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RNS Number : 8959F B&M European Value Retail S.A. 10 November 2022
10 November 2022
B&M European Value Retail S.A.
FY23 Interim Results Announcement
Solid underlying growth in a tough environment
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
24 September 2022.
HIGHLIGHTS
· Group revenues increased by 1.8% on prior year to £2,309m (+1.9%
constant currency(1)). This represents a step up in Q2 sales, which rose by
6.3% compared to a (2.3)% decline in Q1. Momentum has continued into Q3
· Group adjusted EBITDA(4) of £232m and margin of 10.0% on a pre-IFRS16
basis versus £282m and margin of 12.4% in the prior year, driven by the
reduction in gross margin but a strong increase compared to the pre-pandemic
adjusted EBITDA figure in HY1 FY20 of £151m and margin of 8.5%. Current year
group adjusted EBITDA on a post-IFRS16 basis was £340m versus £385m in the
previous year
· Group cash generated from operations was £370m (H1 FY22: £201m), year
on year ("YoY") growth of 83.3% reflecting planned stock reductions and strong
inventory controls
· B&M UK fascia(2) revenue decreased by (0.9)% on prior year, with
like-for-like(3) ("LFL") revenues decreasing by (3.9)%. However, Q2 LFLs were
up 2.0%, compared with a decline of (9.1)% in Q1, which was affected by the
strong seasonal sales in Q1 in the previous year. Q2 3-year LFL increased by
14.4% with strong transaction numbers
· B&M UK adjusted EBITDA(4) % decreased to 10.6% (H1 FY22: 13.5%),
which was driven by the trading gross margin % reduction of 213 bps(8),
largely due to higher markdowns in the gardening category resulting from the
late arrival of warm weather
· Total gross new store openings in in H1 FY23 for B&M UK were 10,
4 in France and 7 in Heron. New space is performing well and store standards
continue to strengthen
· Strong strategic and financial progress in France as sales
increased by 18.2%, with all stores now under the B&M banner and adjusted
EBITDA(4) of £18m (9.6% of sales) versus £11m in H1 FY22 (7.3% of sales).
The business continues to build strong operational momentum
· Strong operational and financial progress in Heron Foods as sales
increased by 14.6% as consumers were attracted to our convenience discount
stores. Adjusted EBITDA(4) of £14m (6.1% of sales) versus £13m in H1 FY22
(6.6% of sales)
· Group statutory operating profit was £249m (H1 FY22: £283m),
statutory profit before tax was £201m (H1 FY22: £241m) and statutory diluted
earnings per share was 15.7p (H1 FY22: 19.0p)
· An interim dividend(5) of 5.0p per Ordinary Share will be paid on 16
December 2022, which is at the same level as the previous financial year
· Net debt to adjusted EBITDA leverage ratio (pre-IFRS16) at 1.3x
remaining comfortably below our previously stated ceiling of 2.25x. Strong
cash generation and low leverage provides the Group with flexibility
· Trading has been good in the first six weeks of the Golden Quarter,
with LFL sales up 2.5% in B&M UK stores and strong sell-through in
non-grocery categories. We confirm previous guidance given of £550m - £600m
Group adjusted EBITDA(4), significantly ahead of the pre-pandemic level of
£342m in FY20
Alex Russo, Chief Executive, said,
"Sales momentum is good as we enter a difficult period for the economy and
consumers. Our value-based approach is winning with existing and new
customers, and we will do our very best to help them weather the
cost-of-living crisis. We are well positioned as we trade through the Golden
Quarter and our strategy remains unchanged - a relentless focus on price and
product.
I would like to personally thank Simon Arora for his leadership of B&M. He
and his brother Bobby have built an exceptional business and the team will
continue to build on Simon's legacy. We see four drivers of long-term growth:
i) Existing Stores: We see potential for improving sales in existing
stores, by continuing to improve store standards, by refining product mix and
by emphasising our value for money credentials. Consumers are under pressure
from inflation, falling real earnings and rising interest rates, but we are
well positioned to help new and existing customers.
ii) New Stores. We confirm our long-term target of 950 stores in the UK,
which would represent an additional 35% more stores. Although new store
openings have slowed during and since COVID, we retain a healthy pipeline and
there are a significant number of localities in the United Kingdom where
B&M is not represented at all.
iii) France: Our business in France offers excellent long term growth
potential - through new stores and through improving the offer as the business
adopts B&M best practice and the B&M supply chain. With just 111
stores in a country with a population similar in size to the UK, medium to
long term growth potential is high.
iv) Heron Foods: During tough times consumers seek out value offerings and
stores with limited ranges. This helps consumers manage their budgets, and in
this environment Heron Foods (along with our B&M fascia stores) is
particularly well positioned as a discount convenience store.
We plan for an ongoing long term operating margin higher than pre-pandemic
levels. During lockdown, the business demonstrated its ability to deliver
operational gearing, as overall Group sales densities and profits increased.
As sales returned to a normalised level, albeit significantly higher than
pre-lockdown, some of the margin growth and operational gearing has moderated.
The longer-term outlook remains positive for sustained margin improvement,
with cost control, efficiencies and improved processes offsetting cost
inflation.
We remain a highly cash generative business and we maintain our ceiling of
2.25x for gearing. We expect to be able to continue to return excess cash
periodically to shareholders over and above normal dividends."
H1 FY23 H1 FY22 Change
Total Group revenues £2,309m £2,268m +1.8%
B&M UK £1,892m £1,910m (0.9)%
B&M France £184m £155m +18.2%
Heron Foods £233m £203m +14.6%
Change in total group revenues at constant currency(1) - - +1.9%
Group adjusted EBITDA(4) £232m £282m (17.9)%
B&M UK £200m £258m (22.3)%
( )
B&M France £18m £11m +54.6%
( )
Heron Foods £14m £13m +5.7%
( )
( )
Group adjusted EBITDA(4) margin % 10.0% 12.4% (240) bps
Group cash generated from operations £370m £201m +83.3%
Group adjusted profit before tax(4) £178m £238m (25.3)%
Group statutory profit before tax £201m £241m (16.7)%
Adjusted diluted EPS(4) 14.4p 18.7p (23.0)%
Statutory diluted EPS 15.7p 19.0p (17.4)%
Ordinary dividends(5) 5.0p 5.0p -
Total number of stores 1,129 1,097 +2.9%
B&M UK 704 686 +2.6%
Heron Foods 314 307 +2.3%
France 111 104 +6.7%
Financial Results (unaudited)
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 includes
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 includes
both the Heron Foods fascia and B&M Express fascia convenience stores in
the UK. When reporting adjusted EBITDA, B&M UK also includes the corporate
segment as referred to in note 2 of the financial statements, and includes an
adjusted loss of <£1m (H1 FY22: 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 FY22. This 14-month
approach has been adopted as it excludes the 2-month halo period which new
stores experience following opening.
4. The Directors consider adjusted figures to be more reflective of
the underlying business performance of the Group and believe that this measure
provides additional useful information for investors on the Group's
performance. Further details can be found in notes 3 and 4. In particular,
adjusted figures exclude the impact of IFRS16, both to maintain comparability
with prior periods and as management consider that the pre-IFRS 16 measure of
rental costs is key to the operational management of the business.
5. Dividends are stated as gross amounts before deduction of
Luxembourg withholding tax which is currently 15%.
6. Net capital expenditure includes the purchase of property, plant
and equipment, intangible assets and proceeds of sale of any of those items.
These exclude IFRS16 lease liabilities.
7. Net debt comprises interest bearing loans and borrowings,
overdrafts and cash and cash equivalents. Net debt was £736m at the year end,
reflecting £959m as the carrying value of gross debt netted against £223m of
cash. See note 8 of the financial statements for more details.
8. 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, which declined 284bps from 37.3% to 34.5%, due to technical
accounting adjustments in relation to the allocation of gains and losses from
derivative accounting, storage costs and commercial income, with the
derivative adjustments the main factor. Our current Group hedging profile is
strong with a £108m asset included on the half year statement of financial
position which is in relation to our foreign exchange position that runs until
September 2023.
9. The consolidated financial statements are presented in pounds
sterling and all values are rounded to the nearest million (£'m), except when
otherwise indicated. This is the first interim report where the Group has
rounded to the nearest million (previously rounding to the nearest thousand).
In transitioning the prior year accounts, usual rounding practices have been
adhered to.
Results Presentation
An in-person presentation for analysts in relation to these FY23 Interim
Results will be held today at 09:30 am (UK) at Bank of America, 2 King Edward
St, London, EC1A 1HQ. Attendance is by invitation only.
A simultaneous live audio webcast and presentation will be available via the
B&M corporate website at
https://www.bandmretail.com/investors/presentations/year/2022
(https://www.bandmretail.com/investors/presentations/year/2022)
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 +44 (0) 207 379 5151
Sam Cartwright, Maitland
bmstores-maitland@maitland.co.uk (mailto:bmstores-maitland@maitland.co.uk)
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.
Notes to editors
B&M European Value Retail S.A. is a variety retailer with 704 stores in
the UK operating under the "B&M" brand, 314 stores under the "Heron Foods"
and "B&M Express" brands, and 111 stores in France also operating under
the "B&M" brand as at 24 September 2022. 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.bmstores.co.uk
(http://www.bmstores.co.uk)
OVERVIEW OF FY23 INTERIM RESULTS
The Group performed well throughout the first half of the financial year,
building momentum as the half progressed and providing our customers with the
best products and prices in the current environment. Group revenues for the 26
weeks ended 24 September 2022 grew by 1.8% to £2,309m and by 1.9% on a
constant currency basis(1).
In the core B&M UK business, Q1 LFL sales declined by (9.1)%, due to the
exceptionally strong seasonal performance at the start of the comparative
prior year period. Q2 LFL sales were up 2.0%, showing growing momentum as the
half progressed, which has continued into Q3.
Gross margins declined year on year with the main driver a reduction in
B&M's trading gross margin by 213 bps(8) to 34.9% from 37.0%. This
reduction is primarily driven by markdowns in the gardening category taken to
have a clean closing position. The stock position is significantly lower than
in the previous year and in the right place heading into the Golden Quarter.
On a statutory basis profit before tax declined to £201m from £241m driven
by the reduction in gross margins.
In France, total sales were up 18.2%, the strong momentum from FY22 has
carried through and it has been a strong half against the strategic and
financial objectives of the business. New store openings are performing well
and 31 out of 111 are now company operated, rather than by mandated managers.
Heron Foods performed strongly in the period, with sales up 14.6%. Our
discount convenience offering demonstrates that we can provide our customers
everyday essentials at cheaper prices than our competitors - helping ease the
pressure on many households.
Momentum builds across the first half of the year
The Group financial statements have been prepared in accordance with IFRS16,
however adjusted figures presented before the impact of IFRS16 continue to be
reported where they are relevant to understanding the performance of the
Group.
B&M UK
In the UK, the B&M fascia(2) business, total revenues declined by (0.9)%
to £1,892m (H1 FY22: £1,910m), against tough comparatives, but momentum
built across the half year with Q2 sales up 5.0%. On a one-year basis, LFL
sales decreased (3.9)%, Q2 LFLs were up 2.0% compared with the Q1 decline of
(9.1)%, which was affected by the strong seasonal comparative.
There were a total of 10 gross new stores openings in H1. The performance of
recent openings continues to be strong, with both the FY22 and H1 FY23 cohorts
delivering a higher store contribution margin than the company average. New
stores do not require a maturity period to achieve profitability, due to the
disruptive nature of the retail offer and a capital light model, making the
new store payback economics highly attractive. New store openings slowed
during the pandemic and lockdown, impacting the pipeline, but we expect this
to recover going forward.
B&M UK revenues also included £17m of wholesale revenues (H1 FY22:
£24m), the majority of which represented sales made to our associate Centz
Retail Holdings Limited, a chain of 49 variety goods stores in the Republic of
Ireland.
B&M's trading gross margin reduced by 213 bps(8) to 34.9% from 37.0%. This
reduction is primarily driven by markdowns in the gardening category taken to
have a clean closing position. Our YoY total stock position has decreased
significantly by £50m. Our current Group hedging profile is strong with a
£108m asset included on the half year statement of financial position which
is in relation to our foreign exchange position that runs until September
2023.
Operating costs excluding depreciation and amortisation increased by +7bps YoY
as a % of revenue to 23.9% from 23.8%. This was because of an increase in
store costs driven by a strategic decision to focus on store standards to
drive LFL sales, offset against foreign exchange gains made due to our strong
hedging position against the underlying spot rate. The increase in store costs
is expected to moderate in H2.
Transport and distribution costs were managed effectively as a percentage of
revenues despite the slightly negative LFL sales performance. The business
has a long-standing shipping partner for goods sourced out of Asia, with
freight rates fixed at contracted rates. Supply chain flexibility and service
levels throughout H1 remain very robust.
Adjusted EBITDA(4) decreased by (22.3)% to £200m (H1 FY22: £258m), with
adjusted EBITDA margin decreasing by 292 bps to 10.6% (H1 FY22: 13.5%), caused
primarily by the decline in gross margin. Statutory operating profit for the
period was £223m (H1 FY22: £265m).
B&M France
In France, revenues increased by 18.2% to £184m (H1 FY22: £155m). This
represented a strong performance highlighting the appeal of the product range
and continued improvement in store standards execution, with a modest increase
caused by the six week 'soft lockdown' in place at the start of the
comparative period.
Adjusted EBITDA(4) increased by 54.6% to £18m (H1 FY22: £11m), representing
an adjusted EBITDA(4) margin of 9.6%, up 225 bps YoY (H1 FY22: 7.3%).
Statutory operating profit for the period was £17m (H1 FY22: £10m).
Heron Foods
The discount convenience chain, Heron Foods, generated revenues of £233m up
14.6% (H1 FY22: £203m). As consumers look to manage their budgets, they
increasingly turn to stores with lower prices and limited ranges. Like the
B&M fascia, Heron Foods is well positioned to help consumers manage their
budgets.
Adjusted EBITDA(4) increased by 5.7% to £14m (H1 FY22: £13m) representing an
adjusted EBITDA(4) margin of 6.1%, down 52 bps YoY (H1 FY22: 6.6%). Statutory
operating profit for the period was £9m (H1 FY22: £8m).
Group
Group adjusted EBITDA(4) decreased (17.9)% to £232m (H1 FY22: £282m),
representing an adjusted EBITDA(4) margin of 10.0% (H1 FY22: 12.4%), a
reduction of 240 bps year-on-year.
Depreciation and amortisation expenses, excluding the impact of IFRS16, grew
by 10.4% to £35m (H1 FY22: £32m). This was due to continued investment in
new stores across all fascias, with 32 more stores year-on-year across the
Group at the end of H1.
The Group's adjusted profit before tax(4) decreased by (25.3)% to £178m (H1
FY22: £238m), whilst statutory profit before tax decreased by (16.7)% to
£201m (H1 FY22: £241m). The impact of IFRS16 on the Group's interim
financial statements was to decrease profit before tax by £5m.
Cashflow, capital expenditure and leverage
Cash generated from operations was £370m (H1 FY22: £201m), an increase of
83.3% YoY reflecting planned stock reductions and strong controls.
Group net capital expenditure, excluding IFRS16 right-of-use asset additions,
was £45m (H1 FY22: £43m). This included £16m spent on 21 new stores opened
in the first half across the Group (H1 FY22: £12m on 23 stores), £22m on
maintenance works to ensure that our existing store estate and warehouses are
appropriately invested (H1 FY22: £19m), and a total of £7m on infrastructure
projects and opportunistic freehold acquisitions to support the continued
growth of the business (H1 FY22: £12m).
The Group remains comfortably within its stated leverage ceiling of 2.25x,
with a net debt(7) to last-twelve-months adjusted EBITDA(4) ratio of 1.3x at
the end of H1 FY23 (H1 FY22: 1.1x), calculated on a pre-IFRS16 basis. The
current leverage and cash position continues to be evaluated in line with the
Group's capital allocation framework.
Dividend
An interim dividend of 5.0p(5) per Ordinary Share will be paid on 16 December
2022 to shareholders on the register at 18 November 2022. The ex-dividend date
will be 17 November 2022. 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 www.bandmretail.com
(http://www.bandmretail.com) or by visiting the website of our Registrar,
Capita Asset Services at www.capitashareportal.com.
Strategic performance
The macroeconomic backdrop remains highly uncertain, with the consumer
challenged by high inflation, rising interest rates and by declining
discretionary incomes. Against this backdrop we remain focused on delivering
our strategic priorities around product, price and growth and on helping
consumers weather the cost-of-living crisis. In doing so, we will deliver
against our strategic priorities and against the 4 drivers of growth outlined
earlier:
1. Growing Sales in Existing Stores
There remains considerable scope for growing sales in existing stores -
through attracting new customers from different demographics and from existing
customers increasing their spend with us, both helped by our engaging social
media presence. B&M is able to trade well in an environment where
customers are looking for value.
Whilst there are increasing numbers of people who need a bargain, everyone
likes a bargain. Over the past two years, B&M have seen a number of new
customers discover the stores and the brand. Retaining these customers is
about providing low prices and quality goods, including leading brands. Our
relentless focus on price and product will help us retain many recently won
customers.
A combination of our evolving offer, low prices and improving store standards,
against a tough consumer environment, leaves our existing stores well
positioned to increase sales densities, as evidenced with our growing momentum
through the first half.
2. New B&M Stores
We re-iterate our target of 950 stores, which represents a 35% increase in
store numbers compared to today. With our appeal widening to other
demographics, there is scope for increasing this number in the future. As it
stands, there remain significant localities in the UK, where B&M is either
under-represented or not represented at all.
In the core B&M UK business, 10 gross new stores were opened across the
UK. There were 4 closures in H1 FY23, of which 3 were relocations, meaning
that there was a net increase of 3 stores overall. The closed stores were
typically opened over a decade ago and were in catchments where a larger, more
modern store had been opened in a prior financial year and which is delivering
materially superior returns.
Looking ahead to H2 FY23, the new store pipeline should deliver 10-12 openings
in H2. With our uncompromised focus on the quality of store location and
premises, progress on the roll out in H1 has been slower than anticipated but
we expect this to recover going forward.
3. France
France is seen as a real growth area for the Group - off the back of the
successfully completed B&M rebrand exercise. We remain focussed on working
towards our long-term strategic and financial goals for the business. In the
short term, a store roll-out plan is in place with further 3 new store
openings to be completed in H2 and 10 openings planned for the next financial
year.
The rebranding has been a success with 111 stores now under the B&M
banner. Product ranges have been refined, prices sharpened and store standards
stepped up. Sales in both the grocery and non-grocery categories have
performed strongly.
The strong H1 FY23 performance and strong cash generation has demonstrated the
significant progress we have made towards achieving our long-term strategic
goals for the French business. Our strategy for France requires a clear
focus, and as such no other international geographies are currently being
evaluated to avoid any management distraction.
4. Heron Foods
Heron Foods remains a strong growth opportunity and a core part our business.
Its strong sales in the first half demonstrate how this business is well
positioned in the current environment. With only 314 stores currently, and
requiring only small catchment areas, this convenience discount chain offers
considerable scope for long term development.
Heron Foods opened 7 new stores and closed 4 stores in H1 FY23. These
closures included 3 stores that had been unprofitable since opening prior to
our acquisition, and 1 relocation. Heron Foods remains on track to achieve 15
gross new stores over the full financial year. The Heron Foods store estate
has the potential to be materially larger than its current size over the
longer term, and the Group is committed to carefully expanding its UK
footprint.
Environmental, Social & Governance
Since publishing our first standalone ESG report in June 2022 progress has
been made with our Scope 1 & 2 reduction targets, which have been
validated by SBTi, along with a Scope 3 supplier engagement target and with
developing a road map to Net Zero by 2040 using a science-based approach. We
will look to improve our data collection processes to achieve more granular
metrics and targets for both environmental and social issues, in accordance
with the Global Reporting Initiative (GRI).
Outlook
We expect full year Group adjusted EBITDA(4) to be in the range £550m -
£600m, in line with previous guidance. We are trading well into the first
six weeks of Golden Quarter, with LFL sales at B&M UK up 2.5%. This
represents a significant increase in total sales over pre-COVID levels, and is
against a backdrop of rising interest rates, increased cost inflation and
declining consumer confidence. We expect our gross margin to improve going
forwards compared to H1, helped by strong stock discipline, and not impacted
by disappointing weather patterns as at the beginning of Spring/Summer 2022.
We remain well positioned to benefit from consumers trading down in grocery
and non-grocery. As some customers experience our value for money offer for
the first time, so would we expect to retain many of these consumers into any
economic recovery. We will continue to focus on building long term
relationships and loyalty with our consumers and will not sacrifice hard-won,
long-term positioning for short term gains.
The H2 FY23 new store pipeline for B&M UK is expected to be 10-12 stores,
B&M France is on track to open 3 new stores with Heron Foods delivering an
additional 8.
Principal risks and uncertainties
There are a number of risks and uncertainties which could have a material
negative impact on the Group's performance over the remainder of the current
financial year. These could cause actual results to materially differ from
historical or expected results. The Board does not believe that these risks
and uncertainties are materially different to those published in the Annual
Report for the year ended 26 March 2022.
These risks comprise all those associated with the COVID-19 pandemic, the
disruption in the supply chain, high levels of competition, the broader
economic environment and volatile market conditions, failure to comply with
laws and regulations, inherent risks in international expansion, failure to
maintain and invest in key infrastructure, disruption to key IT systems, cyber
security and business continuity, fluctuations in commodity prices and cost
inflation, key management reliance, availability of suitable new stores and
failure of stock management controls.
Detailed explanations of these risks are set out on pages 26 to 34 of the
Annual Report 2022 which is available at
https://www.bandmretail.com/investors/presentations/year/2022
(https://www.bandmretail.com/investors/presentations/year/2022)
Alex Russo
Chief Executive Officer
9 November 2022
To the Shareholders of
B&M European Value Retail S.A.
68-70, boulevard de la Pétrusse
L-2320 Luxembourg
Luxembourg
REPORT OF THE REVISEUR D'ENTREPRISES AGREE
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
2022, the related condensed consolidated statements of comprehensive income,
changes in shareholders' equity and cash flows for the 26 week period then
ended, and notes to the interim financial information ("the condensed
consolidated interim financial information").
Board of Directors' responsibility for 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, and for
such internal control as the Board of Directors determines is necessary to
enable the preparation of condensed consolidated interim financial information
that are free from material misstatement, whether due to fraud or error.
Our responsibility is to express a conclusion on this condensed consolidated
interim financial information based on our review.
Responsibility of the Réviseur d'Entreprises Agréé
Our responsibility is to express a conclusion on these condensed consolidated
interim financial information based on our review. We conducted our review in
accordance with International Standard on Review Engagements (ISRE 2410
"Review of interim financial information performed by the independent auditor
of the entity") as adopted for Luxembourg by the "lnstitut des Réviseurs
d'Entreprises".
This standard requires us to comply with relevant ethical requirements and
conclude whether anything has come to our attention that causes us to believe
that the condensed consolidated interim financial information, taken as a
whole, are not prepared in all material respects in accordance with the
applicable financial reporting framework.
A review of condensed consolidated interim financial information in accordance
with ISRE 2410 is a limited assurance engagement. The "Réviseur d'Entreprises
Agréé" performs procedures, primarily consisting of making inquiries of
management and others within the Group, as appropriate, and applying
analytical procedures, and evaluates the evidence obtained.
The procedures performed in a review are substantially less than those
performed in an audit conducted in accordance with International Standards on
Auditing. Accordingly, we do not express an audit opinion on these condensed
consolidated interim financial information.
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 2022 is not prepared, in all material
respects, in accordance with IAS 34 "Interim Financial Reporting" as adopted
by the European Union.
Luxembourg, 9 November
2022
KPMG Luxembourg
Société anonyme
Cabinet de révision agréé
Thierry Ravasio
Condensed consolidated statement of Comprehensive Income
26 weeks ended Restated*
24 September 2022 26 weeks ended 52 weeks ended
25 September 26 March
2021 2022
Note £'m £'m £'m
Revenue 2 2,309 2,268 4,673
Cost of sales (1,501) (1,420) (2,921)
Gross profit 808 848 1,752
Administrative expenses (560) (566) (1,142)
Operating profit 248 282 610
Share of profits of investments in associates 1 1 3
Profit on ordinary activities before interest and tax 249 283 613
Finance costs on lease liabilities (29) (30) (59)
Other finance costs (19) (12) (29)
Finance income 0 0 0
Profit on ordinary activities before tax 201 241 525
Income tax expense 5 (44) (50) (103)
Profit for the period 157 191 422
Other comprehensive income for the period
Items that may be subsequently reclassified to profit or loss:
Exchange differences on retranslation of subsidiaries and associates 6 0 (2)
Fair value movements recorded in the hedging reserve 85 7 20
Tax effect of other comprehensive income (10) (3) (4)
Total other comprehensive income 81 4 14
Total comprehensive income for the period 238 195 436
Earnings per share
Basic earnings attributable to ordinary equity holders (pence) 4 15.7 19.0 42.2
Diluted earnings attributable to ordinary equity holders (pence) 4 15.7 19.0 42.1
* Other comprehensive income has been restated in 2021 to remove the effect of
the hedging gains and losses transferred to inventories. These are recorded
directly in the consolidated statement of changes in equity. See note 1.
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 24 September 2022 25 September 2021
£'m £'m 26 March
Assets 2022
£'m
Non-current
Goodwill 922 921 920
Intangible assets 122 119 120
Property, plant and equipment 375 350 363
Right-of-use assets 1,052 1,057 1,066
Investments accounted for using the equity method 9 5 8
Other receivables 6 7 7
Deferred tax asset 26 34 31
2,512 2,493 2,515
Current
Cash and cash equivalents 223 92 173
Inventories 837 887 863
Trade and other receivables 72 69 53
Other current financial assets 108 16 25
Income tax receivable - 6 9
1,240 1,070 1,123
Total assets 3,752 3,563 3,638
Equity
Share capital 7 (100) (100) (100)
Share premium (2,478) (2,476) (2,476)
Retained earnings (162) (189) (121)
Hedging reserve (58) (7) (13)
Legal reserve (10) (10) (10)
Merger reserve 1,979 1,979 1,979
Foreign exchange reserve (11) (7) (5)
(840) (810) (746)
Non-current liabilities
Interest-bearing loans and borrowings 8 (951) (699) (950)
Lease liabilities (1,139) (1,137) (1,140)
Deferred tax liabilities (39) (36) (43)
Provisions (5) (8) (4)
(2,134) (1,880) (2,137)
Current liabilities
Interest-bearing loans and borrowings 8 (1) (42) (6)
Trade and other payables (590) (644) (564)
Lease liabilities (172) (172) (170)
Other financial liabilities - - (0)
Income tax payable (7) (6) (4)
Provisions (8) (9) (11)
(778) (873) (755)
Total liabilities (2,912) (2,753) (2,892)
Total equity and liabilities (3,752) (3,563) (3,638)
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 9 November 2022 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 27 March 2021 100 2,475 128 (8) 10 (1,979) 7 733
Declaration of year end dividend - - (130) - - - - (130)
Ordinary dividend payments to owners - - - - - - - -
Special dividends declared - - - - - - - -
Effect of share options 0 1 - - - - - 1
Total for transactions with owners 0 1 (130) - - - - (129)
Profit from continuing operations - - 191 - - - - 191
Other comprehensive income (restated*) - - - 4 - - - 4
Total comprehensive income for the period - - 191 4 - - - 195
Hedging gains & losses reclassified as inventory (restated*) - - - 11 - - - 11
Balance at 25 September 2021 100 2,476 189 7 10 (1,979) 7 810
Ordinary dividend payments to owners - - - - - - - -
Declaration of interim dividend - - (50) - - - - (50)
Special dividend payments to owners - - (250) - - - - (250)
Effect of share options - - 1 - - - - 1
Total for transactions with owners - - (299) - - - - (299)
Profit from continuing operations - - 231 - - - - 231
Other comprehensive income - - - 12 - - (2) 10
Total comprehensive income for the period - - 231 12 - - (2) 241
Hedging gains & losses reclassified as inventory - - - (6) - - - (6)
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
* Other comprehensive income, total comprehensive income and hedging gains
& losses reclassified as inventory have been restated in the prior year to
remove the effect of the hedging gains and losses transferred to inventories.
These are recorded directly in the consolidated statement of changes in
equity. See note 1.
The accompanying accounting policies and notes form an integral part of these
consolidated financial statements.
Condensed consolidated statement of Cash Flows
26 weeks ended 26 weeks ended 52 weeks ended
24 September 2022 25 September 2021 26 March
2022
Note £'m £'m £'m
Cash flows from operating activities
Cash generated from operations 9 370 201 598
Income tax paid (42) (59) (107)
Net cash flows from operating activities 328 142 491
Cash flows from investing activities
Purchase of property, plant and equipment (47) (48) (96)
Purchase of intangible assets (3) (2) (4)
Proceeds from the sale of property, plant and equipment 5 7 15
Finance income received 0 0 0
Net cash flows from investing activities (45) (43) (85)
Cash flows from financing activities
Newly issued corporate bonds 8 - - 250
Net receipt of Group revolving bank loans - 20 -
Net repayment of Heron bank facilities (3) (1) (4)
Net repayment of government backed loan in France - (8) (22)
Net (repayment)/receipt of French bank facilities 8 (2) (2) 1
Repayment of the principal in relation to right-of-use assets (69) (63) (159)
Payment of interest in relation to right-of-use assets (29) (30) (59)
Fees on refinancing 8 - - (3)
Other finance costs paid (17) (12) (24)
Dividends paid to owners of the parent (115) (130) (430)
Net cash flows from financing activities (235) (226) (450)
Effects of exchange rate changes on cash and cash equivalents 2 1 (1)
Net increase/(decrease) in cash and cash equivalents 50 (126) (45)
Cash and cash equivalents at the beginning of the period 173 218 218
Cash and cash equivalents at the end of the period 223 92 173
Cash and cash equivalents comprise:
Cash at bank and in hand 223 92 173
Overdrafts - - -
223 92 173
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 26 March 2022.
The financial statements for B&M European Value Retail S.A. for the period
to 26 March 2022 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 is the first interim report where the Group has rounded to the
nearest million (previously rounding to the nearest thousand). In
transitioning the prior half year accounts, usual rounding practices have been
adhered to.
This consolidated financial information does not constitute statutory
financial statements.
Restatement of other comprehensive income
The Group has restated the other comprehensive income caption of 'fair value
movement as recorded in the hedging reserve' to exclude the amount moved to
inventories on the maturation of effective hedges as required by IFRS 9
'Financial Instruments'.
This has resulted in a decrease of £11m in other and total comprehensive
income for the prior half year. The corresponding credit to the hedging
reserve is presented in the consolidated statement of changes in equity.
There was no effect on the profit for the period, earnings per share,
consolidated statement of financial position or consolidated statement of cash
flows.
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 27
March 2022 to 24 September 2022. 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, which are
prepared through to March 2024 and take into account reasonably possible
changes in trading performance show that the Group will trade within its
current banking facilities for that period.
The forecasts have been sensitised to the recent macro-economic volatility,
including consideration of the US Dollar rate, interest rates and utility
costs, none of which were considered to have a significant impact on this
going concern statement due to the Group's existing headroom and available
mitigations.
The Group refinanced in July 2020 and the current banking facilities do not
mature until April 2025, with the current high yield bonds maturing in July
2025 and November 2028. The Group's US Dollar forward derivatives had an asset
value of £108m at the end of the half.
Accordingly, the Director's 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 2022 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 €1.1759/£ during the
period, with the period end rate being €1.1228/£ (March 2022: €1.1756/£
and €1.2009; September 2021: €1.1648/£ and €1.1673/£ respectively).
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) 200 14 18 28 260
EBITDA (IFRS 16) (note 3) 287 20 34 27 368
Depreciation and amortisation (91) (11) (17) - (119)
Net finance expense (23) (1) (6) (18) (48)
Income tax expense (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)
26 week period to 25 September 2021 UK UK France Corporate Total
B&M Heron B&M
£'m £'m £'m £'m £'m
Revenue 1,910 203 155 - 2,268
EBITDA (note 3) 258 13 11 10 292
EBITDA (IFRS 16) (note 3) 339 19 27 10 395
Depreciation and amortisation (84) (11) (17) - (112)
Net finance expense (24) (1) (6) (11) (42)
Income tax expense (43) (1) (1) (5) (50)
Segment profit/(loss) 188 6 3 (6) 191
Total assets 2,855 287 360 61 3,563
Total liabilities (1,588) (120) (257) (788) (2,753)
Capital expenditure* (39) (4) (7) - (50)
52 week period to 26 March 2022 UK UK France Corporate Total
B&M Heron B&M
£'m £'m £'m £'m £'m
Revenue 3,909 411 353 - 4,673
EBITDA (note 3) 563 23 32 13 631
EBITDA (IFRS 16) (note 3) 729 34 64 13 840
Depreciation and amortisation (170) (23) (34) - (227)
Net finance expense (48) (2) (11) (27) (88)
Income tax expense (96) (1) (5) (1) (103)
Segment profit/(loss) 415 8 14 (15) 422
Total assets 2,952 281 331 74 3,638
Total liabilities (1,513) (117) (251) (1,011) (2,892)
Capital expenditure* (80) (9) (11) - (100)
* Capital expenditure includes both tangible and intangible capital
Revenue is disaggregated geographically as follows:
Period to 26 weeks ended 26 weeks ended 52 weeks ended
24 September 2022 25 September 2021 26 March
2022
£'m £'m £'m
Revenue due to UK operations 2,125 2,113 4,320
Revenue due to French operations 184 155 353
Overall revenue 2,309 2,268 4,673
Non-current assets (excluding deferred tax) are disaggregated geographically
as follows:
As at 24 September 2022 25 September 2021 26 March
2022
£'m £'m £'m
UK operations 2,237 2,223 2,252
French operations 240 231 224
Luxembourg operations 9 5 8
Overall 2,486 2,459 2,484
The Group operates small wholesale and online operations, with the relevant
disaggregation of revenue as follows:
Period to 26 weeks ended 26 weeks ended 52 weeks ended
24 September 2022 25 September 2021 26 March
2022
£'m £'m £'m
Revenue due to sales made in stores 2,289 2,244 4,628
Revenue due to wholesale activities 17 24 45
Revenue due to online activities 3 - -
Overall revenue 2,309 2,268 4,673
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 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
24 September 2022 25 September 2021 26 March
2022
£'m £'m £'m
Profit on ordinary activities before interest and tax 249 283 613
Add back depreciation and amortisation 119 112 227
EBITDA (IFRS 16) 368 395 840
Exclude effects of IFRS 16 on administrative expenses (108) (103) (209)
EBITDA 260 292 631
Reverse the fair value effect of ineffective derivatives (28) (10) (13)
Foreign exchange on intercompany balances 0 0 1
Adjusted EBITDA 232 282 619
Pre-IFRS 16 depreciation and amortisation (35) (32) (66)
Net adjusted finance costs (see below) (19) (12) (29)
Adjusted profit before tax 178 238 524
Adjusted tax (34) (51) (107)
Adjusted profit for the period 144 187 417
All adjusted profit for the period is fully attributable to owners of the
parent.
Adjusted EBITDA (IFRS 16) and Adjusted Profit (IFRS 16) are calculated as
follows. These are the statements of adjusted profit that includes the effects
of IFRS 16.
Period to 26 weeks ended 26 weeks ended 52 weeks ended
24 September 2022 25 September 2021 26 March
2022
£'m £'m £'m
Adjusted EBITDA (above) 232 282 619
Include effects of IFRS 16 on EBITDA 108 103 209
Adjusted EBITDA (IFRS 16) 340 385 828
Depreciation and amortisation (119) (112) (227)
Interest costs related to lease liabilities (29) (30) (59)
Net adjusted other finance costs (19) (12) (29)
Adjusted profit before tax (IFRS 16) 173 231 513
Adjusted tax (35) (48) (101)
Adjusted profit for the period (IFRS 16) 138 183 412
Net adjusted finance costs reconcile to finance costs in the statement of
comprehensive income as follows:
Period to 26 weeks ended 24 September 2022 26 weeks ended 52 weeks ended 26 March
25 September 2021 2022
£'m £'m £'m
Other finance costs from the statement of comprehensive income (19) (12) (29)
Finance income from the statement of comprehensive income 0 0 0
Net adjusted finance costs (19) (12) (29)
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.
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 (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 24 September 2022 25 September 2021 26 March
2022
£'m £'m £'m
Profit for the period attributable to owners of the parent 157 191 422
Adjusted profit for the period attributable to owners of the parent 144 187 417
Adjusted (IFRS 16) profit for the period attributable to owners of the parent 138 183 412
Thousands Thousands Thousands
Weighted average number of ordinary shares for basic earnings per share 1,001,331 1,000,894 1,001,061
Dilutive effect of employee share options 1,986 1,740 1,893
Weighted average number of ordinary shares adjusted for the effect of dilution 1,003,317 1,002,634 1,002,954
Pence Pence Pence
Basic earnings per share 15.7 19.0 42.2
Diluted earnings per share 15.7 19.0 42.1
Adjusted basic earnings per share 14.4 18.7 41.6
Adjusted diluted earnings per share 14.4 18.7 41.6
Adjusted IFRS 16 basic earnings per share 13.8 18.3 41.2
Adjusted IFRS 16 diluted earnings per share 13.8 18.2 41.1
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 19% (UK) and 25%
(France) and then adjusted for allowances and non-deductibles in line with the
prior year.
6 Impairment review
Impairment reviews of the B&M UK, Heron and B&M France segments were
carried out at the year end, see the 2022 annual report for further details.
In the annual impairment review, Heron was found to have a lower level of
headroom, however, their performance in the first half of this financial year
has exceeded the performance expected in the forecast prepared for use in the
impairment review. There were also no other indicators of impairment noted.
Management therefore consider that a full additional interim impairment review
was not required.
Management have also judged that there are no identifiable triggers for a
further impairment review in any of the other segments to be carried out.
Full impairment reviews will next be carried out at the Groups next year end
date of 25 March 2023.
7 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 27 March 2021 100 1,000,819,688
Shares issued due to exercise of employee share options 0 407,148
25 September 2021 and 26 March 2022 100 1,001,226,836
Shares issued due to exercise of employee share options 0 626,899
At 24 September 2022 100 1,001,853,735
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 2,970,368,487 ordinary shares.
The outstanding share options can be summarised as follows:
24 September 2022 25 September 2021 26 March
2022
Vested, available to exercise - 112,901 105,244
Not vested, not subject to conditions (in holding) 1,487,106 712,600 745,511
Not vested, subject to conditions 1,767,452 2,282,682 2,319,878
Total outstanding share options 3,254,558 3,108,183 3,170,633
For the dilutive effect of these see note 4.
8 Financial liabilities - borrowings
24 September 2022 25 September 2021 26 March
2022
£'m £'m £'m
Current
Revolving facility bank loan - 20 -
French government backed loan facility - 13 -
France other loan facilities 1 3 3
Heron loan facilities - 6 3
1 42 6
Non-current
High yield bond notes 646 397 646
Term facility bank loan 297 297 297
France loan facilities 8 5 7
951 699 950
Bond issue
On 24 November 2021 the Group issued £250m of high yield bond notes. The
maturity date of these notes is November 2028, and they have an interest rate
of 4.00%. £56m of the bonds were purchased by a related party, see note 11
for further details.
Fees incurred totalled £3m and these were capitalised. The carrying value of
these bonds includes these fees which are amortised over the term of the
bonds.
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 24 September 25 September 26 March
2022 2021 2022
% £'m £'m £'m
Revolving facility loan 1.75% + SONIA N/A - 20 -
Term facility bank loan A 2.00% + SONIA Apr-25 300 300 300
High yield bond notes (2020) 3.625% Jul-25 400 400 400
High yield bond notes (2021) 4.00% Nov-28 250 - 250
Heron loan facilities - Melton N/A N/A - 3 3
Heron loan facilities - Term N/A N/A - 3 -
B&M France - Government Guaranteed N/A N/A - 13 -
B&M France - BNP Paribas 0.75-0.76% Jul 23-Sep 24 1 1 1
B&M France - Caisse d'Épargne 0.75-1.51% Aug 23-Oct 24 1 1 1
B&M France - CIC 0.71-1.20% Nov 22-Jan 27 2 2 3
B&M France - Crédit Agricole 0.39-0.81% Aug 23-Jan 28 1 2 1
B&M France - Crédit Lyonnais 0.68-0.74% Nov 24-Mar 27 4 1 4
B&M France - Société Générale 0.63% Jun-23 0 1 0
959 747 963
The revolving facility of £155m is committed until April 2025 in line with
the term facility.
The term loan A and the high yield bond notes have carrying values which
include transaction fees allocated on inception.
The Group transitioned from LIBOR based floating rates to SONIA based floating
rates during FY22. This has not had a material impact on the accounts.
The Group measures net debt as the total of the gross cash borrowed less the
cash held on the statement of financial position:
24 September 2022 25 September 2021 26 March
2022
£'m £'m £'m
Interest bearing loans and borrowings 959 747 963
Less : Cash and short term deposits - overdrafts (223) (92) (173)
Net debt 736 655 790
9 Reconciliation of profit before tax to cash generated from
operations
26 weeks ended 26 weeks ended 52 weeks ended
24 September 2022 25 September 2021 26 March
2022
£'m £'m £'m
Profit before tax 201 241 525
Adjustments for:
Net interest expense 48 42 88
Depreciation of property, plant and equipment 34 30 62
Depreciation of right of use assets 84 81 163
Impairment of right of use assets 0 - 2
Amortisation of intangible assets 1 1 2
Gain on sale and leaseback (1) (0) (1)
(Gain)/loss on disposal of property, plant and equipment (0) 1 1
Charge on share options 1 1 2
Change in inventories 32 (282) (260)
Change in trade and other receivables (21) (27) (12)
Change in trade and other payables 21 120 40
Change in provisions (1) 4 2
Share of profit from associates (1) (1) (3)
Gain resulting from fair value of financial derivatives (28) (10) (13)
Cash generated from operations 370 201 598
10 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 September 25 September 26 March
2022 2021 2022
Financial assets: £'m £'m £'m
Fair value through profit and loss
Forward foreign exchange contracts 37 7 9
Fair value through other comprehensive income
Forward foreign exchange contracts 71 9 16
Loans and receivables
Cash and cash equivalents 223 92 173
Trade receivables 22 22 20
Other receivables 17 15 10
As at 24 September 25 September 26 March
2022 2021 2022
Financial liabilities £'m £'m £'m
Fair value through profit and loss
Forward foreign exchange contracts - - 0
Amortised cost
Lease liabilities 1,311 1,309 1,310
Interest-bearing loans and borrowings 952 741 956
Trade payables 415 478 415
Other payables 9 7 12
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.
11 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 director Simon Arora, his family, or his
family trusts (together, the Arora related parties).
There was a significant related party transaction in the period in June 2022
as SSA Investments purchased a total of £43m of our 4.00% corporate bonds and
£13m of our 3.625% corporate bonds. Purchases have also 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
24 September 2022 25 September 2021 26 March
£'m £'m 2022
£'m
SSA Investments (3.625%, 2025 Bonds) 13 - -
SSS Investments (4.000%, 2028 Bonds) 99 56 -
Rani 1 Investments (3.625%, 2025 Bonds) 50 50 50
Rani 2 Investments (3.625%, 2025 Bonds) 50 50 50
Total 212 156 100
The interest expense recorded on these bonds was £4m, with £2m accrued at
the period end (September 21: £2m, £1m and March 22: £4m, £2m
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
24 September 2022 25 September 2021 26 March
£'m £'m 2022
£'m
Sales to associates of the Group
Centz Retail Holdings Limited 16 24 44
Total sales to related parties 16 24 44
26 weeks ended 26 weeks ended 52 weeks ended
24 September 2022 25 September 2021 26 March
£'m £'m 2022
£'m
Purchases from associates of the Group
Multi-lines International Company Ltd 90.3 137.8 279.4
Purchases from parties related to key management personnel
Fulland Investments Limited 0.2 0.1 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 0.2 0.1 0.2
SSA Investments 0.1 - 0.0
Total sales to related parties 91.1 138.3 280.4
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 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 September 2021
Rani Investments 0 0 0 1 (1) (0)
Ropley Properties 1 0 1 9 (13) (4)
TJL UK Limited 1 0 1 12 (14) (2)
Triple Jersey Limited 4 2 6 60 (75) (15)
6 2 8 82 (103) (21)
Period ended 26 March 2022
Rani Investments 0 0 0 1 (1) (0)
Ropley Properties 1 1 2 8 (11) (3)
TJL UK Limited 1 1 2 11 (13) (2)
Triple Jersey Limited 9 3 12 54 (67) (13)
11 5 16 74 (92) (18)
The following tables set out the total amount of trading balances with related
parties outstanding at the period end.
Trade receivables 24 September 25 September 26 March
2022 2021 2022
£'m £'m £'m
With associates of the Group:
Centz Retail Holdings Limited 5 8 3
Total trade receivables 5 8 3
Trade payables 26 weeks ended 26 weeks ended 52 weeks ended
24 September 2022 25 September 2021 26 March
£'m £'m 2022
£'m
With associates of the Group:
Multi-lines International Company Ltd 22 22 25
With parties related to key management personnel:
Ropley Properties Ltd 0 0 0
Triple Jersey Ltd 0 0 2
Total sales to related parties 22 22 27
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 $16m
(September 2021: $nil; March 2022: $21m) held within a supply chain facility.
The facility is operated by a major banking partner 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
24 September 2022 25 September 2021 26 March
£'m £'m 2022
£'m
Not later than one year 15 17 15
Later than one year and not later than two years 14 16 14
Later than two years and not later than five years 36 39 36
Later than five years 41 55 47
106 127 112
Further details regarding the Group's associates and transactions with key
management personnel are disclosed in the annual report.
12 Commitments
There are no significant capital commitments as at the half year end.
13 Post balance sheet events
An interim dividend of 5.0p per Ordinary Share will be paid on 16 December
2022.
14 Directors
The directors that served during the period were:
Peter Bamford (Chairman)
A Russo (CEO, from 26 September 2022, previously CFO)
S Arora (CEO to 26 September 2022)
M Schmidt (CFO, appointed 1 November 2022)
R McMillan
T Hall
C Bradley
P MacKenzie
O Tant (Appointed 1 November 2022)
Whilst Simon Arora has retired as CEO, he will continue to serve the Board as
an Executive Director until the end of his notice period in April 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
9 November 2022
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