Corporate Governance

Dear Shareholder,

Good corporate governance is important to support the delivery of the Group’s five key strategic themes and ensure long term sustainable value for our shareholders. However as a Board we believe that good governance is also about being a great company and that our role is to support and encourage the evolution of the business in ways which reflect our core values of Protect, Explore and Inspire – both for those within the Company and those with whom we connect.

The growth of the Group’s business continues to be dynamic despite the current uncertain global economic and political climate. Consequently the Board’s focus during the year has been on the execution of the Group’s strategy, identification and mitigation of risk, ensuring that the Group’s controls and infrastructure are appropriate in the context of the Group’s continuing growth, and that the Group attracts and retains the right senior talent (including on the Board) to secure the future of the Company.

The Board welcomed Lord Davies’ report entitled “Women on Boards”. We are proud of the fact that the Company is diverse and not only in terms of gender. Diversity is at the heart of our culture and brand which is characterised by a democratic and meritocratic ethos. Our Board succession planning is focused on ensuring the right mix of skills and experience for the Board with due regard for the benefits of diversity, including gender.

The debate over good corporate governance continues at a national, EU and international level. I believe that this dialogue is important and that as a global company it is our responsibility to practice high standards of corporate governance and to promote such standards wherever we operate.

This report sets out the Board’s approach and work during the financial year 2011/12 and, together with the Directors’ Remuneration Report on pages 83 to 92, includes details of how we applied and complied with the principles and provisions of the UK Corporate Governance Code. The Group complied with the provisions of the Code throughout the year.

The Board and I will endeavour to ensure the Group’s continued success as a dynamic and well governed business over the coming year.

Sir John Peace

Chairman

Governance

“The Board is collectively responsible for promoting the success of the Company, and is accountable to shareholders for ensuring that the Company achieves its strategic objectives and is appropriately managed.”

Our Board

The Board currently consists of eight members – the Chairman, the Chief Executive Officer, the Chief Financial Officer and five independent non-executive directors. A list of individual directors and their biographies is set out here.

The Chairman, Sir John Peace, has led the Board as Chairman since 2002. The Chairman is responsible for leading and managing the business of the Board and ensuring its effectiveness. He sets the agenda for Board discussions and ensures that the Board receives accurate, timely and clear information, particularly in relation to the Company’s performance. He promotes an open culture which allows for debate and constructive challenge of the executive directors.

The Chairman works collaboratively with the Chief Executive Officer, Angela Ahrendts, in setting the Board agenda and ensuring any actions agreed by the Board are effectively implemented.

During the year, the Chairman maintained regular contact and met with the Senior Independent Director and other non-executive directors outside of formal board meetings. The Chairman also met with the non-executive directors without the executive directors being present.

The Chairman is also responsible for the Company’s performance to shareholders and has frequent discussions with the Company’s main institutional shareholders.

The major commitments of the Chairman are detailed in his biography and have not changed during the year.

The Senior Independent Director, Philip Bowman, supports the Chairman in his role and leads the non-executive directors in the oversight of the Chairman. The Senior Independent Director is also available as an additional point of contact for shareholders.

The Non-Executive Directors provide strong experience and independent support to the Board. They assist in the development of strategy and provide constructive challenge and support to management.

The Chief Executive Officer, Angela Ahrendts, is responsible for the management of the business, developing the Group’s strategic direction for consideration and approval by the Board and implementing the agreed strategy. The Chief Executive Officer is assisted by members of her senior management team who meet regularly. Members of the senior management team are identified in here.

Role of the Board

“Developing and refining our strategy is key to our future success. As a Board we need to understand the competitive landscape, monitor emerging trends and keep updated on the Group’s operations.

The Company has experienced – and is continuing to experience – a period of considerable growth. With this success comes a responsibility for the Board to ensure we grow in a controlled and sustainable way for our shareholders and wider stakeholders, and that we understand the risks to achieving this objective.”

The Board is ultimately responsible for the activities of the Group – its governance, strategy, risk management and performance. The Chief Executive Officer is accountable for, and reports to the Board on, the performance of the business.

The Board has a formal schedule of matters reserved for its decision which includes:

• the Group’s business strategy;
• the annual budget and operating plans;
• matters materially affecting the reputation or financial position of the Group;
• major capital expenditure, acquisitions and divestments, licensing and franchise transactions above defined thresholds;
• the systems of corporate governance, internal control and risk management;
• the approval of the interim and annual financial statements; and
• the determination of any interim dividend and the recommendation of the final dividend.

The Board monitors the performance of the Group:

• through reports from the Chief Executive Officer and Chief Financial Officer who are responsible for reporting to the Board on the performance of the business;
• through discussion at Board meetings where management are challenged on the performance of the Group;
• by evaluating the Group’s progress on achieving its five strategic objectives; and
• by monitoring, including through the Board Committees, the significant risks facing the Group.

The matters reserved for the Board’s decision are set out in writing and available on the Company’s website at burberryplc.com.

Role of the Board Committees

The Board is supported in the activities set out above by a number of committees including the following principal committees: Audit Committee, Nomination Committee and Remuneration Committee. All the non-executive directors are members of each of the principal committees of the Board. The Board believes this to be appropriate as the Board remains relatively small and ensures the linkage between the work of the Committees and the Board.

The terms of reference of each of the principal committees can be viewed below:

Audit Committee

Nomination Committee

Remuneration Committee

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

Highlights of Board and Committee activities

The Board has spent time on the following matters (amongst others) during the year:

• Continued evolution of the Board’s oversight of the strategic plan – the Board participated in a two day interactive session with management on strategy. Strategic updates are regularly included on the Board agenda giving the Board the opportunity to discuss progress against the strategic plan and new strategic opportunities.
• Continued focus on balancing the prevailing external conditions and the achievement of the strategic plan and budget objectives – the Board considered the particular risks which could impact on the strategy and/or business model.
• Continued focus on the evolution of the Company’s risk management systems and internal control framework, largely through the work of the Audit Committee.
• Monitoring of policies and procedures in relation to the UK Bribery Act, health and safety and governance.
• Continued improvement in understanding of the business, the competitive landscape and emerging trends – the Board engaged with senior management below Board level on key areas of the business such as its digital evolution and product and licensing development. It also obtained external expert perspectives on issues facing the business such as the current political and economic outlook. In April 2012 the Board visited Asia, one of the Company’s key strategic markets, to view its operations and better understand the market.
• Continued focus on the retention and incentivisation of executive directors and senior management through the work of the Remuneration Committee.
• Continued consideration of Board and Committee composition and senior executive succession.

Time allocation

Each of the non-executive directors has a letter of appointment which sets out the terms and conditions of his or her directorship. The Chairman and the non-executive directors are expected to devote such time as is necessary for the proper performance of their duties. This is expected to be approximately 20 days each year for basic duties. The Chairman and Senior Independent Director are expected to spend additional time over and above this to discharge their added responsibilities.

During the year the Board held six scheduled meetings and one additional meeting, including an in depth two day session on strategic matters. The Board spent five days visiting Asia in April 2012. Between meetings directors spend a significant amount of time on Board and Committee related matters. The Board considers that it met sufficiently often to enable the directors to discharge their duties effectively.

The table below gives details of directors’ attendance at Board and Committee meetings during the financial year ended 31 March 2012.

Any absences were due to unavoidable prior commitments.

External directorships

The Board’s executive directors are permitted to hold only one non-executive directorship of a FTSE 100 company. Details of the directors’ other directorships can be found in their biographies.

Board effectiveness

“As a Board we strive to provide effective leadership that supports the Company’s five strategic themes and accords with the Company’s core values – to protect, explore, and inspire. To do this we must remain an open, dynamic, connected and collaborative team.”

Composition and succession

The non-executive directors are drawn from a wide range of industries and backgrounds, including banking and financial services, hotels and hospitality, marketing, broadcast and media. They have appropriate experience of complex organisations with global reach including experience of the Group’s key markets of Europe, the Americas and Asia. Their varied yet relevant experience brings a wealth of insight to Board discussions and important support to the management team. All the directors will stand for re-election at the upcoming Annual General Meeting on 12 July 2012.

The Board aims to continuously refresh its membership to ensure that it reflects the growth profile of the business. However this needs to be balanced over time to ensure that it can draw on the valuable experience of its longer serving directors, particularly given the significant continuing growth of the business and the current volatile macro-economic and global environment.

In relation to Board Committee succession matters, on 22 May David Tyler resigned as Chairman of the Remuneration Committee, with effect from the close of the Group’s upcoming Annual General Meeting. Sir John Peace has also resigned as a member of the Committee with effect from the close of the Annual General Meeting. The Board has appointed Ian Carter as the new Chairman of the Remuneration Committee. David Tyler will continue to serve as a member of the Committee.

During the recent independent investor audit (as referred to in “Engagement with shareholders” below), the view was expressed that the current Board provides a good balance and support to the management team.

During the year, the Board (through the Nomination Committee) focused on its future composition in relation to both executive and non-executive succession planning. It concluded that whilst the current composition of the Board remained appropriate, the Board should continue to build on its relevant skills and competencies for the future. It was identified that the future addition of a director with experience of operating in Asia and/or Emerging Markets would be beneficial and this is something the Board will focus on in the coming months.

Diversity and inclusion

The Board welcomed Lord Davies’ report entitled “Women on Boards”. The Company is proud of the fact that it is diverse, not only in terms of gender. Diversity is at the heart of the culture and brand which is characterised by a democratic and meritocratic ethos.

At our Group headquarters in London, 54 different nationalities are represented and approximately 70% of the total workforce is female. Of the eight directors on the Board, three are women including both of the executive directors. Approximately 35% of management are female.

The Company continues to focus on its recruitment strategies and cultural values to ensure it recruits and retains a talented workforce operating in an inclusive and diverse environment. Board succession planning is focused on ensuring the right mix of skills and experience for the Board with due regard for the benefits of diversity, including gender.

Evaluating our performance

The Board undertakes a formal review of its performance and that of its committees each financial year, with an external evaluation once every three years. During the year an internally facilitated review by way of an online questionnaire was undertaken. Feedback from the evaluation was provided in the form of a written report to the Board followed by a discussion of the outcomes, led by the Chairman. In 2010/11 an externally facilitated review of the Board’s effectiveness was facilitated by Dr Tracy Long of Boardroom Review.

Consistent with Dr Long’s findings last year, the review concluded that the Board was highly effective, the size and continuity of the Board was felt to encourage open and, where necessary, robust debate. The review identified that the Board had a number of key strengths, including:

• the small size and open culture of the Board encouraged discussion and debate, fostered by the Chairman who is viewed as a strong and positive influence and a great ambassador for the Group;
• the Board operated effectively as currently composed with a diversity of skills and very good knowledge of the business and management;
• the Board’s role in overseeing the strategic plan was rated highly and had improved significantly over the last few years;
• the increased use of informal meetings, presentations from senior management and the visit to the businesses in Asia, were all positive developments;
• the annual cycle of Board and Committee work and information provided was appropriate and well planned; and
• Board and Committee performance in managing principal risks was rated highly.

Following its discussion the Board agreed the following recommendations:

• whilst the current composition of the Board was considered appropriate, the Board should plan for the next few years to build on its relevant skills and competencies. It was identified that the future addition of a director with experience of operating in Asia and/or Emerging Markets would be beneficial;
• the Board should continue to strengthen its contribution and impact on overseeing strategy including by affording more opportunities throughout the year to engage with senior management responsible for key elements of the business and strategy; and
• the Board should continue to consider its approach to assessing Board and Committee effectiveness to ensure that the Group’s approach to this remained meaningful and reflective of the unique and collaborative nature of the Board.

The non-executive directors, led by the Senior Independent Director, also considered the performance of the Chairman without the Chairman present. They confirmed that the Chairman’s leadership, performance and overall contribution were of a high standard.

Information flow and professional development

The Chairman works closely with the Company Secretary to ensure that the Board is supplied in a timely manner with information in a form and of a quality appropriate to enable it to effectively discharge its duties. During the year the Company introduced the provision of Board papers and additional information via iPad to allow for easy and instant access to a wide range of information.

The Board is kept up to date on legal, regulatory and governance matters through advice and regular papers from the Company Secretary, the General Counsel and other advisers. During the year the Board was briefed on boardroom diversity, various developments in narrative and risk reporting and executive remuneration, compliance with the UK Bribery Act 2010, and other developments in corporate governance reporting.

The Company Secretary assists the Chairman in designing and facilitating a tailored induction programme for new directors and their on-going training. The Chairman reviews training needs with directors on an annual basis as part of the performance evaluation process.

The Board have direct access to the advice and services of the Company Secretary and the appointment and removal of the Company Secretary is a matter reserved for the Board as a whole. Directors may also obtain, in the furtherance of their duties, independent professional advice, if necessary, at the Group’s expense.

Re-election of directors

At the Annual General Meeting in 2011, all directors offered themselves for re-election. Each director was re-elected and no director received less than 94% in favour of the votes cast. At the Annual General Meeting in 2012, all of the directors will again retire and all will offer themselves for re-election.

The Board believes that each of the directors standing for re-election continue to be effective and accordingly, the Board recommends that shareholders approve the resolutions to be proposed at the 2012 Annual General Meeting relating to the re-election of the directors.

Board tenure

The balance of tenure of service of the directors is set out in the diagram above. At the time of the 2012 Annual General Meeting, Sir John Peace, Philip Bowman and David Tyler will have served on the Board for ten years. The performance of Philip Bowman and David Tyler has been subject to a rigorous review including with regard to their independence. The Board has concluded that they continue to provide independent and constructive challenge to the executive directors and remain effective non-executive directors. As discussed under “Board Composition and Succession” above, these directors bring valuable insight, experience and balance to the Board’s deliberations.

Managing conflicts of interest

All directors have a duty under the Companies Act 2006 to avoid a situation in which they have, or could have, a direct or indirect conflict of interest or possible conflict of interest with the Group.

Under the Group’s Articles of Association, the Board has the authority to approve such “situational” conflicts of interest and has adopted procedures to manage and, where appropriate, to approve such conflicts. Authorisations granted by the Board are recorded by the Company Secretary in a register and are noted by the Board at its next meeting.

A review of situational conflicts which have been authorised is undertaken by the Board annually. Following the last review, the Board concluded that the conflicts had been appropriately authorised and that the process for authorisation continued to operate effectively.

Engagement with shareholders

The Board believes that effective leadership also involves maintaining an open and constructive dialogue with shareholders and other stakeholders, and seeks to achieve this in various ways including at the Annual General Meeting.

The Chief Executive Officer and Executive Vice President, Chief Financial Officer give live presentations to institutional shareholders and analysts immediately following the release of the half and full year results which are then made available on the Results and Presentations section. The Group’s Investor Relations department acts as the centre for ongoing communications with investors and analysts.

The Chairman also maintains a regular dialogue with major shareholders to hear their views and discuss issues of mutual importance and communicates their views to the other members of the Board. The Senior Independent Director and all the other non-executive directors are available to meet with shareholders. The Group also carried out an independent investor audit of its major investors through Makinson Cowell, a capital markets advisory firm, to gauge investor perception.

Effective internal controls

The Group has a clear and consistent strategy as reflected in its five key strategic themes. The strategy has been developed to exploit identified opportunities through a diversified business model. Where material risks have been identified within our business, the Group has implemented an appropriate internal control environment to endeavour to mitigate such risks.

The Board is ultimately responsible for the Group’s system of internal controls and risk management, and it discharges its duties in this area by:

• determining the nature and extent of the significant risks it is willing to take in achieving the Group’s strategic objectives; and
• ensuring that management implement effective systems of risk identification, assessment and mitigation.

The Audit Committee has been delegated the responsibility for reviewing the effectiveness of the Group’s internal controls. The Audit Committee uses information drawn from a number of different sources to carry out this review including;

• Internal Audit provides objective assurance through its annual work plan which is approved by the Audit Committee and focuses on the principal risks identified in the risk assessment and key internal controls;
• regular reports to the Audit Committee from executive management and key Group support functions detailing their risk management and compliance approaches and highlighting any significant issues;
• key outcomes from discussions at the Group Risk Committee; and
• further objective assurance is provided by external auditors.

The internal control framework has been in operation for the whole of the year under review and continues to operate up to the date of approval of the Annual Report and Accounts. The system of internal controls is designed to manage rather than eliminate the risk of not achieving business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss.

There are areas of the Group’s business where it is necessary to take risks to achieve a satisfactory return for shareholders so long as such risks reflect the Board’s overall appetite for risk. It is the Group’s objective to apply expertise to prudently manage rather than eliminate such risks including keeping them under constant review.

The Board, through the Audit Committee, has reviewed the assessment of risks and the Group’s internal control framework and has considered the effectiveness of the system of internal control in operation in the Group for the year covered by the Annual Report and up to the date of its approval by the Board. The process followed by the Board in reviewing the system of internal controls accords with the Turnbull guidance. It also accords with the provisions of the UK Corporate Governance Code.

For details of the principal risks which may adversely impact the management of the Group and the execution of its growth strategies and the steps the Group takes to address these risks (where they are matters within Group control), see the Principal Risks section.

Managing risks

The Group has an integrated approach to risk management and internal controls to ensure that its review of risk is used to inform the internal audit process and the design of internal controls.

A detailed three year strategic plan and annual budget process provides the principal metrics against which the performance of the Group is measured. The strategic plan and budget are agreed with the Board together with defined performance targets and risks to delivery. The plan and the principal risks for delivering the strategy also form part of the Board’s annual review of Group strategy. The Audit Committee also plays a key role by reviewing the effectiveness of the Group’s internal controls and risk management.

Executive management assess risk on a regular basis through the Group Risk Committee which meets at least three times per year and reports any key findings to the Audit Committee. The Group Risk Committee evaluates risk through reports made to it by Internal Audit and Risk Assurance and other assurance teams and management committees. The Committee benefits from cross functional membership encompassing senior management of key areas such as IT, Finance, Legal, Brand Protection, Company Secretariat, Corporate Responsibility, Human Resources, Supply Chain and a number of assurance functions. These meetings are attended by the Chief Financial Officer and/or the Chief Executive Officer as well as the Director of Audit and Risk Assurance.

The executive directors also meet with senior management on a monthly basis to discuss performance, operational and budget issues to identify any emerging risks to achieving the strategic plan.

All internal audit activity is conducted by the Internal Audit team under the leadership of the Director of Audit and Risk Assurance, who reports to the Executive Vice President, Chief Financial Officer, but also has an independent reporting line to the Chairman of the Audit Committee. In the light of Internal Audit’s recommendations, management agrees and implements corrective action plans, which are tracked to completion by Internal Audit, with the results reported to executive management, the Audit Committee and the Board.

As part of the Board’s consideration of the principal risks facing the Group, Internal Audit and Risk Assurance facilitate a risk assessment process in each key business area and global support function to review the significant risks facing its operations and to record the relevant controls and any actions in place to mitigate the risks. The materiality of the risk is measured based on financial and non-financial criteria, and the probability of the risk arising is also mapped. The detailed assessments are then consolidated to provide input into the Group risk assessment. This process also enables Internal Audit and Risk Assurance to engage with senior management throughout the business on risk monitoring and management.

Financial reporting

Management is responsible for establishing and maintaining adequate internal controls over financial reporting. These controls are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes.

The Group has comprehensive planning, budgeting, forecasting and monthly reporting processes in place. A summary of Group financial results supported by commentary and performance measures is provided to the Board each month.

In relation to the preparation of the Group financial statements, the controls in place include:

• a centre of expertise responsible for reviewing new developments in reporting requirements and standards to ensure that these are reflected in Group accounting policies;
• a dedicated finance governance team who are responsible for developing the Group’s financial control processes and procedures and implementing them across the Group; and
• a global finance structure consisting of employees with the appropriate expertise to ensure that Group policies and procedures are correctly applied. Effective management and control of the finance structure is achieved through the finance leadership team, consisting of key finance employees from the regional and corporate centre.

The reporting process is supported by transactional and consolidation finance systems. Reviews of the applications of controls for external reporting purposes are carried out by senior finance management. The results of these reviews are considered by the Board as part of its monitoring of the performance of controls around financial reporting.

The Audit Committee reviews the application of financial reporting standards and any significant accounting judgements made by management.

Control environment

The Group’s business model is based on a central design, supply chain and distribution operation to source products to global markets, via retail and wholesale channels. This is reflected in the internal control framework which includes central direction, resource allocation, oversight and risk management of the key activities of marketing, inventory management, brand and technology development. This includes central support in relation to legal, human resources, information systems and financial practice.

The Group has established procedures for the delegation of authorities to ensure that approval for matters that are considered significant is considered at an appropriate level, either because of their value or the impact on the Group. In addition the Group has policies and procedures in place that are designed to support risk management across the Group. These authorities, policies and procedures are being kept under review as the Group continues to grow. These include policies relating to treasury, the conduct of employees and third parties with which the Group conducts business and prohibiting bribery and corruption, amongst others.

Accountability and audit

The Board is required to present a balanced and understandable assessment of the Group’s position and prospects in the Annual Report and in interim and other public reports. The Board is satisfied that it has met this obligation. A summary of the directors’ responsibilities for the financial statements is set out here and includes a statement regarding the Group’s status as a going concern as required by the UK Corporate Governance Code. The Report of the Auditors includes a statement by the auditors concerning their reporting responsibilities.

Report of the Audit Committee

Dear Shareholder,

The role of the Audit Committee is to monitor the integrity of financial information and to provide assurance to the Board that the Company’s internal controls and risk management systems are appropriate and regularly reviewed.

The Committee continues to focus on ensuring that the Group’s systems and controls are operating effectively, are evolving in line with the Group’s growth and are responsive the demands of the external operating environment. This will remain a priority for the coming year.

In addition to the usual work of the Committee (as set out below), during the year the Committee focused on other matters, including:

• evaluating and taking into account any movements in Group risks when considering budgets and forecasts that support going concern and impairment assessments;
• monitoring and seeking assurance that any effects on the Group’s business arising from the volatility in the economic environment (including supply of credit, bad debtors and reliance on key vendors) are being closely monitored;
• monitoring and seeking assurance of the continual improvement of the risk and control environment across the Group;
• considering Internal Audit and Risk Assurance findings and recommendations, and monitoring management responses and progress on implementing remedial actions;
• monitoring the establishment of the Group’s anti-bribery and anti-corruption policies and procedures and the on-going evolution of these against best practice; and
• considering the risks of the Group’s dependency on digital technology and Group policies to mitigate these risks.

As a Committee we are fortunate that we benefit from a constructive and open relationship with management and we thank them for their assistance during the year.

Philip Bowman

Chairman, Audit Committee

Committee membership

The following directors served as members of the Committee throughout the financial year ending 31 March 2012:

The Audit Committee met three times during the year. The attendance record of Committee members is recorded in the table above. In addition to the scheduled meetings the Chairman of the Committee meets separately with the Chief Financial Officer and the Director of Audit and Risk Assurance on a regular basis including prior to each meeting.

Other regular attendees at Committee meetings include: the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the Director of Audit and Risk Assurance, the Chief Corporate Affairs Officer & General Counsel, the Company Secretary, the Senior Vice President – Group Finance, the Group Financial Controller, the Director of Tax and the External Auditors.

The Board is satisfied that Philip Bowman as Chairman has recent and relevant financial experience and that all other Committee members have past employment experience in either finance or accounting roles or broad experience and knowledge of financial reporting and international businesses. Details of their experience can be found in their biographies.

Role of the Committee

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

These responsibilities include (among others):

• the integrity of the Group’s financial statements and formal announcements of the Group’s performance;
• the Group’s internal financial, operational and compliance controls and risk identification and management systems;
• recommending the appointment of external auditors, approving their remuneration and overseeing their work;
• developing and implementing policies on the engagement of the external auditors for the supply of non-audit services; and
• reviewing arrangements whereby employees may, in confidence, raise concerns about possible improprieties in matters of financial reporting and other matters.

External auditors

The Committee oversees the work undertaken by PricewaterhouseCoopers. During the year the Committee met with the external auditors without members of management being present.

Appointment and fees

The Committee has primary responsibility for making a recommendation on the appointment, re-appointment and removal of the external auditors. The Committee assesses on an annual basis the qualifications, expertise, resources and independence of the external auditors and the effectiveness of the previous audit process. Over the course of the year, the Committee has reviewed the audit process and the quality and experience of the audit partners engaged in the audit.

The Committee also reviewed the proposed audit fee and terms of engagement for the 2011/12 financial year. Details of the fees paid to the external auditors during the financial year can be found in note 5 in the financial statements.

PricewaterhouseCoopers have remained in place as auditors since prior to the IPO of the Company in 2002. They were re-appointed following an audit tender process undertaken by the Group for the 2010/11 financial year. The external auditors are required to rotate the audit engagement partner every five years. The current audit partner commenced his engagement for the 2010/11 financial year and is not subject to rotation until after the audit of the Group’s financial statements for the 2014/15 financial year has been concluded.

During the year, the Committee approved the re-appointment, remuneration and terms of engagement of PricewaterhouseCoopers as the Group’s statutory auditor. The Committee recommended to the Board that it proposes to shareholders that PricewaterhouseCoopers be re-appointed as the Group’s external auditors at the Group’s forthcoming Annual General Meeting.

Non-audit services

The Committee recognises that the independence of the auditors is an essential part of the audit framework and the assurance that it provides. The Committee has adopted a policy which sets out certain principles which the Group should follow in relation to the engagement of the Group’s auditors for non-audit services.

Under the policy, the auditors may provide non-audit services that do not conflict with their independence, subject to prior approval as set out in the policy. Proposed fees above a certain level must be approved by the Audit Committee. Such fees must be activity based and not success related. At the half year and year end, the Audit Committee reviews all non-audit services provided by the auditors during the period and the fees relating to such services. If during the year Group expenditure for non-audit services exceeds £1m, all further requests for work must be referred to the Chairman of the Committee.

During the year, the Group spent £0.5m on non-audit services provided by PricewaterhouseCoopers. Further details can be found in note 5.

Report of the Nomination Committee

Dear Shareholder,

The role of the Nomination Committee is to review the balance and composition of the Board and its committees, ensuring that they remain fit for purpose.

Our focus during the year has been on:

• reviewing Board and committee succession to ensure that the Board continues to build on its relevant skills and competencies for the future;
• executive and senior management succession planning; and
• consideration of diversity issues including in the context of Lord Davies’ report entitled “Women on Boards”.

These will remain a priority for the coming year. Set out below is more detail on the role of the Committee and its activities during the year.

Sir John Peace

Chairman, Nomination Committee

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Committee membership

The following directors served as members of the Committee throughout the financial year ended 31 March 2012:

Role of the Committee

The main roles and responsibilities of the Nomination Committee are set out in written terms of reference to here. The Committee reviews its terms of reference annually.

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

Activities during the year

The Nomination Committee met twice during the year under review. The table above under Time allocation gives details of directors’ attendance at these meetings.

Other regular attendees at Committee meetings include: the Executive Vice President Corporate Resources, the Chief Corporate Affairs Officer and the Company Secretary.

All directors have, since the 2011 Annual General Meeting, offered themselves for annual re-election in accordance with the UK Corporate Governance Code. The directors will do so again at the 2012 Annual General Meeting.

The biographical details of the directors can be found here. The Board confirms that, following the internal evaluation during the year led by the Chairman, the performance of each of the directors standing for re-election continues to be effective and demonstrates commitment to their roles, including commitment of time for Board and committee meetings and any other duties.

The terms and conditions of appointment of non-executive directors, including the expected time commitment, are available for inspection at the Company’s registered office.

Other governance disclosures

Annual General Meeting

As required by UK Corporate Governance Code, the Notice of the 2011 Annual General Meeting was sent to shareholders at least 20 working days before the Meeting. A poll vote was taken on each of the resolutions put before shareholders. All directors attended the 2011 Annual General Meeting and the Chairman of the Board and the chairmen of each of the committees were available to answer shareholders’ questions.

Voting at the upcoming 2012 Annual General Meeting will be by way of poll. The results of the voting at the Annual General Meeting will be announced and details of the votes will be available to view on the Group’s website at burberryplc.com as soon as possible after the meeting.

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

Share capital

Further information about the Company’s share capital, including substantial shareholdings, can be found on pages 70 to 73.