REG - B&M European - Preliminary Results <Origin Href="QuoteRef">BMEB.L</Origin> - Part 4
25/05/2017 07:06
- Part 4: For the preceding part double click ID:nRSY1698Gc
These all represent financial assets and liabilities measured at amortised cost except where
stated as measured at fair value through the profit and loss.
As at 25 March2017 26 March 2016
Financial assets £'000 £'000
Fair value through profit and loss
Forward foreign exchange contracts 61 4,769
Fuel price swap 232 -
Fair value through other comprehensive income
Forward foreign exchange contracts 117 -
Loans and receivables
Cash and cash equivalents 155,551 91,148
Trade receivables 11,215 7,775
Other receivables 91 344
Financial liabilities
Fair value through profit and loss
Forward foreign exchange contracts 287 307
Fuel price swap - 63
Interest rate swap - 117
Put/call options over the non-controlling interest of Jawoll 17,886 16,041
Fair value through other comprehensive income
Forward foreign exchange contracts 1,783 -
Amortised cost
Interest-bearing loans and borrowings 543,725 435,142
Trade payables 206,373 141,577
Other payables 8,950 7,813
25 Related party transactions
The Group has transacted with the following related parties over the periods:
Multi-lines International Company Limited, a supplier, and Home Focus Group, a customer, have been associates of the Group
since March 2013.
Ropley Properties Ltd, Triple Jersey Ltd, TJL UK Ltd, Rani Investments and Multi Lines International (Properties) Ltd, all
landlords of properties occupied by the group, are directly or indirectly owned by director Simon Arora, his family, or his
family trusts (together, the Arora related parties).
Jawoll Immobilien GmbH, Stern Grundstück Entwicklungs GmbH, DS Grundstücks GmbH and Silke Stern are all landlords of
properties occupied by the Group and are related by virtue of connection to a director of J.A.Woll-Handels GmbH (together,
the German related parties). Some of these are held under finance lease, as detailed below.
The following table sets out the total amount of trading transactions with related parties included in the statement of
comprehensive income, including the P&L impact of any finance leases;
Period ended 25 March 2017£'000 26 March 2016
£'000
Sales to associates of the Group
Home Focus Group Limited 2,503 770
Total sales to related parties 2,503 770
Purchases from associates of the Group
Multi-lines International Company Ltd 121,351 98,105
Purchases from parties related to key management personnel
Multi-Lines International (Properties) Ltd 154 134
DS Grundstücks GmbH 759 581
Jawoll Immobilien GmbH 524 458
Rani Investments 192 191
Ropley Properties Ltd 2,811 2,811
Silke Stern 148 133
Stern Grundstück Entwicklungs 591 475
TJL UK Ltd 42 -
Triple Jersey Ltd 10,250 7,176
Total purchases from related parties 136,822 110,064
Included in the current year figures above are 6 leases of new stores and no renewals of existing stores, entered into by
Group companies during the current period with the Arora related parties (2016: 6 new, or extensions to existing, leases
and 1 renewal). The total expense on these leases in the period was £763k (2016: £927k). There were also 2 conditionally
exchanged leases (1 of which was new in the period) with Arora related parties in the current period with long stop
completion dates likely to be in the next financial year (2016: 3), and no expense is incurred under them until they are
completed.
The following table sets out the total amount of trading balances with related parties outstanding at the period end. Note
that the receivables balance held with Multi-lines International is with our German operation (a deposit on account) and
the payables balance is with our UK operation.
As at 25 March2017£'000 26 March 2016 £'000
Trade receivables from associates of the group
Home Focus Group Ltd 706 251
Multi-lines International Company Ltd 629 546
Trade receivables from companies owned by key management personnel
DS Grundstücks GmbH - 2
Total related party trade receivables 1,335 799
Trade payables to companies owned by key management personnel
Multi-lines International Company Ltd 3,385 -
Rani Investments - 39
Ropley Properties Ltd 850 852
TJL UK Ltd 85 -
Triple Jersey Ltd 2,152 1,290
Total related party trade payables 6,472 2,181
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 business has not recorded any impairment of trade receivables relating to amounts owed by related parties at 25 March
2017 (2016: no impairment). This assessment is undertaken each year through examining the financial position of the related
party and the market in which the related party operates.
The future operating lease commitments on the Arora related party properties are;
As at 25 March2017 26 March 2016
£'000 £'000
Not later than one year 14,544 10,995
Later than one year and not later than five years 57,704 43,648
Later than five years 76,341 61,073
148,589 115,716
The future operating lease commitments on the German related party properties are;
As at 25 March2017 26 March 2016
£'000 £'000
Not later than one year 578 785
Later than one year and not later than five years 561 1,039
Later than five years - -
1,139 1,824
The balances remaining on the finance lease asset and liabilities at each year end is as follows:
As at 25 March2017£'000 26 March 2016 £'000
Finance lease assets from parties related to key management personnel
DS Grundstücks GmbH 2,386 994
Jawoll Immobilien GmbH 1,161 1,194
Silke Stern 632 701
Stern Grundstück Entwicklungs 2,520 1,695
Total assets held under finance lease from related parties 6,699 4,584
Finance lease liabilities with parties related to key management personnel
DS Grundstücks GmbH 2,531 1,196
Jawoll Immobilien GmbH 1,332 1,370
Silke Stern 733 815
Stern Grundstück Entwicklungs 2,707 1,899
Total finance lease liabilities held with related parties 7,303 5,280
All related party finance leases are on properties occupied by the German business. During the year six of these properties
were extended, resulting in a profit of £317k on remeasurement.
For further details on the transactions with key management personnel, see note 7 and the remuneration report.
26 Non-controlling interest
Non-controlling interest balances are valued on acquisition as a proportion of the fair value of net assets to which the
non-controlling interest relates. Post acquisition the non-controlling interest is valued as the original value plus/minus
the comprehensive income/loss owed to the non-controlling interest and minus any dividend paid to the non-controlling
interest.
There exists a non-controlling interest in Jawoll, an 80% subsidiary of B&M European Value Retail Germany GmbH, which was
created on purchase of that company in April 2014. The percentage has not changed over the period of ownership.
In the 52 weeks to 25 March 2017, £2,082k has been accrued to the non-controlling interest in Jawoll (2016: £1,229k), and
no dividends have been paid (2016: no dividends).
The summarised financial information of the subsidiary is as follows.
52 weeks ended25 March2017£'000 52 weeks ended26 March2016£'000
Revenue 178,395 132,728
EBITDA 11,677 11,588
Profit after tax 5,908 5,458
Net cashflow (3,586) (4,587)
As at 25 March2017£'000 26 March2016£'000
Non-current assets 38,062 28,574
Current assets 55,334 47,201
Non-current liabilities (9,248) (6,353)
Current liabilities (19,026) (13,464)
Net assets 65,122 55,958
There previously existed an additional non-controlling interest in BestFlora GmbH, which was a 75% subsidiary of Jawoll at
the start of the current year. This company was incorporated into the group in April 2014. In December 2016 Jawoll
purchased the remaining 25% share and therefore this additional non-controlling interest no longer exists.
During the year £nil was accrued to the non-controlling interest (2016: £36k) and £nil was paid out in dividends (2016:
£36k).
Jawoll bought out the non-controlling interest for E210k, when it had a book value on the Group accounts of E476k. There
was therefore a profit recognised in reserves of E266k, which has translated to £224k for these accounts. The effects of
this transaction can be seen in the Statement of Changes in Equity.
BestFlora is considered immaterial for further disclosure.
27 Business combinations
On 1 August 2016 the business acquired the trade and assets of a small chain of German stores (Knüller).
The details of the assets acquired are as follows:
E'000
Property, plant & equipment 50
Cash (floats) 50
Inventory 1,204
Total assets acquired 1,304
Purchase price paid 2,879
Goodwill recognised 1,575
The goodwill recognised represents the stores location and customer base and it was not possible to separate this out
further into material separately identifiable and recognisable intangible assets. It has been considered for impairment as
part of the overall impairment test carried out annually by the Group (see note 11).
The purchase price paid net of the cash acquired was E2,829 and this translates to £2,374k as shown on the consolidated
statement of cash flows.
The business was incorporated directly into the German entities, with the stores reopening as rebranded Jawoll stores.
The Group considers that the transaction is immaterial for further disclosure.
28 Capital management
For the purpose of the Group's capital management, capital includes issued capital and all other equity reserves
attributable to the equity holders of the parent. The primary objective of the Group's capital management is to maximise
the shareholder value.
In order to achieve this overall objective, the Group's capital management, amongst other things, aims to ensure that it
meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements.
Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have
been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current or prior period.
The Group manages its capital structure and makes adjustments in light of changes in economic conditions and the
requirements of the financial covenants.
To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to
shareholders or issue new shares.
The Group uses the following definition of net debt:
External interest bearing loans and borrowings less cash and short-term deposits.
The interest bearing loans figure used is the gross amount of cash borrowed at that time, as opposed to the carrying value
under the amortised cost method, and includes finance leases.
As at 25 March2017£'000 26 March 2016 £'000
Interest bearing loans and borrowings 557,463 445,371
Less: Cash and short term deposits (155,551) (91,148)
Net debt 401,912 354,223
29 Post balance sheet events
There have been no material events between the balance sheet date and the date of issue of these accounts.
30 Dividends
A special dividend of 10.0 pence per share (£100,000,000) was paid in July 2016.
An interim dividend of 1.9 pence per share (£19,000,000) was paid in December 2016.
A final dividend of 3.9 pence per share (£39,000,000), giving a full year (non-special) dividend of 5.8 pence per share
(£58,000,000), is proposed.
Relating to the prior year;
An interim dividend of 1.6 pence per share (£16,000,000) was paid in January 2016.
A final dividend of 3.2 pence per share (£32,000,000), giving a full year dividend of 4.8 pence per share (£48,000,000) was
agreed at the AGM and paid in August 2016.
31 Contingent liabilities and guarantees
As at 25 March 2017, B&M European Value Retail S.A., B&M European Value Retail 1 S.à r.l., B&M European Value Retail 2 S.à
r.l., B&M European Value Retail Holdco 1 Ltd, B&M European Value Retail Holdco 2 Ltd, B&M European Value Retail Holdco 3
Ltd, B&M European Value Retail Holdco 4 Ltd, EV Retail Ltd and B&M Retail Ltd are all guarantors to both the loan and notes
agreements which are formally held within B&M European Value Retail SA. The amounts outstanding as at the period end were
£300.0m for the loan, with the balance held in B&M European Value Retail Holdco 4 Ltd, and £250.0m for the notes, with the
balance held in B&M European Value Retail S.A.
As at 26 March 2016, B&M European Value Retail S.A., B&M European Value Retail 1 S.à r.l., B&M European Value Retail 2 S.à
r.l., B&M European Value Retail Holdco 1 Ltd, B&M European Value Retail Holdco 2 Ltd, B&M European Value Retail Holdco 3
Ltd, B&M European Value Retail Holdco 4 Ltd, EV Retail Ltd, B&M Retail Ltd and Opus Homewares Ltd were all guarantors to
the loan agreement which was formally held within B&M European Value Retail SA. The amount outstanding as at the period end
was £440.0m, with the balance held in B&M European Value Retail Holdco 4 Ltd.
32 Directors
The directors that served during the period were:
Name
Sir T Leahy (Chairman)
S Arora (CEO)
P McDonald (CFO)
T Hübner
R McMillan
K Guion
H Brouwer
D Novak
All directors served for the whole period.
Statement of Directors' responsibilities
The Directors are responsible for preparing the Annual Report and the Group and Company financial statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare Group and Company financial statements for each financial year. Under that
law
they are required to prepare the Group financial statements in accordance with International Financial Reporting Standards
("IFRSs")
as adopted by the EU and applicable law and have prepared the Company financial statements in accordance with Luxemburg
legal
and regulatory requirements regarding the preparation of annual accounts ("Lux GAAP").
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true
and fair view of the state of affairs of the Group and Company and of their profit or loss for that period. In preparing
each of the Group and Company financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• present the financial statements and policies in a manner that provides relevant, reliable, comparable and understandable
information;
• state whether they have been prepared in accordance with IFRSs as adopted by the EU;
• provide additional disclosures when compliance with the specific requirements in IFRSs or in accordance with Lux GAAP are
insufficient to enable users to understand the impact of particular transactions, other events and conditions on the
entity's financial
position and financial performance; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the
Company
will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to
ensure that
its financial statements comply with the Company Law. They have general responsibility for taking such steps as are
reasonably open
to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
The Directors are responsible for preparing the Annual Report in accordance with applicable laws and regulations. Having
taken
advice from the Audit & Risk Committee the Directors consider the Annual Report and the financial statements taken as a
whole,
provides the information necessary to assess the Group's performance, business model and strategy and is fair balanced and
understandable.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Company's website. The financial statements will be published on the Company's website.
Legislation in Luxembourg governing the preparation and dissemination of financial statements may differ from legislation
in other jurisdictions.
We confirm that to the best of our knowledge:
• the consolidated financial statements of B&M European Value Retail S.A. ("Company") presented in this Annual Report and
established in conformity with International Financial Reporting Standards as adopted in the European Union give a true and
fair view of the assets, liabilities, financial position, cash flows and profits of the Company and the undertakings
included within
the consolidation taken as a whole;
• the annual accounts of the Company presented in this Annual Report and established in conformity with the Luxembourg
legal
and regulatory requirements relating to the preparation of annual accounts give a true and fair view of the assets,
liabilities,
financial position and profits of the Company;
• the Strategic Report includes a fair review of the development and performance of the business and position of the
Company and
the undertakings included within the consolidation taken as a whole, together with a description of the principal risks and
uncertainties it faces; and
• this Annual Report (including the financial statements), taken as a whole, is fair, balanced and understandable and
provides the
information necessary for shareholders to assess the Company's performance, business model and strategy.
Approved by order of the Board
Simon Arora
Chief Executive Officer
Paul McDonald
Chief Financial Officer
25 May 2017
This information is provided by RNS
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