REG - B&M European - Preliminary Results <Origin Href="QuoteRef">BMEB.L</Origin> - Part 2
25/05/2017 07:06
- Part 2: For the preceding part double click ID:nRSY1698Ga
· rights arising from other contractual arrangements, and,
· 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
Viability and going concern statements have been made in the 'Principal risks and uncertainties' section of this annual
report. On the basis of these, the directors have determined that it is appropriate to continue to use the going concern
basis for production of these consolidated financial statements.
Turnover
Revenue is recognised to the extent that it is probable that economic benefits will flow to the Group and the revenue can
be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the
consideration received or receivable.
Revenue is the total amount receivable by the Group for goods supplied, in the ordinary course of business, excluding VAT
and trade discounts, and after deducting returns and relevant vouchers and offers. Store retail turnover is recognised at
the initial point of sale of goods to customers, when the risks and rewards of the ownership of the goods have been
transferred to the buyer.
Other administrative expenses
Administrative expenses contain all running costs of the business, except those relating to inventory (which are expensed
through cost of sales), tax, interest and other comprehensive income.
Elements which are unusual and significant may be separated as a separate line item, this would include items such as
material restructuring costs.
Goodwill
Goodwill is initially measured at cost, being the excess of the fair value of consideration transferred over the fair value
of the net identifiable assets acquired and liabilities assumed at the date of acquisition.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of
impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to the relevant
cash-generating units (CGUs) that are expected to benefit from the combination.
Goodwill is tested for impairment at each year end and at any time where there is any indication that goodwill may be
impaired. Internally generated goodwill is not recognised as an asset.
Segment reporting
Operating segments are reported in a manner consistent with internal reporting provided to the chief operating decision
maker. The chief operating decision maker has been identified as the executive directors of the Group. The executive
directors are responsible for assessing the performance of the business for the purpose of making decisions about resources
to be allocated.
Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the
aggregate of the consideration transferred, measured at the acquisition date fair value. Acquisition-related costs are
expensed depending on their nature with costs of raising finance amortised over the term of the relevant element of finance
provided and the remainder expensed when incurred.
Brands
Brands acquired as part of a business combination are initially recognised at fair value and subsequently reviewed at least
annually for impairment or whenever events or changes in circumstances indicate that their carrying amount may not be
recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use and fair
value less costs to sell), the asset is written down accordingly, and charged to administration expenses.
Brands are considered to have an indefinite life on the basis that they form part of the cash generating units within the
Group which will continue in operation indefinitely, with no foreseeable limit to the period over which they are expected
to generate net cash inflows.
Intangible assets
Intangible assets acquired separately, including computer software, are measured on initial recognition at cost comprising
the purchase price and any directly attributable costs of preparing the asset for use.
Following initial recognition, assets are carried at cost less accumulated amortisation and accumulated impairment losses.
Amortisation begins when an asset is available for use and is calculated on a straight line basis to allocate the cost of
the asset over its estimated useful life as follows:
Computer software acquired - 4 years
Property, plant and equipment
Property, plant and equipment is carried at cost less accumulated depreciation and accumulated impairment losses.
Cost comprises purchase price and directly attributable costs. Unless significant or incurred as part of a refit programme,
subsequent expenditure will usually be treated as repairs or maintenance and expensed to the income statement.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can
be measured reliably. The carrying amount of the replaced part is derecognised.
Freehold land is not depreciated. For all other property, plant and equipment, depreciation is calculated on a straight
line basis to allocate cost, less residual value of the assets, over their estimated useful lives as follows.
Depreciation
Depreciation is provided on all other items of property, plant and equipment and the effect is to write off the carrying
value of items by equal instalments over their expected useful economic lives. It is applied at the following rates:
Leasehold buildings - Life of lease
Freehold buildings - 2-4% straight line
Plant, fixtures and equipment - 10% - 25% straight line
Motor vehicles - 20% - 25% straight line
Residual values and useful lives are reviewed annually and adjusted prospectively, if appropriate.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected
from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the
net disposal proceeds and the carrying amount of the asset) is included in the statement of comprehensive income when the
asset is derecognised.
Investments in associates
Associates are those entities over which the Group has significant influence but which are neither subsidiaries nor
interests in joint ventures. Investments in associates are recognised initially at cost and subsequently accounted for
using the equity method. However any goodwill or fair value adjustment attributable to the Group's share of associates is
included in the amount recognised as investment in associates.
All subsequent changes to the share of interest in the equity of the associate are recognised in the Group's carrying
amount of the investment. Changes resulting from the profit or loss generated by the associate are reported in "share of
profits of associates" in the consolidated income statement and therefore affect net results of the Group. These changes
include subsequent depreciation, amortisation and impairment of the fair value adjustments of assets and liabilities.
Items that have been recognised directly in the associate's other comprehensive income are recognised in the consolidated
other comprehensive income of the Group. However, when the Group's share of losses in an associate equals or exceeds its
interest in the associate the Group does not recognise further losses, unless it has incurred obligations or made payments
on behalf of the associate. If the associate subsequently reports profits, the investor resumes recognising its share of
those profits only after its share of the profits equals the share of losses not recognised.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group's interest
in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the
asset transferred. Amounts reported in the consolidated financial statements of associates have been adjusted where
necessary to ensure consistency with the accounting policies adopted by the Group.
Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication
exists, or when annual impairment testing for an asset is required (for goodwill or indefinite life assets), the Group
estimates the asset's recoverable amount.
Indications of impairment might include (for goodwill and the brand assets, for instance) a significant impairment to the
like for like sales of established stores, sustained negative publicity or a drop off in visits to our website and social
media accounts.
An asset's recoverable amount is the higher of an asset's or CGU's fair value less costs to sell and its value in use. It
is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of
those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount,
the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.
The Group bases its impairment calculation on detailed budgets and forecasts which are prepared separately for each of the
Group's CGU's to which the individual assets are allocated. These budgets and forecast calculations cover a period of five
years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth
year.
Impairment losses of continuing operations, including impairment of inventories, are recognised in the income statement in
those expense categories consistent with the function of the impaired asset.
For assets excluding goodwill and acquired brands with indefinite lives, an assessment is made at each reporting date as to
whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If
such indication exists, the Group estimates the asset's or CGU's recoverable amount.
A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine
the asset's recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying
amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined,
net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in
the income statement, except for impairment of goodwill which is not reversed.
Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the
inception date. The arrangement is assessed for whether fulfilment of the arrangement is dependent on the use of a specific
asset or assets or the arrangement conveys a right to use the asset or assets even if that right is not explicitly
specified in an arrangement.
The economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and
rewards related to the ownership of the leased asset. The related asset is recognised at the time of inception of the
lease at the fair value of the leased asset, or, if lower, the present value of the minimum lease payments plus incidental
payments, if any, to be borne by the lessee. A corresponding amount is recognised as a finance leasing liability.
The interest element of leasing payments represents a constant proportion of the capital balance outstanding and is charged
in the income statement over the period of the lease.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the
Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful
life of the asset and the lease term.
All other leases are regarded as operating leases and the payments made under them are charged to the statement of
comprehensive income on a straight line basis over the lease term. Lease incentives are spread over the term of the
lease.
Onerous leases
The Group carries a property provision which is recognised on specific sites within the Group's leasehold property
portfolio where an exit can be reasonably expected to occur, and a lease is considered onerous.
A lease is considered onerous when the economic benefits of occupying the leased properties are less than the obligations
payable under the lease.
The amount held covers any costs expected to accrue before the end of the contract, netted against any income, as well as a
portion related to any dilapidation expense which may arise.
Inventories
Inventories are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow
moving items. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs
of completion and the estimated costs to sell.
Share options
The Group operates share option schemes, with the first such scheme commencing in August 2014.
The schemes have been accounted for under the provisions of IFRS 2, and accordingly have been fair valued on their
inception date using appropriate methodology (the Black Scholes and Monte Carlo models).
A cost is recorded through the income statement in respect of the number of options outstanding and the fair value of those
options. A corresponding credit is made to the retained earnings reserve and the effect of this can be seen in the
statement of changes in equity.
Taxation
Current income tax
Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from
or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted, at the reporting date, in the countries where the Group operates and generates taxable income. Tax
is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity,
respectively.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities
are recognised for all taxable temporary differences, except:
• When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit
nor taxable profit or loss.
• In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests
in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that
the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused
tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:
• When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of
an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss.
• In respect of deductible temporary differences associated with investments in subsidiaries, associates and
interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary
differences will reverse in the foreseeable future and taxable profit will be available against which the temporary
differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be
utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it
has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is
realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at
the reporting date.
Financial instruments
The Group has altered their policy on financial instruments since the prior 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.
Financial assets
Initial recognition and measurement
The classification of financial instruments is determined at initial recognition. The Group has the following types of
financial assets: Trade and other receivables and cash which are classified within the IAS 39 definition of loans and
receivables and derivative contracts which are classified within the IAS 39 definition of fair value through profit and
loss. All financial assets are recognised when the Group becomes a party to the contractual provisions of the instrument.
All financial assets are initially recognised at fair value plus transaction costs other than for financial assets carried
at fair value through profit or loss.
The Group does not have any held-to-maturity or available-for-sale financial assets.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification as described below:
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the
effective interest rate method (EIR), less impairment. Amortised cost is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation and the losses arising
from impairment are recognised in profit and loss.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include derivative financial instruments entered into by the Group
that are not designated as hedging instruments in hedge relationships as defined by IAS 39. Financial assets at fair value
through profit or loss are carried in the statement of financial position at fair value with changes in fair value
recognised in profit and loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is
derecognised when the rights to receive cash flows from the asset have expired and the entity has transferred its rights to
receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full and either (a) the
entity has transferred substantially all the risks and rewards of the asset, or (b) the entity has neither transferred nor
retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Impairment of financial assets
The Group assesses at each reporting date whether there is any objective evidence that a financial asset or a group of
financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, there is
objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the
asset (an incurred 'loss event') and that loss event has an impact on the estimated future cash flows of the financial
asset or the group of financial assets that can be reliably estimated.
Financial liabilities
Initial recognition and measurement
Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or
loss or other financial liabilities. The entity determines the classification of its financial liabilities at initial
recognition. All financial liabilities are recognised initially at fair value.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial derivatives held for trading. Financial
liabilities are classified as held-for-trading if they are acquired for the purpose of selling in the near term. This
category includes derivative financial instruments entered into by the Group. Gains or losses on liabilities
held-for-trading are recognised in profit and loss.
Other financial liabilities
After initial recognition, interest bearing loans and borrowings, trade and other payables and other liabilities are
subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the
income statement when the liabilities are derecognised as well as through the effective interest rate method (EIR)
amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included in finance costs.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
Fair value of financial instruments
The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference
to mark-to-market valuations obtained from the relevant bank (bid price for long positions and ask price for short
positions), without any deduction for transaction costs.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, less bank overdrafts.
Equity
Equity comprises the following:
§ "Share capital" represents the nominal value of equity shares;
§ "Share premium" represents the excess of the consideration made for the shares, over and above the nominal valuation of
those shares;
§ "Legal reserve" representing the statutory reserve required by Luxembourg law as an apportionment of profit within each
Luxembourg company (up to 10% of the standalone share capital);
§ "Hedging reserve" representing the fair value of the derivatives held by the Group at the period end that are accounted
for under hedge accounting and that represent effective hedges.
§ "Merger reserve" representing the reserve created during the reorganisation of the Group in 2014;
§ "Retained earnings reserve" represents retained profits;
§ "Put/call option reserve" representing the initial valuation of the put/call option held by the Group over the
non-controlling interest of J.A. Woll Handels GmbH (Jawoll);
§ "Foreign exchange reserve'' represents the cumulative differences arising in retranslation of the subsidiaries results;
§ "Non-controlling interest" representing the portion of the equity which belongs to the non-controlling interest in the
Group's subsidiaries.
Foreign currency translation
These consolidated financial statements are presented in pounds sterling.
The following Group companies have a functional currency of pounds sterling;
· B&M European Value Retail S.A.
· B&M European Value Retail 1 S.à r.l. (Lux Holdco)
· B&M European Value Retail Holdco 1 Ltd (UK Holdco 1)
· B&M European Value Retail Holdco 2 Ltd (UK Holdco 2)
· B&M European Value Retail Holdco 3 Ltd (UK Holdco 3)
· B&M European Value Retail Holdco 4 Ltd (UK Holdco 4)
· EV Retail Ltd
· B&M Retail Ltd
· Opus Homewares Ltd
The following Group companies have a functional currency of the Euro;
· B&M European Value Retail 2 S.à r.l. (SBR Europe)
· B&M European Value Retail Germany GmbH (Germany Holdco)
· J.A. Woll Handels GmbH (Jawoll)
· Jawoll Vertriebs GmbH
· BestFlora GmbH.
The Group companies whose functional currency is the Euro have been consolidated into the Group via retranslation of their
accounts in line with IAS 21 Effects of Changes in Foreign Exchange Rates. The assets and liabilities are translated into
pounds sterling at the year end exchange rate. The revenues and expenses are translated into pounds sterling at the average
monthly exchange rate during the period. Any resulting foreign exchange difference is cumulatively recorded in the foreign
exchange reserve with the annual effect being charged/credited to other comprehensive income.
Transactions entered into by the company in a currency other than the currency of the primary economic environment in which
it operates (the "functional currency") are recorded at the rates ruling when the transactions occur. Foreign currency
monetary assets and liabilities are translated at the rates ruling at the balance sheet date. Exchange differences arising
on the retranslation of unsettled monetary assets and liabilities are recognised immediately in profit or loss.
Pension costs
The Group operates a defined contribution scheme and contributions are charged to profit or loss in the period in which
they are incurred.
Provisions
Provisions are recognised when a present obligation (legal or constructive) exists as a result of a past event and where it
is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the
amount can be reliably estimated. Provisions are discounted where the time value of money is considered to be material.
Critical judgements 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, are disclosed and further explained in note
11.
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 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 contains 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 (see note 17).
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 E1.1915/£ during the year, with the year end rate being E1.1559/£ (2016:
E1.3677/£ and E1.2670/£, respectively).
52 week period to 25 March 2017 UK Retail Germany Retail Corporate Total
£'000 £'000 £'000 £'000
Revenue 2,252,265 178,395 - 2,430,660
Gross profit 777,785 66,551 - 844,336
EBITDA (note 3) 223,722 11,677 (3,876) 231,523
Finance income 112 12 1,396 1,520
Finance costs (5) (292) (23,813) (24,110)
Income tax expense (40,310) (2,406) 3,831 (38,885)
Segment profit/(loss) 161,241 5,257 (22,465) 144,033
Total assets 1,640,398 126,040 7,078 1,773,516
Total liabilities (325,372) (27,399) (607,124) (959,895)
Other disclosures:
Capital expenditure (including intangible) (44,492) (7,464) - (51,956)
Depreciation and amortisation (22,277) (3,734) (4) (26,015)
Share of profit of associates - - 1,005 1,005
Investment in associates accounted for by the equity method - - 5,669 5,669
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 (note 3) 182,035 11,588 2,461 196,084
Finance income 170 13 277 460
Finance costs (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 non-IFRS measures from the statement of comprehensive income
EBITDA, adjusted EBITDA and Adjusted Profit are non-IFRS measures and therefore we provide a reconciliation from the
statement of comprehensive income below.
In the prior year the Group reported a greater number of adjusting items. However management believe that the simplified
measure now presented is a clearer measure of performance. The comparative information has been restated accordingly.
Period to 52 weeks ended 25 March2017 52 weeks ended26 March2016
£'000 £'000
Profit on ordinary activities before interest and tax 205,508 175,658
Add back depreciation and amortisation 26,015 20,426
EBITDA 231,523 196,084
Reverse the effect of derivatives recorded within cost of sales 1,479 -
Reverse the effect of derivatives recorded within administrative expenses 1,890 (3,577)
Adjusted EBITDA 234,892 192,507
Depreciation and amortisation (26,015) (20,426)
Net adjusted finance costs (see note 5) (18,726) (20,667)
Adjusted profit before tax 190,151 151,414
Adjusted tax (40,273) (28,030)
Adjusted profit for the period 149,878 123,384
Attributable to non-controlling interests 1,095 1,264
Attributable to owners of the parent 148,783 122,120
The adjusting items are the effects of derivatives, one off refinancing fees (as set out in note 5) and the effects of the
call/put option held over the non-controlling interest of our German operation (as set out in note 5). Significant project
costs may also be included if incurred. Adjusted tax represents the tax charge per the statement of comprehensive income as
adjusted only for the effects of the other adjusting items detailed above.
Under the previous measure, Adjusted EBITDA would have been £242.1m (2016: £202.5m) and Adjusted profit for the period
would have been £155.4m (2016: £131.5m).
The segmental split in EBITDA and Adjusted EBITDA reconciles as follows;
52 week period to 25 March 2017 UK Retail Germany Retail Corporate Total
£'000 £'000 £'000 £'000
Profit on ordinary activities before interest and tax 201,445 7,943 (3,880) 205,508
Add back depreciation and amortisation 22,277 3,734 4 26,015
EBITDA 223,722 11,677 (3,876) 231,523
Reverse the effect of derivatives - - 3,369 3,369
Adjusted EBITDA 223,722 11,677 (507) 234,892
52 week period to 26 March 2016 UK Retail Germany Retail Corporate Total
£'000 £'000 £'000 £'000
Profit on ordinary activities before interest and tax 164,267 8,935 2,456 175,658
Add back depreciation and amortisation 17,768 2,653 5 20,426
EBITDA 182,035 11,588 2,461 196,084
Reverse the effect of derivatives - - (3,577) (3,577)
Adjusted EBITDA 182,035 11,588 (1,116) 192,507
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 Operating profit
The following items have been charged in arriving at operating profit:
Period ended 52 weeks ended 25 March 2017 52 weeks ended 26 March 2016
£'000 £'000
Auditor's remuneration 330 367
Payments to auditors in respect of non-audit services:
Taxation advisory services - -
Other assurance services 88 9
Inventories:
Cost of inventories recognised as an expense (included in cost of sales) 1,595,471 1,349,161
Depreciation of property, plant and equipment:
Owned assets 24,305 18,946
Leased assets 916 780
Amortisation (included within administration costs) 794 700
Operating lease rentals 126,798 104,621
New store pre-opening costs 6,285 7,573
(Profit)/loss on sale of property, plant and equipment (405) 52
Gain on foreign exchange (214) (70)
5 Finance costs and finance income
Finance costs include all interest related income and expenses. The following amounts have been included in the statement
of comprehensive income line for each reporting period presented:
Period ended 52 weeks to25 March2017 52 weeks to 26 March 2016
£'000 £'000
Interest on debt and borrowings (17,446) (19,325)
Ongoing amortisation of finance fees (1,381) (1,384)
Finance charges payable under finance leases and hire purchase contracts (23) (141)
Total adjusted finance expense (18,850) (20,850)
One-off costs incurred on raising debt finance (3,687) -
Unwinding of the call/put option held over the minority interest of Jawoll (1,573) (723)
Total finance costs (24,110) (21,573)
Period ended 52 weeks to25 March2017 52 weeks to26 March 2016
£'000 £'000
Interest income on loans and bank accounts 124 183
Total adjusted finance income 124 183
Gain on financial instruments at fair value through profit or loss 117 277
Gain on revaluing call/put option held over the minority interest of Jawoll 1,279 -
Total finance income 1,520 460
Total net adjusted finance costs are therefore;
Period ended 52 weeks to25 March2017 52 weeks to26 March 2016
£'000 £'000
Total adjusted finance expense (18,850) (20,850)
Total adjusted finance income 124 183
Total net adjusted finance costs (18,726) (20,667)
6 Employee remuneration
Expense recognised for employee benefits is analysed below:
Period ended 52 weeks to25 March2017 52 weeks to26 March 2016
£'000 £'000
Wages and salaries 277,054 229,229
Social security costs 12,907 10,126
Pensions - defined contribution plans 1,022 834
290,983 240,189
There are £73k of defined contribution pension liabilities owed by the Group at the period end (2016: £70k).
The Group has one employee who is a member of a defined benefit scheme (2016: one employee). The liability held on the
balance sheet at the year end was £267k (2016: £258k).
The scheme is considered immaterial to the Group and the effect of the year end actuarial valuation can be seen within
other comprehensive income.
The average monthly number of persons employed by the Group during the period was:
Period ended 52 weeks to25 March2017 52 weeks to26 March 2016
Sales staff 25,418 22,359
Administration 639 570
26,057 22,929
7 Key management remuneration
Key management personnel and Directors' remuneration includes the following:
Period ended 52 weeks to25 March2017 52 weeks to26 March 2016
£'000 £'000
Directors' remuneration:
Short term employee benefits 2,177 1,175
Benefits accrued under the share option scheme 124 80
2,301 1,255
Key management expense (includes Directors' remuneration):
Short term employee benefits 4,648 2,627
Benefits accrued under the share option scheme 124 80
4,772 2,707
Amounts in respect of the highest paid director emoluments:
Short term employee benefits 1,393 576
Benefits accrued under the share option scheme - -
1,393 576
The emoluments disclosed above are of the directors and key management personnel who have served as a director within any
of the Group companies.
8 Taxation
The relationship between the expected tax expense based on the standard rate of corporation tax in the UK of 20% (2016:
20%) and the tax expense actually recognised in the statement of comprehensive income can be reconciled as follows:
Period ended 52 weeks to25 March2017 52 weeks to26 March 2016
£'000 £'000
Current tax expense 40,186 29,930
Deferred tax credit (1,301) (1,185)
Total tax expense 38,885 28,745
Result for the year before tax 182,918 154,545
Expected tax charge at the standard tax rate 36,584 30,909
Effect of :
Expenses not deductible for tax purposes 2,615 1,812
Income not taxable (734) (1,076)
Foreign operation taxed at local rate 985 883
Changes in the rate of corporation tax (1,027) (1,963)
Adjustment in respect of prior years 382 (1,827)
Other 80 7
Actual tax expense 38,885 28,745
Deferred taxation
Statement of Financial Position 25 March2017 26 March 2016
£'000 £'000
Accelerated tax depreciation (819) (552)
Relating to intangible brand assets (17,473) (18,275)
Fair valuing of assets and liabilities (asset) 607 351
Fair valuing of assets and liabilities (liability) (82) (880)
Movement in provision 85 82
Relating to share options 98 40
Held over gains on fixed assets (471) (403)
Other temporary differences (asset) 34 -
Other temporary differences (liability) - (9)
Net deferred tax liability (18,021) (19,646)
Deferred tax asset 824 473
Deferred tax liability (18,845) (20,119)
Statement of Comprehensive Income 52 weeks to25 March2017 52 weeks to26 March 2016
£'000 £'000
Accelerated tax depreciation (267) 69
Relating to intangible brand assets 802 1,538
Fair valuing of assets and liabilities 1,054 (499)
Movement in provision 3 (22)
Relating to share options 58 2
Held over gains on fixed assets (68) 221
Other temporary differences 43 (111)
Net deferred tax credit 1,625 1,198
Total deferred tax in profit or loss 1,301 1,185
Total deferred tax in other comprehensive income 324 13
The Group offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax
assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied
by the same tax authority.
9 Earnings per share
Basic earnings per share amounts are calculated by dividing the net profit or loss 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
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