REG - B&M European - FY24 Interim Results
09/11/2023 07:00
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RNS Number : 8589S B&M European Value Retail S.A. 09 November 2023
9 November 2023
B&M European Value Retail S.A.
FY24 Interim Results Announcement
Disciplined profitable growth momentum
B&M European Value Retail S.A. ("the Group"), the UK's leading variety
goods value retailer, today announces its interim results for the 26 weeks to
23 September 2023.
Highlights
· Group revenues increased by 10.4% on prior year to £2,549m (+10.3% constant
currency(1))
· Group adjusted EBITDA(4) (pre-IFRS 16) of £269m and margin of 10.5% (H1 FY23:
10.0%) represents 16.1% growth vs. last half year (H1 FY23: £232m)
· Group adjusted operating profit(4) increased 19.1% to £263m (H1 FY23:
£221m), with statutory operating profit of £275m (H1 FY23: £248m) and
statutory profit before tax of £222m (H1 FY23: £201m)
· Group inventory in a clean exit position of £856m (H1 FY23: £837m)
· Group cash generated from operations was £352m (H1 FY23: £370m), reflecting
a normalised working capital movement with strong stock availability ahead of
the Golden Quarter across the three fascias
· All fascias trading well with positive transaction numbers and new space
growth
· Now expect to reach not less than 1,200 B&M UK stores in total, vs.
previous guidance of 950
· Opened 28 gross new stores across the Group (13 in B&M UK, 10 in Heron
Foods and 5 in B&M France). Total average selling area increase continues
to outpace the increase in number of stores
· Net debt(7) to adjusted EBITDA(4) (pre-IFRS 16) leverage ratio of 1.1x (H1
FY23: 1.3x)
· An interim dividend(6) of 5.1p per Ordinary Share will be paid on 15 December
2023 (H1 FY23: 5.0p)
· FY24 Group adjusted EBITDA (pre-IFRS 16) guidance, increased to be in the
range of £620m - £630m, materially higher than FY23 (£573m)
Fascia perfomance Revenue growth % Adjusted EBITDA(2,4) (pre-IFRS 16) margin %
H1 FY24 H1 FY23 H1 FY24 H1 FY23
B&M UK(2) 8.1% (0.9)% 11.4% 10.6%
B&M UK LFL(3) 6.2% (3.9)% - -
B&M France 26.1% 18.2% 7.8% 9.6%
Heron Foods 17.0% 14.6% 6.6% 6.1%
Alex Russo, Chief Executive, said:
"Another strong half year has seen the Group deliver 10.4% total sales growth,
16.1% adjusted EBITDA(4) (pre-IFRS 16) growth and £352m cash generated from
operations. All four of our channels of growth are delivering strong results,
underpinned by our relentless focus on low prices, cost control, simplicity in
everything we do and disciplined profitable growth. Highlights for the half
include:
• Existing B&M UK stores saw like-for-like(3) sales
increase by 6.2%, with around half coming from increased customer transaction
numbers and helped by the material step change in store operational standards
- a key focus for management
• Opened 13 gross new B&M UK stores, a net increase
of 5 stores, with total sales area outgrowing growth in store numbers. We
expect to open not less than 35 stores this financial period, and not less
than 45 stores in each of the next two years
• France delivered total sales growth of over 26%, with
LFL sales growth in double figures. France remains on track for 10 new stores
across this financial year, and at least the same number next year
• Heron Foods total sales were up 17.0% including 9 net
new stores. We remain on track to open 20 new stores in this financial year
The agreement to acquire up to 51 ex-Wilko stores is a significant step which
underpins our opening programme. Over the next three years we expect to open
not less than 125 new B&M stores in the UK, adding up to 20% to our sales
area.
I am delighted that many of our existing shareholders have been with us since
our IPO and continue to see our long-term growth potential. With our new store
number guidance (of not less than 1,200 B&M UK stores) and continued LFL
growth, we have the runway to at least double our size in the UK in the medium
term, while France also offers sizeable long-term potential."
Current trading and outlook
In the first six weeks of the Golden Quarter, B&M UK LFL(3) growth has
been 1.6%. Momentum has been particularly strong in the last three weeks, with
LFL(3) exit growth of 4.5%. The Group is trading against tough comparatives
making this a pleasing result against an uncertain and ever-changing economic
background.
This volatile background makes forecasting for the full year difficult.
However, given the strong first half results and positive momentum, the
Group's FY24 adjusted EBITDA (pre-IFRS 16) guidance is increased to a range of
£620m - £630m, materially higher than FY23 performance (£573m).
Financial results (unaudited)
H1 FY24 H1 FY23 Change
Total Group revenue £2,549m £2,309m 10.4%
Group adjusted EBITDA(2,4) (pre-IFRS 16) £269m £232m 16.1%
Group adjusted EBITDA(4) (pre-IFRS 16) margin % 10.5% 10.0% 52 bps
Group adjusted operating profit(2,4) £263m £221m 19.1%
Group statutory operating profit £275m £248m 11.0%
Group statutory operating profit margin % 10.8% 10.7% 6 bps
Group cash generated from operations £352m £370m (4.7)%
Group statutory profit before tax £222m £201m 10.5%
Adjusted (pre-IFRS 16) diluted EPS(4) 15.5p 14.4p 7.6%
Statutory diluted EPS 16.3p 15.7p 4.2%
Ordinary dividends(6) 5.1p 5.0p 2.0%
Notes:
1. Constant currency comparison involves restating the prior year Euro
revenues using the same exchange rate as that used to translate the current
year Euro revenues.
2. References in this announcement to the B&M UK business include
the B&M fascia stores in the UK except for the 'B&M Express' fascia
stores. References in this announcement to the Heron Foods business include
both the Heron Foods fascia and B&M Express fascia convenience stores in
the UK. When reporting adjusted EBITDA (pre-IFRS 16) and adjusted operating
profit, B&M UK also includes the corporate segment as referred to in note
2 of the financial information, and includes an adjusted loss of £2m in this
period (H1 FY23: adjusted loss of <£1m).
3. One-year like-for-like revenues relate to the B&M UK estate
only (excluding wholesale revenues) and include each store's revenue for that
part of the current period that falls at least 14 months after it opened
compared with its revenue for the corresponding part of FY23. This 14-month
approach has been adopted as it excludes the 2-month halo period which new
stores experience following opening.
4. Adjusted values are considered to be appropriate to exclude unusual,
non-trading and/or non-recurring impacts on performance which therefore
provides the user of the accounts with additional metrics to compare periods
of account. See notes 2, 3 and 4 of the financial information for further
details.
5. Trading gross margin is considered to be a meaningful measure of
profitability as it refers to the measure of gross margin used by management
to commercially run the business. It differs to the statutory definition for
B&M UK, which increased 233 bps from 34.5% to 36.8%, due to technical
accounting adjustments in relation to the allocation of gains and losses from
derivative foreign exchange accounting, commercial income and storage costs,
with the derivative adjustments the main factor.
6. Dividends are stated as gross amounts before deduction of
Luxembourg withholding tax which is currently 15%.
7. Net debt comprises interest bearing loans and borrowings,
overdrafts and cash and cash equivalents. Net debt was £700m at the half year
end (H1 FY23: £736m), reflecting £924m (H1 FY23: £959m) as the carrying
value of gross debt netted against £224m of cash (H1 FY23: £223m). See note
7 of the financial information for more details.
8. UK market share is calculated based on the reported revenues of
B&M UK and Heron Foods, compared to NIQ Scantrack, Total Store, Total
Coverage inc. Discounters, 52 weeks ending 31.12.22.
Results Presentation
An in-person presentation for analysts in relation to these FY24 Interim
Results will be held today at 09:30 am (UK) at London Stock Exchange, 10
Paternoster Square, London, EC4M 7LS. Attendance is by invitation only and
attendees must be registered in advance.
A simultaneous live audio webcast and presentation will be available via the
B&M corporate website at
https://www.bandmretail.com/investors/presentations/year/2023
(https://www.bandmretail.com/investors/presentations/year/2023)
Enquiries
B&M European Value Retail S.A.
For further information please contact: +44 (0) 151 728 5400 Ext 6363
Alex Russo, Chief Executive Officer
Mike Schmidt, Chief Financial Officer
Dave McCarthy, Head of Investor Relations
Investor.relations@bandmretail.com
Media
For media please contact:
Sam Cartwright, H-advisors, sam.cartwright@h-advisors.global +44 (0) 7827 254
561
Jonathan Cook, H-advisors, jonathan.cook@h-advisors.global
(mailto:jonathan.cook@h-advisors.global) +44 (0) 7730 777 865
Disclaimer
This announcement contains statements which are or may be deemed to be
'forward-looking statements'. Forward-looking statements involve risks and
uncertainties because they relate to events and depend on events or
circumstances that may or may not occur in the future. All forward-looking
statements in this announcement reflect the Company's present view with
respect to future events as at the date of this announcement. Forward-looking
statements are not guarantees of future performance and actual results in
future periods may and often do differ materially from those expressed in
forward-looking statements. Except where required by law or the Listing Rules
of the UK Listing Authority, the Company undertakes no obligation to release
publicly the results of any revisions to any forward-looking statements in
this announcement that may occur due to any change in its expectations or to
reflect any events or circumstances arising after the date of this
announcement.
About B&M European Value Retail S.A.
B&M European Value Retail S.A. is a variety retailer with 712 stores in
the UK operating under the "B&M" brand, 328 stores under the "Heron Foods"
and "B&M Express" brands, and 119 stores in France also operating under
the "B&M" brand as at 23 September 2023. It was admitted to the FTSE 100
index on 21 September 2020.
The B&M Group was founded in 1978 and listed on the London Stock Exchange
in June 2014. For more information, please visit www.bandmretail.com
(http://www.bandmretail.com)
Chief Executive's review
Another half of disciplined profitable growth
This has been another strong first half for the Group with adjusted EBITDA
(pre-IFRS 16) up 16.1%. Total sales were up 10.4%, including 6.2% LFL(3)
growth in our core B&M UK fascia. Our Group adjusted EBITDA(4) (pre-IFRS
16) margin of 10.5% is 52 bps ahead of the comparable period last year.
Exceptionally strong sales in the first quarter ensured that limited markdowns
were required in the second quarter leading to a strong gross margin for the
half. Strong first quarter growth moderated as expected in the second quarter,
hindered by unseasonal weather which was unhelpful to the retail industry
overall. Despite this backdrop, we delivered profitable sales growth across
the half. This was underpinned by a step change in our store standards and by
our pricing position. Our laser focus on prices and store standards is core to
our offer and underpins future growth in existing and new stores.
In addition to the 13 gross new B&M stores opened in the half, we also
announced the agreement to acquire up to 51 ex-Wilko stores which underpins
our well-established store opening programme. We confidently expect to open
not less than 125 new B&M UK stores over next three years. We will never
over-extend ourselves or compromise on the quality of our store locations in
pursuit of achieving a promised number of openings. We will not neglect our
core estate in pursuit of an excessive number of new openings. Our growth will
be disciplined and not at the expense of excellence in standards.
Delivering compounding, profitable growth and strong cash generation is our
core investment objective. To deliver this we must remain relevant to the
consumer, be highly competitive through price, store standards and the right
product range. We are an Every Day Low Price discounter and so we must also
remain an Every Day Low Cost operator. Once again, despite high cost and high
labour inflation we were able to deliver underlying cost ratios broadly in
line with sales.
Our strategy is intact and unchanged, and is underpinned by several
sustainable competitive advantages, which include:
• Improving store standards. As many retailers look to cut costs,
with a resultant reduction in store standards, so we continue to improve ours,
without impacting our cost ratios. Over the last 12-18 months, there has been
a step change in store standards and this has helped drive our LFL sales. This
has put us firmly on the virtuous circle of retailing, where improved sales
finances further improvements in the overall offer, leading to further sales
gains.
• Low-cost structure leads to low prices. We are able to sell
cheaper than our rivals because we operate a low-cost structure and are able
to share the benefits with our customers through a laser focus on price. As we
continue to grow, so we will benefit from further operational leverage through
our central, logistics and store fixed costs.
• Strong supply chain and sourcing for non-grocery,
built over several decades with direct sourcing. This ensures we retain low
buying-in prices, have excellent availability and have rapid replenishment
from suppliers.
• Strong and improving relationships with FMCG suppliers. We only
stock known brands and we remain a key growth channel for many FMCG suppliers
in the UK. With an edited range and growing sales, our negotiating and buying
position is strong and continues to build, helping ensure our price
competitive position is continually strengthened.
Competitive position
The retail industry remains highly competitive and the consumer remains under
pressure. We are seeing many retailers struggle, fail and close stores, but
against a tough industry background we continue to prosper and expand
profitably. The consumer has seen purchasing power cut over the last two
years, with rising interest rates reducing disposable and discretionary
incomes. Through our low prices, best in class availability and depth of range
- we are helping consumers through the ongoing cost-of-living crisis and in
doing so, are winning new customers and are building lasting loyalty. In our
grocery range we remain significantly cheaper than the mainstream
supermarkets. In non-grocery, compared to specialist retailers, our price
position is even stronger than it is in grocery.
The move by consumers to discounters is a major trend in many countries and is
set to continue over the long term. In the UK and France, we are at the
forefront of this trend. In the UK, we have a little over 2% market share(8)
and much less in France, meaning there are many more years of growth ahead.
While market share gain is not an objective in itself, it is a consequence of
what we are delivering to the consumer - a strong price-based offer, a
relevant product range and excellence in store standards.
Strategic progress review
Our strategy remains unchanged. The short-term outlook for the consumer
remains challenging but the long-term potential for growth is highly
attractive. We believe in the broadening appeal of our offer, the continued
move by consumers to discounting and greater penetration of our offer withing
existing catchment areas. Our strategy continues to be relevant in both the
short-term (cost of living crisis) and the long-term (structural shift by
consumers to discounting). We believe our laser focus on price is a winner in
any market.
1. Existing B&M UK stores:
We continue to improve store standards and will always strive for
best-in-class product availability. This has been a key driver in our strong
LFL sales in the first half. LFL(3) growth of 6.2% is the equivalent sales
contribution of over 40 new stores, without any incremental investment
required. Focusing on our core estate is highly profitable, it increases cash
generation and improves return on invested capital. We will not make the
mistake of neglecting existing stores in the pursuit of an excessive number of
new openings, nor will we compromise on the quality of our new openings.
2. New B&M UK stores:
Our opening programme is building strongly and is well underpinned. Over the
next three years we plan to open not less than 125 stores, supported by the
agreement to acquire up to 51 ex-Wilko stores. These ex-Wilko stores will be
converted steadily over the next 12 months and in many instances will take the
B&M offer to more consumers in more parts of the country. In total, we now
expect to open 35 stores in the current financial year and not less than 45
stores in each of the next two financial years.
We are increasing our long-term store target to not less than 1,200 stores, up
from the 950 we announced in FY17, this underlines the clear runway of growth
ahead. Underpinning this guidance, we have updated our previous analysis to
take account of our significant LFL sales growth and strong track record of
successfully opening stores in closer proximity to one another. The
performance of new stores has been extremely positive and provides us with
confidence for our continued UK expansion.
3. France:
The potential in France is substantial. In a country with a population similar
in size and demographics to the UK, we have just 119 stores. In H1 FY24, we
have opened 5 stores, and these are all performing strongly, helping further
increase the profitability of the business as it scales up. France is highly
successful but there remain more significant opportunities, such as increasing
sales densities by improving the offer (e.g. increasing the FMCG range) and to
expand the store network without adding to the current infrastructure. There
is also the added benefit of sharing knowledge between our French operations
and the UK business.
4. Heron Foods:
Our discount neighbourhood convenience store offer continues to perform well
during these challenging times for the consumer. We see the great-value,
highly-local Heron proposition resonating as customers budget through the
month by purchasing only what they need, and only when they need it. Once
again Heron has delivered strong growth through new and existing stores, with
an adjusted EBITDA(4) (pre-IFRS 16) margin higher than most of its
competitors. We will continue to expand the business steadily with 20 new
stores this year, making this a complementary and cash generating fourth
channel of growth.
Management changes
At the full year we highlighted the strengthened management team and we have
added to that further with the appointment of Alex Simpson, who joins us from
Amazon UK, as Group General Counsel. The fact that we are able to recruit from
companies like Amazon and Walmart amongst others, is a strong testament of how
far B&M has come and how large our opportunity remains.
I am also very pleased that Bobby Arora, Group Trading Director, has committed
his future to the Group as announced in July 2023. Bobby is important in
delivering the Group's long-term growth and profitability. I look forward to
building further on our partnership as we continue to work together to deliver
on our objectives for shareholders.
Alex Russo
Chief Executive Officer
8 November 2023
Financial review
Group
£'m H1 FY24 H1 FY23 YoY Change
Revenue 2,549 2,309 10.4%
Gross profit 941 808 16.4%
% 36.9% 35.0% 191 bps
Operating costs (672) (576) 16.6%
Adjusted EBITDA(2,4) (pre-IFRS 16) 269 232 16.1%
% 10.5% 10.0% 52 bps
Depreciation and amortisation (pre-IFRS 16) (40) (35) 13.1%
Operating impact of IFRS 16* 34 24 38.4%
Adjusted operating profit(2,4) 263 221 19.1%
Adjusting items(4) 12 27 (55.8)%
Statutory operating profit 275 248 11.0%
Share of profit in associates - 1 (100.0)%
Finance costs relating to right-of-use assets (32) (29) 9.6%
Other net finance costs (21) (19) 12.8%
Statutory profit before tax 222 201 10.5%
*includes depreciation on right-of-use assets of £84m - H1 total depreciation
& amortisation was £124m (H1 FY23: £119m)
Group revenues for the 26 weeks ended 23 September 2023 increased by 10.4%,
(10.3% on a constant currency basis(1)), with growth across all fascias. In
B&M UK, our offer has resonated with customers resulting in LFL growth but
also we have seen new stores perform well. Both B&M France and Heron Foods
meanwhile continue to drive sales densities with both reaching double digit
LFL growth.
Group gross profit increased by 16.4% YoY thanks to the strong performance
across the Group. The execution of the Garden & Outdoor trading periods in
B&M UK was critical to this performance, with only limited markdowns being
carried out in General Merchandise categories.
Group adjusted EBITDA(4) (pre-IFRS 16) increased by 16.1% to £269m (H1 FY23:
£232m), representing a margin of 10.5% (H1 FY23: 10.0%). We saw inflationary
pressure in our cost base, particularly following minimum wage changes, but
these were managed effectively by each of the fascias.
Group adjusted operating profit(4) increased by 19.1% moving in line with the
above. Overall depreciation and amortisation grew by 5.1% due to the continued
investment across the store estate, with 30 net more stores across the Group
YoY.
B&M UK
In the B&M UK fascia(2) business, total revenues increased by 8.1% to
£2,045m (H1 FY23: £1,892m), with LFL(3) revenues up 6.2%. We started well in
Q1, with LFL sales growth of 9.2%. LFL growth slowed in Q2 to 3.1% following
the strong start and hindered by the unseasonal weather over the summer. Our
LFL growth reflects a strong increase in customer transaction numbers and an
increased basket value. Our balanced sales mix between FMCG and General
Merchandise remains intact and in line with our expectations.
B&M UK's statutory gross profit margin increased by 233 bps to 36.8% from
34.5%, due to the sell-through driven by Q1 trading resulting in limited
markdown activity requirement in Q2. Trading gross margin(5) was 36.1%, up 114
bps year on year from 34.9%, with the growth in statutory gross margin
mitigated chiefly by the inclusion of foreign exchange impacts, principally in
respect of the prior period, which are recorded in statutory administration
costs.
There were 13 gross new stores openings in H1. Most of our store openings for
the financial period are H2 weighted and we remain on track to open no fewer
than 35 new stores in this financial period.
In addition to revenue generated in-store, B&M UK revenues also included
£15m of wholesale revenues (H1 FY23: £17m), the majority of which
represented sales made to our associate Centz Retail Holdings Limited, a chain
of 53 variety goods stores in the Republic of Ireland.
Adjusted EBITDA(4) (pre-IFRS 16) increased by 16.6% to £233m (H1 FY23:
£200m), with margin increasing by 83 bps to 11.4% (H1 FY23: 10.6%), from the
gross profit margin expansion described above, partially offset by foreign
exchange losses related to stock bought for future resale. Operating costs
(excluding foreign exchange) were well managed holding at 25.0% of revenues
compared to 25.5% in the prior year.
Statutory profit before interest and tax for the period was £235m (H1 FY23:
£221m).
B&M France
In France, revenues increased by 26.1% to £232m (H1 FY23: £184m). This
reflects the continual improvement of the range and in particular the
strengthening of the FMCG offer and also the clear focus on store standards
that resulted in an improvement in sales densities.
The business is still on track to open 10 new stores by the end of the
financial period, with 5 opened in H1 FY24.
Adjusted EBITDA(4) (pre-IFRS 16) remained flat at £18m (H1 FY23: £18m)
representing an adjusted EBITDA(4) margin of 7.8% compared to 9.6% as reported
in the prior year and an underlying margin of 7.3% in that comparative period.
This underlying comparative excludes c.£5m of one-off government support
received at the start of the prior period.
Statutory profit before interest and tax for the period was £25m (H1 FY23:
£19m).
Heron Foods
Our discount convenience offering, Heron Foods, generated revenues of £272m,
up 17.0% (H1 FY23: £233m). Our LFL growth reflects a pleasing increase in
customer transaction numbers and an increased basket value.
Heron opened 10 gross new stores in the period, on track for 20 at the end of
the financial period.
Adjusted (pre-IFRS 16) EBITDA(4) increased by 26.7% to £18m (H1 FY23: £14m)
representing a sector-leading margin of 6.6% (H1 FY23: 6.1%).
Statutory profit before interest and tax for the period was £15m (H1 FY23:
£9m).
Cashflow, capital expenditure and leverage
Cash generated from operations was £352m (H1 FY23: £370m), a decrease of
4.7% YoY reflecting a normalised first-half working capital movement with
inventory build-up ahead of our golden quarter remaining tightly controlled.
We will continue to maintain our cash discipline in the second half, with
working capital growth expected to be less than revenue growth, subject to any
payment timing variances from the 53 week financial year.
Group net capital expenditure, excluding IFRS 16 right-of-use asset additions,
was £48m (H1 FY23: £45m). This included £18m spent on 28 new stores opened
in the first half across the Group (H1 FY23: £16m on 21 stores), £13m on
maintenance works (<1% of H1 revenues) to ensure that our existing store
estate and warehouses are appropriately invested (H1 FY23: £22m), and a total
of £17m on infrastructure projects and opportunistic freehold acquisitions,
which includes the consideration with respect of the Wilko transaction, to
support the continued growth of the business (H1 FY23: £7m).
The Group has operated with net debt in a range of 1.0x - 1.5x since FY20. We
remain comfortable with this range and believe it balances cost of capital
efficiency with maintaining our strategic flexibility and level of resilience
beneath our hard leverage ceiling of 2.25x EBITDA. Where we have no superior
alternative use of our capital we will use special dividends to keep us
operating within this 1.0x - 1.5x leverage range. Net debt(7) to
last-twelve-months adjusted EBITDA(4) (pre-IFRS 16) is at 1.1x at the end of
H1 FY24 (H1 FY23: 1.3x), at the lower end of our target range. We will
review our capital allocation and special dividend approach at the end of the
key Golden Quarter trading period.
Dividend
An interim dividend of 5.1p(6) per Ordinary Share will be paid on 15 December
2023 to shareholders on the register at 17 November 2023. The ex-dividend date
will be 16 November 2023. The dividend payment will be subject to a deduction
of Luxembourg withholding tax of 15%.
Shareholders and Depository Interest holders can obtain further information on
the methods of receiving their dividends on our website or by visiting the
website of our Registrar, Capita Asset Services at www.capitashareportal.com
(http://www.capitashareportal.com) .
Future change of our key profit measure
The Group intends to use adjusted operating profit for future guidance, rather
than adjusted EBITDA (pre-IFRS 16). For the current year, we will reference
adjusted EBITDA (pre-IFRS 16), given it is the metric used in prior guidance
and is the basis of targets in the current year's management incentive
programme. For at least the next financial year, we will continue to report
EBITDA (pre-IFRS 16) but will reduce its prominence.
Adjusted operating profit incorporates the effects of IFRS 16 and management
believes it is a fair measure of underlying trading performance in a period.
Further commentary on adjusted items and reconciliation to statutory figures
can be found in notes 2 and 3 of the financial statements.
Fascia H1 FY24 H1 FY24
Adjusted EBITDA(2,4) (pre-IFRS 16): Ad
ju
st
ed
op
er
at
in
g
pr
of
it
(2
,4
):
Profit Margin % Profit Margin %
(£m)
(£m)
B&M UK 233 11.4% 228 11.2%
B&M France 18 7.8% 20 8.7%
Heron Foods 18 6.6% 15 5.5%
Group 269 10.5% 263 10.3%
Principal risks and uncertainties
The principal risks and uncertainties faced by the Group remain those as set
out on page 26 to 33 of our Annual Report and Financial Statement 2023: supply
chain; competition; economic environment; regulation and compliance;
international expansion; warehouse infrastructure; IT systems, cyber security
and business continuity; key management reliance; store expansion and stock
management.
Recognising the progress that the Group has made in increasing the resilience
of its distribution network and its controls over stock, the Board currently
expects in May 2024 to consolidate the description of the 'warehouse
infrastructure' and 'stock management' risks into a broadened supply chain
risk. The Board separately continues to monitor the political environment
and increases in political intervention and regulation ahead of an anticipated
2024 general election; the outcome of this general election and the extent of
any further political interventions could also increase the risks facing the
Group.
Mike Schmidt
Chief Financial Officer
8 November 2023
Condensed Consolidated Statement of Comprehensive Income
26 weeks ended
23 September 2023 26 weeks ended 52 weeks ended
24 September 25 March
2022 2023
Note £'m £'m £'m
Revenue 2 2,549 2,309 4,983
Cost of sales (1,608) (1,501) (3,182)
Gross profit 941 808 1,801
Administrative expenses (666) (560) (1,265)
Operating profit 3 275 248 536
Share of profit/(loss) of investments in associates - 1 (1)
Profit on ordinary activities before interest and tax 275 249 535
Finance costs on lease liabilities (32) (29) (61)
Other finance costs (22) (19) (40)
Finance income 1 0 2
Profit on ordinary activities before tax 222 201 436
Income tax expense 5 (58) (44) (88)
Profit for the period 164 157 348
Other comprehensive income for the period
Items that may be subsequently reclassified to profit or loss:
Exchange differences on retranslation of subsidiaries and associates (1) 6 5
Fair value movements recorded in the hedging reserve 1 85 28
Tax effect of other comprehensive income (2) (10) 5
Total other comprehensive income (2) 81 38
Total comprehensive income for the period 162 238 386
Earnings per share
Basic earnings attributable to ordinary equity holders (pence) 4 16.4 15.7 34.8
Diluted earnings attributable to ordinary equity holders (pence) 4 16.3 15.7 34.7
All profit and other comprehensive income is attributable to the owners of the
parent.
The accompanying accounting policies and notes form an integral part of these
condensed consolidated financial statements.
Condensed Consolidated Statement of Financial Position
Note 23 September 2023 24 September 2022
£'m £'m 25 March
Assets 2023
£'m
Non-current
Goodwill 921 922 921
Intangible assets 124 122 120
Property, plant and equipment 383 375 380
Right-of-use assets 1,052 1,052 1,056
Investments accounted for using the equity method 8 9 8
Other receivables 5 6 6
Deferred tax asset 27 26 30
2,520 2,512 2,521
Current
Cash and cash equivalents 224 223 237
Inventories 856 837 764
Trade and other receivables 103 72 52
Other current financial assets 12 108 1
Income tax receivable 15 - 12
1,210 1,240 1,066
Total assets 3,730 3,752 3,587
Equity
Share capital 6 (100) (100) (100)
Share premium (2,480) (2,478) (2,478)
Retained earnings (171) (162) (104)
Hedging reserve (4) (58) 3
Legal reserve (10) (10) (10)
Merger reserve 1,979 1,979 1,979
Foreign exchange reserve (9) (11) (10)
(795) (840) (720)
Non-current liabilities
Interest-bearing loans and borrowings 7 (873) (951) (873)
Lease liabilities (1,128) (1,139) (1,124)
Deferred tax liabilities (44) (39) (43)
Provisions (4) (5) (3)
(2,049) (2,134) (2,043)
Current liabilities
Interest-bearing loans and borrowings 7 (43) (1) (81)
Trade and other payables (644) (590) (541)
Lease liabilities (182) (172) (177)
Other financial liabilities (3) - (13)
Income tax payable (7) (7) (6)
Provisions (7) (8) (6)
(886) (778) (824)
Total liabilities (2,935) (2,912) (2,867)
Total equity and liabilities (3,730) (3,752) (3,587)
The accompanying accounting policies and notes form an integral part of this
financial information. The condensed financial statements were approved by the
Board of Directors on 8 November 2023 and signed on their behalf by:
A. Russo, Chief Executive Officer.
Condensed Consolidated Statement of Changes in Shareholders' Equity
Share capital Share Retained Hedging Legal Merger Foreign Total
premium earnings reserve reserve reserve exchange Share-
reserve holders'
equity
£'m £'m £'m £'m £'m £'m £'m £'m
Balance at 26 March 2022 100 2,476 121 13 10 (1,979) 5 746
Ordinary dividend payments to owners - - (115) - - - - (115)
Effect of share options 0 2 (1) - - - - 1
Total for transactions with owners 0 2 (116) - - - - (114)
Profit for the period - - 157 - - - - 157
Other comprehensive income - - - 75 - - 6 81
Total comprehensive income for the period - - 157 75 - - 6 238
Hedging gains & losses reclassified as inventory - - - (30) - - - (30)
Balance at 24 September 2022 100 2,478 162 58 10 (1,979) 11 840
Allocation to legal reserve - - (0) - 0 - - -
Declaration of interim dividend - - (50) - - - - (50)
Special dividend payments to owners - - (201) - - - - (201)
Effect of share options - - 2 - - - - 2
Total for transactions with owners - - (249) - - - - (249)
Profit for the period - - 191 - - - - 191
Other comprehensive income - - - (42) - - (1) (43)
Total comprehensive income for the period - - 191 (42) - - (1) 148
Hedging gains & losses reclassified as inventory - - - (19) - - - (19)
Balance at 25 March 2023 100 2,478 104 (3) 10 (1,979) 10 720
Ordinary dividend payments to owners - - (96) - - - - (96)
Effect of share options 0 2 (1) - - - - 1
Total for transactions with owners 0 2 (97) - - - - (95)
Profit for the period - - 164 - - - - 164
Other comprehensive income - - - (1) - - (1) (2)
Total comprehensive income for the period - - 164 (1) - - (1) 162
Hedging gains & losses reclassified as inventory - - - 8 - - - 8
Balance at 23 September 2023 100 2,480 171 4 10 (1,979) 9 795
The accompanying accounting policies and notes form an integral part of these
consolidated financial statements.
Condensed Consolidated Statement of Cash Flows
52 weeks ended 25 March
26 weeks ended 26 weeks ended 2023
23 September 2023 24 September 2022
Note £'m £'m £'m
Cash flows from operating activities
Cash generated from operations 8 352 370 866
Income tax paid (58) (42) (84)
Net cash flows from operating activities 294 328 782
Cash flows from investing activities
Purchase of property, plant and equipment (43) (47) (93)
Purchase of intangible assets (6) (3) (5)
Proceeds from the sale of property, plant and equipment 1 5 9
Finance income received 1 0 2
Net cash flows from investing activities (47) (45) (87)
Cash flows from financing activities
Receipt of Group revolving credit facilities 7 40 - -
Repayment of old bank loan facilities 7 (300) - -
Receipt of new bank loan facilities 7 225 - -
Net repayment of Heron bank facilities - (3) (3)
Net repayment of French bank facilities 7 (2) (2) 0
Fees on refinancing 7 (3) - -
Repayment of the principal in relation to right-of-use assets (71) (69) (168)
Payment of interest in relation to right-of-use assets (32) (29) (61)
Other finance costs paid (21) (17) (36)
Dividends paid to owners of the parent (96) (115) (366)
Net cash flows from financing activities (260) (235) (634)
Effects of exchange rate changes on cash and cash equivalents (0) 2 3
Net (decrease)/increase in cash and cash equivalents (13) 50 64
Cash and cash equivalents at the beginning of the period 237 173 173
Cash and cash equivalents at the end of the period 224 223 237
Cash and cash equivalents comprise:
Cash at bank and in hand 224 223 237
Overdrafts - - -
224 223 237
Notes to the financial information
1 General information and basis of preparation
The results for the first half of the financial year have not been audited and
are prepared on the basis of the accounting policies set out in the Group's
last set of consolidated accounts released by the ultimate controlling party,
B&M European Value Retail S.A. (the "company"), a company listed on the
London Stock Exchange and incorporated in Luxembourg.
The financial information has been prepared in accordance with the Disclosure
and Transparency Rules of the Financial Conduct Authority (DTR) and with
International Accounting Standard (IAS) 34 'Interim Financial Reporting' as
endorsed by the European Union.
The Group's trade is general retail, with trading taking place in the UK and
France.
The principal accounting policies have remained unchanged from the prior
financial information for the Group for the period to 25 March 2023.
The financial statements for B&M European Value Retail S.A. for the period
to 25 March 2023 have been reported on by the Group auditor and delivered to
the Luxembourg Registrar of Companies. The audit report was unqualified.
The consolidated financial statements are presented in pounds sterling and all
values are rounded to the nearest million (£'m), except when otherwise
indicated.
This consolidated financial information does not constitute statutory
financial statements.
Basis of consolidation
This Group financial information consolidates the financial information of the
company and its subsidiary undertakings, together with the Group's share of
the net assets and results of associated undertakings, for the period from 26
March 2023 to 23 September 2023. Acquisitions of subsidiaries are dealt with
by the acquisition method of accounting. The results of companies acquired are
included in the consolidated statement of comprehensive income from the
acquisition date.
Control is achieved when the Group is exposed, or has rights, to variable
returns from its involvement with the investee and has the ability to affect
those returns through its power over the investee.
Specifically, the Group controls an investee if and only if the Group has:
· Power over the investee (i.e. existing rights that give it the current
ability to direct the relevant activities of the investee)
· Exposure, or rights, to variable returns from its involvement with the
investee, and
· The ability to use its power over the investee to affect its returns
When the Group has less than a majority of the voting or similar rights of an
investee, the Group considers all relevant facts and circumstances in
assessing whether it has power over an investee, including:
· The contractual arrangement with the other vote holders of the
investee
· Rights arising from other contractual arrangements
· The Group's voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control. Consolidation of a subsidiary begins when the Group
obtains control over the subsidiary and ceases when the Group loses control of
the subsidiary. Assets, liabilities, income and expenses of a subsidiary
acquired or disposed of during the year are included in the statement of
comprehensive income from the date the Group gains control until the date the
Group ceases to control the subsidiary, excluding the situations as outlined
in the basis of preparation.
Going concern
As a value retailer, the Group is well placed to withstand volatility within
the economic environment. The Group's forecasts and projections, taking into
account reasonably possible changes in trading performance, show that the
Group will trade within its current banking facilities.
After making enquiries, including preparing cash flow forecasts for at least
12 months from the date of approval of these financial statements, the
Directors are confident that the Group has adequate resources to continue its
successful growth.
In the prior year, the Group fully re-financed its term loan and RCF
facilities, totalling £455m, for a new £225m term loan and a £225m RCF
maturing in March 2028, with two one-year extension options. The Group also
maintained its £400m bond maturing in July 2025 and its £250m bond maturing
in November 2028.
There have been no significant post balance sheet changes to liquidity and the
current inflationary pressures do not have a material impact on this
assessment as the Group is well placed to absorb or pass on these costs given
our position as a low-cost retailer.
Consequently, the Directors are confident that the Group and Company will have
sufficient funds to continue to meet its liabilities as they fall due for at
least 12 months from the date of approval of the financial statements and
therefore have prepared the financial statements on a going concern basis.
Accordingly, the Directors continue to adopt the going concern basis in
preparing these financial statements.
Critical judgments and key sources of estimation uncertainty
There are no significant changes to the items listed in the 2023 Annual
Report.
2 Segmental information
IFRS 8 ('Operating segments') requires the Group's segments to be identified
on the basis of internal reports about the components of the Group that are
regularly reviewed by the chief operating decision maker to assess performance
and allocate resources across each reporting segment.
The chief operating decision maker has been identified as the executive
directors who monitor the operating results of the retail segments for the
purpose of making decisions about resource allocation and performance
assessment.
For management purposes, the Group is organised into three operating segments,
UK B&M, UK Heron and France B&M segments comprising the three
separately operated business units within the Group.
Items that fall into the corporate category, which is not a separate segment
but is presented to reconcile the balances to those presented in the main
statements, include those related to the Luxembourg or associate entities,
Group financing, corporate transactions, any tax adjustments and items we
consider to be adjusting (see note 3).
The average euro rate for translation purposes was €1.1566/£ during the
period, with the period end rate being €1.1507/£ (March 2023: €1.1581/£
and €1.1360; September 2022: €1.1759/£ and €1.1228/£ respectively).
26 week period to 23 September 2023 UK UK France Corporate
B&M Heron B&M Total
£'m £'m £'m £'m £'m
Revenue 2,045 272 232 - 2,549
EBITDA (note 3) 324 26 39 10 399
Depreciation and amortisation (94) (11) (19) - (124)
PBIT 230 15 20 10 275
Net finance expense (23) (1) (7) (22) (53)
Income tax (charge)/credit (53) (4) (3) 2 (58)
Segment profit/(loss) 154 10 10 (10) 164
Total assets 3,001 281 386 62 3,730
Total liabilities (1,543) (122) (287) (983) (2,935)
Capital expenditure* (37) (6) (6) - (49)
26 week period to 24 September 2022 UK UK France Corporate
B&M Heron B&M Total
£'m £'m £'m £'m £'m
Revenue 1,892 233 184 - 2,309
EBITDA (note 3) 287 20 34 27 368
Depreciation and amortisation (91) (11) (17) - (119)
PBIT 196 9 17 27 249
Net finance expense (23) (1) (6) (18) (48)
Income tax charge (35) (2) (3) (4) (44)
Segment profit 138 6 8 5 157
Total assets 2,944 290 375 143 3,752
Total liabilities (1,500) (122) (281) (1,009) (2,912)
Capital expenditure* (41) (5) (4) - (50)
52 week period to 25 March 2023 UK UK France Corporate Total
B&M Heron B&M
£'m £'m £'m £'m £'m
Revenue 4,067 485 431 - 4,983
EBITDA (note 3) 680 41 76 (20) 777
Depreciation and amortisation (182) (22) (38) - (242)
PBIT 498 19 38 (20) 535
Net finance expense (45) (3) (11) (40) (99)
Income tax (charge)/credit (87) (3) (6) 8 (88)
Segment profit/(loss) 366 13 21 (52) 348
Total assets 2,856 295 385 51 3,587
Total liabilities (1,443) (119) (277) (1,028) (2,867)
Capital expenditure* (77) (11) (10) - (98)
* Capital expenditure includes both tangible and intangible capital
Adjusted operating profit by segment is equal to the profit on ordinary
activities before interest and tax (PBIT) figures given above by segment,
except with the adjusted corporate loss of £2m (September 2022: <£1m,
March 2023: £1m) included in the UK B&M segment.
UK UK France Total
B&M Heron B&M
£'m £'m £'m £'m
26 week period to 23 September 2023 228 15 20 263
26 week period to 24 September 2022 195 9 17 221
52 week period to 25 March 2023 497 19 38 554
Revenue is disaggregated geographically as follows:
Period to 26 weeks ended 26 weeks ended 52 weeks ended
23 September 2023 24 September 2022 25 March
2023
£'m £'m £'m
Revenue due to UK operations 2,317 2,125 4,552
Revenue due to French operations 232 184 431
Overall revenue 2,549 2,309 4,983
Non-current assets (excluding deferred tax) are disaggregated geographically
as follows:
As at 23 September 2023 24 September 2022 25 March
2023
£'m £'m £'m
UK operations 2,246 2,237 2,240
French operations 239 240 243
Luxembourg operations 8 9 8
Overall 2,493 2,486 2,491
The Group operates small wholesale operations and previously operated online
in the FY23 financial year, with the relevant disaggregation of revenue as
follows:
Period to 26 weeks ended 26 weeks ended 52 weeks ended
23 September 2023 24 September 2022 25 March
2023
£'m £'m £'m
Revenue due to sales made in stores 2,534 2,289 4,940
Revenue due to wholesale activities 15 17 37
Revenue due to online activities - 3 6
Overall revenue 2,549 2,309 4,983
3 Reconciliation of non-IFRS measures from the statement of
comprehensive income
The Group reports a selection of alternative performance measures as detailed
below. The Directors believe that these measures provide additional
information that is useful to the users of the accounts.
EBITDA, adjusted EBITDA, adjusted operating profit and adjusted profit are
non-IFRS measures and therefore we provide a reconciliation of these amounts
to the statement of comprehensive income below.
Period to 26 weeks ended 26 weeks ended 52 weeks ended
23 September 2023 24 September 2022 25 March
2023
£'m £'m £'m
Profit on ordinary activities before interest and tax 275 249 535
Add back depreciation and amortisation 124 119 242
EBITDA 399 368 777
Reverse the fair value impact of derivatives yet to mature (12) (28) 17
Online project costs - - 2
Foreign exchange on intercompany balances 0 0 0
Adjusted EBITDA 387 340 796
Depreciation and amortisation (124) (119) (242)
Adjusted operating profit 263 221 554
Interest costs related to lease liabilities (32) (29) (61)
Net other finance costs (21) (19) (38)
Adjusted profit before tax 210 173 455
Adjusted tax (55) (35) (91)
Adjusted profit for the period 155 138 364
Adjusted EBITDA (pre-IFRS 16), adjusted operating profit (pre-IFRS 16) and
adjusted profit (pre-IFRS 16) are calculated as follows. These are the
statements of adjusted profit that excludes the effects of IFRS 16.
Period to 26 weeks ended 26 weeks ended 52 weeks ended
23 September 2023 24 September 2022 25 March
2023
£'m £'m £'m
EBITDA (above) 399 368 777
Remove effects of IFRS 16 on EBITDA (118) (108) (223)
EBITDA (pre-IFRS 16) 281 260 554
Adjusting items (above) (12) (28) 19
Adjusted EBITDA (pre-IFRS 16) 269 232 573
Pre-IFRS 16 depreciation and amortisation (40) (35) (76)
Adjusted operating profit (pre-IFRS 16) 229 197 497
Net other finance costs (21) (19) (38)
Adjusted profit before tax (pre-IFRS 16) 208 178 459
Adjusted tax (53) (34) (93)
Adjusted profit for the period (pre-IFRS 16) 155 144 366
Net finance costs reconcile to finance costs in the statement of comprehensive
income as follows:
Period to 26 weeks ended 26 weeks ended 52 weeks ended
23 September 2023 24 September 2022 25 March
2023
£'m £'m £'m
Other finance costs from the statement of comprehensive income (22) (19) (40)
Finance income from the statement of comprehensive income 1 0 2
Net other finance costs (21) (19) (38)
The tables below give the breakdowns of EBITDA and EBITDA (pre-IFRS 16) by
segment:
26 week period to 23 September 2023 UK UK France
B&M Heron B&M Total
£'m £'m £'m £'m
Adjusted EBITDA 322 26 39 387
Remove effects of IFRS 16 on EBITDA (89) (8) (21) (118)
Adjusted EBITDA (pre-IFRS 16) 233 18 18 269
26 week period to 24 September 2022 UK UK France
B&M Heron B&M Total
£'m £'m £'m £'m
Adjusted EBITDA 285 20 35 340
Remove effects of IFRS 16 on EBITDA (85) (6) (17) (108)
Adjusted EBITDA (pre-IFRS 16) 200 14 18 232
52 week period to 25 March 2023 UK UK France
B&M Heron B&M Total
£'m £'m £'m £'m
Adjusted EBITDA 679 42 75 796
Remove effects of IFRS 16 on EBITDA (177) (12) (34) (223)
Adjusted EBITDA (pre-IFRS 16) 502 30 41 573
Segmental adjusted EBITDA is the same as segmental EBITDA given in note 2,
except with the adjusted corporate loss of £2m (September 2022: <£1m,
March 2023: £1m) included in the B&M segment.
Adjusting items are the effects of derivatives, one-off refinancing fees,
foreign exchange on the translation of intercompany balances and the effects
of revaluing or unwinding balances related to the acquisition of subsidiaries.
Significant project costs or gains or losses arising from unusual
circumstances or transactions may also be included if incurred, as they have
been in the prior year, recognising the loss incurred from the online trading
trial which had ceased by the previous year end date of 25 March 2023.
Adjusted tax represents the tax charge per the statement of comprehensive
income as adjusted only for the effects of the adjusting items detailed above.
All adjusting items are considered to relate to the corporate segment.
Adjusted EBITDA and related measures are not measures of performance or
liquidity under IFRS and should not be considered in isolation or as a
substitute for measures of profit, or as an indicator of the Group's operating
performance or cash flows from operating activities as determined in
accordance with IFRS.
4 Earnings per share
Basic earnings per share amounts are calculated by dividing the net profit for
the financial period attributable to ordinary equity holders of the parent by
the weighted average number of ordinary shares outstanding at each period end.
Diluted earnings per share amounts are calculated by dividing the net profit
attributable to ordinary equity holders of the parent by the weighted average
number of ordinary shares outstanding during each year plus the weighted
average number of ordinary shares that would be issued on conversion of any
dilutive potential ordinary shares into ordinary shares.
Adjusted (and adjusted (pre-IFRS 16)) basic and diluted earnings per share are
calculated in the same way as above, except using adjusted profit attributable
to ordinary equity holders of the parent, as defined in note 3.
There are share option schemes in place which have a dilutive effect on all
periods presented. The increase in the number of shares used in the
calculation of the basic earnings per share is due to the exercise of some of
these options.
The following reflects the income and share data used in the earnings per
share computations:
Period to 23 September 2023 24 September 2022 25 March
2023
£'m £'m £'m
Profit for the period attributable to owners of the parent 164 157 348
Adjusted profit for the period attributable to owners of the parent 155 138 364
Adjusted (pre-IFRS 16) profit for the period attributable to owners of the 155 144 366
parent
Thousands Thousands Thousands
Weighted average number of ordinary shares for basic earnings per share 1,002,004 1,001,331 1,001,593
Dilutive effect of employee share options 2,554 1,986 1,730
Weighted average number of ordinary shares adjusted for the effect of dilution 1,004,558 1,003,317 1,003,323
Pence Pence Pence
Basic earnings per share 16.4 15.7 34.8
Diluted earnings per share 16.3 15.7 34.7
Adjusted basic earnings per share 15.5 13.8 36.3
Adjusted diluted earnings per share 15.4 13.8 36.2
Adjusted (pre-IFRS 16) basic earnings per share 15.5 14.4 36.5
Adjusted (pre-IFRS 16) diluted earnings per share 15.4 14.4 36.5
5 Taxation
The continuing tax charge for the interim period has been calculated on the
basis of the corporation tax rate for the full year of 25% (UK) and 25%
(France) and then adjusted for allowances and non-deductibles in line with the
prior year (March 2023 and September 2022: 19% UK and 25% France).
6 Share capital
Nominal value Number of shares
Allotted, called up and fully paid £'m
B&M European Value Retail S.A. Ordinary shares of 10p each;
At 26 March 2022 100 1,001,226,836
Shares issued due to exercise of employee share options 0 626,899
At 24 September 2022 and 25 March 2023 100 1,001,853,735
Shares issued due to exercise of employee share options 0 901,904
At 23 September 2023 100 1,002,755,639
Ordinary Shares
Each ordinary share ranks pari passu with each other ordinary share and each
share carries one vote.
In addition to the issued share capital, the company has an authorised but
unissued share capital of 2,969,466,583 ordinary shares.
The outstanding share options can be summarised as follows:
23 September 2023 24 September 2022 25 March
2023
Vested, available to exercise - - -
Not vested, not subject to conditions (in holding) 1,610,253 1,487,106 1,644,749
Not vested, subject to conditions 2,487,416 1,767,452 2,499,574
Total outstanding share options 4,097,669 3,254,558 4,144,323
For the dilutive effect of these see note 4.
7 Financial liabilities - borrowings
23 September 2023 24 September 2022 25 March
2023
£'m £'m £'m
Current
Revolving credit facility 40 - -
Term facility bank loan - - 78
France other loan facilities 3 1 3
43 1 81
Non-current
High yield bond notes 647 646 646
Term facility bank loan 220 297 219
France loan facilities 6 8 8
873 951 873
Extension of senior loan facilities
During the prior period, the Group completed an extension of its term facility
bank loan.
The previous £300m term facility was drawn down in July 2020 with £4m of
fees capitalised into the balance at that time. The agreement included a
revolving facility of £155m and was due to mature in April 2025.
This was extended with new facilities totalling £450m due to mature in April
2028. These comprise a term loan of £225m and a revolving facility of £225m
and the agreement also includes the availability of two 1-year extension
terms, subject to mutual consent with the banking syndicate.
An assessment was made by management with the conclusion that the transaction
represents an extension and not a significant modification. More details of
which are contained in our previous Annual Report.
As such, the remaining £2m of unamortised capitalised fees have remained on
the balance sheet and will be amortised over the extended term. There were
£3m of fees associated with the extension which have also been capitalised
into the loan balance.
Loan details
The French loan facilities are held in Euros. All other borrowings are held in
sterling.
The term facility bank loan and high yield bonds have a book value lower than
the cash amount that is outstanding due to the allocation of fees to these
facilities on their inception.
The current applicable interest rates, gross cash debt and maturities on the
Group's loans are as follows:
Interest rate Maturity 23 September 24 September 25 March
2023 2022 2023
% £'m £'m £'m
Revolving credit facility 1.75% + SONIA Oct-23 40 - -
Term facility bank loan A 2.00% + SONIA N/A - - 75
Term facility bank loan A 2.00% + SONIA Apr-28 225 300 225
High yield bond notes (2020) 3.625% Jul-25 400 400 400
High yield bond notes (2021) 4.00% Nov-28 250 250 250
B&M France - BNP Paribas 0.75-3.50% Sep 24-Feb 28 3 1 3
B&M France - Caisse d'Épargne 0.75-2.60% Aug 24-Nov 29 2 1 2
B&M France - CIC 0.71-0.75% Sep 24-Jan 27 1 2 2
B&M France - Crédit Agricole 0.39-0.81% Sep 25-Jan 28 1 1 1
B&M France - Crédit Lyonnais 0.68-0.74% Nov 24-Mar 27 2 4 3
B&M France - Société Générale 0.63% N/A - 0 0
924 959 961
The revolving facility of £225m is committed until April 2028.
The term loan A and the high yield bond notes have carrying values which
include transaction fees allocated on inception.
The Group measures net debt as the total of the gross cash borrowed less the cash held on the statement of financial position:
23 September 2023 24 September 2022 25 March
2023
£'m £'m £'m
Interest bearing loans and borrowings 924 959 961
Less: Cash and short-term deposits - overdrafts (224) (223) (237)
Net debt 700 736 724
8 Reconciliation of profit before tax to cash generated from
operations
26 weeks ended 26 weeks ended 52 weeks ended
23 September 2023 24 September 2022 25 March
2023
£'m £'m £'m
Profit before tax 222 201 436
Adjustments for:
Net interest expense 53 48 99
Depreciation of property, plant and equipment 39 34 71
Depreciation of right-of-use assets 84 84 167
Impairment of right-of-use assets 0 0 2
Amortisation of intangible assets 1 1 4
Gain on sale and leaseback - (1) (1)
Loss/(gain) on disposal of property, plant and equipment 0 (0) (1)
Charge on share options 2 1 3
Change in inventories (84) 32 103
Change in trade and other receivables (51) (21) 1
Change in trade and other payables 96 21 (30)
Change in provisions 2 (1) (6)
Share of (profit)/loss from associates - (1) 1
(Gain)/loss resulting from fair value of financial derivatives (12) (28) 17
Cash generated from operations 352 370 866
9 Financial instruments
The fair value of the financial assets and liabilities of the Group are not
materially different from their carrying value. Refer to the table below.
As at 23 September 24 September 25 March
2023 2022 2023
Financial assets: £'m £'m £'m
Fair value through profit and loss
Forward foreign exchange contracts 6 37 1
Fair value through other comprehensive income
Forward foreign exchange contracts 6 71 0
Loans and receivables
Cash and cash equivalents 224 223 237
Trade receivables 11 22 11
Other receivables 27 17 10
As at 23 September 24 September 25 March
2023 2022 2023
Financial liabilities £'m £'m £'m
Fair value through profit and loss
Forward foreign exchange contracts 1 - 8
Fair value through other comprehensive income
Forward foreign exchange contracts 2 - 5
Amortised cost
Lease liabilities 1,310 1,311 1,301
Interest-bearing loans and borrowings 916 952 954
Trade payables 452 415 382
Other payables 21 9 16
Financial instruments at fair value through profit and loss
The financial assets and liabilities through profit or loss reflect the fair
value of those foreign exchange forward contracts that are intended to reduce
the level of risk for expected sales and purchases.
The forward foreign exchange and fuel derivative contracts have been valued by
the issuing bank, using a mark to market method. The bank has used various
inputs to compute the valuations, and these include inter alia the relevant
maturity date strike rates and the current exchange rate.
The Group's financial instruments are either carried at fair value or have a
carrying value which is considered a reasonable approximation of fair value.
10 Related party transactions
The Group has transacted with the following related parties over the periods:
Multi-lines International Company Limited, a supplier, and Centz Retail
Holdings, a customer, are associates of the Group.
Ropley Properties Ltd, Triple Jersey Ltd, TJL UK Ltd, Rani Investments,
Fulland Investments Limited, Golden Honest International Investments Limited,
Hammond Investments Limited, Joint Sino Investments Limited and Ocean Sense
Investments Limited, all landlords of properties occupied by the Group, and
Rani 1 Holdings Limited, Rani 2 Holdings Limited and SSA Investments,
bondholders and beneficial owners of equipment hired to the Group, are
directly or indirectly owned by the recently retired director Simon Arora, his
family, or his family trusts (together, the Arora related parties).
There were significant related party transactions in the prior period, with
SSA Investments purchasing a total of £43m of our 4.00% corporate bonds and
£13m of our 3.625% corporate bonds in June 2022, and Simon Arora purchasing
£35m of our 3.625% corporate bonds over December 2022 and January 2023.
Purchases have been made in prior periods and the overall position is
summarised in the table below with all related party bondholders being Arora
related parties.
26 weeks ended 26 weeks ended 52 weeks ended
23 September 2023 24 September 2022 25 March
£'m £'m 2023
£'m
Simon Arora (3.625%, 2025 bonds) 35 - 35
SSA Investments (3.625%, 2025 Bonds) 13 13 13
SSA Investments (4.000%, 2028 Bonds) 99 99 99
Rani 1 Investments (3.625%, 2025 Bonds) 50 50 50
Rani 2 Investments (3.625%, 2025 Bonds) 50 50 50
Total 247 212 247
The interest expense recorded on these bonds was £5m, with £3m accrued at
the period end (September 22: £4m, £2m and March 23: £8m, £3m
respectively).
The following tables set out the total amount of trading transactions with
related parties included in the statement of comprehensive income:
26 weeks ended 26 weeks ended 52 weeks ended
23 September 2023 24 September 2022 25 March
£'m £'m 2023
£'m
Sales to associates of the Group
Centz Retail Holdings Limited 13 16 34
Total sales to related parties 13 16 34
26 weeks ended 26 weeks ended 52 weeks ended
23 September 2023 24 September 2022 25 March
£'m £'m 2023
£'m
Purchases from associates of the Group
Multi-lines International Company Ltd 104.8 90.3 193.7
Purchases from parties related to key management personnel
Fulland Investments Limited 0.1 0.2 0.2
Golden Honest International Investments Limited 0.1 0.1 0.2
Hammond Investments Limited 0.1 0.1 0.2
Joint Sino Investments Limited 0.1 0.1 0.2
Ocean Sense Investments Limited 0.1 0.2 0.2
SSA Investments - 0.1 0.1
Total purchases from related parties 105.3 91.1 194.8
The IFRS 16 Lease figures in relation to the following related parties, which
are all related to key management personnel, are as follows:
Depreciation Interest Total Right-of-use Lease Net
charge charge charge asset liability liability
£'m £'m £'m £'m £'m £'m
Period ended 23 September 2023
Rani Investments 0 0 0 1 (1) (0)
Ropley Properties 1 0 1 7 (10) (3)
TJL UK Limited 1 0 1 10 (12) (2)
Triple Jersey Limited 4 2 6 55 (67) (12)
6 2 8 73 (90) (17)
Period ended 24 September 2022
Rani Investments 0 0 0 1 (1) (0)
Ropley Properties 1 0 1 7 (11) (4)
TJL UK Limited 0 0 0 11 (13) (2)
Triple Jersey Limited 4 2 6 50 (63) (13)
5 2 7 69 (88) (19)
Period ended 25 March 2023
Rani Investments 0 0 0 1 (1) (0)
Ropley Properties 2 1 3 8 (11) (3)
TJL UK Limited 1 0 1 10 (12) (2)
Triple Jersey Limited 8 3 11 46 (57) (11)
11 4 15 65 (81) (16)
The following tables set out the total amount of trading balances with related
parties outstanding at the period end.
Trade receivables 23 September 24 September 25 March
2023 2022 2023
£'m £'m £'m
With associates of the Group:
Centz Retail Holdings Limited 4 5 2
Multi-lines International Company Ltd 0 - -
Total related party trade receivables 4 5 2
Trade payables 26 weeks ended 26 weeks ended 52 weeks ended
23 September 2023 24 September 2022 25 March
£'m £'m 2023
£'m
With associates of the Group:
Multi-lines International Company Ltd 19 22 7
With parties related to key management personnel:
Rani Investments 0 - 0
Ropley Properties Ltd 1 0 1
TJL UK Limited 0 - 1
Triple Jersey Ltd 3 0 2
Total related party trade payables 23 22 11
Outstanding trade balances at the balance sheet dates are unsecured and
interest free and settlement occurs in cash. There have been no guarantees
provided or received for any related party trade receivables or payables.
The balance with Multi-lines International Company Ltd includes $18m
(September 2022: $16m; March 2023: $nil) held within a supply chain facility.
The facility is operated by major banking partners with high credit ratings
and is limited to $50m total exposure at any one time.
The purpose of the arrangement is to enable our participating suppliers, at
their discretion, to draw down against their receivables from the Group prior
to their usual due date.
There would be no impact on the Group if the facility became unavailable and
there are no fees or charges payable by the Group in regards to this
arrangement.
As these invoices continue to be part of the normal operating cycle of the
Group, the scheme does not change the recognition of the invoices subject to
the scheme, so they continue to be recognised as trade payables, with the
associated cash flows presented within operating cash flows and without
affecting the calculation of Group net debt.
The business has not recorded any impairment of trade receivables relating to
amounts owed by related parties in any of the presented periods. This
assessment is undertaken through examining the financial position of the
related party and the market in which the related party operates.
The future lease commitments on the related party properties are:
26 weeks ended 26 weeks ended 52 weeks ended
23 September 2023 24 September 2022 25 March
£'m £'m 2023
£'m
Not later than one year 16 15 14
Later than one year and not later than two years 15 14 13
Later than two years and not later than five years 41 36 35
Later than five years 36 41 35
108 106 97
Further details regarding the Group's associates and transactions with key
management personnel are disclosed in the annual report.
11 Commitments
There are no significant capital commitments as at the half year end.
12 Post balance sheet events
An interim dividend of 5.1p per Ordinary Share will be paid on 15 December
2023.
13 Directors
The directors that served during the period were:
Peter Bamford (Chairman)
Alex Russo (CEO)
Mike Schmidt (CFO)
Ron McMillan
Tiffany Hall
Paula MacKenzie
Oliver Tant
Hounaїda Lasry (appointed 22 September 2023)
Simon Arora (until 21 April 2023)
Carolyn Bradley (until 25 July 2023)
All directors served for the whole period except where indicated above.
DIRECTORS' RESPONSIBILITIES STATEMENT
We confirm that to the best of our knowledge:
· The condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted for use in the
EU;
· The Interim Management Report includes a fair review of the information
required by:
a. DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first 26 weeks of
the financial period and their impact on the condensed set of interim
financial statements; and a description of the principal risks and
uncertainties for the remaining 26 weeks of the reporting period; and
b. DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first 26 weeks of the current
financial period and that have materially affected the financial position or
performance of the entity during that period; and any changes in the related
party transactions described in the last annual report that could do so.
By order of the Board
Alex Russo
Chief Executive Officer
8 November 2023
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