We are going to build our property planted equipment and intangible forecast for Burberry.

And you can see here that we have CapEx and intangibles purchases assumptions in our balance sheet tab.

And if we scroll to our segments tab, you can see that we have depreciation and amortization assumptions.

One thing we need to remember is that all recurring depreciation and amortization is allocated to the retail and wholesale segment.

This will affect how we build our calculations and it makes sense to assume that retail and wholesale revenue will drive CapEx and intangibles purchases.

If we return to our balance sheet tab and scroll down to the calculation section.

A further thing to note when it comes to our intangibles is that we split out a fragrance license here.

The fragrance license of 41.1 million is disclosed on page 137 of the financial statements as you can see here.

And the reason we're gonna split out the base calculation for this license is that it's due to expire in 2017.

So the amortization is gonna be treated as non-recurring, and the expense will be excluded from EBIT. According to page 54 of the financial statements.

As you can see here, the annual amortization charge on this license is 14.9 million.

Therefore, the intangible assets here in our base calculation reflect total intangible assets in the balance sheet, less this fragrance license.

Now let's have a look at our assumptions and we'll start with CapEx and purchases of intangibles.

We can see that CapEx spend levels off in our forecasts as we expect store openings to be in line with store closures.

So investment in physical stores is below historic levels.

Meanwhile, purchase of intangible spend is higher than historic levels.

This reflects the fact that the company frequently refers to increased investment in digital commerce in its financial statements.

For example, this would include website development and fulfillment systems, all of which would be captured in intangible assets.

Looking now at our assumptions for depreciation and amortization, we can see that these have been held constant with historic levels.

This reflects the fact that within each asset type, there are no major changes in asset mix or average asset life.

Also, we've assumed that impairments will be 0.

This is pretty standard unless the company has guided that they will be recognizing impairments.

We're now ready to start building our property plans and equipment and intangibles calculations.

So let's go back to the balance sheet.

We'll build our base calculations in the usual way.

CapEx is gonna be forecast using just our revenues for retail and wholesale, because remember the depreciation is allocated.

We then use our appreciation assumption on the segments tab and multiply this by the beginning balance.

Now that we've finished at this base calculation, we can roll the calculation forward to the end of our forecasts.

We can now build our calculation for intangible assets in exactly the same way.

The next calculation is the fragrance license.

As we know that the amortization on this license is on a straight line basis for the remaining few years of the license, we can use the min function to compare the prior year amortization charge and the remaining balance to forecast amortization.

Let's do this now. So I'm gonna pop minus min into my formula to make sure that amortization is displayed as a negative number.

And I'm now gonna scroll to the income statement to grab the prior year amortization.

And then I need to multiply this by minus 1 to make this a positive number so that the minus min then converts it back into a negative number.

And when I go back to the balance sheet tab, I can then compare this with a beginning balance on my license, and I can see that the amortization here is consistent with the prior number, but we'll see the effects of that min function when we roll forward our calculation.

Let's sum those lines above to give our ending balance.

And now let's roll forward our formula.

And you can see that by the third forecast year, this fragrance license is fully amortized and therefore no further amortization is going to be recognized.

The next step is to take the forecast balance sheet numbers from our calculations and pop those into our balance sheet.

We can also now return to the segments tab and input our depreciation and amortization from our calculations.

The final step is to go back to our balance sheet tab and check our CapEx forecasts.

CapEx consumes a significant amount of free cash flow, so we must be comfortable with this.

One thing we can do is check the management guidance page 55 of the financial statement shows us that management is expecting CapEx spend for FY16 of 180 million pounds, and that refers to both CapEx for intangibles and physical assets.

This is slightly above our forecasts of 176.5 million, but within the same ballpark.

So I think we should feel pretty comfortable with that.