Preliminary Results

RNS Number : 3412Z

B&M European Value Retail S.A.

26 May 2016

 

26 May 2016

B&M European Value Retail S.A.

Preliminary Results for the 52 weeks to 26 March 2016

Continued Delivery of our Strategy; Trading in Line with Expectations

B&M European Value Retail S.A. ("the Group"), the UK's leading multi-price value retailer, today announces its preliminary results for the 52 weeks to 26 March 2016.

HIGHLIGHTS

Business highlights

● Record number of 79 UK store openings (74 net new stores), taking our total number of stores in the UK to 499 at the end of March  

● Pipeline of 50 new stores in the UK for FY2017

● Two new additional distribution centres opened in the UK in September 2015 totalling 800,000 square feet, supporting continued rapid store growth

● Pipeline of 19 new store openings in Germany for FY2017 through organic growth of 10 stores and the exchange of a conditional agreement for the acquistion of a 9 store chain in the second half

Financial overview

● Group revenues increased by +23.6% to £2,035.3m (2015: £1,646.8m)

● UK like-for-like sales +0.3% (2015: +4.4%) and 2.4% on an underlying basis¹

● Adjusted Group EBITDA increased by 16.2% to £202.5m (2015: £174.2m)

● Group EBITDA increased by 30.6% to £196.1m (2015: £150.1m)

● Adjusted profit before tax increased by 19.5% to £161.4m (2015: £135.0m)

● Adjusted diluted earnings per share 13.0p (2015: 10.3p)

● Diluted earnings per share 12.4p (2015: 3.4p)

Strong cash generation

● Strong cashflow conversion whilst also investing in new stores and distribution centres, with operating cashflow of £170.9m (2015: £152.9m),

● Net debt reduced to £354.2m from £381.0m in 2015 and net debt to Adjusted Group EBITDA reduced from 2.19 times to 1.75 times

● Recommended final dividend of 3.2p per share to be paid on 5 August 2016, an increase of 41.2% in the total dividend for the year of 4.8p (2015: 3.4p).

● Declared a special dividend of 10.0p per share (equating to £100m in total) in line with our capital structure policy, to be paid on 8 July 2016

¹ Underlying like-for-like sales includes only those stores which have traded for 14 months and excludes stores that are within a three mile radius of a new B&M store opening for the first 12 months following the opening of that new store.

 

Sir Terry Leahy, Chairman, said,

"B&M has delivered another year of strong progress with the implementation of our strategy for growth and an excellent financial performance in terms of overall sales, profits and cash generation. Our expansion strategy is on track to deliver further growth during the year ahead in our chosen markets. The Board is pleased to declare a special dividend of 10.0p per share as well as recommending a substantial increase in the final dividend, reflecting our strongly cash generative business model."

Simon Arora, Chief Executive, said,

"B&M's disruptive pricing, unique sourcing model and range discipline has continued to drive our business forward to win market share. More people are able to access our stores as a result of our continuing and successful new store programme. We now regularly serve 3.3 million customers on average each week. As a result of a record 79 new stores opened in the financial year, we have now passed the milestone of 500 UK stores. In the UK there are many locations where we don't currently trade but would like to and in Germany we are beginning to accelerate our pace of expansion, and we continue to see attractive returns from our new store programme. Everyone at B&M has worked tremendously hard to deliver this market-leading growth and I would like to thank them for their continued commitment and hard work."

Financial Results

	FY 2016 £m	FY 2015 £m	Change %
Total Group Revenues B&M Jawoll	2,035.3 1,902.6 132.7	1,646.8 1,526.2 120.6	+23.6 +24.7 +10.0
Gross Margin	34.5%	34.6%	-0.1
Adjusted EBITDA² B&M Jawoll Adjusted EBITDA %	202.5 190.2 12.3 9.9%	174.2 163.4 10.8 10.6%	+16.2 +16.4 +13.8 -0.7
EBITDA	196.1	150.1	+30.6
Profit Before Tax	154.5	61.7	+150.2
Adjusted Profit Before Tax²	161.4	135.0	+19.5
Adjusted Diluted EPS	13.0p	10.3p	+26.5
Diluted EPS	12.4p	3.4p	+262.2
Dividends³	4.8p	3.4p	41.1

² Adjusted items are those that the Directors consider to be exceptional and non-trading items. The Directors consider the adjusted figures to be more reflective of the underlying business performance of the Group and we believe that this measure provides additional useful information for investors on the Group's performance, as well as being consistent with how business performance is monitored internally. Further details can be found in notes 3 and 4.

³ Dividends are stated as gross amounts before deduction of Luxembourg withholding tax which is currently 15%. 

Analyst Meeting & Webcast

An Analyst Meeting in relation to the final results will be held on Thursday 26 May at 10:15 am (UK) at:

Bank of America Merrill Lynch

2 King Edward Street

London

EC1A 1HQ

The meeting can be accessed live via a dial-in facility on:

UK & International:              [phone]   

US:                                        [phone] 

Participant Pin Code:           31907454

A simultaneous audio webcast and presentation slides will be available via the B&M corporate website at www.bandmretail.com 

A trading update for the first quarter trading will be provided in mid-July 2016.

Enquiries

B&M European Value Retail S.A.

For further information please contact [phone]

Simon Arora, Chief Executive

Paul McDonald, Chief Financial Officer

[e-mail] 

Media

For media please contact [phone]

Maitland

Greg Lawless

Tom Eckersley  

[e-mail] 

Notes to editors

B&M European Value Retail S.A. is a variety retailer with 499 stores in the UK operating under the "B&M" brand and 56 stores in Germany primarily operating under the "Jawoll" brand as at 26 March 2016. It has passed the 500 UK stores milestone immediately after its year end. It was admitted to the FTSE 250 index in June 2015.

The B&M group was founded in 1978 and listed on the London Stock Exchange in June 2014. For more information please visit www.bmstores.co.uk 

Chief Executive's Review

Overview

B&M's strategy for driving sustainable long-term revenue and earnings growth has four key elements:

      1.   delivering great value to our customers;

      2.   investing in new stores;

      3.   developing our international business; and

      4.   investing in our infrastructure and our people.

By focusing on these four priorities B&M has continued to strengthen its position as the UK's leading multi-price general merchandise value retailer. We have also taken significant steps forward in preparing Jawoll, our German business acquired in 2014, to become over time the second engine of growth for the Group.

The strength of our unique, high returning and cash generative business model underscores our potential to increase significantly the scale of our business. We continue to believe there is scope to grow from over 500 stores today to at least 850 stores in the UK. Additionally the German market also offers exciting potential where we are working hard to accelerate the pace of expansion in our Jawoll store estate in Europe's largest consumer retail market. We are pleased that the B&M product sourcing and store format business model is proving to be a success for Jawoll.

Delivering great value

B&M's retail proposition is all about helping our customers spend less on everyday items for their homes and their families, doing what we can to enable tight household budgets go further. Our aim is to provide customers not only with great value for money across a broad range of product categories but also a fun and appealing shopping experience so that they want to return again and again to a B&M store.

Like-for-like sales for the year were +0.3%, which compares with +4.4% in 2014/15. This like-for-like performance is against a backdrop of deflationary pressures on grocery sales, but also more importantly the effect of the cannibalisation we have chosen to absorb from our record new store opening programme this year of 79 new stores.  

Although trading conditions in the general retail sector were as competitive as ever in 2015/16, B&M's disruptive pricing, unique sourcing model and range discipline has continued to enable us to win market share. More people are able to access our stores as a result of our successful new store opening programme and we now regularly serve 3.3 million customers on average each week compared to 2.6 million at the time of our IPO in June 2014. We only carry out very limited targeted advertising and our customers remain our most powerful advocates, with word of mouth continuing to help make B&M increasingly a familiar household name across the UK.

The competitiveness of our offer has continued to drive excellent growth during 2015/16, particularly in bulkier product categories that have benefited from the strong growth this year in the number of our larger Homestore units.

Investing in new stores

2015/16 was a record year for new store openings. We invested a total of £38.2m opening 79 new stores in the UK and a further 6 new stores in Germany. A modest number of UK store closures meant our estate grew by a net 74 stores in the UK whilst there were no closures in Germany.

New stores remain the main driver of B&M's revenue and earnings growth. A good pipeline of suitable leasehold store opportunities, the strong customer appeal and flexibility to trade across a wide range of store sizes and locations, combined with the low capital intensity of our model means that we are able to grow fast and profitably. We believe we have a long runway of growth ahead, with at least 350 suitable catchments in the UK alone still without access to a B&M store. Securing a good flow of suitable, high quality new stores at attractive rents remains therefore a key strategic priority for the business over the medium term.

Property market conditions in the UK were unusually favourable in 2015/16, supporting our record new store programme including the availability of some very good store portfolio packages from national retailers who had decided to rationalise their retail estates. The availability of those packages of stores was the principal reason in the UK that we were able to open significantly more stores than originally planned for the year. However we believe these conditions are unlikely to be quite so favourable in 2016/17.

We have however assembled a good pipeline of new stores for 2016/17 with 50 net new stores planned for the UK and (as referred to below) around 19 for Germany. In the UK, we are seeing an increasing level of confidence from retail property developers to design and build new stores specifically for us, often on retail park locations alongside one or more other retailers. We expect this to be an attractive and useful source of new store opportunities going forward and, as a result, we already have some new store developments in our pipeline for 2017/18.

Developing our international business

Germany is a large, highly fragmented and underserved market for our variety retail format. In the two years since B&M bought a majority stake in Jawoll our UK and German teams have made very good progress bringing the Jawoll business closer to the B&M model in terms of sourcing, assortment and store format. There is more to do and there are three key areas which we are focusing on as we prepare for more expansion:

·     Accessing the B&M sourcing model:

While appreciating differences in consumption patterns and tastes between UK and German customers, B&M and Jawoll have worked hard to increase access for Jawoll to B&M's differentiated general merchandise sourcing from China in key product categories, from garden furniture and homewares to small electrical appliances. From a standing start Jawoll now sources over 2,000 products through B&M's supply chain network. There is more to do in terms of category coverage and growing volumes for Jawoll to access further buying efficiencies, but we are very pleased with progress so far.

  ·     Store format convergence:

We have been successfully trialling a small number of new format Jawoll stores over the last twelve months. They are smaller stores and have a lower SKU count than the regular Jawoll stores, and so are closer to the retail operating model of B&M. We are encouraged by their performance to date and are now confident that this will allow us to pick-up the rate of store expansion in Germany. There are 10 organic new store acquisitions planned for the 2016/17 financial year. We have also reached conditional agreement for the acquisition of a portfolio of 9 stores from a privately owned retail chain in the second half of 2016/17. This is an acceleration from 6 new stores opened in the year under review and 1 in the previous year when we acquired the business.

·     Preparing for accelerated growth:

Gearing up for acceleration in Jawoll's rate of expansion has required investment in infrastructure and people. The extension to our main Distribution Centre at Jawoll's head office in Soltau has almost been completed, and it has sufficient capacity to serve an additional 25 more stores to Jawoll's current store estate, with scope on the site still for further expansion. We have invested in IT infrastructure and Jawoll now has access to similar systems to those which have underpinned the success of B&M in the UK. Investment in our teams at Jawoll has also been continuing, with additional resource now concentrated on property acquisitions and overall head count growth in all key commercial areas.

Jawoll is a profitable business with a strong economic model, which is close to B&M's. Having taken the time to build patiently on its existing strengths and working with its established management team, we are now ready to accelerate Jawoll's pace of growth in the highly fragmented German general merchandise retail market.

Investing in our colleagues and infrastructure

We have continued to invest in physical infrastructure and in the skills and capability of our teams to support the long-term growth of the business.

During the financial year we added two new warehouses in the North West of the UK, in Runcorn and Middlewich. This provides us with the capacity we need to support our growth for at least the next two years. These two additional warehouses were brought on stream earlier than originally planned to support the additional stores that we acquired during the year. They did not become operational until the second half of the calendar year 2015, which was close to the build-up in stock levels ahead of the seasonal peak. Consequently, with those pressures, service levels from the distribution network were impacted and we experienced some disruption to store operations and trade for a number of weeks. Although December trading was itself pleasing with strongly positive like-for-like, the distribution function was not at budgeted productivity until the last few weeks of the financial year 2015/16. This resulted in higher than budgeted distribution costs in 2015/16 overall, but they have now settled to normal levels.

The total headcount of employees in the UK rose from 18,813 to 22,351 at the year ended 2015/16. Within that increase 674 new jobs having been created in the 2 additional UK Distribution Centres and 2,812 new jobs in UK stores.

Corporate Social Responsibility

B&M's approach to CSR is rooted firmly in the belief that our core purpose is about doing what we can to help our customers get better value for money on everyday and other items for their homes and families, helping tight household budgets go further. We also recognise of course that as a responsible business we have obligations as well to other key stakeholders, particularly our colleagues, suppliers and the wider community and the environment.

I am proud to say that our expansion continues to create many opportunities for new colleagues to join B&M and for others to progress within the business. On behalf of the Board of the Group I would like to thank the whole team, both in the UK and Germany. The hard work and commitment of all our colleagues in the Group delivering the best value we can for our customers in the UK and Germany, day-in, day-out, is the basis of our success.

We have made further good progress this year on our broader corporate responsibility agenda, in particular:

      ·    created 3,463 new local jobs together in the UK and Germany through our expansion programme;

      ·    maintained our record of strong, long-term supplier relationships;

      ·    maintained our commitment to prompt supplier payment, with UK and German suppliers at the
     year-end paid on average 24.6 days after delivery;

      ·   maintained our strong record of reduced supply chain waste, with 99% of trade packaging in the
    UK still being recycled and 79% in Germany; and

      ·   continued to build on the management reporting protocols established in 2014/15 in areas such as
    greenhouse gas emissions, health & safety, employee diversity and supporting charitable activity.

Outlook

We made very good strategic progress in 2015/16. The business grew rapidly, opening a record number of new stores, making a step-change in its Distribution Centre infrastructure capacity in the UK and pushing ahead with its preparations for accelerated growth in Germany in relation to product sourcing, format development, infrastructure and the creation of a store expansion team. We achieved this whilst also generating significant cashflow, demonstrating the attractiveness of our unique business model.

We are confident that we now have an even stronger platform from which to deliver further growth in the current year and into the long-term, both in the UK and Germany. Whilst we are mindful that the general economic outlook is uncertain, and the market remains fiercely competitive, we have made a solid start to the new financial year. We believe our unique business model places us in a strong position and we look forward to the year ahead with confidence.

Simon Arora

Chief Executive Officer

26 May 2016

Chief Financial Officer's Review

Accounting period

The FY2016 accounting period represents the 52 trading weeks to 26 March 2016 and the comparative FY2015 period represents trading for the 52 weeks to 28 March 2015.

Revenue

The Group achieved revenues in excess of £2 billion for the first time in FY2016 with actual revenues of £2,035.3m (FY2015: £1,646.8m), this represents an increase of 23.6% and on a constant currency basis this was a 24.3% increase.

In the UK, revenues increased by 24.7% to £1,902.6m, principally driven by the new store openings, including both the annualisation of revenues from the 52 net new store openings in FY2015 and the 74 net new store openings in FY2016. 

There were a total of 79 UK openings and 5 store closures in the year. The 79 store openings represented a record number for the Group and the stores contributed revenues of £248.9m in FY2016, reflecting both the number of new stores and also their timing within the year, with 47 opened during the first half of the financial year. The new stores have performed well and returns from them remain attractive. The five closures that took place were relocations, where the business was able to open a new, better-located or larger store.

Sales in the like-for-like store estate grew by +0.3%. This growth was against a strong like-for-like comparable of +4.4% in FY2015. The like-for-like performance was adversely affected by deflationary pressures on grocery retail prices and predicted cannibalisation of revenue reflecting the record number of openings that took place in the year and the proximity of some of these stores to the existing store estate. On an underlying basis, like-for-like sales growth was 2.4%. The calculation of underlying like-for-like brings new stores into the like-for-like estate 14 months after opening (rather than 12 months), to avoid comparison with the opening 2 month 'halo' when a new store is opened, this equated to 0.6%. Similarly, it excludes existing stores within a three mile radius of a new store in the catchment for the first 12 months following the opening of a new store, this equated to 1.5%.

In our German business Jawoll, revenues grew to £132.7m, which was a 10% increase over the £120.6m achieved in the 11 months of the Group's ownership of the business in FY2015. In local currency, revenues increased by 18.1%, which was driven by six new stores opened in the year combined with modest like-for-like revenue growth.

Gross margin

Our gross margin decreased by 6 basis points to 34.5% (FY2015: 34.6%). In the UK business the margin reduced by only 12 basis points as the business managed to largely mitigate the adverse impact of US dollar strength, benefitting from increased buying power and an improved sales mix towards higher margin non-grocery product. In Germany we saw margin improvement of 115 basis points to 37.9% (FY2015:36.8%).

Operating costs and adjusted EBITDA

The Group continues to manage costs carefully whilst also ensuring that strategic investments are made in both the UK and German businesses' head office functions and warehouse infrastructure in anticipation of future growth. The operating costs of the Group in FY2016, including depreciation, grew by 26.6% to £520.9m.

In the UK, operating costs were £462.6m (FY2015: £361.9m), an increase of 27.8% and costs as a percentage of revenues increased by 60 basis points to 24.3% (FY2015: 23.7%). There were planned cost increases, driven by the number of new store openings in the year and the annualisation of costs from the new store openings in FY2015. The new stores in the UK added over £40m of incremental EBITDA to the Group and we continue to see an attractive level of returns from our new store investment.

The UK business incurred additional fixed occupancy costs of £3.4m in the year, following the opening of the two new warehouses in June and September to support the store opening programme. There will be a further £1.3m of incremental costs incurred in FY2017 given the new warehouses were not operational for the full 12 month period in FY2016. During the year our variable transport and warehouse costs as a percentage of revenues increased by 57 basis points to 4.0%, as we incurred unbudgeted short-term operating costs to ensure that the new warehouses adequately serviced the store estate in the important Autumn/Winter trading period. By the end of the year, as productivity improvements were made, the cost performance returned to budgeted levels.

In Germany, costs increased by £4.1m to £37.9m, (FY2015: £33.8m) reflecting the additional month of trading in FY2016 compared to 11 months of Jawoll being part of our Group in FY2015, the impact of the new stores and investments made in buying and head office teams in Germany to support the future growth of the business.

We report an adjusted EBITDA to allow the Board and investors to understand better the underlying performance of the business, and the items that we have adjusted are detailed in notes 3 and 4 of the financial statements. These adjustments include costs totalling £6.4m in FY2016 (FY2015: £24.1m). In FY2016 the majority of those costs related to new store pre-opening costs.

In the UK the adjusted EBITDA increased by 16.4% to £190.2m (FY2015:£163.4m) and in Germany adjusted EBITDA increased by 13.8% to £12.3m (FY2015:£10.8m).  The Group adjusted EBITDA increased in the year by 16.2% to £202.5m (FY2014: £174.2m) and on a statutory accounting basis EBITDA increased by 30.6% to £196.1m (FY2015: £150.1m).

Financing Costs

Following the capital restructuring of the Group prior to the IPO and subsequent refinancing in FY2015, FY2016 is the first year that fully reflects the finance costs of the post IPO capital structure. The underlying finance costs in the year reduced by 12.4% to £20.7m, (FY2015: £23.6m) which comprises bank and finance lease interest of £19.3m and amortised fees of £1.4m.

The exceptional interest costs of £0.4m relates to the non-cash charge on the Jawoll put/call option of £0.7m and a £0.3m credit on the mark to market value of interest rate hedges. In FY2015 the £49.2m comprised £28.8m of previously unamortised fees that were written-off in the year relating to the March 2013 refinancing, £16.2m of non-cash interest on the preferred equity certificates that were subsequently converted to equity, £2.2m mark to market value of interest rate hedges and £2.0m relating to the non-cash charge on the Jawoll put/call option.

Profit before Tax

The statutory profit before tax was £154.5m, which compares to £61.7m in FY2015, although FY2015 was distorted by the exceptional costs, largely relating to costs associated with the IPO and the previous financing structure. Hence, we also report an adjusted profit before tax to allow the Board and investors to understand better the operating performance of the business. The adjusted profit before tax was £161.4m (FY2015: £135.0m) which reflected a 19.5% increase.

Taxation

The tax charge for the year was £28.8m (£21.9m in FY2015) and the underlying charge was 21.0% (FY2015: 22.9%). There was a prior year adjustment of £1.8m that reduced the corporation tax liability in the year relating to the treatment of interest costs on the pre-IPO capital structure. The tax charge in the year was also reduced by a non-cash credit of £2.0m relating to the deferred tax on the brand asset as a result of the future reduction in the corporation tax rate to 18%. We expect the tax charge going forward to reflect the mix of the impact of the tax rates in the countries in which we operate, being 20% in the UK and 30% in Germany, with the effective rate likely to be approximately 70 basis points higher, reflecting non-qualifying expenditure.

Profit after tax and earnings per share

The profit after tax was £125.8m compared to £39.9m in FY2015, and, on adjusted profit after tax basis which is a better measure of  performance due to the reasons outlined above, it was £131.5m which was a 26.3% increase over last year (FY2015: £104.1m).

The basic and fully diluted adjusted earnings per share for the year ended 26 March 2016 was 13.0p; (FY2015: 10.3p), being an increase of 26.2%.

Investing activities

The Group's net capital expenditure during the year was £56.2m. This was principally driven by the new store opening programme, with 85 stores having been opened in the year, with a capital expenditure of £36.9m and £1.3m in the UK and German business respectively. We ended the year with 499 stores in the UK and 56 in Germany.

Another major feature of the year was the investment in additional warehouse capacity, both in the UK and Germany ahead of planned store openings, with the fitting out of the two new warehouse locations in the UK at a total cost of £2.4m and a further £2.4m having been spent to date on the warehouse extension in Germany.

The Group also continues to invest in its existing store estate and an additional £13.2m was incurred on maintenance expenditure, representing 0.6% of revenues, including investments made in store refits and IT hardware.

Net debt and cash flow

The Group continues to be strongly cash generative and during the year the cash flow from operations increased by 11.8% to £170.9m (FY2015: £152.9m). This reflects the continued growth in EBITDA and the tight control over working capital in the UK. There was some planned additional working capital invested in Jawoll of £6.6m, as the strategic aim of increasing the products sourced through the B&M supply chain continues to grow.

The Group's net debt in the year has reduced to £354.2m (FY2015: £381.0m) and the net debt to adjusted EBITDA has fallen to 1.75 times from 2.19 times at the end of FY2015.

Capital structure

The Group continues to grow rapidly, opening 133 new stores (net 126 stores) in the UK during the last two financial years, as well as acquiring a majority stake in Jawoll in Germany in June 2014. The cash generative qualities of our unique business model have enabled the Group to invest in infrastructure in the UK and Germany to support our store, revenue and earnings growth whilst at the same time paying (subject to shareholder approval at the AGM) an increase in our total dividend for FY2016 of 41.2% compared with FY2015 and reducing the net debt from a ratio at March 2014 of 3.3 times net debt to Adjusted Group EBITDA to 1.75 times at the end of FY2016.

The Board remains committed to investing for future growth, to its progressive dividend policy and to maintaining an efficient balance sheet. In the context of our continuing growth, it has been concluded that an appropriate ratio of net debt to adjusted EBITDA should be around 2.25 times. In line with this capital structure policy the Board has declared a Special Dividend of 10.0p per share¹, which will be paid on 8 July 2016 to shareholders on the register of the Company as at close of business on 10 June 2016.

Restatements

As explained more fully in the basis of preparation (within note 1), goods in transit from overseas suppliers are now reflected in the statement of financial position as from 29 March 2014. The comparative figures in the statements of financial position as at 28 March 2015 have, accordingly, been restated. These restatements have no impact whatsoever on the statements of comprehensive income, nor on net equity in the current financial year or in prior years.

 

Ordinary Dividend

An interim dividend of 1.6p was paid in January 2016 and it is proposed to pay a final dividend of 3.2p per share. The total dividend of 4.8p for the 2015/16 financial year reflects the upper end of the dividend policy of 30 to 40% of normalised post IPO earnings.¹ Subject to approval of the dividend by shareholders at the AGM on 29 July 2016, the final dividend of 3.2p per share is to be paid on 5 August 2016 to shareholders on the register of the Company at the close of business on 24 June 2016. The ex-dividend date will be 23 June 2016.

Paul McDonald

Chief Financial Officer

26 May 2016

¹ Dividends are stated as gross amounts before deduction of Luxembourg withholding tax which is currently 15%

 

Consolidated statement of Comprehensive Income

Period ended		52 weeks ended 26 March 2016	52 weeks ended 28 March 2015
	Note	£'000	£'000
Revenue		2,035,285	1,646,824
Cost of sales		(1,332,263)	(1,076,916)
Gross profit	2	703,022	569,908
Administrative expenses		(528,530)	(437,049)
Operating profit		174,492	132,859
Share of profits of investments in associates		1,166	1,632
Profit on ordinary activities before interest and tax		175,658	134,491
Finance costs		(21,573)	(72,875)
Finance income		460	99
Profit on ordinary activities before tax		154,545	61,715
Income tax expense	5	(28,142)	(21,852)
Other tax expense		(603)	-
Profit for the period	3	125,800	39,863
Attributable to non-controlling interests		1,264	1,223
Attributable to owners of the parent		124,536	38,640
Other comprehensive income for the period
Items which may be reclassified to profit and loss :
Exchange differences on retranslation of subsidiary and associate accounts		5,505	(4,236)
Actuarial gain/(loss) on the defined benefit pension scheme		5	(35)
Tax effect of other comprehensive income	5	13	11
Total comprehensive income for the period		131,323	35,603
Attributable to non-controlling interests		1,265	1,218
Attributable to owners of the parent		130,058	34,385
Earnings per share
Basic earnings per share attributable to ordinary equity holders (pence)	6	12.5	3.4
Diluted earnings per share attributable to ordinary equity holders (pence)	6	12.4	3.4

The accompanying accounting policies and notes form an integral part of this consolidated financial information.

 

Consolidated statement of Financial Position

As at	Note	26 March  2016 £'000	28 March 2015 £'000
Assets
Non-current
Goodwill	7	837,450	835,258
Intangible assets	7	101,174	99,695
Property, plant and equipment	8	138,050	101,823
Investments in associates		3,995	3,822
Other receivables		2,771	-
Deferred tax asset		473	354
		1,083,913	1,040,952
Current assets
Cash and cash equivalents		91,148	64,943
Inventories		356,312	286,136
Trade and other receivables		28,761	35,167
Other current financial assets		4,769	1,145
		480,990	387,391
Total assets		1,564,903	1,428,343
Equity
Share capital		(100,000)	(100,000)
Share premium		(2,577,668)	(2,600,000)
Merger reserve		1,979,131	1,979,131
Retained earnings		(115,898)	(10,392)
Luxembourg legal reserve		(614)	-
Put/call option reserve		13,855	13,855
Foreign exchange reserve		(1,273)	4,232
Non-controlling interest		(11,883)	(10,655)
		(814,350)	(723,829)
Non-current liabilities
Interest bearing loans and borrowings	9	(435,142)	(433,758)
Finance lease liabilities		(4,252)	(4,918)
Other financial liabilities		(16,041)	(14,219)
Other liabilities		(66,544)	(52,381)
Deferred tax liabilities		(20,119)	(21,199)
Provisions		(2,047)	(1,430)
		(544,145)	(527,905)
Current liabilities
Trade and other payables		(189,743)	(161,131)
Finance lease liabilities		(1,119)	(1,066)
Other financial liabilities		(487)	(642)
Income tax payable		(10,290)	(7,940)
Provisions		(4,769)	(5,830)
		(206,408)	(176,609)
Total liabilities		(750,553)	(704,514)
Total equity and liabilities		(1,564,903)	(1,428,343)

As explained more fully in the basis of preparation (within note 1), goods in transit from overseas suppliers are now reflected in the statement of financial position as from 29 March 2014. The comparative figures in the statements of financial position as at 28 March 2015 have, accordingly, been restated. These restatements have no impact whatsoever on the statements of comprehensive income, nor on net equity in the current financial year or in prior years. The accompanying accounting policies and notes form an integral part of this consolidated financial information.

 

Consolidated statement of Changes in Shareholders' Equity

	Share	Share	Retained	Legal	Merger	Foreign exchange	Put/call option	Non-control- ling	Total share-holders'
	capital	premium	earnings	reserve	reserve	reserve	reserve	interest	equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 29 March 2014	97,222	2,527,778	(19,415)	-	(2,625,000)	4	-	-	(19,411)
Reserve balances recognised on acquisition	-	-	-		-	-	(13,855)	9,515	(4,340)
Effect of Group reconstruction	-	-	-	-	645,869	-	-	-	645,869
Effect of raising equity during IPO exercise	2,778	72,222	-	-	-	-	-	-	75,000
Dividends to owners	-	-	(9,000)	-	-	-	-	-	(9,000)
Dividends to non-controlling interest	-	-	-	-	-	-	-	(78)	(78)
Effect of share options	-	-	186	-	-	-	-	-	186
Total for transactions with owners	2,778	72,222	(8,814)	-	645,869	-	-	(78)	711,977
Profit for the period	-	-	38,640	-	-	-	-	1,223	39,863
Other comprehensive income:
Exchange differences on retranslation of subsidiaries and associates	-	-	-		-	(4,236)	-	-	(4,236)
Other items and tax effect	-	-	(19)	-	-	-	-	(5)	(24)
Total comprehensive income for the period	-	-	38,621	-	-	(4,236)	-	1,218	35,603
Balance at 28 March 2015	100,000	2,600,000	10,392	-	(1,979,131)	(4,232)	(13,855)	10,655	723,829
Allocation to legal reserve	-	-	(614)	614	-	-	-	-	-
Dividends to owners	-	(22,332)	(18,668)	-	-	-	-	-	(41,000)
Dividends to non-controlling interest	-	-	-	-	-	-	-	(37)	(37)
Effect of share options	-	-	235	-	-	-	-	-	235
Total for transactions with owners	-	(22,332)	(18,433)	-	-	-	-	(37)	(40,802)
Profit for the period	-	-	124,536	-	-	-	-	1,264	125,800
Other comprehensive income:
Exchange differences on retranslation of subsidiaries and associates	-	-	-	-	-	5,505	-	-	5,505
Other items and tax effect	-	-	17	-	-	-	-	1	18
Total comprehensive income for the period	-	-	124,553	-	-	5,505	-	1,265	131,323
Balance at 26 March 2016	100,000	2,577,668	115,898	614	(1,979,131)	1,273	(13,855)	11,883	814,350

The accompanying accounting policies and notes form an integral part of this consolidated financial information.

Consolidated statement of Cash Flows

Period ended		52 weeks ended 26 March  2016	52 weeks ended 28 March 2015
	Note	£'000	£'000
Cash flows from operating activities
Cash generated from operations	10	170,934	152,880
Fees associated with acquisitions and refinancing		-	(8,160)
Fees associated with the IPO and associated restructuring	4	(770)	(19,709)
Luxembourg Net Wealth Tax paid		(7)	-
Income tax paid		(27,551)	(13,726)
Net cash flows from operating activities		142,606	111,285
Cash flows from investing activities
Purchase of property, plant and equipment	8	(54,912)	(35,667)
Purchase of intangible assets	7	(1,801)	(248)
Acquisition of subsidiaries net of cash received		-	(54,356)
Settlement of PLTA liability on the acquired balance sheet		-	(5,465)
Proceeds from sale of property, plant and equipment		538	2,735
Interest received		183	99
Dividends received from associates		1,295	-
Net cash flows from investing activities		(54,697)	(92,902)
Cash flows from financing activities
Net (payment) / receipt of bank loans		-	(17,625)
Receipt from share issue		-	75,000
Interest paid		(19,662)	(25,534)
Dividends paid to non-controlling interest		(37)	(78)
Dividends paid to owners of the parent		(41,000)	(9,000)
Repayment of finance lease		(1,005)	(1,057)
Net cash flows from financing activities		(61,704)	21,706
Net increase in cash and cash equivalents		26,205	40,089
Cash and cash equivalents at the beginning of the period		64,943	24,854
Cash and cash equivalents at the end of the period		91,148	64,943
Cash and cash equivalents comprise:
Cash at bank and in hand		91,148	64,943
		91,148	64,943

The accompanying accounting policies and notes form an integral part of this consolidated financial information.

 

Notes to the consolidated financial information

1          General Information and Basis of Preparation

The consolidated financial information has been prepared in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board (IASB) as adopted by the European Union.

The information presented within this document does not constitute statutory financial accounts for the Group. The statutory financial accounts to which the presented information relates to has not yet been filed with the registrar of companies but will be issued and filed in due course. The auditor has expressed his intention to issue an unmodified audit opinion.

The Group's trade is general retail, with trading taking place in the UK and Germany. The Group has been listed on the London Stock Exchange since June 2014.

The financial information has been prepared under the historical cost convention. The measurement basis and principal accounting policies of the Group are set out below and have been applied consistently throughout the financial statements.

The financial information is presented in pounds sterling and all values are rounded to the nearest thousand (£'000), except when otherwise indicated.

The consolidated accounts represent the results for the Group for the 52 week period ended 26 March 2016, B&M European Value Retail S.A. is the head of the Group and there is no consolidation that takes place above the level of this company. The auditors have made a report on the Group's consolidated financial statements for the year ended 26 March 2016 under Luxembourg company law of 10 August 1915 which is unqualified.

The principal accounting policies of the Group will be set out in the Annual Report which will be released in June 2016.

Restatements

At 26 March 2016, the level of imported goods in transit was £58.2m. Following a detailed review of the terms and conditions under which these goods were shipped they have been recognised within inventory at the period end reflecting that the risks and rewards of ownership are transferred to the Group at the point of shipment and not at the UK port as previously concluded.

The level of imported goods in transit has increased significantly in recent years and as a consequence of recognising these in inventory at the year end, it has been necessary to revise the recognition of imported goods in transit in previous periods also. These changes have no impact on the statements of comprehensive income or on net equity in the current period or in any of the earlier periods affected. The restatements are simply reclassifications within working capital.

In accordance with IAS 8, the 2015 statement of financial position has been restated to reclassify payments on account with suppliers to inventories and to increase trade creditors and inventories to recognise the respective period end positions.

The reclassifications result in:

·     Decreases in deposits on account with suppliers of £29.7m in 2015 and £24.6m in 2014, including those held by related parties (£15.9m, £10.8m respectively);

·     Increases in trade creditors of £17.5m in 2015 and £8.5m in 2014;

·     Increases in inventory of £47.2m in 2015 and £33.1m in 2014.

Further information will be available in the annual report.

Basis of Consolidation

The Group financial information consolidate the financial statements of the company and its subsidiary undertakings together with the Group's share of the net assets and results of associated undertakings for the period from 29 March 2015 to 26 March 2016. Acquisitions of subsidiaries are dealt with by the acquisition method of accounting.  The results of companies acquired are included in the consolidated statement of comprehensive income from the acquisition date.

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

Specifically, the Group controls an investee if and only if the Group has:

·     Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)

·     Exposure, or rights, to variable returns from its involvement with the investee, and

·     The ability to use its power over the investee to affect its returns

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

·     The contractual arrangement with the other vote holders of the investee

·     Rights arising from other contractual arrangements

·     The Group's voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary, excluding the situations as outlined in the basis of preparation.

A separate statement of comprehensive income for the parent company is not presented with the Group financial statements as permitted by Section 408 of the Companies Act 2006.

Going concern

Viability and Going Concern statements will be made in the Principle Risks and Uncertainties section of the annual report to be issued in June 2016. On the basis of these, the directors have determined that it is appropriate to continue to use the going concern basis for production of this financial information.

Critical judgements and key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the financial information was prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use.

The fair value less costs to sell calculation is based on available data from binding sales transactions, conducted at arm's length for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a discounted cash flow model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the performance of the CGU being tested.

The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash inflows and the growth rate used for extrapolation purposes. The key assumptions used to determine the recoverable amount for the different CGUs, including a sensitivity analysis, will be disclosed in the full annual report.

Investments in Associates

Multi-lines International Company Ltd (Multi-lines), which is 50% owned by the Group, has been considered by management to be an associate rather than a subsidiary or a joint venture. Under IFRS 10 control is determined by :

           ·     Power over the investee.

           ·     Exposure, or rights, to variable returns from its involvement with the investee.

           ·     The ability to use its power over the investee to affect the amount of the investor's returns.

Although 50% owned,

·     Multi-Lines have their own independent management who operate without direct oversight of Group management on a day to day basis.

·     The Group does not have the right to appoint directors nor does it have a casting vote.

Therefore the level of power over the business is considered to be more in keeping with that of an associate than a joint-venture, and hence it has been treated as such within these consolidated accounts.

Put/call options on Jawoll non-controlling interest

The purchase agreement for Jawoll included call and put options over the shares not purchased by the Group, representing 20% of Jawoll. The options are arranged such that it is considered likely that either the call or put option will be taken at the exercise date in 2019.

The exercise price of the options contain a variable element and as such the risk and rewards of the options are considered to remain with the non-controlling interest. The purchase of the non-controlling interest will be recognised upon exercise of one of the options.

A financial liability has been recognised carried at amortised cost to represent the expected exercise price, with the corresponding debit entry to the put/call option reserve. Management have estimated the future measurement inputs in arriving at this value, using knowledge of current performance, expected growth and planned strategy. Any subsequent movements in the liability will be recognised in profit or loss.

Standards and Interpretations applied and not yet applied by the Group

A detailed list will appear in the full annual report.

 

2          Segmental information 

IFRS 8 ("Operating segments") requires the Group's segments to be identified on the basis of internal reports about the components of the Group that are regularly reviewed by the chief operating decision maker to assess performance and allocate resources across each reporting segment.

For management purposes, the Group is organised into two reportable segments, being the UK retail segment and the German retail segment (since acquisition of Jawoll on April 30 2014).

The chief operating decision maker has been identified as the executive directors who monitor the operating results of the retail segments for the purpose of making decisions about resource allocation and performance assessment.

The average euro rate for translation purposes was €1.3677/£ during the year, with the year end rate being €1.2670/£ (2015: €1.2741/£ and €1.3670/£, respectively).

52 week period to 26 March 2016	UK Retail	Germany Retail	Corporate	Total
	£'000	£'000	£'000	£'000
Revenue	1,902,557	132,728	-	2,035,285
Gross profit	652,775	50,247	-	703,022
EBITDA	182,035	11,588	2,461	196,084
Interest received	170	13	277	460
Interest expense	(51)	(162)	(21,360)	(21,573)
Income tax expense	(32,877)	(2,636)	6,768	(28,745)
Segment profit/(loss)	131,509	6,150	(11,859)	125,800
Total assets	1,450,936	104,636	9,331	1,564,903
Total liabilities	(247,490)	(19,577)	(483,486)	(750,553)
Other disclosures:
Capital expenditure (including intangible)	(51,760)	(4,935)	(18)	(56,713)
Depreciation and amortisation	(17,768)	(2,653)	(5)	(20,426)
Share of profit of associates	-	-	1,166	1,166
Investment in associates accounted for by the equity method	-	-	3,995	3,995

52 week period to 28 March 2015	UK Retail	Germany Retail	Corporate	Total
	£'000	£'000	£'000	£'000
Revenue	1,526,181	120,643	-	1,646,824
Gross profit	525,497	44,411	-	569,908
EBITDA	163,166	10,659	(23,660)	150,165
Interest received	80	19	-	99
Interest expense	(112)	(181)	(72,582)	(72,875)
Income tax expense	(31,558)	(2,305)	12,011	(21,852)
Segment profit/(loss)	118,717	5,379	(84,233)	39,863
Total assets	1,329,816	92,981	5,546	1,428,343
Total liabilities	(205,201)	(19,763)	(479,550)	(704,514)
Other disclosures:
Capital expenditure (including intangible)	(34,246)	(1,669)	-	(35,915)
Depreciation and amortisation	(12,859)	(2,813)	(2)	(15,674)
Share of profit of associates	-	-	1,632	1,632
Investment in associates accounted for by the equity method	-	-	3,822	3,822

3          Adjusted profit and loss statement

Period ended	52 weeks ended 26 March 2016	Adjusting items (Note 4)	Adjusted  52 weeks ended 26 March 2016	52 weeks ended 28 March 2015	Adjusting items (Note 4)	Adjusted 52 weeks ended 28 March 2015
	£'000	£'000	£'000	£'000	£'000	£;000
Revenue	2,035,285	-	2,035,285	1,646,824	-	1,646,824
Cost of sales	(1,332,263)	-	(1,332,263)	(1,076,916)	-	(1,076,916)
Gross profit	703,022	-	703,022	569,908	-	569,908
Administrative expenses	(528,530)	(6,387)	(522,143)	(437,049)	(24,103)	(412,946)
Add back depreciation & amortisation	20,426	-	20,426	15,674	-	15,674
Share of profits of investments in associates	1,166	-	1,166	1,632	-	1,632
EBITDA	196,084	(6,387)	202,471	150,165	(24,103)	174,268
Depreciation & amortisation	(20,426)	-	(20,426)	(15,674)	-	(15,674)
Profit on ordinary activities before interest and tax	175,658	(6,387)	182,045	134,491	(24,103)	158,594
Finance costs	(21,573)	(723)	(20,850)	(72,875)	(49,173)	(23,702)
Finance income	460	277	183	99	-	99
Profit/(loss) on ordinary activities before tax	154,545	(6,833)	161,378	61,715	(73,276)	134,991
Income tax expense	(28,142)	1,139	(29,281)	(21,852)	9,064	(30,916)
Other tax expense	(603)	-	(603)
Profit/(loss) for the period	125,800	(5,694)	131,494	39,863	(64,212)	104,075
Attributable to non-controlling interests	1,264	(100)	1,364	1,223	(18)	1,241
Attributable to owners of the parent	124,536	(5,594)	130,130	38,640	(64,194)	102,834
Other comprehensive income for the period
Items which may be reclassified to Profit and loss :
Exchange differences on retranslation of subsidiary and associate accounts	5,505	5,505	-	(4,236)	(4,236)	-
Actuarial gain/(loss) on the defined benefit pension scheme	5	5	-	(35)	(35)	-
Tax effect of other comprehensive income	13	13	-	11	11	-
Total comprehensive income/(loss) for the period	131,323	(171)	131,494	35,603	(68,472)	104,075
Attributable to non-controlling interests	1,265	(99)	1,364	1,218	(23)	1,241
Attributable to owners of the parent	130,058	(72)	130,130	34,385	(68,449)	102,834
Earnings/(loss) per share
Basic earnings/(loss) per share attributable to ordinary equity holders (pence)	12.5	(0.5)	13.0	3.4	(6.8)	10.3
Diluted earnings/(loss) per share attributable to ordinary equity holders (pence)	12.4	(0.6)	13.0	3.4	(6.8)	10.3

 

4          Adjusting Items

Period ended	52 weeks ended 26 March 2016	52 weeks ended 28 March 2015
	£'000	£'000
Administrative expenses
Fees related to the IPO	(770)	(19,709)
Fees related to the acquisition of the German entities	-	(827)
Fair value adjustments to foreign exchange and fuel derivatives	3,577	2,270
Professional fees associated with the prior financing structure	-	(970)
New store pre-opening costs	(7,573)	(5,272)
Foreign exchange movements on intercompany balances	(198)	(2,840)
Property provision and compulsory purchase order income	(1,322)	3,148
Other items which management considered one off in nature	(101)	97
	(6,387)	(24,103)
Finance costs and Income
Interest on loans from owners	-	(16,170)
One off costs incurred on raising debt finance	-	(28,815)
Fair value adjustments on interest swap derivatives	277	(2,214)
Unwinding of the call/put option held over the minority interest of Jawoll	(723)	(1,974)
	(446)	(49,173)
Income tax expense
Tax adjustment relating to items adjusting administrative costs	1,194	557
Tax adjustment relating to items adjusting finance costs	(55)	8,507
	1,139	9,064
Other comprehensive income
Exchange differences relating to retranslation of Group entities	5,505	(4,236)
Actuarial change in the defined benefit pension liability	5	(35)
Tax effect of other comprehensive income	13	11
	5,523	(4,260)

Adjusting items are exceptional and non-trading items considered by the directors to not be incurred in the usual underlying running of the trade of the Group. The directors consider the adjusted figures to be a more accurate reflection of the underlying business performance of the Group and believe that this measure provides additional useful information for investors on the Group's performance, as well as being consistent with how business performance is monitored internally.

Adjusting items include expenses relating to new acquisitions, special projects and restructuring expenses (such as IPO, refinancing, maintaining ownership structures), pre-opening new store costs, provisions for onerous leases, regulatory investigations or fines, dilapidation provisions, compulsory purchase order income, foreign exchange gains/(losses), fair value gains/(losses) on derivatives, other comprehensive income items, unwinding interest on items not directly related to the trade of the business, impairment on non-financial assets, profit/(loss) on fixed assets disposal and the estimated tax effect of these items.

Adjusted EBITDA and related measures are not a measurement of performance or liquidity under IFRS and should not be considered in isolation or as a substitute for measures of profit, or as an indicator of the Group's operating performance or cash flows from operating activities as determined in accordance with IFRS.

5          Taxation

The relationship between the expected tax expense based on the standard rate of corporation tax in the UK of 20% (2015 : 21%) and the tax expense actually recognised in the statement of comprehensive income can be reconciled as follows:

Period ended	52 weeks to 26 March 2016	52 weeks to 28 March 2015
	£'000	£'000
Current tax expense	29,327	20,667
Deferred tax (credit)/charge	(1,185)	1,185
Total tax expense	28,142	21,852
Result for the year before tax	154,545	61,715
Expected tax charge at the standard tax rate	30,909	12,960
Effect of :
Expenses not deductible for tax purposes	1,812	8,179
Income not taxable	(1,076)	(362)
Foreign operation taxed at local rate	280	964
Changes in the rate of corporation tax	(1,963)	(33)
Adjustment in respect of prior years	(1,827)	128
Other	7	16
Actual tax expense	28,142	21,852

            The other tax expense amounting to £603k (2015: £nil) comprises Luxembourg Net Wealth Tax payable by the Group's Luxembourg entities.

6          Earnings/(loss) per share

Basic earnings per share amounts are calculated by dividing the net profit or loss for the financial period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding at each period end.

As the Group undertook a Group reconstruction in June 2014, the number of shares in the prior period has been adjusted to match the post-restructuring position such that the figures remain comparable.

Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during each year plus the weighted average number of ordinary shares that would be issued on conversion of any dilutive potential ordinary shares into ordinary shares. 

Adjusted basic and diluted earnings per share are calculated on the same basis except using the adjusted profit or loss attributable to the equity holders of the parent.

There are share option schemes in place which has a dilutive effect on both periods presented.

The following reflects the income and share data used in the basic and diluted earnings per share computations:

 

Period ended	26 March  2016	28 March 2015
	£'000	£'000
Profit for the period attributable to ordinary equity holders of the Group	124,536	34,385
Adjusted profit for the period attributable to ordinary equity holders of the Group	130,130	102,834
	Thousands	Thousands
Weighted average number of ordinary shares for basic earnings per share	1,000,000	1,000,000
Effect of dilution:
Employee share options	475	521
Weighted average number of ordinary shares adjusted for the effect of dilution	1,000,475	1,000,521
	Pence	Pence
Basic earnings per share	12.5	3.4
Diluted earnings per share	12.4	3.4
Adjusted basic earnings per share	13.0	10.3
Adjusted diluted earnings per share	13.0	10.3

7          Intangible assets

	Goodwill	Software	Brands	Other	Total
	£'000	£'000	£'000	£'000	£'000
Cost or valuation
At 29 March 2014	807,496	811	93,700	-	902,007
Acquired via purchase of Jawoll	31,258	357	4,901	1,422	37,938
Additions	-	248	-	-	248
Effect of retranslation	(3,496)	(44)	(548)	(159)	(4,247)
At 28 March 2015	835,258	1,372	98,053	1,263	935,946
Additions	-	1,801	-	-	1,801
Disposals	-	(76)	-	-	(76)
Effect of retranslation	2,192	26	343	100	2,661
At 26 March 2016	837,450	3,123	98,396	1,363	940,332
Accumulated amortisation / impairment
At 29 March 2014	-	204	-	-	204
Charge for the year	-	391	-	436	827
Effect of retranslation	-	(9)	-	(29)	(38)
At 28 March 2015	-	586	-	407	993
Charge for the year	-	416	-	284	700
Disposals	-	(54)	-	-	(54)
Effect of retranslation	-	15	-	54	69
At 26 March 2016	-	963	-	745	1,708
Net book value at 26 March 2016	837,450	2,160	98,396	618	938,624
Net book value at 28 March 2015	835,258	786	98,053	856	934,953

An impairment review has been carried out over the Goodwill and Brand assets as at the year end date. No requirement for impairment was recognised and full details will be issued within our annual report.

 

8          Property, plant & equipment

	Land and buildings	Motor Vehicles	Plant, fixtures and equipment	Total
	£'000	£'000	£'000	£'000
Cost or valuation
29 March 2014	9,537	2,288	62,383	74,208
Arising on acquisition of Jawoll	16,078	189	4,688	20,955
Additions	5,593	919	29,155	35,667
Disposals	(2,157)	(481)	(395)	(3,033)
Effect of retranslation	(1,799)	(36)	(589)	(2,424)
Adjustment	(38)	344	203	509
28 March 2015	27,214	3,223	95,445	125,882
Additions	6,493	1,129	47,290	54,912
Disposals	(270)	(855)	(326)	(1,451)
Effect of retranslation	1,313	28	573	1,914
26 March 2016	34,750	3,525	142,982	181,257
Accumulated depreciation
At 29 March 2014	2,055	407	6,750	9,212
Charge for the period	2,988	833	11,026	14,847
Disposals	(4)	(202)	(162)	(368)
Effect of retranslation	(69)	(5)	(67)	(141)
Adjustment	(38)	344	203	509
At 28 March 2015	4,932	1,377	17,750	24,059
Charge for the period	3,435	732	15,559	19,726
Disposals	-	(565)	(316)	(881)
Effect of retranslation	156	6	141	303
At 26 March 2016	8,523	1,550	33,134	43,207
Net book value at 26 March 2016	26,227	1,975	109,848	138,050
Net book value at 28 March 2015	22,282	1,846	77,695	101,823

On the acquisition of the SBR Europe group on 6 March 2013, the property, plant and equipment was restated such that their net book value equalled their cost. Initially an estimation technique was used to perform this task, due to the number of assets on the fixed asset register, but the value was calculated exactly before the 28 March 2015 year end. The resulting differences in cost and accumulated depreciation, which have no impact on net book value, have been included in the adjustment line related to the prior year.

9          Financial liabilities - borrowings

As at	26 March 2016	28 March 2015
	£'000	£'000
Non-current
Term facility bank loans	435,142	433,758

The term facility bank loans are held at amortised cost and were initially capitalised in June 2014 with £7.3m of fees attributed to them (2015: same).

 

The maturities of the loan facilities are as follows.

	Interest Rate	Maturity	26 March 2016	28 March 2015
	%		£'000	£'000
Current interest bearing loans and borrowings
Finance Leases	1.2-3.9%	2015-17	1,119	1,066
Non-current interest bearing loans and borrowings
UK Holdco term loan A	2.75/3.25% + LIBOR	2019	300,000	300,000
UK Holdco term loan B	3/3.5% + LIBOR	2020	140,000	140,000
Finance leases	1.2%-3.9%	2017-24	4,252	4,918

Term loans A and B have carrying values which include transaction fees allocated on inception.

10        Cash generated from operations

Period ended	52 weeks ended 26 March 2016	52 weeks ended 28 March 2015
	£'000	£'000
Profit before tax	154,545	61,715
Adjustments for:
Net interest expense	21,113	72,776
Depreciation	19,726	14,847
Amortisation of intangible assets	700	827
Transaction fees through administrative expenses	770	20,536
(Profit) / loss on disposal of property, plant and equipment	52	(70)
Loss on share options	235	186
Change in inventories	(67,184)	(53,302)
Change in trade and other receivables	7,855	(10,342)
Change in trade and other payables	37,153	49,898
Change in provisions	312	(1,863)
Share of profit from associates	(1,166)	(1,632)
Non-cash foreign exchange effect from retranslation of subsidiary cashflows	400	1,574
(Profit) / loss resulting from fair value of financial derivatives	(3,577)	(2,270)
Cash generated from operations	170,934	152,880

11         Related party transactions

The Group has transacted with the following related parties over the periods:

Multi-Lines International Company Limited, a supplier, and Home Focus Group, a customer, have been associates of the Group since the purchase of SBR Europe on March 6, 2013.

Ropley Properties Ltd, Triple Jersey Ltd, Rani Investments, Multi Lines International (Properties) Ltd and Speke Point Ltd, all landlords of properties occupied by the group, are directly or indirectly owned by director Simon Arora, his family, or his family trusts (together, the Arora related parties).

Rani 1 Life Interest Trust and Rani 2 Life Interest Trust, directly or indirectly owned by director Simon Arora, his family, or his family trusts, were reimbursed for management and financial consulting services provided to the Group. These services ceased upon listing.

Clayton, Dubilier & Rice, the part-owners of the previous ultimate parent undertaking, and current shareholders, provided management and financial consulting services to the Group. These services ceased upon listing.

Jawoll Immobilien GmbH, Stern Grundstück Entwicklungs GmbH, DS Grundstücks GmbH and Silke Stern are all landlords of properties occupied by the Group and are related by virtue of connection to a director of the J.A.Woll-Handels GmbH. Some of these are held under finance lease, as detailed below.

 
The following table sets out the total amount of trading transactions with related parties included in the statement of comprehensive income, including the P&L impact of any finance leases;

Period ended	26 March 2016 £'000	28 March 2015  £'000
Sales to associates of the Group
Home Focus Group Limited	770	737
Total sales to related parties	770	737
Purchases from associates of the Group
Multi-Lines International Company Ltd	98,105	72,371
Purchases from owners of the business
Clayton, Dubilier & Rice	-	17,608
Purchases from parties related to key management personnel
Multi-Lines International (Properties) Ltd	134	120
DS Grundstücks GmbH	581	570
Jawoll Immobilien GmbH	458	451
Rani Investments	191	191
Rani 1 Life Interest Trust	-	36
Rani 2 Life Interest Trust	-	36
Ropley Properties Ltd	2,811	2,632
Silke Stern	133	135
Speke Point Ltd	-	2,125
Stern Grundstück Entwicklungs	475	464
Triple Jersey Ltd	7,176	2,925
Total purchases from related parties	110,064	99,664

Included in the current year figures above are 6 leases of new stores (or extensions to existing stores), and 1 lease renewal of an existing store, entered into by Group companies during the current period with the Arora related parties (2015: 4 new, or extensions to existing, leases and no renewals since the IPO date). The total expense on these leases in the period was £927k (2015: £188k). There were also 3 conditionally exchanged leases with Arora related parties in the current period with long stop completion dates in the next financial year, and no expense is incurred under them until they are completed.

The following table sets out the total amount of trading balances with related parties outstanding at the period end. Note that the debtors balance held by Multi-Lines International is a deposit on account and included a goods received not invoiced (GRNI) balance of £1.6m (2015: £2.9m).

As at	26 March 2016 £'000	28 March 2015 £'000
Trade receivables from associates of the group
Home Focus Group Ltd	251	79
Multi-Lines International Company Ltd	546	2,842
Trade receivables from companies owned by key management personnel
DS Grundstücks GmbH	2	-
Total related party trade receivables	799	2,921
Trade payables to companies owned by key management personnel
Rani Investments	39	39
Ropley Properties Ltd	852	727
Triple Jersey Ltd	1,290	566
Total related party trade payables	2,181	1,332

Outstanding trade balances at the balance sheet date are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party trade receivables or payables.

The business has not recorded any impairment of trade receivables relating to amounts owed by related parties at 26 March 2016 (2015: no impairment). This assessment is undertaken each year through examining the financial position of the related party and the market in which the related party operates.

The balances remaining on the finance lease asset and liabilities at each year end is as follows:

As at	26 March 2016 £'000	28 March 2015 £'000
Finance lease assets from parties related to key management personnel
DS Grundstücks GmbH	994	1,192
Jawoll Immobilien GmbH	1,194	1,227
Silke Stern	701	762
Stern Grundstück Entwicklungs	1,695	1,848
Total assets held under finance lease from related parties	4,584	5,029
Finance lease liabilities with parties related to key management personnel
DS Grundstücks GmbH	1,196	1,431
Jawoll Immobilien GmbH	1,370	1,408
Silke Stern	815	883
Stern Grundstück Entwicklungs	1,899	2,070
Total finance lease liabilities held with related parties	5,280	5,792

All related party finance leases are on properties occupied by the German business.

Key management personnel and Directors' remuneration includes the following:

Period ended	52 weeks to 26 March 2016	52 weeks to 28 March 2015
	£'000	£'000
Directors' remuneration
Short term employee benefits	1,175	833
Benefits accrued under the share option scheme	80	22
	1,255	855
Key management expense (includes Directors' remuneration)
Short term employee benefits	2,627	2,122
Benefits accrued under the share option scheme	80	22
	2,707	2,144
Amounts in respect of the highest paid director emoluments:
Short term employee benefits	576	376
Benefits accrued under the share option scheme	-	22
	576	398

The emoluments disclosed above are of the directors and key management personnel who have served as a director within any of the Group companies.  A full remuneration report will be included with the annual report.

12        Directors

The directors that served during the period were:

Name                          

Sir T Leahy (Chairman)

S Arora (CEO)             

P McDonald (CFO)      

T Hübner                     

R McMillan                  

K Guion                      

H Brouwer                   

D Novak                     

All directors served for the whole period.

Statement of Directors' responsibilities

 

The Directors are responsible for preparing the Annual Report and the Group and Company financial statements in accordance with applicable law and regulations.

 

Company law requires the Directors to prepare Group and Company financial statements for each financial year. Under that law they are required to prepare the Group financial statements in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the EU and applicable law and have prepared the Company financial statements in accordance with Luxemburg legal and regulatory requirements regarding the preparation of annual accounts ("Lux GAAP").

 

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of their profit or loss for that period. In preparing each of the Group and Company financial statements, the Directors are required to:

•  select suitable accounting policies and then apply them consistently;

•  make judgements and estimates that are reasonable and prudent;

•  present the financial statements and policies in a manner that provides relevant, reliable, comparable and understandable information;

•  state whether they have been prepared in accordance with IFRSs as adopted by the EU;

•  provide additional disclosures when compliance with the specific requirements in IFRSs or in accordance with Lux GAAP are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

•  prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business.

 

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with the Company Law. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

 

The Directors are responsible for preparing the Annual Report in accordance with applicable laws and regulations. Having taken advice from the Audit & Risk Committee the Directors consider the Annual Report and the financial statements taken as a whole, provides the information necessary to assess the Group's performance, business model and strategy and is fair balanced and understandable.

 

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. The financial statements will be published on the Company's website.

 

Legislation in Luxembourg governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

 

We confirm that to the best of our knowledge:

•  the consolidated financial statements of B&M European Value Retail S.A. ("Company") presented in this Annual Report and established in conformity with International Financial Reporting Standards as adopted in the European Union give a true and fair view of the assets, liabilities, financial position, cash flows and profits of the Company and the undertakings included within the consolidation taken as a whole;

•  the annual accounts of the Company presented in this Annual Report and established in conformity with the Luxembourg legal and regulatory requirements relating to the preparation of annual accounts give a true and fair view of the assets, liabilities, financial position and profits of the Company;

•  the Strategic Report includes a fair review of the development and performance of the business and position of the Company and the undertakings included within the consolidation taken as a whole, together with a description of the principal risks and uncertainties it faces; and

•  this Annual Report (including the financial statements), taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's performance, business model and strategy.

 

Approved by order of the Board

 

 

 

Simon Arora

Chief Executive Officer

Paul McDonald

Chief Financial Officer

26 May 2016

 

END

 

 

FR UVRKRNNAVUAR