Half-year Results

"We saw a mixed trading performance in the first half of the year. We made good progress with our strategic priorities, continuing to invest in the business and our people to drive sustainable long-term growth. During the period we focused on controlling the controllables: we delivered significant supply chain savings, successfully transformed our North America distribution network, opened 25 new stores, and launched a Dr. Martens UK repair service. The DOCS strategy of brand control and prioritising more profitable sales via our own stores and websites continued to deliver, with Direct to Consumer ("DTC") revenues up 11% in constant currency, representing half of Group revenues.

We saw a continued strong DTC performance in EMEA and APAC. In the USA, where there is an increasingly difficult consumer environment, our results have been more challenged, led by weakness in wholesale. We have strengthened the Americas leadership team and they are taking action, including refocusing marketing and improving our ecommerce trading capabilities. It is likely, however, that given the challenging backdrop it will take longer to see an improvement in USA results than initially anticipated. Notwithstanding the clear challenges we face in the USA market we remain very confident in our iconic brand and the significant growth opportunity ahead of us.

I am delighted that I'll be joined by Giles Wilson as Chief Financial Officer and Ije Nwokorie as Chief Brand Officer in the new year, bolstering our leadership team. I would like to take this opportunity to thank the dedicated and passionate people of Dr. Martens for their exceptional hard work in H1 and their continued support as we enter the busiest period of the year."

Kenny Wilson, Chief Executive Officer

• EBITDA - Earnings before exchange gains/losses, finance income/expense, income tax, depreciation and amortisation
• Constant currency applies the same exchange rate to the FY23 and FY24 results, based on FY23 budgeted rates
• H1 revenue down 5% (3% constant currency (CC)), primarily driven by weakness in USA wholesale

o DTC revenue up 9% (11% CC) to 50% mix. Retail revenue up 15% (17% CC) and ecommerce up 3% (5% CC)

o Wholesale revenue impacted by planned strategic decisions to reduce volumes into EMEA etailers and exit of the China distributor, together with a weaker USA wholesale performance than previously anticipated

o Regional shape of performance in line with expectations, with good growth in EMEA (revenue up 9% or 8% CC), a strong performance in Japan DTC (revenue up 41% CC) and America revenue down 18% (15% CC), driven by wholesale

• New marketing brand platform "Made Strong" launched, with high impact city activations in New York, London and Tokyo
• 14XX capsule collection unveiled, the first step of a faster pace of product innovation, driving brand energy. Strong product pipeline for AW24
• Opened 25 new own stores globally
• Successful rollout of omnichannel offer in UK, with positive initial results. Rollout across core EMEA markets in 2024
• Transformed our North America distribution network with automation of LA DC, expansion of New Jersey DC and relocation of Canadian DC to Toronto
• Launched Authorised Repair service to UK consumers in October
• Strategic supply chain savings drove both a gross margin improvement of 2.8%pts (to 64.4%) and resulted in EBITDA margin performance ahead of guidance
• Profit before tax was down 55% to £25.8m, reflecting the EBITDA performance together with higher depreciation and amortisation as a result of continued investment into IT projects, DCs and new stores
• Interim dividend held flat year-on-year and £50m buyback programme progressing well

Current trading and guidance

Trading in the second half to date has been mixed, with the start of the Autumn/Winter season impacted by warm weather across all three regions and weaker traffic overall. However, in both EMEA and APAC, we have seen improved trading in more recent weeks. We expect trading for the remainder of the full year in these two regions to be broadly in line with previous expectations.

In the USA, the consumer environment has become more challenging in recent months. Although we have seen some encouraging signs in very recent DTC trading, including over the Black Friday weekend, we expect that it will take longer to see a material improvement in USA performance than initially anticipated. The most challenging part within our USA business is wholesale, with widespread macro-economic caution amongst our wholesale customers resulting in a weaker order book than in prior years. Wholesale customers have low in-market inventory levels of our products and therefore we can expect them to re-order, however the timing and level of these re-orders are unpredictable, reducing visibility in our wholesale business.

There is a large part of the financial year still ahead of us, however, given the backdrop, we expect that full year revenue will decline by high single-digit percentage year-on-year, on a constant currency basis. Assuming this revenue outturn, we expect FY24 EBITDA to be moderately below the bottom end of the range of consensus expectations, with PBT also impacted by c.£5m higher net finance costs in addition to this lower EBITDA *.

Given macro-economic uncertainty, we are withdrawing our previous guidance of high single-digit revenue growth in FY25. Our medium-term expectations are unchanged, underpinned by the significant white-space growth opportunity and our iconic brand and product range.

*Sell-side consensus FY24 EBITDA range £223.7m to £240.0m and PBT range £128.7m to £148.0m.

Detailed technical guidance is on page 12.

BUSINESS REVIEW

We achieved a lot in the first half of FY24 and our DOCS strategy continues to drive results. We delivered a good performance in EMEA, with growth well-balanced across our home UK market and our core continental Europe markets, as we continue to benefit from the multi-year growth opportunity from converting markets from distributor to directly-operated. In APAC, Japan accounts for the vast majority of our profits and here we saw a strong DTC performance, following the successful integration of the recently transferred 14 Japanese franchise stores.

At our full year results in June, we discussed the execution issues that had impacted our FY23 USA performance, and the actions that the new Americas leadership team were taking to address these. Since then, those actions have been completed, and the team have refocused the marketing plan and better allocated spend to ensure boots messaging is at the core. While it is still early days, reaction to our New York launch of the Made Strong brand platform and 14XX collection were very encouraging. We have also implemented a number of website upgrades, the majority of which went live on 1st November. Again, there is more to come but this was an important step in improving our website trading capability.

Over recent months, however, the consumer environment in the USA has evolved and become more challenging. We are seeing a weaker boots market in the USA overall, which is exacerbating the macro-economic factors. We have also had to contend with warm weather in October, impacting the Autumn/Winter season. Our busiest period is still ahead of us and we will continue to take action to reignite the USA boots category and meet the challenge of the prevailing conditions.

Our USA wholesale business was impacted both by the planned reduction of orders to two large USA customers, together with deeper inventory destocking than previously anticipated across our customer base, driven by macro-economic uncertainty. Throughout, we have adopted a long-term mindset, ensuring that the wholesale channel inventory position is managed down in line with sales. At the end of October, the average inventory position of our top ten USA wholesale customers was down 20%. It is clear in customer interactions that this inventory destocking is widespread across the industry.

We were pleased to recently announce the appointment of Giles Wilson as CFO and Ije Nwokorie as Chief Brand Officer (CBO). Giles has significant listed company experience and will join in 2024 (date to be confirmed) to replace Jon Mortimore who is retiring, as previously announced. The creation of a CBO role is an important step in our journey to become a £2bn revenue brand. Ije Nwokorie, who has served as a Non-Executive Director since IPO, will be stepping down from the Board and joining as CBO in February. He joins from Apple Inc, where he has been Senior Director, Apple Retail, since January 2018. He will oversee the Global Marketing, Product and Strategy functions and will be responsible for setting the overall brand strategy, vision and direction.

We launched our new marketing brand platform, 'Made Strong', in October, with very encouraging initial feedback. Made Strong brings our brand purpose to life for today's wearers, reframing our role as a catalyst to empower rebellious self-expression. During the launch, we held a number of high impact city activations across London, New York and Tokyo. The launch saw strong engagement on social media channels and drove a step forward in earned PR coverage.

Our product strategy is centered on 'icons and innovation', meaning that we aim to grow revenue of our iconic continuity products through constant innovation around this core, to drive brand heat and newness. We aim to grow all three categories of boots, shoes and sandals simultaneously. Overall, pairs were down 9%, however this was predominantly due to the reduction in the wholesale business. Total DTC pairs, a far more relevant metric, was up 12%. All three categories saw DTC volume growth, with sandals up 8%, shoes up 26% and boots up 6%.

Alongside the launch of Made Strong, we launched a capsule collection of our new Amp category: 14XX. Amp and 14XX represent the pinnacle of our creative expression, with cutting-edge innovation at the forefront while still remaining true to our product handwriting and design principles of durability and versatility. The capsule collection is made of up three new products, built around our original 1460 boot, 1461 shoe and 2976 Chelsea boot. In Autumn/Winter 24 we will launch a larger 14XX range to consumers. The purpose of these collections is to create a 'trickle down' effect, creating demand for the mainline product range amongst new and existing consumers.

Collaborations play a crucial role in our product strategy, creating energy and buzz while being an incubator for future product success. We had a number of successful collaborations in Spring/Summer 23, including A-COLD-WALL*, Wacko Maria and BT21 XXXXX. In 2023 we are celebrating 10 years of the Jadon, our biggest product within our Fusion category and one of our four icon products, with a sell-out collaboration with Marc Jacobs. Since September, we've launched our first collaboration with Denim Tears using the 1460 boot and penton loafer silhouettes as the canvas, as well as highly successful collaborations with Supreme, Warner Bros. and Born X Raised, all of which signify big cultural brand moments.

During the half we completed the transformation of our North American distribution network, with automated picking implemented in our LA DC, a significant expansion of our New Jersey DC, enabling picking for all three channels, and the opening of a new DC in Toronto, moving from our previous west-coast Canadian facility, with the new facility servicing both wholesale and DTC orders. This new North American DC network improves both distribution costs and delivery speeds.

We achieved significant supply chain savings in the half. This is as a result of the transformation we have been executing in the supply chain over recent years, steadily increasing direct control over our supply chain inputs from c.10% five years ago to c.70% control today. This has enabled improved quality and consistency, diversification of risk from single point dependency and direct negotiation of costs. The savings delivered in the half as a result of this strategy include lower costs for leather (due to competition between tanneries), factory benchmarking to align profit, re-negotiation of our inbound shipping contract and optimisation and re-tender of retail outbound freight. This also enabled us to directly benefit from weaker macro demand for raw materials and lower global freight costs.

We have a number of significant technology projects underway, which will drive efficiency savings and underpin future growth. We have now implemented an order management system ("OMS") in EMEA and at the end of FY23 we started a trial of omnichannel offerings, 'click and collect', 'ecom return to store' and 'store stock look-up' in the UK. Following this successful trial, we rolled these services out across UK stores in August and September, with positive initial results. For instance, repurchase following a return in-store is approximately double the ecommerce rate. We intend to roll out these omnichannel services across the rest of our core EMEA markets in 2024, starting with Germany. In Japan we began trialling virtual sizing functionality and expanded staff recommendations on-line.

We have also begun work to build a Customer Data Platform which will give us a single view of the consumer across both DTC channels. This will allow us to drive more consumer-first initiatives, a key pillar of our DOCS strategy. In supply chain, we have commenced the project to implement a modern supply and demand planning system, which is so far progressing well. This will drive working capital savings from FY26 onwards and improve availability and accuracy of product forecasting.

Finally, we made good progress on our sustainability agenda. Our Science Based Targets were verified and approved by the Science Based Target Initiative in October. We have committed to reducing our absolute greenhouse gas emissions aligned with the Science Based Targets initiative to achieve near-term reduction targets by 2030 and Net Zero by 2040. In October we launched our Authorised Repair service to consumers in the UK. The service enables consumers to repair their Dr. Martens products, working with a third-party repair partner and using our own machines and materials. Whilst early days, we are pleased with initial consumer reaction and will look to roll this out in our other key markets in the future. Work on launching our own resale trial in the USA, named ReWair, is ongoing and we expect to launch this during 2024.

FINANCE REVIEW

Total revenue declined 5% (3% CC) with growth in DTC offset by weaker wholesale revenues. EBITDA was £77.6m, 13% lower than last year, with margins 1.6%pts lower at 19.6%. The first half of the financial year is typically a lower margin period due to higher margin DTC trading being weighted to the second half. Profit before tax was £25.8m (H1 FY23: £57.9m), down 55%, reflecting lower EBITDA, increased depreciation and amortisation charges and higher rate-led interest costs.

As described in the outlook, there is considerable macroeconomic uncertainty. However, we remain confident in our long-term growth prospects and the cash generative nature of the business. The balance sheet is strong. As a result, the Board has maintained the interim dividend at 1.56p, in line with H1 last year.

• EBITDA - Earnings before exchange gains/losses, finance income/expense, income tax, depreciation, amortisation and impairment.
• Own stores on streets and malls operated under arm's length leasehold arrangements.
• Wholesale revenue including distributor customers.
• Constant currency applies the same exchange rate to the FY24 and FY23 non-GBP results, based on FY24 budgeted rates.
• Alternative Performance Measures are used as we believe they provide additional useful information on underlying trends.

PERFORMANCE BY CHANNEL

Revenue decreased by 5%, or 3% CC, to £395.8m, with a good DTC performance offset by a decline in wholesale. Wholesale was impacted both by the planned strategic decisions to reduce the volume sold into EMEA etailers and cease the distributor contract in China, and by weaker wholesale in Americas. DTC mix was up 7%pts to 50% of Group revenues.

Ecommerce revenue grew 3% to £91.7m (5% CC) which represented a revenue mix of 23%, up 2%pts. We had very strong growth in both EMEA (up 19% CC) and APAC (up 18% CC), with America down 10%. We saw traffic growth in EMEA and APAC, whilst in America traffic declined. Ecommerce conversion improved in all three regions.

Retail revenue grew 15% to £104.7m (17% CC). Growth compared to last year was led by new and maturing stores (stores opened last year) across all geographies, with continued footfall recovery in EMEA and APAC, offset by footfall decline in America. We also benefitted from the transfer of 14 Japan franchise store at the end of FY23. During the half, we have opened 25 new stores and closed four stores, to end H1 with 225 own stores.

Wholesale revenue was down 17% to £199.4m (15% CC). As previously announced, we took three strategic decisions which impacted wholesale revenues this year, but will create a strong platform for future growth. Firstly, we significantly reduced the quantity and range of product sold into EMEA etailers, in order to ensure scarcity of supply in the region and migrate sales to our own websites. Secondly, we ceased sales to our distributor in China ahead of the contract ending in June 2023. In the Americas we worked with two large wholesale accounts who had excess inventory, reducing shipments through the first half in order to rightsize their inventory positions. In addition to these strategic decisions, we also saw industry-wide destocking amongst USA wholesale customers.

The total number of wholesale accounts globally remained broadly flat at 1.9k after closing c.150 accounts and opening a similar number, as we continued to elevate distribution of the brand. Total revenues per account declined by 5%, with growth in EMEA offset by lower revenue per account in America.

PERFORMANCE BY REGION

• EBITDA - Earnings before exchange gains/losses, finance income/expense, income tax, depreciation, amortisation and impairment.
• Support costs represent group related support costs not directly attributable to each regions operations and including Group Finance, Legal, Group HR, Global Brand and Design, Directors and other group only related costs and expenses.

EMEA revenue grew by 9% to £194.2m (8% CC). DTC grew by 21% (20% CC) with retail and ecommerce up 22% (21% CC) and 20% (19% CC) respectively. DTC mix increased by 5%pts. There was good DTC growth in all core markets (UK up 8%, France up 19%, Germany up 29% and Italy up 62%, all CC). Wholesale was marginally down as expected, due to the strategic decision to reduce volume to etailers.

During the first half we opened 11 new stores: four stores in Italy, two stores in Belgium, two stores in Germany, two stores in UK and our first store in Denmark. Included in the new store openings were three locations that were closed and stores relocated to more prominent positions in Belgium and the UK.

EMEA EBITDA was up 6% to £55.8m (H1 FY23: £52.8m), with EBITDA margin 28.7%, 0.8%pts lower than last year, impacted by FX on purchases and the temporary cost base drag of recently opened stores.

America revenue was down 18% to £147.7m (15% CC). DTC revenue was down 7% (3% CC) with retail up 5% CC and ecommerce down 10% CC with lower footfall and traffic in retail and ecommerce respectively, only partly mitigated by new and maturing stores and better conversion across both channels. DTC mix increased by 6%pts. Wholesale revenue declined 22% CC, due to both the strategic decision to manage down inventory of some of our larger wholesale customers, as well as industry-wide destocking resulting in weak order book momentum. We maintained a disciplined approach to wholesale, and at the end of October the average position of our top ten USA wholesale customers was down 20% on the prior year.

During the first half we opened seven new stores including in LA, Washington DC, San Antonio and Denver.

America EBITDA was 31% lower at £28.6m with EBITDA margin 3.6%pts lower than last year, reflecting lower revenue together with incremental inventory storage costs in LA of £7.0m.

APAC revenue was down 10% to £53.9m (3% CC). We saw lower revenue in China due to the planned exit of the distributor contract in June, which also drove APAC wholesale revenue down 29% CC. APAC DTC revenues grew 26% CC, improving DTC mix by 14%pts, with both retail and ecommerce growing double-digit. This was led by Japan with DTC revenues up 41% CC following the transfer of 14 franchise stores at the end of FY23.

During the first half we opened seven new stores including three stores in Shanghai (including one outlet), two in Japan and one in both South Korea and Hong Kong.

APAC EBITDA was down 7% to £12.2m (H1 FY23: £13.1m) and EBITDA margin up 0.7%pts due to increased mix from Japan (our most profitable market), partly offset by lower EBITDA in China.

RETAIL STORE ESTATE

During the period, we opened 25 (H1 FY23: 21) new own retail stores (via arm's length leasehold arrangements) and closed four stores as follows:

The Group also trades from 26 (FY23: 28) concession counters in department stores in South Korea and a further 82 (FY23: 119) mono-branded franchise stores around the world with 15 in China (FY23: 55, the decline being due to the end of the distribution contract), 16 in Japan (FY23: 16), 21 across Australia and New Zealand (FY23: 20), 23 across other South East Asia countries and the balance in the Nordics and Canada (FY23: 21).

QUARTERLY REVENUE PERFORMANCE

Ecommerce revenue was up in Q1 and flat in Q2, in part driven by a stronger comparative in Q2. In retail, revenue grew double-digit in Q1 and mid-single digit in Q2, driven by a slowdown in the pace of traffic recovery. Both EMEA and APAC were impacted by strategic decisions, of reducing EMEA etailer volumes and ceasing the distributor in China respectively; these were mainly seen during Q1. In Americas, revenue was down in both quarters as expected, driven by wholesale.

• Wholesale revenue including distributor customers.

EBITDA ANALYSIS

Gross margin improved by 2.8%pts to 64.4% as follows:

%pts Increase

+2.8pts

In the half, the average price increase was 4.5% and COGS inflation was approximately 6%, with the incremental margin benefit of +0.7%pts funding all opex inflation (of around 5%). Supply chain savings in the period were approximately £10m, improving gross margin by 1.1%pts.

Operating expenses increased by 5% to £177.3m as follows:

Increase/(Decrease)

Excluding additional USA storage costs, the cost base increased by 1% with new store annualisation offset by the timing of the autumn brand marketing campaign moving from September/October last year to October/November this year, combined with good cost control across all other categories including lower volume-related costs and retail outbound freight savings. The additional USA storage costs of £7.0m were all in relation to temporary space rented in LA, which will annualise at around £15m, as previously guided.

EBITDA decreased by 13% to £77.6m (H1 FY23: £88.8m) resulting in an EBITDA margin movement of 1.6%pts to 19.6%.

• Incremental OPEX from new stores net gross margin benefit from space. During the first half we opened 25 new stores compared to 21 in H1 last year and 31 in H2 in the prior year. In the year of opening, a store takes approximately six to 12 months to break even EBITDA, as a result a store opening increases the cost base faster than revenue in the year of the store opening before positive returns are generated, broadly in year two.
• Incremental stock holding costs in America.

Before additional USA storage costs, underlying EBITDA margin was marginally up, driven by the supply chain savings.

Exchange

The profit and loss figures are prepared on an average actual currency basis for the period. These exchange rates are calculated monthly and applied to revenue and profits generated in that month, such that the actual figures translated across the year are dependent upon monthly trading profiles as well as exchange movement. In addition, all distributor revenues are invoiced in USD. To aid comparability of underlying performance, we have also calculated constant currency performance for revenue. This is calculated by translating non-UK revenues at the same exchange rate year on year.

We have a natural GBP/Euro vs USD hedge. The UK is our second-largest market after the USA but only comprised 18% of global revenues in H1. Due to our balanced global trading footprint with 37% of revenues in America and 31% in Continental Europe, we have a strong natural hedge which protects group EBITDA should the USD strengthen against GBP and Euro. Approximately 93% of COGS purchases are paid in USD such that an appreciation of USD compared to GBP and Euro leads to higher purchase costs in EMEA but is broadly offset by a corresponding translation benefit from USA derived cash flows, such that USA revenue and EBITDA is higher and funds lower EMEA EBITDA. This hedge effect also operates should the USD depreciate against GBP/Euro.

The major exchange rates that impact the Group are £/$, £/€ and £/¥. The following table summarises average exchange rates used in the year:

EARNINGS

The following table analyses the results for the year from EBITDA to profit before tax.

• EBITDA - Earnings before exchange gains/losses, finance income/expense, income tax, depreciation, amortisation and impairment.

Depreciation and amortisation charged in the period was £37.9m (H1 FY23: £23.3) with the increase due to the annualisation of new store openings in prior year, increased DC space in North America and investment in the IT infrastructure including the implementation of the OMS and omnichannel capabilities in EMEA.

Profit before tax declined by 55% to £25.8m (H1 FY23: £57.9m) with profit after tax of £19.0m (H1 FY23: £44.7m). This was primarily due to lower EBITDA together with higher depreciation and amortisation costs.

Interest costs have increased due to higher interest rates on the bank debt (being 3.4%pts higher than last year at 6.2%) and a lower average cash balance.

Depreciation and amortisation charged in the period was £37.9m (H1 FY23: £23.3m), and is analysed as follows:

• Mainly represented by IT related spend with the average term of 3 to 7 years.
• Mainly represented by new store fit out costs with the average term of 5 years.
• Mainly represented by depreciation of IFRS 16 capitalised leases with the average term of 4.9 years and 301 properties (H1 FY23: 5.4 years and 210 properties).

In the year we recognised an exchange gain of £0.6m (H1 FY23: loss £0.2m) which was predominantly due to the revaluation of Euro denominated bank debt and working capital.

The tax charge was £6.8m (H1 FY23: £13.2m) with an effective tax rate of 26.4% (H1 FY23 22.8%) which is slightly higher than the UK corporate tax rate of 25.0%, due mainly to non-UK tax rates and deferred tax on temporary differences. The tax rate was higher than last year due to the increase in UK tax rate from 19.0% to 25.0% on 1 April 2023.

Earnings per share was 1.9p (H1 FY23: 4.5p). The total number of diluted shares is detailed in note 6 in the financial statements. The following table summarises these EPS figures:

EPS and diluted EPS for the current and prior year are presented as the same amount due to the minimal dilutive impact of share options on the total diluted share number.

OPERATING CASH FLOW

• EBITDA - Earnings before exchange gains/losses, finance income/expense, income tax, depreciation, amortisation and impairment.
• Alternative Performance Measures as defined in the Glossary on pages 29 and 30.

Operating cash outflow was £24.4m (H1 FY23: £27.9m) representing a cash conversion of EBITDA of negative 31%, in line with H1 FY23.

Trade debtor days increased from 48 days to 53 days, primarily due to customer mix with a higher proportion of EMEA debtors (with payment terms closer to 60 days) than America (with payment terms closer to 30 days).

Capex was £16.3m (H1 FY23: £19.3m) and represented 4.1% of revenue (H1 FY23: 4.6%). The breakdown in capex by category is as follows:

• Operating cash flow and free cash flow are Alternative Performance Measures defined in the Glossary on pages 29 and 30.

Net interest paid was £7.3m, higher than H1 FY23 by £5.2m due to the timing of interest payments and higher interest rates, which were partially offset by higher interest receivables from cash investments. The increase in lease liabilities was due mainly to the increased number of retail stores opened in the period under lease arrangements and increased space across the DC network.

Funding and Leverage

The Group is funded by cash, bank debt and equity. Further details on the capital structure and debt are given in note 9 of the interim financial statements. The Group's bank debt is denominated in Euros to reflect the excess Euros the Group generates from trading in Continental Europe to fund interest costs (with USD revenue generated broadly funding USD purchase of inventory and GBP generated broadly funding GBP related costs). The bank debt falls due for repayment in full on 2 February 2026. The Group also has a revolving credit facility of £200.0m which also expires on 2 February 2026 with £25.0m drawdown during the period (expected to be fully repaid before this financial year end) and £5.1m utilised in relation to certain guarantee arrangements primarily for landlord guarantees.

The group financing arrangements have a total net leverage covenant test every six months. The total net leverage test is calculated with a full 12 months of EBITDA and net debt being inclusive of IFRS 16 lease liabilities at the balance sheet date. At 30 September 2023 the Group had total net leverage of 2.0 times (H1 FY23: 1.1x, FY23: 1.2x) giving us significant headroom against our covenant test. If this was calculated using average cash throughout the year, (reflecting the Groups intra-year cash swing) average gearing would be approximately 1.7x.

Pensions

Dr Martens Airwair Group Limited and Airwair International Limited (subsidiaries of the Group) operate a defined benefit pension scheme in the UK, which was closed to new members in 2002, and provides both pensions in retirement and death benefits to members. At the most recent triennial valuation date (June 2022), on an actuarial funding valuation basis as agreed with the Trustees, the scheme had assets with a value of £55.4m and estimated future liabilities (technical provisions) of £48.5m, resulting in a surplus of £6.9m.

A detailed description of all pension commitments, including the IAS 19 accounting valuation (which is prepared on a different valuation basis of liabilities to the actuarial funding valuation basis, the latter being used to agree with the pension trustees whether cash contributions are or are not required to be made and the former being purely for accounting purposes), is given in note 29 of the Group Annual Report. The surplus under the scheme is not recognised as an asset benefitting the Group on the balance sheet on the basis that the Group is unlikely to derive any economic benefits from that surplus. At 30 September 2023 (H1 FY24), the scheme had assets of £43.6m (H1 FY23: £48.5, FY23: £49.5m).

The Group also operates a defined contribution scheme for its employees and during the year the Group contributions to this scheme were £2.6m (H1 FY23: £2.3m). At 30 September 2023, this scheme had assets of £25.1m (H1 FY23: £19.9m).

BALANCE SHEET

• Other includes investments, deferred tax assets, income tax assets, and provisions.
• Include bank interest of £8.0m (Sep22: £3.3m, Mar23: £6.0m).
• Includes drawdown of RCF of £25.0m

Net financing is summarised below:

Inventory

Given the high proportion of continuity products we sell, with four out of five pairs being black and having a strong product margin structure, we have minimal markdown risk below cost. Inventory levels are higher than optimal and we plan to right-size inventory through the course of FY25.

• Calculated as historic LTM COGS divided by inventory.
• Calculated as 52 weeks divided by stock turn.

Equity of £363.6m can be analysed as follows:

• Martens plc (the Company) has distributable reserves of £1,312.1m.

RETURNS TO SHAREHOLDERS

Our capital allocation philosophy guides our view of returns to shareholders and usage of excess cash. The first priority for investment is into the business and we will continue to invest in a targeted manner to support long-term growth and resilience of the Group. This is mainly represented by investment into marketing, logistics, people, systems and inventory. Beyond this, our priority is to return excess cash to shareholders, through a regular dividend and, when possible, further returns.

Dividends

The Board has approved and the Company has declared an interim dividend of 1.56p per share (H1 FY23: 1.56p). The interim dividend will be paid to shareholders on the register as at 5 January 2024 with payment on 2 February 2024.

Equity dividends on ordinary shares declared and paid during the period:

Proposed dividends

(not recognised as a liability at H1 Sep 24 and H1 FY23)

Share Buyback

On 14 July 2023 Dr. Martens plc commenced a share buyback programme of £50m. Under the buyback programme shares are repurchased daily. All shares repurchased during a given week are cancelled collectively the following week. Treasury shares are a result of the timing delay between the repurchase and cancellation of these shares.

During the period, the Group repurchased 13.9m shares and cancelled £18.9m of shares (12.5m shares). The cash outflow was £20.4m. The average cost of shares purchased was £1.50.

DETAILED GUIDANCE FOR FY24

• Net new own store openings to be at the top-end of previous guidance; around 35
• Depreciation and amortisation to be around £70m, at the top end of previous guidance
• Net finance costs of c.£30m, compared to previous guidance of c.£25m, driven by higher interest rates and lower average cash than previously expected
• Blended tax rate of c.26%
• Capital expenditure of around £50m, at the bottom end of the previous guidance range of £50-£55m, due to timing of some project spend
• Operating cash conversion of around 80% of EBITDA, compared to previous guidance of more than 100% as we now anticipate that our inventory position with rightsize through the course of FY25

Principal risks

The Board has considered the principal risks and uncertainties which could impact the Group over the remaining half of the financial year. This review has highlighted an increase in macro-economic uncertainty since the FY2023 Annual Report and Accounts. The risk was previously embedded within 'Financial Risks' but it will now be disclosed separately. The principal risks are therefore summarised as follows: Macro-economic uncertainty; Brand and product; Social and environmental; People, culture and change; Supply chain; Information and cyber security; Financial; and Legal and compliance. These are detailed on pages 56 to 59 of the 2023 Annual Report, a copy of which is available on the Company's website at www.drmartensplc.com.

Consolidated Statement of Profit or Loss

For the six months ended 30 September 2023

• Alternative Performance Measure 'APM' as defined in the Glossary on pages 29 and 30.
• Exchange gains(losses) were previously combined with depreciation and amortisation in Sep 22.
• Finance income and expense were previously combined net in Sep 22.

The notes on pages 18 to 27 form part of these consolidated financial statements.

Consolidated Statement of Comprehensive Income

For the six months ended 30 September 2023

Other comprehensive income/(expense)

Items that may subsequently be reclassified to profit or loss

The notes on pages 18 to 27 form part of these consolidated financial statements.

Consolidated Balance Sheet

As at 30 September 2023

• Included in intangible assets is goodwill of £240.7m Sep 22: £240.7m, Mar 23: £240.7m).
• Bank debt is net of £2.9m (Sep 22: £4.1m, Mar 23: £3.4m) of unamortised bank fees.
• On 14 July 2023 Dr. Martens plc announced a share buyback programme. Treasury shares are a result of a timing delay between the repurchase of shares under this programme, and the subsequent cancellation of these shares.

The notes on pages 18 to 27 form part of these consolidated financial statements.

Consolidated Statement of Changes in Equity

For the six months ended 30 September 2023

• On 14 July 2023 Dr. Martens plc announced a share buyback programme. Treasury shares are a result of a timing delay between the repurchase of shares under this programme, and the subsequent cancellation of these shares.

The notes on pages 18 to 27 form part of these consolidated financial statements.

Consolidated Statement of Cash Flows

For the six months ended 30 September 2023

The notes on pages 18 to 27 form part of these consolidated financial statements.

Consolidated Non-GAAP Statement of Cash Flows

• Alternative Performance Measures as defined in the Glossary on pages 29 and 30.
• Included in working capital are share-based payments.
• Includes interest of £4.6m (Sep 22: £2.1m, Mar 23: £4.8m).

Notes to the Consolidated Interim Financial Statements

For the six months ended 30 September 2023

• General information
• Accounting policies

The principal accounting policies adopted in the preparation of the Consolidated Interim Financial Statements are the same as those set out in the Group's Annual Financial Statements for the year ended 31 March 2023 other than for the areas noted below. The interim financial information is presented in GBP and to the nearest million pounds (to one decimal place) unless otherwise noted.

Taxation

As per the requirements of IAS 34 (Interim Financial Reporting) paragraph 16A9a), the estimated effective tax rate for the full year has been applied to taxable profits.

Share buyback

Where the Company purchases any of its own equity instruments, for example, pursuant to the share buyback programme, the consideration paid, including any directly attributable incremental costs, is deducted from equity attributable to the owners of the company. The repurchased shares are recognised as treasury shares until the shares are cancelled. As at 30 September 2023, the company still had control over whether the programme would continue and therefore, no liability is recognised.

Basis of preparation

The condensed Consolidated Interim Financial Statements have been prepared in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority, and with UK-adopted International Accounting Standard (IAS) 34 "Interim Financial Reporting".

The interim results for the six months ended 30 September 2023 and the comparatives for the six months ended 30 September 2022 are unaudited but have been reviewed by the auditors. A copy of their review report has been included at the end of this report.

The financial information for the year ended 31 March 2023 has been extracted from the Group financial statements for that period and does not constitute statutory accounts as defined in section 434 of the Companies Act. These published financial statements were reported on by the auditors without qualification or an emphasis of matter reference and did not include a statement under section 498(2) or (3) of the Companies Act 2006 and have been delivered to the Registrar of Companies.

The Consolidated Interim Financial Statements have been prepared under the historical cost convention, except for derivative financial instruments and pension scheme assets that have been measured at fair value.

In preparing the Consolidated Interim Financial Statements management has considered the impact of climate change, particularly in the context of the financial statements as a whole, in addition to disclosures included in the Strategic Report of the Group financial statements for the year ended 31 March 2023. Climate change remains as an emerging risk and is not expected to have a significant impact on the Group's going concern assessment to 31 March 2024.

Significant judgements and sources of estimation uncertainty

The Group's significant judgements and key sources of estimation uncertainty are consistent with those disclosed in the Group's latest audited financial statements.

Going concern

The interim consolidated financial information has been prepared on the going concern basis. The Directors' assessment is based on detailed trading and cash flow forecasts, including forecast liquidity and covenant compliance. The period of management's assessment is a 16-month period from the date of the signing of the consolidated financial statements (the going concern period) to 31 March 2025 and the going concern basis is dependent on the Group maintaining adequate levels of resources to operate during the period.

The Directors also considered the Group's funding arrangements at 30 September 2023 with cash of £45.7m, available undrawn facilities of £171.7m and bullet debt repayment of £292.5m not due until 2 February 2026.

FY24 started with a continuing challenging global macroeconomy and weak consumer sentiment particularly in America. Global recovery remains slow with growing divergences of impacts on our core markets making it a challenge to return to pre-pandemic growth.

The first half of FY24 was a difficult trading environment particularly in America with good DTC growth in a number of our core markets, particularly in EMEA, resulting in DTC mix expansion +7%pts. There was strong ecommerce growth in EMEA and APAC, with improved conversion and traffic growth. Retail growth was led by maturing stores with continued footfall recovery in EMEA and APAC, but footfall decline in America. We were encouraged to see that the underlying core fundamentals of the DOCS strategy continued to be in line with expectation. The H1 decline in revenue was mainly from lower wholesale with planned volume reduction of etailers in EMEA, a decision not to renew China distributor contract and lower wholesale revenues in America due to industry wide destocking. Gross margins growth was supported by strong supply chain savings of c.£10m with price increases finding inflation.

In EMEA inflation started to ease as a result of a decline of energy prices and moderating inflationary pressures. Russia's ongoing aggression against Ukraine however continues to pose risks and remains a source of uncertainty. Mounting climate risks, illustrated by extreme weather conditions and unprecedented wildfires and floods in the summer, also weigh on the outlook. In America, the landscape continued to be increasingly uncertain with weak consumer spending. The first half was also impacted by unseasonable warm weather. The consumer in America is very cautious and we do not expect significant improvement in the short/midterm, with a risk of customer sentiment deteriorating further given the recent conflict in the Middle East. In APAC the outlook remains more balanced with recovery from the pandemic slow and gradual.

Notes to the Consolidated Interim Financial Statements (continued)

For the six months ended 30 September 2023

Accounting policies (continued)

Going concern (continued)

As a result, the Directors will maintain a cautious outlook through the second half and beyond and will react appropriately to further developments and associated risks (across ecommerce, retail and wholesale channels). The Directors however remain confident in the long-term growth prospects, cash generative nature of the business, and strong balance sheet, with low risk from the higher than optimal inventory levels due the inventory profile of core product (minimal mark down risk). The Group is operationally strong with a long track record consistently generating profits and cash which is expected to continue over the short and long term. The principal measure of future strength is in relation to our brand and key metrics and brand survey together with our economic strength gives confidence on our future growth prospects.

The Directors analyse the prospects of the Group by reference to its current financial position, recent trading trends and momentum, detailed trading and cashflow forecasts including forecast liquidity and covenant compliance, strategy, economic model and the principal risks, monitoring a number of consumer confidence metrics across all core markets. Detailed forecasts are prepared and plans for the assessment period taking into account experiences of trading through the period to September 2023, including the impact of the continued current global economic uncertainty, high inflation on profitability, and cash flow and covenant compliance.

As part of the going concern assessment, management have modelled, and the Directors have reviewed a base case and a severe but plausible downside scenario with no planned cost or working capital mitigation (including the payment of dividends).

Our central planning assumptions in the base case are:

Micro:

• Store growth in key markets will continue to be led by traffic recovery back towards pre Covid-19 levels, though America will have the slowest recovery, with a step improvement in ecommerce awareness also continuing in conjunction with new store openings
• Price increases do not materially impact demand and funds inflation
• Inventory to be right sized for forward demand through FY25
• All DCs and factories remain open and operational throughout the year

Macro:

• No material change to the global political situation /war in Ukraine/Middle East
• No material deterioration in climate risk with respect to extreme weather
• Higher inflation to remain (with associated higher interest rates) with no marked stepped improvement in consumer confidence in EMEA or America

The severe but plausible downside scenario includes a low base case, where revenue and EBITDA have been reduced for risks and challenging trading environment identified above, to reflect further weakening of consumer demand, particularly America, with no mitigation (but includes dividend payments), and a decline in both revenue and EBITDA in FY25 to reflect continuation of weakened consumer demand.

Should this severe but plausible downside scenario occur then mitigating actions could also be taken including, (but not limited to) cancellation of pay awards, reduced capital expenditure and reduced marketing spend. Under this scenario dividends could be maintained but would be reviewed if required. In the severe but plausible downside scenario, the Group continues to have satisfactory liquidity and significant covenant headroom throughout the 16-month period under review. A more extreme downside scenario is not considered plausible.

In addition, a reverse stress test has been modelled to determine what could break covenant compliance estimates and liquidity before any mitigating actions. To model these reverse stress tests the impact on revenue of zero covenant headroom and zero liquidity was calculated at the end of FY25 from the base case. Under the covenant breach test, it is concluded that the business could weather extreme growth reductions without mitigation, -33pts of revenue growth in FY25 before covenants are breached. Similarly, the business would have to experience -87pts revenue growth reduction in FY25 before zero cash headroom is reached. Under both tests modelled, there were no mitigating actions (including dividend payments) modelled and the resulting revenues calculated and likelihood of occurring have been considered. The Directors have assessed the likelihood of occurrence to be remote.

In adopting the going concern basis for preparing the consolidated financial statements, the Directors have considered the business activities as well as the principal risks and uncertainties faced by the business. Based on the Group trading and cashflow forecasts, the Directors have reasonable expectation that the Group has an adequate level of resources to continue in operational existence during the period under review.

Adoption of new and revised standards

A number of new or amended standards became applicable for the current reporting period. These standards, amendments or interpretations are not expected to have a material impact on the Group in the current or future reporting periods:

• Amendments to IAS 1 - Classification of liabilities as current, and disclosure of accounting policies
• Amendments to IAS 8 - Definition of accounting estimates
• Amendments to IAS 12 - Pillar two model rules
• Implementation of IFRS 17.

New standards and interpretations not yet applied

Amendments to IFRS 16 - Leases on sale and leaseback

These standards, amendments or interpretations are not expected to have a material impact on the Group in the current or future reporting periods.

Notes to the Consolidated Interim Financial Statements (continued)

For the six months ended 30 September 2023

Segmental Analysis

IFRS 8 'Operating Segments' requires operating segments to be determined by the Group's internal reporting to the Chief Operating Decision Maker (CODM). The CODM has been determined to be both the CEO and CFO, who receive information on this basis of the Group's revenue in key geographical regions based on the Group's management and internal reporting structure. The CODM assesses the performance of geographical segments based on a measure of revenue and EBITDA2. To increase transparency the Group also includes additional voluntary disclosure analysis of global revenue within different operating channels. Included within EMEA is revenue attributable to Airwair International Limited and Airwair Wholesale Limited, the principal UK trading subsidiaries of Dr. Martens plc, with revenue from retail stores in Continental Europe and wholesale and export customers, America revenue is fully attributable to the USA and Canada, and APAC revenue is mainly attributable to Japan, Australia, China, Hong Kong and South Korea. The types of products from which each reportable segment derives its revenue are consistent across all segments. The Group typically generates approximately 60% of total revenue in the second half reflecting the peak Q3 DTC trading period and, as a result of the stronger gross margin structure of DTC compared to wholesale, EBITDA margins are higher in the second half of the year.

• Alternative Performance Measure 'APM' as defined in the Glossary on pages 29 and 30.

• Included in the EMEA non-current assets is £83.8m (Sep 22: £64.5m, Mar 23: £79.4m) in relation to the UK legal entities.

Notes to the Consolidated Interim Financial Statements (continued)

For the six months ended 30 September 2023

Finance expense

• Bank debt and charges and other interest charges were £11.0m (Sep 22: £5.1m Mar 23: £12.7m), compared to interest paid in the period of £9.1m (Sep 22: £2.1m; Mar 23 £7.2m), with the difference of £1.9m (Sep 22: £3.0m; Mar 23: £5.5m) relating to timing of interest payments on the debt.
• Interest income of £1.7m (Sep 22: £0.4m, Mar 23: £2.1m) was previously included within 'Bank debt and charges'.
• Tax expense

The Group calculates the period tax expense using the tax rate that would be applicable to the expected total annual earnings. The major components of tax expense in the Consolidated Statement of Profit or Loss are:

• The adjustments in respect of prior periods are in relation to current and deferred tax on temporary differences.

Factors that may affect future tax charges

The Group is within the scope of the OECD Pillar two model rules. Pillar two legislation was recently substantively enacted in some of the territories in which the Group operates and will come into effect in these territories from 1 January 2024. On 20 June 2023, Finance (No.2) Act 2023 was substantively enacted in the UK, introducing a global minimum effective tax rate of 15%. The legislation implements a domestic top-up tax and a multinational top-up tax, effective for accounting periods starting on or after 31 December 2023. The Group has applied the exception allowed by an amendment to IAS 12 to recognising and disclosing information about deferred tax assets and liabilities related to top-up income taxes.

Notes to the Consolidated Interim Financial Statements (continued)

For the six months ended 30 September 2023

Earnings per share

The calculation of basic earnings per share is based on the profit attributable to ordinary shareholders of the Parent Company divided by the weighted average number of ordinary shares in issue during the period.

Diluted earnings per share is calculated by dividing the profit for the period attributable to ordinary equity holders of the Parent Company by the weighted average number of ordinary shares in issue during the period plus the weighted average number of ordinary shares that would be issued on the conversion of all dilutive potential ordinary shares into ordinary shares.

During the 6 months to 30 September 2023 the Group repurchased 13.9m shares. The cash outflow was £20.4m, with an additional £0.7m of accrued expenditure at period end, resulting in a total cost of £21.1m (including transaction costs of £0.2m) pursuant to the share buyback scheme that was announced on 14 July 2023.

Dividends

Equity dividends on ordinary shares declared and paid during the period/year:

Proposed dividends (not recognised as a liability Sep 23, Sep 22 or Mar 23)

The Board has approved and the Company has declared an interim dividend of 1.56 pence per share (H1 FY23: 1.56 pence) equating to a 81% (H1 FY23: 35%) earnings payout. The Dr. Martens plc International Share Incentive Plan Trust has waived all dividends payable by the Company in respect of the ordinary shares it holds. The interim dividend will be paid to shareholders on the register as at 5 January 2024 with payment on 2 February 2024.

Notes to the Consolidated Interim Financial Statements (continued)

For the six months ended 30 September 2023

Property, plant and equipment and right-of-use assets

Movements in property, plant and equipment since 31 March 2023 predominantly relate to additions of £11.0m and depreciation charged of £7.9m.

• Additions include £0.8m of direct costs (Sep 22: £0.8m, Mar 23: £3.2m) and £0.6m (Sep 22: £1.3m, Mar 23: £2.7m) in relation to costs of removal and restoring.
• During FY23, impairment charge was mainly in relation to three stores in the US where footfall recovery, in their locality, was weak, and they were written down to £nil.
• Borrowings

• From total borrowings, only bank loans (excluding unamortised bank fees) and the revolving credit facility drawdown and lease liabilities are included in debt for bank loan covenant calculation purposes.
• Bank debt is net of £2.9m (Sep 22: £4.1m, Mar 23: £3.4m) of unamortised bank fees.

Notes to the Consolidated Interim Financial Statements (continued)

For the six months ended 30 September 2023

Borrowings (continued)

Analysis of bank loan:

On 29 January 2021, the Group entered into a Facilities Agreement comprising a new term B loan facility of €337.5m (equivalent to £300.0m at that date) and a new multi-currency revolving credit facility of £200.0m. These facilities have a maturity date of 2 February 2026. Included within this agreement is a committed ancillary facility of which £3.3m (Sep 22: £4.1m) has been utilised primarily related to landlord bank guarantees.

At 30 September 2023 the Group had utilised £25.0m (Sep 22: £nil, Mar 23: £nil) of drawn debt under the revolving credit facility to support short-term working capital requirements.

The Group value of the bank loan as at 30 September 2023 (excluding unamortised bank fees and accrued interest) of £292.5m (Sep 22: £297.0) is £7.5m lower (Sep 22: £3.0m lower) than the amount borrowed on 29 January 2021 due to an appreciation of the sterling Euro exchange rate movement. The Group's total gross bank borrowings (excluding lease liabilities) is denominated in Euros and loan repayments will occur in February 2026.

Provisions

Provisions as at 30 September 2023 of £4.9m (31 March 2023: £4.4m) consist of property provisions relating to the estimated repair and restoration costs for retail stores at the end of the lease. The provisions are not discounted for the time value of money as this is not considered materially different from the current cost.

Financial instruments

IFRS 13 requires the classification of financial instruments measured at fair value to be determined by reference to the source of inputs used to derive fair value.

The fair values of all financial instruments, except for leases, in both periods are materially equal to their carrying values. All financial instruments are classified as amortised cost with the exception of derivatives, cash amounts held within Money Market Funds, and investments in equity instruments which are measured at fair value. Derivatives and Money Market Funds are classified as Level 2 under the fair value hierarchy, and investments in equity instruments as Level 3, which is consistent with that defined in note 2.17 of the Group's consolidated financial statements for the year ended 31 March 2023.

Unaudited 30 September 2023

Leases

Set out below are the carrying amounts of lease liabilities (included under borrowings - lease liabilities) and the movements during the period:

Notes to the Consolidated Interim Financial Statements (continued)

For the six months ended 30 September 2023

Leases (continued)

The following amounts were recognised in the Statement of Profit or Loss:

The Group operates its own retail stores via arm's length leasehold arrangements and also leases one warehouse (in the UK) and its offices (apart from one property which is freehold). At 30 September 2023, the average lease term remaining across all property related leases to end of term was 4.9 years (H1 FY23: 5.4 years), and 3.5 years (H1 FY23: 3.4 years) to tenant-only break. The annual rent commitment was £47.8m (H1 FY23: £29.7m) and undiscounted total lease commitment was £235.0m (H1 FY23: £161.4m), reducing to £167.4m (H1 FY23: £100.4m) to lease break.

At 30 September 2023 the Group has right-of-use ('ROU') assets of £195.0m (H1 FY23: £133.9m) and lease liabilities of £207.1m (H1 FY23: £142.8m). This includes 4 DC 3PL contracts that are within the scope of IFRS16.

Pensions

Defined contribution scheme

The Group operates a defined contribution pension scheme for its employees. The Group's expenses in relation to this scheme were £2.6m for the six months ended 30 September 2023 (Sep 22: £2.3m) and at 30 September 2023 £0.9m (Sep 22: £1.2m, Mar 23: £0.8m) remained payable to the pension fund.

Defined benefit scheme

Dr Martens Airwair Group Limited and Airwair International Limited operates a pension arrangement called the Dr. Martens Airwair Group Pension Plan (the Plan). The Plan has a defined benefit section that provides benefits based on final salary and length of service on retirement, leaving service or death. The defined benefit section closed to new members on 6 April 2002 and closed to future accrual with effect from 31 January 2006.

The defined benefit section of the Plan is subject to the Statutory Funding Objective under the Pensions Act 2004. A valuation of the Plan is carried out at least once every three years to determine whether the Statutory Funding Objective is met. The last valuation was carried out at 30 June 2022 which confirmed that the Plan had sufficient assets to meet the Statutory Funding Objective. The next valuation is due at 30 June 2025. The Statutory Funding Objective does not currently impact on the recognition of the Plan in these accounts.

During the period, no discretionary benefits were awarded. There were no Plan amendments, settlements or curtailments during the period.

The weighted average duration of the defined benefit obligation is approximately 12 years (Mar 23: 13 years). Around 50% of the undiscounted benefits are due to be paid beyond 17 years' time, with the projected actuarial cashflows declining to zero in about 70 years.

Effect of the Plan on Company's future cash flows

Airwair International Limited is required to agree a Schedule of Contributions with the Trustees of the Plan following a valuation, which must be carried out at least once every three years. Following the valuation of the Plan at 30 June 2022, a Schedule of Contributions was agreed under which Airwair International Limited was not required to make any contributions to the defined benefit section of the Plan (other than payments in respect of administrative expenses). Accordingly, Airwair International Limited does not expect to contribute to the defined benefit section of the Plan, although it will continue to contribute to the defined contribution section in line with the Schedule of Contributions. The next valuation of the Plan is due at 30 June 2025. If this reveals a deficit then Airwair International Limited may be required to pay contributions to the Plan to repair the deficit over time.

The amounts recognised in the Balance Sheet are determined as follows:

Notes to the Consolidated Interim Financial Statements (continued)

For the six months ended 30 September 2023

Pensions (continued)

Although the Plan has a surplus, this is not recognised on the grounds that Airwair International Limited is unlikely to derive any future economic benefits from the surplus. As such, an asset ceiling has been applied to the Balance Sheet, and the net surplus of £8.5m (Mar 23: £11.1m) has not been recognised on the balance sheet. The net surplus has been restricted to £nil (Mar 23: £nil).

Share Capital

The movements in ordinary share capital during the half year ended 30 September 2023 were as follows:

Unaudited 30 September 2023

During the half year ended 30 September 2023 Dr. Martens plc repurchased 13.9m ordinary shares for a cash outflow of £20.4m, with an additional £0.7m of accrued expenditure at period end, resulting in a total cost of £21.1m, including transaction costs of £0.2m, as part of a share repurchase programme announced on 1 July 2023. All shares purchased were for cancellation, with 12.5m shares cancelled and 1.4m shares to be cancelled. The repurchased shares represented 1.4% of ordinary share capital. The number of shares in issue is reduced where shares are repurchased.

Treasury Shares

The movements in treasury shares held by the Company during the half year ended 30 September 2023 were as follows:

Unaudited 30 September 2023

On 14 July 2023 Dr. Martens plc announced a share buyback programme. All shares repurchased during a given week are cancelled collectively the following week. Treasury shares are a result of the timing delay between the repurchase and cancellation of these shares.

Related party transactions

The Group's related party transactions are with key management personnel and other related parties as disclosed in the Group's Annual Report and Accounts for the year to 31 March 2023. There have been no material changes to the Group's related party transactions during the six months to 30 September 2023.

Post balance sheet events

The Group has continued with the repurchase and cancellation of shares in line with the share buyback programme that was announced on 14 July 2023.

First half / second half financial summary

• EBITDA - earnings before exchange gains/losses, finance income/expense, income tax, depreciation, amortisation, and impairment.
• Own stores on streets and malls operated under leasehold arrangements.
• Wholesale revenue including distributor customers.

Glossary and Alternative Performance Measures (APMs)

The Group tracks a number of performance measures (KPIs) including Alternative Performance Measures (APMs) in managing its business, which are not defined or specified under the requirements of IFRS because they exclude amounts that are included in, or include amounts that are excluded from, the most directly comparable measures calculated and presented in accordance with IFRS or are calculated using financial measures that are not calculated in accordance with IFRS.

In FY23 the Group disclosed two measures relating to FY22 comparatives which are now no longer relevant to the current or comparative period. The Group is no longer presenting free cash flow as this measure is no longer discussed as a performance measure for the group. Discussed in its place, and considered more relevant, are the other cash flow related performance measures included in the glossary below. The Group is also no longer presenting underlying EPS. In previous years this metric was introduced to present existing performance measures exclusive of exceptional costs and preference share interest. The Group recognised £nil exceptional costs and £nil preference share interest in HY24, FY23 and FY22, and as such, this adjustment measure is no longer relevant.

Company Information

Shareholders' enquiries

Electronic shareholder communications

Registered Office

28 Jamestown Road

Camden

London

NW1 7BY

The directors of Dr. Martens plc are listed in the Dr. Martens plc annual report for 31 March 2023. A list of current directors is maintained on the Dr. Martens plc website: www.drmartensplc.com.

By order of the board

Jon Mortimore, CFO

Independent review report to Dr. Martens plc

Report on the condensed consolidated interim financial statements

Our conclusion

We have reviewed Dr. Martens plc's condensed consolidated interim financial statements (the "interim financial statements") in the Interim results of Dr. Martens plc for the 6 month period ended 30 September 2023 (the "period").

The interim financial statements comprise:

• the Consolidated Balance Sheet as at 30 September 2023;
• the Consolidated Statement of Profit or Loss and the Consolidated Statement of Comprehensive Income for the period then ended;
• the Consolidated Statement of Cash Flows for the period then ended;
• the Consolidated Statement of Changes in Equity for the period then ended; and
• the explanatory notes to the interim financial statements.

The interim financial statements included in the Interim results of Dr. Martens plc have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Basis for conclusion

Conclusions relating to going concern

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

PricewaterhouseCoopers LLP

Chartered Accountants

London