14th Nov 2007 07:01
Burberry Group PLC14 November 2007 14 November 2007 Burberry Group plc Interim results for the six months ended 30 September 2007 Burberry Group plc, the global luxury company, today announces its unauditedresults for the six months ended 30 September 2007. Angela Ahrendts, Chief Executive Officer, commented: "We are pleased with the progress Burberry has made in the first half of theyear. We delivered underlying revenue and profit growth of 19%, underpinned bythe success of our luxury, retail and non-apparel strategies. This performanceis consistent with our full year expectations. The diversity and balance thatBurberry has across its products, channels and regions give us manyopportunities for future growth." Six months to 30 % change September£ million 2007 2006 reported underlying #------------------ --------- --------- -------- ---------Revenue 449.1 392.0 15 19 --------- --------- -------- ---------Operating profit 97.3 74.6 30 38Adjusted operating profit * 95.1 84.2 13 19Profit before taxation 95.8 73.4 31 --------- --------- --------Diluted eps (pence) 14.9 11.1 34Adjusted diluted eps (pence)* 14.8 12.5 18 --------- --------- --------Dividend per share (pence) 3.35 2.875 17 * "Adjusted" refers to profitability measures calculated before: 1. Atlas costs of £12.9m (2006: £9.6m) which relate to the Group's infrastructure redesign initiative announced in May 2005.2. Net profit of £15.1m (2006: nil) relating to the relocation of global headquarters. # Underlying change is calculated at constant exchange rates. Certain financial data within this announcement have been rounded. Operational highlights • Retail revenue up 25% underlying; comparable store sales growth of 11%; opened 11 new stores • Wholesale revenue up 16% underlying; US up over 40% underlying • Accessories now 31% of sales (excluding licensing), led by luxury handbags • Atlas implementation in final stages • Increased investment in infrastructure to support strong growth Financial highlights • Total revenue up 19% underlying (15% reported) • Adjusted operating profit up 19% underlying (13% reported) - Retail/wholesale operating margin up to 15.2% (2006: 14.0%), as gross margin increases by 300 basis points • Adjusted diluted eps up 18% as share buyback continues • Profit before tax up 31%, including £15.1m net profit relating to the planned relocation of global headquarters • Interim dividend increased by 17% to 3.35p Enquiries Burberry 020 7968 5919Stacey Cartwright Chief Financial OfficerFay Dodds Director of Investor Relations Brunswick 020 7404 5959David YellandLaura CummingsRobert Gardener There will be a presentation today at 9am (UK time) to analysts and investors atthe Merrill Lynch Financial Centre, 2 King Edward Street, London, EC1A 1HQ. Thepresentation can be viewed live on the Burberry website (www.burberryplc.com)and can also be accessed live via a dial-in facility on 44 (0)20 7081 7194. Thesupporting slides and an indexed replay will also be available on the websitelater in the day. There will be a conference call to discuss these results today at 3pm (UK time).The conference call can be accessed live on the Burberry website (www.burberryplc.com), with a replay available later today. Burberry will update on trading on 15 January 2008 when it will issue itsInterim Management Statement in respect of the Third Quarter. Certain statements made in this announcement are forward-looking statements.Such statements are based on current expectations and are subject to a number ofrisks and uncertainties that could cause actual results to differ materiallyfrom any expected future results in forward-looking statements. This announcement does not constitute an invitation to underwrite, subscribe foror otherwise acquire or dispose of any Burberry Group plc shares. Pastperformance is not a guide to future performance and persons needing adviceshould consult an independent financial adviser. INTERIM MANAGEMENT REPORT Good progress against our five key strategic initiatives Burberry continued to make considerable operational progress throughout theorganisation in the first six months of the year, while delivering 19%underlying growth in revenue and adjusted operating profit. This growthcontinues to be driven by strong product designs, our cohesive and compellingmarketing campaigns, the monthly flow of new products as a result of the revisedcalendar and the introduction of a basic replenishment programme. Looking forward, in the second half of the year, and the third quarter inparticular, Burberry faces an intense period of activity. In our largestquarter, we continue to experience high volume growth driven by the strength ofour product designs. At the same time, we are in the most demanding phase ofimplementing our new IT infrastructure (SAP), while also rapidly evolving ourglobal supply chain and logistics functions. Leveraging the franchise Burberry has continued to act more as one brand and company during the firsthalf of the year - be it in product design, marketing or organisationalstructure. For example, the success of Burberry's runway (or Prorsum)collections continues, both financially (with sales nearly doubling in the firsthalf) and in providing design inspiration for our tailored and casual offers.From an organisational standpoint, Burberry now has four regional Presidents (Americas, Asia, Europe and Spain), who for the first time have responsibilityfor both retail and wholesale operations within their markets. This allows muchgreater consistency over brand positioning, merchandising and pricing thanbefore. Intensifying non-apparel development Accessories grew by 35% on an underlying basis in the first half to reach 31% ofretail and wholesale revenue. Currently, luxury handbags in our European and USretail stores account for 50-60% of all handbag sales compared to less than 40%a year ago, and less than 5% some 18 months ago. This move to luxury isincreasing the average price point of our handbags by over 25%. Accelerating retail-led growth During the first half, Burberry opened 11 new stores, including three additionaltrial icon stores. We also refurbished several stores as the start of ourprogramme to renovate about 20 stores a year, with early pleasing results. Weare also trialling new fixtures and visual merchandising techniques to improvethe productivity of space in both our stores and those of our wholesalecustomers. Finally, the basic replenishment programme introduced in late 2006allowed more reorders of continuity products and fast-selling lines. Thisprogramme contributed about 2% of wholesale revenue in the half. Investing in under-penetrated markets The United States remains a key target market for Burberry. In the first half,sales grew by 29% on an underlying basis, with over 20% growth in retail and 40%growth in wholesale. Emerging markets grew strongly from a small base, with afurther six franchise stores opened in the half, in locations such as MexicoCity, Istanbul and Rostov on Don in Russia. Pursuing operational excellence In addition to implementing our new IT platform (SAP), Burberry continues toevolve its global supply chain and logistics functions. During the first half,we further upgraded our supplier base, using some larger, more verticallyintegrated vendors. We also opened new distribution facilities in the US and theNetherlands to support growth of the business and started to move to directdeliveries of apparel from suppliers in order to reduce cycle times. Atlas implementation in final stages and delivering benefits The implementation of Project Atlas continued in the first half, with furtherprogress in both improving business processes and in installing a new ITplatform. During the first half, we used the new SAP system for the first timein areas such as finance and non-stock procurement in the US and, importantly,used it to write all orders, procure goods and take inbound deliveries forSpring/Summer 2008 merchandise. At a time when Burberry is growing so strongly, we decided to delay certainelements of the IT roll-out into the third quarter to mitigate the risks ofimplementation. This was predominantly to handle Spring/Summer 2008 outbounddeliveries and retail in the UK and Europe. This re-phasing has led to someadditional spend, both in operating costs within the business and in ITresources. As a result of the latter, overall costs relating to Atlas in thecurrent financial year are now expected to be approximately £19m (previously£15m). This brings the total project cost to just over £50m in the three yearperiod. Both the warehouse implementation, which has been used from September 2007 toship Spring/Summer 2008 products, and the UK/Europe retail phase, which startedin October 2007, are progressing to plan. As is normal with this type ofimplementation, typical data and process issues are being addressed daily byinternal and external resources. With the core system now built and beingdeployed in Europe and core central functions, the full roll-out to the US andAsia will follow during calendar 2008. The Atlas programme remains on track to deliver the targeted £20m tangiblebenefits this year, having delivered about £6m of this in the second half oflast year and £7m of this in the first half of this year. Looking beyond this,the programme will enable further sales growth and margin expansion in areassuch as markdown reductions, dynamic replenishment, greater visibility of stocklevels and reduced manual processing. Increased investment in first half to support strong growth We have also increased our investment in improving business processes around thegroup, including adding distribution capacity to handle the strong growth involume, strengthening our global supply chain team and upgrading our corporatefunctions. Capital expenditure in the first six months was £20.9m (2006: £14.5m). We nowexpect to spend between £50-55m in the current financial year (previously £60m)as certain store projects have been rescheduled into next year. Outlook Retail: Average selling space is expected to increase by 12% year-on-year in thesecond half. We expect to open about eight new mainline stores in this period,predominantly in Europe. Wholesale: Based upon orders received to date, Burberry expects wholesalerevenue in the second half to show a further mid-teens percentage increase on anunderlying basis. This builds on the strong performance of wholesale in thesecond half of last year (H1 2006/7: wholesale revenue +1%; H2 2006/7: +17% onan underlying basis). Spain is expected to show further weakness, countered bygood growth elsewhere across the rest of Europe and the US. Licensing: For the full financial year, Burberry continues to expect broadlyflat underlying licensing revenue relative to last year. For the second half ofthe year, revenue is expected to be moderately down, largely reflectingdifferent phasing of royalty payments between halves and the non-renewal ofcertain menswear licences. The weakness of the yen is expected to reducereported revenue and profit by about a further £3m in the second half (about £6min the full year). Group financial highlights Revenue up 19% on an underlying basis, 15% reported. Exchange rates reducerevenue by £17m. Adjusted operating profit up 19% on an underlying basis, 13% reported. Exchangerates reduce adjusted operating profit by £5.4m. Adjusted operating margin of 21.2%, or 21.6% at constant exchange rates (2006:21.5%). Yen weakness impacts reported operating margin. Adjusted retail/wholesale margin up to 15.2% (2006: 14.0%), as gross marginincreases by 300 basis points. Profit before tax up 31% reported, after Atlas costs of £12.9m and £15.1m netprofit relating to the relocation of global headquarters. Reported tax rate of 31% (2006: 32%). Adjusted eps up 18% as share buyback continues. Reported eps up 34%. Interim dividend of 3.35p, as progressively move towards a 40% payout ratio. Six months to 30 September % change£ million 2007 2006 reported underlying------------------ --------- --------- --------- ---------Revenue 449.1 392.0 15 19 Cost of sales (163.2) (150.4) (9) --------- --------- --------- ---------Gross margin 285.9 241.6 18Adjusted operating expenses (190.8) (157.4) (21) --------- --------- --------- ---------Adjusted operating profit 95.1 84.2 13 19 Atlas costs (12.9) (9.6) (34)Relocation of headquarters 15.1 - - --------- --------- --------- ---------Operating profit 97.3 74.6 30 38 Net finance charge (1.5) (1.2) (25) --------- --------- ---------Profit before taxation 95.8 73.4 31Taxation (29.7) (23.5) (26) --------- --------- ---------Attributable profit 66.1 49.9 32 --------- --------- --------- Adjusted eps (pence) 14.8 12.5 18Eps (pence) 14.9 11.1 34Weighted average number ofordinary shares (millions) 442.4 449.8 - Eps is calculated on a diluted basis. Revenue analysis Revenue in the six months to 30 September 2007 was £449.1m, an underlyingincrease of 19% (15% reported), further reinforcing the strength of the Burberrybrand and strategies. Revenue by channel of distribution Six months to 30 September % change£ million 2007 2006 reported underlying------------------ --------- --------- --------- ---------Retail 202.5 169.1 20 25Wholesale 207.1 182.1 14 16Licensing 39.5 40.8 (3) 5 --------- --------- --------- ---------Total 449.1 392.0 15 19 Retail Retail sales grew by 25% on an underlying basis (20% reported) in the firsthalf, to reach 45% of total revenue compared to 43% in the same period lastyear. Comparable store sales grew by 11%, driven particularly by strong Autumn/Winterproduct designs, by cohesive advertising and marketing campaigns and by the morefrequent flow of new products to our stores. Luxury handbags, women's runwayapparel and outerwear continued to perform well, further increasing the averageunit retail price in our mainline stores. Comparable store sales growth wasparticularly pleasing in the US, Italy and other parts of Continental Europe,including our Spanish womenswear concessions. During the first half, Burberry opened 11 new stores, bringing the total to 88.Five stores were opened in Europe, one in Asia and five in the US, includingthree additional icon trials. These test stores are smaller than average andoffer a higher proportion of accessories, shoes and outerwear than a mainlinestore. We also opened a further net 13 concessions (now 195 in total), of whichnine were in Asia. A net two outlets were opened during the half, bringing thetotal to 35. Overall, in the first half, there was a 12% increase in averageselling space year-on-year, bringing the total net selling space at 30 September2007 to just under 700,000 square feet. Wholesale Wholesale revenue, which continued to account for 46% of total sales in thefirst half, increased by 16% on an underlying basis (14% reported), consistentwith our expectations. This performance continued the momentum of the secondhalf of last year. Sales growth in the first half reflected the strength of the Autumn/Wintercollection which was shipped to wholesale customers predominantly during thesecond quarter. As in retail, revenue growth was driven by the appeal of theproduct, by the more frequent flow of product to customers with the new marketcalendar and by basic replenishment. While Spain remained down year-on-year, theUS showed particular strength with growth in key accounts of over 40%. Europe(excluding Spain) and emerging markets also performed well. In conjunction with local franchisees, Burberry opened six stores during thehalf, including those in Mexico City, Istanbul and Rostov on Don in Russia. Thisbrings the number of franchise stores to 64 in markets such as China, the MiddleEast, India, Russia and Latin America. Licensing Total licensing revenue in the first half increased by 5% on an underlying basis(down 3% reported). The weakness of the yen reduced reported revenue by £3.4m. Apparel volumes in Japan were broadly flat in the first half but there was somegrowth in our smaller, more traditional non-apparel licensed categories. Globalproduct licensing revenue benefited from good growth in eyewear, following thelaunch of the first collection in late 2006 by our new licensee, Luxottica.Burberry continues to rationalise its licensed products, both in Japanesenon-apparel and in menswear in Europe and the US as it moves to a moreconsistent product offer globally. Revenue by region Revenue by origin of business Six months to 30 September % change£ million 2007 2006 reported------------------ --------- --------- ---------Europe (excluding Spain) 168.9 127.1 33Spain 82.1 86.8 (5)North America 96.0 79.8 20Asia Pacific 102.1 98.3 4 --------- --------- ---------Total 449.1 392.0 15 Retail/wholesale revenue by destination Six months to 30 September % change£ million 2007 2006 reported underlying------------------ --------- --------- --------- ---------Europe (excluding Spain) 138.3 109.9 26 26Spain 75.5 74.8 1 1North America 98.0 81.8 20 29Asia Pacific 82.6 75.8 9 16Rest of world 15.2 8.9 71 71 --------- --------- --------- ---------Total retail/wholesale 409.6 351.2 17 21 The comments below refer to revenue by destination which better reflects theregional demand for Burberry products. Europe (excluding Spain) Revenue in the first half in Europe (excluding Spain) increased by 26% on anunderlying and reported basis. Wholesale revenue accounts for just over half ofthe region's sales. There was roughly equal growth in retail and wholesaleduring the period. France and Italy were the best performers as Europeanconsumers responded favourably to the Autumn/Winter collection in particular. Spain Revenue in the first half in Spain was in line with last year, against thebackground of a challenging market environment. Retail, which accounts for aboutone-third of Spanish sales, grew very strongly, largely reflecting thecontinuing success of the womenswear concessions that Burberry now operates.Wholesale revenue was down by double-digit percentages, due in part to theongoing erosion of multi-brand accounts - a trend we expect to continue in thesecond half. North America Revenue in the first half in North America increased by 29% on an underlyingbasis (20% reported). Retail, which is more than twice the size of wholesale,grew sales by over 20% underlying - broadly half from comparable stores growthand half from new space. The wholesale growth of over 40% reflects our renewedfocus on this market and our five key accounts there. Asia Pacific Revenue in the first half in Asia Pacific increased by 16% on an underlyingbasis (9% reported). Just over half the revenue comes from retail (in Korea,Hong Kong, Taiwan and other markets) where there was moderate growth incomparable store sales in the half. Wholesale revenue grew by double-digits onan underlying basis, with the duty free market in Korea leading the way.Refurbishments in the region are generating pleasing sales uplifts. Retail/wholesale revenue by product category Six months to 30 September % change£ million 2007 2006 reported underlying------------------ --------- --------- --------- ---------Womenswear 156.2 138.2 13 16Menswear 115.6 109.0 6 11Accessories 125.1 95.3 31 35Other* 12.7 8.7 46 50 --------- --------- --------- ---------Total retail/wholesale 409.6 351.2 17 21 * Mainly childrenswear Womenswear (38% of sales, 39% in 2006) Womenswear revenue grew by 16% on an underlying basis in the first half.Outerwear and the new pre-line runway apparel collection continued to drivegrowth in both channels. We continued to refine and strengthen the design andmerchandising of the collection to build a comprehensive offering across theproduct pyramid. Menswear (28% of sales, 31% in 2006) Menswear revenue grew by 11% underlying, with outerwear in particularoutperforming with the introduction of more modern styles. This was the firstcollection to benefit from greater collaboration with the new centralised designteam, under Christopher Bailey. It also reflects the first global outerwearprogramme where the core central team has worked on an integrated basis with theSpanish team. Accessories (31% of sales, up from 27% in 2006) Accessories were the fastest growing of Burberry's main product categories inthe half, up 35% underlying. Luxury handbags and shoes were the highlights withsales growth globally supported by product innovation, a basic replenishmentprogramme and the Autumn/Winter 2007 marketing campaign strongly featuring theseproducts across all mediums (print, editorial, catalogue, e-commerce). Althoughstill small, sales of shoes more than doubled in the first half and we haverecently strengthened the team across design, merchandising and sourcing. Operating profit analysis Total operating profit Six months to 30 September % change£ million 2007 2006 reported underlying------------------ --------- --------- --------- ---------Retail/wholesale 62.1 49.2 26 30Licensing 33.0 35.0 (6) 4 --------- --------- --------- ---------Adjusted operating profit 95.1 84.2 13 19Adjusted operating margin 21.2% 21.5% Atlas costs (12.9) (9.6) (34) (34)Relocation of headquarters 15.1 - - - --------- --------- --------- ---------Operating profit 97.3 74.6 30 38 --------- --------- --------- --------- Adjusted operating profit grew by 13% to £95.1m in the first half. Exchangerates reduced profit by £5.4m or 6%. The adjusted operating margin fell by 30basis points. While there were improvements in the revenue and operating marginfrom retail and wholesale combined, these were more than offset by a lowerproportion of profit from licensing, as well as a reduction of approximately £3min licensing revenue and profit relating to the weaker yen. Retail/wholesale adjusted operating profit Six months to 30 September % change£ million 2007 2006 reported------------------ --------- --------- ---------Revenue 409.6 351.2 17 Cost of sales (163.2) (150.4) (8) --------- --------- ---------Gross margin 246.4 200.8 23Gross margin % 60.2% 57.2% Adjusted operating expenses (184.3) (151.6) (22) --------- --------- ---------Adjusted operating profit 62.1 49.2 26 Adjusted operating expenses as %of sales 45.0% 43.2%Adjusted operating margin 15.2% 14.0% Gross margin in retail and wholesale combined increased by 300 basis points inthe first half of the year. Nearly half of this gain came from Atlas-relatedbenefits, predominantly from better sourcing of products. We also benefited fromthe mix change in favour of retail, which is a higher gross margin channel, andthe mix change in favour of accessories. During the half, we had higher regularprice sell-throughs, leading to less markdown inventory. This allowed us toreduce both the length of our sale periods and the percentage discounts given. Operating expenses as a percentage of sales increased to 45.0%. Again thisreflects a greater proportion of sales from the retail channel where operatingexpenses as a percentage of revenue are higher than in wholesale. In addition,there was significant investment through the profit and loss account to supportthe current and forecast levels of growth in the business. This covered areassuch as expanded and new distribution facilities; supply chain; increased ITcosts; more new store openings; and investment in a more professional corporatecentre, such as design and merchandising, customer service and upgradingcorporate functions. Licensing adjusted operating profit Six months to 30 September Six months to 30 September 2007£ million 2007 2006 At constant FX------------------ --------- --------- -------------Revenue 39.5 40.8 42.9 Cost of sales - - - --------- --------- -------------Gross margin 39.5 40.8 42.9Gross margin % 100% 100% 100% Adjusted operatingexpenses (6.5) (5.8) (6.6) --------- --------- -------------Adjusted operating profit 33.0 35.0 36.3 Adjusted operating margin 83.5% 85.8% 84.6% As discussed earlier, on an underlying basis, licensing revenue was up by 5%(down 3% reported). However, as the table above shows, the weakness of the yenreduced both reported revenue and adjusted operating profit by about £3m. Theweakness of the yen is expected to reduce reported revenue and profit by about afurther £3m in the second half (about £6m in the full year). Relocation of headquarters As previously announced, Burberry completed the sale of its central Londonbuilding during the first half, in advance of the global headquarters relocationplanned for late 2008. The net profit relating to this disposal was £15.1m andthe cash proceeds were £28m. Capital expenditure next year will include about£20-25m relating to the fit-out costs of the new building. Taxation The taxation rate on reported profit before taxation for the first half is 31%(2006: 32%). This is the estimated rate for the full year (compared to 29.5% forlast year, after a 1.5% one-time adjustment). The taxation rate on adjusted profit before taxation is 30.2%, after anadjustment of 0.8% relating to the net profit on relocation of headquarters. Cash flow and net debt Net debt at 30 September 2007 was £89.2m, compared to £2.8m at 31 March 2007 and£55.2m at 30 September 2006. Major movements in the first six months of the yearinclude a £95m working capital outflow (£58m in the same period last year),reflecting the growth in the business and a change in the operating model. Forexample, we have been building stocks of replenishment products ahead of the keyselling season. Other flows were a £29m inflow mainly from the disposal of theheadquarters building, dividend payments of £33m (2006: £24m) and a £40m outflowon the share buyback programme, where we purchased 6.2m shares. Principal risks and uncertainties The principal risks and uncertainties affecting the business activities of theGroup are much in line with those detailed on pages 58 to 60 of the BurberryGroup plc Annual Report 2006/07. On an ongoing basis throughout the period, theGroup carries out a structured process to identify, evaluate and managesignificant risks faced by the Group. In the view of the directors, there hasbeen no material change in these factors in respect of the remaining six monthsof the financial year. Store portfolio Directly-operated stores Mainline Concessions Outlets Total Franchise stores stores------------- -------- ---------- -------- -------- -------- At 31 March 2007 77 182 33 292 58Additions 11 20 3 34 6Closures - (7) (1) (8) -------------- -------- ---------- -------- -------- --------At 30 September 2007 88 195 35 318 64 Store portfolio by region Directly-operated stores At 30 September 2007 Mainline Concessions Outlets Total Franchise stores stores------------- -------- ---------- -------- -------- -------- Europe (exc.Spain) 25 15 13 53 7Spain 5 93 4 102 -North America 44 - 17 61 -Asia Pacific 14 87 1 102 40Rest of world - - - - 17------------- -------- ---------- -------- -------- --------Total 88 195 35 318 64 Sales to franchise stores reported in wholesale revenue Net retail selling square footage 000s square feet ------------------At 30 September 2006 630At 31 March 2007 650At 30 September 2007 700 Retail selling square footage at period end; not the average for the period Condensed group income statement - unaudited Note Six months to Six months to Year to 30 September 30 September 31 March 2007 2006 2007 £m £m £m ---- ------ ------ ------Turnover 3 449.1 392.0 850.3Cost of sales (163.2) (150.4) (329.0)---------------------------------------- ---- ------ ------ ------Gross profit 285.9 241.6 521.3Net operating expenses (188.6) (167.0) (364.3)---------------------------------------- ---- ------ ------ ------Operating profit 97.3 74.6 157.0Financing ---------------------------------------- ---- ------ ------ ------Interest receivable and similar income 3.1 2.4 5.5Interest payable and similar charges (4.6) (3.6) (6.2)---------------------------------------- ---- ------ ------ ------Net finance charge 3 (1.5) (1.2) (0.7)---------------------------------------- ---- ------ ------ ------Profit before taxation 3 95.8 73.4 156.3Taxation 5 (29.7) (23.5) (46.1)---------------------------------------- ---- ------ ------ ------Attributable profit for the period 13 66.1 49.9 110.2---------------------------------------- ---- ------ ------ ------ The profit for the period is attributable to the equity holders of the Company andrelates to continuing operations. Earnings per share- basic 6 15.2p 11.4p 25.2p- diluted 6 14.9p 11.1p 24.7p---------------------------------------- ---- ------ ------ ------ Non-GAAP measures Adjusted operating profit £m £m £mOperating profit as above 97.3 74.6 157.0Add:Atlas costs 4 12.9 9.6 21.6Treorchy closure costs 4 - - 6.5Less:Relocation of Headquarters net profit 4 (15.1) - ----------------------------------------- ---- ------ ------ ------Adjusted operating profit 95.1 84.2 185.1---------------------------------------- ---- ------ ------ ------ Adjusted earnings per share- basic 6 15.1p 12.9p 29.7p- diluted 6 14.8p 12.5p 29.1p---------------------------------------- ---- ------ ------ ------ Dividends per share- Proposed interim (not recognised as a liability at 30 September) 7 3.35p 2.875p 2.875p- Final (not recognised as a liability at 31 March) 7 - - 7.625p---------------------------------------- ---- ------ ------ ------ Condensed group statement of recognised income and expense - unaudited Note Six months to Six months to Year to 30 September 30 September 31 March 2007 2006 2007 £m £m £m ---------------------------------------- ---- ------ ------ ------Attributable profit for the period 66.1 49.9 110.2 Cash flow hedges - gains deferred in equity 1.3 5.4 9.1Foreign currency translation differences 0.1 (20.8) (28.9)Net actuarial losses on defined benefitpension scheme (0.4) (0.2) (0.5)Tax on items taken directly to equity 0.7 (0.8) (1.5)---------------------------------------- ---- ------ ------ ------Net income/(expense) recognised directly in equity 13 1.7 (16.4) (21.8)Cash flow hedges - transferred to theincome statement (3.2) (0.6) (5.9)Tax on items transferred from equity 1.1 0.2 1.8---------------------------------------- ---- ------ ------ ------Net losses recognised directly in equity net of transfers (0.4) (16.8) (25.9)---------------------------------------- ---- ------ ------ ------Total recognised income for the period 13 65.7 33.1 84.3---------------------------------------- ---- ------ ------ ------ All the recognised income and expense for the period is attributable to theequity holders of the Company. Condensed group balance sheet - unaudited Note As at As at As at 30 September 30 September 31 March 2007 2006 2007 £m £m £m ---------------------------------------- ---- ------ ------ ------ASSETSNon-current assetsIntangible assets 8 135.0 133.0 133.6Property, plant and equipment 8 156.9 164.5 162.7Deferred taxation assets 24.4 14.0 24.6Trade and other receivables 9 6.3 5.1 5.1---------------------------------------- ---- ------ ------ ------ 322.6 316.6 326.0---------------------------------------- ---- ------ ------ ------ Current assetsInventory 218.5 131.7 149.8Trade and other receivables 9 161.1 150.5 137.2Derivative financial assets 4.3 5.8 5.3Cash and cash equivalents 98.0 102.2 131.4---------------------------------------- ---- ------ ------ ------ 481.9 390.2 423.7---------------------------------------- ---- ------ ------ ------Total assets 804.5 706.8 749.7---------------------------------------- ---- ------ ------ ------ LIABILITIESNon-current liabilities Long term liabilities 10 (12.3) (10.9) (10.4)Deferred taxation liabilities (8.9) (8.9) (10.2)Retirement benefit obligations (1.7) (1.7) (1.8)Provisions for liabilities and charges 11 (3.6) (2.8) ----------------------------------------- ---- ------ ------ ------ (26.5) (24.3) (22.4)---------------------------------------- ---- ------ ------ ------ Current liabilitiesBank overdrafts and borrowings (187.2) (157.4) (134.2)Derivative financial liabilities (1.1) (0.4) (0.5)Trade and other payables 12 (153.1) (132.1) (170.7)Income tax liabilities (34.6) (25.0) (25.0)---------------------------------------- ---- ------ ------ ------ (376.0) (314.9) (330.4)---------------------------------------- ---- ------ ------ ------Total liabilities (402.5) (339.2) (352.8)---------------------------------------- ---- ------ ------ ------Net assets 402.0 367.6 396.9---------------------------------------- ---- ------ ------ ------ EQUITYCapital and reserves attributable to theCompany's equity holdersOrdinary Share capital 13 0.2 0.2 0.2Share premium account 13 174.0 166.6 167.3Capital reserve 13 26.6 26.0 26.0Hedging reserve 13 0.6 3.0 1.8Foreign currency translation reserve 13 (5.0) 1.4 (6.2)Retained earnings 13 205.6 170.4 207.8---------------------------------------- ---- ------ ------ ------Total equity 402.0 367.6 396.9---------------------------------------- ---- ------ ------ ------ Condensed group cash flow statement - unaudited Note Six months to Six months to Year to 30 September 30 September 31 March 2007 2006 2007 £m £m £m---------------------------------------- ---- ------ ------ ------Cash flows from operating activitiesOperating profit 97.3 74.6 157.0Depreciation 14.2 12.1 25.9Amortisation 1.7 1.0 1.8Impairment releases - - (1.0)(Profit)/loss on disposal of property,plant and equipment (18.8) - 1.1Fair value losses on derivative instruments (0.8) - -Charges in respect of employee share incentive schemes 7.1 4.8 10.8Increase in inventories (68.7) (10.3) (33.4)Increase in trade and other receivables (22.5) (44.3) (33.8)(Decrease)/increase in trade and other payables (3.7) (3.3) 32.8---------------------------------------- ---- ------ ------ ------Cash generated from operations 5.8 34.6 161.2Interest received 2.1 2.0 4.6Interest paid (4.5) (2.7) (6.2)Taxation paid (18.8) (20.3) (45.8)---------------------------------------- ---- ------ ------ ------Net cash (outflow)/inflow from operating activities (15.4) 13.6 113.8---------------------------------------- ---- ------ ------ ------ Cash flows from investing activities Purchase of tangible and intangible fixed assets (20.9) (14.5) (34.3)Proceeds from sale of property, plant andequipment 29.0 - 0.1Payment of deferred consideration (10.0) (1.5) (1.4)Acquisition of subsidiary - - (0.1)---------------------------------------- ---- ------ ------ ------Net cash outflow from investing activities (1.9) (16.0) (35.7)---------------------------------------- ---- ------ ------ ------ Cash flows from financing activitiesDividends paid in the year (32.9) (24.0) (36.5)Issue of ordinary share capital 0.5 0.3 0.6Purchase of shares through share buy back (39.5) (37.6) (62.2)Sale of own shares by ESOPs 4.2 1.7 6.1Draw down on loan facility 86.5 50.0 10.0---------------------------------------- ---- ------ ------ ------Net cash inflow/(outflow) fromfinancing activities 18.8 (9.6) (82.0)---------------------------------------- ---- ------ ------ ------ Net increase/(decrease)in cash and cashequivalents 1.5 (12.0) (3.9)Effect of exchange rate changes on openingbalances (1.4) (5.7) (1.4)Cash and cash equivalents at beginningof period 57.2 62.5 62.5---------------------------------------- ---- ------ ------ ------ Cash and cash equivalents at end ofperiod 57.3 44.8 57.2---------------------------------------- ---- ------ ------ ------ ------------------------------------------ ------ ------ ------ As at As at As at 30 September 30 September 31 March 2007 2006 2007 £m £m £m ------------------------------------------ ------ ------ ------Cash at bank and in hand 58.9 61.6 72.0Short term deposits 39.1 40.6 59.4------------------------------------------ ------ ------ ------Cash and cash equivalents as per the balance sheet 98.0 102.2 131.4Bank overdrafts (40.7) (57.4) (74.2)------------------------------------------ ------ ------ ------Cash and cash equivalentsper the cash flow statement 57.3 44.8 57.2Bank borrowings (146.5) (100.0) (60.0)------------------------------------------ ------ ------ ------Net debt (89.2) (55.2) (2.8)------------------------------------------ ------ ------ ------ Notes to the condensed financial statements 1. Corporate information Burberry Group is a luxury goods manufacturer, wholesaler and retailer inEurope, North America and Asia Pacific; licensing activity is also carried out,principally in Japan. All of the companies which comprise Burberry Group areowned by Burberry Group plc ("the Company") directly or indirectly. 2. Accounting policies and basis of preparation The financial information contained in this report is unaudited. The CondensedGroup Income Statement, Condensed Group Statement of Recognised Income andExpense and Condensed Group Cash Flow Statement for the interim period to 30September 2007, and the Condensed Group Balance Sheet as at 30 September 2007and related notes have been reviewed by the auditors and their report to theCompany is set out on page 26. These interim financial statements do notconstitute statutory accounts within the meaning of Section 240 of the CompaniesAct 1985. Statutory accounts for the year ended 31 March 2007 were approved bythe Board of directors on 23 May 2007 and filed with the Registrar of Companies.The report of the auditors on the statutory accounts for the year ended 31 March2007 was unqualified, did not contain an emphasis of matter paragraph and didnot contain a statement under Section 237 of the Companies Act 1985. These condensed consolidated financial statements for the six months ended 30September 2007 have been prepared in accordance with the Disclosure andTransparency Rules of the Financial Services Authority and with IAS 34, 'Interimfinancial reporting' as adopted by the European Union. This report should beread in conjunction with the Group's financial statements for the year ended 31March 2007, which have been prepared in accordance with IFRSs as adopted by theEuropean Union. Accounting policies and presentation are consistent with those applied in theGroup's financial statements for the year ended 31 March 2007 as set out onpages 81 to 85. The following new standards or interpretations are mandatory for the first timefor the financial year ending 31 March 2008: IFRS 7 Financial Instruments: Disclosures Effective for annual periods beginningon or after 1 January 2007 IFRIC 8 Scope of IFRS 2 Effective for annual periods beginning on or after 1 May2006 IFRIC 9 Reassessment of Embedded Derivatives Effective for annual periodsbeginning on or after 1 June 2006 IFRIC 10 Interim Financial Reporting and Impairment Effective for annual periodsbeginning on or after 1 November 2006 IFRIC 11 IFRS 2: Group and Treasury Share Transactions Effective for annualperiods beginning on or after 1 March 2007 Non-GAAP measures Non-GAAP measures are presented in order to provide a clear and consistentpresentation of the underlying performance of the Group's ongoing business. Suchpresentation will be prepared on a consistent basis in the future. 3. Segmental analysis (a) Turnover and profit before taxation - by origin of business Europe comprises operations in France, Germany, Italy, Switzerland, Austria,Belgium, Czech Republic, Hungary and the UK. North America comprises operationsin the USA. Asia Pacific comprises operations in Australia, Hong Kong, Korea,Malaysia, Singapore and Taiwan. Europe (excluding Spain) Spain North America Asia Pacific Total------------------ -------- -------- -------- -------- ------- Six months to30 September 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 £m £m £m £m £m £m £m £m £m £m------------------ ----- ------ ----- ----- ----- ----- ----- ----- ----- -----Gross segmentturnover 299.3 213.8# 93.5 88.5* 96.0 79.8 102.1 99.5 590.9 481.6#*Inter-segmentturnover (130.4) (86.7)# (11.4) (1.7)* - - - (1.2) (141.8) (89.6)#*------------------ ----- ------ ----- ----- ----- ----- ----- ----- ----- -----Turnover 168.9 127.1 82.1 86.8 96.0 79.8 102.1 98.3 449.1 392.0------------------ ----- ------ ----- ----- ----- ----- ----- ----- ----- -----Operating profit 58.0 56.8# 14.6 8.0 10.0 (4.5)# 14.7 14.3 97.3 74.6Net financecharge (1.5) (1.2)------------------ ----- ------ ----- ----- ----- ----- ----- ----- ----- Profit before taxation 95.8 73.4Taxation (29.7) (23.5)------------------ ----- ------ ----- ----- ----- ----- ----- ----- ----- -----Attributableprofit for theyear 66.1 49.9------------------ ----- ------ ----- ----- ----- ----- ----- ----- ----- ----- *Restated for inter-segment turnover#Restated for the advanced pricing agreement in relation to internal salesbetween the UK and USA, previously under negotiation with the UK and USACompetent Authorities, which has been finalised in the period. 3. Segmental analysis (a) Turnover and profit before taxation - by origin of business (continued) --------------------------------- ------ ------ ------ ------ ------Year to 31 March 2007 Europe (excluding North Asia Spain) Spain America Pacific Total £m £m £m £m £m--------------------------------- ------ ------ ------ ------ ------Gross segment turnover 450.0# 177.6 192.6 214.4 1,034.6#Inter-segment turnover (179.3)# (3.7) - (1.3) (184.3)#--------------------------------- ------ ------ ------ ------ ------Turnover 270.7 173.9 192.6 213.1 850.3--------------------------------- ------ ------ ------ ------ ------ --------------------------------- ------ ------ ------ ------ ------Operating profit 104.1# 13.4 5.3# 34.2 157.0Net finance charge (0.7)--------------------------------- ------ ------ ------ ------ ------Profit before taxation 156.3Taxation (46.1)------------------ ------ ------ ------ ------ ------Attributable profit for the year 110.2------------------ ------ ------ ------ ------ ------*Restated for inter-segment turnover#Restated for the advanced pricing agreement in relation to internal salesbetween the UK and USA, previously under negotiation with the UK and USACompetent Authorities, which has been finalised in the period. (b) Turnover by destination ----------------------------------------- ------ ------ ------ Six months to Six months to Year to 30 September 30 September 31 March 2007 2006 2007 £m £m £m----------------------------------------- ------ ------ ------Europe (excluding Spain) 138.3 109.9 229.8 North America 98.0 81.8 196.5 Asia Pacific 82.6 75.8 167.5 Spain 75.5 74.8 151.8 Rest of the world 15.2 8.9 18.6----------------------------------------- ------ ------ ------Wholesale and Retail 409.6 351.2 764.2 Licensing 39.5 40.8 86.1----------------------------------------- ------ ------ ------Total 449.1 392.0 850.3----------------------------------------- ------ ------ ------ (c) Turnover by class of business (being the channels to markets) ------------ -------- --------- -------- -------- --------Six months to Total 30 September Retail Wholesale Retail and wholesale Licensing Total ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 £m £m £m £m £m £m £m £m £m £m------------ ----- ----- ----- ----- ----- ----- ----- ----- ----- -----Gross segmentturnover 202.5 169.1 297.2 242.3#* 499.7 411.4#* 39.5 40.8 539.2 452.2#*Inter-segmentturnover - - (90.1) (60.2)#* (90.1) (60.2)#* - - (90.1) (60.2)#*------------ ----- ----- ----- ----- ----- ----- ----- ----- ----- -----Turnover 202.5 169.1 207.1 182.1 409.6 351.2 39.5 40.8 449.1 392.0------------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- --------------------------------- ------ ------ ------ ------ ------Year to 31 March 2007 Retail Wholesale Total Wholesale Licensing Total £m £m and Retail £m £m --------------------------------- ------ ------ ------ ------ ------Gross segmentturnover 410.1 498.8# 908.9# 86.1 995.0#Inter-segmentturnover - (144.7)# (144.7)# - (144.7)#--------------------------------- ------ ------ ------ ------ ------Turnover 410.1 354.1 764.2 86.1 850.3--------------------------------- ------ ------ ------ ------ ------ *Restated for inter-segment turnover#Restated for the advanced pricing agreement in relation to internal salesbetween the UK and USA, previously under negotiation with the UK and USACompetent Authorities, which has been finalised in the period. Notes to the condensed financial statements (continued) 3. Segmental analysis (continued) (d) Analysis of turnover by product category presented as additional information ----------------------------------------- ------ ------ ------ Six months to Six months to Year to 30 September 30 September 31 March 2007 2006 2007 £m £m £m----------------------------------------- ------ ------ ------ Womenswear 156.2 138.2 305.5Menswear 115.6 109.0 227.0Accessories 125.1 95.3 211.2Other 12.7 8.7 20.5----------------------------------------- ------ ------ ------Wholesale and Retail 409.6 351.2 764.2Licensing 39.5 40.8 86.1----------------------------------------- ------ ------ ------Total 449.1 392.0 850.3----------------------------------------- ------ ------ ------ Number of directly operated stores,concessions and outlets open at endof period 318 277 292----------------------------------------- ------ ------ ------ 4. Non-GAAP measures Operating profit for the six months to 30 September 2007 includes charges of£12.9m (2006: £9.6m) relating to Project Atlas, our major infrastructureredesign initiative, which was announced in May 2005. This project is designedto create a substantially stronger platform to support long term operation andgrowth of the Group. Investment in Project Atlas is expected to be around £50mover the three year period to 31 March 2008. Operating profit for the six months to 30 September 2007 also includes a netprofit of £15.1m relating to the Group's plans to relocate their globalheadquarters in 2008. This net profit is represented by a profit on the sale offreehold property of £19.6m, the cost of accelerated depreciation of £0.9m and aprovision for onerous leases as a result of the relocation for £3.6m. Operating profit for the year to 31 March 2007 includes charges of £6.5m for theclosure of a polo shirt manufacturing facility in Treorchy, South Wales. 5. Taxation The effective rate of tax is based on the estimated tax charge for the full yearat a rate of 31.0% (2006: 32.0%). The actual effective rate of tax for the yearto 31 March 2007 was 29.5%, which included a 1.5% benefit relating to previousyears as a result of the advanced pricing agreement in relation to internalsales between the UK and USA. On an underlying basis the rate was 31%. 6. Earnings per share The calculation of basic earnings per share is based on attributable profit forthe period divided by the weighted average number of ordinary shares in issueduring the period. Basic and diluted earnings per share based on adjustedoperating profit are also disclosed to indicate the underlying profitability ofthe Burberry Group. ----------------------------------------- ------ ------ ------ Six months to Six months to Year to 30 September 30 September 31 March 2007 2006 2007 £m £m £m----------------------------------------- ------ ------ ------Attributable profit for the periodbefore Atlas costs, relocation ofHeadquarters and Treorchy costs 65.3 56.4 130.0Effect of Atlas costs, relocation ofHeadquarters and Treorchy costs(after taxation) 0.8 (6.5) (19.8)----------------------------------------- ------ ------ ------Attributable profit for the period 66.1 49.9 110.2----------------------------------------- ------ ------ ------ The weighted average number of Ordinary shares represents the weighted averagenumber of Burberry Group plc ordinary shares in issue throughout the period,excluding ordinary shares held in Burberry Group's ESOPs. Diluted earnings per share is based on the weighted average number of Ordinaryshares in issue during the period. In addition, account is taken of any awardsmade under the share incentive schemes, which will have a dilutive effect whenexercised. ----------------------------------------- ------ ------ ------ Six months to Six months to Year to 30 September 30 September 31 March 2007 2006 2007 Millions Millions Millions ----------------------------------------- ------ ------ ------Weighted average number of ordinaryshares in issue during the period 433.1 439.1 437.8Dilutive effect of the shareincentive schemes 9.3 10.7 8.3----------------------------------------- ------ ------ ------Diluted weighted average number ofordinary shares in issue during theperiod 442.4 449.8 446.1----------------------------------------- ------ ------ ------ Notes to the condensed financial statements (continued) 6. Earnings per share (continued)----------------------------------------- ------ ------ ------Basic earnings per share Six months to Six months to Year to 30 September 30 September 31 March 2007 2006 2007 Pence Pence Pence ----------------------------------------- ------ ------ ------Basic earnings per share before Atlascosts, relocation of Headquarters andTreorchy costs 15.1 12.9 29.7Effect of Atlas costs, relocation ofHeadquarters and Treorchy costs(after taxation) 0.1 (1.5) (4.5)----------------------------------------- ------ ------ ------Basic earnings per share 15.2 11.4 25.2----------------------------------------- ------ ------ ------Diluted earnings per share----------------------------------------- ------ ------ ------Diluted earnings per share beforeAtlas costs, relocation ofHeadquarters and Treorchy costs 14.8 12.5 29.1Effect of Atlas costs, relocation ofHeadquarters and Treorchy costs(after taxation) 0.1 (1.4) (4.4)----------------------------------------- ------ ------ ------Diluted earnings per share 14.9 11.1 24.7----------------------------------------- ------ ------ ------ 7. Dividends The interim dividend of 3.35p (2006: 2.875p) per share has been approved by theBoard of directors after 30 September 2007. Accordingly, this dividend has notbeen recognised as a liability at the period end. The interim dividend will be paid on 31 January 2008 to Shareholders on theRegister at the close of business on 4 January 2008. A dividend of 7.625p (2006: 5.5p) per share was paid during the period inrelation to the year ending 31 March 2007. A total dividend of 10.5p per sharewas paid in respect of the year ending 31 March 2007. 8. Capital expenditure In the period there were additions to intangible assets of £1.1m (2006: £2.6m).In the period there were additions to property, plant and equipment of £19.2m(2006: £17.7m) and disposals with a net book value of £8.7m (2006: £0.1m). Capital commitments contracted but not provided for by the Group amounted to£7.5m. 9. Trade and other receivables ----------------------------------------- ------ ------ ------ As at As at As at 30 September 30 September 31 March 2007 2006 2007 £m £m £m ----------------------------------------- ------ ------ ------Non-currentDeposits and prepayments 6.3 5.1 5.1----------------------------------------- ------ ------ ------Total non-current trade andother receivables 6.3 5.1 5.1 CurrentTrade receivables 131.3 126.3 111.2Other receivables 15.1 2.8 9.4Prepayments and accruedincome 14.7 21.4 16.6----------------------------------------- ------ ------ ------Total current trade andother receivables 161.1 150.5 137.2----------------------------------------- ------ ------ ------ Total 167.4 155.6 142.3----------------------------------------- ------ ------ ------ 10. Long term liabilities ----------------------------------------- ------ ------ ------ As at As at As at 30 September 30 September 31 March 2007 2006 2007 £m £m £m ----------------------------------------- ------ ------ ------UnsecuredOther payables, accrualsand deferred income 12.3 10.9 10.4----------------------------------------- ------ ------ ------Total 12.3 10.9 10.4----------------------------------------- ------ ------ ------ 11. Provisions for liabilities and charges ------------------------------------------------ ------- Property obligations £m------------------------------------------------ -------As at 1 April 2007 -Created in the period 3.6------------------------------------------------ -------As at 30 September 2007 3.6------------------------------------------------ ------- Property obligations arose from the portfolio of leasehold obligations of theGroup following the plans to relocate the global headquarters. 12. Trade and other payables ----------------------------------------- ------ ------ ------ As at As at As at 30 September 30 September 31 March 2007 2006 2007 £m £m £m ----------------------------------------- ------ ------ ------UnsecuredTrade payables 55.2 27.0 56.8Other taxes and socialsecurity costs 8.5 8.0 6.4Other payables 17.6 25.9 19.4Accruals and deferred income 71.8 61.2 78.1Deferred consideration for acquisitions - 10.0 10.0----------------------------------------- ------ ------ ------Total 153.1 132.1 170.7----------------------------------------- ------ ------ ------Deferred consideration in prior periods arose from the acquisition of Burberry'sbusiness in Korea. 13. Share capital and reserves ------------------------- ------ ------ ------ ------ ------ ------ ------ Foreign Ordinary Share currency share premium Hedging translation Capital Retained Total capital account reserve reserve reserve earnings equity £m £m £m £m £m £m £m ------------------------- ------ ------ ------ ------ ------ ------ ------Balance as at 1 April 2007 0.2 167.3 1.8 (6.2) 26.0 207.8 396.9 Cash flow hedges - gainsdeferred in equity 1.3 1.3Foreign currency translationdifferences 0.1 0.1Net actuarial loss on definedbenefit pension scheme (0.4) (0.4)Tax on items taken directlyto equity (0.4) 1.1 0.7------------------------- ------ ------ ------ ------ ------ ------ ------Net income/(expense) recognised directly inequity - - 0.9 1.2 - (0.4) 1.7Cash flow hedges -transferred to the incomestatement (3.2) (3.2)Tax on items transferredfrom equity 1.1 1.1Attributable profit for theperiod 66.1 66.1------------------------- ------ ------ ------ ------ ------ ------ ------Total recognisedincome/(expense) for theperiod - - (1.2) 1.2 - 65.7 65.7Transfer between reserves 0.6 (0.6) -Employee share option -scheme- value of share optionsgranted 7.1 7.1- tax on share optionsgranted 0.1 0.1- exercise of share options 6.7 6.7- price differential on exercise of shares (6.3) (6.3)Share buy back costs (39.5) (39.5)Sale of own shares byESOPs 4.2 4.2Dividend paid in the period (32.9) (32.9)------------------------- ------ ------ ------ ------ ------ ------ ------Balance as at 30 September2007 0.2 174.0 0.6 (5.0) 26.6 205.6 402.0------------------------- ------ ------ ------ ------ ------ ------ ------ During the six months to 30 September 2007, the Company repurchased andsubsequently cancelled 6,173,167 Ordinary shares, representing 1.4% of theissued share capital, at a total cost of £39.5m. The nominal value of the shareswas £3,087, which was transferred to a capital reserve. Retained earnings werereduced by £39.5m. The share repurchase programme commenced in January 2005 andsince then, a total of 79,038,397 Ordinary shares have been repurchased andsubsequently cancelled. This represents 15.7% of the original issued sharecapital at a total cost of £351.7m. The nominal value of the shares was £39,520and has been transferred to a capital reserve and the retained earnings havebeen reduced by £351.7m. Options exercised during the first half to 30 September 2007 resulted in1,030,282 shares being issued (2006: 3,242,918), with exercise proceeds of £6.7m(2006: £14.8m). The related weighted average price at the time of exercise was£6.52 (2006: £4.57) per share. 14. Contingent liabilities There have been no material changes to the Group's contingent liabilities since31 March 2007. Notes to the condensed financial statements (continued) 15. Related party disclosures The Group's significant related parties are disclosed in the Annual Report forthe year ended 31 March 2007, there were no material changes to these relatedparties in the period. No material related party transactions have taken placeduring the first six months of the current financial year. 16. Foreign Currency The results of overseas subsidiaries are translated into the Group'spresentation currency of Sterling each month at the weighted average exchangerate for the period according to the phasing of the Group's trading results. Theweighted average exchange rate is used, as it is considered to approximate theactual exchange rates on the dates of the transactions. The assets andliabilities of such undertakings are translated at period end exchange rates.Differences arising on the retranslation of the opening net investment insubsidiary companies, and on the translation of their results, are takendirectly to the foreign currency translation reserve within equity. The principal exchange rates used were as follows: Average----------------------------------------- -------------- Six months to Six months to Year to 30 September 30 September 31 March 2007 2006 2007----------------------------------------- ------ ------ ------Euro 1.47 1.47 1.49US dollar 2.00 1.86 1.91Hong Kong dollar 15.67 14.40 14.80Korean won 1,861 1,770 1,801----------------------------------------- ------ ------ ------ Closing -------------- As at As at As at 30 September 30 September 31 March 2007 2006 2007----------------------------------------- ------ ------ ------Euro 1.43 1.48 1.47US dollar 2.05 1.87 1.97Hong Kong dollar 15.92 14.59 15.38Korean won 1,873 1,772 1,851----------------------------------------- ------ ------ ------ The average exchange rate achieved by Burberry Group on its Yen licensingincome, taking into account its use of Yen forward sale contracts on a monthlybasis approximately 12 months in advance of royalty receipts, was Yen 220.7: £1in the six months to 30 September 2007 (2006: Yen 194.7: £1; Year to 31 March2007: Yen 199.2: £1). Statement of directors' responsibilities The directors confirm to the best of their knowledge that this condensed set offinancial statements has been prepared in accordance with InternationalAccounting Standard 34, "Interim Financial Reporting", as adopted by theEuropean Union and that the Interim Management Report and condensed financialstatements include a fair review of the information required by Disclosure andTransparency Rules 4.2.7 and 4.2.8 of the United Kingdom's Financial ServicesAuthority. The directors of Burberry Group plc are listed in the Burberry Group plc AnnualReport for 31 March 2006/07. A list of current directors is maintained on theBurberry Group website: www.burberryplc.com. By order of the Board John PeaceChairman13 November 2007 Stacey CartwrightChief Financial Officer13 November 2007 Independent review report to Burberry Group plc Introduction We have been engaged by the company to review the interim financial informationin the half-yearly financial report ("interim report") for the six months ended30 September 2007, which comprises the Condensed Group Income Statement,Condensed Group Balance Sheet, Condensed Group Statement of Recognised Incomeand Expense, Condensed Group Cash Flow Statement and the related notes. We haveread the other information contained in the interim report and consideredwhether it contains any apparent misstatements or material inconsistencies withthe interim financial information. Directors' responsibilities The interim report is the responsibility of, and has been approved by, thedirectors. The directors are responsible for preparing the interim report inaccordance with the Disclosure and Transparency Rules of the United Kingdom'sFinancial Services Authority. As disclosed in note 1, the annual financial statements of the group areprepared in accordance with IFRSs as adopted by the European Union. Thecondensed set of financial statements included in this interim report has beenprepared in accordance with International Accounting Standard 34, "InterimFinancial Reporting", as adopted by the European Union. The maintenance and integrity of the Burberry Group plc website is theresponsibility of the directors; our work carried out does not involveconsideration of these matters and, accordingly we accept no responsibility forany changes that may have occurred to the interim report since it was initiallypresented on the website. Our responsibility Our responsibility is to express to the company a conclusion on the condensedset of financial statements in the interim report based on our review. Thisreport, including the conclusion, has been prepared for and only for the companyfor the purpose of the Disclosure and Transparency Rules of the FinancialServices Authority and for no other purpose. We do not, in producing thisreport, accept or assume responsibility for any other purpose or to any otherperson to whom this report is shown or into whose hands it may come save whereexpressly agreed by our prior consent in writing. Scope of review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, 'Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity' issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making enquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly, wedo not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believethat the condensed set of financial statements in the interim report for the sixmonths ended 30 September 2007 is not prepared, in all material respects, inaccordance with International Accounting Standard 34 as adopted by the EuropeanUnion and the Disclosure and Transparency Rules of the United Kingdom'sFinancial Services Authority. PricewaterhouseCoopers LLPChartered Accountants 13 November 2007 London Shareholder information Registrar Enquiries concerning shareholdings, changes of name or address should bereferred to Equiniti Limited (formerly LloydsTSB Registrars), Aspect House,Spencer Road, Lancing, West Sussex BN99 6DA, telephone: 0870 600 3970 (or +44121 415 7047 from outside the UK). In addition, Equiniti Limited offer a rangeof shareholder information online at www.shareview.co.uk. A textphone facilityfor those with hearing difficulties is available by calling: 0870 600 3950 (or+44 121 415 7028 from outside the UK). Internet A full range of investor relations information is available atwww.burberryplc.com. This includes webcasts of results presentations given toanalysts and fund managers together with the slides accompanying thosepresentations. Dividends The interim dividend of 3.35p per share will be paid on 31 January 2008 toshareholders on the register at the close of business on 4 January 2008. Dividend Reinvestment Plan The Dividend Reinvestment Plan (DRIP) enables shareholders to use their cashdividends to buy further shares in the Company. Full details on the DRIP can beobtained from the Registrars. If you would like your interim and futuredividends to qualify for the DRIP completed application forms must be returnedto the Registrars by 17 January 2008. Electronic Communication Shareholders have the opportunity to receive all shareholder documentation inelectronic form via the internet, rather than through the post in paper format.Shareholders who decide to register for this option will receive an email eachtime a statutory document is published on the internet. Shareholders who wish toreceive documentation in electronic form should register at www.shareview.co.uk. ShareGift Shareholders with a small number of shares, the value of which makes ituneconomic to sell them, may wish to consider donating their shares to charitythrough ShareGift, a donation scheme operated by The Orr Mackintosh Foundation(registered charity 1052686). A ShareGift donation form can be obtained fromEquiniti Limited. Further information is available at www.sharegift.org or bytelephone on +44 (0) 20 7930 3737 Financial calendar Interim dividend record date 4 January 2008Third quarter interim management statement 15 January 2008Interim dividend payment 31 January 2008Second half trading update April 2008Preliminary results announcement of results for the year ended 31 March 2008 May 2008Annual General Meeting July 2008 Registered office Burberry Group plc18-22 HaymarketLondonSW1Y 4DQTelephone: +44 (0) 20 7968 0000Fax: +44 (0) 20 7980 2950www.burberryplc.com Registered in England and WalesRegistered Number 03458224 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Burberry