REG - Burberry Group PLC - Burberry Group plc Interim Results
17/11/2022 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20221117:nRSQ6926Ga&default-theme=true
RNS Number : 6926G Burberry Group PLC 17 November 2022
17 November 2022
BURBERRY GROUP PLC
THE NEXT PHASE: MODERN BRITISH LUXURY
"Burberry has an extraordinary legacy, a unique British heritage and a very
strong platform to build on, as shown in our half-year results. Our focus in
this next phase is on growth and acceleration. We have a clear plan to achieve
this across brand, product and distribution and a very talented designer in
Daniel Lee, supported by a passionate team. I am confident in our ability to
deliver our medium-term targets and realise our potential as the modern
British luxury brand. I am excited about what we can achieve in pursuit of our
long-term ambition to reach £5bn in revenue." Jonathan Akeroyd, Chief
Executive Officer
Strategy for the next phase
The key elements of our plan to drive revenue growth and acceleration are:
· Harness the power of our brand, informed by a new creative vision set
by Daniel Lee
o Refocus on Britishness and strengthen our connection with British design,
craft and culture
o Amplify our brand through strong marketing and communication activations
with high levels of impact
· Bring all product categories to full potential
o Broadly double sales of leather goods, shoes and women's ready to wear and
grow outerwear by around 50% in the medium term
o Ambition to grow accessories to more than 50% of Group sales in the long
term
· Grow customer lifetime value
o Accelerate customer acquisition, strengthen our relationship with
customers and drive loyalty and retention
· Strengthen distribution across all channels and regions
o Convert all stores to new concept by end-FY26 and boost sales densities by
more than 50% to £25k per sq m
o Double e-commerce revenue to reach around 15% of retail sales in the
medium term
o Accelerate momentum in core markets
· Seamless execution
o Continue to simplify and streamline key processes, deliver our bold
sustainability commitments, ensure our people are supported and inspired to
deliver, and positively impact our communities
OUTLOOK
We maintain our near-term guidance to FY24 while mindful of the challenging
macro environment and its potential impact on trading, particularly Covid-19
related disruption in Mainland China and recessionary risks in Europe and the
Americas. We have established a new medium-term target to grow sales to £4bn
at CER*, sustaining high-single digit growth with operating leverage ensuring
good margin progression.
* Base year FY22 exchange rates
INTERIM RESULTS FOR 26 WEEKS ENDED 1 OCTOBER 2022
GROUP FINANCIAL HIGHLIGHTS
Period ended 26 weeks ended 26 weeks ended YoY % change YoY % change
1 October 25 September Reported FX CER
£ million 2022 2021
Revenue 1,345 1,213 11 5
Retail comparable store sales* +5% +37%
Adjusted operating profit* 238 196 21 6
Adjusted operating profit margin * 17.7% 16.2% +150bps +10bps
Adjusted Diluted EPS (pence)* 44.3 33.5 32 15
Reported operating profit 263 207 27
Reported operating profit margin 19.5% 17.1% +240bps
Reported diluted EPS (pence) 48.9 35.7 37
Free cash flow* 88 104
Dividend (pence) 16.5 11.6 42
*See page 12/13 for definitions of alternative performance measures,
Revenue
· Revenue £1,345m +5% CER, +11% reported
· Retail comparable store sales +5% (Q1: +1%; Q2: +11%); Wholesale +1%
CER, +6% reported
Adjusted profit
· Adjusted operating profit £238m, +6% CER, +21% reported
· Adjusted gross margin of 70.1%, flat at CER and +80bps at reported
rates
· Adjusted operating profit margin of 16.3% at CER, (+10bps), 17.7%
reported rates (+150bps)
· Operating expenses before adjusting items rose 4% at CER (+9%
reported)
· Adjusted diluted EPS 44.3p, +15% at CER, +32% reported
Reported profit measures
· Operating profit £263m, +27% after adjusting items of £25m net
credit (H1 FY22: £11m net credit)
· Diluted EPS 48.9p, +37% reported
Cash measures
· Interim dividend per share declared of 16.5p (H1 FY22: 11.6p)
· Free cash flow of £88m (H1 FY22: £104m)
· Cash net of overdrafts and borrowings of £643m at 1 October 2022 (2
April 2022: £879m). Cash net of overdrafts amounted to £941m with borrowings
of £298m and IFRS 16 liabilities of £1,139m.
Business review
During the period, we continued to invest in our brand. We ran a highly
successful campaign to support the expansion of our Lola handbag range, which
drove above average comparable store sales growth in leather goods. We had a
strong reception to our AW22 collection and we also debuted our SS23
collection, celebrating the British seaside. The show, which was Riccardo
Tisci's last for Burberry, was streamed across local and global platforms
where it was watched 1.5m times. We have started the second half with the
launch of our outerwear campaign. This was accompanied by a film, 'Night
Creatures', that reflects a celebration of the joy and opportunity found in
fearlessly embracing the unknown.
New product launches and seasonal collections performed strongly. Leather
goods sales saw good momentum with comparable sales increasing +15% in Q2; and
+11% in H1. This was driven by handbags with the Lola now our best seller and
helped by the introduction of the Frances shape for AW22. Outerwear comparable
sales grew +3% in H1. Growth was impacted by lockdowns in Mainland China. The
performance outside of Mainland China robust at +18% growth, with a strong
performance across both Men's and Women's.
In H1 we opened or renovated 22 stores including Bal Harbour in Miami and
Taipei 101. We remain on track to open or refurbish 65 stores in the new
concept this year, in addition to the 47 stores from FY22.
In August, Burberry became the first luxury fashion brand and one of the
first companies globally to receive approval from the Science Based Targets
initiative (SBTi) for our net-zero emissions target. As we continue to explore
alternative materials, we are proud to have become an Innovation Partner of
Fashion For Good, a global initiative designed to inspire change across the
industry.
To support our colleagues with the rising cost of living this winter, we
brought forward the new UK real Living Wage pay rates as defined by the Living
Wage Foundation by more than six months. As we expand our support for young
people around the world through The Burberry Foundation, we recently announced
two new partners, International Youth Foundation and UK-based OnSide.
All metrics and commentary in the Group Financial Highlights and Business and
Financial Review exclude adjusting items unless stated otherwise.
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 definition of these
alternative performance measures are in the Appendix on page 12/13.
Certain financial data within this announcement have been rounded. Growth
rates and ratios are calculated on unrounded numbers.
ENQUIRIES
Investors and analysts 020 3367 4458
Julian Easthope VP, Investor Relations julian.easthope@burberry.com (mailto:julian.easthope@burberry.com)
Media 020 3367 3764
Andrew Roberts SVP, Corporate Relations and Engagement andrew.roberts@burberry.com
· There will be a presentation today at 9.30am (UK time) to
investors and analysts at our Regent Street store - 121 Regent St., London W1B
4TB
· The presentation can be viewed live on the Burberry website
www.burberryplc.com (http://www.burberryplc.com) and can also be accessed live
via a listen only dial-in facility on +44 (0)20 3936 2999 (access code 056896)
· 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 18
January 2023
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
SUMMARY INCOME STATEMENT
Period ended 26 weeks ended 26 weeks ended YoY % change YoY % change
£ million 1 October 25 September Reported FX CER
2022
2021
Revenue 1,345 1,213 11 5
Cost of sales* (403) (372) 8 5
Gross profit* 942 841 12 5
Gross margin* 70.1% 69.3% +80bps flat
Net operating expenses* (704) (645) 9 4
Operating expenses as a % of sales* 52.4% 53.2% -80bps -20bps
Adjusted operating profit* 238 196 21 6
Adjusted operating margin * 17.7% 16.2% +150bps +10bps
Adjusting operating items 25 11
Operating profit 263 207
Operating margin 19.5% 17.1% 240bps
Net finance charge (12) (16)
Profit before taxation 251 191
Taxation (57) (46)
Non-controlling interest (1) -
Attributable profit 193 145
Adjusted profit before taxation* 226 180 26
Adjusted diluted EPS (pence)* 44.3 33.5 32
Diluted EPS (pence) 48.9 35.7 37
Weighted average number of diluted ordinary shares (millions) 394.4 406.3
Adjusted EBITDA* 401 341 18
* Excludes adjusting items. All items below adjusting operating items on a
reported basis unless otherwise stated
For detail, see Appendix.
FINANCIAL PERFORMANCE
Revenue by channel
Period ended 26 weeks ended 26 weeks ended YoY % change YoY % change
1 October 25 September Reported FX CER
2022 2021
£ million
Retail 1,061 944 12 6
Retail comparable store sales growth 5% 37%
Wholesale 263 249 6 1
Licensing 21 20 6 8
Revenue 1,345 1,213 11 5
· H1 FY23 Retail sales +6% at CER; +12% reported
· Impact of space +1%
· Total comparable store sales grew 5% with Q1 +1% impacted by COVID
lockdowns in Mainland China and Q2 +11%. Comparable store sales outside of
Mainland China +15% in Q2 FY23 broadly in line with +16% in Q1 FY23
Comparable store sales growth by region
FY23 vs LY
Q1 Q2 H1
Group +1% +11% +5%
Asia Pacific -16% +11% -4%
EMEIA +47% +25% +34%
Americas -4% -3% -3%
Asia Pacific H1 FY23 comparable store sales declined 4% with COVID related
lockdowns in Mainland China in Q1 FY23 impacting the overall result:
· Mainland China comparable store sales fell 19% in the half with Q2
FY23 broadly stable despite localised COVID related lockdowns in September
following a 35% decline in Q1 FY23
· South Korea grew 5% in H1 FY23 with Q2 FY23 up 11% benefiting from
having around 40% of the stores in the new concept
· South Asia Pacific (SAP) rose over 40% in H1 FY23 with a strong
performance across South East Asia and Australia
· Japan also saw strong comparable store sales growth up 25%
EMEIA comparable store sales grew 34% in H1 FY23 with Q1 FY23 up 47%
recovering strongly from the COVID related lockdowns last year and Q2 FY23
+25%, a strong performance against a period with most stores open last year:
· The region benefited from strong tourist growth that more than
doubled in the half, doubling its share of the mix to more than 40% of total
sales with a very strong performance from US, Middle East and other Asia
outside of Mainland China
· Continental Europe outperformed in the region with a strong
performance from France and Spain
· The UK performed in line with the region average
· Americas H1 FY23 fell 3% with a similar performance over the period.
We continue to see higher AUR categories, especially bags, performing well
with some pressure in the entry level items. Compared with pre-pandemic
levels, the Americas saw H1 FY23 comparable store sales growth in excess of
30% and significantly higher for full price sales. Globally, the US customer
remained broadly stable in Q2 FY23 as Americans transitioned to buying
Burberry in EMEIA.
By product
· We maintained our focus on the core leather and outerwear categories
with both showing a good performance in the half excluding the impact of the
Mainland China lockdowns
· Outerwear comparable store sales grew +18% in H1 FY23 excluding
Mainland China (+3% including Mainland China with the category
disproportionately impacted by the Q1 FY23 lockdowns), with a strong
performance in Men's
· Leather Goods comparable store sales grew +11% in H1 FY23 including
Mainland China. This was driven by bags especially from the continued success
of our Lola campaign as well as the Frances shape
· Within Ready-to-wear, both Men's and Women's performance was broadly
in line with the average
Store footprint
The transformation of our distribution network continued as we rolled out the
new concept stores:
· In H1 FY23 we opened 10 mainline stores, closed 13 stores with one
outlet opened and one closed
· Including refurbishments, we increased the number of new concept
stores by 22
· Key openings/refurbishments in the new concept included Bal Harbour
in Miami and Taipei 101
· We now have 69 stores in the new design; 56 in Asia including 19 in
South Korea and 18 in Mainland China, 9 in EMEIA and 4 in Americas.
· We remain on track to increase the footprint of new concept stores by
65 in FY23 to 112 cumulatively and complete the roll out by FY26
· We remain pleased with the performance of new stores that have
generated a higher revenue and AUR following their openings
WHOLESALE
· Wholesale revenue increased 1% at CER (+6% at reported rates) with a
good performance in the Americas and EMEIA broadly offset by the halting of
shipments to Russia as well as weakness in Asia travel retail following COVID
related lockdowns
LICENSING
Licensing revenue grew 8% at CER and 6% at reported exchange rates.
OPERATING PROFIT ANALYSIS
Adjusted operating profit
Period ended 26 weeks ended 26 weeks ended YoY % change YoY % change
£ million 1 October 25 September
2022 2021
Reported FX CER
Revenue 1,345 1,213 11 5
Cost of sales* (403) (372) 8 5
Gross profit* 942 841 12 5
Gross margin %* 70.1% 69.3% +80bps flat
Net operating expenses* (704) (645) 9 4
Operating expenses as a % of sales* 52.4% 53.2% -80bps -20bps
Adjusted operating profit* 238 196 21 6
Adjusted operating margin %* 17.7% 16.2% +150bps +10bps
*Excludes adjusting items
Adjusted operating profit increased 6% at CER and 21% reported with the margin
up 10bps and 150bps respectively:
· Gross margin was flat at CER with benefits from price increases
offset by cost inflation and regional sales mix headwinds. It increased 80bps
at reported rates
· Adjusted operating expenses rose by 4% at CER
· Adjusted operating profit came in at £238m including a £31m FX
tailwind in H1 FY23
ADJUSTING ITEMS(*)
Period ended 26 weeks ended 26 weeks ended
£ million 1 October 25 September
2022 2021
The impact of COVID-19
Inventory provisions** 1 6
Rent concessions 7 9
Government grants 1 1
COVID-19 adjusting items 9 16
Profit on sale of property 19 -
Revaluation of deferred consideration liability (2) -
Restructuring costs (1) (5)
Adjusting items 25 11
Adjusting items were a net credit of £25m (H1 FY22: £11m net credit).
*For more details see note 4 of the Financial Statements
**Includes a £1m credit (H1 FY22: £6m credit) that has been recognised
through COGS
The key adjusting items are as follows:
· Impact of the COVID-19 pandemic: we saw a total credit of £9m
from COVID-19 related adjustments with £1m representing an inventory
provision reversal, £7m of rent concessions and £1m of Government grants
· £1m of restructuring costs
· Net £19m profit on the sale of a Boston property
ADJUSTED PROFIT BEFORE TAX*
After an adjusted net finance charge of £12m (H1 FY22: £16m), adjusted
profit before tax was £226m (H1 FY22: £180m).
*For detail on adjusting items see note 4 of the Financial Statements
TAXATION*
The effective tax rate on adjusted profit decreased to 22.4% (H1 FY22: 24.1%).
This was lower than the prior year due to increased adjusted profits
rebalancing the geographical mix. The reported tax rate on H1 FY23 profit
before taxation was 22.7% (H1 FY22: 24.1%).
* For detail see note 6 of the Financial Statements
CASH FLOW
Represented statement of cash flows
The following table is a representation of the cash flows.
Period ended 26 weeks ended 26 weeks ended
£ million 1 October 25 September
2022 2021
Adjusted operating profit 238 196
Depreciation and amortisation 163 145
Working capital (125) (27)
Other including adjusting items 13 9
Cash inflow from operations 289 323
Payment of lease principal and related cash flows (93) (89)
Capital expenditure (53) (39)
Proceeds from disposal of non-current assets 22 8
Interest (12) (15)
Tax (65) (84)
Free cash flow 88 104
Free cash inflow* was £88m in the half (H1 FY22: £104m).
The major components were:
· Cash generated from operating activities decreased to £289m from
£323m
o A working capital outflow of £125m (H1 FY22: £27m outflow) due to the
accelerated inventory build ahead of the festive season, increased trade
year-on-year, FX and timing of wholesale shipments
· Capital expenditure of £53m (H1 FY22: £39m)
Cash net of overdrafts at 1 October 2022 was £941m, compared to £1,177m at 2
April 2022. At 1 October 2022 borrowings were £298m from the bond issue
leaving cash net of overdrafts and borrowings of £643m (2 April 2022:
£879m). With lease liabilities of £1,139m, net debt in the period was £496m
(2 April 2022: £179m). Net Debt / Adjusted EBITDA was 0.6x on a rolling 12
months period, at the lower end of our target range of 0.5x to 1.0x. The
increase in gearing from 0.2x at the year end has primarily been driven by the
share buy back programme.
*For a definition of free cash flow and net debt see pages 12-13.
Period ended 26 weeks ended 26 weeks ended
£ million 1 October 25 September
2022 2021
Adjusted EBITDA - rolling 12 months 896 834
Cash net of overdrafts (941) (1,143)
Bond 298 297
Lease debt 1,139 1,070
Net Debt 496 224
Net Debt/Adjusted EBITDA 0.6x 0.3x
APPENDIX
Detailed guidance for FY23
Item Financial impact
Markdowns Markdowns were fully exited in FY22 and are no longer a headwind going
forward.
Wholesale revenue Wholesale is expected to be broadly stable in FY23.
Impact of retail space on revenues Space is expected to be broadly stable in FY23.
Tax We expect the adjusted tax rate to be around 22%.
Capex Capex is expected to be c.£170m including around 65 stores opened/refurbished
in the new concept.
Dividend Interim dividend recommended at 16.5p. 42% ahead of H1 FY22.
Cash interest Rising interest rates are now expected to lead to a £17m year-on-year benefit
in net cash interest income relative to last year
Share buy back £400m share buyback commenced, £180m completed at end September with the
balance to be completed during FY23
Calendar FY23 is a 52 week calendar year with FY22 a 53 week year. The extra week in
FY22 contributed £35m revenue and £9m adjusted operating profit.
FX Based on 27 October effective FX rates, the impact of year-on-year exchange
rate movements is expected to be a c.£170m tailwind on revenue and c.£70m
tailwind on adjusted operating profit
Note: guidance based on CER at FY22 rates
Retail/wholesale revenue by destination*
Period ended 26 weeks ended 26 weeks ended YoY % change
1 October 25 September
£ million 2022 2021 Reported FX CER
Asia Pacific (93% retail)* 525 522 0 (5)
EMEIA (66% retail)* 445 361 23 23
Americas (79% retail)* 354 310 14 0
Total 1,324 1,193 11 5
* Mix based on H1 FY23
Retail/wholesale revenue by product division
Period ended 26 weeks ended 26 weeks ended YoY % change
1 October 25 September
£ million 2022 2021 Reported FX CER
Accessories 495 435 14 7
Women's 357 330 8 3
Men's 383 347 10 4
Children's & other 89 81 10 3
Total 1,324 1,193 11 5
Store portfolio
Directly-operated stores
Stores Concessions Outlets Total Franchise stores
At 2 April 2022 218 143 57 418 38
Additions 9 1 1 11 1
Closures (6) (7) (1) (14) (1)
At 1 October 2022 221 137 57 415 38
Store portfolio by region*
Directly-operated stores
Stores Concessions Outlets Total Franchise stores
At 1 October 2022
Asia Pacific 107 91 24 222 8
EMEIA 53 37 18 108 30
Americas 61 9 15 85 -
Total 221 137 57 415 38
*Excludes the impact of pop up stores
*For additional detail on adjusting items see note 4 of the Financial
Statements
Adjusted operating profit* 26 weeks ended 26 weeks ended YoY % change YoY % change CER
Period ended 1 October 25 September Reported FX
£ millions 2022 2021
Retail/wholesale 219 178 23 5
Licensing 19 18 4 11
Adjusted operating profit 238 196 21 6
Adjusted operating margin 17.7% 16.2% +150bps +10bps
Exchange rates Forecast effective rates for FY23 Actual average exchange rates
27 October 2022 11 July 2022 H1 FY23 H1 FY22 FY22
£1=
Euro 1.17 1.18 1.17 1.16 1.18
US Dollar 1.18 1.20 1.21 1.39 1.36
Chinese Renminbi 8.29 8.03 8.16 8.98 8.73
Hong Kong Dollar 9.26 9.45 9.50 10.79 10.63
Korean Won 1,595 1,557 1,579 1,583 1,596
Profit before tax reconciliation
Period ended 26 weeks ended 26 weeks ended YoY % change YoY % change
£ million 1 October 25 September Reported FX CER
2022 2021
Adjusted profit before tax 226 180 26 10
Adjusting items*
COVID-19 related items 9 16
Profit on sale of property 19 -
Restructuring costs (1) (5)
Revaluation of deferred consideration liability (2) -
Profit before tax 251 191 32
*For additional 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 for external reporting purposes.
APM Description and purpose GAAP measure reconciled to
Constant Exchange Rates (CER) This measure removes the effect of changes in exchange rates and the 53(rd) Results at reported rates
week in the prior period. The constant exchange rate incorporates both the
impact of the movement in exchange rates on the translation of overseas
subsidiaries' results and also on foreign currency procurement and sales
through the Group's UK supply chain.
Comparable sales The year-on-year change in sales from stores trading over equivalent time Retail Revenue:
periods and measured at constant foreign exchange rates. It also includes
online sales. This measure is used to strip out the impact of permanent store
openings and closings, or those closures relating to refurbishments, allowing
Period ended 26 weeks ended 26 weeks ended
a comparison of equivalent store performance against the prior period. The
measurement of comparable sales has not excluded stores temporarily closed as
a result of the COVID-19 outbreak.
YoY% 1 October 25 September
2022 2021
Comparable sales 5% 37%
Change in space 1% 4%
CER retail 6% 41%
FX 6% (7%)
Retail revenue 12% 34%
Comparable sales vs pre-pandemic levels (FY20) The change in sales over three years measured at constant foreign exchange
rates. It also includes online sales. The measurement of comparable sales has
not excluded stores temporarily closed as a result of the COVID-19 outbreak.
This measure reflects the three year aggregation of the growth rates.
Adjusted Profit Adjusted profit measures are presented to provide additional consideration of Reported Profit:
the underlying performance of the Group's ongoing business. These measures
remove the impact of those items which should be excluded to provide a A reconciliation of reported profit before tax to adjusted profit before tax
consistent and comparable view of performance. and the Group's accounting policy for adjusted profit before tax are set out
in the financial statements.
Free Cash Flow Free cash flow is defined as net cash generated from operating activities less Net cash generated from operating activities:
capital expenditure plus cash inflows from disposal of fixed assets and
Period ended 26 weeks ended 26 weeks ended
including cash outflows for lease principal payments and other lease related
items.
£m 1 October 25 September
2022 2021
Net cash generated from operating activities 212 224
Capex (53) (39)
Lease principal and related cash flows (93) (89)
Proceeds from disposal of non-current assets 22 8
Free cash flow 88 104
Comparable sales vs pre-pandemic levels (FY20)
The change in sales over three years measured at constant foreign exchange
rates. It also includes online sales. The measurement of comparable sales has
not excluded stores temporarily closed as a result of the COVID-19 outbreak.
This measure reflects the three year aggregation of the growth rates.
Adjusted Profit
Adjusted profit measures are presented to provide additional consideration of
the underlying performance of the Group's ongoing business. These measures
remove the impact of those items which should be excluded to provide a
consistent and comparable view of performance.
Reported Profit:
A reconciliation of reported profit before tax to adjusted profit before tax
and the Group's accounting policy for adjusted profit before tax are set out
in the financial statements.
Free Cash Flow
Free cash flow is defined as net cash generated from operating activities less
capital expenditure plus cash inflows from disposal of fixed assets and
including cash outflows for lease principal payments and other lease related
items.
Net cash generated from operating activities:
Period ended 26 weeks ended 26 weeks ended
£m 1 October 25 September
2022 2021
Net cash generated from operating activities 212 224
Capex (53) (39)
Lease principal and related cash flows (93) (89)
Proceeds from disposal of non-current assets 22 8
Free cash flow 88 104
Cash Conversion Cash conversion is defined as free cash flow pre-tax/adjusted profit before Net cash generated from operating activities:
tax. It provides a measure of the Group's effectiveness in converting its
profit into cash.
Period ended 26 weeks ended 26 weeks ended
£m 1 October 25 September
2022 2021
Free cash flow 88 104
Tax paid 65 84
Free cash flow before tax 153 188
Adjusted profit before tax 226 180
Cash conversion 68% 104%
Net Debt Net debt is defined as the lease liability recognised on the balance sheet Cash net of overdrafts:
plus borrowings less cash net of overdrafts.
Period ended 26 weeks ended 26 weeks ended
£m 1 October 25 September
2022 2021
Cash net of overdrafts 941 1,143
Lease liability (1,139) (1,070)
Borrowings (298) (297)
Net debt (496) (224)
Adjusted EBITDA Adjusted EBITDA is defined as operating profit, excluding adjusting operating Reconciliation from operating profit to adjusted EBITDA:
items, depreciation of property, plant and equipment, depreciation of right of
use assets and amortisation of intangible assets. Any depreciation or
amortisation included in adjusting operating items are not double-counted.
Period ended 26 weeks ended 26 weeks ended
Adjusted EBITDA is shown for the calculation of Net Debt/EBITDA for our
gearing ratios.
£m 1 October 25 September
2022 2021
Operating profit 263 207
Adjusted operating items (25) (11)
Amortisation of intangible assets 18 18
Depreciation of property, plant and equipment 45 38
Depreciation of right-of-use assets 100 89
Adjusted EBITDA 401 341
Net Debt
Net debt is defined as the lease liability recognised on the balance sheet
plus borrowings less cash net of overdrafts.
Cash net of overdrafts:
Period ended 26 weeks ended 26 weeks ended
£m 1 October 25 September
2022 2021
Cash net of overdrafts 941 1,143
Lease liability (1,139) (1,070)
Borrowings (298) (297)
Net debt (496) (224)
Adjusted EBITDA
Adjusted EBITDA is defined as operating profit, excluding adjusting operating
items, depreciation of property, plant and equipment, depreciation of right of
use assets and amortisation of intangible assets. Any depreciation or
amortisation included in adjusting operating items are not double-counted.
Adjusted EBITDA is shown for the calculation of Net Debt/EBITDA for our
gearing ratios.
Reconciliation from operating profit to adjusted EBITDA:
Period ended 26 weeks ended 26 weeks ended
£m 1 October 25 September
2022 2021
Operating profit 263 207
Adjusted operating items (25) (11)
Amortisation of intangible assets 18 18
Depreciation of property, plant and equipment 45 38
Depreciation of right-of-use assets 100 89
Adjusted EBITDA 401 341
PRINCIPAL RISKS
At H1 FY23, the principal risks the Group faces for the remaining 26 weeks of
the financial year have been reviewed relative to the prior year-end. In most
cases, the principal risks are consistent with the year-end position, however
there is increased uncertainty in the external risk environment, specifically
the geopolitical and macro-economic environment. The uncertainty is considered
to have elevated two principal risks: i) macro-economic and political
instability; and ii) volatility in foreign exchange rates. In response to the
geopolitical and macro-economic environment, the Group has implemented and
planned mitigations, and has introduced additional monitoring across business
areas. The Group's hedging policy remains in place to mitigate FX volatility.
All other principal risks remain broadly in line with the prior year-end
position. Details of the principal risks including definitions are set out in
the FY21/22 Annual Report (p107 - 129).
CONDENSED GROUP INCOME STATEMENT- UNAUDITED
Note 26 weeks to 26 weeks to 53 weeks to
1 October 25 September 2021 2 April
2022
2022(1)
£m £m
£m
Revenue 3 1,345 1,213 2,826
Cost of sales (402) (366) (815)
Gross profit 943 847 2,011
Operating expenses (712) (658) (1,498)
Other operating income 32 18 30
Net operating expenses (680) (640) (1,468)
Operating profit 263 207 543
Financing
Finance income 6 1 3
Finance expense (18) (17) (34)
Other financing charge - - (1)
Net finance expense 5 (12) (16) (32)
Profit before taxation 251 191 511
Taxation 6 (57) (46) (114)
Profit for the period 194 145 397
Attributable to:
Owners of the Company 193 145 396
Non-controlling interest 1 - 1
Profit for the period 194 145 397
Earnings per share
Basic 7 49.1p 35.8p 98.2p
Diluted 7 48.9p 35.7p 97.7p
£m £m £m
Reconciliation of adjusted profit before taxation:
Profit before taxation 251 191 511
Adjusting operating items:
Cost of sales (income) 4 (1) (6) (16)
Net operating income 4 (24) (5) (4)
Adjusting financing items 4 - - 1
Adjusted profit before taxation - non-GAAP measure 226 180 492
Adjusted earnings per share - non-GAAP measure
Basic 7 44.5p 33.7p 94.5p
Diluted 7 44.3p 33.5p 94.0p
Dividends per share
Proposed interim (not recognised as a liability at period end) 8 16.5p 11.6p 11.6p
Final (not recognised as a liability at 2 April 2022) 8 N/A N/A 35.4p
(1 ) Balances for the 53 weeks to 2 April 2022 have been audited.
( )
CONDENSED Group STATEMENT OF COMPREHENSIVE INCOME - UNAUDITED
( )
26 weeks to 26 weeks to 53 weeks to
1 October 25 September 2021 2 April(1)
2022
2022
£m £m
£m
Profit for the period 194 145 397
Other comprehensive income(2):
Cash flow hedges 1 - (1)
Foreign currency translation differences 53 4 22
Tax on other comprehensive income:
Foreign currency translation differences (1) - -
Other comprehensive income for the period, net of tax 53 4 21
Total comprehensive income for the period 247 149 418
Total comprehensive income attributable to:
Owners of the Company 245 149 417
Non-controlling interest 2 - 1
247 149 418
(1 ) Balances for the 53 weeks to 2 April 2022 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
Note As at As at As at
1 October 25 September 2021 2 April
2022
2022(1)
£m £m
£m
ASSETS
Non-current assets
Intangible assets 9 245 234 240
Property, plant and equipment 10 345 277 322
Right-of-use assets 11 947 875 880
Deferred tax assets 6 204 158 175
Trade and other receivables 12 53 47 45
1,794 1,591 1,662
Current assets
Inventories 13 484 434 426
Trade and other receivables 12 338 300 283
Derivative financial assets 3 1 5
Income tax receivables 87 56 86
Cash and cash equivalents 14 1,017 1,197 1,222
Assets held for sale 10 11 - 13
1,940 1,988 2,035
Total assets 3,734 3,579 3,697
LIABILITIES
Non-current liabilities
Trade and other payables 15 (84) (94) (91)
Lease liabilities (922) (853) (849)
Borrowings 18 (298) (297) (298)
Deferred tax liabilities 6 (1) (1) (1)
Retirement benefit obligations (1) (1) (1)
Provisions for other liabilities and charges 16 (40) (33) (36)
(1,346) (1,279) (1,276)
Current liabilities
Trade and other payables 15 (498) (443) (481)
Bank overdrafts 17 (76) (54) (45)
Lease liabilities (217) (217) (209)
Derivative financial liabilities (5) (3) (2)
Income tax liabilities (34) (26) (39)
Provisions for other liabilities and charges 16 (27) (21) (28)
(857) (764) (804)
Total liabilities (2,203) (2,043) (2,080)
Net assets 1,531 1,536 1,617
EQUITY
Capital and reserves attributable to owners of the Company
Ordinary share capital 19 - - -
Share premium account 228 224 227
Capital reserve 41 41 41
Hedging reserve 5 5 4
Foreign currency translation reserve 269 200 218
Retained earnings 982 1,063 1,123
Equity attributable to owners of the Company 1,525 1,533 1,613
Non-controlling interest in equity 6 3 4
Total equity 1,531 1,536 1,617
(1 ) Balances as at 2 April 2022 have been audited.
CONDENSED Group STATEMENT OF CHANGES IN EQUITY - UNAUDITED
Attributable to owners
of the Company
Ordinary share capital Share premium account Other reserves Retained earnings Total Non-controlling interest Total equity
£m
£m
£m
£m
£m
£m
£m
Balance as at 27 March 2021 - 223 242 1,092 1,557 3 1,560
Profit for the period - - - 145 145 - 145
Other comprehensive income:
Foreign currency translation differences - - 4 - 4 - 4
Total comprehensive income for the period - - 4 145 149 - 149
Transactions with owners:
Employee share incentive schemes
Equity share awards - - - 7 7 - 7
Equity share awards transferred to liabilities - - - (1) (1) - (1)
Exercise of share options - 1 - - 1 - 1
Purchase of own shares
Held by ESOP trusts - - - (8) (8) - (8)
Dividends paid in the period - - - (172) (172) - (172)
Balance as at 25 September 2021 - 224 246 1,063 1,533 3 1,536
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 - losses deferred in equity - - 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 19 - - - (201) (201) - (201)
Held by ESOP trusts - - - (1) (1) - (1)
Dividends paid in the period 8 - - - (140) (140) - (140)
Balance as at 1 October 2022 - 228 315 982 1,525 6 1,531
Condensed group statement of cash flows - unaudited
Note 26 weeks to 26 weeks to 53 weeks to
1 October 25 September 2021 2 April
2022
2022(1)
£m £m
£m
Cash flows from operating activities
Operating profit 263 207 543
Amortisation of intangible assets 18 18 39
Depreciation of property, plant and equipment 45 38 86
Depreciation of right-of-use assets 100 89 188
COVID-19 related rent concessions (7) (9) (18)
Net impairment charge of property, plant and equipment 10 - 1 1
Net impairment (reversal)/charge of right-of-use assets 11 (1) 2 7
Gain on disposal of property, plant and equipment and intangible assets (19) (5) (3)
Loss/(gain) on derivative instruments 5 2 (4)
Charge in respect of employee share incentive schemes 10 7 16
Increase in inventories (46) (31) (22)
Increase in receivables (53) (26) (5)
(Decrease)/increase in payables and provisions (26) 30 81
Cash generated from operating activities 289 323 909
Interest received 5 1 2
Interest paid (17) (16) (32)
Taxation paid (65) (84) (180)
Net cash generated from operating activities 212 224 699
Cash flows from investing activities
Purchase of property, plant and equipment (35) (26) (124)
Purchase of intangible assets (18) (13) (37)
Proceeds from sale of property, plant and equipment 22 8 8
Initial direct costs of right-of-use assets - (4) (4)
Payment in respect of acquisition of subsidiary - - (7)
Net cash outflow from investing activities (31) (35) (164)
Cash flows from financing activities
Dividends paid in the period (140) (172) (219)
Payment of deferred consideration for acquisition of non-controlling interest 15 (6) - (3)
Payment of lease principal (93) (85) (202)
Issue of ordinary share capital 1 1 4
Purchase of own shares through share buy-back (180) - (150)
Purchase of own shares through share buy-back - stamp duty and fees (1) - (3)
Purchase of own shares by ESOP trusts (1) (8) (8)
Net cash outflow from financing activities (420) (264) (581)
Net decrease in cash net of overdrafts (239) (75) (46)
Effect of exchange rate changes 3 2 7
Cash net of overdrafts at beginning of period 1,177 1,216 1,216
Cash net of overdrafts 941 1,143 1,177
Cash and cash equivalents 14 1,017 1,197 1,222
Bank overdrafts 17 (76) (54) (45)
Cash net of overdrafts 941 1,143 1,177
(1 ) Balances for the 53 weeks to 2 April 2022 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 16 November 2022.
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 53 weeks to 2 April 2022 were approved by the
Board of Directors on 17 May 2022 and have been filed with the Registrar of
Companies. The report of the auditors on the statutory accounts for the 53
weeks to 2 April 2022 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
1 October 2022 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 53 weeks to 2
April 2022, which have been prepared in accordance with UK adopted
International Accounting Standards.
These condensed consolidated interim financial statements are presented in £m
in order to align external reporting with the information presented to the
Chief Operating Decision Maker. Financial ratios are calculated using
unrounded numbers. Prior year comparatives have been rounded accordingly. The
face of the income statement for the current and prior period has been updated
to provide separate disclosure on amounts of other operating income and
expense that make up total net operating expenses.
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. The Directors have also considered the forecast for the
period up to the subsequent financial year end, March 2024, 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 principal risks, consistent with those at 2
April 2022, and included an increased uncertainty in the external risk
environment, specifically the geopolitical and macro-economic environment. The
uncertainty is considered to have elevated two principial risks, being
macro-economic and political instability and volatility in foreign exchange
rates.
Further mitigating actions within management control would be taken under each
scenario, including working capital reduction measures and limiting capital
expenditure but these were not incorporated into the downside modelling.
The Directors have also considered the Group's current liquidity and available
facilities. As at 1 October 2022, the Group balance sheet reflects cash net of
overdrafts is £941 million. In addition the Group has access to a £300
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. 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 1
October 2022.
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 53 weeks ended 2 April 2022, with the exception of the following:
IFRS 16 Leases
The COVID-19-Related Rent Concessions amendment to IFRS 16 Leases was adopted
by the IASB on 28 May 2020. The amendment was intended to apply until 30 June
2021, and subsequently extended to 30 June 2022. The amendment allows for a
simplified approach to accounting for rent concessions occurring as a direct
result of COVID-19 and for which the following criteria are met:
· The revised consideration is substantially the same, or less
than, the consideration prior to the change
· The concessions affect only payments originally due on or before
30 June 2022 and
· There is no substantive change to other terms and conditions of
the lease
From 1 July 2022, the Group has applied the principles of IFRS 9 Financial
Instruments and continues to account for eligible rent forgiveness as negative
variable lease payments where:
· The rent concessions are occurring as a direct result of COVID-19
· The revised consideration is substantially the same, or less
than, the consideration prior to the change and
· There is no substantive change to other terms and conditions of
the lease
Lessees are not required to assess whether eligible rent concessions are lease
modifications, allowing the lessee to account for eligible rent concessions as
if they were not lease modifications.
The Group has chosen to account for eligible rent forgiveness as negative
variable lease payments. Rent concessions are recognised once a legally
binding agreement is made between both parties, by derecognising the portion
of the lease liability that has been forgiven and recognising the benefit in
the Income Statement.
Rent deferrals do not change the total consideration due over the life of the
lease. Deferred rent payments are recognised as a payable until the period the
original rent payment is due.
The Group has not early adopted any standard, interpretation or amendment that
has been issued but is not yet effective. Several amendments apply for the
first time for the period ended 1 October 2022, but do not have an impact on
the condensed consolidated interim financial statements of the Group.
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 53 weeks to 2 April 2022,
as set out on pages 243 to 245 of those financial statements.
For details of changes to significant estimates for impairment of property,
plant and equipment and right-of-use assets in the current period, refer to
note 10. There have been no changes to the significant estimates relating to
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 1 October 2022 and the 26 weeks to 25 September 2021 are as
follows:
Where the Group is a lessee, judgement is required in determining the lease
term at initial recognition where extension or termination options exist. In
such instances, all facts and circumstances that may create an economic
incentive to exercise an extension option, or not exercise a termination
option, have been considered to determine the lease term. Considerations
include, but are not limited to, the period assessed by management when
approving initial investment, together with costs associated with any
termination options or extension options. Extension periods (or periods after
termination options) are only included in the lease term if the lease is
reasonably certain to be extended (or not terminated). Where the lease term
has been extended by assuming an extension option will be recognised, this
will result in the initial right-of-use assets and lease liabilities at
inception of the lease being greater than if the option was not assumed to be
exercised. Likewise, assuming a break option will be exercised will reduce the
initial right-of-use assets and lease liabilities.
Translation of the results of overseas businesses
The results of overseas subsidiaries are translated into the Group's
presentation currency of Sterling each month at the weighted average exchange
rate according to the phasing of the Group's trading results. The weighted
average exchange rate is used, as it is considered to approximate the actual
exchange rates on the dates of the transactions. The assets and liabilities of
such undertakings are translated at period end exchange rates. Differences
arising on the retranslation of the opening net investment in subsidiary
companies, and on the translation of their results, are taken directly to the
foreign currency translation reserve within equity.
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 to 26 weeks to 53 weeks to As at As at As at
1 October 25 September 2021 2 April 1 October 25 September 2021 2 April
2022
2022
2022
2022
Euro 1.17 1.16 1.18 1.14 1.17 1.19
US Dollar 1.21 1.39 1.36 1.12 1.37 1.31
Chinese Yuan Renminbi 8.16 8.98 8.73 7.95 8.84 8.34
Hong Kong Dollar 9.50 10.79 10.63 8.76 10.66 10.26
Korean Won 1,579 1,583 1,596 1,598 1,611 1,592
Adjusted profit before taxation
In order to provide additional consideration of the underlying performance of
the Group's ongoing business, the Group's results include a presentation of
Adjusted operating profit and Adjusted profit before taxation (adjusted PBT).
Adjusted PBT is defined as profit before taxation and before adjusting items.
Adjusting items are those items which, in the opinion of the Directors, should
be excluded in order to provide a consistent and comparable view of the
performance of the Group's ongoing business. Generally, this will include
those items that are largely one-off and material in nature as well as income
or expenses relating to acquisitions or disposals of businesses or other
transactions of a similar nature, including the impact of changes in fair
value of expected future payments or receipts relating to these transactions.
Adjusting items are identified and presented on a consistent basis each year
and a reconciliation of adjusted PBT to profit before tax is included in the
financial statements. Adjusting items and their related tax impacts, as well
as adjusting taxation items, are added back to/deducted from profit
attributable to owners of the Company to arrive at adjusted earnings per
share. Refer to note 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 situated in Europe and
the US.
Licensing revenues are generated through the receipt of royalties from global
licensees of beauty products, eyewear and from licences relating to the use of
non-Burberry trademarks in Japan.
The Board assesses channel performance based on a measure of adjusted
operating profit. This measurement basis excludes the effects of adjusting
items. The measure of earnings for each operating segment that is reviewed by
the Board includes an allocation of corporate and central costs. Interest
income and charges are not included in the result for each operating segment
that is reviewed by the Board.
Retail/Wholesale Licensing Total
26 weeks 26 weeks to 26 weeks 26 weeks to 26 weeks 26 weeks to
to 1 October 25 September to 1 October 26 September to 1 October 26 September
2022
2021
2022
2021
2022
2021
£m
£m
£m
£m
£m
£m
Retail 1,061 944 - - 1,061 944
Wholesale 263 249 - - 263 249
Licensing - - 22 20 22 20
Total segment revenue 1,324 1,193 22 20 1,346 1,213
Inter-segment revenue(1) - - (1) - (1) -
Revenue from external customers 1,324 1,193 21 20 1,345 1,213
Adjusted operating profit 219 178 19 18 238 196
Adjusting items(2) 25 11
Finance income 6 1
Finance expense (18) (17)
Profit before taxation 251 191
Retail/Wholesale Licensing Total
53 weeks to 2 April 2022 £m £m £m
Retail 2,273 - 2,273
Wholesale 512 - 512
Licensing - 42 42
Total segment revenue 2,785 42 2,827
Inter-segment revenue(1) - (1) (1)
Revenue from external customers 2,785 41 2,826
Adjusted operating profit 486 37 523
Adjusting items(2) 19
Finance income 3
Finance expense (34)
Profit before taxation 511
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.
Revenue by product division 26 weeks to 26 weeks to 53 weeks to
1 October 25 September 2021 2 April
2022
2022
£m £m
£m
Accessories 495 435 1,017
Women's 357 330 784
Men's 383 347 807
Children's/Other 89 81 177
Retail/Wholesale 1,324 1,193 2,785
Licensing 21 20 41
Total 1,345 1,213 2,826
Revenue by destination 26 weeks to 26 weeks to 53 weeks to
1 October 25 September 2021 2 April
2022
2022
£m £m
£m
Asia Pacific 525 522 1,276
EMEIA(1) 445 361 813
Americas 354 310 696
Retail/Wholesale 1,324 1,193 2,785
Licensing 21 20 41
Total 1,345 1,213 2,826
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 to 26 weeks to 53 weeks to
1 October 25 September 2021 2 April
2022
2022
£m £m
£m
Adjusting operating items
Impact of COVID-19:
Impairment charge relating to retail cash generating units - - 5
Impairment reversal relating to inventory (1) (6) (16)
Impairment reversal relating to receivables - - (1)
COVID-19 related rent concessions (7) (9) (18)
COVID-19 related government grant income (1) (1) (2)
Other adjusting items:
Gain on disposal of property (19) - -
Restructuring costs 1 5 11
Revaluation of deferred consideration liability 2 - 1
Total adjusting operating items (25) (11) (20)
Adjusting financing items
Finance charge on deferred consideration liability - - 1
Total adjusting financing items - - 1
26 weeks to 26 weeks to 53 weeks to
1 October 25 September 2021 2 April
2022
2022
£m £m
£m
Analysis of adjusting operating items:
Included in Cost of sales (Impairment reversal relating to inventory) (1) (6) (16)
Included in operating expenses 3 5 17
Included in other operating income (27) (10) (21)
Total adjusting operating items (25) (11) (20)
26 weeks to 26 weeks to 53 weeks to
1 October 25 September 2021 2 April
2022
2022
£m £m
£m
Total adjusting operating items (pre-tax) (25) (11) (20)
Total adjusting financing items (pre-tax) - - 1
Tax on adjusting items 6 2 5
Total adjusting items (post-tax) (19) (9) (14)
Impact of COVID-19
At 1 October 2022, impairments and provisions recorded as adjusting items in
prior periods as a result of the impact of COVID-19 have been reviewed and the
assumptions updated where appropriate, to reflect management's latest
expectations. The impact of changes in assumptions has been presented as an
update to the adjusting item charge. Further details regarding the approach
applied to measure these updates are set out below for each of the specific
adjusting items.
Impairment of retail cash generating units
During the 26 weeks to 1 October 2022, the impairment provisions remaining
have been reassessed, using management's latest expectations, with no charge
or reversal recorded (last half year: £nil; last full year: charge of £5
million). There was no related tax charge (last half year: £nil; last full
year: credit of £1 million) recognised in the period. Any charges or
reversals which did not arise from the reassessment of the original impairment
adjusting item, had they arisen, would not have been included in this
adjusting item. Refer to notes 10 and 11 for details of impairment testing of
retail cash generating units.
Impairment of inventory
During the 26 weeks to 1 October 2022, reversals of inventory provisions,
relating to inventory which had been provided for as an adjusting item at the
previous year end and has either been sold, or is now expected to be sold, at
a higher net realisable value than had been assumed when the provision had
been initially estimated, of £1 million (last half year: £6 million; last
full year £16 million) have been recorded and presented as an adjusting item.
A related tax charge of £nil (last half year: £1 million; last full year £4
million) has also been recognised in the period. All other charges and
reversals relating to inventory provisions have been recorded in adjusted
operating profit. Refer to note 13 for details of inventory provisions.
Impairment of receivables
During the 26 weeks to 1 October 2022, the expected credit loss rates have
been reassessed, taking into account the experience of losses incurred during
the period and changes in market conditions at 1 October 2022 compared to the
previous year end. As a result of this reassessment, management has made no
changes (last half year: no changes) to the expected credit loss rates and
there has been no adjustment recorded. Last full year a reversal of £1
million, resulting from the reduction in credit loss rate assumption, was
recorded as an adjusting item. There was no related tax charge (last half
year: £nil; last full year £nil) recognised in the period. All other charges
and reversals relating to impairment of receivables, arising from changes in
the value and aging of the receivables portfolio, have been included in
adjusted operating profit. Refer to note 12 for details of impairment of
receivables.
COVID-19-related rent concessions
Eligible rent forgiveness amounts have been treated as negative variable lease
payments, resulting in a credit of £7 million (last half year: £9 million;
last full year: £18 million) for the 26 weeks to 1 October 2022 being
recorded in other operating income. This income has been presented as an
adjusting item given that the amendment to IFRS 16 is only applicable for a
limited period of time and it is explicitly related to COVID-19. The amendment
expired on 30 June 2022 however the Group continues to apply the same
accounting treatment applying the principles of IFRS 9 (refer to note 2). A
related tax charge of £1 million (last half year: £2 million; last full year
£4 million) has also been recognised in the current period.
COVID-19-related government grant income
The Group has recorded grant income of £1 million (last half year: £1
million; last full year: £2 million) within other operating income for the 26
weeks to 1 October 2022, relating to government support to alleviate the
impact of COVID-19. This income has been presented as an adjusting item as it
is explicitly related to COVID-19, and the arrangements are expected to last
for a limited period of time. A related tax charge of £nil (last half year:
£nil; last full year £1 million) has also been recognised in the current
period.
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 £22 million resulting in a net
gain on disposal of £19 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 is considered to be material and one-off
in nature. A related tax charge of £5 million was also recognised in the
year.
Restructuring costs
Restructuring costs of £1 million (last half year: £5 million; last full
year: £11 million) were incurred in the current period, arising primarily as
a result of the organisational efficiency programme announced in July 2020
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 for the 26 weeks to 1 October
2022 principally relate to redundancies and consulting costs, partially offset
by an impairment reversal of £1 million related to office premises. These
costs are recorded in operating expenses. They are presented as an adjusting
item, in accordance with the Group's accounting policy, as the cost of the
restructuring programme is considered material and discrete in nature. A
related tax credit of £nil (last half year: £1 million; last full year: £3
million) has also been recognised in the current period.
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 to 2023.
A charge of £2 million in relation to the revaluation of this balance has
been recognised in operating expenses for the 26 weeks to 1 October 2022 (last
half year: nil; last full year: charge of £1 million). A financing charge of
£nil in relation to the unwinding of the discount on the non-current portion
of the deferred consideration liability has also been recognised for the 26
weeks to 1 October 2022 (last half year: £nil; last full year: £1 million).
No tax has been recognised as the future payments are not considered
to be deductible for tax purposes. This is presented as an adjusting item in
accordance with the Group's accounting policy, as it arises 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 to 26 weeks to 53 weeks to
1 October 25 September 2021 2 April
2022
2022
£m £m
£m
Finance income - amortised cost 1 - 1
Bank interest income - fair value through profit and loss 5 1 2
Finance income 6 1 3
Interest expense on lease liabilities (14) (13) (27)
Interest expense on borrowings (2) (2) (4)
Bank charges (1) (2) (2)
Other finance expense (1) - (1)
Finance expense (18) (17) (34)
Finance charge on deferred consideration liability - - (1)
Net finance expense (12) (16) (32)
6. Taxation
The interim tax charge has been calculated by applying the estimated weighted
average tax rate applicable to the Group's full year forecast adjusted profit
before tax to the actual adjusted profit before tax in the interim period. Tax
on prior year adjustments and remeasurement of tax balances due to changes in
tax rates have been recorded as identified in the period. The resulting
effective tax rate on adjusted profit before tax in the period is 22.4% (last
half year: 24.1%; last full year: 22.3%). Tax on adjusting items has been
recognised at the prevailing tax rates as appropriate. The resulting effective
tax rate on reported profit before taxation is 22.7% (last half year: 24.1%;
last full year: 22.4%). The effective tax rate on adjusted profit before tax
for the full year is estimated to be 22%.
26 weeks to 26 weeks to 53 weeks to
1 October 25 September 2021 2 April
2022
2022
£m £m
£m
Current tax
Current tax on income for the period 69 58 135
Adjustments in respect of prior years 2 7 10
Total current tax 71 65 145
Deferred tax
Origination and reversal of temporary differences (15) (18) (30)
Impact of changes to tax rates - (3) (4)
Adjustments in respect of prior years 1 2 3
Total deferred tax (14) (19) (31)
Total tax charge on profit 57 46 114
Total taxation recognised in the condensed group income statement comprises:
26 weeks to 26 weeks to 53 weeks to
1 October 25 September 2021 2 April
2022
2022
£m £m
£m
Tax on adjusted profit before taxation 51 44 109
Tax on adjusting items (note 4) 6 2 5
Total taxation charge 57 46 114
Deferred taxation
The major deferred tax assets/(liabilities) recognised by the Group and
movements during the period are as follows:
Capital allowances Unrealised inventory profit and other inventory provisions Share schemes Unused tax losses Leases Other Net deferred tax asset
£m
£m
£m £m £m £m £m
Balance as at 2 April 2022 19 97 5 3 32 18 174
Effect of foreign exchange rates - 11 - - 1 3 15
Credited/(charged) to the Income Statement (4) 19 1 - 1 (3) 14
Balance as at 1 October 2022 15 127 6 3 34 18 203
Balance as at 25 September 2021 20 85 4 1 30 17 157
An increase in the UK's main corporation tax rate from 19% to 25% was
substantially enacted in the previous period to take effect from 1 April 2023.
All UK deferred tax assets and liabilities which are forecast to be utilised
after this date are recorded at the higher enacted tax rate.
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 to 26 weeks to 53 weeks to
1 October 25 September 2021 2 April
2022
2022
£m £m
£m
Attributable profit for the period before adjusting items(1) 174 136 382
Effect of adjusting items(1) (after taxation) 19 9 14
Attributable profit for the period 193 145 396
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.
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 to 26 weeks to 53 weeks to
1 October 25 September 2021 2 April
2022
2022
Millions Millions
Millions
Weighted average number of ordinary shares in issue during the period 392.9 404.3 402.5
Dilutive effect of the employee share incentive schemes 1.5 2.0 2.3
Diluted weighted average number of ordinary shares in issue during the period 394.4 406.3 404.8
8. Dividends paid to owners of the Company
The interim dividend of 16.5p (last half year: 11.6p) per share has been
approved by the Board of Directors after 1 October 2022. Accordingly, this
dividend has not been recognised as a liability at the period end and will be
paid on 27 January 2023 to Shareholders on the Register at the close of
business on 16 December 2022. The ex-dividend date is 15 December 2022 and the
final day for dividend reinvestment plan ('DRIP') elections is 6 January 2023.
A dividend of 35.4p (last half year: 42.5p) was paid during the period to 1
October 2022 in relation to the year ended 2 April 2022.
9. Intangible assets
Goodwill at 1 October 2022 is £113 million (last half year: £106 million;
last full year: £109 million). There were no additions to goodwill in the
period (last half year: £nil).
In the period there were additions to other intangible assets of £18 million
(last half year: £13 million) and disposals with a net book value of £nil
(last half year: £nil).
Capital commitments contracted but not provided for by the Group amounted to
£4 million (last half year: £3 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 1 October 2022.
Management has performed a review for indicators of impairment as at 1 October
2022 and concluded that there are no indicators at this time. The annual
impairment test will be performed at 1 April 2023.
There was no impairment charge for other intangible assets for the 26 weeks to
1 October 2022 (last half year: no impairment)
10. Property, plant and equipment
In the period there were additions to property, plant and equipment of £44
million (last half year: £35 million) and disposals with a net book value of
£nil (last half year: £nil). Additions include £35 million (last half year:
£26 million) arising as a result of investing cash outflows and £9 million
(last half year: £9 million) movement in capital expenditure accruals.
Capital commitments contracted but not provided for by the Group amounted to
£43 million (last half year: £39 million).
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 £19 million has been included as an adjusting item
(refer to note 4).
As at 1 October 2022 the Group had two freehold properties that met the
criteria to be classified as held for sale. These
assets were 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 for each, the related
assets and liabilities were recorded at their
carrying value. The sale of these properties is expected to complete within
the current financial year.
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 1 October 2022, following the review of impairment of
retail stores, no impairment charges or reversals were recorded against
property, plant and equipment (last half year: impairment charge of £2
million). Last half year, a charge of £2 million was recorded against
right-of-use assets. Refer to note 11 for further details of right-of-use
assets.
Last half year, the impairment charge recorded in property, plant and
equipment related to three retail cash generating units for which the total
recoverable amount at the balance sheet date was £nil.
11. Right of use assets
In the period there were additions to right-of-use assets of £79 million
(last half year: £124 million) and remeasurements of £34 million (last half
year: £20 million). Depreciation of right-of-use assets of £100 million
(last half year: £89 million) is included within operating expenses.
Impairment testing
As a result of the assessment of retail cash generating units for impairment,
an impairment charge of £nil (last half year: £2 million) was recorded
against right-of-use assets. Refer to note 10 for further details of
impairment assessment of retail cash generating units.
An impairment reversal of £1 million (last half year: £nil) 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
1 October 25 September 2021 2 April
2022
2022
£m £m
£m
Non-current
Other financial receivables(1) 49 43 42
Other non-financial receivables(2) 1 1 1
Prepayments 3 3 2
Total non-current trade and other receivables 53 47 45
Current
Trade receivables 206 154 151
Provision for expected credit losses (10) (9) (7)
Net trade receivables 196 145 144
Other financial receivables(1) 33 32 36
Other non-financial receivables(2) 53 54 63
Prepayments 48 59 32
Accrued income 8 10 8
Total current trade and other receivables 338 300 283
Total trade and other receivables 391 347 328
1. Other financial receivables include rental deposits and other sundry
debtors.
2. Other non-financial receivable relates to indirect taxes, other taxes and
duties and COVID-19 related government grant receivables.
The net charge for impairment of financial receivables in the period was £3
million (last half year: charge of £2 million; last full year: reversal of
£1 million). None of this net charge has been presented as an adjusting item
(last half year: £nil; last full year: reversal of £1 million). Refer to
note 4 for details of adjusting items.
13. Inventories
Inventory provisions of £76 million (last half year: £110 million; last full
year: £83 million) are recorded, representing 13.5% (last half year: 20.2%;
last full year 16.3%) of the gross value of inventory. The provisions reflect
management's best estimate of the net realisable value of inventory, where
this is considered to be lower than the cost of the inventory.
As at 28 March 2020, £68 million of the provision was included in cost of
sales as a result of the estimated reduction in net realisable value of
inventory due to COVID-19 and was presented as an adjusting item. In the
current period, £4 million of the provision (last half year: £5 million;
last full year: £14 million) has been utilised, where inventory previously
provided for had been sold below cost in the current year and is recognised in
cost of sales.
An additional £1 million (last half year: £6 million; last full year: £16
million) has been released upon re-assessment of the provision, where
inventory previously provided for has been sold, or is now expected to be
sold, for a higher net realisable value than has been estimated last year as
performance during the current period has exceeded, and is expected to
continue to exceed, the assumptions made at 2 April 2022. This reversal is
presented as an adjusting item. Refer to note 4 for details of adjusting
items.
14. Cash and cash equivalents
As at As at As at
1 October 25 September 2021 2 April
2022
2022
£m £m
£m
Cash and cash equivalents held at amortised cost 186 189 124
Cash at bank and in hand
Short-term deposits 72 113 73
258 302 197
Cash and cash equivalents held at fair value through profit and loss 759 895 1,025
Short-term deposits
Total 1,017 1,197 1,222
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
1 October 25 September 2021 2 April
2022
2022
£m £m
£m
Non-current
Other payables(1) 2 8 5
Deferred income and non-financial accruals 21 15 18
Contract liabilities 61 67 64
Deferred consideration(2) - 4 4
Total non-current trade and other payables 84 94 91
Current
Trade payables 177 144 181
Other taxes and social security costs 54 56 60
Other payables(1, 3) 28 18 6
Accruals 204 191 204
Deferred income and non-financial accruals 16 7 13
Contract liabilities 13 13 13
Deferred consideration(2) 6 14 4
Total current trade and other payables 498 443 481
Total trade and other payables 582 537 572
1. Other payables are comprised of interest and employee related liabilities.
2. Deferred consideration relates to the acquisition of the economic right to
the non-controlling interest in Burberry Middle East LLC on 22 April 2016. The
change in the deferred consideration liability in the period arises as a
result of a financing cash outflow and non-cash movements. Total deferred
consideration payments of £6 million were made in the 26 weeks to 1 October
2022 (last half year: £nil; last full year: £12 million).
3. Includes £20 million (last half year: £nil; last full year £nil)
relating to the cost of shares not yet purchased, under an agreement entered
into by the Group to purchase its own shares, together with anticipated stamp
duty arising. Refer to note 19 for further details.
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
1 October 25 September 2021 2 April
2022
2022
£m £m
£m
Retail contract liabilities 7 6 7
Licensing contract liabilities 67 74 70
Total contract liabilities 74 80 77
16. Provisions for other liabilities and charges
Property obligations Other Total
£m
costs
£m
£m
Balance as at 2 April 2022 49 15 64
Effect of foreign exchange rate changes 2 2 4
Created during the period 2 3 5
Utilised during the period (2) - (2)
Released during the period (1) (3) (4)
Balance as at 1 October 2022 50 17 67
Balance as at 25 September 2021 43 11 54
As at As at As at
1 October 25 September 2021 2 April
2022
2022
£m £m
£m
Analysis of total provisions:
Non-current 40 33 36
Current 27 21 28
Total 67 54 64
17. Bank overdrafts
Included within bank overdrafts is £76 million (last half year: £54 million;
last full year: £45 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 1 October 2022, the Group held bank overdrafts of £nil
(last half year: £nil; last full year: £nil) 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 £300 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 1 October 2022 is £298m (last half year:£297m; last
full year: £298m), all movements on the bond are non-cash.
On 26 July 2021, the Group entered into a new £300 million multi-currency
sustainability linked revolving credit facility with a syndicate of banks
replacing the previous £300 million RCF that had been in place since 2014.
There were no drawdowns or repayments of the RCF during the current or
previous year and at 1 October 2022, there were £nil outstanding drawings.
The Group is in compliance with the financial and other covenants within the
facilities and has been in compliance throughout the financial period.
19. Share capital and reserves
Allotted, called up and fully paid share capital Number £m
Ordinary shares of 0.05p (last year: 0.05p) each
As at 27 March 2021 404,864,359 -
Allotted on exercise of options during the period 64,529 -
As at 25 September 2021 404,928,888 -
As at 2 April 2022 405,107,301 -
Allotted on exercise of options during the period 69,226 -
Cancellation of shares (9,800,686) -
As at 1 October 2022 395,375,841 -
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 1 October 2022, the Company entered into agreements to
purchase a total of £400 million of its own shares, excluding stamp duty,
through two share buy-back programmes of £200 million each (last half year:
£nil). The first programme commenced during the period and resulted in
purchases of £180 million of own shares, excluding stamp duty, in the period.
£20 million (last half year: £nil) relating to the cost of shares not yet
purchased under this agreement has been charged to retained earnings, with the
payment obligation recognised in other payables (refer to note 15). The second
programme to purchase a further £200 million own shares will commence and
complete in the second half of the year.
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 1 October 2022, 9.8 million shares were cancelled (last half
year: none). As at 1 October 2022, the amount held against retained earnings
in relation to shares bought back but not cancelled yet was £13 million (last
half year: £nil) including stamp duty of £nil (last half year: £nil).
As at 1 October 2022, the Company held 6.1 million treasury shares (last half
year: none), with a market value of £109 million based on the share price at
the reporting date (last half year: £nil). The treasury shares held by the
Company are related to the share buy-back programme completed during the 53
weeks to 2 April 2022. During the 26 weeks to 1 October 2022, 2.3 million
treasury shares were transferred to ESOP trusts (last half year: none). During
the 26 weeks to 1 October 2022, no treasury shares were cancelled (last half
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 1 October 2022 the cost of own shares held by ESOP trusts
and offset against retained earnings is £48 million (last half year: £15
million). As at 1 October 2022, the ESOP trusts held 3 million shares (last
half year: 1 million) in the Company, with a market value of £48 million
(last half year: £15 million). In the 26 weeks to 1 October 2022 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 53 weeks to 2 April 2022. There were no material changes to these related
parties in the period. 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), deferred
consideration, 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 £298 million sustainability bond
(last half year: £297 million) and £14 million (last half year: £13
million) held in non-current other receivables relating to an interest-free
loan provided to a landlord in Korea. At 1 October 2022, the discounted fair
value of the sustainability bond is £257 million (last half year: £297
million) and the discounted fair value of the loan provided to a landlord in
Korea is £13 million (last half year: £14 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.
The fair value of the contingent payment component of deferred consideration
is considered to be a Level 3 measurement and is derived using a present value
calculation, incorporating observable and non-observable inputs. This
valuation technique has been adopted as it most closely mirrors the
contractual arrangement.
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.
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 53 weeks to 2 April 2022 with the
exception of Alan Stewart who was appointed on 1 September 2022.
A list of current directors is maintained on the Burberry Group plc website:
www.burberryplc.com (http://www.burberryplc.com) .
By order of the Board
Jonathan Akeroyd
Chief Executive Officer
16 November 2022
Julie Brown
Chief Operating and Financial Officer
16 November 2022
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 1
October 2022 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 22. 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 1 October 2022 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
16 November 2022
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR FFUEFMEESESFRecent news on Burberry
See all newsREG - Burberry Group PLC - Total Voting Rights
AnnouncementREG - Burberry Group PLC - Directorate Change
AnnouncementREG - Burberry Group PLC - Total Voting Rights
AnnouncementREG - Burberry Group PLC - Block listing Interim Review
AnnouncementREG - Burberry Group PLC - Total Voting Rights
Announcement