TIDMBRBY
RNS Number : 6180T
Burberry Group PLC
16 November 2023
16 November 2023
BURBERRY GROUP PLC
INTERIM RESULTS FOR 26 WEEKSED 30 SEPTEMBER 2023
"We made good progress against our strategic goals, executing
our priorities at pace. We continued to build momentum around our
new creative vision with the launch of our Winter 23 collection in
September, the first designed by Daniel Lee. While the
macroeconomic environment has become more challenging recently, we
are confident in our strategy to realise our potential as the
modern British luxury brand, and we remain committed to achieving
our medium and long-term targets."
- Jonathan Akeroyd, Chief Executive Officer
Period ended 26 weeks 26 weeks YoY % change YoY % change
ended ended Reported CER
GBP million 30 September 1 October FX
2023 2022
-------------- -----------
Revenue 1,396 1,345 4 7
Retail comparable store
sales(*) 10% 5%
Adjusted operating profit
(*) 223 238 (6) 1
Adjusted operating profit
margin(*) 15.9% 17.7% (180bps) (110bps)
Adjusted diluted EPS
(pence) (*) 42.1 44.3 (5) 2
Reported operating profit 223 263 (15)
Reported operating profit
margin 15.9% 19.5% (360bps)
Reported diluted EPS
(pence) 42.1 48.9 (14)
Free cash flow (*) (15) 88 nm(**)
Dividend (pence) 18.3 16.5 11
------------------------------- -------------- ----------- ------------- -------------
(*) See page 11 for definitions of alternative performance
measures, (**) Not meaningful
-- Q2 comparable store sales increased 1%, with EMEIA +10%, Asia Pacific +2%, Americas -10%
-- Significant progress on our plan, executing our priorities at pace
-- Good performance across core outerwear and leather goods categories
o Outerwear comparable store sales up 21% in H1 and 10% in
Q2
o Leather goods comparable store sales up 8% in H1 and 3% in
Q2
-- Delivered a more coherent brand aesthetic with campaigns
generating significantly improved brand clarity , supported by a
series of high-impact activations
-- Launched Winter 23 collection, broadening distribution and
ensuring greater visibility in stores compared with previous
seasons; new product complements core offer and early indicators
are encouraging
-- Continued investment in distribution , opening or
refurbishing 33 stores in the half and refreshed website in line
with our new creative vision
-- Achieved efficiency improvements across the value chain in
terms of product availability, on time delivery and material waste
re-use
-- Strengthened supply chain with the completion of an outerwear
acquisition in Italy in early October
-- GBP400m share buyback completed at end of October, with GBP20 0 m completed in H1
-- Interim dividend of 18.3p, +11% based on 30% of FY23 full year dividend
GUIDANCE
We are confident in our strategy and remain committed to
achieving our medium and long-term targets. The slowdown in luxury
demand globally is having an impact on current trading. If the
weaker demand continues, we are unlikely to achieve our previously
stated revenue guidance for FY24*. In this context, adjusted
operating profit would be towards the lower end of the current
consensus range (GBP552m-GBP668m)**.
Based on the effective foreign exchange rates as of 25 October
2023, we now expect a reduced currency headwind of c.GBP110m to
revenue and c.GBP60m to adjusted operating profit.
*High single-digit revenue CAGR from FY20 base equating to a low
double-digit growth in FY24 YoY.
** As published on our corporate website here .
All metrics and commentary in the Group Financial Highlights and
Business and Financial Review exclude adjusting items unless stated
otherwise.
The financial information contained herein is unaudited.
The following alternative performance measures are presented in
this announcement: CER, adjusted profit measures, comparable sales,
free cash flow, cash conversion, adjusted EBITDA and net debt. The
definitions of these alternative performance measures are in the
Appendix on page 11.
Certain financial data within this announcement have been
rounded. Growth rates and ratios are calculated on unrounded
numbers.
Enquiries
Investors and analysts 020 3367 3524
Julian Easthope VP, Investor Relations julian.easthope@burberry.com
Media 020 3367 3764
Andrew Roberts SVP, Corporate Relations and andrew.roberts@burberry.com
Engagement
----------------- ------------------------------ -----------------------------
-- There will be a virtual presentation for investors and
analysts today at 9.30am (UK time) that can be viewed live on the
Burberry website https://www.burberryplc.com/ and can also be
accessed live via a listen only dial-in facility, click here to
register
-- The supporting slides and an indexed replay will be available
on the website later in the day
-- Burberry will issue its Third Quarter Trading Update on 19 January 2024
Certain statements made in this announcement are forward-looking
statements. Such statements are based on current expectations and
are subject to a number of risks and uncertainties that could cause
actual results to differ materially from any expected future
results in forward-looking statements. Burberry Group plc
undertakes no obligation to update these forward-looking statements
and will not publicly release any revisions it may make to these
forward-looking statements that may result from events or
circumstances arising after the date of this document. Nothing in
this announcement should be construed as a profit forecast. All
persons, wherever located, should consult any additional
disclosures that Burberry Group plc may make in any regulatory
announcements or documents which it publishes. All persons,
wherever located, should take note of these disclosures. This
announcement does not constitute an invitation to underwrite,
subscribe for or otherwise acquire or dispose of any Burberry Group
plc shares, in the UK, or in the US, or under the US Securities Act
1933 or in any other jurisdiction.
Burberry is listed on the London Stock Exchange (BRBY.L) and is
a constituent of the FTSE 100 index. ADR symbol OTC:BURBY.
BURBERRY, the Equestrian Knight Device, the Burberry Check, and
the Thomas Burberry Monogram and Print are trademarks belonging to
Burberry.
www.burberryplc.com
LinkedIn: Burberry
BUSINESS REVIEW
In November 2022, we set out our strategy to realise Burberry's
potential as the modern British luxury brand with a medium-term
target to grow sales to GBP4bn and a longer-term ambition to reach
GBP5bn. During the half, we made significant progress against our
plan, executing our priorities at pace.
We continued to invest in our creative vision with campaigns and
activations that were recognisably Burberry and told a coherent
brand story. Our Winter 23 campaign showcased our new offer with a
distinctive visual language that celebrated our new and enduring
brand codes and placed product centre stage. The strong level of
interest from fashion editors globally led to higher volumes of
editorials with more than two times the reach of our previous
Winter campaign.
We complemented the launch of Winter 23 with a series of city
takeovers in high-impact locations. Our "Burberry Streets"
activations in London, Seoul and Shanghai celebrated the art of
exploration and brought our brand to life through immersive
experiences, installations and events. These initiatives
contributed to our highest level of brand clarity in the last three
years as well as continued growth in consumers who associate
Burberry with 'Britishness' and 'Heritage', which are key to our
luxury positioning.
In terms of our core product categories, outerwear comparable
store sales increased 21% in the half. This was driven by the
strong performance of Heritage rainwear across both men's and
women's. Leather goods comparable store sales advanced 8%, led by
14% growth in bags with ongoing momentum in icons such as the
Vintage Check and new shapes introduced for Winter 23 such as the
Knight bag and Trench tote gaining traction. In parallel, we
continued to expand and evolve ready-to-wear, and introduced a more
complete shoe offering.
The Winter 23 collection, the first designed by Daniel Lee,
arrived in stores in September. Across all categories, we supported
the launch with a higher level of investment in new product than in
previous seasons, enabling us to broaden distribution and ensure
greater visibility in our stores. The new product complements our
existing strong core offer and while it is still too soon to have
an in-depth read on commercial performance, the early indicators
are encouraging.
We continued to build on this momentum with our Summer 24 show,
also in September, that was well attended by high profile talent
from the worlds of music, creative arts and sports. Through the
collection, we further developed the aesthetic and codes for the
brand across leather goods, shoes and ready-to-wear. The response
has been highly positive with global reach from press coverage more
than doubling season on season.
In addition, our beauty business generated an excellent
performance in the half, driven by the successful launch of our
latest fragrance Burberry Goddess.
We continued to invest in distribution, opening or refurbishing
33 stores in the half including New Bond Street London, Rodeo Drive
Los Angeles and Omotesando Tokyo. Financials of the updated stores
continue to show both store productivity and AUR up mid-teens
percentage against equivalent existing stores. We also refreshed
our e-commerce website Burberry.com. Launched to coincide with the
arrival of our Winter 23 collection in stores, the website offers
customers a more elevated and cohesive experience aligned with our
new brand identity.
We further strengthened our supply chain in our core product
categories with completion in early October of the acquisition of a
product development business from our longstanding supplier Pattern
SpA. This strategic investment will enhance our technical outerwear
capabilities and give us greater control over the quality, cost,
delivery, and sustainability of our offer.
At the same time, we maintained support for our communities,
partnering with Tate Britain for 'Sarah Lucas: HAPPY GAS', an
exhibition honouring one of Britain's leading artists. We also
partnered with British artist Keith Khan and LEEDS 2023 to create a
series of bespoke textile artworks at the Burberry Mill in Keighley
to celebrate the 33 distinctive and diverse wards of the city of
Leeds.
We continued to progress our sustainability agenda, introducing
plastic-free packaging as part of our commitment to eliminate
plastic from our consumer packaging by FY26. We also expanded our
aftercare services to help more of our customers extend the life of
their products.
SUMMARY INCOME STATEMENT
Period ended 26 weeks 26 weeks YoY % change YoY % change
GBP million ended ended Reported CER
30 September 1 October FX
2023 2022
Revenue 1,396 1,345 4 7
Cost of sales* (421) (403) 4 6
----------------------------- -------------- ----------- ------------- -------------
Gross profit* 975 942 3 8
Gross margin* 69.8% 70.1% (30bps) 30bps
Net operating expenses* (752) (704) 7 10
Net opex as a % of sales* 53.9% 52.4% 150bps 140bps
----------------------------- -------------- ----------- ------------- -------------
Adjusted operating profit* 223 238 (6) 1
Adjusted operating profit
margin* 15.9% 17.7% (180bps) (110bps)
Adjusting operating items - 25
----------------------------- -------------- ----------- ------------- -------------
Operating profit 223 263
Operating profit margin 15.9% 19.5% (360bps)
Net finance expense (4) (12)
----------------------------- -------------- ----------- ------------- -------------
Profit before taxation 219 251
Taxation (60) (57)
Non-controlling interest (1) (1)
Attributable profit 158 193
Adjusted profit before
taxation* 219 226 (3) 4
Adjusted diluted EPS
(pence)* 42.1 44.3 (5) 2
Diluted EPS (pence) 42.1 48.9 (14)
Weighted average number
of diluted ordinary shares
(millions) 376.1 394.4 (5)
----------------------------- -------------- ----------- ------------- -------------
*Excludes adjusting items. All items below adjusting operating
items are on a reported basis unless otherwise stated.
For detail, see Appendix.
FINANCIAL PERFORMANCE
Revenue by channel
26 weeks 26 weeks YoY % change YoY % change
ended ended Reported CER
30 September 1 October FX
Period ended 2023 2022
GBP million
------------------------- ------------ ------------
Retail 1,124 1,061 6 10
Retail comparable store
sales 10% 5%
Wholesale 241 263 (8) (8)
Licensing 31 21 45 44
------------- ---------- ------------ ------------
Revenue 1,396 1,345 4 7
------------------------- ------------- ---------- ------------ ------------
In the half:
-- Retail sales grew 10% at CER; 6% reported
-- Comparable store sales grew 10% with no impact from space
Comparable store sales growth by region
FY24 vs LY Q1 Q2 H1
Group 18% 1% 10%
Asia Pacific 36% 2% 18%
EMEIA 17% 10% 14%
Americas -8% -10% -9%
--- ---- ---
Asia Pacific grew 18% in the half with a strong Q1 recovery of
36% against a period that saw COVID-19 related disruption in
Mainland China and slowed to 2% in Q2 against a tougher
comparative.
-- Mainland China comparable store sales increased 15% in the
half. Q2 fell 8% as spending shifted offshore with the Chinese
customer group growing 25%
-- South Korea fell 1% in the half with a robust 6% growth in Q1 offset by a 7% decline in Q2
-- Japan saw strong comparable store sales growth up 43% in the
half and 41% in Q2 driven by tourists
-- South Asia Pacific rose 30% in the half and 22% in Q2, also benefitting from tourist demand
EMEIA had another strong half with comparable store sales up
14%, and Q2 +10%.
-- The region benefitted from tourist growth of 39% for the half
with the share of mix from tourists increasing to 51% of retail
sales with a strong performance from American and Asian
tourists
-- Continental Europe outperformed the regional average in the half
-- UK continued to lag Continental Europe in attracting tourism
spend compared with pre-pandemic levels, reflecting the withdrawal
of VAT refunds in the UK since January 2021
Americas declined 9% in the half with Q2 -10%.
-- While the American customer has remained weak overall, we are
pleased with the progress made with our customer acquisition
programme with an increased share of higher income female
clients
By product
We maintained our focus on our core leather and outerwear
categories.
-- Outerwear comparable store sales grew 21% in the half and 10%
in Q2, driven by Heritage rainwear following the launch of our new
visual expression of Burberry
-- Leather goods comparable store sales grew 8% in the half and
3% in Q2. This was driven by bags especially the Vintage Check
line. The new bag pillars launched at the end of the period and are
gaining traction, particularly the Knight bag and Trench tote
-- Ready-to-wear excluding outerwear grew 6% in the half with
men's up 6% and women's increasing 7%
Store footprint
The transformation of our distribution network continued during
the half.
-- Including refurbishments, we increased the number of updated
stores by 33 in the half, bringing the total of stores in new
design to 140
-- We remain on track to complete more than 50% of the network by the end of this financial year
-- Key openings/refurbishments include New Bond Street London,
Rodeo Drive Los Angeles and Omotesando Tokyo
-- We are pleased with the performance of updated stores that
saw both store productivity and AUR higher by mid-teens compared
with equivalent existing stores
Wholesale
Wholesale revenue decreased 8% at both CER and reported rates in
the half driven by a weak Americas performance. We expect the full
year to be down a mid-single digit percentage with the channel
impacted by the macroeconomic environment.
Licensing
Licensing revenue grew 44% at CER and 45% at reported exchange
rates in the half driven by a strong performance in beauty with the
highly successful launch of the Burberry Goddess fragrance.
OPERATING PROFIT ANALYSIS
Adjusted operating profit
Period ended 26 weeks 26 weeks YoY % change YoY % change
GBP million ended ended Reported CER
30 September 1 October FX
2023 2022
------------- ----------
Revenue 1,396 1,345 4 7
Cost of sales* (421) (403) 4 6
Gross profit* 975 942 3 8
Gross margin %* 69.8% 70.1% (30bps) 30bps
Net operating expenses* (752) (704) 7 10
Operating expenses as a
% of sales* 53.9% 52.4% 150bps 140bps
--------------------------- ------------- ---------- ------------ ------------
Adjusted operating profit* 223 238 (6) 1
Adjusted operating margin
%* 15.9% 17.7% (180bps) (110bps)
--------------------------- ------------- ---------- ------------ ------------
*Excludes adjusting items
Adjusted operating profit increased 1% at CER and but fell 6% at
reported with the margin down 110bps and 180bps respectively:
-- Gross margin increased by 30bps at CER with regional and
channel mix benefits as well as lower transportation costs more
than offsetting inflationary pressures, and fell 30bps at
reported
-- Adjusted net operating expenses rose by 10% at CER and 7%
reported due to investments in stores and marketing as well as
impact of inflation of people costs
-- Adjusted operating profit was GBP223m at reported including a
GBP17m foreign exchange headwind (H1 FY23: GBP238m at reported with
GBP31m foreign exchange tailwind)
ADJUSTING ITEMS(*)
Adjusting items were nil (H1 FY23: GBP25m net credit).
Period ended 26 weeks ended 26 weeks ended
GBP million 30 September 1 October
2023 2022
----------------
The impact of COVID-19
Inventory provisions** - 1
Rent concessions - 7
Government grants - 1
COVID-19 adjusting items - 9
Profit on sale of property - 19
Revaluation of deferred consideration
liability - (2)
Restructuring costs - (1)
Adjusting items - 25
--------------------------------------- ----------------
*For detail on adjusting items see note 4 of the Financial
Statements **Includes nil (H1 FY23: GBP1m credit) that has been
recognised through COGS
ADJUSTED PROFIT BEFORE TAX*
After an adjusted net finance charge of GBP4m (H1 FY23: GBP12m),
adjusted profit before tax was GBP219m (H1 FY23: GBP226m).
*For detail on adjusting items see note 4 of the Financial
Statements
TAXATION*
The effective tax rate on adjusted profit increased to 27.2% (H1
FY23: 22.4%) due to the higher UK corporation tax rate. The
reported tax rate on H1 FY24 profit before taxation was also 27.2%
(H1 FY23: 22.7%).
*For detail see note 6 of the Financial Statements
CASH FLOW
R epresented statement of cash flows
Period ended 26 weeks ended 26 weeks ended
GBP million 30 September 1 October
2023 2022
Adjusted operating profit 223 238
Depreciation and amortisation 179 163
Working capital (154) (125)
Other including adjusting items 23 13
------------------------------------------ --------------- --------------
Cash generated from operating activities 271 289
Payment of lease principal and related
cash flows (97) (93)
Capital expenditure (89) (53)
Proceeds from disposal of non-current
assets - 22
Interest (2) (12)
Tax (98) (65)
------------------------------------------ --------------- --------------
Free cash flow* (15) 88
------------------------------------------ --------------- --------------
*For a definition of free cash flow see page 11
Free cash flow was a GBP15m outflow in the half (H1 FY23: GBP88m
inflow) as we continued to invest in product and distribution.
The major components were:
-- Cash generated from operating activities decreased from GBP289m to GBP271m
-- A working capital outflow of GBP154m (H1 FY23: GBP125m)
impacted by changes to the timing of our seasonal collections and
the build of inventory in preparation for festive
-- Capital expenditure of GBP89m (H1 FY23: GBP53m) attributed to
the store network as we continued to roll out our store
refurbishment programme
-- Tax cash outflow of GBP98m (H1 FY23: GBP65m) due to the
higher UK tax rate and one-off payments
Cash net of overdrafts on 30 September 2023 was GBP570m,
compared to GBP961m on 1 April 2023. On 30 September 2023
borrowings were GBP299m from the bond issue leaving cash net of
overdrafts and borrowings of GBP271m (1 April 2023: GBP663m). With
lease liabilities of GBP1,158m, net debt in the period was GBP887m
(1 April 2023: GBP460m). Net Debt/Adjusted EBITDA was 0.9x, at the
upper end of our target range of 0.5x to 1.0x. The increase in
leverage from 0.5x at the FY23 year-end was primarily driven by the
share buyback programme, payment of the final dividend and seasonal
working capital outflows as we approach the festive period.
Period ended 26 weeks ended 26 weeks ended
GBP million 30 September 1 October
2023 2022
Adjusted EBITDA - rolling
12 months 976 896
Cash net of overdrafts (570) (941)
Bond 299 298
Lease debt 1,158 1,139
--------------- ---------------
Net Debt* 887 496
--------------- ---------------
Net Debt/Adjusted EBITDA 0.9x 0.6x
--------------- ---------------
*For a definition of net debt see page 12.
APPIX
Detailed guidance for FY24
Item Financial impact
Impact of retail Space is expected to be broadly stable in FY24.
space on revenues
---------------------------------------------------------
Wholesale revenue Wholesale revenue is expected to decline by a mid-single
digit percentage in FY24.
---------------------------------------------------------
Tax We expect the adjusted effective tax rate to be
around 27%.
---------------------------------------------------------
Currency Based on 25 October effective foreign exchange
rates, the impact of year-on-year exchange rate
movements is now expected to be a c.GBP110m headwind
on revenue and c.GBP60m headwind on adjusted operating
profit.
---------------------------------------------------------
Capex Capex is expected to be around GBP200m including
over 50% of the store network updated by end of
the year.
---------------------------------------------------------
Dividend Interim dividend at 18.3p, 30% of FY23 full year
dividend - progressive dividend policy with pay-out
ratio around 50% of the full year.
---------------------------------------------------------
Share buyback GBP400m share buyback completed on 31 October with
20.5m shares acquired at an average price of 1,951p.
---------------------------------------------------------
Note: Guidance based on CER at FY23 rates
GUIDANCE
We are confident in our strategy and remain committed to
achieving our medium and long-term targets. The slowdown in luxury
demand globally is having an impact on current trading. If the
weaker demand continues, we are unlikely to achieve our previously
stated revenue guidance for FY24*. In this context, adjusted
operating profit would be towards the lower end of the current
consensus range (GBP552m-GBP668m)**.
Based on effective foreign exchange rates as of 25 October 2023,
we now expect a reduced currency headwind of c.GBP110m to revenue
and c.GBP60m to adjusted operating profit.
*High single-digit revenue CAGR from FY20 base equating to a low
double-digit growth in FY24
** As published on our corporate website here .
Retail/wholesale revenue by destination*
Period ended 26 weeks 26 weeks ended YoY % change
ended 30 1 October
September
GBP million 2023 2022 Reported CER
FX
------------------------ ----------- --------------- --------- -----
Asia Pacific (94%
retail)* 584 525 11 19
EMEIA (68% retail)* 485 445 9 8
Americas (83% retail)* 296 354 (16) (14)
Total (82% retail) 1,365 1,324 3 7
------------------------ ----------- --------------- ---------
*Mix based on H1 FY24
Retail/wholesale revenue by product division
Period ended 26 weeks 26 weeks ended YoY % change
ended 30 1 October
September
GBP million 2023 2022 Reported CER
FX
-------------------- ----------- --------------- --------- -----
Accessories 498 495 1 4
Women's 391 357 9 13
Men's 399 383 4 8
Children's & other 77 89 (13) (10)
----------- --------------- --------- -----
Total 1,365 1,324 3 7
-------------------- ----------- --------------- --------- -----
Store portfolio*
Directly operated stores
--------------------------------------- ----------
Stores Concessions Outlets Total Franchise
stores
------------------------ ------- ------------ -------- ----------
At 1 April 2023 219 138 56 413 35
Additions 7 1 2 10 2
Closures (10) (4) - (14) (5)
At 30 September
2023 216 135 58 409 32
------- ------------ --------
*Excludes the impact of pop-up stores
----------------------------------------------------------------- ----------
Store portfolio by region*
Directly operated stores
--------------------------------------- ----------
Stores Concessions Outlets Total Franchise
At 30 September 2023 stores
------------------------ ------- ------------ -------- ----------
Asia Pacific 113 94 24 231 8
EMEIA 44 33 19 96 24
Americas 59 8 15 82 -
Total 216 135 58 409 32
------- ------------ --------
*Excludes the impact of pop-up stores
Adjusted operating profit* 26 weeks ended 26 weeks ended % change % change
Period ended 30 September 1 October Reported CER
GBP millions 2023 2022 FX
Retail/wholesale 194 219 (11) (3)
Licensing 29 19 46 45
---------------------------- --------------- --------------- ---------- ---------
Adjusted operating profit 223 238 (6) 1
Adjusted operating profit
margin 15.9% 17.7% (180bps) (110bps)
---------------------------- --------------- --------------- ---------- ---------
*For detail on adjusting items see note 4 of the Financial
Statements
Exchange rates Forecast effective average Actual average exchange
rates for FY24 rates
GBP1= 25 October 29 June 2023 H1 FY24 H1 FY23 FY23
2023
------------- -------------- --------- --------- ------
Euro 1.15 1.16 1.16 1.17 1.16
US Dollar 1.23 1.26 1.26 1.21 1.20
Chinese Renminbi 8.91 9.07 8.97 8.16 8.27
Hong Kong Dollar 9.65 9.87 9.86 9.50 9.43
Korean Won 1,694 1,659 1,654 1,579 1,577
------------- -------------- --------- --------- ------
Profit before tax reconciliation
----------- ----------
Period ended 26 weeks 26 weeks % change % change
GBP million ended ended Reported CER
30 September 1 October FX
2023 2022
Adjusted profit before
tax 219 226 (3) 4
Adjusting items*
COVID-19 related items - 9
Profit on sale of
property - 19
Restructuring costs - (1)
Revaluation of deferred
consideration liability - (2)
Profit before tax 219 251 (13)
-------------- ----------- ----------
*For detail on adjusting items see note 4 of the Financial
Statements
Alternative performance measures
Alternative performance measures (APMs) are non-GAAP measures.
The Board uses the following APMs to describe the Group's financial
performance and for internal budgeting, performance monitoring,
management remuneration target setting and external reporting
purposes.
APM Description and purpose GAAP measure reconciled to
Constant This measure removes the Results at reported rates
Exchange effect of changes in exchange
Rates (CER) rates. The constant exchange
rate incorporates both
the impact of the movement
in exchange rates on the
translation of overseas
subsidiaries' results and
on foreign currency procurement
and sales through the Group's
UK supply chain.
-------------------------------------- --------------------------------------------------------------
Comparable The year-on-year change Retail Revenue:
sales growth in sales from stores trading Period ended 26 weeks 26 weeks
over equivalent time periods YoY% ended ended
and measured at constant 30 September 1 October
foreign exchange rates. 2023 2022
It also includes online ---------------- -------------- -----------
sales. This measure is Comparable
used to strip out the impact sales growth 10% 5%
of permanent store openings Change in
and closings, or those space 0% 1%
closures relating to refurbishments, ---------------- -------------- -----------
allowing a comparison of CER retail 10% 6%
equivalent store performance ---------------- -------------- -----------
against the prior period. FX (4%) 6%
---------------- -------------- -----------
Retail revenue 6% 12%
---------------- -------------- -----------
-------------------------------------- --------------------------------------------------------------
Adjusted Adjusted profit measures Reported Profit:
Profit are presented to provide A reconciliation of reported
additional consideration profit before tax to adjusted
of the underlying performance profit before tax and the Group's
of the Group's ongoing accounting policy for adjusted
business. These measures profit before tax are set out
remove the impact of those in the financial statements.
items which should be excluded
to provide a consistent
and comparable view of
performance.
-------------------------------------- --------------------------------------------------------------
Free Cash Free cash flow is defined Net cash generated from operating
Flow as net cash generated from activities: Period ended 26 weeks 26 weeks
operating activities less GBPm ended ended
capital expenditure plus 30 September 1 October
cash inflows from disposal 2023 2022
of fixed assets and including -------------------- -------------- -----------
cash outflows for lease Net cash generated
principal payments and from operating
other lease related items. activities 171 212
Capex (89) (53)
Lease principal
and related
cash flows (97) (93)
Proceeds from
disposal of
non-current
assets - 22
-------------------- -------------- -----------
Free cash flow (15) 88
-------------------------------------- --------------------------------------------------------------
Cash Conversion Cash conversion is Net cash generated from operating
defined activities:
as free cash flow Period ended 26 weeks 26 weeks
pre-tax/adjusted GBPm ended ended
profit before tax. It 30 September 1 October
provides a measure of 2023 2022
the Group's effectiveness ----------------- -------------- -----------
in converting its profit Free cash
into cash. flow (15) 88
Tax paid 98 65
----------------- -------------- -----------
Free cash
flow before
tax 83 153
----------------- -------------- -----------
Adjusted profit
before tax 219 226
Cash conversion 38% 68%
Net Debt Net debt is defined as Cash net of overdrafts: Period ended As at As at
the lease liability GBPm 30 September 1 October
recognised 2023 2022
on the balance sheet plus ----------------- -------------- -----------
borrowings less cash net Cash net of
of overdrafts. overdrafts 570 941
Lease liability (1,158) (1,139)
Borrowings (299) (298)
----------------- -------------- -----------
Net debt (887) (496)
-------------------------- ------------------------------------------------------------------------
Adjusted Adjusted EBITDA is Reconciliation from operating profit
EBITDA defined to adjusted EBITDA: Period ended 26 weeks 26 weeks
as operating profit, GBPm ended ended
excluding 30 September 1 October
adjusting operating 2023 2022
items, ---------------------- -------------- -----------
depreciation of property, Operating profit 223 263
plant and equipment, Adjusting operating
depreciation items - (25)
of right of use assets Amortisation
and amortisation of of intangible
intangible assets 19 18
assets. Any depreciation Depreciation
or amortisation included of property,
in adjusting operating plant and equipment 49 45
items are not double Depreciation
counted. of right-of-use
Adjusted EBITDA is shown assets 111 100*
for the calculation of ---------------------- -------------- -----------
Net Debt/EBITDA for our Adjusted EBITDA 402 401
leverage ratios. *Excludes GBP3m depreciation on
right-of-use assets included in
adjusting items
-------------------------- ------------------------------------------------------------------------
PRINCIPAL RISKS
At H1 FY24, the principal risks the Group faces for the
remaining 26 weeks of the financial year have been reviewed
relative to the prior year-end. The principal risk ratings are
considered to be consistent with the year-end position. Details of
the principal risks including definitions are set out in the FY23
Annual Report (p121- 144).
CONDENSED Group INCOME statement- UNAUDITED
26 weeks 26 weeks 52 weeks
to to to
30 September 1 October 1 April
2023 2022 2023(1)
Note GBPm GBPm GBPm
--------------------------------------- ---- ------------- ---------- --------
Revenue 3 1,396 1,345 3,094
Cost of sales (421) (402) (911)
--------------------------------------- ---- ------------- ---------- --------
Gross profit 975 943 2,183
--------------------------------------- ---- ------------- ---------- --------
Operating expenses (758) (712) (1,572)
Other operating income 6 32 46
--------------------------------------- ---- ------------- ---------- --------
Net operating expenses (752) (680) (1,526)
--------------------------------------- ---- ------------- ---------- --------
Operating profit 223 263 657
Financing
--------------------------------------- ---- ------------- ---------- --------
Finance income 20 6 21
Finance expense (24) (18) (42)
Other financing charge - - (2)
--------------------------------------- ---- ------------- ---------- --------
Net finance expense 5 (4) (12) (23)
--------------------------------------- ---- ------------- ---------- --------
Profit before taxation 219 251 634
Taxation 6 (60) (57) (142)
--------------------------------------- ---- ------------- ---------- --------
Profit for the period 159 194 492
--------------------------------------- ---- ------------- ---------- --------
Attributable to:
Owners of the Company 158 193 490
Non-controlling interest 1 1 2
--------------------------------------- ---- ------------- ---------- --------
Profit for the period 159 194 492
--------------------------------------- ---- ------------- ---------- --------
Earnings per share
Basic 7 42.4 p 49.1p 126.9p
Diluted 7 42.1 p 48.9p 126.3p
--------------------------------------- ---- ------------- ---------- --------
GBPm GBPm GBPm
--------------------------------------- ---- ------------- ---------- --------
Reconciliation of adjusted profit
before taxation:
Profit before taxation 219 251 634
Adjusting operating items:
Cost of sales (income) 4 - (1) (1)
Net operating expense (income) 4 - (24) (22)
Adjusting financing items 4 - - 2
--------------------------------------- ---- ------------- ---------- --------
Adjusted profit before taxation -
non-GAAP measure 219 226 613
--------------------------------------- ---- ------------- ---------- --------
Adjusted earnings per share - non-GAAP
measure
Basic 7 42.4 p 44.5p 123.1p
Diluted 7 42.1 p 44.3p 122.5p
--------------------------------------- ---- ------------- ---------- --------
Dividends per share
Proposed interim (not recognised as
a liability at period end) 8 18.3 p 16.5p 16.5p
Final (not recognised as a liability
at 1 April 2023) 8 N/A N/A 44.5p
--------------------------------------- ---- ------------- ---------- --------
(1) Balances for the 52 weeks to 1 April 2023 have been
audited.
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME -
UNAUDITED
26 weeks 26 weeks 52 weeks to
to to 1 April
30 September 1 October 2023(1)
2023 2022 GBPm
GBPm GBPm
------------------------------------------------------ ------------- ---------- -----------
Profit for the period 159 194 492
Other comprehensive income(2) :
Cash flow hedges (1) 1 1
Foreign currency translation differences (16) 53 14
Tax on other comprehensive income: - (1) (1)
Other comprehensive income for the period, net of tax (17) 53 14
------------------------------------------------------- ------------- ---------- -----------
Total comprehensive income for the period 142 247 506
------------------------------------------------------- ------------- ---------- -----------
Total comprehensive income attributable to:
Owners of the Company 141 245 504
Non-controlling interest 1 2 2
------------------------------------------------------- ------------- ---------- -----------
142 247 506
------------------------------------------------------ ------------- ---------- -----------
(1) Balances for the 52 weeks to 1 April 2023 have been
audited.
(2) All items included in other comprehensive income may
subsequently be reclassified to profit and loss in a future
period.
CONDENSED GROUP BALANCE SHEET - UNAUDITED
As at As at As at
30 September 1 October 1 April
2023 2022 2023(1)
Note GBPm GBPm GBPm
------------------------------------- ---- ------------- ---------- --------
ASSETS
Non-current assets
Intangible assets 9 248 245 248
Property, plant and equipment 10 377 345 376
Right-of-use assets 11 972 947 950
Deferred tax assets 6 204 204 197
Trade and other receivables 12 52 53 52
1,853 1,794 1,823
------------------------------------- ---- ------------- ---------- --------
Current assets
Inventories 13 526 484 447
Trade and other receivables 12 365 338 307
Derivative financial assets 1 3 7
Income tax receivables 87 87 76
Cash and cash equivalents 14 663 1,017 1,026
Assets held for sale 10 13 11 -
------------------------------------- ---- ------------- ---------- --------
1,655 1,940 1,863
------------------------------------- ---- ------------- ---------- --------
Total assets 3,508 3,734 3,686
------------------------------------- ---- ------------- ---------- --------
LIABILITIES
Non-current liabilities
Trade and other payables 15 (70) (84) (76)
Lease liabilities (922) (922) (902)
Borrowings 18 (299) (298) (298)
Deferred tax liabilities 6 - (1) (1)
Retirement benefit obligations (1) (1) (1)
Provisions for other liabilities and
charges 16 (35) (40) (40)
------------------------------------- ---- ------------- ---------- --------
(1,327) (1,346) (1,318)
------------------------------------- ---- ------------- ---------- --------
Current liabilities
Trade and other payables 15 ( 672 ) (498) (477)
Bank overdrafts 17 (93) (76) (65)
Lease liabilities (236) (217) (221)
Derivative financial liabilities (10) (5) (1)
Income tax liabilities (31) (34) (43)
Provisions for other liabilities and
charges 16 (22) (27) (22)
(1,064) (857) (829)
------------------------------------- ---- ------------- ---------- --------
Total liabilities (2,391) (2,203) (2,147)
------------------------------------- ---- ------------- ---------- --------
Net assets 1,117 1,531 1,539
------------------------------------- ---- ------------- ---------- --------
EQUITY
Capital and reserves attributable
to owners of the Company
Ordinary share capital 19 - - -
Share premium account 230 228 230
Capital reserve 41 41 41
Hedging reserve 3 5 4
Foreign currency translation reserve 216 269 232
Retained earnings 620 982 1,026
------------------------------------- ---- ------------- ---------- --------
Equity attributable to owners of the
Company 1,110 1,525 1,533
Non-controlling interest in equity 7 6 6
------------------------------------- ---- ------------- ---------- --------
Total equity 1,117 1,531 1,539
------------------------------------- ---- ------------- ---------- --------
(1) Balances as at 1 April 2023 have been audited.
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY - UNAUDITED
Attributable to owners
of the Company
-----------------------------
Ordinary Share
share premium Other Retained Non-controlling Total
capital account reserves earnings Total interest equity
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------- ---- -------- -------- --------- --------- ----- --------------- -------
Balance as at 2 April 2022 - 227 263 1,123 1,613 4 1,617
------------------------------- ---- -------- -------- --------- --------- ----- --------------- -------
Profit for the period - - - 193 193 1 194
Other comprehensive income:
Cash flow hedges - - 1 - 1 - 1
Foreign currency translation
differences - - 52 - 52 1 53
Tax on other comprehensive
income - - (1) - (1) - (1)
Total comprehensive income
for the period - - 52 193 245 2 247
------------------------------- ---- -------- -------- --------- --------- ----- --------------- -------
Transactions with owners:
Employee share incentive
schemes
Equity share awards - - - 10 10 - 10
Equity share awards
transferred
to liabilities - - - (2) (2) - (2)
Exercise of share options - 1 - - 1 - 1
Purchase of own shares
Share buy-back - - - (201) (201) - (201)
Held by ESOP trusts - - - (1) (1) - (1)
Dividends paid in the period - - - (140) (140) - (140)
------------------------------- ---- -------- -------- --------- --------- ----- --------------- -------
Balance as at 1 October 2022 - 228 315 982 1,525 6 1,531
------------------------------- ---- -------- -------- --------- --------- ----- --------------- -------
Balance as at 1 April 2023 - 230 277 1,026 1,533 6 1,539
------------------------------- ---- -------- -------- --------- --------- ----- --------------- -------
Profit for the period - - - 158 158 1 159
Other comprehensive income:
Cash flow hedges - - (1) - (1) - (1)
Foreign currency translation
differences - - (16) - (16) - (16)
Total comprehensive income
for the period - - (17) 158 141 1 142
------------------------------- ---- -------- -------- --------- --------- ----- --------------- -------
Transactions with owners:
Employee share incentive
schemes
Equity share awards - - - 7 7 - 7
Tax on share awards - - - (2) (2) - (2)
Purchase of own shares
Share buy-back(1) 19 - - - (402) (402) - (402)
Dividends paid in the period 8 - - - (167) (167) - (167)
Balance as at 30 September
2023 - 230 260 620 1,110 7 1,117
------------------------------- ---- -------- -------- --------- --------- ----- --------------- -------
(1) Includes GBP201 million paid in relation to the first share
buy-back programme which commenced and completed in period as well
as GBP201 million included within payables related to the second
share buy-back programme which commenced in the period and
completed in the second half of the year. Refer to note 19.
CONDENSED GROUP STATEMENT OF CASH FLOWS - UNAUDITED
26 weeks 26 weeks 52 weeks
to to to
30 September 1 October 1 April
2023 2022 2023(1)
Note GBPm GBPm GBPm
--------------------------------------------------- ---- ------------- ---------- --------
Cash flows from operating activities
Profit before tax 219 251 634
Adjustments to reconcile profit before
tax to net cash flows:
Amortisation of intangible assets 19 18 37
Depreciation of property, plant and equipment 49 45 95
Depreciation of right-of-use assets 111 100 212
COVID-19 related rent concessions - (7) (13)
Net impairment charge of property, plant
and equipment 10 - - 2
Net impairment (reversal)/charge of right-of-use
assets 11 - (1) 2
Loss/(gain) on disposal of property, plant
and equipment and intangible assets 3 (19) (19)
Gain on modification of right-of-use assets (1) - (2)
Loss/(gain) on derivative instruments 14 5 (2)
Charge in respect of employee share incentive
schemes 7 10 19
Net finance expense 4 12 23
Working capital changes:
Increase in inventories (76) (46) (10)
Increase in receivables (58) (53) (17)
Decrease in payables and provisions (20) (26) (49)
--------------------------------------------------- ---- ------------- ---------- --------
Cash generated from operating activities 271 289 912
Interest received 21 5 18
Interest paid (23) (17) (40)
Taxation paid (98) (65) (140)
--------------------------------------------------- ---- ------------- ---------- --------
Net cash generated from operating activities 171 212 750
Cash flows from investing activities
Purchase of property, plant and equipment (64) (35) (136)
Purchase of intangible assets (25) (18) (43)
Proceeds from sale of property, plant
and equipment - 22 32
Initial direct costs of right-of-use assets (1) - -
Net cash outflow from investing activities (90) (31) (147)
Cash flows from financing activities
Dividends paid in the period (167) (140) (203)
Payment of deferred consideration for
acquisition of non-controlling interest 15 - (6) (6)
Payment of lease principal (96) (93) (210)
Issue of ordinary share capital - 1 3
Purchase of own shares through share buy-back (200) (180) (400)
Purchase of own shares through share buy-back
- stamp duty and fees (1) (1) (4)
Purchase of own shares by ESOP trusts - (1) (1)
Net cash outflow from financing activities (464) (420) (821)
Net decrease in cash net of overdrafts (383) (239) (218)
Effect of exchange rate changes (8) 3 2
Cash net of overdrafts at beginning of
period 961 1,177 1,177
--------------------------------------------------- ---- ------------- ---------- --------
Cash net of overdrafts 570 941 961
--------------------------------------------------- ---- ------------- ---------- --------
Cash and cash equivalents 14 663 1,017 1,026
Bank overdrafts 17 (93) (76) (65)
--------------------------------------------------- ---- ------------- ---------- --------
Cash net of overdrafts 570 941 961
--------------------------------------------------- ---- ------------- ---------- --------
(1) Balances for the 52 weeks to 1 April 2023 have been
audited.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
1. Corporate information
Burberry Group plc and its subsidiaries (the Group) is a global
luxury goods manufacturer, retailer and wholesaler. The Group also
licenses third parties to manufacture and distribute products using
the 'Burberry' trademarks. All of the companies which comprise the
Group are controlled by Burberry Group plc (the Company) directly
or indirectly.
2. Accounting policies and Basis of preparation
Basis of preparation
These condensed consolidated interim financial statements are
unaudited but have been reviewed by the auditors and their report
to the Company is set out on page 36. They were approved by the
Board of Directors on 15 November 2023. These condensed
consolidated interim financial statements do not constitute
statutory accounts within the meaning of Section 434 of the
Companies Act 2006. Statutory accounts for the 52 weeks to 1 April
2023 were approved by the Board of Directors on 17 May 2023 and
have been filed with the Registrar of Companies. The report of the
auditors on the statutory accounts for the 52 weeks to 1 April 2023
was unqualified and did not contain a statement under Section 498
of the Companies Act 2006.
These condensed consolidated interim financial statements for
the 26 weeks to 30 September 2023 have been prepared in accordance
with the Disclosure Guidance and Transparency Rules of the
Financial Services Authority and with IAS 34, 'Interim Financial
Reporting' as adopted by the UK. This report should be read in
conjunction with the Group's financial statements for the 52 weeks
to 1 April 2023, which have been prepared in accordance with
UK-adopted International Accounting Standards (IFRS).
These condensed consolidated interim financial statements are
presented in GBPm. Financial ratios are calculated using unrounded
numbers.
Going concern
In considering the appropriateness of adopting the going concern
basis in preparing the financial statements, the Directors have
assessed the potential cash generation of the Group. This
assessment covers the period of a minimum of 12 months from the
date of signing the condensed consolidated interim financial
statements. Therefore, the Directors have considered the forecast
for the period up to the subsequent financial year end, the period
ending 29 March 2025, for any indicators that the going concern
basis of preparation is not appropriate.
The scenarios considered by the Directors include a severe but
plausible downside reflecting the Group's base plan adjusted for
severe but plausible impacts from the Group's principal risks,
which are consistent with the principal risks at 1 April 2023. The
scenarios were informed by a comprehensive review of macroeconomic
scenarios using third party projections of macroeconomic data for
the luxury fashion industry. The Group central planning scenario
reflects a balanced projection with a continued focus on growing
markets and maintaining momentum built as part of the strategy. As
a sensitivity, this central planning scenario has been flexed to
reflect a 15% downgrade to revenues in the 18 month period to March
2025, in comparison to the base case, as well as the associated
consequences for EBITDA and cash. Management consider this
represents a severe but plausible downside scenario appropriate for
assessing going concern.
The severe but plausible downside modelled the following risks
occurring simultaneously:
-- A more severe and prolonged reduction in the GDP growth
assumptions in Europe, China, and the Americas compared to the
central planning scenario
-- An increase in geopolitical tension which reduces GDP growth
assumptions compared to the central planning model
-- A severe reduction to our global consumer demand arising from
a change in consumer preference
-- A significant reputational incident such as negative
sentiment propagated through social media
-- The impact of a business interruption event, following a
technology vulnerability, resulting in a two week interruption in
one of our geographies arising from the supply chain impact, and
interruption to one of our channels
-- The occurrence of a one-time physical risk relating to
climate change in FY 2024/25 and the materialisation of a severe
but plausible ongoing market risk relating to climate change in
line with a scenario reflecting a 2degC global temperature increase
compared to pre-industrial levels
-- The payment of a settlement arising from a regulatory or compliance-related matter
-- A short term impact of a 10% weakening in a key non-sterling
currency for the Group before it is recovered through price
adjustment
Further mitigating actions within management control would be
taken under the severe but plausible scenario, including working
capital reduction measures and limiting capital expenditure or
inorganic acquisition spend, but these were not incorporated into
the downside modelling.
The Directors have also considered the Group's current liquidity
and available facilities. As at 30 September 2023, the Group
balance sheet reflects cash net of overdrafts is GBP570 million. In
addition the Group has access to a GBP300 million Revolving Credit
Facility (RCF), which is currently undrawn and not relied upon for
the purpose of this going concern assessment. The Group is in
compliance with the covenants for the RCF and the borrowings raised
via the sustainability bond are not subject to covenants. Details
of cash, overdrafts, borrowings and facilities are set out in notes
14, 17 and 18 of these financial statements.
In all the scenarios assessed, taking into account liquidity and
available resources and before the inclusion of any mitigating
actions within management control, the Group was able to maintain
sufficient liquidity to continue trading, having considered the
going concern period up to 29 March 2025. On the basis of the
assessment performed, the Directors consider it is appropriate to
continue to adopt the going concern basis in preparing the
condensed consolidated interim financial statements for the period
ended 30 September 2023.
Accounting policies
The accounting policies adopted in the preparation of the
condensed consolidated interim financial statements are consistent
with those followed in the preparation of the Group's annual
consolidated financial statements for the 52 weeks ended 1 April
2023.
Several standards and amendments apply for the first time for
the period ended 30 September 2023, but do not have a material
impact on the condensed consolidated interim financial statements
of the Group. The Group has not early adopted any standard,
interpretation or amendment that has been issues but is not yet
effective.
Key sources of estimation uncertainty
Preparation of the condensed consolidated interim financial
statements in conformity with IFRS requires that management make
certain estimates and assumptions that affect the measurement of
reported revenues, expenses, assets and liabilities and the
disclosure of contingent liabilities.
If in the future such estimates and assumptions, which are based
on management's best estimates at the date of the financial
statements, deviate from actual circumstances, the original
estimates and assumptions will be updated as appropriate in the
period in which the circumstances change.
Estimates are continually evaluated and are based on historical
experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.
The key areas where the estimates and assumptions applied have a
significant risk of causing a material adjustment to the carrying
value of assets and liabilities are consistent with those applied
in the Group's financial statements for the 52 weeks to 1 April
2023, as set out on pages 271 to 272 of those financial
statements.
There have been no changes to the significant estimates relating
to impairment, or reversal of impairment, of property plant and
equipment and right-of-use assets, inventory provisioning or
uncertain tax positions in the period.
Key judgements in applying the Group's accounting policies
Judgements are those decisions made when applying accounting
policies which have a significant impact on the amounts recognised
in the Group's financial statements. Key judgements that have a
significant impact on the amounts recognised in the condensed
consolidated interim financial statements for the 26 weeks to 30
September 2023 and the 26 weeks to 1 October 2022 are as
follows:
Where the Group is a lessee, judgement is required in
determining the lease term at initial recognition, and throughout
the lease term, where extension or termination options exist. In
such instances, all facts and circumstances that may create an
economic incentive to exercise an extension option, or not exercise
a termination option, have been considered to determine the lease
term. Considerations include, but are not limited to, the period
assessed by management when approving initial investment, together
with costs associated with any termination options or extension
options. Extension periods (or periods after termination options)
are only included in the lease term if the lease is reasonably
certain to be extended (or not terminated). Where the lease term
has been extended by assuming an extension option will be
recognised, this will result in the initial right-of-use assets and
lease liabilities at inception of the lease being greater than if
the option was not assumed to be exercised. Likewise, assuming a
break option will be exercised will reduce the initial right-of-use
assets and lease liabilities. There have been no significant
judgements in relation to lease term made in the period. Refer to
note 23 for details of a significant judgement made in relation to
lease term after the balance sheet date.
Translation of the results of overseas businesses
The results of overseas subsidiaries are translated into the
Group's presentation currency of sterling each month at the average
exchange rate for the month, weighted according to the phasing of
the Group's trading results. The average exchange rate is used, as
it is considered to approximate the actual exchange rates on the
dates of the transactions. The assets and liabilities of such
undertakings are translated at the closing rates. Differences
arising on the retranslation of the opening net investment in
subsidiary companies, and on the translation of their results, are
recognised in other comprehensive income.
Goodwill and fair value adjustments arising on the acquisition
of a foreign operation are treated as assets and liabilities of the
foreign operation and translated at the closing rate.
The principal exchange rates used were as follows:
Average rate Closing rate
----------------------------------- ------------------------- --------
26 weeks 26 weeks 52 weeks As at As at As at
to to to 30 September 1 October 1 April
30 September 1 October 1 April 2023 2022 2023
2023 2022 2023
---------------------- ------------- ---------- -------- ------------- ---------- --------
Euro 1.16 1.17 1.16 1.15 1.14 1.14
US Dollar 1.26 1.21 1.20 1.22 1.12 1.24
Chinese Yuan Renminbi 8.97 8.16 8.27 8.90 7.95 8.51
Hong Kong Dollar 9.87 9.50 9.43 9.56 8.76 9.73
Korean Won 1,654 1,579 1,577 1,646 1,598 1,613
---------------------- ------------- ---------- -------- ------------- ---------- --------
Adjusted profit before taxation
In order to provide additional consideration of the underlying
performance of the Group's ongoing business, the Group's results
include a presentation of Adjusted operating profit and Adjusted
profit before taxation (adjusted PBT). Adjusted PBT is defined as
profit before taxation and before adjusting items. Adjusting items
are those items which, in the opinion of the Directors, should be
excluded in order to provide a consistent and comparable view of
the performance of the Group's ongoing business. Generally, this
will include those items that are largely one-off and/or material
in nature as well as income or expenses relating to acquisitions or
disposals of businesses or other transactions of a similar nature,
including the impact of changes in fair value of expected future
payments or receipts relating to these transactions. Adjusting
items are identified and presented on a consistent basis each year
and a reconciliation of adjusted PBT to profit before tax is
included in the financial statements. Adjusting items and their
related tax impacts, as well as adjusting taxation items, are added
back to/deducted from profit attributable to owners of the Company
to arrive at adjusted earnings per share. Refer to note 4 for
further details of adjusting items.
3. Segmental analysis
The Chief Operating Decision Maker has been identified as the
Board of Directors. The Board reviews the Group's internal
reporting in order to assess performance and allocate resources.
Management has determined the operating segments based on the
reports used by the Board. The Board considers the Group's business
through its two channels to market, being retail/wholesale and
licensing.
Retail/wholesale revenues are generated by the sale of luxury
goods through Burberry mainline stores, concessions, outlets and
digital commerce as well as Burberry franchisees, prestige
department stores globally and multi-brand specialty accounts. The
flow of global product between retail and wholesale channels and
across our regions is monitored and optimised at a corporate level
and implemented via the Group's inventory hubs and principal
distribution centres situated in Europe, the US, Mainland China and
Hong Kong S.A.R. China.
Licensing revenues are generated through the receipt of
royalties from global licensees of beauty products, eyewear and
from licences relating to the use of non-Burberry trademarks in
Japan.
The Board assesses channel performance based on a measure of
adjusted operating profit. This measurement basis excludes the
effects of adjusting items. The measure of earnings for each
operating segment that is reviewed by the Board includes an
allocation of corporate and central costs. Interest income and
charges are not included in the result for each operating segment
that is reviewed by the Board.
Retail/Wholesale Licensing Total
----------------------------------------- ------------------------- -------------------------
26 weeks 26 weeks 26 weeks 26 weeks 26 weeks 26 weeks
to to to to to to
30 September 1 October 30 September 1 October 30 September 1 October
2023 2022 2023 2022 2023 2022
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- ------------- ---------- ------------- ---------- ------------- ----------
Retail 1,124 1,061 - - 1,124 1,061
Wholesale 241 263 - - 241 263
Licensing - - 32 22 32 22
--------------------------- ------------- ---------- ------------- ---------- ------------- ----------
Total segment revenue 1,365 1,324 32 22 1,397 1,346
Inter-segment revenue(1) - - (1) (1) (1) (1)
--------------------------- ------------- ---------- ------------- ---------- ------------- ----------
Revenue from external
customers 1,365 1,324 31 21 1,396 1,345
--------------------------- ------------- ---------- ------------- ---------- ------------- ----------
Adjusted operating profit 194 219 29 19 223 238
--------------------------- ------------- ---------- ------------- ---------- ------------- ----------
Adjusting items(2) - 25
Finance income 20 6
Finance expense (24) (18)
--------------------------- ------------- ---------- ------------- ---------- ------------- ----------
Profit before taxation 219 251
--------------------------- ------------- ---------- ------------- ---------- ------------- ----------
Retail/Wholesale Licensing Total
---------------- --------- -----
52 weeks to 1 April 2023 GBPm GBPm GBPm
-------------------------------- ---------------- --------- -----
Retail 2,501 - 2,501
Wholesale 543 - 543
Licensing - 51 51
-------------------------------- ---------------- --------- -----
Total segment revenue 3,044 51 3,095
Inter-segment revenue(1) - (1) (1)
-------------------------------- ---------------- --------- -----
Revenue from external customers 3,044 50 3,094
-------------------------------- ---------------- --------- -----
Adjusted operating profit 587 47 634
-------------------------------- ---------------- --------- -----
Adjusting items(2) 21
Finance income 21
Finance expense (42)
-------------------------------- ---------------- --------- -----
Profit before taxation 634
-------------------------------- ---------------- --------- -----
1. Inter-segment transfers or transactions are entered into
under the normal commercial terms and conditions that would be
available to unrelated third parties.
2. Refer to note 4 for details of adjusting items.
Additional revenue analysis
All revenue is derived from contracts with customers. The Group
derives Retail and Wholesale revenue from contracts with customers
from the transfer of goods and related services at a point in time.
Licensing revenue is derived over the period the licence agreement
gives the customer access to the Group's trademarks.
26 weeks 26 weeks 52 weeks
to to to
30 September 1 October 1 April
2023 2022 2023
Revenue by product division GBPm GBPm GBPm
---------------------------- ------------- ---------- --------
Accessories 498 495 1,125
Women's 391 357 867
Men's 399 383 868
Children's/Other 77 89 184
---------------------------- ------------- ---------- --------
Retail/Wholesale 1,365 1,324 3,044
Licensing 31 21 50
---------------------------- ------------- ---------- --------
Total 1,396 1,345 3,094
---------------------------- ------------- ---------- --------
26 weeks 26 weeks 52 weeks
to to to
30 September 1 October 1 April
2023 2022 2023
Revenue by destination GBPm GBPm GBPm
----------------------- ------------- ---------- --------
Asia Pacific 584 525 1,297
EMEIA(1) 485 445 1,004
Americas 296 354 743
Retail/Wholesale 1,365 1,324 3,044
Licensing 31 21 50
----------------------- ------------- ---------- --------
Total 1,396 1,345 3,094
----------------------- ------------- ---------- --------
1. EMEIA comprises Europe, Middle East, India and Africa.
Due to the seasonal nature of the business, Group revenue is
usually expected to be higher in the second half of the year than
in the first half. While some of the Group's operating costs are
also higher in the second half of the year, such as contingent
rentals and sales related employee costs, most of the operating
costs, in particular salaries and fixed rentals, are phased more
evenly across the year. As a result, adjusted operating profit is
expected to be higher in the second half of the financial year.
4. Adjusting items
26 weeks 26 weeks 52 weeks
to to to
30 September 1 October 1 April
2023 2022 2023
GBPm GBPm GBPm
-------------------------------------------------- -------------- ---------- --------
Adjusting items
Adjusting operating items
Impact of COVID-19:
Impairment reversal relating to retail cash
generating units - - (6)
Impairment reversal relating to inventory - (1) (1)
COVID-19 related rent concessions - (7) (13)
COVID-19 related government grant income - (1) (2)
Other adjusting items:
Gain on disposal of property - (19) (19)
Restructuring costs - 1 16
Revaluation of deferred consideration liability - 2 2
Total adjusting operating items (pre-tax) - (25) (23)
-------------------------------------------------- -------------- ---------- --------
Adjusting financing items
Finance charge on adjusting items - - 2
Total adjusting financing items (pre-tax) - - 2
-------------------------------------------------- -------------- ---------- --------
Tax on adjusting items - 6 6
-------------------------------------------------- -------------- ---------- --------
Total adjusting items (post-tax) - (19) (15)
-------------------------------------------------- -------------- ---------- --------
26 weeks 26 weeks 52 weeks
to to to
30 September 1 October 1 April
2023 2022 2023
GBPm GBPm GBPm
----------------------------------------------- -------------- ---------- --------
Analysis of adjusting operating items:
Included in Cost of sales (Impairment reversal
relating to inventory) - (1) (1)
Included in Operating expenses - 3 12
Included in Other operating income - (27) (34)
Total adjusting operating items - (25) (23)
----------------------------------------------- -------------- ---------- --------
No adjusting items have been recorded for the 26 weeks to 30
September 2023. Adjusting items related to prior periods were as
follows:
Impact of COVID-19
Impairment of retail cash generating units
During the 52 weeks to 1 April 2023, a net impairment reversal
of GBP6 million, and an associated tax charge of GBP1 million, was
recorded following the reassessment of the COVID related impairment
provision. Any charges or reversals from the reassessment of the
original impairment adjusting item, had they arisen, would have
been included in this adjusting item. Refer to note 10 for details
of impairment consideration of retail cash generating units.
Impairment of inventory
During the 26 weeks to 1 October 2022 and the 52 weeks to 1
April 2023, reversals of inventory provisions of GBP1 million were
recorded and presented as adjusting items. This was relating to
inventory which had been provided for as an adjusting item at the
previous year end and had either been sold, or was expected to be
sold, at a higher net realisable value than had been assumed when
the provision had been initially estimated. All other charges and
reversals relating to inventory provisions have been recorded in
adjusted operating profit.
COVID-19-related rent concessions
Eligible rent forgiveness amounts relating to COVID-19 were
treated as negative variable lease payments, which resulted in a
credit of GBP7 million for the 26 weeks to 1 October 2022 and GBP13
million for the 52 weeks to 1 April 2023 recorded in other
operating income. This income was presented as an adjusting item
given that the amendment to IFRS 16 was only applicable for a
limited period of time and it explicitly related to COVID-19. The
amendment expired on 30 June 2022 however the Group continued to
apply the same accounting treatment applying the principles of IFRS
9 for any ongoing COVID-19 related rent forgiveness. A related tax
charge of GBP1 million and GBP3 million was also recognised in the
last half year and full year respectively.
COVID-19-related government grant income
The Group recorded grant income of GBP1 million for the 26 weeks
to 1 October 2022 and GBP2 million for the 52 weeks to 1 April 2023
relating to government support to alleviate the impact of COVID-19
within other operating income. This income was presented as an
adjusting item as it was explicitly related to COVID-19, and the
arrangements were expected to last for a limited period of time. A
related tax charge of GBPnil and GBP1 million was also recognised
in the last half year and full year respectively.
Other adjusting items
Gain on disposal of property
During the 26 weeks to 1 October 2022, the Group completed the
sale of an owned property in the US for cash proceeds of GBP22
million resulting in a net gain on disposal of GBP19 million,
recorded within other operating income. The net gain on disposal
was recognised as an adjusting item, in accordance with the Group's
accounting policy, as it was considered to be material and one-off
in nature. A related tax charge of GBP5 million was also recognised
in the last half year and full year.
Restructuring costs
During the 26 weeks to 1 October 2022, restructuring costs of
GBP1 million (last full year: GBP16 million) were incurred, arising
primarily as a result of the organisational efficiency programme
announced in July 2020, which completed last year, that included
the creation of three new business units to enhance product focus,
increase agility and elevate quality and to further streamline of
office-based functions and facilities. The costs principally
related to impairment charges on non-retail assets and redundancies
and were recorded in operating expenses. They were presented as an
adjusting item, in accordance with the Group's accounting policy,
as the cost of the restructuring programme was considered material
and discrete in nature. A related tax credit of GBPnil and GBP4
million was also recognised in the last half year and full year
respectively.
Items relating to the deferred consideration liability
On 22 April 2016, the Group entered into an agreement to
transfer the economic right of the non-controlling interest in
Burberry Middle East LLC to the Group in exchange for consideration
of contingent payments to be made to the minority shareholder over
the period ending 30 March 2024.
No charge in relation to the revaluation of this balance has
been recognised in operating expenses for the 26 weeks to 30
September 2023 (last half year: GBP2 million; last full year: GBP2
million). No tax was recognised as the future payments are not
considered to be deductible for tax purposes. This was presented as
an adjusting item in accordance with the Group's accounting policy,
as it arose from changes in the value of the liability for expected
future payments relating to the purchase of a non-controlling
interest in the Group.
5. Financing
26 weeks 26 weeks 52 weeks
to to to
30 September 1 October 1 April
2023 2022 2023
GBPm GBPm GBPm
------------------------------------------------- ------------- ---------- --------
Finance income - amortised cost 4 1 3
Bank interest income - fair value through profit
and loss 16 5 18
Finance income 20 6 21
Interest expense on lease liabilities (19) (14) (31)
Interest expense on overdrafts (2) - (2)
Interest expense on borrowings (2) (2) (4)
Bank charges (1) (1) (1)
Other finance expense - (1) (4)
------------------------------------------------- ------------- ---------- --------
Finance expense (24) (18) (42)
------------------------------------------------- ------------- ---------- --------
Finance charge on adjusting items - - (2)
Net finance expense (4) (12) (23)
------------------------------------------------- ------------- ---------- --------
6. Taxation
The Group's adjusted effective tax rate is 27.2% (last half
year: 22.4%) and the reported effective tax rate is 27.2% (last
half year: 22.7%). The increase in the effective tax rate primarily
reflects the impact of the increase in the UK tax rate which took
effect from 1 April 2023.
The Group expects the adjusted effective tax rate for the year
ended 30 March 2024 to be around 27%. The effective tax rate is
sensitive to the geographic mix of profits. The rate is also
sensitive to future legislative changes affecting international
businesses such as changes arising from the OECD's (Organisation
for Economic Co-operation and Development) Base Erosion and Profits
Shifting (BEPS) work. On 20 June 2023, Finance (No.2) Act 2023 was
substantively enacted in the UK, introducing a global minimum
effective tax rate of 15%. The legislation implements a domestic
top-up tax and a multinational top-up tax, which will apply to the
Group for the period ending 29 March 2025. The Group has applied
the exception under IAS 12 to recognising and disclosing
information about deferred tax assets and liabilities related to
top-up income taxes.
26 weeks 26 weeks 52 weeks
to to to
30 September 1 October 1 April
2023 2022 2023
GBPm GBPm GBPm
-------------------------------------------------- ------------- ---------- --------
Current tax
Current tax on income for the period 74 69 150
Double taxation relief (1) - (5)
Adjustments in respect of prior years 2 2 15
-------------------------------------------------- ------------- ---------- --------
Total current tax 75 71 160
-------------------------------------------------- ------------- ---------- --------
Deferred tax
Origination and reversal of temporary differences (15) (15) (22)
Adjustments in respect of prior years - 1 4
Total deferred tax (15) (14) (18)
-------------------------------------------------- ------------- ---------- --------
Total tax charge on profit 60 57 142
-------------------------------------------------- ------------- ---------- --------
Total taxation recognised in the condensed group income
statement comprises:
26 weeks 26 weeks 52 weeks
to to to
30 September 1 October 1 April
2023 2022 2023
GBPm GBPm GBPm
--------------------------------------- ------------- ---------- --------
Tax on adjusted profit before taxation 60 51 136
Tax on adjusting items (note 4) - 6 6
Total taxation charge 60 57 142
--------------------------------------- ------------- ---------- --------
Deferred taxation
The major deferred tax assets/(liabilities) recognised by the
Group and movements during the period are as follows:
Net deferred
tax asset
GBPm
--------------------------------- ------------
Balance as at 1 April 2023 196
Effect of foreign exchange
rates (5)
Credited to the Income Statement 15
Charged to Equity (2)
Balance as at 30 September
2023 204
--------------------------------------- ------------
Balance as at 1 October
2022 203
--------------------------------------- ------------
The most significant deferred tax asset recognised for the
period relates to the provision for unrealised profit on stock sold
intragroup.
7. Earnings per share
The calculation of basic earnings per share is based on profit
or loss attributable to owners of the Company for the period
divided by the weighted average number of ordinary shares in issue
during the period. Basic and diluted earnings per share based on
adjusted profit before taxation are also disclosed to indicate the
underlying profitability of the Group.
26 weeks 26 weeks 52 weeks
to to to
30 September 1 October 1 April
2023 2022 2023
GBPm GBPm GBPm
---------------------------------------------- ------------- ---------- --------
Attributable profit for the period before
adjusting items(1) 158 174 475
Effect of adjusting items(1) (after taxation) - 19 15
---------------------------------------------- ------------- ---------- --------
Attributable profit for the period 158 193 490
---------------------------------------------- ------------- ---------- --------
1. Refer to note 4 for details of adjusting items.
The weighted average number of ordinary shares represents the
weighted average number of Burberry Group plc ordinary shares in
issue throughout the period, excluding ordinary shares held in the
Group's ESOP trusts and treasury shares held by the Company or its
subsidiaries. This includes the effect of the cancellation of 9.3
million shares during the period (last half year: 9.8 million; last
full year: 21.1 million) as a result of the share buy-back
programmes. Refer to note 19 for additional information on the
share buy-backs.
Diluted earnings per share is based on the weighted average
number of ordinary shares in issue during the period. In addition,
account is taken of any options and awards made under the employee
share incentive schemes, which will have a dilutive effect when
exercised.
26 weeks 26 weeks 52 weeks
to to to
30 September 1 October 1 April
2023 2022 2023
Millions Millions Millions
------------------------------------------------ ------------- ---------- ---------
Weighted average number of ordinary shares
in issue during the period 373.1 392.9 386.1
Dilutive effect of the employee share incentive
schemes 3.0 1.5 1.9
------------------------------------------------ ------------- ---------- ---------
Diluted weighted average number of ordinary
shares in issue during the period 376.1 394.4 388.0
------------------------------------------------ ------------- ---------- ---------
26 weeks 26 weeks 52 weeks
to to to
30 September 1 October 1 April
2023 2022 2023
Pence Pence Pence
---------------------------- ------------- ---------- --------
Earnings per share
Basic 42.4 49.1 126.9
Diluted 42.1 48.9 126.3
Adjusted earnings per share
Basic 42.4 44.5 123.1
Diluted 42.1 44.3 122.5
---------------------------- ------------- ---------- --------
8. Dividends paid to owners of the Company
The interim dividend of 18.3p (last half year: 16.5p) per share
has been approved by the Board of Directors after 30 September
2023. Accordingly, this dividend has not been recognised as a
liability at the period end and will be paid on 26 January 2024 to
Shareholders on the Register at the close of business on 15
December 2023. The ex-dividend date is 14 December 2023 and the
final day for dividend reinvestment plan ('DRIP') elections is 5
January 2024.
A dividend of 44.5p (last half year: 35.4p) per share was paid
during the period to 30 September 2023 in relation to the year
ended 1 April 2023.
9. Intangible assets
Goodwill at 30 September 2023 is GBP105 million (last half year:
GBP113 million; last full year: GBP109 million). There were no
additions or impairments of goodwill in the period (last half year:
GBPnil; last full year: GBPnil).
In the period there were additions to other intangible assets of
GBP26 million (last half year: GBP18 million; last full year: GBP46
million) and disposals with a net book value of GBP3 million (last
half year: GBPnil; last full year: GBPnil).
Capital commitments contracted but not provided for by the Group
amounted to GBP7 million (last half year: GBP4 million; last full
year: GBP3 million).
Impairment testing
Assets that have an indefinite useful economic life are not
subject to amortisation and are tested annually for impairment.
Goodwill is the only intangible asset category with an
indefinite useful economic life included within total intangible
assets at 30 September 2023. Management has performed a review for
indicators of impairment as at 30 September 2023 and concluded that
there are no indicators at this time. The annual impairment test
will be performed at 30 March 2024.
There was no impairment charge for other intangible assets for
the 26 weeks to 30 September 2023 (last half year: no impairment;
last full year: no impairment)
10. Property, plant and equipment
In the period there were additions to property, plant and
equipment of GBP66 million (last half year: GBP44 million; last
full year: GBP147 million) and disposals with a net book value of
GBPnil (last half year: GBPnil; last full year: GBPnil). Additions
include GBP64 million (last half year: GBP35 million; last full
year: GBP136 million) arising as a result of investing cash
outflows and GBP2 million (last half year: GBP9 million; last full
year: GBP11 million) movement in capital expenditure accruals.
Capital commitments contracted but not provided for by the Group
amounted to GBP51 million (last half year: GBP43 million; last full
year: GBP38 million).
As at 30 September 2023, the Group had one freehold property
that met the criteria to be classified as held for sale. This asset
is required to be recorded at the lower of carrying value or fair
value less any costs to sell. As the fair value less any costs to
sell exceeded the carrying value, the related asset was recorded at
its carrying value of GBP13 million. The sale of this property is
expected to complete within the next 12 months. As at 1 October
2022 the Group had two freehold properties with a carrying value of
GBP11 million that met the criteria to be classified as held for
sale. The sale of these properties was completed during the 52
weeks to 1 April 2023 resulting in a net gain on disposal of
nil.
During the 26 weeks to 1 October 2022, the Group completed the
sale of an owned property in the US previously classified as held
for sale. A gain on disposal of property of GBP19 million was
included as an adjusting item (refer to note 4).
Impairment testing
During the current period, management reviewed their assumptions
on retail cash generating units and reviewed these units for any
indication of impairment or impairment reversal. Where indicators
of impairment have been identified, an impairment analysis was
carried out and if the value-in-use was less than the carrying
value of the cash generating unit, an impairment of property, plant
and equipment and right-of-use asset would be recorded. The pre-tax
cash flow projections used for this review were based on financial
plans of expected revenues and costs of each retail cash generating
unit, approved by management, and extrapolated beyond the current
year to the lease end dates using growth rates and inflation rates
appropriate to each store's location.
During the 26 weeks to 30 September 2023, following the review
of impairment of retail stores, no impairment charges or reversals
were recorded against property, plant and equipment (last half
year: GBPnil; last full year: charge of GBP2 million). The
impairment review carried out looks at internal and external
impairment indicators for all retail stores with a specified asset
value and the subsequent value-in-use calculations include certain
assumptions, particularly over expected margins and revenue growth
over the lease term. Refer to note 11 for further details of
right-of-use assets.
11. Right-of- use assets
In the period there were additions to right-of-use assets of
GBP65 million (last half year: GBP79 million; last full year:
GBP157 million) and remeasurements of GBP75 million (last half
year: GBP34 million; last full year: GBP113 million). Depreciation
of right-of-use assets of GBP111 million (last half year: GBP100
million; last full year: GBP212 million) is included within
operating expenses.
Impairment testing
As a result of the assessment of retail cash generating units
for impairment, no impairment charges or reversals were recorded
against right-of-use assets (last half year: GBPnil; last full
year: net impairment reversal of GBP1 million). Refer to note 10
for further details of impairment assessment of retail cash
generating units.
During the 26 weeks to 1 October 2022, an impairment reversal of
GBP1 million was recognised in relation to office premises as part
of restructuring costs in adjusting items (refer to note 4).
12. Trade and other receivables
As at As at As at
30 September 1 October 1 April
2023 2022 2023
GBPm GBPm GBPm
---------------------------------------------- ------------- ---------- --------
Non-current
Other financial receivables(1) 47 49 45
Other non-financial receivables(2) 2 1 2
Prepayments 3 3 5
---------------------------------------------- ------------- ---------- --------
Total non-current trade and other receivables 52 53 52
---------------------------------------------- ------------- ---------- --------
Current
Trade receivables 186 206 184
Provision for expected credit losses (9) (10) (7)
---------------------------------------------- ------------- ---------- --------
Net trade receivables 177 196 177
Other financial receivables(1) 31 33 25
Other non-financial receivables(2) 68 53 59
Prepayments 71 48 32
Accrued income 18 8 14
---------------------------------------------- ------------- ---------- --------
Total current trade and other receivables 365 338 307
---------------------------------------------- ------------- ---------- --------
Total trade and other receivables 417 391 359
---------------------------------------------- ------------- ---------- --------
1. Other financial receivables include rental deposits and other
sundry debtors.
2. Other non-financial receivable relates to indirect taxes and
other taxes and duties.
The net charge for impairment of financial receivables in the
period was GBP2 million (last half year: net charge of GBP3
million; last full year: net charge of GBP1 million).
13. Inventories
Inventory provisions of GBP63 million (last half year: GBP76
million; last full year: GBP57 million) are recorded, representing
10.7% (last half year: 13.5%; last full year: 11.4%) of the gross
value of inventory. The provisions reflect management's best
estimate of the net realisable value of inventory, where this is
considered to be lower than the cost of the inventory.
14. Cash and cash equivalents
As at As at As at
30 September 1 October 1 April
2023 2022 2023
GBPm GBPm GBPm
--------------------------------------------- ------------- ---------- --------
Cash and cash equivalents held at amortised
cost
Cash at bank and in hand 185 186 152
Short-term deposits 76 72 77
--------------------------------------------- ------------- ---------- --------
261 258 229
Cash and cash equivalents held at fair value
through profit and loss
Short-term deposits 402 759 797
--------------------------------------------- ------------- ---------- --------
Total 663 1,017 1,026
--------------------------------------------- ------------- ---------- --------
Cash and cash equivalents classified as fair value through
profit and loss relate to deposits held in low volatility net asset
value money market funds. The cash is available immediately and,
since the funds are managed to achieve low volatility, no
significant change in value is anticipated. The funds are monitored
to ensure there are no significant changes in value.
15. Trade and other payables
As at As at As at
30 September 1 October 1 April
2023 2022 2023
GBPm GBPm GBPm
------------------------------------------- ------------- ---------- --------
Non-current
Other payables(1) 2 2 -
Deferred income and non-financial accruals 14 21 19
Contract liabilities 54 61 57
Total non-current trade and other payables 70 84 76
------------------------------------------- ------------- ---------- --------
Current
Trade payables 204 177 186
Other taxes and social security costs 48 54 50
Other payables(1, 2) 209 28 10
Accruals 180 204 199
Deferred income and non-financial accruals 13 16 14
Contract liabilities 13 13 13
Deferred consideration(3) 5 6 5
------------------------------------------- ------------- ---------- --------
Total current trade and other payables 672 498 477
------------------------------------------- ------------- ---------- --------
Total trade and other payables 742 582 553
------------------------------------------- ------------- ---------- --------
1. Other payables are comprised of interest and employee-related
liabilities.
2. Includes GBP201 million related to the share buy-back
programme that commenced in the period and completed in the second
half of the year. GBP173 million (last half year: GBP20 million;
last full year: GBPnil) relates to the cost of shares not yet
purchased under this agreement and GBP27 million relates to shares
purchased but not yet paid, together with GBP1 million anticipated
stamp duty. Refer to note 19 for further details.
3. Deferred consideration relates to the acquisition of the
economic right to the non-controlling interest in Burberry Middle
East LLC on 22 April 2016. No deferred consideration payments were
made in the 26 weeks to 30 September 2023 (last half year: GBP6
million; last full year: GBP6 million).
Contract liabilities
Retail contract liabilities relate to unredeemed balances on
issued gift cards and similar products, and advanced payments
received for sales which have not yet been delivered to the
customer, which are all considered current. Licensing contract
liabilities relate to deferred revenue arising from the upfront
payment for the Beauty licence which is being recognised in revenue
over the term of the licence on a straight-line basis reflecting
access to the trademark over the licence period to 2032.
As at As at As at
30 September 1 October 1 April
2023 2022 2023
GBPm GBPm GBPm
------------------------------- ------------- ---------- --------
Retail contract liabilities 6 7 6
Licensing contract liabilities 61 67 64
------------------------------- ------------- ---------- --------
Total contract liabilities 67 74 70
------------------------------- ------------- ---------- --------
16. Provisions for other liabilities and charges
Property Other
obligations costs Total
GBPm GBPm GBPm
---------------------------------------- ------------ ------ -----
Balance as at 1 April 2023 49 13 62
Effect of foreign exchange rate changes (2) - (2)
Created during the period 2 2 4
Utilised during the period (1) - (1)
Released during the period - (6) (6)
Balance as at 30 September 2023 48 9 57
---------------------------------------- ------------ ------ -----
Balance as at 1 October 2022 50 17 67
---------------------------------------- ------------ ------ -----
As at As at As at
30 September 1 October 1 April
2023 2022 2023
GBPm GBPm GBPm
------------------------------ ------------- ---------- --------
Analysis of total provisions:
Non-current 35 40 40
Current 22 27 22
------------------------------ ------------- ---------- --------
Total 57 67 62
------------------------------ ------------- ---------- --------
17. Bank overdrafts
Included within bank overdrafts is GBP93 million (last half
year: GBP76 million; last full year: GBP65 million) representing
balances on cash pooling arrangements in the Group.
The Group has a number of committed and uncommitted arrangements
agreed with third parties. At 30 September 2023, the Group held
bank overdrafts of GBPnil (last half year: GBPnil; last full year:
GBPnil) excluding balances on cash pooling arrangements.
The fair value of overdrafts approximates the carrying amount
because of the short maturity of these instruments.
18. Borrowings
On 21 September 2020, Burberry Group plc issued medium term
notes with a face value of GBP300 million and 1.125% coupon
maturing on 21 September 2025 (the sustainability bond). Proceeds
from the sustainability bond will allow the Group to finance
projects which support the Group's sustainability agenda. There are
no financial penalties for not using the proceeds as anticipated.
Interest on the sustainability bond is payable semi-annually. The
carrying value of the bond at 30 September 2023 is GBP299 million
(last half year: GBP298 million; last full year: GBP298 million),
all movements on the bond are non-cash. The fair value of the bond
at 30 September 2023 is GBP274 million (last half year: GBP257
million; last full year: GBP273 million).
On 26 July 2021, the Group entered into a GBP300 million
multi-currency sustainability linked revolving credit facility
(RCF) with a syndicate of banks, maturing on 26 July 2026. There
were no drawdowns or repayments of the RCF during the current or
previous period, and at 30 September 2023 there were no outstanding
drawings.
The Group is in compliance with the financial and other
covenants within the facilities above and has been in compliance
throughout the financial period.
19. Share capital and reserves
Allotted, called up and fully paid share capital Number GBPm
-------------------------------------------------- ----------- ----
Ordinary shares of 0.05p (last year: 0.05p) each
-------------------------------------------------- ----------- ----
As at 2 April 2022 405,107,301 0.2
Allotted on exercise of options during the period 69,226 -
Cancellation of shares (9,800,686) -
-------------------------------------------------- ----------- ----
As at 1 October 2022 395,375,841 0.2
As at 1 April 2023 384,267,928 0.2
Allotted on exercise of options during the period 11,910 -
Cancellation of shares (9,265,324) -
As at 30 September 2023 375,014,514 0.2
-------------------------------------------------- ----------- ----
Other reserves
The Company has a general authority from shareholders, renewed
at each Annual General Meeting, to repurchase a maximum of 10% of
its issued share capital. During the 26 weeks to 30 September 2023,
the Company entered into agreements to purchase, at fair value, a
total of GBP400 million of its own shares, excluding stamp duty,
through two share buy-back programmes of GBP200 million each (last
half year and full year: GBP400 million through two share buy-back
programmes of GBP200 million each). The first programme commenced
and completed during the period and resulted in purchases of GBP200
million of own shares, excluding stamp duty of GBP1 million. The
second programme commenced in the period and completed in the
second half of the year. GBP173 million (last half year: GBP20
million; last full year: GBPnil) relating to the cost of shares not
yet purchased under this agreement and GBP27 million relating to
shares purchased but not yet paid has been charged to retained
earnings, with the payment obligation recognised in payables (refer
to note 15).
The cost of own shares purchased by the Company, as part of a
share buy-back programme is offset against retained earnings, as
the amounts paid reduce the profits available for distribution by
the Company. When shares are cancelled, a transfer is made from
retained earnings to the capital reserve, equivalent to the nominal
value of the shares purchased and subsequently cancelled. In the 26
weeks to 30 September 2023, 9.3 million shares were cancelled (last
half year: 9.8 million; last full year: 21.1 million). As at 30
September 2023, the amount held against retained earnings in
relation to shares bought back but not yet cancelled was GBP27
million (last half year: GBP13 million; last full year: GBPnil)
including stamp duty of GBPnil million (last half year: GBPnil;
last full year: GBPnil).
As at 30 September 2023, the Company held 5.2 million treasury
shares (last half year: 6.1 million; last full year: 6.1 million),
with a market value of GBP100 million based on the share price at
the reporting date (last half year: GBP109 million; last full year:
GBP157 million). The treasury shares held by the Company are
related to the share buy-back programme completed during the 52
weeks to 1 April 2023. During the 26 weeks to 30 September 2023,
0.8 million treasury shares were transferred to ESOP trusts (last
half year: 2.3 million; last full year: 2.3 million). During the 26
weeks to 30 September 2023, no treasury shares were cancelled (last
half year: none; last full year: none).
The cost of shares purchased by ESOP trusts are offset against
retained earnings, as the amounts paid reduce the profits available
for distribution by the Company. As at 30 September 2023 the cost
of own shares held by ESOP trusts and offset against retained
earnings is GBP38 million (last half year: GBP48 million; last full
year: GBP42 million). As at 30 September 2023, the ESOP trusts held
2.1 million shares (last half year: 2.7 million; last full year:
2.3 million) in the Company, with a market value of GBP41 million
(last half year: GBP48 million; last full year: GBP60 million). In
the 26 weeks to 30 September 2023 the ESOP trusts and the Company
have waived their entitlement to dividends.
Other reserves in the Statement of Changes in Equity consists of
the capital reserve, the foreign currency translation reserve, and
the hedging reserves. The hedging reserves consist of the cash flow
hedge reserve and the net investment hedge reserve.
20. Related party transactions
The Group's significant related parties are disclosed in the
Annual Report for the 52 weeks to 1 April 2023. There were no
material changes to these related parties in the period, other than
changes to the composition of the Board. Other than total
compensation in respect of key management, no material related
party transactions have taken place during the current period.
21. Fair value disclosure for financial instruments
The Group's principal financial instruments comprise derivative
instruments, cash and cash equivalents, borrowings (including
overdrafts), trade and other receivables and trade and other
payables arising directly from operations.
The fair value of the Group's financial assets and liabilities
held at amortised cost approximate their carrying amount due to the
short maturity of these instruments with the exception of the
GBP299 million sustainability bond (last half year: GBP298 million)
and GBP14 million (last half year: GBP14 million) held in
non-current other receivables relating to an interest-free loan
provided to a landlord in Korea. At 30 September 2023, the
discounted fair value of the sustainability bond is GBP274 million
(last half year: GBP257 million) and the discounted fair value of
the loan provided to a landlord in Korea is GBP13 million (last
half year: GBP13 million).
The measurements for financial instruments carried at fair value
are categorised into different levels in the fair value hierarchy
based on the inputs to the valuation technique used. The different
levels are defined as follows:
Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities that the Group can access at the
measurement date.
Level 2: inputs other than quoted prices included within level 1
that are observable for the asset or liability, either directly or
indirectly.
Level 3: includes unobservable inputs for the asset or
liability.
Observable inputs are those which are developed using market
data, such as publicly available information about actual events or
transactions. The Group has an established framework with respect
to measurement of fair values, including Level 3 fair values. The
Group regularly reviews any significant inputs which are not
derived from observable market data and considers, where available,
relevant third-party information, to support the conclusion that
such valuations meet the requirements of IFRS. The classification
level in the fair value hierarchy is also considered periodically.
Significant valuation issues are reported to the Audit
Committee.
The fair value of those cash and cash equivalents measured at
fair value through profit and loss, principally money market funds,
is derived from their net asset value which is based on the value
of the portfolio investment holdings at the balance sheet date.
This is considered to be a Level 2 measurement.
The fair value of forward foreign exchange contracts, equity
swap contracts and trade and other receivables is based on a
comparison of the contractual and market rates and, in the case of
forward foreign exchange contracts, after discounting using the
appropriate yield curve as at the balance sheet date. All Level 2
fair value measurements are calculated using inputs which are based
on observable market data.
22. Contingent liabilities
The Group is subject to claims against it and to tax audits in a
number of jurisdictions which arise in the ordinary course of
business. These typically relate to Value Added Taxes, sales taxes,
customs duties, corporate taxes, transfer pricing, payroll taxes,
various contractual claims, legal proceedings and other matters.
Where appropriate, the estimated cost of known obligations have
been provided in these financial statements in accordance with the
Group's accounting policies. The Group does not expect the outcome
of current similar contingent liabilities to have a material effect
on the Group's financial position.
23. Events after the balance sheet date
Acquisition of subsidiary
On 2 October 2023, Burberry Italy S.r.l., Burberry's
wholly-owned subsidiary, acquired a 100% holding in a business from
Italian technical outerwear supplier Pattern SpA, a company
incorporated in Italy, for total cash consideration of GBP19
million.
Based in Turin, the activities of the business acquired revolve
around the engineering and production of Burberry products. The
acquisition allows the Group to secure capacity, build technical
outerwear capabilities and further embed sustainability into its
value chain.
The assets and liabilities to be recognised as a result of the
acquisition are as follows:
Provisional
fair value
GBPm
-------------------------------- -----------
Assets acquired
Property, plant and equipment 1
Inventories 2
Right-of-use assets 2
Lease liabilities (1)
Employee-related liabilities (1)
Net assets acquired 3
Goodwill arising on acquisition 16
Total cost of acquisition 19
------------------------------------- -----------
The values used in accounting for the identifiable assets and
liabilities of the acquisition are provisional in nature as they
are still being determined. If necessary, adjustments will be made
to these carrying values and the related goodwill, within 12 months
of the acquisition date.
The estimated goodwill arising on the acquisition of GBP16
million reflects the expected synergies from vertical integration
of engineering and production of technical outerwear within the
Group's supply chain together with the value of the retained
workforce.
If the acquisition had occurred at the beginning of the
financial year, the impact on the Group's revenue and profit or
loss would not have been material.
Lease Remeasurement
Subsequent to 30 September 2023, Burberry agreed a material
lease modification in relation to a key retail store. The
modification included agreeing renewal terms at an earlier date
than set out in the original agreement and extending the lease term
for an additional ten years, with the option to extend for a
further ten years. The modification will result in an additional
right-of-use asset and lease liability of approximately GBP50
million being recorded in the second half of the year. The Group is
not reasonably certain to exercise the 10 year extension option,
resulting in approximately GBP100 million in undiscounted future
cash flows that will not be included in the initial right-of-use
asset and lease liabilities.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors confirm that the condensed consolidated interim
financial statements have been prepared in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the UK and that the Interim Management
Report and condensed consolidated interim financial statements
include a fair review of the information required by Disclosure
Guidance and Transparency Rules 4.2.7 and 4.2.8, namely:
- an indication of important events that have occurred during
the first 26 weeks of the financial year and their impact on the
condensed consolidated interim financial statements, and a
description of the principal risks and uncertainties for the
remaining 26 weeks of the financial year; and
- material related party transactions in the first 26 weeks of
the financial year and any material changes in the related party
transactions described in the last Annual Report.
The Directors of Burberry Group plc are consistent with those
listed in the Burberry Group plc Annual Report for the 52 weeks to
1 April 2023 with the exception of Kate Ferry who was appointed on
17 July 2023, Alessandra Cozzani who was appointed on 1 September
2023, and Matthew Key who retired on 12 July 2023.
A list of current directors is maintained on the Burberry Group
plc website: www.burberryplc.com .
By order of the Board
Jonathan Akeroyd
Chief Executive Officer
15 November 2023
Kate Ferry
Chief Financial Officer
15 November 2023
INDEPENDENT REVIEW REPORT TO BURBERRY GROUP PLC
Conclusion
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
26 week period ended 30 September 2023 which comprises the
condensed Group income statement, the condensed Group statement of
comprehensive income, the condensed Group balance sheet, the
condensed Group statement of changes in equity, the condensed Group
statement of cash flows and the related explanatory notes 1 to 23.
We have read the other information contained in the half yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the 26 week period ended 30
September 2023 is not prepared, in all material respects, in
accordance with UK adopted International Accounting Standard 34 and
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements 2410 (UK) "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" (ISRE) issued by the Auditing Practices Board. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
As disclosed in Note 2, the annual financial statements of the
Group are prepared in accordance with UK adopted international
accounting standards. The condensed set of financial statements
included in this half-yearly financial report has been prepared in
accordance with UK adopted International Accounting Standard 34,
"Interim Financial Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis of Conclusion
section of this report, nothing has come to our attention to
suggest that management have inappropriately adopted the going
concern basis of accounting or that management have identified
material uncertainties relating to going concern that are not
appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with this ISRE, however future events or conditions may
cause the entity to cease to continue as a going concern.
Responsibilities of the Directors
The Directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, the Directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statements in the half-yearly financial report. Our
conclusion is based on procedures that are less extensive than
audit procedures, as described in the 'Basis for Conclusion'
paragraph of this report.
Use of our report
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
15 November 2023
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END
IR NKPBPCBDDKDD
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November 16, 2023 02:00 ET (07:00 GMT)
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