NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1. Corporate information

Burberry Group plc and its subsidiaries (the Group) is a global luxury goods manufacturer, retailer and wholesaler. The Group also licenses third parties to manufacture and distribute products using the 'Burberry' trademarks. All of the companies which comprise the Group are controlled by Burberry Group plc (the Company) directly or indirectly.

2. Accounting policies and Basis of preparation

Basis of preparation

These condensed consolidated interim financial statements are unaudited but have been reviewed by the auditors and their report to the Company is set out on page 35. They were approved by the Board of Directors on 12 November 2025. These condensed consolidated interim financial statements do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the 52 weeks to 29 March 2025 were approved by the Board of Directors on 13 May 2025 and have been filed with the Registrar of Companies. The report of the auditors on the statutory accounts for the 52 weeks to 29 March 2025 was unqualified and did not contain a statement under Section 498 of the Companies Act 2006.

These condensed consolidated interim financial statements for the 26 weeks to 27 September 2025 have been prepared in accordance with the Disclosure Guidance and Transparency Rules of the Financial Services Authority and with IAS 34, 'Interim Financial Reporting' as adopted by the UK. This report should be read in conjunction with the Group's financial statements for the 52 weeks to 29 March 2025, which have been prepared in accordance with UK-adopted International Accounting Standards (IFRS).

These condensed consolidated interim financial statements are presented in £m. Financial ratios are calculated using unrounded numbers.

Going concern

In considering the appropriateness of adopting the going concern basis in preparing the financial statements, the Directors have assessed the potential cash generation of the Group. This assessment covers the period of a minimum of 12 months from the date of signing the condensed consolidated interim financial statements. The Directors have also considered the forecast for the period up to 27 March 2027, for any indicators that the going concern basis of preparation is not appropriate.

The scenarios considered by the Directors include a severe but plausible downside reflecting the Group's base plan adjusted for severe but plausible impacts from the Group's principal risks, which are consistent with the principal risks at 29 March 2025 other than the increasing risk to Cybersecurity and the reduced risk related to People. This central planning scenario is informed by a comprehensive review of macroeconomic scenarios using third party projections of macroeconomic data for the luxury fashion industry which reflects the current uncertain outlook. The Group's central planning scenario reflects a balanced projection with a continued focus to stabilise the business and position the brand for profitable sustainable growth.

As a sensitivity, this central planning scenario has been stressed to reflect the aggregation of severe impacts arising linked to our principal risks which in total represents a 18% downgrade to revenues in the 18 month period to 27 March 2027 as well as the associated consequences for EBITDA and cash. Management considers that this represents a severe but plausible downside scenario appropriate for assessing going concern.

For the purposes of the reverse stress test, we have considered the plausibility of a scenario that erodes the remaining cash headroom by reference to the lowest cash level in the annual business cycle. This test identified that the amount of revenue decline required on top of the severe but plausible scenario before the Group requires additional fundraising was, in the Group's opinion, implausible.

The severe but plausible downside modelled the following risks occurring simultaneously:

·      A more severe and prolonged reduction in the GDP growth assumptions across the markets in which we operate combined with a reduction to our global consumer demand arising from a change in consumer preference compared to our central planning scenario

·      An increase in geopolitical tension which leads to incremental unmitigated tariff risks compared to the central planning scenario

·      A significant reputational incident such as negative sentiment propagated through social media

·      The impact of a business interruption event, resulting in a two-week interruption arising from the supply chain impact, and interruption to one of our channels

·      The occurrence of a one-time physical risk relating to climate change in FY 2026/27 and the materialisation of a severe but plausible ongoing market risk relating to climate change in line with a scenario reflecting a 2°C global temperature increase compared to pre-industrial levels

·      The payment of a settlement arising from a regulatory or compliance-related matter

·      The impact of not delivering the anticipated cost savings from the Burberry Forward transformation programme

·      A short-term impact of a 10% weakening in a key non-sterling currency for the Group before it is recovered through price adjustment

Further mitigating actions within management control could be taken under a severe but plausible scenario, including working capital reduction measures and limiting capital expenditure and/or variable marketing costs.

The Directors have also considered the Group's current liquidity and available facilities. As at 27 September 2025, the Group Balance Sheet reflects cash net of overdrafts of £424 million. In addition, the Group has access to a £300 million revolving credit facility (£300 million RCF) which matures in November 2027,  which is currently undrawn. The going concern assessment does not rely upon having access to the £300 million RCF.

Details of cash, overdrafts, borrowings and facilities are set out in notes 14 and 17 of these financial statements.

In all the scenarios assessed, taking into account liquidity and available resources, the Group is able to maintain sufficient liquidity to continue trading throughout the going concern period to 27 March 2027. On the basis of the assessment performed, the Directors consider it is appropriate to continue to adopt the going concern basis in preparing the condensed consolidated interim financial statements for the period ended 27 September 2025.

Accounting policies

The material accounting policies adopted in the preparation of the condensed consolidated interim financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the 52 weeks ended 29 March 2025.

New standards, amendments and interpretations adopted in the period

There are no standards or amendments effective for the first time for the period ended 27 September 2025 that have a material impact on the condensed consolidated interim financial statements of the Group.

Standards not yet adopted

Certain new accounting standards and amendments to standards have been published that are not yet mandatory for the period ended 27 September 2025 and have not been early adopted by the Group. The Group is assessing the impact of these standards, including the impact from Classification and Measurement of Financial Instruments - Amendments to IFRS 9 and IFRS 7, which is effective for the reporting period beginning 29 March 2026, and may have an impact on the Group. The Group has begun a comprehensive assessment of the impact of IFRS 18 Presentation and Disclosure in Financial Statements, which is effective for the reporting period beginning on 28 March 2027, subject to UK endorsement, to identify expected changes in the presentation of the Group's financial statements and in internal processes necessary to meet the requirements.

Key sources of estimation uncertainty

Preparation of the condensed consolidated interim financial statements in conformity with IFRS requires that management make certain estimates and assumptions that affect the measurement of reported revenues, expenses, assets and liabilities and the disclosure of contingent liabilities.

If in the future such estimates and assumptions, which are based on management's best estimates at the date of the financial statements, deviate from actual circumstances, the original estimates and assumptions will be updated as appropriate in the period in which the circumstances change.

Estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The key areas where the estimates and assumptions applied have a significant risk of causing a material adjustment to the carrying value of assets and liabilities are consistent with those applied in the Group's financial statements for the 52 weeks to 29 March 2025, as set out on pages 179 to 180 of those financial statements.

There have been no changes to the matters considered to be significant estimates in the period which remain impairment, or reversal of impairment, of property plant and equipment and right-of-use assets, inventory provisioning and uncertain tax positions.

Key judgements in applying the Group's accounting policies

Judgements are those decisions made when applying accounting policies which have a significant impact on the amounts recognised in the Group's financial statements. Key judgements that have a significant impact on the amounts recognised in the condensed consolidated interim financial statements for the 26 weeks to 27 September 2025 and the 26 weeks to 28 September 2024 are as follows:

Where the Group is a lessee, judgement is required in determining the lease term at initial recognition, and throughout the lease term, where extension or termination options exist. In such instances, all facts and circumstances that may create an economic incentive to exercise an extension option, or not exercise a termination option, have been considered to determine the lease term. Considerations include, but are not limited to, the period assessed by management when approving initial investment, together with costs associated with any termination options or extension options. Extension periods (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). There have been no significant judgements in relation to lease term made in the period.

Translation of the results of overseas businesses

The results of overseas subsidiaries are translated into the Group's presentation currency of sterling each month at the average exchange rate for the month, weighted according to the phasing of the Group's trading results. The average exchange rate is used, as it is considered to approximate the actual exchange rates on the dates of the transactions. The assets and liabilities of such undertakings are translated at the closing rates. Differences arising on the retranslation of the opening net investment in subsidiary companies, and on the translation of their results, are recognised in other comprehensive income.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and are translated at the closing rate.

The principal exchange rates used were as follows:

Adjusted profit before taxation

In order to provide additional understanding of the underlying performance of the Group's ongoing business, the Group's results include a presentation of adjusted operating profit and adjusted profit before taxation (adjusted PBT). Adjusted PBT is defined as profit before taxation and before adjusting items. Adjusting items are those items which, in the opinion of the Directors, should be excluded in order to provide a consistent and comparable view of the performance of the Group's ongoing business. Generally, this will include those items that are largely one-off and/or material in nature, such as restructuring charges, as well as income or expenses relating to acquisitions or disposals of businesses or other transactions of a similar nature, including the impact of changes in fair value of expected future payments or receipts relating to these transactions. Adjusting items are identified and presented on a consistent basis each year and a reconciliation of adjusted PBT to profit before tax is included in the financial statements. Adjusting items and their related tax impacts, as well as adjusting taxation items, are added back to/deducted from profit attributable to owners of the Company to arrive at adjusted earnings per share. Refer to note 4 for further details of adjusting items and note 7 for details on adjusted earnings per share.

3. Segmental analysis

The Chief Operating Decision Maker has been identified as the Board of Directors. The Board reviews the Group's internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on the reports used by the Board. The Board considers the Group's business through its two channels to market, being retail/wholesale and licensing.

Retail/wholesale revenues are generated by the sale of luxury goods through Burberry full price stores, concessions, outlets and digital commerce as well as Burberry franchisees, prestige department stores globally and multi-brand specialty accounts. The flow of global product between retail and wholesale channels and across our regions is monitored and optimised at a corporate level and implemented via the Group's inventory hubs and principal distribution centres situated in Europe, the US, Mainland China and Hong Kong S.A.R, China.

Licensing revenues are generated through the receipt of royalties from global licensees of beauty products, eyewear and from licences relating to the use of non-Burberry trademarks in Japan.

The Board assesses channel performance based on a measure of adjusted operating profit. This measurement basis excludes the effects of adjusting items. The measure of earnings for each operating segment that is reviewed by the Board includes an allocation of corporate and central costs. Interest income and charges are not included in the result for each operating segment that is reviewed by the Board.

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. Adjusting items relate to the Retail/Wholesale segment. Refer to note 4 for details of adjusting items.

Additional revenue analysis

All revenue is derived from contracts with customers. The Group derives retail and wholesale revenue from contracts with customers from the transfer of goods and related services at a point in time. Licensing revenue is derived over the period the licence agreement gives the customer access to the Group's trademarks.

1. Commencing 30 March 2025, the former Asia Pacific region was restructured into two regions, Asia Pacific and Greater China. The revenue by destination for the comparative periods has been restated to reflect the new regional structure. For the 26 weeks to 28 September 2024 and 52 weeks to 29 March 2025, revenue attributable to Asia Pacific decreased by £277 million and £662 million, respectively, with that revenue now attributable to Greater China.

2. EMEIA consists of Europe, Middle East, India and Africa.

3. Greater China consists of Mainland China; Hong Kong S.A.R, China; Macau S.A.R, China; and Taiwan Area, China.

4. Asia Pacific consists of the rest of Asia; including Japan, South Korea, Southeast Asia, Australia and New Zealand.

Due to the seasonal nature of the business, Group revenue is usually expected to be higher in the second half of the year than in the first half. Some of the Group's operating costs are also higher in the second half of the year, such as contingent rentals and sales related employee costs, most of the operating costs, in particular salaries and fixed rentals, are phased more evenly across the year.

4. Adjusting items

Restructuring costs

During the 26 weeks to 27 September 2025, restructuring costs of £37 million (last half year: £12 million; last full year: £29 million) were incurred, arising as a result of the Burberry Forward transformation programme initiated during the prior year and the majority of which is expected to conclude by the end of FY 2025/26. The costs, principally related to redundancies and consultancy costs, were recorded in operating expenses. These costs are presented as an adjusting item, in accordance with the Group's accounting policy, as the anticipated cost of the restructuring programme is considered material and discrete in nature. A related tax credit of £9 million (last half year: £3 million; last full year: £7 million) has also been recognised in the current year. The cumulative costs, which are largely cash costs, related to the Burberry Forward transformation programme are expected to total £80 million.

5. Financing