TIDMBME
RNS Number : 0458F
B&M European Value Retail S.A.
12 November 2020
12 November 2020
B&M European Value Retail S.A.
FY21 Interim Results Announcement
A strong first half
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 26 September 2020.
HIGHLIGHTS
-- Group revenues(1) increased by +25.3% to GBP2,242.1m, +25.3%
on a constant currency basis(2)
-- B&M UK fascia(3) revenue up +29.5%, including
like-for-like(4) ("LFL") revenues of +23.0%, within which Q1 was
+26.9% and Q2 was 19.1%
-- LFL(4) sales growth in the B&M UK fascia(3) is expected
to moderate over H2, but so far in Q3 has been at a similar level
to H1
-- Group adjusted EBITDA(5) increased by 95.3% to GBP295.6m (H1
FY20: GBP151.4m) on a pre-IFRS16 basis
-- Group statutory profit before tax, post-IFRS16, increased
122.4% to GBP235.6m (H1 FY20: GBP106.0m)
-- Group adjusted profit before tax(5) increased by 128.5% to
GBP253.6m (H1 FY20: GBP111.0m). Statutory diluted earnings per
share were 18.7p (H1 FY20: 8.4p(1) ) and adjusted diluted earnings
per share(5) were 20.1p (H1 FY20: 8.8p(1) )
-- 9 gross new B&M UK store openings offset by 8 closures in
H1, and on track to open 40 to 45 gross new B&M UK stores this
financial year, offset by 10 closures
-- Heron Foods has continued to trade well and opened 7 gross
new stores with 1 closure, and on track to open 20 gross new
stores, 16 net of closures, this financial year
-- Positive like-for-like sales growth at Babou in France since
re-opening on 11 May 2020, with total revenue of GBP140.6m and
adjusted EBITDA(5) of GBP2.7m in H1 despite being closed due to
lockdown for the first 6 weeks. Approximately half of the Babou
stores remain open, but are restricted to selling essential goods
only during the November lockdown in France
-- Net cash flows from operating activities of GBP343.0m (H1
FY20: GBP138.2m), reflecting EBITDA growth, lower capital
expenditure and tight working capital discipline
-- Ordinary half year dividend(6) increased by 59.2% to 4.3p per
share (H1 FY20: 2.7p), to be paid on 4 December 2020
-- Special dividend(6) of 25.0p per share (equating to
approximately GBP250m in total) to return surplus cash to
shareholders. In the current uncertain macroeconomic outlook we are
taking a prudent approach to our capital structure and returns,
remaining comfortably within our stated leverage ceiling of 2.25x
net debt(8) to adjusted EBITDA(5) (pre-IFRS16). We continue to
evaluate our leverage and surplus cash position in line with our
capital allocation framework
Simon Arora, Chief Executive, said,
"The Group delivered a strong performance in the first half,
with our business model proving well-attuned to the evolving needs
of customers. Our combination of everyday value across a broad
range of product categories and convenient Out of Town locations
has proved popular with shoppers.
During such challenging times, we have been proud to play an
active role in supporting the communities in which we operate,
having created over 1,800 new jobs across the Group during the past
six months in addition to repaying the GBP3.7m furlough support
originally received during the height of the crisis.
I am proud of the way in which our colleagues have risen to the
many challenges posed by Covid-19. I thank them for the commitment,
hard work and resilience they have demonstrated in keeping our
shelves filled and maintaining an environment which is as safe as
possible for our colleagues and customers.
Despite the wider economic uncertainty and ongoing restrictions
related to Covid-19, we remain confident in our business model and
future prospects."
Financial Results (unaudited)
H1 FY21 H1 FY20(1) Change
Total Group revenues(1) GBP2,242.1m GBP1,788.7m +25.3%(2)
B&M GBP1,885.4m GBP1,456.4m +29.5%
Heron GBP216.2m GBP188.2m +14.8%
Babou GBP140.6m GBP144.1m (2.4)%
Total Group revenues at - - +25.3%
constant currency(2)
-------------- -------------- ------------
Number of stores
Group 1,059 1,034 +2.4%
B&M 657 645 +1.9%
Heron 299 290 +3.1%
Babou 103 99 +4.0%
-------------- -------------- ------------
Group adjusted EBITDA GBP295.6m GBP151.4m +95.3%
(5)
GBP274.7m GBP137.3m +100.0%
B&M
GBP18.3m GBP12.3m +48.7%
Heron
GBP2.7m GBP1.8m +52.8%
Babou
-------------- -------------- ------------
Group adjusted EBITDA
(5) margin % 13.3% 8.5% +484 bps
-------------- -------------- ------------
Group adjusted profit
before tax(5) GBP253.6m GBP111.0m +128.5%
-------------- -------------- ------------
Group statutory profit
before tax GBP235.6m GBP106.0m +122.4%
-------------- -------------- ------------
Adjusted diluted EPS(1,5) 20.1p 8.8p +128.4%
-------------- -------------- ------------
Statutory diluted EPS 18.7p 8.4p +122.6%
-------------- -------------- ------------
Ordinary dividends(6) 4.3p 2.7p +59.2%
-------------- -------------- ------------
1. The figures presented in this announcement are for the 26
week period ended 26 September 2020 for the continuing operations
of the Group following the sale of Jawoll in FY20. The figures
presented for the 26 week period ended 28 September 2019 have been
restated to exclude Jawoll in order to provide a comparable basis
with those for the continuing operations as at 26 September
2020.
2. Constant currency comparison involves restating the prior
year Euro revenues using the same exchange rate as used to
translate the current year Euro revenues.
3. References in this announcement to the B&M 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.
4. Like-for-like revenues relates to the B&M estate only and
includes 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 the previous period. This 14
month approach has been taken as it excludes the two month halo
period which new stores experience following opening.
5. 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 2 and 4 . Adjusted figures exclude the impact of
IFRS16.
6. Dividends are stated as gross amounts before deduction of
Luxembourg withholding tax which is currently 15%.
7. 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.
8. Net debt was GBP325.4m at the period end. This reflects
GBP760.2m of gross debt (note 13) and GBP4.0m of finance leases
netted against GBP438.8m of cash.
Analyst & Investor webcast & conference call
An Analyst & Investor only webcast and conference call in
relation to these FY21 Interim Results will be held today at 9.30am
(UK).
The conference call can be accessed live via a dial-in facility
on:
UK & International: +44 33 0606 1122
US: +1 646 585 9191
Room Number: 596070
Participant Pin: 2969
A simultaneous audio webcast and presentation will be available
via the B&M corporate website at www.bandmretail.com
Enquiries
B&M European Value Retail S.A.
For further information please contact +44 (0) 151 728 5400 Ext
5763
Simon Arora, Chief Executive
Paul McDonald, Chief Financial Officer
Jonny Armstrong, 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
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
664 stores in the UK operating under the "B&M" brand, 299
stores under the "Heron Foods" and "B&M Express" brands, and
103 stores in France operating under both the "Babou" and "B&M"
brands as at 10 November 2020. 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
Impact of Covid-19 on the B&M Group
The ongoing Covid-19 pandemic continues to affect all of our
daily lives. So much has changed and is changing as we learn to
live with the virus.
During the height of the crisis at the start of the financial
year, B&M was proud to recognise the considerable efforts of
store and distribution colleagues in paying them 110% of their
normal pay. In addition, GBP1m in cash donations were delivered at
speed to Foodbanks across the UK, and GBP2.9m of discounts were
granted to NHS workers.
In light of the strong results delivered in H1 FY21 and ongoing
trading performance, the Group has repaid GBP3.7m received under
the UK Government's Job Retention Scheme during the initial Spring
lockdown. It does not intend to participate in any further support
relating to that Job Retention Scheme.
By remaining open in the UK throughout the crisis, we have
created over 1,800 jobs in our communities and have been able to
learn a lot about how best to adapt to the new realities of serving
customers safely, protecting and supporting colleagues and managing
the supply chain both in the UK and in China. This means we are
well placed to continue serving customers efficiently and
safely.
That said, recent events demonstrate just how quickly things can
change, as Governments look to control the spread of the virus.
-- In the core B&M UK business, as a retailer of essential goods, all stores remain open.
-- The Heron Foods business is a convenience grocery retailer
and all 299 stores continue to offer the full range of products to
customers.
-- In France, approximately half of our stores are currently
open but are restricted to selling essential goods only, which form
a very much smaller proportion of the offer than in the UK. As
such, revenues will be very significantly reduced during
November.
-- The incremental costs incurred by the Group in relation to
social distancing, such as provision of PPE, additional social
distancing marshals at stores and enhanced cleaning regimes across
the business, has substantially offset the c.GBP38m one-off saving
in business rates during H1.
-- We have taken account of potential impacts due to the ongoing
pandemic, but we have not tested the impact of a total closure of
the business in view of the fact that the majority of the product
categories sold in the UK businesses and certain lines in the
French business are officially classified as essential goods.
Recognising the role we play in the communities in which we
trade, we are pleased to be a headline partner for 'Mission
Christmas' across twelve UK radio regions. Mission Christmas aims
to distribute GBP15m of gifts to some 400,000 under-privileged or
poorly children, and most of our stores will act as collection
points for this initiative.
As a value retailer, the B&M appeal is strengthened when
large sections of the population are concerned about their personal
finances or are having to live within constrained household
budgets. This is important, as it means B&M can play a crucial
role in helping people navigate through the crisis. In addition,
the flexibility of the B&M business model is such that it is
able to adapt very quickly to meet the evolving needs of
customers.
The lasting impact of Covid-19 on individuals, communities, the
retail industry and the wider economy remain unknown, but will
clearly be very significant. Should it lead to further acceleration
of the already profound structural changes affecting retailing,
including the trend towards value and convenience, then the B&M
business remains well positioned to grow sustainably into the long
term.
OVERVIEW OF FY21 INTERIM RESULTS
The Group performed strongly throughout the first half of the
financial year, despite the challenges posed by the ongoing
coronavirus crisis. In the UK, many new customers have shopped with
B&M for the first time, with a value-led model and large Out of
Town locations proving particularly relevant during these uncertain
times. The strong sales performance has been broad-based across all
key product categories, with sustained revenue growth driving
operational leverage on a fixed cost base.
The Heron Foods business enjoyed a similarly strong outturn for
the half year, where performance continues to be pleasing.
In France, the Babou business was severely impacted by the local
lockdown at the start of the financial year, but despite that
managed to deliver a positive contribution for H1. Unfortunately,
whilst approximately half of stores in France remain open, they are
currently restricted to selling essential goods only during the
November lockdown.
Financial Performance
The Group financial statements have been prepared in accordance
with IFRS16, however underlying figures presented before the impact
of IFRS16 continue to be reported where they are relevant to
understanding the performance of the Group.
Group revenues for the 26 weeks ended 26 September 2020 grew by
+25.3% to GBP2,242.1m and by +25.3% on a constant currency basis(1)
.
B&M UK
In the B&M UK stores business, revenues grew by +29.5% to
GBP1,885.4m (H1 FY20: GBP1,456.4m), with like-for-like ("LFL")
sales of +23.0% for the first half as a whole. The LFL performance
moderated over the course of H1, but remained strong with a
performance of +26.9% in Q1 and +19.1% in Q2.
In addition to strong LFL performance, the continued successful
execution of the new store opening programme also contributed
revenue growth, with the annualisation of the net 36 new stores
opened in FY20 plus one net new opening in H1 FY21. The performance
of the new stores has been good. For example, the cohort of new
stores opened in FY20 together delivered a slightly higher store
contribution margin as a percentage of sales than the remainder of
the estate, being accretive to profit margin. New stores do not
require a maturity period to achieve profitability, due to the
disruptive nature of the retail offer.
There have been a total of 9 gross new store openings in H1, all
of which have performed strongly. In addition there were 8 store
closures, of which 3 were relocations. The majority of closures are
stores which are over 10 years old and undersized or poorly located
relative to current new store formats. The new store opening
programme was impacted in H1 by coronavirus in the UK. However, a
recent uptick in leasing activity means the B&M UK business now
expects 40 to 45 gross new store openings in the full year, offset
by 10 closures and relocations. New store openings will be back-end
weighted in both Q3 and Q4, assuming Q4 openings are not further
delayed by construction restrictions, and consequently they will
not contribute material incremental sales to FY21.
B&M revenues also included GBP20.4m of wholesale revenues
(H1 FY20: GBP11.5m).
Gross margins improved 176 bps relative to last year to 35.8%
(H1 FY20: 34.0%). This was driven by both a shift in mix towards
higher margin Non-Grocery categories as well as strong sell-through
across Non-Grocery, particularly on seasonal ranges, leading to
lower markdown activity.
Operating costs, excluding depreciation and amortization,
increased by 11.7% to GBP399.7m (H1 FY20: GBP358.0m), with these
costs as a percentage of revenues decreasing by 338 bps to 21.2%
(H1 FY20: 24.6%). The Group welcomes the Government's business
rates holiday given the disproportionate burden this places on
physical stores versus online competitors, with this being
particularly relevant during the pandemic when store customer
numbers have remained subdued. The business rates relief
represented a c.GBP35m saving in H1 compared to the previous year
for the B&M UK business, but was substantially offset by the
increased costs of implementing social distancing in stores.
Transport and distribution costs remained broadly flat as a
percentage of revenues, where savings through optimisation of the
transport network were offset by distribution inefficiencies
(particularly at the new Bedford distribution centre) as a
consequence of introducing new protocols and procedures to ensure
compliance with social distancing.
In the B&M business(3) , adjusted EBITDA(5) increased by
100.0% to GBP274.7m (H1 FY20: GBP137.3m) and the adjusted EBITDA(5)
margin increased by 530 bps to 14.7% (H1 FY20: 9.4%) due to the
higher participation of Non-Grocery sales, strong sell-through
across ranges and operational leverage as explained above.
Heron Foods
The discount convenience chain, Heron Foods(3) , generated
revenues of GBP216.2m (H1 FY20: GBP188.2m). The business continues
to perform well and has maintained good like-for-like sales
momentum, with ambient food ranges in particular performing
strongly. There have been 6 net new store openings so far this
year, increasing the number of stores to 299 at the end of H1. A
total of 16 net new stores are expected for the full year.
Heron Foods adjusted EBITDA(5) increased by 48.7% to GBP18.3m
(H1 FY20: GBP12.3m) and the adjusted EBITDA(5) margin improved by
193 bps to 8.5% (H1 FY20: 6.5%), with the business also benefiting
from a one-off saving in business rates worth c.GBP3m in H1.
Babou
In the French business Babou, revenues decreased by (2.4)% to
GBP140.6m (H1 FY20: GBP144.1m), reflecting the closure of all
stores for the first 6 weeks of the financial year under the French
Government's initial lockdown. This closure period led to the loss
of c.GBP33m of revenue compared to H1 FY20.
The programme to evolve the product offer and move it closer to
that of the B&M UK stores continues to progress, and products
purchased through the B&M supply chain have been well received
by the French consumer. The business' offer in Clothing and
Footwear categories has been reduced, and they now represent c.20%
of revenues. Gross margin increased by 98 bps to 41.9% (H1 FY20:
40.9%) as a result of less markdown activity than in H1 FY20, which
was needed to exit legacy product ranges that pre-dated the
ownership by B&M.
Adjusted EBITDA(5) was GBP2.7m (H1 FY20: GBP1.8m), despite a
GBP5.7m adjusted EBITDA loss that arose during the 6 week closure
period.
At the end of H1 there were 103 stores in total, 37 of which are
now under the B&M banner. The performance of the re-branded
locations has been encouraging, having outperformed the wider Babou
estate. Subject to any further lockdown restrictions the
re-branding programme will re-commence in January 2021, with a
further 21 conversions planned before the FY21 year end and the
entire estate being re-branded by the end of FY22.
Group
Group adjusted EBITDA(5) increased 95.3% to GBP295.6m (H1 FY20:
GBP151.4m), representing a Group adjusted EBITDA(5) margin of
13.3%. This is 484 bps higher year on year, driven primarily by
operational leverage in the UK businesses.
Depreciation and amortisation expenses, excluding the impact of
IFRS16, grew by 7.0% to GBP30.1m largely due to continued
investment in new stores across all fascias, with 25 more stores
year on year at total Group level as at the end of H1.
Including the impact of IFRS16, operating costs and depreciation
increased by 9.0% to GBP514.2m (H1 FY20: GBP471.7m).
In relation to finance costs, excluding IFRS16, the adjusted net
interest charge was GBP11.9m (H1 FY20: GBP12.2m). Including the
IFRS16 lease interest charge, total interest costs increased to
GBP47.0m (H1 FY20: GBP40.7m), with GBP4.5m relating to fees from
the previous refinancing that were written off and interest
resulting from the early repayment of the previous GBP250m High
Yield Bond.
The Group's adjusted profit before tax(5) increased by 128.5% to
GBP253.6m, whilst statutory profit before tax increased by 122.4%
to GBP235.6m. The impact of IFRS16 on the Group interim financial
statements was to decrease profit before tax by GBP8.7m.
Group net capital expenditure, excluding IFRS16 leases
right-of-use asset additions, was GBP25.8m(7) , GBP14.2m of which
related to new store openings having opened a total of 20 gross new
stores across the Group during H1. This was lower than in previous
years as the new store opening programme was severely impacted by
restrictions associated with the coronavirus outbreak in the UK,
with the 9 gross new B&M UK stores in particular being some 21
fewer than in the prior year. In addition, there was significant
one-off expenditure last year on the Bedford distribution
centre.
Net cash flows from operating activities was GBP343.0m, an
increase of 148.2% from the comparable period last year, with the
increased rate of sales across all ranges driving an improved
adjusted EBITDA(5) performance, together with lower capital
expenditure and tight working capital management.
The Group also completed a refinancing of existing banking
facilities in July 2020, extending the maturity on both the GBP300m
loan facility and GBP155m Revolving Credit Facility to April 2025.
The refinancing also included the issue of a GBP400m High Yield
Bond, maturing in July 2025, which enabled the repayment of the
GBP82.3m bi-lateral loan facility used for the Babou acquisition.
Additionally, Babou utilised the French Government-backed loan
facility scheme made available due to the disruption caused by
Covid-19, resulting in a loan of GBP45.7m. The impact of these
transactions was to increase the Group's gross borrowings by
GBP113.4m.
The Group paid a total of GBP204.1m of dividends in the period,
including the GBP150m Special dividend following the sale and
leaseback of the Bedford facility in March 2020.
The business continues to de-lever and net debt(8) to annualised
adjusted EBITDA(5) was 0.7x at the end of H1 FY21 (H1 FY20: 2.2x),
calculated on a pre-IFRS16 basis.
Dividend
An Ordinary half year dividend of 4.3p per Ordinary Share and a
Special dividend of 25.0p per Ordinary Share will be paid as one
interim dividend together on 4 December 2020 to shareholders on the
register at 20 November 2020. The ex-dividend date will be 19
November 2020. The dividend payment will be subject to a deduction
of Luxembourg withholding tax of 15%.
In the current uncertain macroeconomic outlook we are taking a
prudent approach to our capital structure and returns, remaining
comfortably within our stated leverage ceiling of 2.25x net debt(8)
to adjusted EBITDA(5) (pre-IFRS16). We continue to evaluate our
leverage and surplus cash position in line with our capital
allocation framework.
Shareholders and Depository Interest holders can obtain further
information on the methods of receiving their dividends on our
website www.bandmretail.com or by visiting the website of our
Registrar, Capita Asset Services at www.capitashareportal.com
Strategic Development
The priority of the Group continues to be the wellbeing of
colleagues and customers, having worked hard to maintain a safe
working and shopping environment.
That said, the business continued to execute its strategy for
driving sustainable growth in revenues, earnings and free cash flow
throughout the first half of FY21, despite the many challenges that
Covid-19 continues to present.
1. Delivering great value to shoppers
B&M is all about providing consistently great value on the
things customers buy regularly for their homes and families. Only
the best sellers are stocked in any category, so there is always
something that shoppers will want or need that can be bought
quickly, cheaply and conveniently at B&M. As well as offering
great value, convenience has never been more important than during
the current Covid-19 pandemic. B&M stores are generally large
format, with an average size of approximately 20,000 sq. ft, and
mostly in locations with easy access by car, making them attractive
to customers. They also do not require changing rooms, customer
service counters or contain café areas, further lessening the
impact of the pandemic on our ability to trade.
Visits to B&M stores often result in impulse purchases, with
great value and constant newness (typically 100 new lines per week)
meaning that there's always something for everyone. For B&M,
it's not just about providing low prices to customers but also
about selling quality goods, including many leading brands, at
discount prices compared to other retailers, including online
operators.
Whilst there are plenty of people who need a bargain, everyone
likes a bargain. Over the past six months a large number of
customers have discovered B&M for the first time, as the appeal
of variety goods value retailing has broadened. So much so that in
June 2020, an estimated 23% of all shoppers had not visited B&M
in the preceding five months, suggesting that more shoppers have
found B&M to be a convenient and compelling retail
proposition.
B&M is increasingly appealing to a broad range of
socio-economic groups, in particular low to middle income
households. It is these same households who form the largest
demographic by both number and overall consumer spending in the UK.
This combination of new customers, together with existing customers
buying into new categories, creates an exciting opportunity for
B&M to make further market share gains.
B&M stores are increasingly becoming a destination in their
own right, with customers valuing the range of product categories
on offer. As such, sales performance in the first half was strong
and broad based, with most categories in double-digit LFL growth.
The LFL performance was also geographically broad based with all
five UK regions, including the South of England, delivering LFL
sales growth in excess of 20% for H1.
With people spending more time in their homes during the initial
lockdown period in the UK, the DIY and Homewares ranges proved
particularly popular. In addition, as Spring 2020 turned out to be
the sunniest on record in the UK, there was a similarly strong
sales and gross margin performance across categories such as
Gardening and Leisure.
With Covid-19 continuing to have a profound impact on daily
lives, the ability to offer customers both value and convenience
should continue to resonate with those who increasingly regard
B&M as a part of their regular shopping routines.
2. Investing in new stores
The B&M UK business remains committed to its new store
rollout strategy and has a long growth runway from the current base
of 657 B&M fascia stores to the stated UK store target of 950
stores.
In the first half of the financial year there were 9 gross new
B&M UK fascia stores opened, of which 3 were relocations where
there was an opportunity to open a larger, more modern unit capable
of providing a better shopping experience for customers and
generating a significantly higher quantum of profit. The total of 9
gross new stores in H1 was a record low for B&M in recent
years, and reflects the severe impact of Covid-19 on the
construction industry and the slowdown in leasing activity by
commercial property landlords since March 2020.
As a consequence of the 8 B&M store closures, 3 of which
were relocations as noted above and the balance mostly 'first
generation' smaller stores in poor locations, there was a net
increase of only one in the first half of the financial year.
However, recent pick up in leasing activity means the B&M
business now expects to open 40 to 45 gross new stores in the
financial year as a whole, although both Q3 and Q4 openings are
likely to be back-end weighted, assuming Q4 openings are not
further delayed by construction restrictions. Looking ahead, FY22
will see the full year benefit of the delayed FY21 openings and the
pipeline of further new stores is healthy, with 25 locations
already in legal negotiations.
Heron Foods opened 6 net new stores in the first half of the
financial year, bringing the total to 299, and is on track to
achieve 16 net new stores in the financial year as a whole. Like
the B&M fascia stores, and for similar reasons, these will be
weighted towards the end of the financial year.
In France, the focus remains very much on converting the
existing Babou portfolio rather than opening new stores. At the end
of H1 FY21, there were a total of 103 stores in France with 37
trading under the B&M brand and the remaining 66 still under
the Babou fascia. Subject to any further lockdown restrictions, a
further 21 re-branded stores are expected by the end of FY21.
3. Developing the international business
In France, the Babou business was closed for the first 6 weeks
of the financial year due to the lockdown restrictions imposed by
the French Government, which inevitably set back plans. However,
when permitted to re-open, there was a strong recovery in sales
over the remainder of the first half. Trading was helped by the
good weather through the Summer which drove strong sales and margin
performance in Gardening and Outdoor Leisure categories during the
period under review.
There is an immediate need to manage the French business through
the current second lockdown, with a c.EUR5m adjusted EBITDA loss
expected to be made during the month of November 2020.
Beyond that, Babou has two priorities for the second half of the
year. The first is to complete the planned evolution of the product
offer towards that of B&M, with less exposure to the Clothing
category. This continues to progress, with the new product being
well received by the French consumer. Secondly, the programme of
re-branding existing Babou stores to the B&M fascia is expected
to continue. Subject to any further disruption caused by the second
lockdown in France, a total of 58 stores are expected to be trading
under the B&M banner by the end of FY21.
Although a more settled period of time is needed to assess the
success of the stores converted so far, early results are
encouraging. No other international geographies are currently being
evaluated whilst work continues to prove that the B&M model can
be successful in France, with management and local teams wholly
focused on the task in hand. The proposition in France will
continue to be developed once the disruption caused by Covid-19 has
passed.
4. Investment in people and infrastructure
The c.1 million square feet Southern distribution centre at
Bedford, which was completed and fitted-out during FY20, is now
fully operational and currently supplies over one-third of the
B&M store estate. However, it is currently experiencing higher
than expected operating costs due to inefficiencies relating to
additional social distancing measures across the warehouse
network.
The senior management team continues to broaden and strengthen,
having welcomed Anthony Giron as President of Babou on 11 May 2020
and Alex Russo as Group Chief Financial Officer on 5 October 2020.
A new Supply Chain Director also joined the B&M UK business in
October 2020, as a result of the upcoming retirement of the current
Distribution Director.
One consequence of Covid-19 was that travel restrictions
curtailed buying trips to the Far East, meaning that in-house
talent has increasingly been used in areas such as new product
development and design. In so doing, the business demonstrated an
ability to be as effective in these areas as its suppliers in Asia
have been, whilst at the same time providing development
opportunities for colleagues.
At store level, the planned rollout of a digital Workforce
Management System has gradually re-commenced, having paused
training during the initial coronavirus outbreak. This new system
will enable a more agile approach to store rotas, as well as
creating efficiencies through the reduction of paper-based
processes.
Although store colleague learning and development had to be put
on hold at the start of the financial year, the "Step-Up" programme
was successfully adapted to facilitate e-learning. Around 300
colleagues have completed their training in time for the Golden
Quarter trading period, allowing them to play a crucial role in
delivering the success of the business.
Outlook
There is undoubtedly a greater level of uncertainty surrounding
the remainder of the financial year than would usually be the case.
The business is no better placed than any other to predict what
impact the economic environment will have on consumers across the
UK. With social distancing seemingly here to stay for the
foreseeable future, and with new lockdown measures currently in
force across the UK and France, there is a risk that the ability to
serve customers in their usual numbers during the peak trading
season will be challenged.
However, B&M has a number of significant advantages which
mean the business is well positioned to respond to the new
realities. Those strengths include the 'variety retailing' model
with its core ranges in everyday essentials such as Food, Personal
Care and Household Care products, a well-invested infrastructure,
strong value credentials and a large format, modern and convenient
store network in Out of Town locations, which mean the business can
continue to serve shoppers' needs effectively.
As the appeal of variety goods value retailing continues to
broaden, B&M is playing an increasingly important role within
the UK supply chain, for example with the 4.5m average weekly
shopper visits during September helping to alleviate some of the
pressure on the mainstream supermarkets for essential Grocery
products.
Having remained open throughout the crisis, the business has
learnt a lot about how customers want to shop, and which products
they are increasingly seeking out. The B&M model enables the
business to respond to these changing trends at pace, for example
through ongoing work to evolve pricing architecture. In the near
term, there is a considerable opportunity to retain the loyalty of
those customers who have discovered B&M for the first time
during the past six months, and in doing so grow the currently
modest market share across both Grocery and Non-Grocery
segments.
LFL sales growth in the B&M UK fascia is expected to
moderate over H2, but so far in Q3 has been at a similar level to
H1. Approximately half of the Babou/B&M France stores remain
open, albeit selling essential goods only and with significantly
reduced footfall during the November lockdown. In France, it
remains unclear what level of lost revenue recovery can be achieved
as December peak trading approaches. Although both the B&M UK
and Heron Foods businesses remain open, there is significant
uncertainty surrounding both the nature and duration of Covid-19
restrictions during the second half of the financial year. As such,
the range of potential outcomes for FY21 remains unusually wide at
this stage of the year and it is difficult to make a clear
assessment of how consumers will react over the coming months.
However, against this backdrop, whilst acknowledging the outlook
for consumer confidence remains unknown, the B&M Group is
cautiously optimistic that its broad range of essential goods will
continue to appeal to customers.
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 28 March 2020.
These risks comprise all those associated with the Covid-19
pandemic, high levels of competition, the broader economic
environment and market conditions, failure to comply with laws and
regulations, failure to maintain and invest in key infrastructure,
inherent risks in international expansion, disruption to key IT
systems, cyber security and business continuity, credit risk and
liquidity, fluctuations in commodity prices and cost inflation,
regulatory, tax and customs effects generally on the UK's exit from
the EU, key management reliance, disruption in supply chain,
availability of suitable new stores and failure of stock management
controls.
Whilst the uncertainties around Brexit are well documented
elsewhere, the Group is relatively less exposed to the potential
challenges this may present to businesses. In particular, its
supply chains do not materially depend on trade flows between the
UK and Continental Europe, with the vast majority of General
Merchandise sourced instead from the Far East and not reliant on
English Channel ports. Currency hedging policies are also in place
to withstand short-term volatility in the value of Sterling against
the US Dollar, being the principal currency in which goods are
procured from the Far East. The Group has a track record of
maintaining gross margins despite previous periods of exchange rate
volatility or Sterling weakness.
Detailed explanations of these risks are set out on pages 24 to
32 of the Annual Report 2020 which is available at
www.bandmretail.com
Simon Arora
Chief Executive
12 November 2020
Consolidated statement of Comprehensive Income
Restated*
26 weeks 52 weeks
26 weeks ended ended ended
26 September 28 September 28 March
2020 2019 2020
Note GBP'000 GBP'000 GBP'000
Continuing operations
Revenue 3 2,242,112 1,788,693 3,813,387
Cost of sales (1,440,592) (1,174,956) (2,530,579)
Gross profit 801,520 613,737 1,282,808
Gain on sale and leaseback of the Bedford
warehouse - - 16,932
Administrative expenses - other (518,926) (467,591) (966,928)
Operating profit 282,594 146,146 332,812
Share of profits of investments in associates - 500 879
Profit on ordinary activities before interest
and tax 282,594 146,646 333,691
Finance costs on lease liabilities (30,577) (28,451) (57,206)
Other finance costs (16,414) (12,334) (24,809)
Finance income 33 95 213
Gain on revaluation of financial instrument - - 134
Profit on ordinary activities before tax 235,636 105,956 252,023
Income tax expense 7 (48,460) (22,158) (57,246)
Profit for the period from continuing operations 187,176 83,798 194,777
-------------- ------------- -----------
Attributable to owners of the parent 187,176 83,798 194,777
Discontinued operations
Loss from discontinued operations - (78,546) (113,922)
Profit for the period 187,176 5,252 80,855
-------------- ------------- -----------
Attributable to non-controlling interests - (9,051) (9,172)
Attributable to owners of the parent 187,176 14,303 90,027
Other comprehensive income for the period
Items that may be subsequently reclassified
to profit or loss:
Exchange differences on retranslation of
subsidiaries and associates (52) 3,868 1,661
Fair value movements recorded in the hedging
reserve (10,235) 11,527 8,679
Tax effect of other comprehensive income 1,859 (2,010) (1,383)
Total comprehensive income for the period 178,748 18,637 89,812
-------------- ------------- -----------
Attributable to non-controlling interests - (8,487) (9,753)
Attributable to owners of the parent 178,748 27,124 99,565
Earnings per share from continuing operations
Basic earnings attributable to ordinary
equity holders (pence) 6 18.7 8.4 19.5
Diluted earnings attributable to ordinary
equity holders (pence) 6 18.7 8.4 19.5
Earnings per share from all operations
Basic earnings attributable to ordinary
equity holders (pence) 6 18.7 1.4 9.0
Diluted earnings attributable to ordinary
equity holders (pence) 6 18.7 1.4 9.0
The accompanying accounting policies and notes form an integral
part of these financial statements.
* This statement has been restated in respect of the
reclassification of Jawoll as a discontinued operation and
adjustments to our IFRS 16 balances, see notes 1 and 5.
Consolidated statement of Financial Position
Restated*
26 September 28 September 28 March
2020 2019 2020
Assets Note GBP'000 GBP'000 GBP'000
Non-current
Goodwill 5,8 922,502 921,678 921,911
Intangible assets 8 118,882 120,407 119,696
Property, plant and equipment 10 312,383 327,524 312,198
Right-of-use assets 11 1,067,737 1,068,653 1,086,618
Investments accounted for using
the equity method 5,700 6,488 5,700
Other receivables 7,680 8,513 7,517
Deferred tax asset 22,091 17,319 22,988
------------ ------------- -----------
2,456,975 2,470,582 2,476,628
------------ ------------- -----------
Current
Cash and cash equivalents 438,763 77,644 428,205
Assets held for sale 10 - 89,016 -
Inventories 695,904 830,903 588,000
Trade and other receivables 49,198 59,676 60,588
Other current financial assets 4,462 21,453 16,702
Income tax receivable - 6,814 -
1,188,327 1,085,506 1,093,495
------------ ------------- -----------
Total assets 3,645,302 3,556,088 3,570,123
------------ ------------- -----------
Equity
Share capital 12 (100,073) (100,056) (100,058)
Share premium (2,474,858) (2,474,249) (2,474,318)
Retained earnings (378,324) (359,310) (244,829)
Hedging reserve (904) (11,501) (9,280)
Legal reserve (10,010) (10,010) (10,010)
Merger reserve 1,979,131 1,979,131 1,979,131
Foreign exchange reserve (7,983) (9,097) (8,035)
Put/call option reserve - 13,855 -
Non-controlling interest - (1,266) -
(993,021) (972,503) (867,399)
------------ ------------- -----------
Non-current liabilities
Interest-bearing loans and borrowings 13 (705,113) (564,772) (561,418)
Lease liabilities (1,143,393) (1,106,189) (1,146,233)
Other financial liabilities - (12) -
Other liabilities (483) (629) (171)
Deferred tax liabilities (26,327) (28,149) (29,008)
Provisions (788) (785) (766)
(1,876,104) (1,700,536) (1,737,596)
------------ ------------- -----------
Current liabilities
Interest-bearing loans and borrowings 13 (55,076) (193,646) (211,062)
Overdrafts - (15,634) (928)
Trade and other payables (532,558) (475,367) (419,999)
Lease liabilities (160,985) (159,968) (149,011)
Other financial liabilities (6,115) (12,372) (1,847)
Income tax payable (14,256) (19,700) (26,115)
Dividends - - (150,087)
Provisions (7,187) (6,362) (6,079)
------------ ------------- -----------
(776,177) (883,049) (965,128)
------------ ------------- -----------
Total liabilities (2,652,281) (2,583,585) (2,702,724)
------------ ------------- -----------
Total equity and liabilities (3,645,302) (3,556,088) (3,570,123)
------------ ------------- -----------
* This statement has been restated for adjustments to our IFRS
16 balances, see note 1.
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 12 November
2020 and signed on their behalf by:
S. Arora, Chief Executive Officer.
Consolidated statement of Changes in Shareholders' Equity
Non- Total
Foreign Put/call control. Share-
Share Share Retained Hedging Legal Merger exchange option . holders'
capital premium earnings reserve reserve reserve reserve reserve interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 30
March 2019 100,056 2,474,249 393,375 1,984 10,010 (1,979,131) 5,793 (13,855) 9,753 1,002,234
------- --------- --------- ------- -------- ----------- -------- -------- -------- ---------
Ordinary
dividend
payments to
owners - - (49,027) - - - - - - (49,027)
Effect of
share options - - 659 - - - - - - 659
Total for
transactions
with owners - - (48,368) - - - - - - (48,368)
------- --------- --------- ------- -------- ----------- -------- -------- -------- ---------
Profit from
continuing
operations - - 83,798 - - - - - - 83,798
Loss from
discontinued
operations - - (69,495) - - - - - (9,051) (78,546)
Other
comprehensive
income - - - 9,517 - - 3,304 - 564 13,385
------- --------- --------- ------- -------- ----------- -------- -------- -------- ---------
Total
comprehensive
income for
the period - - 14,303 9,517 - - 3,304 - (8,487) 18,637
------- --------- --------- ------- -------- ----------- -------- -------- -------- ---------
Balance at 28
September
2019 100,056 2,474,249 359,310 11,501 10,010 (1,979,131) 9,097 (13,855) 1,266 972,503
------- --------- --------- ------- -------- ----------- -------- -------- -------- ---------
Ordinary
dividend
payments to
owners - - (27,015) - - - - - - (27,015)
Special
dividend
payments to
owners - - (150,087) - - - - - - (150,087)
Effect of
share options 2 69 752 - - - - - - 823
------- --------- --------- ------- -------- ----------- -------- -------- -------- ---------
Total for
transactions
with owners 2 69 (176,350) - - - - - - (176,279)
------- --------- --------- ------- -------- ----------- -------- -------- -------- ---------
Profit from
continuing
operations - - 110,979 - - - - - - 110,979
Loss from
discontinued
operations - - (35,255) - - - - - (121) (35,376)
Other
comprehensive
income - - - (2,221) - - (1,062) - (1,145) (4,428)
------- --------- --------- ------- -------- ----------- -------- -------- -------- ---------
Total
comprehensive
income for
the period - - 75,724 (2,221) - - (1,062) - (1,266) 71,175
------- --------- --------- ------- -------- ----------- -------- -------- -------- ---------
Disposal of
Jawoll - - (13,855) - - - - 13,855 - -
Balance at 28
March 2020 100,058 2,474,318 244,829 9,280 10,010 (1,979,131) 8,035 - - 867,399
------- --------- --------- ------- -------- ----------- -------- -------- -------- ---------
Ordinary
dividend
payments to
owners - - (54,035) - - - - - - (54,035)
Effect of
share options 15 540 354 - - - - - - 909
------- --------- --------- ------- -------- ----------- -------- -------- -------- ---------
Total for
transactions
with owners 15 540 (53,681) - - - - - - (53,126)
------- --------- --------- ------- -------- ----------- -------- -------- -------- ---------
Profit for the
period - - 187,176 - - - - - - 187,176
Other
comprehensive
income - - - (8,376) - - (52) - - (8,428)
------- --------- --------- ------- -------- ----------- -------- -------- -------- ---------
Total
comprehensive
income for
the period - - 187,176 (8,376) - - (52) - - 178,748
------- --------- --------- ------- -------- ----------- -------- -------- -------- ---------
Balance at 26
September
2020 100,073 2,474,858 378,324 904 10,010 (1,979,131) 7,983 - - 993,021
------- --------- --------- ------- -------- ----------- -------- -------- -------- ---------
* This statement has been restated in respect of the
reclassification of Jawoll as a discontinued operation and
adjustments to our IFRS 16 balances, see notes 1 and 5.
Consolidated statement of Cash Flows
Restated*
26 weeks 52 weeks
26 weeks ended ended ended
26 September 28 September 28 March
2020 2019 2020
Note GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Cash generated from operations 14 403,211 107,250 532,645
Non cash write off from discontinued operations - 59,533 68,036
Income tax paid (60,241) (28,618) (57,924)
---------------- ------------- ----------
Net cash flows from operating activities 342,970 138,165 542,757
---------------- ------------- ----------
Cash flows from investing activities
Purchase of property, plant and equipment (30,708) (79,352) (123,270)
Purchase of intangible assets (418) (824) (1,361)
Deferred consideration in respect of business
acquisitions - - (11,950)
Business disposal net of cash disposed 9,074 - 2,964
Proceeds from the sale of property, plant
and equipment 6,159 1,871 160,518
Finance income received 33 95 214
Dividends received from associates - 932 2,580
---------------- ------------- ----------
Net cash flows from investing activities (15,860) (77,278) 29,695
---------------- ------------- ----------
Cash flows from financing activities
Newly issued corporate bonds net of bonds
repaid 13 150,000 - -
New group bank facilities net of bank facilities
repaid 13 (82,430) - -
Net (repayment)/receipt of Group revolving
bank loans (120,000) 66,000 80,000
Net repayment of Heron bank facilities (1,089) (947) (2,030)
Net receipt of Babou bank facilities 13 45,407 2,046 1,587
Repayment of the principal in relation
to right-of-use assets (51,577) (54,077) (142,653)
Payment of interest in relation to right-of-use
assets (30,577) (31,904) (63,790)
Fees on refinancing 13 (10,835) - (119)
Oher finance costs paid (10,991) (13,453) (23,957)
Receipt from exercise of employee share
options 30 - 60
Dividends paid to owners of the parent (204,123) (49,027) (76,042)
Net cash flows from financing activities (316,185) (81,362) (226,944)
---------------- ------------- ----------
Effects of exchange rate changes on cash
and cash equivalents 561 1,929 1,213
Net increase/(decrease) in cash and cash
equivalents 11,486 (18,546) 346,721
Cash and cash equivalents at the beginning
of the period 427,277 80,556 80,556
---------------- ------------- ----------
Cash and cash equivalents at the end of
the period 438,763 62,010 427,277
---------------- ------------- ----------
Cash and cash equivalents comprise:
Cash at bank and in hand 438,763 77,644 428,205
Overdrafts - (15,634) (928)
---------------- ------------- ----------
438,763 62,010 427,277
---------------- ------------- ----------
* This statement has been restated in respect of the
reclassification of Jawoll as a discontinued operation, adjustments
to our IFRS 16 balances, and to present the foreign exchange
movement in line with the current year presentation, see notes 1
and 5.
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 28
March 2020.
The financial statements for B&M European Value Retail S.A.
for the period to 28 March 2020 have been reported on by the Group
auditor and delivered to the Luxembourg Registrar of Companies. The
audit report was unqualified.
The financial information is presented in pounds sterling and
all values are rounded to the nearest thousand (GBP'000), except
when otherwise indicated.
This consolidated financial information does not constitute
statutory financial statements.
Restatements
The prior half year (26 weeks to 28 September 2019) information
has been restated to reflect that the Group's German business has
been disposed and for the finalised IFRS 16 figures.
Disposal of German operations
On 27 March 2020 the Group announced the disposal of their 80%
shareholding in the subsidiary J.A. Woll-Handels GmbH, and the
results of the entity have ceased to be consolidated from this
date.
This subsidiary was previously consolidated as the Germany
Jawoll segment, and as such the prior half year statement of
comprehensive income has been restated to include the results of
the Germany Jawoll segment within the discontinued operations
categorisation.
See note 5 for more information.
Finalisation of IFRS 16 figures
Following the prior half year end further detailed analysis of
the IFRS 16 lease balances resulted in minor restatements to the
prior half year balances.
The effect on overall profit due to these restatements was a
loss of GBP1.2m, whilst the overall effect to net equity was a
debit of GBP0.4m.
See note 11 for more details on the Group's IFRS 16 figures.
The overall restatements to the statement of profit or loss are
shown below.
Effect of
Effect of the restatement
As previously the disposal of IFRS 16
reported of Jawoll balances Restated
GBP'000 GBP'000 GBP'000 GBP'000
Continuing operations
Revenue 1,903,438 (114,745) - 1,788,693
Cost of sales (1,251,825) 76,869 - (1,174,956)
Gross profit 651,613 (37,876) - 613,737
Administrative expenses - impairment
of Jawoll (59,533) 59,533 - -
Administrative expenses - other (516,166) 49,678 (1,103) (467,591)
Operating profit 75,914 71,335 (1,103) 146,146
Share of profits of investments in
associates 500 - - 500
Profit on ordinary activities before
interest and tax 76,414 71,335 (1,103) 146,646
Finance costs on lease liabilities (31,888) 3,499 (62) (28,451)
Other finance costs (12,441) 107 - (12,334)
Finance income 95 - - 95
Profit on ordinary activities before
tax 32,180 74,941 (1,165) 105,956
Income tax expense (25,761) 3,565 38 (22,158)
Profit for the period from continuing
operations 6,419 78,506 (1,127) 83,798
------------- ------------- ---------------- -----------
Discontinued operations
Loss from discontinued operations - (78,506) (40) (78,546)
Profit for the period 6,419 - (1,167) 5,252
------------- ------------- ---------------- -----------
Earnings per share from continuing
operations
Basic earnings attributable to ordinary
equity holders (pence) 1.5 7.0 (0.1) 8.4
Diluted earnings attributable to
ordinary equity holders (pence) 1.5 7.0 (0.1) 8.4
The restatements to the statement of financial position are
related to the IFRS 16 corrections. A summary of the more
significant of these is shown in the table below.
As previously
reported Restatement Restated
GBP'000 GBP'000 GBP'000
Non-current assets
Right-of-use assets 1,054,758 13,895 1,068,653
Deferred tax asset 18,468 (1,149) 17,319
Current assets
Trade and other receivables 57,790 1,886 59,676
Total assets 3,541,456 14,632 3,556,088
Equity
Retained earnings (359,673) 363 (359,310)
Total equity (972,910) 407 (972,503)
Non-current liabilities
Lease liabilities (1,090,391) (15,798) (1,106,189)
Deferred tax liabilities (28,712) 563 (28,149)
Total liabilities (2,568,546) (15,039) (2,583,585)
----------------------------- ------------- ----------- -----------
Cash flow foreign exchange
A presentational restatement has been made to the consolidated
statement of cash flows such that the effects of exchange rate
changes on cash and cash equivalents has been shown separately from
cash flows in line with IAS 7. In prior years this separation was
not made on grounds of materiality, and as such the prior half year
has been represented to align with the current year presentation.
This has resulted in an increase of net cash flows from operating
activities of GBP682k and a decrease in net cash flows from
financing activities of GBP2,611k.
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 29 March 2020 to 26
September 2020. 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 2022 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 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 (see note 13 for more details on
the refinancing).
The French Babou stores were closed at the year end date,
reopening on May 11 2020, and have been impacted in November by
some closures and stores currently restricted to selling essential
goods only, as part of the French Government's response to the
pandemic. However, the losses incurred are not significant to the
Group as a whole, they have received support in the form of loans
that are 90% guaranteed by the French government, and therefore
have no short term liquidity issues, and have traded successfully
and profitably in the period when they were allowed to remain
open.
The UK stores within the B&M and Heron segments (which
comprise over 90% of Group revenue) have traded well in the period,
and as a retailer of essential goods all stores remain open with no
restrictions currently imposed on what can be sold in England,
Scotland or Norther Ireland. During the recent 17 day "firebreak"
in Wales, the 43 Welsh stores remained open but sold essential
items only, which limited the performance of those stores. The
Group in it's operations has been highly cash generative.
Given the mitigations above in France, and that the majority of
the Group's stores have continued to operate profitably, and are
expected to continue to do so during the latest UK lockdown
announced in November, management do not consider that the Covid-19
pandemic has had a material impact on the going concern
assessment.
After making enquiries and considering severe but plausible
downside scenarios the Directors are confident that the Group has
adequate resources to remain a going concern even in those
circumstances.
Accordingly they continue to adopt the going concern basis in
preparing these financial statements.
Critical judgments and key sources of estimation uncertainty
Goodwill impairment
At year end the Group considered that the Babou segment showed
potential signs of impairment due to the requirement to close those
stores during the early phase of the Covid-19 pandemic.
An impairment test was carried out, as reported in our March
2020 financial statements, which demonstrated that no impairment
was required, but that the situation should be kept under
management review as it continued to evolve.
Since the impairment test was carried out, Babou results have
exceeded management expectations with all stores reopened and
significantly positive like for like sales achieved. The model was
subsequently updated to include the impact of the second lockdown
in France (based upon all stores closing). At a high level the
model reported headroom of over EUR40m when sensitised to include
the full lockdown closures.
Management have therefore made the judgement that there are
currently no signs of potential impairment at Babou, and therefore
no requirement to carry out a further impairment test at the
interim date.
Babou will continue to be monitored by management and will next
be tested for impairment, as usual, at the year end date (27 March
2021).
Babou Stock Provision
At the March 2020 year end date management exercised significant
judgement in relation to the net realisable value of inventories
held at Babou, as a result of the closure of Babou stores between
15 March and 11 May 2020 and the subsequent loss of revenues.
A provision of EUR7.3m was made against this inventory category.
Following the reopening of Babou stores on 11 May, trading was
better than anticipated, however due to the seasonality of the
stock, most of it remains in and it will be brought out again for
the Spring/Summer 2021 season.
Given there remains some uncertainty with regards to the net
realisable value of this inventory, management have considered it
prudent to maintain the existing EUR7.3m provision, and this will
be considered again once we have seen the sales performance in the
early part of that season.
As there has been no P&L impact from the stock provision,
and the business traded strongly post reopening from the April /
May 2020 lockdown, no Covid-19 P&L impact has been adjusted for
in the half year.
Standards and interpretations applied and not yet applied by the
Group
Adoption of new and revised standards
The Group continues to monitor the potential impact of new
standards and interpretations which have been or may be endorsed
and require adoption by the Group in future reporting periods.
The Group does not consider that any standards, amendments or
interpretations issued by the IASB, but not yet applicable, will
have a significant impact on the financial statements.
2 Statement of profit and loss without the effects of IFRS 16
The Group applied IFRS 16 for the first time in the prior year.
Therefore in order to aid the comparability of our results with
those previously issued, we provide the profit and loss statement
without the effects of IFRS 16.
Restated*
26 weeks 52 weeks
26 weeks ended ended ended
26 September 28 September 28 March
2020 2019 2020
GBP'000 GBP'000 GBP'000
Continuing operations
Revenue 2,242,112 1,788,693 3,813,387
Cost of sales (1,440,592) (1,174,956) (2,530,579)
Gross profit 801,520 613,737 1,282,808
Gain on sale and leaseback of the Bedford
warehouse - - 48,984
Administrative expenses (540,680) (485,378) (1,007,378)
Operating profit 260,840 127,359 324,414
Share of profits of investments in associates - 500 879
Profit on ordinary activities before interest
and tax 260,840 127,859 325,293
Finance costs (16,469) (12,428) (24,983)
Finance income 33 95 213
Gain on revaluation of financial instrument - - 134
Profit on ordinary activities before tax 244,404 115,526 300,657
Income tax expense (47,617) (24,002) (64,012)
Profit for the period from continuing operations 196,787 91,524 236,645
-------------- ------------- -----------
Attributable to owners of the parent 196,787 91,524 236,645
Discontinued operations
Loss from discontinued operations - (77,844) (119,444)
Profit for the period 196,787 13,680 117,201
-------------- ------------- -----------
Attributable to non-controlling interests - (8,911) (10,306)
Attributable to owners of the parent 196,787 22,591 127,507
* This statement has been restated in respect of the
reclassification of Jawoll as a discontinued operation and
adjustments to our IFRS 16 balances, see notes 1 and 5.
The overall effect on continuing profit before tax of the IFRS
16 adjustments for the current period was a loss of GBP8.8m (Mar
20: GBP48.6m (including GBP32.1m in relation to the sale and
leaseback of the Bedford warehouse), Sept 19: GBP9.6m). See note 11
for further details of the IFRS 16 balances.
3 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 Babou segments
comprising the three separately operated business units within the
Group. Previously the Group consolidated the Germany Jawoll
segment, until disposal in March 2020, see note 5.
Items that fall into the corporate category, which is not a
separate segment but is presented to reconcile th 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 4).
The average euro rate for translation purposes was EUR1.1161/GBP
during the period, with the period end rate being EUR1.0935/GBP
(March 2020: EUR1.1441/GBP and EUR1.1176; September 2019:
EUR1.1257/GBP and EUR1.1274/GBP respectively).
26 week period to UK UK France Continuing
26 September 2020 B&M Heron Babou Corporate Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 1,885,390 216,168 140,554 - 2,242,112
EBITDA (note 4) 276,053 18,291 2,680 (6,057) 290,967
EBITDA (IFRS 16) (note
4) 352,611 23,621 17,539 (6,057) 387,714
Depreciation and amortisation (78,211) (10,478) (16,431) - (105,120)
Net finance expense (24,228) (1,329) (6,186) (15,215) (46,958)
Income tax (expense)/credit (50,144) (2,244) 1,534 2,394 (48,460)
Segment profit/(loss) 200,028 9,570 (3,544) (18,878) 187,176
Total assets 2,929,493 295,742 390,167 29,900 3,645,302
Total liabilities (1,463,060) (121,246) (258,759) (809,216) (2,652,281)
Capital expenditure* (20,561) (5,267) (5,298) - (31,126)
The prior year statement, below, has been restated to reflect
minor changes to the IFRS 16 calculations and to exclude the
Germany Jawoll segment as it is a discontinued operation. Note that
some expenses relating to the discontinued operation were
previously included in the corporate column, and that these have
also been excluded.
26 week period to UK UK France Continuing
28 September 2019 B&M Heron Babou Corporate Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Continuing operations
Revenue 1,456,380 188,247 144,066 - 1,788,693
EBITDA (note 4) 137,339 12,303 1,754 4,613 156,009
EBITDA (IFRS 16) (note
4) 208,117 16,104 16,944 4,613 245,778
Depreciation and amortisation (72,594) (8,660) (17,875) (3) (99,132)
Net finance expense (23,409) (1,400) (5,046) (10,835) (40,690)
Income tax (expense)/credit (21,301) (1,148) 1,972 (1,681) (22,158)
Segment profit/(loss) 90,813 4,896 (4,005) (7,906) 83,798
Total assets 2,632,567 285,275 323,536 125,005 3,366,383
Total liabilities (1,283,172) (123,287) (220,088) (808,137) (2,434,684)
Capital expenditure* (52,930) (7,412) (3,939) (13,522) (77,803)
52 week period to UK UK France Continuing
28 March 2020 B&M Heron Babou Corporate Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Continuing operations
Revenue 3,140,144 389,867 283,376 - 3,813,387
EBITDA (note 4) 321,590 25,551 (3,003) 38,839 382,977
EBITDA (IFRS 16) (note
4) 467,155 34,956 28,212 6,787 537,110
Depreciation and amortisation (148,946) (19,109) (35,357) (7) (203,419)
Net finance expense (42,722) (2,809) (10,538) (25,599) (81,668)
Income tax (expense)/credit (48,921) (2,444) 5,629 (11,510) (57,246)
Segment profit/(loss) 226,566 10,594 (12,054) (30,329) 194,777
Total assets 2,874,747 290,742 345,222 59,412 3,570,123
Total liabilities (1,342,935) (127,191) (249,816) (982,782) (2,702,724)
Capital expenditure* (69,908) (13,220) (8,198) (30,276) (121,602)
* Capital expenditure includes both tangible and intangible
capital. The reconciling figure between the total and the figure
given in the statement of cash flows is the capital expenditure at
Jawoll in the respective periods. See note 5.
4 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. The prior year has
been restated to reflect that the German operations were
discontinued.
Restated
26 weeks ended 26 weeks ended 52 weeks ended
26 September 28 September 28 March
Period to 2020 2019 2020
GBP'000 GBP'000 GBP'000
Continuing operations
Profit on ordinary activities before
interest and tax 282,594 146,646 333,691
Add back depreciation and amortisation 105,120 99,132 203,419
-------------- --------------- --------------
EBITDA (IFRS 16) 387,714 245,778 537,110
Exclude effects of IFRS 16 on administrative
expenses (96,747) (89,769) (154,133)
EBITDA 290,967 156,009 382,977
Reverse the effect of ineffective derivatives 6,242 (4,101) (641)
Foreign exchange on intercompany balances (1,569) (3,133) (3,694)
Foreign exchange on the acquisition
facility - 2,620 3,334
Gain on sale and leaseback of the Bedford
warehouse - - (48,984)
Direct effects of the closure of the
French stores due to Covid-19 - - 9,315
Adjusted EBITDA 295,640 151,395 342,307
Pre IFRS 16 depreciation and amortisation (30,127) (28,150) (57,684)
Net adjusted finance costs (see below) (11,863) (12,239) (24,596)
Adjusted profit before tax 253,650 111,006 260,027
Adjusted tax (52,171) (23,125) (57,048)
-------------- --------------- --------------
Adjusted profit for the period 201,479 87,881 202,979
-------------- --------------- --------------
All continuing adjusted profit for the period is 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.
Restated
26 weeks ended 26 weeks ended 52 weeks ended
26 September 28 September 28 March
Period to 2020 2019 2020
GBP'000 GBP'000 GBP'000
Continuing operations
Adjusted EBITDA (above) 295,640 151,395 342,307
Include effects of IFRS 16 on EBITDA 96,747 89,769 154,133
Exclude the effect of IFRS 16 on the
gain on Bedford - - 32,052
-------------- --------------- --------------
Adjusted EBITDA (IFRS 16) 392,387 241,164 528,492
Depreciation and amortisation (105,120) (99,132) (203,419)
Interest costs related to lease liabilities (30,577) (28,451) (57,206)
Net adjusted other finance costs (11,863) (12,239) (24,596)
-------------- --------------- --------------
Adjusted profit before tax (IFRS 16) 244,827 101,342 243,271
Adjusted tax (50,481) (21,281) (56,372)
-------------- --------------- --------------
Adjusted profit for the period (IFRS
16) 194,346 80,061 186,899
-------------- --------------- --------------
Net adjusted finance costs reconcile to finance costs in the
statement of comprehensive income as follows;
26 weeks ended 26 weeks ended 52 weeks ended
26 September 28 September 28 March
Period to 2020 2019 2020
GBP'000 GBP'000 GBP'000
Other finance costs from the statement
of comprehensive income (16,414) (12,334) (24,809)
Add back one-off costs of refinancing
(note 13) 4,518 - -
Finance income from the statement of
comprehensive income 33 95 213
Net adjusted finance costs (11,863) (12,239) (24,596)
-------------- -------------- --------------
Adjusting items are the effects of derivatives, one off
refinancing fees, foreign exchange on the translation of
intercompany balances and the effects of revaluing or unwinding
balances related to the acquisition of subsidiaries. Significant
project costs or gains or losses arising from unusual circumstances
or transactions may also be included if incurred, such as with the
gain on the sale and leaseback of the Bedford warehouse and the
direct loss incurred at Babou due to the closure of their stores
during the pandemic in the prior full year. 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.
5 Business disposal
In the prior year, on 27 March 2020 the Group announced the
disposal of J.A. Woll-Handels GmbH and it's subsidiaries
("Jawoll"), therefore forming a disposal group, for a consideration
of EUR12,501k, comprising EUR12,500k to repay intercompany balances
and GBP1k for the enterprise value of the business. Jawoll has
therefore not been consolidated since this date.
As such it's prior period results have been reclassified in the
statement of comprehensive income as discontinued operations under
the definition given in IFRS 5.
The consideration receivable breaks down as follows;
GBP'000 EUR'000
Deferred receivable against the intercompany
loan balance 8,948 10,000
Receivable immediately against the intercompany
trade receivable balance 2,237 2,500
Receivable against the transfer of the share
capital 1 1
------- --------
Total 11,186 12,501
Deferred consideration (8,948) (10,000)
Overdraft released on disposal 726 811
------- --------
Amount related to the disposal as disclosed
on the statement of cash flows 2,964 3,312
------- --------
The EUR10m deferred receivable, less EUR24k of fees, was
received in September 2020.
The loss on discontinued operations disclosed in the statement
of comprehensive income comprised the following;
52 weeks to 26 weeks to
28 March 28 September
Period ended 2020 2019
GBP'000 GBP'000
Revenue 210,662 114,744
Impairment expense recognised in September
2019 (59,533) (59,533)
Other expenses (240,224) (130,196)
----------- -------------
Loss before tax (89,095) (74,985)
Income tax expense (1,721) (3,561)
----------- -------------
Loss from discontinued operations before
disposal (90,816) (78,546)
Loss on disposal (23,106) -
Tax charge on disposal - -
----------- -------------
Loss from discontinued operations (113,922) (78,546)
----------- -------------
Attributable to non-controlling interests (9,172) (9,051)
Attributable to owners of the parent (104,750) (69,495)
The net cash flows of the disposed entity break down as
follows;
52 weeks to 26 weeks to
28 March 28 September
Period ended 2020 2020
GBP'000 GBP'000
Net cash flows from operating activities 3,015 (2,929)
Net cash flows from investing activities (3,033) (2,379)
Net cash flows from financing activities (2,487) (7,268)
----------- -------------
Net decrease in cash and cash equivalents (2,505) (12,576)
----------- -------------
Specifically, Jawoll spent GBP3,029k on capital additions in the
prior full year and GBP2,373k in the prior half year. These are
therefore the balancing numbers between the segment analysis cash
flow in note 3, and that given on the statement of cash flows.
The equity balances held in non-controlling interests and the
call/put reserve were entirely related to the Jawoll entities and
have therefore been derecognised at the date of this transaction.
The remaining balances have been recycled through to the retained
earnings reserve, see the statement of changes in equity.
On 6 March 2020 the business Bedford DC Investments Ltd was
disposed by the Group as part of a sale and leaseback transaction.
The entity had no significant profit or loss items except those
that related directly to the sale & leaseback transaction and
therefore no further disclosures have been made relating to the
discontinued operation within these interim accounts. Further
disclosures relating to the sale and leaseback transaction are
included in the previous annual report.
6 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 4.
The prior half year figures have been restated in regard the
reclassification of Jawoll as a discontinued operation and
finalisation of the IFRS 16 balances.
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 Restated
26 September 28 September 28 March
2020 2019 2020
GBP'000 GBP'000 GBP'000
Continuing operations
Profit for the period attributable to owners
of the parent 187,176 83,798 194,777
Adjusted profit for the period attributable
to owners of the parent 201,479 87,881 202,979
Adjusted (IFRS 16) profit for the period attributable
to owners of the parent 194,346 80,061 186,899
Discontinued operations
Loss for the period attributable to owners
of the parent - (69,495) (104,750)
All operations
Profit for the period attributable to owners
of the parent 187,176 14,303 90,027
------------- -------------- -----------
Thousands Thousands Thousands
Weighted average number of ordinary shares
for basic loss per share 1,000,627 1,000,561 1,000,570
Effect of dilution:
Employee share options 1,220 674 698
---------- ---------- ----------
Weighted average number of ordinary shares
adjusted for the effect of dilution 1,001,847 1,001,235 1,001,268
---------- ---------- ----------
Continuing operations Pence Pence Pence
Basic earnings per share 18.7 8.4 19.5
Diluted earnings per share 18.7 8.4 19.5
Adjusted basic earnings per share 20.1 8.8 20.3
Adjusted diluted earnings per share 20.1 8.8 20.3
Adjusted IFRS 16 basic earnings per share 19.4 8.0 18.7
Adjusted IFRS 16 diluted earnings per share 19.4 8.0 18.7
------ ------ ------
Discontinued operations Pence Pence Pence
Basic earnings per share - (6.9) (10.5)
Diluted earnings per share - (6.9) (10.5)
------- ------ -------
All operations Pence Pence Pence
Basic earnings per share 18.7 1.4 9.0
Diluted earnings per share 18.7 1.4 9.0
------ ------ ------
7 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 31% (France) and then adjusted for allowances
and non-deductibles in line with the prior year.
8 Intangible assets
Goodwill Software Brands Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost or valuation
At 30 March 2019 954,757 9,715 120,213 2,551 1,087,236
Additions - 824 - - 824
Disposals - (1) - - (1)
Effect of retranslation 1,980 38 303 84 2,405
At 28 September 2019 956,737 10,576 120,516 2,635 1,090,464
Additions - 537 - - 537
Disposal of Jawoll (35,367) (1,108) (5,324) (1,545) (43,344)
Other disposals - (11) - - (11)
Effect of retranslation 541 16 82 23 662
-------- -------- ------- ------- ---------
At 28 March 2020 921,911 10,010 115,274 1,113 1,048,308
Additions - 418 - - 418
Disposals - - - - -
Effect of retranslation 591 6 93 25 715
-------- -------- ------- ------- ---------
At 26 September 2020 922,502 10,434 115,367 1,138 1,049,441
-------- -------- ------- ------- ---------
Accumulated amortisation / impairment
At 30 March 2019 - 4,377 235 1,308 5,920
Charge for the period - 1,108 159 27 1,294
Impairment of Jawoll 35,112 611 5,286 154 41,163
Disposals - - - - -
Effect of retranslation (53) 14 (2) 43 2
At 28 September 2019 35,059 6,110 5,678 1,532 48,379
Charge for the period - 1,079 196 - 1,275
Disposal of Jawoll (35,367) (1,095) (5,324) (1,545) (43,331)
Other disposals - (12) - - (12)
Effect of retranslation 308 13 56 13 390
-------- -------- ------- ------- ---------
At 28 March 2020 - 6,095 606 - 6,701
Charge for the period - 1,132 202 - 1,334
Disposals - - - - -
Effect of retranslation - 6 16 - 22
-------- -------- ------- ------- ---------
At 26 September 2020 - 7,233 824 - 8,057
-------- -------- ------- ------- ---------
Net book value at 26 September 2020 922,502 3,201 114,543 1,138 1,041,384
-------- -------- ------- ------- ---------
Restated net book value at 28 March 2020 921,911 3,915 114,668 1,113 1,041,607
-------- -------- ------- ------- ---------
Net book value at 28 September 2019 921,678 4,466 114,838 1,103 1,042,085
-------- -------- ------- ------- ---------
9 Impairment review
Impairment reviews of the B&M, Heron and Babou segments were
carried out at the year end, see the 2020 annual report for further
details.
At the year end date, 28 March 2020, the Babou stores were
closed due to the restrictions put in place by the French
government in response to the Covid-19 pandemic, and that this was
an indication of potential impairment. However, the impairment test
carried out did not identify that a specific impairment was
required.
Since that date the Babou stores have reopened and are trading
profitably in excess of management expectations. A review of the
impairment test at the year end, holding other variables equal but
updating the forecast for the improved performance and the
potential effects of the second lockdown in November, indicates
that Babou has significant headroom and no other signs of
impairment have been noted. Therefore no further impairment review
is required at the interim period. Also see note 18 in regards to
post balance sheet events.
Due to a minor change in policy by the Group, terminal growth
rates as used in impairment tests are to be capped in line with the
overall growth rate of the macro economy to which each segment
belongs, when non-negative. Had this policy been in place at the
prior year end it would only have affected the test carried out
over the Heron segment and would have reduced the reported head
room from GBP143m to GBP132m. This therefore does not affect the
judgement that no impairment was required. Full impairment tests to
cover all CGU's will take place at the Group's next year end date
of 27 March 2021.
Jawoll impairment (prior year)
Our German business Jawoll continued to underperform against
management expectations and had not yet delivered the improvement
that was previously expected. As such, it became necessary to carry
out a further impairment review at the half year end date in
September 2019.
The review considered the projected future performance of the
business based on a range of inputs, and was carried out in the
segments base currency of the Euro. The key assumptions were as
stated in the table below and also there was a key assumption in
regards to the abnormal level of logistics costs with some
mitigation expected over the period of the projections, but without
the logistics costs returning to the original lower level
previously experienced by the business.
The assumptions used were as stated below with the usual Group
key assumptions used, in addition to the gross margin which was an
estimate provided by management based upon the expected rate of
recovery of the margin in the business.
September
As at 2019
Discount rate (Jawoll) 12.4%
Inflation rate for costs (Jawoll) 1.4%
Like for like sales growth (Jawoll) 1.0%
Gross margin (Jawoll) 37.5%
Terminal growth rate (Jawoll) 1.4%
The results of the impairment exercise were considered by the
Board which concluded that all of the Goodwill and Brand assets
should be impaired, as well as other assets within the
underperforming stores excluding the assets based at the warehouse
which management considered separately supportable.
Associated deferred tax assets and liabilities have been
derecognised, and the deferred tax asset carried in relation to the
use of future profits has also been derecognised. The right of use
assets, previously classified as finance leases, were also provided
against.
The total impairment reflects the following adjustments, with
the GBP values presented at the rate used to translate the items
for the purposes of profit and loss (1.1257EUR/GBP, the rate for
the statement of financial position was 1.1274EUR/GBP), being the
prevailing rates for the half year.
EUR'000 GBP'000
Goodwill 39,526 35,112
Brands 5,950 5,286
Software and other intangible assets 861 765
Land & buildings (including GBP4,940k
right of use assets) 6,282 5,581
Other fixed assets 14,398 12,789
------- -------
Impairment recognised in administrative
costs 67,017 59,533
------- -------
Deferred tax asset 12,717 11,297
Deferred tax liability (1,710) (1,519)
------- -------
Impairment recognised in income tax expense 11,007 9,778
------- -------
Total impairment 78,024 69,311
------- -------
The impairment is included in loss from discontinued operations
as Jawoll was subsequently disposed in March 2020. See note 5 for
more details on the disposal.
10 Property, plant and equipment
Plant,
Land and buildings Motor Vehicles fixtures and equipment Total
GBP'000 GBP'000 GBP'000 GBP'000
Cost or valuation
At 30 March 2019 163,267 12,943 341,721 517,931
Additions 30,302 2,628 46,422 79,352
Disposals (1,490) (778) (1,537) (3,805)
Transfer to "Held for sale" (89,016) - - (89,016)
Effect of retranslation 559 19 1,558 2,136
At 28 September 2019 103,622 14,812 388,164 506,598
Additions 6,739 1,947 35,232 43,918
Disposal of Jawoll (17,777) (478) (24,406) (42,661)
Other disposals (7,096) (384) (19,225) (26,705)
Effect of retranslation 315 3 667 985
At 28 March 2020 85,803 15,900 380,432 482,135
Additions 6,230 1,383 23,095 30,708
Disposals (3,427) (257) (2,849) (6,533)
Effect of retranslation - 1 861 862
------------------ -------------- ----------------------- --------
At 26 September 2020 88,606 17,027 401,539 507,172
------------------ -------------- ----------------------- --------
Accumulated depreciation
At 30 March 2019 20,037 3,303 116,010 139,350
Charge for the period 2,203 1,315 23,892 27,410
Impairment 1,193 32 12,759 13,984
Disposals (199) (559) (1,414) (2,172)
Effect of retranslation 144 6 352 502
------------------ -------------- ----------------------- --------
At 28 September 2019 23,378 4,097 151,599 179,074
Charge for the period 2,343 1,455 23,047 26,845
Disposal of Jawoll (6,220) (167) (21,973) (28,360)
Other disposals (250) (301) (7,689) (8,240)
Effect of retranslation 219 1 398 618
At 28 March 2020 19,470 5,085 145,382 169,937
Charge for the period 2,024 1,516 23,877 27,417
Disposals (198) (219) (2,440) (2,857)
Effect of retranslation - - 292 292
------------------ -------------- ----------------------- --------
At 26 September 2020 21,296 6,382 167,111 194,789
------------------ -------------- ----------------------- --------
Net book value at 26 September 2020 67,310 10,645 234,428 312,383
------------------ -------------- ----------------------- --------
Net book value at 28 March 2020 66,333 10,815 235,050 312,198
------------------ -------------- ----------------------- --------
Net book value at 26 September 2019 80,244 10,715 236,565 327,524
------------------ -------------- ----------------------- --------
In the prior year the Group built a large new warehouse which
was subsequently sold and leased back. As such the asset was held
as "Held for Sale" at the prior half year end.
11 Right of use assets
This schedule has been restated in respect of the prior year in
order to reflect the finalised IFRS 16 balances.
Plant,
Land and buildings Motor vehicles fixtures and equipment Total
GBP'000 GBP'000 GBP'000 GBP'000
Net book value
At 30 March 2019 1,010,733 20,096 6,044 1,036,873
Additions 102,538 2,363 2,852 107,753
Modifications 5,778 22 98 5,898
Disposals (6,114) (129) (77) (6,320)
Impairment (6,162) - - (6,162)
Depreciation (71,643) (3,421) (1,805) (76,869)
Foreign exchange 7,340 24 116 7,480
As at 28 September 2019 1,042,470 18,955 7,228 1,068,653
Additions 210,342 3,027 2,550 215,919
Modifications (1,576) (1) (95) (1,672)
Disposal of Jawoll (82,459) (560) (237) (83,256)
Other disposals (34,985) - (245) (35,230)
Impairment (676) - - (676)
Depreciation (74,593) (3,564) (1,772) (79,929)
Foreign exchange 2,750 9 50 2,809
------------------ -------------- ----------------------- ---------
As at 28 March 2020 1,061,273 17,866 7,479 1,086,618
Additions 54,420 57 1,799 56,276
Modifications 2,642 2 - 2,644
Disposals (3,927) (19) (47) (3,993)
Impairment (1,134) - - (1,134)
Depreciation (71,513) (3,062) (1,795) (76,370)
Foreign exchange 3,781 6 (91) 3,696
------------------ -------------- ----------------------- ---------
As at 26 September 2020 1,045,542 14,850 7,345 1,067,737
------------------ -------------- ----------------------- ---------
The vast majority of the Group's leases are in relation to the
property comprising the store and warehouse network for the
business. The other leases recognised are trucks, trailers, company
cars, manual handling equipment and various fixtures and fittings.
The leases are separately negotiated and no subgroup is considered
to be individually significant nor to contain individually
significant terms.
The Group recognises a lease term appropriate to the business
expectation of the term of use for the asset which usually assumes
that all extension clauses are taken, and break clauses are not,
unless the business considers there is a good reason to recognise
otherwise.
Sale and Leasebacks
During the period the business has undertaken one sale and
leaseback (Sept 19: none, Mar 20: 2). The transaction in this
period and one of the prior year transactions were for stores
occupied by B&M Retail Ltd. The other prior year transaction
was in regards to the Bedford warehouse.
Period to 26 September 28 September 28 March
2020 2019 2020
GBP'000 GBP'000 GBP'000
Consideration received 6,080 - 158,710
Net book value of the disposed asset (3,209) - (106,614)
Costs of sale when specifically recognised - - (1,070)
------------- ------------- ----------
Profit per pre-IFRS 16 accounting standards 2,871 - 51,026
Opening adjustment to the right of use
asset (3,013) - (34,098)
------------- ------------- ----------
(Loss)/profit recognised in the statement
of comprehensive income (142) - 16,928
------------- ------------- ----------
Initial right of use asset recognised 3,368 - 69,310
Initial lease liability recognised (6,381) - (103,408)
------------- ------------- ----------
12 Share capital
Nominal value Number of shares
Allotted, called up and fully paid GBP'000
B&M European Value Retail S.A. Ordinary
shares of 10p each;
At 30 March 2019 and 28 September 2019 100,056 1,000,561,222
Shares issued due to exercise of employee
share options 2 21,676
------------- ----------------
At 28 March 2020 100,058 1,000,582,898
Shares issued due to exercise of employee
share options 15 150,249
------------- ----------------
At 26 September 2020 100,073 1,000,733,147
------------- ----------------
Ordinary Shares
Each ordinary share ranks pari passu with each other ordinary
share and each share carries one vote. The Group parent is
authorised to release up to a maximum of 2,971,661,000 (2019:
2,971,661,000) ordinary shares.
The outstanding share options can be summarised as follows;
26 September 28 September 28 March
2020 2019 2020
Vested, available to exercise 285,027 32,725 11,049
Vested, not available to exercise (in
holding period) 346,876 322,819 326,469
Awarded, not vested (subject to conditions) 2,286,801 2,029,773 2,129,607
------------ ------------ ---------
Total outstanding share options 2,918,704 2,385,317 2,467,125
------------ ------------ ---------
For the dilutive effect of these, see note 6.
13 Financial liabilities - borrowings
26 September 28 September 28 March
2020 2019 2020
GBP'000 GBP'000 GBP'000
Current
Revolving facility bank loan - 106,000 120,000
Acquisition facility - 81,547 82,304
Babou government backed loan facility 46,639 - -
Babou other loan facilities 3,572 3,921 3,608
Heron loan facilities 4,865 2,178 5,150
------------ ------------ --------
55,076 193,646 211,062
------------ ------------ --------
Non-current
High yield bond notes 396,421 248,512 248,830
Term facility bank loan 295,830 298,508 298,916
Babou loan facilities 7,350 7,381 7,357
Heron loan facilities 5,512 10,371 6,315
------------ ------------ --------
705,113 564,772 561,418
------------ ------------ --------
Refinancing
On 13 July 2020 the Group refinanced their main facilities by
repaying the previously existing GBP250m high yield bond notes, the
GBP300m term loan and the EUR92m acquisition facility, and drawing
down a new main facility of GBP300m and issuing GBP400m of high
yield bonds. The maturity dates on the new facilities are April
2025 and July 2025 respectively.
The previously held GBP150m revolving loan facility has also
been replaced by a GBP155m revolving loan facility which was not
drawn on the date of the refinancing.
GBP100m of the high yield bonds issued were purchased by a
related party. See note 16 for further details.
The carrying values given above include fees incurred on the
refinancing which are to be amortised over the terms of those
facilities. More details of these are given below.
The following fees were expensed through other finance costs in
relation to the loans and bonds which have been repaid.
GBP'000
Remaining unamortised fees associated with
the repaid term loan 845
Remaining unamortised fees associated with
the repaid acquisition loan 65
Remaining unamortised fees associated with
the repaid high yield bonds 983
Early repayment charge associated with the
corporate bonds 2,578
Breakage fees 47
--------
Total fees expensed through other finance
costs 4,518
--------
The following fees were incurred on refinancing and have been
capitalised within the debt balance, to be amortised over the term
of the debt to which it relates.
GBP'000
Capitalised fees relating to the term loan
facility 4,348
Capitalised fees relating to the high yield
bonds 3,742
--------
Total fees capitalised within the debt balances 8,090
--------
The figure on the cashflow of GBP10.8m includes the above
GBP8.1m capitalised fees, GBP2.6m early repayment/breakage charges
and GBP0.1m of fees associated with an earlier extension of the
acquisition facility.
Further fees are to be received but are not expected to be
significant. Those fees are likely to be capitalised.
French government backed loan
In April 2020 the French government mandated that our Babou
stores were required to close as part of their response to the
Covid-19 pandemic. As a mitigation they introduced government
backed loans to assist the company's affected by this measure. As a
precaution and due to the uncertainty over the progression of the
virus and the impact on trade, the Group's French entity took a
EUR51m loan under this scheme.
The loan has an initial maturity of 1 year, which is interest
free but attracts a guarantor's fee of 0.5%. On maturity, in April
2021, the loan can be repaid or extended for up to 5 years with a
guarantor's fee of up to 2.0% and a low variable interest rate
payable to the bank.
The loan is only for use in the French business, in respect to
their working capital cash flows, and as such the cash balance
remains in that entity and did not impact the refinancing decisions
taken in the period.
Other loan details
The Babou loan facilities are held in Euros. All other
borrowings are held in sterling.
The term facility bank loan, high yield bonds and formerly the
acquisition facility 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 gross cash values of these facilities are GBP300m for the
term facility bank loan (Sept 19, Mar 20: GBP300m) and GBP400m for
the high yield bonds (Sept 19, Mar 20: GBP250m). The acquisition
facility had a gross value of EUR92m. All other loans have book
value equal to the gross cash value.
The current applicable interest rates and maturities on the
Group's loans are as follows;
Interest rate Maturity
%
Revolving facility loan 1.75% + LIBOR N/A - none held
Term facility bank loan A 2.00% + LIBOR Apr-25
High yield bond notes 3.625% Jul-25
Heron loan facilities - Melton 2.25% + LIBOR Jul-22
Heron loan facilities - Offset 2.45% + LIBOR Sep-20*
Heron loan facilities - Term 2.50% + LIBOR Dec-21
Babou - BNP Paribas 0.75%-0.76% Jan 23-Mar 24
Babou - Caisse d'Épargne 0.75%-1.50% Feb 22-Oct 24
Babou - CIC 0.71%-2.18% Jul 21-Jun 25
Babou - Cr é dit Agricole 0.39%-0.52% Aug 23-Sep 25
Babou - Crédit Lyonnais 0.68%-0.74% Nov 24-Apr 25
Babou - Société Générale 0.63% Jun-23
Babou - Government backed loan N/A Apr-21
* the Heron-Offset loan was repaid on 28 September 2020.
14 Reconciliation of profit before tax to cash generated from operations
26 weeks ended 26 weeks ended 28 September 2019 52 weeks ended 28 March
26 September 2020 2020
GBP'000 GBP'000 GBP'000
Profit for the period 187,176 5,252 80,855
Tax charge on continuing operations 48,460 22,158 57,246
Tax charge on discontinued operations - 3,561 1,721
------------------ -------------------------------- -----------------------
Profit before tax 235,636 30,971 139,822
Adjustments for:
Net interest expense 46,958 44,250 88,588
Depreciation of property, plant and
equipment 27,417 27,410 54,255
Depreciation of right of use assets 76,370 76,868 156,798
Amortisation of intangible assets 1,334 1,294 2,568
Gain on sale and leaseback 142 - (16,928)
Loss/(profit) on disposal of property,
plant and equipment 387 (244) (163)
Charge on share options 879 659 1,422
Change in inventories (106,445) (170,685) 29,348
Change in trade and other receivables 3,519 (3,329) 693
Change in trade and other payables 111,143 104,086 77,076
Change in provisions (371) 571 686
Share of profit from associates - (500) (879)
Loss/(profit) resulting from fair value
of financial derivatives 6,242 (4,101) (641)
------------------ -------------------------------- -----------------------
Cash generated from operations 403,211 107,250 532,645
------------------ -------------------------------- -----------------------
* This statement has been restated in respect of the
reclassification of Jawoll as a discontinued operation, adjustments
to our IFRS 16 balances, and to present the foreign exchange
movement in line with the current year presentation, see notes 1
and 5.
15 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.
26 September 28 September 28 March
As at 2020 2019 2020
Financial assets: GBP'000 GBP'000 GBP'000
Fair value through profit and loss
Fuel price swap - 73 -
Forward foreign exchange contracts 1,015 7,002 5,351
Fair value through other comprehensive income
Forward foreign exchange contracts 3,447 14,378 11,351
Loans and receivables
Cash and cash equivalents 438,763 77,644 428,205
Trade receivables 17,073 10,112 13,566
Other receivables 15,667 14,032 24,918
------------ ------------ ---------
Financial liabilities:
Fair value through profit and loss
Fuel price swap 827 26 1,847
Forward foreign exchange contracts 2,957 96 -
Deferred consideration relating to Heron purchase - 12,084 -
Fair value through other comprehensive income
Forward foreign exchange contracts 2,331 178 -
Amortised cost
Overdrafts - 15,634 928
Lease liabilities 1,304,378 1,266,157 1,295,244
Interest-bearing loans and borrowings 760,189 758,418 772,480
Trade payables 400,226 386,951 326,578
Other payables 5,265 9,057 4,201
------------ ------------ ---------
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,
interest rate swaps and fuel swaps 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 and strike rates, the
current exchange rate, fuel prices and LIBOR levels.
The Group's financial instruments are either carried at fair
value or have a carrying value which is considered a reasonable
approximation of fair value.
16 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 and Centz Retail Holdings, both customers, are
associates of the Group.
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, and SSA Investments,
bondholders and the 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).
As announced in July 2020, there was a significant new related
party transaction in the period as SSA Investments participated in
the High Yield Bonds issued by the Group by purchasing GBP100m of
these 3.625% bonds with a five year maturity. GBP1,057k of interest
expense has been incurred on these bonds in the period. Further
details on these bonds and the refinancing are given in note
13.
The following tables set out the total amount of trading
transactions with related parties included in the statement of
comprehensive income;
28 March 30 March
2020 2019
Period ended GBP'000 GBP'000
Purchases from associates of the Group
Multi-lines International Company Ltd 180,721 141,015
Purchases from parties related to key management
personnel
Multi-Lines International (Properties) Ltd 479 410
SSA Investments 97 44
Total purchases from related parties 181,297 141,469
-------- --------
26 weeks ended 26 weeks ended 52 weeks ended
26 September 28 September 26 March
2020 2019 2020
GBP'000 GBP'000 GBP'000
Sales to associates of the Group
Centz Retail Holdings Limited 18,924 10,275 25,327
Home Focus Group Limited 962 959 1,944
-------------- -------------- --------------
Total sales to related parties 19,886 11,234 27,271
-------------- -------------- --------------
26 weeks ended 26 weeks ended 52 weeks ended
26 September 28 September 26 March
2020 2019 2020
GBP'000 GBP'000 GBP'000
Purchases from associates of the
Group
Multi-lines International Company
Ltd 98,267 124,433 180,721
Purchases from parties related to key management
personnel
Multi-Lines International (Properties)
Ltd 242 241 479
SSA Investments - 21 97
-------------- -------------- --------------
Total sales to related parties 98,509 124,695 181,297
-------------- -------------- --------------
The IFRS 16 Lease figures in relation to the following related
parties, which are all related to key management personnel, are as
follows;
Right of
Depreciation Interest use Net
Charge Charge Total Charge Asset Lease Liability Liability
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Period ended 26 September
2020
Rani Investments 42 31 73 654 (820) (166)
Ropley Properties 830 464 1,294 11,464 (14,459) (2,995)
TJL UK Limited 371 207 578 8,864 (10,341) (1,477)
Triple Jersey Limited 4,407 2,073 6,480 69,910 (84,971) (15,061)
------------ -------- ------------ -------- --------------- ----------
5,650 2,775 8,425 90,892 (110,591) (19,699)
------------ -------- ------------ -------- --------------- ----------
Period ended 28 September
2019
Rani Investments 38 31 69 642 (801) (159)
Ropley Properties 967 583 1,550 14,215 (16,664) (2,449)
TJL UK Limited 371 218 589 9,605 (10,964) (1,359)
Triple Jersey Limited 4,903 2,650 7,553 80,553 (97,559) (17,006)
------------ -------- ------------ -------- --------------- ----------
6,279 3,482 9,761 105,015 (125,988) (20,973)
------------ -------- ------------ -------- --------------- ----------
Period ended 28 March
2020
Rani Investments 76 61 137 604 (734) (130)
Ropley Properties 1,827 1,078 2,905 12,518 (14,825) (2,307)
TJL UK Limited 741 432 1,173 9,235 (10,656) (1,421)
Triple Jersey Limited 9,362 4,914 14,276 72,121 (86,039) (13,918)
------------ -------- ------------ -------- --------------- ----------
12,006 6,485 18,491 94,478 (112,254) (17,776)
------------ -------- ------------ -------- --------------- ----------
The following tables set out the total amount of trading
balances with related parties outstanding at the period end.
26 September 28 September 26 March
2020 2019 2020
Trade receivables GBP'000 GBP'000 GBP'000
With associates of the Group
Centz Retail Holdings Limited 5,972 3,831 5,687
Home Focus Group Limited - 97 85
With parties related to key management personnel
Rani Investments 13 13 -
Ropley Properties Ltd 113 149 -
Triple Jersey Ltd 400 502 -
-------------- ------------ --------
Total trade receivables 6,498 4,592 5,772
-------------- ------------ --------
26 weeks ended 26 weeks ended 52 weeks ended
26 September 28 September 26 March
2020 2019 2020
Trade payables GBP'000 GBP'000 GBP'000
With associates of the Group
Multi-lines International Company
Ltd 12,900 17,285 9,588
With parties related to key management personnel
Rani Investments - - 26
Ropley Properties Ltd - - 380
Triple Jersey Ltd - - 1,438
Total sales to related parties 12,900 17,285 11,432
-------------- -------------- --------------
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 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
26 September 28 September 26 March
2020 2019 2020
GBP'000 GBP'000 GBP'000
Not later than one year 16,397 17,276 16,496
Later than one year and not later
than two years 16,713 17,453 16,604
Later than two years and not later
than five years 41,474 47,839 42,280
Later than five years 63,581 78,733 66,743
-------------- -------------- --------------
138,165 161,301 142,123
-------------- -------------- --------------
Further details regarding the Group's associates and
transactions with key management personnel are disclosed in the
annual report.
17 Commitments
There are no significant capital commitments as at the half year
end.
18 Post balance sheet events
An interim dividend of 4.3 pence per share (GBP43.0m), and a
special dividend of 25.0 pence per share (GBP250.3m) have been
proposed.
On 28 October 2020 the French government announced a second
national lockdown, and this necessitated the closure of the Group's
Babou stores which are all in that country.
Babou have been supported with a EUR51m loan, drawn in April and
90% guaranteed by the French government whilst the remainder of the
Group remains open and trading profitably. Therefore management
consider that this does not have a material impact on the going
concern statement.
Babou also traded in excess of management expectations once they
reopened after the first lockdown, and management believe that
there is therefore no reason to believe that this temporary closure
reflects an indication of impairment, and believe that it is not
realistic to consider that the calculated excess on our review
would be breached by the loss of earnings over this period.
Therefore the closures have no material impact on this
assessment.
On 1 November 2020 the UK government announced a second national
lockdown however, as in the earlier national lockdown, all stores
are expected to remain open and trading and therefore this does not
have an impact on the going concern statement, nor impairment
calculations.
In light of the strong performance during H1 FY21 and the
ongoing trading performance, the Group has repaid GBP3.6m received
under the UK Government's Job Retention Scheme, which primarily
related to the 49 stores closed during the early weeks of the
initial spring lockdown. Additionally, it does not intend to
participate in the Job Retention Bonus.
There have been no other material events between the balance
sheet date and the date of issue of these accounts.
19 Directors
The directors that served during the period were:
Peter Bamford (Chairman)
S Arora (CEO)
P McDonald (CFO) (see note below)
R McMillan
T Hall
C Bradley
G Petit
All directors served for the whole period.
As announced on 9 July 2020, Paul McDonald will retire from the
board on 15 November 2020. Alex Russo will join the board on 16
November 2020 as Group CFO.
Responsibility statement of the Directors in respect of the
half-yearly financial report
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 by
the EU;
-- the interim management report includes a fair review of the
information required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency
Rules, being an indication of important events that have occurred
during the first six months of the financial year and their impact
on the condensed set of financial statements; and a description of
the principal risks and uncertainties for the remaining six months
of the year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency
Rules, being related party transactions that have taken place in
the first six months of the current financial year 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
Simon Arora Paul McDonald
Chief Executive Chief Financial Officer
12 November 2020
Report of the Réviseur d'Entreprises agréé
on the review of condensed consolidated interim financial
information
Introduction
We have reviewed the accompanying condensed consolidated
statement of financial position of B&M European Value Retail
S.A. as at 26 September 2020, the related condensed consolidated
statements of comprehensive income, changes in equity and cash
flows for the 26 week period then ended, and notes to the interim
financial information ("the condensed consolidated interim
financial information"). The Board of Directors is responsible for
the preparation and presentation of these condensed consolidated
interim financial information in accordance with IAS 34 "Interim
Financial Reporting" as adopted by the European Union. Our
responsibility is to express a conclusion on these condensed
consolidated interim financial information based on our review.
Scope of Review
We conducted our review in accordance with the International
Standard on Review Engagements 2410, "Review of Interim Financial
Information Performed by the Independent Auditor of the Entity" as
adopted, for Luxembourg, by the Institut des Réviseurs
d'Entreprises. A review of interim financial information consists
of making inquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
and consequently does not enable us to obtain assurance that we
would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the accompanying condensed consolidated
interim financial information as at 26 September 2020 is not
prepared, in all material respects, in accordance with IAS 34
"Interim Financial Reporting" as adopted by the European Union.
Luxembourg, November 12, 2020 KPMG Luxembourg Société
coopérative
Cabinet de révision agréé
Thierry Ravasio
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IR GPGUCGUPUGMG
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