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2002/03 Preliminary Results

May 22, 2003

John Peace

Chairman

2002/03 Highlights

Exceeded expectations set at IPO

Strong financial performance

Excellent strategic progress

Enhanced strong management team

Rose Marie Bravo

Chief Executive

Year Financial Highlights

Revenue (millions)

£593.6

£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2

£427.8

£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2

£499.2

£499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
£427.8 £499.2
2000/2001 Retail
2000/2001
Retail

2001/2002

Wholesale

Highlights Revenue (millions) £593.6 £427.8 £499.2 2000/2001 Retail 2001/2002 Wholesale 2002/2003 Licensing

2002/2003

Licensing

Year Financial Highlights

Gross Margin

56.0%

47.8% 50.3%
47.8% 50.3%
47.8% 50.3%
47.8% 50.3%
47.8% 50.3%

47.8%

47.8% 50.3%
47.8% 50.3%
47.8% 50.3%
47.8% 50.3%
47.8% 50.3%
47.8% 50.3%

50.3%

47.8% 50.3%
47.8% 50.3%
47.8% 50.3%
47.8% 50.3%
47.8% 50.3%
47.8% 50.3%
47.8% 50.3%
47.8% 50.3%
47.8% 50.3%
47.8% 50.3%
47.8% 50.3%
47.8% 50.3%
47.8% 50.3%
47.8% 50.3%
47.8% 50.3%

2000/2001

2001/2002

2002/2003

Year Financial Highlights

Operating Income (millions)*

£116.7

£68.7 £90.3
£68.7 £90.3
£68.7 £90.3
£68.7 £90.3
£68.7 £90.3

£68.7

£68.7 £90.3
£68.7 £90.3
£68.7 £90.3
£68.7 £90.3
£68.7 £90.3
£68.7 £90.3

£90.3

£68.7 £90.3
£68.7 £90.3
£68.7 £90.3
£68.7 £90.3
£68.7 £90.3
£68.7 £90.3
£68.7 £90.3
£68.7 £90.3
£68.7 £90.3
£68.7 £90.3
£68.7 £90.3
£68.7 £90.3
£68.7 £90.3
£68.7 £90.3
£68.7 £90.3

Margin

2000/2001

16.1%

* EBITA before IPO-related charges

2001/2002

18.1%

2002/2003

19.7%

Multiple Growth Opportunities

Update on Key Strategies

Products

Channels

Regions

Revenue by Product Category

Year 2002/03

Other

1% Licensing 10% Menswear 27% Accessories 29% Womenswear 33%
1%
Licensing
10%
Menswear
27%
Accessories
29%
Womenswear
33%

Growth Rates

Menswear

9%

Womenswear

20%

Accessories

35%

Product Milestones

Enhanced in-store positioning

Increased accessory penetration

Expansion of global licensee product

Strengthened Spring/ Summer collection

Icon evolution

Gift destination

Wholesale Progress

North America

UK & Europe

Asia

Travel

Accessories Achievements

Accessories Achievements

Timepieces

Accessories Achievements

Eyewear

Apparel Achievements

Autumn/Spring Balance

Apparel Achievements

Cult Classic Evolution

Apparel Achievements

Duffle Evolution

Revenue by Channel of Distribution

Year 2002/03

License 10% Retail 38% Wholesale 52%
License
10%
Retail
38%
Wholesale
52%

Growth Rates

Retail

46%

Wholesale

6%

Licensing

9%

Repositioning Progress in Spain

Wholesale Channel

Barcelona store impact

Major customer developments

accessory

shop-in-shops

co-staffing

arrangements

Merchandising initiatives

Red Label

International product

Volumes stabilising

Japan

2002/03 Performance

10% volume growth

Solid growth across categories

Key drivers

brand revitalisation efforts

key product category emphasis

sophisticated segmentation

Volume Growth Distribution

Accessories,

Home

Blue/Black

Core Apparel

Japan

Key Initiatives

Organisation initiatives

Accessories strategy

work with licensees

imports test

Additional free- standing stores

Revenue by Region

Year 2002/03

RoW

1% Asia 24% Europe 51% US 24%
1%
Asia
24%
Europe
51%
US
24%

Growth Rates

US

27%

Asia

47%

Europe

6%

Eugenia Ulasewicz

President US

US Development

Revenue Growth

27% 22% 2000/2001 2001/2002 2002/2003
27%
22%
2000/2001
2001/2002
2002/2003

US Development

Distribution Channels

Licenses

1% Wholesale 25% Retail 74%
1%
Wholesale
25%
Retail
74%

US Development

Wholesale

Concentrated with prestige retailers

Growth through

adding products to existing doors

improving in-store positioning and display

US Development

Retail

New York flagship

2003/04 initiatives

3 new stores

6 renovations

US Development

New York Store

US Development

2003/2004 Growth

New Stores

Houston

Las Vegas

Tyson’s Corner

Renovations

San Francisco

Boston

Atlanta

Costa Mesa

Manhasset

Oakbrook

US Development

Gifts – Core Classics

Financial Review

Mike Metcalf

COO & CFO

Turnover

6 Months to 31 March

Growth

+ 22% overall

+ 24% at constant exchange rates

Asia contributed £25.4 million (+ 9%)

+ 15% underlying growth

£25.4m (£5.8m) (£0.9m) £320.2m £39.4m £262.1m 2001/02 Underlying Asia Exchange Other 2002/03 growth rates
£25.4m
(£5.8m)
(£0.9m) £320.2m
£39.4m
£262.1m
2001/02
Underlying
Asia
Exchange
Other
2002/03
growth
rates

Retail Revenue

6 Months to 31 March

Growth

+ 55% overall

+ 30% underlying

Double-digit same store growth

Q4 impacted by external events

£28.8m (£5.2m) £143.7m £27.7m £92.4m 2001/02 Underlying Asia Exchange 2002/03 growth rates
£28.8m
(£5.2m) £143.7m
£27.7m
£92.4m
2001/02
Underlying
Asia
Exchange
2002/03
growth
rates

Wholesale Revenue

6 Months 31 March

Growth

+ 4% overall

+ 6% underlying

High single-digit growth across SS 03

Excellent shipping performance in Q4

£9.1m (£3.3m) £0.5m (£0.9m) £145.4m £140.0m
£9.1m
(£3.3m)
£0.5m
(£0.9m) £145.4m
£140.0m

2001/02

Underlying

growth

Asia

Exchange

rates

Other

2002/03

Licensing Revenue

6 Months to 31 March

Growth

+ 4% overall

+ 9% underlying

Japan the primary factor

modest volume gain

royalty rate increase

Yen depreciation c. 5%

Yen hedges secure

£3 million gain vs. “spot” rates in 2002/03

£2.6m (£0.1m) (£1.1m) £31.1m £29.7m
£2.6m
(£0.1m)
(£1.1m)
£31.1m
£29.7m

2001/02

Underlying

growth

Asia

Exchange

rates

2002/03

Gross Profit Margin

Performance by Half Year

Gross margin growth

product mix

56

54

retail expansion

other factors

Asia acquisition effect

52

50

48

46

%

56.2% 55.7% 52.5% 47.8% First half Second half First half Second half 2001/02 2001/02 2002/03
56.2%
55.7%
52.5%
47.8%
First half
Second half
First half
Second half
2001/02
2001/02
2002/03
2002/03

Operating Expenses

Performance by Half Year

Retail expansion and new store costs

Asia integration

Impairment charge

Investment in infrastructure

36

35

34

33

32

31

30

%

36.9% 35.6% 33.9% 30.3% First half Second half First half Second half 2001/02 2001/02 2002/03
36.9%
35.6%
33.9%
30.3%
First half
Second half
First half
Second half
2001/02
2001/02
2002/03
2002/03

EBITA

6 Months to 31 March

Impact of Asia acquisitions

Underlying growth momentum

£6.2m (£2.5m) £61.6m £9.4m £48.5m
£6.2m
(£2.5m)
£61.6m
£9.4m
£48.5m

2001/02

Underlying

growth

Asia

Exchange

rates

2002/03

EBITA Margin

6 Months to 31 March

6 months to 31 March

 

2001/02

2002/03

Wholesale and retail

9.5%

11.4%

Licence

89.9%

92.3%

Total

18.6%

19.3%

Profit and Loss Account

Year to 31 March

2001/02

£m

2002/03

Before IPO-related items £m

EBITA

90.3

116.7

Goodwill amortisation

(4.9)

(6.4)

EBIT

85.4

110.3

Net interest expense

(0.6)

(0.9)

Pre-tax profit

84.8

109.4

Tax

(28.3)

(39.9)

Profit after tax

56.5

69.5

EPS (pre-goodwill amortisation)

NM

14.9p

Taxation

Rate higher than anticipated in 2002/03

non deductible elements

prior year adjustment

Projecting 33% tax rate

Cash Flow from Operations

Year to 31 March

2001/02

2002/03

 

£m

£m

EBITA

90.3

116.7

Depreciation and similar charges

14.0

19.0

Decrease (increase) in stocks

(7.0)

5.2

Increase in debtors

(5.2)

(2.4)

Increase (decrease) in creditors

(2.2)

25.0

Other

0.2

1.5

Cash flow from operations

90.1

165.0

Cash Flow

Year to 31 March

2001/02

2002/03

 

£m

£m

Cash inflow from operations

90.1

165.0

Net capital expenditure

(38.9)

(55.5)

Tax paid

(17.6)

(30.6)

Purchase of own shares

-

(4.5)

Acquisition – related payments

(4.5)

(26.8)

Other

(0.4)

(0.5)

Cash flow before dividends and financing items

28.7

47.1

Net Cash at year end

N/A

79.6

Cash Flow and Capitalisation

Tax paid reduced by

£7 million pre-IPO amounts paid via GUS balances

£3 million deferrals in Asia (reversing in 2003/04)

Final dividend (£10 million) payable in August

3p per share for full year (20% payout ratio)

Strong capitalisation

2003/04 Outlook

Considerable uncertainty for industry Retail

continuing impact of events in Q4 2002/03

+10% expansion in selling space

Wholesale

initial orders indicate high single-digit growth for AW 03

potential impact of recent events on SS 04 volumes Japan

licensee partners anticipate modest volume growth

Current expectations

meet consensus assuming improved conditions by Autumn

2002/03 Highlights

Exceeded expectations set at IPO

Strong financial performance

Excellent strategic progress

Enhanced strong management team

Disclaimer

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.

This announcement does not constitute an invitation to underwrite, subscribe for or otherwise acquire or dispose of any Burberry Group plc shares. Past performance is not a guide to future performance and persons needing advice should consult an independent financial adviser.

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