ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH 2009
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HIGHLIGHTS
l Sales increased by 14% to £58.6 million (2008: £51.2 million)
l UK retail sales growth of 15%, like-for-like growth of 2%
l Wholesale sales increased by 15%
l Profit before tax ahead of market expectations at £4.2 million (2008: £5.2 million)
l Cash of £3.7 million (2008: £10.2 million)
l UK retail sales for the first 10 weeks of the new year up 26%, like-for-like up 21%
Group revenue
Gross profit
Profit before tax
Basic EPS
Final dividend proposed per share
2009
£58.6m
£35.1m
£4.2m
4.5p
2.0p
2008
£51.2m
£30.6m
£5.2m
6.0p
2.0p
Cash
£3.7m
£10.2m
Change
+14%
+15%
–19%
–25%
–
–64%
6 YEAR REVENUE GROWTH
(£m)
30.1
25.3
58.6
51.2
43.4
45.1
2004*
2005*
2006*
2007
2008
2009
*prepared under UK GAAP
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009
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1
3
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7
9
12
16
17
18
18
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20
21
50
58
60
CONTENTS
Highlights
Chairman and Chief Executive’s review
Financial review
Directors, Secretary and advisers
Corporate governance
Directors’ remuneration report
Directors’ report
Statement of Directors’ responsibilities
Independent auditors’ report
Consolidated income statement
Consolidated statement of recognised income and expense
Consolidated balance sheet
Consolidated cash flow statement
Notes to the consolidated financial statements
Company financial statements
Notice of Annual General Meeting
Group five year summary
2 MULBERRY GROUP PLC
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CHAIRMAN AND CHIEF EXECUTIVE’S REVIEW
The Group has completed a successful year with sales growth of 14% to £58.6 million (2008: £51.2 million). Sales grew
by 29% during the first half and then slowed from September 2008 running up to Christmas as the economic uncertainty
intensified. Subsequently, UK wholesale and retail sales picked up strongly during the last two weeks of December 2008
and continued to show good growth compared to the prior year through to 31 March 2009.
The result of this last quarter performance in the UK was that profit before tax was ahead of market expectations at
£4.2 million (2008: £5.2 million). A final dividend of 2 pence per share will be recommended for approval by shareholders
(2008: 2 pence).
We continued to invest in the business both in the UK and internationally, using retained profits and cash flow to invest
in new shops, developing new products, strengthening the management team and increasing expenditure on marketing.
This strategy has enabled the Group to continue to grow and increase market share despite demanding market conditions.
The Group’s balance sheet is strong with no debt. Stocks have risen due to growth in the business and because production
and purchases were planned and committed in anticipation of higher sales before the downturn in the economy. Production
and purchases have been adjusted for the forthcoming year and the benefits of this are expected to flow through as a
reduction in working capital and an increase in cash. The Group’s positive cash position means that it is able to continue
to pursue its growth objectives.
BUSINESS REVIEW
The business has continued to perform well despite the global slowdown. While Mulberry’s performance has been strong,
the Group has not been immune to broader market conditions. Starting in mid-September 2008, sales slowed in all markets,
but the pattern was not uniform with the USA being hardest hit.
Trading in the UK was variable but sales returned to healthy growth during the last two weeks of December 2008 and this
was sustained through to the financial year end. We resisted pressure from other retailers to go on sale early resulting
in planned margins being achieved during the important Christmas period. The upturn in sales performance coincided
with the introduction within our Spring 2009 collection of the Mitzy family of bags which have become immediate best
sellers. We have also benefited from an increase in demand from tourists, particularly in London, due to the weaker pound.
Accessories remain our core business and continue to account for over 90% of Group sales. Handbags have continued to
be the mainstay of the accessories business.
In the UK we opened shops in Leeds and the new Westfield development in west London. Our UK retail business grew
by 15% during the year and like-for-like shop sales increased by 2%. Online sales grew by 38% year on year helped by the
introduction of a US dollar denominated site during November 2008 and a euro denominated site during February 2009.
Our online presence has become a key channel for the development of Mulberry as a modern global luxury brand.
The Group’s wholesale sales for the year grew by 15%. Growth slowed during the second half as buyers became increasingly
cautious; however, our order book for the Spring/Summer 2009 season grew by 3% compared to the prior year.
In Asia, our Korean business with our partner SHK continues to make good progress with the opening of a further department
store shop in shop, bringing the total to six plus two duty free outlets. As previously reported, the arrangements with our
Japanese partner finished during January 2009. Since that date, we have been working directly with the influential Isetan
department store in Tokyo. Our business with our partner Club 21 in the rest of Asia continues satisfactorily.
In Europe, our partners opened two new shops in Athens and Copenhagen Airport during the financial year. While in the
Middle East, our partners opened two new shops in Dubai and Kuwait.
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009
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CHAIRMAN AND CHIEF EXECUTIVE’S REVIEW
(continued)
CURRENT TRADING AND OUTLOOK
Our UK shops have continued to perform well since the financial year end. During the first ten weeks of the current financial
year, total retail sales in the UK were 26% above prior year with like-for-like sales up 21%. A pattern has developed with
like-for-like sales in our full price shops increasing by 11% and in our off price stores by 45%. This growth in sales has
been due to continued demand for the Group’s products combined with the success of the new Mitzy family of bags and
increased demand from tourists. Despite this, we remain cautious given the weak domestic economy.
Our wholesale customers remain very cautious and this is reflected in their reduced buying budgets. This is despite the
fact that the sell through of Mulberry products remains strong. We have planned on the basis of third party wholesale
orders dropping year on year by approximately 15% for the Autumn/Winter 2009 season and 4% for the Spring/Summer
2010 season.
During the year to 31 March 2010, our international partners are scheduled to open three further shops in Athens, Qatar
and Helsinki Airport respectively.
In Asia, our Korean partner continues to perform well and opened another department store shop in shop during May 2009
bringing the total to seven plus two duty free outlets. One further shop in shop is planned for Korea in early 2010.
As announced on 14 May 2009, we have reached an agreement with our joint venture partner in the USA to take full
control of the wholesale and retail business in the US. Our retail operation will be focused on the two shops in New York
and the wholesale business which will be controlled by the Mulberry team in London. This will allow the US website
which is operated from the UK to be integrated with the rest of the US business, which in turn will simplify marketing and
administration. The arrangement has been agreed in principle and is subject to the completion of legal formalities. In the
meantime Mulberry assumed management control of these US operations from 1 April 2009.
As previously reported, we have outgrown our existing London premises and are continuing to work on a project to
relocate our London offices and showrooms during 2010.
Overall, we have made a very positive start to the current financial year. However, we remain cautious due to the uncertain
economic climate.
DIVIDEND
The Board is recommending the payment of a dividend on the ordinary shares of 2 pence per share (2008: 2 pence) which
will be paid on 21 August 2009 to ordinary shareholders on the register on 24 July 2009.
STAFF
I would like to thank all of our staff for their enthusiasm and commitment which are so important to the brand’s future
development. The achievements of the last year are a direct result of their efforts and would not have been possible
without them.
Godfrey Davis
Chairman and Chief Executive
17 June 2009
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FINANCIAL REVIEW
GROSS MARGIN
The Group’s gross profit as a percentage of revenue has remained consistent with the prior year at 60%. Although some
pressure on costs was experienced due to the devaluation of sterling, this has been counteracted by the increase in the
proportion of retail sales to wholesale sales, which carry a higher margin.
NET OPERATING EXPENSES
Net operating expenses for the year increased by £5.4 million to £31.2 million (2008: £25.8 million). This increase reflects
£2.1 million of additional costs associated with expanding the retail network, £1.5 million increase in employee costs,
£0.8 million of extra marketing investment in building the international Mulberry brand and £0.2 million incurred with the
reorganisation of the US business. This reflects our investment in growing the Group and providing a firm foundation for
the future.
FINANCE INCOME AND EXPENSE
The decrease in net finance income of £0.1 million has resulted from the fall in interest rates achieved on cash held on
deposit and through the decrease in cash balances held on deposit throughout the year.
TAXATION
The Group reported an effective tax rate of 38.2% (2008: 33.7%), resulting in a tax charge of £1.6 million (2008: £1.8 million).
The increase in the effective rate compared to the prior year is due to the withdrawal of Industrial Building Allowances
(3.1%) and the non-deductible expense for share-based payments (1.4%). The accounting for the withdrawal of Industrial
Building Allowances under IFRS gives rise to a one-off deferred tax expense.
BALANCE SHEET
Capital expenditure on tangible fixed assets for the year totalled £2.4 million (2008: £2.6 million) and included the fit-out
of the new stores opened during the year. The expenditure of £0.4 million on intangible fixed assets reflects the ongoing
investment in the Group’s new ERP system, the retail module of which was rolled out during February 2009.
Stock levels have increased by £7.0 million to £14.8 million (2008: £7.8 million) resulting from the growth of the business and
the impact of sales falling below expectations during the second half of the year. Purchasing decisions are made six months
in advance of the selling season and therefore when sales declined during the autumn of 2008, the inflow of goods could not
be stemmed in the short term. Purchases have been adjusted to reflect the current trading conditions and with the objective
of reducing stocks to normal levels by the end of the current financial year.
CASH FLOW
The principal source of funds was cash generated from operations which amounted to £6.2 million (2008: £6.1 million)
during the year before changes in working capital. The net cash balance has reduced to £3.7 million (2008: £10.2 million)
due primarily to the extra investment in stock.
SHAREHOLDER RETURN
The basic earnings per share for the year declined by 25% to 4.5p (2008: 6.0p). This reflects the 19% reduction in pre-tax
profit and the significant increased tax charge explained above.
Roger Mather
Group Finance Director
17 June 2009
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009
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DIRECTORS, SECRETARY AND ADVISERS
Directors:
Godfrey Pawle Davis FCA
Roger Thomas Mather FCA
Robert (Robin) Edward Graeme Gibson
Andrew Christopher (Chris) Roberts FCCA
Steven Grapstein
Bernard Lam Kong Heng
Edward Vandyk
Registered Office:
The Rookery, Chilcompton, Bath, Somerset, BA3 4EH
Secretary:
Roger Thomas Mather FCA
Nominated Adviser and
Nominated Broker:
Altium Capital Limited
London
Registered Auditors:
Solicitors:
Principal Bankers:
Registrars:
Deloitte LLP
Bristol
Osborne Clarke
Bristol
HSBC Bank plc
Bristol
Computershare Investor Services PLC
PO Box 82
The Pavilions
Bridgwater Road
Bristol
BS99 7NH
6 MULBERRY GROUP PLC
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CORPORATE GOVERNANCE
The Company is listed on the Alternative Investment Market and is not required to comply with the 2006 Combined
Code issued by the Financial Reporting Council on Corporate Governance. However, the Directors support the principles
contained in these requirements and apply these where they consider they are appropriate to Mulberry Group plc.
THE BOARD OF DIRECTORS
The Board comprises two Executive Directors and five Non-Executive Directors. Details of the Directors are set out on
page 6. Since the roles of Chairman and Chief Executive are not separated, as recommended by the Combined Code,
the Directors consider it important that the Board should include Non-Executive Directors who bring strong independent
judgement and considerable knowledge and experience to the Board’s deliberations.
The Board meets formally on a bi-monthly basis and is responsible inter alia for overall Group strategy, investments and
capital projects and for ensuring that an appropriate framework of internal control is in place throughout the Group.
The Executive Directors are each employed under a contract of employment which can be terminated on not more than
one year’s notice. The Non-Executive Directors provide their services under twelve month agreements renewed annually
in January.
NOMINATION AND REMUNERATION COMMITTEE
The Nomination and Remuneration Committee is chaired by a Non-Executive Director, Robin Gibson. It is responsible
for nominating Executive Directors to the Board and then determining the remuneration and terms and conditions of
employment of Executive Directors and senior employees of the Group. The Directors’ remuneration report is set out on
pages 9 to 11.
AUDIT COMMITTEE
The Audit Committee is chaired by a Non-Executive Director, Chris Roberts. It is the opinion of the Board that all Directors
should attend Audit Committee meetings where possible as part of the programme to maintain the Group’s systems of
internal control. The Committee may examine any matters relating to the financial affairs of the Group. This includes review
of the annual financial statements prior to their approval by the Board, together with accounting policies and compliance
with accounting standards, and of internal control procedures and monthly financial reporting, and other related functions
as the Committee may require. The Non-Executive Directors have access to the Group’s auditors and legal advisers at any
time without Executive Directors being present.
INTERNAL FINANCIAL CONTROL
The Board has overall responsibility for the Group’s systems of internal financial control and for monitoring their effectiveness.
The Directors place considerable importance on maintaining full control and direction over appropriate strategic, financial,
organisational and compliance issues, and have put in place an organisational structure with formally defined lines of
responsibility and delegation of authority. There are established procedures for planning and capital expenditure, for
information and reporting systems and for monitoring the Group’s business and its performance. Adherence to specified
procedures is required at all times and the Board actively promotes a culture of quality and integrity. Compliance is
monitored by the Directors.
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009
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CORPORATE GOVERNANCE
(continued)
The systems of internal financial control are designed to provide reasonable, but not absolute, assurance against material
misstatement or loss. They include comprehensive budgeting systems with an annual budget approved by the Board,
monthly consideration of actual operational results compared with budgets, forecasts and regular reviews by the Board of
year end forecasts. The Board reports to shareholders half-yearly.
The Group’s control systems address key business and financial risks. Matters arising are reviewed on a regular basis.
Performance indicators are reviewed at least monthly to assess progress towards objectives. Variances from approved
plans are followed up vigorously.
The auditors are engaged to express an opinion on the financial statements. They review and test the system of internal
financial control and the data contained in the financial statements to the extent necessary to express their audit opinion.
GOING CONCERN
After making enquiries, the Directors have a reasonable expectation that the Company will have adequate resources to
continue in operational existence for the foreseeable future. More information on how the Board assesses and controls the
principal risks of the business (including going concern) is given within the Directors’ report. Accordingly, they continue to
adopt the going concern basis in preparing the Annual Report and financial statements.
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DIRECTORS’ REMUNERATION REPORT
Mulberry Group plc is listed on the Alternative Investment Market and therefore is not required to prepare a Directors’
remuneration report.
The following narrative disclosures are prepared on a voluntary basis and are not subject to audit.
The Nomination and Remuneration Committee comprises:
l Robin Gibson (Chairman and Non-Executive Director)
l Chris Roberts (Non-Executive Director)
l Steven Grapstein (Non-Executive Director)
l Bernard Heng (Non-Executive Director)
l Edward Vandyk (Non-Executive Director)
The Committee decides the remuneration policy that applies to Executive Directors and the Group’s other senior
management. In setting the policy it considers a number of factors including:
l the basic salaries and benefits available to Executive Directors of comparable companies;
l the need to attract and retain Directors of an appropriate calibre; and
l the need to ensure Executive Directors’ commitment to the continued success of the Group by means of incentive
schemes.
The Committee meets at least once a year in order to consider and set the annual salaries for Executive Directors,
having regard to personal performance. Executive Directors’ salaries are reviewed on 31 March each year, along with the
remuneration of all other Group employees.
REMUNERATION OF NON-EXECUTIVE DIRECTORS
The Non-Executive Directors each receive a fee for their services, which is agreed by the Board taking into account the role
to be undertaken. They do not receive any pension or other benefits from the Company apart from a small allowance of
Mulberry products, nor do they participate in any of the share option or bonus schemes.
The Non-Executive Directors are appointed for a twelve month term.
REMUNERATION POLICY FOR EXECUTIVE DIRECTORS
The Company’s remuneration policy for Executive Directors is to:
l have regard to the Directors’ experience and the nature and complexity of their work in order to pay a competitive
salary that attracts and retains Directors of the highest quality;
l link individual remuneration packages to the Group’s long-term performance through the award of share options and
incentive schemes;
l provide post-retirement benefits through the Group’s pension schemes; and
l provide employment-related benefits including the provision of a company car or cash alternative, life assurance,
insurance relating to the Director’s duties, medical insurance and permanent health insurance.
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009
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DIRECTORS’ REMUNERATION REPORT
(continued)
SALARIES AND INCENTIVE BONUSES
Each Executive Director receives a base salary and an annual incentive bonus which shall not in any year exceed 50% of the
basic salary for the Director, without the prior sanction of the Nomination and Remuneration Committee. The base salary
reflects job responsibility, market value and the sustained level of individual performance.
The long-term incentive strategy for the Executive Directors and management team has been revised by the Nomination
and Remuneration Committee to include a balance of benefits to reward current performance and long-term commitment.
A new unapproved share option scheme was introduced in April 2008 following the expiry of the previous scheme and a
deferred bonus plan commenced in June 2008. The Mulberry Group plc 2008 Deferred Bonus Plan represents a long-term
award scheme where participants receive all or part of their annual bonus in shares. These shares are held as deferred
shares in the Mulberry Group plc Employee Share Trust. Matching shares are then granted and vest after a period of two
years conditional upon the participant remaining an employee of the Group and the original deferred shares remaining in
the Trust.
The following information is required by the Companies Act and is subject to audit.
Executive Directors
Godfrey Davis
Roger Mather
Non-Executive Directors
Robin Gibson
Chris Roberts
Steven Grapstein
Bernard Heng
Edward Vandyk
Previous Director
Guy Rutherford
Total
207
134
17
17
17
17
17
–
426
Fees/
Basic salary
£’000
Bonus
£’000
Taxable
Pension
benefits contributions
£’000
£’000
2009
Total
£’000
342
220
17
17
17
17
18
–
2008
Total
£’000
298
–
18
17
17
17
18
124
509
60
50
–
–
–
–
–
–
24
17
–
–
–
–
1
–
51
19
–
–
–
–
–
–
110
42
70
648
The emoluments disclosed above do not include any amounts for the value of share options to subscribe for ordinary
shares in the Company granted to or held by the Directors, or the potential matching shares granted through the Deferred
Bonus Plan.
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Details of the options granted under the unapproved option schemes are as follows:
Godfrey Davis
Godfrey Davis
Roger Mather
31 March
31 March
2008
Granted
Exercised
Forfeited
2009
100,000
–
–
–
150,000
250,000
–
–
–
–
–
–
100,000
150,000
250,000
The outstanding options are exercisable between 4 August 2008 and 25 July 2018.
Details of the potential matching shares granted under the Deferred Bonus Plan are as follows:
31 March
31 March
2008
Granted
Exercised
Forfeited
2009
Godfrey Davis
Roger Mather
–
–
10,034
4,014
–
–
–
–
10,034
4,014
Exercise
price (p)
145.5
144.5
144.7
Exercise
price (p)
–
–
The matching shares will vest between 15 August 2010 and 15 August 2018. The market price of the shares at the date of
the award was 147p.
The market price of the ordinary shares at 31 March 2009 was 64.25p (2008: 133p) and the range during the year was 64p
to 185.5p (2008: 282p to 111p).
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009 11
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DIRECTORS’ REPORT
The Directors present their report on the affairs of the Group, together with the financial statements and independent
auditors’ report, for the year ended 31 March 2009.
BUSINESS REVIEW AND PRINCIPAL ACTIVITIES
The Group’s principal activities are the design and manufacture or sourcing of fashion accessories and clothing and their
subsequent sale through wholesale channels or the Group’s own shops in home and export markets. There have not been
any significant changes in these activities during the year under review. The Directors are not aware, at the date of this
report, of any likely major changes in the Group’s activities during the next year.
The Company’s principal activity is that of a holding company.
The Group continues to invest in design and development in order to develop and market two accessory and clothing
collections per year. This results in the continuous introduction of new products and updates to existing products. The
Directors regard this investment in design and product development as necessary for continuing success in the medium
to long-term future.
The Chairman and Chief Executive’s review on page 3 and the Financial review on page 5 provide a review of the business
for the year and future developments.
PRINCIPAL RISKS AND UNCERTAINTIES
The management of the business and the execution of the Group’s growth strategies are subject to a number of risks,
which could adversely affect the Group’s future development.
Competitive pressure and changes in consumer demand and fashion are continuing risks, which could result in the loss of
sales to key competitors. The Group manages this risk by the continuous investment in the design of new products and
marketing to stimulate customer interest and by maintaining strong relationships with customers.
The current adverse economic climate has and could continue to affect sales both in the UK and internationally. A significant
amount of Mulberry sales are generated in the UK. As a result, a further deterioration in the UK economy that reduced
spending by consumers on luxury goods could materially affect our trading results. Success of the Group’s strategy to
increase penetration of international markets is expected to reduce the impact of this risk. The Group has a policy of
insuring its receivables or seeking other security where insurance cover is not available. The impact on current trading is
discussed further in the Chairman and Chief Executive’s review.
A major terrorist attack, particularly in central London, could seriously affect our operations. The Group has developed a
business continuity plan to mitigate the impact on the business, where possible.
The Group continues to engage in a substantial programme of change. The next phase of the implementation of a new
Group ERP system, replacing the Group’s retail systems was successfully completed in the year. Over the next two years,
the implementation will cover the Group’s remaining systems including distribution, planning, manufacturing and sourcing.
If this project were to be unsuccessful, it could have a significant impact on operations. A comprehensive management
process and significant pre-implementation testing are part of an intensive process designed to minimise the risks of
the project.
The Group’s sales and purchases are made in sterling, euros and US dollars and so it is exposed to the movement in the
euro and the US dollar to sterling exchange rates. The Group manages this risk by building a natural hedge of euro and
US dollar denominated sales and purchases whereby the in and outflows of euros and dollars are similar and covers the
balance through foreign exchange contracts.
12 MULBERRY GROUP PLC
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In order to ensure that the business remains a going concern, the management of cash is of fundamental importance. The
long lead times associated with the procurement of Mulberry products means that inventories have built up significantly
over the last year as the economic downturn has impacted sales. This has led to a fall in the level of cash held by the
Group. A series of initiatives have already been implemented to rectify this stock imbalance and we anticipate positive
cash flows for the year ending 31 March 2010. The Group currently has no debt but none the less has organised overdraft
facilities of £4.5 million. The Group’s banking facilities were renewed in May 2009 and these will remain in place until
30 June 2010. As such, the Group is on a firm financial footing and confident of its going concern.
RESULTS AND DIVIDENDS
The results for the year are set out in the Income Statement. The Directors are recommending the payment of a final
dividend of 2.0p per ordinary share (2008: 2.0p), to be paid on 21 August 2009 to ordinary shareholders on the register on
24 July 2009.
POST BALANCE SHEET EVENT
Subsequent to the year end the Group has entered into an agreement to restructure its US operations and take control
of the trade and assets of the retail and wholesale business previously undertaken by an associate, Mulberry USA LLC.
Further details of this restructuring are given in the Chairman and Chief Executive’s review and note 32 to the consolidated
financial statements.
TREASURY AND FOREIGN EXCHANGE
The Group has continued a policy of balancing its currency exchange exposures which arise through normal trading. This
is achieved through the natural hedge which exists in which the total inflows and outflows generated from normal trading,
principally in the euro and US dollar, are balanced to similar levels. This minimises the potential impact on the Group of
movements in exchange rates.
Where necessary the Group enters into forward foreign exchange contracts to manage the currency risks arising from
the Group’s operations and its sources of finance not covered by the natural hedge. There were no open forward foreign
exchange contracts at the year end. The Group’s policy is and has been throughout the year that no trading in financial
instruments shall be undertaken.
The Group’s financial instruments, other than derivatives comprise cash and liquid resources and various items such as
trade debtors and trade creditors that arise directly from its operations.
DIRECTORS AND THEIR INTERESTS
The Directors who served during the year and subsequently are shown below.
Executive Directors
Godfrey Davis FCA, 60, is Chairman and Chief Executive. He is a fellow of the Institute of Chartered Accountants in
England and Wales and joined Mulberry as Group Finance Director in 1987 after 15 years at Arthur Andersen, where he
was an international partner. He became Chairman and Chief Executive in November 2002.
Roger Mather FCA, 44, is the Group Finance Director. He is a fellow of the Institute of Chartered Accountants in England
and Wales having trained professionally with Price Waterhouse. He joined Mulberry during November 2007 after spending
the previous 10 years in senior finance and commercial roles within the multi-national Otto Group based both in Hong
Kong and the UK. He was appointed as Company Secretary on 20 December 2007 and was appointed as a Director on
7 May 2008.
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009 13
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DIRECTORS’ REPORT
(continued)
Non-Executive Directors
Robin Gibson, 67, is Chairman of the Nomination and Remuneration Committee. He was appointed on 1 May 1996.
Andrew Christopher Roberts FCCA, 45, is Chairman of the Audit Committee. He was appointed on 6 June 2002. Chris was
Finance Director of Astaire Group plc, an AIM quoted financial services group until December 2008. He is a fellow of the
Chartered Association of Certified Accountants.
Steven Grapstein, 51, was appointed on 17 November 2003. He is presently the Chief Executive Officer of Kuo Investment
Company (USA), an international investment group with extensive interests in the retail and hotel industries; Chairman of
Presidio International dba A/X Armani Exchange, a fashion retail company, and serves as the Lead Director on the Board of
Directors of Tesoro Petroleum Corporation, a US publicly held Fortune 500 company engaged in the oil and gas industry.
He is a certified public accountant.
Bernard Lam Kong Heng, 63, was appointed on 17 November 2003. He is presently the Chief Executive of Como
Holdings (UK) Ltd. a Singapore based company which has extensive retail, hotel and real estate operations in the UK
and internationally.
Edward Vandyk, 61, was appointed on 6 June 2002. He is Chief Executive of Astaire Group plc, an AIM quoted financial
services group.
Directors’ beneficial interests in the shares of the Company are as follows:
Godfrey Davis
Roger Mather
Robin Gibson
5p Ordinary 5p Ordinary
Shares
2008
Shares
2009
1,679,592
4,014
10,029
1,669,558
–
10,029
The other Directors had no interests in the shares of the Company. Details of Directors’ share options are disclosed in the
Directors’ remuneration report.
SUBSTANTIAL SHAREHOLDINGS
At 16 June 2009 the Company had been notified of the following interests of 3% or more of the share capital of the
Company, other than those of the Directors above:
l Challice Limited
59.6%
l Kaupthing Bank Luxembourg SA
25.4%
SUPPLIER PAYMENT POLICY
The Company’s current policy concerning the payment of its suppliers is:
l settle the terms of payment with those suppliers when agreeing the terms of each transaction;
l ensure that those suppliers are made aware of the terms of payment; and
l abide by the terms of payment, subject to the terms and conditions being met by the supplier.
At the year end, trade creditors expressed as a number of days purchases outstanding was nil for the Company (2008: nil).
For Mulberry Company (Design) Limited, the main trading subsidiary, it was 32 days (2008: 32 days).
14 MULBERRY GROUP PLC
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Proof 3
EQUAL OPPORTUNITIES
The Group is committed to an active equal opportunities policy. It is our policy to promote an environment free from
discrimination, harassment and victimisation, where everyone will receive equal treatment regardless of gender, colour,
ethnic or national origin, disability, age, marital status, sexual orientation or religion. We apply employment practices which
are fair, equitable and consistent with the skills and abilities of our employees and the needs of the business.
DISABLED EMPLOYEES
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the
applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their
employment with the Group continues and that appropriate training is arranged. It is the policy of the Group that the
training, career development and promotion of disabled persons should, as far as possible, be identical with that of
other employees.
EMPLOYEE CONSULTATION
The Group places considerable value on the involvement of its employees and has continued its previous practice of
keeping them informed on matters affecting them as employees and on the various factors affecting the performance of
the Group, which is achieved through formal and informal meetings. Employee representatives are consulted regularly on
a wide range of matters affecting their current and future interests.
CHARITABLE AND POLITICAL DONATIONS
The Group made charitable donations of £22,000 (2008: £67,000) during the year. The Group made no political donations.
AUDITORS
In the case of each of the persons who are Directors of the Company at the date when this report was approved:
l
l
so far as each of the Directors is aware, there is no relevant audit information (as defined in the Companies Act 1985)
of which the Company’s auditors are unaware; and
each of the Directors has taken all the steps that he ought to have taken as a Director to make himself aware of any
relevant audit information (as defined) and to establish that the Company’s auditors are aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of s234ZA of the Companies
Act 1985.
A resolution to reappoint Deloitte LLP as the Company’s auditors will be proposed at the forthcoming Annual
General Meeting.
By order of the Board
Roger Mather
Secretary
17 June 2009
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009 15
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Proof 3
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. The Directors are required
to prepare the Group financial statements under International Financial Reporting Standards (IFRSs) as adopted by the
European Union. The Group financial statements are also required by law to be properly prepared in accordance with the
Companies Act 1985.
International Accounting Standard 1 requires that IFRS financial statements present fairly for each financial year the
Company’s financial position, financial performance and cash flows. This requires the faithful representation of the effects
of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities,
income and expenses set out in the International Accounting Standards Board’s ‘Framework for the preparation and
presentation of financial statements’. In virtually all circumstances, a fair presentation will be achieved by compliance with
all applicable IFRSs. However, Directors are also required to:
l
l
l
properly select and apply accounting policies;
present information, including accounting policies, in a manner that provides relevant, reliable, comparable and
understandable information; and
provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable
users to understand the impact of particular transactions, other events and conditions on the entity’s financial position
and financial performance.
The Directors have elected to prepare the parent company financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The parent company
financial statements are required by law to give a true and fair view of the state of affairs of the Company. In preparing these
financial statements, the Directors are required to:
l select suitable accounting policies and then apply them consistently;
l make judgements and estimates that are reasonable and prudent; and
l state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed
and explained in the financial statements.
The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time
the financial position of the Company and enable them to ensure that the parent company financial statements comply
with the Companies Act 1985. They are also responsible for safeguarding the assets of the Company 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 corporate and financial information included on
the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
16 MULBERRY GROUP PLC
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Proof 3
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF MULBERRY GROUP PLC
We have audited the Group financial statements of Mulberry Group plc for the year ended 31 March 2009 which comprise
the consolidated income statement, the consolidated statement of recognised income and expense, the consolidated
balance sheet, the consolidated cash flow statement, and the related notes 1 to 33. These Group financial statements
have been prepared under the accounting policies set out therein. We have also audited the information in the Directors’
remuneration report that is described as having been audited.
We have reported separately on the parent company financial statements of Mulberry Group plc for the year ended
31 March 2009.
This report is made solely to the Company’s members, as a body, in accordance with section 235 of the Companies Act
1985. 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 auditors’ 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.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
The Directors’ responsibilities for preparing the Annual Report, the Directors’ remuneration report and the Group financial
statements in accordance with applicable law and International Financial Reporting Standards (IFRSs) as adopted by the
European Union are set out in the Statement of Directors’ responsibilities. Our responsibility is to audit the Group financial
statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK
and Ireland).
We report to you our opinion as to whether the Group financial statements give a true and fair view, and whether the
Group financial statements have been properly prepared in accordance with the Companies Act 1985 and whether the
part of the Directors’ remuneration report described as having been audited has been properly prepared in accordance
with the Companies Act 1985. We also report to you whether in our opinion the information given in the Directors’ report
is consistent with the Group financial statements. The information given in the Directors’ report includes that specific
information presented in the Chairman and Chief Executive’s review and Financial review that is cross referred from the
Business review section of the Directors’ report. In addition we report to you if, in our opinion, we have not received all the
information and explanations we require for our audit.
We read the other information contained in the Annual Report as described in the contents section and consider whether it
is consistent with the audited Group financial statements. We consider the implications for our report if we become aware
of any apparent misstatements or material inconsistencies with the Group financial statements. Our responsibilities do not
extend to any further information outside the Annual Report.
BASIS OF AUDIT OPINION
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing
Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the
Group financial statements and the part of the Directors’ remuneration report to be audited. It also includes an assessment of
the significant estimates and judgements made by the Directors in the preparation of the Group financial statements, and of
whether the accounting policies are appropriate to the Group’s circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary
in order to provide us with sufficient evidence to give reasonable assurance that the Group financial statements and the
part of the Directors’ remuneration report to be audited are free from material misstatement, whether caused by fraud or
other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information
in the Group financial statements and the part of the Directors’ remuneration report to be audited.
OPINION
In our opinion:
l the Group financial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union,
of the state of the Group’s affairs as at 31 March 2009 and of its profit for the year then ended;
l the Group financial statements have been properly prepared in accordance with the Companies Act 1985;
l the information given in the Directors’ report is consistent with the Group financial statements; and
l the part of the Directors’ remuneration report described as having been audited has been properly prepared in
accordance with the Companies Act 1985.
Deloitte LLP
Chartered Accountants and Registered Auditors
Bristol, United Kingdom
17 June 2009
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009 17
16783
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Proof 3
CONSOLIDATED INCOME STATEMENT
Year ended 31 March 2009
Revenue
Cost of sales
Gross profit
Administrative expenses
Other operating income
Operating profit
Share of results of associates
Finance income
Finance expense
Profit before tax
Tax
Profit for the year
Attributable to:
Equity holders of the parent
Basic earnings per share
Diluted earnings per share
All activities arise from continuing operations.
Note
2009
£’000
2008
£’000
5
58,585
(23,449)
51,174
(20,622)
35,136
30,552
(31,627)
421
(25,979)
201
3,930
34
229
(16)
4,774
63
473
(124)
4,177
5,186
(1,596)
(1,750)
2,581
3,436
2,581
3,436
pence
pence
4.5
4.5
6.0
6.0
18
10
11
12
26
14
14
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
Year ended 31 March 2009
Profit for the year
Exchange differences on translation of foreign operations
2009
£’000
2,581
278
2008
£’000
3,436
309
Total recognised income and expense for the year
2,859
3,745
Attributable to:
Equity holders of the parent
2,859
3,745
18 MULBERRY GROUP PLC
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02/07/2009
Proof 3
CONSOLIDATED BALANCE SHEET
At 31 March 2009
Non-current assets
Intangible assets
Property, plant and equipment
Interests in associates
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Obligations under finance leases
Non-current liabilities
Deferred tax liabilities
Obligations under finance leases
Total liabilities
Net assets
Equity
Share capital
Share premium account
Own share reserve
Revaluation reserve
Capital redemption reserve
Special reserve
Foreign exchange reserve
Retained earnings
Total equity
Note
15
16
18
19
20
20
24
23
22
23
25, 26
26
26
26
26
26
26
26
2009
£’000
2,527
8,872
295
2008
£’000
2,095
8,454
242
11,694
10,791
14,830
6,032
3,710
7,785
5,548
10,237
24,572
23,570
36,266
34,361
(10,726)
(1,024)
–
(10,894)
(917)
(10)
(11,750)
(11,821)
(132)
–
(132)
(17)
(4)
(21)
(11,882)
(11,842)
24,384
22,519
2,871
7,007
(49)
–
154
1,467
493
12,441
2,871
7,007
–
18
154
1,467
215
10,787
24,384
22,519
The financial statements were approved by the Board of Directors and authorised for issue on 17 June 2009. They were
signed on its behalf by:
Godfrey Davis
Roger Mather
Director
Director
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009 19
16783
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Proof 3
CONSOLIDATED CASH FLOW STATEMENT
At 31 March 2009
Operating profit for the year
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Loss on sale of property, plant and equipment
Effects of foreign exchange
Share based payments charge/(credit)
Operating cash flows before movements in working capital
Increase in stocks
Increase in debtors
(Decrease)/increase in creditors
Cash (used in)/generated by operations
Corporation taxes paid
Interest paid
Preference dividends paid
Net cash (outflow)/inflow from operating activities
Investing activities:
Interest received
Purchases of property, plant and equipment
Proceeds from sale of property, plant and equipment
Acquisition of intangible fixed assets
Net cash used in investing activities
Financing activities:
Dividends paid
Repayments of borrowings
Repayments of obligations under finance leases
Proceeds on issue of shares
Investment in own shares
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
20 MULBERRY GROUP PLC
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Proof 3
2009
£’000
2008
£’000
3,930
4,774
1,723
217
287
(117)
203
1,231
137
12
(61)
(5)
6,243
6,088
(7,045)
(484)
(205)
(1,097)
(1,679)
2,772
(1,491)
6,084
(1,374)
(16)
–
(1,685)
(121)
(56)
(2,881)
4,222
229
(2,313)
11
(362)
473
(2,418)
32
(389)
(2,435)
(2,302)
(1,148)
–
(14)
–
(49)
(861)
(1,250)
(50)
207
–
(1,211)
(1,954)
(6,527)
10,237
(34)
10,271
3,710
10,237
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Year ended 31 March 2009
1 General information
Mulberry Group plc is a company incorporated in the United Kingdom under the Companies Act 1985. The address of
the registered office is given on page 58. The nature of the Group’s operations and its principal activities are set out
in note 6 and in the Directors’ report.
These financial statements are presented in pounds sterling because that is the currency of the primary economic
environment in which the Group operates. Foreign operations are included in accordance with the policies set out in
note 3.
2 Adoption of new and revised Standards
At the date of authorisation of these financial statements, the following Standards and Interpretations which have not
been applied in these financial statements were in issue but not yet effective:
Share-based Payment – Vesting Conditions and Cancellations
Business Combinations
Operating Segments
Presentation of Financial Statements
Borrowing Costs
IFRS 2 (amended)
IFRS 3 (revised 2008)
IFRS 8
IAS 1 (revised 2007)
IAS 23 (revised 2007)
IAS 27 (revised 2008) Consolidated and Separate Financial Statements
IFRIC 13
Improvements to IFRSs (May 2008)
Customer Loyalty Programmes
The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no
material impact on the financial statements of the Group except for additional disclosures when IFRS 8 and IAS 1
(revised) come into effect for the financial year commencing 1 April 2009.
3
Significant accounting policies
Basis of accounting
The financial statements have been prepared in accordance with IFRSs adopted by the European Union.
The financial statements are prepared under the historical cost convention and under the going concern assumption.
Further details of the Directors’ considerations in relation to going concern are included in the Directors’ report.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by
the Company (its subsidiaries) made up to 31 March each year. Control is achieved where the Company has the power
to govern the financial and operating policies of each investee entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of in any year are included in the Consolidated income statement from
the date of acquisition or up to the date of disposal.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies
used into line with those used by the Group.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Goodwill
Goodwill written off to reserves under UK GAAP prior to 1998 has not been reinstated and is not included in determining
any subsequent profit or loss on disposal.
Intangible assets
Intangible assets that are acquired by the Group are stated at cost less accumulated amortisation. Amortisation is
charged to the income statement on a straight-line basis over the estimated useful life of the asset.
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009 21
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Proof 3
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
3
Significant accounting policies (continued)
Computer software that is integral to a related item of hardware is included as property, plant and equipment. All
other computer software is recorded as an intangible asset and is amortised over the estimated useful life of the asset.
Research and development
Expenditure on research is written off against profits as incurred. An internally generated intangible asset arising from
the Group’s product development is recognised only if the following conditions are met:
l An asset is created that can be identified;
l It is probable that the asset created will generate future economic benefits; and
l The development cost of the asset can be measured reliably.
Internally generated intangible assets are amortised on a straight-line basis over the useful lives. Where no internally
generated intangible asset can be recognised, development expenditure is recognised as an expense in the period
in which it is incurred.
Property, plant and equipment
Items of property, plant and equipment are stated at cost or deemed cost less accumulated depreciation and any
recognised impairment loss.
Depreciation is charged so as to write off the cost or valuation of assets over their estimated useful lives, using the
straight-line method, on the following bases:
Freehold buildings
Short leasehold land and buildings
Fixtures, fittings and equipment
Plant and equipment
Motor vehicles
Freehold land is not depreciated.
5%
over the term of the lease
10% to 33%
20%
25%
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets
or, where shorter, over the term of the relevant lease.
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales
proceeds and the carrying amount of the asset and is recognised in income.
Assets in the course of construction are not depreciated. Depreciation on these assets commences when the assets
are ready for intended use.
Impairment of tangible and intangible assets
At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where
the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs. An intangible asset with an indefinite useful life is
tested for impairment annually and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows
have not been adjusted.
22 MULBERRY GROUP PLC
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02/07/2009
Proof 3
3
Significant accounting policies (continued)
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount,
the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is
recognised as an expense immediately. Where an impairment loss subsequently reverses, the carrying amount of the
asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased
carrying amount does not exceed the carrying amount that would have been determined had no impairment loss
been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised
as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the
impairment loss is treated as a revaluation increase.
Investments in associates
An associate is an entity over which the Group is in a position to exercise significant influence, but not control or joint
control, through the participation in the financial and operating policy decisions of the investee. Significant influence is
the power to participate in the financial and operating policy decisions of the investee but is not control or joint control
over these policies. The results and assets and liabilities of associates are incorporated in these financial statements
using the equity method of accounting. Investments in associates are carried in the balance sheet at cost as adjusted
by post-acquisition changes in the Group’s share of the net assets of the associate, less any impairment in the value
of individual investments. Losses of the associates in excess of the Group’s interest in those associates are recognised
only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of
the associate.
Any excess of the cost of acquisition over the Group’s share of the fair values of the identifiable net assets of the
associate at the date of acquisition is recognised as goodwill. Any deficiency of the cost of acquisition below the
Group’s share of the fair values of the identifiable net assets of the associate at the date of acquisition (i.e. discount on
acquisition) is credited in profit or loss in the period of acquisition.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises materials, direct labour costs
and those overheads incurred in bringing the inventories to their current location and condition. Cost is calculated
using the standard cost method. Net realisable value represents the estimated selling price less all estimated costs of
completion and costs to be incurred in marketing, selling and distribution.
Revenue recognition
Revenue represents amounts receivable for goods provided in the normal course of business, net of discounts, VAT
and other sales-related taxes and intra-group transactions. Sales of goods are recognised at the point of sale, or for
the wholesale business, when goods are delivered and title has passed. Sales of gift vouchers are recognised on
presentation of the voucher for payment of goods.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to that asset’s net carrying amount.
Royalty income is accrued on a time basis as the income is earned and is recognised as other operating income.
Operating profit
Operating profit is stated after charging restructuring costs but before the share of results of associates, finance
income and finance expense.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009 23
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Proof 3
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
3
Significant accounting policies (continued)
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 that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets
and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit,
and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable
profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are
not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition
(other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit
nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and
associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it
is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the
asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged
or credited directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends
to settle its current tax assets and liabilities on a net basis.
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards
of ownership to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present
value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to
the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between
finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining
balance of the liability. Finance charges are charged directly against income.
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant
lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread on a
straight-line basis over the lease term.
Retirement benefit costs
Payments to employees’ personal pension plans are charged as an expense as they fall due. Payments made to
state-managed retirement benefit schemes are dealt with as payments to defined contribution schemes where
the Group’s obligations under the schemes are equivalent to those arising in a defined contribution retirement
benefit scheme.
24 MULBERRY GROUP PLC
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02/07/2009
Proof 3
3
Significant accounting policies (continued)
Provisions
A provision is recognised when the Group has a present legal or constructive obligation as a result of a past event, and
where it is probable that an outflow will be required to settle the obligation. Provisions are measured at the Directors’
best estimate of the expenditure required to settle the obligation at the balance sheet date and are discounted to
present value where the effect is material.
Share-based payments
The Group has applied the requirements of ‘IFRS 2 Share-based payments’ to all grants of equity instruments after
November 2002 that were unvested at 1 April 2006.
The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments
are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. The fair
value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis
over the vesting period, based on the Group’s estimate of shares that will eventually vest and adjusted for the effect
of non market-based vesting conditions.
Fair value is measured by use of the Black-Scholes model. The expected life used in the model has been adjusted,
based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural
considerations.
Foreign currencies
The individual financial statements of each Group company are presented in the currency of the primary economic
environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the
results and financial position of each Group company are expressed in pounds sterling, which is the functional currency
of the Company, and the presentation currency for the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s
functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions.
At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated
at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in
foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary
items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are
included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items
carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of
non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary
items, any exchange component of that gain or loss is also recognised directly in equity.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign
operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are
translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that
period, in which case the exchange rates at the date of the transactions are used. Exchange differences arising, if
any, are classified as equity and transferred to the Group’s foreign exchange reserve. Such translation differences are
recognised as income or as expenses in the period in which the operation is disposed of.
Financial instruments
Financial assets and financial liabilities are recognised in the Group’s balance sheet when the Group becomes a party
to the contractual provisions of the instrument.
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009 25
16783
02/07/2009
Proof 3
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
3
Significant accounting policies (continued)
Trade receivables
Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances
for estimated irrecoverable amounts.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments
that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements
entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after
deducting all of its liabilities.
Bank borrowings
Interest-bearing bank loans and overdrafts are recorded at the fair value of the proceeds received, net of direct issue
costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted
for on an accruals basis against profit or loss using the effective interest rate method and are added to the carrying
amount of the instrument to the extent that they are not settled in the period in which they arise.
Convertible shares
Convertible shares are regarded as compound instruments, consisting of a liability component and an equity
component. At the date of issue, the fair value of the liability component is estimated using the prevailing market
interest rate for similar non-convertible debt. The difference between the proceeds of issue of the convertible shares
and the fair value assigned to the liability component, representing the embedded option to convert the liability into
equity of the Group, is included in equity.
Issue costs are apportioned between the liability and equity components of the convertible shares based on their
relative carrying amounts at the date of issue. The portion relating to the equity component is charged directly
against equity.
Trade payables
Trade payables are not interest-bearing and are stated at their nominal value.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
26 MULBERRY GROUP PLC
16783
02/07/2009
Proof 3
4 Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group’s accounting policies the Directors are required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current and future periods.
The critical judgements undertaken by the Directors relate to the key sources of estimation uncertainty. The following
estimates that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year, are discussed below.
Impairment of property, plant and equipment
Property, plant and equipment are reviewed for impairment if events or changes in circumstances indicate that the
carrying amount may not be recoverable. When a review for impairment is conducted, the recoverable amount is
determined based on value in use calculations prepared on the basis of management’s assumptions and estimates.
Depreciation of property, plant and equipment
Depreciation is charged so as to write off the cost of assets over their estimated useful lives. The selection of the
estimated lives requires the exercise of management judgement.
Recoverability of intangible asset
The carrying value of the lease premium and related costs for the shop in Rue St Honoré, Paris, is reassessed each year
based on the ongoing performance of the store and the realisable value of the lease.
Stock provisions
The Group designs, produces and sells luxury goods and as such is at risk that the net realisable value of stock will be
less than the carrying value. Stock provisions for raw materials are calculated based on the expected future usage and
for finished goods on the saleability of finished goods and age and condition of the items.
5
Revenue
Sale of goods
Royalty income
Finance income
Other income
Total revenue
2009
£’000
58,585
353
229
68
2008
£’000
51,174
201
473
–
59,235
51,848
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009 27
16783
02/07/2009
Proof 3
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
6
Business and geographical segments
a) Business segments
For management purposes, the Group is currently organised into two operating divisions – the Retail and Design
businesses. These divisions are the basis upon which the Group reports its primary segment information. The principal
activities are as follows:
Retail – sale of Mulberry branded fashion accessories and clothing through a number of shops and department store
concessions.
Design – brand management, marketing, product design, manufacture, sourcing and wholesale distribution for the
Mulberry brand.
Inter-segment sales for both years are charged at market prices in line with our third party wholesale customers.
Segment information about these businesses is presented below.
2009
Income statement
External sales
Inter-segment sales
Total revenue
Retail
2009
£’000
36,643
–
Design Eliminations
2009
£’000
2009
£’000
21,942
15,212
–
(15,212)
Total
2009
£’000
58,585
–
36,643
37,154
(15,212)
58,585
Segment operating profit
2,787
1,634
548
4,969
Unallocated corporate expenses
Operating profit
Share of results of associates
Finance income
Finance expense
Profit before tax
Tax
Profit for the year
Other information
Capital additions
Depreciation and amortisation
(1,039)
3,930
34
229
(16)
4,177
(1,596)
2,581
1,731
1,177
936
543
–
–
2,667
1,720
28 MULBERRY GROUP PLC
16783
02/07/2009
Proof 3
6
Business and geographical segments (continued)
Balance sheet
Assets
Segment assets
Interests in associates
Unallocated corporate assets
Consolidated total assets
Liabilities
Segment liabilities
Unallocated corporate liabilities
Consolidated total liabilities
2008
Income statement
External sales
Inter-segment sales
Total revenue
Retail
2009
£’000
Design Eliminations
2009
£’000
2009
£’000
Total
2009
£’000
17,766
18,674
(3,153)
33,287
295
2,684
36,266
10,692
15,210
(15,230)
10,672
1,210
11,882
Total
2008
£’000
51,174
–
Retail
2008
£’000
31,722
–
Design Eliminations
2008
£’000
2008
£’000
19,452
12,860
–
(12,860)
31,722
32,312
(12,860)
51,174
Segment operating profit
3,595
1,312
759
5,666
Unallocated corporate expenses
Operating profit
Share of results of associates
Finance income
Finance expense
Profit before tax
Tax
Profit for the year
Other information
Capital additions
Depreciation and amortisation
(892)
4,774
63
473
(124)
5,186
(1,750)
3,436
1,743
850
1,144
383
–
–
2,887
1,233
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009 29
16783
02/07/2009
Proof 3
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
6
Business and geographical segments (continued)
Balance sheet
Assets
Segment assets
Interests in associates
Unallocated corporate assets
Consolidated total assets
Liabilities
Segment liabilities
Unallocated corporate liabilities
Consolidated total liabilities
Retail
2008
£’000
Design Eliminations
2008
£’000
2008
£’000
Total
2008
£’000
14,695
19,470
(3,002)
31,163
242
2,956
34,361
9,349
16,527
(15,171)
10,705
1,137
11,842
b) Geographical segments
The following table provides an analysis of the Group’s sales by geographical market, irrespective of the origin of
the goods:
Europe
North America
Asia
Rest of the World
Sales revenue by
geographical market
2009
£’000
51,306
1,145
4,604
1,530
2008
£’000
45,998
1,319
3,044
813
58,585
51,174
The Group’s operations are mainly located in Europe and as such no additional geographical analysis has been
provided.
30 MULBERRY GROUP PLC
16783
02/07/2009
Proof 3
7
Profit for the year
Profit for the year has been arrived at after charging/(crediting):
Net foreign exchange gains
Depreciation of property, plant and equipment:
Owned
Held under finance leases and hire purchase contracts
Amortisation of intangible assets
Operating lease rentals
Write downs of inventories recognised as an expense
Staff costs (see note 9)
Impairment of trade receivables
Loss on disposal of property, plant and equipment
8 Auditors’ remuneration
The analysis of auditors’ remuneration is as follows:
Fees payable to the Company’s auditors for the audit of the Company’s
annual accounts
Fees payable to the Company’s auditors and their associates for other
services to the Group:
The audit of the Company’s subsidiaries pursuant to legislation
Total audit fees
Tax services
Other services
Total non-audit fees
2009
£’000
2008
£’000
(411)
(390)
1,718
5
217
3,197
1,250
15,278
83
287
1,219
12
137
2,931
162
11,925
135
12
2009
£’000
2008
£’000
10
36
46
30
5
35
10
40
50
3
33
36
In 2009, tax services include advice in relation to the US restructuring. Other services in 2008 include assistance with
the conversion to IFRS and the interim review.
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009 31
16783
02/07/2009
Proof 3
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
9
Staff costs
The average monthly number of employees (including Executive Directors and those on a part time basis) was:
Production
Sales and distribution
Administration
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Other pension costs (see note 29)
Share-based payments (see note 28)
2009
Number
2008
Number
275
377
44
696
250
353
42
645
£’000
£’000
13,407
1,314
354
203
10,629
994
307
(5)
15,278
11,925
Details of Directors’ remuneration and interests are provided in the audited section of the Directors’ remuneration
report and should be regarded as integral to this note.
10 Finance income
Interest income on cash balances
11 Finance expense
Interest on bank overdraft and loans
Dividends on redeemable cumulative B preference shares classified as financial liabilities
Interest on obligations under finance leases
2009
£’000
229
2009
£’000
15
–
1
16
2008
£’000
473
2008
£’000
114
7
3
124
32 MULBERRY GROUP PLC
16783
02/07/2009
Proof 3
12 Tax
Current tax
Adjustment to prior year corporation tax
Deferred tax (note 22)
The charge for the year can be reconciled to the profit per the income statement as follows:
Profit before tax
Tax at the UK corporation tax rate of 28% (2008: 30%)
Preference dividends payable
Tax effect of expenses that are not deductible in determining taxable profit
Capital allowances in excess of depreciation
Short-term timing differences
Permanent differences
Profit/(losses) carried forward to offset against future profits
2009
£’000
1,467
14
115
2008
£’000
1,700
8
42
1,596
1,750
2009
£’000
4,177
2008
£’000
5,186
£’000
£’000
1,170
–
272
26
1
(12)
10
1,556
2
239
(146)
63
–
(14)
Current tax expense for the year
1,467
1,700
The impact of the phasing out of the Industrial Building Allowances (‘IBAs’) from April 2008 until April 2011 has now
been fully reflected in the deferred tax provision, resulting in a one-off deferred tax expense of approximately £131,000.
13 Dividends
The dividends approved and paid during the year are as follows:
2.0p (2008: 1.5p) per share on 5p ordinary shares
2009
£’000
1,148
2008
£’000
861
The Directors are recommending the payment of a final dividend of 2.0p per ordinary share to be paid on
21 August 2009 to ordinary shareholders on the register as at 24 July 2009. This proposed final dividend is subject
to approval by shareholders at the Annual General Meeting and has not been included as a liability in these
financial statements.
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009 33
16783
02/07/2009
Proof 3
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
14 Earnings per share
Basic earnings per ordinary share has been calculated by dividing the profit
(2008: 56,968,275) ordinary shares, being the weighted average number of ordinary shares in issue during the year.
the year by 57,419,505
for
Diluted earnings per share has been calculated by dividing the profit for the year excluding the interest and finance
costs relating to the preference shares by 57,438,950 (2008: 57,832,347) potential ordinary shares. These shares take
into account the exercise of unexercised dilutive options and the diluting effect of the preference shares prior to their
conversion during April 2007.
The weighted average number of ordinary shares in issue during the year includes those held by the Mulberry Group
Plc Employee Share Trust.
15 Intangible assets
Cost
At 1 April 2007
Additions
Exchange differences
At 1 April 2008
Additions
Exchange differences
At 31 March 2009
Amortisation
At 1 April 2007
Charge for the year
Exchange differences
At 1 April 2008
Charge for the year
Exchange differences
At 31 March 2009
Carrying amount
At 31 March 2009
At 31 March 2008
Software
£’000
101
389
–
490
362
–
852
13
71
–
84
140
–
224
628
406
Lease
costs
£’000
1,517
–
258
1,775
–
301
Total
£’000
1,618
389
258
2,265
362
301
2,076
2,928
18
66
2
86
77
14
177
31
137
2
170
217
14
401
1,899
2,527
1,689
2,095
Lease costs comprise the lease premium and related costs associated with the Group’s shop on Rue St Honoré in Paris
which are being amortised over the effective lease term of twenty seven years.
Included within software is £4,000 (2008: £49,000) of assets in the course of construction in respect of the new
ERP system which have not been put into operation at the balance sheet date and so have not been amortised.
34 MULBERRY GROUP PLC
16783
02/07/2009
Proof 3
16 Property, plant and equipment
Freehold
land and
buildings
£’000
Short
leasehold
land and
buildings
£’000
Plant and
equipment
£’000
Fixtures,
fittings and
equipment
£’000
Motor
vehicles
£’000
3,596
133
–
–
3,729
34
–
–
3,114
40
(15)
18
3,157
19
–
19
3,107
554
(69)
–
3,592
471
–
–
5,192
1,886
(187)
72
6,963
1,781
(458)
91
110
34
(45)
–
99
45
(39)
–
Total
£’000
15,119
2,647
(316)
90
17,540
2,350
(497)
110
Cost
At 1 April 2007
Additions
Disposals
Exchange differences
At 1 April 2008
Additions
Disposals
Exchange differences
At 31 March 2009
3,763
3,195
4,063
8,377
105
19,503
Accumulated depreciation
At 1 April 2007
Charge for the year
Disposals
Exchange differences
At 1 April 2008
Charge for the year
Disposals
Exchange differences
988
96
–
–
1,084
104
–
–
1,359
215
(5)
4
1,573
300
–
7
2,426
232
(60)
–
2,598
295
–
–
3,284
668
(176)
1
3,777
1,004
(168)
14
65
20
(31)
–
54
20
(31)
–
8,122
1,231
(272)
5
9,086
1,723
(199)
21
At 31 March 2009
1,188
1,880
2,893
4,627
43
10,631
Carrying amount
At 31 March 2009
2,575
1,315
1,170
3,750
At 31 March 2008
2,645
1,584
994
3,186
62
45
8,872
8,454
Freehold land of £997,000 (2008: £997,000) has not been depreciated.
At 31 March 2009 included in short leasehold land and buildings, plant and equipment, motor vehicles and fixtures,
fittings and equipment are items acquired under hire purchase contracts and finance lease arrangements with a net
book value of £nil (2008: £13,000). The assets under these contracts and arrangements are secured against the assets
to which they relate and guarantees provided by the Company. The Group does not hold the title to these assets.
At 31 March 2009, the Group had entered into contractual commitments for the acquisition of property, plant and
equipment amounting to £nil (2008: £349,000).
17 Subsidiaries
A list of the significant investments in subsidiaries and associates, including the name, country of incorporation,
proportion of ownership interest is given in note 36 to the Company’s separate financial statements.
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009 35
16783
02/07/2009
Proof 3
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
18 Interests in associates
Aggregated amounts relating to associates
Total assets
Total liabilities
Revenues
Loss
Aggregated amounts recognised relating to associates
Share of profits recognised for the year
Share of losses not recognised for the year
Cumulative losses not recognised
2009
£’000
4,428
(17,072)
4,299
(5,445)
2008
£’000
6,020
(10,348)
3,837
(3,586)
34
(2,757)
(4,615)
63
(1,850)
(1,858)
A list of the significant investments in associates, including the name, country of incorporation, proportion of ownership
interest is given in note 36 to the Company’s separate financial statements.
19 Inventories
Raw materials
Work-in-progress
Finished goods
20 Other financial assets
Trade and other receivables
Amount receivable for the sale of goods
Allowance for doubtful debts
Amounts owed by associate undertakings
Other debtors
Prepayments and accrued income
2009
£’000
1,040
298
13,492
2008
£’000
840
193
6,752
14,830
7,785
2009
£’000
3,801
(177)
3,624
1,283
119
1,006
2008
£’000
3,674
(115)
3,559
504
575
910
6,032
5,548
36 MULBERRY GROUP PLC
16783
02/07/2009
Proof 3
20 Other financial assets (continued)
Trade receivables
The average credit period taken on the sale of goods is 55 days (2008: 55 days). No interest is charged on the
outstanding receivables.
The Group has provided for the estimated irrecoverable amount from the sale of goods, where there is doubt as to the
recoverability of the receivables balance. Before accepting any new customer, the Group, in association with a credit
insurance company, assesses the potential customer’s credit quality and defines individual credit limits by customer.
The Group’s receivables comprise primarily its overseas associates, franchise partners and concessions. Those
customers who represented more than 10% of the total balance of trade receivables at the year end were Mulberry
USA LLC, Club 21 and House of Fraser (Stores) Limited.
Included in the Group’s trade receivables balance are debtors with a carrying amount of £672,000 (2008: £732,000)
which are past due at the reporting date for which the Group has not provided as there has not been a significant
change in credit quality and the amounts are still considered recoverable. The Group retains retention of title for the
goods sold. Balances due from Mulberry USA LLC have been excluded as these balances are expected to be repaid
in full as part of the post year end restructuring.
Ageing of past due but not impaired receivables
0–30 days overdue
31–60 days overdue
Given the relatively small nature of the provision for receivables no further analysis is provided.
Cash and cash equivalents
Cash and cash equivalents
2009
£’000
672
–
672
2008
£’000
622
110
732
2009
£’000
2008
£’000
3,710
10,237
Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of
three months or less. The carrying amount of these assets approximates to their fair value.
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009 37
16783
02/07/2009
Proof 3
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
21 Borrowings
Secured borrowing at amortised cost
Finance leases
Total borrowings
Amount due for settlement within 12 months
Amount due for settlement after 12 months
2009
£’000
2008
£’000
–
–
–
–
14
14
10
4
The principal features of the Group’s borrowings are as follows:
l Bank overdrafts are repayable on demand. The multicurrency facilities of £3,500,000 (2008: £3,500,000) have
been secured by a charge over the Group’s assets. The interest rates are determined based on 1% over the bank
base rate.
l Redeemable cumulative B preference shares of £2,800,000 were issued on 11 September 2000 at an issue price
of 35p per share. The shares carried 7% interest and were converted into ordinary shares on 16 April 2007. See
note 25 for further details.
Undrawn borrowing facilities
At 31 March 2009, the Group had available £3,500,000 (2008: £6,250,000) of undrawn committed borrowing facilities in
respect of which all conditions precedent had been met. Subsequent to the year end the multicurrency facilities were
increased to £4,500,000.
22 Deferred tax
The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon
during the current and prior reporting periods.
At 1 April 2007
Charge/(credit) to income
Effect of change in tax rate
– income statement
At 1 April 2008
Charge/(credit) to income
At 31 March 2009
Accelerated
tax
depreciation
£’000
Short-term
timing
differences
£’000
108
92
(13)
187
145
332
(133)
(49)
12
(170)
(30)
(200)
Total
£’000
(25)
43
(1)
17
115
132
Certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances
(after offset) for financial reporting purposes:
Deferred tax assets
Deferred tax liabilities
38 MULBERRY GROUP PLC
16783
02/07/2009
Proof 3
2009
£’000
332
(200)
132
2008
£’000
187
(170)
17
23 Obligations under finance leases
Amounts payable under finance leases:
Within one year
In the second to fifth years
Less: future finance charges
Present value of lease obligations
Less:
– amount due for settlement within 12 months
(shown under current liabilities)
Amount due for settlement after 12 months
Minimum
lease payments
Present value
of lease payments
2009
£’000
2008
£’000
2009
£’000
2008
£’000
–
–
–
–
–
11
4
15
(1)
14
–
–
–
n/a
–
–
–
10
4
14
n/a
14
(10)
4
It is the Group’s policy to lease certain of its fixtures and equipment under finance leases. The average lease term is
usually for four years. For the year ended 31 March 2009, the average effective borrowing rate was 14.9% (2008: 14.9%).
Interest rates are fixed at the contract date. All leases are on a fixed repayment basis and no arrangements have been
entered into for contingent rental payments.
All lease obligations are denominated in sterling. The assets under finance lease arrangements are secured against
the assets to which they relate and guarantees provided by the Group.
The fair value of the Group’s lease obligations approximates their carrying amount.
24 Other financial liabilities
Trade and other payables
Trade creditors
Accruals and deferred income
Other creditors
2009
£’000
3,939
5,950
837
2008
£’000
5,239
5,138
517
10,726
10,894
Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The
average credit period taken for trade purchases is 32 days (2008: 32 days). For most suppliers no interest is charged on
the trade payables for the first 60 days from the date of the invoice. Thereafter, interest is charged on the outstanding
balances at various interest rates. The Group has financial risk management policies in place to ensure that all payables
are paid within the credit timeframe.
The Directors consider that the carrying amount of trade payables approximates to their fair value.
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009 39
16783
02/07/2009
Proof 3
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
25 Share capital
Authorised
65,000,000 ordinary shares of 5p each (2008: 65,000,000)
Issued and fully paid
57,419,505 ordinary shares of 5p each (2008: 57,419,505)
2009
£’000
3,250
£’000
2,871
2008
£’000
3,250
£’000
2,871
The Company has granted 1,276,000 options in respect of 5p ordinary shares during the year (2008: nil).
No ordinary shares were allotted during the year due to the exercise of options (2008: 405,000 5p ordinary shares were
allotted with a nominal value of £20,250 and a total consideration £207,474).
The 7% convertible redeemable B preference shares were converted into ordinary shares on 16 April 2007 at the
request of the shareholder as the conditions for conversion had been met. The B preference shares were convertible
into ordinary shares on the basis of one ordinary share for each one B preference share (equivalent to a conversion
price of 35 pence) after the later of the second anniversary of their subscription and the opening of four outlets in the
United States and the contracting for a fifth outlet, one of which was to be the flagship store in Manhattan, by Mulberry
USA LLC. If Mulberry USA LLC had not opened the required number of outlets in the United States, the B preference
shares would not have been converted into ordinary shares and would have been redeemed by the Company at
35 pence each on 11 September 2008 being the eighth anniversary of their subscription.
Until the date of conversion, the B preference shares had a right to receive a fixed cumulative dividend of 7% per
annum on their subscription price in priority to all other dividends or distributions made by the Company.
As a result of the conversion of the preference shares on 16 April 2007, the overall authorised share capital of the
Company remained the same but the amount of authorised 5p ordinary shares was increased by 8,000,000 to 65,000,000
and the amount of authorised 7% convertible redeemable B preference shares was reduced to nil.
40 MULBERRY GROUP PLC
16783
02/07/2009
Proof 3
26 Reserves
Share
capital
£’000
Share
premium
£’000
Own
share
reserve
£’000
Revalu-
ation
reserve
£’000
Capital
redemp-
tion
reserve
£’000
Special
reserve*
£’000
Foreign
exchange
reserve
£’000
Profit
and loss
account
£’000
Total
£’000
Balance at 1 April 2007
2,474
4,633
Charge for employee
share-based payments
New shares issued
Conversion of preference
shares
Amortisation of
revaluation surplus
Currency translation
difference
Profit for the year
Ordinary dividends paid
–
20
–
187
377
2,187
–
–
–
–
–
–
–
–
Balance at 1 April 2008
2,871
7,007
Charge for employee
share-based payments
Amortisation of
revaluation surplus
Own shares
Currency translation
difference
Profit for the year
Ordinary dividends paid
Balance at
31 March 2009
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(49)
–
–
–
2,871
7,007
(49)
49
154
1,467
(94)
8,186
16,869
–
–
–
(31)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(5)
–
–
31
309
–
–
–
3,436
(861)
(5)
207
2,564
–
309
3,436
(861)
18
154
1,467
215
10,787
22,519
–
(18)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
203
203
18
–
–
(49)
278
–
–
–
2,581
(1,148)
278
2,581
(1,148)
154
1,467
493
12,441
24,384
* created as part of a capital restructuring of the Group in 2004.
The own share reserve represents the cost of £49,000 (2008: £nil) of shares in Mulberry Group plc purchased in the
market and held by the Mulberry Group Plc Employee Share Trust to satisfy the deferred shares under the Deferred
Share Plan.
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009 41
16783
02/07/2009
Proof 3
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
27 Operating lease arrangements
Minimum lease payments under operating leases recognised as an expense in the year
2009
£’000
3,197
2008
£’000
2,931
At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under
non-cancellable operating leases, which fall due as follows:
Within one year
In the second to fifth years inclusive
After five years
£’000
£’000
2,800
10,382
11,842
2,795
9,744
12,996
25,024
25,535
Operating lease payments represent rentals payable by the Group for certain of its retail stores, warehouse and offices.
The leases are for a varied length of time with the longest lease running until 2023. Leases are typically subject to rent
reviews at specified intervals and some payments are contingent upon levels of revenue above minimum thresholds.
The amount paid under this contingent element in the year was £204,000 (2008: £282,000).
28 Share-based payments
The Group operated the following schemes during the year.
The Mulberry Group plc 1996 Company Share Option Scheme
The scheme was open to all employees. The exercise price is equal to the market value of the shares on the date of
grant. The vesting period is three years. If the options remain unexercised after a period of ten years from the date of
grant, the options expire. Options may be forfeited if the employee leaves the Group. This scheme expired in 2006.
Mulberry Group plc 2008 Unapproved Share Option Scheme
The scheme was established on 14 April 2008 and is open to all employees of Mulberry Group plc and its subsidiaries.
The exercise price is equal to the market value of the shares on the date of grant. The vesting period is three years. If
the options remain unexercised after a period of ten years from the date of grant the options expire. Options may be
forfeited if the employee leaves the Group.
Details of the share options outstanding for both schemes during the year are as follows:
Outstanding at beginning of year
Granted during the year
Forfeited during the year
Exercised during the year
2009
2008
Weighted
average
exercise
price
(in p)
146.0
144.7
140.2
–
Weighted
average
exercise
price
(in p)
100.1
–
140.2
51.5
Number
of share
options
880,000
–
(250,000)
(405,000)
Number
of share
options
225,000
1,276,000
(20,000)
–
Outstanding at the end of the year
1,481,000
144.7
225,000
146.0
Exercisable at the end of the year
225,000
146.0
–
–
42 MULBERRY GROUP PLC
16783
02/07/2009
Proof 3
28 Share-based payments (continued)
The weighted average share price at the date of exercise for share options exercised during the period was nil
(2008: 263.0p). The options outstanding at 31 March 2009 had a weighted average remaining contractual life of 2.1
years (2008: 0.3 years).
The inputs into the Black–Scholes model are as follows:
Share price
Exercise price
Expected volatility
Expected life
Risk-free rate
Expected dividend yields
2009
2008
50.0p - 145.5p
50.0p - 145.5p
33.57% - 58.52%
3.25 years to 5 years
3.94% - 5.05%
0% - 1.23%
50.0p - 145.5p
50.0p - 145.5p
33.57% - 35.15%
5 years
4.09% - 5.05%
0% - 0.7%
Expected volatility was based on historical volatility over the expected life of the schemes. The expected life is based
upon historical data and has been adjusted based on management’s best estimate for the effects of non-transferability,
exercise restrictions, and behavioural considerations.
Mulberry Group plc 2008 Deferred Bonus Plan
The plan was established on 8 August 2008 and is open to all employees of Mulberry Group plc and its subsidiaries.
The share-based payments charge relates to the cost of matching shares awarded to employees participating in this
plan. The vesting period is two years. If the matching shares remain unexercised after a period of ten years from the
date of grant the award expires. The matching shares may be forfeited if the employee leaves the Group.
Details of the share options outstanding during the year are as follows:
Outstanding at beginning of year
Granted during the year
Outstanding at the end of the year
Exercisable at the end of the year
Number
of matching
shares
–
31,129
31,129
–
The options outstanding at 31 March 2009 had a weighted average remaining contractual life of 1.4 years and have an
exercise price of nil.
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009 43
16783
02/07/2009
Proof 3
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
28 Share-based payments (continued)
The inputs into the Black–Scholes model are as follows:
Share price
Exercise price
Expected volatility
Expected life
Risk-free rate
Expected dividend yields
2009
147p
–
43.93%
2 years 3 months
4.52%
1.23%
Expected volatility was based on historical volatility over the expected life of the scheme. The expected life is based
upon historical data and has been adjusted based on management’s best estimate for the effects of non-transferability,
exercise restrictions, and behavioural considerations.
The Group recognised the following expense/(income) related to share-based payments:
Mulberry Group plc 1996 Share Option Scheme
Mulberry Group plc 2008 Unapproved Share Option Scheme
Mulberry Group plc 2008 Deferred Bonus Plan
2009
£’000
2008
£’000
(2)
193
12
203
(5)
–
–
(5)
29 Retirement benefit schemes
The Group contributes to personal pension plans for all qualifying employees. The total cost charged to income of
£354,000 (2008: £307,000) represents contributions payable to these schemes by the Group at rates specified in the
rules of the plans. As at 31 March 2009, there were no contributions due in respect of the current reporting period
which had not been paid over to the schemes (2008: nil).
44 MULBERRY GROUP PLC
16783
02/07/2009
Proof 3
30 Financial instruments
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while
maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure
of the Group consists of cash and cash equivalents and equity attributable to equity holders of the parent, comprising
issued capital, reserves and retained earnings as disclosed in notes 25 and 26.
Externally imposed capital requirement
The Group is not subject to externally imposed capital requirements.
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset,
financial liability and equity instrument are disclosed in note 3 to the financial statements.
Categories of financial instruments
Financial assets
Loans and receivables (including cash and cash equivalents)
Financial liabilities
Amortised cost
Carrying values
2009
£’000
2008
£’000
7,334
13,796
10,726
10,910
Financial risk management objectives
The Group’s Finance Director is responsible to the Board for the Group’s financial risk management. This includes
analysing the Group’s exposure by degree and magnitude of risks. These risks include market risk (including currency
risk and interest rate risk), credit risk and liquidity risk.
The Group seeks to minimise the effects of these risks where possible. It does this by maintaining bank accounts in
all of the major currencies in which it trades and it operates its own internal hedging by offsetting currency receipts
on sales against purchases in related currencies. Where there is significant risk remaining, and the Group deems it
necessary, it uses derivative financial instruments to hedge these risk exposures. The Group does not enter into or
trade financial instruments, including derivative financial instruments, for speculative purposes.
Market risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and
interest rates. The Group reviews the need to enter into financial instruments on a regular basis but has not entered
into any during the current or previous periods. As the Group has no debt, it is not significantly exposed to interest rate
risk on its financial liabilities and continues to seek to maximise the returns from its bank deposits.
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009 45
16783
02/07/2009
Proof 3
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
30 Financial instruments (continued)
Foreign currency risk management
The Group undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange rate
fluctuations arise. The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary
liabilities at the reporting date are as follows:
Euro
US dollar
Liabilities
Assets
2009
£’000
773
952
2008
£’000
1,163
193
2009
£’000
1,489
1,554
2008
£’000
1,795
1,429
Foreign currency sensitivity analysis
The Group is mainly exposed to the US dollar and euro currencies.
The following table details the Group’s sensitivity to a 10% increase and decrease in sterling against the relevant
foreign currencies. 10% is the sensitivity rate which represents management’s assessment of the reasonably possible
change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated
monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. A positive
number below indicates an increase in profit and other equity where sterling strengthens 10% against the relevant
currency. For a 10% weakening of sterling against the relevant currency, there would be an equal and opposite impact
on the profit and other equity, and the balances below would be negative or positive.
Euro currency
impact
US dollar currency
impact
2009
£’000
2008
£’000
2009
£’000
2008
£’000
Profit or loss
(65)
(12)
(55)
(63)
Interest rate risk management and sensitivity analysis
The Group’s exposure to interest rate risk on borrowings is limited as there is no outstanding debt within the Group.
The Group’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk
management section of this note.
The Group’s sensitivity to changes in interest rates has been illustrated based on a 1% increase or decrease in interest
rates. For floating rate deposits and liabilities, the analysis is prepared assuming the amount of liability outstanding at
the balance sheet date was outstanding for the whole year. A 1% increase or decrease has been applied to represent
management’s assessment of the reasonably possible change in interest rates.
If interest rates had been 1% higher and all other variables were held constant, the Group’s profit for the year ended
31 March 2009 would have increased by £41,000 (2008: increase by £66,000). This is mainly attributable to the Group’s
exposure to interest rates on its cash deposits.
The Group’s sensitivity to interest rates has decreased during the current period mainly due to the net decrease in the
funds on which interest is received and the reduction in bank base rates.
46 MULBERRY GROUP PLC
16783
02/07/2009
Proof 3
30 Financial instruments (continued)
Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to
the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient
credit insurance, as a means of mitigating the risk of financial loss from defaults.
Trade receivables consist of a large number of customers. Credit evaluation is performed on the financial condition of
accounts receivable and, where appropriate, credit insurance cover is purchased.
The Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties
having similar characteristics, other than as disclosed in note 20. The Group defines counterparties as having similar
characteristics if they are connected entities.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate
liquidity risk management framework for the management of the Group’s short, medium and long-term funding and
liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves and banking
facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial
assets and liabilities. Included in note 21 is a description of additional undrawn facilities that the Group has at its
disposal to reduce further liquidity risk.
Liquidity and interest risk tables
The Group’s financial assets all contractually mature within the next year. Trade receivables do not accrue interest. The
weighted average interest rate on cash and cash equivalents was 4.4% (2008: 5.6%).
The following tables detail the Group’s remaining contractual maturity for its financial liabilities. The tables have been
drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group
can be required to pay. The table includes both interest and principal cash flows.
2009
Weighted
average Less than 1
year
interest
£’000
rate
1 to 2
years
£’000
2 to 3
years
£’000
3 to 4
years
£’000
4 to 5
years
£’000
Total
£’000
Trade and other payables
–
10,726
–
–
–
–
10,726
2008
Weighted
average Less than 1
year
interest
£’000
rate
1 to 2
years
£’000
2 to 3
years
£’000
3 to 4
years
£’000
4 to 5
years
£’000
Trade and other payables
Leases
–
14.9%
10,894
11
10,905
–
4
4
–
–
–
–
–
–
–
–
–
Total
£’000
10,894
15
10,909
Fair value of financial instruments
The carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements
approximate to their fair values.
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009 47
16783
02/07/2009
Proof 3
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
31 Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation
and are not disclosed in this note. Transactions between the Group and its associates are disclosed below and in
note 32.
Trading transactions
During the year, Group companies entered into the following transactions with related parties who are not members of
the Group:
Mulberry Oslo AS
Mulberry USA LLC
Club 21 Retail (Hong Kong) Limited*
Club 21 Pte Limited*
Club 21 (Thailand) Co Limited*
Club 21 Pte Limited Taiwan Branch*
Club 21 Distribution (S) Pte Limited*
Club Twenty-One Retail (M) Sdn Bhd*
Sale of goods
2009
£’000
638
900
1,288
649
339
135
45
89
2008
£’000
498
1,319
971
629
239
158
–
–
Amounts owed by
related parties
2009
£’000
2008
£’000
102
826
77
11
38
16
–
20
97
313
141
260
49
43
–
–
*These are related parties of the Group as they are all associated companies of Challice Limited, the majority
shareholder of the Group.
All sales of goods have been made on an arm’s length basis. The amounts outstanding are unsecured and will be
settled in cash. No guarantees have been given or received. No provisions have been made for doubtful debts in
respect of the amounts owed by related parties.
Remuneration of key management personnel
The remuneration of the Directors, who are the key management personnel of the Group, is set out below in aggregate
for each of the categories specified in IAS 24 ‘Related Party Disclosures’. Further information about the remuneration
of individual Directors is provided within the audited part of the Directors’ remuneration report.
Short-term employee benefits
Post-employment benefits
Share-based payments
2009
£’000
2008
£’000
578
70
81
729
445
64
(1)
508
48 MULBERRY GROUP PLC
16783
02/07/2009
Proof 3
32 Post balance sheet event
On 14 May 2009 Mulberry Group plc reached an agreement with its US partner, Mulberry USA LLC to terminate the
existing joint venture arrangements allowing Mulberry to take full control of the trade and assets of the retail and
wholesale businesses in the US.
As part of this restructuring Mulberry Group plc will sell its shares in Mulberry USA LLC and acquire the following:
l
l
$0.5 million of inventories held at the two retail stores; and
The leases and fixed assets within the two shops for $1.
In addition, Mulberry Group plc agreed to deferred consideration of up to £1 million based on the level of sales
achieved by the US operations after three years. The consideration will be payable in cash or at Mulberry’s option new
shares in Mulberry Group plc.
The arrangement has been agreed in principle but has not yet been completed. In the meantime Mulberry have
assumed the management control of these US operations from 1 April 2009.
33 Controlling party
At the year end, Challice Limited controlled 59.6% of the issued share capital of the Company.
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009 49
16783
02/07/2009
Proof 3
Mulberry Group plc
Company financial statements
Year ended 31 March 2009
CONTENTS
Independent auditors’ report
Company balance sheet
Notes to the Company financial statements
Page
51
52
53
50 MULBERRY GROUP PLC
16783
02/07/2009
Proof 3
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF MULBERRY GROUP PLC
We have audited the parent company financial statements of Mulberry Group plc for the year ended 31 March 2009 which
comprise the Company balance sheet and the related notes 34 to 44. These parent company financial statements have
been prepared under the accounting policies set out therein.
We have reported separately on the Group financial statements of Mulberry Group plc for the year ended 31 March 2009.
This report is made solely to the Company’s members, as a body, in accordance with section 235 of the Companies Act
1985. 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 auditors’ 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.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
The Directors’ responsibilities for preparing the Annual Report and the parent company financial statements in accordance
with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice)
are set out in the Statement of Directors’ responsibilities.
Our responsibility is to audit the parent company financial statements in accordance with relevant legal and regulatory
requirements and International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the parent company financial statements give a true and fair view and whether
they have been properly prepared in accordance with the Companies Act 1985. We also report to you whether in our
opinion the Directors’ report is consistent with the parent company financial statements.
In addition we report to you if, in our opinion, the Company has not kept proper accounting records, if we have not
received all the information and explanations we require for our audit, or if information specified by law regarding Directors’
remuneration and other transactions is not disclosed.
We read the other information contained in the Annual Report as described in the contents section and consider whether
it is consistent with the audited parent company financial statements. We consider the implications for our report if we
become aware of any apparent misstatements or material inconsistencies with the parent company financial statements.
Our responsibilities do not extend to any further information outside the Annual Report.
BASIS OF AUDIT OPINION
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing
Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the
parent company financial statements. It also includes an assessment of the significant estimates and judgements made by
the Directors in the preparation of the parent company financial statements, and of whether the accounting policies are
appropriate to the Company’s circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary
in order to provide us with sufficient evidence to give reasonable assurance that the parent company financial statements
are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also
evaluated the overall adequacy of the presentation of information in the parent company financial statements.
OPINION
In our opinion:
l
l
l
the parent company financial statements give a true and fair view, in accordance with United Kingdom Generally
Accepted Accounting Practice, of the state of the Company’s affairs as at 31 March 2009;
the parent company financial statements have been properly prepared in accordance with the Companies Act 1985;
and
the information given in the Directors’ report is consistent with the parent company financial statements.
Deloitte LLP
Chartered Accountants and Registered Auditors
Bristol, United Kingdom
17 June 2009
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009 51
16783
02/07/2009
Proof 3
COMPANY BALANCE SHEET
At 31 March 2009
Fixed assets
Tangible assets
Investments
Current assets
Debtors
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Net assets
Capital and reserves
Called up share capital
Share premium account
Revaluation reserve
Capital redemption reserve
Special reserve
Profit and loss account
Shareholders’ funds
Note
37
36
38
39
42
43
43
43
43
43
44
2009
£’000
2,595
13,202
2008
£’000
2,770
13,202
15,797
15,972
1,416
1,610
(510)
(646)
906
964
16,703
16,936
16,703
16,936
2,871
7,007
–
154
4,187
2,484
2,871
7,007
18
154
4,187
2,699
16,703
16,936
The financial statements were approved by the Board of Directors and authorised for issue on 17 June 2009. They were
signed on its behalf by:
Godfrey Davis
Director
Roger Mather
Director
52 MULBERRY GROUP PLC
16783
02/07/2009
Proof 3
NOTES TO THE COMPANY FINANCIAL STATEMENTS
Year ended 31 March 2009
34 Significant accounting policies
Basis of accounting
The separate financial statements of the Company are presented as required by the Companies Act 1985 and have
been prepared in accordance with applicable United Kingdom Accounting Standards and law. They have been
prepared under the historical cost convention and under the going concern assumption. Further details of the
Directors’ considerations in relation to going concern are included in the Directors’ report.
The principal accounting policies are summarised below. These have been applied consistently throughout the year
and the preceding year.
Tangible fixed assets
Fixed assets are shown at cost less accumulated depreciation and any provision for impairment.
Depreciation is provided at rates calculated to write off the cost, less estimated residual value, of each asset on a
straight-line basis over its expected useful life at the following rates per annum:
Freehold buildings
Short leasehold property
Fixtures, fittings and equipment
5%
term of the lease
10% to 33% per annum
Freehold land is not depreciated.
Investments
Fixed asset investments in subsidiaries and associates are shown at cost less provision for impairment.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements
entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after
deducting all of its liabilities.
Bank borrowings
Interest-bearing bank loans are recorded at the proceeds received, net of direct issue costs. Finance charges, including
premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in profit
or loss using the effective interest method and are added to the carrying amount of the instrument to the extent that
they are not settled in the period in which they arise.
Equity instruments
Equity instruments issued by the Company are recorded as the proceeds received, net of direct issue costs.
Foreign exchange
Transactions denominated in foreign currencies are translated into sterling at the rates ruling at the dates of the
transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated
at the rates ruling at that date. These translation differences are dealt with in the profit and loss account.
Pension costs
Payments to employees’ personal pension plans are charged as an expense as they fall due.
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009 53
16783
02/07/2009
Proof 3
NOTES TO THE COMPANY FINANCIAL STATEMENTS
(continued)
34 Significant accounting policies (continued)
Taxation
Current tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been
enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet
date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the
future have occurred at the balance sheet date. Timing differences are differences between the Company’s taxable profits
and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in
periods different from those in which they are recognised in the financial statements. A net deferred tax asset is regarded
as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely
than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be
deducted. Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing
differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the
balance sheet date. Deferred tax is measured on a non-discounted basis. The taxation liabilities are reduced wholly or in
part by the surrender of tax losses by fellow Group undertakings for which payment is made.
Cash flow statement
A cash flow statement has not been prepared as the consolidated financial statements include a consolidated cash flow
statement.
35 Profit for the year
As permitted by section 230 of the Companies Act 1985 the Company has elected not to present its own profit and loss
account for the year. Mulberry Group plc reported a profit for the financial year ended 31 March 2009 of £712,000 (2008:
£1,467,000).
The auditors’ remuneration for audit and other services is disclosed within note 8 to the consolidated financial
statements. The only employees of the Company are the Directors whose emoluments are disclosed in the Directors’
remuneration report.
36 Fixed asset investments
Cost
At 1 April 2008 and 31 March 2009
Provision for impairment
At 1 April 2008 and 31 March 2009
Net book value
End and beginning of year
Subsidiaries Subsidiaries
loans
£’000
shares
£’000
Associates
shares
£’000
Total
£’000
2,858
11,804
571
15,233
(1,460)
–
(571)
(2,031)
1,398
11,804
–
13,202
54 MULBERRY GROUP PLC
16783
02/07/2009
Proof 3
36 Fixed asset investments (continued)
The Company has investments in the following subsidiaries and associates which principally contributed to the profits
or net assets of the Group.
Subsidiaries
Mulberry Company (Design) Limited
Country of
incorporation
England and Wales
Mulberry Company (France) SARL
France
Mulberry Company (Sales) Limited
England and Wales
Kilver Street Inc
Mulberry Group plc Employee Share Trust
USA
Guernsey
Associates
Mulberry USA LLC
USA
Mulberry Oslo AS***
Norway
Principal activity
Design and manufacture
of clothing and fashion
accessories in the UK
Establishment and
operation of retail
shops in France
Establishment and
operation of retail
shops in the UK
Holding Company
Operation of an
employee share Trust
Establishment and
operation of retail
shops in the USA and
distributor for the USA
Operation of a
retail shop in Oslo
* Owned by Mulberry Company (Europe) Limited
** Owned through Kilver Street Inc
*** Accounting reference date changed during the year from 31 December to 30 September
Holding of
ordinary
shares
100%
100%
100%*
100%
100%
50%**
50%*
Total
£’000
4,571
44
(528)
Freehold
land and
buildings
£’000
Short
leasehold
land and
buildings
£’000
Fixtures,
fittings and
equipment
£’000
3,729
34
–
3,763
1,084
104
–
1,188
2,575
2,645
314
10
–
324
189
115
–
304
20
125
528
–
(528)
–
4,087
528
–
(528)
–
–
–
1,801
219
(528)
1,492
2,595
2,770
37 Tangible fixed assets
Cost
At 1 April 2008
Additions
Disposals
At 31 March 2009
Depreciation
At 1 April 2008
Charge for the year
Disposals
At 31 March 2009
Net book value
End of year
Beginning of year
Freehold land of £997,000 (2008: £997,000) has not been depreciated.
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009 55
16783
02/07/2009
Proof 3
NOTES TO THE COMPANY FINANCIAL STATEMENTS
(continued)
38 Debtors
Amounts falling due within one year:
Amounts owed by Group undertakings
Amounts owed by associate undertakings
Prepayments and accrued income
Other debtors (see note 40)
39 Creditors
Amounts falling due within one year:
Amounts owed to Group undertakings
Other creditors - corporation tax
Accruals and deferred income
40 Deferred tax
Excess of capital allowances over depreciation on fixed assets
Short-term timing differences
At 1 April 2008
Charge for the year
At 31 March 2009
2009
£’000
1,402
–
1
13
2008
£’000
1,485
94
1
30
1,416
1,610
2009
£’000
2008
£’000
356
–
154
510
478
38
130
646
2009
£’000
2008
£’000
13
17
30
3
10
13
30
(17)
13
41 Related party transactions
Details of related party transactions are provided in note 31 of the consolidated financial statements. The Company has
taken advantage of the exemption in FRS 8 not to disclose details of transactions with other Group companies.
56 MULBERRY GROUP PLC
16783
02/07/2009
Proof 3
42 Called up share capital
Authorised
65,000,000 ordinary shares of 5p each (2008: 65,000,000)
Issued and fully paid
57,419,505 ordinary shares of 5p each (2008: 57,419,505)
43 Reserves
2009
£’000
3,250
£’000
2,871
2008
£’000
3,250
£’000
2,871
Balance at 1 April 2008
Charge for share-based payments
Amortisation of revaluation surplus
Profit for the year
Ordinary dividends paid
Balance at 31 March 2009
Capital
Share Revaluation redemption
reserve
reserve
£’000
£’000
premium
£’000
7,007
–
–
–
–
7,007
18
–
(18)
–
–
–
154
–
–
–
–
154
Special
reserve*
£’000
4,187
–
–
–
–
Profit
and loss
account
£’000
2,699
203
18
712
(1,148)
4,187
2,484
* created as part of a capital restructuring of the Group in 2004.
The cumulative amount of goodwill resulting from acquisitions in earlier financial years which has been written off is
£165,000 (2008: £165,000).
44 Reconciliation of movements in shareholders’ funds
Balance at 1 April 2008
Credit for share-based payments
Ordinary dividends paid
Profit for the financial year
Balance at 31 March 2009
£’000
16,936
203
(1,148)
712
16,703
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009 57
16783
02/07/2009
Proof 3
NOTICE OF ANNUAL GENERAL MEETING
Notice is given that the Annual General Meeting of Mulberry Group plc will be held at Mulberry Group plc’s offices,
4th Floor, Shepherds Building, Rockley Road, London, W14 0DA on 19 August 2009 at 11 am for the following purposes:
Ordinary Business:
To consider and, if thought fit, pass the following resolutions, which will be proposed as ordinary resolutions:
Adoption of financial statements
1. That the report of the Directors and the financial statements for the year ended 31 March 2009 together with the
independent auditors’ report be received and adopted.
Dividend declaration
2. To declare a final dividend of 2.0 pence per ordinary share for the year ended 31 March 2009.
Re-election of retiring Directors
3. That Mr R E G Gibson who retires as a Director by rotation in accordance with the Company’s Articles of Association
be re-elected as a Director.
4. That Mr A C Roberts who retires as a Director by rotation in accordance with the Company’s Articles of Association
be re-elected as a Director.
Appointment of auditors
5. That Deloitte LLP be re-appointed as auditors of the Company until the conclusion of the next general meeting before
which accounts are laid and, that their remuneration be agreed by the Directors.
Special Business:
To consider and, if thought fit, pass the following resolution, which will be proposed as an ordinary resolution:
Directors’ power to allot securities
6. That in substitution for any equivalent authorities and powers granted to the Directors prior to the passing of this
resolution, the Directors be and they are generally and unconditionally authorised pursuant to Section 80 of the
Companies Act 1985 (“the Act”) to allot relevant securities (as defined in that section) up to an aggregate nominal
amount of £379,024 to such persons at such times and on such terms as they think proper during the period expiring at
the conclusion of the next Annual General Meeting of the Company after the passing of this resolution or such earlier
date (if any) on which this authority is revoked, save that the Company may prior to the expiry of such period make any
offer or agreement which would or might require relevant securities to be allotted after the expiry of this period and
the Directors may allot relevant securities in pursuance of any such offer or agreement notwithstanding the expiry of
the authority given by this resolution.
To consider and, if thought fit, pass the following resolutions, which will be proposed as special resolutions:
Waiver of statutory pre-emption rights
7. That in substitution for any equivalent authorities and powers granted to the Directors prior to the passing of this
resolution, the Directors be and they are empowered pursuant to Section 95(1) of the Act to allot equity securities (as
defined in Section 94(2) of the Act) of the Company for cash pursuant to the authority of the Directors under Section
80 of the Act conferred by Resolution 6 set out in the Notice of Annual General Meeting convened on 19 August 2009
and/or by way of a sale of treasury shares (by virtue of Section 94(3A) of the Act), in each case as if Section 89(1) of
the Act did not apply to such allotment and at any time prior to the expiry of the power conferred by this resolution
to make any offer or agreement which would or might require equity securities to be allotted after the expiry of such
power notwithstanding the expiry of such power provided that such power shall, subject as aforesaid, cease to have
effect at the conclusion of the next Annual General Meeting of the Company after the passing of this resolution or such
earlier date (if any) on which the said authority is revoked, and provided that the power conferred by this resolution
shall be limited to the allotment of ordinary shares up to a maximum amount of £143,548 representing less than 5% of
the issued share capital of the Company.
Adoption of new Articles of Association
8. That the Articles of Association produced to the meeting and initialled by the Chairman of the meeting for
the purposes of identification be adopted as the Articles of Association of the Company in substitution for,
and to the exclusion of, the existing Articles of Association of the Company.
By order of the Board
Roger Mather
Secretary
Registered office:
The Rookery
Chilcompton
Bath
BA3 4EH
58 MULBERRY GROUP PLC
17 June 2009
16783
02/07/2009
Proof 3
Notes:
1. All members holding ordinary shares are entitled to attend, speak and vote at the meeting. Such members may appoint
a proxy to attend, speak and vote instead of them. A proxy need not also be a member of the Company but must attend
the Annual General Meeting in order to represent you. A member may appoint more than one proxy provided each
proxy is appointed to exercise rights attached to different shares (so a member must have more than one share to be
able to appoint more than one proxy). A form of proxy is enclosed. The notes to the form of proxy include instructions
on how to appoint the Chairman of the Annual General Meeting or another person as proxy and how to appoint a proxy
electronically or by using the CREST proxy appointment service. To be effective the form must reach the Company’s
registrar, Computershare Investor Services PLC at The Pavilions, Bridgwater Road, Bristol BS99 6ZY by 11 am on
17 August 2009.
2. In order to facilitate voting by corporate representatives at the meeting, arrangements will be put in place at the meeting so
that (a) if a corporate shareholder has appointed the Chairman of the meeting as its corporate representative to vote on a
poll in accordance with the directions of all of the other corporate representatives for that shareholder at the meeting, then
on a poll those corporate representatives will give voting directions to the Chairman and the Chairman will vote (or withhold
a vote) as corporate representative in accordance with those directions; and (b) if more than one corporate representative
for the same corporate shareholder attends the meeting but the corporate shareholder has not appointed the Chairman of
the meeting as its corporate representative, a designated corporate representative will be nominated, from those corporate
representatives who attend, who will vote on a poll and the other corporate representatives will give voting directions to
that designated corporate representative. Corporate shareholders are referred to the guidance issued by the Institute of
Chartered Secretaries and Administrators on proxies and corporate representatives (www.icsa.org.uk) for further details of
this procedure. The guidance includes a sample form of appointment letter if the Chairman is being appointed as described
in (a) above.
3. The following documents are available for inspection at the registered office of the Company during the usual business hours
on any weekday (Saturday, Sunday or public holidays excluded) from the date of this notice until the conclusion of the Annual
General Meeting and will also be available for inspection at the place of the Annual General Meeting from 10.45 am on the
day of the Annual General Meeting until its conclusion:
(a) the register of Directors’ interests in the shares of the Company;
(b) copies of the Executive Directors’ service contracts with the Company and letters of appointment of the Non-Executive
Directors; and
(c) a copy of the proposed new Articles of Association of the Company, and a copy of the existing Articles of Association
marked to show the changes being proposed pursuant to resolution 8.
Explanation of proposed resolution 8:
It is proposed that the Company adopt new Articles of Association (the “New Articles”) in order to update the Company’s
existing Articles (“Existing Articles”) to take account of changes in English company law relating to Directors’ conflicts of
interest brought about by the Companies Act 2006 (the “2006 Act”). The 2006 Act is being implemented in stages and the final
implementation of such changes is expected to be on 1 October 2009. Apart from the change to the Existing Articles relating
to Directors’ conflicts of interest, the Directors consider it is appropriate to wait for the 2006 Act to be implemented in full before
seeking the approval of the shareholders for any other changes to the Existing Articles.
The 2006 Act sets out Directors’ general duties which largely codified the pre-existing law but with some changes. Under the 2006 Act a
Director must avoid a situation where they have, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the
Company’s interests. The requirement is very broad and could apply, for example, if a Director becomes a Director of another company
or a trustee of another organisation. The 2006 Act allows Directors of public companies to authorise conflicts and potential conflicts,
where appropriate, where the Articles of Association contain a provision to this effect. The 2006 Act also allows the Articles of Association
to contain other provisions for dealing with Directors’ conflicts of interest to avoid a breach of duty. The New Articles give the Directors
authority to approve such situations and to include other provisions to allow conflicts of interest to be dealt with in a similar way to the
current position.
There are safeguards which will apply when Directors decide whether to authorise a conflict or potential conflict. First, only Directors
who have no interest in the matter being considered will be able to take the relevant decision, and secondly, in taking the decision the
Directors must act in a way they consider, in good faith, will be most likely to promote the Company’s success. The Directors will be able
to impose limits or conditions when giving authorisation if they think this is appropriate.
It is also proposed that the New Articles should contain provisions relating to confidential information, attendance at board meetings
and availability of board papers to protect a Director being in breach of duty if a conflict of interest or potential conflict of interest arises.
These provisions will only apply where the position giving rise to the potential conflict has previously been authorised by the Directors.
There may be other changes to the Existing Articles which the Company may wish to introduce in the light of the 2006 Act. It is likely that
any such changes will be introduced once the whole of the 2006 Act has come into force (which is expected to be in October this year).
A copy of the New Articles marked to show the proposed changes is available for inspection as stated in note 3 to the Notice of Annual
General Meeting.
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009 59
16783
02/07/2009
Proof 3
GROUP FIVE YEAR SUMMARY
Results
Revenue
Operating profit
Profit before tax
Profit attributable to equity holders
Assets employed
Non-current assets
Current assets
Current liabilities
Non-current liabilities
2005
£’000
2006
£’000
2007
£’000
2008
£’000
2009
£’000
30,064
43,406
45,078
51,174
58,585
2,137
6,157
6,672
4,774
3,930
1,705
1,738
4,964
11,084
(4,383)
(53)
6,135
4,831
5,958
18,488
(8,415)
(2,579)
6,200
3,981
5,186
3,436
4,177
2,581
8,910
20,828
(8,879)
(3,990)
10,791
23,570
(11,821)
(21)
11,694
24,572
(11,750)
(132)
Net assets
11,612
13,452
16,869
22,519
24,384
Key statistics
Earnings per share
Diluted earnings per share
3.6p
3.5p
9.9p
8.8p
8.1p
7.4p
6.0p
6.0p
4.5p
4.5p
The amounts disclosed for 2005 and 2006 are stated on the basis of UK GAAP because it is not practicable to restate
amounts for periods prior to the date of transition to IFRSs.
Printed on Hannoart, an FSC Mixed Sources Accredited stock, confirming the pulp comes from well managed forests and other controlled sources.
60 MULBERRY GROUP PLC
16783
02/07/2009
Proof 3
16783
02/07/09
Proof 3
MULBERRY GROUP PLC THE ROOKERY CHILCOMPTON SOMERSET BA3 4EH
T. 01761 234 500 F. 01761 234 555 MULBERRYGROUPPLC.COM MULBERRY.COM
16783
02/07/09
Proof 3