TIDMBRBY
RNS Number : 6926G
Burberry Group PLC
17 November 2022
17 November 2022
BURBERRY GROUP PLC
THE NEXT PHASE: MODERN BRITISH LUXURY
"Burberry has an extraordinary legacy, a unique British heritage
and a very strong platform to build on, as shown in our half-year
results. Our focus in this next phase is on growth and
acceleration. We have a clear plan to achieve this across brand,
product and distribution and a very talented designer in Daniel
Lee, supported by a passionate team. I am confident in our ability
to deliver our medium-term targets and realise our potential as the
modern British luxury brand. I am excited about what we can achieve
in pursuit of our long-term ambition to reach GBP5bn in revenue."
Jonathan Akeroyd, Chief Executive Officer
Strategy for the next phase
The key elements of our plan to drive revenue growth and
acceleration are:
-- Harness the power of our brand, informed by a new creative vision set by Daniel Lee
o Refocus on Britishness and strengthen our connection with
British design, craft and culture
o Amplify our brand through strong marketing and communication
activations with high levels of impact
-- Bring all product categories to full potential
o Broadly double sales of leather goods, shoes and women's ready
to wear and grow outerwear by around 50% in the medium term
o Ambition to grow accessories to more than 50% of Group sales
in the long term
-- Grow customer lifetime value
o Accelerate customer acquisition, strengthen our relationship
with customers and drive loyalty and retention
-- Strengthen distribution across all channels and regions
o Convert all stores to new concept by end-FY26 and boost sales
densities by more than 50% to GBP25k per sq m
o Double e-commerce revenue to reach around 15% of retail sales
in the medium term
o Accelerate momentum in core markets
-- Seamless execution
o Continue to simplify and streamline key processes, deliver our
bold sustainability commitments, ensure our people are supported
and inspired to deliver, and positively impact our communities
OUTLOOK
We maintain our near-term guidance to FY24 while mindful of the
challenging macro environment and its potential impact on trading,
particularly Covid-19 related disruption in Mainland China and
recessionary risks in Europe and the Americas. We have established
a new medium-term target to grow sales to GBP4bn at CER*,
sustaining high-single digit growth with operating leverage
ensuring good margin progression.
* Base year FY22 exchange rates
INTERIM RESULTS FOR 26 WEEKSED 1 OCTOBER 2022
GROUP FINANCIAL HIGHLIGHTS
Period ended 26 weeks ended 26 weeks YoY % YoY %
1 October ended change change
25 September Reported CER
FX
GBP million 2022 2021
------------------------------- --------------- -------------- ---------- ---------
Revenue 1,345 1,213 11 5
Retail comparable store
sales* +5% +37%
Adjusted operating profit* 238 196 21 6
Adjusted operating profit
margin * 17.7% 16.2% +150bps +10bps
Adjusted Diluted EPS (pence)* 44.3 33.5 32 15
Reported operating profit 263 207 27
Reported operating profit
margin 19.5% 17.1% +240bps
Reported diluted EPS (pence) 48.9 35.7 37
Free cash flow* 88 104
Dividend (pence) 16.5 11.6 42
------------------------------- --------------- -------------- ---------- ---------
*See page 12/13 for definitions of alternative performance
measures,
Revenue
-- Revenue GBP1,345m +5% CER, +11% reported
-- Retail comparable store sales +5% (Q1: +1%; Q2: +11%); Wholesale +1% CER, +6% reported
Adjusted profit
-- Adjusted operating profit GBP238m, +6% CER, +21% reported
-- Adjusted gross margin of 70.1%, flat at CER and +80bps at reported rates
-- Adjusted operating profit margin of 16.3% at CER, (+10bps), 17.7% reported rates (+150bps)
-- Operating expenses before adjusting items rose 4% at CER (+9% reported)
-- Adjusted diluted EPS 44.3p, +15% at CER, +32% reported
Reported profit measures
-- Operating profit GBP263m, +27% after adjusting items of
GBP25m net credit (H1 FY22: GBP11m net credit)
-- Diluted EPS 48.9p, +37% reported
Cash measures
-- Interim dividend per share declared of 16.5 p (H1 FY22: 11.6p)
-- Free cash flow of GBP88m (H1 FY22: GBP104m)
-- Cash net of overdrafts and borrowings of GBP643m at 1 October
2022 (2 April 2022: GBP879m). Cash net of overdrafts amounted to
GBP941m with borrowings of GBP298m and IFRS 16 liabilities of
GBP1,139m.
Business review
During the period, we continued to invest in our brand. We ran a
highly successful campaign to support the expansion of our Lola
handbag range, which drove above average comparable store sales
growth in leather goods. We had a strong reception to our AW22
collection and we also debuted our SS23 collection, celebrating the
British seaside. The show, which was Riccardo Tisci's last for
Burberry, was streamed across local and global platforms where it
was watched 1.5m times. We have started the second half with the
launch of our outerwear campaign. This was accompanied by a film,
'Night Creatures', that reflects a celebration of the joy and
opportunity found in fearlessly embracing the unknown.
New product launches and seasonal collections performed
strongly. Leather goods sales saw good momentum with comparable
sales increasing +15% in Q2; and +11% in H1. This was driven by
handbags with the Lola now our best seller and helped by the
introduction of the Frances shape for AW22. Outerwear comparable
sales grew +3% in H1. Growth was impacted by lockdowns in Mainland
China. The performance outside of Mainland China robust at +18%
growth, with a strong performance across both Men's and
Women's.
In H1 we opened or renovated 22 stores including Bal Harbour in
Miami and Taipei 101. We remain on track to open or refurbish 65
stores in the new concept this year, in addition to the 47 stores
from FY22.
In August, Burberry became the first luxury fashion brand and
one of the first companies globally to receive approval from the
Science Based Targets initiative (SBTi) for our net-zero emissions
target. As we continue to explore alternative materials, we are
proud to have become an Innovation Partner of Fashion For Good, a
global initiative designed to inspire change across the
industry.
To support our colleagues with the rising cost of living this
winter, we brought forward the new UK real Living Wage pay rates as
defined by the Living Wage Foundation by more than six months. As
we expand our support for young people around the world through The
Burberry Foundation, we recently announced two new partners,
International Youth Foundation and UK-based OnSide.
All metrics and commentary in the Group Financial Highlights and
Business and Financial Review exclude adjusting items unless stated
otherwise.
The following alternative performance measures are presented in
this announcement: CER, adjusted profit measures, comparable sales,
free cash flow, cash conversion, adjusted EBITDA and net debt. The
definition of these alternative performance measures are in the
Appendix on page 12/13.
Certain financial data within this announcement have been
rounded. Growth rates and ratios are calculated on unrounded
numbers.
ENQUIRIES
Investors and analysts 020 3367 4458
Julian Easthope VP, Investor Relations julian.easthope@burberry.com
Media 020 3367 3764
Andrew Roberts SVP, Corporate Relations andrew.roberts@burberry.com
and Engagement
----------------- -------------------------- -----------------------------
-- There will be a presentation today at 9.30am (UK time) to
investors and analysts at our Regent Street store - 121 Regent St.,
London W1B 4TB
-- The presentation can be viewed live on the Burberry website
www.burberryplc.com and can also be accessed live via a listen only
dial-in facility on +44 (0)20 3936 2999 (access code 056896)
-- The supporting slides and an indexed replay will be available
on the website later in the day
-- Burberry will issue its Third Quarter Trading Update on 18 January 2023
Certain statements made in this announcement are forward-looking
statements. Such statements are based on current expectations and
are subject to a number of risks and uncertainties that could cause
actual results to differ materially from any expected future
results in forward-looking statements. Burberry Group plc
undertakes no obligation to update these forward-looking statements
and will not publicly release any revisions it may make to these
forward-looking statements that may result from events or
circumstances arising after the date of this document. Nothing in
this announcement should be construed as a profit forecast. All
persons, wherever located, should consult any additional
disclosures that Burberry Group plc may make in any regulatory
announcements or documents which it publishes. All persons,
wherever located, should take note of these disclosures. This
announcement does not constitute an invitation to underwrite,
subscribe for or otherwise acquire or dispose of any Burberry Group
plc shares, in the UK, or in the US, or under the
US Securities Act 1933 or in any other jurisdiction.
Burberry is listed on the London Stock Exchange (BRBY.L) and is
a constituent of the FTSE 100 index. ADR symbol OTC:BURBY.
BURBERRY, the Equestrian Knight Device, the Burberry Check, and the
Thomas Burberry Monogram and Print are trademarks belonging to
Burberry.
www.burberryplc.com
LinkedIn: Burberry
SUMMARY INCOME STATEMENT
Period ended 26 weeks 26 weeks YoY % change YoY % change
GBP million ended ended Reported CER
1 October 25 September FX
2022
2021
-------------- -------------
Revenue 1,345 1,213 11 5
Cost of sales* (403) (372) 8 5
-------------------------- ----------- -------------- ------------- -------------
Gross profit* 942 841 12 5
Gross margin* 70.1% 69.3% +80bps flat
Net operating expenses* (704) (645) 9 4
Operating expenses as
a % of sales* 52.4% 53.2% -80bps -20bps
-------------------------- ----------- -------------- ------------- -------------
Adjusted operating
profit* 238 196 21 6
Adjusted operating
margin * 17.7% 16.2% +150bps +10bps
Adjusting operating
items 25 11
-------------------------- ----------- -------------- ------------- -------------
Operating profit 263 207
Operating margin 19.5% 17.1% 240bps
Net finance charge (12) (16)
-------------------------- ----------- -------------- ------------- -------------
Profit before taxation 251 191
Taxation (57) (46)
Non-controlling interest (1) -
Attributable profit 193 145
Adjusted profit before
taxation* 226 180 26
Adjusted diluted EPS
(pence)* 44.3 33.5 32
Diluted EPS (pence) 48.9 35.7 37
Weighted average number
of diluted ordinary
shares (millions) 394.4 406.3
Adjusted EBITDA* 401 341 18
-------------------------- ----------- -------------- ------------- -------------
* Excludes adjusting items. All items below adjusting operating
items on a reported basis unless otherwise stated
For detail, see Appendix.
FINANCIAL PERFORMANCE
Revenue by channel
26 weeks 26 weeks YoY % change YoY % change
ended ended Reported CER
1 October 25 September FX
Period ended 2022 2021
GBP million
----------------------------- ------------ ------------
Retail 1,061 944 12 6
Retail comparable store
sales growth 5% 37%
Wholesale 263 249 6 1
Licensing 21 20 6 8
---------- ------------- ------------ ------------
Revenue 1,345 1,213 11 5
----------------------------- ---------- ------------- ------------ ------------
-- H1 FY23 Retail sales +6% at CER; +12% reported
-- Impact of space +1%
-- Total comparable store sales grew 5% with Q1 +1% impacted by
COVID lockdowns in Mainland China and Q2 +11%. Comparable store
sales outside of Mainland China +15% in Q2 FY23 broadly in line
with +16% in Q1 FY23
Comparable store sales growth by region
FY23 vs LY
Q1 Q2 H1
-----
Group +1% +11% +5%
Asia Pacific -16% +11% -4%
EMEIA +47% +25% +34%
Americas -4% -3% -3%
----- ----- -----
Asia Pacific H1 FY23 comparable store sales declined 4% with
COVID related lockdowns in Mainland China in Q1 FY23 impacting the
overall result:
-- Mainland China comparable store sales fell 19% in the half
with Q2 FY23 broadly stable despite localised COVID related
lockdowns in September following a 35% decline in Q1 FY23
-- South Korea grew 5% in H1 FY23 with Q2 FY23 up 11% benefiting
from having around 40% of the stores in the new concept
-- South Asia Pacific (SAP) rose over 40% in H1 FY23 with a
strong performance across South East Asia and Australia
-- Japan also saw strong comparable store sales growth up 25%
EMEIA comparable store sales grew 34% in H1 FY23 with Q1 FY23 up
47% recovering strongly from the COVID related lockdowns last year
and Q2 FY23 +25%, a strong performance against a period with most
stores open last year:
-- The region benefited from strong tourist growth that more
than doubled in the half, doubling its share of the mix to more
than 40% of total sales with a very strong performance from US,
Middle East and other Asia outside of Mainland China
-- Continental Europe outperformed in the region with a strong performance from France and Spain
-- The UK performed in line with the region average
-- Americas H1 FY23 fell 3% with a similar performance over the
period. We continue to see higher AUR categories, especially bags,
performing well with some pressure in the entry level items.
Compared with pre-pandemic levels, the Americas saw H1 FY23
comparable store sales growth in excess of 30% and significantly
higher for full price sales. Globally, the US customer remained
broadly stable in Q2 FY23 as Americans transitioned to buying
Burberry in EMEIA.
By product
-- We maintained our focus on the core leather and outerwear
categories with both showing a good performance in the half
excluding the impact of the Mainland China lockdowns
-- Outerwear comparable store sales grew +18% in H1 FY23
excluding Mainland China (+3% including Mainland China with the
category disproportionately impacted by the Q1 FY23 lockdowns),
with a strong performance in Men's
-- Leather Goods comparable store sales grew +11% in H1 FY23
including Mainland China. This was driven by bags especially from
the continued success of our Lola campaign as well as the Frances
shape
-- Within Ready-to-wear, both Men's and Women's performance was broadly in line with the average
Store footprint
The transformation of our distribution network continued as we
rolled out the new concept stores:
-- In H1 FY23 we opened 10 mainline stores, closed 13 stores
with one outlet opened and one closed
-- Including refurbishments, we increased the number of new concept stores by 22
-- Key openings/refurbishments in the new concept included Bal Harbour in Miami and Taipei 101
-- We now have 69 stores in the new design; 56 in Asia including
19 in South Korea and 18 in Mainland China, 9 in EMEIA and 4 in
Americas.
-- We remain on track to increase the footprint of new concept
stores by 65 in FY23 to 112 cumulatively and complete the roll out
by FY26
-- We remain pleased with the performance of new stores that
have generated a higher revenue and AUR following their
openings
WHOLESALE
-- Wholesale revenue increased 1% at CER (+6% at reported rates)
with a good performance in the Americas and EMEIA broadly offset by
the halting of shipments to Russia as well as weakness in Asia
travel retail following COVID related lockdowns
LICENSING
Licensing revenue grew 8% at CER and 6% at reported exchange
rates.
OPERATING PROFIT ANALYSIS
Adjusted operating profit
Period ended 26 weeks 26 weeks YoY % change YoY %
GBP million ended ended change
1 October 25 September
2022 2021
Reported CER
FX
Revenue 1,345 1,213 11 5
Cost of sales* (403) (372) 8 5
Gross profit* 942 841 12 5
Gross margin %* 70.1% 69.3% +80bps flat
Net operating expenses* (704) (645) 9 4
Operating expenses as
a % of sales* 52.4% 53.2% -80bps -20bps
---------------------------- ----------- -------------- ------------- --------
Adjusted operating profit* 238 196 21 6
Adjusted operating margin
%* 17.7% 16.2% +150bps +10bps
---------------------------- ----------- -------------- ------------- --------
*Excludes adjusting items
Adjusted operating profit increased 6% at CER and 21% reported
with the margin up 10bps and 150bps respectively:
-- Gross margin was flat at CER with benefits from price
increases offset by cost inflation and regional sales mix headwinds
. It increased 80bps at reported rates
-- Adjusted operating expenses rose by 4% at CER
-- Adjusted operating profit came in at GBP238m including a GBP31m FX tailwind in H1 FY23
ADJUSTING ITEMS(*)
Period ended 26 weeks ended 26 weeks ended
GBP million 1 October 25 September
2022 2021
---------------
The impact of COVID-19
Inventory provisions** 1 6
Rent concessions 7 9
Government grants 1 1
COVID-19 adjusting items 9 16
Profit on sale of property 19 -
Revaluation of deferred consideration (2) -
liability
Restructuring costs (1) (5)
Adjusting items 25 11
--------------------------------------- ---------------
Adjusting items were a net credit of GBP25m (H1 FY22: GBP11m net
credit).
*For more details see note 4 of the Financial Statements
**Includes a GBP1m credit (H1 FY22: GBP6m credit) that has been
recognised through COGS
The key adjusting items are as follows:
-- Impact of the COVID-19 pandemic: we saw a total credit of
GBP9m from COVID-19 related adjustments with GBP1m representing an
inventory provision reversal, GBP7m of rent concessions and GBP1m
of Government grants
-- GBP1m of restructuring costs
-- Net GBP19m profit on the sale of a Boston property
ADJUSTED PROFIT BEFORE TAX*
After an adjusted net finance charge of GBP12m (H1 FY22:
GBP16m), adjusted profit before tax was GBP226m (H1 FY22:
GBP180m).
*For detail on adjusting items see note 4 of the Financial
Statements
TAXATION*
The effective tax rate on adjusted profit decreased to 22.4% (H1
FY22: 24.1%). This was lower than the prior year due to increased
adjusted profits rebalancing the geographical mix. The reported tax
rate on H1 FY23 profit before taxation was 22.7% (H1 FY22:
24.1%).
* For detail see note 6 of the Financial Statements
CASH FLOW
Represented statement of cash flows
The following table is a representation of the cash flows.
Period ended 26 weeks ended 26 weeks ended
GBP million 1 October 25 September
2022 2021
Adjusted operating profit 238 196
Depreciation and amortisation 163 145
Working capital (125) (27)
Other including adjusting items 13 9
---------------------------------------- --------------- --------------
Cash inflow from operations 289 323
Payment of lease principal and related
cash flows (93) (89)
Capital expenditure (53) (39)
Proceeds from disposal of non-current
assets 22 8
Interest (12) (15)
Tax (65) (84)
---------------------------------------- --------------- --------------
Free cash flow 88 104
---------------------------------------- --------------- --------------
Free cash inflow* was GBP88m in the half (H1 FY22: GBP104m).
The major components were:
-- Cash generated from operating activities decreased to GBP289m from GBP323m
o A working capital outflow of GBP125m (H1 FY22: GBP27m outflow)
due to the accelerated inventory build ahead of the festive season,
increased trade year-on-year, FX and timing of wholesale
shipments
-- Capital expenditure of GBP53m (H1 FY22: GBP39m)
Cash net of overdrafts at 1 October 2022 was GBP941m, compared
to GBP1,177m at 2 April 2022. At 1 October 2022 borrowings were
GBP298m from the bond issue leaving cash net of overdrafts and
borrowings of GBP643m (2 April 2022: GBP879m). With lease
liabilities of GBP1,139m, net debt in the period was GBP496m (2
April 2022: GBP179m). Net Debt / Adjusted EBITDA was 0.6x on a
rolling 12 months period, at the lower end of our target range of
0.5x to 1.0x. The increase in gearing from 0.2x at the year end has
primarily been driven by the share buy back programme.
*For a definition of free cash flow and net debt see pages 12-13
.
Period ended 26 weeks ended 26 weeks ended
GBP million 1 October 25 September
2022 2021
Adjusted EBITDA - rolling
12 months 896 834
Cash net of overdrafts (941) (1,143)
Bond 298 297
Lease debt 1,139 1,070
--------------- ---------------
Net Debt 496 224
Net Debt/Adjusted EBITDA 0.6x 0.3x
--------------- ---------------
APPIX
Detailed guidance for FY23
Item Financial impact
Markdowns Markdowns were fully exited in FY22 and are
no longer a headwind going forward.
-----------------------------------------------------
Wholesale revenue Wholesale is expected to be broadly stable in
FY23.
-----------------------------------------------------
Impact of retail Space is expected to be broadly stable in FY23.
space on revenues
-----------------------------------------------------
Tax We expect the adjusted tax rate to be around
22%.
-----------------------------------------------------
Capex Capex is expected to be c.GBP170m including
around 65 stores opened/refurbished in the new
concept.
-----------------------------------------------------
Dividend Interim dividend recommended at 16.5 p. 42%
ahead of H1 FY22.
-----------------------------------------------------
Cash interest Rising interest rates are now expected to lead
to a GBP17m year-on-year benefit in net cash
interest income relative to last year
---------------------------------------------------
Share buy back GBP400m share buyback commenced, GBP180m completed
at end September with the balance to be completed
during FY23
-----------------------------------------------------
Calendar FY23 is a 52 week calendar year with FY22 a
53 week year. The extra week in FY22 contributed
GBP35m revenue and GBP9m adjusted operating
profit.
-----------------------------------------------------
FX Based on 27 October effective FX rates, the
impact of year-on-year exchange rate movements
is expected to be a c.GBP170m tailwind on revenue
and c.GBP70m tailwind on adjusted operating
profit
-----------------------------------------------------
Note: guidance based on CER at FY22 rates
Retail/wholesale revenue by destination*
Period ended 26 weeks 26 weeks YoY % change
ended ended
1 October 25 September
GBP million 2022 2021 Reported CER
FX
-------------------------------- -------- -------------- ---------- ------------
Asia Pacific (93% retail)* 525 522 0 (5)
EMEIA ( 66 % retail)* 445 361 23 23
Americas ( 79 % retail)* 354 310 14 0
Total 1,324 1,193 11 5
-------------------------------- -------- -------------- ----------
* Mix based on H1 FY23
Retail/wholesale revenue by product division
Period ended 26 weeks 26 weeks YoY % change
ended ended
1 October 25 September
GBP million 2022 2021 Reported CER
FX
--------------------- ----------- -------------- ------------- -----
Accessories 495 435 14 7
Women's 357 330 8 3
Men's 383 347 10 4
Children's & other 89 81 10 3
Total 1,324 1,193 11 5
--------------------- ----------- -------------- -------------
Store portfolio
Directly-operated stores
--------------------------------------- ----------
Stores Concessions Outlets Total Franchise
stores
--------------------- ------- ------------ -------- ----------
At 2 April 2022 218 143 57 418 38
Additions 9 1 1 11 1
Closures (6) (7) (1) (14) (1)
At 1 October
2022 221 137 57 415 38
------- ------------ --------
Store portfolio by region*
Directly-operated stores
--------------------------------------- ----------
Stores Concessions Outlets Total Franchise
At 1 October 2022 stores
--------------------- ------- ------------ -------- ----------
Asia Pacific 107 91 24 222 8
EMEIA 53 37 18 108 30
Americas 61 9 15 85 -
Total 221 137 57 415 38
------- ------------ --------
*Excludes the impact of pop up stores
*For additional detail on adjusting items see note 4 of the
Financial Statements
26 weeks ended 26 weeks YoY % change YoY % change
Adjusted operating 1 October ended Reported CER
profit* 2022 25 September FX
Period ended 2021
GBP millions
Retail/wholesale 219 178 23 5
Licensing 19 18 4 11
--------------------- --------------- -------------- ------------- -------------
Adjusted operating
profit 238 196 21 6
Adjusted operating
margin 17.7% 16.2% + 150bps + 10bps
--------------------- --------------- -------------- ------------- -------------
Exchange rates Forecast effective rates Actual average exchange rates
for FY23
27 October 11 July 2022 H1 FY23 H1 FY22 FY22
GBP1= 2022
------------ ------------- ----------- ----------- --------
Euro 1.17 1.18 1.17 1.16 1.18
US Dollar 1.18 1.20 1.21 1.39 1.36
Chinese Renminbi 8.29 8.03 8.16 8.98 8.73
Hong Kong Dollar 9.26 9.45 9.50 10.79 10.63
Korean Won 1,595 1,557 1,579 1,583 1,596
------------ ------------- ----------- ----------- --------
Profit before tax reconciliation
--------------- -------------
Period ended 26 weeks 26 weeks ended YoY % change YoY % change
GBP million ended 25 September Reported CER
1 October 2021 FX
2022
Adjusted profit before
tax 226 180 26 10
Adjusting items*
COVID-19 related items 9 16
Profit on sale of property 19 -
Restructuring costs (1) (5)
Revaluation of deferred (2) -
consideration liability
Profit before tax 251 191 32
----------- --------------- -------------
*For additional detail on adjusting items see note 4 of the
Financial Statements
ALTERNATIVE PERFORMANCE MEASURES
Alternative performance measures (APMs) are non-GAAP measures.
The Board uses the following APMs to describe the Group's financial
performance and for internal budgeting, performance monitoring,
management remuneration target setting and for external reporting
purposes.
APM Description and purpose GAAP measure reconciled to
Constant This measure removes the Results at reported rates
Exchange effect of changes in exchange
Rates (CER) rates and the 53(rd) week
in the prior period. The
constant exchange rate
incorporates both the impact
of the movement in exchange
rates on the translation
of overseas subsidiaries'
results and also on foreign
currency procurement and
sales through the Group's
UK supply chain.
------------------------------------- --------------------------------------------------------------
Comparable The year-on-year change Retail Revenue:
sales in sales from stores trading Period ended 26 weeks 26 weeks
over equivalent time periods YoY% ended ended
and measured at constant 1 October 25 September
foreign exchange rates. 2022 2021
It also includes online ---------------- ----------- --------------
sales. This measure is Comparable
used to strip out the impact sales 5% 37%
of permanent store openings Change in
and closings, or those space 1% 4%
closures relating to refurbishments, ---------------- ----------- --------------
allowing a comparison of CER retail 6% 41%
equivalent store performance ---------------- ----------- --------------
against the prior period. FX 6% (7%)
The measurement of comparable ---------------- ----------- --------------
sales has not excluded Retail revenue 12% 34%
stores temporarily closed ---------------- ----------- --------------
as a result of the COVID-19
outbreak.
------------------------------------- --------------------------------------------------------------
Comparable The change in sales over
sales vs three years measured at
pre-pandemic constant foreign exchange
levels (FY20) rates. It also includes
online sales. The measurement
of comparable sales has
not excluded stores temporarily
closed as a result of the
COVID-19 outbreak. This
measure reflects the three
year aggregation of the
growth rates.
------------------------------------- --------------------------------------------------------------
Adjusted Adjusted profit measures Reported Profit:
Profit are presented to provide A reconciliation of reported profit
additional consideration before tax to adjusted profit before
of the underlying performance tax and the Group's accounting policy
of the Group's ongoing for adjusted profit before tax are
business. These measures set out in the financial statements.
remove the impact of those
items which should be excluded
to provide a consistent
and comparable view of
performance .
------------------------------------- --------------------------------------------------------------
Free Cash Free cash flow is defined Net cash generated from operating
Flow as net cash generated from activities: Period ended 26 weeks 26 weeks
operating activities less GBPm ended ended
capital expenditure plus 1 October 25 September
cash inflows from disposal 2022 2021
of fixed assets and including -------------------- ----------- --------------
cash outflows for lease Net cash generated
principal payments and from operating
other lease related items. activities 212 224
Capex (53) (39)
Lease principal
and related
cash flows (93) (89)
Proceeds from
disposal of
non-current
assets 22 8
-------------------- ----------- --------------
Free cash flow 88 104
------------------------------------- --------------------------------------------------------------
Cash Conversion Cash conversion is defined Net cash generated from operating
as free cash flow activities:
pre-tax/adjusted ---------------------------------------------
profit before tax. It Period ended 26 weeks 26 weeks
provides GBPm ended ended
a measure of the Group's 1 October 25 September
effectiveness in converting 2022 2021
its profit into cash. ----------------- ----------- ----------------
Free cash
flow 88 104
Tax paid 65 84
----------------- ----------- ----------------
Free cash
flow before
tax 153 188
----------------- ----------- ----------------
Adjusted
profit before
tax 226 180
Cash conversion 68% 104%
Net Debt Net debt is defined as Cash net of overdrafts: Period ended 26 weeks 26 weeks
the lease liability GBPm ended ended
recognised 1 October 25 September
on the balance sheet plus 2022 2021
borrowings less cash net ----------------- ----------- --------------
of overdrafts. Cash net of
overdrafts 941 1,143
Lease liability (1,139) (1,070)
Borrowings (298) (297)
----------------- ----------- --------------
Net debt (496) (224)
---------------------------- ----------------------------------------------------------------------
Adjusted Adjusted EBITDA is defined Reconciliation from operating profit
EBITDA as operating profit, to adjusted EBITDA:
excluding Period ended 26 weeks 26 weeks
adjusting operating items, GBPm ended ended
depreciation of property, 1 October 25 September
plant and equipment, 2022 2021
depreciation ---------------------- ----------- --------------
of right of use assets Operating profit 263 207
and amortisation of Adjusted operating
intangible items (25) (11)
assets. Any depreciation Amortisation
or amortisation included of intangible
in adjusting operating assets 18 18
items are not Depreciation
double-counted. of property,
Adjusted EBITDA is shown plant and equipment 45 38
for the calculation of Depreciation
Net Debt/EBITDA for our of right-of-use
gearing ratios. assets 100 89
---------------------- ----------- --------------
Adjusted EBITDA 401 341
---------------------------- ----------------------------------------------------------------------
PRINCIPAL RISKS
At H1 FY23, the principal risks the Group faces for the
remaining 26 weeks of the financial year have been reviewed
relative to the prior year-end. In most cases, the principal risks
are consistent with the year-end position, however there is
increased uncertainty in the external risk environment,
specifically the geopolitical and macro-economic environment. The
uncertainty is considered to have elevated two principal risks: i)
macro-economic and political instability; and ii) volatility in
foreign exchange rates. In response to the geopolitical and
macro-economic environment, the Group has implemented and planned
mitigations, and has introduced additional monitoring across
business areas. The Group's hedging policy remains in place to
mitigate FX volatility. All other principal risks remain broadly in
line with the prior year-end position. Details of the principal
risks including definitions are set out in the FY21/22 Annual
Report (p107 - 129).
CONDENSED GROUP INCOME STATEMENT- UNAUDITED
26 weeks 26 weeks 53 weeks
to to to
1 October 25 September 2 April
2022 2021 2022(1)
Note GBPm GBPm GBPm
--------------------------------------- ---- ---------- ------------- --------
Revenue 3 1,345 1,213 2,826
Cost of sales (402) (366) (815)
--------------------------------------- ---- ---------- ------------- --------
Gross profit 943 847 2,011
--------------------------------------- ---- ---------- ------------- --------
Operating expenses (712) ( 658 ) (1,498)
Other operating income 32 18 30
--------------------------------------- ---- ---------- ------------- --------
Net operating expenses (680) (640) (1,468)
--------------------------------------- ---- ---------- ------------- --------
Operating profit 263 207 543
Financing
--------------------------------------- ---- ---------- ------------- --------
Finance income 6 1 3
Finance expense (18) (17) (34)
Other financing charge - - (1)
--------------------------------------- ---- ---------- ------------- --------
Net finance expense 5 (12) (16) (32)
--------------------------------------- ---- ---------- ------------- --------
Profit before taxation 251 191 511
Taxation 6 (57) (46) (114)
--------------------------------------- ---- ---------- ------------- --------
Profit for the period 194 145 397
--------------------------------------- ---- ---------- ------------- --------
Attributable to:
Owners of the Company 193 145 396
Non-controlling interest 1 - 1
--------------------------------------- ---- ---------- ------------- --------
Profit for the period 194 145 397
--------------------------------------- ---- ---------- ------------- --------
Earnings per share
Basic 7 49.1p 35.8p 98.2p
Diluted 7 48.9p 35.7p 97.7p
--------------------------------------- ---- ---------- ------------- --------
GBPm GBPm GBPm
--------------------------------------- ---- ---------- ------------- --------
Reconciliation of adjusted profit
before taxation:
Profit before taxation 251 191 511
Adjusting operating items:
Cost of sales (income) 4 (1) (6) (16)
Net operating income 4 (24) (5) (4)
Adjusting financing items 4 - - 1
--------------------------------------- ---- ---------- ------------- --------
Adjusted profit before taxation -
non-GAAP measure 226 180 492
--------------------------------------- ---- ---------- ------------- --------
Adjusted earnings per share - non-GAAP
measure
Basic 7 44.5p 33.7p 94.5p
Diluted 7 44.3p 33.5p 94.0p
--------------------------------------- ---- ---------- ------------- --------
Dividends per share
Proposed interim (not recognised as
a liability at period end) 8 16.5p 11.6p 11.6p
Final (not recognised as a liability
at 2 April 2022) 8 N/A N/A 35.4p
--------------------------------------- ---- ---------- ------------- --------
(1) Balances for the 53 weeks to 2 April 2022 have been
audited.
CONDENSED Group STATEMENT OF COMPREHENSIVE INCOME -
UNAUDITED
26 weeks 26 weeks 53 weeks
to to to
1 October 25 September 2 April(1)
2021
2022 GBPm 2022
GBPm GBPm
------------------------------------------- ---------- ------------- -----------
Profit for the period 194 145 397
Other comprehensive income(2) :
Cash flow hedges 1 - (1)
Foreign currency translation differences 53 4 22
Tax on other comprehensive income:
Foreign currency translation differences (1) - -
Other comprehensive income for the
period, net of tax 53 4 21
----------------------------------------------- ---------- ------------- -----------
Total comprehensive income for the
period 247 149 418
----------------------------------------------- ---------- ------------- -----------
Total comprehensive income attributable
to:
Owners of the Company 245 149 417
Non-controlling interest 2 - 1
----------------------------------------------- ---------- ------------- -----------
247 149 418
---------------------------------------------- ---------- ------------- -----------
(1) Balances for the 53 weeks to 2 April 2022 have been
audited.
(2) All items included in other comprehensive income may
subsequently be reclassified to profit and loss in a future
period.
CONDENSED Group Balance Sheet - UNAUDITED
As at As at As at
1 October 25 September 2 April
2022 2021 2022(1)
Note GBPm GBPm GBPm
------------------------------------- ---- ---------- ------------- --------
ASSETS
Non-current assets
Intangible assets 9 245 234 240
Property, plant and equipment 10 345 277 322
Right-of-use assets 11 947 875 880
Deferred tax assets 6 204 158 175
Trade and other receivables 12 53 47 45
1,794 1,591 1,662
------------------------------------- ---- ---------- ------------- --------
Current assets
Inventories 13 484 434 426
Trade and other receivables 12 338 300 283
Derivative financial assets 3 1 5
Income tax receivables 87 56 86
Cash and cash equivalents 14 1,017 1,197 1,222
Assets held for sale 10 11 - 13
------------------------------------- ---- ---------- ------------- --------
1,940 1,988 2,035
------------------------------------- ---- ---------- ------------- --------
Total assets 3,734 3,579 3,697
------------------------------------- ---- ---------- ------------- --------
LIABILITIES
Non-current liabilities
Trade and other payables 15 (84) (94) (91)
Lease liabilities (922) (853) (849)
Borrowings 18 (298) (297) (298)
Deferred tax liabilities 6 (1) (1) (1)
Retirement benefit obligations (1) (1) (1)
Provisions for other liabilities and
charges 16 (40) (33) (36)
------------------------------------- ---- ---------- ------------- --------
(1,346) (1,279) (1,276)
------------------------------------- ---- ---------- ------------- --------
Current liabilities
Trade and other payables 15 (498) (443) (481)
Bank overdrafts 17 (76) (54) (45)
Lease liabilities (217) (217) (209)
Derivative financial liabilities (5) (3) (2)
Income tax liabilities (34) (26) (39)
Provisions for other liabilities and
charges 16 (27) (21) (28)
(857) (764) (804)
------------------------------------- ---- ---------- ------------- --------
Total liabilities (2,203) (2,043) (2,080)
------------------------------------- ---- ---------- ------------- --------
Net assets 1,531 1,536 1,617
------------------------------------- ---- ---------- ------------- --------
EQUITY
Capital and reserves attributable
to owners of the Company
Ordinary share capital 19 - - -
Share premium account 228 224 227
Capital reserve 41 41 41
Hedging reserve 5 5 4
Foreign currency translation reserve 269 200 218
Retained earnings 982 1,063 1,123
------------------------------------- ---- ---------- ------------- --------
Equity attributable to owners of the
Company 1,525 1,533 1,613
Non-controlling interest in equity 6 3 4
------------------------------------- ---- ---------- ------------- --------
Total equity 1,531 1,536 1,617
------------------------------------- ---- ---------- ------------- --------
(1) Balances as at 2 April 2022 have been audited.
CONDENSED Group STATEMENT OF CHANGES IN EQUITY - UNAUDITED
Attributable to owners
of the Company
----------------------------------------
Ordinary Share
share premium Other Retained Non-controlling Total
capital account reserves earnings Total interest equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------- --- -------- -------- --------- --------- ----- --------------- -------
Balance as at 27 March 2021 - 223 242 1,092 1,557 3 1,560
-------------------------------- --- -------- -------- --------- --------- ----- --------------- -------
Profit for the period - - - 145 145 - 145
Other comprehensive income:
Foreign currency translation
differences - - 4 - 4 - 4
Total comprehensive income
for the period - - 4 145 149 - 149
-------------------------------- --- -------- -------- --------- --------- ----- --------------- -------
Transactions with owners:
Employee share incentive
schemes
Equity share awards - - - 7 7 - 7
Equity share awards
transferred
to liabilities - - - (1) (1) - (1)
Exercise of share options - 1 - - 1 - 1
Purchase of own shares
Held by ESOP trusts - - - (8) (8) - (8)
Dividends paid in the period - - - (172) (172) - (172)
-------------------------------- --- -------- -------- --------- --------- ----- --------------- -------
Balance as at 25 September
2021 - 224 246 1,063 1,533 3 1,536
-------------------------------- --- -------- -------- --------- --------- ----- --------------- -------
Balance as at 2 April 2022 - 227 263 1,123 1,613 4 1,617
-------------------------------- --- -------- -------- --------- --------- ----- --------------- -------
Profit for the period - - - 193 193 1 194
Other comprehensive income:
Cash flow hedges - losses
deferred in equity - - 1 - 1 - 1
Foreign currency translation
differences - - 52 - 52 1 53
Tax on other comprehensive
income - - (1) - (1) - (1)
-------------------------------- --- -------- -------- --------- --------- ----- --------------- -------
Total comprehensive income
for the period - - 52 193 245 2 247
-------------------------------- --- -------- -------- --------- --------- ----- --------------- -------
Transactions with owners:
Employee share incentive
schemes
Equity share awards - - - 10 10 - 10
Equity share awards
transferred
to liabilities - - - (2) (2) - (2)
Exercise of share options - 1 - - 1 - 1
Purchase of own shares
Share buy-back 19 - - - (201) (201) - (201)
Held by ESOP trusts - - - (1) (1) - (1)
Dividends paid in the period 8 - - - (140) (140) - (140)
Balance as at 1 October 2022 - 228 315 982 1,525 6 1,531
-------------------------------- --- -------- -------- --------- --------- ----- --------------- -------
Condensed group statement of cash flows - unaudited
26 weeks 26 weeks 53 weeks
to to to
1 October 25 September 2 April
2022 2021 2022(1)
Note GBPm GBPm GBPm
------------------------------------------------- ---- ---------- ------------- --------
Cash flows from operating activities
Operating profit 263 207 543
Amortisation of intangible assets 18 18 39
Depreciation of property, plant and equipment 45 38 86
Depreciation of right-of-use assets 100 89 188
COVID-19 related rent concessions (7) (9) (18)
Net impairment charge of property, plant
and equipment 10 - 1 1
Net impairment (reversal)/charge of right-of-use
assets 11 (1) 2 7
Gain on disposal of property, plant and
equipment and intangible assets (19) (5) (3)
Loss/(gain) on derivative instruments 5 2 (4)
Charge in respect of employee share incentive
schemes 10 7 16
Increase in inventories (46) (31) (22)
Increase in receivables (53) (26) (5)
(Decrease)/increase in payables and provisions (26) 30 81
------------------------------------------------- ---- ---------- ------------- --------
Cash generated from operating activities 289 323 909
Interest received 5 1 2
Interest paid (17) (16) (32)
Taxation paid (65) (84) (180)
------------------------------------------------- ---- ---------- ------------- --------
Net cash generated from operating activities 212 224 699
Cash flows from investing activities
Purchase of property, plant and equipment (35) (26) (124)
Purchase of intangible assets (18) (13) (37)
Proceeds from sale of property, plant
and equipment 22 8 8
Initial direct costs of right-of-use assets - (4) (4)
Payment in respect of acquisition of subsidiary - - (7)
Net cash outflow from investing activities (31) (35) (164)
Cash flows from financing activities
Dividends paid in the period (140) (172) (219)
Payment of deferred consideration for
acquisition of non-controlling interest 15 (6) - (3)
Payment of lease principal (93) (85) (202)
Issue of ordinary share capital 1 1 4
Purchase of own shares through share buy-back (180) - (150)
Purchase of own shares through share buy-back
- stamp duty and fees (1) - (3)
Purchase of own shares by ESOP trusts (1) (8) (8)
Net cash outflow from financing activities (420) (264) (581)
Net decrease in cash net of overdrafts (239) (75) (46)
Effect of exchange rate changes 3 2 7
Cash net of overdrafts at beginning of
period 1,177 1,216 1,216
------------------------------------------------- ---- ---------- ------------- --------
Cash net of overdrafts 941 1,143 1,177
------------------------------------------------- ---- ---------- ------------- --------
Cash and cash equivalents 14 1,017 1,197 1,222
Bank overdrafts 17 (76) (54) (45)
-------------------------- ----- ----- -----
Cash net of overdrafts 941 1,143 1,177
-------------------------- ----- ----- -----
(1) Balances for the 53 weeks to 2 April 2022 have been
audited.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
1. Corporate information
Burberry Group plc and its subsidiaries (the Group) is a global
luxury goods manufacturer, retailer and wholesaler. The Group also
licenses third parties to manufacture and distribute products using
the 'Burberry' trademarks. All of the companies which comprise the
Group are controlled by Burberry Group plc (the Company) directly
or indirectly.
2. Accounting policies and Basis of preparation
Basis of preparation
These condensed consolidated interim financial statements are
unaudited but have been reviewed by the auditors and their report
to the Company is set out on page 36. They were approved by the
Board of Directors on 16 November 2022. These condensed
consolidated interim financial statements do not constitute
statutory accounts within the meaning of Section 434 of the
Companies Act 2006. Statutory accounts for the 53 weeks to 2 April
2022 were approved by the Board of Directors on 17 May 2022 and
have been filed with the Registrar of Companies. The report of the
auditors on the statutory accounts for the 53 weeks to 2 April 2022
was unqualified and did not contain a statement under Section 498
of the Companies Act 2006.
These condensed consolidated interim financial statements for
the 26 weeks to 1 October 2022 have been prepared in accordance
with the Disclosure Guidance and Transparency Rules of the
Financial Services Authority and with IAS 34, 'Interim Financial
Reporting' as adopted by the UK. This report should be read in
conjunction with the Group's financial statements for the 53 weeks
to 2 April 2022, which have been prepared in accordance with UK
adopted International Accounting Standards.
These condensed consolidated interim financial statements are
presented in GBPm in order to align external reporting with the
information presented to the Chief Operating Decision Maker.
Financial ratios are calculated using unrounded numbers. Prior year
comparatives have been rounded accordingly. The face of the income
statement for the current and prior period has been updated to
provide separate disclosure on amounts of other operating income
and expense that make up total net operating expenses.
Going concern
In considering the appropriateness of adopting the going concern
basis in preparing the financial statements, the Directors have
assessed the potential cash generation of the Group. This
assessment covers the period of a minimum of 12 months from the
date of signing the condensed consolidated interim financial
statements. The Directors have also considered the forecast for the
period up to the subsequent financial year end, March 2024, for any
indicators that the going concern basis of preparation is not
appropriate.
The scenarios considered by the Directors include a severe but
plausible downside reflecting the Group's principal risks,
consistent with those at 2 April 2022, and included an increased
uncertainty in the external risk environment, specifically the
geopolitical and macro-economic environment. The uncertainty is
considered to have elevated two principial risks, being
macro-economic and political instability and volatility in foreign
exchange rates.
Further mitigating actions within management control would be
taken under each scenario, including working capital reduction
measures and limiting capital expenditure but these were not
incorporated into the downside modelling.
The Directors have also considered the Group's current liquidity
and available facilities. As at 1 October 2022, the Group balance
sheet reflects cash net of overdrafts is GBP941 million. In
addition the Group has access to a GBP300 million Revolving Credit
Facility (RCF), which is currently undrawn and not relied upon for
the purpose of this going concern assessment. The Group is in
compliance with the covenants for the RCF and the borrowings raised
via the sustainability bond are not subject to covenants. Details
of cash, overdrafts, borrowings and facilities are set out in notes
14, 17 and 18 of these financial statements.
In all the scenarios assessed, taking into account liquidity and
available resources and before the inclusion of any mitigating
actions within management control, the Group was able to maintain
sufficient liquidity to continue trading. On the basis of the
assessment performed, the Directors consider it is appropriate to
continue to adopt the going concern basis in preparing the
condensed consolidated interim financial statements for the period
ended 1 October 2022.
Accounting policies
The accounting policies adopted in the preparation of the
condensed consolidated interim financial statements are consistent
with those followed in the preparation of the Group's annual
consolidated financial statements for the 53 weeks ended 2 April
2022, with the exception of the following:
IFRS 16 Leases
The COVID-19-Related Rent Concessions amendment to IFRS 16
Leases was adopted by the IASB on 28 May 2020. The amendment was
intended to apply until 30 June 2021, and subsequently extended to
30 June 2022. The amendment allows for a simplified approach to
accounting for rent concessions occurring as a direct result of
COVID-19 and for which the following criteria are met:
-- The revised consideration is substantially the same, or less
than, the consideration prior to the change
-- The concessions affect only payments originally due on or before 30 June 2022 and
-- There is no substantive change to other terms and conditions of the lease
From 1 July 2022, the Group has applied the principles of IFRS 9
Financial Instruments and continues to account for eligible rent
forgiveness as negative variable lease payments where:
-- The rent concessions are occurring as a direct result of COVID-19
-- The revised consideration is substantially the same, or less
than, the consideration prior to the change and
-- There is no substantive change to other terms and conditions of the lease
Lessees are not required to assess whether eligible rent
concessions are lease modifications, allowing the lessee to account
for eligible rent concessions as if they were not lease
modifications.
The Group has chosen to account for eligible rent forgiveness as
negative variable lease payments. Rent concessions are recognised
once a legally binding agreement is made between both parties, by
derecognising the portion of the lease liability that has been
forgiven and recognising the benefit in the Income Statement.
Rent deferrals do not change the total consideration due over
the life of the lease. Deferred rent payments are recognised as a
payable until the period the original rent payment is due.
The Group has not early adopted any standard, interpretation or
amendment that has been issued but is not yet effective. Several
amendments apply for the first time for the period ended 1 October
2022, but do not have an impact on the condensed consolidated
interim financial statements of the Group.
Key sources of estimation uncertainty
Preparation of the condensed consolidated interim financial
statements in conformity with IFRS requires that management make
certain estimates and assumptions that affect the measurement of
reported revenues, expenses, assets and liabilities and the
disclosure of contingent liabilities.
If in the future such estimates and assumptions, which are based
on management's best estimates at the date of the financial
statements, deviate from actual circumstances, the original
estimates and assumptions will be updated as appropriate in the
period in which the circumstances change.
Estimates are continually evaluated and are based on historical
experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.
The key areas where the estimates and assumptions applied have a
significant risk of causing a material adjustment to the carrying
value of assets and liabilities are consistent with those applied
in the Group's financial statements for the 53 weeks to 2 April
2022, as set out on pages 243 to 245 of those financial
statements.
For details of changes to significant estimates for impairment
of property, plant and equipment and right-of-use assets in the
current period, refer to note 10. There have been no changes to the
significant estimates relating to inventory provisioning or
uncertain tax positions in the period.
Key judgements in applying the Group's accounting policies
Judgements are those decisions made when applying accounting
policies which have a significant impact on the amounts recognised
in the Group's financial statements. Key judgements that have a
significant impact on the amounts recognised in the condensed
consolidated interim financial statements for the 26 weeks to 1
October 2022 and the 26 weeks to 25 September 2021 are as
follows:
Where the Group is a lessee, judgement is required in
determining the lease term at initial recognition where extension
or termination options exist. In such instances, all facts and
circumstances that may create an economic incentive to exercise an
extension option, or not exercise a termination option, have been
considered to determine the lease term. Considerations include, but
are not limited to, the period assessed by management when
approving initial investment, together with costs associated with
any termination options or extension options. Extension periods (or
periods after termination options) are only included in the lease
term if the lease is reasonably certain to be extended (or not
terminated). Where the lease term has been extended by assuming an
extension option will be recognised, this will result in the
initial right-of-use assets and lease liabilities at inception of
the lease being greater than if the option was not assumed to be
exercised. Likewise, assuming a break option will be exercised will
reduce the initial right-of-use assets and lease liabilities.
Translation of the results of overseas businesses
The results of overseas subsidiaries are translated into the
Group's presentation currency of Sterling each month at the
weighted average exchange rate according to the phasing of the
Group's trading results. The weighted average exchange rate is
used, as it is considered to approximate the actual exchange rates
on the dates of the transactions. The assets and liabilities of
such undertakings are translated at period end exchange rates.
Differences arising on the retranslation of the opening net
investment in subsidiary companies, and on the translation of their
results, are taken directly to the foreign currency translation
reserve within equity.
Goodwill and fair value adjustments arising on the acquisition
of a foreign operation are treated as assets and liabilities of the
foreign operation and translated at the closing rate.
The principal exchange rates used were as follows:
Average rate Closing rate
----------------------------------- -------------------------------- ---
26 weeks 26 weeks 53 weeks As at As at As at
to to to 1 October 25 September 2 April
1 October 25 September 2 April 2022 2021 2022
2022 2021 2022
---------------------- ---------- ------------- -------- ---------- ------------- ----------
Euro 1.17 1.16 1.18 1.14 1.17 1.19
US Dollar 1.21 1.39 1.36 1.12 1.37 1.31
Chinese Yuan Renminbi 8.16 8.98 8.73 7.95 8.84 8.34
Hong Kong Dollar 9.50 10.79 10.63 8.76 10.66 10.26
Korean Won 1,579 1,583 1,596 1,598 1,611 1,592
---------------------- ---------- ------------- -------- ---------- ------------- ----------
Adjusted profit before taxation
In order to provide additional consideration of the underlying
performance of the Group's ongoing business, the Group's results
include a presentation of Adjusted operating profit and Adjusted
profit before taxation (adjusted PBT). Adjusted PBT is defined as
profit before taxation and before adjusting items. Adjusting items
are those items which, in the opinion of the Directors, should be
excluded in order to provide a consistent and comparable view of
the performance of the Group's ongoing business. Generally, this
will include those items that are largely one-off and material in
nature as well as income or expenses relating to acquisitions or
disposals of businesses or other transactions of a similar nature,
including the impact of changes in fair value of expected future
payments or receipts relating to these transactions. Adjusting
items are identified and presented on a consistent basis each year
and a reconciliation of adjusted PBT to profit before tax is
included in the financial statements. Adjusting items and their
related tax impacts, as well as adjusting taxation items, are added
back to/deducted from profit attributable to owners of the Company
to arrive at adjusted earnings per share. Refer to note 4 for
further details of adjusting items.
3. Segmental analysis
The Chief Operating Decision Maker has been identified as the
Board of Directors. The Board reviews the Group's internal
reporting in order to assess performance and allocate resources.
Management has determined the operating segments based on the
reports used by the Board. The Board considers the Group's business
through its two channels to market, being retail/wholesale and
licensing.
Retail/wholesale revenues are generated by the sale of luxury
goods through Burberry mainline stores, concessions, outlets and
digital commerce as well as Burberry franchisees, prestige
department stores globally and multi-brand specialty accounts. The
flow of global product between retail and wholesale channels and
across our regions is monitored and optimised at a corporate level
and implemented via the Group's inventory hubs situated in Europe
and the US.
Licensing revenues are generated through the receipt of
royalties from global licensees of beauty products, eyewear and
from licences relating to the use of non-Burberry trademarks in
Japan.
The Board assesses channel performance based on a measure of
adjusted operating profit. This measurement basis excludes the
effects of adjusting items. The measure of earnings for each
operating segment that is reviewed by the Board includes an
allocation of corporate and central costs. Interest income and
charges are not included in the result for each operating segment
that is reviewed by the Board.
Retail/Wholesale Licensing Total
--------------------------- --------------------------- ----------------------------
26 weeks 26 weeks 26 weeks
26 weeks to 26 weeks to 26 weeks to
to 1 October 25 September to 1 October 26 September to 1 October 26 September
2022 2021 2022 2021 2022 2021
GBPm GBPm GBPm GBPm GBPm GBPm
---------------------- ------------ ------------- ------------ ------------- ------------- ---------------
Retail 1,061 944 - - 1,061 944
Wholesale 263 249 - - 263 249
Licensing - - 22 20 22 20
---------------------- ------------ ------------- ------------ ------------- ------------- ---------------
Total segment revenue 1,324 1,193 22 20 1,346 1,213
Inter-segment
revenue(1) - - (1) - (1) -
---------------------- ------------ ------------- ------------ ------------- ------------- ---------------
Revenue from external
customers 1,324 1,193 21 20 1,345 1,213
---------------------- ------------ ------------- ------------ ------------- ------------- ---------------
Adjusted operating
profit 219 178 19 18 238 196
---------------------- ------------ ------------- ------------ ------------- ------------- ---------------
Adjusting items(2) 25 11
Finance income 6 1
Finance expense (18) (17)
---------------------- ------------ ------------- ------------ ------------- ------------- ---------------
Profit before taxation 251 191
---------------------- ------------ ------------- ------------ ------------- ------------- ---------------
Retail/Wholesale Licensing Total
---------------- --------- -----
53 weeks to 2 April 2022 GBPm GBPm GBPm
-------------------------------- ---------------- --------- -----
Retail 2,273 - 2,273
Wholesale 512 - 512
Licensing - 42 42
-------------------------------- ---------------- --------- -----
Total segment revenue 2,785 42 2,827
Inter-segment revenue(1) - (1) (1)
-------------------------------- ---------------- --------- -----
Revenue from external customers 2,785 41 2,826
-------------------------------- ---------------- --------- -----
Adjusted operating profit 486 37 523
-------------------------------- ---------------- --------- -----
Adjusting items(2) 19
Finance income 3
Finance expense (34)
-------------------------------- ---------------- --------- -----
Profit before taxation 511
-------------------------------- ---------------- --------- -----
1. Inter-segment transfers or transactions are entered into
under the normal commercial terms and conditions that would be
available to unrelated third parties.
2. Refer to note 4 for details of adjusting items.
Additional revenue analysis
All revenue is derived from contracts with customers. The Group
derives Retail and Wholesale revenue from contracts with customers
from the transfer of goods and related services at a point in time.
Licensing revenue is derived over the period the licence agreement
gives the customer access to the Group's trademarks.
26 weeks 26 weeks 53 weeks
to to to
1 October 25 September 2 April
2022 2021 2022
Revenue by product division GBPm GBPm GBPm
---------------------------- ---------- ------------- --------
Accessories 495 435 1,017
Women's 357 330 784
Men's 383 347 807
Children's/Other 89 81 177
---------------------------- ---------- ------------- --------
Retail/Wholesale 1,324 1,193 2,785
Licensing 21 20 41
---------------------------- ---------- ------------- --------
Total 1,345 1,213 2,826
---------------------------- ---------- ------------- --------
26 weeks 26 weeks 53 weeks
to to to
1 October 25 September 2 April
2022 2021 2022
Revenue by destination GBPm GBPm GBPm
----------------------- ---------- ------------- --------
Asia Pacific 525 522 1,276
EMEIA(1) 445 361 813
Americas 354 310 696
Retail/Wholesale 1,324 1,193 2,785
Licensing 21 20 41
----------------------- ---------- ------------- --------
Total 1,345 1,213 2,826
----------------------- ---------- ------------- --------
1. EMEIA comprises Europe, Middle East, India and Africa.
Due to the seasonal nature of the business, Group revenue is
usually expected to be higher in the second half of the year than
in the first half. While some of the Group's operating costs are
also higher in the second half of the year, such as contingent
rentals and sales related employee costs, most of the operating
costs, in particular salaries and fixed rentals, are phased more
evenly across the year. As a result, adjusted operating profit is
expected to be higher in the second half of the financial year.
4. Adjusting items
26 weeks 26 weeks 53 weeks
to to to
1 October 25 September 2 April
2022 2021 2022
GBPm GBPm GBPm
------------------------------------------------------- ---------- ------------- --------
Adjusting operating items
Impact of COVID-19:
Impairment charge relating to retail cash generating
units - - 5
Impairment reversal relating to inventory (1) (6) (16)
Impairment reversal relating to receivables - - (1)
COVID-19 related rent concessions (7) (9) (18)
COVID-19 related government grant income (1) (1) (2)
Other adjusting items:
Gain on disposal of property (19) - -
Restructuring costs 1 5 11
Revaluation of deferred consideration liability 2 - 1
Total adjusting operating items (25) (11) (20)
------------------------------------------------------- ---------- ------------- --------
Adjusting financing items
Finance charge on deferred consideration liability - - 1
Total adjusting financing items - - 1
------------------------------------------------------- ---------- ------------- --------
26 weeks 26 weeks 53 weeks
to to to
1 October 25 September 2 April
2022 2021 2022
GBPm GBPm GBPm
----------------------------------------------- ---------- ------------- --------
Analysis of adjusting operating items:
Included in Cost of sales (Impairment reversal
relating to inventory) (1) (6) (16)
Included in operating expenses 3 5 17
Included in other operating income (27) (10) (21)
Total adjusting operating items (25) (11) (20)
----------------------------------------------- ---------- ------------- --------
26 weeks 26 weeks 53 weeks
to to to
1 October 25 September 2 April
2022 2021 2022
GBPm GBPm GBPm
------------------------------------------ ---------- ------------- --------
Total adjusting operating items (pre-tax) (25) (11) (20)
Total adjusting financing items (pre-tax) - - 1
Tax on adjusting items 6 2 5
Total adjusting items (post-tax) (19) (9) (14)
------------------------------------------ ---------- ------------- --------
Impact of COVID-19
At 1 October 2022, impairments and provisions recorded as
adjusting items in prior periods as a result of the impact of
COVID-19 have been reviewed and the assumptions updated where
appropriate, to reflect management's latest expectations. The
impact of changes in assumptions has been presented as an update to
the adjusting item charge. Further details regarding the approach
applied to measure these updates are set out below for each of the
specific adjusting items.
Impairment of retail cash generating units
During the 26 weeks to 1 October 2022, the impairment provisions
remaining have been reassessed, using management's latest
expectations, with no charge or reversal recorded (last half year:
GBPnil; last full year: charge of GBP5 million). There was no
related tax charge (last half year: GBPnil; last full year: credit
of GBP1 million) recognised in the period. Any charges or reversals
which did not arise from the reassessment of the original
impairment adjusting item, had they arisen, would not have been
included in this adjusting item. Refer to notes 10 and 11 for
details of impairment testing of retail cash generating units.
Impairment of inventory
During the 26 weeks to 1 October 2022, reversals of inventory
provisions, relating to inventory which had been provided for as an
adjusting item at the previous year end and has either been sold,
or is now expected to be sold, at a higher net realisable value
than had been assumed when the provision had been initially
estimated, of GBP1 million (last half year: GBP6 million; last full
year GBP16 million) have been recorded and presented as an
adjusting item. A related tax charge of GBPnil (last half year:
GBP1 million; last full year GBP4 million) has also been recognised
in the period. All other charges and reversals relating to
inventory provisions have been recorded in adjusted operating
profit. Refer to note 13 for details of inventory provisions.
Impairment of receivables
During the 26 weeks to 1 October 2022, the expected credit loss
rates have been reassessed, taking into account the experience of
losses incurred during the period and changes in market conditions
at 1 October 2022 compared to the previous year end. As a result of
this reassessment, management has made no changes (last half year:
no changes) to the expected credit loss rates and there has been no
adjustment recorded. Last full year a reversal of GBP1 million,
resulting from the reduction in credit loss rate assumption, was
recorded as an adjusting item. There was no related tax charge
(last half year: GBPnil; last full year GBPnil) recognised in the
period. All other charges and reversals relating to impairment of
receivables, arising from changes in the value and aging of the
receivables portfolio, have been included in adjusted operating
profit. Refer to note 12 for details of impairment of
receivables.
COVID-19-related rent concessions
Eligible rent forgiveness amounts have been treated as negative
variable lease payments, resulting in a credit of GBP7 million
(last half year: GBP9 million; last full year: GBP18 million) for
the 26 weeks to 1 October 2022 being recorded in other operating
income. This income has been presented as an adjusting item given
that the amendment to IFRS 16 is only applicable for a limited
period of time and it is explicitly related to COVID-19. The
amendment expired on 30 June 2022 however the Group continues to
apply the same accounting treatment applying the principles of IFRS
9 (refer to note 2). A related tax charge of GBP1 million (last
half year: GBP2 million; last full year GBP4 million) has also been
recognised in the current period.
COVID-19-related government grant income
The Group has recorded grant income of GBP1 million (last half
year: GBP1 million; last full year: GBP2 million) within other
operating income for the 26 weeks to 1 October 2022, relating to
government support to alleviate the impact of COVID-19. This income
has been presented as an adjusting item as it is explicitly related
to COVID-19, and the arrangements are expected to last for a
limited period of time. A related tax charge of GBPnil (last half
year: GBPnil; last full year GBP1 million) has also been recognised
in the current period.
Gain on disposal of property
During the 26 weeks to 1 October 2022, the Group completed the
sale of an owned property in the US for cash proceeds of GBP22
million resulting in a net gain on disposal of GBP19 million,
recorded within other operating income. The net gain on disposal
was recognised as an adjusting item, in accordance with the Group's
accounting policy, as it is considered to be material and one-off
in nature. A related tax charge of GBP5 million was also recognised
in the year.
Restructuring costs
Restructuring costs of GBP1 million (last half year: GBP5
million; last full year: GBP11 million) were incurred in the
current period, arising primarily as a result of the organisational
efficiency programme announced in July 2020 that included the
creation of three new business units to enhance product focus,
increase agility and elevate quality and to further streamline of
office-based functions and facilities. The costs for the 26 weeks
to 1 October 2022 principally relate to redundancies and consulting
costs, partially offset by an impairment reversal of GBP1 million
related to office premises. These costs are recorded in operating
expenses. They are presented as an adjusting item, in accordance
with the Group's accounting policy, as the cost of the
restructuring programme is considered material and discrete in
nature. A related tax credit of GBPnil (last half year: GBP1
million; last full year: GBP3 million) has also been recognised in
the current period.
Items relating to the deferred consideration liability
On 22 April 2016, the Group entered into an agreement to
transfer the economic right of the non-controlling interest in
Burberry Middle East LLC to the Group in exchange for consideration
of contingent payments to be made to the minority shareholder over
the period to 2023.
A charge of GBP2 million in relation to the revaluation of this
balance has been recognised in operating expenses for the 26 weeks
to 1 October 2022 (last half year: nil; last full year: charge of
GBP1 million). A financing charge of GBPnil in relation to the
unwinding of the discount on the non-current portion of the
deferred consideration liability has also been recognised for the
26 weeks to 1 October 2022 (last half year: GBPnil; last full year:
GBP1 million).
No tax has been recognised as the future payments are not
considered to be deductible for tax purposes. This is presented as
an adjusting item in accordance with the Group's accounting policy,
as it arises from changes in the value of the liability for
expected future payments relating to the purchase of a
non-controlling interest in the Group.
5. Financing
26 weeks 26 weeks 53 weeks
to to to
1 October 25 September 2 April
2022 2021 2022
GBPm GBPm GBPm
--------------------------------------------------- ---------- ------------- --------
Finance income - amortised cost 1 - 1
Bank interest income - fair value through profit
and loss 5 1 2
Finance income 6 1 3
Interest expense on lease liabilities (14) (13) (27)
Interest expense on borrowings (2) (2) (4)
Bank charges (1) (2) (2)
Other finance expense (1) - (1)
--------------------------------------------------- ---------- ------------- --------
Finance expense (18) (17) (34)
--------------------------------------------------- ---------- ------------- --------
Finance charge on deferred consideration liability - - (1)
Net finance expense (12) (16) (32)
--------------------------------------------------- ---------- ------------- --------
6. Taxation
The interim tax charge has been calculated by applying the
estimated weighted average tax rate applicable to the Group's full
year forecast adjusted profit before tax to the actual adjusted
profit before tax in the interim period. Tax on prior year
adjustments and remeasurement of tax balances due to changes in tax
rates have been recorded as identified in the period. The resulting
effective tax rate on adjusted profit before tax in the period is
22.4% (last half year: 24.1%; last full year: 22.3%). Tax on
adjusting items has been recognised at the prevailing tax rates as
appropriate. The resulting effective tax rate on reported profit
before taxation is 22.7% (last half year: 24.1%; last full year:
22.4%). The effective tax rate on adjusted profit before tax for
the full year is estimated to be 22%.
26 weeks 26 weeks 53 weeks
to to to
1 October 25 September 2 April
2022 2021 2022
GBPm GBPm GBPm
-------------------------------------------------- ---------- ------------- --------
Current tax
Current tax on income for the period 69 58 135
Adjustments in respect of prior years 2 7 10
-------------------------------------------------- ---------- ------------- --------
Total current tax 71 65 145
-------------------------------------------------- ---------- ------------- --------
Deferred tax
Origination and reversal of temporary differences (15) (18) (30)
Impact of changes to tax rates - (3) (4)
Adjustments in respect of prior years 1 2 3
Total deferred tax (14) (19) (31)
-------------------------------------------------- ---------- ------------- --------
Total tax charge on profit 57 46 114
-------------------------------------------------- ---------- ------------- --------
Total taxation recognised in the condensed group income
statement comprises:
26 weeks 26 weeks 53 weeks
to to to
1 October 25 September 2 April
2022 2021 2022
GBPm GBPm GBPm
--------------------------------------- ---------- ------------- --------
Tax on adjusted profit before taxation 51 44 109
Tax on adjusting items (note 4) 6 2 5
Total taxation charge 57 46 114
--------------------------------------- ---------- ------------- --------
Deferred taxation
The major deferred tax assets/(liabilities) recognised by the
Group and movements during the period are as follows:
Unrealised
inventory
profit
and other
Capital inventory Share Unused Net deferred
allowances provisions schemes tax losses Leases Other tax asset
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- ----------- ----------- -------- ----------- ------ ----- ------------
Balance as at 2 April 2022 19 97 5 3 32 18 174
Effect of foreign exchange
rates - 11 - - 1 3 15
Credited/(charged) to the
Income Statement (4) 19 1 - 1 (3) 14
Balance as at 1 October
2022 15 127 6 3 34 18 203
--------------------------- ----------- ----------- -------- ----------- ------ ----- ------------
Balance as at 25 September
2021 20 85 4 1 30 17 157
--------------------------- ----------- ----------- -------- ----------- ------ ----- ------------
An increase in the UK's main corporation tax rate from 19% to
25% was substantially enacted in the previous period to take effect
from 1 April 2023. All UK deferred tax assets and liabilities which
are forecast to be utilised after this date are recorded at the
higher enacted tax rate.
7. Earnings per share
The calculation of basic earnings per share is based on profit
or loss attributable to owners of the Company for the period
divided by the weighted average number of ordinary shares in issue
during the period. Basic and diluted earnings per share based on
adjusted profit before taxation are also disclosed to indicate the
underlying profitability of the Group.
26 weeks 26 weeks 53 weeks
to to to
1 October 25 September 2 April
2022 2021 2022
GBPm GBPm GBPm
---------------------------------------------- ---------- ------------- --------
Attributable profit for the period before
adjusting items(1) 174 136 382
Effect of adjusting items(1) (after taxation) 19 9 14
---------------------------------------------- ---------- ------------- --------
Attributable profit for the period 193 145 396
---------------------------------------------- ---------- ------------- --------
1. Refer to note 4 for details of adjusting items.
The weighted average number of ordinary shares represents the
weighted average number of Burberry Group plc ordinary shares in
issue throughout the period, excluding ordinary shares held in the
Group's ESOP trusts and treasury shares held by the Company or its
subsidiaries.
Diluted earnings per share is based on the weighted average
number of ordinary shares in issue during the period. In addition,
account is taken of any options and awards made under the employee
share incentive schemes, which will have a dilutive effect when
exercised.
26 weeks 26 weeks 53 weeks
to to to
1 October 25 September 2 April
2022 2021 2022
Millions Millions Millions
------------------------------------------------ ---------- ------------- ---------
Weighted average number of ordinary shares
in issue during the period 392.9 404.3 402.5
Dilutive effect of the employee share incentive
schemes 1.5 2.0 2.3
------------------------------------------------ ---------- ------------- ---------
Diluted weighted average number of ordinary
shares in issue during the period 394.4 406.3 404.8
------------------------------------------------ ---------- ------------- ---------
8. Dividends paid to owners of the Company
The interim dividend of 16.5p (last half year: 11.6p) per share
has been approved by the Board of Directors after 1 October 2022.
Accordingly, this dividend has not been recognised as a liability
at the period end and will be paid on 27 January 2023 to
Shareholders on the Register at the close of business on 16
December 2022. The ex-dividend date is 15 December 2022 and the
final day for dividend reinvestment plan ('DRIP') elections is 6
January 2023.
A dividend of 35.4p (last half year: 42.5p) was paid during the
period to 1 October 2022 in relation to the year ended 2 April
2022.
9. Intangible assets
Goodwill at 1 October 2022 is GBP113 million (last half year:
GBP106 million; last full year: GBP109 million). There were no
additions to goodwill in the period (last half year: GBPnil).
In the period there were additions to other intangible assets of
GBP18 million (last half year: GBP13 million) and disposals with a
net book value of GBPnil (last half year: GBPnil).
Capital commitments contracted but not provided for by the Group
amounted to GBP4 million (last half year: GBP3 million).
Impairment testing
Assets that have an indefinite useful economic life are not
subject to amortisation and are tested annually for impairment.
Goodwill is the only intangible asset category with an
indefinite useful economic life included within total intangible
assets at 1 October 2022. Management has performed a review for
indicators of impairment as at 1 October 2022 and concluded that
there are no indicators at this time. The annual impairment test
will be performed at 1 April 2023.
There was no impairment charge for other intangible assets for
the 26 weeks to 1 October 2022 (last half year: no impairment)
10. Property, plant and equipment
In the period there were additions to property, plant and
equipment of GBP44 million (last half year: GBP35 million) and
disposals with a net book value of GBPnil (last half year: GBPnil).
Additions include GBP35 million (last half year: GBP26 million)
arising as a result of investing cash outflows and GBP9 million
(last half year: GBP9 million) movement in capital expenditure
accruals.
Capital commitments contracted but not provided for by the Group
amounted to GBP43 million (last half year: GBP39 million).
During the 26 weeks to 1 October 2022, the Group completed the
sale of an owned property in the US previously classified as held
for sale. A gain on disposal of property of GBP19 million has been
included as an adjusting item (refer to note 4).
As at 1 October 2022 the Group had two freehold properties that
met the criteria to be classified as held for sale. These
assets were required to be recorded at the lower of carrying
value or fair value less any costs to sell. As the fair value
less any costs to sell exceeded the carrying value for each, the
related assets and liabilities were recorded at their
carrying value. The sale of these properties is expected to
complete within the current financial year.
Impairment testing
During the current period, management reviewed their assumptions
on retail cash generating units and reviewed these units for any
indication of impairment or impairment reversal. Where indicators
of impairment have been identified an impairment analysis was
carried out and if the value-in-use was less than the carrying
value of the cash generating unit, an impairment of property, plant
and equipment and right-of-use asset would be recorded. The pre-tax
cash flow projections used for this review were based on financial
plans of expected revenues and costs of each retail cash generating
unit, approved by management, and extrapolated beyond the current
year to the lease end dates using growth rates and inflation rates
appropriate to each store's location.
During the 26 weeks to 1 October 2022, following the review of
impairment of retail stores, no impairment charges or reversals
were recorded against property, plant and equipment (last half
year: impairment charge of GBP2 million). Last half year, a charge
of GBP2 million was recorded against right-of-use assets. Refer to
note 11 for further details of right-of-use assets.
Last half year, the impairment charge recorded in property,
plant and equipment related to three retail cash generating units
for which the total recoverable amount at the balance sheet date
was GBPnil.
11. Right of use assets
In the period there were additions to right-of-use assets of
GBP79 million (last half year: GBP124 million) and remeasurements
of GBP34 million (last half year: GBP20 million). Depreciation of
right-of-use assets of GBP100 million (last half year: GBP89
million) is included within operating expenses.
Impairment testing
As a result of the assessment of retail cash generating units
for impairment, an impairment charge of GBPnil (last half year:
GBP2 million) was recorded against right-of-use assets. Refer to
note 10 for further details of impairment assessment of retail cash
generating units.
An impairment reversal of GBP1 million (last half year: GBPnil)
was recognised in relation to office premises as part of
restructuring costs in adjusting items (refer to note 4).
12. Trade and other receivables
As at As at As at
1 October 25 September 2 April
2022 2021 2022
GBPm GBPm GBPm
---------------------------------------------- ---------- ------------- --------
Non-current
Other financial receivables(1) 49 43 42
Other non-financial receivables(2) 1 1 1
Prepayments 3 3 2
---------------------------------------------- ---------- ------------- --------
Total non-current trade and other receivables 53 47 45
---------------------------------------------- ---------- ------------- --------
Current
Trade receivables 206 154 151
Provision for expected credit losses (10) (9) (7)
---------------------------------------------- ---------- ------------- --------
Net trade receivables 196 145 144
Other financial receivables(1) 33 32 36
Other non-financial receivables(2) 53 54 63
Prepayments 48 59 32
Accrued income 8 10 8
---------------------------------------------- ---------- ------------- --------
Total current trade and other receivables 338 300 283
---------------------------------------------- ---------- ------------- --------
Total trade and other receivables 391 347 328
---------------------------------------------- ---------- ------------- --------
1. Other financial receivables include rental deposits and other
sundry debtors.
2. Other non-financial receivable relates to indirect taxes,
other taxes and duties and COVID-19 related government grant
receivables.
The net charge for impairment of financial receivables in the
period was GBP3 million (last half year: charge of GBP2 million;
last full year: reversal of GBP1 million). None of this net charge
has been presented as an adjusting item (last half year: GBPnil;
last full year: reversal of GBP1 million). Refer to note 4 for
details of adjusting items.
13. Inventories
Inventory provisions of GBP76 million (last half year: GBP110
million; last full year: GBP83 million) are recorded, representing
13.5% (last half year: 20.2%; last full year 16.3%) of the gross
value of inventory. The provisions reflect management's best
estimate of the net realisable value of inventory, where this is
considered to be lower than the cost of the inventory.
As at 28 March 2020, GBP68 million of the provision was included
in cost of sales as a result of the estimated reduction in net
realisable value of inventory due to COVID-19 and was presented as
an adjusting item. In the current period, GBP4 million of the
provision (last half year: GBP5 million; last full year: GBP14
million) has been utilised, where inventory previously provided for
had been sold below cost in the current year and is recognised in
cost of sales.
An additional GBP1 million (last half year: GBP6 million; last
full year: GBP16 million) has been released upon re-assessment of
the provision, where inventory previously provided for has been
sold, or is now expected to be sold, for a higher net realisable
value than has been estimated last year as performance during the
current period has exceeded, and is expected to continue to exceed,
the assumptions made at 2 April 2022. This reversal is presented as
an adjusting item. Refer to note 4 for details of adjusting
items.
14. Cash and cash equivalents
As at As at As at
1 October 25 September 2 April
2022 2021 2022
GBPm GBPm GBPm
--------------------------------------------- ---------- ------------- --------
Cash and cash equivalents held at amortised
cost
Cash at bank and in hand 186 189 124
Short-term deposits 72 113 73
--------------------------------------------- ---------- ------------- --------
258 302 197
Cash and cash equivalents held at fair value
through profit and loss
Short-term deposits 759 895 1,025
--------------------------------------------- ---------- ------------- --------
Total 1,017 1,197 1,222
--------------------------------------------- ---------- ------------- --------
Cash and cash equivalents classified as fair value through
profit and loss relate to deposits held in low volatility net asset
value money market funds. The cash is available immediately and,
since the funds are managed to achieve low volatility, no
significant change in value is anticipated. The funds are monitored
to ensure there are no significant changes in value.
15. Trade and other payables
As at As at As at
1 October 25 September 2 April
2022 2021 2022
GBPm GBPm GBPm
------------------------------------------- ---------- ------------- --------
Non-current
Other payables(1) 2 8 5
Deferred income and non-financial accruals 21 15 18
Contract liabilities 61 67 64
Deferred consideration(2) - 4 4
------------------------------------------- ---------- ------------- --------
Total non-current trade and other payables 84 94 91
------------------------------------------- ---------- ------------- --------
Current
Trade payables 177 144 181
Other taxes and social security costs 54 56 60
Other payables(1, 3) 28 18 6
Accruals 204 191 204
Deferred income and non-financial accruals 16 7 13
Contract liabilities 13 13 13
Deferred consideration(2) 6 14 4
------------------------------------------- ---------- ------------- --------
Total current trade and other payables 498 443 481
------------------------------------------- ---------- ------------- --------
Total trade and other payables 582 537 572
------------------------------------------- ---------- ------------- --------
1. Other payables are comprised of interest and employee related
liabilities.
2. Deferred consideration relates to the acquisition of the
economic right to the non-controlling interest in Burberry Middle
East LLC on 22 April 2016. The change in the deferred consideration
liability in the period arises as a result of a financing cash
outflow and non-cash movements. Total deferred consideration
payments of GBP6 million were made in the 26 weeks to 1 October
2022 (last half year: GBPnil; last full year: GBP12 million).
3. Includes GBP20 million (last half year: GBPnil; last full
year GBPnil) relating to the cost of shares not yet purchased,
under an agreement entered into by the Group to purchase its own
shares, together with anticipated stamp duty arising. Refer to note
19 for further details.
Contract liabilities
Retail contract liabilities relate to unredeemed balances on
issued gift cards and similar products, and advanced payments
received for sales which have not yet been delivered to the
customer, which are all considered current. Licensing contract
liabilities relate to deferred revenue arising from the upfront
payment for the Beauty licence which is being recognised in revenue
over the term of the licence on a straight-line basis reflecting
access to the trademark over the licence period to 2032.
As at As at As at
1 October 25 September 2 April
2022 2021 2022
GBPm GBPm GBPm
------------------------------- ---------- ------------- --------
Retail contract liabilities 7 6 7
Licensing contract liabilities 67 74 70
------------------------------- ---------- ------------- --------
Total contract liabilities 74 80 77
------------------------------- ---------- ------------- --------
16. Provisions for other liabilities and charges
Property Other
obligations costs Total
GBPm GBPm GBPm
---------------------------------------- ------------ ------ -----
Balance as at 2 April 2022 49 15 64
Effect of foreign exchange rate changes 2 2 4
Created during the period 2 3 5
Utilised during the period (2) - (2)
Released during the period (1) (3) (4)
Balance as at 1 October 2022 50 17 67
---------------------------------------- ------------ ------ -----
Balance as at 25 September 2021 43 11 54
---------------------------------------- ------------ ------ -----
As at As at As at
1 October 25 September 2 April
2022 2021 2022
GBPm GBPm GBPm
------------------------------ ---------- ------------- --------
Analysis of total provisions:
Non-current 40 33 36
Current 27 21 28
------------------------------ ---------- ------------- --------
Total 67 54 64
------------------------------ ---------- ------------- --------
17. Bank overdrafts
Included within bank overdrafts is GBP76 million (last half
year: GBP54 million; last full year: GBP45 million) representing
balances on cash pooling arrangements in the Group.
The Group has a number of committed and uncommitted arrangements
agreed with third parties. At 1 October 2022, the Group held bank
overdrafts of GBPnil (last half year: GBPnil; last full year:
GBPnil) excluding balances on cash pooling arrangements.
The fair value of overdrafts approximates the carrying amount
because of the short maturity of these instruments.
18. Borrowings
On 21 September 2020, Burberry Group plc issued medium term
notes with a face value of GBP300 million and 1.125% coupon
maturing on 21 September 2025 (the sustainability bond). Proceeds
from the sustainability bond will allow the Group to finance
projects which support the Group's sustainability agenda. There are
no financial penalties for not using the proceeds as anticipated.
Interest on the sustainability bond is payable semi-annually. The
carrying value of the bond at 1 October 2022 is GBP298m (last half
year:GBP297m; last full year: GBP298m), all movements on the bond
are non-cash.
On 26 July 2021, the Group entered into a new GBP300 million
multi-currency sustainability linked revolving credit facility with
a syndicate of banks replacing the previous GBP300 million RCF that
had been in place since 2014. There were no drawdowns or repayments
of the RCF during the current or previous year and at 1 October
2022, there were GBPnil outstanding drawings.
The Group is in compliance with the financial and other
covenants within the facilities and has been in compliance
throughout the financial period.
19. Share capital and reserves
Allotted, called up and fully paid share capital Number GBPm
-------------------------------------------------- ----------- ----
Ordinary shares of 0.05p (last year: 0.05p) each
-------------------------------------------------- ----------- ----
As at 27 March 2021 404,864,359 -
Allotted on exercise of options during the period 64,529 -
As at 25 September 2021 404,928,888 -
As at 2 April 2022 405,107,301 -
Allotted on exercise of options during the period 69,226 -
Cancellation of shares (9,800,686) -
As at 1 October 2022 395,375,841 -
-------------------------------------------------- ----------- ----
Other reserves
The Company has a general authority from shareholders, renewed
at each Annual General Meeting, to repurchase a maximum of 10% of
its issued share capital. During the 26 weeks to 1 October 2022,
the Company entered into agreements to purchase a total of GBP400
million of its own shares, excluding stamp duty, through two share
buy-back programmes of GBP200 million each (last half year:
GBPnil). The first programme commenced during the period and
resulted in purchases of GBP180 million of own shares, excluding
stamp duty, in the period. GBP20 million (last half year: GBPnil)
relating to the cost of shares not yet purchased under this
agreement has been charged to retained earnings, with the payment
obligation recognised in other payables (refer to note 15). The
second programme to purchase a further GBP200 million own shares
will commence and complete in the second half of the year.
The cost of own shares purchased by the Company, as part of a
share buy-back programme is offset against retained earnings, as
the amounts paid reduce the profits available for distribution by
the Company. When shares are cancelled, a transfer is made from
retained earnings to the capital reserve, equivalent to the nominal
value of the shares purchased and subsequently cancelled. In the 26
weeks to 1 October 2022, 9.8 million shares were cancelled (last
half year: none). As at 1 October 2022, the amount held against
retained earnings in relation to shares bought back but not
cancelled yet was GBP13 million (last half year: GBPnil) including
stamp duty of GBPnil (last half year: GBPnil).
As at 1 October 2022, the Company held 6.1 million treasury
shares (last half year: none), with a market value of GBP109
million based on the share price at the reporting date (last half
year: GBPnil). The treasury shares held by the Company are related
to the share buy-back programme completed during the 53 weeks to 2
April 2022. During the 26 weeks to 1 October 2022, 2.3 million
treasury shares were transferred to ESOP trusts (last half year:
none). During the 26 weeks to 1 October 2022, no treasury shares
were cancelled (last half year: none).
The cost of shares purchased by ESOP trusts are offset against
retained earnings, as the amounts paid reduce the profits available
for distribution by the Company. As at 1 October 2022 the cost of
own shares held by ESOP trusts and offset against retained earnings
is GBP48 million (last half year: GBP15 million). As at 1 October
2022, the ESOP trusts held 3 million shares (last half year: 1
million) in the Company, with a market value of GBP48 million (last
half year: GBP15 million). In the 26 weeks to 1 October 2022 the
ESOP trusts and the Company have waived their entitlement to
dividends.
Other reserves in the Statement of Changes in Equity consists of
the capital reserve, the foreign currency translation reserve, and
the hedging reserves. The hedging reserves consist of the cash flow
hedge reserve and the net investment hedge reserve.
20. Related party transactions
The Group's significant related parties are disclosed in the
Annual Report for the 53 weeks to 2 April 2022. There were no
material changes to these related parties in the period. Other than
total compensation in respect of key management, no material
related party transactions have taken place during the current
period.
21. Fair value disclosure for financial instruments
The Group's principal financial instruments comprise derivative
instruments, cash and cash equivalents, borrowings (including
overdrafts), deferred consideration, trade and other receivables
and trade and other payables arising directly from operations.
The fair value of the Group's financial assets and liabilities
held at amortised cost approximate their carrying amount due to the
short maturity of these instruments with the exception of the
GBP298 million sustainability bond (last half year: GBP297 million)
and GBP14 million (last half year: GBP13 million) held in
non-current other receivables relating to an interest-free loan
provided to a landlord in Korea. At 1 October 2022, the discounted
fair value of the sustainability bond is GBP257 million (last half
year: GBP297 million) and the discounted fair value of the loan
provided to a landlord in Korea is GBP13 million (last half year:
GBP14 million).
The measurements for financial instruments carried at fair value
are categorised into different levels in the fair value hierarchy
based on the inputs to the valuation technique used. The different
levels are defined as follows:
Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities that the Group can access at the
measurement date.
Level 2: inputs other than quoted prices included within level 1
that are observable for the asset or liability, either directly or
indirectly.
Level 3: includes unobservable inputs for the asset or
liability.
Observable inputs are those which are developed using market
data, such as publicly available information about actual events or
transactions. The Group has an established framework with respect
to measurement of fair values, including Level 3 fair values. The
Group regularly reviews any significant inputs which are not
derived from observable market data and considers, where available,
relevant third-party information, to support the conclusion that
such valuations meet the requirements of IFRS. The classification
level in the fair value hierarchy is also considered periodically.
Significant valuation issues are reported to the Audit
Committee.
The fair value of those cash and cash equivalents measured at
fair value through profit and loss, principally money market funds,
is derived from their net asset value which is based on the value
of the portfolio investment holdings at the balance sheet date.
This is considered to be a Level 2 measurement.
The fair value of forward foreign exchange contracts, equity
swap contracts and trade and other receivables is based on a
comparison of the contractual and market rates and, in the case of
forward foreign exchange contracts, after discounting using the
appropriate yield curve as at the balance sheet date. All Level 2
fair value measurements are calculated using inputs which are based
on observable market data.
The fair value of the contingent payment component of deferred
consideration is considered to be a Level 3 measurement and is
derived using a present value calculation, incorporating observable
and non-observable inputs. This valuation technique has been
adopted as it most closely mirrors the contractual arrangement.
22. Contingent liabilities
The Group is subject to claims against it and to tax audits in a
number of jurisdictions which arise in the ordinary course of
business. These typically relate to Value Added Taxes, sales taxes,
customs duties, corporate taxes, transfer pricing, payroll taxes,
various contractual claims, legal proceedings and other matters.
Where appropriate, the estimated cost of known obligations have
been provided in these financial statements in accordance with the
Group's accounting policies. The Group does not expect the outcome
of current similar contingent liabilities to have a material effect
on the Group's financial position.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors confirm that the condensed consolidated interim
financial statements have been prepared in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the UK and that the Interim Management
Report and condensed consolidated interim financial statements
include a fair review of the information required by Disclosure
Guidance and Transparency Rules 4.2.7 and 4.2.8, namely:
- an indication of important events that have occurred during
the first 26 weeks of the financial year and their impact on the
condensed consolidated interim financial statements, and a
description of the principal risks and uncertainties for the
remaining 26 weeks of the financial year; and
- material related party transactions in the first 26 weeks of
the financial year and any material changes in the related party
transactions described in the last Annual Report.
The Directors of Burberry Group plc are consistent with those
listed in the Burberry Group plc Annual Report for the 53 weeks to
2 April 2022 with the exception of Alan Stewart who was appointed
on 1 September 2022.
A list of current directors is maintained on the Burberry Group
plc website: www.burberryplc.com .
By order of the Board
Jonathan Akeroyd
Chief Executive Officer
16 November 2022
Julie Brown
Chief Operating and Financial Officer
16 November 2022
INDEPENDENT REVIEW REPORT TO BURBERRY GROUP PLC
Conclusion
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
26 week period ended 1 October 2022 which comprises the condensed
Group income statement, the condensed Group statement of
comprehensive income, the condensed Group balance sheet, the
condensed Group statement of changes in equity, the condensed Group
statement of cash flows and the related explanatory notes 1 to 22.
We have read the other information contained in the half yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the 26 week period ended 1
October 2022 is not prepared, in all material respects, in
accordance with UK adopted International Accounting Standard 34 and
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements 2410 (UK) "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" (ISRE) issued by the Auditing Practices Board. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
As disclosed in Note 2, the annual financial statements of the
Group are prepared in accordance with UK adopted international
accounting standards. The condensed set of financial statements
included in this half-yearly financial report has been prepared in
accordance with UK adopted International Accounting Standard 34,
"Interim Financial Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis of Conclusion
section of this report, nothing has come to our attention to
suggest that management have inappropriately adopted the going
concern basis of accounting or that management have identified
material uncertainties relating to going concern that are not
appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with this ISRE, however future events or conditions may
cause the entity to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statements in the half-yearly financial report. Our
conclusion is based on procedures that are less extensive than
audit procedures, as described in the 'Basis for Conclusion'
paragraph of this report.
Use of our report
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
16 November 2022
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END
IR FFUEFMEESESF
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November 17, 2022 02:00 ET (07:00 GMT)
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