TIDMMCLS
RNS Number : 4939I
McColl's Retail Group plc
12 August 2021
12 August 2021
McColl's Retail Group plc ("McColl's", the "Company" or "the
Group")
INTERIM RESULTS FOR 26 WEEK PERIODED 30 MAY 2021
- Resilient results with continued like-for-like sales growth
- Morrisons Daily roll-out progressing ahead of expectations
Jonathan Miller, Chief Executive, said: "We have continued to
play an important role serving local neighbourhoods through the
challenges of COVID-19, sustaining like-for-like sales growth
despite the strong prior year comparator in Q2 following the first
national lockdown.
"Many of the changes in consumer behaviour we have seen since
the onset of the pandemic have continued in 2021, with customers
spending less on impulse goods, but buying more take-home and
multipack products, impacting overall margins. Alongside the impact
that the industry-wide shortage of delivery drivers has had on our
product availability, we are confident that these temporary trading
effects will reverse as restrictions ease and distribution returns
to normal.
"During the period we made good progress against our strategic
initiatives. We are delighted with the performance of our Morrisons
Daily conversions and we now have a blueprint for this model that
offers a strong return on investment.
"Looking ahead, whilst the wider economic outlook remains
uncertain, we have clear demand for our grocery-led convenience
offer, and our focus in the second half will firmly be on the
continued roll-out of the Morrisons Daily stores, to help drive
sustainable, profitable growth over the medium term."
Financial highlights
-- Like-for-like sales growth of 1.0% against a strong
comparative period, and two-year like-for-like sales growth of
7.4%
-- Total revenue down 5.3% to GBP572.7m (2020: GBP604.8m),
principally reflecting store closures
-- Gross margin of 23.5% (2020: 24.9%), reflecting changing
product mix due to different shopping behaviours during the
pandemic, with lower sales of higher-margin impulse products.
Margins improved by 50 basis points from H2 2020
-- Gross profit of GBP134.3m (2020: GBP150.7m)
-- Adjusted EBITDA declined to GBP24.3m (2020: GBP28.0m) due to
lower gross profit and ongoing net COVID-19 costs
-- Adjusted loss before tax of GBP2.1m (2020: loss of GBP0.5m).
Statutory loss before tax of GBP5.9m ( 2020 : loss of GBP1.3m)
-- Basic loss per share of 5.5p (2020: loss per share of 0.9p);
adjusted loss per share of 2.5p (2020: loss per share of 0.2p)
-- Period-end increase in net debt (pre IFRS 16) to GBP111.3m
(2020: GBP79.5m(1) ) primarily reflecting timing differences of
staff payroll and VAT payments
Morrisons Daily roll-out programme ahead of expectations
-- 25 new Morrisons Daily conversions during the period; total
of 56 stores currently in operation
-- Blueprint developed for future model offering 2-3 year payback on investment
-- Proven capability to roll out at 6 stores per week, on track to complete 100 by end of FY21
Capital Raising
The Group has today separately announced a proposed Capital
Raising comprised of a firm placing to raise GBP30m (before
expenses) and an open offer to raise up to GBP5m (before expenses)
to accelerate the Company's growth strategy, with the intention to
use the proceeds to:
-- Increase the number, and accelerate the pace of rollout, of
Morrisons Daily stores from 56 to 350 by the end of the financial
year ending November 2022 (an increase of 50 stores against the
Group's previous target of 300 stores by the end of December
2023);
-- Further improve the grocery infrastructure in the Morrisons
Daily sites, thus enhancing the standard of the refit and expanding
the chilled offer with more refrigeration, adding further profit
potential; and
-- Strengthen the balance sheet.
The Board believes the proposed Capital Raising, which is
expected to be earnings accretive by FY23, represents a compelling
investment opportunity to capitalise on the growth in neighbourhood
convenience and to accelerate the transformation of McColl's into a
grocery-led retailer. Further details are set out in today's
separate release.
Progress against key strategic initiatives
The Group continues to make progress against its
customer-focused strategic change programme:
-- Enhancing our customer offer
o Significant progress with Morrisons Daily blueprint
o Format, space and range changes to launch across 30% of
McColl's estate, to help drive sales to higher margin
categories
o Uber Eats partnership progressing well across 400 stores.
Opportunity being trialled in Morrisons Daily stores
-- Increasing operating efficiency
o Cost savings driven through better workforce management
initiatives including greater customer-facing time for store staff
and streamlining store tasks
o Adjusted administrative expenses as a percentage of revenue
reduced to 22.6% (2020: 23.9%)
-- Improving the quality of our estate
o 43 stores closed in period, in line with our strategy to
increase focus on larger, more profitable, grocery-led stores
o On track to conclude divestment programme this year, with
total estate of c.1,150 shops expected by end of FY21
-- Great place to work
o Supported colleagues with their health and wellbeing though
the pandemic and invested in mental health first aid programme
o Engaged in Government kickstart scheme providing 1,600 roles
for people aged 16-24, one of the UK's largest participants
Notes:
The business uses a number of non-statutory measures (for
example, LFL, adjusted EBITDA and adjusted EPS) because management
believe that these - placed with equal prominence alongside other
statutory measures - help to better explain the underlying
performance of the business and its key dynamics. These are kept
under continuous review and are defined and used consistently, or
explained otherwise. The Group has defined and outlined the purpose
of its alternative performance measures, including its key
measures, in the glossary of terms.
1. Restated - See Note 13
2. LFL sales reflect sales from stores that have traded
throughout the current and prior financial periods, and include VAT
but exclude sales of fuel, lottery, mobile phone top up, gift cards
and travel tickets.
3. See reconciliation of pre IFRS 16 impact on EBITDA in the glossary
4. See reconciliation of pre IFRS 16 impact on Net Debt in the glossary
Enquiries
A copy of this announcement is available at
www.mccollsplc.co.uk/investor . For further information please
contact:
Analyst & Investors: Tej Randhawa, McColl's +44 (0)1277 372916
Media: Ed Young, Headland +44 (0)203 805 4822
Rob Walker, Headland mccolls@headlandconsultancy.com
Charlie Twigg, Headland
Notes to editors
McColl's is a leading neighbourhood retailer, with an estate of
over 1,200 managed convenience stores and newsagents. We operate
McColl's and Morrisons Daily branded convenience stores as well as
newsagents branded Martin's across the UK, except in Scotland where
we operate under our heritage brand, RS McColl.
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No 596/2014.
LEI: 213800R1TLR536P8YJ67
Cautionary statements
Certain statements made in this announcement are forward-looking
statements. Such statements are based on current expectations and
are subject to a number of risks and uncertainties that could cause
actual events or results to differ materially from any expected
future events or results referred to in these forward-looking
statements. They appear in a number of places throughout this
announcement and include statements regarding our intentions,
beliefs or current expectations and those of our officers,
Directors and employees concerning, amongst other things, our
results of operations, financial condition, liquidity, prospects,
growth, strategies and the business we operate. Neither we nor any
of our officers, Directors or employees provide any representation,
assurance or guarantee that the occurrence of the events expressed
or implied in any forward-looking statements in this announcement
will actually occur and undue reliance should not be placed on
these forward-looking statements which only speak as of the date of
this announcement. Unless otherwise required by applicable law,
regulation or accounting standard, we do not undertake any
obligation to update or revise any forward-looking statements,
whether as a result of new information, future developments or
otherwise.
No statement in this announcement is intended as a profit
forecast or a profit estimate and past performance cannot be relied
on as a guide to future performance. This announcement does not
constitute or form part of any offer or invitation to sell or
issue, or any solicitation of any offer to purchase or subscribe
for any securities.
STRATEGIC AND OPERATIONAL REVIEW
We are well placed to build on the momentum experienced during
the pandemic, particularly in relation to our strategy of
increasing fresh food and grocery mix and keeping the customer
central to the Group's strategy. Our partnership with Morrisons and
the exciting blueprint we have developed for Morrisons Daily is key
to delivering this.
Morrisons Daily
Whilst our first half performance has been impacted by changes
in customer behaviour during the pandemic, we have continued to
learn from and to optimise the performance of our trial Morrisons
Daily stores. We are increasingly confident that this format can be
applied successfully to a larger part of our estate.
We are convinced that the combined "best of both" store format
is a winning combination. McColl's key neighbourhood store
locations, strengths in convenience operations and expertise in
services, such as Post Office, are perfectly complemented by
Morrisons core grocery proposition. In addition, we believe that
there are further opportunities to improve Morrisons Daily store
performance beyond that seen so far, particularly through
allocating more space to chilled display.
Morrisons Daily stores have the highest revenues out of all
stores operating in the estate, due to a high grocery mix and wider
product choice for customers. The Morrisons Daily format allows us
to grow customer spend, frequency and loyalty by growing the basket
size, offering customers access to great value fresh food at close
to supermarket prices, on their doorstep, under the Morrisons
brand, which is synonymous with fresh food. The rollout of
Morrisons Daily stores ties in with the Group's strategic focus on
the larger convenience store format, to drive incremental sales in
grocery, fresh food and alcohol, providing opportunities for sales
mix improvement.
During the period, 25 new Morrisons Daily conversions were
completed, bringing the total number of Morrisons Daily stores in
operation to 56. The majority of these new store conversions were
launched in our fiscal second quarter. Margin performance from
these initial stores has been strong due to a better sales mix and
enhancement of the product offer. We now have a clear blueprint for
success for the rest of the planned conversions.
We have proven capability to convert 6 stores per week and
remain on track to complete 100 conversions by the end of FY21.
Trading trends
The pandemic has changed the retail environment and consumer
behaviours. We continue to see good demand in our convenience
stores, even as social distancing restrictions have eased. At the
height of the pandemic, we experienced reduced visit frequency
offset by a strong increase in basket sizes. Some categories
benefitted from this change, with fresh food, alcohol and tobacco
growing quickly, with a shift away from other products such as
higher-margin impulse confectionery, snacks and soft drinks. There
has been evidence of these trends starting to revert, whilst
overall volumes remain above pre-pandemic levels.
The recent environment has presented us with an opportunity to
put our best foot forward within the communities in which we
operate. Our format, range and differentiated customer service all
hold us in good stead to retain the additional customers drawn to
our stores.
Progress against key strategic initiatives
Our strategy centres on the customer, recognising the need to
better meet the needs of the communities we serve. The pandemic has
reinforced our conviction that our strategy of growing grocery mix
and keeping the customer at the heart of everything we do will
achieve our vision to be your favourite neighbourhood shop. This
strategy is built on four key pillars; strong customer offer, easy
to run stores, improving our stores and providing a great place to
work. The roll out of the Morrisons Daily conversions is the key
focus of our strategic journey.
A big part of delivering improvements in store and a better
experience for customers is by optimising the space, range and
pricing of our product offering.
We have invested to make improvements to the commercial offer by
analysing each specific trading line, comparing basket economics
and a customer's propensity to buy. As part of this evaluation, we
are assessing segmentation of stores by location, performance, size
and demographics, to strengthen our targeting of Morrisons Daily
conversions, products, promotions and services to local markets and
shopping missions, in order to maximise sales and gross margin.
These changes will launch across 380 stores, equating to 30% of
our total estate by the end of September 2021. They have also been
applied to our Morrisons Daily blueprint. We expect these changes
to drive a shift of sales from legacy categories such as news and
tobacco towards higher-margin grocery and alcohol categories. The
work undertaken will also be carried into our small convenience
stores and newsagents over time, providing an opportunity to drive
further incremental returns.
Our partnership with Uber Eats continues to make good progress.
The partnership enables us to make a range of daily essentials
available on demand from around 400 McColl's stores. Customers can
order a wide range of different convenience products, including
groceries, soft drinks, confectionery, snacks, beer, wine,
toiletries, and essential household items, all delivered directly
to their doorsteps. We are now exploring the opportunity of rolling
out Uber Eats in our Morrisons Daily stores, with trials currently
in place.
Online remains a focus for the business, providing an
incremental revenue opportunity and in line with our strategy to
further strengthen our customer offer by making it easier than ever
for customers to get their daily essentials, as well as helping to
attract the younger generation of customers. As a result, we
continue to explore alternative options for online home delivery
with local partners.
We continued our programme of store optimisation during the
period, exiting loss-making stores to focus our estate on larger,
food-led convenience stores. As a result, we closed 43 stores
leaving a total of 1,223 stores at the end of H1. We expect the
store optimisation programme to conclude at the end of this
financial year, targeting 1,150 stores overall.
We have continued to develop McColl's as a great place to work.
The last period has been an uncertain and challenging one for many
of our colleagues. During this period, we have supported the
health, safety and wellbeing of our colleagues, including the
investment in a mental health first aid programme across the
business. McColl's has also engaged with the Government-backed
Kickstart Scheme, providing 1600 roles for 16 to 24 year olds.
Outlook
Like-for-like sales increased 1.0% in the period. This was
achieved against the strong comparative period in Q2 last year as a
result of the onset of the pandemic. On a two year view,
like-for-like sales were up 7.4% in the first half, highlighting
the continued momentum the business has seen, growing on top of
last year's exceptional sales.
As social distancing restrictions have eased, we have started to
see a stabilisation in underlying gross margin trends as customers
revert to pre-pandemic buying patterns. This includes more frequent
visits with lower basket sizes and increased sales of higher-margin
impulse products.
Despite this, revenues have been impacted by availability issues
in stores over recent months due to supply chain disruption. This
has been caused by the widely publicised nationwide shortage of
delivery drivers due to a combination of external factors. We have
put in place a number of temporary mitigating actions and continue
to work closely with our supply chain partner to resolve these
challenges as quickly as possible.
If these challenges to trading do not materially improve in the
second half of the financial year, the performance in the full year
is likely to fall short of management expectations. Notwithstanding
these short-term headwinds, we remain optimistic for the future.
Management believes that a post pandemic trading environment,
coupled with the significant benefits of the acceleration and
scaling up of its Morrisons Daily roll out, will allow the Group to
significantly exceed its current performance.
The Board considers that the strong demand for the Group's
convenience offering, an expected step change in growth and a
strong investment case from its Morrisons Daily stores, and the
ability to leverage new opportunities such as the demand for local
delivery options, is likely to deliver sustainable profitable
growth in 2022 and beyond.
FINANCIAL REVIEW
Overview
Total revenue was GBP572.7m and LFL sales growth for the period
was +1.0%, building on top of the exceptional sales performance
during the same period last year (H1 2020 LFL +8.3%). The third
national lockdown in the UK saw trading patterns revert to those
seen previously, with customers favouring lower-margin take home
rather than higher-margin impulse products, and a preference for
multi-buys and value packs, resulting in a reduction in the gross
margin rate of 140 basis points. This margin dilution was partly
offset by continued cost discipline and business rates relief
leading to an adjusted EBITDA decline of GBP2.8m to GBP10.3m.
GBPm H1 2021 H1 2020 Change
Sales 572.7 604.8 -5.3%
--------- ------------ -----------
Like-for-like sales
growth(2) +1.0% +8.3% -7.3 ppts
--------- ------------ -----------
Gross Profit 134.3 150.7 -10.9%
--------- ------------ -----------
Gross Margin % 23.5% 24.9% -140 bps
--------- ------------ -----------
Adjusted EBITDA 24.3 28.0 -13.2%
--------- ------------ -----------
Adjusted EBITDA (pre
IFRS 16)(3) 10.3 13.1 -21.4%
--------- ------------ -----------
Loss after tax (6.3) (1.0) -530%
--------- ------------ -----------
Net Debt (292.1) (283.3)(*) -3.1%
--------- ------------ -----------
Net Debt (pre IFRS 16)(4) (111.3) (79.5)(*) -40.0%
--------- ------------ -----------
* Restated - See Note 13.
Revenue
Half year revenue was down by 5.3% to GBP572.7m (2020:
GBP604.8m) reflecting fewer stores year on year. As part of the
store optimisation programme, we closed 43 sites in the period. We
saw LFL sales growth of 1.0% (2020: 8.3%) in the period, which
comes against a period of exceptional demand as consumers chose to
shop locally during the start of the pandemic. Strong growth in
grocery, BWS (beers, wine, spirits), tobacco and multipack
products, came at the expense of impulse products (crisps and
snacks, soft drinks, confectionery) and food-to-go. Sales were also
more recently impacted by product availability issues.
Gross profit margin
Gross margin was down to 23.5% (2020: 24.9%) due to the changing
mix of sales as customers moved away from higher-margin impulse
purchases to lower margin take home products as well as multi-buys
and value items. However, the Group has seen improvement in margin
since the height of the pandemic, with gross margin improving from
the levels seen during H2 2020 of 23.0%.
In terms of overall value, gross profit decreased by 10.9% to
GBP134.3m (2020: GBP150.7m) reflecting the decline in total sales
and dilution from mix.
Administrative expenses
Administrative expenses, excluding the impact of adjusted items,
fell by 10.3% to GBP129.5m (2020: GBP144.3m) during the period, due
to stronger cost discipline, including our ongoing business
reorganisation, and the impact of our store optimisation programme.
Adjusted administrative expenses as a percentage of revenue were
22.6% (2020: 23.9%). We experienced a number of underlying cost
pressures including National Living Wage inflation and continued
COVID-19 related costs, including the personal protective equipment
(PPE) necessary to keep our colleagues and customers safe. These
costs were partly offset by government support measures. The
government support measures included business rates relief of
GBP5.8m (2020: GBP1.7m) and job retention scheme for our most
vulnerable colleagues on furlough of GBP0.5m (2020: nil).
Adjusting items
Adjusted operating profit decreased to GBP6.3m (2020: GBP8.4m).
Statutory operating profit decreased to GBP2.3m (2020:
GBP7.6m).
In total there were GBP3.8m of adjusting items before tax
including GBP2.5m within administrative expenses relating to the
organisation structure, predominantly the cost of redundancies. Net
property-related loss of GBP1.5m (2020: profit of GBP0.3m) included
costs associated with store closures as part of the store
optimisation programme.
Adjusted loss before tax was GBP(2.1)m (2020: loss of GBP0.5m)
and Statutory loss before tax was GBP5.9m (2020: loss of
GBP1.3m).
Adjusted EBITDA
Adjusted EBITDA was GBP24.3m (2020: GBP28.0m). Adjusted EBITDA
margin declined by 40 basis points to 4.2% (2020: 4.6%). On a pre
IFRS 16 basis, adjusted EBITDA was GBP10.3m (2020: GBP13.1m).
Interest and tax
Net finance costs before adjusting items decreased year-on-year
to GBP8.4m (2020: GBP8.9m).
The tax expense for the 26 week period was GBP0.4m (2020:
GBP0.3m credit) representing a rate of 6.8% (2020: -23.1%). The
comparable effective tax rate in 2021 excluding the impact of
adjusting items was 38.1% (2020: 60.0%). The difference between the
current statutory rate of 19.0% and the effective tax rate
excluding the impact of non-deductible adjusting items is due
principally to the change in the tax rate impact on deferred
tax.
On 24 May 2021 the UK corporation tax rate was substantively
enacted to rise to 25% from 1 April 2023. Any deferred tax expected
to unwind after 1 April 2023 has been recognised at the revised
rate.
Earnings per share
Basic loss per share was 5.5 pence (2020: loss of 0.9 pence).
Adjusted loss per share was 2.5 pence (2020: loss of 0.2
pence).
Balance sheet and net debt
Total shareholder funds at the end of the period were GBP15.9m
(2020: GBP26.3m). The book value of non-current assets decreased by
GBP23.0m year on year to GBP410.2m (2020: GBP433.2m).
Current assets at the end of the period decreased to GBP135.8m
(2020: GBP193.1m) reflecting decreases in cash and cash equivalents
of GBP39.4m, receivables of GBP8.1m, and inventories of GBP6m.
Current liabilities decreased to GBP218.4m (2020: GBP260.6m),
reflecting lower trade and other payables and borrowings.
Non-current liabilities decreased to GBP311.7m (2020:
GBP339.4m).
Net debt (total borrowings less cash and cash equivalents) at
the end of the period was GBP292.1m (2020: GBP283.3m). On a pre
IFRS 16 basis, net debt increased to GBP111.3m (2020: GBP79.5m)
driven by decline in operating cash flow. The business remains
focused on working capital and cash management to reduce business
leverage.
Pension schemes
We operate two defined benefit pension schemes, the TM Group
Pension Scheme and the TM Pension Plan, both of which are closed to
future accrual. The combined accounting surplus in the two defined
benefit pension schemes operated by the Group decreased to GBP6.3m
(2020: GBP9.1m). The last actuarial review of the two schemes in
March 2019 concluded that the combined funding deficit was GBP2.9m,
and the Group currently contributes approximately GBP1.8m per year,
inclusive of fees and levies. Total assets across both schemes had
a value of GBP136.7m at the interim period end date of 30 May
2021.
Cash flow and capital expenditure
Cash generation continues to support our capital investment
programme which remains key to our change programme, including;
developing the customer offer, harnessing new technology to improve
the operating model and investment in store conversions.
Net cash provided by operating activities in the period
decreased to GBP5.0m (2020: GBP38.9m), driven mainly by the timing
of payroll and VAT as our period end moved by one week compared to
the prior year, from 24 May last year to 30 May this year.
Gross capital expenditure was GBP7.7m (2020: GBP6.3m). Net
capital expenditure, including property proceeds from the sale of
properties, increased to GBP7.1m (2020: GBP4.1m).
Bank loan interest paid is in line with last year at GBP3.9m
(2020: GBP4.0m). Lease payments were GBP15.1m (2020: GBP16.3m).
In the period bank draw down was GBP29.1m (2020: GBP19.3m)
driven by decline in operating cash flow.
Bank facilities
In March 2021, we announced that our banking arrangements have
been revised in order to give us more certainty and flexibility to
execute our strategy. The amended credit facility agreement
provides improved headroom against covenants, a realigned
amortisation schedule and extends the maturity from May 2022 to
February 2024. The updated facility consists of a GBP100m revolving
credit facility and an amortising GBP67.5m term loan (of which
GBP61.7m is available and fully committed as at today's date).
The facility has been arranged with our existing syndicate of
six banks, comprising AIB Group (UK), Barclays Bank PLC, HSBC UK
Bank plc, National Westminster Bank plc, Santander UK PLC, and Bank
of Ireland. The continuing support of our banks reflects their
confidence in the prospects of the Group.
Statement of Directors' Responsibilities
26 week period ended 30 May 2021
We confirm that to the best of our knowledge:
The condensed set of financial statements has been prepared in
accordance with IAS 34 'Interim Financial Reporting';
The interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months of the year); and
The interim management report includes a fair review of the
information required by DTR.4.2.8R (disclosure of related parties'
transactions and changes therein).
By order of the board
Jonathan Miller
Chief Executive
12 August 2021
Giles David
Chief Financial Officer
12 August 2021
Consolidated Income Statement for the 26 week period ended 30
May 2021
26 weeks to 30 May 2021 26 weeks to 24 May 2020
(unaudited) (unaudited)
Adjusting Adjusting
items items
Adjusted Note Total Adjusted Note Total
5 5
Note GBP m GBP m GBP m GBP m GBP m GBP m
Revenue 4 572.7 - 572.7 604.8 - 604.8
Cost of sales (438.4) - (438.4) (454.1) - (454.1)
---------- ----------- --------- ---------- ----------- ---------
Gross profit 134.3 - 134.3 150.7 - 150.7
Administrative
expenses (129.5) (2.5) (132.0) (144.3) (1.1) (145.4)
Other operating
income 4 1.5 - 1.5 2.1 - 2.1
(Losses)/profits
arising on property-related
items - (1.5) (1.5) (0.1) 0.3 0.2
---------- ----------- --------- ---------- ----------- ---------
Operating profit/(loss) 6 6.3 (4.0) 2.3 8.4 (0.8) 7.6
---------- ----------- --------- ---------- ----------- ---------
Finance income 0.1 0.2 0.3 - - -
Finance costs (8.5) - (8.5) (8.9) - (8.9)
---------- ----------- --------- ---------- ----------- ---------
Net finance (cost)/income (8.4) 0.2 (8.2) (8.9) - (8.9)
---------- ----------- --------- ---------- ----------- ---------
Loss before tax (2.1) (3.8) (5.9) (0.5) (0.8) (1.3)
Income tax (charge)/credit 7 (0.8) 0.4 (0.4) 0.3 - 0.3
---------- ----------- --------- ---------- ----------- ---------
Loss for the period (2.9) (3.4) (6.3) (0.2) (0.8) (1.0)
========== =========== ========= ========== =========== =========
Losses per share
(pence) 9 (2.5) (5.5) (0.2) (0.9)
Diluted Losses
per share (pence) 9 (2.5) (5.5) (0.2) (0.9)
Consolidated Statement of Comprehensive Income for the 26 week
period ended 30 May 2021
26 weeks
to 26 weeks to
30 May 24 May
2021 2020
GBP m GBP m
(unaudited) (unaudited)
Loss for the period (6.3) (1.0)
-------------- --------------
Items that will not be reclassified subsequently
to profit or loss
Actuarial gain on defined benefit pension
schemes before tax 1.8 0.3
Deferred tax effect of items in other comprehensive
income 0.4 (0.2)
-------------- --------------
Other comprehensive gain for the period 2.2 0.1
-------------- --------------
Total comprehensive loss for the period (4.1) (0.9)
============== ==============
Consolidated Statement of Financial Position for the 26 week
period ended 30 May 2021
29 November
24 May 2020
30 May 2020 GBP m
2021 GBP m Restated
GBP m Restated * *
Note (unaudited) (unaudited) (audited)
Assets
Non-current assets
Property, plant and equipment
(2) 232.0 257.3 243.9
Intangible assets 160.3 158.0 159.6
Deferred tax assets 5.4 4.6 3.5
Retirement benefit asset 9.9 11.7 9.0
Trade and other receivables 2.6 1.6 2.7
-------------- -------------- -------------
Total non-current assets 410.2 433.2 418.7
-------------- -------------- -------------
Current assets
Inventories 74.9 80.9 77.8
Trade and other receivables 29.5 37.6 40.3
Income tax asset - - 2.3
Cash and cash equivalents 31.4 70.8 23.2
Assets classified as held
for sale - 3.8 -
-------------- -------------- -------------
Total current assets 135.8 193.1 143.6
-------------- -------------- -------------
Total assets 546.0 626.3 562.3
============== ============== =============
Equity and liabilities
Current liabilities
Trade and other payables (186.6) (226.1) (215.3)
Loans and borrowings 10 (31.1) (33.4) (32.3)
Income tax liability - (0.2) -
Provisions (0.7) (0.9) (0.9)
-------------- -------------- -------------
Total current liabilities (218.4) (260.6) (248.5)
============== ============== =============
Net current liabilities (82.6) (67.5) (104.9)
============== ============== =============
Non-current liabilities
Loans and borrowings 10 (292.4) (320.7) (272.7)
Other payables (5.2) (8.9) (7.3)
Provisions (5.1) (1.6) (5.3)
Deferred tax liabilities (5.4) (5.6) (3.5)
Retirement benefit obligations (3.6) (2.6) (5.1)
-------------- -------------- -------------
Total non-current liabilities (311.7) (339.4) (293.9)
============== ============== =============
Total liabilities (530.1) (600.0) (542.4)
============== ============== =============
Net assets 15.9 26.3 19.9
============== ============== =============
Consolidated Statement of Financial Position for the 26 week
period ended 30 May 2021
29 November
24 May 2020
30 May 2020 GBP m
2021 GBP m Restated
GBP m Restated * *
Note (unaudited) (unaudited) (audited)
Equity
Share capital (0.1) (0.1) (0.1)
Share premium (12.6) (12.6) (12.6)
Retained earnings (3.2) (13.6) (7.2)
-------------- -------------- -------------
Equity attributable to owners
of the Company (15.9) (26.3) (19.9)
============== ============== =============
Notes:
1. * Restated - See Note 13
2. Property, plant and equipment as at 24 May 2020 includes
GBP186m of right of use assets. This was previously shown
separately under "Right-of-use assets" on the statement of
financial position.
These condensed financial statements of McColl's Retail Group
registered number 08783477 were approved and authorised for issue
by the Board on 12 August 2021 and signed on its behalf by:
.........................................
Giles David
Director
Consolidated Statement of Changes in Equity for the 26 week
Period ended 30 May 2021
Share Share Retained Total
capital premium earnings equity
Note GBP m GBP m GBP m GBP m
At 30 November 2020 (audited) 0.1 12.6 7.2 19.9
Loss for the period - - (6.3) (6.1)
Remeasurement of defined benefit
pension scheme - - 2.2 2.0
---------- ---------- ----------- ---------
Total comprehensive income - - (4.1) (4.1)
Share based payment transactions - - 0.1 0.1
---------- ---------- ----------- ---------
At 30 May 2021 (unaudited) 0.1 12.6 3.2 15.9
========== ========== =========== =========
Share Share Retained Total
capital premium earnings equity
GBP m GBP m GBP m GBP m
At 24 May 2020 (unaudited) 0.1 12.6 13.6 26.3
---------- ---------- ----------- ---------
Loss for the period - - (1.7) (1.7)
Remeasurement of defined benefit pension
scheme - - (4.8) (4.8)
---------- ---------- ----------- ---------
Total comprehensive income - - (6.5) (6.5)
Share based payment transactions - - 0.1 0.1
---------- ---------- ----------- ---------
At 29 November 2020 (audited) 0.1 12.6 7.2 19.9
========== ========== =========== =========
Consolidated Statement of Changes in Equity for the 27 week
Period 24 May 2020 to 29 November 2020
Share Share Retained Total
capital premium earnings equity
GBP 000 GBP 000 GBP 000 GBP 000
At 25 November 2019 post IFRS
16 (audited) 0.1 12.6 14.4 27.1
Loss for the period - - (1.0) (1.0)
Remeasurement of defined benefit
pension scheme - - 0.1 0.1
---------- ---------- ----------- ----------
Total comprehensive income - - (0.9) (0.9)
Share based payment transactions - - 0.1 0.1
---------- ---------- ----------- ----------
At 24 May 2020 (unaudited) 0.1 12.6 13.6 26.3
========== ========== =========== ==========
Consolidated Statement of Cash Flows for the 26 week period
ended 30 May 2021
26 weeks to
26 weeks to 24 May 53 weeks to
30 May 2020 29 November
2021 Restated (1) 2020
GBP m GBP m GBP m
Note (unaudited) (unaudited) (audited)
Cash flows from operating activities
Loss for the period (6.3) (1.0) (2.7)
Adjustments to cash flows
from non-cash items
Depreciation and amortisation 17.9 19.4 39.0
Profit/(loss) on disposal
of property plant and equipment 0.3 (1.0) (2.0)
Finance income (0.3) - (0.1)
Finance costs 8.5 8.9 17.7
Share based payment transactions 0.1 0.1 0.2
Income tax charge/(credit) 7 0.4 (0.3) (2.6)
Impairment losses (0.7) (1.0) 0.3
-------------- --------------- --------------
19.9 25.1 49.8
Working capital adjustments
Decrease in inventories 2.9 5.6 8.6
Decrease/(increase) in trade
and other receivables 11.4 1.9 (1.2)
(Decrease)/increase in trade
and other payables (30.3) 8.8 (4.3)
Decrease in retirement benefit
obligation net of actuarial
changes (0.7) (0.9) (1.6)
Decrease in provisions (0.5) (2.7) (3.4)
-------------- --------------- --------------
Cash generated from operations 2.7 37.8 47.9
Income taxes received 2.3 1.1 1.1
-------------- --------------- --------------
Net cash flow from operating
activities 5.0 38.9 49.0
-------------- --------------- --------------
Cash flows from investing
activities
Interest received 0.2 - 0.1
Acquisitions of property
plant and equipment (7.7) (6.3) (17.3)
Proceeds from sale of property
plant and equipment 0.6 2.2 11.7
Acquisition of businesses,
net of cash acquired - - (0.3)
-------------- --------------- --------------
Net cash flows from investing
activities (6.9) (4.1) (5.8)
-------------- --------------- --------------
Consolidated Statement of Cash Flows for the 26 week period
ended 30 May 2021
26 weeks to 26 weeks to 53 weeks to
30 May 24 May 29 November
2021 2020(1) 2020
GBP m GBP m GBP m
Note (unaudited) (unaudited) (audited)
Cash flows from financing
activities
Interest paid (3.9) (4.0) (7.0)
Drawdown of bank borrowings 10 29.6 19.3 -
Repayment of bank borrowing 10 (0.5) - (18.2)
Repayment of lease liabilities (11.0) (11.7) (22.6)
Interest payments on lease
liabilities (4.1) (4.6) (9.2)
Net cash flows from financing
activities 10.1 (1.0) (57.0)
-------------- -------------- --------------
Net increase in cash and
cash equivalents 8.2 33.8 (13.8)
Cash and cash equivalents
at beginning of period 23.2 37.0 37.0
-------------- -------------- --------------
Cash and cash equivalents
at end of period 31.4 70.8 23.2
============== ============== ==============
Notes:
1. Restated - See Note 13.
Notes to the condensed Financial Statements
for the 26 week period ended 30 May 2021
1 General information
The Group is a public company limited by share capital,
incorporated in England and Wales and domiciled in United
Kingdom.
McColl's Retail Group plc
Ground Floor West
One London Road
Brentwood
Essex
CM14 4QW
United Kingdom
Principal activity
The Group engages in one principal area of activity, as an
operator of convenience and newsagent stores.
2 Significant accounting policies
Basis of preparation
These condensed consolidated interim financial statements for
the 26 week period ended 30 May 2021 have been prepared in
accordance with IAS 34 'Interim financial reporting' and also in
accordance with the measurement and recognition principles of UK
adopted international accounting standards. They do not include all
of the information required for full annual financial statements
and should be read in conjunction with the 2020 Annual Report and
Accounts, which were prepared in accordance with international
accounting standards in conformity with the requirements of the
Companies Act 2006 and in accordance with international financial
reporting standards adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union.
The accounting policies applied by the Group in these
consolidated results are the same as those applied by the Group in
its Annual Report 2020 for the period ending 29 November 2020 with
the exception of the adoption of new IFRSs as referenced in note
2.
The Annual Report 2020 is available at:
https://www.mccollsplc.co.uk/investors/
The financial information for the period ended 30 May 2021 does
not constitute statutory accounts as defined in section 434 of the
Companies Act 2006. The Group has filed statutory accounts for the
period ended 29 November 2020. The Auditor has reported on these
accounts; their report was unqualified, did not include a reference
to any matters to which the Auditor drew attention by way of
emphasis of matter and did not contain a statement under section
498 (2) or (3) of the Companies Act 2006.
The condensed consolidated financial information is presented in
sterling, the Group's functional currency. In the current period
the Group has changed the rounding from thousands to millions to
make the condensed financial statements less encumbered with
numbers and therefore easier for the user to read.
Basis of measurement
The consolidated financial information has been prepared on a
historical cost basis, except for the net defined benefit pension
asset or liability (refer to individual accounting policy for
details).
Business Combinations
On acquisition, the assets, liabilities and contingent
liabilities are measured at their fair values at the date of
acquisition.
Any excess of the cost of acquisition over the fair value of the
identifiable net assets acquired, including separately identifiable
assets, is recognised as goodwill. Any discount on acquisition,
i.e. where the cost of acquisition is below the fair value of the
identifiable net assets acquired, is credited to the income
statement in the period of acquisition.
Going concern
The condensed financial statements have been prepared on a going
concern basis as the Directors have a reasonable expectation that
the Group has adequate resources to continue in operational
existence for the foreseeable future.
The Directors, in considering going concern have considered a
number of factors, including financial assumptions and estimates,
current and prior performance and macroeconomic factors, including
the ongoing effects of the COVID-19 pandemic and the expected
impact this will have on the Group's cash flows. The Directors also
considered the banking facilities available to the Group.
Throughout the Covid-19 pandemic the business has managed to
keep stores open and serving the communities during this difficult
time. Although uncertainties remain, as the country emerges out of
national lockdowns the Group will remain adept to the prevailing
situation and continue trading.
In February 2021, the Group renewed its borrowing facilities
with GBP67.5m term loan and GBP100.0m revolving facility. The Group
has net current liabilities of GBP82.6m at the period end. The
Directors have additionally considered this position to determine
if it presents any going concern issues. The Group generates a
positive EBITDA and is cash generative and is supported by the
revolving credit facility alongside the amortising GBP67.5m term
loan. Additionally, the Group has today announced a proposed
Capital Raising comprised of a firm placing to raise GBP30m (before
expenses) and an open offer to raise up to GBP5m (before
expenses).
The Directors also reviewed the Group's forecasts to the end of
2023, looking to take advantage of business opportunities and the
expected changes in customer buying patterns as the country emerges
from COVID-19 restrictions. The current facility drawn as at 30 May
2021 is GBP144.5m against the combined facility, and therefore,
under this scenario, there is sufficient headroom to meet the
Group's debts as they fall due.
The Directors have considered the resilience of the group in
severe but plausible scenarios taking account of the above and the
principal risks facing the business. In assessing whether the group
could withstand such negative impacts, the group considered a range
of mitigating actions which would be put in place to defer and
reduce costs in order to conserve cash and remain within the
Group's banking covenants. The Directors therefore have a
reasonable expectation that the Group has adequate finances to
continue its operations for at least 12 months from the approval of
this condensed financial information and have applied the going
concern principle in their preparation.
Changes in accounting policy
Adoption of new IFRSs
The Group considered the following amendments to accounting
standards that are effective for the Group for the year beginning
30 November 2020 and concluded that they do not have material
impact for the Group's condensed financial statements.
-- Amendments to References to the Conceptual Framework in IFRS
Standards;
-- IAS 1 and IAS 8: amendment to definition of material;
-- IFRS 3 Business Combinations: amendment to definition of a
business;
-- IFRS 9, IAS 39 and IFRS 7: Interest Rate Benchmark Reform
phase 1.
New standards, interpretations and amendments not yet
effective
The following amendments are effective for the Group for the
period beginning 29 November 2021
-- IFRS 9, IAS 39 and IFRS 7: Interest Rate Benchmark
Reform-Phase 2
-- IFRS 17, Insurance Contracts
The following amendments are effective for the Group for the
period beginning 28 November 2022
-- IAS 1: amendment to classification of liabilities as Current
or Non-current
-- Amendments to IAS 37, Provisions, Contingent Liabilities and
Contingent Assets
-- Further amendments to IFRS 3, Business Combinations
-- Amendments to IAS 16, Property, Plant and Equipment (PPE) -
Proceeds before Intended Use
On adoption none are expected to have a material impact on the
Group's financial statements.
Alternative Performance Measures
In reporting financial information, the Directors have presented
various Alternative Performance Measures (APMs) of financial
performance, position or cash flows, which are not defined or
specified under the requirements of International Financial
Reporting Standards IFRS. On the basis that these measures are not
defined by IFRS, they may not be directly comparable with other
companies' APMs, including those in the Group's industry.
The Group believes that these APMs, which are not considered to
be a substitute for or superior to IFRS measures, provide
stakeholders with additional useful information on the performance
of the business. These APMs are consistent with how the business
performance is planned, reported and analysed between reporting
periods within the internal management reporting to the Board. Some
of these measures are also used for the purpose of setting
remuneration targets and covenant calculations.
The key APMs that the Group uses include: adjusted EBITDA,
adjusted profit before tax, like-for-like sales (LFL), net debt and
adjusted earnings per share. Each of the APMs, and others used by
the Group, are set out in the Glossary including explanations of
how they are calculated and how they can be reconciled to a
statutory measure where relevant. These measures have remained
consistent with the prior year.
The Group makes certain adjustments to the statutory profit
measures in order to derive many of these APMs. The Group's policy
is to exclude costs or incomes that derive from events or
transactions that fall within the normal activities of the Group,
but which are excluded from the Group's adjusted profit before tax
measure due to their size and nature in order to better reflect
management's view of the performance of the Group. Treatment as
adjusting items provides stakeholders with additional useful
information to assess the annual performance of the Group.
Revenue recognition
Revenue represents the amounts receivable for goods and services
sold through retail outlets in the period which fall within the
Group's principal activities, stated net of value added tax.
Revenue is shown net of returns. Revenue is recognised when the
significant performance obligations have been completed, control of
goods and services have been passed to the buyer and can be
measured reliably.
Commission from the sale of lottery tickets, travel tickets,
electronic phone top-ups and products sold through the Post Office
in store is recognised net within turnover, when transactions
deriving commissions are completed, as the Group acts as an
agent.
In the opinion of the Directors, the Group engages in one
principal area of activity, that of operators of convenience and
newsagent stores. Turnover is derived entirely from the United
Kingdom.
Cost of sales
Cost of sales consists of all direct costs to the point of sale
including warehouse and transportation costs. Supplier incentives,
rebates and discounts are recognised as a credit to cost of sales
in the period in which the stock to which the discounts apply is
sold. The accrued value at the reporting date is included in
supplier rebates receivables.
Adjusting items
Adjusting items relate to costs or incomes that derive from
events or transactions that fall within the normal activities of
the Group, but are excluded from the Group's adjusted profit before
tax measure due to their size and nature in order to better reflect
management's view of the performance of the Group. The adjusted
profit before tax measure (profit before adjusting items) is not a
recognised profit measure under IFRS and may not be directly
comparable with adjusted profit measures used by other companies.
Details of adjusting items are set out in note 5.
Other operating income
Rental income and ATM commissions are recognised in the
consolidated income statement when the services to which they
relate are earned.
Tax
The tax expense for the period comprises of current and deferred
tax. Tax is recognised in profit or loss, except that a change
attributable to an item of income or expense recognised as other
comprehensive income is also recognised directly in other
comprehensive income.
Current tax is provided at amounts expected to be paid using the
tax rates and laws that have been enacted or substantively enacted
at the balance sheet date. Current tax is charged or credited to
the income statement, except when it relates to items charged to
equity or other comprehensive income, in which case the current tax
is also dealt with in equity or other comprehensive income
respectively.
Deferred tax is accounted for on the basis of temporary
differences arising from differences between the tax base and
accounting base of assets and liabilities. Deferred tax is
recognised for all temporary differences, except to the extent
where a deferred tax liability arises from the initial recognition
of goodwill or from the initial recognition of an asset or a
liability in a transaction that is not a business combination and,
at the time of the transaction, affects neither accounting profit
nor taxable profit. It is determined using tax rates and laws that
have been enacted or substantively enacted by the balance sheet
date and are expected to apply when the related deferred income tax
asset is realised or the deferred income tax liability is
settled.
Deferred tax assets are recognised only to the extent that the
Directors consider that, on the basis of all available evidence, it
is probable that there will be suitable future taxable profits from
which the future reversal of the underlying differences can be
deducted.
Deferred tax is charged or credited to the income statement,
except when it relates to items charged or credited directly to
equity or other comprehensive income, in which case the deferred
tax is also dealt with in equity or other comprehensive income
respectively.
Goodwill
Goodwill represents the excess of the fair value of the
consideration of an acquisition over the fair value of the Group's
share of the net identifiable assets of the acquired subsidiary at
the date of acquisition. Goodwill is recognised as an asset on the
Group's balance sheet in the period in which it arises. Goodwill is
not amortised but is tested for impairment at least annually and is
stated at cost less any provision for impairment. Any impairment is
recognised in the income statement and is not reversed in a
subsequent period.
Borrowings
All borrowings are initially recorded at the amount of proceeds
received, net of transaction costs. Borrowings are subsequently
carried at amortised cost, with the difference between the
proceeds, net of transaction costs, and the amount due on
redemption being recognised as a charge to the income statement
over the period of the relevant borrowing.
Interest expense is recognised on the basis of the effective
interest method and is included in finance costs.
Borrowings are classified as current liabilities unless the
group has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting date.
The Group includes lease liabilities within Loans &
Borrowings. See leases policy on how the lease liability is
determined and carried.
Leases
Definition of a lease
At inception of a contract the Group assesses whether a contract
is or contains a lease.
A lease is defined as 'a contract, or part of a contract, that
conveys the right to use an asset (the underlying asset) for a
period of time in exchange for consideration'. To apply this
definition the Group assesses whether the contract meets key
criteria which are whether:
-- The contract contains an identified asset, which is either
explicitly identified in the contract or implicitly specified by
being identified at the time the asset is made available to the
Group
-- The Group has the right to obtain substantially all of the
economic benefits from use of the identified asset throughout the
period of use.
-- The Group has the right to direct the use of the asset.
Right-of-use assets
At lease commencement date, the Group recognises a right-of-use
asset on the balance sheet. The right-of-use asset is measured at
cost less any accumulated depreciation and impairment losses and
any adjustment for re-measurement. The initial cost is made up
of:
-- Initial lease liabilities recognised
-- Plus any payments made in advance of the lease commencement
date for the right to use the asset (net of any incentives
received).
-- Plus any initial direct costs incurred by the Group.
-- Plus an estimate of any costs to dismantle, remove and
restore the asset at the end of the lease.
The Group depreciates the right-of-use assets on a straight-line
basis from the lease commencement date to the earlier of the end of
the useful life of the right-of-use asset or the end of the lease
term. The Group also assesses the right-of-use asset for impairment
when such indicators exist. On the statement of financial position,
right-of-use assets are included in property, plant and
equipment.
Lease liabilities
At lease commencement, the lease liability is measured at the
present value of the lease payments payable over the lease term,
discounted at the rate implicit in the lease if that can be readily
determined. If the rate cannot be readily determined, the Group
will use its incremental borrowing rate.
Lease payments included in the measurement of the lease
liability are made up of fixed payments (or in-substance fixed),
variable payments based on an index or rate, amounts expected to be
payable under a residual value guarantee and payments arising from
options reasonably certain to be exercised.
On the statement of financial position lease liabilities have
been included in loans and borrowings.
Subsequent measurement
The liability will be reduced for payments made and increased
for interest. It is re-measured to reflect any reassessment or
modification, or if there are changes in in-substance fixed
payments. When the lease liability is re-measured, the
corresponding adjustment is reflected in the right-of-use asset, or
income statement if the right-of-use asset is already reduced to
zero.
Sub-lease accounting
Under IFRS 16, the Group is required to assess the
classification of a sub-lease with reference to the right-of-use
asset, not the underlying asset. For sub-leases that fall under
IFRS 16 definition the Group will:
-- De-recognise the right-of-use asset or part therefore that
has been sublet and recognise as a receivable the net investment in
the sub-lease.
-- Recognise any difference between the right-of-use asset and
net investment in sub-lease in the income statement.
-- Retain the lease liability relating to the head lease in the
statement of financial position.
-- The receivable is subject to testing for impairment under the
requirements of IFRS 9 'Financial instruments'.
Short-term leases and leases of low value assets
Short-term leases and low value assets payments are recognised
as an expense in the income statement.
Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new ordinary shares or
options are shown in equity as a deduction, net of tax, from the
proceeds.
Defined contribution pension obligation
Contributions to defined contribution pension schemes are
charged to the income statement in the period to which they
relate.
Defined benefit pension obligation
The Group operates two defined benefit pension schemes in
addition to several defined contribution schemes, which require
contributions to be made to separately administered funds.
Defined benefit scheme surpluses and deficits are measured
at:
-The fair value of plan assets at the reporting date; less
-Scheme liabilities calculated using the projected unit credit
method discounted to its present value using yields available on
high quality corporate bonds that have maturity dates approximating
to the terms of the liabilities; less
-The effect of minimum funding requirements agreed with scheme
trustees.
A surplus is recognised where the Group has an unconditional
right to the economic benefits in the form of future contribution
reductions or refunds.
Any difference between the interest income on scheme assets and
that actually achieved on assets, and any changes in the
liabilities over the period due to changes in assumptions or
experience within the scheme, are recognised in other comprehensive
income in the period in which they arise.
Costs are recognised separately as operating and finance costs
in the income statement. Operating costs comprise the current
service cost, any income or expense on settlements or curtailments
and past service costs.
Finance items comprise the interest on the net defined benefit
asset or liability.
Share based payments
Equity-settled share-based payments to employees and others
providing similar services are measured at the fair value of the
equity instruments at the grant date. The fair value determined at
the grant date of the equity-settled share-based payments is
expensed on a straight-line basis over the vesting period, based on
the Group's estimate of equity instruments that will eventually
vest, with a corresponding increase in equity. Where applicable at
the end of each reporting period, the Group revises its estimate of
the number of equity instruments expected to vest. The impact of
the revision of the original estimates, if any, is recognised in
the income statement.
3 Critical accounting judgements and key sources of estimation
uncertainty
In the application of the Group's accounting policies, the
Directors are required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities
that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may
differ from these estimates.
Critical accounting judgements
Critical judgements, apart from those involving estimations,
that are applied in the preparation of the consolidated condensed
financial statements are discussed below:
Adjusting items
During the period certain items are identified and separately
disclosed as adjusting items. Judgement is applied as to whether
the item meets the necessary criteria as per the accounting policy
disclosure. This assessment covers the nature of the item, cause of
occurrence and the scale of impact of that item on reported
performance. Note 5 provides information on all of the items
disclosed as adjusting in the current period condensed financial
statements.
Sources of estimation uncertainty
Estimates and underlying assumptions are reviewed on an ongoing
basis. Sources of estimation and uncertainty are discussed
below:
Impairment
Where there are indicators of impairment, management performs an
impairment test. Recoverable amounts for cash-generating units are
the higher of fair value less costs of disposal, and value in use.
Value in use is calculated from cash flow projections based on the
Group's five year internal forecasts. The forecasts are
extrapolated to perpetuity using the long-term growth rate.
In the 26 weeks period ended 30 May 2021, management reviewed
impairment and concluded that there were no indicators of
impairment. Although the Group performance has been impacted by the
third lockdown, the business remains confident it will achieve its
long-term plan, the long-term plans remains materially unchanged
from the 2020 year end position. Management will review impairment
again at year end.
Supplier income
Supplier income is recognised as a credit within cost of sales.
For some sources of supplier income, management is required to make
estimates in determining the amount and timing of recognition of
income. These estimates are based on documented evidence of
agreements with suppliers.
In determining the amount of volume-related allowances
recognised in any period, management estimate whether the Group
will meet contractual target volumes, based on historical and
forecast performance. Once purchases are estimated the amount due
is based on contractual terms based on the level of purchases.
For promotional funding relating to investment in the customer
offer by a supplier, there is limited estimation required as
funding is pre-agreed and collected throughout the year shortly
after promotions have ended.
Accrued income makes up a material part of the supplier rebate
receivables at the balance sheet date. Whilst accrued income
involves management estimation, actual results are unlikely to be
materially different to the carrying amount on the balance
sheet.
Pension
The liabilities of the defined benefit pension schemes operated
by the Group are determined using methods relying on the actuarial
estimates and assumptions, including rates of increase in
pensionable salaries and pensions, net defined benefit asset or
liability, life expectancies and discount rates. The Group takes
advice from independent actuaries relating to the appropriateness
of the assumptions and the recognition of any surplus. Changes in
the assumptions used may have a significant effect on the Group
statement of comprehensive income and the Group statement of
financial position.
Leases
The Group uses incremental borrowing rates for discounting lease
liabilities. The incremental borrowing rate is determined based on
a series of inputs including: the risk-free rate based on
government bond rates; a credit risk adjustment based on the
Group's current borrowing margins; and lease specific adjustments
based on terms of the lease.
4 Revenue and other income
In accordance with IFRS 8 'Operating segments' an operating
segment is defined as a business activity whose operating results
are reviewed by the chief operating decision maker and for which
discrete information is available. The chief operating decision
maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the
Board of Directors. The principal activities of the Group are
currently managed as one segment. Consequently all activities
relate to this segment, being the operation of convenience and
newsagent stores in the UK.
The analysis of the Group's revenue for the period from
continuing operations is as follows:
26 weeks
to 26 weeks to
30 May 24 May
2021 2020
GBP m GBP m
(unaudited) (unaudited)
Revenue
Sale of goods 572.7 604.8
-------------- --------------
Other operating income
Property rental income 0.8 0.9
Other income 0.7 1.2
-------------- --------------
1.5 2.1
-------------- --------------
Finance income 0.3
-------------- --------------
574.5 606.9
============== ==============
5 Adjusting items
Due to their significance or one-off nature, certain items have
been classified as adjusting as follows:
26 weeks 26 weeks
to to
30 May 24 May
2021 2020
GBP m GBP m
(unaudited) (unaudited)
Administrative expenses
Fines (a) - 0.5
Business reorganisation (b) 2.5 0.6
-------------- --------------
2.5 1.1
-------------- --------------
Losses/(Profits) arising on property-related items
Store optimisation programme (c) 1.5 (0.3)
-------------- --------------
Finance income
Head office (d) (0.2) -
-------------- --------------
Tax effect on adjusting items (0.4) -
-------------- --------------
3.4 0.8
============== ==============
a. Fines
The Group has not incurred any fines during the 26 week period
ended 30 May 2021 (2020: GBP0.5m). The 2020 cost of GBP0.5m was in
relation to a potential health and safety fine and associated legal
fees.
b. Business reorganisation
The Group has been reviewing its organisational structure
leading to additional costs of GBP2.5m (2020: GBP0.6m) associated
with the restructuring, predominantly the cost of redundancies.
c. Store optimisation programme
Management has undertaken a store optimisation programme
resulting in a material number of store closures. Costs associated
with the closures have been classified as adjusting due to the
one-off nature of the closure programme. Included in the costs are
net book value write off and other costs in relation to store
closure net of any proceeds received. The net cash outflow was
GBP2.0m (2020: GBP0.2m).
d. Head office disposal interest income
The Group earned GBP0.2m interest on delayed receipt of the head
office disposal and classified it as adjusting as the disposal of
head office was not part of ordinary activities. The net cash
inflow was GBP0.2m.
6 Operating profit
Adjusted EBITDA and operating profit excluding property- related
items
In order to provide shareholders with a measure of the
underlying performance of the business which is more aligned with
the way that management monitor and manage the business, the Group
makes adjustments to profit before tax. Adjusting items relate to
costs or incomes that derive from events or transactions that fall
within the normal activities of the Group, but which are excluded
from the Group's adjusted profit before tax measure due to their
size and nature in order to better reflect management's view of the
performance of the Group. The adjusted profit before tax measure
(profit before adjusting items) is not a recognised profit measure
under IFRS and may not be directly comparable with adjusted profit
measures used by other companies. Details of adjusting items are
set out in note 5.
26 weeks
to 26 weeks to
30 May 24 May
2021 2020
GBP m GBP m
(unaudited) (unaudited)
Adjusted EBITDA excluding property-related items and share based
payments
Operating profit before adjusting items 6.3 8.4
Plant, Property & Equipment depreciation 6.7 6.6
Right of use asset depreciation 10.6 12.3
Amortisation of intangible assets 0.6 0.5
Losses arising on property-related items - 0.1
Share based payments 0.1 0.1
Total Adjusted EBITDA 24.3 28.0
============================================ ============== ==============
7 Income tax
The tax expense for the 26 week period was GBP0.4m (2020:
GBP0.3m credit) representing a rate of 6.8% (2020: -23.1%). The
comparable effective tax rate in 2021 excluding the impact of
adjusting items was 38.1% (2020: -60.0%). The difference between
the current statutory rate of 19.0% and the effective tax rate
excluding the impact of non-deductible adjusting items is due
principally to the change in the tax rate impact on deferred
tax.
On 24 May 2021 the UK corporation tax rate was substantively
enacted to rise to 25% from 1 April 2023. Any deferred tax expected
to unwind after 1 April 2023 has been recognised at the revised
rate.
8 Dividends
The Board is not declaring an interim dividend (2020: Nil).
There was no final dividend declared for 2020.
The Group is restricted from paying a dividend until certain
conditions are satisfied in its banking facilities, including
achieving a Group leverage below 1.75x EBITDA.
9 Earnings per share
Basic and diluted earnings per share are calculated by dividing
the profit for the period attributable to shareholders by the
weighted average number of shares.
30 May 24 May
2021 2020
(unaudited) (unaudited)
Basic weighted average number of shares 115,304,400 115,193,909
=============== ===============
Diluted weighted average number of shares 115,327,564 115,312,954
=============== ===============
Loss attributable to ordinary shareholders
(GBP m) (6.3) (1.0)
=============== ===============
Basic losses per share (5.5)p (0.9)p
Anti diluting losses per share (5.5)p (0.9)p
=============== ===============
Adjusted earnings per share:
Loss attributable to ordinary shareholders
(GBP m) (6.3) (1.0)
Adjusting items (note 5) 3.8 0.8
Tax effect of adjustments (0.4) -
Loss after tax and before adjusting items (2.9) (0.2)
=============== ===============
Basic losses per share (2.5)p (0.2)p
=============== ===============
Anti diluting losses per share (2.5)p (0.2)p
=============== ===============
The share options in issue are anti-dilutive at the period
end.
The diluted weighted average number of ordinary shares is
calculated using the following:
30 May 24 May
2021 2020
(unaudited) (unaudited)
Ordinary shares in issue at the start of
the period 115,304,400 115,193,909
Total shares in issue at the end of the
period 115,304,400 115,193,909
--------------- ---------------
Effect of shares to be issued for the Long
term incentive plan (LTIP) 23,164 119,045
--------------- ---------------
Weighted average number of ordinary shares
at the end of the period 115,327,564 115,312,954
=============== ===============
10 Loans and borrowings
24 May
30 May 2020 29 November
2021 Restated(*) 2020
GBP m GBP m GBP m
(unaudited) (unaudited) (audited)
Current
Bank borrowings -Term loan 10.0 10.0 10.0
Lease liabilities 21.1 23.4 22.3
-------------- --------------- ---------------
31.1 33.4 32.3
============== =============== ===============
Non-current
Bank borrowings -Term Loan 57.0 62.5 57.5
Bank borrowings -Revolving credit
facility 77.5 77.5 45.0
Unamortised issue costs (3.4) (1.8) (1.3)
Lease liabilities 161.3 182.5 171.5
-------------- --------------- ---------------
292.4 320.7 272.7
============== =============== ===============
Note:
1. * Restated - See Note 13.
The long-term bank borrowings are secured on Group assets.
During the period, the margin on the term loan and revolving
credit facility ranged between 3.75% and 4.75% in line with the
banking facility agreement.
The Group's term loan and the revolving credit facility have
attached covenants on leverage, fixed charge cover and capital
expenditure which are assessed quarterly and the Group was
compliant with all assessments in the period.
The Group renewed its bank facility in February 2021 made up of
an amortising term loan of GBP67.5m and a GBP100m revolving credit
facility. The current facility drawn as at 30 May 2021 is GBP144.5m
(2020: GBP150.0m). The maximum drawdown in the period was 67.5m for
the term loan and GBP77.5m for the revolving credit facility.
11 Net debt
24 May
30 May 2020 29 November
2021 GBP m 2020
GBP m Restated (*) GBP m
(unaudited) (unaudited) (audited)
Cash at bank and in hand 31.4 70.8 23.2
--------------- ---------------- -------------
Term Loan and revolving credit
facility available until
February 2024 (144.5) (150.0) (112.5)
Less: unamortised issue
costs 3.4 1.8 1.3
(141.1) (148.2) (111.2)
Lease liabilities (182.4) (205.9) (193.8)
Net debt (292.1) (283.3) (281.8)
=============== ================ =============
Note:
1. *Restated - See Note 13.
Analysis of net debt
29 November Amortisation Non-current 30 May
2020 Cash of issue Lease Lease to current 2021
GBP m flow costs additions disposal movements GBP m
(audited) GBP m GBP m GBP m GBP 000 GBP m (unaudited)
Analysis of net debt
Bank borrowings
Current (10.0) 0.50 - - - (0.5) (10.0)
Non-current (101.2) (29.6) (0.8) - - 0.5 (131.1)
------------- -------- -------------- ------------ ----------- ------------- --------------
(111.2) (29.1) (0.8) - - - (141.1)
------------- -------- -------------- ------------ ----------- ------------- --------------
Lease liabilities
Current (22.3) 11.0 - (0.6) 0.6 (9.8) (21.1)
Non-current (171.5) - - (2.9) 3.3 9.8 (161.3)
------------- -------- -------------- ------------ ----------- ------------- --------------
(193.8) 11.0 - (3.5) 3.9 - (182.4)
Arising from
financing
activities (305.0) (18.1) (0.8) (3.5) 3.9 - (323.5)
------------- -------- -------------- ------------ ----------- ------------- --------------
Cash and
short-term
deposits 23.2 8.2 - - - - 31.4
Net debt (281.8) (9.9) (0.8) (3.5) 3.9 - (292.1)
============= ======== ============== ============ =========== ============= ==============
In the period interest was charged as follows: current bank
borrowings GBP0.4m (2020: GBP0.4m), non-current bank borrowings
GBP2.9m (2020: GBP3.1m), current leases GBP0.5m (2020: 0.7m) and
non-current leases GBP3.6m (2020: GBP3.9m) in addition to other
finance costs of GBP1.1m.
24 May
24 2020
November Amortisation Lease Non-current Restated(*)
2019 IFRS 16 Cash of issue Lease disposal to current
GBP m adoption flow costs additions GBP movements GBP m
(audited) GBP m GBP m GBP m GBP m m GBP m (unaudited)
Bank
borrowings
Current (10.0) - 5.0 - - - (5.0) (10.0)
Non-current (118.5) - (24.3) (0.4) - - 5.0 (138.2)
----------- ---------- ----------- -------------- ----------- ---------- ------------- -------------
(128.5) - (19.3) (0.4) - - - (148.2)
----------- ---------- ----------- -------------- ----------- ---------- ------------- -------------
Lease
liabilities
Current (1.2) (22.9) 11.7 - (0.9) 0.7 (10.8) (23.4)
Non-current (1.4) (194.2) - - (2.4) 4.7 10.8 (182.5)
----------- ---------- ----------- -------------- ----------- ---------- ------------- -------------
(2.6) (217.1) 11.7 - (3.3) 5.4 - (205.9)
Arising from
financing
activities (131.1) (217.1) (7.6) (0.4) (3.3) 5.4 - (354.1)
----------- ---------- ----------- -------------- ----------- ---------- ------------- -------------
Cash and
short-term
deposits 37.0 - 33.8 - - - - 70.8
Net debt (94.1) (217.1) 26.2 (0.4) (3.3) 5.4 - (283.3)
=========== ========== =========== ============== =========== ========== ============= =============
Note:
1. *Restated - See Note 13.
12 Related party transactions
Only the Directors are deemed to be key management personnel.
All transactions between Directors and the Group are on an arm's
length basis and no period end balances have arisen as a result of
these transactions.
Salaries and other short term employee benefits for the
Directors for period ended 30 May 2021 totalled GBP1.0m.
There were no other material transactions or balances between
the Group and its key management personnel or members of their
close family.
13 Restatements
The Group has restated the financial statements for the periods
ending 24 May 2020 and 29 November 2020 as shown below. None of
these restatements has any impact on the statement of comprehensive
income or total shareholder funds previously reported.
Leases receivables
24 May 2020 Other Leases non-current 24 May 2020
Original borrowings(1) on transition(2) split(2) Restated
GBP m GBPm GBP m GBP m GBP m
Non-current assets
Property, plant and
equipment 255.7 1.6 257.3
Trade and other
receivables 1.6 1.6
------------- -------------------- ------------------- -------------------- -------------
255.7 1.6 1.6 258.9
------------- -------------------- ------------------- -------------------- -------------
Current assets
------------- -------------------- ------------------- -------------------- -------------
Trade and other
receivables 39.2 (1.6) 37.6
------------- -------------------- ------------------- -------------------- -------------
Current liabilities
Trade and other
payables (223.6) (2.5) (226.1)
Loans and
borrowings (35.8) 2.5 (0.1) (33.4)
------------- -------------------- ------------------- -------------------- -------------
(259.4) - (0.1) (259.5)
------------- -------------------- ------------------- -------------------- -------------
Non-current
liabilities
------------- -------------------- ------------------- -------------------- -------------
Loans and
borrowings (319.2) (1.5) (320.7)
------------- -------------------- ------------------- -------------------- -------------
Impact to Net
assets - - -
============= ==================== =================== ==================== =============
Notes:
1. The Group has re-classified GBP2.5m previously classified as
loans and borrowings to trade and other payables for period ended
24 May 2020. These amounts relate to unsolicited government COVID
grants which will be repaid in due course and, on further
reflection, management have concluded that these amounts should
have been presented as operating liabilities rather than financing
liabilities. The cash receipt of GBP2.5m has also been reclassified
from cash flows from financing activities to operating cash flows.
This restatement has no impact on the previously reported loss for
the year and group net assets. This approach is consistent with the
accounting within the group's annual report for the 53 weeks ended
29 November 2020.
2. The Group adopted IFRS 16 in the group financial statements
for the 53 weeks ended 29 November 2020. When preparing these
financial statements it was noted that certain leases which had
been signed by the group were not included in the transition to
IFRS 16 included in the interim accounts prepared as at 24 May
2020. As such the interim results as at 24 May 2020, previously
reported have been restated to include these leases. The correction
has had nil impact to the previously recognised statement of
comprehensive income or total shareholder funds.
The Group has also re-classified balances of lease receivables
that were due after 12 months at 24 May 2020 that had been included
in current assets to non-current assets.
Leases receivables
29 November non-current 29 November
2020 Original Subleases(3) split(3) 2020 Restated
GBP m GBPm GBP m GBP m
Non-current assets
Property, plant and
equipment 245.3 (1.4) 243.9
Trade and other receivables 2.7 2.7
---------------- -------------- -------------------- ----------------
245.3 (1.4) 2.7 246.6
---------------- -------------- -------------------- ----------------
Current assets
---------------- -------------- -------------------- ----------------
Trade and other receivables 41.6 1.4 (2.7) 40.3
---------------- -------------- -------------------- ----------------
Impact to Net assets - -
================ ============== ==================== ================
Notes:
3. Subsequent to the signing of the financial statements
prepared for the 53 weeks ended 29 November 2020, it has been
identified that the group had not incorporated all signed sub
leases into its financial statements. Management has corrected the
error by recognising the sub-lease receivable for these leases and
reducing the previously recognised right-of-use asset. The
correction resulted in nil gain and therefore has no impact on the
previously recognised statement of comprehensive income or total
shareholder funds.
The Group has also re-classified balances of lease receivables
that were due after 12 months at 29 November 2020 that had been
included in current assets to non-current assets.
14 Subsequent events
Management has evaluated subsequent events through to 12 August
2021, which is the date the condensed financial statements were
available to be issued. COVID 19 continues to impact the wider
economy and communities we serve, however the business continues to
cope with the pandemic with its stores open and trading well.
There were no subsequent events that required adjustment to or
disclosure in the Group condensed financial statements.
Principal Risks and Uncertainties
A detailed assessment of the principal risk issues that face
the business can be found on pages 44 to 47 of the Annual
Report and Accounts 2020.
The Directors consider that the following principal risks
and uncertainties will remain relevant for the remaining six
months of the 2021 financial year.
Customer proposition
Customer shopping habits are influenced by a wide range of
factors and are constantly evolving. COVID-19 restrictions
have accelerated some existing trends and introduced some
new ones. If we do not respond to their changing needs, with
internal processes and resource allocated appropriately to
adapt in terms of offer, price, range and availability, they
are more likely to shop with a competitor, resulting in falling
revenues.
Reliance on third party supply
We rely on a small number of key distributors and may be adversely
affected by uncompetitive pricing or processes and procedures
being unable to support customer innovation, range development
or have agility in customer responsiveness. A disruption in
supply, however short term, would prevent orderly trading
and impact the brand and financial performance.
Operating model and cost efficiency challenges
We have a high operational cost base, consisting primarily
of wages (impacted by the National Living Wage), property
rental and utility costs. Increases in these costs without
a corresponding increase in revenues could adversely impact
our profitability. COVID-19 had made the operating environment
more challenging and has introduced new investments and processes
that need to be absorbed into the cost base.
Availability of funding/cash
The main financial risks are the availability of appropriate
liquidity and covenant headroom to meet business needs for
trading and investment. The shape of trading during COVID-19
has varied greatly in volume and mix reinforcing the need
for flexibility and headroom with all funding arrangements.
Strategic vision
If the Board either pursues an unsuccessful strategy or does
not communicate and implement its strategy effectively, business
performance and reputation may suffer. The Board must fully
take account of environmental, sustainability and social governance
matters, including diversity, when setting the vision for
the business.
Macroeconomic factors
All our revenue is generated in the UK. Any deterioration
in the UK economy and consumer confidence could affect spending
and cost of goods, which in turn would impact our sales and
profitability. COVID-19 represents the most dramatic shift
in the macroeconomic environment in our lifetimes. The business
has needed to operate crisis management processes to react
to the short- term challenges but also recognise longer-term
trends from the pandemic that will be with us for years to
come.
Health & Safety, Regulation and Reputation
The business is required to operate within all laws and regulations.
The Board actively engages to ensure it is fulfilling all
of its responsibilities to its customers, colleagues, the
local communities in which it operates and the broader environment.
Where the business identifies a gap in compliance with any
regulation we put in place recovery programmes to recover
the situations as rapidly as practical. The COVID-19 pandemic
has overlaid new challenges within health and safety further
enhancing the need to ensure a safe operating environment
for our colleagues and customers. The business actively monitors
and manages factors that would impact its reputation and brand.
Crime & colleague welfare
We need to provide and maintain a healthy environment for
our colleagues and customers. Failure to do so restricts the
ability to recruit new colleagues and impacts negatively to
the willingness of customers to frequent our stores. The COVID-19
pandemic has introduced a new set of challenges for our colleagues
to seek to ensure customers comply with COVID regulations.
GLOSSARY OF TERMS
Introduction
In the reporting of financial information, the Directors have
adopted various Alternative Performance Measures (APMs) of
financial performance, position or cash flows other than those
defined or specified under International Financial Reporting
Standards (IFRS).
These measures are not defined by IFRS and therefore may not be
directly comparable with other companies' APMs, including those in
the Group's industry.
APMs should be considered in addition to IFRS measures and are
not intended to be a substitute for IFRS measurements.
Purpose
The Directors believe that these APMs provide additional useful
information on the underlying performance and position of
McColl's.
APMs are also used to enhance the comparability of information
between reporting periods by adjusting for non-recurring or
uncontrollable factors which affect IFRS measures, to aid the user
in understanding McColl's performance.
Consequently, APMs are used by the Directors and management for
performance analysis, planning, reporting and incentive-setting
purposes and have remained consistent with prior year.
The key APMs that the Group has focused on this period are as
follows:
Like-for-like sales (LFL): This is a widely used indicator of a
retailer's current trading performance and is a measure of growth
in sales from stores that have been open for at least a year.
Sales from stores that have traded throughout the whole of the
current and prior periods, and including VAT but excluding sales of
fuel, lottery, mobile top-up, gift cards and travel tickets.
Adjusted EBITDA excluding property-related items and share based
payments: This profit measure shows the Group's Earnings Before
Interest, Tax, Depreciation and Amortisation adjusted for both
property gains and losses, share-based payments and other adjusting
items.
Property gains and losses: Are incomes and costs that arise from
events and transactions in relation to the Group's property and not
from the principal activity of the Group, i.e. that of an operator
of convenience and newsagent stores.
Adjusting items: Relate to costs or incomes that derive from
events or transactions that fall within the normal activities of
the Group but which, individually or, if of a similar type, in
aggregate, are excluded from the Group's adjusted profit measures
due to their size and nature in order to reflect management's view
of the performance of the Group.
Adjusted operating profit: Operating profit before the impact of
adjusting items as explained above.
Adjusted earnings per share: Earnings per share before the
impact of adjusting items.
Adjusted EBITDA pre IFRS 16 : This profit measure is utilised on
the same basis as the adjusted EBITDA excluding property-related
items and share-based payments above. The difference is that rent
expense has been added back to administrative expenses and rental
income to other income to reverse the impact of IFRS 16.
Grocery mix: This measure is the proportion of grocery sales
excluding VAT as a percentage of total revenue. Grocery includes
ambient, fresh, frozen and household groceries, and food-to-go, but
excludes impulse categories (including confectionery, crisps and
snacks, soft drinks and ice cream), general merchandise, news and
magazines, and services.
APM Closest Note reference for reconciliation Definition and
equivalent purpose
IFRS measure
--------------------- ---------------------------------------------
Income statement
Revenue
measures
------------------- --------------------- --------------------------------------------- -----------------------
Sales mix No direct Not applicable The relative
equivalent proportion
or ratio of products
sold compared to the
same period in the
prior
year.
------------------- --------------------- --------------------------------------------- -----------------------
Like-for-like IFRS Revenue Revenue 2020 GBP605m Like-for-like is a
(LFL) measure
of growth in Group
sales
from stores that have
been open for at
least
a year (but excludes
prior year sales of
stores closed during
the year). It is a
widely
used indicator of a
retailer's current
trading
performance and is
important
when comparing growth
between retailers
that
have different
profiles
of expansion,
disposals
and closures. It's
reported
on an 'including VAT'
basis, which aligns
with the sales
measurement
by the field and
stores
teams, whose focus is
on the retail
performance.
------------------- --------------------- -----------------------
Add VAT GBP76m
------------------- --------------------- -----------------------
Excl. non store GBP(62)m
rev.
Excl. acq/closures GBP(50)m
LFL Sales 2020 GBP569m
Revenue 2021 GBP573m
Add VAT GBP73m
Excl. non store GBP(65)m
rev.
Excl. acq/closures GBP(6)m
LFL Sales 2021 GBP575m
LFL% 1.0%
----------------------------------------------------------------- -------------------- -----------------------
Profit measures
------------------------------------------------------------------- -------------------- -----------------------
Adjusted Operating Note 6 This profit measure
EBITDA Profit shows the Group's
Earnings
Before Interest, Tax,
Depreciation and
Amortisation
adjusted for both
property
gains and losses,
share-based
payments and other
adjusting
items, in order to
provide
shareholders with a
measure of true
underlying
performance of the
business.
------------------- --------------------- --------------------------------------------- -----------------------
Pre IFRS Operating 2021 This profit measure
16 Adjusted Profit is on the same base
EBITDA as adjusted EBITDA in
note 6 except for the
adjustment of net
rent
payable which would
have been in
operating
profit pre IFRS 16.
------------------- --------------------- -----------------------
Adjusted EBITDA GBP24.3m
-----------------------
Net rent adjustment (GBP14.0)m
Pre IFRS 16 Adjusted
EBITDA GBP10.3m
2020
Adjusted EBITDA GBP28.0m
Net rent adjustment (GBP14.9)m
Pre IFRS 16 Adjusted
EBITDA GBP13.1m
----------------------------------------------------------------- -------------------- -----------------------
Basic adjusted Basic earnings Note 9 This relates to
earnings per share profit
per share after tax before
(EPS) adjusting
items divided by the
basic weighted
average
number of shares, in
order to provide
shareholders
with a measure of
true
underlying
performance
of the business.
------------------- --------------------- --------------------------------------------- -----------------------
Diluted Diluted Note 9 The difference
adjusted earnings between
earnings per share basic and diluted
per share metric
is the impact of the
dilutive effect of
share
options and warrants
in existence.
------------------- --------------------- --------------------------------------------- -----------------------
Balance sheet measures
------------------------------------------ --------------------------------------------- -----------------------
Net debt Borrowings Note 11 Net debt comprises
less cash bank
and related and other borrowings,
hedges lease liabilities,
and
net interest
receivables/payables,
offset by cash and
cash
equivalents and
short-term
investments. It is a
useful measure of the
progress in
generating
cash and
strengthening
of the Group's
balance
sheet position and is
a measure widely used
by credit rating
agencies.
------------------- --------------------- --------------------------------------------- -----------------------
Pre IFRS Borrowings 2 021 This measure is on
16 Net debt less cash the
and related same base as net debt
hedges less in note 11 except for
IFRS 16 the adjustment of
lease liabilities IFRS
16 leases which would
have been operating
leases pre IFRS 16
------------------- --------------------- -----------------------
Net debt GBP292.1m
-----------------------
IFRS 16 leases
adjustment (GBP180.8)m
Pre IFRS 16 Net GBP111.3m
debt
2020*
Net debt GBP283.3m
IFRS 16 leases
adjustment (GBP203.8)m
Pre IFRS 16 Net GBP79.5m
debt
----------------------------------------------------------------- -------------------- -----------------------
* Restated - See Note 13.
Other
Capital expenditure (Capex): The additions to property, plant
and equipment and intangible assets.
Grocery lines: This includes ambient, fresh, frozen and
household groceries, and food-to-go, but excludes impulse
categories (including confectionery, crisps and snacks, soft drinks
and ice cream), general merchandise, news and magazines, and
services.
Quarter: The 'first quarter' refers to the 13-week period from
30 November 2020 to 28 February 2021, 'second quarter' refers to
the 13-week period from 01 March 2021 to 30 May 2021, 'third
quarter' refers to the 13-week period from 31 May 2021 to 29 August
2021 and 'fourth quarter' refers to the 13-week period from 30
August to 28 November 2021.
Profits/(losses) arising on property-related items: This relates
to the Group's property activities including: gains and losses on
disposal of property assets, sale and lease back of freehold
interests; costs resulting from changes in the Group's store
portfolio, including pre-opening and post-closure costs; and
income/(charges) associated with impairment of non-trading property
and related onerous contracts. These items are disclosed separately
to clearly identify the impact of these items versus the other
operating expenses related to the core retail operations of the
business. They can be one-time in nature and can have a
disproportionate impact on profit between reporting periods.
INDEPENT REVIEW REPORT TO MCCOLL'S RETAIL GROUP PLC
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
26 weeks ended 30 May 2021 which comprises the consolidated income
statement, the consolidated statement of comprehensive income, the
consolidated statement of financial position, the consolidated
statement of changes in equity, the consolidated statement of cash
flows and the notes to the financial information.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of and
has been approved by the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the
group are prepared in accordance with international accounting
standards in conformity with the Companies Act 2006 and
international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union.
The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with
International Accounting Standard 34, "Interim Financial
Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity", issued by the Financial Reporting Council for use
in the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the 26 weeks ended 30 May
2021 is not prepared, in all material respects, in accordance with
International Accounting Standard 34, as adopted by the European
Union, and the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting its responsibilities in
respect of half-yearly financial reporting in accordance with the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority and for no other purpose. No person is
entitled to rely on this report unless such a person is a person
entitled to rely upon this report by virtue of and for the purpose
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IR XLLFFFVLLBBQ
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