REG - Burberry Group PLC - Burberry Interim Results
14/11/2024 07:00
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RNS Number : 1689M Burberry Group PLC 14 November 2024
14 November 2024
BURBERRY GROUP PLC
STRATEGY UPDATE & INTERIM RESULTS FOR 26 WEEKS ENDED 28 SEPTEMBER 2024
"My first few months have reaffirmed my belief that Burberry is an
extraordinary luxury brand, quintessentially British, equal parts heritage and
innovation. Burberry's original purpose to design clothing that protects
people from the weather is more relevant than ever. Our recent
underperformance has stemmed from several factors, including inconsistent
brand execution and a lack of focus on our core outerwear category and our
core customer segments. Today, we are acting with urgency to course correct,
stabilise the business and position Burberry for a return to sustainable,
profitable growth. We have a powerful brand with broad appeal among luxury
customers, authority in the outerwear and scarf categories which have remained
resilient through this period, and a strong presence in all key luxury
markets. Now, we have a clear framework to reignite brand desire, improve our
performance and drive long-term value creation. Building on our strong
foundations, I am confident that Burberry's best days are ahead."
- Joshua Schulman, Chief Executive Officer
STRATEGY UPDATE
Today, Burberry announces 'Burberry Forward', a strategic plan to reignite
brand desire, improve our performance and drive long-term value creation. Our
focus in this next phase is on reconnecting our brand with its original
purpose and leveraging our strengths with a disciplined approach and a range
of products to attract a broad base of luxury customers.
Burberry is a highly differentiated luxury brand with a unique history and
heritage, and category authority in outerwear and scarves. Over the past
several years, we moved too far from our core with disappointing results. Our
brand expression was focused on being modern at the expense of celebrating our
heritage. We introduced new brand codes and signifiers that were unfamiliar to
our customers. Our product was weighted to seasonal fashion with a niche
aesthetic obscuring our more timeless core collections. As we pursued brand
elevation, our pricing particularly in leather goods did not always align with
our category authority. Consequently, Burberry's offer was skewed to a narrow
base of luxury customers.
Burberry has all the attributes to be a high-performing luxury brand. We have
the most opportunity where we have the most authenticity. We have an
inspirational founder who created practical and stylish solutions for his era.
An original purpose linked to a product that still resonates today. Authority
in a core category. Quality that confers status and identity. Iconic brand
codes. Relevance to a broad range of luxury customers and global brand
awareness that is bigger than our business.
Today's luxury customer craves authenticity. As the only British luxury brand
with such strong foundations, we have a competitive advantage. We will
leverage our strengths and broad universal appeal to reclaim market share.
BURBERRY FORWARD:
OUR FRAMEWORK FOR SUSTAINABLE VALUE CREATION
· Timeless British Luxury
o Juxtapose heritage and innovation across all customer touchpoints
o Balance seasonal fashion messages with campaigns celebrating outerwear
authority
o Capture British wit and style and balance recognisable London imagery with
British countryside
· Lead with outerwear and earn authority in other categories
o Align pricing with category authority
o Celebrate iconic brand codes with recognisable brand signifiers
o Rebalance offer with fewer, bigger investments
· Align distribution with product and customer strategy
o Increase store productivity through core category amplification
o Optimise brand presence in wholesale and outlet
o Improve e-commerce functionality and rebalance product assortment and
styling
· Reignite high-performance culture and capabilities
o Drive organisational clarity
o Rebuild executional discipline
o Leverage data-driven decision making to complement creativity and
intuition
Delivery of the plan will be facilitated by greater alignment between
commercial and creative teams and consistently putting the customer at the
heart of everything Burberry does. We are reviving a high-performing culture.
Our plan will be underpinned by continued focus on productivity,
simplification and financial discipline.
We recognise there is much to be done in the short term, and we are acting
with urgency. We are confident we can get back to generating £3 billion in
annual revenue over time, while rebuilding margins and driving strong cash
generation.
IMMEDIATE ACTIONS
In the last 90 days, we have implemented the following immediate actions:
· Launched "It's Always Burberry Weather" Outerwear campaign and
"Wrapped in Burberry" Festive campaign to reset brand in the eyes of customers
· Evolved visual merchandising to accentuate outerwear and scarves
in stores; initiated global roll out of Scarf Bars in 57th Street flagship in
New York
· Updated styling online to appeal to a broad range of luxury
customers; launched Virtual Scarf Try On
· Appointed new leaders across Marketing, Product Merchandising and
Planning, and the Americas; introduced new ways of working to achieve creative
and commercial alchemy
· Initiated cost savings programme to unlock annualised savings of
c.£40m (c.£25m to deliver in FY25)
· Accelerated plan to address inventory overhang and restore
scarcity
FY25 OUTLOOK
We are acting with urgency to stabilise the business and position the brand
for a return to sustainable, profitable growth, supported by strong cash
generation and balance sheet strength. We are confident that our strategic
plan will improve our performance and drive long-term value creation. In the
short term, with our all-important festive trading period ahead and an
uncertain macroeconomic environment, it is too early to determine whether our
second-half results will fully offset the first-half adjusted operating loss.
INTERIM RESULTS FOR 26 WEEKS ENDED 28 SEPTEMBER 2024
GROUP FINANCIAL HIGHLIGHTS
Period ended 26 weeks ended 26 weeks ended YoY % change YoY % change CER
£ million 28 September 30 September Reported FX
2024 2023
Revenue 1,086 1,396 (22) (20)
Retail comparable store sales(*) (20%) 10%
Adjusted operating (loss)/profit(*) (41) 223 (119) (117)
Adjusted operating margin(*) (3.8%) 15.9% (1970bps) (1930bps)
Adjusted diluted EPS (pence)(*) (18.3) 42.1 (143) (141)
Reported operating (loss)/profit (53) 223 (124)
Reported operating margin (4.9%) 15.9% (2080bps)
Reported diluted EPS (pence) (20.8) 42.1 (149)
Free cash flow(*) (184) (15) nm**
Dividend (pence) - 18.3 n/a
(*)See page 12 for definitions of alternative performance measures, (**) Not
meaningful
Comparable store sales by region*
vs LY Group Asia Pacific* EMEIA Americas
Q1 (21%) (23%) (16%) (23%)
Q2 (20%) (28%) (10%) (18%)
H1 (20%) (25%) (13%) (21%)
*See page 6 for further detail including split of Asia Pacific
Revenue
· Revenue £1,086m -20% CER, -22% reported
· Retail comparable store sales -20% (Q1 -21%, Q2 -20%); Wholesale -29%
CER, -30% reported
Adjusted (loss)/profit measures
· Adjusted operating loss of £41m including headwinds of £33m
impairment charge (H1 FY24: £nil) and net £29m inventory provision charge
(H1 FY24: net £6m charge)
· Adjusted gross margin 63.4%, -640bps at CER and reported
· Adjusted operating margin -3.4% CER, -3.8% reported
· Operating expenses before adjusting items -1% CER, -3% reported
· Adjusted diluted EPS -18.3p (H1 FY24: 42.1p).
Reported (loss)/profit measures
· Operating loss of £53m after £12m adjusting items charge (H1 FY24:
£nil)
· Operating margin -4.9% reported
· Operating expenses after adjusting items flat versus last year at
reported
· Diluted EPS -20.8p (H1 FY24: 42.1p).
Cash measures
· Free cash outflow of £184m (H1 FY24: £15m outflow)
· Cash net of overdrafts £324m at 28 September 2024 (30 March 2024:
£362m), with borrowings of £602m and lease liabilities £1,136m.
All metrics and commentary in the Group Financial Highlights and Business and
Financial Review exclude adjusting items unless stated otherwise.
The financial information contained herein is unaudited.
The following alternative performance measures are presented in this
announcement: CER, adjusted (loss)/profit measures, comparable sales, free
cash flow, cash conversion, adjusted EBITDA and net debt. The definitions of
these alternative performance measures are on page 12.
Certain financial data within this announcement have been rounded. Growth
rates and ratios are calculated on unrounded numbers.
Enquiries
Investors and analysts 020 3367 3524
Lauren Wu Leng Head of Investor Relations lauren.wuleng@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) for
investors and analysts at Horseferry House 2, 1A Page Street, London SW1P 4PQ
· The presentation can also be viewed live on the Burberry
website https://www.burberryplc.com/ (https://www.burberryplc.com/) , you can
also click here (https://streamstudio.world-television.com/1349-2475-40680/en)
to register
· The supporting slides will be available on the website prior
to the presentation and an indexed replay will be available later in the day
· Burberry will issue its Third Quarter Trading Update on 24
January 2025
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 250 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
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LinkedIn: Burberry
SUMMARY INCOME STATEMENT
Period ended 26 weeks ended 26 weeks ended YoY % change YoY % change
£ million 28 September 30 September Reported FX CER
2024 2023
Revenue 1,086 1,396 (22) (20)
Cost of sales (397) (421) (6) (3)
Gross profit 689 975 (29) (28)
Gross margin 63.4% 69.8% (640bps) (640bps)
Net operating expenses* (730) (752) (3) (1)
Net opex as a % of sales* 67.3% 53.9% 1340bps 1290bps
Adjusted operating (loss)/profit* (41) 223 (119) (117)
Adjusted operating margin* (3.8%) 15.9% (1970bps) (1930bps)
Adjusting operating items (12) -
Operating (loss)/profit (53) 223 (124)
Operating margin (4.9%) 15.9% (2080bps)
Net finance expense (27) (4) 642
(Loss)/profit before taxation (80) 219 (137)
Taxation 6 (60) (110)
Non-controlling interest - (1)
Attributable (loss)/profit (74) 158 (147)
Adjusted (loss)/profit before taxation* (68) 219 (131)
Adjusted diluted EPS (pence)* (18.3) 42.1 (143)
Diluted EPS (pence) (20.8) 42.1 (149)
Weighted average number of diluted ordinary shares (millions) 357.3 376.1 (5)
*Excludes adjusting items. All items below adjusting operating items are on a
reported basis unless otherwise stated.
For detail, see Appendix.
FINANCIAL PERFORMANCE
Revenue by channel
Period ended 26 weeks ended 26 weeks YoY % change YoY % change
£ million 28 September ended Reported FX CER
2024 30 September
2023
Retail 885 1,124 (21) (19)
Retail comparable store sales (20%) 10%
Wholesale 169 241 (30) (29)
Licensing 32 31 3 5
Revenue 1,086 1,396 (22) (20)
In H1:
· Retail sales declined 19% at CER; -21% reported
· Comparable store sales fell by 20% with 1% impact from space
Comparable store sales by region
FY25 vs LY Q1 Q2 H1
Group (21%) (20%) (20%)
Asia Pacific (23%) (28%) (25%)
EMEIA (16%) (10%) (13%)
Americas (23%) (18%) (21%)
Asia Pacific declined 25% in H1 (Q1 -23%; Q2 -28%)
· Mainland China comparable store sales fell 24% in H1 (Q1 -21%; Q2
-27%). Globally, the Chinese customer group declined low-double digits but
continued to perform better than Mainland China in Q2.
· South Korea declined 26% in H1 (Q1 -26%; Q2 -26%)
· Japan fell 2% in H1 with Q2 down 9% offsetting the positive
performance in Q1 of +6%. Tourist growth remained robust up double-digits in
H1, against tough comparators last year
· South Asia Pacific declined 38% in H1 (Q1 -38%; Q2 -37%).
EMEIA fell 13% in H1 (Q1 -16%; Q2 -10%). The sequential improvement in
quarters versus last year was driven by both local and tourist spend with
tourists declining a mid-single digit percentage and accounting for just over
half of retail revenues.
Americas declined 21% in H1 with Q2 down 18%, showing an improvement versus Q1
which was down 23%. Globally, the Americas customer group performed slightly
better than the region in H1.
By product
· Outerwear and softs continued to perform better than the average in
all key regions
· Ready-to-wear performed in line with the group average in H1, with an
improving trend Q1 to Q2 for both men's and women's
· Leather goods and shoes underperformed the group in H1.
Store footprint
We opened 19 stores in the half and closed 12, with 429 directly operated
stores at 28 September 2024.
Wholesale
Wholesale revenue decreased 29% at CER and 30% at reported rates in H1
impacted by weakening consumer demand. We expect the full year to be down
around 35% as we continue the strategic review of our partners.
Licensing
Licensing revenue grew 5% at CER and 3% at reported rates in H1 driven by the
continued strong performance in fragrance.
OPERATING (LOSS)/PROFIT ANALYSIS
Adjusted operating (loss)/profit
Period ended 26 weeks ended 26 weeks ended YoY % change YoY % change
£ million 28 September 30 September Reported FX CER
2024 2023
Revenue 1,086 1,396 (22) (20)
Cost of sales (397) (421) (6) (3)
Gross profit 689 975 (29) (28)
Gross margin % 63.4% 69.8% (640bps) (640bps)
Net operating expenses* (730) (752) (3) (1)
Operating expenses as a % of sales* 67.3% 53.9% 1340bps 1290bps
Adjusted operating (loss)/profit* (41) 223 (119) (117)
Adjusted operating margin%* (3.8%) 15.9% (1970bps) (1930bps)
*Excludes adjusting items
· Adjusted operating loss was £41m in the first half including
headwinds of £33m impairment charge (H1 FY24: £nil) and net £29m inventory
provision charge (H1 FY24: net £6m charge)
· Gross margin was 63.4%, down 640bps at CER and reported, driven by
increases in product costs, inventory provisioning and inventory exit
· Adjusted net operating expenses were 1% lower at CER and 3% at
reported rates. This was driven by tight cost control alongside a reduction in
our variable costs. We delivered £8m in structural savings from our
organisational efficiency programme initiated during the half year.
· Adjusted operating margin was -3.8% compared to 15.9% last year.
ADJUSTING ITEMS(*)
(Adjusting items were a £12m charge (H1 FY24: £nil))
Period ended 26 weeks ended 26 weeks ended
£ million 28 September 30 September
2024 2023
Restructuring costs (12) -
Adjusting items (12) -
*For detail on adjusting items see note 4 of the Financial Statements
Restructuring costs of £12m (H1 FY24: £nil) were incurred, arising primarily
as a result of an organisational efficiency programme initiated during the
period, which includes the streamlining of office-based functions. The costs
principally related to redundancies and were recorded in operating expenses.
ADJUSTED (LOSS)/PROFIT BEFORE TAX*
After a net finance charge of £27m (H1 FY24: £4m), adjusted loss before tax
was £68m (H1 FY24 adjusted profit before tax: £219m).
*For detail on adjusting items see note 4 of the Financial Statements
TAXATION*
The Group's adjusted effective tax rate is 5% (H1 FY24: 27%) and the reported
effective tax rate is 8% (H1 FY24: 27%). The reduction in the H1 FY25
reported tax rate versus H1 FY24 is driven by reduced profitability causing
routine disallowed expenses to have a greater impact.
*For detail see note 6 of the Financial Statements
CASH FLOW
Represented statement of cash flows
Period ended 26 weeks ended 26 weeks ended
£ million 28 September 30 September
2024 2023
Adjusted operating (loss)/profit (41) 223
Depreciation and amortisation 199 179
Working capital (123) (154)
Other including adjusting items 16 23
Cash generated from operating activities 51 271
Payment of lease principal and related cash flows (102) (97)
Capital expenditure (87) (89)
Proceeds from disposal of non-current assets 12 -
Interest (20) (2)
Tax (38) (98)
Free cash flow* (184) (15)
*For a definition of free cash flow see page 12
Free cash outflow was £184m in the half (H1 FY24: £15m outflow) driven by
reduced profitability
The major components were:
· Cash generated from operating activities decreased from £271m to
£51m
· A working capital outflow of £123m (H1 FY24: £154m) due to
inventory build-up and seasonal effects
· Capital expenditure of £87m (H1 FY24: £89m).
Cash net of overdrafts on 28 September 2024 was £324m (30 March 2024:
£362m). On 28 September 2024 borrowings were £602m after raising a £300m
bond in June 2024, in addition to the existing £300m sustainability bond
maturing in September 2025. This resulted in net debt of £278m before lease
liabilities of £1,136m (30 March 2024: net cash £63m).
After lease liabilities, net debt in the period was £1,414m (30 March 2024:
£1,125m). Net Debt/Adjusted EBITDA was 2.4x. The increase in leverage from
1.4x at the FY24 year-end was primarily driven by lower profitability and
working capital outflows. The £300m Revolving Credit Facility (RCF) remains
undrawn.
Period ended 26 weeks ended 52 weeks ended 30 March 26 weeks ended
£ million 28 September 2024 30 September
2024 2023
Adjusted EBITDA - rolling 12 months* 600 811 976
Cash net of overdrafts (324) (362) (570)
Borrowings 602 299 299
Lease debt 1,136 1,188 1,158
Net Debt* 1,414 1,125 887
Net Debt/Adjusted EBITDA 2.4x 1.4x 0.9x
*For a definition of adjusted EBITDA and net debt see page 13
APPENDIX
Detailed guidance for FY25
Item Financial impact
Impact of retail space on revenues Space is expected to be broadly stable in FY25.
Wholesale revenue Wholesale revenue is expected to decline by around 35% in FY25.
Opex Initiated cost savings programme to unlock annualised savings of around £40m,
with around £25m to be delivered in FY25, and of which £8m realised in H1
FY25.
Adjusting items Restructuring charge of around £20m in FY25, of which £12m was incurred in
H1 FY25.
Currency Based on 25 October effective foreign exchange rates, the impact of
year-on-year exchange rate movements is now expected to be around £70m
headwind on revenue and around £20m headwind on adjusted operating profit.
Capex Capex is expected to be around £150m.
Dividend As we navigate this period, we have suspended dividend payments in respect of
FY25 in order to maintain a strong balance sheet and our capacity to invest in
Burberry's long-term growth.
Note: Guidance based on CER at FY24 rates
Retail/wholesale revenue by destination*
Period ended 26 weeks ended 28 September 2024 26 weeks ended 30 September YoY % change
2023
£ million Reported FX CER
Asia Pacific (91% retail)* 444 584 (24) (21)
EMEIA (74% retail)* 392 485 (19) (18)
Americas (89% retail)* 218 296 (26) (25)
Total (84% retail) 1,054 1,365 (23) (21)
*Mix based on H1 FY25
Retail/wholesale revenue by product division
Period ended 26 weeks ended 28 September 26 weeks ended YoY % change
30 September
£ million 2024 2023 Reported FX CER
Accessories 367 498 (26) (24)
Women's 313 391 (20) (18)
Men's 324 399 (19) (17)
Children's & other 50 77 (36) (34)
Total 1,054 1,365 (23) (21)
Store portfolio*
Directly operated stores
Stores Concessions Outlets Total Franchise stores
At 30 March 2024 227 139 56 422 33
Additions 9 10 - 19 1
Closures (5) (6) (1) (12) (1)
At 28 September 2024 231 143 55 429 33
*Excludes the impact of pop-up stores
Store portfolio by region*
Directly operated stores
Stores Concessions Outlets Total Franchise stores
At 28 September 2024
Asia Pacific 127 92 23 242 10
EMEIA 45 38 17 100 23
Americas 59 13 15 87 -
Total 231 143 55 429 33
*Excludes the impact of pop-up stores
Adjusted operating (loss)/profit* 26 weeks ended 26 weeks ended % change % change
28 September 2024
30 September 2023
Period ended Reported FX CER
£ millions
Retail/wholesale (70) 194 (137) (135)
Licensing 29 29 2 5
Adjusted operating (loss)/profit (41) 223 (119) (117)
Adjusted operating margin (3.8%) 15.9% (1970bps) (1930bps)
*For detail on adjusting items see note 4 of the Financial Statements
Exchange rates Forecast effective average rates for FY25 Actual average exchange rates
25 October 2024 28 June 2024 H1 FY25 H1 FY24 FY24
£1=
Euro 1.19 1.18 1.18 1.16 1.16
US Dollar 1.29 1.26 1.29 1.26 1.26
Chinese Renminbi 9.23 9.18 9.23 8.97 9.01
Hong Kong Dollar 10.04 9.87 10.01 9.87 9.84
Korean Won 1,779 1,747 1,746 1,654 1,657
Japanese Yen 196 202 195 178 182
(Loss)/profit before tax reconciliation
Period ended 26 weeks ended 26 weeks ended % change % change
28 September 2024
30 September 2023
£ million Reported FX CER
Adjusted (loss)/profit before tax (68) 219 (131) (130)
Adjusting items* (12) - n/a
(Loss)/profit before tax (80) 219 (137)
*For detail on adjusting items see note 4 of the Financial Statements
Alternative performance measures
Alternative performance measures (APMs) are non-GAAP measures. The Board uses
the following APMs to describe the Group's financial performance and for
internal budgeting, performance monitoring, management remuneration target
setting and external reporting purposes.
APM Description and purpose GAAP measure reconciled to
Constant Exchange Rates (CER) This measure removes the effect of changes in exchange rates. The constant Results at reported rates
exchange rate incorporates both the impact of the movement in exchange rates
on the translation of overseas subsidiaries' results and on foreign currency
procurement and sales through the Group's UK supply chain.
Comparable sales growth 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 26 weeks
a comparison of equivalent store performance against the prior period.
YoY% ended ended
28 September 30 September
2024 2023
Comparable sales growth (20%) 10%
Change in space 1% 0%
CER retail (19%) 10%
FX (2%) (4%)
Retail revenue (21%) 6%
Adjusted (Loss)/Profit Adjusted (loss)/profit measures are presented to provide additional Reported (loss)/profit:
consideration of the underlying performance of the Group's ongoing business.
These measures remove the impact of those items which should be excluded to A reconciliation of reported (loss)/profit before tax to adjusted
provide a consistent and comparable view of performance. (loss)/profit before tax and the Group's accounting policy for adjusted
(loss)/profit before tax are set out in the financial statements.
Free Cash Flow Free cash flow is defined as net cash (used in)/generated from operating Net cash (used in)/generated from operating activities:
activities less capital expenditure plus cash inflows from disposal of fixed
Period ended 26 weeks ended 26 weeks
assets and including cash outflows for lease principal payments and other
lease related items.
£m 28 September ended
2024 30 September
2023
Net cash (used in)/generated from operating activities (7) 171
Capex (87) (89)
Lease principal and related cash flows (102) (97)
Proceeds from disposal of non-current assets 12 -
Free cash flow (184) (15)
Cash Conversion Cash conversion is defined as free cash flow pre-tax/adjusted (loss)/profit Net cash (used in)/generated from operating activities:
before tax. It provides a measure of the Group's effectiveness in converting Period ended 26 weeks 26 weeks
its (loss)/profit into cash.
£m ended ended
28 September 30 September
2024 2023
Free cash flow (184) (15)
Tax paid 38 98
Free cash flow before tax (146) 83
Adjusted (loss)/profit before tax (68) 219
Cash conversion n/a 38%
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 As at As at
£m 28 September 30 September
2024 2023
Cash net of overdrafts 324 570
Lease liability (1,136) (1,158)
Borrowings (602) (299)
Net debt (1,414) (887)
Adjusted EBITDA Adjusted EBITDA* is defined as operating (loss)/profit, excluding adjusting Operating (loss)/profit:
operating items, depreciation and impairment of property, plant and equipment,
Period ended 26 weeks 26 weeks
depreciation and impairment of right of use assets and amortisation and
impairment of intangible assets. Any depreciation, amortisation or impairment ended
included in adjusting operating items are not double counted. Adjusted EBITDA ended
is shown for the calculation of Net Debt/EBITDA for our leverage ratios. £m
28 September 30 September
*Our definition of adjusted EBITDA has been updated to reflect the exclusion
of the impairment of right of use and other non-current assets where this 2024 2023
income statement impact is included within adjusted operating (loss)/profit. Operating (loss)/profit (53) 223
There is no impact to adjusted EBITDA for the 26 weeks ended 30 September Adjusting operating items 12 -
2023. Amortisation and impairment of intangible assets 23 19
Depreciation and impairment of property, plant and equipment 61 49
Depreciation and impairment of right-of-use assets 148 111
Adjusted EBITDA 191 402
Adjusted (Loss)/Profit
Adjusted (loss)/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 (loss)/profit:
A reconciliation of reported (loss)/profit before tax to adjusted
(loss)/profit before tax and the Group's accounting policy for adjusted
(loss)/profit before tax are set out in the financial statements.
Free Cash Flow
Free cash flow is defined as net cash (used in)/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 (used in)/generated from operating activities:
Period ended 26 weeks ended 26 weeks
£m 28 September ended
2024 30 September
2023
Net cash (used in)/generated from operating activities (7) 171
Capex (87) (89)
Lease principal and related cash flows (102) (97)
Proceeds from disposal of non-current assets 12 -
Free cash flow (184) (15)
Cash Conversion
Cash conversion is defined as free cash flow pre-tax/adjusted (loss)/profit
before tax. It provides a measure of the Group's effectiveness in converting
its (loss)/profit into cash.
Net cash (used in)/generated from operating activities:
Period ended 26 weeks 26 weeks
£m ended ended
28 September 30 September
2024 2023
Free cash flow (184) (15)
Tax paid 38 98
Free cash flow before tax (146) 83
Adjusted (loss)/profit before tax (68) 219
Cash conversion n/a 38%
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 As at As at
£m 28 September 30 September
2024 2023
Cash net of overdrafts 324 570
Lease liability (1,136) (1,158)
Borrowings (602) (299)
Net debt (1,414) (887)
Adjusted EBITDA
Adjusted EBITDA* is defined as operating (loss)/profit, excluding adjusting
operating items, depreciation and impairment of property, plant and equipment,
depreciation and impairment of right of use assets and amortisation and
impairment of intangible assets. Any depreciation, amortisation or impairment
included in adjusting operating items are not double counted. Adjusted EBITDA
is shown for the calculation of Net Debt/EBITDA for our leverage ratios.
*Our definition of adjusted EBITDA has been updated to reflect the exclusion
of the impairment of right of use and other non-current assets where this
income statement impact is included within adjusted operating (loss)/profit.
There is no impact to adjusted EBITDA for the 26 weeks ended 30 September
2023.
Operating (loss)/profit:
Period ended 26 weeks 26 weeks
ended
ended
£m
28 September 30 September
2024 2023
Operating (loss)/profit (53) 223
Adjusting operating items 12 -
Amortisation and impairment of intangible assets 23 19
Depreciation and impairment of property, plant and equipment 61 49
Depreciation and impairment of right-of-use assets 148 111
Adjusted EBITDA 191 402
PRINCIPAL RISKS
The Group's approach to risk management and principal risks are detailed on
pages 83-90 of the FY24 Annual Report. The principal risks the Group faces for
the remaining 26 weeks of the financial year have been reviewed relative to
the prior year-end. At the half year, Global Consumer Demand principal
risk is considered to have increased, exacerbated by slower economic growth in
our key regions. The Group is addressing the challenges by implementing
revised risk mitigation strategies. The Board consider there to be no other
significant changes in the Group's principal risks for the remaining 26 weeks
of the financial year.
CONDENSED Group INCOME statement- UNAUDITED
Note 26 weeks to 26 weeks to 52 weeks to
28 September 2024 30 September 30 March
£m
2023
2024(1)
£m
£m
Revenue 3 1,086 1,396 2,968
Cost of sales (397) (421) (959)
Gross profit 689 975 2,009
Operating expenses (755) (758) (1,604)
Other operating income 13 6 13
Net operating expenses (742) (752) (1,591)
Operating (loss)/profit (53) 223 418
Financing
Finance income 11 20 31
Finance expense (38) (24) (66)
Net finance expense 5 (27) (4) (35)
(Loss)/profit before taxation (80) 219 383
Taxation 6 6 (60) (112)
(Loss)/profit for the period (74) 159 271
Attributable to:
Owners of the Company (74) 158 270
Non-controlling interest - 1 1
(Loss)/profit for the period (74) 159 271
(Loss)/earnings per share
Basic 7 (20.8)p 42.4p 74.1p
Diluted 7 (20.8)p 42.1p 73.9p
£m £m £m
Reconciliation of adjusted (loss)/profit before taxation:
(Loss)/profit before taxation (80) 219 383
Adjusting operating items:
Net operating expense 4 12 - -
Adjusted (loss)/profit before taxation - non-GAAP measure (68) 219 383
Adjusted (loss)/earnings per share - non-GAAP measure
Basic 7 (18.3)p 42.4p 74.1p
Diluted 7 (18.3)p 42.1p 73.9p
Dividends per share
Proposed interim (not recognised as a liability at period end) 8 - 18.3p 18.3p
Final (not recognised as a liability at 30 March 2024) 8 N/A N/A 42.7p
(1) Balances for the 52 weeks to 30 March 2024 have been audited.
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME - UNAUDITED
26 weeks to 26 weeks to 52 weeks to
28 September 2024 30 September 2023 30 March 2024(1)
£m
£m £m
(Loss)/profit for the period (74) 159 271
Other comprehensive (loss)/income(2):
Cash flow hedges 1 (1) (3)
Foreign currency translation differences (22) (16) (34)
Tax on other comprehensive (loss)/income: - - 1
Other comprehensive loss for the period, net of tax (21) (17) (36)
Total comprehensive (loss)/income for the period (95) 142 235
Total comprehensive (loss)/income attributable to:
Owners of the Company (95) 141 234
Non-controlling interest - 1 1
(95) 142 235
(1) Balances for the 52 weeks to 30 March 2024 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
28 September 2024 30 September 2023 30 March 2024(1)
£m
£m
£m
ASSETS
Non-current assets
Intangible assets 9 251 248 267
Property, plant and equipment 10 405 377 406
Right-of-use assets 11 930 972 1,013
Deferred tax assets 6 251 204 208
Trade and other receivables 12 47 52 52
Derivative financial assets 4 - -
1,888 1,853 1,946
Current assets
Inventories 13 596 526 507
Trade and other receivables 12 335 365 340
Derivative financial assets 4 1 2
Income tax receivables 115 87 122
Cash and cash equivalents 14 430 663 441
Assets held for sale 10 - 13 12
1,480 1,655 1,424
Total assets 3,368 3,508 3,370
LIABILITIES
Non-current liabilities
Trade and other payables 15 (57) (71) (63)
Lease liabilities (911) (922) (959)
Borrowings 18 (303) (299) (299)
Deferred tax liabilities 6 (1) - (1)
Provisions for other liabilities and charges 16 (35) (35) (37)
(1,307) (1,327) (1,359)
Current liabilities
Trade and other payables 15 (397) (672) (439)
Bank overdrafts 17 (106) (93) (79)
Lease liabilities (225) (236) (229)
Borrowings 18 (299) - -
Derivative financial liabilities (2) (10) (4)
Income tax liabilities (91) (31) (86)
Provisions for other liabilities and charges 16 (26) (22) (20)
(1,146) (1,064) (857)
Total liabilities (2,453) (2,391) (2,216)
Net assets 915 1,117 1,154
EQUITY
Capital and reserves attributable to owners of the Company
Ordinary share capital 19 - - -
Share premium account 231 230 231
Capital reserve 41 41 41
Hedging reserve 3 3 2
Foreign currency translation reserve 176 216 198
Retained earnings 457 620 675
Equity attributable to owners of the Company 908 1,110 1,147
Non-controlling interest in equity 7 7 7
Total equity 915 1,117 1,154
(1) Balances as at 30 March 2024 have been audited.
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY - UNAUDITED
Attributable to owners
of the Company
Note 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 1 April 2023 - 230 277 1,026 1,533 6 1,539
Profit for the period - - - 158 158 1 159
Other comprehensive income:
Cash flow hedges - - (1) - (1) - (1)
Foreign currency translation differences - - (16) - (16) - (16)
Total comprehensive income for the period - - (17) 158 141 1 142
Transactions with owners:
Employee share incentive schemes
Equity share awards - - - 7 7 - 7
Tax on share awards - - - (2) (2) - (2)
Purchase of own shares
Share buy-back - - - (402) (402) - (402)
Dividends paid in the period - - - (167) (167) - (167)
Balance as at 30 September 2023 - 230 260 620 1,110 7 1,117
Balance as at 30 March 2024(1) - 231 241 675 1,147 7 1,154
Loss for the period - - - (74) (74) - (74)
Other comprehensive income:
Cash flow hedges - - 1 - 1 - 1
Foreign currency translation differences - - (22) - (22) - (22)
Total comprehensive loss for the period - - (21) (74) (95) - (95)
Transactions with owners:
Employee share incentive schemes
Equity share awards - - - 8 8 - 8
Dividends paid in the period 8 - - - (152) (152) - (152)
Balance as at 28 September 2024 - 231 220 457 908 7 915
(1) Balances as at 30 March 2024 have been audited.
CONDENSED GROUP STATEMENT OF CASH FLOWS - UNAUDITED
Note 26 weeks to 26 weeks to 52 weeks to
28 September 2024 30 September 2023 30 March 2024(1)
£m
£m
£m
Cash flows from operating activities
(Loss)/profit before tax (80) 219 383
Adjustments to reconcile profit before tax to net cash flows:
Amortisation of intangible assets 22 19 42
Depreciation of property, plant and equipment 53 49 103
Depreciation of right-of-use assets 124 111 234
Impairment charge of intangible assets 1 - -
Impairment charge of property, plant and equipment 10 8 - 5
Impairment charge of right-of-use assets 11 24 - 9
Loss on disposal of intangible assets - 3 3
Gain on modification of right-of-use assets (9) (1) (4)
(Gain)/loss on derivative instruments (4) 14 5
Charge in respect of employee share incentive schemes 8 7 16
Net finance expense 27 4 35
Working capital changes:
Increase in inventories (89) (76) (57)
Decrease/(increase) in receivables 12 (58) (32)
Decrease in payables and provisions (46) (20) (77)
Cash generated from operating activities 51 271 665
Interest received 10 21 32
Interest paid (30) (23) (52)
Taxation paid (38) (98) (139)
Net cash (used in)/generated from operating activities (7) 171 506
Cash flows from investing activities
Purchase of property, plant and equipment (71) (64) (158)
Purchase of intangible assets (16) (25) (50)
Proceeds from sale of property, plant and equipment 12 - -
Initial direct costs of right-of-use assets 1 (1) (4)
Payment received on termination of lease 7 - -
Payment in respect of acquisition of subsidiary - - (19)
Net cash outflow from investing activities (67) (90) (231)
Cash flows from financing activities
Dividends paid in the period (152) (167) (233)
Proceeds from borrowings 297 - -
Payment of lease principal (110) (96) (231)
Issue of ordinary share capital - - 1
Purchase of own shares through share buy-back - (200) (400)
Purchase of own shares through share buy-back - stamp duty and fees - (1) (2)
Net cash inflow/(outflow) from financing activities 35 (464) (865)
Net decrease in cash net of overdrafts (39) (383) (590)
Effect of exchange rate changes 1 (8) (9)
Cash net of overdrafts at beginning of period 362 961 961
Cash net of overdrafts 324 570 362
Cash and cash equivalents 14 430 663 441
Bank overdrafts 17 (106) (93) (79)
Cash net of overdrafts 324 570 362
(1) Balances for the 52 weeks to 30 March 2024 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 34. They were approved by the Board of Directors on 13 November 2024.
These condensed consolidated interim financial statements do not constitute
statutory accounts within the meaning of Section 434 of the Companies Act
2006. Statutory accounts for the 52 weeks to 30 March 2024 were approved by
the Board of Directors on 14 May 2024 and have been filed with the Registrar
of Companies. The report of the auditors on the statutory accounts for the 52
weeks to 30 March 2024 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
28 September 2024 have been prepared in accordance with the Disclosure
Guidance and Transparency Rules of the Financial Services Authority and with
IAS 34, 'Interim Financial Reporting' as adopted by the UK. This report should
be read in conjunction with the Group's financial statements for the 52 weeks
to 30 March 2024, which have been prepared in accordance with UK-adopted
International Accounting Standards (IFRS).
These condensed consolidated interim financial statements are presented in
£m. Financial ratios are calculated using unrounded numbers.
Going concern
In considering the appropriateness of adopting the going concern basis in
preparing the financial statements, the Directors have assessed the potential
cash generation of the Group. This assessment covers the period of a minimum
of 12 months from the date of signing the condensed consolidated interim
financial statements. The Directors have also considered the forecast for the
period up to the subsequent financial year end, the period ending 28 March
2026, for any indicators that the going concern basis of preparation is not
appropriate.
The scenarios considered by the Directors include a severe but plausible
downside reflecting the Group's base plan adjusted for severe but plausible
impacts from the Group's principal risks, which are consistent with the
principal risks at 30 March 2024. The scenarios were informed by a
comprehensive review of macroeconomic scenarios using third party projections
of macroeconomic data for the luxury fashion industry. The Group base plan
reflects a balanced projection with a continued focus to stabilise the
business and position the brand for profitable sustainable growth. As a
sensitivity, this base plan has been flexed to reflect an 11% downgrade to
revenues in the 18 month period to 28 March 2026, as well as the associated
consequences for EBITDA and cash. Management consider this represents
a severe but plausible downside scenario appropriate for assessing going
concern.
The severe but plausible downside modelled the following risks occurring
simultaneously:
• A more severe and prolonged reduction in the GDP growth
assumptions in Europe, China, and the Americas compared to the base plan
• An increase in geopolitical tension which leads to
increased costs of operating compared to the base plan
• A more severe reduction to our global consumer demand
arising from a change in consumer preference
• A significant reputational incident such as negative
sentiment propagated through social media
• The impact of a business interruption event, following a
technology vulnerability, resulting in a two week interruption in one of our
geographies arising from the supply chain impact, and interruption to one of
our channels
• The materialisation of a severe but plausible ongoing
market risk relating to climate change in line with a scenario reflecting a
2°C global temperature increase compared to pre-industrial levels
• The payment of a settlement arising from a regulatory or
compliance-related matter
• A short term impact of a 10% weakening in a key
non-sterling currency for the Group before it is recovered through price
adjustment
Mitigating actions within management control could be taken under a severe but
plausible scenario, including working capital reduction measures, limiting
capital expenditure and/or variable marketing or other costs.
The Directors have also considered the Group's current liquidity and available
facilities. As at 28 September 2024, the Group Balance Sheet reflects cash net
of overdrafts of £324 million. In the going concern assessment period to 28
March 2026, the Group's £300 million sustainability bond matures. For the
purpose of this going concern assessment, the Group has assumed the £300
million Revolving Credit Facility (RCF), which is currently undrawn and not
relied upon, is used to repay the bond in the scenarios modelled. Whilst this
is an appropriate assumption for the going concern assessment the Group's
intention would be to refinance within the going concern period. The Group is
in compliance with the covenants of the RCF in the base case without
mitigating actions and in the severe but plausible scenario after relying upon
certain mitigating actions already undertaken or within management control.
The current RCF is due to mature on 26 July 2026 which is four months after
the going concern assessment period. The Directors are confident that an
extension of the RCF or alternative financing arrangements will be available
to the company prior to maturity of the RCF based upon the recent bond
issuance and financing discussions.
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, available
resources and mitigating actions within management control, the Group is able
to maintain sufficient liquidity to continue trading and meet covenant
requirements throughout the going concern period to 28 March 2026. 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 28 September
2024.
Accounting policies
The material accounting policies adopted in the preparation of the condensed
consolidated interim financial statements are consistent with those followed
in the preparation of the Group's annual consolidated financial statements for
the 52 weeks ended 30 March 2024.
New standards, amendments and interpretations adopted in the period
Several standards and amendments apply for the first time for the period ended
28 September 2024, but do not have a material impact on the condensed
consolidated interim financial statements of the Group.
Standards not yet adopted
Certain new accounting standards and amendments to standards have been
published that are not yet mandatory and have not been early adopted by the
Group. The Group is assessing the impact of these standards on the financial
statements, and the results will be communicated in future periods. The Group
does expect a material impact from IFRS 18 Presentation and Disclosure in
Financial Statements in the Group's primary financial statements. IFRS 18,
which is effective for the reporting period beginning on 28 March 2027,
subject to UK endorsement, replaces IAS 1 Presentation of Financial
Statements.
Key sources of estimation uncertainty
Preparation of the condensed consolidated interim financial statements in
conformity with IFRS requires that management make certain estimates
and assumptions that affect the measurement of reported revenues, expenses,
assets and liabilities and the disclosure of contingent liabilities.
If in the future such estimates and assumptions, which are based on
management's best estimates at the date of the financial statements, deviate
from actual circumstances, the original estimates and assumptions will be
updated as appropriate in the period in which the circumstances change.
Estimates are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be
reasonable under the circumstances. The key areas where the estimates and
assumptions applied have a significant risk of causing a material adjustment
to the carrying value of assets and liabilities are consistent with those
applied in the Group's financial statements for the 52 weeks to 30 March 2024,
as set out on pages 166 to 167 of those financial statements.
There have been no changes to the matters considered to be significant
estimates in the period which remain impairment, or reversal of impairment, of
property plant and equipment and right-of-use assets, inventory provisioning
and uncertain tax positions.
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 28 September 2024 and the 26 weeks to 30 September 2023 are as
follows:
Where the Group is a lessee, judgement is required in determining the lease
term at initial recognition, and throughout the lease term, where extension or
termination options exist. In such instances, all facts and circumstances that
may create an economic incentive to exercise an extension option, or not
exercise a termination option, have been considered to determine the lease
term. Considerations include, but are not limited to, the period assessed by
management when approving initial investment, together with costs associated
with any termination options or extension options. Extension periods (or
periods after termination options) are only included in the lease term if the
lease is reasonably certain to be extended (or not terminated). Where the
lease term has been extended by assuming an extension option will be
recognised, this will result in the initial right-of-use assets and lease
liabilities at inception of the lease being greater than if the option was not
assumed to be exercised. Likewise, assuming a break option will be exercised
will reduce the initial right-of-use assets and lease liabilities. There have
been no significant judgements in relation to lease term made in the period.
Translation of the results of overseas businesses
The results of overseas subsidiaries are translated into the Group's
presentation currency of sterling each month at the average exchange rate for
the month, weighted according to the phasing of the Group's trading results.
The average exchange rate is used, as it is considered to approximate the
actual exchange rates on the dates of the transactions. The assets and
liabilities of such undertakings are translated at the closing rates.
Differences arising on the retranslation of the opening net investment in
subsidiary companies, and on the translation of their results, are recognised
in other comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of a foreign
operation are treated as assets and liabilities of the foreign operation and
translated at the closing rate.
The principal exchange rates used were as follows:
Average rate Closing rate
26 weeks to 26 weeks to 52 weeks to As at As at As at
28 September 2024 30 September 2023 30 March 2024 28 September 2024 30 September 2023 30 March 2024
Euro 1.18 1.16 1.16 1.20 1.15 1.17
US Dollar 1.29 1.26 1.26 1.34 1.22 1.26
Chinese Yuan Renminbi 9.23 8.97 9.01 9.41 8.90 9.13
Hong Kong Dollar 10.01 9.87 9.84 10.43 9.56 9.89
Korean Won 1,746 1,654 1,657 1,755 1,646 1,702
Japanese Yen 195 178 182 192 182 191
Adjusted profit before taxation
In order to provide additional consideration of the underlying performance of
the Group's ongoing business, the Group's results include a presentation of
Adjusted operating profit and Adjusted profit before taxation (adjusted PBT).
Adjusted PBT is defined as profit before taxation and before adjusting items.
Adjusting items are those items which, in the opinion of the Directors, should
be excluded in order to provide a consistent and comparable view of the
performance of the Group's ongoing business. Generally, this will include
those items that are largely one-off and/or material in nature as well as
income or expenses relating to acquisitions or disposals of businesses or
other transactions of a similar nature, including the impact of changes in
fair value of expected future payments or receipts relating to these
transactions. Adjusting items are identified and presented on a consistent
basis each year and a reconciliation of adjusted PBT to profit before tax is
included in the financial statements. Adjusting items and their related tax
impacts, as well as adjusting taxation items, are added back to/deducted from
profit attributable to owners of the Company to arrive at adjusted earnings
per share. Refer to note 4 for further details of adjusting items.
3. Segmental analysis
The Chief Operating Decision Maker has been identified as the Board of
Directors. The Board reviews the Group's internal reporting in order to
assess performance and allocate resources. Management has determined the
operating segments based on the reports used by the Board. The Board
considers the Group's business through its two channels to market, being
retail/wholesale and licensing.
Retail/wholesale revenues are generated by the sale of luxury goods through
Burberry full price stores, concessions, outlets and digital commerce as well
as Burberry franchisees, prestige department stores globally and multi-brand
specialty accounts. The flow of global product between retail and wholesale
channels and across our regions is monitored and optimised at a corporate
level and implemented via the Group's inventory hubs and principal
distribution centres situated in Europe, the US, Mainland China and Hong Kong
S.A.R. China.
Licensing revenues are generated through the receipt of royalties from global
licensees of beauty products, eyewear and from licences relating to the use of
non-Burberry trademarks in Japan.
The Board assesses channel performance based on a measure of adjusted
operating profit. This measurement basis excludes the effects of adjusting
items. The measure of earnings for each operating segment that is reviewed by
the Board includes an allocation of corporate and central costs. Interest
income and charges are not included in the result for each operating segment
that is reviewed by the Board.
Retail/Wholesale Licensing Total
26 weeks to 26 weeks to 26 weeks to 26 weeks to 26 weeks to 26 weeks to
28 September 2024 30 September 28 September 2024 30 September 28 September 2024 30 September
£m
2023
£m
2023
£m
2023
£m
£m
£m
Retail 885 1,124 - - 885 1,124
Wholesale 169 241 - - 169 241
Licensing - - 32 32 32 32
Total segment revenue 1,054 1,365 32 32 1,086 1,397
Inter-segment revenue(1) - - - (1) - (1)
Revenue from external customers 1,054 1,365 32 31 1,086 1,396
Adjusted operating (loss)/profit (70) 194 29 29 (41) 223
Adjusting items(2) (12) -
Operating (loss)/profit (53) 223
Finance income 11 20
Finance expense (38) (24)
(Loss)/profit before taxation (80) 219
Retail/Wholesale Licensing Total
52 weeks to 30 March 2024 £m £m £m
Retail 2,400 - 2,400
Wholesale 506 - 506
Licensing - 63 63
Total segment revenue 2,906 63 2,969
Inter-segment revenue(1) - (1) (1)
Revenue from external customers 2,906 62 2,968
Adjusted operating profit 359 59 418
Finance income 31
Finance expense (66)
Profit before taxation 383
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 52 weeks to
28 September 2024 30 September 2023 30 March
£m
2024
£m
£m
Accessories 367 498 1,055
Women's 313 391 860
Men's 324 399 842
Children's/Other 50 77 149
Retail/Wholesale 1,054 1,365 2,906
Licensing 32 31 62
Total 1,086 1,396 2,968
Revenue by destination 26 weeks to 26 weeks to 52 weeks to
28 September 2024 30 September 30 March
£m
2023
2024
£m
£m
Asia Pacific 444 584 1,286
EMEIA(1) 392 485 1,017
Americas 218 296 603
Retail/Wholesale 1,054 1,365 2,906
Licensing 32 31 62
Total 1,086 1,396 2,968
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. 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.
4. Adjusting items
26 weeks to 26 weeks to 52 weeks to
28 September 2024 30 September 2023 30 March
£m
2024
£m
£m
Adjusting operating items
Restructuring costs 12 - -
Total adjusting operating items (pre-tax) 12 - -
Tax credit on adjusting items (3) - -
Total adjusting operating items (post-tax) 9 - -
Restructuring costs
During the 26 weeks to 28 September 2024, restructuring costs of £12 million
(last half year: £nil; last full year: £nil) were incurred, arising
primarily as a result of an organisational efficiency programme initiated
during the period, which includes the streamlining of office-based functions.
The costs principally related to redundancies and were recorded in operating
expenses. These costs are presented as an adjusting item, in accordance with
the Group's accounting policy, as the anticipated cost of the restructuring
programme is considered material and discrete in nature. A related tax credit
of £3 million (last half year: £nil; last full year: £nil) has also been
recognised in the current year.
5. Financing
26 weeks to 26 weeks to 52 weeks to
28 September 30 September 2023 30 March
2024
2024
£m £m
£m
Finance income - amortised cost 6 4 9
Bank interest income - fair value through profit and loss 5 16 22
Finance income 11 20 31
Interest expense on lease liabilities (25) (19) (43)
Interest expense on overdrafts (3) (2) (7)
Interest expense on borrowings (8) (2) (4)
Bank charges (1) (1) (1)
Other finance expense (1) - (11)
Finance expense (38) (24) (66)
Net finance expense (27) (4) (35)
6. Taxation
The Group's adjusted effective tax rate is 5% (last half year: 27%) and the
reported effective tax rate is 8% (last half year: 27%).
The effective tax rate is sensitive to the geographic mix of profits. The
Group is within the scope of the UK legislation in relation to the Global
anti-Base Erosion Model Rules ('GLoBE Rules' or 'Pillar Two' model rules)
which will apply to the Group for this accounting period. Based on the most
recent forecast financial information available for the constituent entities
in the Group, the Pillar Two effective tax rates in most of the jurisdictions
in which the Group operates are above 15%. However, there are a limited number
of jurisdictions where the transitional safe harbour relief does not apply and
the Pillar Two effective tax rate is close to 15%. There is no material impact
of the Pillar Two legislation for the Group.
26 weeks to 26 weeks to 52 weeks to
28 September 30 September 2023 30 March
2024
2024
£m £m
£m
Current tax
Current tax on income for the period 49 74 130
Double taxation relief (1) (1) (3)
Adjustments in respect of prior years (2) 2 9
Total current tax charge 46 75 136
Deferred tax
Origination and reversal of temporary differences (54) (15) (23)
Adjustments in respect of prior years 2 - (1)
Total deferred tax credit (52) (15) (24)
Total tax (credit)/charge on profit or loss (6) 60 112
Total taxation recognised in the Condensed Group Income Statement comprises:
26 weeks to 26 weeks to 52 weeks to
28 September 30 September 30 March
2024
2024
£m 2023
£m
£m
Tax on adjusted (loss)/profit before taxation (3) 60 112
Tax on adjusting items (note 4) (3) - -
Total tax (credit)/charge on profit or loss (6) 60 112
Deferred tax
The major deferred tax assets/(liabilities) recognised by the Group and
movements during the period are as follows:
Net deferred tax asset
£m
Balance as at 30 March 2024 207
Effect of foreign exchange rates (9)
Credited to the Income Statement 52
Balance as at 28 September 2024 250
Balance as at 30 September 2023 204
The most significant deferred tax asset recognised for the period relates to
the provision for unrealised profit on inventory sold intragroup.
7. Earnings per share
The calculation of basic earnings per share is based on profit or loss
attributable to owners of the Company for the period divided by the weighted
average number of ordinary shares in issue during the period. Basic and
diluted earnings per share based on adjusted profit before taxation are also
disclosed to indicate the underlying profitability of the Group.
26 weeks to 26 weeks to 52 weeks to
28 September 30 September 30 March
2024
2024
£m 2023
£m
£m
Attributable (loss)/profit for the period before adjusting items(1) (65) 158 270
Effect of adjusting items(1) (after taxation) (9) - -
Attributable (loss)/profit for the period (74) 158 270
1. Refer to note 4 for details of adjusting items.
The weighted average number of ordinary shares represents the weighted average
number of Burberry Group plc ordinary shares in issue throughout the period,
excluding ordinary shares held in the Group's ESOP trusts and treasury shares
held by the Company or its subsidiaries. This includes the effect of the
cancellation of 9.3 million shares last half year and 20.5 million shares
last full year as a result of the share buy-back programmes. No shares were
cancelled in the current period. Refer to note 19 for additional information
on the share buy-backs in the prior year.
Diluted (loss)/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
could have a dilutive effect when exercised.
26 weeks to 26 weeks to 52 weeks to
28 September 30 September 2023 30 March
2024
2024
Millions Millions
Millions
Weighted average number of ordinary shares in issue during the period 357.3 373.1 365.0
Dilutive effect of the employee share incentive schemes 0.7 3.0 1.2
Diluted weighted average number of ordinary shares in issue during the period 358.0 376.1 366.2
26 weeks to 26 weeks to 52 weeks to
28 September 30 September 30 March
2024
2024
Pence 2023
Pence
Pence
(Loss)/earnings per share
Basic (20.8) 42.4 74.1
Diluted(1) (20.8) 42.1 73.9
Adjusted (loss)/earnings per share
Basic (18.3) 42.4 74.1
Diluted(1) (18.3) 42.1 73.9
1. As the Group incurred an attributable loss for the 26 weeks to 28 September
2024, the effect of employee share incentive schemes was antidilutive and
therefore not included in the calculation of diluted loss per share for the
period.
8. Dividends paid to owners of the Company
The Directors have elected not to declare an interim dividend in respect of
the 26 weeks to 28 September 2024 (last half year: 18.3p).
A dividend of 42.7p (last half year: 44.5p) per share was paid during the
period to 28 September 2024 in relation to the year ended 30 March 2024.
9. Intangible assets
Goodwill at 28 September 2024 is £115 million (last half year: £105 million;
last full year: £119 million). There were no additions (last half year:
£nil; last full year: £16 million) and no impairments (last half year:
£nil; last full year: £nil) of goodwill in the period.
In the period there were additions to other intangible assets of £11 million
(last half year: £26 million; last full year: £53 million) and disposals
with a net book value of £nil (last half year: £nil; last full year: £3
million).
Intangible asset capital commitments contracted but not provided for by the
Group amounted to £2 million (last half year: £7 million; last full year:
£4 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 28 September 2024.
Management has performed a review for indicators of impairment as at 28
September 2024 and concluded that there are no indicators at this time as
sufficient headroom remains after considering updated cost and revenue
assumptions for the most significant cost generating units. The annual
impairment test will be performed at 29 March 2025.
An impairment charge of £1 million was recorded in relation to other
intangible assets for the 26 weeks to 28 September 2024 (last half year:
£nil; last full year: £nil).
10. Property, plant and equipment
In the period there were additions to property, plant and equipment of £72
million (last half year: £66 million; last full year: £164 million) and
disposals with a net book value of £12 million, related to the sale of a
freehold property previously classified as held for sale (last half year:
£nil; last full year: £nil). Additions include £71 million (last half year:
£64 million; last full year: £158 million) arising as a result of investing
cash outflows and £1 million (last half year: £2 million; last full year:
£8 million) movement in capital expenditure accruals.
Property, plant and equipment capital commitments contracted but not provided
for by the Group amounted to £42 million (last half year: £51 million; last
full year: £67 million).
No assets were classified as held for sale at 28 September 2024. During the 26
weeks to 28 September 2024, the Group completed the sale of a freehold
property previously classified as held for sale for £12 million, resulting in
a net gain on disposal of £nil.
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 has been 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 28 September 2024, following the review of impairment
of retail cash generating units, a charge of £8 million was recorded against
property, plant and equipment (last half year: £nil; last full year: charge
of £5 million). The impairment review carried out considers internal and
external impairment indicators for all retail stores above a specified asset
value and the subsequent value-in-use calculations include certain
assumptions, particularly over revenue growth over the remaining lease term.
Refer to note 11 for further details of right-of-use asset impairment.
Management has considered the potential impact of changes in assumptions on
the impairment recorded against the Group's
retail assets. Given the geopolitical uncertainty and global consumer demand
risk on the Group's retail operations and on the global economy, management
has considered sensitivities to the impairment charge as a result of changes
to the estimate of future revenues achieved by the retail stores. The
sensitivities applied are an increase or decrease in revenue of 10% from the
estimate used to determine the impairment charge or reversal. We have also
considered retail cash generating units with no indicators of impairment but
with a significant asset balance. It is estimated that a 10% decrease/increase
in revenue assumptions for the first 12 months of the model, with no change
to subsequent forecast revenue growth rate assumptions, would result in
approximately a £24 million increase/£12 million decrease in the impairment
charge of retail store assets in the 26 weeks to 28 September 2024.
11. Right-of-use assets
In the period there were additions to right-of-use assets of £39 million
(last half year: £65 million; last full year: £162 million) and
remeasurements of £52 million (last half year: £75 million; last full year:
£169 million). Depreciation of right-of-use assets of £124 million (last
half year: £111 million; last full year: £234 million) is included within
operating expenses.
Impairment testing
As a result of the assessment of retail cash generating units for impairment
during the 26 weeks to 28 September 2024, a charge of £24 million was
recorded against right-of-use assets (last half year: £nil; last full year:
net charge of £9 million). Refer to note 10 for further details of the
impairment assessment of retail cash generating units.
12. Trade and other receivables
As at As at As at
28 September 2024 30 September 30 March
£m
2024
2023
£m
£m
Non-current
Other financial receivables(1) 44 47 47
Other non-financial receivables(2) - 2 -
Prepayments 3 3 5
Total non-current trade and other receivables 47 52 52
Current
Trade receivables 149 186 189
Provision for expected credit losses (12) (9) (10)
Net trade receivables 137 177 179
Other financial receivables(1) 32 31 27
Other non-financial receivables(2) 103 68 86
Prepayments 46 71 33
Accrued income 17 18 15
Total current trade and other receivables 335 365 340
Total trade and other receivables 382 417 392
1. Other financial receivables include rental deposits and other sundry
debtors.
2. Other non-financial receivables relate to indirect taxes and other taxes
and duties.
The net charge for impairment of financial receivables in the period was £2
million (last half year: net charge of £2 million; last full year: net charge
of £4 million).
13. Inventories
Inventory provisions of £102 million (last half year: £63 million; last full
year: £73 million) are recorded, representing 14.6% (last half year: 10.7%;
last full year: 12.6%) 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.
Taking into account factors impacting the inventory provisioning including
trading assumptions being higher or lower than expected, management considers
that a reasonable potential range of outcomes could result in an increase in
inventory provisions of £22 million or a decrease in inventory provisions of
£37 million in the next 12 months. This would result in a potential range of
inventory provisions of 9.3% to 17.7% as a percentage of the gross value of
inventory as at 28 September 2024.
14. Cash and cash equivalents
As at As at As at
28 September 30 September 30 March
2024
2024
£m 2023
£m
£m
Cash and cash equivalents held at amortised cost 185 180
Cash at bank and in hand 188
Short-term deposits 101 76 83
289 261 263
Cash and cash equivalents held at fair value through profit and loss 402 178
Short-term deposits 141
Total 430 663 441
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
28 September 30 September 30 March
2024
2024
£m 2023
£m
£m
Non-current
Other payables(1) 2 2 3
Deferred income and non-financial accruals 7 14 9
Contract liabilities 48 54 51
Total non-current trade and other payables 57 70 63
Current
Trade payables 146 204 180
Other taxes and social security costs 52 48 45
Other payables(1, 2) 26 209 21
Accruals 147 180 165
Deferred income and non-financial accruals 10 13 11
Contract liabilities 11 13 12
Deferred consideration(3) 5 5 5
Total current trade and other payables 397 672 439
Total trade and other payables 454 742 502
1. Other payables are comprised of interest and employee-related liabilities.
2. At 30 September 2023, other payables included £201 million related to the
share buy-back programme that commenced in the period and completed in the
second half of last year. There is no share buy-back programme in the current
year.
3. Deferred consideration relates to the acquisition of the economic right to
the non-controlling interest in Burberry Middle East LLC on 22 April 2016. No
deferred consideration payments were made in the 26 weeks to 28 September 2024
(last half year: £nil; last full year: £nil).
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
28 September 30 September 30 March
2024
2024
£m 2023
£m
£m
Retail contract liabilities 5 6 6
Licensing contract liabilities 54 61 57
Total contract liabilities 59 67 63
16. Provisions for other liabilities and charges
Property obligations Restructuring costs(1) Other Total
£m
£m
costs
£m
£m
Balance as at 30 March 2024 48 - 9 57
Effect of foreign exchange rate changes (1) - (1) (2)
Created during the period 3 7 1 11
Utilised during the period (2) - (1) (3)
Released during the period (1) - (1) (2)
Balance as at 28 September 2024 47 7 7 61
Balance as at 30 September 2023 48 - 9 57
As at As at As at
28 September 30 September 30 March
2024
2024
£m 2023
£m
£m
Analysis of total provisions:
Non-current 35 35 37
Current 26 22 20
Total 61 57 57
1. Provision for restructuring costs relates to the organisational efficiency
programme initiated in the period which is included as an adjusting item.
Refer to note 4 for details of adjusting items.
17. Bank overdrafts
Included within bank overdrafts is £106 million (last half year: £93
million; last full year: £78 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 28 September 2024, the Group held bank overdrafts of £nil
(last half year: £nil; last full year: £1 million) excluding balances on
cash pooling arrangements.
The fair value of overdrafts approximates the carrying amount due to the short
maturity of these instruments.
18. Borrowings
On 20 June 2024, Burberry Group plc issued medium term notes with a face value
of £300 million and 5.75% coupon maturing on 20 June 2030. Interest on the
bond is payable semi-annually. The carrying value of the bond at 28 September
2024 is £303 million (last half year: £nil; last full year: £nil), the
proceeds from the bond were £297 million, all other movements on the bond are
non-cash. The fair value of the bond at 28 September 2024 is £290 million
(last half year: £nil; last full year: £nil). The Group has entered into an
interest rate swap to reduce the level of fixed rate debt in accordance with
the Group Treasury Policy and has entered the swap into a fair value hedge
relationship with the bond.
On 26 July 2021, the Group entered into a £300 million multi-currency
sustainability linked revolving credit facility (RCF) with a syndicate of
banks, maturing on 26 July 2026. There were no drawdowns or repayments of the
RCF during the current or previous period, and at 28 September 2024 there were
no outstanding drawings.
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 have been used by
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 28 September 2024 is £299 million (last half year: £299
million; last full year: £299 million), all movements on the bond are
non-cash. The fair value of the bond at 28 September 2024 is £288 million
(last half year: £274 million; last full year: £281 million).
The Group is in compliance with the financial and other covenants within the
facilities above and has been in compliance throughout the financial period.
19. Share capital and reserves
Allotted, called up and fully paid share capital Number £m
Ordinary shares of 0.05p (last year: 0.05p) each
As at 1 April 2023 384,267,928 0.2
Allotted on exercise of options during the period 11,910 -
Cancellation of shares (9,265,324) -
As at 30 September 2023 375,014,514 0.2
As at 30 March 2024 363,815,743 0.2
Allotted on exercise of options during the period 571 -
As at 28 September 2024 363,816,314 0.2
Other reserves
The Company has a general authority from shareholders, renewed at each Annual
General Meeting, to repurchase a maximum of 10% of its issued share capital.
There has been no share buy-back programme in the current period.
During the prior 26 weeks to 30 September 2023, the Company entered into
agreements to purchase, at fair value, a total of £400 million of its own
shares, excluding stamp duty, through two share buy-back programmes of £200
million each. The first programme commenced and completed during the period
and resulted in purchases of £200 million of own shares, excluding stamp duty
of £1 million. The second programme commenced and completed in the second
half of the prior year. £173 million related to the cost of shares not yet
purchased under this agreement and £27 million relating to shares purchased
but not yet paid was charged to retained earnings, with the payment obligation
recognised in payables (refer to note 15).
The cost of own shares purchased by the Company, as part of a share buy-back
programme is offset against retained earnings, as the amounts paid reduce the
profits available for distribution by the Company. When shares are cancelled,
a transfer is made from retained earnings to the capital reserve, equivalent
to the nominal value of the shares purchased and subsequently cancelled. In
the 26 weeks to 28 September 2024, no shares were cancelled (last half year:
9.3 million; last full year: 20.5 million). As at 28 September 2024, the
amount held against retained earnings in relation to shares bought back but
not yet cancelled was £nil (last half year: £27 million; last full year:
£nil).
As at 28 September 2024, the Company held 5.2 million treasury shares (last
half year: 5.2 million; last full year: 5.2 million), with a market value of
£37 million based on the share price at the reporting date (last half year:
£100 million; last full year: £63 million). The treasury shares held by the
Company are related to the share buy-back programme completed during the 52
weeks to 30 March 2024. During the 26 weeks to 28 September 2024, no treasury
shares were transferred to ESOP trusts (last half year: 0.8 million; last full
year: 0.9 million). During the 26 weeks to 28 September 2024, no treasury
shares were cancelled (last half year: none; last full year: none).
The cost of shares purchased by ESOP trusts are offset against retained
earnings, as the amounts paid reduce the profits available for distribution by
the Company. As at 28 September 2024 the cost of own shares held by ESOP
trusts and offset against retained earnings is £23 million (last half year:
£38 million; last full year: £34 million). As at 28 September 2024, the ESOP
trusts held 1.3 million shares (last half year: 2.1 million; last full year:
1.9 million) in the Company, with a market value of £9 million (last half
year: £41 million; last full year: £23 million). In the 26 weeks to 28
September 2024 the ESOP trusts and the Company have waived their entitlement
to dividends.
Other reserves in the Statement of Changes in Equity consists of the capital
reserve, the foreign currency translation reserve, and the hedging reserves.
The hedging reserves consist of the cash flow hedge reserve and the net
investment hedge reserve.
20. Related party transactions
The Group's significant related parties are disclosed in the Annual Report for
the 52 weeks to 30 March 2024. There were no material changes to these related
parties in the period, other than changes to the composition of the Board.
Other than total compensation in respect of key management, no material
related party transactions have taken place during the current period.
21. Fair value disclosure for financial instruments
The Group's principal financial instruments comprise derivative instruments,
cash and cash equivalents, borrowings (including overdrafts), trade and other
receivables and trade and other payables arising directly from operations.
The fair value of the Group's financial assets and liabilities held at
amortised cost approximate their carrying amount due to the short maturity of
these instruments with the exception of the £299 million sustainability bond
issued on 21 September 2020 (last half year: £299 million), the £303 million
bond issued on 20 June 2024 (last year: £nil) and £13 million (last half
year: £14 million) held in non-current other receivables relating to an
interest-free loan provided to a landlord in Korea. At 28 September 2024, the
fair value of the sustainability bond issued on 21 September 2020 is £288
million (last half year: £274 million), fair value of the bond issued on 20
June 2024 is £290 million (last half year: £nil) and the discounted fair
value of the loan provided to a landlord in Korea is £13 million (last half
year: £13 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, interest rate swaps,
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 and interest rate swaps, after discounting using the
appropriate yield curve as at the balance sheet date. This is considered to be
a Level 2 measurement. All Level 2 fair value measurements are calculated
using inputs which are based on observable market data.
22. Acquisition of subsidiary
On 2 October 2023, Burberry Italy S.R.L., Burberry's wholly-owned subsidiary,
acquired a 100% shareholding in Burberry Tecnica, S.R.L., from Italian
technical outerwear supplier, Pattern SpA, a company incorporated in Italy,
for total cash consideration of £19 million. As a result of the acquisition,
net assets of £3 million were acquired and goodwill of £16 million was
recognised. There were no adjustments to the acquisition accounting in the 26
weeks to 28 September 2024.
23. 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 52 weeks to 30 March 2024 with the
exception of Joshua Schulman who was appointed on 17 July 2024, Jonathan
Akeroyd who resigned on 15 July 2024 and Debra L Lee who stepped down from the
Board on 16 July 2024.
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
Joshua Schulman
Chief Executive Officer
13 November 2024
Kate Ferry
Chief Financial Officer
13 November 2024
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 weeks ended 28
September 2024 which comprises the condensed group income statement, the
condensed group statement of comprehensive income, the condensed group balance
sheet, the condensed group statement of changes in equity, the condensed group
statement of cash flows and the related explanatory notes 1 to 23. We have
read the other information contained in the half yearly financial report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the 26 week period ended 28 September 2024 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 Financial
Reporting Council. 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 for 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, including our Conclusions
Relating to Going Concern, are 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) "Review of
Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council. 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
13 November 2024
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