Burberry Group PLC BRBY Interim Results

  Burberry Group PLC (BRBY) - Interim Results

RNS Number : 4956Q
Burberry Group PLC
07 November 2012




7 November 2012

                                      

                              Burberry Group plc

                                      

                               Interim results

                  for the six months ended 30 September 2012



· Financial performance

- Total revenue growth 8% underlying to £883m (up 6% reported)

- Retail revenue growth 10% underlying to £577m (up 9% reported)

- Adjusted PBT up 6% underlying to £173m (up 7% reported)

- Reported PBT £112m (2011: £159m)

- Net cash of £237m

- Interim dividend up 14% to 8p



· Retail/wholesale reported revenue up 7%; adjusted operating profit up 11%

- Adjusted operating margin up 60 basis points to 15.5%

- Better quality sales and tight control of discretionary spend

- Enabled continued investment in key growth initiatives



· Focused execution of key strategies

- Digital innovation: Regent Street opening - Burberry World Live

- Brand balance: Prorsum and London penetration increased

- Non-apparel growth: mens accessories grew 40% in retail

- Retail investment focus in flagship markets: new stores in Hong Kong,
Milan, Rome and London; full year capital expenditure unchanged at £180-200m

- Emerging markets focus: 62 franchise stores in 27 countries worldwide

- Operational excellence: expanded and upgraded logistics network



· Fragrance and beauty directly operated as fifth product division from 1
April 2013

- Consistent with ongoing strategy of greater brand control

- Significant opportunity in under-penetrated opening price point
categories

- Euro181m payment to be made in H2 for ending licence relationship;
£71m of which is recognised within exceptional items in H1

- Broadly neutral to adjusted PBT in FY 2013/14, a transition year;
earnings accretive thereafter



Angela Ahrendts, Chief Executive Officer, commented:



"In retail/wholesale, which accounts for over 90% of our business, Burberry
delivered 7% revenue growth, 11% profit growth and a further improvement in
operating margin, all in a challenging external environment. Our five key
strategies remain highly relevant and we continue to invest in our retail,
digital and technology growth initiatives.



Integrating fragrance and beauty is a significant brand and business
opportunity. Our global teams are excited to partner with long-standing
distributors, suppliers and customers to optimise these under-penetrated
categories. One consistent brand expression, leveraged across all categories,
will underpin future growth in the Beauty division and our existing core
business."





All metrics and commentary in the Group Financial Highlights and Interim
Management Report exclude the results of the discontinued business in Spain
and exceptional items unless stated otherwise.



Exceptional items are:

· A charge of £73.8m relating to the termination of the fragrance and
beauty licence relationship (2011: nil).

· A restructuring credit of £0.6m (2011: nil).

· A put option liability finance credit of £11.7m relating to the third
party 15% economic interest in the Chinese business (2011: charge of £2.9m).



Details of exceptional items are contained in Note 4 of the Condensed
Consolidated Interim Financial Statements. Underlying change is calculated at
constant exchange rates. Certain financial data within this announcement have
been rounded.





Enquiries



Burberry                                         020 3367 3524
Stacey Cartwright EVP, Chief Financial Officer
Jenna Littler     VP, PR and Corporate Relations
Fay Dodds         Director of Investor Relations



Brunswick       020 7404 5959
Nick Claydon
Laura Cummings



· There will be a presentation today at 9.30am (UK time) to investors and
analysts at Horseferry House, Horseferry Road, London, SW1P 2AW.

· The presentation 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 3364 5381, password 1564290.

· The supporting slides and an indexed replay will be available on the
website later in the day.

· Burberry will update on trading on 15 January 2013 when it will issue
its Interim Management Statement for 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
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. 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, the Equestrian Knight Device and the Burberry Check are trademarks
belonging to Burberry which are registered and enforced worldwide.



Group financial highlights



Total revenue up 6% to £883m (2011: £830m)



Retail/wholesale revenue up 7%, adjusted operating profit up 11%; adjusted
operating margin of 15.5% (2011: 14.9%)



Group adjusted profit before tax up 7% to £173.4m (2011: £161.6m)



Reported profit before tax of £111.9m (2011: £158.7m), after £61.5m
exceptional items



Forecast effective tax rate of 25.0% on adjusted PBT for the full year



Adjusted diluted EPS up 8% at 29.0p; reported diluted EPS of 19.1p



Interim dividend up 14% to 8.0p (2011: 7.0p); reflecting rebalancing between
halves. Dividend policy is approximately 40% payout based on full year
adjusted diluted EPS



Net cash of £237m at 30 September 2012 (2011: £174m), after £89m investment in
capital expenditure

                                    Six months to 30          % change
                                       September
£ million                               2012    2011  reported FX underlying 
Revenue                                882.5   829.6            6          8 
                                                                             
Cost of sales                        (255.5) (257.7)            1            
Gross margin                           627.0   571.9           10            
Operating expenses*                  (453.4) (409.8)         (11)            
Adjusted operating profit              173.6   162.1            7          6 
                                                                             
Net finance charge*                    (0.2)   (0.5)                         
Adjusted profit before taxation        173.4   161.6            7          6 
                                                                             
Exceptional items                     (61.5)   (2.9)                         
Profit before taxation                 111.9   158.7                         
Taxation                              (26.5)  (42.8)                         
Discontinued operations^#                0.1     0.6                         
Non-controlling interest               (0.5)     0.7                         
Attributable profit                     85.0   117.2                         
                                                                             
Adjusted EPS (pence)^~                  29.0    26.9                         
EPS (pence)^~                           19.1    26.4                         
Weighted average number of ordinary    445.9   444.5                         
shares (millions) ^~



Adjusted measures exclude exceptional items and discontinued operations.

*Operating expenses in 2012 in the table above exclude a charge relating to
the termination of the licence relationship of £73.8m (2011: nil) and a
restructuring credit of £0.6m (2011: nil) included in the reported expenses of
£526.6m (2011: £409.8m). The net finance charge in the table above excludes a
£11.7m China put option liability finance credit (2011: £2.9m charge) included
in the reported net finance income of £11.5m (2011: £3.4m charge).

^# Discontinued operations in Spain in 2012 delivered a profit of £0.1m (2011:
£0.6m).

^~ EPS is presented on a diluted basis.



INTERIM MANAGEMENT REPORT





· Total revenue grew 8% underlying to £883m (up 6% reported)

· Retail revenue grew 10% underlying to £577m (up 9% reported)

· Group adjusted PBT grew 6% underlying to £173m (up 7% reported)



Against a challenging external environment, Burberry has driven productivity,
through an intense focus on innovative product, merchandising and marketing
initiatives, while optimising efficiency and tightly controlling expenses.
Brand momentum remains strong and the continued execution of the five key long
term strategies will consistently underpin future revenue and profit growth.





Leverage the franchise



Brand reach and engagement increased as Burberry continued to use traditional
and digital media in innovative ways. 14m Facebook fans, Twitter accounts in
ten languages, global real-time initiatives with Clear Channel International
and the Weather Channel over the Olympic period as well as the Regent Street
opening further connected consumers to compelling brand content.



Burberry's product assortments continued to be tightly merchandised and
balanced by product division, label, category and price point. The
penetration of Burberry Prorsum and London increased during the first half,
while certain opening price point products in core accessories and outerwear
were rationalised.



Outerwear remained at the core of Burberry's business, with good growth in the
half driven by fashion and replenishment styles. Key marketing and retail
initiatives globally continued to centre on the iconic trench, from innovative
outdoor advertising in London linked to Art of the Trench, to the introduction
of physical Burberry Bespoke experiences in Regent Street and Chicago.



Mens was the fastest growing product division (up 12% underlying), accounting
for 25% of retail/wholesale revenue.



Burberry will directly operate fragrance and beauty from 1 April 2013,
following the end of its existing licence relationship with Interparfums SA.

· The ongoing strategy of greater brand control and integrating fragrance
and beauty will enable Burberry to capitalise on the significant growth
opportunities in these key opening price point product categories, where
Burberry is under-penetrated compared to peers.

· The wider brand halo has impact internally and externally, as witnessed
by last year's launch of Burberry Body. When leveraged with the core
business, the increased scale will further accelerate growth in revenue and
profit over time.



Fragrance and beauty will be run as Burberry Beauty, the fifth product
division alongside accessories and womens, mens and childrens apparel.

· Burberry historically led all product design, packaging and marketing
activities for fragrance and beauty and will now oversee product development,
sourcing and logistics, while partnering with distributors worldwide.

· The Beauty division will be supported by Burberry's existing IT, planning
and central infrastructure; supplemented by a number of key senior hires with
extensive functional expertise in these Beauty categories.

· Burberry will pay Euro181m in cash to Interparfums SA on 31 December 2012
for the ending of the licence relationship.

· The transaction is expected to be broadly neutral to adjusted PBT in the
transitional financial year 2013/14, excluding the amortisation of the
intangible asset which will be charged to exceptional items. Further
financial information is given in the appendix.





Intensify non-apparel



Non-apparel revenue increased by 8% underlying and remained the largest
product division at 39% of retail/wholesale revenue.



Large leather goods remained at around half of mainline non-apparel sales,
driven by innovation in core programmes and focused marketing and
merchandising behind key shapes.



Mens accessories grew strongly, reaching 18% of total mainline non-apparel
sales, with the fastest growth in Asia Pacific and on burberry.com.





Accelerate retail-led growth



With 10% underlying growth, retail accounted for 65% of revenue in the first
half.

This is the 14^th consecutive six month period where Burberry has delivered
double digit percentage underlying retail growth and was achieved against
record prior year comparatives.



Burberry continued to elevate its real estate portfolio, opening 13 stores and
16 concessions, while closing seven and nine respectively. Openings were
focused in flagship markets including Hong Kong, Milan, Rome and London,
including the brand's largest and most innovative environment on Regent
Street.



The store opening programme remains robust. Second half openings in flagship
markets include Chicago, Shanghai and a standalone menswear store in
Knightsbridge, London, as well as further stores in Brazil, Mexico and the
Middle East. Having recently reviewed all proposed store and business
projects, projected capital expenditure remains at between £180-200m for FY
2012/13. This excludes the cash spend in the second half on the intangible
asset relating to fragrance and beauty.





Burberry continued to innovate in digital commerce, enabling consumers around
the world to engage and transact more easily with the brand on and off line.
With the addition of Spanish and Korean, the website is now accessible in
eight languages; customer services including Click to Call and Click to Chat
are available in 14 languages; with delivery to over 100 countries. A new
local payment method has been introduced in China and the collect in store
trial extended in London and the United States.





Invest in under-penetrated markets



Burberry continued to invest in mainland China, opening seven stores and
closing two in the first half. There are currently 68 stores in 35 cities, up
from 50 stores in 30 cities acquired in September 2010. To ensure appropriate
brand representation, the investment is clustered around flagship markets and
provincial capitals. Three new larger format stores are planned for Shanghai
during calendar year 2013 at an average size of about 9,000 square feet each.
This compares to the average of 2,000 square feet for China at acquisition.



North American wholesale revenue grew strongly in the half, reaching 9% of
group retail/wholesale revenue, helped by continued investment in wholesale
shop-in-shops. Burberry is starting to test concessions in the Americas
region.



Burberry continued to invest in real estate and retail productivity in high
growth emerging markets. About eight new directly-operated stores are planned
this financial year in the Middle East and Latin America.





Pursue operational excellence



Burberry continued to develop and optimise its logistics network, increasing
capacity and upgrading hub capabilities in Europe and Asia Pacific. A local
distribution centre in China was opened to ensure continuity and speed of
supply for replenishment styles and to provide future fulfilment for rapidly
growing digital commerce.



The operating model continued to evolve, with improved execution of monthly
floorsets, focused assortments and global buys of key items in greater depth.



Burberry continued to leverage the investment made in technology, from early
learnings from customer insight, innovative in store technology trials to
personalisation tools in digital marketing. Facilitated by the investment in
planning and IT, procurement was significantly reduced to drive better working
capital efficiency.





Revenue analysis





Revenue by channel



          Six months to 30 September         % change
£ million          2012         2011  reported FX underlying
Retail            576.8        527.4            9         10
Wholesale         253.1        247.9            2          5
Licensing          52.6         54.3          (3)        (5)
Revenue           882.5        829.6            6          8





Retail

65% of revenue (2011: 64%); generated from 198 mainline stores, 215
concessions within department stores, digital commerce and 49 outlets



· Retail sales increased 10% on an underlying basis (up 9% at reported FX)

· Comparable store sales increased by 3% (Q1: +6%; Q2: +1%)

· New space contributed the balance of growth (7%)

· Average retail selling space increased by 12%



During the first half, there was a broad-based slowdown in revenue growth
across regions and product divisions. The key driver of the softer second
quarter was footfall, partly mitigated by higher average transaction values.



In mainline stores and concessions, revenue in the first half was driven by
modest pricing increases and mix shift. In particular, the penetration of
Burberry Prorsum and London increased by five percentage points.
Replenishment remained at around half of mainline revenue. Mens tailoring
more than doubled in the half and soft accessories and mens non-apparel
outperformed.



In the first half, all four regions showed positive comparable store sales
growth, but slowed compared to the growth rates in the second half of last
year.



Asia Pacific

Retail accounted for over 80% of revenue in Asia Pacific. Mainland China,
which accounted for about 40% of the region's retail sales, delivered
mid-teens percentage underlying growth in the first half. Comparable store
sales in China were still positive but slowed in the second quarter, driven
primarily by lower traffic.



Hong Kong's performance, although uneven, remained robust for the half as a
whole. Stores were opened in Russell Street and Pacific Place, the largest
and most digitally advanced in the region, bringing the total to 20 stores in
this key flagship market. Korea and Taiwan remained weak, while Singapore and
the 14 directly-operated stores in Japan, which sell the global collection,
performed well.





Europe

In Europe, which was about two-thirds retail, France and Germany remained
robust, due in part to the travelling luxury customer, while Italy was soft.
The United Kingdom accounted for over 40% of European retail sales. Footfall
in London decelerated in the second quarter, in part due to the disruption
from the Olympics, impacting both tourist and domestic customers. Burberry
continued to upgrade its brand presence in retail concessions in key European
department stores, opening seven and closing three in the half.



Americas

Retail contributed about 60% of revenue in the Americas. Comparable store
sales growth was modest reflecting tough prior year comparatives, a more
domestic customer base than other regions and greater exposure to the
rationalisation of certain opening price point products in core accessories
and outerwear.



Rest of World

Retail accounted for about half of Rest of World revenue. The Middle East
remained uneven while standalone stores in India performed strongly. With 23
stores in the Middle East and seven in India, Burberry continues to grow and
evolve its store portfolio in these high potential markets.





Wholesale

29% of revenue (2011: 30%); generated from sales to department stores,
multi-brand specialty accounts, Emerging Market franchisees and Travel Retail



· Wholesale revenue increased by 5% on an underlying basis (up 2% at
reported FX), in line with guidance

· Performance was led by mens accessories, small leather goods and mens
apparel

· Department stores and emerging markets partners outperformed



Asia Pacific

Wholesale revenue in Asia Pacific, which was about 20% of group wholesale
revenue, is predominantly Travel Retail. Burberry worked dynamically with key
partners to offset the impact of the slowdown in tourist footfall in the
region.



Europe

Europe contributed around 40% of group wholesale revenue and was broadly
unchanged year-on-year. Growth in key department stores was offset by the
continuing planned rationalisation of small specialty accounts. 



Americas

Wholesale achieved double-digit percentage underlying growth in the United
States even after planned brand rationalisation. Over 10 dedicated
shop-in-shops were opened, bringing the total to 92.



Rest of World

Double-digit percentage underlying growth was achieved in Rest of World,
despite more challenging trading conditions in certain franchise markets.
During the first half, five franchise stores were opened, including two with
a new partner in the Baltic region and the first Burberry store in Jordan,
bringing the total to 62.





Licensing

6% of revenue (2011: 6%); of which approximately two-thirds from Japan (split
roughly 80% apparel and 20% from various short-term, mainly non-apparel,
licences), with the balance from global product licences (fragrance, eyewear
and timepieces) and European wholesale childrenswear



· Licensing revenue decreased by 5% underlying (down 3% at reported FX)

· Consistent with full year guidance of broadly unchanged revenue,
reflecting timing benefits in the second half

· H2 global launch of The Britain watch collection

· Fragrance and beauty to be directly operated from 1 April 2013



In Japan, apparel royalty income was broadly unchanged, while non-apparel
income was down year-on-year due to continuing licence rationalisation.



Against the anniversary of the Burberry Body fragrance launch last year,
global product licences delivered solid growth in the half, helped by
deliveries to distributors ahead of the launch of The Britain watch in early
October. As part of the marketing campaign, Burberry developed innovative
mobile-only content, interactively exploring the collection while also showing
the user's local time, location and weather.





Operating profit analysis





Adjusted operating profit





                          Six months to 30 September          % change
£ million                          2012         2011  reported FX underlying 
Retail/wholesale                  128.9        115.7           11         10 
Licensing                          44.7         46.4          (4)        (6) 
Adjusted operating profit         173.6        162.1            7          6 
Adjusted operating margin         19.7%        19.5%                         



Adjusted operating profit increased by 7% to £173.6m in the first half, with a
£2.3m benefit from exchange rates.





Adjusted retail/wholesale operating profit



                                       Six months to 30 September     % change
£ million                                       2012         2011  reported FX
Revenue                                       829.9        775.3            7
Cost of sales                                (255.5)      (257.7)            1
Gross margin                                   574.4        517.6           11
Gross margin                                   69.2%        66.7%
Operating expenses                           (445.5)      (401.9)         (11)
Adjusted operating profit                      128.9        115.7           11
Operating expenses as a % of sales         53.7%        51.8%
Adjusted operating margin                      15.5%        14.9%



Adjusted retail/wholesale operating profit grew by 11% to £128.9m in the half,
with the operating margin up by 60 basis points to 15.5%.



Gross margin was 69.2% in the first half - up 250 basis points from 66.7% in
the same period last year. The key drivers were the net benefit from price
increases and FX on procurement, as well as the continued mix shift to retail.



Operating expenses increased by £44m or 11%, including a £15m reduction in
performance-related payments. Of the gross increase of £59m, about half was
for new space, including pre-opening costs, around one-third was general
inflation and the balance was investment in areas such as IT, customer
resources, logistics and creative media. While marketing was held flat as a
percentage of sales in the first half, expenses were tightly controlled in
areas such as headcount, travel and discretionary business projects.
Operating expenses as a percentage of revenue increased to 53.7% (2011:
51.8%).



For FY 2012/13, Burberry continues to expect a modest improvement in
retail/wholesale operating margin, dynamically managing gross margin and
operating expenses to enable continued strategic investment in the business.





Licensing operating profit



                   Six months to 30 September  Six months to 30 September 2012
£ million                   2012         2011                       underlying
Revenue                     52.6         54.3                             51.5
Cost of sales                  -            -                                -
Gross margin                52.6         54.3                             51.5
Gross margin                100%         100%
Operating expenses         (7.9)        (7.9)                            (7.9)
Operating profit            44.7         46.4                             43.6
Operating margin           85.0%        85.5%



Licensing revenue decreased by 5% on an underlying basis (down 3% at reported
FX). Operating expenses were unchanged year-on-year, and with a £1.1m FX
benefit, operating profit was £44.7m (2011: £46.4m).





Exceptional items



                                                   Six months to 30 September
£ million                                                   2012         2011
Termination of licence relationship                       (73.8)            -
Restructuring credit                                         0.6            -
China put option liability finance credit/(charge)          11.7        (2.9)
                                                          (61.5)        (2.9)



In the first half, £73.8m has been recognised as an exceptional item relating
to the ending of the fragrance and beauty licence relationship.



· Of the Euro181m termination payment (£142m), £70.9m has been capitalised
as an intangible asset and will be amortised on a straight line basis over the
period 1 April 2013 to 31 December 2017. This intangible asset relates to the
present value of the anticipated incremental income from fragrance and beauty
which will be earned by the Group up to 31 December 2017.



· The remaining £71.3m has been recognised as an expense, together with
related costs of £2.5m. It is anticipated that this value will be recovered
through increased income from fragrance and beauty beyond 31 December 2017.



The restructuring credit of £0.6m relates to the release of a provision held
in respect of the cost efficiency programme announced in January 2009.



The China put option liability finance credit/(charge) relates to fair value
movements on the put option liability over the non-controlling interest in the
acquired Chinese business. Largely reflecting lower growth assumptions for
the Chinese luxury goods market, the credit in the first half was £11.7m
(2011: £2.9m charge).





Discontinued operations



                                                   Six months to 30 September
£ million                                                   2012         2011
Restructuring credit for discontinued Spanish                0.1          0.6
operations



The restructuring credit of £0.1m relates to the release of restructuring
provisions held in respect of the discontinued Spanish operations.



Cash spend in the first half associated with the restructuring was £0.6m.





Taxation

The effective rate of tax on adjusted profit for FY 2012/13 is estimated to be
25.0%, which is the rate applied in H1 2012 (H1 2011: 26.5%). Tax on
exceptional items has been recognised as appropriate. The resulting effective
tax rate on reported profit is 23.7% (H1 2011: 27.0%).





Net cash

Net cash at 30 September 2012 was £237m, compared to £338m at 31 March 2012
and £174m at 30 September 2011. The major cash outflows in the first half
included capital expenditure of £89m (2011: £63m), of which three-quarters was
retail; a seasonal working capital outflow of £108m (2011: £114m); tax of £47m
(2011: £49m); and dividends of £79m (2011: £68m).



Inventory at 30 September 2012 was £353m (2011: £340m), up 4%, less than half
the rate of growth in retail sales. The proportion of inventory held in
replenishment and current season styles increased significantly compared to
last year.





Outlook

The following is consistent with the guidance given in October 2012.



Retail: For the second half of FY 2012/13, average retail selling space is on
plan to increase by about 14%.



Wholesale: For the second half of FY 2012/13, Burberry expects broadly
unchanged underlying wholesale revenue year-on-year (H2 2011/12: £230m),
reflecting the rationalisation of certain opening price point products in core
accessories and outerwear. With a more cautious approach from customers
globally, the United States, Asia Travel Retail and emerging markets are
expected to continue to grow, offset by further contraction of small specialty
wholesale accounts, especially in Southern Europe.



Licensing: With timing benefits in the second half, Burberry continues to
expect licensing revenue for FY 2012/13 at constant and reported exchange
rates to be broadly unchanged year-on-year.

Appendix



1. Financial implications of directly operating fragrance and beauty



As previously announced, Burberry has agreed to end its existing licence
relationship with Interparfums SA with effect from 31 December 2012. At that
date, it will pay Euro181m in cash (exclusive of any inventories and other
tangible assets) to Interparfums. To facilitate the transition to direct
operation, the licence relationship with Interparfums has been extended until
31 March 2013. Burberry will commence direct operations from 1 April 2013.



Based on current expectations, the key financial assumptions, which are
forward-looking statements, are detailed below.



Adjusted retail/wholesale

FY 2012/13: No impact on retail/wholesale revenue and operating profit.



FY 2013/14: This is expected to be a transitional year, reflecting the
short-term impact of the move from licence to direct operation and Burberry's
strategy to clean up and elevate the distribution of fragrance and beauty,
ensuring closer alignment with the core business and brand positioning.
Revenue in FY 2013/14 is expected to be about £140m, with around £25m of
incremental retail/wholesale operating profit, weighted towards the second
half.



Licensing

FY 2012/13: No change to guidance, with total licensing revenue broadly
unchanged year-on-year at constant and reported exchange rates.



FY 2013/14: Reduction of licensing revenue of about £25m, based on internal
three year plan.



Adjusted PBT

As a result of the above factors and taking into account the reduced interest
income arising from the Euro181m payment, the net impact on adjusted PBT is
expected to be as below:



FY 2012/13: Minimal.



FY 2013/14: Broadly neutral to adjusted PBT in the year of transition.



Exceptional items

FY 2012/13: In addition to the exceptional items incurred in the first half,
Burberry expects a second half exceptional charge of between £5-10m, relating
to set-up costs incurred prior to direct operation.



FY 2013/14: Of the Euro181m payment, £71m has been capitalised as an
intangible asset and will be amortised on a straight line basis over the
period 1 April 2013 to 31 December 2017, the remaining period of the original
licence. The annual amortisation charge is expected to be £15m.





2. Additional disclosure





Retail/wholesale revenue by destination



              Six months to 30 September          % growth
£ million              2012         2011  reported FX underlying 
Asia Pacific          298.7        265.3           13          11 
Europe                272.3        270.8            1           8 
Americas              202.8        189.9            7           5 
Rest of World          56.1         49.3           14          14 
                      829.9        775.3            7           8 





Retail/wholesale revenue by product division



                Six months to 30 September          % growth
£ million                2012         2011  reported FX underlying 
Accessories             324.5        303.6            7          8 
Womens                  265.5        254.2            4          6 
Mens                    206.7        185.9           11         12 
Childrens/other          33.2         31.6            5          5 
                        829.9        775.3            7          8 





Store portfolio



                    Directly-operated stores
                     Stores Concessions Outlets Total Franchise stores
At 31 March 2012        192         208      44   444               57
Additions                13          16       7    36                5
Closures                (7)         (9)     (2)  (18)                -
At 30 September 2012    198         215      49   462               62





Store portfolio by region



                    Directly-operated stores                  
At 30 September 2012 Stores Concessions Outlets Total Franchise stores
Asia Pacific             56         155      12   223               17
Europe                   41          57      19   117               26
Americas                 74           1      17    92                3
Rest of World            27           2       1    30               16
Total                   198         215      49   462               62



Retail net selling square footage



                     000s square feet
At 31 March 2008                  740
At 31 March 2009                  845
At 31 March 2010                  890
At 31 March 2011                1,010
At 30 September 2011            1,085
At 31 March 2012                1,145
At 30 September 2012            1,240







3. Related parties



Related party disclosures are given in note 15 of the Condensed Consolidated
Interim Financial Statements.





4. Principal risks



The Group carried out a formal process throughout the period to identify,
evaluate and manage significant risks faced by the Group. In the view of the
directors, the principal risks and uncertainties affecting the Group for the
remaining six months of the financial year comprise those set out on pages 56
to 59 of the Annual Report for the year ended 31 March 2012 (a copy of which
is available at the Group's website at www.burberryplc.com ) and which are
summarised below. These principal risks and uncertainties have remained
unchanged subject to the following:

· The macro-economic climate has worsened with expectations for global
economic growth reducing, adversely impacting on consumer confidence and sales
growth. 

· The Group announced plans to operate directly its fragrance and beauty
business commencing 1 April 2013, exiting its existing licence relationship
with Interparfums SA. Under the new structure, the Group will bear full
operating responsibility for this business, requiring the Group to perform
functions currently the responsibility of Interparfums. Failure to adequately
complete this transition would adversely affect the Group's financial
performance. In addition, this incremental activity could divert management
resources with an adverse impact on the Group's existing business.





Summary of principal risks set out in the Annual Report



Economic downturn

The Group's performance remains strong; however, reduced consumer wealth
driven by adverse economic conditions could lead to a reduction in demand,
disrupt its supply chain or lead to an increase in bad debts, all of which
would impact sales and profitability.

Loss of key management or the inability to attract and retain key employees

The loss of key individuals or the inability to recruit and retain individuals
with the relevant talent and experience would disrupt the operation of the
business and adversely impact the Group's ability to deliver its strategies.



Dependence on IT systems and operational infrastructure

The Group's operations depend on IT systems and operational infrastructure in
order to trade efficiently. Increasingly technology is also being used to
stream major events and to communicate through social media. A failure in
these systems or a denial of service could have a significant impact on the
Group's operations and reputation, and potentially result in the loss of
sensitive information. Negative social media campaigns could impact on the
Group's reputation.



Over-reliance on key vendors

The Group relies on a small number of vendors in key product categories, and
for specialist digital and IT services. Failure of one of these businesses to
deliver products or services would have a significant impact on business
operations.



Major incidents

Major incidents such as natural catastrophes, global pandemics or terrorist
attacks affecting one or more of the Group's key locations could significantly
impact its operations. The impact may vary depending on the location of the
incident and its nature. The impact of the loss of a distribution hub would
clearly differ from a global pandemic, but both would impact revenue and
profits.



Non-compliance with ethical and environmental standards

A failure by the Group or associated third parties to act in accordance with
ethical and environmental standards could result in penalties, adverse press
coverage and reputational damage with a resulting drop in revenue and profit.



Non-compliance with legislation and regulation

The Group's operations are subject to a broad spectrum of regulatory
requirements in the various jurisdictions in which the Group operates. The
pace of change and the consistency of application of legislation can vary
significantly across these jurisdictions, particularly in an environment where
public sector debt is often high and tax revenues are falling. Failure to
comply with these requirements could leave the Group open to civil and/or
criminal legal challenge, significant penalties and reputational damage.



Significant growth and pace of change

Significant growth and pace of change within the business puts pressure on
both internal and external resources. Failure to effectively manage the pace
of change will inevitably adversely impact the Group's operations and return
on investment.



Licences

A substantial proportion of Group profits is reliant upon its licensed
business in Japan and other key licensed product categories. The Group
expects licensees to maintain operational and financial control over their
businesses. Should licensees fail to manage their operations effectively or
be affected by a major incident, the royalty income may decline directly
impacting the profits of the Group.



Stability of emerging markets

The Group operates in a number of emerging markets which are typically more
volatile than developed markets, and are subject to changing economic,
regulatory, social and political developments that are beyond the Group's
control. Infrastructure and services also tend to be less developed.



Unauthorised use of the Group's trademarks and other proprietary rights

Trademarks and other intellectual property (IP) rights are fundamentally
important to the Group's reputation, success and competitive position.
Unauthorised use of these, as well as the distribution of counterfeit
products, damages the Burberry brand image and profits.





Condensed group Income Statement - UNAUDITED



                                                                       Audited
                                       Six months to                   Year to
                                       30 September Six months to 30 31 March
                                                2012   September 2011     2012
                                Note             £m               £m       £m
  Revenue                           3          882.5            829.6  1,857.2
  Cost of sales                              (255.5)          (257.7)  (558.3)
  Gross profit                                 627.0            571.9  1,298.9
  Net operating expenses                     (526.6)          (409.8)  (922.0)
  Operating profit                             100.4            162.1    376.9
  Financing
  Interest income                                1.6              1.3      2.9
  Interest expense                             (1.8)            (1.8)    (3.6)
  Other financing                                                       (10.2)
  income/(charges)                              11.7            (2.9)
  Net finance income/(charge)                   11.5            (3.4)   (10.9)
  Profit before taxation                       111.9            158.7    366.0
  Taxation                          5         (26.5)           (42.8)  (100.6)
  Profit for the period from                                             265.4
  continuing operations                         85.4            115.9
  Profit/(loss) for the period                                           (0.3)
  from discontinued operations     17            0.1              0.6
  Profit for the period                         85.5            116.5    265.1
  Attributable to:
  Equity holders of the Company                 85.0            117.2    263.3
  Non-controlling interest                       0.5            (0.7)      1.8
  Profit for the period                         85.5            116.5    265.1



 Earnings per share
 - basic                                                 6  19.5p 26.9p  60.4p
 - diluted                                               6  19.1p 26.4p  59.3p
 Earnings per share from continuing operations
 - basic                                                 6  19.5p 26.7p  60.4p
 - diluted                                               6  19.1p 26.2p  59.3p
                                                               £m    £m     £m
 Reconciliation of adjusted profit before taxation:
 Profit before taxation                                     111.9 158.7  366.0
 Exceptional items:
 - termination of licence relationship                   4   73.8     -      -
 - restructuring credit relating to continuing
 operations                                              4  (0.6)     -      -
 - put option liability finance (credit)/charge          4 (11.7)   2.9   10.2
 Adjusted profit before taxation - non-GAAP measure         173.4 161.6  376.2
 Adjusted earnings per share - non-GAAP measure
 - basic                                                 6  29.7p 27.4p  62.8p
 - diluted                                               6  29.0p 26.9p  61.6p
 Dividends per share
 - Proposed interim (not recognised as a liability at 30 7        7.00p  7.00p
 September)                                                 8.00p
 - Final (not recognised as a liability at 31 March)     7      -     - 18.00p



Condensed group Statement OF COMPREHENSIVE INCOME - UNAUDITED



                                                                       Audited
                                         Six months to  Six months to  Year to
                                         30 September  30 September 31 March
                                                  2012           2011    2012
                                                    £m             £m       £m
Profit for the period                             85.5          116.5    265.1
Other comprehensive income:
- cash flow hedges                               (2.8)              -      3.3
- foreign currency translation                                           (3.8)
differences                                      (6.9)            6.4
Tax on other comprehensive income:
- cash flow hedges                                 0.7              -    (0.8)
- foreign currency translation                                           (0.2)
differences                                        0.4          (0.6)
Other comprehensive (expense)/income                                     (1.5)
for the period, net of tax                       (8.6)            5.8
Total comprehensive income for the                                       263.6
period                                            76.9          122.3


Total comprehensive income attributable
to:
Equity holders of the Company                     76.7          122.1    261.2
Non-controlling interest                           0.2            0.2      2.4
                                                  76.9          122.3    263.6





Condensed group balance sheet - UNAUDITED



                                                                       Audited
                                                 As at         As at     As at
                                         30 September 30 September 31 March
                                                  2012          2011     2012
                                    Note            £m            £m        £m
ASSETS
Non-current assets
Intangible assets                      8         204.1         133.4     133.1
Property, plant and equipment          9         371.4         299.5     328.8
Investment properties                              2.6           2.9       2.8
Deferred tax assets                               99.3          77.6      84.1
Trade and other receivables           10          23.4          17.3      22.3
Derivative financial assets                        6.2           7.9      14.7
                                                 707.0         538.6     585.8
Current assets
Inventories                                      352.6         340.3     311.1
Trade and other receivables           10         191.3         177.0     145.2
Derivative financial assets                        1.6           2.3       3.2
Income tax receivables                             8.1           4.8      10.1
Cash and cash equivalents                        380.3         328.5     546.9
                                                 933.9         852.9   1,016.5
Assets classified as held for sale    17           7.8          13.2       8.3
                                                 941.7         866.1   1,024.8
Total assets                                   1,648.7       1,404.7   1,610.6
LIABILITIES
Non-current liabilities
Trade and other payables              11        (96.2)        (89.5)   (104.9)
Deferred tax liabilities                         (1.1)         (1.8)     (1.4)
Derivative financial liabilities                 (2.7)             -     (0.2)
Retirement benefit obligations                   (0.5)         (0.6)     (0.8)
Provisions for other liabilities
and charges                           12        (17.9)        (10.1)    (15.1)
                                               (118.4)       (102.0)   (122.4)
Current liabilities
Bank overdrafts and borrowings        13       (143.1)       (154.3)   (208.6)
Derivative financial liabilities                 (3.2)         (4.1)     (1.9)
Trade and other payables              11       (458.2)       (309.8)   (324.4)
Provisions for other liabilities
and charges                           12         (6.2)        (10.1)     (8.2)
Income tax liabilities                         (55.4)        (51.3)    (53.7)
                                               (666.1)       (529.6)   (596.8)
Total liabilities                              (784.5)       (631.6)   (719.2)
Net assets                                       864.2         773.1     891.4
EQUITY
Capital and reserves attributable
to the Company's equity holders
Ordinary share capital                14           0.2           0.2       0.2
Share premium account                            203.4         202.3     202.6
Capital reserve                                   33.5          28.9      33.9
Hedging reserve                                    2.8           2.4       4.9
Foreign currency translation
reserve                                          112.4         128.1     118.6
Retained earnings                                487.2         389.0     507.1
                                                 839.5         750.9     867.3
Non-controlling interests in equity               24.7          22.2      24.1
Total equity                                     864.2         773.1     891.4



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
                 Note       £m      £m       £m       £m     £m              £m     £m
Balance as at 1            0.2   192.5    154.5    366.4  713.6            20.1  733.7
April 2011
Profit/(loss)
for the period               -       -        -    117.2  117.2           (0.7)  116.5
Other
comprehensive
income:
Cash flow hedges
- losses
deferred in
equity                       -       -    (2.0)        -  (2.0)               -  (2.0)
Cash flow hedges
- losses
transferred to
income                       -       -      2.0        -    2.0               -    2.0
Foreign currency
translation
differences                  -       -      5.5        -    5.5             0.9    6.4
Tax on other
comprehensive
income                       -       -    (0.6)        -  (0.6)               -  (0.6)
Total
comprehensive
income for the
period                       -       -      4.9    117.2  122.1             0.2  122.3
Transactions
with owners:
Employee share
incentive scheme
- value of share                              -
awards granted               -       -              16.0   16.0               -   16.0
- value of share
awards
transferred to
liabilities                  -       -        -    (0.8)  (0.8)               -  (0.8)
- tax on share                                -
awards granted               -       -               7.2    7.2               -    7.2
- exercise of                                 -
share awards                 -     9.8             (9.4)    0.4               -    0.4
Sale of own                                   -
shares by ESOP
trusts                       -       -               0.1    0.1               -    0.1
Purchase of own                               -
shares by ESOP
trusts                       -       -            (42.3) (42.3)               - (42.3)
Capital                                       -        -      -
contribution by
non-controlling
interest                     -       -                                      4.9    4.9
Dividend paid in                              -
the period                   -       -            (65.4) (65.4)           (3.0) (68.4)
Balance as at 30
September 2011             0.2   202.3    159.4    389.0  750.9            22.2  773.1
Balance as at 1            0.2   202.6    157.4    507.1  867.3            24.1  891.4
April 2012
Profit for the                                -
period                       -       -              85.0   85.0             0.5   85.5
Other
comprehensive
income:
Cash flow hedges
- losses
deferred in
equity                       -       -    (3.6)        -  (3.6)               -  (3.6)
Cash flow hedges
- losses
transferred to
income                       -       -      0.8        -    0.8               -    0.8
Foreign currency
translation
differences                  -       -    (6.6)        -  (6.6)           (0.3)  (6.9)
Tax on other
comprehensive
income                       -       -      1.1        -    1.1               -    1.1
Total
comprehensive
(expense)/income
for the period               -       -    (8.3)     85.0   76.7             0.2   76.9
Transfer between
reserves                     -       -    (0.4)      0.4      -               -      -
Transactions
with owners:
Employee share
incentive scheme
- value of share
awards granted               -       -        -     10.2   10.2               -   10.2
- value of share
awards
transferred to
liabilities                  -       -        -    (0.9)  (0.9)               -  (0.9)
- tax on share
awards granted               -       -        -    (7.8)  (7.8)               -  (7.8)
- exercise of
share awards       14        -     0.8        -        -    0.8               -    0.8
Sale of own                          -
shares by ESOP
trusts                       -                -        -      -               -      -
Purchase of own                      -
shares by ESOP
trusts                       -                -   (28.2) (28.2)               - (28.2)
Capital                              -                 -      -                    0.4
contribution by
non-controlling
interest                     -                -                             0.4
Dividend paid in                     -
the period                   -                -   (78.6) (78.6)               - (78.6)
Balance as at 30                 203.4
September 2012             0.2            148.7    487.2  839.5            24.7  864.2



CONDENSED GROUP Statement of Cash flows -UNAUDITED



                                                                       Audited
                                        Six months to  Six months to   Year to
                                        30 September  30 September  31 March
                                                 2012           2011     2012
                                  Note             £m             £m        £m
Cash flows from operating
activities
Operating profit                                100.4          162.1     376.9
Operating profit/(loss) from
discontinued operations                           0.1            0.6     (0.3)
Termination of licence                                             -         -
relationship                         4           73.8
Depreciation                                     40.9           33.8      74.3
Amortisation                                      7.7            5.7      13.3
Net impairment charges               9            2.4              -       6.8
Write-down of assets held for
sale                                                -              -       4.5
Loss on disposal of property,
plant and equipment and
intangible assets                                 0.1            0.2       0.3
Fair value losses/(gains) on
derivative instruments                           11.0            1.3     (5.7)
Charges in respect of employee
share incentive schemes                          10.2           16.0      31.8
Increase in inventories                        (42.3)         (90.3)    (61.8)
Increase in receivables                        (48.1)         (43.9)    (17.6)
(Decrease)/increase in payables                (17.9)           19.8      60.0
Cash generated from operations                  138.3          105.3     482.5
Interest received                                 1.6            1.3       2.7
Interest paid                                   (1.0)          (1.8)     (3.3)
Taxation paid                                  (46.8)         (48.7)   (108.2)
Net cash generated from operating
activities                                       92.1           56.1     373.7
Cash flows from investing
activities
Purchase of property, plant and
equipment                                     (79.3)         (50.7)   (126.1)
Purchase of intangible assets                   (9.5)         (12.3)    (27.0)
Proceeds from sale of asset held                                   -         -
for sale                            17            0.1
Acquisition of subsidiary, net of
cash acquired                                   (1.0)         (11.0)    (23.5)
Net cash outflow from investing
activities                                     (89.7)         (74.0)   (176.6)
Cash flows from financing
activities
Dividends paid in the year                     (78.6)         (65.4)    (95.9)
Dividends paid to non-controlling
interest                                            -          (3.0)     (3.3)
Capital contributions by
non-controlling interest                          0.4            4.9       4.9
Issue of ordinary share capital                   0.8            0.4       0.6
Sale of own shares by ESOP trusts                   -            0.1       0.1
Purchase of own shares by ESOP
trusts                                         (28.2)         (42.3)    (60.7)
Net cash outflow from financing
activities                                    (105.6)        (105.3)   (154.3)
Net (decrease)/increase in cash
and cash equivalents                          (103.2)        (123.2)      42.8
Effect of exchange rate changes                   2.1          (0.4)     (2.4)
Cash and cash equivalents at
beginning of period                             339.6          299.2     299.2
Cash and cash equivalents at end
of period                                       238.5          175.6     339.6
                                                                       Audited
                                                                         As at
                                                As at          As at 31 March
                                        30 September  30 September
                                                 2012           2011      2012
ANALYSIS OF NET CASH              Note             £m             £m        £m
Cash and cash equivalents as per
the Balance Sheet                               380.3          328.5     546.9
Bank overdrafts                     13        (141.8)        (152.9)   (207.3)
Cash and cash equivalents as per
the Statement of Cash Flows                     238.5          175.6     339.6
Bank and other borrowings           13          (1.3)          (1.4)     (1.3)
Net cash                                        237.2          174.2     338.3



Notes to the CONDENSED consolidated INTERIM financial statements

Corporate information

Burberry Group plc and its subsidiaries (the 'Group') is a global luxury goods
manufacturer, wholesaler and retailer. 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.

Accounting policies and basis of preparation

Basis of preparation

The financial information contained in this report is unaudited. The Condensed
Group Income Statement, Condensed Group Statement of Comprehensive Income,
Condensed Group Statement of Changes in Equity and Condensed Group Statement
of Cash Flows for the interim period ended 30 September 2012, and the
Condensed Group Balance Sheet as at 30 September 2012 and related notes have
been reviewed by the auditors and their report to the Company is set out on
page 32. 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 year ended 31 March 2012 were
approved by the Board of Directors on 22 May 2012 and have been filed with the
Registrar of Companies. The report of the auditors on the statutory accounts
for the year ended 31 March 2012 was unqualified, did not contain an emphasis
of matter paragraph and did not contain a statement under Section 498 of the
Companies Act 2006.

These condensed consolidated interim financial statements for the six months
ended 30 September 2012 have been prepared in accordance with the Disclosure
and Transparency Rules of the Financial Services Authority and with IAS 34,
'Interim Financial Reporting' as adopted by the European Union. This report
should be read in conjunction with the Group's financial statements for the
year ended 31 March 2012, which have been prepared in accordance with
International Financial Reporting Standards ('IFRSs') as adopted by the
European Union.

The Directors have made enquiries and reviewed the Group's updated forecasts
and projections. These include the assumptions around the Group's products and
markets, expenditure commitments, expected cashflows and borrowing facilities.
Taking into account reasonable possible changes in trading performance, and
after making enquiries, the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence for the
foreseeable future. Accordingly, the Directors consider it appropriate to
continue to adopt the going concern basis in preparing the condensed
consolidated interim financial statements for the six months ended 30
September 2012.

Accounting policies

Accounting policies and presentation are consistent with those applied in the
Group's financial statements for the year ended 31 March 2012, as set out on
pages 103 to 109 of those financial statements, with the exception of
taxation. Taxes on income in the interim periods are accrued using the
expected tax rate that would be applicable to total annual earnings.

Key sources of estimation and judgement

The preparation of the condensed consolidated interim financial statements
requires that management make certain judgements, estimates and assumptions
that affect the reported revenues, expenses, assets and liabilities and the
disclosure of certain contingent liabilities. The key sources of estimation
and uncertainty and the assumptions applied in the preparation of these
condensed consolidated interim financial statements are consistent with those
applied in the Group's financial statements for the year ended 31 March 2012,
as set out on page 102 of those financial statements, with the exception of
taxation as described above, and the valuation of the intangible asset
relating to the termination of the fragrance and beauty licence relationship
with Interparfums SA, which is a new area of estimation and judgement for the
current period.

The Group has an obligation to make a payment to Interparfums SA of €181.2m on
31 December 2012 (£142.2m at the spot rate at the time of exercise). This has
resulted in the recognition of an intangible asset of £70.9m and an expense of
£71.3m in the current period. In order to identify the carrying value of the
intangible asset acquired, management is required to estimate the incremental
income that will be earned by the Group from 1 April 2013 to 31 December 2017,
which represents the remaining period of the original licence, prior to its
termination. A value-in-use calculation has been performed, based on key
forecast assumptions including: sales of products until 2017, by product
category; operating margins achieved on this activity; tax charged on the
incremental profits; the working capital required to support this activity;
and anticipated tax relief on the payment made to acquire the intangible
asset. Such forecast assumptions are inherently uncertain and the actual
experience between 1 April 2013 and 31 December 2017 may differ materially
from these assumptions. Refer to notes 4 and 8 for further details of the
accounting for this transaction.

Adjusted profit before taxation and exceptional items

Exceptional items include those items that are largely one-off and material in
nature. Fair value movements on options held over equity interests, which are
held for the purpose of future business developments, rather than speculative
purposes, are also considered to be exceptional items and are separately
presented in the Income Statement. These items are added back/deducted from
profit/loss before taxation to arrive at adjusted profit/loss before taxation.
These items and their related tax impacts are added back/deducted from profit
attributable to equity holders of the Company to arrive at adjusted earnings
per share. These measures are disclosed in order to provide additional
consideration of the underlying performance of the Group's ongoing business.



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 Burberry'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 the regions is monitored and optimised at a corporate
level and implemented via the Group's inventory hubs situated in Asia, Europe
and the US.

Licensing revenues are generated through the receipt of royalties from
Burberry's partners in Japan and global licensees of fragrances, eyewear,
watches and European childrenswear.

The Board assesses channel performance based on a measure of adjusted
operating profit. This measurement basis excludes the effects of exceptional
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
               Six months Six months Six months Six months       Six       Six
                       to         to         to         to months to months to
                       30         30         30         30        30        30
                September  September  September  September September September
                     2012       2011       2012       2011      2012      2011
                       £m         £m         £m         £m        £m        £m
Retail              576.8      527.4          -          -     576.8     527.4
Wholesale           253.1      247.9          -          -     253.1     247.9
Licensing               -          -       53.3       63.6      53.3      63.6
Total segment
revenue             829.9      775.3       53.3       63.6     883.2     838.9
Inter-segment
revenue^(1)             -          -      (0.7)      (9.3)     (0.7)     (9.3)
Revenue from
external
customers           829.9      775.3       52.6       54.3     882.5     829.6
Adjusted
operating
profit              128.9      115.7       44.7       46.4     173.6     162.1
Interest
income                                                           1.6       1.3
Interest
expense                                                        (1.8)     (1.8)
Exceptional
items^(2)                                                     (61.5)     (2.9)
Profit before
taxation                                                       111.9     158.7



Year to 31 March 2012           Retail / Wholesale Licensing   Total
                                                £m        £m      £m
Retail                                     1,270.3         - 1,270.3
Wholesale                                    478.3         -   478.3
Licensing                                        -     118.9   118.9
Total segment revenue                      1,748.6     118.9 1,867.5
Inter-segment revenue^(1)                        -    (10.3)  (10.3)
Revenue from external customers            1,748.6     108.6 1,857.2
Adjusted operating profit                    286.9      90.0   376.9
Interest income                                                  2.9
Interest expense                                               (3.6)
Exceptional items^(2)                                         (10.2)
Profit before taxation                                         366.0

^(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 Condensed Group Income Statement for details of exceptional
items.

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.



                       Six months to Six months to  Year to
                        30 September  30 September 31 March
                                2012          2011     2012
Revenue by destination            £m            £m       £m
Asia Pacific                   298.7         265.3    652.5
Europe                         272.3         270.8    552.6
Americas                       202.8         189.9    434.5
Rest of World                   56.1          49.3    109.0
Retail/Wholesale               829.9         775.3  1,748.6
Licensing                       52.6          54.3    108.6
Total                          882.5         829.6  1,857.2

Exceptional items

Exceptional operating items

Termination of licence relationship

During the six months ended 30 September 2012, a total of £73.8m has been
recognised as an exceptional item relating to the termination of the fragrance
and beauty licence relationship with Interparfums SA.

On 16 July 2012, the Group exercised its right to terminate its fragrance and
beauty licence relationship with Interparfums SA in exchange for a payment of
€181.2m (£142.2m at the spot rate on the date of exercise). The payment is due
to be made on 31 December 2012 and the termination will be effective from 1
April 2013. The terms of the termination were set out in the licence
agreement, as modified by a subsequent transition agreement signed on 10
October 2012. If the licence relationship had not been terminated it would
have expired on 31 December 2017.

£70.9m of this payment has been capitalised as an intangible asset within the
category 'trademarks, licences and other intangible assets' (refer note 8).

The remaining £71.3m, which does not qualify to be capitalised as an
intangible asset, has been recognised as an expense in the current period.

Both items have been recognised at the spot rate of €1.27: £1 on 16 July 2012.

The payment to Interparfums SA has been hedged through taking out forward
contracts, which mature on 31 December 2012. These contracts have a combined
effective average of €1.26: £1. This has resulted in a difference of £2.0m
between the sterling equivalent of the amount to settle the creditor with
Interparfums SA and the amount to settle the forward contract.

The £71.3m expense, together with the net £2.0m foreign exchange losses and
ancillary transaction costs of £0.5m, have been reported as exceptional in the
current period, due to the size and nature of the transaction. A tax credit of
£17.0m has been recognised in respect of this exceptional charge in the
current period.

Restructuring

During the six months ended 30 September 2012, an exceptional credit was
recognised for the release of £0.6m of the restructuring provision held in
respect of the cost efficiency programme announced in the year to 31 March
2009. A tax charge of £0.1m has been recognised in relation to this
exceptional credit in the current period.

No exceptional operating items were recognised in the six months ended 30
September 2011 or the twelve months ended 31 March 2012.

Exceptional financing charges

The exceptional financing credit of £11.7m for the six months ended 30
September 2012 relates to fair value movements including the unwinding of the
discount on the put option liability over the non-controlling interest in
Burberry (Shanghai) Trading Co., Ltd (six months ended 30 September 2011:
charge of £2.9m; year ended 31 March 2012: charge of £10.2m). No tax has been
recognised on this item, as it is not considered to be deductible for tax
purposes.

Taxation

The tax charge for the six months ended 30 September 2012 has been calculated
based on an estimated effective underlying rate of tax on adjusted profit
before taxation for the full year of 25.0% (30 September 2011: 26.5%; 31 March
2012: 26.7%). Tax on exceptional items has been recognised at the prevailing
tax rates as appropriate. The resulting effective tax rate on reported profit
before taxation is 23.7% (30 September 2011: 27.0%; 31 March 2012: 27.5%).

Total taxation recognised in the Condensed Group Income Statement comprises:

                                       Six months to Six months to  Year to
                                        30 September  30 September 31 March
                                                2012          2011     2012
                                                  £m            £m       £m
Tax on adjusted profit before taxation          43.4          42.8    100.6
Tax on exceptional items (note 4)             (16.9)             -        -
Total taxation charge                           26.5          42.8    100.6

Earnings per share

The calculation of basic earnings per share is based on profit attributable to
equity holders 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.

                                          Six months to Six months to  Year to
                                           30 September  30 September 31 March
                                                   2012          2011     2012
                                                     £m            £m       £m
Attributable profit for the period before
exceptional items^(1) and discontinued
operations                                        129.5         119.5    273.8
Effect of exceptional items^(1) (after
taxation)                                        (44.6)         (2.9)   (10.2)
Attributable profit for the period from
continuing operations                              84.9         116.6    263.6
Attributable profit/(loss) from                                   0.6
discontinued operations                             0.1                  (0.3)
Attributable profit for the period                 85.0         117.2    263.3

^(1) Refer to Condensed Group Income Statement for the details of exceptional
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 employee share option plan
trusts ('ESOP trusts').

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.

                                          Six months to Six months to  Year to
                                           30 September  30 September 31 March
                                                   2012          2011     2012
                                               Millions      Millions Millions
Weighted average number of ordinary                                      435.9
shares in issue during the period                 436.4         435.9
Dilutive effect of the share incentive                                     8.4
schemes                                             9.5           8.6
Diluted weighted average number of                                       444.3
ordinary shares in issue during the
period                                            445.9         444.5

Dividends

The interim dividend of 8.00p (2011: 7.00p) per share has been approved by the
Board of Directors after 30 September 2012. Accordingly, this dividend has not
been recognised as a liability at the period end.

The interim dividend will be paid on 25 January 2013 to Shareholders on the
Register at the close of business on 21 December 2012.

A dividend of 18.00p (2011: 15.00p) per share was paid during the period ended
30 September 2012 in relation to the year ended 31 March 2012.

Intangible assets

Goodwill at 30 September 2012 is £80.8m (2011: £82.8m).

There were additions to other intangible assets of £78.0m in the period (2011:
£12.1m), of which £70.9m relates to the termination of the licence
relationship with Interparfums SA.

On 16 July 2012, the Group exercised its right to terminate its fragrance and
beauty licence relationship with Interparfums SA in exchange for a payment of
€181.2m (£142.2m at the spot rate at the time of exercise). The payment is due
to be made on 31 December 2012. The termination will be effective from 1 April
2013. The terms of the termination were set out in the licence agreement, as
modified by a subsequent transition agreement signed on 10 October 2012. If
the licence relationship had not been terminated it would have expired on 31
December 2017.

The obligation to pay €181.2m gave rise to an intangible asset of £70.9m and
an expense of £71.3m at the spot rate of €1.27: £1 on 16 July 2012.

The intangible asset relates to the present value of the anticipated
incremental income which will be earned by the Group, as a result of selling
fragrance and beauty products through retail and wholesale channels rather
than under licence, from 1 April 2013 to 31 December 2017, being the remaining
period of the original licence, prior to its termination. In order to identify
the carrying value of the intangible asset acquired, a value-in-use
calculation has been performed, based on key forecast assumptions including:
sales of products until 2017, by product category; operating margins achieved
on this activity; tax charged on the incremental profits; the working capital
required to support this activity; and anticipated tax relief on the payment
made to acquire the intangible asset. Such forecast assumptions are inherently
uncertain and the actual experience between 1 April 2013 and 31 December 2017
may differ materially from these assumptions.

The asset will be presented within the intangible asset category 'trademarks,
licence and other intangible assets'. It will be amortised on a straight line
basis over the period 1 April 2013 to 31 December 2017.

The remaining £71.3m, which does not qualify to be capitalised as an
intangible asset, has been recognised as an expense in the current period
(refer to note 4).

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 30 September 2012.
Management has performed a review for indicators of impairment as at 30
September 2012. There is no indication that the goodwill may be impaired. The
annual impairment test will be performed at 31 March 2013.

Property, plant and equipment

In the period there were additions to property, plant and equipment of £91.9m
(2011: £48.7m) and disposals with a net book value of £0.1m (2011: £0.2m).

Capital commitments contracted but not provided for by the Group amounted to
£37.8m (2011: £18.9m).

Impairment testing

Assets that are subject to amortisation or depreciation are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. Where indicators of impairment are
identified, an impairment review is performed to compare the assets'
value-in-use to their carrying values.

For the six months ended 30 September 2012, a net impairment charge of £2.4m
(2011: £nil) was identified.



Trade and other receivables

                                                                         As at
                                            As at              As at 31 March
                               30 September 2012 30 September 2011      2012
                                               £m                 £m        £m
Non-current
Deposits and prepayments                     23.4               17.3      22.3
Total non-current trade and
other receivables                            23.4               17.3      22.3
Current
Trade receivables                           144.7              135.1     103.0
Provision for doubtful debts                (8.2)             (13.0)     (7.6)
Net trade receivables                       136.5              122.1      95.4
Other receivables                            27.3               24.1      26.4
Prepayments and accrued income               27.5               30.8      23.4
Total current trade and other
receivables                                 191.3              177.0     145.2
Total trade and other
receivables                                 214.7              194.3     167.5

Trade and other payables

                                                                         As at
                                                               As at 31 March
                                                 As at 30 September
                                    30 September 2012          2011      2012
                                                    £m            £m        £m
Non-current
Deferred consideration                               -           1.1       1.1
Put option liability over
non-controlling interest                          45.5          51.5      57.8
Other creditors, accruals and
deferred income                                   50.7          36.9      46.0
Total non-current trade and other
payables                                          96.2          89.5     104.9
Current
Trade creditors                                  132.8         110.3     118.8
Other taxes and social security
costs                                             23.9          20.3      23.3
Deferred consideration                             1.0          13.5       1.1
Other creditors                                  150.3          23.8       5.8
Accruals and deferred income                     150.2         141.9     175.4
Total current trade and other
payables                                         458.2         309.8     324.4
Total trade and other payables                   554.4         399.3     429.3



Put option liability over non-controlling interest

Sparkle Roll Holdings Limited, a non-Group company, holds a 15% economic
interest in the Group's retail business in China. Put and call options exist
over this interest stake which are exercisable after 1 September 2015 in the
case of the call option, and after 1 September 2020 in the case of the put
option. The net present value of the put option has been recognised as a
non-current financial liability under IAS 39.

The fair value of the put option has been derived using a present value
calculation, incorporating observable and non-observable inputs. The key
inputs applied in arriving at the value of the put option are the future
performance of the Group and that of the Group's business in China; the
Burberry Group plc market capitalisation at the date of exercise; and the risk
adjusted discount rate for China, taking into account the risk free rate in
China.

The value of the put option liability is £45.5m at the period end (30
September 2011: £51.5m; 31 March 2012: £57.8m).

The key inputs applied in calculating the fair value of the put option at 30
September 2012 have been derived using an approach consistent with that
applied at 31 March 2012. The reduction in liability in the period largely
reflects lower long term growth assumptions in China for the luxury goods
market.

Other creditors

The Group has an obligation to make a payment to Interparfums SA of €181.2m on
31 December 2012, in relation to the termination of the fragrance and beauty
licence relationship. The liability arising from the termination has been
included in Other Creditors. The carrying value of this liability at the spot
rate of €1.25: £1 at 30 September 2012 is £144.4m. Refer to notes 4 and 8 for
further details of this transaction.

12. Provisions for other liabilities and charges

                                     Property                      Other
                                  obligations Restructuring costs  costs Total
                                           £m                  £m     £m    £m
As at 1 April 2012                     18.5                 3.5    1.3  23.3
Effect of foreign exchange rate                                        -
changes                                 (0.2)               (0.1)        (0.3)
Created during the period                 3.1                   -    0.8   3.9
Utilised during the period              (1.0)               (0.6)  (0.3) (1.9)
Released during the period              (0.2)               (0.7)      - (0.9)
As at 30 September 2012                  20.2                 2.1    1.8  24.1
As at 30 September 2011                  11.9                 6.5    1.8  20.2



                                                                        As at
                                                                    31 March
                                           As at              As at
                              30 September 2012 30 September 2011      2012
                                              £m                 £m        £m
Analysis of total provisions:
Non-current                                 17.9               10.1      15.1
Current                                      6.2               10.1       8.2
Total                                       24.1               20.2      23.3



Bank overdrafts and borrowings

                                                           As at
                                                       31 March
                              As at              As at
                 30 September 2012 30 September 2011      2012
                                 £m                 £m        £m
Unsecured
Bank overdrafts               141.8              152.9     207.3
Bank borrowings                 0.8                0.8       0.8
Other borrowings                0.5                0.6       0.5
Total                         143.1              154.3     208.6

Included within bank overdrafts is £138.1m (2011: £151.5m) representing
balances on cash pooling arrangements in the Group. The remaining overdrafts
of £3.7m (2011: £1.4m) are provided by a number of committed and uncommitted
arrangements agreed with third parties.

On 28 March 2011, a £300m multi-currency revolving credit facility was agreed
with a syndicate of third party banks. At 30 September 2012, there were no
outstanding drawings (2011: £nil). Interest is charged on this facility at
LIBOR plus 0.90% on drawings less than £100m, at LIBOR plus 1.05% on drawings
between £100m and £200m and at LIBOR plus 1.20% on drawings over £200m. The
facility matures on 30 June 2016.

Share capital and other reserves

Allotted, called up and fully paid share        Number of shares Share capital
capital                                                  million            £m
As at 1 April 2012                                         438.8           0.2
Allotted on exercise of options during the
period                                                       3.1             -
As at 30 September 2012                                    441.9           0.2



Other reserves

The cost of own shares held by the Group has been offset against retained
earnings, as the amounts paid reduce the profits available for distribution by
the Company. As at 30 September 2012 the amount held against this reserve was
£70.0m (2011: £23.8m).

Related party disclosures

The Group's significant related parties are disclosed in the Annual Report for
the year ended 31 March 2012. 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
first six months of the current financial year.

16. Foreign currency

The results of overseas subsidiaries are translated into the Group's
presentation currency of Sterling each month at the weighted average exchange
rate for the period 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
                      Six months to Six months to  Year to
                       30 September  30 September 31 March
                               2012          2011     2012
Euro                           1.25          1.14     1.16
US dollar                      1.58          1.62     1.60
Hong Kong dollar              12.27         12.68    12.38
Korean won                    1,810         1,757    1,775
Chinese Yuan Renminbi         10.02         10.46    10.15



                                   Closing
                             As at        As at    As at
                      30 September 30 September 31 March
                              2012         2011     2012
Euro                          1.25         1.16     1.20
US dollar                     1.62         1.56     1.60
Hong Kong dollar             12.53        12.18    12.41
Korean won                   1,797        1,848    1,811
Chinese Yuan Renminbi        10.15         9.99    10.07

The average exchange rate achieved by the Group on its Yen royalty income,
taking into account its use of Yen forward exchange contracts on a monthly
basis approximately twelve months in advance of royalty receipts, was Yen
125.3: £1 in the six months ended 30 September 2012 (six months ended 30
September 2011: Yen 134.8: £1; year ended 31 March 2012: Yen 133.1: £1).

Discontinued operations and assets classified as held for sale

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