TIDMBME
RNS Number : 6025P
B&M European Value Retail S.A.
11 June 2020
11 June 2020
B&M European Value Retail S.A.
Preliminary Results Announcement
Solid growth and robust trading despite the challenges from
Covid-19
B&M European Value Retail S.A. ("the Group"), the UK's
leading variety goods value retailer, today announces its
Preliminary Results for the 52 weeks to 28 March 2020.
HIGHLIGHTS
-- Group revenues(1) increased by 16.5% to GBP3,813.4m (FY19:
GBP3,272.6)
-- UK B&M(3) store fascia revenue(1) growth of 12.6%,
including Like-for-Like revenue(4) growth of 3.3% for the year,
including 6.6% in the fourth quarter
-- Group profit before tax increased by 3.2% to GBP252.0m for
the 52 week period (FY19: GBP244.3m), diluted earnings per share
19.5p (FY19:19.5p)
-- UK B&M store fascia(3) Adjusted EBITDA(1&5) growth of
8.7% to GBP319.8m (FY19: GBP294.1m)
-- Progress made in France with 19 Babou stores out of a total
estate of 101 stores, now trading as "B&M" but the controlled
testing of the performance of the converted stores was subsequently
interrupted by the 8 week Covid-19 closure period from 15 March to
11 May 2020
-- Cash generated from operations of GBP532.6m for the 52 week
period (2019: GBP423.0m), year-end net debt(6) of GBP347.5m before
the payment of the GBP150.1m special dividend in April 2020
following the sale and leaseback of the Bedford Distribution
Centre, and with net debt(6) to EBITDA of 1.02 x (FY19: 1.91x)
-- Recommended final dividend(7) increased to 5.4p per share
(FY19: 4.9p) to be paid on 28 September 2020, bringing full year
ordinary dividend to 8.1p per share being an increase of 6.6%
-- 36 net new B&M UK fascia stores opened in the period (51
gross) and a further 30 net new store openings planned for FY21.
The rate of new openings for FY21 is impacted by disruption from
Covid-19,but our overall long term target of at least 950 B&M
stores in the UK remains unchanged
-- The trading since the year-end has been strong
-- Since the year end, the UK business delivered GBP1 million in
cash donations to Foodbanks and gave GBP2.9 million of discounts to
NHS workers. Store and distribution colleagues received 110% of
normal pay to reflect their increased responsibilities and
workload
Simon Arora, Chief Executive, said,
"In this last financial year our core B&M UK business
delivered solid growth, as did our Heron Foods convenience store
business. However, so much about our lives has changed so
profoundly and so fast as a result of Covid-19 that a financial
year which ended only a short time ago already seems a world away.
It is an understatement to say that the progress made during the
year has been overtaken by recent events. The challenges posed by
the virus have been beyond anything we have experienced before;
they have tested every aspect of the way we do business in recent
weeks and I'm pleased to say that B&M is coming through the
crisis well because of the strength of the B&M proposition and
the way our team has responded to those challenges. For that, I
express my gratitude to all of my colleagues across the
business.
Looking ahead, there are of course many uncertainties for the
economy, consumers and not least for the retail industry. We will
all be living with the consequences of the virus and the public
health responses to it for a long time to come. I am however
confident though that B&M with its modern network of mostly
out-of-town stores, well-invested infrastructure and value-led
variety offer is well positioned to support the communities in
which we trade for whatever lies ahead. The health and safety of
our colleagues and customers will remain a priority."
Financial Results
FY 2020 FY 2019 Change
Total Group Revenues
B&M 3,140.1 2,789.4 12.6%
Heron 389.9 354.1 10.1%
Babou 283.4 129.1 119.4%
Total 3,813.4 3,272.6 16.5%
---------- ---------- ----------
Number of Stores
Group 1,050 997 5.3%
B&M 656 620 5.8%
Heron Foods 293 281 4.3%
Babou 101 96 5.2%
---------- ---------- ----------
Adjusted EBITDA(5) 342.3 319.6 7.1%
B&M 319.8 294.1 8.7%
Heron Foods 25.5 19.9 28.2%
Babou (3.0) 5.6 -153.8%
---------- ---------- ----------
Adjusted EBITDA %(5) 9.0% 9.8% -79 bps
---------- ---------- ----------
Profit Before Tax 252.0 244.3 3.2%
---------- ---------- ----------
EPS 19.5 19.5 0.0%
---------- ---------- ----------
Adjusted Profit Before Tax(5) 260.0 252.4 3.0%
---------- ---------- ----------
Adjusted Diluted EPS(5) 20.3 20.2 0.5%
---------- ---------- ----------
Ordinary Dividends(7) 8.1p 7.6p 6.6%
---------- ---------- ----------
(1) The figures presented in this announcement are for the 52
week period ended 28 March 2020 for the continuing operations of
the Group following the sale of Jawoll prior to the year-end date.
The figures for the previous year 52 week period ended 30 March
2019 exclude Jawoll to provide a comparable basis with those for
the continuing operations at as 28 March 2020.
(2) 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.
(3) References in this announcement to the B&M business,
includes the B&M fascia stores in the UK except for the
'B&M Express' fascia stores. References in this announcement to
the Heron Foods business, includes both the Heron Foods fascia and
B&M Express fascia convenience stores in the UK.
(4) Like-for-like revenues relate to the B&M estate only 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 the previous period. This 14
month approach has been used as it excludes the two month halo
period which new stores experience following opening.
(5) The Directors consider adjusted figures to be more
reflective of the underlying business performance of the Group and
believe that this measure provides additional useful information
for investors on the Group's performance. Further details can be
found in note 3 . Adjusting items are the effects of derivatives,
one off refinancing fees, foreign exchange on the translation of
intercompany balances and the effects of revaluing or unwinding
balances related to the acquisition of subsidiaries. Significant
project costs or gains or losses arising from unusual circumstances
or transactions may also be included if incurred, such as this year
with the gain on the sale and leaseback of the Bedford warehouse
and the direct loss incurred at Babou due to the closure of their
stores during the pandemic. The Babou stores closed under the
French Covid-19 restrictions from 15 March 2020 until 11 May 2020.
Babou incurred an EBITDA loss of GBP2.946m in the part of the
period when they were closed to 28 March 2020. A stock provision of
GBP6.369m has also been made relating to losses we are likely to
incur to discount seasonal stock not sold during the closed period
to sell it through in the rest of the Spring and Summer season.
They have both been included as adjusting items as they arose as a
result of the Covid-19 restrictions.
(6) Net Debt comprises interest bearing loans and borrowings,
overdrafts, cash/cash equivalents and finance leases excluding
capitalised fees. See notes 21, 23 and 24 for more details.
(7) Dividends are stated as gross amounts before deduction of
Luxembourg withholding tax which is currently 15%.
(8) Net capital expenditure includes the purchase of property,
plant and equipment, intangible assets and proceeds of sale of any
of those items.
Analyst & Investors Webcast and Conference Call
An Analyst & Investors only webcast and conference call in
relation to the final results will be held on Thursday 11 June 2020
at 08:30 am (UK):
The conference call can be accessed live via a dial-in facility
on:
UK & International: +44 (0) 800 408 7373
US: +1 800 939 0944
Room number: 596070
Participant Pin: 2969
A simultaneous audio webcast of the presentation slides will be
on 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
Daniel Yea
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
656 stores in the UK operating under the "B&M" brand, 293
stores under the "Heron Foods" and "B&M Express" brands, and
101 stores in France operating under the "Babou" and B&M brand
as at 28 March 2020. 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
Chief Executive's Review
Covid-19
So much has changed and is changing in many aspects of
everyone's lives as we come to terms with the impact of Covid-19.
It seems strange to be reviewing a period that ended only in March
2020 but which already seems a long time ago. The impacts of the
virus on individuals, communities, our industry and the wider
economy are today still unknown but clearly very significant and
potentially long lasting.
The progress of the business in this last year has inevitably
been overtaken by events. While business moves on quickly, the
challenges posed by this new threat have been of a whole new order
and scale. Much of our focus and effort was switched in the recent
period leading up to the year-end to the immediate operational
challenges of how we deal with the new realities of serving our
customers safely, protecting and supporting our colleagues and on
managing our supply chain both in the UK and in China.
I am very proud of the way the whole B&M team has risen to
those challenges. Normally in my annual updates, I express my
thanks to our colleagues at the end with gratitude for another year
in which their hard work was again decisive in our continued
success. The team once again delivered in FY20, but this year is
different because of the experience of recent weeks. Thanking my
team and all our colleagues for everything they have done on behalf
of customers and shareholders is my most important task this year.
Covid-19 is different from anything any of us has encountered
before, and as a retailer of essential goods, during the crisis
keeping our shelves continually re-stocked and serving customers
efficiently and safely during periods of high demand were
critically important. The whole team deserves our thanks and praise
for their efforts.
The crisis and how we have reacted to it also speaks to the
strength and resilience of the B&M model. At its heart is the
fact we are a variety goods retailer, backed by a fully invested
infrastructure and robust supply chain. The unique breadth of our
product range delivers balance and resilience to overall financial
performance from year to year and allows us to absorb downturns in
any one specific product category. The business also has been able
to respond quickly to the changing needs of our customers,
particularly during the restrictions imposed by the pandemic crisis
in our store and supply chain operations. Our 656 B&M UK stores
are conveniently located, easy to shop safely and they have
demonstrated they are now destinations in their own right. They are
increasingly in high quality locations and are not dependent on
shopping malls or anchor department stores to generate footfall.
When the strain of meeting high and fluctuating demand,
particularly for everyday essentials was at its most intense,
B&M was well-positioned and able to react quickly. At our
warehouses we re-deployed labour and re-prioritised the picking of
products experiencing the highest demand at stores to keep them
replenished and serving customers daily with what they needed.
Our business quickly implemented social distancing measures
across its stores and distribution centres. We deployed masks,
disposable gloves, hand sanitiser and social distancing marshalling
across the network. Our store, warehouse and transport colleagues
faced increased workloads and responsibilities with the
implementation of social distancing, whilst the business was
experiencing high levels of absence due to sickness or
self-isolating. To recognise this additional burden, we increased
the pay of store and distribution colleagues by 10% over the peak
of the crisis.
To play our part in the collective national effort to respond to
the pandemic, we quickly implemented two successful initiatives. We
made a total GBP1 million cash donation at speed to Foodbanks
across the UK using our store network. We granted priority access
to NHS workers for the first hour of each trading day and we have
provided GBP2.9 million in discounts to NHS workers in a 2 month
period.
We should also not forget that as a discounter, our appeal is
strengthened when large sections of the population are worried
about their personal finances or are having to live within
constrained household budgets.
This is important, not just because we were able to do our bit
in the crisis, but because I believe it demonstrates the
flexibility of our model to adapt very quickly to meet the evolving
needs of customers. The lasting effects of Covid-19 on our industry
may result in the further acceleration of the already profound
structural changes affecting retailing. Positioning the business to
address two of the most powerful strategic trends in retail, being
discount and convenience shopping, will, in my view, continue to
deliver plenty of growth opportunity for B&M into the long
term.
Financial Performance
The core B&M UK business had a good year, tempered in part
by the weak performance of our Christmas and Toy categories during
the third quarter which was also impacted by disappointing footfall
affecting most UK retailers at the time of election and Brexit
uncertainty. We have taken steps to learn from the year's Christmas
trading period as we plan our space allocation and sales budgets
for the 2020 Golden Quarter. Our final quarter saw a strong return
in trading performance with pleasing like-for-like ("LFL") sales of
6.6%, attributable to a surge in grocery sales in late March.
The performance of new stores exceeded our expectations and
demonstrated our continued ability to deliver profitable organic
growth. A robust gross margin, combined with diligent control of
costs, resulted in a good overall outcome in terms of profit growth
and cash generation.
Heron Foods continued to perform well throughout the year and
also benefitted from the exceptionally high demand in March. Its
emphasis on local convenience retailing and value for money put it
in good stead to serve shoppers' needs throughout the coronavirus
crisis.
Until the disruption caused by Covid-19, our repositioning of
Babou and the development of B&M in France was making good
progress. A large proportion of Babou's product range had moved to
the Group's supply chain in China. The business had successfully
reduced its reliance on Clothing while increasing its ambient
grocery and FMCG ranges to drive frequency of visit and average
transaction values. In the final quarter of FY20, we rebranded 13
stores from Babou to B&M and were encouraged by initial
customer reaction. We ended the financial year with 19 stores in
France trading as B&M out of the store estate of 101 stores.
However, the lockdown imposed on the business from 15 March 2020,
which was lifted on 11 May 2020, has delayed our ability to
continue the development of the B&M proposition.
Our Babou stores are focused on short term trading priorities
and the delivery of social distancing measures for the remainder of
the Summer 2020. It would not be sensible for us to disrupt 2020
Golden Quarter trading with store remodelling and rebranding to
B&M. We expect to resume the rebranding of Babou to the B&M
brand in France in early 2021, subject to the controlled testing of
the performance of the pilot group of 19 stores converted to
B&M format stores so far.
Recent and Current Trading
Our priority since the year-end in our UK businesses has been
the safety of our colleagues and customers. The teams have worked
quickly and tirelessly to deliver social distancing guidelines at
our stores, which were permitted to stay open due to the majority
of our sales falling within the Government's essential categories
of Food, Drink, Personal & Household Care, Petcare as well as
DIY and Hardware.
Our ability to react quickly and implement new ways of working
safely have underpinned our unusually strong trading performance in
the period since the year-end. This has been boosted by the very
favourable hot weather and the acceleration of demand in DIY, much
of which will be a pull-forward of trade from later in the season.
All our stores are currently trading and we do not have any
employees on furlough under the Government's scheme, other than
colleagues in receipt of the "shielding letter" for those extremely
vulnerable to the virus. We have not taken any loans under the UK
Government's lending schemes, nor are we currently paying VAT or
any other taxes on a delayed basis. However, the pandemic has
brought significant increases in cost of working both at a store
level and in distribution. Due to the general uncertainty over
future consumer behaviour and the duration of restrictions, it is
currently particularly difficult to predict what the remainder of
the year may be like.
We have seen very strong early LFL sales in the UK businesses
since the year-end of 22.7% to 23 May 2020. Excluding Gardening and
DIY categories, the LFL sales performance for that period was
10.3%. We have also incurred increased costs of trading (excluding
the benefit of the business rates holiday) from the social
distancing measures implemented in our stores and warehouses since
the onset of the Covid-19 crisis. Together with closure period
losses in Babou, these costs partially offset the additional
revenue from the recent surge in Gardening and DIY sales.
In France we had to temporarily close all of our 101 stores
under the French Government restrictions for a period of 8 weeks
from 15 March 2020. Since the stores re-opened on 11 May 2020 we
have seen an initial strong sales performance with LFL sales of
81.8% in the period to 23 May 2020, with the French consumer having
been able to access stores for the first time since the 8 week
closure period.
Strategic Development
Although maintaining a strong focus on dealing with the
challenges posed by Covid-19 has been vitally important, we have
not lost sight of the need to drive our strategy for growth
forward, both before and since the crisis. From a strategic
standpoint the execution of our UK expansion strategy has continued
to go well. Inevitably there are also consequences of the Covid-19
crisis and its aftermath for the implementation our UK strategy in
the near term. For example, the slowdown in the construction
sectors in the UK will result in some delay in our new store
opening programme. We have not taken a decision to deliberately
slow that programme but it will take some months for building and
shop-fitting contractors to catch up time lost during lockdown
periods. This applies not only to our own shop-fitting works but
also further upstream where works are required to be carried out by
the property owner prior to handover to us. In France the
transformation of the Babou business we acquired in 2018 to a model
similar to B&M and testing of a pilot group of 19 stores
converted to the B&M format is underway, although progress has
been delayed due to the disruption from Covid-19.
The completion of the sale of our Jawoll business in Germany
just before the financial year end, to a private equity led buyer
consortium, was the culmination of a the strategic review process
which began in late 2019. The comprehensive review we undertook
included an evaluation of the likely potential for the Group to
create value from the business in Germany going forward under our
ownership and weighing that against the continued disappointing
performance of the business driven by persistent recruitment,
trading and operational issues. The carrying value of the brand,
goodwill and of property, plant and equipment on under-performing
stores, had already been impaired by us at the half year-end of the
Group in September 2019. The Group also cancelled and wrote-off
EUR36.1m of loans and intra-group debt owed to it by the German
business as part of the terms of the sale. The review concluded
that the path to restoring profitability, the creation of a
business model capable of delivering acceptable financial returns
and the potential for long term growth was likely to entail further
substantial investment with an uncertain outcome. As a result, the
decision was taken to find a buyer for the business where it could
be repositioned back to a clearance outlet model under other
ownership. This was in the best interests of the Group and the
other stakeholders of the Jawoll business, notably its colleagues.
Clearly the experience in Germany was beset with difficulties, but
the lessons learned have informed our approach in France so that
the execution of our strategy avoids the issues we encountered in
Germany.
The B&M Group's strategy for driving sustainable growth in
revenues, earnings and free cash flow has the following four key
elements. Details of our progress in relation to those during the
year were as follows:
1. Delivering great value to our customers
B&M is all about delivering great value across a variety of
product categories, with the range of items within each product
line being limited to best sellers. The offer is focused on the
things customers buy regularly for their homes and families. There
is always something a household needs that can be bought quickly,
cheaply and conveniently at B&M, whether it is a light bulb, a
new kettle, a jar of coffee or a tube of toothpaste. Combined with
a constant stream of typically c.100 new lines each week, this is
why our customers (which averaged about4.8m a week) choose to keep
coming back to our stores so regularly. With 656 stores across the
UK B&M has become a routine part of customers' shopping habits
wherever we trade. In the week immediately prior to the Covid-19
lockdown crisis our stores served6.6m customers, with some of them
also likely being new to B&M. Our stores are generally in
locations with easy access by car or other independent means of
travel, as opposed to being dependant on city public transport
links with the social distancing risks associated with those
networks.
Our competitiveness and our profitability are driven by
relentless discipline around keeping costs low, buying large
volumes per product line directly from factories rather than
through intermediaries, and stocking only a limited assortment of
the best-selling items. Low costs help us deliver low prices but
B&M is not just about seeking cheap products. Our focus is on
selling quality products, including many leading brands at
discounted prices. Some people need a bargain but many people also
enjoy one, and that's why B&M's appeal continues to
broaden.
The majority of our product categories saw strong overall total
sales growth this year helped by the new store programme, resulting
in continued market share gains. On a comparable basis, it was a
similarly strong picture. Our Homewares categories saw excellent
year on year growth, in part rebounding from a weaker performance
in the prior year. Following a complete range review and reset in
the prior year all stores have been fully re-merchandised in
Homewares and we have been delighted with the improved design,
ranging, co-ordination and presentation of these ranges. This
includes areas across home textiles, bedding and home adornment.
The customer response to these changes has been excellent, and as a
result we have extended some of the themed styles to this year's
outdoor leisure and furniture ranges. Homewares remains an
opportunity area for the business and we will be allocating more
space to those products when the disruptive impact of Covid-19
subsides.
Seasonal goods are a significant element of B&M's appeal in
general merchandise. Around 20% of the space in a typical store is
fully re-merchandised through the seasons. These are also areas
where our pricing can be at its most disruptive. Garden and Outdoor
Leisure enjoyed a pleasing 2019 season, despite very demanding
comparables from the prior year's heatwaves. By contrast, the
Christmas selling season was disappointing, partly driven by the
weakness in the toy market but we believe also by the unhelpful
timing of the UK's General Election in early December and the
intense media coverage of potential Brexit impacts to the economy.
Although margins remained robust through the season, like-for-like
sales in the Autumn/Winter seasonal categories were lower than
expected.
Grocery categories achieved strong growth. For most of the year
their outperformance of the business as a whole was modest, but
sales accelerated during the final weeks of the year driven by
customer anxiety over the potential impact of Covid-19. Customers
buying tinned and packaged food, cleaning and laundry products,
soft drinks, paper goods and pet care products drove very strong
growth in the last few weeks of the year. Because of the long life
nature of what we sell, as well as our low prices and high levels
of buffer stock, B&M proved to be a very efficient way for many
customers, including those new to B&M, to stock-up and at
consistently great value prices.
2. Investing in new stores
We have a long growth runway in the UK, with the potential to
open at least 950 B&M facia stores across the country from our
current base of 656, both in heartland areas and in areas where we
have few or even no stores. This excludes Heron Foods, our discount
convenience business which, with its smaller existing geographic
footprint, strong returns profile and small store model, has the
potential itself to become multiple times larger than its present
293 store count. With B&M new store performance continuing to
be very strong and the flow of attractive profitable opportunities
looking healthy, the target of at least 950 B&M stores in the
UK is increasingly looking like a conservative estimate.
We opened 51 new B&M fascia stores during the year, with 8
of those being replacement stores where larger and more profitable
store opportunities have become available to move our business
elsewhere in a town. There were a further 7 closures, largely the
consequence of older, early generation stores coming to the end of
leases and where the locations were not attractive enough to renew
or in fact a larger replacement store had been opened in prior
years. In the year there were therefore 36 net new B&M store
openings. The current year's opening programme is, or would have
been, equally strong had the unhelpful impact of Covid-19 on the
construction industry not intervened. Currently, we expect a
reduced programme to that in FY20, with 30 net new openings in FY21
and being more heavily weighted to the second half of the financial
year. The forward pipeline for FY22 is similarly impacted but it is
possible that the fallout across the retail industry from the
impact of the virus may provide further attractive opportunities
that we have not yet factored into our budgets.
Heron Foods had another strong year, benefitting from its
appealing positioning as a value convenience retailer. Profit
performance was particularly pleasing, helped by improvements to
labour scheduling and also distribution efficiencies. Like our
B&M main facia stores, Heron Foods performed strongly during
the final few weeks of the financial year, as customers altered
their shopping habits towards stocking-up. Heron Foods'
neighbourhood locations and predominantly frozen and packaged food
offer was, and is, very appropriate to its customers' needs. Heron
Foods opened at total of 18 new stores during the year, bringing
the total to 293. We are expecting to open about 15 new Heron Foods
stores in FY21, but that is subject to any impacts of disruption to
building fit-out works from Covid-19. As with the B&M UK fascia
the openings will be weighted to the second half of FY21.
In France, we opened 5 new stores, most of them having been
committed to prior to our ownership of the business. All of them
were opened under the B&M fascia and with layouts and
merchandising akin to our UK stores, albeit with a category
emphasis reflecting the differing needs of the Babou customer.
Babou operated a total of 101 Babou and B&M fascia stores at
the year end.
3. Developing our international business
Until the imposition of the lockdown period in France linked to
Covid-19, which kept the stores fully closed for 8 weeks, the
business was making good progress moving towards the B&M model
with the re-setting and re-formatting of a number of pilot stores
in the estate. Most of the category changes we envisaged, including
switching to products sourced from the B&M supply chain, were
also well advanced. We had made progress in reducing Babou's
exposure to the Clothing category and we had begun to introduce
more Food, Grocery and FMCG products. Babou's supply chain had
proven itself up to the task of managing large volumes of
containerised inbound product, having navigated the peak stock
intake last Autumn smoothly and successfully. We now have 19
B&M pilot re-formatted stores trading in France, most of them
converted in early 2020 from existing Babou stores, combined with
the 5 new stores openings. In the early weeks of trading prior to
the Covid-19 closure restrictions coming into force, the B&M
stores were trading encouragingly above their trading levels as
Babou, but it is as yet unclear how much of this improved
performance was not just the 'halo effect' of a new store
opening.
Inevitably, a lengthy period of store closure during the
lockdown period in France has been unhelpful and has set back our
plans for the business to some extent. Our priority since the
lifting of the lockdown has been to trade the stores and sell
through inventory. Before the further development of the B&M
fascia, we need a more settled period of time first to test the
results of the 19 stores converted as a pilot group so far.
4. Investing in our people and infrastructure
Our new c.1 million square feet Southern distribution centre at
Bedford was completed and fitted-out during the financial year. It
is our largest single distribution centre building. Commissioning
of the facility was successfully achieved before and during the
Covid-19 crisis and it is now supplying almost one-third of the
B&M store estate. Having the additional logistics capacity in
place during the Covid-19 surge in demand for particular categories
was particularly useful, but it is fair to say that the lockdown
restrictions are imposing higher costs and inefficiencies across
our network. We expect the new centre to provide sufficient
capacity for our expansion plans for the foreseeable future
including enough to meet our 950 UK store target.
At store level, we had planned by the time of this report going
to print to have rolled-out our digital technology Workforce
Management System. That was unfortunately delayed by the on-set of
Covid-19 in view of the priority rightly given to the
implementation of new safety measures rather than the roll-out of
training on a new system. We have successfully piloted it and the
technology is ready to go live across the estate as soon as it's
practical to do so.
During the financial year we recruited Allison Green as the
Group People Director. Allison is re-joining the business after
having been with B&M previously until 2016 and then having
worked in the hospitality sector. We are delighted that she has
re-joined the management team at B&M, having made a significant
contribution during her previous tenure with the business.
In France we welcomed Gilles de Frémicourt who we appointed
during the year as the Distribution Director to the Babou business,
with the distribution function having been fully integrated into
the Babou business in place of the separately managed distribution
workforce service arrangement that was in place prior to the
acquisition. We also appointed Anthony Giron as President of Babou
on 11 May 2020, in order to strengthen the senior management team
in line with our high ambitions for the business. Anthony has
previously launched and rolled out the Hema retail business in
France, and his experience is a good fit with the opportunities
ahead of us to grow B&M in France.
Corporate Social Responsibility
We are very proud as a Group to serve customers across the UK in
many different communities and localities through our B&M and
Heron Food stores. Our presence in communities gives customers
access locally to the everyday products they need and at bargain
prices. Our new store opening programmes extend the reach of our
value proposition to new communities and customers, create new
local jobs and help in our own way to revitalise areas where other
retailers have in many cases retrenched. We strive in all the areas
where we operate to be a good corporate citizen and to make a
difference, whether that's through the great prices we offer in
stores to our customers or through career opportunities and
development paths for our colleagues. Some of the points I would
like to highlight this year are:
-- the creation by the Group this year of over 2,200 new jobs in
the UK, mainly through our store expansion programmes;
-- the development and training of our own talent through our
Step-Up Programme promoting 125 colleagues to B&M Deputy and
Store Manager positions;
-- our recycling of high levels of supply chain waste, with
99.8% of the Group's trade packaging waste being recycled;
-- proudly supporting for the fourth year the "Mission
Christmas" charity appeal through sponsorship, with stores
participating as collection points for presents donated for
underprivileged or poorly children for the appeal;
-- in response to the Covid-19 virus and the impacts to some of
the most vulnerable in society, we donated GBP1,500 per B&M
store to local Foodbanks totalling GBP1m nationally; and
-- extending GBP2.9 million of discounts to all National Health
Service workers during the peak of the crisis.
Outlook
For many retailers the outlook in the Covid-19 world is more
about survival than it is about the shape of the year ahead and
beyond. B&M has significant advantages. The 'variety retailing'
model with its core strength in everyday essentials, a
well-invested infrastructure, strong value credentials, a modern
and convenient store network with continuing growth opportunities
in the UK and France, mean that the business is better positioned
and more resilient than most to deal with the new realities.
We welcome the UK Government's business rates holiday which we
see as essential to support the viability of the UK retail industry
and the incremental operating costs of serving customers in the
present circumstances. We hope this will be a precursor to the much
needed reform of the UK business rates system. The benefit of the
business rates holiday for B&M will fall in our financial year
ending March 2021 and is likely to be fully offset by Covid-19
related costs, dependent on the progression of the virus and, in
particular, the nature and duration of social distancing
requirements.
Our strong trading performance in the B&M UK stores in the
initial 8 weeks of the new financial year was boosted in particular
by our Gardening and DIY categories as announced on 29 May. Much of
that outperformance is likely to have been a pull-forward of sales
which would ordinarily be achieved later in the first half of the
financial year. LFL customer count was -28.9% whilst LFL Average
Transaction Value was +72.5% over the initial 8 weeks. Whilst
trading has continued to be strong in more recent weeks, the growth
rate is unlikely to be sustained as Gardening ranges have sold
through and stock in some other categories is now lower than normal
for this time of year.
The pandemic has delayed construction work on new stores and
consequently there has been a slowdown to our store opening
programme for this financial year. For FY21 we now expect to have
30 net new B&M UK store openings and the programme could be
reduced to a similar number in FY22 dependent on the progress of
the virus and social distancing requirements. Our overall long term
target of at least 950 B&M stores in the UK remains
unchanged.
There are greater than usual uncertainties during the remainder
of the year. The economic environment and its impact on customers
is difficult to predict. In addition to the impact of social
distancing on operating costs, should this continue during the
winter months, it is likely to reduce footfall due to the
reluctance of customers to queue outside during less pleasant
weather, and detract from our ability to serve customers in their
usual numbers during the peak trading season.
Against this uncertain backdrop B&M, as noted above, is in a
strong position to continue to grow profitably in the UK, and work
continues to develop and prove the proposition in France.
Simon Arora
Chief Executive Officer
11 June 2020
Financial Review
Accounting period
The FY20 accounting period represents the 52 weeks trading to 28
March 2020 and the comparative financial period represents the 52
week period for the B&M UK segment to 30 March 2019. This is
the first time that the Financial Statements have therefore been
prepared following the introduction of IFRS16. The comparative
figures in this report have been restated for IFRS16 as we have
adopted the fully retrospective approach. Additional details in
relation to this can be found in notes 17 and 18. We have continued
to report underlying figures where we believe they are relevant to
understanding the performance of the Group and these underlying
figures referred to are presented pre the impact of IFRS16.
As a result of the disposal of our German business, Jawoll, in
March 2020, the results of Jawoll are treated under IFRS5 as a
discontinued operation within the statement of consolidated income
and the comparative figures have also been restated to reflect
this.
Financial performance
Group
The Group revenue in FY20 was GBP3,813.4m (FY19: GBP3,272.6m),
this represents an increase of 16.5% and on a constant currency
basis, a 16.6% increase(2) .
The overall adjusted gross margin(5) was 33.8% (FY19: 34.1%).The
adjusted operating costs(5) of the Group, excluding depreciation
and amortisation, grew by 18.3% to GBP946.9m (including new store
pre-opening costs) and depreciation and amortisation expenses
(excluding adjusting items) grew by 28.2% to GBP57.7m, reflecting
the increased number of stores as a result of the new store opening
programme and the additional costs relating to the non-comparable
period of Babou following the acquisition in October 2018.
We report an adjusted EBITDA(5) to allow investors to understand
better the underlying performance of the business. The items that
we have adjusted are detailed in note 4, they totalled GBP(40.7)m
in FY20 (FY19: GBP(5.5)m).
Overall Group adjusted EBITDA(2) increased by 7.1% to
GBP342.3m.
B&M UK
In the UK, B&M revenues increased by 12.6% to GBP3,140.1m,
driven by an increase in like-for-like revenues of 3.3% and the new
store opening programme, including both the annualisation of
revenues from the 44 net new store openings in FY19 and the 36 net
new store openings in FY20, and an additional GBP16.3m from
wholesale revenue.
There were 51 gross new store openings in the year and 15
closures with 8 of the closures being relocations. We have
continued to see attractive returns on investment on the FY20 new
store openings and they delivered GBP157.9m of revenues in the
year. We have also continued to take advantage of relocation
opportunities. These are typically small first generation B&M
stores that are replaced by modern, larger stores that allow
customers access to the full product range, and these opportunities
continue to be earnings enhancing.
Revenues in the like-for-like store estate grew by 3.3%
(FY19:0.7%). The like-for-like performance was enhanced by a two
week period of exceptional demand in March 2020 as the UK consumer
purchased essential products ahead of the Coronavirus lockdown in
the UK. Excluding these two weeks, the like-for-like would have
been 1.7%. During the year we have seen a continuation of the
strong performance on grocery/FMCG ranges as consumers structurally
continue to seek out value and we have also seen an improved
performance on our homeware ranges following the changes that were
made to the ranges, against the backdrop of a disappointing
performance in FY19.
In the B&M UK business the margin reduced by 63 basis
points, this comprises 12 basis points as a result of the levels of
demand in March 2020 on the lower margin grocery and FMCG sales and
the increase in the wholesale revenues.
In the B&M UK business, operating costs, excluding
depreciation and adjusting costs, grew by 11.3% to GBP734.4m, while
costs as a percentage of revenues decreased by 27 basis points to
23.4%. Within the year the business has managed to largely absorb
the impact of the living wage through efficiency savings, although
there have been inflationary cost pressures on transport and
distribution costs, as well as the additional operating costs
arising from the opening of our new warehouse in Bedford.
In the B&M UK business, adjusted EBITDA(5) increased by 8.7%
to GBP319.8m (FY19: GBP294.1m) and the adjusted EBITDA(5) margin
decreased by 36bps to 10.2%.
Heron Foods
Revenues at our convenience food store business, Heron Foods
grew to GBP389.9m (FY19: GBP354.1m). The business has continued to
deliver a strong sales performance following the strong
like-for-like performance that was delivered in FY19. The business
also benefited from an exceptional level of demand in March 2020
ahead of the Coronavirus lockdown.
The business has continued to manage its cost base despite the
headwinds of inflationary cost increases on store wages and
operating costs as a percentage of revenues decreased by 82bps to
25.0% (FY19: 25.9%).The EBITDA(5) was GBP25.5m, which compares to
GBP19.9m for FY19 and the EBITDA margin improved by 93bps to
6.6%.
Babou
Babou's revenues grew to EUR324.2m, (FY19: EUR146.5m), an
increase of 121.3%, of which EUR162.2m related to the
non-comparable period of ownership. Within the year the business
opened 5 new stores. Trading in the business was impacted by the
lockdown in France with all stores closed from 11 March 2020, as a
result of the French government's response to the Coronavirus
outbreak.
The business had been progressing with its transformation and
moving the product offer to that of the B&M UK stores. However,
the store closures following the lockdown period in France resulted
in a negative EBITDA of GBP3.0m during the lockdown period and an
additional net realisable value provision of GBP6.4m has been made
on stock, mainly clothing that will require additional markdowns to
be sold, both of these items have been excluded from the adjusted
EBITDA.
The adjusted EBITDA was GBP(3.0)m and this compares to GBP5.6m
in FY19.
Jawoll
Following the disposal of the Group's entire 80% shareholding in
Jawoll to a private equity-led consortium in March 2020, the
results of Jawoll are shown with discontinued operations.
The Group received an initial consideration of EUR2.5m and there
is a further EUR10.0m to be received no later than December
2020.This element of the consideration is subject to the on-going
trading of Jawoll. This was in consideration for a EUR5.6m
intragroup trading account and a EUR43.0m loan provided by the
Group. The loss from discounted operations was GBP113.9m,
reflecting a loss on writing-off loan balances, trading losses in
the year and impairment of assets.
Financing
The net interest charge in the year was GBP81.7m (FY19:
GBP75.2m) representing an increase of 8.6%
The interest charge includes GBP57.2m for the finance costs
relating to the lease liabilities under the IFRS16 accounting
treatment following the introduction of the new standard lease
interest, (FY19: GBP52.0m). Bank, high yield bond and interest
receivable was GBP22.7m (FY19: GBP20.3m) and amortised fees of
GBP2.1m (FY19: GBP1.9m).
The increase in the cash interest charge largely reflected the
additional funding required for the build of the new warehouse at
Bedford prior to the sale and leaseback transaction which was
completed on 6 March 2020.
Profit before tax
The statutory profit before tax was GBP252.0m, which compares to
GBP244.3m in FY19. We also report an adjusted profit before tax to
allow investors to understand better the operating performance of
the business (see note 4). The adjusted profit before tax(5) was
GBP260.0m (FY19: GBP252.4m) which reflected a 3.0% increase.
Taxation
The tax charge in the year was GBP57.2m (GBP49.2m in FY19) and
we expect the tax rate going forward to reflect the mix of the
impact of the tax rates in the countries in which we operate being
19% in the UK and 30% in France, with an effective rate of 19.5% in
FY21.
As a Group we are committed to paying the right tax in the
territories in which we operate. In the UK the total tax paid was
GBP275.6m. This is mostly those taxes which are ultimately borne by
the company amounting to GBP182.8m which includes corporation tax,
customs duties, business rates, employer's national insurance
contributions and stamp duty and land taxes. The balance of
GBP92.8m are taxes we collect from customers and employees on
behalf of the UK Exchequer which includes Value Added Tax, Pay As
You Earn and employee national insurance contributions.
Profit after tax and earnings per share
The profit after tax was GBP80.9m compared to GBP191.1m in FY19
and the fully diluted earnings per share was 9.0p (FY19:
19.5p).
On an adjusted profit after tax basis(5) , which we consider to
be a better measure of performance due to the reasons outlined
above, it was GBP203.0m which was a 0.2% increase over last year
(FY19: GBP202.7m) and the adjusted fully diluted earnings per
share(5) was 20.3p (FY19: 20.2p).
Investing activities
The Group incurred GBP124.6m on the purchase of property, plant,
equipment and intangible assets, including GBP32.0m on the build
and fit out of our new warehouse in Bedford with a further GBP42.5m
being incurred on the 74 gross new stores opening programme across
the Groups fascia's and an additional GBP50.1m on the Groups
infrastructure and ensuring that our existing store estate and
warehouses are appropriately invested and maintained. The Group
will continue to invest in its existing store estate and IT
infrastructure across the Group in the year to March 2021 and we
would expect the level of maintenance expenditure to be 0.8% of
revenues.
The deferred consideration that was outstanding relating to the
acquisition of Heron in August 2017 that was due was agreed with
the vendors and GBP12.0m was paid in the year.
There were GBP160.5m of proceeds received from the sale of
property, plant and equipment in the year, the majority of this
related to the proceeds from the sale and leaseback of our
warehouse in Bedford, GBP149.5m in March 2020 and there was a
further GBP6.6m relating to the sale of freehold properties. In
addition there were also receipts of GBP2.4m from the disposal of
our shareholding in Jawoll and GBP2.6m in dividends received from
associates.
Net debt and cash flow
As a Group we continue to be strongly cash generative and the
cash flow from operations increased by 25.9% to GBP532.6m (FY19:
GBP423.0m).
The cash generation reflects the continued growth in the Group's
EBITDA(5) , and the continuation of the attractive cash paybacks
from the new store opening programme. Within the year we have also
seen a working capital inflow as a result of both the accelerated
demand for essential products in March 2020 ahead of the lockdown
and also lower levels of imported stock following some delays to
the timing of merchandise being shipped from the Far East following
the Covid-19 outbreak in China. The working capital benefit is
likely to reverse in FY21 if normal trading conditions are
experienced.
The strong cash flows have enabled the Group to pay GBP76.0m of
dividends in the year and also to declare a dividend of GBP150.1m
that was paid to shareholders in April 2020.
The Group's net debt(6) in the year has reduced to GBP347.5m
(FY19: GBP610.9m) and the net debt(6) to adjusted EBITDA(5) has
reduced to 1.02 times (FY19: 1.91 times). Adjusting the net debt
for the GBP150.1m special dividend that was paid on 17 April 2020,
the underlying net debt would have increased to GBP497.6m and the
net debt to adjusted EBITDA would have been 1.45 times. This
remains comfortably within our 2.25 times leverage target.
B&M periodically explores opportunities to repay, prepay,
repurchase, refinance or extend its existing indebtedness prior to
the scheduled maturity of such indebtedness, and/or amend its terms
with the requisite consent of lenders as part of B&M's
continuing efforts to manage its capital structure. B&M and/or
its Group may also incur additional indebtedness to the extent
permitted by the covenants of existing indebtedness or with the
requisite consent of lenders, including in connection with the
Group's evaluation of strategic expansion and acquisition
opportunities.
The Board adopted a long-term capital allocation policy in 2016
to provide a framework to help investors understand how the Group
will continue to balance the funding requirements of a growth
business like B&M with the desire to return surplus capital to
shareholders. The Board will continue to evaluate opportunities to
invest and support the growth of the business along with the scope
for any incremental return of capital to shareholders in the
context of that framework.
Dividends
The Group has a dividend policy which targets a pay-out ratio of
between 30-40% of net income on a normalised tax basis. The Group
generally pays the interim and final dividends for each financial
year approximately in proportions of one-third and two-thirds
respectively of the total annual dividend.
The Group is strongly cash generative and its capital policy is
to allocate cash surpluses in the following order of priority:
1. the roll-out of new stores with a strong payback profile;
2. ordinary dividend cover to shareholders;
3. mergers & acquisition opportunities; and
4. returns of surplus cash to shareholders.
The above list is a summary of the main items, but it is not an
exhaustive list as other factors may arise from time to time which
require investment to support the long-term growth objectives of
the Group.
The parent company of the Group is an investment holding company
which does not carry on retail commercial trading operations. Its
distributable reserves are derived from intra-group dividends
originating from its subsidiaries. As the parent company is a
Luxembourg registered company the Board is permitted to have
recourse to the company's share premium account as a distributable
reserve. It remains the Group's policy though generally to have
recourse to distributable profits from within the Group, and
accordingly, ahead of interim dividends, and also ahead of the year
end in relation to final dividends, the Board reviews the levels of
dividend cover in the parent company to maintain sufficient levels
of distributable profits in the parent company for each of those
dividends. The Group's consolidated balance sheet position as at 28
March 2020 includes distributable profit reserves of GBP245m. The
vast majority of these reserves have been generated by and are on
the balance sheet of the principal trading subsidiary of the Group
in the UK, B&M Retail Limited. There are intermediate holding
companies in the Group structure between B&M Retail Limited and
the Group's ultimate parent company, but those intermediate holding
companies do not carry on retail trading business operations and
there are no dividend blocks of any material amounts in any year in
relation to expenses which those companies may incur.
The Group has continued to be strongly cash generative and is in
a very good position to fund and maintain its dividend policy
notwithstanding the current economic situation general. The
principal risks of the Group and in particular those relating to
Covid-19, supply chain, competition, economic environment,
commodity prices, infrastructure and international expansion are
relevant to the ability of the Group to maintain its dividend
policy in the future. The Group however maintains strategies to
mitigate those risks and the Board believes the Group has a robust
and resilient business model through the combination of having a
value-led product assortment which to a large extent comprises
essential goods and also competes across a very broad section of
the retail markets in our chosen locations.
During the year the Company paid an interim dividend of 2.7p per
share and also declared a special dividend of 15.0p per share
following the sale and leaseback of the Bedford Distribution Centre
which was paid in April 2020. Subject to approval of the dividend
by shareholders at the AGM on 18 September 2020, a final dividend
of 5.4p per share is to be paid on 28 September 2020 to
shareholders on the register of the Company at the close of
business on 21 August 2020. The ex-dividend date will be 20 August
2020.
Paul McDonald
Chief Financial Officer
11 June 2020
Consolidated Statement of Comprehensive Income
Restated*
52 weeks ended 52 weeks ended
Period ended 28 March 2020 30 March 2019
Note GBP'000 GBP'000
Continuing operations
Revenue 3 3,813,387 3,272,632
Cost of sales (2,530,579) (2,152,403)
Gross profit 1,282,808 1,120,229
Gain on sale and leaseback of the Bedford
warehouse 17 16,932 -
Administrative expenses (966,928) (801,492)
Operating profit 5 332,812 318,737
Share of profits in associates 14 879 775
Profit on ordinary activities before
net finance costs and tax 3 333,691 319,512
Finance costs on lease liabilities 6 (57,206) (52,040)
Other finance costs 6 (24,809) (24,228)
Finance income 6 213 369
Gain on revaluation of financial instruments 6, 23 134 716
Profit on ordinary activities before
tax 252,023 244,329
Income tax expense 12 (57,246) (49,220)
Profit for the period from continuing
operations 3 194,777 195,109
-------------- ---------------
Attributable to owners of the parent 194,777 195,109
Discontinued operations
Loss from discontinued operations 7 (113,922) (3,975)
Profit for the period 80,855 191,134
-------------- ---------------
Attributable to non-controlling interests (9,172) (2,717)
Attributable to owners of the parent 90,027 193,851
Other comprehensive income for the period
Items which may be reclassified to profit
and loss:
Exchange differences on retranslation
of subsidiary and associate investments 1,661 (2,125)
Fair value movement as recorded in the
hedging reserve 8,679 19,996
Items which will not be reclassified
to profit and loss:
Actuarial gain on the defined benefit
pension scheme 9 - 5
Tax effect of other comprehensive income 12 (1,383) (3,481)
-------------- ---------------
Total comprehensive income for the period 89,812 205,529
-------------- ---------------
Attributable to non-controlling interests (9,753) (3,051)
Attributable to owners of the parent 99,565 208,580
Earnings per share from continuing operations
Basic earnings per share attributable
to ordinary equity holders (pence) 13 19.5 19.5
Diluted earnings per share attributable
to ordinary equity holders (pence) 13 19.5 19.5
Earnings per share from all operations
Basic earnings per share attributable
to ordinary equity holders (pence) 13 9.0 19.4
Diluted earnings per share attributable
to ordinary equity holders (pence) 13 9.0 19.4
-------------- ---------------
The accompanying accounting policies and notes form an integral
part of these consolidated financial statements.
* This statement has been restated in respect of the Group's
first time application of IFRS 16 (see notes 1, 2, 17 and 18), for
the reclassification of the Germany Jawoll segment as a
discontinued operation (see notes 1 and 7) and for the results of
the final purchase price allocation exercise for Babou (see notes 1
and 8).
Consolidated Statement of Financial Position
Restated* Restated*
28 March 30 March 1 April
As at Note 2020 2019 2018
Assets GBP'000 GBP'000 GBP'000
Non-current
Goodwill 15 921,911 954,757 929,718
Intangible assets 15 119,696 126,559 120,962
Property, plant and equipment 16 312,198 378,581 298,581
Right of use assets 17 1,086,618 1,036,873 872,686
Investments in associates 14 5,700 6,920 5,140
Other receivables 20 7,517 7,237 -
Deferred tax asset 12 22,988 23,751 17,923
----------- ----------- -----------
2,476,628 2,534,678 2,245,010
----------- ----------- -----------
Current assets
Cash at bank and in hand 21 428,205 86,202 90,816
Inventories 19 588,000 665,570 558,690
Trade and other receivables 20 60,588 52,400 16,438
Other financial assets 23 16,702 6,294 -
Income tax receivable - 3,781 -
1,093,495 814,247 665,944
----------- ----------- -----------
Total assets 3,570,123 3,348,925 2,910,954
----------- ----------- -----------
Equity
Share capital 26 (100,058) (100,056) (100,056)
Share premium (2,474,318) (2,474,249) (2,474,249)
Retained earnings (244,829) (393,375) (273,619)
Hedging reserve (9,280) (1,984) 14,532
Legal reserve (10,010) (10,010) (10,000)
Merger reserve 1,979,131 1,979,131 1,979,131
Foreign exchange reserve (8,035) (5,793) (7,583)
Put/call option reserve - 13,855 13,855
Non-controlling interest - (9,753) (12,804)
(867,399) (1,002,234) (870,793)
----------- ----------- -----------
Non-current liabilities
Interest bearing loans and
borrowings 24 (561,418) (562,941) (558,426)
Lease liabilities 17 (1,146,233) (1,056,759) (913,268)
Other financial liabilities 23 - - (19,209)
Other liabilities 22 (171) (578) (419)
Deferred tax liabilities 12 (29,008) (26,522) (24,281)
Provisions 25 (766) (184) (151)
----------- ----------- -----------
(1,737,596) (1,646,984) (1,515,754)
----------- ----------- -----------
Current liabilities
Interest bearing loans and
borrowings 24 (211,062) (124,272) (47,212)
Overdrafts 21 (928) (5,646) (6,112)
Trade and other payables 22 (419,999) (376,722) (320,058)
Lease liabilities 17 (149,011) (150,163) (108,754)
Other financial liabilities 23 (1,847) (13,731) (16,666)
Income tax payable (26,115) (23,197) (19,677)
Dividends payable 34 (150,087) - -
Provisions 25 (6,079) (5,976) (5,928)
----------- ----------- -----------
(965,128) (699,707) (524,407)
----------- ----------- -----------
Total liabilities (2,702,724) (2,346,691) (2,040,161)
----------- ----------- -----------
Total equity and liabilities (3,570,123) (3,348,925) (2,910,954)
----------- ----------- -----------
* These statements have been restated in respect of the Group's
first time application of IFRS 16 (see notes 1, 17 and 18) and for
the results of the final purchase price allocation exercise for
Babou (see note 8).
The accompanying accounting policies and notes form an integral
part of these consolidated financial statements. This consolidated
statement of financial position was approved by the Board of
Directors and authorised for issue on 10 June 2020 and signed on
their behalf by:
Simon 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 1
April 2018 100,056 2,474,249 327,073 (14,532) 10,000 (1,979,131) 7,833 (13,855) 13,692 925,385
Restatements
due to the
adoption of
IFRS 16 - - (53,454) - - - (250) - (888) (54,592)
Restated
balance as at
1 April 2018 100,056 2,474,249 273,619 (14,532) 10,000 (1,979,131) 7,583 (13,855) 12,804 870,793
Allocation to
legal reserve - - (10) - 10 - - - - -
Ordinary
dividends
declared - - (75,042) - - - - - - (75,042)
Effect of
share options - - 954 - - - - - - 954
------- --------- --------- -------- ------- ----------- ------- -------- -------- ---------
Total
transactions
with owners - - (74,088) - - - - - - (74,088)
Profit/(loss)
for the
period - - 193,851 - - - - - (2,717) 191,134
Other
comprehensive
income - - 3 16,516 - - (1,790) - (334) 14,395
------- --------- --------- -------- ------- ----------- ------- -------- -------- ---------
Total
comprehensive
income for
the period - - 193,854 16,516 - - (1,790) - (3,051) 205,529
Balance at 30
March 2019 100,056 2,474,249 393,375 1,984 10,010 (1,979,131) 5,793 (13,855) 9,753 1,002,234
------- --------- --------- -------- ------- ----------- ------- -------- -------- ---------
Ordinary
dividends
declared - - (76,042) - - - - - - (76,042)
Special
dividends
declared - - (150,087) - - - - - - (150,087)
Effect of
share options 2 69 1,411 - - - - - - 1,482
------- --------- --------- -------- ------- ----------- ------- -------- -------- ---------
Total
transactions
with owners 2 69 (224,718) - - - - - - (224,647)
Profit for the
period
relating to
continuing
operations - - 194,777 - - - - - - 194,777
Loss for the
period
relating to
discontinued
operations - - (104,750) - - - - - (9,172) (113,922)
Other
comprehensive
income - - - 7,296 - - 2,242 - (581) 8,957
------- --------- --------- -------- ------- ----------- ------- -------- -------- ---------
Total
comprehensive
income for the
period - - 90,027 7,296 - - 2,242 - (9,753) 89,812
Disposal of
Jawoll - - (13,855) - - - - 13,855 - -
Balance at 28
March 2020 100,058 2,474,318 244,829 9,280 10,010 (1,979,131) 8,035 - - 867,399
------- --------- --------- -------- ------- ----------- ------- -------- -------- ---------
The accompanying accounting policies and notes form an integral
part of these consolidated financial statements.
Consolidated Statement of Cash Flows
Restated*
52 weeks 52 weeks
ended 28 ended
March 30 March
Period ended 2020 2019
Note GBP'000 GBP'000
Cash flows from operating activities
Cash generated from operations 27 532,645 422,996
Non cash write off from discontinued
operations 68,036 -
Income tax paid (57,924) (47,271)
---------- ----------
Net cash flows from operating activities 542,757 375,725
---------- ----------
Cash flows from investing activities
Purchase of property, plant and equipment 16 (123,270) (103,315)
Purchase of intangible assets 15 (1,361) (2,654)
Business acquisitions net of cash
acquired 8 - (75,879)
Deferred consideration in respect
of business acquisitions 23 (11,950) -
Business disposal net of cash disposed 7 2,964 -
Acquisition of shares in associates 14 - (1,200)
Proceeds from sale of property, plant
and equipment 160,518 563
Finance income received 214 369
Dividends received from associates 14 2,580 570
---------- ----------
Net cash flows from investing activities 29,695 (181,546)
---------- ----------
Cash flows from financing activities
Receipt of bank loans 24 - 81,086
Net receipt of Group revolving bank
loans 24 80,000 (5,000)
Net repayment of Heron facilities 24 (2,030) (2,297)
Net receipt/(repayment) of Babou facilities 24 1,587 (5,489)
Repayment of the principal in relation
to right of use assets (142,653) (109,972)
Payment of interest in relation to
right of use assets (63,790) (58,544)
Capitalised fees on refinancing (119) (935)
Finance costs paid (23,957) (21,476)
Receipt from exercise of employee
share options 11 60 -
Dividends paid to owners of the parent 34 (76,042) (75,042)
Net cash flows from financing activities (226,944) (197,669)
---------- ----------
Effects of exchange rate changes on
cash and cash equivalents 1,213 (658)
Net increase(decrease) in cash and
cash equivalents 346,721 (4,148)
Cash and cash equivalents at the beginning
of the period 80,556 84,704
---------- ----------
Cash and cash equivalents at the end
of the period 427,277 80,556
---------- ----------
Cash and cash equivalents comprise:
Cash at bank and in hand 21 428,205 86,202
Overdrafts (928) (5,646)
---------- ----------
427,277 80,556
---------- ----------
The accompanying accounting policies and notes form an integral
part of these consolidated financial statements.
* This statement has been restated in respect of the Group's
first time application of IFRS 16 (see notes 1, 17 and 18), and to
represent foreign exchange movement in line with the current year
presentation (see note 1).
Notes to the Consolidated Financial Statements
1 General information and basis of preparation
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union.
The Group's trade is general retail, with continuing trading
taking place in the UK and France and discontinued operations in
Germany. The Group has been listed on the London Stock Exchange
since June 2014.
The consolidated financial statements have been prepared under
the historical cost convention as modified by the revaluation of
financial assets and financial liabilities at fair value through
profit or loss. The measurement basis and principal accounting
policies of the Group are set out below and have been applied
consistently throughout the consolidated financial statements.
The consolidated financial statements are presented in pounds
sterling and all values are rounded to the nearest thousand
(GBP'000), except when otherwise indicated.
The consolidated financial statements cover the 52 week period
from 31 March 2019 to 28 March 2020 which is a different period to
the parent company stand alone accounts (from 1 April 2019 to 31
March 2020). This exception is permitted under article 1712-12 of
the Luxembourg company law of 10 August 1915 as amended as the
Directors believe that;
-- the consolidated financial statements are more informative
when they cover the same period as used by the main operating
entity, B&M Retail Ltd; and
-- that it would be unduly onerous to rephase the year end in
this subsidiary to match that of the parent company.
The year end for B&M Retail Ltd, in any year, would not be
more than six days prior to the parent company year end.
B&M European Value Retail S.A. (the "Company") is the head
of the Group and there is no consolidation that takes place above
the level of this company.
The principal accounting policies of the Group are set out
below.
Restatement due to the Group's adoption of IFRS 16 'Leases'
The new leasing standard, IFRS 16, was adopted by the Group on
31 March 2019, the start of the current financial year. The Group
has adopted the fully retrospective approach and therefore has
applied the standard to all leases from the acquisition date of
each lease, with the consequence that the prior year financial
statements have been restated.
The impact on our financial statements is significant, see notes
17 and 18 for more details.
The Group has taken advantage of the practical expedient allowed
on transition to IFRS 16 to not re-assess which contracts contain
or are a lease and which are not. Therefore the Group has applied
the standard to those contracts previously identified as leases
only, as well as contracts entered into after 31 March 2019.
Our new accounting policies for Leases are as follows:
Leases
The Group applies the leasing standard, IFRS 16, to all
contracts identified as leases at their inception, unless they are
considered a short-term lease (with a term less than a year) or
where the asset is of a low underlying value (under GBP5k). Assets
which may fall into this categorisations include printers, vending
machines and security cameras, and the lease expense is within
administrative expenses.
The Group has lease contracts in relation to property,
equipment, fixtures & fittings and vehicles. A contract is
classified as a lease if it conveys the right to control the use of
an identified asset for a period of time in exchange for
consideration.
When a lease contract is recognised, the business assesses the
term for which we are reasonably certain to hold that lease, and
the minimum lease payments over that term are discounted to give
the initial lease liability. The initial right-of-use asset is then
recognised at the same value, adjusted for incentives or payments
made on the day that the lease was acquired. Any variable lease
costs are expensed to administrative costs when incurred.
The date that the lease is brought into the accounts is the date
from which the lease has been effectively agreed by both parties as
evidenced by the Group's ability to use that property.
The right-of-use asset is subsequently depreciated on a
straight-line basis over the term of that lease, or useful life
(whichever is shorter) with the charge being made to administrative
costs. The lease liability attracts interest which is charged to
finance costs, and is measured at amortised cost using the
effective interest method.
Right-of-use assets may be impaired if, for instance, a lease
becomes onerous. Impairment costs are charged to administrative
costs.
On a significant event, such as the lease reaching its expiry
date or the likely exercise of a previously unrecognised break
clause, the lease term is re-assessed by management as to how long
we can be reasonably certain to stay in that property, and a new
lease agreement or modification (if the change is made before the
expiry date) is recognised for the re-assessed term.
The discount rate used is individual to each lease. Where a
lease contract includes an implicit interest rate, that rate is
used. In the majority of leases this is not the case and the
discount rate is taken to be the incremental borrowing rate as
related to that specific asset. This is a calculation based upon
the external market rate of borrowing for the Group, as well as
several factors specific to the asset to be discounted.
The Group separates lease payments between lease and non-lease
components (such as service charges on property) at the point at
which the lease is recognised. Non-lease components are charged
through administrative expenses.
Sale and leaseback transactions
The Group recognises a sale and leaseback transaction when the
Group sells an asset that has been previously recognised in
property, plant and equipment, and subsequently leases it back as
part of the same or a linked transaction.
Management use the provisions of IFRS 15 to assess if a sale has
taken place, and the provisions of IFRS 16 to recognise the
resulting lease, with the liability and discount rate calculated in
line with our lease policy and the asset subject to an adjustment
based upon the net book value of the disposed asset, the opening
lease liability, the consideration received and the fair value of
the asset on the date it was sold.
Resulting gains or losses are recognised in administrative
expenses.
Disposal of Jawoll
On 27 March 2020 the Group announced the disposal of their 80%
shareholding in the subsidiary J.A. Woll-Handels GmbH, and the
results of the entity have ceased to be consolidated from this
date.
This subsidiary was previously consolidated as the Germany
Jawoll segment, and as such the prior year statement of
comprehensive income has been restated to include the results of
the Germany Jawoll segment within the discontinued operations
categorisation.
All current year results have been presented within the loss
from discontinued operations caption, including the loss on
disposal and impairment as reported in the September 2019 half year
accounts.
Our policy on assets held for sale and disposal groups is as
follows:
The Group reclassifies an asset or a disposal group as held for
sale if the carrying amount is to be recovered principally through
a sale transaction rather than through continuing use. Their
carrying value on reclassification is measured at the lower of the
carrying amount and fair value less costs to sell with any gain or
loss included in gain or loss on discontinued operations (for a
disposal group) or administrative costs (for an asset held for
sale), and no depreciation is charged on this balance.
Any assets classified as held for sale are separately presented
on the statement of financial position, with any results separately
presented in the statement of comprehensive income (as discontinued
operations for a disposal group). Any prior year statements of
comprehensive income that are presented are also restated to aide
comparability.
Further disclosures have been made in note 7.
Acquisition of Babou
A final review of the identifiable assets and liabilities was
carried out within the year with the result that, due to
information available after the prior year end which reflected
circumstances at the acquisition date, an additional EUR6m goodwill
was recognised in relation to a write-down of inventory. As such
the prior year cost of sales has also been restated for this
amount, which translates to GBP5.3m.
Cash flow foreign exchange
A presentational restatement has been made to the consolidated
statement of cash flows such that the effects of exchange rate
changes on cash and cash equivalents has been shown separately from
cash flows in line with IAS 7. In prior years this separation was
not made on grounds of materiality, and as such the prior year has
been represented to align with the current year presentation. This
has resulted in a reduction of net cash flows from operating
activities of GBP1,781k and an increase in net cash flows from
financing activities of GBP2,439k.
Basis of consolidation
The Group financial statements consolidate the financial
statements 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 31 March 2019 to 28 March 2020.
Acquisitions of subsidiaries are dealt with by the acquisition
method of accounting. The results of companies acquired are
included in the consolidated statement of comprehensive income from
the acquisition date.
During the year, on 27 March 2020, the Group disposed of
J.A.Woll Handels GmbH ("Jawoll"). Jawoll has only been consolidated
until this date, as a discontinued operation. See note 7 for more
details.
During the year, on 6 March 2020, and as part of a sale and
leaseback transaction involving the new warehouse at Bedford, the
Group disposed of Bedford DC Investment Ltd ("Bedford Ltd").
Bedford Ltd has only been consolidated until this date, see note 17
for more details.
During the prior year, on 19 October 2018, the Group acquired
Paminvest SAS, a discount general merchandise retailer group
operating under the trading name Babou in France ("Babou"). Babou
has been consolidated in the Group accounts from this date. For
more details see note 8.
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 arrangements with the other vote holders of the investee,
-- rights arising from other contractual arrangements, and,
-- the Group's voting rights and potential voting rights.
The Group re-assesses whether or not it controls an investee if
facts and circumstances indicate that there are changes to one or
more of the three elements of control. Consolidation of a
subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Group loses control of the
subsidiary. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the year are included in
the statement of comprehensive income from the date the Group gains
control until the date the Group ceases to control the subsidiary,
excluding the situations as outlined in the basis of
preparation.
Going concern
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, the Directors are confident that the
Group has adequate resources to continue its successful growth.
Accordingly, they continue to adopt the going concern basis in
preparing the financial statements.
The Covid-19 pandemic has not had a material impact on this
assessment, as the majority of the Group's stores have continued to
operate profitably. The French Babou stores were closed at the year
end date, and whilst losses were incurred in this segment, they
have received support in the form of loans that are 90% guaranteed
by the French government (see note 33).
Note also that viability and going concern statements have been
made in the 'Principal risks and uncertainties' section of this
annual report.
Revenue
Under IFRS 15 Revenue is recognised when all the following
criteria are met;
-- the parties to the contract have approved the contract;
-- the Group can identify each parties rights regarding the goods to be transferred;
-- the Group can identify the payment terms;
-- the contract has commercial substance;
-- it is probable that the Group will collect the consideration
we are entitled to in respect to the goods to be transferred.
In the vast majority of cases the Group's sales are made through
stores and the control of goods is immediately transferred at the
same time as the consideration received via our tills. Therefore
revenue is recognised at this point.
The Group does not actively sell vouchers to use in the future
or operate discount schemes and, therefore, no deferred revenue is
recognised.
The Group operates a small wholesale function which recognises
revenue when goods are delivered and the invoice is raised. The
revenue is considered collectable as the Group's wholesale
customers are usually related parties to the Group (such as our
associates) or are subject to credit checks before trade takes
place.
Revenue is the total amount receivable by the Group for goods
supplied, in the ordinary course of business, excluding VAT and
trade discounts, and after deducting returns and relevant vouchers
and offers.
Other administrative expenses
Administrative expenses include all running costs of the
business, except those relating to inventory (which are expensed
through cost of sales), tax, interest and other comprehensive
income. Transport and warehouse costs are included in this
caption.
Elements which are unusual and significant, such as material
restructuring costs, may be separated as a line item.
Goodwill
Goodwill is initially measured at cost, being the excess of the
fair value of consideration transferred over the fair value of the
net identifiable assets acquired and liabilities assumed at the
date of acquisition.
After initial recognition, goodwill is measured at cost less any
accumulated impairment losses. For the purpose of impairment
testing, goodwill acquired in a business combination is, from the
acquisition date, allocated to the relevant cash-generating units
(CGUs) that are expected to benefit from the combination.
Goodwill is tested for impairment at each year end and at any
time where there is any indication that it may be impaired.
Internally generated goodwill is not recognised as an asset.
Segment reporting
Operating segments are reported in a manner consistent with
internal reporting provided to the chief operating decision maker.
The chief operating decision maker has been identified as the
executive directors of the Group. The executive directors are
responsible for assessing the performance of the business for the
purpose of making decisions about resources to be allocated.
Alternative performance measures
The Group reports a selection of alternative performance
measures as detailed below and in note 4, as the Directors believe
that these measures provide additional information that is useful
to the users of our accounts.
The alternative performance measures we report in these accounts
are:
-- Earnings before interest, tax, depreciation and amortisation (EBITDA)
-- Adjusted EBITDA
-- Adjusted Profit
-- Adjusted Earnings per share
Both IFRS 16 and non-IFRS 16 versions of these alternative
performance measures have been calculated and presented in order to
aide comparability with the non-IFRS 16 figures presented in
previous years.
Interest, tax, depreciation and amortisation are as defined
statutorily whilst the items we adjust for are those we consider
not to be reflective of the underlying performance of the business
as detailed in note 4. These adjustments include the effect of
ineffective derivatives and foreign exchange on intercompany
balances, which do not relate to underlying trading, and costs
incurred in relation to acquisitions, which are non-recurring and
do not relate to underlying trading.
The directors believe that EBITDA provides users of the account
with a measure of performance which is appropriate to the retail
industry and presented by peers and competitors. 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 an additional metric to compare
periods of account.
The alternative performance measures used 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.
Business combinations
Business combinations are accounted for using the acquisition
method. The cost of an acquisition is measured as the aggregate of
the consideration transferred, measured at the acquisition date
fair value, which may include contingent consideration at net
present value. Acquisition-related costs are expensed depending on
their nature with costs of raising finance amortised over the term
of the relevant element of finance provided and the remainder
expensed when incurred.
Assets and liabilities are recognised at their acquisition date
fair value, with the difference between the consideration and the
net assets recognised as goodwill on the statement of financial
position or as a gain in administrative expenses.
Brands
Brands acquired by the business are amortised if the
corresponding agreement is specifically time limited, or if the
fair valuation exercise (carried out for brands acquired via
business combinations) identifies a fair lifespan for the brand.
This amortisation is charged to administrative expenses.
Otherwise, brands are considered to have an indefinite life on
the basis that they form part of the cash generating units within
the Group which will continue in operation indefinitely, with no
foreseeable limit to the period over which they are expected to
generate net cash inflows.
Where brands are considered to have an indefinite life they are
reviewed at least annually for impairment or whenever events or
changes in circumstances indicate that their carrying amount may
not be recoverable.
Where the carrying value of an asset exceeds its recoverable
amount (i.e. the higher of value in use and fair value less costs
to sell), the asset is written down accordingly with the write down
charged to administration expenses.
Intangible assets
Intangible assets acquired separately, including computer
software, are measured on initial recognition at cost comprising
the purchase price and any directly attributable costs of preparing
the asset for use.
Following initial recognition, assets are carried at cost less
accumulated amortisation and accumulated impairment losses.
Amortisation begins when an asset is available for use and is
calculated on a straight line basis to allocate the cost of the
asset over its estimated useful life as follows:
Computer software acquired - 3 or 4 years
Amortisation method, useful lives and residual values are
reviewed at each reporting date and adjusted if appropriate.
Property, plant and equipment
Property, plant and equipment is carried at cost less
accumulated depreciation and accumulated impairment losses.
Cost comprises purchase price and directly attributable costs.
Unless significant or incurred as part of a refit programme,
subsequent expenditure will usually be treated as repairs or
maintenance and expensed to the statement of comprehensive
income.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. The carrying amount of the replaced part is
derecognised.
Freehold land is not depreciated. For all other property, plant
and equipment, depreciation is calculated on a straight line basis
to allocate cost, less residual value of the assets, over their
estimated useful lives as follows.
Depreciation
Depreciation is provided on all other items of property, plant
and equipment and the effect is to write off the carrying value of
items by equal instalments over their expected useful economic
lives. It is applied at the following rates:
Leasehold buildings - Life of lease (max 50 years)
Freehold buildings - 2-4% straight line
Plant, fixtures and equipment - 10% - 33% straight line
Motor vehicles - 12.5% - 33% straight line
Residual values and useful lives are reviewed annually and
adjusted prospectively, if appropriate.
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected from its
use or disposal. Any gain or loss arising on derecognition of the
asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in the
statement of comprehensive income when the asset is
derecognised.
Investments in associates
Associates are those entities over which the Group has
significant influence but which are neither subsidiaries nor
interests in joint ventures. Investments in associates are
recognised initially at cost and subsequently accounted for using
the equity method. However, any goodwill or fair value adjustment
attributable to the Group's share of associates is included in the
amount recognised as investment in associates.
All subsequent changes to the share of interest in the equity of
the associate are recognised in the Group's carrying amount of the
investment. Changes resulting from the profit or loss generated by
the associate are reported in "share of profits of associates" in
the consolidated statement of comprehensive income and therefore
affect net results of the Group. These changes include subsequent
depreciation, amortisation and impairment of the fair value
adjustments of assets and liabilities.
Items that have been recognised directly in the associate's
other comprehensive income are recognised in the consolidated other
comprehensive income of the Group. However, when the Group's share
of losses in an associate equals or exceeds its interest in the
associate the Group does not recognise further losses, unless it
has incurred obligations or made payments on behalf of the
associate. If the associate subsequently reports profits, the
investor resumes recognising its share of those profits only after
its share of the profits equals the share of losses not
recognised.
Unrealised gains on transactions between the Group and its
associates are eliminated to the extent of the Group's interest in
the associates. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the asset
transferred. Amounts reported in the consolidated financial
statements of associates have been adjusted where necessary to
ensure consistency with the accounting policies adopted by the
Group.
Impairment of non-financial assets
The Group assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists,
or when annual impairment testing for an asset is required (for
goodwill or indefinite life assets), the Group estimates the
asset's recoverable amount.
The Group bases its impairment calculation on detailed budgets
and forecasts which are prepared separately for each of the Group's
cash generating units (CGU's) to which the individual assets are
allocated. These budgets and forecast calculations cover a period
of five years. For longer periods, a long-term growth rate is
calculated and applied to project future cash flows after the fifth
year.
Indications of impairment might include (for goodwill and the
brand assets, for instance) a significant decrease in the like for
like sales of established stores, sustained negative publicity or a
drop off in visits to our website and social media accounts.
An asset's recoverable amount is the higher of an asset's or
CGU's fair value less costs to sell and its value in use. It is
determined for an individual asset, unless the asset does not
generate cash inflows that are largely independent of those from
other assets or groups of assets. Where the carrying amount of an
asset or CGU exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable
amount.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset or CGU.
Impairment losses of continuing operations, are recognised in
the statement of comprehensive income in those expense categories
consistent with the function of the impaired asset.
For assets excluding goodwill and acquired brands with
indefinite lives, an assessment is made at each reporting date as
to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. If
such indication exists, the Group estimates the asset's or CGU's
recoverable amount.
A previously recognised impairment loss is reversed only if
there has been a change in the assumptions used to determine the
asset's recoverable amount since the last impairment loss was
recognised. The reversal is limited so that the carrying amount of
the asset does not exceed its recoverable amount, nor exceed the
carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised for the asset
in prior years. Such reversal is recognised in the statement of
comprehensive income, except for impairment of goodwill which is
not reversed.
Onerous leases
The Group carries a property provision which relates to
leasehold property where an exit can be reasonably expected to
occur, and the relevant lease is considered to be onerous.
A lease is considered onerous when the economic benefits of
occupying the leased properties are less than the obligations
payable under the lease.
When a lease is classified as onerous, the right-of-use asset
associated with the lease is impaired to GBPnil value and
non-rental costs that are likely to accrue before the end of the
contract are provided against.
The property provision also contains expected dilapidation costs
on any lease considered onerous, as well as any relating to stores
recently or planned to be closed.
Inventories
Inventories are valued at the lower of cost and net realisable
value, after making due allowance for obsolete and slow moving
items, using the weighted average method.
Stock purchased in foreign currency is booked in at the hedge
rate applicable to that stock (if effectively hedged) or the
underlying foreign currency rate on the date that the item is
brought into stock.
Net realisable value is the estimated selling price in the
ordinary course of business, less estimated costs to sell.
Transport, warehouse and distribution costs are not included in the
valuation of inventory.
Share options
The Group operates equity settled share option schemes, with the
first such scheme commencing in August 2014.
The schemes have been accounted for under the provisions of IFRS
2, and accordingly have been fair valued on their inception date
using appropriate methodology (the Black Scholes and Monte Carlo
models).
A cost is recorded through the statement of comprehensive income
in respect of the number of options outstanding and the fair value
of those options. A corresponding credit is made to the retained
earnings reserve and the effect of this can be seen in the
statement of changes in equity. See note 11 for more details.
Taxation
Current income tax
Current income tax assets and liabilities for the current period
are measured at the amount expected to be recovered from or paid to
the taxation authorities. The tax rates and tax laws used to
compute the amount are those that are enacted or substantively
enacted, at the reporting date, in the countries where the Group
operates and generates taxable income. Tax is recognised in the
statement of comprehensive income, except to the extent that it
relates to items recognised in other comprehensive income or
directly in equity. In this case, the tax is also recognised in
other comprehensive income or directly in equity.
Deferred tax
Deferred tax is provided using the liability method on temporary
differences between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes at the
reporting date. Deferred tax liabilities are recognised for all
taxable temporary differences, except:
-- When the deferred tax liability arises from the initial
recognition of goodwill or an asset or liability in a transaction
that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable
profit or loss.
-- In respect of taxable temporary differences associated with
investments in subsidiaries, associates and interests in joint
ventures, when the timing of the reversal of the temporary
differences can be controlled and it is probable that the temporary
differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary
differences, carry forward of unused tax credits and unused tax
losses, to the extent that it is highly probable that taxable
profit will be available against which the deductible temporary
differences, and the carry forward of unused tax credits and unused
tax losses can be utilised, except:
-- When the deferred tax asset relating to the deductible
temporary difference arises from the initial recognition of an
asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss.
-- In respect of deductible temporary differences associated
with investments in subsidiaries, associates and interests in joint
ventures, deferred tax assets are recognised only to the extent
that it is probable that the temporary differences will reverse in
the foreseeable future and taxable profit will be available against
which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow
all or part of the deferred tax asset to be utilised. Unrecognised
deferred tax assets are re-assessed at each reporting date and are
recognised to the extent that it has become probable that future
taxable profits will allow the deferred tax asset to be
recovered.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the year when the asset is
realised or the liability is settled, based on tax rates (and tax
laws) that have been enacted or substantively enacted at the
reporting date.
Financial instruments
The Group uses derivative financial instruments such as forward
currency contracts, fuel swaps and interest rate swaps to reduce
its foreign currency risk, commodity price risk and interest rate
risk.
Derivative financial instruments are recognised at fair value.
The fair value is derived using an internal model and supported by
valuations by third party financial institutions.
Where a derivative financial instrument is designated as a hedge
of the variability in cash flows of a recognised asset or
liability, or a highly probable forecast transaction, the effective
part of any gain or loss on the derivative financial instrument is
recognised directly in other comprehensive income and accumulated
in the hedging reserve. Any ineffective portion of the hedge is
recognised immediately in the statement of comprehensive income.
Effectiveness of the derivatives subject to hedge accounting is
assessed prospectively at inception of the derivative, and at each
reporting period end date prior to maturity.
Where a hedge of a forecast transaction subsequently results in
the recognition of a non-financial asset, such as an item of
inventory, the associated gains and losses are recognised in the
initial cost of that asset.
When a hedging instrument expires or is sold, terminated or
exercised, or the entity revokes designation of the hedge
relationship but the hedged forecast transaction is still expected
to occur, the cumulative gain or loss at that point remains in
equity and is recognised in accordance with the above policy when
the transaction occurs. If the hedged transaction is no longer
expected to take place, the cumulative unrealised gain or loss
recognised in equity is reclassified in the statement of other
comprehensive income immediately.
Financial assets
Under IFRS 9, on initial recognition, a financial asset is
classified as measured at amortised cost, fair value through profit
or loss or fair value though other comprehensive income.
A financial asset is measured at amortised cost using the
effective interest rate if it meets both of the following
conditions: it is held within a business model whose objective is
to hold assets to collect contractual cash flows; and its
contractual terms give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal
amount outstanding. Under IFRS 9 trade receivables, without a
significant financing component, are classified and held at
amortised cost, being initially measured at the transaction price
and subsequently measured at amortised cost less any impairment
loss.
IFRS 9 includes an 'expected loss' model ('ECL') for recognising
impairment of financial assets held at amortised cost. The Group
has elected to measure loss allowances for trade receivables at an
amount equal to lifetime ECLs. Credit losses are measured as the
present value of all cash shortfalls (i.e. the difference between
the cash flows due to the entity in accordance with the contract
and the cash flows that the Group expects to receive).
When determining whether the credit risk of a financial asset
has increased significantly since initial recognition and when
estimating expected credit losses, the Group considers reasonable
and supportable information that is relevant and available without
undue cost or effort. This includes both quantitative and
qualitative information and analysis based on the Group's
historical experience and informed credit assessment and including
forward-looking information. The Group performs the calculation of
expected credit losses separately for each customer group.
Financial assets at fair value through other comprehensive
income
Financial assets at fair value through other comprehensive
income comprise derivative financial instruments entered into by
the Group that are designated as hedging instruments in hedge
relationships as defined by IFRS 9. Financial assets at fair value
through other comprehensive income are carried in the statement of
financial position at fair value with changes in fair value
recognised in other comprehensive income.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include
derivative financial instruments entered into by the Group that are
not designated as hedging instruments in hedge relationships as
defined by IFRS 9. Financial assets at fair value through profit or
loss are carried in the statement of financial position at fair
value with changes in fair value recognised in profit and loss.
Derecognition
A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is
derecognised when the rights to receive cash flows from the asset
have expired and the entity has transferred its rights to receive
cash flows from the asset or has assumed an obligation to pay the
received cash flows in full and either (a) the entity has
transferred substantially all the risks and rewards of the asset,
or (b) the entity has neither transferred nor retained
substantially all the risks and rewards of the asset, but has
transferred control of the asset.
Impairment of financial assets
The Group assesses at each reporting date whether there is any
objective evidence that a financial asset or a group of financial
assets is impaired. A financial asset or a group of financial
assets is deemed to be impaired if, there is objective evidence of
impairment as a result of one or more events that has occurred
after the initial recognition of the asset (an incurred 'loss
event') and that loss event has an impact on the estimated future
cash flows of the financial asset or the group of financial assets
that can be reliably estimated.
Financial liabilities
Initial recognition and measurement
Financial liabilities within the scope of IFRS 9 are classified
as financial liabilities at fair value through profit or loss or
other financial liabilities. The entity determines the
classification of its financial liabilities at initial recognition.
All financial liabilities are recognised initially at fair
value.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss
include financial derivatives held for trading. Financial
liabilities are classified as held-for-trading if they are acquired
for the purpose of selling in the near term. This category includes
derivative financial instruments entered into by the Group. Gains
or losses on liabilities held-for-trading are recognised in profit
and loss.
Other financial liabilities
After initial recognition, interest bearing loans and
borrowings, trade and other payables and other liabilities are
subsequently measured at amortised cost using the effective
interest rate method. Gains and losses are recognised in the
statement of comprehensive income when the liabilities are
derecognised as well as through the effective interest rate method
(EIR) amortisation process.
Amortised cost is calculated by taking into account any discount
or premium on acquisition and fees or costs that are an integral
part of the EIR. The EIR amortisation is included in finance
costs.
Derecognition
A financial liability is derecognised when the obligation under
the liability is discharged or cancelled or expires.
Fair value of financial instruments
The fair value of financial instruments that are traded in
active markets at each reporting date is determined by reference to
mark-to-market valuations obtained from the relevant bank (bid
price for long positions and ask price for short positions),
without any deduction for transaction costs.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand,
less bank overdrafts.
Equity
Equity comprises the following:
-- "Share capital" represents the nominal value of equity
shares;
-- "Share premium" represents the excess of the consideration
made for the shares, over and above the nominal valuation of those
shares;
-- "Legal reserve" representing the statutory reserve required
by Luxembourg law as an apportionment of profit within each
Luxembourg company (up to 10% of the standalone share capital);
-- "Hedging reserve" representing the fair value of the
derivatives held by the Group at the period end that are accounted
for under hedge accounting and that represent effective hedges;
-- "Merger reserve" representing the reserve created during the
reorganisation of the Group in 2014;
-- "Retained earnings reserve" represents retained profits;
-- "Put/call option reserve" representing the initial valuation
of the put/call option held by the Group over the non-controlling
interest of J.A. Woll Handels GmbH (Jawoll);
-- "Foreign exchange reserve" represents the cumulative
differences arising in retranslation of the subsidiaries
results;
-- "Non-controlling interest" representing the portion of the
equity which belongs to the non-controlling interest in the Group's
subsidiaries.
Foreign currency translation
These consolidated financial statements are presented in pounds
sterling.
The following Group companies have a functional currency of
pounds sterling;
-- B&M European Value Retail S.A.
-- B&M European Value Retail 1 S.Ã r.l. (Lux Holdco)
-- B&M European Value Retail Holdco 1 Ltd (UK Holdco 1)
-- B&M European Value Retail Holdco 2 Ltd (UK Holdco 2)
-- B&M European Value Retail Holdco 3 Ltd (UK Holdco 3)
-- B&M European Value Retail Holdco 4 Ltd (UK Holdco 4)
-- Bedford DC Investments Limited (Disposed March 2020)
-- EV Retail Ltd
-- B&M Retail Ltd
-- Opus Homewares Ltd
-- Retail Industry Apprenticeships Ltd
-- Heron Food Group Ltd
-- Heron Foods Ltd
-- Cooltrader Ltd
-- Heron Properties (Hull) Ltd
The following Group companies have a functional currency of the
Euro;
-- B&M European Value Retail 2 S.Ã r.l. (SBR Europe)
-- SAS Babou
-- Babou Relationship Partners - BRP SAS
-- B&M European Value Retail Germany GmbH (Germany Holdco)
The following former Group companies had a functional currency
of the Euro;
-- J.A. Woll Handels GmbH (Jawoll)
-- Jawoll Vertriebs GmbH
-- Paminvest SAS
The Group companies whose functional currency is the Euro have
been consolidated into the Group via retranslation of their results
in line with IAS 21 Effects of Changes in Foreign Exchange Rates.
The assets and liabilities are translated into pounds sterling at
the year end exchange rate. The revenues and expenses are
translated into pounds sterling at the average monthly exchange
rate during the period. Any resulting foreign exchange difference
is cumulatively recorded in the foreign exchange reserve with the
annual effect being charged/credited to other comprehensive
income.
Transactions entered into by the company in a currency other
than the currency of the primary economic environment in which it
operates (the "functional currency") are recorded at the rates
ruling when the transactions occur. Foreign currency monetary
assets and liabilities are translated at the rates ruling at the
balance sheet date. Exchange differences arising on the
retranslation of unsettled monetary assets and liabilities are
recognised immediately in profit or loss.
Pension costs
The Group operates a defined contribution scheme and
contributions are charged to profit or loss in the period in which
they are incurred.
Provisions
Provisions are recognised when a present obligation (legal or
constructive) exists as a result of a past event and where it is
probable that an outflow of resources embodying economic benefits
will be required to settle the obligation and the amount can be
reliably estimated. Provisions are discounted where the time value
of money is considered to be material.
Critical judgements and key sources of estimation
uncertainty
The key assumptions concerning the future and other key sources
of estimation uncertainty at the reporting date, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are described below. The Group based its assumptions and estimates
on parameters available when the financial information was
prepared. Existing circumstances and assumptions about future
developments, however, may change due to market changes or
circumstances arising beyond the control of the Group. Such changes
are reflected in the assumptions when they occur.
Critical judgments
Investments in Associates
Multi-lines International Company Ltd (Multi-lines), which is
50% owned by the Group, has been judged 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.
Hedge accounting
The Group hedge accounts for stock purchases made in US
Dollars.
There is significant management judgment involved in forecasting
the level of dollar purchases to be made within the period that the
forward hedge has been bought for.
Management takes a prudent view that no more than 80% of the
operational hedging in place can be subject to hedge accounting,
due to forecast uncertainties, and assesses every forward hedge
taken out, on inception, if that figure should be reduced further
by considering general purchasing trends, and discussion of
specific purchasing decisions.
Deferred Consideration
During the year the Group disposed of the German trading
subsidiaries, see note 7. The transaction entitled the Group to
receive EUR12.5m, with EUR10m of this deferred until no later than
December 2020, payable if the business does not become
insolvent.
A key management judgment has been made that this amount is
fully recoverable, based upon an analysis which included
consideration of prudent forecasts, the proposed business plan put
forward by the new owners (and their experience in this
marketplace), the likely timescales and the ability to overcome
prior issues within the businesses.
The analysis was further sensitised to the impact of Covid-19 on
the retail market in Germany, ultimately without impacting the
judgment made that the full amount should be considered
recoverable.
Sale & Leaseback of Bedford
The Group performed a major sale and leaseback in the year in
respect to the new warehouse at Bedford.
The warehouse was built by the Group for a cost of GBP103.7m
over the past two years, and sold for GBP153.8m in March 2020 to a
third party who subsequently leased back the warehouse to the Group
for our use. The profit recognised by the company was GBP16.9m with
a further GBP32.1m gain rolled into the asset value (as required by
the IFRS 16 leasing standard) and which will therefore be realised
on a straight line basis over the 20 year term of the lease as a
reduction in depreciation. See note 17 for further details.
A key judgment was made by management to recognise the sale.
Under the provisions of IFRS 15 the key requirement over which
judgment is applied for a sale to be recognised is that the control
of the asset, as defined by the ability to direct the use of and
obtain substantially all of the benefits from the asset, has
transferred from the Group to the third party. If this is not the
case, the transaction should be recognised as financing on the
property.
Following consideration of the provisions within the lease
(including the extension clause and lack of reversionary rights),
and the rights and ability of the third party to extract value from
the asset they acquired, management believe that the appropriate
treatment is to recognise the transaction as a sale, and therefore
the whole transaction as a sale and leaseback.
Estimation uncertainty
Goodwill impairment
The Group's calculation for goodwill impairment includes several
assumptions that are based upon managerial judgment.
As well as those discussed in note 15 around the inputs, they
include the basis of the calculation itself i.e. which cash flows
should be included, whether allowance should be made for growth of
the store estate and, related to this, the level of capital
expenditure to be included and on which timescale.
Management believes that the key element in determining whether
an impairment is required is the value in use of the cash
generating units themselves, which can be summarised as the return
made by those cash generating units when considering the costs
directly attributable to making those sales.
Inventory Valuation
Under IAS 2 ("Inventories") inventory is required to be
recognised at the lower of cost and net realisable value.
Management has exercised significant judgment in relation to the
net realisable value of inventory held at Babou during the period
of closure enforced by the Covid-19 pandemic.
Following the closure of the Babou stores on 15(th) March 2020
and the stores re opening on 11(th) May 2020 the business has lost
nine weeks of revenues and following the re-opening there is also
uncertainty as to the level of consumer confidence and therefore
revenues over the reminder of the Spring Summer season. The
business purchases and carries stocks that are specific to the
Spring Summer selling season and hence given the lost revenues
during the closure period and the potential impact on consumer
confidence a judgement has been made with regards to the net
realisable value of specific merchandise in this category that has
resulted in an additional provision of EUR7.3m.
Lease discount rates
Where a rate implicit to the lease is not available, the
selection of a discount rate for a lease is based upon the marginal
cost of borrowing to the business in relation to the funding for a
similar asset.
Management calculates appropriate discount rates based upon the
marginal cost of borrowing currently available to the business as
adjusted for several factors including, the term of the lease, the
location and type of asset and how often payments are made.
Management consider that these are the key details in
determining the appropriate marginal cost of borrowing for each of
these assets.
Lease term
The lease term is a key input into calculating the initial lease
liability under IFRS 16.
Management consider it appropriate, unless there is a good
reason to act otherwise, to initially set a lease term equal to the
longest possible contractual term of that lease, reflecting our
intention to operate profitable locations on acquisition without
requiring break clauses, but taking extension clauses where
available.
Upon termination of a lease, where there does not exist a new
agreement for the property but we remain in occupation, a new
'Holding over' lease is created with a term based upon management's
expectations of how long the group is reasonably certain to stay in
that property based upon recent trading patterns and the pipeline
of existing or potential new opportunities.
Management consider that this is appropriate as it more fairly
reflects the Group's intention to continue to occupy and trade from
these properties.
Standards and Interpretations not yet applied by the Group
The following amendments to accounting standards and
interpretations, issued by the International Accounting Standards
Board (IASB), have not yet been applied by the Group in the period.
None of these are expected to have a significant impact on the
Group's consolidated results or financial position:
IASB effective for annual periods beginning on or after 1
January 2020
Standard Summary of changes EU Endorsement status
Amendments to References Amendments to IFRS 2, IFRS Endorsed (29 November
to the Conceptual Framework 3, IFRS 6, IFRS 14, IAS 1, 2019). EU effective
in IFRS Standards IAS 8, IAS 34, IAS 37, IAS date 1 January 2020.
38, IFRIC 12, IFRIC 19, IFRIC
20, IFRIC 22, and SIC-32 to
update those pronouncements
with regard to the revised
Conceptual Framework.
-------------------------------- ----------------------
Amendment to IFRS 3 Amendment to IFRS 3 to clarify Endorsed (21 April
Business Combinations the definition of business. 2020). EU Effective
date 1 January 2020.
-------------------------------- ----------------------
Amendments to IAS 1 Amendments to IAS 1 and IAS Endorsed (29 November
and IAS 8 8 to update the definition 2019). EU effective
of material. date 1 January 2020.
-------------------------------- ----------------------
Amendments to IFRS Amendments to IFRS 7, IFRS Endorsed (15 January
7, IFRS 9 and IAS 39 9 and IAS 39 addressing issues 2020). EU effective
affecting financial reporting date 1 January 2020.
in the period leading up to
LIBOR reform.
-------------------------------- ----------------------
IASB effective for annual periods beginning on or after 1
January 2021
Standard Summary of changes EU Endorsement status
IFRS 17 Insurance contracts IFRS 17 establishes the principles Not yet endorsed.
for the recognition, measurement,
presentation and disclosure
of insurance contracts within
the scope of the standard.
The objective of IFRS 17 is
to ensure that an entity provides
relevant information that
faithfully represents those
contracts. It will apply to
all entities that issue insurance
and reinsurance contracts,
and to all entities that hold
reinsurance contracts.
----------------------------------- ----------------------
2 Statement of profit and loss without the effects of IFRS 16
As referred to in Note 1, the Group has applied IFRS 16 for the
first time in these set of results. In order to aid the
comparability of our results with those previously issued, we
provide the profit and loss statement without the effects of IFRS
16.
Restated*
52 weeks ended 52 weeks ended
Period ended 28 March 2020 30 March 2019
GBP'000 GBP'000
Continuing operations
Revenue 3,813,387 3,272,632
Cost of sales (2,530,579) (2,152,403)
Gross profit 1,282,808 1,120,229
Gain on sale and leaseback of the Bedford
warehouse 48,984 -
Administrative expenses (1,007,378) (840,953)
Operating profit 324,414 279,276
Share of profits in associates 879 775
Profit on ordinary activities before
net finance costs and tax 325,293 280,051
Finance costs (24,983) (24,410)
Finance income 213 369
Gain on revaluation of financial instruments 134 716
Profit on ordinary activities before
tax 300,657 256,726
Income tax expense (64,012) (51,402)
Profit for the period from continuing
operations 236,645 205,324
-------------- ---------------
Attributable to owners of the parent 236,645 205,324
Discontinued operations
Loss from discontinued operations (119,444) (2,615)
Profit for the period 117,201 202,709
-------------- ---------------
Attributable to non-controlling interests (10,306) (2,445)
Attributable to owners of the parent 127,507 205,154
* This statement has been restated for the reclassification of
the Germany Jawoll segment as a discontinued operation.
The overall effect on continuing profit before tax of the IFRS
16 adjustments was a loss of GBP48,634k, GBP32,052k of which was
due to the difference in the gain recognised on the Bedford
warehouse sale & leaseback (March 2019: overall GBP12,397k) see
notes 17 and 18 for further details.
3 Segmental information
IFRS 8 ("Operating segments") requires the Group's segments to
be identified on the basis of internal reports about the components
of the Group that are regularly reviewed by the chief operating
decision maker to assess performance and allocate resources across
each reporting segment.
The chief operating decision maker has been identified as the
executive directors who monitor the operating results of the retail
segments for the purpose of making decisions about resource
allocation and performance assessment.
For management purposes, the Group is organised into three
operating segments, UK B&M, UK Heron and France Babou segments
comprising the three separately operated business units within the
Group. Previously the Group consolidated the Germany Jawoll
segment, until disposal in March 2020, see note 7. The France Babou
segment has been active since the acquisition of Babou in October
2018.
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 4).
The average euro rate for translation purposes was EUR1.1441/GBP
during the year, with the year end rate being EUR1.1176/GBP (2019:
EUR1.1341/GBP and EUR1.1648/GBP respectively).
52 week period to UK UK France Continuing
28 March 2020 B&M Heron Babou Corporate Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 3,140,144 389,867 283,376 - 3,813,387
EBITDA (note 4) 321,590 25,551 (3,003) 38,839 382,977
EBITDA (IFRS 16) (note
4) 467,155 34,956 28,212 6,787 537,110
Depreciation and amortisation (148,946) (19,109) (35,357) (7) (203,419)
Net finance expense (42,722) (2,809) (10,538) (25,599) (81,668)
Income tax (expense)/credit (48,921) (2,444) 5,629 (11,510) (57,246)
Segment profit/(loss) 226,566 10,594 (12,054) (30,329) 194,777
Total assets 2,874,747 290,742 345,222 59,412 3,570,123
Total liabilities (1,342,935) (127,191) (249,816) (982,782) (2,702,724)
Capital expenditure* (69,908) (13,220) (8,198) (30,276) (121,602)
The prior year statement, below, has been restated to include
the effects of adopting IFRS 16, and to exclude the Germany Jawoll
segment as it is a discontinued operation. Note that some expenses,
such as the revaluation of the call/put option in relation to
Germany, were previously classified as corporate but as they were
not part of the result for the continuing operations they have also
been excluded.
52 week period to UK UK France Continuing
30 March 2019 B&M Heron Babou Corporate Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 2,789,431 354,057 129,144 - 3,272,632
EBITDA (note 4) 296,398 19,923 5,596 3,131 325,048
EBITDA (IFRS 16) (note
4) 436,263 29,450 18,843 3,131 487,687
Depreciation and amortisation (133,647) (18,497) (16,029) (2) (168,175)
Net finance expense (46,501) (2,614) (3,434) (22,634) (75,183)
Income tax (expense)/credit (48,959) (1,602) 110 1,231 (49,220)
Segment profit/(loss) 207,156 6,737 (510) (18,274) 195,109
Total assets 2,487,954 275,161 304,192 41,284 3,108,591
Total liabilities (1,139,225) (114,373) (213,387) (754,424) (2,221,409)
Capital expenditure* (63,394) (15,432) (2,626) (19,590) (101,042)
* includes capital expenditure on intangible assets. The
reconciling figure between the total and the figure given in the
statement of cash flows is the capital expenditure at Jawoll in the
year, see note 7.
Revenue is disaggregated geographically as follows;
52 weeks ended 52 weeks ended
28 March 30 March
Period to 2020 2019
GBP'000 GBP'000
Continuing operations
Revenue due to UK operations 3,530,011 3,143,488
Revenue due to French operations 283,376 129,144
-------------- --------------
Overall revenue 3,813,387 3,272,632
-------------- --------------
The Group operates a small wholesale operation, with the
relevant disaggregation of revenue as follows;
52 weeks ended 52 weeks ended
28 March 30 March
Period to 2020 2019
GBP'000 GBP'000
Continuing operations
Revenue due to sales made in stores 3,777,238 3,249,049
Revenue due to wholesale activities 36,149 23,583
-------------- --------------
Overall revenue 3,813,387 3,272,632
-------------- --------------
4 Reconciliation of non-IFRS measures from the statement of comprehensive income
EBITDA, Adjusted EBITDA and Adjusted Profit are non-IFRS
measures and therefore reconciliations from the statement of
comprehensive income are set out below.
The foreign exchange difference on our acquisition facility loan
has been included for the first time as an adjusting item in these
accounts. This is because the loan has been specifically drawn to
cover costs associated with a Group project. Our March 2019
adjusted EBITDA has been restated to reflect this.
Restated
52 weeks ended 52 weeks ended
28 March 30 March
Period to 2020 2019
GBP'000 GBP'000
Continuing operations
Profit on ordinary activities before interest
and tax 333,691 319,512
Add back depreciation and amortisation 203,419 168,175
-------------- ---------------
EBITDA (IFRS 16) 537,110 487,687
Exclude effects of IFRS 16 on administrative
costs (154,133) (162,639)
-------------- ---------------
EBITDA 382,977 325,048
Reverse the fair value effect of ineffective
derivatives (641) (5,707)
Foreign exchange on intercompany balances (3,694) 2,799
Foreign exchange on acquisition facility 3,334 (2,978)
Gain on sale and leaseback of the Bedford
warehouse (48,984) -
Direct effects of the closure of the French
stores due to Covid-19 9,315 -
Remove costs associated with the acquisition
of Heron - 425
Adjusted EBITDA 342,307 319,587
Pre-IFRS 16 depreciation and amortisation (57,684) (44,997)
Net adjusted finance costs (see note 6) (24,596) (22,192)
-------------- ---------------
Adjusted profit before tax 260,027 252,398
Adjusted tax (57,048) (49,739)
-------------- ---------------
Adjusted profit for the period 202,979 202,659
-------------- ---------------
Attributable to owners of the parent 202,979 202,659
Adjusted EBITDA (IFRS 16) and Adjusted Profit (IFRS 16) are
calculated as follows. These are the statements of adjusted profit
that includes the effects of IFRS 16.
52 weeks ended 52 weeks ended
28 March 30 March
Period to 2020 2019
GBP'000 GBP'000
Continuing operations
Adjusted EBITDA (above) 342,307 319,587
Include other effects of IFRS 16 on EBITDA 154,133 162,639
Exclude the effect of IFRS 16 on the gain
on the Bedford transaction 32,052 -
-------------- --------------
Adjusted EBITDA (IFRS 16) 528,492 482,226
Depreciation and amortisation (203,419) (168,175)
Interest costs related to right-of-use assets
(note 6) (57,206) (52,040)
Net adjusted other finance costs (24,596) (22,192)
-------------- --------------
Adjusted profit before tax (IFRS 16) 243,271 239,819
Adjusted tax (56,372) (51,921)
-------------- --------------
Adjusted profit for the period (IFRS 16) 186,899 187,898
-------------- --------------
Adjusting items are the effects of derivatives, one off
refinancing fees, foreign exchange on the translation of
intercompany balances and the effects of revaluing or unwinding
balances related to the acquisition of subsidiaries. Significant
project costs or gains or losses arising from unusual circumstances
or transactions may also be included if incurred, such as this year
with the gain on the sale and leaseback of the Bedford warehouse
and the direct loss incurred at Babou due to the closure of their
stores during the pandemic. Adjusted tax represents the tax charge
per the statement of comprehensive income as adjusted only for the
effects of the adjusting items detailed above.
The segmental split in EBITDA (IFRS 16) and Adjusted EBITDA
(IFRS 16) reconciles as follows;
52 week period to 28 UK UK France
March 2020 B&M Heron Babou Corporate Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Continuing operations
Profit/(loss) before
interest and tax 318,209 15,847 (7,145) 6,780 333,691
Add back depreciation
and amortisation 148,946 19,109 35,357 7 203,419
-------- -------- -------- ---------- ---------
EBITDA (IFRS 16) 467,155 34,956 28,212 6,787 537,110
Adjusting items detailed
above - - - (40,670) (40,670)
IFRS 16 adjustment to
gain at Bedford - - - 32,052 32,052
Adjusted EBITDA 467,155 34,956 28,212 (1,831) 528,492
-------- -------- -------- ---------- ---------
52 week period to 30 UK UK France
March 2019 B&M Heron Babou Corporate Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Continuing operations
Profit before interest
and tax 302,616 10,953 2,814 3,129 319,512
Add back depreciation
and amortisation 133,647 18,497 16,029 2 168,175
-------- -------- -------- ---------- --------
EBITDA 436,263 29,450 18,843 3,131 487,687
Adjusting items detailed
above - - - (5,461) (5,461)
Adjusted EBITDA 436,263 29,450 18,843 (2,330) 482,226
-------- -------- -------- ---------- --------
Adjusted EBITDA and related measures are not measures of
performance or liquidity under IFRS and should not be considered in
isolation or as a substitute for measures of profit, or as an
indicator of the Group's operating performance or cash flows from
operating activities as determined in accordance with IFRS.
5 Operating profit
The following items have been charged in arriving at operating
profit from continuing operations;
52 weeks ended 52 weeks ended
28 March 30 March
Period ended 2020 2019
GBP'000 GBP'000
Auditor's remuneration 722 348
Payments to auditors in respect of non-audit
services:
Taxation advisory services - -
Other assurance services 10 7
Other professional services - -
Cost of inventories recognised as an expense
(included in cost of sales) 2,530,579 2,152,403
Depreciation of owned property, plant and
equipment: 52,366 41,294
Amortisation (included within administration
costs) 2,433 1,976
Depreciation of right of use assets 148,620 124,905
Operating lease rentals 4,479 4,839
(Gain)/loss on sale of property, plant and
equipment (163) 568
Gain on sale and leaseback (16,928) -
Loss/(gain) on foreign exchange 660 (7,986)
The prior year figures have been restated in respect of the
Group's first time application of IFRS 16, for the reclassification
of the Germany Jawoll segment as a discontinued operation and for
the results of the final purchase price allocation exercise for
Babou.
6 Finance costs and finance income
Finance costs include all interest related income and expenses.
The following amounts have been included in the continuing profit
line for each reporting period presented:
52 weeks to 52 weeks to
28 March 30 March
Period ended 2020 2019
GBP'000 GBP'000
Continuing operations
Interest on debt and borrowings (22,732) (20,699)
Ongoing amortisation of finance fees (2,077) (1,862)
Total adjusted finance expense (24,809) (22,561)
Unwinding of deferred acquisition costs for
subsidiaries - (1,667)
----------- -----------
Total other finance expense (24,809) (24,228)
Finance costs on lease liabilities (57,206) (52,040)
----------- -----------
Total finance expense (82,015) (76,268)
----------- -----------
The finance expense reconciles to the statement of cash flows as
follows;
52 weeks to 52 weeks to
28 March 30 March
Period ended 2020 2019
GBP'000 GBP'000
Cash
Finance costs paid in relation to debt and
borrowings 23,957 21,476
Finance costs paid in relation to right of
use assets 63,790 58,544
----------- -----------
Finance costs paid 87,747 80,020
Finance costs paid for debt and borrowings
within discontinued operations (1,350) (302)
Finance costs paid for right of use assets
within discontinued operations (6,584) (6,504)
----------- -----------
Finance costs paid for within continuing
operations 79,813 73,214
Non cash
Movement of accruals in relation to debt
and borrowings 125 (475)
Amortisation of finance fees 2,077 1,862
Unwinding of deferred acquisition costs for
subsidiaries - 1,667
----------- -----------
Total finance expense within continuing operations 82,015 76,268
----------- -----------
52 weeks to 52 weeks to
28 March 30 March
Period ended 2020 2019
GBP'000 GBP'000
Interest income on loans and bank accounts 213 369
----------- -----------
Total adjusted finance income 213 369
Gain on revaluing deferred consideration
in respect of Heron 134 716
----------- -----------
Total finance income 347 1,085
----------- -----------
Total net adjusted finance costs are therefore;
52 weeks to 52 weeks to
28 March 30 March
Period ended 2020 2019
GBP'000 GBP'000
Total adjusted finance expense (24,809) (22,561)
Total adjusted finance income 213 369
----------- -----------
Total net adjusted finance costs (24,596) (22,192)
----------- -----------
The prior year figures have been restated in respect of the
Group's first time application of IFRS 16 and for the
reclassification of the Germany Jawoll segment as a discontinued
operation.
7 Business disposal
On 27 March 2020 the Group announced the disposal of J.A.
Woll-Handels GmbH and their subsidiaries ("Jawoll"), therefore
forming a disposal group, for a consideration of EUR12,501k,
comprising EUR12,500k to repay intercompany balances and GBP1k for
the enterprise value of the business. Jawoll has therefore not been
consolidated since this date.
As such their results have been reclassified in the statement of
comprehensive income as discontinued operations under the
definition given in IFRS 5. The prior year results have therefore
also been restated to reflect this new classification.
The consideration receivable breaks down as follows;
GBP'000 EUR'000
Deferred receivable against the intercompany
loan balance 8,948 10,000
Receivable immediately against the intercompany
trade receivable balance 2,237 2,500
Receivable against the transfer of the share
capital 1 1
------- --------
Total 11,186 12,501
Deferred consideration (8,948) (10,000)
Overdraft released on disposal 726 811
------- --------
Amount related to the disposal as disclosed
on the statement of cash flows 2,964 3,312
------- --------
The EUR10m deferred receivable is due in December 2020 or
earlier, and is contingent against Jawoll remaining a going concern
as at that date. Management consider that this is highly probable
and have therefore recognised the full EUR10m, see note 1.
The loss on discontinued operations disclosed in the statement
of comprehensive income comprised the following;
52 weeks to 52 weeks to
28 March 30 March
Period ended 2020 2019
GBP'000 GBP'000
Revenue 210,662 213,663
Impairment expense recognised in September
2019 (59,533) -
Other expenses (240,224) (222,906)
----------- -----------
Loss before tax (89,095) (9,243)
Income tax (expense)/credit (1,721) 5,268
----------- -----------
Loss from discontinued operations before
disposal (90,816) (3,975)
Loss on disposal (23,106) -
Tax charge on disposal - -
----------- -----------
Loss from discontinued operations (113,922) (3,975)
----------- -----------
Attributable to non-controlling interests (9,172) (2,717)
Attributable to owners of the parent (104,750) (1,258)
At the half year the Group carried out an impairment review in
respect to Jawoll with the result that the above GBP59.5m
impairment was recognised. A further GBP23.1m loss has been
recognised on disposal.
Jawoll had no other comprehensive income in the period other
than to recognise the change in the foreign exchange reserve which
was the release of the full amount relating to Jawoll, a charge of
GBP3,053k.
The net cash flows of the disposed entity break down as
follows;
52 weeks to 52 weeks to
28 March 30 March
Period ended 2020 2019
GBP'000 GBP'000
Net cash flows from operating activities 3,015 (22,259)
Net cash flows from investing activities (3,033) (4,910)
Net cash flows from financing activities (2,487) 24,070
----------- -----------
Net decrease in cash and cash equivalents (2,505) (3,099)
----------- -----------
Specifically, Jawoll spent GBP3,029k on capital additions in the
year (2019: GBP4,927k) and this is therefore the balancing number
between the segment analysis cash flow in note 3, and that given on
the statement of cash flows.
The equity balances held in non-controlling interests and the
call/put reserve were entirely related to the Jawoll entities and
have therefore been derecognised on the date of this transaction.
The remaining balances have been recycled through to the retained
earnings reserve, see the statement of changes in equity.
On 6 March 2020 the business Bedford DC Investments Ltd was
disposed by the Group as part of a sale and leaseback transaction.
The entity had no significant profit or loss items except those
that related directly to the sale & leaseback transaction and
therefore no further disclosures have been made related to the
discontinued operation. Further disclosures relating to the sale
and leaseback transaction are included in note 17.
8 Business acquisition
In the prior year, on 19 October 2018, the Group acquired
Paminvest SAS a discount general merchandise retailer group
operating under the trading name Babou in France ("Babou"). As part
of the same transaction the Group acquired the third party
distribution service provider to Babou and these operations were
immediately brought into the Paminvest group. The exchange rate on
the acquisition date was 1.1346EUR/GBP.
A final review of the fair values of the identifiable assets and
liabilities has been carried out within the year, with the result
that, due to information available after the prior year end which
reflected circumstances at the acquisition date, an additional
EUR6m goodwill has been recognised in relation to a write-down of
inventory.
Whilst all other fair values remain unchanged from the
provisional figures given in the 2019 Annual Report, we have
restated acquisition assets and liabilities to incorporate IFRS 16.
This change includes reclassifying the previously recognised
favourable, unfavourable and finance lease balances and recognising
a right-of-use asset balance and related lease liabilities. The
IFRS 16 restatement is net assets neutral overall and therefore
this has had no overall impact on the net assets figure and
goodwill acquired.
The fair values of the identifiable assets and liabilities
acquired have therefore been finalised as:
Assets EUR'000
Babou brand asset (10 year life) 4,690
Other intangible assets 1,402
Property, plant and equipment 27,591
Right of use assets 166,353
Inventories 77,280
Corporation and deferred tax 2,671
Receivables and other assets 18,087
Cash 4,038
---------
Total assets 302,112
---------
Liabilities
Creditors and accruals (64,947)
Lease liabilities (164,537)
Bank loans (12,488)
---------
Total liabilities (241,972)
---------
Net assets acquired 60,140
Fair value of consideration 90,130
Goodwill recognised on acquisition 29,990
This is an increase from the estimated goodwill of EUR24.0m
recognised at the 2019 year end.
None of the receivables recognised were considered irrecoverable
at the acquisition date.
Fees of GBP0.4m were incurred during the acquisition all of
which have been expensed through the P&L, and which are treated
as adjusting for the purposes of note 4.
The goodwill (which translates to GBP26.4m on the acquisition
date) 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.
The effect the acquisition has had on the consolidated statement
of comprehensive income can be seen in the segment note (note 3).
Had the company been bought at the start of the prior year it would
have contributed an estimated extra EUR162.3m to the prior year
revenue and EUR2.8m to the prior year operating profit under their
local accounting policies (French GAAP, on the basis that it was
not practical to translate to IFRS). These translate to GBP143.1m
and GBP2.5m at the exchange rate used for the Group consolidated
statement of comprehensive income.
The balance on the consolidated statement of cash flows
reconciles as follows:
EUR'000 GBP'000
Initial cash consideration 90,130 79,438
Cash acquired (4,038) (3,559)
Net cash for acquisitions 86,092 75,879
------- -------
9 Employee remuneration
Expense recognised for employee benefits is analysed below:
52 weeks to 52 weeks to
28 March 30 March
Period ended 2020 2019
GBP'000 GBP'000
Continuing operations
Wages and salaries 394,894 352,291
Social security costs 21,390 18,356
Pensions - defined contribution plans 5,359 3,308
----------- -----------
421,643 373,955
----------- -----------
There are GBP526k of defined contribution pension liabilities
owed by the Group at the period end (2019: GBP116k).
As at 30 March 2019, the Group had one employee who is a member
of a defined benefit scheme with the liability held on the balance
sheet at GBP245k. This scheme was run by the discontinued operation
and as such there are no defined benefit schemes within the Group
as at 28 March 2020.
The scheme was considered immaterial to the Group and the effect
of the prior year end actuarial valuation can be seen within other
comprehensive income.
Babou operates a scheme where they must provide a certain amount
per employee to pay upon their retirement date. The accrual on this
scheme was GBP1,226k (2019: GBP1,174k) at the year end.
The average monthly number of persons employed by the Group's
continuing operations during the period was:
52 weeks to 52 weeks to
28 March 30 March
Period ended 2020 2019
Continuing operations
Sales staff 33,437 31,086
Administration 769 683
----------- -----------
34,206 31,769
----------- -----------
10 Key management remuneration
Key management personnel and Directors' remuneration includes
the following:
52 weeks to 52 weeks to
28 March 30 March
Period ended 2020 2019
GBP'000 GBP'000
Directors' remuneration:
Short term employee benefits 2,040 2,204
Benefits accrued under the share option scheme 298 219
----------- -----------
2,338 2,423
----------- -----------
Key management expense (includes Directors'
remuneration):
Short term employee benefits 4,678 4,440
Benefits accrued under the share option scheme 524 328
Pension 38 36
----------- -----------
5,240 4,804
----------- -----------
Amounts in respect of the highest paid director
emoluments:
Short term employee benefits 1,069 1,212
Benefits accrued under the share option scheme 181 84
----------- -----------
1,250 1,296
----------- -----------
The emoluments disclosed above are of the directors and key
management personnel who have served as a director within any of
the continuing Group companies and the prior year figures have been
restated to exclude the key management associated with the
discontinued operation.
11 Share Options
The Group operates three equity settled share option schemes
which split down to various tranches. Details of these schemes
follow.
1) The Company Share Option Plan (CSOP) scheme
The CSOP scheme was adopted by the Group as a Schedule 4 CSOP
Scheme on 29 March 2014. No grant under this scheme can be made
more than 10 years after this date.
Eligibility
Employees and executive directors of the Group are eligible for
the CSOP and the awards are made at the discretion of the
remuneration committee.
Limits & Pricing
A fixed number of options are offered to each participant, with
the pricing set as the close price on the grant date. The options
offered to each individual cannot exceed a total value of GBP30,000
measured as the option price multiplied by the number of options
awarded, with the whole scheme limited to 10% of the share capital
in issue.
Vesting & Exercise
The awards vest on the third anniversary of grant, subject to
the following condition:
In order for an option to be eligible for vesting, the
underlying UK EBITDA in the last financial year that ended prior to
the third anniversary of the grant should not be less than 130% of
the underlying UK EBITDA in the last financial year that ended
before the grant was made.
Once vested the award can be exercised up until the tenth
anniversary of the grant.
Tranches
To the end of March 2020 there have been four tranches of the
CSOP, details are as follows:
Tranche 1 Tranche 3 Tranche 4
Date of grant 1 Aug 2014 17 Dec 2015 19 Aug 2016
Option price 271.5p 286.0p 276.8p
Options granted 596,646 10,489 21,676
Fair value of each option
at date of grant 83p 79p 50p
Options outstanding at
31 March 2018 11,049 10,489 21,676
Lapsed - (10,489) -
---------- ----------- -----------
Options outstanding at
30 March 2019 11,049 - 21,676
Exercised - - (21,676)
---------- ----------- -----------
Options outstanding at
28 March 2020 11,049 - -
---------- ----------- -----------
No options remained on Tranche 2 as at 31 March 2018.
2) Long-Term Incentive Plan (LTIP) Awards
The LTIP was adopted by the board on 29 May 2014. No grant under
this scheme can be made more than 10 years after this date.
Eligibility
Employees and executive directors of the Group are eligible for
the LTIP and the awards are made at the discretion of the
remuneration committee.
Limits & Pricing
A fixed number of options are offered to each participant, with
the pricing set at GBPnil. The options offered to each individual
cannot exceed a total value of 100% (200% under exceptional
circumstances) of the participants base salary where the value is
measured as the market value of the shares on grant multiplied by
the number of options awarded, with the whole scheme limited to 10%
of the share capital in issue.
Dividend Credits
All participants in any LTIP awards granted after 1 April 2018
are entitled to a dividend credit where the notional dividend they
would have received on the maximum number of shares available under
their award is converted into new share options and added to the
award based upon the share price on the date of the dividend. These
additional awards have been reflected in the tables below.
Vesting & Exercise
The share options vest on the third anniversary of the grant
date, subject to a set of conditions as follows:
LTIP 2015, 2016, 2017A, 2018A, 2019A:
-- 50% of the awards are subject to a TSR performance condition,
where the Group's TSR over the vesting period is compared with a
comparator group. The awards vest on a sliding scale where the full
50% is awarded if the Group falls in the upper quartile, 12.5%
vests if the Group falls exactly at the median, and 0% below
that.
-- 50% of the awards are subject to a Diluted EPS performance
target. The awards vest on a sliding scale based upon the Earnings
per share as follows:
Award 50% paid 12.5% paid
EPS as at at at
LTIP 2015 March-18 19.0p 15.0p
LTIP 2016 March-19 22.5p 17.5p
LTIP 2017A March-20 24.0p 19.0p
LTIP 2018A March-21 28.0p 23.0p
LTIP 2019A March-22 33.0p 27.0p
Below the 12.5% boundary, no options vest. Diluted EPS is
considered to be on frozen GAAP and so does not include the effects
of IFRS 16.
After these schemes have vested they are subject to a two year
holding period before they can be exercised.
LTIP 2017/B1, 2017/B2, 2018/B1, 2018/B2, 2019/B1, 2019/B2:
-- Group EBITDA must be positive in each year of the LTIP.
-- The awards also have an employee performance condition attached.
Vested awards can be exercised up to the tenth anniversary of
grant.
Tranches
To the end of March 2020 there have been several awards of the
LTIP, with the details as follows.
Note that the LTIP 2015, LTIP 2016, LTIP 2017A and LTIP 2018A
have been split into the element subject to the TSR (50%) and the
element subject to the EPS (50%) since these were valued
separately.
LTIP 2014 had no outstanding options as at 31 March 2018.
The key information used in the valuation of these tranches is
as follows;
Original Fair Value
Date of Options of each Risk Free Expected
Scheme Grant Granted option Rate Life (years) Volatility
5 Aug
2015-TSR 15 40,616 210p 0.92% 5 24%
5 Aug
2015-EPS 15 40,616 341p 0.92% 5 24%
18 Aug
2016-TSR 16 122,385.5 164p 0.09% 5 26%
18 Aug
2016-EPS 16 122,385.5 254p 0.09% 5 26%
7 Aug
2017A-TSR 17 40,610 272p 0.52% 5 32%
7 Aug
2017A-EPS 17 40,610 351p 0.52% 5 32%
22 Aug
2018A-TSR 18 226,672.5 240p 0.97% 5 29%
22 Aug
2018A-EPS 18 226,672.5 409p 0.97% 5 29%
22 Aug
2019A-TSR 19 275,640.5 251p 0.37% 5 31%
22 Aug
2019A-EPS 19 275,640.5 361p 0.37% 5 31%
7 Aug
2017/B1 17 287,963 361p 0.25% 3 32%
14 Aug
2017/B2 17 101,654 360p 0.25% 3 32%
23 Jan
2018/B1 18 19,264 400p 0.25% 3 32%
20 Aug
2018/B2 18 236,697 406p 0.25% 3 30%
20 Aug
2019/B1 19 369,061 348p 0.47% 3 30%
18 Sep
2019/B2 19 2,678 373p 0.47% 3 30%
Options Options
at 30 Dividend at 28
Scheme Mar 19 Granted Credit Forfeited Exercised Mar 20
2015-TSR 40,616* - - - - 40,616*
2015-EPS 31,477* - - - - 31,477*
2016-TSR 122,385.5 - - - - 122,385.5*
2016-EPS 122,385.5 - - (51,403) - 70,982.5*
2017A-TSR 40,610 - - - - 40,610
2017A-EPS 40,610 - - - - 40,610
2018A-TSR 226,672.5 - 18,046 - - 244,718.5
2018A-EPS 226,672.5 - 18,046 - - 244,718.5
2019A-TSR - 255,640.5 16,282 - - 271,922.5
2019A-EPS - 255,640.5 16,282 - - 271,922.5
2017/B1 263,855 - - - - 263,855
2017/B2 93,629 - - - - 93,629
2018/B1 16,856 - - - - 16,856
2018/B2 227,304 - 18,093 - - 245,397
2019/B1 - 369,061 23,460 - - 392,521
2019/B2 - 2,678 169 - - 2,847
Options Options
at 31 Dividend at 30
Scheme Mar 18 Granted Credit Forfeited Exercised Mar 19
2015-TSR 40,616 - - - - 40,616*
2015-EPS 40,616 - - (9,139) - 31,477*
2016-TSR 122,385.5 - - - - 122,385.5
2016-EPS 122,385.5 - - - - 122,385.5
2017A-TSR 40,610 - - - - 40,610
2017A-EPS 40,610 - - - - 40,610
2018A-TSR - 224,914.5 1,758 - - 226,672.5
2018A-EPS - 224,914.5 1,758 - - 226,672.5
2017/B1 271,891 - - (8,036) - 263,855
2017/B2 101,654 - - (8,025) - 93,629
2018/B1 19,264 - - (2,408) - 16,856
2018/B2 - 236,697 1,797 (11,190) - 227,304
* These share options have vested and are in a two year holding
period.
3) Deferred Bonus Share Plan (DBSP) Awards
The Deferred Bonus Share Plan differs from the other awards in
that there are no vesting conditions.
The scheme has been set up in order to allocate 1/3(rd) of the
executive directors annual bonus into nil price share options which
are then placed in holding for three years.
As there are no vesting conditions, these awards have been
valued at the amount of the bonus to be converted into share
options under the scheme.
The total fair value of the 2019 scheme was GBP217k to be
released over the three year holding period.
There has been one award under the scheme. The 2020 award will
be made after this set of statutory accounts has been published,
and will therefore be reported in the next annual report.
Options Options
at 30 Dividend at 28
Scheme Mar 19 Granted Credit Forfeited Exercised Mar 20
2019 Bonus allocation - 56,512 4,496 - - 61,008
The summary year end position is as follows;
28 March 30 March
Period ended 2020 2019
Share options outstanding at the start of
the year 1,485,798 843,246
Share options granted during the year (including
via dividend credit) 1,054,406 691,839
Share options forfeited or lapsed during
the year (51,403) (49,287)
Share options exercised in the year (21,676) -
Share options outstanding at the end of the
year 2,467,125 1,485,798
Of which;
Share options that are not vested 2,129,607 1,402,656
Share options that are vested, but are not
eligible for exercise (in holding) 326,469 72,093
Share options that are vested and eligible
for exercise 11,049 11,049
All exercised options are satisfied by the issue of new share
capital.
In the year, GBP1,422k has been charged to the consolidated
statement of comprehensive income in respect to the share option
schemes (2019: GBP954k). At the end of the year the outstanding
share options had a carrying value of GBP3,155k (2019:
GBP1,733k).
12 Taxation
A UK corporation tax rate of 19% was substantively enacted on 17
March 2020, reversing the previously enacted reduction in the rate
from 19% to 17%. This will increase the company's future current
tax charge accordingly. The deferred tax balances at the period end
have been calculated at 19%.
The relationship between the expected tax expense based on the
standard rate of corporation tax in the UK of 19% (2019: 19%) and
the tax expense actually recognised in the statement of
comprehensive income can be reconciled as follows:
52 weeks to 52 weeks to
28 March 30 March
Period ended 2020 2019
GBP'000 GBP'000
Continuing operations
Current tax expense 60,889 50,897
Deferred tax credit (3,643) (1,677)
----------- -----------
Total tax expense recorded in continuing
operations profit and loss 57,246 49,220
----------- -----------
Deferred tax charge in other comprehensive
income 1,383 3,479
----------- -----------
Total tax charge recorded in other comprehensive
income 1,383 3,479
----------- -----------
Result for the year before tax due to continuing
operations 252,023 244,329
Expected tax charge at the standard tax rate 47,885 46,423
Effect of :
Expenses not deductible for tax purposes 11,559 3,632
Income not taxable (1,925) (1,163)
Lease accounting 873 410
Foreign operations taxed at local rates (2,495) (81)
Changes in the rate of corporation tax 386 (58)
Adjustment in respect of prior years 322 (108)
Hold over gains on fixed assets 430 -
Other 211 165
----------- -----------
Actual tax expense 57,246 49,220
----------- -----------
Deferred taxation
28 March 30 March
Statement of financial position 2020 2019
GBP'000 GBP'000
Accelerated tax depreciation (3,029) (3,250)
Relating to intangible brand assets (21,589) (20,955)
Fair valuing of assets and liabilities (asset) 12 272
Fair valuing of assets and liabilities (liability) (3,474) (1,801)
Effects of lease accounting 21,008 17,226
Movement in provision 1,349 1,308
Relating to share options 521 360
Held over gains on fixed assets (834) (450)
Losses carried forward - 4,501
Other temporary differences (asset) 98 84
Other temporary differences (liability) (82) (66)
-------- --------
Net deferred tax liability (6,020) (2,771)
Analysed as;
Deferred tax asset 22,988 23,751
Deferred tax liability (29,008) (26,522)
52 weeks to 52 weeks to
28 March 30 March
Statement of comprehensive income 2020 2019
GBP'000 GBP'000
Accelerated tax depreciation 220 (26)
Relating to intangible brand assets (2,057) (62)
Fair valuing of assets and liabilities (3,061) (4,635)
Lease accounting 7,386 2,583
Movement in provision (6) 328
Relating to share options 161 153
Held over gains on fixed assets (384) -
Other temporary differences 1 (40)
Effect of foreign exchange - (103)
Net deferred tax credit/(charge) 2,260 (1,802)
Analysed as;
Total deferred tax credit in profit or loss
due to continuing operations 3,643 1,677
Total deferred tax charge in other comprehensive
income (1,383) (3,479)
The prior year schedules have been restated due to the impact of
the first time application of IFRS 16 and the reclassification of
the Germany Jawoll results to discontinued operations
There were GBP9.6m of unrecognised deferred tax assets in
relation to losses carried forward within the Group at the period
end (2019: GBPnil).
The Group offsets tax assets and liabilities if and only if it
has a legally enforceable right to set off current tax assets and
current tax liabilities and the deferred tax assets and deferred
tax liabilities relate to income taxes levied by the same tax
authority.
13 Earnings per share
Basic earnings per share amounts are calculated by dividing the
net profit or loss for the financial period attributable to
ordinary equity holders of the parent by the weighted average
number of ordinary shares outstanding at each period end.
Diluted earnings per share amounts are calculated by dividing
the net profit attributable to ordinary equity holders of the
parent by the weighted average number of ordinary shares
outstanding during each year plus the weighted average number of
ordinary shares that would be issued on conversion of any dilutive
potential ordinary shares into ordinary shares.
Adjusted (and adjusted (IFRS 16)) basic and diluted earnings per
share are calculated in the same way as above, except using
adjusted profit attributable to ordinary equity holders of the
parent, as defined in note 4.
The prior year figures have been restated in regards to the
first time inclusion of IFRS 16 and the reclassification of Jawoll
as a discontinued operation.
There are share option schemes in place (see note 11) which have
a dilutive effect on both periods presented. The following reflects
the income and share data used in the earnings per share
computations:
Period ended 28 March 30 March
2020 2019
GBP'000 GBP'000
Continuing operations
Profit for the period attributable to owners
of the parent 194,777 195,109
Adjusted profit for the period attributable
to owners of the parent 202,979 202,659
Adjusted (IFRS 16) profit for the period
attributable to owners of the parent 186,899 187,898
Discontinued operations
Loss for the period attributable to owners
of the parent (104,750) (1,258)
---------- ---------
All operations
Profit for the period attributable to owners
of the parent 90,027 193,851
---------- ---------
Thousands Thousands
Weighted average number of ordinary shares
for basic earnings per share 1,000,570 1,000,561
Dilutive employee share options 698 453
----------
Weighted average number of ordinary shares
adjusted for the effect of dilution 1,001,268 1,001,014
---------- ----------
Continuing operations Pence Pence
Basic earnings per share 19.5 19.5
Diluted earnings per share 19.5 19.5
Adjusted basic earnings per share 20.3 20.2
Adjusted diluted earnings per share 20.3 20.2
Adjusted IFRS 16 basic earnings per share 18.7 18.8
Adjusted IFRS 16 diluted earnings per share 18.7 18.8
------ ------
Discontinued operations Pence Pence
Basic loss per share (10.5) (0.1)
Diluted loss per share (10.5) (0.1)
------- ------
All operations Pence Pence
Basic earnings per share 9.0 19.4
Diluted earnings per share 9.0 19.4
------ ------
14 Investments in associates
28 March 30 March
Period ended 2020 2019
GBP'000 GBP'000
Net book value
Carrying value at the start of the period 6,920 5,140
Acquisition of holding in Centz Retail Holdings - 1,200
Dividends received (2,580) (570)
Share of profits in associates since the
prior year valuation exercise 879 775
Effect of foreign exchange on translation 481 375
-------- ---------
Carrying value at the end of the period 5,700 6,920
-------- ---------
In the prior year, on 19 November 2018, the Group acquired a
22.5% holding in Centz Retail Holdings Limited, "Centz", a company
incorporated in Ireland, for EUR1,350,000. The principal activity
of the company is retail sales and their registered address is 5
Old Dublin Road, Stillorgan, Co. Dublin.
The Group has a 50% interest in Multi-lines International
Company Ltd, "Multi-Lines", a company incorporated in Hong Kong.
The principal activity of the company is the purchase and sale of
goods and their registered address is 8/F, Hope Sea Industrial
Centre, No. 26 Lam Hing Street, Kowloon Bay, Hong Kong.
The Group also holds 20% of the ordinary share capital of Home
Focus Group Ltd, a company incorporated in Republic of Ireland and
whose principal activity is retail sales and their registered
address is Boole House, Beech Hill Office Campus, Beech Hill Road,
Clonskeagh, Dublin 4.
There have been no changes in the percentage ownership over the
presented years. The 20% holding in Home Focus Group Ltd is
contracted to be sold in December 2020 for EUR350k. Home Focus
Group is therefore immaterial for further disclosure.
None of the entities have discontinued operations or other
comprehensive income, except that on consolidation all entities
have a foreign exchange translation difference.
28 March 30 March
Period ended 2020 2019
GBP'000 GBP'000
Multi-lines
Non-current assets 2,417 2,344
Current assets 74,702 50,045
Non-current liabilities - -
Current liabilities (67,688) (39,577)
-------- ---------
Net assets 9,431 12,812
-------- ---------
Revenue 221,145 160,903
Profit 969 1,562
-------- ---------
28 March 30 March
Period ended 2020 2019
GBP'000 GBP'000
Centz
Non-current assets 9,941 5,281
Current assets 12,447 5,743
Non-current liabilities (8,834) (3,968)
Current liabilities (9,225) (4,570)
-------- ---------
Net assets 4,329 2,486
-------- ---------
Revenue 30,305 -
Profit 1,719 -
-------- ---------
The figures for Multi-lines show 12 months to December 2019
(2019: 12 months to December 2018), being the period used in the
valuation of the associate.
The figures for Centz also show 12 months to December 2019,
although there are no prior year profit and loss figures for Centz
Retail Holdings Limited as this is the first full year of
ownership.
15 Intangible assets
Goodwill Software Brands Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost or valuation
At 31 March 2018 929,718 7,251 116,043 1,514 1,054,526
Additions due to purchase of Babou 21,281 139 4,134 1,096 26,650
Additions - 2,404 250 - 2,654
Disposals - (51) - - (51)
Effect of retranslation (1,393) (28) (214) (59) (1,694)
-------- -------- ------- ------- ---------
At 30 March 2019 949,606 9,715 120,213 2,551 1,082,085
Recalculation of acquired goodwill (note 8) 5,151 - - - 5,151
At 30 March 2019 954,757 9,715 120,213 2,551 1,087,236
Additions - 1,361 - - 1,361
Disposal of Jawoll (35,367) (1,108) (5,324) (1,545) (43,344)
Other disposals - (12) - - (12)
Effect of retranslation 2,521 54 385 107 3,067
-------- -------- ------- ------- ---------
At 28 March 2020 921,911 10,010 115,274 1,113 1,048,308
Accumulated amortisation / impairment
At 31 March 2018 - 2,575 13 1,258 3,846
Charge for the year - 1,854 227 77 2,158
Disposals - (41) - - (41)
Effect of retranslation - (11) (5) (27) (43)
-------- -------- ------- ------- ---------
At 30 March 2019 - 4,377 235 1,308 5,920
Charge for the year - 2,187 355 26 2,568
Impairment of Jawoll 35,112 611 5,286 154 41,163
Disposal of Jawoll (35,367) (1,095) (5,324) (1,545) (43,331)
Other disposals - (12) - - (12)
Effect of retranslation 255 27 54 57 393
-------- -------- ------- ------- ---------
At 28 March 2020 - 6,095 606 - 6,701
Net book value at 28 March 2020 921,911 3,915 114,668 1,113 1,041,607
-------- -------- ------- ------- ---------
Net book value at 30 March 2019 954,757 5,338 119,978 1,243 1,081,316
-------- -------- ------- ------- ---------
Prior year goodwill has been restated as a result of the
finalisation of the purchase price allocation exercise for Babou,
see note 8.
Amortisation breaks down as follows:
28 March 30 March
As at 2020 2019
GBP'000 GBP'000
Amortisation of intangible assets in continuing
operations 2,433 1,976
Amortisation of intangible assets in discontinued
operations 135 182
-------- --------
Amortisation of intangible assets 2,568 2,158
-------- --------
For more information in respect of the disposal of Jawoll, see
note 7.
Impairment review of intangible assets held with indefinite
life
The Group holds the following assets with indefinite life:
28 March 28 March 30 March 30 March
Segment 2020 2020 2019 2019
Goodwill Brand Goodwill Brand
GBP'000 GBP'000 GBP'000 GBP'000
UK B&M 807,496 95,900 807,496 95,650
UK Heron 87,580 14,178 87,580 14,178
Germany Jawoll - - 33,934 5,108
France Babou 26,834 - 25,747 -
Not all items in the brand classification have an indefinite
life as some are time limited. The brand intangible assets that
have been identified as having an indefinite life are designated as
such as management believe that these assets will hold their value
for an indefinite period of time. Specifically the B&M and
Heron brands represent leading brands in their sectors with
significant histories and growth prospects.
In each case the goodwill and brand assets have been allocated
to one group of CGUs, being the store estate within the specific
segment to which those assets relate. The Babou assets were a new
addition in the prior year and the Jawoll assets have been disposed
during the year, see notes 7 and 8.
The Group performs impairment tests at each period end. The
impairment test involves assessing the net present value (NPV) of
the expected cash flows in relation to the stores within each CGU
according to a number of assumptions to calculate the value in use
(VIU) for the group of CGUs.
The Babou goodwill is held in Euros, with an underlying balance
of EUR30.0m (2019 restated: EUR30.0m).
The Jawoll balances were also held in euros with values at March
2019 of EUR39.5m for goodwill and EUR6.0m for the brand. The
balances were subsequently fully impaired in the year and disposed
in March 2020. The disclosures below for Jawoll in this financial
year relate to the impairment test undertaken in September 2019 in
relation to this entity.
The Jawoll Goodwill and Brand were impaired at the half year,
further details are included in a separate section below.
Due to the inclusion of IFRS 16 balances for the first time in
the continuing entities, a full review of the calculation and
assumptions was carried out by management and the model updated to
include additional allocated central costs and central assets as
well as working capital and appropriate limits on like for like and
terminal growth assumptions.
From this year we will also report the headroom in respect of
each segments impairment calculation, and as such this has been
included below. The prior year figures have been restated to be on
a comparable basis.
The key assumptions used were
(i) The Group's discount rate, calculated via an internal model.
(ii) The inflation rate for expenses, which has been based upon
the consumer price index for the relevant country.
(iii) The like for like sales growth, an estimate made by
management.
(iv) A terminal growth rate, an estimate made by management
based upon the expected position of the business at the end of the
five year forecast period.
The assumptions for the continuing entities were as follows:
28 March 30 March
As at 2020 2019
Discount rate (B&M) 11.7% 10.4%
Discount rate (Heron) 12.4% 10.7%
Discount rate (Babou) 13.0% 12.4%
Inflation rate for costs (B&M & Heron) 2.6% 2.4%
Inflation rate for costs (Babou) 1.5% 1.6%
Like for like sales growth (B&M) 2.6% 2.4%
Like for like sales growth (Heron) 2.6% 2.4%
Like for like sales growth (Babou) 2.4% 1.6%
Terminal growth rate (B&M) 0.5% 0.5%
Terminal growth rate (Heron) 2.6% 2.4%
Terminal growth rate (Babou) 1.5% 1.3%
These assumptions are reflected for five years in the CGU
forecasts and beyond this a perpetuity calculation is performed
using the assumptions made regarding terminal growth rates.
In each case, the results of the impairment tests on the
continuing operations identified that the VIU was in excess of the
carrying value of assets within each group of CGUs at the period
end dates. The headroom with the base case assumptions in B&M
was GBP2,071m, Heron GBP143m and Babou EUR23m (2019: GBP2,027m,
GBP115m and EUR59m respectively).
The Babou stores were closed at the year-end date following the
French government's lockdown measures in relation to the Covid-19
pandemic, prior to reopening on 11 May 2020. As such they suffered
significant losses during this closure period and are expected to
incur further losses resulting from the need to clear Spring/Summer
stock lines and therefore this is an indication of potential
impairment.
In the assumptions regarding the Babou impairment test, the
impact of Covid-19 has been included, but the underlying medium and
long term health of the business is not expected to be materially
impacted. Therefore the like for like and terminal growth rate
reflect management's belief in the continued growth of the company
after recovery from the provisions necessary during the
pandemic.
Given the calculated sensitivities shown below, there are
plausible scenarios where an impairment may be required to be made
to the Goodwill at Babou in future periods, such as lower than
planned like-for-like sales. However, these are considered unlikely
by management and can be balanced against for example the
likelihood of planned new store openings (which are not permitted
to be included as part of the goodwill calculation). Therefore
management believe that it is correct to record no impairment at
the year end date.
Since the re-opening of stores, the sales performance of the
business has been promising and we will continue to monitor the
performance with an update planned for the half year review.
No indicators of impairment were noted in the other continuing
entities and the sensitivity of the assumptions is set out below
with the figures given representing the point at which an
impairment will first be recognised for that key assumption, with
all other key assumptions held equal.
The 2019 figures have been restated to reflect the new
calculation basis as outlined above.
28 March 30 March
2020 2019
B&M
Discount rate 29.3% 27.5%
Inflation rate for expenses 10.5% 10.0%
Like for like sales (2.9)% (2.9)%
Terminal growth rate Not sensitive (87.0)%
Babou
Discount rate 15.9% 21.5%
Inflation rate for expenses 3.9% 3.3%
Like for like sales 1.5% 0.4%
Terminal growth rate (2.4)% (20.4)%
Heron
Discount rate 22.5% 17.1%
Inflation rate for expenses 6.6% 5.2%
Like for like sales (0.3)% 0.3%
Terminal growth rate (22.0)% (9.3)%
Jawoll Impairment (September 2019)
Our German business Jawoll continued to underperform against
management expectations and had not yet delivered the improvement
that was previously expected. As such, it became necessary to carry
out a further impairment review at the half year end date in
September 2019.
The review considered the projected future performance of the
business based on a range of inputs, and was carried out in the
segments base currency of the Euro. The key assumptions were as
stated in the table below and also there was a key assumption in
regards to the abnormal level of logistics costs with some
mitigation expected over the period of the projections, but without
the logistics costs returning to the original lower level
previously experienced by the business.
The assumptions used were as stated below with the usual Group
key assumptions used, in addition to the gross margin which was an
estimate provided by management based upon the expected rate of
recovery of the margin in the business.
September
As at 2019
Discount rate (Jawoll) 12.4%
Inflation rate for costs (Jawoll) 1.4%
Like for like sales growth (Jawoll) 1.0%
Gross margin (Jawoll) 37.5%
Terminal growth rate (Jawoll) 1.4%
The results of the impairment exercise were considered by the
Board which concluded that all of the Goodwill and Brand assets
should be impaired, as well as other assets within the
underperforming stores excluding the assets based at the warehouse
which management considered separately supportable.
Associated deferred tax assets and liabilities have been
derecognised, and the deferred tax asset carried in relation to the
use of future profits has also been derecognised. The right of use
assets, previously classified as finance leases, were also provided
against.
The total impairment reflects the following adjustments, with
the GBP values presented at the rate used to translate the items
for the purposes of profit and loss (1.1257EUR/GBP, the rate for
the statement of financial position was 1.1274EUR/GBP), being the
prevailing rates for the half year.
EUR'000 GBP'000
Goodwill 39,526 35,112
Brands 5,950 5,286
Software and other intangible assets 861 765
Land & buildings (including GBP4,940k
right of use assets) 6,282 5,581
Other fixed assets 14,398 12,789
------- -------
Impairment recognised in administrative
costs 67,017 59,533
------- -------
Deferred tax asset 12,717 11,297
Deferred tax liability (1,710) (1,519)
------- -------
Impairment recognised in income tax expense 11,007 9,778
------- -------
Total impairment 78,024 69,311
------- -------
The impairment is included in loss from discontinued operations
as Jawoll was subsequently disposed in March 2020. See note 7 for
more details on the disposal.
16 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 31 March 2018 128,680 8,403 258,039 395,122
Acquisition of Babou 153 63 24,101 24,317
Additions 34,960 5,628 62,727 103,315
Disposals (174) (1,140) (1,991) (3,305)
Effect of retranslation (352) (11) (1,155) (1,518)
------------------ -------------- ----------------------- ---------
At 30 March 2019 163,267 12,943 341,721 517,931
Additions 37,041 4,575 81,654 123,270
Disposal of Jawoll (17,777) (478) (24,406) (42,661)
Other disposals (97,602) (1,162) (20,762) (119,526)
Effect of retranslation 874 22 2,225 3,121
------------------ -------------- ----------------------- ---------
At 28 March 2020 85,803 15,900 380,432 482,135
Accumulated depreciation and impairment charges
At 31 March 2018 16,110 1,876 78,555 96,541
Charge for the period 4,037 2,099 38,662 44,798
Disposals (13) (668) (935) (1,616)
Effect of retranslation (97) (4) (272) (373)
At 30 March 2019 20,037 3,303 116,010 139,350
Charge for the period 4,546 2,770 46,939 54,255
Impairments 1,193 32 12,757 13,982
Disposal of Jawoll (6,220) (167) (21,973) (28,360)
Disposals (449) (860) (9,103) (10,412)
Effect of retranslation 363 7 752 1,122
------------------ -------------- ----------------------- ---------
At 28 March 2020 19,470 5,085 145,382 169,937
Net book value at 28 March 2020 66,333 10,815 235,050 312,198
------------------ -------------- ----------------------- ---------
Net book value at 30 March 2019 143,230 9,640 225,711 378,581
------------------ -------------- ----------------------- ---------
This note has been restated to reflect the transfer of assets
held under finance lease into the new category of right-of-use
assets, due to the first time adoption of IFRS 16, see note 17.
Depreciation breaks down as follows:
28 March 30 March
As at 2020 2019
GBP'000 GBP'000
Depreciation of property, plant and equipment
in continuing operations 52,366 41,294
Depreciation of property, plant and equipment
in discontinued operations 1,889 3,504
-------- --------
Depreciation of property, plant and equipment 54,255 44,798
-------- --------
For more details regarding the impairment and disposal of
Jawoll, see notes 7 and 15.
Under the terms of the loan and notes facilities in place at 28
March 2020, fixed and floating charges were held over GBP66.3m of
the net book value of land and buildings, GBP10.8m of the net book
value of motor vehicles and GBP210.7m of the net book value of the
plant, fixtures and equipment. (2019: GBP130.8m, GBP9.6m, GBP190.4m
respectively).
A significant sale and leaseback took place in relation to the
Bedford warehouse, which was carried at GBP103.7m on the date of
the transaction. See note 17 for more details.
At the year end no assets were under construction (2019:
GBP73.2m within the land and buildings category).
Included within land and buildings is land with a cost of
GBP5.8m (2019: GBP62.8m) which is not depreciated.
Capital commitments
There were GBP3.3m of contractual capital commitments not
provided within the Group financial statements as at 28 March 2020
(2019: GBP30.2m). The prior year figures included an estimated
GBP26.3m in relation to the build and fit out of the southern
warehouse.
17 Right of use assets
Plant,
Land and buildings Motor vehicles fixtures and equipment Total
GBP'000 GBP'000 GBP'000 GBP'000
Net book value
As at 31 March 2018 850,535 19,970 2,181 872,686
Acquisition of Babou 142,689 34 4,301 147,024
Additions 148,711 6,518 1,891 157,120
Modifications 13,014 - 45 13,059
Disposals (14,346) (128) (129) (14,603)
Impairment (131) - - (131)
Depreciation (124,340) (6,280) (2,151) (132,771)
Foreign exchange (5,399) (18) (94) (5,511)
As at 30 March 2019 1,010,733 20,096 6,044 1,036,873
Additions 312,880 5,390 5,402 323,672
Modifications 4,202 21 3 4,226
Disposal of Jawoll (82,459) (560) (237) (83,256)
Other disposals (41,099) (129) (235) (41,463)
Impairment (6,838) - - (6,838)
Depreciation (146,236) (6,985) (3,577) (156,798)
Foreign exchange 10,090 33 79 10,202
------------------ -------------- ----------------------- ---------
As at 28 March 2020 1,061,273 17,866 7,479 1,086,618
------------------ -------------- ----------------------- ---------
Depreciation breaks down as follows:
28 March 30 March
As at 2020 2019
GBP'000 GBP'000
Right of use asset depreciation in continuing
operations 148,620 124,905
Right of use asset depreciation in discontinued
operations 8,178 7,866
-------- --------
Right of use asset depreciation 156,798 132,771
-------- --------
The vast majority of the Group's leases are in relation to the
property comprising the store and warehouse network for the
business. The other leases recognised are trucks, trailers, company
cars, manual handling equipment and various fixtures and fittings.
The leases are separately negotiated and no subgroup is considered
to be individually significant nor to contain individually
significant terms.
The Group recognises a lease term appropriate to the business
expectation of the term of use for the asset which usually assumes
that all extension clauses are taken, and break clauses are not,
unless the business considers there is a good reason to recognise
otherwise.
At the year end there was one property with a significant
unrecognised extension clause for which the Group has full autonomy
over exercising in 2040. On the date of recognition of the relevant
right of use asset the extension period liability had a net present
value of GBP30.2m. There were no significant unrecognised extension
clauses in 2019.
There are no material covenants imposed by our right-of-use
leases
In the year the Group expensed GBP1.8m (2019: GBP1.9m) in
relation to low value leases and GBP0.3m (2019: GBPnil) in relation
to short term leases for which the Group applied the practical
expedient under IFRS 16.
The Group has expensed GBP22k (2019: GBP32k) in relation to
variable lease payments. The agreements are on-going and future
payments are expected to be in-line with those expensed
recently.
The Group received GBP2,226k (2019: GBP1,129k) in relation to
subletting right-of-use assets.
The current and future cashflows for the right-of-use assets
are
28 March 30 March
2020 2019
GBP'000 GBP'000
This year 206,443 168,516
Within 1 year 197,842 203,850
Between 1 and 2 years 203,272 197,275
Between 2 and 5 years 513,295 495,552
More than 5 years 712,227 681,351
--------- ---------
Total 1,626,636 1,578,028
--------- ---------
The change in lease liability reconciles to the figures
presented in the consolidated statement of cashflows as
follows;
28 March 30 March
2020 2019
GBP'000 GBP'000
Lease liabilities brought forward 1,206,922 1,022,022
Cash
Repayment of the principal in relation to
right of use assets (142,653) (109,972)
Payment of interest in relation to right
of use assets (63,790) (58,544)
Non-cash
Interest charge (continuing operations) 57,206 52,040
Interest charge (discontinued operations) 6,584 6,504
Acquisition of Babou - 145,018
Disposal of Jawoll (93,732) -
Effects on lease liability relating to lease
additions, modifications and disposals 313,727 155,698
Effects of foreign exchange 10,980 (5,843)
Total cash movement in the year (206,443) (168,516)
Total non-cash movement in the year 294,765 353,416
--------- ---------
Movement in the year 88,322 184,900
Lease liabilities carried forward 1,295,244 1,206,922
--------- ---------
Of which current 149,011 150,163
Of which non-current 1,146,233 1,056,759
Discount rates
Where, as in most cases, a discount rate implicit to the lease
is not available, discount rates are calculated for each lease with
reference to the underlying cost of borrowing available to the
business and several other factors specific to the asset.
The selection of discount rates is therefore a management
judgement, see note 1. As this is a significant management
judgement we have calculated the weighted average discount rates
and sensitivity to a 50bps change in the discount rate to the
interest charge as follows;
28 March 30 March
2020 2019
Weighted average discount rate
Property 5.08% 5.25%
Equipment 3.31% 3.57%
All right of use assets 5.06% 5.22%
Effect on finance costs with a change of GBP'000 GBP'000
50bps to the discount rate
Property 6,211 5,468
Equipment 127 131
-------- --------
All right of use assets 6,338 5,599
-------- --------
Sale and Leaseback
During the year the business has undertaken two sale and
leasebacks (2019: none).
One was in regards to the new warehouse at Bedford which is to
be used by our UK segments, this has been separated in the table
below due to the individual significance of this transaction. The
other was in regards to a store occupied by B&M Retail.
The details of the transactions were as follows;
Bedford Others
GBP'000 GBP'000
Consideration received 153,800 4,910
Net book value of the asset disposed (103,746) (2,868)
Costs of sale when specifically recognised (1,070) -
--------- -------
Profit per pre-IFRS 16 accounting standards 48,984 2,042
Opening adjustment to the right of use asset (32,052) (2,046)
--------- -------
Profit/(loss) recognised in the statement
of comprehensive income 16,932 (4)
--------- -------
Initial right of use asset recognised 66,435 2,875
Initial lease liability recognised (98,487) (4,921)
--------- -------
The pre-IFRS 16 profit is higher because the provisions of IFRS
16 require that a portion of the profit relating to the sale and
leaseback is instead recognised as a reduction in the opening right
of use asset, and therefore the benefit is released over the term
of the contract.
18 First time adoption of IFRS 16
The new lease standard, IFRS 16, applied to the Group from the
start of this financial year, 31 March 2019.
The Group has chosen to implement the new standard by adopting
the fully retrospective approach, which means that we have fully
restated our prior year accounts and treated the right-of-use
leases from the date they were taken on by the Group, with a
discount rate selected appropriate to that point in time. This is
in accordance with the transitional provisions within the
standard.
Although the impact of IFRS 16 on the primary statements is
significant, IFRS 16 is essentially presentational and does not
impact on the underlying cash generation of the business nor how we
commercially operate and manage the business and store
portfolio.
A full statement of our new policy is included in note 1. A
statement of profit and loss based upon the previously applicable
standards has been provided in note 2 to aide comparability.
The previously held rent prepayments, lease premiums, reverse
lease premiums, favourable and unfavourable lease balances and the
portion of the onerous lease balance that related to rent have all
been superseded by the new standard and are therefore incorporated
into the IFRS 16 balances.
All assets previously held under finance leases have been
transferred to this new categorisation.
The difference in retained earnings brought forward as at the
start of the earliest period presented here (1 April 2018) was
GBP53.5m.
The schedule of adjustments to the main statements here
presented are as follows:
52 weeks ended 52 weeks ended
Statement of Comprehensive Income 28 March 2020 30 March 2019
GBP'000 GBP'000
Continuing operations
Rental Expense 188,802 161,493
Reduced gain on sale & leaseback transactions
(note 17) (34,098) -
Net (loss)/gain in relation to the termination
of leases (571) 1,146
Effect on EBITDA (IFRS 16) (note 4) 154,133 162,639
Depreciation expense on property plant and
equipment 2,885 1,727
Depreciation on right of use Assets (148,620) (124,905)
-------------- --------------
Effect on continuing administrative costs 8,398 39,461
Finance costs on IFRS 16 lease liabilities (57,206) (52,040)
Finance costs on IAS 17 finance leases 174 182
-------------- --------------
Effect on continuing profit before tax (48,634) (12,397)
tax expense 6,766 2,182
-------------- --------------
Effect on net profit from continuing operations (41,868) (10,215)
-------------- --------------
Attributable to owners of the parent (41,868) (10,215)
Effect on the loss due to discontinued operations 5,522 (1,360)
Effect on net profit (36,346) (11,575)
-------------- --------------
Attributable to non-controlling interests 1,134 (272)
Attributable to owners of the parent (37,480) (11,303)
Other comprehensive Income
Exchange differences on retranslation of
subsidiary and associate investments 51 160
-------------- --------------
Total comprehensive income for the period (36,295) (11,415)
-------------- --------------
Attributable to non-controlling interests 1,134 (246)
Attributable to owners of the parent (37,429) (11,169)
Earnings per share from continuing operations
Basic earnings per share attributable to
ordinary equity holders (pence) (4.2) (1.1)
Diluted earnings per share attributable to
ordinary equity holders (pence) (4.2) (1.1)
28 March 30 March 1 April
Statement of financial position 2020 2019 2018
Assets GBP'000 GBP'000 GBP'000
Non-current
Property, plant and equipment (6,310) (11,371) (10,072)
Right of use assets 1,086,618 1,036,873 872,686
Other receivables (2,739) (3,752) (3,187)
Deferred tax asset 19,044 14,556 12,269
Current
Trade and other receivables (18,927) (19,240) (17,604)
----------- ----------- ---------
Total assets 1,077,686 1,017,066 854,092
----------- ----------- ---------
Equity
Retained earnings 102,237 64,757 53,454
Foreign exchange reserve 65 116 250
Non-controlling interest - 1,134 888
----------- ----------- ---------
Total Equity 102,302 66,007 54,592
----------- ----------- ---------
Liabilities
Non-current
Lease liabilities (1,144,122) (1,049,655) (905,962)
Other liabilities 90,860 92,313 86,711
Deferred tax liabilities 508 626 214
Provisions - 190 228
Current
Trade and other payables 18,874 19,244 16,014
Lease liabilities (146,562) (146,533) (106,884)
Provisions 454 742 995
----------- ----------- ---------
Total Liabilities (1,179,988) (1,083,073) (908,684)
--------------------------------- ----------- ----------- ---------
19 Inventories
28 March 30 March
As at 2020 2019
GBP'000 GBP'000
Goods for resale 588,000 665,570
-------- --------
The balance sheet balance for 2019 was restated due to the
finalisation of the purchase price allocation exercise on the
acquisition of Babou, see note 8.
Included in the amount above was a net charge of GBP6.7m related
to inventory provisions (2019: GBP3.5m net charge). In the period
to 28 March 2020 GBP2,531m (2019: GBP2,297m) was recognised as an
expense for inventories.
20 Trade and other receivables
28 March 30 March
2020 2019
GBP'000 GBP'000
Non-current
Other receivables 7,517 7,237
-------- --------
7,517 7,237
-------- --------
Current
Trade receivables 6,568 4,866
Deposits on account 1,478 5,507
Provision for impairment (252) (247)
-------- --------
Net trade receivables to non-related parties 7,794 10,126
Prepayments 19,775 20,810
Related party receivables 5,772 13,079
Other tax 2,329 3,213
Other receivables 24,918 5,172
-------- --------
60,588 52,400
-------- --------
This schedule has been restated for the prior year due to the
first time adoption of IFRS 16. The balances which previously
related to leases, including deferred lease premiums, favourable
lease assets and prepayments, are now recognised as part of the
IFRS 16 balances directly.
Trade receivables are stated initially at their fair value and
then at amortised cost as reduced by appropriate allowances for
estimated irrecoverable amounts. The carrying amount is determined
by the directors to be a reasonable approximation of fair
value.
There are significant balances of GBP8.9m (EUR10m) in relation
to the consideration receivable for Jawoll in December 2020 (see
note 7), and of GBP4.7m in relation to the final part of the
consideration receivable in respect of the Bedford transaction (see
note 17). These balances are both held within the current other
receivables caption above. There were no individually non-related
significant balances held at the prior year end. See note 30 in
respect of balances held with related parties.
The following table sets out an analysis of provisions for
impairment of trade and other receivables:
28 March 30 March
Period ended 2020 2019
GBP'000 GBP'000
Provision for impairment at the start of
the period (247) (160)
Impairment during the period (52) (247)
Utilised/released during the period 56 160
Effect of foreign exchange (9) -
-------- --------
Balance at the period end (252) (247)
-------- --------
Trade receivables are non-interest bearing and are generally on
terms of 30 days or less.
The following table sets out a maturity analysis of trade
receivables, including those which are past due but not
impaired:
28 March 30 March
As at 2020 2019
GBP'000 GBP'000
Neither past due nor impaired 5,073 1,900
Past due less than one month 499 2,387
Past due between one and three months 15 66
Past due for longer than three months 981 513
-------- --------
Balance at the period end 6,568 4,866
-------- --------
21 Cash and cash equivalents
28 March 30 March
As at 2020 2019
GBP'000 GBP'000
Cash at bank and in hand 428,205 86,202
Overdrafts (928) (5,646)
-------- --------
Cash and cash equivalents 427,277 80,556
-------- --------
As at the year end the Group had available GBP21.5m of undrawn
committed borrowing facilities (2019: GBP93.4m).
22 Trade and other payables
28 March 30 March
As at 2020 2019
GBP'000 GBP'000
Non-current
Accruals 171 299
Other payables - 279
-------- --------
171 578
-------- --------
Current
Trade payables 315,146 306,902
Other tax and social security payments 43,715 14,933
Accruals and deferred income 45,505 44,269
Related party trade payables 11,432 3,248
Other payables 4,201 7,370
-------- --------
419,999 376,722
-------- --------
This schedule has been restated to reflect the first time
adoption of IFRS 16. The main difference is that the unfavourable
lease and reverse lease premium balances are now directly
recognised as part of the IFRS 16 lease balances.
Trade payables are generally on 30 day terms and are not
interest bearing. The carrying value of trade payables approximates
to their fair value. For further details on the related party trade
payables, see note 30.
23 Other financial assets and liabilities
Other financial assets
28 March 30 March
As at 2020 2019
GBP'000 GBP'000
Current financial assets at fair value through
profit and loss:
Foreign exchange forward contracts 5,351 2,383
Fuel swap contracts - 127
Current financial assets at fair value through
other comprehensive income:
Foreign exchange forward contracts 11,351 3,784
Total current other financial assets 16,702 6,294
-------- --------
Total other financial assets 16,702 6,294
-------- --------
Financial assets through profit or loss reflect the fair value
of those derivatives that are not designated as hedge relationships
but are nevertheless intended to reduce the level of risk for
expected sales and purchases.
Other financial liabilities
28 March 30 March
As at 2020 2019
GBP'000 GBP'000
Current financial liabilities at fair value through
profit and loss:
Deferred consideration in relation to the purchase
of Heron - 12,084
Foreign exchange forward contracts - 535
Fuel swap contracts 1,847 -
Current financial liabilities at fair value through
other comprehensive income:
Foreign exchange forward contracts - 1,112
Total current other financial liabilities 1,847 13,731
-------- --------
Total other financial liabilities 1,847 13,731
-------- --------
The deferred consideration related to the acquisition of Heron.
The valuation at the prior year end reflected management's
calculation of the amount expected to be payable in 2019. The final
amount paid was GBP11,950k.
The other financial liabilities through profit or loss reflect
the fair value of those foreign exchange forward contracts that are
not designated as hedge relationships but are nevertheless 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
28 March 2020
Foreign exchange contracts 16,702 - 16,702 -
Fuel swap contract (1,847) - (1,847) -
30 March 2019
Foreign exchange contracts 4,520 - 4,520 -
Fuel swap contract 127 - 127 -
Deferred consideration in relation to Heron (12,084) - - (12,084)
The deferred consideration was valued with reference to the sale
and purchase agreement underpinning the relevant acquisition. The
key variable in determining the fair value of the balance was the
forecast EBITDA, of Heron, as prepared by management.
The movement in the valuation of deferred consideration
reconciles as follows:
52 weeks to 52 weeks to
28 March 30 March
Period ended 2020 2019
GBP'000 GBP'000
Opening value 12,084 11,133
Unwinding of the deferred consideration balance - 1,667
Revaluation of the deferred consideration (134) (716)
Payment of the deferred consideration (11,950) -
----------- -----------
Closing value - 12,084
----------- -----------
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.
24 Financial liabilities - borrowings
28 March 30 March
As at 2020 2019
GBP'000 GBP'000
Current
Revolving facility bank loan 120,000 40,000
Acquisition facility 82,304 78,461
Babou loan facilities 3,608 3,599
Heron loan facilities 5,150 2,212
211,062 124,272
-------- --------
Non-current
High yield bond notes 248,830 248,194
Term facility bank loan 298,916 298,102
Babou loan facilities 7,357 5,362
Heron loan facilities 6,315 11,283
561,418 562,941
-------- --------
The acquisition facility of EUR92.0m was drawn down by the Group
on 19 October 2018 to facilitate the purchase of Babou. It had an
initial maturity date of October 2019 which has been extended to
October 2020. It is held at amortised cost. The gross amount and
other details can be seen in the maturity table below.
The term facility bank loan and high yield bond notes 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 Babou and Heron loan facilities are carried at their gross
cash amount. The Babou loan facilities are held with various
counterparties and at various margins and maturities, further
details are included in the maturity table below.
The maturities of the loan facilities are as follows.
28 March 30 March
Interest rate Maturity 2020 2019
% GBP'000 GBP'000
Revolving facility
loan 2.00% + LIBOR Jun-20 120,000 40,000
Term facility bank
loan A 2.00% + LIBOR Jul-21 300,000 300,000
High yield bond notes 4.125% Feb-22 250,000 250,000
Acquisition facility 3.17% (see note) Oct-20 82,319 78,984
Heron loan facilities
- Melton 2.25% + LIBOR Jul-22 4,352 5,159
Heron loan facilities
- Offset 2.45% + LIBOR Sep-20 3,543 3,967
Heron loan facilities
- Term 2.50% + LIBOR Dec-21 3,570 4,370
Jan 23-Mar
Babou - BNP Paribas 0.75%-0.76% 24 1,588 1,054
Feb 22-Apr
Babou - Caisse d'Épargne 0.75%-1.50% 24 3,228 3,253
Apr 20-Mar
Babou - CIC 0.71%-2.18% 25 2,652 1,884
Babou - Cr é dit Jan 23-Mar
Agricole 0.39%-0.52% 25 1,334 878
Babou - Crédit Apr 20-Oct
Lyonnais 0.68%-1.28% 24 1,145 266
Babou - Société
Générale 0.63%-1.15% + EURIBOR Apr-20-Dec-22 1,018 1,625
774,749 691,440
-------- --------
The acquisition facility, term loan A and the high yield bond
notes have carrying values which include transaction fees allocated
on inception.
The acquisition facility interest rate varies over the course of
the year. The rate shown in the table is the weighted average rate
for the remaining period until maturity.
The acquisition facility and all Babou facilities have gross
values in euros, and the values above have been translated at the
period end rates of EUR1.1176/GBP (2019: EUR1.1648/GBP).
The movement in the loan liabilities during the year breaks down
as follows;
28 March 30 March
As at 2020 2019
GBP'000 GBP'000
Borrowings brought forward 687,213 605,638
Cash
Receipt of acquisition facility - 81,086
Receipt/(payment) of revolving loan facilities 80,000 (5,000)
Repayment of Heron facilities (2,030) (2.297)
Receipt/(repayment) of Babou facilities 1,587 (1,792)
Capitalised fees on refinancing (119) (935)
Non-cash
Debt recognised on acquisition of subsidiary - 11,007
Foreign exchange on loan balances 3,752 (2,356)
Non-cash amortisation of fees capitalised
on refinancing 2,077 1,862
Total cash movement in the year 79,438 71,062
Total non-cash movement in the year 5,829 10,513
-------- --------
Movement in the year 85,267 81,575
Borrowings carried forward 772,480 687,213
-------- --------
Of which current 211,062 124,272
Of which non-current 561,418 562,941
The reconciling figure in relation to the prior year Babou loan
cash flow figure was a creditor repaid to the former owners which
was classified on the acquisition balance sheet as a creditor, but
was treated locally as a loan.
25 Provisions
Property provisions Other Total
GBP'000 GBP'000 GBP'000
At 31 March 2018 1,618 4,461 6,079
Provided in the period 218 2,361 2,579
Utilised during the period (406) (1,857) (2,263)
Released during the period (235) - (235)
At 30 March 2019 1,195 4,965 6,160
Provided in the period 1,503 2,872 4,375
Utilised during the period (451) (1,869) (2,320)
Released during the period (265) (1,105) (1,370)
At 28 March 2020 1,982 4,863 6,845
Current liabilities 2020 1,216 4,863 6,079
Non-current liabilities 2020 766 - 766
Current liabilities 2019 1,011 4,965 5,976
Non-current liabilities 2019 184 - 184
The property provision has been restated due to the
reclassification of rent within onerous leases which is now
included in the IFRS 16 balance sheet balances.
The property provision relates to the expected future costs on
specific leasehold properties. This is inclusive of onerous leases
and dilapidations on these properties. The timing in relation to
utilisation is dependent upon the individual lease terms.
The other provisions principally relate to disputes concerning
insured liability claims. A prudent amount has been set aside for
each claim as per legal advice received by the Group. These claims
are individually non-significant and average GBP10.7k per claim
(GBP9.4k in 2019).
26 Share capital
Allotted, called up and fully paid Shares GBP'000
B&M European Value Retail S.A. ordinary shares
of 10p each
As at 31 March 2018 and 30 March 2019 1,000,561,222 100,056
Exercise of employee share options 21,676 2
------------- -------
As at 28 March 2020 1,000,582,898 100,058
------------- -------
Ordinary shares
Each ordinary share ranks pari passu with each other ordinary
share and each share carries one vote. The Group parent is
authorised to release up to a maximum of 2,971,661,000 ordinary
shares.
27 Cash generated from operations
52 weeks ended 52 weeks ended
28 March 30 March
Period ended 2020 2019
GBP'000 GBP'000
Net profit 80,855 191,134
Tax charge on continuing operations 57,246 49,220
Tax charge/(credit) on discontinued operations (note 7) 1,721 (5,268)
-------------- --------------
Profit before tax 139,822 235,086
Adjustments for:
Net interest expense 88,588 73,862
Depreciation on property, plant and equipment 54,255 44,798
Depreciation on right of use assets 156,798 132,771
Amortisation of intangible assets 2,568 2,158
Gain on sale and leaseback (16,928) -
(Profit)/loss on disposal of property, plant and equipment (163) 644
Loss on share options 1,422 954
Change in inventories 29,348 (40,947)
Change in trade and other receivables 693 (32,127)
Change in trade and other payables 77,076 12,198
Change in provisions 686 81
Share of profit from associates (879) (775)
Loss resulting from fair value of financial derivatives (641) (5,707)
-------------- --------------
Cash generated from operations 532,645 422,996
-------------- --------------
This statement has been restated due to the first time adoption
of IFRS 16.
The cash flows above include the discontinued operations. The
amortisation and depreciation figures have been reconciled in notes
15, 16 and 17. The interest expense reconciles as follows:
28 March 30 March
As at 2020 2019
GBP'000 GBP'000
Net interest charge in continuing operations 81,668 75,183
Net interest charge/(credit) in discontinued
operations 6,920 (1,321)
-------- --------
Net interest charge 88,588 73,862
-------- --------
Jawoll's prior year net credit was due to the revaluation of the
call/put option.
28 Group information and ultimate parent undertaking
The financial results of the Group include the following
entities.
Percent held
within the
Company name Country Date of incorporation Group Principal activity
B&M European Value Retail
S.A. Luxembourg May 2014 Parent Holding company
B&M European Value Retail
1 S.Ã r.l. Luxembourg November 2012 100% Holding company
B&M European Value Retail
Holdco 1 Ltd UK December 2012 100% Holding company
B&M European Value Retail
Holdco 2 Ltd UK December 2012 100% Holding company
B&M European Value Retail
Holdco 3 Ltd UK November 2012 100% Holding company
B&M European Value Retail
Holdco 4 Ltd UK November 2012 100% Holding company
B&M European Value Retail September
2 S.Ã r.l. Luxembourg 2012 100% Holding company
September
EV Retail Limited UK 1996 100% Holding company
B&M Retail Limited UK March 1978 100% General retail
Opus Homewares Limited UK April 2003 100% Dormant
Retail Industry Apprenticeships
Ltd UK June 2017 100% Employment services
Heron Food Group Ltd UK August 2002 100% Holding company
Heron Foods Ltd UK October 1978 100% Convenience retail
September
Cooltrader Ltd UK 2012 100% Dormant
Heron Properties (Hull) Ltd UK February 2003 100% Dormant
B&M European Value Retail
Germany GmbH Germany November 2013 100% Ex-holding company
SAS Babou France November 1977 100% General retail
Babou Relationship Partners Administrative
- BRP SAS France December 2012 100% services
Registered Offices
-- The Luxembourg entities are all registered at 9 allée Scheffer, L-2520, Luxembourg.
-- The UK entities are all registered at The Vault, Dakota
Drive, Estuary Commerce Park, Speke, Liverpool, L24 8RJ.
-- B&M European Value Retail Germany GmbH is registered at Am Hornberg 6, 29614, Soltau.
-- SAS Babou are registered at 8 rue du Bois Joli, 63800 Cournon d'Auvergne.
-- BRP SAS are registered at 7 rue Biscornet, 75012 Paris.
Changes during the year
The Group disposed of the trading entities within the German
retailing group, J.A.Woll Handels GmbH and Jawoll Vertriebs GmbH I,
see note 7 for further details.
The entity Bedford DC Investment Limited was disposed in
relation to the sale and leaseback carried out on the Bedford
Warehouse, see note 17.
The French entities have restructured such that the former
French holding company Paminvest SAS has been directly incorporated
into the main training entity, SAS Babou, resulting in the disposal
of the former.
Changes during the prior year
The Group acquired the French retailing group headed by
Paminvest SAS. Initially this comprised six entities, but it has
since been rationalised into the three entities given above. See
note 8 for further details on the transaction.
Associates
The Group has a 50% interest in Multi-lines International
Company Limited, a company incorporated in Hong Kong, a 20%
interest in Home Focus Group Limited, a company incorporated in the
Republic of Ireland, and a 22.5% (acquired in November 2018)
interest in Centz Retail Holdings Limited, also incorporated in the
Republic of Ireland. The share of profit/loss from the associates
is included in the statement of comprehensive income, see note
14.
Ultimate parent undertaking
The directors of the Group consider the parent and the ultimate
controlling related party of this Group to be B&M European
Value Retail SA, registered in Luxembourg.
29 Financial risk management
The Group uses various financial instruments, including bank
loans, related party loans, finance company loans, cash, equity
investment, derivatives and various items, such as trade
receivables and trade payables that arise directly from its
operations.
The main risks arising from the Group's financial instruments
are market risk, currency risk, cash flow interest rate risk,
credit risk and liquidity risk. The directors review and agree
policies for managing each of these risks and they are summarised
below.
The existence of these financial instruments exposes the Group
to a number of financial risks, which are described in more detail
below. In order to manage the Group's exposure to those risks, in
particular the Group's exposure to currency risk, the Group enters
into forward foreign currency contracts. No transactions in
derivatives are undertaken of a speculative nature.
Market risk
Market risk encompasses three types of risk, being currency
risk, fair value interest rate risk and commodity price risk.
Commodity price risk is not considered material to the business as
the Group is able to pass on pricing changes to its customers.
Despite the impact of price risk not being considered material,
the Group has engaged in swap contracts over the cost of fuel in
order to minimise the impact of any volatility.
The sensitivity to these contracts for a reasonable change in
the year end fuel price is as follows
28 March 30 March
As at 2020 2019
Change in GBP'000
fuel price GBP'000
Effect on profit before tax +5% 154 159
-5% (154) (159)
This has been calculated by taking the spot price of fuel at the
year end, applying the change indicated in the table, and
projecting this over the life of the contract assuming all other
variables remain equal.
The Group's policies for managing fair value interest rate risk
are considered along with those for managing cash flow interest
rate risk and are set out in the subsection entitled "interest rate
risk" below.
Currency risk
The Group is exposed to translation and transaction foreign
exchange risk arising from exchange rate fluctuation on its
purchases from overseas suppliers.
In relation to translation risk, this is not considered material
to the business as amounts owed in foreign currency are short term
of up to 30 days and are of a relatively modest nature. Transaction
exposures, including those associated with forecast transactions,
are hedged when known, principally using forward currency
contracts.
All of the Group's sales are to customers in the UK, France and
Germany and there is no currency exposure in this respect. A
proportion of t he Group's purchases are priced in US Dollars and
the Group generally uses forward currency contracts to minimise the
risk associated with that exposure.
Approach to hedge accounting
As part of the Group's response to currency risk the currency
forwards taken out are intended to prudently cover the majority of
our stock purchases forecast for that period. However, the Group
only hedge accounts for the part of the forward that we are
reasonably certain will be spent in the forecast period, allowing
for potential volatility. Therefore management always consider the
likely volatility for a period and assign a percentage to each
tranche of forwards purchased, usually in the range 50-80%, and
never more than 80%.
Effectiveness of the hedged forward is then assessed against the
Group hedge ratio, which has been set by management at 80% as a
reasonable guide to the certainty level we expect the hedged
portions of our forwards to at least achieve. If they fail, or are
expected to fail, to meet this ratio of effectiveness then they are
treated as non-hedged items, and immediately expensed through
Profit and Loss.
Ineffectiveness can be caused by exceptional volatility in the
market, by the timing of product availability, or the desire to
manage short term company cash flows, for instance, when a large
amount of cash is required at relatively short notice.
If the Group did not hedge account then the difference is that
the gain or loss in other comprehensive income would be presented
in profit or loss and the assets and liabilities presented under
the classification fair value through other comprehensive income
would be at fair value through profit or loss.
The difference to profit before tax if none of our forwards had
been hedge accounted during the year would have been a gain of
GBP12.4m (2019: GBP18.8m gain) and a pre-tax loss in other
comprehensive income of GBP8.7m (2019: GBP18.4m loss).
The net effective hedging gains transferred to the cost of
inventories in the year was GBP16.1m (2019: net gain of GBP2.8m).
At the year end the amount of outstanding US Dollar contracts
covered by hedge accounting was $334m (2019: $428m).
Foreign currency sensitivity
The following table demonstrates the sensitivity to a reasonably
possible change in US Dollar period end exchange rates with all
other variables held constant.
The impact on the Group's profit before tax and other
comprehensive income (net of tax) is largely due to changes in the
fair value of our foreign exchange derivatives and revaluation of
creditors and deposits held on account with our US Dollar
suppliers.
28 March 30 March
As at 2020 2019
Change in GBP'000
USD rate GBP'000
Effect on profit before tax +2.5% (3,791) (4,648)
-2.5% 3,823 4,886
Effect on other comprehensive
income +2.5% (6,595) (7,976)
-2.5% 6,934 8,385
The following table demonstrates the sensitivity (net of tax) to
a reasonably possible change in the Euro period end exchange rates
with all other variables held constant. The effect on other
comprehensive income is due to the foreign exchange reserve on
retranslation of the Group's subsidiaries that have the Euro as a
functional currency.
28 March 30 March
As at 2020 2019
Change in GBP'000
Euro rate GBP'000
Effect on profit before tax +2.5% 1,008 (418)
-2.5% (979) 440
Effect on other comprehensive
income +2.5% 330 (2,969)
-2.5% (346) 3,121
These calculations have been performed by taking the year end
translation rate used on the accounts and applying the change noted
above. The balance sheet valuations are then directly calculated.
The valuation of the foreign exchange derivatives are projected
based upon the spot rate changing and all other variables being
held equal.
Interest rate risk
Interest rate risk is the risk of variability of the Group cash
flows due to changes in the interest rate . The Group is exposed to
changes in interest rates as the Group's bank borrowings are
subject to a floating rate based on LIBOR.
The Group's interest rate risk arises mainly from long-term
borrowings. Borrowings issued at variable rates expose the Group to
cash flow interest rate risk. The Group's exposure to interest rate
fluctuations is not considered to be material, however the Group
has in the past used interest rate swaps to minimise the
impact.
If LIBOR interest rates had been 50 basis points higher/lower
throughout the year with all other variables held constant, the
effect upon calculated pre-tax profit for the year would have
been:
28 March 30 March
As at 2020 2019
Basis point GBP'000
increase
/ decrease GBP'000
Effect on profit before tax +50 (1,737) (1,754)
-50 1,737 1,754
This sensitivity has been calculated by changing the interest
rate for each interest payment and accrual made by the Group over
the period, by the amount specified in the table above, and then
calculating the difference that would have been required.
The Group also has a very limited exposure to EURIBOR via the
loans held by Babou, see note 24, however this is considered
immaterial for disclosure.
Credit risk
Credit risk is the risk that a counterparty will not meet its
obligations under a financial instrument or customer contract,
leading to a financial loss. The Group's principal financial assets
are cash, derivatives and trade receivables. The credit risks
associated with cash and derivatives are limited as the main
counterparties are banks with high credit ratings (A long term and
A-1 short term (standard & poor) or better, (2019: A, A-1 (or
better) respectively). The principal credit risk arises therefore
from the Group's trade receivables.
Credit risk is further limited by the fact that the vast
majority of sales transactions are made through the store
registers, direct from the customer at the point of purchase,
leading to a low trade receivables balance.
In order to manage credit risk, the directors set limits for
customers based on a combination of payment history and third party
credit references. Credit limits are reviewed by the credit
controller on a regular basis in conjunction with debt ageing and
collection history. Provisions against bad debts are made where
appropriate.
Liquidity risk
Any impact on available cash and therefore the liquidity of the
Group could have a material effect on the business as a result.
The Group's borrowings are subject to quarterly banking
covenants against which the Group has had significant headroom to
date with no anticipated issues based upon forecasts made. Short
term flexibility is achieved via the Group's rolling credit
facility. The following table shows the liquidity risk maturity of
financial liabilities grouping based on their remaining period at
the balance sheet date. The amounts disclosed are the contractual
undiscounted cash flows:
Within 1 year Between 1 and 2 years Between 2 and 5 years More than 5 years Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
28 March 2020
Interest bearing loans 231,801 571,525 6,958 - 810,284
Lease liabilities 197,842 203,272 513,295 712,227 1,626,636
Trade payables 326,578 - - - 326,578
30 March 2019
Interest bearing loans 149,759 23,715 576,083 1,243 750,800
Lease liabilities 203,850 197,275 495,552 681,351 1,578,028
Forward foreign exchange
contracts 1,647 - - - 1,647
Trade payables 310,150 - - - 310,150
Deferred consideration
(Heron) 12,084 - - - 12,084
Fair value
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. These all represent financial assets and
liabilities measured at amortised cost except where stated as
measured at fair value through the profit and loss.
28 March 30 March
As at 2020 2019
Financial assets GBP'000 GBP'000
Fair value through profit and loss
Forward foreign exchange contracts 5,351 2,383
Fuel price swap - 127
Fair value through other comprehensive income
Forward foreign exchange contracts 11,351 3,784
Loans and receivables
Cash and cash equivalents 428,205 86,202
Trade receivables 13,566 23,205
Other receivables 24,918 5,172
-------- --------
28 March 30 March
As at 2020 2019
Financial liabilities GBP'000 GBP'000
Fair value through profit and loss
Forward foreign exchange contracts - 535
Fuel price swap 1,847 -
Deferred consideration in relation to the purchase of Heron - 12,084
Fair value through other comprehensive income
Forward foreign exchange contracts - 1,112
Amortised cost
Overdraft 928 5,646
Lease liabilities 1,295,244 1,206,922
Interest-bearing loans and borrowings 772,480 687,213
Trade payables 326,578 310,150
Other payables 4,201 7,370
--------- ---------
30 Related party transactions
The Group has transacted with the following related parties over
the periods:
Multi-lines International Company Limited, a supplier, and Home
Focus Group and Centz Retail Holdings, both customers, are
associates of the Group.
Ropley Properties Ltd, Triple Jersey Ltd, TJL UK Ltd, Rani
Investments and Multi Lines International (Properties) Ltd, all
landlords of properties occupied by the Group, and SSA Investments
the beneficial owners of equipment hired to the Group are directly
or indirectly owned by director Simon Arora, his family, or his
family trusts (together, the Arora related parties).
David Heuck, a director of Heron was the landlord of a property
occupied by the Group in the prior year (Comprising the Heron
related parties), but is no longer a related party of the
Group.
The following table sets out the total amount of trading
transactions with related parties included in the statement of
comprehensive income, including the P&L impact of any finance
leases;
28 March 30 March
2020 2019
Period ended GBP'000 GBP'000
Sales to associates of the Group
Centz Retail Holdings Limited 25,327 8,858
Home Focus Group Limited 1,944 2,180
-------- --------
Total sales to related parties 27,271 11,038
-------- --------
28 March 30 March
2020 2019
Period ended GBP'000 GBP'000
Purchases from associates of the Group
Multi-lines International Company Ltd 180,721 141,015
Purchases from parties related to key management
personnel
Multi-Lines International (Properties) Ltd 479 410
SSA Investments 97 44
Total purchases from related parties 181,297 141,469
-------- --------
Purchases from parties related to key management personnel has
been restated to reflect that the majority of these related party
transactions comprise leases that are now recognised under the
provisions of IFRS 16.
The IFRS 16 Lease figures in relation to these related parties,
which are all related to key management personnel, are as
follows;
Right of
Depreciation Interest use Net
Charge Charge Total Charge Asset Lease Liability Liability
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Period ended 28 March
2020
Rani Investments 76 61 137 604 (734) (130)
Ropley Properties 1,827 1,078 2,905 12,518 (14,825) (2,307)
TJL UK Limited 741 432 1,173 9,235 (10,656) (1,421)
Triple Jersey Limited 9,362 4,914 14,276 72,121 (86,039) (13,918)
------------ -------- ------------ -------- --------------- ----------
12,006 6,485 18,491 94,478 (112,254) (17,776)
------------ -------- ------------ -------- --------------- ----------
Period ended 30 March
2019
David Hueck 35 14 49 463 (473) (10)
Rani Investments 76 66 142 680 (802) (122)
Ropley Properties 1,989 1,102 3,091 16,790 (19,064) (2,274)
TJL UK Limited 633 381 1,014 9,975 (11,111) (1,136)
Triple Jersey Limited 9,410 5,403 14,813 85,793 (101,882) (16,089)
------------ -------- ------------ -------- --------------- ----------
12,143 6,966 19,109 113,701 (133,332) (19,631)
------------ -------- ------------ -------- --------------- ----------
Included in the current year figures above are two new leases
entered into by Group companies during the current period with the
Arora related parties (2019: four new and five renewals). The total
expense on these leases in the period was GBP680k (2019: GBP1,571k
(restated due to impact of IFRS 16)). There were no conditionally
exchanged leases with Arora related parties in the current period
with a long stop completion date (2019: one).
The following table sets out the total amount of trading
balances with related parties outstanding at the period end.
28 March 30 March
2020 2019
As at GBP'000 GBP'000
Trade receivables from associates of the Group
Centz Retail Holdings Ltd 5,687 2,045
Home Focus Group Ltd 85 143
Multi-lines International Company Ltd - 10,891
Total related party trade receivables 5,772 13,079
-------- --------
28 March 30 March
2020 2019
As at GBP'000 GBP'000
Trade payables to associates of the Group
Multi-lines International Company Ltd 9,588 1,933
Trade payables to companies owned by key management
personnel
Rani Investments 26 26
Ropley Properties Ltd 380 655
TJL UK Ltd - -
Triple Jersey Ltd 1,438 623
-------- --------
Total related party trade payables 11,432 3,237
-------- --------
Outstanding trade balances at the balance sheet dates are
unsecured and interest free and settlement occurs in cash. There
have been no guarantees provided or received for any related party
trade receivables or payables.
The business has not recorded any impairment of trade
receivables relating to amounts owed by related parties at 28 March
2020 (2019: no impairment). This assessment is undertaken each year
through examining the financial position of the related party and
the market in which the related party operates.
The future lease commitments on the Arora related party
properties are;
28 March 30 March
As at 2020 2019
GBP'000 GBP'000
Not later than one year 16,496 18,134
Later than one year and not later than two years 16,604 18,439
Later than two years and not later than five years 42,280 51,792
Later than five years 66,743 84,564
-------- --------
142,123 172,929
-------- --------
The Heron related party properties are no longer considered to
be related to the Group. The future lease commitments as stated in
the prior year were as follows:
30 March
As at 2019
GBP'000
Not later than one year 43
Later than one year and not later than two years 43
Later than two years and not later than five years 128
Later than five years 354
--------
568
--------
See note 14 for further information on the Group's
associates.
For further details on the transactions with key management
personnel, see note 10 and the remuneration report.
31 Non-controlling interest
Non-controlling interest balances are valued on acquisition as a
proportion of the fair value of net assets to which the
non-controlling interest relates. Post acquisition the
non-controlling interest is valued as the original value plus/minus
the comprehensive income/loss owed to the non-controlling interest
and minus any dividend paid to the non-controlling interest.
There previously existed a non-controlling interest in Jawoll,
until its disposal in the current financial year (see note 7).
Until the disposal date the non-controlling interest was 20% of the
subsidiary and this had not changed over the period of ownership,
which started in April 2014.
As the non-controlling interest was disposed of during the year,
there has been no profit or loss recorded in continuing operations
for either period presented. There was a GBP9.2m loss (2019:
GBP4.0m) recorded in discontinued operations. The prior year figure
has been restated to include the effects of the new lease
accounting standard.
The assets and liabilities of the subsidiary, which have been
restated to reflect the impact of IFRS 16, were as follows:
30 March
2019
As at GBP'000
Non-current assets 129,465
Current assets 85,423
Non-current liabilities (92,972)
Current liabilities (37,162)
--------
Net assets 84,754
--------
Further disclosures in respect to the results, cash flows and
disposal of this company are included in note 7.
32 Capital management
For the purpose of the Group's capital management, capital
includes issued capital and all other equity reserves attributable
to the equity holders of the parent. The primary objective of the
Group's capital management is to maximise the shareholder
value.
In order to achieve this overall objective, the Group's capital
management, amongst other things, aims to ensure that it meets
financial covenants attached to the interest-bearing loans and
borrowings that define capital structure requirements. Breaches in
meeting the financial covenants would permit the bank to
immediately call loans and borrowings. There have been no breaches
in the financial covenants of any interest-bearing loans and
borrowing in the current or prior period.
The Group manages its capital structure and makes adjustments in
light of changes in economic conditions and the requirements of the
financial covenants.
To maintain or adjust the capital structure, the Group may
adjust the dividend payment to shareholders, return capital to
shareholders or issue new shares.
The Group uses the following definition of net debt:
External interest bearing loans and borrowings less cash and
short-term deposits.
The interest bearing loans figure used is the gross amount of
cash borrowed at that time, as opposed to the carrying value under
the amortised cost method. The prior year figure has been re-stated
to exclude finance leases in line with the adoption of IFRS 16.
28 March 30 March
2020 2019
As at GBP'000 GBP'000
Interest bearing loans and borrowings (note
24) 774,749 691,440
Less: Cash and short term deposits - overdrafts
(note 21) (427,277) (80,556)
Net debt 347,472 610,884
--------- --------
33 Post balance sheet events
As part of the support measures that were made available by the
French government to aide businesses that have been impacted by the
coronavirus lockdown measures in France, Babou has received EUR
51.0m of state backed loans in April 2020. These loans are 90%
guaranteed by the French government and are available for a period
of up to 6 years with the option to repay at the end of each
year.
There are no interest payments in the first year followed by a
0.16% interest margin applicable to years 2 to 6. In addition there
is a 0.5% guarantee fee that is charged by the French government,
this increases to 1.0% in years 2 and 3 and 2.0% in years 4 to
6.
Following the lockdown measures implemented as a result of the
Covid-19 in the UK, both the B&M and Heron fascia stores have
continued to trade, except seven stores that are within shopping
malls which are currently closed. Health and safety measures have
been put in place for colleagues and customers to ensure we comply
with the appropriate legislation and the businesses have seen no
material adverse impact on their trading performance.
Following the closure of stores in our French business Babou,
the stores were all re-opened on 11 May 2020 and the trading to
date since the re-opening has been positive.
34 Dividends
An interim dividend of 2.7 pence per share (GBP27.0m) was paid
in December 2019.
A special dividend of 15.0 pence per share (GBP150.1m) has been
declared and was paid in April 2020.
A final dividend of 5.4 pence per share (GBP54.0m), giving a
full year dividend of 8.1 pence per share (GBP81.0m), is
proposed.
Relating to the prior year;
An interim dividend of 2.7 pence per share (GBP27.0m) was paid
in December 2018.
A final dividend of 4.9 pence per share (GBP49.0m), giving a
full year dividend of 7.6 pence per share (GBP76.0m), was paid in
August 2019.
35 Contingent liabilities and guarantees
As at 30 March 2019 and 28 March 2020, B&M European Value
Retail S.A., B&M European Value Retail 1 S.Ã r.l., B&M
European Value Retail 2 S.Ã r.l., B&M European Value Retail
Holdco 1 Ltd, B&M European Value Retail Holdco 2 Ltd, B&M
European Value Retail Holdco 3 Ltd, B&M European Value Retail
Holdco 4 Ltd, EV Retail Ltd and B&M Retail Ltd are all
guarantors to both the loan and notes agreements which are formally
held within B&M European Value Retail SA. The amounts
outstanding as at the period end were GBP502m for the loans (2019:
GBP419m), with the balance held in B&M European Value Retail
Holdco 4 Ltd, and GBP250m (2019: GBP250m) for the notes, with the
balance held in B&M European Value Retail S.A.
As at 30 March 2019 and 28 March 2020, Heron Food Group Limited
and Heron Foods Ltd are guarantors to the loans which are formally
held within Heron Foods Ltd. The amount outstanding at the year end
was GBP11m (2019: GBP13m) with the balance held in Heron Foods
Ltd.
36 Directors
The directors that served during the period were:
Peter Bamford (Chairman)
S Arora (CEO)
P McDonald (CFO) (see note below)
R McMillan
T Hall
C Bradley
G Petit (Appointed 2 May 2019)
T Hübner (retired 1 May 2019)
K Guion (retired 1 January 2020)
All directors served for the whole period except where indicated
above.
As announced on 3 March 2020, Paul McDonald will retire in
2021.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report
and the Group and Company financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare Group and Company
financial statements for each financial year. Under that law they
are required to prepare the Group financial statements in
accordance with International Financial Reporting Standards
("IFRSs") as adopted by the EU and applicable law and have prepared
the Company financial statements in accordance with Luxemburg legal
and regulatory requirements regarding the preparation of annual
accounts ("Lux GAAP").
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Company and of their
profit or loss for that period. In preparing each of the Group and
Company financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them
consistently;
-- make judgments and estimates that are reasonable and
prudent;
-- present the financial statements and policies in a manner
that provides relevant, reliable, comparable and understandable
information;
-- state whether they have been prepared in accordance with
IFRSs as adopted by the EU;
-- provide additional disclosures when compliance with the
specific requirements in IFRSs or in accordance with Lux GAAP are
insufficient to enable users to understand the impact of particular
transactions, other
events and conditions on the entity's financial position and
financial performance; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and the
Company will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
its financial statements comply with company law. They have general
responsibility for taking such steps as are reasonably open to them
to safeguard the assets of the Group and to prevent and detect
fraud and other irregularities.
The Directors are responsible for preparing the Annual Report in
accordance with applicable laws and regulations. Having taken
advice from the Audit & Risk Committee the Directors consider
the Annual Report and the financial statements taken as a whole,
provides the information necessary to assess the Group's position,
performance, business model and strategy and is fair, balanced and
understandable.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. The financial statements are published on the
Company's website.
Legislation in Luxembourg governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
We confirm that to the best of our knowledge:
-- the consolidated financial statements of B&M European
Value Retail S.A. ("Company") presented in this Annual Report and
established in conformity with International Financial Reporting
Standards as adopted
in the European Union give a true and fair view of the assets,
liabilities, financial position, cash flows and profits of the
Company and the undertakings included within the consolidation
taken as a whole;
-- the annual accounts of the Company presented in this Annual
Report and established in conformity with the Luxembourg legal and
regulatory requirements relating to the preparation of annual
accounts give a true and fair view of the assets, liabilities,
financial position and profits of the Company;
-- the Strategic Report includes a fair review of the
development and performance of the business and position of the
Company and the undertakings included within the consolidation
taken as a whole,
together with a description of the principal risks and
uncertainties it faces; and
-- this Annual Report (including the financial statements),
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Company's
position, performance, business model and strategy.
Approved by order of the Board.
Simon Arora
Chief Executive Officer
Paul McDonald
Chief Financial Officer
10 June 2020
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR SFEEFSESSESM
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June 11, 2020 02:00 ET (06:00 GMT)
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