REG - B&M European - Half-year Report <Origin Href="QuoteRef">BMEB.L</Origin> - Part 2
15/11/2016 07:06
- Part 2: For the preceding part double click ID:nRSO1514Pa
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
Viability and going concern statements have been made in the Principal risks
and uncertainties section of the annual report for the period to 26 March
2016.
Since this date there has been a period of volatility with regard to exchange
rates following the referendum on the United Kingdom's membership of the
European Union.
With respect to this the directors have reviewed the assumptions and results
of the viability testing carried out, and have judged that the events do not
have a significant impact on the statements previously made.
On this basis, the directors have determined that it is appropriate to
continue to use the going concern basis for production of this financial
report.
Financial instruments
The Group has altered their policy on financial instruments since the year
end, with the intention of applying hedge accounting to qualifying
derivatives. The new policy is as follows, and this has been in place since
the start of the financial year.
The Group uses derivative financial instruments such as forward currency
contracts, fuel swaps and interest rate swaps to reduce its foreign currency
risk, commodity price risk and interest rate risk.
Derivative financial instruments are recognised at fair value. The fair value
is derived using an internal model and supported by valuations by third party
financial institutions.
Where a derivative financial instrument is designated as a hedge of the
variability in cash flows of a recognised asset or liability, or a highly
probable forecast transaction, the effective part of any gain or loss on the
derivative financial instrument is recognised directly in the hedging reserve.
Any ineffective portion of the hedge is recognised immediately in the income
statement. Effectiveness of the derivatives subject to hedge accounting is
assessed at inception of the derivative, when the derivative matures and at
each reporting period end date between.
When a hedging instrument expires or is sold, terminated or exercised, or the
entity revokes designation of the hedge relationship but the hedged forecast
transaction is still expected to occur, the cumulative gain or loss at that
point remains in equity and is recognised in accordance with the above policy
when the transaction occurs. If the hedged transaction is no longer expected
to take place, the cumulative unrealised gain or loss recognised in equity is
recognised in the income statement immediately
Critical judgments and key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation
uncertainty at the reporting date, that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within
the next financial year, are described below. The Group based its assumptions
and estimates on parameters available when the financial information was
prepared. Existing circumstances and assumptions about future developments,
however, may change due to market changes or circumstances arising beyond the
control of the Group. Such changes are reflected in the assumptions when they
occur.
Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit
exceeds its recoverable amount, which is the higher of its fair value less
costs to sell and its value in use.
The fair value less costs to sell calculation is based on available data from
binding sales transactions, conducted at arm's length for similar assets or
observable market prices less incremental costs for disposing of the asset.
The value in use calculation is based on a discounted cash flow model. The
cash flows are derived from the budget for the next five years and do not
include restructuring activities that the Group is not yet committed to or
significant future investments that will enhance the performance of the CGU
being tested.
The recoverable amount is most sensitive to the discount rate used for the
discounted cash flow model as well as the expected future cash inflows and the
growth rate used for extrapolation purposes. The key assumptions used to
determine the recoverable amount for the different CGUs, including a
sensitivity analysis, have been disclosed in the company's annual report.
Investments in Associates
Multi-lines International Company Ltd (Multi-lines), which is 50% owned by the
Group, has been considered by management to be an associate rather than a
subsidiary or a joint venture. Under IFRS 10 control is determined by:
· Power over the investee.
· Exposure, or rights, to variable returns from its involvement with the
investee.
· The ability to use its power over the investee to affect the amount of
the investor's returns.
Although 50% owned, B&M Group does not have voting rights or substantive
rights. Therefore the level of power over the business is considered to be
more in keeping with that of an associate than a joint-venture, and hence it
has been treated as such within these consolidated financial statements.
Put/call options on Jawoll non-controlling interest
The purchase agreement for Jawoll in April 2014 included call and put options
over the shares not purchased by the Group, representing 20% of Jawoll. The
options are arranged such that it is considered likely that either the call or
put option will be taken at the exercise date in 2019.
The exercise price of the options contain a variable element and as such the
risk and rewards of the options are considered to remain with the
non-controlling interest. The purchase of the non-controlling interest will be
recognised upon exercise of one of the options.
A financial liability has been recognised carried at amortised cost to
represent the expected exercise price, with the corresponding debit entry to
the put/call option reserve. Management have estimated the future measurement
inputs in arriving at this value, using knowledge of current performance,
expected growth and planned strategy. Any subsequent movements in the
liability will be recognised in profit or loss.
Standards and interpretations applied and not yet applied by the Group
The following amendments to accounting standards and interpretations, issued
by the International Accounting Standards Board (IASB), have been adopted for
the first time by the Group in the period with no significant impact on its
consolidated results or financial position:
· Annual Improvements to IFRSs 2012-2014 Cycle
· Amendments to IAS 1 'Disclosure Initiative'
· Amendments to IAS 16 and IAS 38 'Clarification of acceptable methods of
depreciation and amortisation'
· Amendments to IAS 27 'Equity method in separate financial statements'
IFRS 9 'Financial Instruments' will be applicable after 1 January 2018. This
standard will simplify the classification of financial assets for measurement
purposes, but it is not anticipated to have a significant impact on financial
statements.
IFRS 15 'Revenue from contracts with customers' will be applicable after 1
January 2018. This standard applies to all contracts with customers except
those that are financial instruments, leases or insurance contracts and will
result in increased disclosure requirements, but is not expected to have a
significant impact on the financial statements.
IFRS 16 Leases is expected to be applicable after 1 January 2019. If endorsed,
this standard will significantly affect the presentation of the Group
financial statements with all leases apart from short term leases being
recognised as on-balance sheet finance leases with a corresponding liability
being the present value of lease payments. The Group is currently considering
the implications of IFRS 16 on the Group's consolidated results and financial
position.
The Group does not consider that any other standards, amendments or
interpretations issued by the IASB, but not yet applicable, will have a
significant impact on the financial statements.
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.
For management purposes, the Group is organised into two reportable segments,
being the UK retail segment and the German retail 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.
The average euro rate for translation purposes was E1.2262 during the period,
with the period end rate being E1.1552 (March 2016: E1.3677/£ and E1.2670;
September 2015: E1.3888/£ and E1.3486/£ respectively)
26 week period to 24 September 2016 UK Retail Germany Retail Corporate Total
£'000 £'000 £'000 £'000
Revenue 1,016,998 88,858 - 1,105,856
Gross profit 350,752 32,610 - 383,362
EBITDA 89,755 7,623 (1,646) 95,732
Interest received 99 13 62 174
Interest expense - (129) (9,824) (9,953)
Income tax expense (15,853) (1,750) 2,574 (15,029)
Segment profit/(loss) 63,414 4,083 (8,836) 58,661
Total assets 1,408,479 122,616 18,139 1,549,234
Total liabilities (252,604) (24,466) (514,778) (791,848)
Other disclosures:
Capital expenditure (including intangible) (21,021) (4,022) - (25,043)
Depreciation and amortisation (10,587) (1,674) (2) (12,263)
Share of profit of associates - - - -
Investment in associates accounted for by the equity method - - 3,995 3,995
26 week period to 26 September 2015 UK Retail Germany Retail Corporate Total
£'000 £'000 £'000 £'000
Revenue 861,731 68,588 - 930,319
Gross profit 295,492 25,081 - 320,573
EBITDA 75,038 7,272 5,004 87,314
Interest received 107 - 120 227
Interest expense (8) (73) (11,261) (11,342)
Income tax expense (13,399) (1,764) 1,215 (13,948)
Segment profit/(loss) 53,597 3,545 (4,356) 52,786
Total assets 1,414,328* 94,373 10,911 1,519,612*
Total liabilities (266,407)* (15,415) (485,080) (766,902)*
Other disclosures:
Capital expenditure (including intangible) (30,271) (1,914) (15) (32,200)
Depreciation and amortisation (8,141) (1,321) (3) (9,465)
Share of profit of associates - - - -
Investment in associates accounted for by the equity method - - 3,822 3,822
*These figures have been restated, as explained more fully in note 1.
52 week period to 26 March 2016 UK Retail Germany Retail Corporate Total
£'000 £'000 £'000 £'000
Revenue 1,902,557 132,728 - 2,035,285
Gross profit 652,775 50,247 - 703,022
EBITDA 182,035 11,588 2,461 196,084
Interest received 170 13 277 460
Interest expense (51) (162) (21,360) (21,573)
Income tax expense (32,877) (2,636) 6,768 (28,745)
Segment profit/(loss) 131,509 6,150 (11,859) 125,800
Total assets 1,450,936 104,636 9,331 1,564,903
Total liabilities (247,490) (19,577) (483,486) (750,553)
Other disclosures:
Capital expenditure (including intangible) (51,760) (4,935) (18) (56,713)
Depreciation and amortisation (17,768) (2,653) (5) (20,426)
Share of profit of associates - - 1,166 1,166
Investment in associates accounted for by the equity method - - 3,995 3,995
3 Reconciliation of EBITDA from the statement of comprehensive
income
EBITDA and adjusted EBITDA are non-IFRS measures and therefore we provide a
reconciliation to the statement of comprehensive income below.
The adjusting items that are used in the calculation of adjusted EBITDA have
been specified in greater detail (as those items adjusting administrative
costs) in note 4.
Period to 26 weeks ended 24 September 2016 26 weeks ended 26 September 2015 52 weeks ended 26 March 2016
£'000 £'000 £'000
Profit for the period 58,661 52,786 125,800
Add back
Tax expense 15,029 13,948 28,745
Finance costs 9,953 11,342 21,573
Finance income (174) (227) (460)
Depreciation & amortisation 12,263 9,465 20,426
EBITDA 95,732 87,314 196,084
Adjusting items (see note 4) 3,501 (742) 6,387
Adjusted EBITDA 99,233 86,572 202,471
Adjusted EBITDA and related measures are not a measurement 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 Adjusted profit and loss statement
Period to 26 weeks ended 24 September 2016 26 weeks ended 26 September 2015 52 weeks ended 26 March 2016
£'000 £'000 £'000
Revenue 1,105,856 930,319 2,035,285
Cost of sales (722,494) (609,746) (1,332,263)
Gross profit 383,362 320,573 703,022
Administrative expenses (296,392) (243,466) (522,143)
Add back depreciation and amortisation 12,263 9,465 20,426
Share of profits of investments in associates - - 1,166
Adjusted EBITDA 99,233 86,572 202,471
Depreciation and amortisation (12,263) (9,465) (20,426)
Adjusted profit before interest and tax 86,970 77,107 182,045
Finance costs (9,189) (10,773) (20,850)
Finance income 111 107 183
Adjusted profit before tax 77,892 66,441 161,378
Income tax expense (15,827) (13,794) (29,884)
Adjusted profit and total comprehensive income 62,065 52,647 131,494
Attributable to non-controlling interests 972 860 1,364
Attributable to owners of the parent 61,093 51,787 130,130
The following table shows the detailed listing of adjusting items:
Period to 26 weeks ended 24 September 2016 26 weeks ended 26 September 2015 52 weeks ended 26 March 2016
£'000 £'000 £'000
Adjustments to administrative expenses
Fees related to the IPO - - (770)
Fees associated with the acquisition of Knüller (452) - -
New store pre-opening costs (3,250) (4,497) (7,573)
Foreign exchange movements on intercompany balances 55 (83) (198)
One off items related to the Group's property estate 924 (132) (1,322)
Fair value adjustments to foreign exchange and fuel derivatives (1,164) 5,568 3,577
Other items which management considered one off in nature 386 (114) (101)
Total adjustments to administrative expenses (3,501) 742 (6,387)
Adjustments to finance costs and income
Fair value adjustments on interest swap derivatives 63 120 277
Unwinding of the option held over the minority interest of Jawoll (764) (569) (723)
Total adjustments to finance costs and income (701) (449) (446)
Adjustments to income tax
Adjustments relating to items adjusting administrative costs 811 (130) 1,194
Adjustments relating to items adjusting finance costs and income (13) (24) (55)
Total adjustments to income tax 798 (154) 1,139
Other comprehensive income
Differences relating to retranslation of Group entities 6,923 981 5,505
Net movement of derivatives through the hedging reserve 11,626 - -
Actuarial change in the defined benefit pension liability - - 5
Tax effect of other comprehensive income (2,325) - 13
Total adjustments to other comprehensive income 16,224 981 5,523
Adjusting items are exceptional and non-trading items considered by the
directors to not be incurred in the usual underlying running of the trade of
the Group. The directors consider the adjusted figures to be a more accurate
reflection of the underlying business performance of the Group and believe
that this measure provides additional useful information for investors on the
Group's performance, as well as being consistent with how business performance
is monitored internally.
Adjusting items include expenses relating to new acquisitions, special
projects and restructuring expenses (such as IPO, refinancing, maintaining
ownership structures), pre-opening new store costs, provisions for onerous
leases, regulatory investigations or fines, dilapidation provisions,
compulsory purchase order income, foreign exchange gains/(losses), fair value
gains/(losses) on derivatives, other comprehensive income items, unwinding
interest on items not directly related to the trade of the business,
impairment on non-financial assets, profit/(loss) on fixed assets disposal and
the estimated tax effect of these items.
5 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 basic and diluted earnings per share are calculated on the same basis
except using the adjusted profit or loss attributable to the equity holders of
the parent.
There are no dilutive potential ordinary shares at the period end. There are
share option schemes in place which have had a dilutive effect on the
comparative periods, and whilst the majority of these are still outstanding at
the period end, they are no longer considered to be dilutive.
The following reflects the income and share data used in the basic and diluted
earnings per share computations:
Period to 24 September 2016 26 September 2015 26 March 2016
£'000 £'000 £'000
Profit for the period attributable to ordinary equity holders of the Group 57,844 51,963 124,536
Adjusted profit for the period attributable to ordinary equity holders of the Group 61,093 51,787 130,130
Thousands Thousands Thousands
Weighted average number of ordinary shares for basic loss per share 1,000,000 1,000,000 1,000,000
Effect of dilution:
Employee share options - 479 475
Weighted average number of ordinary shares adjusted for the effect of dilution 1,000,000 1,000,479 1,000,475
Pence Pence Pence
Basic earnings per share 5.8 5.2 12.5
Diluted earnings per share 5.8 5.2 12.4
Adjusted basic earnings per share 6.1 5.2 13.0
Adjusted diluted earnings per share 6.1 5.2 13.0
6 Taxation
The taxation charge for the interim period has been calculated on the basis of
the corporation tax rate for the full year of 20% (UK) and 30% (Germany) and
then adjusted for allowances and non-deductibles in line with the prior year.
7 Intangible assets
Goodwill Software Brands Other Total
£'000 £'000 £'000 £'000 £'000
Cost or valuation
At 28 March 2015 835,258 1,372 98,053 1,263 935,946
Additions - 1,145 - - 1,145
Effect of retranslation 379 4 59 17 459
At 26 September 2015 835,637 2,521 98,112 1,280 937,550
Additions - 656 - - 656
Disposals - (76) - - (76)
Effect of retranslation 1,813 22 284 83 2,202
At 26 March 2016 837,450 3,123 98,396 1,363 940,332
Additions - 836 1,200 - 2,036
Additions due to Knüller acquisition 1,284 - - - 1,284
Effect of retranslation 2,978 38 454 132 3,602
At 24 September 2016 841,712 3,997 100,050 1,495 947,254
Accumulated amortisation / impairment
At 28 March 2015 - 586 - 407 993
Charge for the period - 211 - 171 382
Effect of retranslation - 3 - 11 14
At 26 September 2015 - 800 - 589 1,389
Charge for the period - 205 - 113 318
Disposals - (54) - - (54)
Effect of retranslation - 12 - 43 55
At 28 March 2016 - 963 - 745 1,708
Charge for the period - 225 - 109 334
Effect of retranslation - 23 - 79 102
At 24 September 2016 - 1,211 - 933 2,144
Net book value at 24 September 2016 841,712 2,786 100,050 562 945,110
Net book value at 26 March 2016 837,450 2,160 98,396 618 938,624
Net book value at 26 September 2015 835,637 1,721 98,112 691 936,161
An impairment review was carried out over the Goodwill and Brand assets at 26
March 2016. Details of these reviews are included in the Group statutory
accounts. A full review will also take place at the next year end date of 25
March 2017.
Due to the nature of the business acquired, management consider it appropriate
not to recognise any intangible assets other than goodwill.
8 Property, plant and equipment
Land and buildings Motor Vehicles Plant, fixtures and equipment Total
£'000 £'000 £'000 £'000
Cost or valuation
28 March 2015 27,214 3,223 95,445 125,882
Additions 3,367 237 27,451 31,055
Disposals - (329) (51) (380)
Effect of retranslation 219 5 100 324
26 September 2015 30,800 3,136 122,945 156,881
Additions 3,126 892 19,839 23,857
Disposals (270) (526) (275) (1,071)
Effect of retranslation 1,094 23 473 1,590
26 March 2016 34,750 3,525 142,982 181,257
Additions 1,968 432 20,607 23,007
Additions due to Knüller acquisition - - 41 41
Remeasurement of finance leases 2,468 - - 2,468
Disposals (839) (484) (70) (1,393)
Effect of retranslation 1,948 39 935 2,922
24 September 2016 40,295 3,512 164,495 208,302
Accumulated depreciation
At 28 March 2015 4,932 1,377 17,750 24,059
Charge for the period 1,636 358 7,089 9,083
Disposals - (170) (35) (205)
Effect of retranslation 28 1 28 57
At 26 September 2015 6,596 1,566 24,832 32,994
Charge for the period 1,799 374 8,470 10,643
Disposals - (395) (281) (676)
Effect of retranslation 128 5 113 246
At 26 March 2016 8,523 1,550 33,134 43,207
Charge for the period 1,891 359 9,679 11,929
Disposals (18) (268) (49) (335)
Effect of retranslation 247 9 235 491
24 September 2016 10,643 1,650 42,999 55,292
Net book value at 24 September 2016 29,652 1,862 121,496 153,010
Net book value at 26 March 2016 26,227 1,975 109,848 138,050
Net book value at 26 September 2015 24,204 1,570 98,113 123,887
9 Share capital
24 September2016 26 September2015 26 March2016
Allotted, called up and fully paid £'000 £'000 £'000
B&M European Value Retail S.A.
1,000,000,000 ordinary shares of 10p each 100,000 100,000 100,000
Ordinary Shares
Each ordinary share ranks pari passu with each other ordinary share and each
share carries one vote. The Group parent is authorised to release up to a
maximum of 2,972,222,222 ordinary shares.
10 Financial liabilities - borrowings
24 September 2016 26 September 2015 26 March 2016
£'000 £'000 £'000
Current
Term facility bank loans - - -
Revolving facility bank loan 25,000 - -
25,000 - -
Non-current
Term facility bank loans 435,834 434,450 435,142
All borrowings are held in Sterling. The term facility bank loans are held at
amortised cost and were initially capitalised in June 2014 with £7.3m of fees
attributed to them.
The maturities of the above loan facilities are as follows:
InterestRate Maturity 24 September2016 26 September2015 26 March2016
% £'000 £'000 £;000
Current
Revolving Facility loan 2.75% + LIBOR Oct-2016 25,000 - -
25,000 - -
Non-Current
UK Holdco term loan A 2.75% + LIBOR Jun-2019 300,000 300,000 300,000
UK Holdco term loan B 3.25% + LIBOR Jun-2020 140,000 140,000 140,000
440,000 440,000 440,000
11 Reconciliation of loss before tax to cash generated from
operations
26 weeks ended 24 September 2016 26 weeks ended 26 September 2015 52 weeks ended 26 March 2016
£'000 £'000 £'000
Profit before tax 73,690 66,734 154,545
Adjustments for:
Interest expense 9,779 11,115 21,113
Depreciation 11,929 9,083 19,726
Amortisation of intangible assets 334 382 700
Transaction fees through administrative expenses - - 770
(Profit) / loss on disposal of property, plant and equipment (456) 82 52
(Profit) / loss on remeasurement of finance leases (308) - -
Charge on share options 151 114 235
Change in inventories (9,735) (96,810)* (67,184)
Change in trade and other receivables (16,143) 2,518* 7,855
Change in trade and other payables 6,539 56,419* 37,153
Change in provisions (587) (51) 312
Share of profit from associates - - (1,166)
Non-cash foreign exchange effect from retranslation of subsidiary cashflows 396 109 400
Unrealised (profit)/loss resulting from fair value of financial derivatives 2,085 (5,569) (3,577)
Cash generated from operations 77,674 44,126 170,934
*These figures have been restated, as explained more fully in note 1.
12 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 24 September2016 26 September2015 26 March2016
Financial Assets £'000 £'000 £'000
Fair value through profit and loss
Fuel price swap 180 127 -
Forward foreign exchange contracts 13,705 6,400 4,769
Loans and receivables
Cash and cash equivalents 14,306 32,819 91,148
Trade receivables 19,925 8,792* 7,775
Other receivables 271 1,821 344
Financial Liabilities
Fair value through profit and loss
Forward foreign exchange contracts - - 307
Fuel price swap - 137 63
Interest rate swap - 274 117
Put/call options over the non-controlling interest of Jawoll 18,405 14,924 16,041
Amortised cost
Interest-bearing loans and borrowings 435,834 434,450 435,142
Trade payables 138,420 180,819* 141,577
Other payables 1,901 2,357 7,813
*These figures have been restated, as explained more fully in note 1.
Financial Instruments at fair value through profit and loss
The put/call options over the non-controlling interest in Jawoll arose as part
of the acquisition of the entity in April 2014. The valuation here reflects
the final estimated valuation unwound to the period end date, and exchanged at
the period end foreign exchange rate, as the options are priced in Euros. The
options mature in 2019 and the carrying value has been discounted to present
value.
The other financial assets and liabilities through profit or loss reflect the
fair value of those foreign exchange forward contracts, interest rate swaps
and fuel swaps that are not designated as hedge relationships but are
nevertheless intended to reduce the level of risk for expected sales and
purchases.
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair
value of financial instruments by valuation technique:
· Level 1 : quoted (unadjusted) prices in active markets for identical
assets or liabilities
· Level 2 : Other techniques for which all inputs which have a significant
effect on the recorded fair value are observable, either directly or
indirectly
· Level 3 : Techniques which use inputs that have a significant effect on
the recorded fair value that are not based on observable market data
As at the reporting dates, the Group held the following financial instruments
carried at fair value on the balance sheet:
Total Level 1 Level 2 Level 3
£'000 £'000 £'000 £'000
24 September 2016
Foreign exchange contracts 13,705 - 13,705 -
Fuel swap contract 180 - 180 -
Put/call options on Jawoll non-controlling interest (18,405) - - (18,405)
26 September 2015
Foreign exchange contracts 6,400 - 6,400 -
Interest rate swaps (274) - (274) -
Fuel swap contract (asset) 127 - 127 -
Fuel swap contract (liability) (137) - (137) -
Put/call options on Jawoll non-controlling interest (14,924) - - (14,924)
26 March 2016
Foreign exchange contracts 4,462 - 4,462 -
Interest rate swaps (117) - (117) -
Fuel swap contract (63) - (63) -
Put/call options on Jawoll non-controlling interest (16,041) - - (16,041)
The put/call option was valued with reference to the Sale and Purchase
Agreement underpinning the acquisition, and the key variable in determining
the fair value of the option, the forecast EBITDA of Jawoll (which is
subsequently discounted to present value) as prepared by management.
The other instruments 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 and strike rates, the
current exchange rate, fuel prices and LIBOR levels.
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.
13 Related party transactions
There have been no changes in the related-party transactions described in the
last annual report of B&M European Value Retail S.A. that have had a material
effect on the financial position or performance of the Group in the six months
ended 24 September 2016.
The Group has entered into material related party transactions over the
current 26-week period with the following party, Multi-lines International
Company Ltd (Multi-lines), a supplier, which is an associate of the Group.
26 weeks ended 24 September 2016£'000 26 weeks ended26 September 2015£'000 52 weeks ended26 March2016£'000
Purchases from associates
Multi-lines 38,649 33,914* 98,105
The following table sets out the total amount of trading balances with
Multi-lines outstanding at the period end. The net debtor balance represents a
deposit on account.
24 September 2016£'000 26 September 2015£'000 28 March 2016 £'000
Trade receivables from associates
Multi-lines 5,846 9,675* 546
*These figures have been restated, as explained more fully in note 1.
Outstanding trade balances at the balance sheet date 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.
14 Post balance sheet events
An interim dividend of 1.9pence per share (£19,000,000) has been proposed.
There have been no other material events between the balance sheet date and
the date of issue of these accounts.
15 Directors
The directors that served throughout the period were:
Name
Sir T Leahy (Chairman)
S Arora (CEO)
P McDonald (CFO)
T Hübner
R McMillan
K Guion
H Brouwer
D Novak
Statement of Directors' Responsibilities
The Directors confirm that these condensed interim financial statements have
been prepared in accordance with International Accounting Standard 34,
'Interim financial reporting', as adopted by the European Union and that the
interim management report includes a fair review of the information required
by DTR 4.2.7R and DTR 4.2.8R, namely:
(a) an indication of important events that have occurred during the first 26
weeks and their impact on the condensed set of financial statements, and a
description of the principal risks and uncertainties for the remaining 26
weeks of the financial year; and
(b) material related-party transactions in the first 26 weeks and any material
changes in the related-party transactions described in the last annual report
of B&M European Value Retail S.A.
By order of the Board
Simon Arora Paul McDonald
Chief Executive Chief Financial Officer
15 November 2016 15 November 2016
Report of the Réviseur d'Entreprises agréé
on the review of condensed consolidated interim financial information
Introduction
We have reviewed the accompanying condensed consolidated statement of
financial position of B&M European Value Retail S.A. as at 24 September 2016,
the related condensed consolidated statements of comprehensive income, changes
in equity and cash flows for the 26 week period then ended, and notes to the
interim financial information ("the condensed consolidated interim financial
information"). The Board of Directors is responsible for the preparation and
presentation of these condensed consolidated interim financial information in
accordance with IAS 34 "Interim Financial Reporting" as adopted by the
European Union. Our responsibility is to express a conclusion on these
condensed consolidated interim financial information based on our review.
Scope of Review
We conducted our review in accordance with the International Standard on
Review Engagements 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" as adopted, for Luxembourg, by the
Institut des Réviseurs d'Entreprises. A review of interim financial
information consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing and consequently does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the accompanying condensed consolidated interim financial
information as at 24 September 2016 is not prepared, in all material respects,
in accordance with IAS 34 "Interim Financial Reporting" as adopted by the
European Union.
Other matter
The condensed consolidated interim financial information of B&M European Value
Retail S.A. as at 26 September 2015, which is used as comparative information
in the condensed consolidated interim financial information of B&M European
Value Retail S.A. as at 24 September, 2016, was reviewed by the predecessor
auditor who expressed a clean review conclusion on 17 November, 2015.
Luxembourg, November 15, 2016 KPMG Luxembourg
Société coopérative
Cabinet de révision agréé
Thierry Ravasio
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