service
FY19/20
Senior
3-year growth in Group adjusted PBT
Management
3-year growth in Group revenue
FY19/20
Senior
3-year growth in Group adjusted PBT
Management
3-year growth in Group revenue
468,300
164,555
680
3-year average retail/wholesale adjusted ROIC
723,842
FY19/20
Senior Leadership
3-year growth in Group adjusted PBT
Team
3-year growth in Group revenue
3-year average retail/wholesale adjusted ROIC
451,836
Targets
Threshold
N/A
Maximum
N/A
N/A
–
1.0%
–
1.0%
13.5%
N/A
–
1.0%
4.0%
3.0%
13.5%
4.0%
3.0%
13.5%
N/A
7.5%
5.5%
7.5%
5.5%
17.0%
N/A
7.5%
5.5%
12.0%
8.0%
17.0%
12.0%
8.0%
17.0%
Obligations under this plan will be met either by market purchase shares via the ESOP trust or by the issue of ordinary
shares of the Company.
Movements in the number of ESP share awards outstanding are as follows:
Outstanding at start of year
Granted during the year
Lapsed and forfeited during the year
Exercised during the year
Outstanding at end of year
Exercisable at end of year
Share awards outstanding at the end of the year have the following terms:
Term of the award
22 July 2015 – 22 July 2025
18 November 2015 – 18 November 2025
30 January 2017 – 30 January 2027
31 July 2017 – 31 July 2027
27 November 2017 – 27 November 2027
31 July 2018 – 31 July 2028
19 November 2018 – 19 November 2028
31 July 2018 – 31 July 2028
31 July 2019 – 31 July 2029
20 November 2019 – 20 November 2029
27 February 2020 – 27 February 2030
Total
280
280
52 weeks to
27 March
2021
4,441,274
52 weeks to
28 March
2020
4,997,807
–
1,619,767
(1,586,130)
(1,980,421)
(163,731)
(195,879)
2,691,413
4,441,274
164,017
103,415
Number of
awards as at
27 March
2021
23,720
395
101,627
101,376
Number of
awards as at
28 March
2020
28,508
988
184,761
1,451,362
–
25,598
1,104,278
1,190,527
19,104
680
22,104
680
1,309,733
1,490,709
7,859
22,641
23,396
22,641
2,691,413
4,441,274
Financial Statements | Notes to the Financial Statements
29. Employee costs continued
Shares and share options granted to directors and employees continued
One-off awards
The Company grants options in respect of ordinary shares with a £nil exercise price or conditional share awards as
one-off awards. Some of these awards vest in tranches, which vary by award, and are dependent upon continued
employment over the vesting period, as well as key strategic performance objectives linked to long-term growth for
certain awards.
During the year, conditional share awards over 26,184 ordinary shares were granted as two one-off awards.
On 19 November 2020, conditional share awards over 19,967 ordinary shares were granted which will vest in the
following manner: 43% vested immediately, 33% will vest on 17 May 2021 and the balance will vest on 21 November
2022. The second conditional share award granted on 19 November 2020 over 6,217 ordinary shares will vest in the
following manner: 57% will vest on 23 November 2021 and the balance will vest on 21 November 2022.
The fair values for the above grants have been determined by applying the closing price of an ordinary share on the
grant date. The key factors used in determining the fair value were as follows:
Share price at contract commencement date
Movements in the number of one-off share awards outstanding are as follows:
Outstanding at start of year
Granted during the year
Lapsed and forfeited during the year
Exercised during the year
Outstanding at end of year
Exercisable at end of year
Share awards outstanding at the end of the year have the following terms:
Term of the award
18 November 2015 – 18 November 2025
30 January 2017 – 22 December 2026
30 January 2017 – 30 January 2027
08 February 2018 – 07 February 2028
31 July 2018 – 31 July 2028
12 February 2019 – 12 February 2029
19 February 2020 – 21 November 2022
Total
Other schemes
19 November 2020
£16.03
52 weeks to
27 March
2021
865,473
26,184
–
(106,286)
785,371
83,611
52 weeks to
28 March
2020
909,998
–
(3,303)
(41,222)
865,473
157,903
Number of
awards as at
27 March
2021
17,974
22,539
–
34,696
667,626
24,937
17,599
Number of
awards as at
28 March
2020
26,318
22,539
73,000
34,696
667,626
41,294
–
785,371
865,473
The Group also grants to employees options under Savings-Related Share Option Schemes (‘Sharesave’) and free
shares under an All Employee Share Plan. In the 52 weeks to 27 March 2021 and the 52 weeks to 28 March 2020,
options were granted under Sharesave with a three-year and five-year vesting period.
Additional awards were granted under an All Employee Share Plan, offering employees awards of ordinary shares in
the Company at a £nil exercise price. All awards vest after three years and the vesting of these share awards is
dependent on continued employment over the vesting period.
The charge for these schemes is not significant to the Group.
281
281
Financial Statements | Notes to the Financial Statements
30. 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. Total compensation in respect of key management,
who are defined as the Board of Directors and certain members of senior management, is considered to be a related
party transaction.
The total compensation in respect of key management for the year was as follows:
Salaries, short-term benefits and social security costs
Termination benefits
Share-based compensation (all awards and options settled in shares)
Total
There were no other material related party transactions in the year.
52 weeks to
27 March
2021
£m
7.8
52 weeks to
28 March
2020
£m
7.9
0.5
1.5
9.8
–
(0.8)
7.1
282
282
Financial Statements | Notes to the Financial Statements
31. Subsidiary undertakings and investments
In accordance with Section 409 of the Companies Act 2006 a full list of related undertakings as at 27 March 2021,
including their country of incorporation and percentage share ownership, is disclosed below. Unless otherwise stated,
all undertakings are indirectly owned by Burberry Group plc and operate in the country of incorporation. All the
subsidiary undertakings have been consolidated as at 27 March 2021.
Holding
(%)
100
Registered
Office
1
Company name
Burberry Pacific Pty Ltd
Burberry (Austria) GmbH
Sandringham Bahrain SPC W.L.L.2
Burberry Antwerp NV
Country/territory
of incorporation
Australia
Austria
Bahrain
Belgium
Burberry Brasil Comércio de Artigos de Vestuário e
Brazil
Acessórios Ltda
Burberry Canada Inc
Burberry (Shanghai) Trading Co., Ltd
Burberry Czech Rep s.r.o.
Burberry France SASU
Burberry (Deutschland) GmbH
Burberry Asia Holdings Limited
Burberry Asia Limited
Burberry China Holdings Limited
Canada
China
Czech Republic
France
Germany
Hong Kong SAR
Hong Kong SAR
Hong Kong SAR
Burberry Hungary Kereskedelmi Korlátolt Felelősségű
Hungary
Társaság
Burberry India Private Limited
India
Burberry Ireland Investments Unlimited Company
Ireland
Burberry Ireland Limited
Burberry Italy (Rome) S.R.L.
Burberry Italy S.R.L.1
Burberry Manifattura S.R.L.
Burberry Japan K.K.
Burberry Kuwait General Trading Textiles and
Accessories Company \With Limited Liability3
Burberry Macau Limited
Burberry (Malaysia) Sdn. Bhd.
Horseferry México S.A. de C.V.
Ireland
Italy
Italy
Italy
Japan
Kuwait
Macau SAR
Malaysia
Mexico
Interest
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Quota
Common shares
Equity interest
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary A shares
Ordinary B shares
Ordinary shares
Quota
Quota
Quota
Ordinary shares
Parts
Quota
Ordinary shares
Ordinary (fixed) shares
Ordinary (variable)
shares
100
100
100
100
100
100
100
100
100
100
100
100
100
51
100
100
100
100
100
100
100
49
100
100
100
100
Horseferry México Servicios Administrativos, S.A.
Mexico
Ordinary (fixed) shares
100
de C.V.
Burberry Netherlands B.V.
Burberry New Zealand Limited
Burberry Qatar W.L.L3
Burberry Korea Limited
Burberry Retail LLC
Netherlands
New Zealand
Qatar
Ordinary shares
Ordinary shares
Ordinary shares
Republic of Korea
Common stock
Russian Federation
Participatory share
Burberry Saudi Company Limited
Kingdom of Saudi Arabia Ordinary shares
Burberry (Singapore) Distribution Company PTE Ltd Singapore
Burberry (Spain) Retail S.L.
Burberry Latin America Holdings S.L.
Burberry (Suisse) SA1
Burberry (Taiwan) Co., Ltd
Burberry (Thailand) Limited
Spain
Spain
Switzerland
Taiwan
Thailand
283
283
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Common shares
Common shares
100
100
49
100
100
100
100
100
100
100
100
100
2
3
4
5
6
7
8
9
10
11
11
11
12
13
14
15
16
16
17
18
19
20
21
22
22
23
24
25
26
27
28
29
30
30
31
32
33
Holding
(%)
100
Registered
Office
34
100
49
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
35
36
37
37
37
37
37
37
37
37
37
37
37
37
37
37
37
37
37
37
37
37
37
37
38
38
39
39
39
39
Financial Statements | Notes to the Financial Statements
31. Subsidiary undertakings and investments continued
Country of
incorporation
Turkey
Interest
Ordinary shares
United Arab Emirates
Ordinary shares
United Arab Emirates
Ordinary shares
Company name
Burberry Turkey Giyim Toptan Ve Perakende
Satış Limited Şirketi
Burberry FZ-LLC
Burberry Middle East LLC3
Burberry (Espana) Holdings Limited
Burberry (No. 7) Unlimited
Burberry (UK) Limited
Burberry Beauty Limited1
Burberry Distribution Limited
Burberry Europe Holdings Limited1
Burberry Finance Limited
Burberry Haymarket Limited1
Burberry Holdings Limited
Burberry International Holdings Limited1
Burberry Latin America Limited
Burberry Limited
Burberry London Limited
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Burberry Treasury Limited
Burberrys Limited1
Hampstead (UK) Limited1
Sweet Street Developments Limited
The Scotch House Limited1
Thomas Burberry Holdings Limited1
Thomas Burberry Limited1
Woodrow-Universal Limited1
United Kingdom
Woodrow-Universal Pension Trustee Limited1 United Kingdom
Burberry (Wholesale) Limited
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United States
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Class X common stock
Class Y common stock
Burberry Limited
United States
Class X common stock
Burberry North America, Inc.
Burberry Warehousing Corporation
Castleford Industries, Ltd.
Castleford Tailors, Ltd.
1. Held directly by Burberry Group plc.
United States
United States
United States
United States
Class Y common stock
Common stock
Common stock
Series A common stock
Common stock
2. The Group has an indirect holding of 100% of the issued share capital through a nominee.
3. The Group has a 100% share of profits of Burberry Middle East LLC as well as a 100% and 88% share of profits in Burberry Middle East
LLC’s subsidiaries in Kuwait and Qatar respectively. The Group has the power to control these companies under the agreements relating to
Burberry Middle East LLC.
284
284
Financial Statements | Notes to the Financial Statements
31. Subsidiary undertakings and investments continued
Ref
1
Registered office address
Level 5, 343 George Street, Sydney NSW 2000, Australia
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
Kohlmarkt 2, 1010 Wien, Austria
Building 1A, Road 365, Manama Center 316, Unit 8, Moda Mall, Manama, Bahrain
Waterloolaan 16, 1000 Brussel, Belgium
City of São Paulo, State of São Paulo, at Rua do Rocio, 350, 3rd Pavement of Condominium Atrium IX, suites No. 31
and No. 32, 28th subdistrict, Vila Olímpia, CEP 04552-000, Brazil
100 King Street West, 1 First Canadian Place, Suite 1600, Toronto ON M5X 1G5, Canada
60th Floor (Actual Floor No.53), Wheelock Square, 1717 Nanjing West Road, Shanghai 200040, China
Praha 1, Pařížská 11/67, PSČ 11000, Czech Republic
56 rue du Faubourg Saint-Honoré, 75008, Paris, France
Königsallee 50, 40212, Düsseldorf, Germany
Suites 2201-02 & 11-14, 22/F Devon House, Taikoo Place, 979 King’s Road, Quarry Bay, Hong Kong
1124 Budapest, Csörsz utca 49-51, Hungary
3 A-1 Taj Apartment, Rao Tula Ram Marg, New Delhi, DL 110022, India
Suite 9, Bunkilla Plaza, Bracetown Business Park, Clonee, Co. Meath., D15 XR27, Ireland
Suite 9, Bunkilla Plaza, Bracetown Office Park, Clonee, Co. Meath., D15 XR27, Ireland
Via Manzoni n.20, 20121, Milano, Italy
Via delle Fonti n.10, 50018 Scandicci (Fi), Italy
5-14 Ginza 2-chome, Chuo-ku, Tokyo, Japan
Hawali, Tunis Street, Block 93, Plt B, Office No 12, Floor 7, Kuwait
Avenida Dr. Sun Yat Sen, One Central Building, 1st floor, Shops 125-127, Macau
Level 21, Suite 21.01, The Gardens South Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur,
Wilayah Persekutuan, Malaysia
Edgar Allan Poe 85-B, Col. Polanco, Delg. Miguel Hidalgo, Mexico City, 11560, Mexico
Pieter Cornelisz. Hooftstraat 48 H, -50, 1071BZ Amsterdam, Netherlands
KPMG AUCKLAND, 18 Viaduct Harbour Avenue, Auckland, 1010, New Zealand
First Floor, Building No. 660, 54 Al Marikh, Street no. 364, Located near Al Rayyan Municipality South, Doha, Qatar
(Cheongdam-dong) 459, Dosan-daero, Gangnam-gu, Seoul, Republic of Korea
Ulitsa Petrovka, 16, floor 3, Premise I, rooms 47-53, 127051, Moscow, Russian Federation
Riyadh, Al Olaya District, Akaria Plaza, First Floor, Office No (119), 11411, Kingdom of Saudi Arabia
391B Orchard Road, #15-02/03, Ngee Ann City, 238874, Singapore
Calle Valencia 640, 08026 Barcelona, Spain
Route de Chêne 30A, c/o L&S Trust Services SA, 1208 Genève, Switzerland
(105) 5F, No. 451, Changchun Rd., Taipei City, Taiwan
No. 989 Siam Piwat Tower, 12A Floor, Unit B1, B2, Rama I Road, Pathumwan Sub-district, Pathumwan District,
Bangkok, Thailand
Reşitpaşa Mahallessi Eski Büyükdere Cad. Windowist Tower Sit. No: 26/1 Sariyer/Istanbul, Turkey
Dubai Design District, Premises: 301, 312, 313, 314 & 315, Floor: 03, Building: 08, Dubai, United Arab Emirates
Dubai Design District, Building 8, Level 3, Office number 312 + 313, PO Box 83916, Dubai, United Arab Emirates
Horseferry House, Horseferry Road, London, SW1P 2AW, United Kingdom
CT Corporation System, 28 Liberty St., New York, New York, 10005, United States
The Corporation Trust Company, Corporation Trust Center 1209 Orange St, Wilmington, New Castle, DE 19801,
United States
285
285
Financial Statements | Notes to the Financial Statements
32. Transactions with non-controlling interests
On 11 January 2021 the Group acquired the remaining 25% economic interest in Burberry Saudi Limited Co. which was
held by Fawaz Abdulaziz Alhokair & Co, a non-Group company, for consideration of SAR 9 million (£1.7 million),
bringing the Group’s shareholding from 75% to 100%. The impact of this transactions has been presented in the
financial statements of the Group as a charge taken through the Statement of Changes in Equity of £0.2 million and a
cash outflow recognised in the Statement of Cash Flows of £1.7 million. Non-controlling interests with a book value of
£1.5 million were transferred to retained earnings.
33. Contingent liabilities
The Group is subject to claims against it and to tax audits in a number of jurisdictions which arise in the ordinary
course of business. These typically relate to Value Added Taxes, sales taxes, customs duties, corporate taxes, transfer
pricing, payroll taxes, various contractual claims, legal proceedings and other matters. Where appropriate, the
estimated cost of known obligations have been provided in these financial statements in accordance with the Group’s
accounting policies. The Group does not expect the outcome of current similar contingent liabilities to have a material
effect on the Group’s financial position.
34. Events after the balance sheet date
In April 2021, the Group entered into agreements to sell two freehold properties, which are currently owned by the
Group. One of the properties is held as an investment property at 27 March 2021. The disposal of this property is
expected to complete in the first half of the next financial year. It has not been presented as held for sale as its net
book value, being £2.4 million, is not considered significant. The other property is held in property, plant and
equipment. Its disposal is expected to complete more than 12 months after the balance sheet date and hence it has
not been classified as held for sale on the balance sheet.
These disposals are expected to result in net cash proceeds of approximately £17.0 million and profits on disposal of
approximately £5.0 million in aggregate.
286
286
Financial Statements | Five-Year Summary (UNAUDITED)
FIVE-YEAR SUMMARY (UNAUDITED)
To end of year
Revenue by channel
Retail
Wholesale
Retail/Wholesale
Licensing
Total revenue
Profit by channel
Retail/Wholesale1
Licensing
Adjusted operating profit1
Segmental analysis of adjusted profit1
Retail/Wholesale gross margin
Retail/Wholesale operating expenses as a percentage
of sales
Retail/Wholesale operating margin
Licensing operating margin
Total operating margin
Summary profit analysis
Adjusted operating profit1
Net finance income/(expense)1
Adjusted profit before taxation1
Adjusting items
Profit before taxation
Taxation
Non-controlling interest
Attributable profit
2017
£m
2,127.2
613.9
2018
£m
2,176.3
526.4
2019
£m
2,185.8
487.9
Pro forma5
2020
£m
2,110.2
475.8
2020
£m
2,110.2
475.8
2021
£m
1,909.9
396.0
2,741.1
2,702.7
2,673.7
2,586.0
2,586.0
2,305.9
24.9
30.1
46.5
47.1
47.1
38.0
2,766.0
2,732.8
2,720.2
2,633.1
2,633.1
2,343.9
£m
437.0
21.7
458.7
%
69.6
53.7
15.9
87.1
16.6
£m
458.7
3.7
462.4
(67.6)
394.8
(107.1)
(0.9)
286.8
£m
440.7
25.9
466.6
%
69.1
52.8
16.3
86.0
17.1
£m
466.6
4.3
470.9
(58.3)
412.6
(119.0)
(0.1)
440.6
(101.5)
0.2
293.5
339.3
£m
395.7
42.4
438.1
%
67.9
53.1
14.8
91.2
16.1
£m
438.1
5.1
443.2
£m
360.8
43.3
404.1
%
66.8
52.8
14.0
91.9
15.3
£m
404.1
5.9
410.0
£m
389.8
43.3
433.1
%
66.8
51.7
15.1
91.9
16.4
£m
433.1
(19.0)
414.1
(2.6)
(245.6)
(245.6)
164.4
(46.0)
0.1
118.5
£m
947.5
796.5
714.8
127.2
168.5
(46.9)
0.1
121.7
£m
947.5
796.5
714.8
127.2
£m
361.4
34.5
395.9
%
69.5
53.8
15.7
90.8
16.9
£m
395.9
(30.2)
365.7
124.5
490.2
(114.3)
(0.2)
375.7
£m
840.9
652.6
667.6
144.8
£m
1,040.5
£m
1,040.5
£m
1,203.2
960.6
584.9
960.6
584.9
628.0
474.7
%
-4
-8
13.5
-3
15.3
-5
%
-4
-1
20.0
-3
16.4
-4
%
-10
-8
17.0
-9
16.9
-14
Retail/Wholesale revenue by product division
Accessories
Women’s
Men’s
Children’s/Other2
Retail/Wholesale revenue by destination
Asia Pacific
EMEIA3
Americas
Financial KPIs
Total revenue growth4
Adjusted operating profit growth1, 4
Adjusted Group return on invested capital (ROIC)1, 6
Comparable store sales growth
Adjusted operating profit margin1
Adjusted diluted EPS growth1
£m
1,033.2
£m
1,046.5
791.9
623.5
292.5
£m
1,069.0
991.2
680.9
808.4
647.3
200.5
£m
1,089.0
975.2
638.5
%
-2
-21
15.4
+1
16.6
+11
%
-1
+5
16.3
+3
17.1
+6
£m
1,012.7
836.8
698.2
126.0
£m
1,104.3
957.4
612.0
%
-1
+0
15.5
+2
16.1
+0
1. Excludes the impact of adjusting items. Refer to note 2s for the Group’s policy on adjusting items.
2. Includes Beauty wholesale revenue up to the disposal of Beauty operations during the year ended 31 March 2018.
3. EMEIA comprises Europe, Middle East, India and Africa.
4. Growth rate is year-on-year underlying change, i.e. at constant exchange rates.
5. The pro forma income statement for 2020 is an estimation of the results for 2020 applying the previous accounting standard for leases, IAS
17 Leases. The actual results for 2020 are reported applying IFRS 16 Leases.
6. Prior to 2020, reported ROIC was measured on a retail/wholesale basis. From 2020 onwards, reported ROIC is measured on a Group basis
and reflects the impact of the adoption of IFRS 16 on the measure.
287
287
Financial Statements | Five-Year Summary (UNAUDITED)
To end of year
Earnings and dividends
Adjusted earnings per
share – diluted1
Earnings per share – diluted
Diluted weighted average
number of ordinary
shares (millions)
Dividend per share (on a
paid basis)
2017
pence
per share
2018
pence
per share
2019
pence
per share
77.4
64.9
82.1
68.4
82.1
81.7
Pro forma
2020
pence
per share
77.9
29.0
2020
pence
per share
2021
pence
per share
78.7
29.8
67.3
92.7
442.2
429.4
415.1
409.0
409.0
405.1
37.3
39.4
41.3
42.8
42.8
–
To end of year
Net cash flow
Adjusted operating profit
Adjusting items
Operating profit
Depreciation and amortisation
Employee share scheme costs
Decrease/(increase) in inventories
Decrease/(increase) in receivables
Increase/(decrease) in payables and provisions
Other cash items
Other non-cash items
Cash flow from operations
Net interest
Tax paid
Net cash flow from operations2
Capital expenditure
Proceeds from disposal of non-current assets
Initial direct costs of right-of-use assets
Payment of lease principal and other lease
outflows
Free cash flow
Proceeds on disposal of Beauty operations and
related licence
Acquisitions
Dividends
Purchase of shares through share buy-back
Proceeds from borrowings
Repayment of borrowings
Other
Exchange difference
Total movement in net cash
2017
£m
458.7
(64.4)
394.3
151.5
13.1
8.4
19.7
43.6
–
58.0
688.6
3.7
(131.6)
560.7
(104.1)
8.5
–
–
2018
£m
466.6
(56.3)
410.3
130.5
17.1
37.2
68.1
27.6
0.5
11.2
702.5
5.6
(118.4)
589.7
(106.0)
–
–
–
2019
£m
438.1
(0.9)
437.2
115.8
15.7
(59.3)
(54.6)
54.9
2.5
3.7
515.9
6.3
(110.8)
411.4
(110.6)
–
–
–
2020
£m
433.1
(244.4)
188.7
330.8
2.8
27.4
(9.8)
(84.0)
0.2
168.8
624.9
(18.8)
(150.3)
455.8
(148.8)
3.0
(5.6)
(238.1)
2021
£m
395.9
125.2
521.1
276.7
12.1
20.9
(39.0)
(7.2)
(1.5)
(106.5)
676.6
(27.2)
(58.0)
591.4
(114.8)
27.2
(2.9)
(152.2)
465.1
483.7
300.8
66.3
348.7
–
(68.8)
(164.5)
(97.2)
–
–
(11.7)
26.0
148.9
149.8
(3.0)
(169.4)
(355.0)
–
–
(8.7)
(14.5)
82.9
0.6
(25.6)
(171.1)
(150.7)
–
–
(10.5)
1.7
(54.8)
–
(2.7)
(175.2)
(150.7)
300.0
–
3.8
8.5
50.0
–
(4.3)
–
–
595.1
(599.8)
2.1
(13.2)
328.6
Net cash
809.2
892.1
837.3
887.3
1,215.9
1. Excludes the impact of adjusting items. Refer to note 2s for the Group’s policy on adjusting items.
2. Following the adoption of IFRS 16 in the year ending 28 March 2020, Net cash flow from operations excludes cash outflows for lease
principal and other lease payments. Free cash flow is presented including these lease payments and hence free cash flow is on a comparable
basis to prior years.
288
288
Financial Statements | Five-Year Summary (UNAUDITED)
At end of year
Balance Sheet
Intangible assets
Property, plant and equipment
Right-of-use assets
Inventories
Trade and other receivables
Trade and other payables
Lease liabilities
Taxation (including deferred taxation)
Net cash
Borrowings
Other net assets
Net assets
Reconciliation of Adjusted
Group ROIC as reported under IFRS 16
Adjusted operating profit1
Adjusted profit effective tax rate1
Adjusted net operating profit after tax1
2017
£m
170.1
399.6
–
505.3
352.0
(561.0)
–
83.7
809.2
–
(61.1)
1,697.8
2018
£m
180.1
313.6
–
411.8
275.5
2019
£m
221.0
306.9
–
465.1
321.2
(629.0)
(702.2)
–
85.1
892.1
–
(103.8)
1,425.4
–
97.5
837.3
–
(86.8)
1,460.0
2019
£m
2020
£m
247.0
294.9
834.0
450.5
305.8
(549.8)
(1,125.5)
213.9
887.3
(300.0)
(39.3)
1,218.8
2020
£m
433.1
22.3%
336.5
2021
£m
237.0
280.4
818.1
402.1
321.9
(492.3)
(1,019.6)
148.1
1,215.9
(297.1)
(54.8)
1,559.7
2021
£m
395.9
25.4%
295.3
Net assets
Adjustments to net assets on adoption of IFRS 16 and
IFRIC 23
Deduct cash net of overdrafts
Add back borrowings
Add back lease debt
Deduct tax assets
Operating assets
Add back net liabilities related to adjusting items:
Deferred consideration
Restructuring liabilities/other
Adjusted operating assets
Average adjusted operating assets
Adjusted Group ROIC
1,460.0
1,218.8
1,559.7
(61.9)
(837.3)
–
1,045.0
(97.5)
1,508.3
21.6
26.7
1,556.6
–
–
–
(887.3)
300.0
1,125.5
(213.9)
1,543.1
18.4
253.7
1,815.2
1,685.9
20.0%
–
(1,215.9)
297.1
1,019.6
(148.1)
1,512.4
16.6
128.3
1,657.3
1,736.3
17.0%
1. Excludes the impact of adjusting items. Refer to note 2s for the Group’s policy on adjusting items.
289
289
Financial Statements | Company Balance Sheet
COMPANY BALANCE SHEET
Fixed assets
Investments in subsidiaries
Current assets
Trade and other receivables – amounts falling due after more than one year
Trade and other receivables – amounts falling due within one year
Cash at bank and in hand
Creditors – amounts falling due within one year
Derivative liabilities maturing within one year
Net current assets
Total assets less current liabilities
Provisions for liabilities
Borrowings
Net assets
Equity
Called up share capital
Share premium account
Capital reserve
Hedging reserve
Profit and loss account
Total equity
Note
D
E
E
F
G
I
As at
27 March
2021
£m
1,651.3
1,651.3
300.5
95.0
0.4
395.9
(174.8)
–
221.1
1,872.4
(1.0)
(297.1)
As at
28 March
2020
£m
1,379.8
1,379.8
0.1
445.7
0.7
446.5
(277.9)
(2.2)
166.4
1,546.2
(1.0)
–
1,574.3
1,545.2
0.2
223.0
0.9
4.6
1,345.6
1,574.3
0.2
220.8
0.9
4.6
1,318.7
1,545.2
Profit for the year was £14.9 million (last year: £199.2 million). The directors consider that, at 27 March 2021, £685.8
million (last year: £650.6 million) of the profit and loss account is non-distributable.
The financial statements on pages 290 to 299 were approved and authorised for issue by the Board on 12 May 2021
and signed on its behalf by:
Marco Gobbetti
Chief Executive Officer
Julie Brown
Chief Operating and Financial Officer
290
290
Financial Statements | Company Statement of Changes in Equity
COMPANY STATEMENT OF CHANGES IN EQUITY
Balance as at 30 March 2019
Profit for the year
Total comprehensive income for
the year
Employee share incentive schemes
Value of share options granted
Exercise of share options
Purchase of own shares
Share buy-back
Dividends paid in the year
Balance as at 28 March 2020
Profit for the year
Total comprehensive income for
the year
Employee share incentive schemes
Value of share options granted
Exercise of share options
Purchase of own shares
Held by ESOP trusts
Note
Called up
share capital
£m
0.2
Share
premium
account
£m
216.9
Capital
reserve
£m
0.9
Hedging
reserve
£m
4.6
J
–
–
–
–
–
–
–
–
–
3.9
–
–
–
–
–
–
–
–
0.2
220.8
0.9
–
–
–
–
–
–
–
–
2.2
–
–
–
–
–
–
–
–
–
–
–
–
4.6
–
–
–
–
–
Profit
and loss
account
£m
1,442.6
199.2
Total
equity
£m
1,665.2
199.2
199.2
199.2
2.8
–
2.8
3.9
(150.7)
(175.2)
(150.7)
(175.2)
1,318.7
1,545.2
14.9
14.9
14.9
14.9
12.1
–
12.1
2.2
(0.1)
(0.1)
Balance as at 27 March 2021
0.2
223.0
0.9
4.6
1,345.6
1,574.3
291
291
Financial Statements | Notes to the Company Financial Statements
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 a public
company which is limited by shares and is listed on the London Stock Exchange. The Company’s principal business is
investment and it is incorporated and domiciled in the UK. The Company is registered in England and Wales and the
address of its registered office is Horseferry House, Horseferry Road, London, SW1P 2AW. The Company is the
sponsoring entity of The Burberry Group plc ESOP Trust and The Burberry Group plc SIP Trust (collectively known as
the ESOP trusts). These financial statements have been prepared by including the ESOP trusts within the financial
statements of the Company. The purpose of the ESOP trusts is to purchase shares of the Company in order to satisfy
Group share-based payment arrangements.
Burberry Group plc and its subsidiaries (‘the Group’) is a global luxury goods manufacturer, retailer and wholesaler.
The Group also licenses third parties to manufacture and distribute products using the ‘Burberry’ trademarks. All of
the companies which comprise the Group are controlled by the Company directly or indirectly.
The financial statements of the Company have been prepared in accordance with Financial Reporting Standard 101
‘Reduced Disclosure Framework’ (‘FRS 101’). The financial statements have been prepared on a going concern basis
under the historical cost convention, as modified by derivative financial assets and derivative financial liabilities
measured at fair value through profit or loss, and in accordance with the Companies Act 2006. As permitted by
Section 408 of the Companies Act 2006, the Company has not presented its own Income Statement.
The preparation of the financial statements in conformity with FRS 101 requires the use of certain critical accounting
estimates. It also requires management to exercise judgement in applying the Company’s accounting policies (refer to
note C).
Financial Reporting Standard 101 – reduced disclosure exemptions
The Company has taken advantage of the applicable disclosure exemptions permitted by FRS 101 in the financial
statements, which are summarised below:
Standard
IFRS 7, ‘Financial Instruments: Disclosures’
Disclosure exemption
• Full exemption
IFRS 13, ‘Fair Value Measurement’
• para 91-99 – disclosure of valuation techniques and inputs used for
IAS 1, ‘Presentation of the Financial Statements’
fair value measurement of assets and liabilities
• para 10(d) – statement of cash flows
• para 10(f) – a statement of financial position as at the beginning of the
preceding period when an entity applies an accounting policy
retrospectively or makes a retrospective statement of items in its
financial statements, or when it reclassifies items in its financial
statements
• para 16 – statement of compliance with all IFRS
• para 38 – present comparative information in respect of paragraph
79(a)(iv) of IAS 1
• para 38A – requirement for minimum of two primary statements,
including cash flow statements
• para 38B-D – additional comparative information
• para 111 – cash flow statement information
• para 134-136 – capital management disclosures
IAS 7, ‘Statement of Cash Flows’
• Full exemption
IAS 8, ‘Accounting Policies, Changes
in Accounting Estimates and Errors’
• para 30-31 – requirement for the disclosure of information when an
entity has not applied a new IFRS that has been issued but is not yet
IAS 24, ‘Related Party Disclosures’
effective
• para 17 – key management compensation
• The requirements to disclose related party transactions entered into
between two or more members of a group, provided that any
subsidiary which is a party to the transaction is wholly owned by such a
member
IAS 36, ‘Impairment of Assets’
• para 134(d)-134(f) and 135(c)-135(e)
292
292
Financial Statements | Notes to the Company Financial Statements
B. Accounting policies
The following principal accounting policies have been applied in the preparation of these financial statements. These
policies have been consistently applied to all the years presented, unless otherwise stated:
Going concern
The Company financial statements are prepared on a going concern basis as set out in note 1 of the Group
consolidated financial statements of Burberry Group plc.
Share schemes
The Group operates a number of equity-settled share-based compensation schemes, under which services are
received from employees (including executive directors) as consideration for equity instruments of the Company.
Instruments used include awards and options. The cost of the share-based incentives is measured with reference to
the fair value of the equity instruments awarded at the date of grant. Appropriate option pricing models, including
Black-Scholes, are used to determine the fair value of the option awards made.
The fair value takes into account the impact of any market performance conditions, but the impact of non-market
performance conditions is not considered in determining the fair value on the date of grant. Vesting conditions which
relate to non-market conditions are allowed for in the assumptions used for the number of share awards or options
expected to vest. The estimate of the number of options expected to vest is revised at each balance sheet date.
In some circumstances, employees may provide services in advance of the grant date. The grant date fair value is
estimated for the purpose of recognising the expense during the period between the service commencement period
and the grant date.
The grant by the Company of share awards or options over its equity instruments to employees of subsidiary
undertakings in the Group is treated as a capital contribution. In the Company’s financial statements, the cost of the
share-based incentives is recognised over the vesting period of the awards as an increase in investment in subsidiary
undertakings, with a corresponding increase in equity. Where amounts are received from Group companies in relation
to equity instruments granted to the employees of the subsidiary undertaking, the amount is derecognised from
investments in Group companies, to the extent that it was initially treated as a capital contribution, with any
remaining amounts recognised as an increase in equity.
When options and awards are exercised, they are settled either via issue of new shares in the Company, or through
shares held in the ESOP trusts, depending on the terms and conditions of the relevant scheme. The proceeds
received from the exercises, net of any directly attributable transaction costs, are credited to share capital and share
premium. Share-based payments disclosures relevant to the Company are presented within note 29 to the
consolidated financial statements.
Dividend distribution
Dividend distributions to Burberry Group plc’s shareholders are recognised as a liability in the year in which the
dividend becomes a committed obligation. Final dividends are recognised when they are approved by the shareholders.
Interim dividends are recognised when paid.
Investments in subsidiaries
Investments in subsidiaries are stated at cost, less any provisions to reflect impairment in value.
Impairment of investments in subsidiaries
Investments in subsidiaries are not subject to amortisation and are tested annually for impairment. An impairment
loss is recognised for the amount by which the carrying value 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 purpose of assessing impairment,
assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).
Investments for which an impairment has been previously recognised are reviewed for possible reversal of impairment
at each reporting date.
293
293
Financial Statements | Notes to the Company Financial Statements
NOTES TO THE COMPANY FINANCIAL STATEMENTS
B. Accounting policies continued
Taxation
Tax expense represents the sum of the tax currently payable and deferred tax charge.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit 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 current tax liability is calculated using tax rates which have been enacted or
substantively enacted by the balance sheet date.
Deferred income tax is recognised, using the liabilities method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the 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, no deferred tax will be recognised.
Deferred tax is determined using tax rates (and laws) that have been enacted or substantively 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 are recognised to the extent that it is probable that future taxable profits will be available against
which the temporary differences can be utilised.
Financial instruments
A financial instrument is initially recognised at fair value on the Balance Sheet when the Company becomes a party to
the contractual provisions of the instrument. A financial asset is derecognised when the contractual rights to the cash
flow expire or substantially all risks and rewards of the asset are transferred. A financial liability is derecognised when
the obligation specified in the contract is discharged, cancelled or expires.
At initial recognition, all financial liabilities are stated at fair value. Subsequent to initial recognition, all financial
liabilities are stated at amortised cost using the effective interest rate method except for derivatives which are held at
fair value and which are classified as fair value through profit and loss. Financial assets are classified as either
amortised cost or fair value through profit and loss depending on their cash flow characteristics. Assets with cash
flows that represent solely payments of principal and interest are measured at amortised cost. The fair value of the
financial assets and liabilities held at amortised cost approximate their carrying amount due to the use of market
interest rates.
The Company classifies its instruments in the following categories:
Financial instrument category
Cash and cash equivalents
Trade and other receivables
Trade and other receivables
Trade and other payables
Borrowings
Equity swap contracts
Note
E
E
F
G
Classification
Amortised cost
Amortised cost
Measurement
Amortised cost
Amortised cost
Fair value through profit and loss
Fair value through profit and loss
Other financial liabilities
Other financial liabilities
Amortised cost
Amortised cost
Fair value through profit and loss
Fair value through profit and loss
The Company’s primary categories of financial instruments are listed below:
Cash at bank and in hand
On the Balance Sheet, cash at bank and in hand comprises cash held with banks. Cash at bank and in hand held at
amortised cost is subject to impairment testing each period end.
294
294
Financial Statements | Notes to the Company Financial Statements
B. Accounting policies continued
Financial instruments continued
Trade and other receivables
Trade and other receivables are included in current assets. Trade and other receivables with maturities greater than
12 months after the balance sheet date are classified in trade and other receivables amounts falling due after more
than one year. The assessment of maturities of loan receivables takes into consideration any intention to renew the
loan, where the loan is provided under a facility which has a maturity of more than 12 months from the balance sheet
date. Most receivables are held with the objective to collect the contractual cash flows and are therefore recognised
initially at fair value and subsequently measured at amortised cost using the effective interest rate method, less
provision for impairment. A provision for the expected loss on receivables is established at inception. This is modified
when there is a change in the credit risk. The amount of the movement in the provision is recognised in the Income
Statement.
Cash settled equity swaps are classified as fair value through profit and loss.
Trade and other payables
Trade and other payables are included in current liabilities, except for maturities greater than 12 months after the
balance sheet date. Payables are recognised initially at fair value and subsequently measured at amortised cost using
the effective interest rate 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 rate method.
Borrowings are classified in creditors amounts falling due within one year unless the Company has an unconditional
right to defer settlement of the liability for at least 12 months after the balance sheet date.
Derivative instruments
The Company uses equity swap contracts to economically hedge its exposure to fluctuations in the Company’s
share price which impacts the social security costs payable by Group companies in relation to share-based
compensation schemes.
The equity swap contracts are initially recognised at fair value at the trade date and classified as fair value through
profit and loss. All subsequent changes in fair value are recognised in the Income Statement up to the maturity date.
Foreign currency translation
Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic environment in
which the Company operates (the functional currency). The financial statements are presented in Sterling which is the
Company’s functional and presentation currency.
Transactions in foreign currencies
Transactions denominated in foreign currencies are translated into the functional currency at the exchange rate
prevailing at the date of the transaction. 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
(closing rate). Exchange differences on monetary items are recognised in the Income Statement in the period in which
they arise.
295
295
Financial Statements | Notes to the Company Financial Statements
NOTES TO THE COMPANY FINANCIAL STATEMENTS
B. Accounting policies continued
Called up share capital
Called up share capital is 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 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 owners of the Company 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 owners of the Company.
C. Key sources of estimation uncertainty and judgements
Key sources of estimation uncertainty
Preparation of the financial statements in conformity with FRS 101 requires that management make certain 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 estimates at the
date of the financial statements, deviate from actual circumstances, the original estimates and assumptions will be
updated as appropriate in the period in which the circumstances change.
Estimates 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. There were no key sources
of estimation uncertainty for the 52 weeks to 27 March 2021.
Key judgements in applying the Company’s accounting policies
Judgements are those decisions made when applying accounting policies which have a significant impact on the
amounts recognised in the Company’s financial statements. Further details of the Company’s accounting policies are
provided in note B. There were no key judgements arising in the current year or prior year that have a significant
impact on the amounts recognised in the Company’s financial statements for the 52 weeks to 27 March 2021 and the
52 weeks to 28 March 2020.
D. Investments in subsidiaries
As at 28 March 2020
Additions
Impairment charges
As at 27 March 2021
£m
1,379.8
334.9
(63.4)
1,651.3
During the year, the Company’s investments in Thomas Burberry Limited and Hampstead (UK) Limited were impaired
by £44.1 million and £19.3 million respectively. The recoverable amount of these investments at 27 March 2021 was
£nil. The Company also increased its investments in Burberry Haymarket Limited by £291.7 million, Burberry Italy SRL
by £31.6 million and Burberry Limited by £11.6 million.
The Company has reviewed the recoverable value of its investments to identify if there is any indication of impairment
of the carrying value. Where applicable, the value in use has been estimated using management’s best estimates of
future cash generation of its investments.
The Company has not impaired the carrying value of its investments, other than as noted above, as their cash
generation in the long-term is considered sufficient to support the carrying value. The subsidiary undertakings and
investments of the Burberry Group are listed in note 31 of the Group financial statements.
296
296
Financial Statements | Notes to the Company Financial Statements
E. Trade and other receivables
Amounts owed by Group companies
Prepayments
Trade and other receivables – amounts falling due after more than one year
Amounts owed by Group companies
Other financial receivables
Other non-financial receivables
Prepayments
Trade and other receivables – amounts falling due within one year
Total trade and other receivables
All amounts owed by Group companies are interest bearing and unsecured.
As at
27 March
2021
£m
300.0
0.5
300.5
90.7
3.3
0.2
0.8
95.0
395.5
As at
28 March
2020
£m
–
0.1
0.1
445.5
–
–
0.2
445.7
445.8
Amounts owed by Group companies falling due after more than one year are receivable on 21 September 2025. The
interest rate is 1.125%. Amounts owed by Group companies falling due within one year are receivable on 25 May 2021
(last year: 17 June 2020), with a facility maturity date of 25 May 2021.
The Company’s impairment policies and the calculation of the loss allowances under IFRS 9 are detailed in note H.
F. Creditors
Amounts owed to Group companies
Other payables
Accruals
Creditors – amounts falling due within one year
Total creditors
As at
27 March
2021
£m
174.5
0.3
–
174.8
174.8
As at
28 March
2020
£m
277.5
0.2
0.2
277.9
277.9
Included within amounts owed to Group companies falling due within one year are interest bearing loans of £122.4
million (last year: £213.6 million). The interest rate earned is based on LIBOR plus 0.9% (last year: 0.5% to 0.9%).
These loans are unsecured and repayable on 17 June 2021 (last year: 17 June 2020). The remaining amounts are
unsecured, interest free and repayable on demand.
G. Borrowings
On 21 September 2020, Burberry Group plc issued medium term notes with a face value of £300.0 million maturing on
21 September 2025 (the sustainability bond). Proceeds from the sustainability bond will allow the Group to finance
projects which support the Group’s sustainability agenda. There are no financial penalties for not using the proceeds
as anticipated. Interest on the sustainability bond is payable semi-annually.
During the year ending 27 March 2021 the non-cash changes to borrowings amounted to £0.4 million.
297
297
Financial Statements | Notes to the Company Financial Statements
NOTES TO THE COMPANY FINANCIAL STATEMENTS
H. Credit risk
The Company’s principal financial instruments comprise cash, borrowings, trade and other receivables and trade and
other payables arising directly from operations.
Trade and other receivables
The trade and other receivables balance comprises of intercompany loans with companies within the Group. These
Group companies are assessed at each reporting date as to their ability to repay outstanding balances. The
amounts owed by Group companies at 27 March 2021 comprise £390.7 million owed by Burberry Limited (last year:
£445.5 million).
The counterparty credit risk of trade and other receivables is reviewed on a regular basis and assessed for impairment
as follows:
At inception the receivable is recorded net of expected 12 month credit losses. If a significant increase in the credit
risk occurs during the life time, credit losses are recorded in the profit and loss account and the effective interest is
calculated using the gross carrying amount of the asset. If a loss event occurs, the effective interest is calculated
using the amortised cost of the asset net of any credit losses.
The Company’s sole debtor, Burberry Limited, is the holder of the Burberry brand and the main operating company of
the Group. Based on its liquidity and expected cash generation, the expected 12 months credit loss for Burberry
Limited trade and other receivables is not considered to be significant. As a result, no impairment has been recorded
for amounts owed by Group companies as at 27 March 2021.
Other financial assets
With respect to credit risk arising from other financial assets, which comprise cash and certain other receivables, the
Company’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 Company has policies that limit the amount of credit exposure to any
financial institution and only deposits funds with independently rated financial institutions with a minimum rating of
‘A’ other than where required for operational purposes.
I. Called up share capital
Allotted, called up and fully paid share capital
Ordinary shares of 0.05p (last year: 0.05p) each
As at 28 March 2020
Allotted on exercise of options during the year
As at 27 March 2021
Number
404,705,886
158,473
404,864,359
£m
0.2
–
0.2
The Company has a general authority from shareholders, renewed at each Annual General Meeting, to repurchase
a maximum of 10% of its issued share capital. During the 52 weeks to 27 March 2021, the Company did not enter into
any share buy-back agreements (last year: £150.0 million). Own shares purchased by the Company, as part of a share
buy-back programme, are classified as treasury shares and their cost offset against the profit and loss account. When
treasury shares are cancelled, a transfer is made from the profit and loss account to the capital redemption reserve,
equivalent to the nominal value of the shares purchased and subsequently cancelled. In the 52 weeks to 27 March
2021, no treasury shares were cancelled (last year: 7.2 million treasury shares with a nominal value of £3,600).
The cost of shares purchased by ESOP trusts are offset against the profit and loss account, as the amounts paid
reduce the profits available for distribution by the Company.
As at 27 March 2021, the amount of own shares held by ESOP trusts and offset against the profit and loss account
is £12.9 million (last year: £19.5 million). As at 27 March 2021, the ESOP trusts held 0.8 million shares (last year:
1.2 million) in the Company, with a market value of £15.0 million (last year: £15.7 million). In the 52 weeks to
27 March 2021 the ESOP trusts and the Company have waived their entitlement to dividends of £nil
(last year: £1.0 million).
The capital reserve consists of the capital redemption reserve arising on the purchase of own shares.
298
298
Financial Statements | Notes to the Company Financial Statements
J. Dividends
Prior year final dividend paid £nil per share (prior year: 31.5p)
Interim dividend paid £nil per share (prior year: 11.3p)
Total
52 weeks to
27 March
2021
£m
–
–
–
52 weeks to
28 March
2020
£m
129.2
46.0
175.2
A final dividend in respect of the 52 weeks to 27 March 2021 of 42.5p (last year: £nil) per share, amounting to
£171.9 million, 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
6 August 2021 to the shareholders on the register at the close of business on 2 July 2021. The ex-dividend date is 1
July 2021 and the final day for dividend reinvestment plan (‘DRIP’) elections is 16 July 2021.
K. Financial guarantees
On 25 November 2014, the Group entered into a £300.0 million multi-currency revolving credit facility with a
syndicate of banks. In March 2020, the Group drew down on this facility in full. On 9 June 2020 the Group repaid this
facility in full. On 18 June 2020 the Group extended the facility for 12 months, and it now matures in November 2022.
A waiver for the existing leverage covenant for the periods ending up to and including 25 September 2021 and a
restriction on shareholder distributions during the period of the waiver, which the Group can opt out of prior to
25 September 2021, was agreed. As a result of the intention to declare a final dividend, the Group will need to opt out
of the waiver prior to the Annual General Meeting in July 2021.
The Group is in compliance with the financial leverage and other covenants within this facility, taking into account the
waiver referred to above, and has been in compliance throughout the financial year. The Group expects to be in
compliance with the covenants, as required, when the waiver is opted out of before the Annual General Meeting.
The companies acting as guarantor to the facility consist of Burberry Group plc, Burberry Limited, Burberry Asia
Limited, Burberry (Wholesale) Limited (US) and Burberry Limited (US). Based on the liquidity and expected cash
generation of Burberry Limited, the expected credit loss in respect of these financial guarantees, as at 27 March 2021,
is not considered to be significant. As a result, no liability has been recorded (last year: £nil).
A potential liability may arise in the future if one of the Group members defaults on these loan facilities. Each
guarantor, including Burberry Group plc, would be liable to cover the amounts outstanding, including principal and
interest elements.
L. Audit fees
The Company has incurred audit fees of £0.1 million for the current year which are borne by Burberry Limited (last
year: £0.1 million).
M. Employee costs
The Company has no employees and therefore no employee costs are included in these financial statements for the
52 weeks to 27 March 2021 (last year: £nil).
299
299
Shareholder Information
SHAREHOLDER
INFORMATION
General shareholder enquiries
Enquiries relating to shareholdings, such as the transfer
Website
The investor section of Burberry Group plc’s
of shares, change of name or address, lost share
website, Burberryplc.com, contains a wide range of
certificates or dividend cheques, should be referred to
information including:
the Company’s Registrar at:
Equiniti
Aspect House
• Regulatory news
• Share price information
• Dividend history, share analysis and the investment
Spencer Road, Lancing West Sussex, BN99 6DA
calculator
Tel: 0371 384 2839 (Lines are open 8.30am to 5.30pm,
• Financial results announcements
Monday to Friday.)
• Frequently asked questions
Please dial +44 121 415 7047 if calling from outside
the UK or see help.shareview.co.uk for
It is also possible to sign up to receive email alerts for
additional information.
RNS news and press releases relating to Burberry Group
American Depositary Receipts
We have a sponsored Level 1 American Depositary
Receipt (ADR) programme to enable USA investors to
plc at www.burberryplc.com/en/alerts.html.
Annual General Meeting
Our AGM will be held at Horseferry House 2, 1a Page
purchase ADRs in US Dollars. Each ADR represents one
Street, London, SW1P 2PQ, on Wednesday, 14 July 2021.
Burberry ordinary share.
The Notice of Meeting, which includes details of the
business to be conducted at the meeting, is available on
For queries relating to ADRs in Burberry, please use the
our Company website at Burberryplc.com.
following contact details:
BNY Mellon Shareowner Services
restrictions on public gatherings that are in place at the
P.O. BOX 505000 Louisville, KY 40233-5000
date of approval of the Annual Report and may continue
Tel: toll free within the USA: +1 888 269 2377
to be in place on 14 July 2021, we are proposing to hold
Tel: international: +1 201 680 6825
the AGM with the minimal quorum present and provide
Email enquiries: shrrelations@cpushareownerservices.com
shareholders with a virtual meeting platform where they
Due to the uncertainty surrounding COVID-19 and the
Website: www.mybnymdr.com
will be able to watch the proceedings of the meeting and
have the opportunity to submit questions to the Board
Managing your shares online
Shareholders and employees can manage their Burberry
(for further details see Notice). As such, we strongly
discourage shareholders from physically attending the
holdings online by registering with Shareview, a secure
meeting and to submit their Form of Proxy electronically
online platform provided by Equiniti. Registration is a
or by post appointing the Chairman of the meeting to
straightforward process and allows shareholders to:
vote on their behalf.
• access information on their shareholdings, including
The voting results for the 2021 AGM will also be
share balance and dividend information
accessible on Burberryplc.com shortly after the meeting.
• sign up for electronic shareholder communications
• buy and sell shares
• update their records following a change of address
Our privacy policy
Please see the privacy policy on www.burberryplc.com/
• have dividends paid into their bank account
en/investors/shareholder-centre/shareholder-privacy-
• vote by proxy online in advance of general meetings
notice.html for details on how Burberry collects and uses
of the Company
shareholder personal information.
Burberry encourages shareholders to sign up for
electronic communication as it allows information to be
disseminated quickly and efficiently and also reduces
paper usage, which makes a valuable contribution to our
global footprint.
300
Shareholder Information
Dividends
Our capital allocation policy remains in place, prioritising
Dividend Reinvestment Plan
Our Dividend Reinvestment Plan (DRIP) enables
investment in the long-term growth of our business and
shareholders to use their dividends to buy further
dividend distribution to shareholders. However, given the
Burberry shares. Full details of the DRIP can be obtained
uncertainty caused by COVID-19, the Board believed it
from Equiniti.
prudent to protect the Company’s liquidity position and
an interim dividend was not declared for FY 2020/21.
Duplicate accounts
Shareholders who have more than one account due to
A final dividend of 42.5p per share has been proposed
inconsistency in account details may avoid duplicate
and, subject to approval at the AGM on 14 July 2021,
mailings by contacting Equiniti and requesting the
will be paid according to the following timetable:
amalgamation of their share accounts.
Ex-dividend date:
Final dividend record date:
Deadline for return of DRIP
mandate forms:
1 July 2021
2 July 2021
Electronic communication
Shareholders may at any time choose to receive all
shareholder documentation in electronic form via the
16 July 2021
internet, rather than in paper format. Shareholders
Final dividend payment date:
6 August 2021
who decide to register for this option will receive an
email each time a shareholder document is published
The ADR local payment date will be approximately five
on the internet. Shareholders who wish to receive
business days after the proposed dividend payment date
documentation in electronic form should register online
for ordinary shareholders.
at www.shareview.co.uk.
Dividends can be paid by BACS directly into a UK bank
Equiniti offers a range of shareholder information and
account, with the dividend confirmation being sent to
services online at www.shareview.co.uk. A textphone
the shareholder’s address. This is the easiest way for
facility for those with hearing difficulties is available
shareholders to receive dividend payments and avoids
by calling: 0371 384 2255. Lines are open 8.30am to
the risk of lost or out-of-date cheques. A dividend
5.30pm, Monday to Friday.
mandate form is available from Equiniti or online at
www.shareview.co.uk.
Financial calendar
AGM:
If you are a UK taxpayer, please note that you are
First quarter trading update:
14 July 2021
16 July 2021
eligible for a tax-free Dividend Allowance of £2,000 in
Interim results announcement:
November 2021
each tax year.
Third quarter trading update:
Preliminary results announcement:
January 2022
May 2022
Any dividends received above this amount will be subject
to taxation. Dividends paid on shares held within
pensions and Individual Savings Accounts (ISAs) will
continue to be tax-free. Further information can be
found at www.gov.uk/tax-on-dividends.
Dividends payable in foreign currencies
Equiniti is able to pay dividends to shareholder bank
Registered office
Burberry Group plc
Horseferry House
Horseferry Road
London SW1P 2AW
Registered in England and Wales
accounts in over 30 currencies worldwide through the
Registered Number 03458224 Burberryplc.com
Overseas Payment Service. An administrative fee will
be deducted from each dividend payment. Further
details can be obtained from Equiniti or online at
Share buy-back
The Company has not undertaken a share buy-back in
www.shareview.co.uk.
FY 2020/21.
301
Shareholder Information
Share dealing
Burberry Group plc shares can be traded through most
Unauthorised brokers (boiler room scams)
Shareholders are advised to be very wary of any
banks, building societies or stock brokers. Equiniti offers
unsolicited advice, offers to buy shares at a discount, or
a telephone and internet dealing service. Terms and
offers of free company reports. These are typically from
conditions and details of the commission charges are
overseas-based “brokers” who target UK shareholders
available on request.
offering to sell them what often turn out to be worthless
or high-risk shares in USA or UK investments. These
For telephone dealing, please telephone 0345 603 7037
operations are commonly known as boiler rooms.
between 8.00am and 4.30pm, Monday to Friday, and for
internet dealing visit www.shareview.co.uk/dealing.
If you receive any unsolicited investment advice, get the
correct name of the person and organisation, and check
Shareholders will need their reference number which can
that they are properly authorised by the FCA before
be found on their share certificate.
getting involved. This can be done by visiting
www.fca.org.uk/register/.
ShareGift
Shareholders with a small number of shares, the value of
If you deal with an unauthorised firm, you will not be
which makes them uneconomical to sell, may wish to
eligible to receive payment under the Financial Services
consider donating their shares to charity through
Compensation Scheme if things go wrong.
ShareGift, a donation scheme operated by The Orr
Mackintosh Foundation. A ShareGift donation form
If you think you have been approached by an
can be obtained from Equiniti. Further information is
unauthorised firm, you should contact the FCA consumer
available at www.sharegift.org or by telephone
helpline on 0800 111 6768.
More detailed information can be found on the FCA
website at www.fca.org.uk/consumers/protect-yourself/
unauthorised-firms.
on 0207 930 3737.
Tips on protecting your information
• Keep any documentation that contains your
shareholder reference number in a safe place and
shred any unwanted documentation
• Inform our registrar, Equiniti, promptly when you
change address
• Be aware of dividend payment dates and contact the
Registrar if you do not receive your dividend cheque or,
better still, make arrangements to have the dividend
paid directly into your bank account
• Consider holding your shares electronically in a CREST
account via a nominee
302
Pages 1-302 are printed on Revive Offset which is made from 100% de-inked pulp recycled fibre.
The cover of this report is printed on Keaykolour Original. This product is made of recycled materials and
other controlled sources. Printed in the UK by Pureprint who are a Carbon Neutral Company using their
technology. Both the manufacturing mills and printer are registered to the Environmental Management
System ISO14001 and are Forest Stewardship Council® (FSC®) chain-of-custody certified.
The copyright for the image on page 101 is owned by Joël van Houdt.
Disclaimer
The purpose of this Annual Report is to provide information to the members of Burberry Group plc. This document contains certain
statements with respect to the operations, performance and financial condition of the Group including among other things, statements
about expected revenues, margins, earnings per share or other financial or other measures. Forward-looking statements appear in a
number of places throughout this document and include statements regarding our intentions, beliefs or current expectations and those
of our officers, Directors and employees concerning, amongst other things, our results of operations, financial condition, liquidity,
prospects, growth, strategies and the business we operate. By their nature, these statements involve uncertainty and subject to a
number of risks since future events and circumstances can cause actual results and developments to differ materially from those
anticipated. The forward-looking statements reflect knowledge and information available at the date of preparation of this document
and unless otherwise required by applicable law the Company undertakes no obligation to update or revise these forward-looking
statements. Nothing in this document should be construed as a profit forecast. All members, wherever located, should consult any
additional disclosures that the Company may make in any regulatory announcements or documents which it publishes. The Company
and its Directors accept no liability to third parties in respect of this document save as would arise under law of England and Wales.
This document does not constitute an invitation to underwrite, subscribe for or otherwise acquire or dispose of any Burberry Group plc
shares, in the UK, or in the USA, or under the USA Securities Act 1933 or any other jurisdiction.
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