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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| B&m European Value Retail S.a. | LSE:BME | London | Ordinary Share | LU1072616219 | ORD 10P (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -8.00 | -1.53% | 516.20 | 516.40 | 516.80 | 524.20 | 514.60 | 523.00 | 4,582,095 | 16:35:11 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Misc Retail Stores, Nec | 4.98B | 348M | 0.3470 | 14.89 | 5.18B |
From Apr 2019 to Apr 2024
TIDMBME
RNS Number : 3771W
B&M European Value Retail S.A.
14 November 2017
14 November 2017
B&M European Value Retail S.A.
Interim Results Announcement
New customers driving strong growth at B&M
B&M European Value Retail S.A. ("the Group"), the UK's leading multi-price value retailer, today announces its interim results for the 26 weeks to 23 September 2017.
HIGHLIGHTS
-- Group revenues increased by +21.7% to GBP1,346.4m, +21.0% at constant currency
-- B&M UK like-for-like revenues(1) increased by +7.5%, including growth of +7.7% in the second quarter
-- Group adjusted EBITDA(4) increased by 19.8% to GBP116.1m (FY17: GBP96.9m); -- Profit before tax increased by 17.8% to GBP86.8m (FY17: GBP73.7m)
-- Adjusted Diluted earnings per share(4) 7.0p, up 18.6% (FY17: 5.9p). Earnings per share 6.8p, an increase of 17.2% (FY17: 5.8p)
-- 20 new B&M UK store openings including 3 relocations and on track to open gross 50 new B&M stores, of which 7 are relocations, this financial year
-- German business, Jawoll, opened 7 new stores in the period, and on track to open 11 new stores this financial year
-- Cash flow from operations GBP44.2m (FY17: GBP77.7m), reflecting earlier than normal seasonal stock building ahead of Christmas to support improving on-shelf product availability for customers
-- Interim dividend increased by 26.3% to 2.4p per share (FY17: 1.9p per share) to be paid on 22 December 2017
-- Heron Foods, a discount convenience retailer, acquired in August 2017 with 251 stores, providing a complementary brand, format and additional profitable growth opportunity
-- Contracts exchanged on the purchase of land in Bedford for large new UK B&M Southern distribution centre, to be operational late in the calendar year 2019
Sir Terry Leahy, Chairman, said,
"B&M has delivered an excellent performance in the first half of the financial year with strong growth in revenues, EBITDA and profit before tax. Our trading momentum in the UK has been maintained, driven by more shoppers seeking out value at B&M, combined with further improvements to our offer for customers particularly in ranging, pricing and store standards. We are well placed for the approaching Christmas season and we look forward to the remainder of the financial year with confidence".
Simon Arora, Chief Executive, said,
"B&M continues to prosper in a challenging retail environment and our teams remain wholly focused on helping our customers spend less during uncertain times. Our UK business continues to go from strength to strength, with new and like-for-like stores performing exceptionally well and the acquisition of Heron has added another leg of growth to the Group. We have also taken steps to enable us to push on with expanding our Jawoll business."
Financial Results (unaudited)
Hot Features
Premium
H1 FY 2018(2) H1 FY 2017(2) Change
--------------------------- ---------------- ---------------- ----------
Total Group Revenues GBP1,346.4m GBP1,105.9m +21.7%
B&M GBP1,192.0m GBP1,017.0m +17.2%
Jawoll GBP106.8m GBP88.9m +20.2%
Heron GBP47.5m - -
Total Group Revenues - - +21.0%
at constant currency(3)
--------------------------- ---------------- ---------------- ----------
Number of Stores
Group 893 585 +52.6%
B&M 552 519 +6.4%
Jawoll 82 66 +24.2%
Heron 259 - -
--------------------------- ---------------- ---------------- ----------
Adjusted EBITDA(4) GBP116.1m GBP96.9m +19.8%
B&M GBP107.8m GBP89.3m +20.7%
Jawoll GBP5.9m GBP7.6m -22.5%
Heron GBP2.4m - -
--------------------------- ---------------- ---------------- ----------
Adjusted EBITDA(4)
Margin % 8.6% 8.8% -14 bps
--------------------------- ---------------- ---------------- ----------
Profit Before Tax GBP86.8m GBP73.7m +17.8%
--------------------------- ---------------- ---------------- ----------
Adjusted Profit
Before Tax(4) GBP89.7m GBP75.6m +18.7%
--------------------------- ---------------- ---------------- ----------
Adjusted Diluted
EPS(4) 7.0p 5.9p +18.6%
--------------------------- ---------------- ---------------- ----------
EPS 6.8p 5.8p +17.2%
--------------------------- ---------------- ---------------- ----------
Ordinary Dividends 2.4p 1.9p +26.3%
--------------------------- ---------------- ---------------- ----------
(1) 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.
(2) The H1 FY 2018 figures represent the 26 week performance to 23 September 2017 and the H1 FY2017 figures represent the 26 week performance to 24 September 2016.
(3) Constant currency comparison involves restating the prior year Euro revenues using the same exchange rate as used to translate the current year Euro revenues.
(4) Adjusted items are those which the directors consider to be exceptional and non-trading items. The directors consider the 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, as well as being consistent with how business performance is monitored internally. Further details can be found in notes 3 and 5 to the financial information.
Analyst Meeting & Webcast
An Analyst Meeting in relation to the Interim Results will be held today at 8.30 am (UK) by invitation only at:
Bank of America Merrill Lynch
2 King Edward Street
London
EC1A 1HQ
The meeting can be accessed live via a dial-in facility on:
UK & International: +44 (0) 20 3427 1903 US: +1 646 254 3362
Participant Pin Code: 6219381
A simultaneous audio webcast and presentation slides 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
Simon Arora, Chief Executive
Paul McDonald, Chief Financial Officer
Steve Webb, Investor Relations Director
Investor.relations@bandmretail.com
Media
For media please contact +44 (0) 207 379 5151
Maitland
Robbie Hynes
Tom Eckersley
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 562 stores in the UK operating under the "B&M" brand and 260 stores under the "Heron Foods" brand, and 82 stores in Germany primarily operating under the "Jawoll" brand as at 4 November 2017. It was admitted to the FTSE 250 index in June 2015.
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
OVERVIEW
The Group has continued to make good progress in the first half of the financial year, pushing on with its UK store roll out, supplemented by the acquisition of the discount convenience chain Heron Foods. We have brought forward the planned succession of the Jawoll CEO and we are excited by the opportunities for the German business under its new leadership.
Financial Performance
Group revenues for the 26 weeks ended 23 September 2017 grew by +21.7% to GBP1,346.4m and by +21.0% on a constant currency basis.
B&M UK
In the B&M store estate in the UK, revenues grew by +17.2% to GBP1,192.0m, (FY17 H1: GBP1,017.0m) with that growth being driven by a strong like-for-like performance of +7.5% (FY17: +0.2%) combined with the successful execution of our new store opening programme, with 15 net new stores opened in the first half of the financial year and the annualisation of the net 38 new stores opened in FY2017.
In terms of the like-for-like revenue increase, the momentum we had seen in the first quarter of FY18 continued into the second quarter, with grocery and FMCG product ranges in particular experiencing strong growth.
There were a total of 20 new store openings and five store closures in the first half of FY18. The five store closures included three relocations where we have continued to take advantage of opportunities to relocate stores to larger and more modern premises, with higher levels of store contribution. As previously indicated, the new store opening programme is weighted to the second half of FY18 and we expect to open at least 50 gross new stores of which 7 will be relocations in the full year. The UK new store performance and returns continue to remain attractive.
Gross margins fell by 80bps relative to last year in the period, affected by both the shift in the sales mix towards the lower margin grocery and FMCG products, and by end of season clearance activity particularly on gardening and outdoor products. The adverse impact of the stronger US Dollar was largely mitigated. We expect gross margins to recover in the second half of the financial year in line with last year if we achieve satisfactory sell-through of seasonal Winter product.
Operating costs excluding depreciation and amortisation increased by 12.3% to GBP293.8m, (FY17: GBP261.5m) and costs as a percentage of revenues decreased by 107bps to 24.6%. We have seen operating efficiencies in Transport and Distribution of 35bps, the impact of the National Living Wage has largely been mitigated and the business has benefitted from the operating leverage on the fixed cost base as a result of the strong like-for-like sales performance.
In the B&M business, the adjusted EBITDA(4) increased by 20.7% to GBP107.8m (FY17: GBP89.3m).
Jawoll
In our German business Jawoll, revenues grew to GBP106.8m, which was a +20.2% increase over the GBP88.9m achieved in FY17 (+11.6% in local currency), although the business has had a challenging first half with the important gardening and plants offer in particular being impacted by a wet summer in Germany and the subsequent impact on footfall, although gross margins were in line with last year. In Germany costs rose by 303bps as a percentage of revenues to 31.1%, relative to last year with the business impacted by the operational leverage of a challenging summer season.
In Germany the adjusted EBITDA(4) decreased by 22.5% to GBP5.9m (FY17: GBP7.6m).
Heron Foods
Following the acquisition of the discount convenience chain Heron Foods in August 2017, we have generated revenues of GBP47.5m in the first 8 weeks since the acquisition closed and the business has good like-for-like sales momentum.
GBP2.4m of adjusted EBITDA(4) was contributed by Heron Foods in the early weeks post-acquisition.
Group
The operating costs of the Group in the first half of FY18, excluding depreciation and amortisation, grew by 18.6% to GBP339.8m, including new store pre-opening costs. Depreciation and amortisation expenses grew by 29.9% to GBP15.9m, reflecting the investment in new stores and the higher levels of store freezers and chillers in the Heron store estate.
Overall Group adjusted EBITDA(4) increased by 19.8% to GBP116.1m. In the B&M business, the adjusted EBITDA(4) increased by 20.7% to GBP107.8m (FY17: GBP89.3m) and in Germany the adjusted EBITDA decreased by 22.5% to GBP5.9m. A further GBP2.4m of adjusted EBITDA(4) was contributed by Heron Foods post the acquisition in August 2017.
Following the refinancing of the Group in FY17 and the acquisition of Heron Foods, there was an increased level of gross debt and the net interest charges were GBP10.5m, which compares to GBP9.1m in the same period in FY17. There will be an annualised non-cash charge of GBP1.2m relating to the accounting treatment of the Heron Foods deferred acquisition consideration. In relation to this, GBP0.2m was charged in first half of this financial year.
The Group's net capital expenditure was GBP27.0m which was principally driven by the Group's new store opening programme, having opened 27 stores, including relocations, and the GBP5.1m incurred to date relating to the acquisition of land for the new UK Southern warehouse, although it is anticipated that the warehouse will ultimately be leased in line with the Group's property strategy.
There was a further GBP106.4m of expenditure relating to the acquisition of Heron in the UK, GBP112.1m of consideration less GBP5.7m of cash acquired. Additionally, the Group also incurred GBP1.0m of costs in acquiring Heron Foods, these have been expensed through the Profit and Loss account and have been treated as an adjusting item.
In the first half of the financial year we took the decision to bring forward the purchase of Christmas related stock in order to ensure that there is a smoother flow through the supply chain, and to allow the stores to be set up and to maximise sale opportunities in the important Christmas trading period, which has resulted in a higher investment in working capital. Because it is wholly timing related, this will reverse as we progress through the Autumn / Winter season. As a result, cash flow from operations was GBP44.2m, which was GBP33.5m lower than the comparable period last year.
Net debt(5) to adjusted annualised EBITDA(6) was 2.2 times at the end of September 2017, including a pro-forma adjustment for Heron, which compares to 2.2 times at the end of September 2016.
(5) Net debt was GBP589.8m at the period end. This can be reconciled as GBP637.2m of gross debt (note 10) and GBP10.2m of finance leases, GBP7.9m of overdraft netted against GBP65.6m of cash.
(6) Pro-forma adjustment reflects the EBITDA from Heron as if the acquisition had taken place at the beginning of the period
Dividend
An interim dividend of 2.4p per Ordinary Share will be paid on 22 December 2017 to shareholders on the register at 24 November 2017 which is an increase of +26.3% on the prior year (FY17: 1.9p). The dividend payment will be subject to a Luxembourg withholding tax of 15%.
Shareholders and Depository Interest holders can obtain further information on the methods of receiving their dividends on our website www.bandmretail.com or by visiting the website of our Registrar, Capita Asset Services at www.capitashareportal.com
Strategic Development
The structural consumer shift towards discount formats is continuing as more and more shoppers, including middle income and even higher-earners, use such stores for the things they buy regularly for their homes and families. With over four million customers a week visiting our stores in the UK alone, our geographic reach is steadily increasing, and with new customers coming to our existing stores in increasing numbers, B&M has become a major participant in this change in behaviour.
Further progress has been made with the implementation of our four strategic priorities, strengthening B&M's position as the UK's leading multi-price general merchandise value retailer.
1. Deliver great value to our shoppers
With inflation returning to the UK market for the first time in several years, B&M has worked hard to meet the challenge of higher cost prices and minimise the effects of inflation on our customers. Our unique sourcing model and low operating costs are key to helping us keep prices down as we source direct from factories, we buy in large volumes and our disciplined approach to keeping running costs down is in our business DNA. In combination, these things keep us competitive week-in, week-out and give our customers reasons to keep coming back to our stores again and again.
2. Investing in new stores
We have over 560 B&M UK stores today but there remain many towns and cities across the country where we have few or no stores. Wherever we open, the customer response is the same; our stores are popular and, as a result, we believe there is the potential for at least 950 B&M stores in the long term. We opened 15 net new stores in the first half of the financial year and we are on track to achieve our planned target, with 50 gross new store openings for this financial year as a whole. New store performance has been very pleasing. Our forward pipeline of new stores is in excellent shape with some 30 projects currently signed up or in legals for 2018/19. A growing proportion of our new stores are purpose-built for B&M, with 20 of this year's planned total being new build stores.
In August we acquired the Heron Food Group, a specialist discount convenience retailer, based in the North of England. The business trades profitably from 260 stores averaging 2,500 square feet in largely suburban locations and has its own dedicated supply chain with a multi-temperature central distribution facility in Hull. Heron Foods is a complementary brand and format to B&M with very substantial long term potential to expand its reach beyond its currently quite limited geographic footprint, centred around the North and North Midlands. It can also provide a platform for B&M to expand its presence in the frozen food category. We are pleased the management team, the store network and the infrastructure acquired with Heron Foods and with its performance in its first few weeks under B&M's ownership.
3. Develop our international business
Whilst our long-term ambition remains to develop a substantial international business, it has been a challenging first half of the financial year. Our German business Jawoll experienced a difficult gardening and plant season and, because this seasonal category is very material to Jawoll's overall performance, the business delivered a disappointing reduction in its first half EBITDA performance. In addition, we have felt for some time that the business needed the skills and ambition to push on faster with expansion in Germany so that Jawoll is able to achieve the scale it requires to become a more disruptive retailer in its market. To that end, we have appointed a new, experienced CEO recruited from outside Jawoll, Christian Müller, who was until recently Action's country manager for Germany and will be in post from 1(st) December 2017.
4. Investment in our people and infrastructure
We continue to invest ahead of growth and have taken the next key step in ensuring we have sufficient long-term supply chain capacity by securing a site in Bedford for a large new B&M Southern distribution centre. The new facility will be c.1 million square feet and will be commissioned in the calendar year 2019.
One of the pleasing aspects about the UK new store openings is the number of store and deputy manager roles that have been filled internally as a result of our Step-Up programme where we encourage store colleagues to progress to these managerial positions.
Outlook
Whilst the economic and consumer background remains uncertain, we are confident that B&M is well-positioned to prosper even in a difficult retail environment. In tough times, many shoppers don't just love a bargain, they need a bargain and B&M's competitive position has never been stronger.
In the coming months we note that we face the challenge of trading against last year's exceptionally strong Christmas performance. But given the robust trading momentum in the business, which is being driven by a steady flow of new customers into our stores and the further improvements we make to the B&M customer offer, particularly in range, pricing and retail standards, we are confident about our plans for peak trading this year.
Looking further ahead, the Group has an excellent runway of growth which has been further enhanced by the addition of Heron, both in terms of its own exciting growth prospects under B&M's ownership but also the platform it provides to strengthen further B&M's core food offer.
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 our 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 25 March 2017.
These risks comprise high levels of competition, the broader economic environment and market conditions, disruption to key IT systems, cyber security and business continuity, failure to comply with laws and regulations, credit risk and liquidity, fluctuations in commodity prices and cost inflation, disruption in supply chain, failure of stock management controls, failure to maintain and invest in key infrastructure, key management reliance, availability of suitable new stores, inherent risks in international expansion and regulatory, tax and customs effects generally on the UK's exit from the EU.
Detailed explanations of these risks are set out on pages 28 to 31 of the Annual Report 2017 which is available at www.bandmretail.com
Simon Arora
Chief Executive
14 November 2017
Consolidated statement of Comprehensive Income
26 weeks 26 weeks 52 weeks
ended ended ended
23 September 24 September 25 March
2017 2016 2017
Note GBP'000 GBP'000 GBP'000
Revenue 2 1,346,372 1,105,856 2,430,660
Cost of sales (890,471) (722,494) (1,586,324)
Gross profit 455,901 383,362 844,336
Administrative expenses (357,693) (299,893) (639,833)
Operating profit 98,208 83,469 204,503
Share of profits of investments
in associates - - 1,005
Profit on ordinary activities
before interest and tax 98,208 83,469 205,508
Finance costs (11,411) (9,953) (24,110)
Finance income 32 174 1,520
Profit on ordinary activities
before tax 86,829 73,690 182,918
Income tax expense (18,490) (15,029) (38,885)
Profit for the period 68,339 58,661 144,033
------------- ------------- -----------
Attributable to non-controlling
interests 435 817 1,107
Attributable to owners of the
parent 67,904 57,844 142,926
Other comprehensive income for
the period
Items that may be subsequently
reclassified to profit or loss:
Exchange differences on retranslation
of subsidiary and associate accounts 1,636 6,923 7,479
Fair value movements recorded
in the hedging reserve (17,004) 11,626 (1,667)
Items that will not be subsequently
reclassified to profit or loss:
Actuarial gain on the defined
benefit pension scheme - - 16
Tax effect of other comprehensive
income 3,231 (2,325) 324
Total comprehensive income for
the period 56,202 74,885 150,185
------------- ------------- -----------
Attributable to non-controlling
interests 759 817 2,082
Attributable to owners of the
parent 55,443 74,068 148,103
Earnings per share
Basic earnings attributable to
ordinary equity holders (pence) 5 6.8 5.8 14.3
Diluted earnings attributable
to ordinary equity holders (pence) 5 6.8 5.8 14.3
All operations are classified as continuing. The accompanying accounting policies and notes form an integral part of these financial statements.
Consolidated statement of Financial Position
23 September 24 September 25 March
2017 2016 2017
Note GBP'000 GBP'000 GBP'000
Assets
Non-current
Goodwill 7 929,476 841,712 841,691
Intangible assets 7 121,009 103,398 103,693
Property, plant and equipment 8 242,844 153,010 165,748
Investments accounted for
using the equity method 4,520 3,995 5,669
Other receivables 3,434 2,565 2,413
Deferred tax asset 6,011 115 824
------------ ------------ -----------
1,307,294 1,104,795 1,120,038
------------ ------------ -----------
Cash and cash equivalents 65,606 14,306 155,551
Inventories 539,260 370,933 462,119
Trade and other receivables 67,137 45,315 35,398
Other current financial
assets 1,508 13,885 410
673,511 444,439 653,478
------------ ------------ -----------
Total assets 1,980,805 1,549,234 1,773,516
------------ ------------ -----------
Equity
Share capital 9 (100,048) (100,000) (100,000)
Share premium (2,474,131) (2,472,482) (2,472,482)
Merger reserve 1,979,131 1,979,131 1,979,131
Retained earnings (232,794) (137,693) (204,077)
Legal reserve (10,000) (10,000) (10,000)
Put/call option reserve 13,855 13,855 13,855
Hedging reserve 15,123 (9,301) 1,350
Foreign exchange reserve (9,137) (8,196) (7,825)
Non-controlling interest (14,332) (12,700) (13,573)
(832,333) (757,386) (813,621)
------------ ------------ -----------
Non-current liabilities
Interest-bearing loans
and borrowings 10 (559,891) (435,834) (543,725)
Finance lease liabilities (8,293) (6,976) (6,469)
Other financial liabilities (29,569) (18,405) (17,886)
Other liabilities (85,794) (70,397) (76,961)
Deferred tax liabilities (24,231) (20,979) (18,845)
Provisions (1,571) (876) (922)
(709,349) (553,467) (664,808)
------------ ------------ -----------
Current liabilities
Interest-bearing loans
and borrowings 10 (71,432) (25,000) -
Overdrafts (7,941) - -
Trade and other payables (315,991) (192,690) (267,815)
Finance lease liabilities (1,923) (957) (994)
Other financial liabilities (20,135) - (2,070)
Income tax payable (15,864) (14,365) (19,339)
Provisions (5,837) (5,369) (4,869)
------------ ------------ -----------
(439,123) (238,381) (295,087)
------------ ------------ -----------
Total liabilities (1,148,472) (791,848) (959,895)
------------ ------------ -----------
Total equity and liabilities (1,980,805) (1,549,234) (1,773,516)
------------ ------------ -----------
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 14 November 2017 and signed on their behalf by:
S. Arora, Chief Executive Officer.
Consolidated statement of Changes in Shareholders' Equity
Total
Foreign Put/call Non- Share-
Share Share Retained Hedging Legal Merger exch. option control. 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 26
March 2016 100,000 2,577,668 115,898 - 614 (1,979,131) 1,273 (13,855) 11,883 814,350
------- --------- -------- -------- ------- ----------- ------- -------- -------- ---------
Allocation to
legal reserve - (6,776) (2,610) - 9,386 - - - - -
Dividend
payments to
owners - (98,410) (33,590) - - - - - - (132,000)
Effect of share
options - - 151 - - - - - - 151
------- --------- -------- -------- ------- ----------- ------- -------- -------- ---------
Total for
transactions
with owners - (98,410) (33,439) - - - - - - (131,849)
Profit for the
period - - 57,844 - - - - - 817 58,661
Other
comprehensive
income - - - 9,301 - - 6,923 - - 16,224
Total
comprehensive
income for the
period - - 57,844 9,301 - - 6,923 - 817 74,885
Balance at 24
September 2016 100,000 2,472,482 137,693 9,301 10,000 (1,979,131) 8,196 (13,855) 12,700 757,386
------- --------- -------- -------- ------- ----------- ------- -------- -------- ---------
Dividend
payments to
owners - - (19,000) - - - - - - (19,000)
Release of
non-controlling
interest - - 224 - - - - - (392) (168)
Effect of share
options - - 103 - - - - - - 103
------- --------- -------- -------- ------- ----------- ------- -------- -------- ---------
Total for
transactions
with owners - - (18,673) - - - - - (392) (19,065)
Profit for the
period - - 85,082 - - - - - 290 85,372
Other
comprehensive
income - - (25) (10,651) - - (371) - 975 (10,072)
------- --------- -------- -------- ------- ----------- ------- -------- -------- ---------
Total
comprehensive
income for the
period - - 85,057 (10,651) - - (371) - 1,265 75,300
Balance at 25
March 2017 100,000 2,472,482 204,077 (1,350) 10,000 (1,979,131) 7,825 (13,855) 13,573 813,621
------- --------- -------- -------- ------- ----------- ------- -------- -------- ---------
Dividend
payments to
owners - - (39,000) - - - - - - (39,000)
Effect of share
options 48 1,649 (187) - - - - - - 1,510
------- --------- -------- -------- ------- ----------- ------- -------- -------- ---------
Total for
transactions
with owners 48 1,649 (39,187) - - - - - - (37,490)
Profit for the
period - - 67,904 - - - - - 435 68,339
Other
comprehensive
income - - - (13,773) - - 1,312 - 324 (12,137)
------- --------- -------- -------- ------- ----------- ------- -------- -------- ---------
Total
comprehensive
income for the
period - - 67,904 (13,773) - - 1,312 - 759 56,202
Balance at 23
September 2017 100,048 2,474,131 232,794 (15,123) 10,000 (1,979,131) 9,137 (13,855) 14,332 832,333
------- --------- -------- -------- ------- ----------- ------- -------- -------- ---------
Consolidated statement of Cash Flows
26 weeks 26 weeks 52 weeks
ended ended ended
23 September 24 September 25 March
2017 2016 2017
Note GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Cash generated from operations 11 44,208 77,674 210,873
Income tax paid (22,174) (12,704) (31,759)
-------------- -------------- ----------
Net cash flows from operating
activities 22,034 64,970 179,114
-------------- -------------- ----------
Cash flows from investing activities
Purchase of property, plant and
equipment (24,648) (23,007) (49,160)
Purchase of intangible assets (2,461) (2,036) (2,796)
Business acquisitions net of
cash acquired 4 (106,436) (2,307) (2,374)
Proceeds from the sale of property,
plant and equipment 129 1,514 1,542
Finance income received 32 112 137
Dividends received from associates 1,149 - -
-------------- -------------- ----------
Net cash flows from investing
activities (132,235) (25,724) (52,651)
-------------- -------------- ----------
Cash flows from financing activities
Repayment of bank loans - - (140,000)
Receipt of High Yield Bonds - - 250,000
Net receipt of Group revolving
bank loans 70,000 25,000 -
Net repayment of Heron revolving
bank loans (8,354) - -
Finance costs paid (9,881) (8,853) (14,983)
Receipt from exercise of employee
share options 1,300 - -
Capitalised fees on refinancing (1,137) - (5,208)
Acquisition of non-controlling
interest in BestFlora - - (175)
Dividends paid to owners of the
parent (39,000) (132,000) (151,000)
Repayment of finance lease (613) (235) (694)
-------------- -------------- ----------
Net cash flows from financing
activities 12,315 (116,088) (62,060)
-------------- -------------- ----------
Net (decrease)/increase in cash
and cash equivalents (97,886) (76,842) 64,403
Cash and cash equivalents at
the beginning of the period 155,551 91,148 91,148
-------------- -------------- ----------
Cash and cash equivalents at
the end of the period 57,665 14,306 155,551
-------------- -------------- ----------
Cash and cash equivalents comprise:
Cash at bank and in hand 65,606 14,306 155,551
Overdrafts (7,941) - -
-------------- -------------- ----------
57,665 14,306 155,551
-------------- -------------- ----------
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., 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 Germany.
The principal accounting policies have remained unchanged from the prior financial information for B&M European Value Retail S.A. for the period to 25 March 2017.
The financial statements for B&M European Value Retail S.A. for the period to 25 March 2017 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.
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 26 March 2017 to 23 September 2017. 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
Viability and going concern statements have been made in the Principal risks and uncertainties section of the annual report for the period to 25 March 2017.
With respect to this the directors have reviewed the assumptions and results of the viability testing carried out, and have judged that the events since this date do not have a significant impact on the statements previously made.
On this basis, the directors have determined that it is appropriate to continue to use the going concern basis for production of this financial report.
Critical judgments and key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the financial information was prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.
Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use.
The fair value less costs to sell calculation is based on available data from binding sales transactions, conducted at arm's length for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a discounted cash flow model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the performance of the CGU being tested.
The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash inflows and the growth rate used for extrapolation purposes. The key assumptions used to determine the recoverable amount for the different CGUs, including a sensitivity analysis, have been disclosed in the company's annual report.
Investments in Associates
Multi-lines International Company Ltd (Multi-lines), which is 50% owned by the Group, has been considered by management to be an associate rather than a subsidiary or a joint venture. Under IFRS 10 control is determined by:
-- Power over the investee. -- Exposure, or rights, to variable returns from its involvement with the investee.
-- The ability to use its power over the investee to affect the amount of the investor's returns.
Although 50% owned, B&M Group does not have voting rights or substantive rights. Therefore the level of power over the business is considered to be more in keeping with that of an associate than a joint-venture, and hence it has been treated as such within these consolidated financial statements.
Put/call options on Jawoll non-controlling interest
The purchase agreement for Jawoll in April 2014 included call and put options over the shares not purchased by the Group, representing 20% of Jawoll. The options are arranged such that it is considered likely that either the call or put option will be taken at the exercise date in 2019.
The exercise price of the options contain a variable element and as such the risk and rewards of the options are considered to remain with the non-controlling interest. The purchase of the non-controlling interest will be recognised upon exercise of one of the options.
A financial liability has been recognised carried at amortised cost to represent the expected exercise price, with the corresponding debit entry to the put/call option reserve. Management have estimated the future measurement inputs in arriving at this value, using knowledge of current performance, expected growth and planned strategy. Any subsequent movements in the liability will be recognised in profit or loss.
Acquisition accounting for purchase of Heron
On 2 August 2017 the Group acquired Heron Food Group Limited ("Heron"), a discount convenience retailer incorporated in the UK. The transaction has been accounted for via the acquisition method of accounting and a provisional purchase price allocation on the acquired balance sheet has taken place.
Key judgments made include;
(i) The only intangible asset to recognise on acquisition was the Heron brand itself. The other potential intangible assets that could be identified were either immaterial or not permitted to be recognised under IFRS.
(ii) The brand asset identified is considered to have indefinite life due to several factors, key amongst which is the growth potential of the Heron business which is considered a long term phenomenon.
(iii) Freehold property was uplifted to values supported by recent third party valuations.
(iv) Favourable and unfavourable lease terms were identified based upon external valuations of properties occupied by the business.
(v) The conditions around the deferred consideration indicate that it will be payable in full.
Notwithstanding the above, given the short period since the acquisition, the accounting applied is at this point considered provisional and it will be finalised at the year end.
Standards and interpretations applied and not yet applied by the Group
IFRS 9 'Financial Instruments' will be applicable after 1 January 2018. This standard will simplify the classification of financial assets for measurement purposes, but it is not anticipated to have a significant impact on financial statements.
IFRS 15 'Revenue from contracts with customers' will be applicable after 1 January 2018. This standard applies to all contracts with customers except those that are financial instruments, leases or insurance contracts and will result in increased disclosure requirements, but is not expected to have a significant impact on the financial statements.
IFRS 16 Leases is expected to be applicable after 1 January 2019. If endorsed, this standard will significantly affect the presentation of the Group financial statements with all leases apart from short term leases being recognised as on-balance sheet finance leases with a corresponding liability being the present value of lease payments. The Group is currently considering the implications of IFRS 16 on the Group's consolidated results and financial position and it will report more fully in the year end financial statements.
The Group does not consider that any other standards, amendments or interpretations issued by the IASB, but not yet applicable, will have a significant impact on the financial statements.
2 Segmental information
IFRS 8 ("Operating segments") requires the Group's segments to be identified on the basis of internal reports about the components of the Group that are regularly reviewed by the chief operating decision maker to assess performance and allocate resources across each reporting segment.
For management purposes, the Group is organised into three reportable segments, being the UK B&M segment, the UK Heron segment and the German retail segment. The UK Heron segment has been active since the acquisition of Heron Food Group in August 2017, the UK B&M segment was previously reported as the UK Retail segment.
Items that fall into the corporate category include those related to the Luxembourg or associate entities, Group financing, corporate transactions, any tax adjustments and items we consider to be adjusting (see note 3).
The chief operating decision maker has been identified as the executive directors who monitor the operating results of the retail segments for the purpose of making decisions about resource allocation and performance assessment.
The average euro rate for translation purposes was EUR1.1377 during the period, with the period end rate being EUR1.1332 (March 2017: EUR1.1915/GBP and EUR1.1559; September 2016: EUR1.2262/GBP and EUR1.1552/GBP respectively)
26 week period to UK UK Germany
23 September 2017 B&M Heron Retail Corporate Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 1,192,617 47,521 106,836 (602) 1,346,372
EBITDA 108,221 2,395 5,909 (2,390) 114,135
Depreciation and amortisation (12,344) (1,387) (2,193) (3) (15,927)
Net finance costs 11 (122) (176) (11,092) (11,379)
Income tax expense (18,219) (168) (1,062) 959 (18,490)
Segment profit/(loss) 77,669 718 2,478 (12,526) 68,339
Total assets 1,635,070 200,597 132,713 12,425 1,980,805
Total liabilities (340,996) (55,681) (27,266) (724,529) (1,148,472)
Capital expenditure
(including intangible) (22,970) (1,716) (2,423) - (27,109)
26 week period to UK UK Germany
24 September 2016 B&M Heron Retail Corporate Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 1,016,998 - 88,858 - 1,105,856
EBITDA 89,755 - 7,623 (1,646) 95,732
Depreciation and amortisation (10,587) - (1,674) (2) (12,263)
Net finance costs 99 - (116) (9,762) (9,779)
Income tax expense (15,853) - (1,750) 2,574 (15,029)
Segment profit/(loss) 63,414 - 4,083 (8,836) 58,661
Total assets 1,408,479 - 122,616 18,139 1,549,234
Total liabilities (252,604) - (24,466) (514,778) (791,848)
Capital expenditure
(including intangible) (21,021) - (4,022) - (25,043)
52 week period to UK UK Germany
25 March 2017 B&M Heron Retail Corporate Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 2,252,265 - 178,395 - 2,430,660
EBITDA 223,722 - 11,677 (3,876) 231,523
Depreciation and amortisation (22,277) - (3,734) (4) (26,015)
Net finance costs 107 - (280) (22,417) (22,590)
Income tax expense (40,310) - (2,406) 3,831 (38,885)
Segment profit/(loss) 161,241 - 5,257 (22,465) 144,033
Total assets 1,640,398 - 126,040 7,078 1,773,516
Total liabilities (325,372) - (27,399) (607,124) (959,895)
Capital expenditure
(including intangible) (44,492) - (7,464) - (51,956)
3 Reconciliation of non-IFRS measures from the statement of comprehensive income
EBITDA, adjusted EBITDA and Adjusted Profit are non-IFRS measures and therefore we provide a reconciliation to the statement of comprehensive income below.
At the prior half year end, the Group reported a greater number of adjusting items. However management believe that the simplified measure now presented is a clearer measure of performance. The comparative information has been restated accordingly.
26 weeks 26 weeks 52 weeks
ended 23 ended ended 25
September 24 September March
Period to 2017 2016 2017
GBP'000 GBP'000 GBP'000
Profit on ordinary activities
before interest and tax 98,208 83,469 205,508
Add back depreciation and
amortisation 15,927 12,263 26,015
---------- ------------- ---------
EBITDA 114,135 95,732 231,523
Reverse the effect of derivatives
recorded in cost of sales 47 - 1,479
Reverse the effect of derivatives
recorded in administrative
costs 881 1,164 1,890
Remove costs associated with
the acquisition of Heron 1,000 - -
Adjusted EBITDA 116,063 96,896 234,892
Depreciation and amortisation (15,927) (12,263) (26,015)
Net finance costs (11,379) (9,779) (22,590)
Reverse the effect of derivatives
recorded in finance costs - (63) (117)
Reverse the effects of the
call/put option 727 764 294
Reverse the effect of unwinding
deferred consideration for
Heron 173 - -
Remove one-off costs incurred
on raising debt finance - - 3,687
Adjusted profit before tax 89,657 75,555 190,151
Adjusted tax (18,856) (15,249) (40,273)
---------- ------------- ---------
Adjusted profit for the period 70,801 60,306 149,878
---------- ------------- ---------
Attributable to non-controlling
interests 435 817 1,095
Attributable to owners of
the parent 70,366 59,489 148,783
The adjusting items are the effects of derivatives, one off refinancing fees, the costs associated with the acquisition of Heron and the effect of unwinding balances related to acquisitions, specifically the call/put option held over the non-controlling interest of our German operation and the deferred consideration liability for Heron (see note 4). Adjusted tax represents the tax charge per the statement of comprehensive income as adjusted only for the effects of the other adjusting items detailed above.
All adjusting items relate to the Corporate segment.
Adjusted EBITDA and related measures are not measures of performance or liquidity under IFRS and should not be considered in isolation or as a substitute for measures of profit, or as an indicator of the Group's operating performance or cash flows from operating activities as determined in accordance with IFRS.
4 Business combinations
On 2 August 2017 the Group acquired Heron Food Group Limited ("Heron"), a discount convenience retailer incorporated in the UK.
The transaction has been accounted for via the acquisition method of accounting. The Group purchased 100% of the share capital, for a fair value of GBP122.5m, which breaks down as follows:
GBP'000
Initial cash consideration 112,123
Fair value of deferred consideration 10,422
-------
Total 122,545
-------
The deferred consideration represents a cash amount of GBP12.8m payable in 2019 based upon certain conditions. An exercise carried out by the business has fair valued this at the acquisition date at GBP10.4m and this will be unwound through the P&L to the full value of GBP12.8m by August 2019.
The fair values of the identifiable assets and liabilities of Heron on the date of the acquisition were:
Assets GBP'000
Heron brand asset 14,178
Favourable lease contracts 1,385
Other intangible assets 1,305
Property, plant and equipment 67,299
Inventories 13,835
Receivables and other assets 8,086
Cash 8,315
--------
Total Assets 114,403
--------
Liabilities
Unfavourable lease contracts (9,984)
Creditors and accruals (32,395)
Provisions (4,141)
Corporation tax (1,030)
Finance leases (3,199)
Overdraft (2,628)
Bank Loans (25,582)
--------
Total liabilities (78,959)
--------
Net assets acquired 35,444
Fair value of consideration 122,545
Goodwill recognised on acquisition 87,101
None of the receivables recognised were considered irrecoverable at the acquisition date.
Fees of GBP1.0m were incurred during the acquisition all of which have been expensed through the P&L.
The goodwill largely relates to the growth potential of the business, the current location of the stores and the existing workforce. None of the elements which make up goodwill can, or are not material enough to be recognised as a separate intangible asset.
Given the short period between the acquisition and half year date the accounting applied is currently considered to be provisional. It will be finalised at the year end.
The effect the acquisition has had on the P&L can be seen in the segment note (note 2). Had the company been bought at the start of the year it would have contributed an estimated extra GBP108.6m to revenue and GBP3.4m operating profit under their local accounting policies (FRS 102 compliant).
The balance on the consolidated statement of cash flows reconciles as follows:
GBP'000
Initial cash consideration 112,123
Cash acquired (8,315)
Overdraft acquired 2,628
-------
Net Cash for acquisitions 106,436
-------
5 Earnings per share
Basic earnings per share amounts are calculated by dividing the net profit for the financial period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding at each period end.
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during each year plus the weighted average number of ordinary shares that would be issued on conversion of any dilutive potential ordinary shares into ordinary shares.
Adjusted basic and diluted earnings per share are calculated on the same basis except using the adjusted profit or loss attributable to the equity holders of the parent, as defined in note 3.
There are share option schemes in place which have a dilutive effect on the period presented.
The following reflects the income and share data used in the basic and diluted earnings per share computations:
Period to 24 September 26 September 26 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
Profit for the period attributable
to ordinary equity holders
of the Group 67,904 57,844 142,926
Adjusted profit for the period
attributable to ordinary equity
holders of the Group 70,366 59,489 148,783
------------- ------------- ----------
Thousands Thousands Thousands
Weighted average number of
ordinary shares for basic loss
per share 1,000,120 1,000,000 1,000,000
Effect of dilution:
Employee share options 219 - 148
----------
Weighted average number of
ordinary shares adjusted for
the effect of dilution 1,000,339 1,000,000 1,000,148
------------- ------------- ----------
Pence Pence Pence
Basic earnings per share 6.8 5.8 14.3
Diluted earnings per share 6.8 5.8 14.3
Adjusted basic earnings per
share 7.0 5.9 14.9
Adjusted diluted earnings per
share 7.0 5.9 14.9
------------- ------------- ----------
6 Taxation
The taxation charge for the interim period has been calculated on the basis of the corporation tax rate for the full year of 19% (UK) and 30% (Germany) and then adjusted for allowances and non-deductibles in line with the prior year.
7 Intangible assets
Goodwill Software Brands Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost or valuation
At 26 March 2016 837,450 3,123 98,396 1,363 940,332
Additions - 836 1,200 - 2,036
Additions due to Knüller acquisition 1,284 - - - 1,284
Effect of retranslation 2,978 38 454 132 3,602
At 24 September 2016 841,712 3,997 100,050 1,495 947,254
Additions - 760 - - 760
Adjustment to Knüller acquisition 38 - - - 38
Disposals - (132) - - (132)
Effect of retranslation (59) (5) (3) (1) (68)
-------- -------- ------- ------- ---------
At 25 March 2017 841,691 4,620 100,047 1,494 947,852
Additions - 711 1,750 - 2,461
Additions due to Heron acquisition 87,101 1,305 14,178 - 102,584
Effect of retranslation 684 7 104 30 825
-------- -------- ------- ------- ---------
At 23 September 2017 929,476 6,643 116,079 1,524 1,053,722
-------- -------- ------- ------- ---------
Accumulated amortisation / impairment
At 26 March 2016 - 963 - 745 1,708
Charge for the period - 225 - 109 334
Effect of retranslation - 23 - 79 102
At 24 September 2016 - 1,211 - 933 2,144
Charge for the period - 349 - 111 460
Disposals - (132) - - (132)
Effect of retranslation - (3) - (1) (4)
-------- -------- ------- ------- ---------
At 25 March 2017 - 1,425 - 1,043 2,468
Charge for the period - 627 3 113 743
Effect of retranslation - 5 - 21 26
-------- -------- ------- ------- ---------
At 23 September 2016 - 2,057 3 1,177 3,237
-------- -------- ------- ------- ---------
Net book value at 23 September 2017 929,476 4,586 116,076 347 1,050,485
-------- -------- ------- ------- ---------
Net book value at 25 March 2017 841,691 3,195 100,047 451 945,384
-------- -------- ------- ------- ---------
Net book value at 24 September 2016 841,712 2,786 100,050 562 945,110
-------- -------- ------- ------- ---------
An impairment review was carried out over the Goodwill and Brand assets at 25 March 2017. Details of these reviews are included in the Group statutory accounts. A full review will also take place at the next year end date of 31 March 2018.
Due to the nature of the business acquired in the prior year (Knüller), management considered it appropriate not to recognise any intangible assets other than goodwill. See note 4 for the details of the business acquired in the current period (Heron).
8 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 26 March 2016 34,750 3,525 142,982 181,257
Additions 1,968 432 20,607 23,007
Additions due to Knüller acquisition - - 41 41
Remeasurement of finance leases 2,468 - - 2,468
Disposals (839) (484) (70) (1,393)
Effect of retranslation 1,948 39 935 2,922
At 24 September 2016 40,295 3,512 164,495 208,302
Additions 6,003 249 19,901 26,153
Adjustment to Knüller acquisition - - 1 1
Remeasurement of finance leases 71 - - 71
Disposals (8) (274) (477) (759)
Effect of retranslation (111) (2) (10) (123)
At 25 March 2017 46,250 3,485 183,910 233,645
Additions 6,878 407 17,363 24,648
Additions due to Heron acquisition 31,388 5,787 30,124 67,299
Transfer to investments (63) - (22) (85)
Disposals (1) (821) (134) (956)
Effect of retranslation 471 8 297 776
------------------ -------------- ----------------------- -------
23 September 2017 84,923 8,866 231,538 325,327
------------------ -------------- ----------------------- -------
Accumulated depreciation
At 26 March 2016 8,523 1,550 33,134 43,207
Charge for the period 1,891 359 9,679 11,929
Disposals (18) (268) (49) (335)
Effect of retranslation 247 9 235 491
------------------ -------------- ----------------------- -------
At 24 September 2016 10,643 1,650 42,999 55,292
Charge for the period 2,050 335 10,907 13,292
Disposals (8) (189) (482) (679)
Effect of retranslation - - (8) (8)
At 25 March 2017 12,685 1,796 53,416 67,897
Charge for the period 2,178 481 12,525 15,184
Transfer to investments (1) - - (1)
Disposals - (722) (32) (754)
Effect of retranslation 77 3 77 157
------------------ -------------- ----------------------- -------
At 23 September 2017 14,939 1,558 65,986 82,483
------------------ -------------- ----------------------- -------
Net book value at 23 September 2017 69,984 7,308 165,552 242,844
------------------ -------------- ----------------------- -------
Net book value at 25 March 2017 33,565 1,689 130,494 165,748
------------------ -------------- ----------------------- -------
Net book value at 24 September 2016 29,652 1,862 121,496 153,010
------------------ -------------- ----------------------- -------
9 Share capital
23 September 24 September 25 March
2017 2016 2017
Allotted, called up and fully
paid GBP'000 GBP'000 GBP'000
B&M European Value Retail S.A.
1,000,000,000 ordinary shares
of 10p each 100,048 100,000 100,000
------------ ------------ --------
Ordinary Shares
Each ordinary share ranks pari passu with each other ordinary share and each share carries one vote. The Group parent is authorised to release up to a maximum of 2,972,222,222 ordinary shares.
During the half year under review 479,782 shares have been acquired under share options exercised by staff. A further 92,489 options have vested and are currently available for exercise whilst 829,006 options, which are subject to various conditions, are held but have not yet vested.
10 Financial liabilities - borrowings
23 September 24 September 25 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
Current
Revolving facility bank loan
(old facility) - 25,000 -
Revolving facility bank loan
(new facility) 70,000 - -
Heron loan facilities - Melton 807 - -
Heron loan facilities - Offset 625 - -
------------ ------------ --------
71,432 25,000 -
------------ ------------ --------
Non-current
Term facility bank loans (old
facilities) - 435,834 -
Term facility bank loans (new
facilities) 296,866 - 296,910
High yield bond notes 247,228 - 246,815
Heron loan facilities - Melton 5,647 - -
Heron loan facilities - Offset 4,250 - -
Heron loan facilities - Term 5,900 - -
------------ ------------ --------
559,891 435,834 543,725
------------ ------------ --------
All borrowings are held in Sterling.
The term facility bank loans and high yield bonds are held at amortised cost and were initially capitalised in February 2017 with GBP3.2m and GBP3.3m (respectively) of fees attributed to them.
The term facility bank loans in place at the prior half year end were held at amortised cost and were initially capitalised in June 2014 with GBP7.3m of fees attributed to them. These facilities were refinanced in February 2017 at which point the remaining unamortised fees of GBP3.7m were expensed to the income statement.
The Heron loan facilities were brought into the Group as part of the acquired balance sheet on 2 August 2017. All are held with Handelsbanken and are carried at their gross cash amount. Further details are in the maturity table below.
The maturities of the above loan facilities are as follows:
Interest 23 September 24 September 25 March
Rate Maturity 2017 2016 2017
% GBP'000 GBP'000 GBP'000
Revolving Facility 2.75% +
loan (old facility) LIBOR Oct-2016 - 25,000 -
Revolving Facility 2.00% +
loan (new facility) LIBOR Oct-2017 70,000 - -
UK Holdco term 2.75% +
loan A (old facility) LIBOR Jun-2019 - 300,000 -
UK Holdco term 3.25% +
loan B (old facility) LIBOR Jun-2020 - 140,000 -
UK Holdco term 2.00% +
loan A (new facility) LIBOR Jul-2021 300,000 - -
UK Holdco term 2.25% +
loan A (new facility) LIBOR Jul-2021 - - 300,000
High yield bond
notes 4.125% Feb-2022 250,000 - 250,000
Heron loan facilities 2.25% +
- Melton LIBOR Jul-2025 6,453 - -
Heron loan facilities 2.45% +
- Offset LIBOR Sep-2022 4,875 - -
Heron loan facilities 2.50% +
- Term LIBOR Dec-2021 5,900 - -
------------ ------------ --------
637,228 465,000 550,000
------------ ------------ --------
11 Reconciliation of profit before tax to cash generated from operations
26 weeks ended 26 weeks ended 24 September 2016 52 weeks ended 25 March
23 September 2017 2017
GBP'000 GBP'000 GBP'000
Profit before tax 86,829 73,690 182,918
Adjustments for:
Interest expense 11,379 9,779 22,590
Depreciation 15,184 11,929 25,221
Amortisation of intangible assets 743 334 794
(Profit) / loss on remeasurement of
finance leases - (308) (317)
(Profit) / loss on disposal of
property, plant and equipment 156 (456) (405)
Charge on share options 210 151 254
Change in inventories (207,885) (9,735) (99,662)
Change in trade and other receivables 14,360 (16,143) (6,666)
Change in trade and other payables 122,225 6,539 84,575
Change in provisions 86 (587) (1,042)
Share of profit from associates - - (1,005)
Non-cash foreign exchange effect from
retranslation of subsidiary cashflows (6) 396 249
Loss resulting from fair value of
financial derivatives 927 2,085 3,369
------------------ -------------------------------- -----------------------
Cash generated from operations 44,208 77,674 210,873
------------------ -------------------------------- -----------------------
12 Financial instruments
The fair value of the financial assets and liabilities of the group are not materially different from their carrying value. Refer to the table below.
23 September 24 September 25 March
As at 2017 2016 2017
Financial assets: GBP'000 GBP'000 GBP'000
Fair value through profit and loss
Fuel price swap 43 180 232
Forward foreign exchange contracts - 890 61
Fair value through other comprehensive income
Forward foreign exchange contracts 1,465 12,815 117
Loans and receivables
Cash and cash equivalents 65,606 14,306 155,551
Trade receivables 26,348 19,925 11,215
Other receivables 1,150 271 91
------------ ------------ --------
Financial liabilities:
Fair value through profit and loss
Forward foreign exchange contracts - - 287
Put/call options over the non-controlling interest of Jawoll 18,974 18,405 17,886
Deferred consideration relating to Heron purchase 10,595 - -
Fair value through other comprehensive income
Forward foreign exchange contracts 20,135 - 1,783
Amortised cost
Interest-bearing loans and borrowings 631,323 460,834 543,725
Overdrafts 7,941
Trade payables 243,936 138,420 206,373
Other payables 9,720 1,901 8,950
------------ ------------ --------
Financial Instruments at fair value through profit and loss
The put/call options over the non-controlling interest in Jawoll arose as part of the acquisition of the entity in April 2014. The valuation here reflects the final estimated valuation unwound to the period end date, and exchanged at the period end foreign exchange rate, as the options are priced in Euros. The options mature in 2019 and the carrying value has been discounted to present value.
The other financial assets and liabilities through profit or loss reflect the fair value of those foreign exchange forward contracts, interest rate swaps and fuel swaps that are intended to reduce the level of risk for expected sales and purchases.
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
-- Level 1 : quoted (unadjusted) prices in active markets for identical assets or liabilities
-- Level 2 : Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly
-- Level 3 : Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data
As at the reporting dates, the Group held the following financial instruments carried at fair value on the balance sheet:
Total Level 1 Level 2 Level 3
GBP'000 GBP'000 GBP'000 GBP'000
23 September 2017
Foreign exchange contracts (18,670) - (18,670) -
Fuel swap contract 43 - 43 -
Put/call options on Jawoll non-controlling interest (18,974) - - (18,974)
Deferred consideration relating to Heron purchase (10,595) - - (10,595)
24 September 2016
Foreign exchange contracts 13,705 - 13,705 -
Fuel swap contract 180 - 180 -
Put/call options on Jawoll non-controlling interest (18,405) - - (18,405)
25 March 2017
Foreign exchange contracts (1,892) - (1,892) -
Fuel swap contract 232 - 232 -
Put/call options on Jawoll non-controlling interest (17,886) - - (17,886)
The put/call option (relating to Jawoll) and the deferred consideration (relating to Heron) are valued with reference to the respective Sale and Purchase Agreements underpinning the acquisitions, and the key variable in determining the fair values is the forecast EBITDA of those entities as prepared by management. The calculation is subsequently discounted to present value.
The other instruments have been valued by the issuing bank, using a mark to market method. The bank has used various inputs to compute the valuations and these include inter alia the relevant maturity date and strike rates, the current exchange rate, fuel prices and LIBOR levels.
The Group's financial instruments are either carried at fair value or have a carrying value which is considered a reasonable approximation of fair value.
13 Related party transactions
As a result of the Heron acquisition the business has entered into a lease with a new related party landlord, David Heuck, a director of Heron. The business occupies one property owned by this landlord and pays rent at a level that Group management considers to be reasonable. There have been no other changes in the related-party transactions described in the last annual report of B&M European Value Retail S.A. that have had a material effect on the financial position or performance of the Group in the six months ended 23 September 2017.
The Group has entered into material related party transactions over the current 26-week period with the following party, Multi-lines International Company Ltd (Multi-lines), a supplier, which is an associate of the Group.
26 weeks 26 weeks 52 weeks
ended ended ended
23 September 24 September 25 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
Purchases from associates
Multi-lines 46,486 38,649 121,351
The following table sets out the total amount of net trading balances with Multi-lines outstanding at the period end.
23 September 24 September 25 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
Trade receivables/(payables)
from associates
Multi-lines 10,206 5,846 (2,756)
------------ ------------ --------
Outstanding trade balances at the balance sheet date are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party trade receivables or payables.
14 Commitments
At the half year date a significant capital commitment exists in terms of an ongoing land purchase transaction, where contracts have been exchanged. The transaction is due to complete in December 2017.
15 Post balance sheet events
An interim dividend of 2.4pence per share (GBP24.0m) has been proposed.
There have been no other material events between the balance sheet date and the date of issue of these accounts.
16 Directors
The directors that served throughout the period were:
Name
Sir T Leahy (Chairman)
S Arora (CEO)
P McDonald (CFO)
T Hübner
R McMillan
K Guion
H Brouwer
D Novak
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
14 November 2017
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 23 September 2017, 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 23 September 2017 is not prepared, in all material respects, in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union.
Luxembourg, November 14, 2017 KPMG Luxembourg Société coopérative
Cabinet de révision agréé
Thierry Ravasio
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GGGRPGUPMGRW
(END) Dow Jones Newswires
November 14, 2017 02:00 ET (07:00 GMT)
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