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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 | |
---|---|---|---|---|---|---|---|---|---|---|
-2.00 | -0.43% | 463.00 | 462.60 | 462.90 | 466.20 | 459.90 | 463.60 | 10,923,075 | 16:35:10 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Misc Retail Stores, Nec | 5.48B | 372M | 0.3710 | 12.47 | 4.64B |
TIDMBME
RNS Number : 8589S
B&M European Value Retail S.A.
09 November 2023
9 November 2023
B&M European Value Retail S.A.
FY24 Interim Results Announcement
Disciplined profitable growth momentum
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 23 September 2023.
Highlights
-- Group revenues increased by 10.4% on prior year to GBP2,549m (+10.3% constant currency(1) ) -- Group adjusted EBITDA(4) (pre-IFRS 16) of GBP269m and margin of 10.5% (H1 FY23: 10.0%) represents 16.1% growth vs. last half year (H1 FY23: GBP232m) -- Group adjusted operating profit(4) increased 19.1% to GBP263m (H1 FY23: GBP221m), with statutory operating profit of GBP275m (H1 FY23: GBP248m) and statutory profit before tax of GBP222m (H1 FY23: GBP201m) -- Group inventory in a clean exit position of GBP856m (H1 FY23: GBP837m) -- Group cash generated from operations was GBP352m (H1 FY23: GBP370m), reflecting a normalised working capital movement with strong stock availability ahead of the Golden Quarter across the three fascias -- All fascias trading well with positive transaction numbers and new space growth -- Now expect to reach not less than 1,200 B&M UK stores in total, vs. previous guidance of 950 -- Opened 28 gross new stores across the Group (13 in B&M UK, 10 in Heron Foods and 5 in B&M France). Total average selling area increase continues to outpace the increase in number of stores -- Net debt(7) to adjusted EBITDA(4) (pre-IFRS 16) leverage ratio of 1.1x (H1 FY23: 1.3x) -- An interim dividend(6) of 5.1p per Ordinary Share will be paid on 15 December 2023 (H1 FY23: 5.0p) -- FY24 Group adjusted EBITDA (pre-IFRS 16) guidance, increased to be in the range of GBP620m - GBP630m, materially higher than FY23 (GBP573m) Revenue growth % Adjusted EBITDA(2,4) (pre-IFRS 16) margin Fascia perfomance % H1 FY24 H1 FY23 H1 FY24 H1 FY23 ------------ -------------- ----------- ------------- B&M UK (2) 8.1% (0.9)% 11.4% 10.6% --------------------------- ------------ -------------- ----------- ------------- B&M UK LFL (3) 6.2% (3.9)% - - --------------------------- ------------ -------------- ----------- ------------- B&M France 26.1% 18.2% 7.8% 9.6% Heron Foods 17.0% 14.6% 6.6% 6.1% ------------ -------------- ----------- -------------
Alex Russo, Chief Executive, said:
"Another strong half year has seen the Group deliver 10.4% total sales growth, 16.1% adjusted EBITDA(4) (pre-IFRS 16) growth and GBP352m cash generated from operations. All four of our channels of growth are delivering strong results, underpinned by our relentless focus on low prices, cost control, simplicity in everything we do and disciplined profitable growth. Highlights for the half include:
-- Existing B&M UK stores saw like-for-like(3) sales increase by 6.2%, with around half coming from increased customer transaction numbers and helped by the material step change in store operational standards - a key focus for management
-- Opened 13 gross new B&M UK stores, a net increase of 5 stores, with total sales area outgrowing growth in store numbers. We expect to open not less than 35 stores this financial period, and not less than 45 stores in each of the next two years
-- France delivered total sales growth of over 26%, with LFL sales growth in double figures. France remains on track for 10 new stores across this financial year, and at least the same number next year
-- Heron Foods total sales were up 17.0% including 9 net new stores. We remain on track to open 20 new stores in this financial year
The agreement to acquire up to 51 ex-Wilko stores is a significant step which underpins our opening programme. Over the next three years we expect to open not less than 125 new B&M stores in the UK, adding up to 20% to our sales area.
I am delighted that many of our existing shareholders have been with us since our IPO and continue to see our long-term growth potential. With our new store number guidance (of not less than 1,200 B&M UK stores) and continued LFL growth, we have the runway to at least double our size in the UK in the medium term, while France also offers sizeable long-term potential."
Current trading and outlook
In the first six weeks of the Golden Quarter, B&M UK LFL(3) growth has been 1.6%. Momentum has been particularly strong in the last three weeks, with LFL(3) exit growth of 4.5%. The Group is trading against tough comparatives making this a pleasing result against an uncertain and ever-changing economic background.
This volatile background makes forecasting for the full year difficult. However, given the strong first half results and positive momentum, the Group's FY24 adjusted EBITDA (pre-IFRS 16) guidance is increased to a range of GBP620m - GBP630m, materially higher than FY23 performance (GBP573m).
Financial results (unaudited)
H1 FY24 H1 FY23 Change Total Group revenue GBP2,549m GBP2,309m 10.4% ---------- ---------- ------- Group adjusted EBITDA(2,4) (pre-IFRS 16) GBP269m GBP232m 16.1% ---------- ---------- ------- Group adjusted EBITDA(4) (pre-IFRS 16) margin % 10.5% 10.0% 52 bps ---------- ---------- ------- Group adjusted operating profit(2,4) GBP263m GBP221m 19.1% ---------- ---------- ------- Group statutory operating profit GBP275m GBP248m 11.0% ---------- ---------- ------- Group statutory operating profit margin % 10.8% 10.7% 6 bps ---------- ---------- ------- Group cash generated from operations GBP352m GBP370m (4.7)% ---------- ---------- ------- Group statutory profit before tax GBP222m GBP201m 10.5% ---------- ---------- ------- Adjusted (pre-IFRS 16) diluted EPS(4) 15.5p 14.4p 7.6% ---------- ---------- ------- Statutory diluted EPS 16.3p 15.7p 4.2% ---------- ---------- ------- Ordinary dividends(6) 5.1p 5.0p 2.0% ---------- ---------- -------
Notes:
1. Constant currency comparison involves restating the prior year Euro revenues using the same exchange rate as that used to translate the current year Euro revenues.
2. References in this announcement to the B&M UK business include 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 include both the Heron Foods fascia and B&M Express fascia convenience stores in the UK. When reporting adjusted EBITDA (pre-IFRS 16) and adjusted operating profit, B&M UK also includes the corporate segment as referred to in note 2 of the financial information, and includes an adjusted loss of GBP2m in this period (H1 FY23: adjusted loss of <GBP1m).
3. One-year like-for-like revenues relate to the B&M UK estate only (excluding wholesale revenues) and include each store's revenue for that part of the current period that falls at least 14 months after it opened compared with its revenue for the corresponding part of FY23. This 14-month approach has been adopted as it excludes the 2-month halo period which new stores experience following opening.
4. Adjusted values are considered to be appropriate to exclude unusual, non-trading and/or non-recurring impacts on performance which therefore provides the user of the accounts with additional metrics to compare periods of account. See notes 2, 3 and 4 of the financial information for further details.
5. Trading gross margin is considered to be a meaningful measure of profitability as it refers to the measure of gross margin used by management to commercially run the business. It differs to the statutory definition for B&M UK, which increased 233 bps from 34.5% to 36.8%, due to technical accounting adjustments in relation to the allocation of gains and losses from derivative foreign exchange accounting, commercial income and storage costs, with the derivative adjustments the main factor.
6. Dividends are stated as gross amounts before deduction of Luxembourg withholding tax which is currently 15%.
7. Net debt comprises interest bearing loans and borrowings, overdrafts and cash and cash equivalents. Net debt was GBP700m at the half year end (H1 FY23: GBP736m), reflecting GBP924m (H1 FY23: GBP959m) as the carrying value of gross debt netted against GBP224m of cash (H1 FY23: GBP223m). See note 7 of the financial information for more details.
8. UK market share is calculated based on the reported revenues of B&M UK and Heron Foods, compared to NIQ Scantrack, Total Store, Total Coverage inc. Discounters, 52 weeks ending 31.12.22.
Results Presentation
An in-person presentation for analysts in relation to these FY24 Interim Results will be held today at 09:30 am (UK) at London Stock Exchange, 10 Paternoster Square, London, EC4M 7LS. Attendance is by invitation only and attendees must be registered in advance.
A simultaneous live audio webcast and presentation will be available via the B&M corporate website at https://www.bandmretail.com/investors/presentations/year/2023
Enquiries
B&M European Value Retail S.A.
For further information please contact: +44 (0) 151 728 5400 Ext 6363
Alex Russo, Chief Executive Officer
Mike Schmidt, Chief Financial Officer
Dave McCarthy, Head of Investor Relations
Investor.relations@bandmretail.com
Media
For media please contact:
Sam Cartwright, H-advisors, sam.cartwright@h-advisors.global +44 (0) 7827 254 561
Jonathan Cook, H-advisors, jonathan.cook@h-advisors.global +44 (0) 7730 777 865
Disclaimer
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.
About B&M European Value Retail S.A.
B&M European Value Retail S.A. is a variety retailer with 712 stores in the UK operating under the "B&M" brand, 328 stores under the "Heron Foods" and "B&M Express" brands, and 119 stores in France also operating under the "B&M" brand as at 23 September 2023. 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.bandmretail.com
Chief Executive's review
Another half of disciplined profitable growth
This has been another strong first half for the Group with adjusted EBITDA (pre-IFRS 16) up 16.1%. Total sales were up 10.4%, including 6.2% LFL(3) growth in our core B&M UK fascia. Our Group adjusted EBITDA(4) (pre-IFRS 16) margin of 10.5% is 52 bps ahead of the comparable period last year. Exceptionally strong sales in the first quarter ensured that limited markdowns were required in the second quarter leading to a strong gross margin for the half. Strong first quarter growth moderated as expected in the second quarter, hindered by unseasonal weather which was unhelpful to the retail industry overall. Despite this backdrop, we delivered profitable sales growth across the half. This was underpinned by a step change in our store standards and by our pricing position. Our laser focus on prices and store standards is core to our offer and underpins future growth in existing and new stores.
In addition to the 13 gross new B&M stores opened in the half, we also announced the agreement to acquire up to 51 ex-Wilko stores which underpins our well-established store opening programme. We confidently expect to open not less than 125 new B&M UK stores over next three years. We will never over-extend ourselves or compromise on the quality of our store locations in pursuit of achieving a promised number of openings. We will not neglect our core estate in pursuit of an excessive number of new openings. Our growth will be disciplined and not at the expense of excellence in standards.
Delivering compounding, profitable growth and strong cash generation is our core investment objective. To deliver this we must remain relevant to the consumer, be highly competitive through price, store standards and the right product range. We are an Every Day Low Price discounter and so we must also remain an Every Day Low Cost operator. Once again, despite high cost and high labour inflation we were able to deliver underlying cost ratios broadly in line with sales.
Our strategy is intact and unchanged, and is underpinned by several sustainable competitive advantages, which include:
-- Improving store standards. As many retailers look to cut costs, with a resultant reduction in store standards, so we continue to improve ours, without impacting our cost ratios. Over the last 12-18 months, there has been a step change in store standards and this has helped drive our LFL sales. This has put us firmly on the virtuous circle of retailing, where improved sales finances further improvements in the overall offer, leading to further sales gains.
-- Low-cost structure leads to low prices. We are able to sell cheaper than our rivals because we operate a low-cost structure and are able to share the benefits with our customers through a laser focus on price. As we continue to grow, so we will benefit from further operational leverage through our central, logistics and store fixed costs.
-- Strong supply chain and sourcing for non-grocery, built over several decades with direct sourcing. This ensures we retain low buying-in prices, have excellent availability and have rapid replenishment from suppliers.
-- Strong and improving relationships with FMCG suppliers. We only stock known brands and we remain a key growth channel for many FMCG suppliers in the UK. With an edited range and growing sales, our negotiating and buying position is strong and continues to build, helping ensure our price competitive position is continually strengthened.
Competitive position
The retail industry remains highly competitive and the consumer remains under pressure. We are seeing many retailers struggle, fail and close stores, but against a tough industry background we continue to prosper and expand profitably. The consumer has seen purchasing power cut over the last two years, with rising interest rates reducing disposable and discretionary incomes. Through our low prices, best in class availability and depth of range - we are helping consumers through the ongoing cost-of-living crisis and in doing so, are winning new customers and are building lasting loyalty. In our grocery range we remain significantly cheaper than the mainstream supermarkets. In non-grocery, compared to specialist retailers, our price position is even stronger than it is in grocery.
The move by consumers to discounters is a major trend in many countries and is set to continue over the long term. In the UK and France, we are at the forefront of this trend. In the UK, we have a little over 2% market share(8) and much less in France, meaning there are many more years of growth ahead. While market share gain is not an objective in itself, it is a consequence of what we are delivering to the consumer - a strong price-based offer, a relevant product range and excellence in store standards.
Strategic progress review
Our strategy remains unchanged. The short-term outlook for the consumer remains challenging but the long-term potential for growth is highly attractive. We believe in the broadening appeal of our offer, the continued move by consumers to discounting and greater penetration of our offer withing existing catchment areas. Our strategy continues to be relevant in both the short-term (cost of living crisis) and the long-term (structural shift by consumers to discounting). We believe our laser focus on price is a winner in any market.
1. Existing B&M UK stores:
We continue to improve store standards and will always strive for best-in-class product availability. This has been a key driver in our strong LFL sales in the first half. LFL(3) growth of 6.2% is the equivalent sales contribution of over 40 new stores, without any incremental investment required. Focusing on our core estate is highly profitable, it increases cash generation and improves return on invested capital. We will not make the mistake of neglecting existing stores in the pursuit of an excessive number of new openings, nor will we compromise on the quality of our new openings.
2. New B&M UK stores:
Our opening programme is building strongly and is well underpinned. Over the next three years we plan to open not less than 125 stores, supported by the agreement to acquire up to 51 ex-Wilko stores. These ex-Wilko stores will be converted steadily over the next 12 months and in many instances will take the B&M offer to more consumers in more parts of the country. In total, we now expect to open 35 stores in the current financial year and not less than 45 stores in each of the next two financial years.
We are increasing our long-term store target to not less than 1,200 stores, up from the 950 we announced in FY17, this underlines the clear runway of growth ahead. Underpinning this guidance, we have updated our previous analysis to take account of our significant LFL sales growth and strong track record of successfully opening stores in closer proximity to one another. The performance of new stores has been extremely positive and provides us with confidence for our continued UK expansion.
3. France:
The potential in France is substantial. In a country with a population similar in size and demographics to the UK, we have just 119 stores. In H1 FY24, we have opened 5 stores, and these are all performing strongly, helping further increase the profitability of the business as it scales up. France is highly successful but there remain more significant opportunities, such as increasing sales densities by improving the offer (e.g. increasing the FMCG range) and to expand the store network without adding to the current infrastructure. There is also the added benefit of sharing knowledge between our French operations and the UK business.
4. Heron Foods:
Our discount neighbourhood convenience store offer continues to perform well during these challenging times for the consumer. We see the great-value, highly-local Heron proposition resonating as customers budget through the month by purchasing only what they need, and only when they need it. Once again Heron has delivered strong growth through new and existing stores, with an adjusted EBITDA(4) (pre-IFRS 16) margin higher than most of its competitors. We will continue to expand the business steadily with 20 new stores this year, making this a complementary and cash generating fourth channel of growth.
Management changes
At the full year we highlighted the strengthened management team and we have added to that further with the appointment of Alex Simpson, who joins us from Amazon UK, as Group General Counsel. The fact that we are able to recruit from companies like Amazon and Walmart amongst others, is a strong testament of how far B&M has come and how large our opportunity remains.
I am also very pleased that Bobby Arora, Group Trading Director, has committed his future to the Group as announced in July 2023. Bobby is important in delivering the Group's long-term growth and profitability. I look forward to building further on our partnership as we continue to work together to deliver on our objectives for shareholders.
Alex Russo
Chief Executive Officer
8 November 2023
Financial review
Group
GBP'm H1 FY24 H1 FY23 YoY Change -------------------------------- -------- -------- ----------- Revenue 2,549 2,309 10.4% Gross profit 941 808 16.4% % 36.9% 35.0% 191 bps Operating costs (672) (576) 16.6% -------------------------------- -------- -------- ----------- Adjusted EBITDA(2,4) (pre-IFRS 16) 269 232 16.1% % 10.5% 10.0% 52 bps Depreciation and amortisation (pre-IFRS 16) (40) (35) 13.1% Operating impact of IFRS 16* 34 24 38.4% -------------------------------- -------- -------- ----------- Adjusted operating profit(2,4) 263 221 19.1% -------------------------------- -------- -------- ----------- Adjusting items(4) 12 27 (55.8)% Statutory operating profit 275 248 11.0% -------------------------------- -------- -------- ----------- Share of profit in associates - 1 (100.0)% Finance costs relating to right-of-use assets (32) (29) 9.6% Other net finance costs (21) (19) 12.8% Statutory profit before tax 222 201 10.5% -------------------------------- -------- -------- -----------
*includes depreciation on right-of-use assets of GBP84m - H1 total depreciation & amortisation was GBP124m (H1 FY23: GBP119m)
Group revenues for the 26 weeks ended 23 September 2023 increased by 10.4%, (10.3% on a constant currency basis(1) ), with growth across all fascias. In B&M UK, our offer has resonated with customers resulting in LFL growth but also we have seen new stores perform well. Both B&M France and Heron Foods meanwhile continue to drive sales densities with both reaching double digit LFL growth.
Group gross profit increased by 16.4% YoY thanks to the strong performance across the Group. The execution of the Garden & Outdoor trading periods in B&M UK was critical to this performance, with only limited markdowns being carried out in General Merchandise categories.
Group adjusted EBITDA(4) (pre-IFRS 16) increased by 16.1% to GBP269m (H1 FY23: GBP232m), representing a margin of 10.5% (H1 FY23: 10.0%). We saw inflationary pressure in our cost base, particularly following minimum wage changes, but these were managed effectively by each of the fascias.
Group adjusted operating profit(4) increased by 19.1% moving in line with the above. Overall depreciation and amortisation grew by 5.1% due to the continued investment across the store estate, with 30 net more stores across the Group YoY.
B&M UK
In the B&M UK fascia(2) business, total revenues increased by 8.1% to GBP2,045m (H1 FY23: GBP1,892m), with LFL(3) revenues up 6.2%. We started well in Q1, with LFL sales growth of 9.2%. LFL growth slowed in Q2 to 3.1% following the strong start and hindered by the unseasonal weather over the summer. Our LFL growth reflects a strong increase in customer transaction numbers and an increased basket value. Our balanced sales mix between FMCG and General Merchandise remains intact and in line with our expectations.
B&M UK's statutory gross profit margin increased by 233 bps to 36.8% from 34.5%, due to the sell-through driven by Q1 trading resulting in limited markdown activity requirement in Q2. Trading gross margin(5) was 36.1%, up 114 bps year on year from 34.9%, with the growth in statutory gross margin mitigated chiefly by the inclusion of foreign exchange impacts, principally in respect of the prior period, which are recorded in statutory administration costs.
There were 13 gross new stores openings in H1. Most of our store openings for the financial period are H2 weighted and we remain on track to open no fewer than 35 new stores in this financial period.
In addition to revenue generated in-store, B&M UK revenues also included GBP15m of wholesale revenues (H1 FY23: GBP17m), the majority of which represented sales made to our associate Centz Retail Holdings Limited, a chain of 53 variety goods stores in the Republic of Ireland.
Adjusted EBITDA(4) (pre-IFRS 16) increased by 16.6% to GBP233m (H1 FY23: GBP200m), with margin increasing by 83 bps to 11.4% (H1 FY23: 10.6%), from the gross profit margin expansion described above, partially offset by foreign exchange losses related to stock bought for future resale. Operating costs (excluding foreign exchange) were well managed holding at 25.0% of revenues compared to 25.5% in the prior year.
Statutory profit before interest and tax for the period was GBP235m (H1 FY23: GBP221m).
B&M France
In France, revenues increased by 26.1% to GBP232m (H1 FY23: GBP184m). This reflects the continual improvement of the range and in particular the strengthening of the FMCG offer and also the clear focus on store standards that resulted in an improvement in sales densities.
The business is still on track to open 10 new stores by the end of the financial period, with 5 opened in H1 FY24.
Adjusted EBITDA(4) (pre-IFRS 16) remained flat at GBP18m (H1 FY23: GBP18m) representing an adjusted EBITDA(4) margin of 7.8% compared to 9.6% as reported in the prior year and an underlying margin of 7.3% in that comparative period. This underlying comparative excludes c.GBP5m of one-off government support received at the start of the prior period.
Statutory profit before interest and tax for the period was GBP25m (H1 FY23: GBP19m).
Heron Foods
Our discount convenience offering, Heron Foods, generated revenues of GBP272m, up 17.0% (H1 FY23: GBP233m). Our LFL growth reflects a pleasing increase in customer transaction numbers and an increased basket value.
Heron opened 10 gross new stores in the period, on track for 20 at the end of the financial period.
Adjusted (pre-IFRS 16) EBITDA(4) increased by 26.7% to GBP18m (H1 FY23: GBP14m) representing a sector-leading margin of 6.6% (H1 FY23: 6.1%).
Statutory profit before interest and tax for the period was GBP15m (H1 FY23: GBP9m).
Cashflow, capital expenditure and leverage
Cash generated from operations was GBP352m (H1 FY23: GBP370m), a decrease of 4.7% YoY reflecting a normalised first-half working capital movement with inventory build-up ahead of our golden quarter remaining tightly controlled. We will continue to maintain our cash discipline in the second half, with working capital growth expected to be less than revenue growth, subject to any payment timing variances from the 53 week financial year.
Group net capital expenditure, excluding IFRS 16 right-of-use asset additions, was GBP48m (H1 FY23: GBP45m). This included GBP18m spent on 28 new stores opened in the first half across the Group (H1 FY23: GBP16m on 21 stores), GBP13m on maintenance works (<1% of H1 revenues) to ensure that our existing store estate and warehouses are appropriately invested (H1 FY23: GBP22m), and a total of GBP17m on infrastructure projects and opportunistic freehold acquisitions, which includes the consideration with respect of the Wilko transaction, to support the continued growth of the business (H1 FY23: GBP7m).
The Group has operated with net debt in a range of 1.0x - 1.5x since FY20. We remain comfortable with this range and believe it balances cost of capital efficiency with maintaining our strategic flexibility and level of resilience beneath our hard leverage ceiling of 2.25x EBITDA. Where we have no superior alternative use of our capital we will use special dividends to keep us operating within this 1.0x - 1.5x leverage range. Net debt(7) to last-twelve-months adjusted EBITDA(4) (pre-IFRS 16) is at 1.1x at the end of H1 FY24 (H1 FY23: 1.3x), at the lower end of our target range. We will review our capital allocation and special dividend approach at the end of the key Golden Quarter trading period.
Dividend
An interim dividend of 5.1p(6) per Ordinary Share will be paid on 15 December 2023 to shareholders on the register at 17 November 2023. The ex-dividend date will be 16 November 2023. The dividend payment will be subject to a deduction of Luxembourg withholding tax of 15%.
Shareholders and Depository Interest holders can obtain further information on the methods of receiving their dividends on our website or by visiting the website of our Registrar, Capita Asset Services at www.capitashareportal.com .
Future change of our key profit measure
The Group intends to use adjusted operating profit for future guidance, rather than adjusted EBITDA (pre-IFRS 16). For the current year, we will reference adjusted EBITDA (pre-IFRS 16), given it is the metric used in prior guidance and is the basis of targets in the current year's management incentive programme. For at least the next financial year, we will continue to report EBITDA (pre-IFRS 16) but will reduce its prominence.
Adjusted operating profit incorporates the effects of IFRS 16 and management believes it is a fair measure of underlying trading performance in a period. Further commentary on adjusted items and reconciliation to statutory figures can be found in notes 2 and 3 of the financial statements.
Fascia H1 FY24 H1 FY24 Adjusted EBITDA(2,4) Adjusted operating profit(2,4) (pre-IFRS 16): : Profit Margin % Profit Margin % (GBPm) (GBPm) ---------- ----------- --------------- ---------------- B&M UK 233 11.4% 228 11.2% B&M France 18 7.8% 20 8.7% Heron Foods 18 6.6% 15 5.5% Group 269 10.5% 263 10.3% ---------- ----------- --------------- ----------------
Principal risks and uncertainties
The principal risks and uncertainties faced by the Group remain those as set out on page 26 to 33 of our Annual Report and Financial Statement 2023: supply chain; competition; economic environment; regulation and compliance; international expansion; warehouse infrastructure; IT systems, cyber security and business continuity; key management reliance; store expansion and stock management.
Recognising the progress that the Group has made in increasing the resilience of its distribution network and its controls over stock, the Board currently expects in May 2024 to consolidate the description of the 'warehouse infrastructure' and 'stock management' risks into a broadened supply chain risk. The Board separately continues to monitor the political environment and increases in political intervention and regulation ahead of an anticipated 2024 general election; the outcome of this general election and the extent of any further political interventions could also increase the risks facing the Group.
Mike Schmidt
Chief Financial Officer
8 November 2023
Condensed Consolidated Statement of Comprehensive Income
26 weeks 26 weeks 52 weeks ended ended ended 23 September 24 September 25 March 2023 2022 2023 Note GBP'm GBP'm GBP'm Revenue 2 2,549 2,309 4,983 Cost of sales (1,608) (1,501) (3,182) Gross profit 941 808 1,801 Administrative expenses (666) (560) (1,265) Operating profit 3 275 248 536 Share of profit/(loss) of investments in associates - 1 (1) Profit on ordinary activities before interest and tax 275 249 535 Finance costs on lease liabilities (32) (29) (61) Other finance costs (22) (19) (40) Finance income 1 0 2 Profit on ordinary activities before tax 222 201 436 Income tax expense 5 (58) (44) (88) Profit for the period 164 157 348 ------------- -------------- ---------- Other comprehensive income for the period Items that may be subsequently reclassified to profit or loss: Exchange differences on retranslation of subsidiaries and associates (1) 6 5 Fair value movements recorded in the hedging reserve 1 85 28 Tax effect of other comprehensive income (2) (10) 5 ------------- -------------- ---------- Total other comprehensive income (2) 81 38 ------------- -------------- ---------- Total comprehensive income for the period 162 238 386 ------------- -------------- ---------- Earnings per share Basic earnings attributable to ordinary equity holders (pence) 4 16.4 15.7 34.8 Diluted earnings attributable to ordinary equity holders (pence) 4 16.3 15.7 34.7
All profit and other comprehensive income is attributable to the owners of the parent.
The accompanying accounting policies and notes form an integral part of these condensed consolidated financial statements.
Condensed Consolidated Statement of Financial Position
23 September 24 September 25 March 2023 2022 2023 Assets Note GBP'm GBP'm GBP'm Non-current Goodwill 921 922 921 Intangible assets 124 122 120 Property, plant and equipment 383 375 380 Right-of-use assets 1,052 1,052 1,056 Investments accounted for using the equity method 8 9 8 Other receivables 5 6 6 Deferred tax asset 27 26 30 ------------ ------------ ---------- 2,520 2,512 2,521 ------------ ------------ ---------- Current Cash and cash equivalents 224 223 237 Inventories 856 837 764 Trade and other receivables 103 72 52 Other current financial assets 12 108 1 Income tax receivable 15 - 12 1,210 1,240 1,066 ------------ ------------ ---------- Total assets 3,730 3,752 3,587 ------------ ------------ ---------- Equity Share capital 6 (100) (100) (100) Share premium (2,480) (2,478) (2,478) Retained earnings (171) (162) (104) Hedging reserve (4) (58) 3 Legal reserve (10) (10) (10) Merger reserve 1,979 1,979 1,979 Foreign exchange reserve (9) (11) (10) (795) (840) (720) ------------ ------------ ---------- Non-current liabilities Interest-bearing loans and borrowings 7 (873) (951) (873) Lease liabilities (1,128) (1,139) (1,124) Deferred tax liabilities (44) (39) (43)
Provisions (4) (5) (3) ---------- (2,049) (2,134) (2,043) ------------ ------------ ---------- Current liabilities Interest-bearing loans and borrowings 7 (43) (1) (81) Trade and other payables (644) (590) (541) Lease liabilities (182) (172) (177) Other financial liabilities (3) - (13) Income tax payable (7) (7) (6) Provisions (7) (8) (6) ------------ ------------ ---------- (886) (778) (824) ------------ ------------ ---------- Total liabilities (2,935) (2,912) (2,867) ------------ ------------ ---------- Total equity and liabilities (3,730) (3,752) (3,587) ------------ ------------ ----------
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 8 November 2023 and signed on their behalf by:
A. Russo, Chief Executive Officer.
Condensed Consolidated Statement of Changes in Shareholders' Equity
Total Foreign Share- Share Retained Hedging Legal Merger exchange holders' Share capital premium earnings reserve reserve reserve reserve equity GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm Balance at 26 March 2022 100 2,476 121 13 10 (1,979) 5 746 ------------- -------- --------- -------- -------- -------- --------- --------- Ordinary dividend payments to owners - - (115) - - - - (115) Effect of share options 0 2 (1) - - - - 1 ------------- -------- --------- -------- -------- -------- --------- --------- Total for transactions with owners 0 2 (116) - - - - (114) ------------- -------- --------- -------- -------- -------- --------- --------- Profit for the period - - 157 - - - - 157 Other comprehensive income - - - 75 - - 6 81 ------------- -------- --------- -------- -------- -------- --------- --------- Total comprehensive income for the period - - 157 75 - - 6 238 ------------- -------- --------- -------- -------- -------- --------- --------- Hedging gains & losses reclassified as inventory - - - (30) - - - (30) Balance at 24 September 2022 100 2,478 162 58 10 (1,979) 11 840 ------------- -------- --------- -------- -------- -------- --------- --------- Allocation to legal reserve - - (0) - 0 - - - Declaration of interim dividend - - (50) - - - - (50) Special dividend payments to owners - - (201) - - - - (201) Effect of share options - - 2 - - - - 2 ------------- -------- --------- -------- -------- -------- --------- --------- Total for transactions with owners - - (249) - - - - (249) ------------- -------- --------- -------- -------- -------- --------- --------- Profit for the period - - 191 - - - - 191 Other comprehensive income - - - (42) - - (1) (43) ------------- -------- --------- -------- -------- -------- --------- --------- Total comprehensive income for the period - - 191 (42) - - (1) 148 ------------- -------- --------- -------- -------- -------- --------- --------- Hedging gains & losses reclassified as inventory - - - (19) - - - (19) Balance at 25 March 2023 100 2,478 104 (3) 10 (1,979) 10 720 Ordinary dividend payments to owners - - (96) - - - - (96) Effect of share options 0 2 (1) - - - - 1 ------------- -------- --------- -------- -------- -------- --------- --------- Total for transactions with owners 0 2 (97) - - - - (95) ------------- -------- --------- -------- -------- -------- --------- --------- Profit for the period - - 164 - - - - 164 Other comprehensive income - - - (1) - - (1) (2) ------------- -------- --------- -------- -------- -------- --------- --------- Total comprehensive income for the period - - 164 (1) - - (1) 162 ------------- -------- --------- -------- -------- -------- --------- --------- Hedging gains & losses reclassified as inventory - - - 8 - - - 8 Balance at 23 September 2023 100 2,480 171 4 10 (1,979) 9 795 ------------- -------- --------- -------- -------- -------- --------- ---------
The accompanying accounting policies and notes form an integral part of these consolidated financial statements.
Condensed Consolidated Statement of Cash Flows
26 weeks 26 weeks 52 weeks ended ended ended 25 23 September 24 September March 2023 2022 2023 Note GBP'm GBP'm GBP'm Cash flows from operating activities Cash generated from operations 8 352 370 866 Income tax paid (58) (42) (84) -------------- -------------- --------- Net cash flows from operating activities 294 328 782 -------------- -------------- --------- Cash flows from investing activities Purchase of property, plant and equipment (43) (47) (93) Purchase of intangible assets (6) (3) (5) Proceeds from the sale of property, plant and equipment 1 5 9 Finance income received 1 0 2 Net cash flows from investing activities (47) (45) (87) -------------- -------------- --------- Cash flows from financing activities Receipt of Group revolving credit facilities 7 40 - - Repayment of old bank loan facilities 7 (300) - - Receipt of new bank loan facilities 7 225 - - Net repayment of Heron bank facilities - (3) (3)
Net repayment of French bank facilities 7 (2) (2) 0 Fees on refinancing 7 (3) - - Repayment of the principal in relation to right-of-use assets (71) (69) (168) Payment of interest in relation to right-of-use assets (32) (29) (61) Other finance costs paid (21) (17) (36) Dividends paid to owners of the parent (96) (115) (366) Net cash flows from financing activities (260) (235) (634) -------------- -------------- --------- Effects of exchange rate changes on cash and cash equivalents (0) 2 3 Net (decrease)/increase in cash and cash equivalents (13) 50 64 Cash and cash equivalents at the beginning of the period 237 173 173 -------------- -------------- --------- Cash and cash equivalents at the end of the period 224 223 237 -------------- -------------- --------- Cash and cash equivalents comprise: Cash at bank and in hand 224 223 237 Overdrafts - - - -------------- -------------- --------- 224 223 237 -------------- -------------- ---------
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 25 March 2023.
The financial statements for B&M European Value Retail S.A. for the period to 25 March 2023 have been reported on by the Group auditor and delivered to the Luxembourg Registrar of Companies. The audit report was unqualified.
The consolidated financial statements are presented in pounds sterling and all values are rounded to the nearest million (GBP'm), 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 2023 to 23 September 2023. 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, taking into account reasonably possible changes in trading performance, show that the Group will trade within its current banking facilities.
After making enquiries, including preparing cash flow forecasts for at least 12 months from the date of approval of these financial statements, the Directors are confident that the Group has adequate resources to continue its successful growth.
In the prior year, the Group fully re-financed its term loan and RCF facilities, totalling GBP455m, for a new GBP225m term loan and a GBP225m RCF maturing in March 2028, with two one-year extension options. The Group also maintained its GBP400m bond maturing in July 2025 and its GBP250m bond maturing in November 2028.
There have been no significant post balance sheet changes to liquidity and the current inflationary pressures do not have a material impact on this assessment as the Group is well placed to absorb or pass on these costs given our position as a low-cost retailer.
Consequently, the Directors are confident that the Group and Company will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis.
Accordingly, the Directors continue to adopt the going concern basis in preparing these financial statements.
Critical judgments and key sources of estimation uncertainty
There are no significant changes to the items listed in the 2023 Annual Report.
2 Segmental information
IFRS 8 ('Operating segments') requires the Group's segments to be identified on the basis of internal reports about the components of the Group that are regularly reviewed by the chief operating decision maker to assess performance and allocate resources across each reporting segment.
The chief operating decision maker has been identified as the executive directors who monitor the operating results of the retail segments for the purpose of making decisions about resource allocation and performance assessment.
For management purposes, the Group is organised into three operating segments, UK B&M, UK Heron and France B&M segments comprising the three separately operated business units within the Group.
Items that fall into the corporate category, which is not a separate segment but is presented to reconcile the balances to those presented in the main statements, include those related to the Luxembourg or associate entities, Group financing, corporate transactions, any tax adjustments and items we consider to be adjusting (see note 3).
The average euro rate for translation purposes was EUR1.1566/GBP during the period, with the period end rate being EUR1.1507/GBP (March 2023: EUR1.1581/GBP and EUR1.1360; September 2022: EUR1.1759/GBP and EUR1.1228/GBP respectively).
26 week period to UK UK France 23 September 2023 B&M Heron B&M Corporate Total GBP'm GBP'm GBP'm GBP'm GBP'm Revenue 2,045 272 232 - 2,549 EBITDA (note 3) 324 26 39 10 399 Depreciation and amortisation (94) (11) (19) - (124) -------- ------- ------- ---------- -------- PBIT 230 15 20 10 275 Net finance expense (23) (1) (7) (22) (53) Income tax (charge)/credit (53) (4) (3) 2 (58) -------- ------- ------- ---------- -------- Segment profit/(loss) 154 10 10 (10) 164 Total assets 3,001 281 386 62 3,730 Total liabilities (1,543) (122) (287) (983) (2,935) Capital expenditure* (37) (6) (6) - (49) 26 week period to 24 UK UK France
September 2022 B&M Heron B&M Corporate Total GBP'm GBP'm GBP'm GBP'm GBP'm Revenue 1,892 233 184 - 2,309 EBITDA (note 3) 287 20 34 27 368 Depreciation and amortisation (91) (11) (17) - (119) -------- ------- ------- ---------- -------- PBIT 196 9 17 27 249 Net finance expense (23) (1) (6) (18) (48) Income tax charge (35) (2) (3) (4) (44) -------- ------- ------- ---------- -------- Segment profit 138 6 8 5 157 Total assets 2,944 290 375 143 3,752 Total liabilities (1,500) (122) (281) (1,009) (2,912) Capital expenditure* (41) (5) (4) - (50) 52 week period to UK UK France 25 March 2023 B&M Heron B&M Corporate Total GBP'm GBP'm GBP'm GBP'm GBP'm Revenue 4,067 485 431 - 4,983 EBITDA (note 3) 680 41 76 (20) 777 Depreciation and amortisation (182) (22) (38) - (242) -------- ------- ------- ---------- -------- PBIT 498 19 38 (20) 535 Net finance expense (45) (3) (11) (40) (99) Income tax (charge)/credit (87) (3) (6) 8 (88) -------- ------- ------- ---------- -------- Segment profit/(loss) 366 13 21 (52) 348 Total assets 2,856 295 385 51 3,587 Total liabilities (1,443) (119) (277) (1,028) (2,867) Capital expenditure* (77) (11) (10) - (98)
* Capital expenditure includes both tangible and intangible capital
Adjusted operating profit by segment is equal to the profit on ordinary activities before interest and tax (PBIT) figures given above by segment, except with the adjusted corporate loss of GBP2m (September 2022: <GBP1m, March 2023: GBP1m) included in the UK B&M segment.
UK UK France B&M Heron B&M Total GBP'm GBP'm GBP'm GBP'm 26 week period to 23 September 2023 228 15 20 263 26 week period to 24 September 2022 195 9 17 221 52 week period to 25 March 2023 497 19 38 554
Revenue is disaggregated geographically as follows:
26 weeks ended 26 weeks ended 52 weeks ended 23 September 24 September 25 March Period to 2023 2022 2023 GBP'm GBP'm GBP'm Revenue due to UK operations 2,317 2,125 4,552 Revenue due to French operations 232 184 431 ------------- -------------- -------------- Overall revenue 2,549 2,309 4,983 ------------- -------------- --------------
Non-current assets (excluding deferred tax) are disaggregated geographically as follows:
23 September 24 September 25 March As at 2023 2022 2023 GBP'm GBP'm GBP'm UK operations 2,246 2,237 2,240 French operations 239 240 243 Luxembourg operations 8 9 8 ------------ ------------ -------- Overall 2,493 2,486 2,491 ------------ ------------ --------
The Group operates small wholesale operations and previously operated online in the FY23 financial year, with the relevant disaggregation of revenue as follows:
26 weeks ended 26 weeks ended 52 weeks ended 23 September 24 September 25 March Period to 2023 2022 2023 GBP'm GBP'm GBP'm Revenue due to sales made in stores 2,534 2,289 4,940 Revenue due to wholesale activities 15 17 37 Revenue due to online activities - 3 6 ------------- -------------- -------------- Overall revenue 2,549 2,309 4,983 ------------- -------------- -------------- 3 Reconciliation of non-IFRS measures from the statement of comprehensive income
The Group reports a selection of alternative performance measures as detailed below. The Directors believe that these measures provide additional information that is useful to the users of the accounts.
EBITDA, adjusted EBITDA, adjusted operating profit and adjusted profit are non-IFRS measures and therefore we provide a reconciliation of these amounts to the statement of comprehensive income below.
26 weeks ended 26 weeks ended 52 weeks ended 23 September 24 September 25 March Period to 2023 2022 2023 GBP'm GBP'm GBP'm Profit on ordinary activities before interest and tax 275 249 535 Add back depreciation and amortisation 124 119 242 ------------- -------------- -------------- EBITDA 399 368 777 Reverse the fair value impact of derivatives yet to mature (12) (28) 17 Online project costs - - 2 Foreign exchange on intercompany balances 0 0 0 ------------- -------------- -------------- Adjusted EBITDA 387 340 796 Depreciation and amortisation (124) (119) (242) ------------- -------------- -------------- Adjusted operating profit 263 221 554 Interest costs related to lease liabilities (32) (29) (61) Net other finance costs (21) (19) (38) -------------- Adjusted profit before tax 210 173 455 Adjusted tax (55) (35) (91) ------------- -------------- -------------- Adjusted profit for the period 155 138 364 ------------- -------------- --------------
Adjusted EBITDA (pre-IFRS 16), adjusted operating profit (pre-IFRS 16) and adjusted profit (pre-IFRS 16) are calculated as follows. These are the statements of adjusted profit that excludes the effects of IFRS 16.
26 weeks ended 26 weeks ended 52 weeks ended 23 September 24 September 25 March Period to 2023 2022 2023 GBP'm GBP'm GBP'm EBITDA (above) 399 368 777 Remove effects of IFRS 16 on EBITDA (118) (108) (223) EBITDA (pre-IFRS 16) 281 260 554 Adjusting items (above) (12) (28) 19 ------------- -------------- -------------- Adjusted EBITDA (pre-IFRS 16) 269 232 573 Pre-IFRS 16 depreciation and amortisation (40) (35) (76) ------------- -------------- -------------- Adjusted operating profit (pre-IFRS
16) 229 197 497 Net other finance costs (21) (19) (38) ------------- -------------- -------------- Adjusted profit before tax (pre-IFRS 16) 208 178 459 Adjusted tax (53) (34) (93) ------------- -------------- -------------- Adjusted profit for the period (pre-IFRS 16) 155 144 366 ------------- -------------- --------------
Net finance costs reconcile to finance costs in the statement of comprehensive income as follows:
26 weeks ended 26 weeks ended 52 weeks ended 23 September 24 September 25 March Period to 2023 2022 2023 GBP'm GBP'm GBP'm Other finance costs from the statement of comprehensive income (22) (19) (40) Finance income from the statement of comprehensive income 1 0 2 Net other finance costs (21) (19) (38) ------------- -------------- --------------
The tables below give the breakdowns of EBITDA and EBITDA (pre-IFRS 16) by segment:
26 week period to 23 September UK UK France 2023 B&M Heron B&M Total GBP'm GBP'm GBP'm GBP'm Adjusted EBITDA 322 26 39 387 Remove effects of IFRS 16 on EBITDA (89) (8) (21) (118) ------ ------- ------- -------- Adjusted EBITDA (pre-IFRS 16) 233 18 18 269 ------ ------- ------- -------- 26 week period to 24 September UK UK France 2022 B&M Heron B&M Total GBP'm GBP'm GBP'm GBP'm Adjusted EBITDA 285 20 35 340 Remove effects of IFRS 16 on EBITDA (85) (6) (17) (108) ------ ------- ------- -------- Adjusted EBITDA (pre-IFRS 16) 200 14 18 232 ------ ------- ------- -------- 52 week period to 25 March UK UK France 2023 B&M Heron B&M Total GBP'm GBP'm GBP'm GBP'm Adjusted EBITDA 679 42 75 796 Remove effects of IFRS 16 on EBITDA (177) (12) (34) (223) ------ ------- ------- -------- Adjusted EBITDA (pre-IFRS 16) 502 30 41 573 ------ ------- ------- --------
Segmental adjusted EBITDA is the same as segmental EBITDA given in note 2, except with the adjusted corporate loss of GBP2m (September 2022: <GBP1m, March 2023: GBP1m) included in the B&M segment.
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, as they have been in the prior year, recognising the loss incurred from the online trading trial which had ceased by the previous year end date of 25 March 2023.
Adjusted tax represents the tax charge per the statement of comprehensive income as adjusted only for the effects of the adjusting items detailed above. All adjusting items are considered to relate to the corporate segment.
Adjusted EBITDA and related measures are not measures of performance or liquidity under IFRS and should not be considered in isolation or as a substitute for measures of profit, or as an indicator of the Group's operating performance or cash flows from operating activities as determined in accordance with IFRS.
4 Earnings per share
Basic earnings per share amounts are calculated by dividing the net profit for the financial period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding at each period end.
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during each year plus the weighted average number of ordinary shares that would be issued on conversion of any dilutive potential ordinary shares into ordinary shares.
Adjusted (and adjusted (pre-IFRS 16)) basic and diluted earnings per share are calculated in the same way as above, except using adjusted profit attributable to ordinary equity holders of the parent, as defined in note 3.
There are share option schemes in place which have a dilutive effect on all periods presented. The increase in the number of shares used in the calculation of the basic earnings per share is due to the exercise of some of these options.
The following reflects the income and share data used in the earnings per share computations:
Period to 23 September 24 September 25 March 2023 2022 2023 GBP'm GBP'm GBP'm Profit for the period attributable to owners of the parent 164 157 348 Adjusted profit for the period attributable to owners of the parent 155 138 364 Adjusted (pre-IFRS 16) profit for the period attributable to owners of the parent 155 144 366 Thousands Thousands Thousands Weighted average number of ordinary shares for basic earnings per share 1,002,004 1,001,331 1,001,593 Dilutive effect of employee share options 2,554 1,986 1,730 ---------- ---------- ---------- Weighted average number of ordinary shares adjusted for the effect of dilution 1,004,558 1,003,317 1,003,323 ---------- ---------- ---------- Pence Pence Pence Basic earnings per share 16.4 15.7 34.8 Diluted earnings per share 16.3 15.7 34.7 Adjusted basic earnings per share 15.5 13.8 36.3 Adjusted diluted earnings per share 15.4 13.8 36.2 Adjusted (pre-IFRS 16) basic earnings per share 15.5 14.4 36.5 Adjusted (pre-IFRS 16) diluted earnings per share 15.4 14.4 36.5 ------ ------ ------ 5 Taxation
The continuing tax charge for the interim period has been calculated on the basis of the corporation tax rate for the full year of 25% (UK) and 25% (France) and then adjusted for allowances and non-deductibles in line with the prior year ( March 2023 and September 2022: 19% UK and 25% France).
6 Share capital Nominal value Number of shares Allotted, called up and fully paid GBP'm B&M European Value Retail S.A. Ordinary shares of 10p each; At 26 March 2022 100 1,001,226,836 Shares issued due to exercise of employee share options 0 626,899 ------------- ---------------- At 24 September 2022 and 25 March 2023 100 1,001,853,735 Shares issued due to exercise of employee share options 0 901,904 ------------- ---------------- At 23 September 2023 100 1,002,755,639 ------------- ----------------
Ordinary Shares
Each ordinary share ranks pari passu with each other ordinary share and each share carries one vote.
In addition to the issued share capital, the company has an authorised but unissued share capital of 2,969,466,583 ordinary shares.
The outstanding share options can be summarised as follows:
23 September 24 September 25 March 2023 2022 2023 Vested, available to exercise - - - Not vested, not subject to conditions (in holding) 1,610,253 1,487,106 1,644,749 Not vested, subject to conditions 2,487,416 1,767,452 2,499,574 ------------ ------------ --------- Total outstanding share options 4,097,669 3,254,558 4,144,323 ------------ ------------ ---------
For the dilutive effect of these see note 4.
7 Financial liabilities - borrowings 23 September 24 September 25 March 2023 2022 2023 GBP'm GBP'm GBP'm Current Revolving credit facility 40 - - Term facility bank loan - - 78 France other loan facilities 3 1 3 43 1 81 ------------ ------------ -------- Non-current High yield bond notes 647 646 646 Term facility bank loan 220 297 219 France loan facilities 6 8 8 873 951 873 ------------ ------------ --------
Extension of senior loan facilities
During the prior period, the Group completed an extension of its term facility bank loan.
The previous GBP300m term facility was drawn down in July 2020 with GBP4m of fees capitalised into the balance at that time. The agreement included a revolving facility of GBP155m and was due to mature in April 2025.
This was extended with new facilities totalling GBP450m due to mature in April 2028. These comprise a term loan of GBP225m and a revolving facility of GBP225m and the agreement also includes the availability of two 1-year extension terms, subject to mutual consent with the banking syndicate.
An assessment was made by management with the conclusion that the transaction represents an extension and not a significant modification. More details of which are contained in our previous Annual Report.
As such, the remaining GBP2m of unamortised capitalised fees have remained on the balance sheet and will be amortised over the extended term. There were GBP3m of fees associated with the extension which have also been capitalised into the loan balance.
Loan details
The French loan facilities are held in Euros. All other borrowings are held in sterling.
The term facility bank loan and high yield bonds have a book value lower than the cash amount that is outstanding due to the allocation of fees to these facilities on their inception.
The current applicable interest rates, gross cash debt and maturities on the Group's loans are as follows:
23 September 24 September 25 March Interest rate Maturity 2023 2022 2023 % GBP'm GBP'm GBP'm Revolving credit facility 1.75% + SONIA Oct-23 40 - - Term facility bank loan A 2.00% + SONIA N/A - - 75 Term facility bank loan A 2.00% + SONIA Apr-28 225 300 225 High yield bond notes (2020) 3.625% Jul-25 400 400 400 High yield bond notes (2021) 4.00% Nov-28 250 250 250 Sep 24-Feb B&M France - BNP Paribas 0.75-3.50% 28 3 1 3 B&M France - Caisse Aug 24-Nov d'Épargne 0.75-2.60% 29 2 1 2 Sep 24-Jan B&M France - CIC 0.71-0.75% 27 1 2 2 B&M France - Cr é Sep 25-Jan dit Agricole 0.39-0.81% 28 1 1 1 B&M France - Crédit Nov 24-Mar Lyonnais 0.68-0.74% 27 2 4 3 B&M France - Société Générale 0.63% N/A - 0 0 924 959 961 ------------ ------------ --------
The revolving facility of GBP225m is committed until April 2028.
The term loan A and the high yield bond notes have carrying values which include transaction fees allocated on inception.
The Group measures net debt as the total of the gross cash borrowed less the cash held on the statement of financial position:
25 March 23 September 2023 24 September 2022 2023 GBP'm GBP'm GBP'm Interest bearing loans and borrowings 924 959 961 Less: Cash and short-term deposits - overdrafts (224) (223) (237) ----------------- ----------------- -------- Net debt 700 736 724 ----------------- ----------------- -------- 8 Reconciliation of profit before tax to cash generated from operations 52 weeks ended 26 weeks ended 26 weeks ended 25 March 23 September 2023 24 September 2022 2023 GBP'm GBP'm GBP'm Profit before tax 222 201 436 Adjustments for: Net interest expense 53 48 99 Depreciation of property, plant and equipment 39 34 71 Depreciation of right-of-use assets 84 84 167 Impairment of right-of-use assets 0 0 2 Amortisation of intangible assets 1 1 4 Gain on sale and leaseback - (1) (1) Loss/(gain) on disposal of property, plant and equipment 0 (0) (1) Charge on share options 2 1 3 Change in inventories (84) 32 103 Change in trade and other receivables (51) (21) 1 Change in trade and other payables 96 21 (30) Change in provisions 2 (1) (6) Share of (profit)/loss from associates - (1) 1 (Gain)/loss resulting from fair value of financial derivatives (12) (28) 17 ------------------ ------------------ -------------- Cash generated from operations 352 370 866 ------------------ ------------------ -------------- 9 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 2023 2022 2023 Financial assets: GBP'm GBP'm GBP'm Fair value through profit and loss Forward foreign exchange contracts 6 37 1 Fair value through other comprehensive income Forward foreign exchange contracts 6 71 0 Loans and receivables Cash and cash equivalents 224 223 237 Trade receivables 11 22 11 Other receivables 27 17 10 ------------ ------------ --------
23 September 24 September 25 March As at 2023 2022 2023 Financial liabilities GBP'm GBP'm GBP'm Fair value through profit and loss Forward foreign exchange contracts 1 - 8 Fair value through other comprehensive income Forward foreign exchange contracts 2 - 5 Amortised cost Lease liabilities 1,310 1,311 1,301 Interest-bearing loans and borrowings 916 952 954 Trade payables 452 415 382 Other payables 21 9 16 ------------ ------------ --------
Financial instruments at fair value through profit and loss
The financial assets and liabilities through profit or loss reflect the fair value of those foreign exchange forward contracts that are intended to reduce the level of risk for expected sales and purchases.
The forward foreign exchange and fuel derivative contracts have been valued by the issuing bank, using a mark to market method. The bank has used various inputs to compute the valuations, and these include inter alia the relevant maturity date strike rates and the current exchange rate.
The Group's financial instruments are either carried at fair value or have a carrying value which is considered a reasonable approximation of fair value.
10 Related party transactions
The Group has transacted with the following related parties over the periods:
Multi-lines International Company Limited, a supplier, and Centz Retail Holdings, a customer, are associates of the Group.
Ropley Properties Ltd, Triple Jersey Ltd, TJL UK Ltd, Rani Investments, Fulland Investments Limited, Golden Honest International Investments Limited, Hammond Investments Limited, Joint Sino Investments Limited and Ocean Sense Investments Limited, all landlords of properties occupied by the Group, and Rani 1 Holdings Limited, Rani 2 Holdings Limited and SSA Investments, bondholders and beneficial owners of equipment hired to the Group, are directly or indirectly owned by the recently retired director Simon Arora, his family, or his family trusts (together, the Arora related parties).
There were significant related party transactions in the prior period, with SSA Investments purchasing a total of GBP43m of our 4.00% corporate bonds and GBP13m of our 3.625% corporate bonds in June 2022, and Simon Arora purchasing GBP35m of our 3.625% corporate bonds over December 2022 and January 2023. Purchases have been made in prior periods and the overall position is summarised in the table below with all related party bondholders being Arora related parties.
26 weeks ended 26 weeks ended 52 weeks ended 23 September 24 September 25 March 2023 2022 2023 GBP'm GBP'm GBP'm Simon Arora (3.625%, 2025 bonds) 35 - 35 SSA Investments (3.625%, 2025 Bonds) 13 13 13 SSA Investments (4.000%, 2028 Bonds) 99 99 99 Rani 1 Investments (3.625%, 2025 Bonds) 50 50 50 Rani 2 Investments (3.625%, 2025 Bonds) 50 50 50 Total 247 212 247 ------------- -------------- --------------
The interest expense recorded on these bonds was GBP5m, with GBP3m accrued at the period end (September 22: GBP4m, GBP2m and March 23: GBP8m, GBP3m respectively).
The following tables set out the total amount of trading transactions with related parties included in the statement of comprehensive income:
26 weeks ended 26 weeks ended 52 weeks ended 23 September 24 September 25 March 2023 2022 2023 GBP'm GBP'm GBP'm Sales to associates of the Group Centz Retail Holdings Limited 13 16 34 Total sales to related parties 13 16 34 ------------- -------------- -------------- 26 weeks ended 26 weeks ended 52 weeks ended 23 September 24 September 25 March 2023 2022 2023 GBP'm GBP'm GBP'm Purchases from associates of the Group Multi-lines International Company Ltd 104.8 90.3 193.7 Purchases from parties related to key management personnel Fulland Investments Limited 0.1 0.2 0.2 Golden Honest International Investments Limited 0.1 0.1 0.2 Hammond Investments Limited 0.1 0.1 0.2 Joint Sino Investments Limited 0.1 0.1 0.2 Ocean Sense Investments Limited 0.1 0.2 0.2 SSA Investments - 0.1 0.1 ------------- -------------- -------------- Total purchases from related parties 105.3 91.1 194.8 ------------- -------------- --------------
The IFRS 16 Lease figures in relation to the following related parties, which are all related to key management personnel, are as follows:
Depreciation Interest Total Right-of-use Lease Net charge charge charge asset liability liability GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm Period ended 23 September 2023 Rani Investments 0 0 0 1 (1) (0) Ropley Properties 1 0 1 7 (10) (3) TJL UK Limited 1 0 1 10 (12) (2) Triple Jersey Limited 4 2 6 55 (67) (12) ------------ -------- ------- ------------ ---------- ---------- 6 2 8 73 (90) (17) ------------ -------- ------- ------------ ---------- ---------- Period ended 24 September 2022 Rani Investments 0 0 0 1 (1) (0) Ropley Properties 1 0 1 7 (11) (4) TJL UK Limited 0 0 0 11 (13) (2) Triple Jersey Limited 4 2 6 50 (63) (13) ------------ -------- ------- ------------ ---------- ---------- 5 2 7 69 (88) (19) ------------ -------- ------- ------------ ---------- ---------- Period ended 25 March 2023 Rani Investments 0 0 0 1 (1) (0) Ropley Properties 2 1 3 8 (11) (3) TJL UK Limited 1 0 1 10 (12) (2) Triple Jersey Limited 8 3 11 46 (57) (11) ------------ -------- ------- ------------ ---------- ---------- 11 4 15 65 (81) (16) ------------ -------- ------- ------------ ---------- ----------
The following tables set out the total amount of trading balances with related parties outstanding at the period end.
23 September 24 September 25 March 2023 2022 2023 Trade receivables GBP'm GBP'm GBP'm With associates of the Group: Centz Retail Holdings Limited 4 5 2 Multi-lines International Company - Ltd 0 - Total related party trade receivables 4 5 2 ------------- ------------ -------- 26 weeks ended 26 weeks ended 52 weeks ended 23 September 24 September 25 March 2023 2022 2023 Trade payables GBP'm GBP'm GBP'm With associates of the Group: Multi-lines International Company Ltd 19 22 7 With parties related to key management personnel: Rani Investments 0 - 0 Ropley Properties Ltd 1 0 1 TJL UK Limited 0 - 1 Triple Jersey Ltd 3 0 2 -------------- Total related party trade payables 23 22 11 ------------- -------------- --------------
Outstanding trade balances at the balance sheet dates are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party trade receivables or payables.
The balance with Multi-lines International Company Ltd includes $18m (September 2022: $16m; March 2023: $nil) held within a supply chain facility. The facility is operated by major banking partners with high credit ratings and is limited to $50m total exposure at any one time.
The purpose of the arrangement is to enable our participating suppliers, at their discretion, to draw down against their receivables from the Group prior to their usual due date.
There would be no impact on the Group if the facility became unavailable and there are no fees or charges payable by the Group in regards to this arrangement.
As these invoices continue to be part of the normal operating cycle of the Group, the scheme does not change the recognition of the invoices subject to the scheme, so they continue to be recognised as trade payables, with the associated cash flows presented within operating cash flows and without affecting the calculation of Group net debt.
The business has not recorded any impairment of trade receivables relating to amounts owed by related parties in any of the presented periods. This assessment is undertaken through examining the financial position of the related party and the market in which the related party operates.
The future lease commitments on the related party properties are:
26 weeks ended 26 weeks ended 52 weeks ended 23 September 24 September 25 March 2023 2022 2023 GBP'm GBP'm GBP'm Not later than one year 16 15 14 Later than one year and not later than two years 15 14 13 Later than two years and not later than five years 41 36 35 Later than five years 36 41 35 ------------- -------------- -------------- 108 106 97 ------------- -------------- --------------
Further details regarding the Group's associates and transactions with key management personnel are disclosed in the annual report.
11 Commitments
There are no significant capital commitments as at the half year end.
12 Post balance sheet events
An interim dividend of 5.1p per Ordinary Share will be paid on 15 December 2023.
13 Directors
The directors that served during the period were:
Peter Bamford (Chairman)
Alex Russo (CEO)
Mike Schmidt (CFO)
Ron McMillan
Tiffany Hall
Paula MacKenzie
Oliver Tant
Houna da Lasry (appointed 22 September 2023)
Simon Arora (until 21 April 2023)
Carolyn Bradley (until 25 July 2023)
All directors served for the whole period except where indicated above.
DIRECTORS' RESPONSIBILITIES STATEMENT
We confirm that to the best of our knowledge:
-- The condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted for use in the EU;
-- The Interim Management Report includes a fair review of the information required by:
a. DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first 26 weeks of the financial period and their impact on the condensed set of interim financial statements; and a description of the principal risks and uncertainties for the remaining 26 weeks of the reporting period; and
b. DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first 26 weeks of the current financial period and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.
By order of the Board
Alex Russo
Chief Executive Officer
8 November 2023
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END
IR NKFBKCBDDODK
(END) Dow Jones Newswires
November 09, 2023 02:00 ET (07:00 GMT)
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