TIDMBRBY

RNS Number : 2475B

Burberry Group PLC

05 June 2019

5 June 2019

Burberry Group plc - Annual Financial Report

The following documents have today been made available to shareholders of Burberry Group plc

(the "Company"):

   1.   Annual Report and Accounts for the financial year ended 30 March 2019; 
   2.   Notice of the 2019 Annual General Meeting; and 
   3.   Form of Proxy for the 2019 Annual General Meeting. 

Pursuant to Listing Rule 9.6.1, each of these documents has been submitted to the National Storage Mechanism and they will shortly be available for inspection at www.morningstar.co.uk/uk/NSM.

In accordance with Disclosure Guidance and Transparency Rule ("DTR") 6.3.5(3), the Annual Report and Notice of 2019 Annual General Meeting are also available on the Company website at www.burberryplc.com.

The 2019 Annual General Meeting (the "AGM") will take place on Wednesday, 17 July 2019 at Conrad London St. James, 22-28 Broadway, London, SW1H 0BH. The total of the votes cast by shareholders for or against or withheld on each resolution to be put to the meeting will be published on www.burberryplc.com as soon as possible after the meeting.

In compliance with DTR 6.3.5, the information in the Appendix below is extracted from the Company's Annual Report and Accounts for the financial year ended 30 March 2019 (the "2018/19 Annual Report and Accounts") and should be read in conjunction with the Company's preliminary announcement issued on 16 May 2019 (the "Preliminary Announcement"), both of which can be viewed at www.burberryplc.com. Together these constitute the material required by DTR 6.3.5 to be communicated to the media in unedited full text through a Regulatory Information Service. This material is not a substitute for reading the 2018/19 Annual Report and Accounts in full. Page numbers and cross-references in the extracted information below refer to page numbers and cross-references in the 2018/19 Annual Report and Accounts.

The information contained in this announcement and in the Preliminary Announcement does not constitute the Company's statutory accounts, but is derived from those statutory accounts. The statutory accounts for the financial year ended 30 March 2019 have been approved by the Board and will be delivered to the Registrar of Companies following the AGM.

Enquiries

Investors and analysts

Annabel Brownrigg-Gleeson

Director, Investor Relations

annabel.brownrigg-gleeson@burberry.com

020 3367 4458

Media

Andrew Roberts

VP, Corporate Relations

andrew.roberts@burberry.com

020 3367 3764

APPIX: ADDITIONAL INFORMATION REQUIRED BY DTR 6.3.5

AUDIT REPORTS

The Preliminary Announcement includes a condensed set of financial statements. Audited financial statements for the financial year ended 30 March 2019 are contained in the 2018/19 Annual Report and Accounts. The Independent Auditors' Report on the Company financial statements and the parent company financial statements (the "Audit Report") is set out in full on pages 153 to 159 of the 2018/19 Annual Report and Accounts. The Audit Report is unqualified and does not contain any statements under section 498(2) (regarding adequacy of accounting records and returns) or under section 498(3) (regarding provision of necessary information and explanations) of the Companies Act 2006.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The following information is extracted from page 152 of the 2018/19 Annual Report and Accounts.

The directors consider that the Annual Report, taken as a whole, is fair, balance and understandable and provides the information necessary for shareholders to assess the Group and the Company's position and performance, business model and strategy.

Each of the directors, whose names and functions are listed on pages 94 to 97 confirm that, to the best of their knowledge:

- the Company financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 'Reduced Disclosure Framework', and applicable law), give a true and fair view of the assets, liabilities, financial position and profit of the Company;

- the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and

- the Strategic Report includes a fair review of the development and performance of the business and the position of the Group and the Company, together with a description of the principal risks and uncertainties that it faces.

PRINCIPAL RISKS

The following information is extracted from pages 74 to 86 of the 2018/19 Annual Report and Accounts.

OUR APPROACH TO RISK

The Group's strategy takes into account risks, as well as opportunities, which need to be actively managed. Effective risk management is essential to executing our strategy, achieving sustainable shareholder value, protecting the brand and ensuring good governance.

The Board is ultimately responsible for determining the nature and extent of the principal risks it is willing to take to achieve our strategic objectives (the Board's risk appetite), and challenging management's implementation of effective systems of risk identification, assessment and mitigation.

The Audit Committee has been delegated the responsibility for reviewing the effectiveness of the Group's internal controls and risk management arrangements.

Ongoing review of these controls is provided through internal governance processes and the work of the Group functions is overseen by the Executive Committee, particularly the work of Group Risk and Internal Audit and the Risk and Ethics Committees.

An integral part of our business, our risk management process is co-ordinated by our Group Risk team, reporting to our Chief Operating and Financial Officer. Risk management activities include identifying risks, undertaking risk assessments and determining mitigating actions. These activities are reviewed by our Internal Audit and other control functions, which provide assurance to our Risk Committee, and ultimately to our Board and Board Committees, as shown in the diagram on page 102.

RISK APPETITE

The Board reviews and validates the Group's risk appetite on an annual basis. This is integrated into our wider risk management framework to support better decision-making and prioritisation.

We will pursue growth and are prepared to accept a certain level of risk to firmly establish our position in luxury fashion and inspire our customers with our unique British twist. We operate in a competitive, dynamic sector with long-term growth potential. Within categories of risk, our tolerance for risk may vary.

Complying with applicable laws and doing the right thing is part of our culture and underpins our strategic ambition. In exploring risks and opportunities, we prioritise the interests and safety of our customers and employees, we seek to protect the long-term value and reputation of the brand, maximising commercial benefits to support responsible and sustained growth, and in doing so minimise risk.

OUR PRINCIPAL RISKS

Our risk management process has identified a broad range of risks and uncertainties, which we believe could adversely impact the profitability or prospects of the Group. Our principal risks are defined as those that we regard as the most relevant to our business. These are the risks that we see as most material to our performance and could threaten our business model or the future long-term performance, solvency or liquidity of Burberry.

Our risk framework is structured around the following categories of risk: Strategic and Financial, Operational and Compliance. Each principal risk is linked to one of these categories and may impact one or more of our strategic priorities.

We have reviewed and updated the descriptions and mitigating actions of our principal risks to reflect new emerging external risks and any new strategic priorities that have been announced. We reviewed whether the level of risk associated with each of the principal risks is increasing or decreasing compared to the previous financial year and noted new risks, which do not have a basis for comparison.

RISK MANAGEMENT PROCESS

 
                                      BOARD AND BOARD COMMITTEES 
 Responsible            Monitors risks through Board processes                 Audit Committee 
  for regular            including regular reviews of strategy,                 reviews effectiveness 
  oversight of           management reports and deep dives                      of risk management 
  risk management,       into selected risk areas.                              process with 
  annual strategic                                                              support from 
  risk review,                                                                  Internal Audit. 
  and setting 
  the Group's 
  risk appetite. 
                       -----------------------------------------------------  ----------------------- 
 
 
                       MANAGEMENT RISK COMMITTEE (CHAIRED BY CHIEF OPERATING AND 
                                           FINANCIAL OFFICER) 
 Reviews external       Meets at least three times per                         Identifies 
  and internal           year and reports key findings to                       changes to 
  environment            the Audit Committee.                                   significant 
  for emerging                                                                  risks and the 
  risks. Performs        Cross-functional attendees, encompassing               effectiveness 
  deep-dive reviews      senior management from IT, Finance,                    and adequacy 
  of principal           Legal, HR, Supply Chain and Retail.                    of 
  risks.                                                                        mitigating 
                                                                                actions to 
  Reviews risk                                                                  achieve agreed 
  register updates                                                              risk tolerance 
  from risk owners.                                                             levels. 
                       -----------------------------------------------------  ----------------------- 
 
    GROUP RISK AND           ETHICS COMMITTEE        FUNCTIONS AND BUSINESS        INTERNAL AUDIT 
    ASSURANCE TEAM                                         RISK OWNERS             AND COMPLIANCE 
                                                                                      FUNCTIONS 
---------------------  ---------------------------  ------------------------  ----------------------- 
 -- Establishes         -- Reviews and               -- Carry out day-to-day   -- Review risk 
  risk                   monitors ethical             risk management           management 
  management             risks, as well               activities.               process 
  framework.             as behavioural               -- Identify and           periodically. 
  -- Facilitates         and responsibility           assess                    -- Compliance 
  updates                practices across             risk and implement        functions provide 
  to risk registers.     the Group. Approves          action to mitigate        independent 
  -- Provides            policies relating            risk                      assurance to 
  resources              to such ethical              within their area.        management 
  and training           matters, including           -- Assign owners          and the Board 
  to                     the Group's codes            to risks                  on risk status 
  support risk           of conduct.                  to update risk            (Health and 
  management process.    -- Performs deep-dive        registers.                Safety, Legal, 
  -- Prepares            reviews and assesses                                   Brand Protection, 
  Board and Risk         results of investigations                              Quality, Asset 
  Committee              and corrective                                         and Profit 
  updates.               actions.                                               Protection, 
                         -- Supports the                                        Responsibility). 
                         Group in managing 
                         ethical and associated 
                         reputational 
                         risks, including 
                         overseeing awareness 
                         and training across 
                         the Group to reinforce 
                         business ethics 
                         and good practice. 
                       ---------------------------  ------------------------  ----------------------- 
 

STRATEGIC AND FINANCIAL RISKS

EXECUTION OF STRATEGIC PLAN

 
            Focused execution of the strategy through our six strategic 
             pillars (Product, Communication, Distribution, Digital, Operational 
             Excellence and Inspired People) is key to sustainable shareholder 
             value. Success depends on the value and relevance of our brand 
             to luxury consumers around the world and our ability to innovate. 
 
             Failure to execute the projects that underpin these strategies 
             successfully could result in under delivery on the expected 
             growth, productivity and efficiency targets. This could have 
             a significant impact on the value of the business and market 
             confidence in our ability to deliver the strategy. 
 
             We operate in the global luxury market, where competition 
             is intensifying. Today's luxury customers demand creativity, 
             curation, excitement, innovation and personalisation. Our 
             ability to make the right strategic investment decisions in 
             response to these changes is vital to our success. 
             No Change 
---------------------------------------------------------------------------------- 
 LINK TO STRATEGY                           ACTIONS TAKEN BY MANAGEMENT 
-----------------------------------------  --------------------------------------- 
 All strategic pillars.                     -- Throughout FY 2018/19 we 
                                             focused on building the capabilities 
                                             to develop and deliver our strategy. 
                                             Key executive-level appointments 
                                             were made to drive the Communication 
                                             and Distribution strategies. 
                                             -- The Executive Committee is 
                                             accountable for the conduct 
                                             of these programmes and delivery 
                                             of outcomes in accordance with 
                                             our Board-approved plan. 
                                             -- A Transformation Management 
                                             Office co-ordinates delivery 
                                             of the programme, monitors the 
                                             risks associated with each of 
                                             the major programmes, and tracks 
                                             progress and benefits. 
                                             -- We have increased our focus 
                                             on measuring and demonstrating 
                                             progress in our transformation. 
                                             We have designed a set of lead 
                                             indicators to assess progress 
                                             in product, communications, 
                                             store performance and service. 
                                             -- FY 2018/19 was an important 
                                             year in advancing our Product 
                                             and Communication strategies 
                                             with significant interest generated 
                                             ahead of commercialising Riccardo 
                                             Tisci's first collections. The 
                                             product assortment and cadence 
                                             of release has been altered 
                                             with a 
                                             stronger focus on leather goods 
                                             and collaborations, and some 
                                             ranges being sold exclusively 
                                             through digital channels. 
                                             -- We continued to increase 
                                             our focus on digital and ensure 
                                             that our social channels and 
                                             their content are relevant for 
                                             the different 
                                             markets in which we operate. 
                                             -- Our Inspired People initiatives 
                                             include leading the Group-wide 
                                             engagement survey. This has 
                                             shown a marked increase in the 
                                             understanding of our strategic 
                                             goals and transformation plan 
                                             within the Group. 
                                             -- Our Operational Excellence 
                                             programme continues apace and 
                                             has now delivered cost savings 
                                             of GBP105 million since its 
                                             inception in 
                                             FY 2016/17. 
                                             -- Our IT strategy, prepared 
                                             by the Chief Information Officer 
                                             and the IT Leadership Team, 
                                             comprises a portfolio of IT 
                                             projects linked to the Group's 
                                             strategic objectives. IT projects 
                                             are managed by the IT Portfolio 
                                             Forum. 
-----------------------------------------  --------------------------------------- 
 RISK TOLERANCE 
-----------------------------------------  --------------------------------------- 
 We will pursue growth and accept 
  a certain level of risk to ignite 
  brand heat and firmly establish 
  our position in luxury fashion. 
  We approve capital investment 
  in strategic projects and accept 
  moderate to high earnings volatility 
  in pursuit of innovation and 
  profitable growth, balancing 
  a reasonable return on capital 
  for a reasonable level of commercial 
  risk within the approved capital 
  allocation framework. 
----------------------------------------- 
 EXAMPLES OF RISKS 
----------------------------------------- 
 -- Firmly positioning the brand 
  in luxury is 
  dependent on creating new and 
  innovative luxury products that 
  excite our global customers. 
  If we are unable to innovate 
  effectively and get these new 
  products into the market with 
  speed, our sales or margins 
  could be adversely affected. 
  -- Our development and deployment 
  of content 
  through communication channels 
  does not create sufficient brand 
  heat globally. 
  -- We do not achieve the required 
  organisational alignment and 
  enhance our capabilities and 
  culture to compete and grow 
  effectively and at the pace 
  required to deliver the targets. 
  -- Failure to sufficiently transform 
  operational 
  processes could undermine our 
  ability to 
  deliver the required cost savings 
  and 
  margin improvements. 
  -- Failure to deliver the technology 
  innovation 
  required to empower changes 
  in the Group's 
  business model and to deliver 
  the anticipated 
  benefits from key investment 
  strategies in 
  Digital, Retail and Group Operations. 
-----------------------------------------  --------------------------------------- 
 

IMAGE AND REPUTATION

 
 The Group carefully safeguards its image and reputational 
  assets. Unfavourable incidents, unethical behaviour or erroneous 
  media coverage relating to the Group's senior executives, 
  products, practices or supply chain operations could damage 
  the Group's reputation. 
 
  As our customers continue to engage with the brand through 
  social media, a misleading perception of the Group's values 
  and performance could potentially lead to a slowdown in sales. 
 
  Burberry's increasing reliance on influencers in its marketing 
  and on collaborations in product design exposes the Group 
  to increased reputational risk. 
  New 
------------------------------------------------------------------------------- 
 LINK TO STRATEGY                          ACTIONS TAKEN BY MANAGEMENT 
----------------------------------------  ------------------------------------- 
 All strategic pillars.                    -- Training and monitoring of 
                                            adherence by personnel to the 
                                            requirements in the Group's 
                                            Responsible Business Principles. 
                                            -- Codified incident management 
                                            policy, monitoring of social 
                                            networks and response procedures. 
                                            -- Oversight of mitigation of 
                                            reputational issues by the Ethics 
                                            and Risk Committees. 
                                            -- The Group has established 
                                            Corporate Responsibility (CR) 
                                            standards, which aim to ensure 
                                            compliance with labour, human 
                                            rights, health and safety and 
                                            environmental standards across 
                                            our operations and extended 
                                            supply chain. 
                                            -- Supplier audits and supplier 
                                            training programmes are examples 
                                            of the actions and programmes 
                                            that have been put in place 
                                            in day-to-day operations. 
                                            -- Strengthening our approval 
                                            processes and editorial controls 
                                            to ensure all product and content 
                                            is reviewed and signed off prior 
                                            to external release. 
                                            -- Introducing additional training 
                                            to strengthen our understanding 
                                            of and sensitivity to a range 
                                            of perspectives to help us live 
                                            our values and fully embrace 
                                            diversity and inclusion. 
                                            -- Establishing employee councils 
                                            focused on diversity and inclusion. 
                                            -- Assembling an advisory board 
                                            of external experts to provide 
                                            insight and help raise Burberry's 
                                            consciousness and understanding 
                                            of social issues. 
                                            -- Increasing awareness of and 
                                            training with respect to Burberry's 
                                            Model Well--being Policy to 
                                            all people who engage with model 
                                            on Burberry's behalf, including 
                                            employees, freelancers, casting 
                                            agents, contractors and 
                                            external third parties to ensure 
                                            they adhere to the policy. 
----------------------------------------  ------------------------------------- 
 RISK TOLERANCE 
----------------------------------------  ------------------------------------- 
 Protecting the brand and its 
  reputation globally is at the 
  heart of everything we do. We 
  take a risk-averse approach, 
  adopting a strategy to avoid 
  or mitigate any reputational/brand 
  risk. 
---------------------------------------- 
 EXAMPLES OF RISKS 
---------------------------------------- 
 -- An unfavourable incident 
  relating to a senior executive, 
  erroneous media coverage or 
  negative discussions on social 
  networks could damage Burberry's 
  reputation. 
  -- A celebrity, influencer, 
  collaborator or model associated 
  with Burberry becoming involved 
  in a reputational incident could 
  potentially lead to pressure 
  on Burberry to distance the 
  brand from them and could reflect 
  poorly on Burberry, negatively 
  impacting Burberry's reputation. 
  -- Unfavourable or erroneous 
  media coverage or negative discussions 
  on social networks about the 
  Group's products, content or 
  practices could impact brand 
  reputation. 
  -- Unethical behaviour on the 
  part of individuals or entities 
  connected with the Group could 
  attract negative attention to 
  the brand. 
  -- If suppliers or partners 
  do not respect the Group's Responsible 
  Business Principles this could 
  reflect negatively on Burberry. 
  -- Failure of employees or those 
  acting on Burberry's behalf 
  to adhere to Burberry's Model 
  Well--being Policy could result 
  in reputational or legal risk. 
  -- Failure to understand social 
  issues and respect cultural 
  sensitivities could negatively 
  impact Burberry's reputation. 
----------------------------------------  ------------------------------------- 
 

GLOBAL CHINESE CONSUMER SPING

 
 Global Chinese consumer spending patterns significantly change 
  having an immediate adverse impact on Group sales. 
  Any significant change to Chinese consumer spending habits 
  or the economic, regulatory, social and/or political environment 
  in China could adversely impact the domestic consumer group's 
  disposable income or confidence. Such changes could also lead 
  to Chinese consumers scaling back on international travel, 
  which could impact the Group's revenue and profits outside 
  China. 
  New 
-------------------------------------------------------------------------------- 
 LINK TO STRATEGY                      ACTIONS TAKEN BY MANAGEMENT 
------------------------------------  ------------------------------------------ 
 All strategic pillars.                -- The Group has strengthened 
                                        the leadership team across Asia 
                                        and has made continued investment 
                                        in new stores, including new 
                                        openings in China, and the refurbishment 
                                        of stores such as Kerry Centre 
                                        in China. 
                                        -- Development and execution 
                                        of China strategy, including 
                                        targeted marketing around lunar 
                                        new year. 
                                        -- Investment in inventory and 
                                        technology to support China 
                                        digital across our own platforms 
                                        and those of our third-party 
                                        partner platforms. 
                                        -- Supporting investment and 
                                        growth strategies in other global 
                                        markets to reduce Burberry's 
                                        exposure to an individual country 
                                        or group of customers. 
------------------------------------  ------------------------------------------ 
 RISK TOLERANCE 
------------------------------------  ------------------------------------------ 
 We will pursue growth and accept 
  a certain level of risk to ignite 
  brand heat with Chinese consumers 
  and firmly establish our position 
  in luxury fashion. 
------------------------------------ 
 EXAMPLES OF RISKS 
------------------------------------ 
 -- Burberry's growth from Asia 
  does not reach expectations 
  either in magnitude or timing, 
  especially in China (where growth 
  rates are highest). 
  -- Significant short-term slowdown 
  in luxury goods consumption 
  by Chinese consumers. 
------------------------------------  ------------------------------------------ 
 

FOREIGN EXCHANGE

 
            Volatility in foreign exchange rates could have a significant 
             impact on the Group's reported results. Burberry is exposed 
             to uncertainty through foreign exchange movements. The outcome 
             of the UK's withdrawal from the EU may have a major impact 
             on foreign exchange rates, which in turn could cause significant 
             change in our Group reported results. 
             Increased 
---------------------------------------------------------------------------------- 
 LINK TO STRATEGY                         ACTIONS TAKEN BY MANAGEMENT 
---------------------------------------  ----------------------------------------- 
 Volatility in foreign exchange           -- Burberry seeks to hedge anticipated 
  rates could impact our overall           foreign currency transactional 
  financial performance.                   cash flows using financial instruments. 
                                           These are mainly in Burberry's 
                                           centralised supply chain 
                                           and wholesale business. Burberry 
                                           does not hedge intra-group foreign 
                                           currency transactions at present. 
                                           -- Burberry monitors the desirability 
                                           of hedging the net assets of 
                                           non-pound sterling subsidiaries 
                                           when translated into pound sterling 
                                           for reporting purposes. We have 
                                           only entered into modest transactions 
                                           for this 
                                           purpose in the current and previous 
                                           year. 
                                           -- Burberry monitors the overall 
                                           impact of unhedged exchange 
                                           movements and provides guidance 
                                           to shareholders if exchange 
                                           rates move on a quarterly basis. 
---------------------------------------  ----------------------------------------- 
 RISK TOLERANCE 
---------------------------------------  ----------------------------------------- 
 Burberry does not seek to manage 
  structural foreign exchange 
  risk relating to its overseas 
  retail operations. 
--------------------------------------- 
 EXAMPLES OF RISKS 
--------------------------------------- 
 -- Burberry operates on a global 
  basis and earns revenues, incurs 
  costs and makes investments 
  in a number of currencies. Burberry's 
  financial results are reported 
  in pound sterling. Most reported 
  revenues are earned in non-pound 
  sterling currencies, with a 
  significant proportion of costs 
  in pound sterling. Therefore, 
  changes in exchange rates, which 
  are driven by several factors, 
  such as global economic trends, 
  the form of the UK's withdrawal 
  from the EU or 
  other developments, could impact 
  Burberry's revenues, margins, 
  profits and cash flows. 
---------------------------------------  ----------------------------------------- 
 

OPERATIONAL RISKS

LOSS OF DATA OR CYBERATTACK

 
            A cyberattack results in a system outage, impacting core operations 
             and/or results in a major data loss leading to reputational 
             damage and financial loss. 
             The Group's technology environment is critical to success. 
             A robust control environment helps decrease the risks to core 
             business operations and/or major data loss. 
             No Change 
------------------------------------------------------------------------------------ 
 LINK TO STRATEGY                            ACTIONS TAKEN BY MANAGEMENT 
------------------------------------------  ---------------------------------------- 
 Having a resilient technology               -- Governance provided through 
  landscape is integral to delivering         the cross-functional Cyber Security 
  our Operational Excellence and              Steering Group with Executive 
  Digital strategic pillars.                  membership and sponsorship. 
                                              -- Continued investment in the 
                                              cybersecurity programme and 
                                              completion of independent risk 
                                              assessments to validate the 
                                              strategy 
                                              and identify capabilities required 
                                              to achieve the appropriate levels 
                                              of security. 
                                              -- Expanded cybersecurity scorecard 
                                              monitoring to Executive and 
                                              IT management through monthly 
                                              reporting. 
                                              -- Security monitoring, which 
                                              provides monitoring of the network 
                                              and computers 24/7, 365 days 
                                              a year, supported by robust 
                                              security incident response processes. 
                                              -- Creation of an Information 
                                              Security Advisory function to 
                                              embed security in new projects 
                                              and initiatives. 
                                              -- Security Training and Awareness 
                                              rolled out to employees globally 
                                              with completion monitoring. 
                                              This included completion of 
                                              multiple phishing awareness 
                                              campaigns. 
                                              -- Implementation of solutions 
                                              to detect personal and sensitive 
                                              data loss with improved control 
                                              over user access management. 
                                              -- Established process for third-party 
                                              security assessments. 
                                              -- Data Privacy Steering Committee, 
                                              a cross-functional group to 
                                              review data controls around 
                                              existing systems as well as 
                                              assess the 
                                              potential data risks (from both 
                                              a legal and reputational perspective) 
                                              associated with new IT, Marketing, 
                                              Retail and Digital initiatives 
                                              across Burberry. 
                                              -- Ongoing collaboration between 
                                              the Data Protection office, 
                                              Legal, IT and Information Security 
                                              to ensure policies are adhered 
                                              to in 
                                              respect to the appropriate collection, 
                                              security, storage, retention 
                                              and deletion of personal data. 
------------------------------------------  ---------------------------------------- 
 RISK TOLERANCE 
------------------------------------------  ---------------------------------------- 
 Protecting the brand and its 
  reputation globally is at the 
  heart of everything we do. We 
  take a 
  risk-averse approach, adopting 
  a strategy to 
  avoid or mitigate any reputational/brand 
  risk. 
------------------------------------------ 
 EXAMPLES OF RISKS 
------------------------------------------ 
 -- Malware results in a loss 
  of system control 
  causing business disruption 
  and/or major 
  data loss. 
  -- Credential compromise of 
  customer or 
  employee accounts leading to 
  business 
  disruption and/or major data 
  loss. 
  -- Accidental personal data 
  loss or disclosure 
  leading to regulatory fines. 
  -- Attack on www.burberry.com 
  causing business disruption 
  and/or major data loss. 
  -- Compromise or misconfiguration 
  of externally 
  facing assets causing business 
  disruption and/ 
  or major data loss. 
  -- Fines due to failure to comply 
  with EU General Data Protection 
  Regulation (GDPR) and/or equivalent 
  applicable data protection 
  legislation globally. 
------------------------------------------  ---------------------------------------- 
 

PEOPLE

 
            Inability to attract, motivate, develop and retain our people 
             to perform to the best of their ability in order to meet our 
             strategic objectives. 
             No Change 
------------------------------------------------------------------------------------- 
 LINK TO STRATEGY                           ACTIONS TAKEN BY MANAGEMENT 
-----------------------------------------  ------------------------------------------ 
 Delivery of our strategy relies            Leadership and Culture 
  on our ability to ensure our               -- A new Leadership Development 
  people continue to be driven               Programme, built around Burberry 
  and inspired to deliver outstanding        Behaviours, is being rolled 
  results for the Group. This                out to engage and equip leaders. 
  is done through fostering a                The programme is run over nine 
  dynamic and inclusive culture              months and comprises 360 feedback, 
  where all employees feel engaged,          coaching and a 
  empowering and equipping our               three-day event. To date, the 
  leaders, strengthening capabilities        Executive Committee, senior 
  and expanding our talent plans,            leadership team and 62 leaders 
  simplifying how we work, and               have attended the three-day 
  driving positive change and                event, with all other leaders 
  a more sustainable future across           to be enrolled by the end of 
  every part of our footprint.               FY 2019/20. 
                                             -- A second global employee 
                                             engagement survey was carried 
                                             out in July 2018, with results 
                                             published in September, with 
                                             87% of employees confirming 
                                             that they were proud to work 
                                             at Burberry. Leaders are held 
                                             accountable for delivering against 
                                             agreed action plans. A third 
                                             global engagement survey will 
                                             take place in July 2019. 
                                             -- Leaders were equipped with 
                                             regular strategy updates, including 
                                             talking points and exercises, 
                                             to engage their teams on the 
                                             strategic direction and build 
                                             a sense of belonging to the 
                                             inclusive culture at Burberry. 
                                             The engagement survey illustrated 
                                             a significant shift in employees' 
                                             understanding of the Group's 
                                             direction (from 68% in 2017 
                                             to 74% in 2018). 
                                             Talent and Careers 
                                             -- A new careers site has been 
                                             created and launched, including 
                                             experience maps, to engage the 
                                             workforce on the Burberry careers 
                                             proposition, in line with feedback 
                                             received through the employee 
                                             engagement survey. 
                                             -- An approach for identifying 
                                             high potentials across the organisation 
                                             has been rolled out. 
                                             -- All line managers have been 
                                             invited to attend "Career Conversations" 
                                             training, rolled out for all 
                                             employees in career development. 
                                             We have also held Global and 
                                             Regional Careers Awareness weeks. 
                                             Performance, Reward and Recognition 
                                             -- Simplified, more effective 
                                             performance management process 
                                             across the business rolled out 
                                             with a four-point performance 
                                             rating scale. 
                                             -- Continuation of embedding 
                                             Burberry Behaviours into performance 
                                             management. 
                                             -- Our Executive Committee ensures 
                                             there is a competitive total 
                                             reward offering, both financial 
                                             and non-financial, to retain 
                                             our people and to attract new 
                                             hires. 
                                             Diversity, Inclusion and Employee 
                                             Relations 
                                             -- We have developed a plan 
                                             focused on increasing understanding, 
                                             diversifying 
                                             the pipeline of talent and championing 
                                             those who help others to ensure 
                                             we create and promote a more 
                                             diverse and inclusive workforce. 
                                             -- We are in the process of 
                                             hiring a Director of Diversity 
                                             and Inclusion and a VP, Employee 
                                             Relations. 
                                             Well-being 
                                             -- 51 UK employees have now 
                                             been trained as qualified mental 
                                             health first aiders, with further 
                                             courses scheduled. 
                                             -- Further plans to define Burberry's 
                                             Well-being strategy in place. 
-----------------------------------------  ------------------------------------------ 
 RISK TOLERANCE 
-----------------------------------------  ------------------------------------------ 
 We recognise the value and importance 
  of 
  successfully delivering our 
  Inspired People strategy and 
  therefore have a low tolerance 
  for risk in this area. 
----------------------------------------- 
 EXAMPLES OF RISKS 
----------------------------------------- 
 -- Failure to engage or equip 
  our teams to 
  deliver our strategy, or address 
  key capability gaps. 
  -- Failure to build the right 
  capabilities and 
  behaviours in our leadership 
  population. 
  -- Loss of critical talent/knowledge/ 
  unmanageable levels of attrition 
  due to ongoing transition period/change 
  fatigue. 
  -- The long-term impact of the 
  UK's withdrawal from the EU 
  on the Group's EU workforce. 
-----------------------------------------  ------------------------------------------ 
 

IT OPERATIONS

 
            IT operations fail to support critical processes across the 
             Group including Retail, Digital and Group functions such as 
             Supply Chain and Finance. 
             No Change 
----------------------------------------------------------------------------- 
 LINK TO STRATEGY                      ACTIONS TAKEN BY MANAGEMENT 
------------------------------------  --------------------------------------- 
 All strategic pillars.                -- IT function has been further 
                                        strengthened with clear alignment 
                                        between the IT teams, the strategic 
                                        pillars, business functions 
                                        and operations. 
                                        -- Controls to maintain the 
                                        continuity of the Group's IT 
                                        systems are in place, including 
                                        business continuity and IT recovery 
                                        plans, which would be implemented 
                                        in the 
                                        event of a major failure. 
                                        -- A tested Group incident management 
                                        framework is in place to report, 
                                        escalate and close high-impact 
                                        events. 
                                        -- Programmes that will improve 
                                        IT's ability to support operations 
                                        are in place with a clear portfolio 
                                        of IT projects linked to the 
                                        Group's strategic objectives. 
                                        Delivery of these projects is 
                                        overseen by our IT Portfolio 
                                        Forum, which regularly monitors 
                                        progress. 
------------------------------------  --------------------------------------- 
 RISK TOLERANCE 
------------------------------------  --------------------------------------- 
 In operating our business and 
  managing the possible disruption 
  to our IT operations, we have 
  a low tolerance for risk. 
------------------------------------ 
 EXAMPLES OF RISKS 
------------------------------------ 
 -- Failure to provide technology 
  platforms that meet customer 
  demands and support innovation 
  could result in failure to deliver 
  the strategy and loss of revenue. 
  -- Failure to provide stable 
  and resilient technology platforms 
  that meet business demands could 
  result in failure to deliver 
  the strategy and negatively 
  impact operations due to poor 
  system performance and/or system 
  outages. 
------------------------------------  --------------------------------------- 
 

SUSTAINABILITY AND CLIMATE CHANGE

 
            The success of our business over the long term will depend 
             on the social and environmental sustainability of our operations, 
             the resilience of our supply chain and our ability to manage 
             the impact of any potential climate change on our business 
             model and performance. 
             To address long-term sustainability challenges and understand 
             potential impacts of climate change on our business, in both 
             operational and financial terms, we have been working with 
             Forum for the Future to explore global environmental, social 
             and technological trends and how they could affect our business 
             model. This exercise has involved senior leadership from across 
             the business and results are now informing the development 
             of cross-functional action plans to help us mitigate long-term 
             risks and future-proof our business. 
             Increased 
------------------------------------------------------------------------------------ 
 LINK TO STRATEGY                           ACTIONS TAKEN BY MANAGEMENT 
-----------------------------------------  ----------------------------------------- 
 Our commitment to being an industry        -- Our Chief Supply Chain Officer 
  leader in responsible and sustainable      is responsible for ethical trading, 
  luxury underpins our vision                environmental sustainability 
  to establish ourselves firmly              and community investment matters 
  in luxury fashion and deliver              and reports on these topics 
  sustainable, long-term value.              to the Ethics Committee, Risk 
                                             Committee and the Board. 
                                             -- Long-standing responsibility 
                                             programmes, coupled with our 
                                             2022 Responsibility goals, are 
                                             driving continuous improvements 
                                             while supporting our supply 
                                             chain partners in moving beyond 
                                             social and environmental compliance. 
                                             See more on pages 42 to 55. 
                                             -- We continuously explore more 
                                             sustainable materials and manufacturing 
                                             processes. Recent examples are 
                                             included on page 47. 
                                             -- During FY 2018/19, we completed 
                                             three scenario analysis workshops 
                                             to assess long-term environmental, 
                                             social and technological trends 
                                             that could significantly impact 
                                             our business model and operations 
                                             over the next 20 years. We explored 
                                             the uncertainties, risks and 
                                             opportunities that lie ahead, 
                                             in light of forecasted climate 
                                             change impacts to 2040, which 
                                             will inform our strategic response 
                                             to climate change. 
                                             -- We have set science based 
                                             targets to address our GHG emissions 
                                             along our entire value chain. 
                                             Our targets have been approved 
                                             by the Science Based Target 
                                             Initiative (SBTi) and are in 
                                             line with the Paris Agreement 
                                             to limit global warming to 1.5 
                                             degrees from pre-industrial 
                                             levels. 
                                             -- We are signatories of the 
                                             UNFCCC Fashion Industry Charter 
                                             for Climate Action, which aims 
                                             to reduce aggregate GHG emissions 
                                             across the fashion industry 
                                             by 30% by 2030. Representatives 
                                             of our Responsibility team 
                                             participate in the working groups 
                                             and chair one of them. 
                                             -- In September 2018, we were 
                                             the first luxury company to 
                                             announce that we were stopping 
                                             the practice of destroying any 
                                             unsaleable finished products. 
                                             We are implementing a zero-waste 
                                             mindset across our global operations, 
                                             with a focus on improving inventory 
                                             management, extending the life 
                                             cycle of our products and maximising 
                                             donation, repurposing and recycling 
                                             routes, while developing new 
                                             partnerships and solutions for 
                                             revaluing waste. 
                                             -- We are core partners of the 
                                             Ellen MacArthur Foundation's 
                                             'Make Fashion Circular' initiative, 
                                             which aims to create a new, 
                                             circular textiles economy, and 
                                             signatories of the New Plastics 
                                             Economy Global Commitment, which 
                                             aims to eradicate plastic waste 
                                             and pollution by 2025. 
                                             -- We continue to support programmes 
                                             led by The Burberry Foundation 
                                             that tackle educational inequality 
                                             in Yorkshire, foster community 
                                             cohesion in Italy, and enhance 
                                             social and economic empowerment 
                                             in Afghanistan. 
                                             -- We use the WWF water risk 
                                             assessment tool and the Aqueduct 
                                             Water Risk Atlas to understand 
                                             potential future strains on 
                                             water resources and long-term 
                                             risks in our supply chain. This 
                                             informs the roll-out of our 
                                             energy 
                                             and water reduction programme 
                                             to key supply chain partners. 
                                             -- We are a founding partner 
                                             of the Sustainable Fibre Alliance 
                                             (SFA), a UK-based NGO working 
                                             with key stakeholders in Mongolia 
                                             to improve the impacts of cashmere 
                                             production by restoring grasslands, 
                                             promoting animal 
                                             welfare and supporting a decent 
                                             living for cashmere goat herders. 
-----------------------------------------  ----------------------------------------- 
 RISK TOLERANCE 
-----------------------------------------  ----------------------------------------- 
 We have a low tolerance for 
  risk, when it comes to protecting 
  the human and environmental 
  resources we all depend on. 
  However, given the long-term 
  nature of some sustainability 
  risks and the level of uncertainty 
  associated with their occurrence 
  and impact, we accept that some 
  risks are inevitable. We therefore 
  focus on helping to minimise 
  global risks 
  while building resilience in 
  our operations 
  and supply chain. 
----------------------------------------- 
 EXAMPLES OF RISKS 
----------------------------------------- 
 -- Resource scarcity, coupled 
  with increasing demand, could 
  affect the production, availability, 
  quality and cost of raw materials. 
  -- Increased frequency of extreme 
  weather 
  events, from floods to droughts, 
  could cause disruption in our 
  supply chain and impact our 
  business model by changing the 
  sourcing of raw materials, as 
  well as the production and distribution 
  of finished goods. 
  -- Increased regulation and 
  more stringent 
  environmental standards could 
  impact our business by affecting 
  production costs and flexibility 
  of operations. 
  -- Our industry is sustained 
  by many agricultural and manufacturing 
  communities around the world. 
  Failure to support them in preserving 
  key skills and building more 
  sustainable livelihoods could 
  cause social, economic and 
  operational challenges, from 
  community 
  tensions and disruption to production 
  to 
  a reduced talent pool. 
-----------------------------------------  ----------------------------------------- 
 

BUSINESS INTERRUPTION

 
            A major incident at one of the Group's main locations, at 
             its suppliers or affecting key products, which significantly 
             interrupts the business. 
             This could be caused by a wide range of events, including 
             natural catastrophe, fire, terrorism or quality-control failures. 
             No Change 
------------------------------------------------------------------------------------ 
 LINK TO STRATEGY                           ACTIONS TAKEN BY MANAGEMENT 
-----------------------------------------  ----------------------------------------- 
 Our Product and Distribution               -- We have policies and procedures 
  strategic pillars enable us                designed to ensure the health 
  to operate effectively and efficiently,    and safety of our employees 
  delivering Operational Excellence          and to deal with major incidents, 
  through continuity of supply               including business continuity 
  of compliant products and services         and disaster recovery. 
  of the highest quality to our              -- The Group continues to evolve 
  customers.                                 its supply chain organisational 
  Ensuring our ability to continually        design to develop its manufacturing 
  execute and operate key sites              base, reducing dependence on 
  and factories to develop, manufacture,     key sites and vendors. 
  distribute and sell our products           -- A Group incident management 
  is a key strategic priority.               framework is in place to ensure 
                                             that incidents are reported 
                                             and managed effectively. Across 
                                             the Group, our Incident Management 
                                             Teams managed 21 incidents in 
                                             the year. Twelve of these related 
                                             to severe weather warnings, 
                                             wild fires and natural disasters. 
                                             Two related to terrorist incidents 
                                             in cities where we have stores 
                                             or employees and we moved quickly 
                                             to ensure our customers, employees 
                                             and assets remained safe and 
                                             secure. The remainder were localised 
                                             issues linked to office, store 
                                             or system interruptions. 
                                             -- Our Group Incident Management 
                                             Team took part in training and 
                                             incident management exercises 
                                             involving large parts of the 
                                             Group, our customers and media 
                                             relations function. Our plans 
                                             as tested during the year were 
                                             found to 
                                             be effective. 
                                             -- Our product suppliers and 
                                             vendors are subject to a quality 
                                             control programme, 
                                             which includes regular site 
                                             inspections and independent 
                                             product testing. 
                                             -- Robust security arrangements 
                                             are in place across our store 
                                             network to protect people and 
                                             products in case of security 
                                             incidents. 
                                             -- Business continuity plans 
                                             are in place for our 10 main 
                                             sites including the three major 
                                             distribution centres and our 
                                             two UK factories. Business continuity 
                                             plans are being developed for 
                                             our third factory Burberry Manifattura 
                                             in Italy. 
                                             -- The Group's key IT systems 
                                             are protected to prevent and 
                                             minimise any potential interruption. 
                                             This includes resilient design 
                                             and the provision of disaster 
                                             recovery services to continue 
                                             operating within pre-agreed 
                                             times in 
                                             case of a major incident. Our 
                                             plans as tested during the year 
                                             were found to be effective. 
                                             -- Management regularly reviews 
                                             and manages business continuity 
                                             and disaster recovery risks, 
                                             recognising that these plans 
                                             cannot always ensure the uninterrupted 
                                             operation of the business, particularly 
                                             in the short term. 
                                             -- A comprehensive insurance 
                                             programme is in place to offset 
                                             the financial consequences of 
                                             insured events, including fires, 
                                             flood, natural catastrophes 
                                             and product liabilities. 
-----------------------------------------  ----------------------------------------- 
 RISK TOLERANCE 
-----------------------------------------  ----------------------------------------- 
 We have a low tolerance for 
  risk in this area, particularly 
  in respect of product safety 
  and quality. 
----------------------------------------- 
 EXAMPLES OF RISKS 
----------------------------------------- 
 -- Burberry operates three owned 
  factories and a global network 
  of storage and distribution 
  hubs. These face typical property 
  risks, such as 
  fires, floods and terrorism. 
  -- Burberry works with several 
  suppliers of luxury goods, which 
  would be difficult to replace 
  quickly. Their loss could interrupt 
  the delivery of core products 
  or a seasonal range. 
  -- A serious product quality 
  issue could 
  result in a product recall. 
-----------------------------------------  ----------------------------------------- 
 

COMPLIANCE RISKS

REGULATORY RISK AND ETHICAL/ENVIRONMENTAL STANDARDS

 
            The Group's operations are subject to a broad spectrum of 
             national and regional laws and regulations in the various 
             jurisdictions in which we operate. 
             These include product safety, trademarks, competition, data, 
             corporate governance, employment, tax and employee and customer 
             health and safety. Changes to laws and regulations, or a major 
             compliance breach, could have a material impact on the business. 
             No Change 
--------------------------------------------------------------------------------- 
 LINK TO STRATEGY                          ACTIONS TAKEN BY MANAGEMENT 
----------------------------------------  --------------------------------------- 
 Compliance with applicable laws           -- The Group monitors and seeks 
  and regulations and behaving              to continuously improve processes 
  in accordance with our values             to gain assurance that its licensees, 
  as a business underlie all our            suppliers, franchisees, distributors 
  strategic pillars.                        and agents comply with the Group's 
                                            contractual terms and conditions, 
                                            its ethical and business policies, 
                                            and relevant legislation. 
                                            -- Specialist teams at corporate 
                                            and regional level, supported 
                                            by third--party specialists 
                                            where required, are responsible 
                                            for ensuring the Group's compliance 
                                            with applicable laws and regulations 
                                            and that employees are aware 
                                            of the laws and regulations 
                                            relevant to their roles. 
                                            -- Assurance processes are in 
                                            place to monitor compliance 
                                            in a number of key risk areas, 
                                            with results being reported 
                                            to our Risk Committee and Audit 
                                            Committee. 
                                            -- We have an established framework 
                                            of policies that aim to drive 
                                            best practice across our direct 
                                            and indirect operations, including 
                                            our Responsible Business Principles 
                                            and Global Environmental Policy. 
                                            Policies available at 
                                            www.burberryplc.com, are owned 
                                            by senior leadership and are 
                                            issued to all supply chain partners. 
                                            Their implementation is monitored 
                                            on a regular basis. 
                                            -- We have established a Data 
                                            Privacy Steering Committee to 
                                            oversee compliance with applicable 
                                            data legislation. 
                                            -- International tax reform 
                                            is a key focus of attention 
                                            with significant developments 
                                            reported to the Audit Committee. 
                                            -- Roll out of annual mandatory 
                                            training to all employees and 
                                            to targeted functions to ensure 
                                            awareness and compliance with 
                                            our policies governing anti-bribery 
                                            and anti-corruption (ABAC), 
                                            Market Abuse Regulations, annual 
                                            conflict declarations, criminal 
                                            finances, anti-money laundering 
                                            and privacy. 
                                            -- Our culture and policies 
                                            encourage employees to speak 
                                            up and report any issues 
                                            without fear of retribution. 
                                            A global confidential employee 
                                            helpline is in place in 
                                            almost all countries where we 
                                            have retail and corporate locations, 
                                            and where it is legally permitted. 
                                            All calls and emails are logged 
                                            and independently reviewed and 
                                            followed up. During the year 
                                            136 cases were received and 
                                            the results and themes are reviewed 
                                            by the Ethics Committee. No 
                                            significant issues were identified 
                                            from these cases during the 
                                            year. 
                                            -- In accordance with our ABAC 
                                            policy, annual training is required 
                                            to be performed. This year the 
                                            annual e-learning module was 
                                            rolled out to all corporate 
                                            staff and manufacturing and 
                                            retail employees of manager 
                                            level and above, a total of 
                                            3,345 employees. The training 
                                            reached a 96% completion rate. 
                                            Any incidents or 
                                            potential areas of concern are 
                                            investigated by highly experienced 
                                            investigators in our Asset Profit 
                                            and Protection team and ABAC 
                                            risks are covered as part of 
                                            the scope of Internal Audit 
                                            reviews. During the year there 
                                            were no ABAC-related issues. 
----------------------------------------  --------------------------------------- 
 RISK TOLERANCE 
----------------------------------------  --------------------------------------- 
 In complying with laws and regulations, 
  including customer and employee 
  safety, and bribery and corruption, 
  we have a low tolerance for 
  risk. 
---------------------------------------- 
 EXAMPLES OF RISKS 
---------------------------------------- 
 -- Regulatory non-compliance. 
  -- Failure by the Group or associated 
  third parties to act in an ethical 
  manner consistent with our code 
  of conduct and our Responsibility 
  Agenda, for example with regard 
  to model well-being. 
  -- Non-compliance with labour, 
  human rights and environmental 
  standards across our own 
  operations and extended supply 
  chain would go against our Responsible 
  Business Principles 
  and could result in financial 
  penalties, disruption in production 
  and reputational damage to our 
  business. 
  -- Failure to comply with GDPR 
  and/or equivalent applicable 
  data protection legislation 
  globally. 
  -- Tax is a complex area where 
  laws and their interpretations 
  are changing regularly. Non-compliance 
  by Burberry and its associated 
  third parties in this area could 
  result in unexpected tax and 
  financial loss. 
----------------------------------------  --------------------------------------- 
 

INTELLECTUAL PROPERTY AND BRAND PROTECTION

 
            Sustained breaches of Burberry's intellectual property (IP) 
             rights or allegations of infringement by Burberry. 
             Counterfeiting, copyright, trademark and design infringement 
             in the marketplace could reduce the demand for genuine Burberry 
             merchandise. 
 
             Failure to implement appropriate brand protection controls 
             in connection with our commitment to stop destroying unsaleable 
             finished products could negatively impact the integrity and 
             the luxury positioning of the brand. 
             No Change 
--------------------------------------------------------------------------------- 
 LINK TO STRATEGY                          ACTIONS TAKEN BY MANAGEMENT 
----------------------------------------  --------------------------------------- 
 Protecting the integrity of               -- The Group's global Brand 
  the brand, safeguarding and               Protection team is responsible 
  elevating its luxury position,            for brand protection efforts 
  complying with applicable laws            globally, including in the digital 
  and regulations and doing the             environment. Where infringements 
  right thing underlie all our              are identified these are addressed 
  strategic pillars.                        through a mixture of criminal 
                                            and 
                                            civil legal action and negotiated 
                                            settlements. 
                                            -- IP rights are driven largely 
                                            by national laws, which afford 
                                            varying degrees of protection 
                                            and enforcement priorities depending 
                                            on the country. 
                                            -- Trademark, copyright and 
                                            design registrations globally 
                                            across all appropriate categories. 
                                            -- The Brand Protection team 
                                            partners closely with the design 
                                            and merchandising teams to ensure 
                                            that our products do not infringe 
                                            the rights of third parties 
                                            and to ensure that we have adequate 
                                            protections in place prior to 
                                            market entry. 
                                            -- Exploring new and emerging 
                                            threats and ways to combat threats. 
                                            -- Inspiring Burberry associates 
                                            and partners to engage with 
                                            us in protecting our brand. 
                                            -- Partnering with enforcement 
                                            agencies and our digital partners 
                                            to minimise the visibility of 
                                            counterfeit and parallel trade 
                                            products both online and offline. 
                                            -- Disrupting the flow of counterfeit 
                                            products by enforcing at source 
                                            level. 
                                            -- Implementation of brand protection 
                                            controls to safeguard the brand 
                                            in connection with our commitment 
                                            to stop destroying unsaleable 
                                            finished products. 
----------------------------------------  --------------------------------------- 
 RISK TOLERANCE 
----------------------------------------  --------------------------------------- 
 We have a low tolerance for 
  risk in protecting the integrity 
  of the brand, asserting our 
  IP rights while ensuring due 
  respect is given to the IP rights 
  of others. 
---------------------------------------- 
 EXAMPLES OF RISKS 
---------------------------------------- 
 -- Counterfeiting, parallel 
  trade, copyright, trademark 
  and design infringement in the 
  marketplace can reduce the demand 
  for genuine Burberry merchandise 
  and impact revenues. 
  -- Unauthorised use of trademarks 
  and other IP, as well as the 
  unauthorised sale of Burberry 
  products and distribution of 
  counterfeit products, damages 
  Burberry's brand image 
  and profits. 
  -- Increased newness and shorter 
  lead times make it more challenging 
  to prevent infringements and 
  counterfeiting of 
  our brand. 
  -- Allegations from third parties 
  of IP infringement by Burberry 
  could negatively impact Burberry's 
  reputation, result in claims 
  and financial loss through withdrawing 
  infringing products. 
  -- Distribution outside of our 
  authorised network could negatively 
  impact the demand for Burberry 
  products and negatively impact 
  our luxury reputation. 
----------------------------------------  --------------------------------------- 
 

EXTERNAL RISKS

MACRO-ECONOMIC AND POLITICAL INSTABILITY

 
            The Group operates in a wide range of markets and is exposed 
             to changing economic, regulatory, social and political developments 
             that may impact consumer demand, disrupt operations and impact 
             profitability. Adverse macro-economic conditions or country-specific 
             changes to the operating or regulatory environment or civil 
             unrest may impact the spending habits of key consumer groups 
             and cause increased operational costs. 
             No Change 
----------------------------------------------------------------------------------- 
 LINK TO STRATEGY                                ACTIONS TAKEN BY MANAGEMENT 
----------------------------------------------  ----------------------------------- 
 Volatility in the external environment          -- Our global reach helps to 
  could impact our overall financial              mitigate reliance on particular 
  performance and operations.                     consumer groups. In addition, 
                                                  our brand has wide appeal across 
                                                  multiple consumer segments, 
                                                  including a broad set of ages 
                                                  and preferences. 
----------------------------------------------  ----------------------------------- 
 RISK TOLERANCE 
----------------------------------------------  ----------------------------------- 
 We have a low tolerance for 
  risk in this area but recognise 
  external factors are more difficult 
  to mitigate as they are often 
  outside of our control. 
---------------------------------------------- 
 EXAMPLES OF RISKS 
---------------------------------------------- 
 -- The strategy does not address 
  how the changes created by macro-economic 
  trends and uncertainty in the 
  outlook for the luxury sector 
  globally or within significant 
  consumer groups could impact 
  our performance. 
----------------------------------------------  ----------------------------------- 
 

UK'S WITHDRAWAL FROM THE EU

 
            Various scenarios could impact the Group's financial position, 
             supply chain and people. 
             Increased 
----------------------------------------------------------------------------------- 
 LINK TO STRATEGY                         ACTIONS TAKEN BY MANAGEMENT 
---------------------------------------  ------------------------------------------ 
 Volatility caused by the UK's            -- Our steering committee continually 
  withdrawal from the EU may impact        monitors the evolving impact 
  our overall financial performance        of the UK's withdrawal from 
  and our ambitions under supply           the EU and oversees our response. 
  chain operational excellence.            -- We have prepared for a no-deal 
                                           scenario across all business 
                                           activities including supply 
                                           chain, trade compliance, intellectual 
                                           property and people. 
                                           -- Any transitional arrangement 
                                           potentially offers some temporary 
                                           relief for longer-term mitigation 
                                           planning and implementation. 
                                           -- We engage with UK government 
                                           departments and other external 
                                           stakeholders to ensure they 
                                           are fully informed of our circumstances. 
---------------------------------------  ------------------------------------------ 
 RISK TOLERANCE 
---------------------------------------  ------------------------------------------ 
 We have a low tolerance for 
  risk caused by the UK's withdrawal 
  from the EU, however, there 
  remains uncertainty about the 
  long-term impact. 
--------------------------------------- 
 EXAMPLES OF RISKS 
--------------------------------------- 
 -- Additional customs duty from 
  exiting the EU single market 
  and the cessation of the UK's 
  access to the EU's free trade 
  agreements. 
  -- Disruption to business operations. 
  -- Impact on some current business 
  road maps. 
  -- Extended supply chain lead 
  times could increase inventory 
  levels. 
  -- Uncertainty over the rights 
  of EU nationals has increased 
  the risk of being unable to 
  recruit and retain talent. 
  -- Exchange rate volatility 
  impacts Group revenues, margins, 
  profits and cash flow. 
---------------------------------------  ------------------------------------------ 
 

Gemma Parsons

Company Secretary

Burberry Group plc

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 or visit www.rns.com.

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