B&M Regulatory News (BME)

17 November 2015

B&M European Value Retail S.A.

Interim Results Announcement

Strong Growth Driven by Accelerated New Store Programme

B&M European Value Retail S.A. ("the Group"), the UK's leading multi-price value retailer, today announces its interim results for the 26 weeks to 26 September 2015.

HIGHLIGHTS

● Group revenues have increased by 25.8% to £930.3m, +26.8% at constant currency

● 47 net new stores opened in the UK in the period, on track for 80 net new openings this financial year

● German business, Jawoll, opened 2 new stores in the period, with 3 more openings before Christmas

● UK Like-for-Like revenues +1.2%

● Group adjusted EBITDA increased by 18.6% to £86.6m

● Group adjusted Profit before Tax increased by 25.4% to £66.4m

● 2 new additional distribution centres opened in the UK by the end of September 2015 totalling 800,000 sq ft  

● Interim dividend increased by 77.8% to 1.6p per share (FY15: interim dividend 0.9p) to be paid on 15 January 2016

Sir Terry Leahy, Chairman, said,

"B&M has made good progress in the first half of the financial year towards its strategic goals of reaching at least 850 UK stores and creating a platform for longer term growth in Germany, whilst delivering further pleasing growth in sales, profits and cash generation. We are well prepared for the rest of the year and beyond."

Simon Arora, Chief Executive, said, 

"Our unique retail model continues to deliver strong revenue growth as we extend our geographic footprint. In the UK, our teams have opened 47 new stores in just 26 weeks - a record rate of openings for B&M. The business is growing at an annualised rate of over £400m per year, which brings its own operational challenges. However, the investment made in our supply chain infrastructure and in other core functions will support the next stage of our expansion. Our colleagues have worked incredibly hard over the period and I am very proud of their continued achievements."

Financial Results (unaudited)

¹ The H1 FY 2016 figures represent the 26 week performance to 26 September 2015 and the H1 FY2015 figures represent the 26 week performance to 27 September 2014.

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 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.

Analyst Meeting & Webcast

An Analyst Meeting in relation to the Interim Results will be held on Tuesday 17 November at 08:30 am (UK) by invitation only at:

Numis Securities LimitedThe London Stock Exchange Building10 Paternoster SquareLondon EC4M 7LT

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

UK & International: +44 (0) 330 606 8318

Pin number: 705 586 0716

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

Enquiries

B&M European Value Retail S.A.

For further information please contact +44 (0) 151 728 5400

Simon Arora, Chief Executive

Paul McDonald, Chief Financial Officer

Investor.relations@bandmretail.com

Media

For media please contact +44 (0) 207 379 5151

Maitland

Greg Lawless

Tom Eckersley

bmstores-maitland@maitland.co.uk

This announcement contains statements which are or may be deemed to be 'forward-looking statements'. Forward-looking statements involve risks and uncertainties because they relate to events and depend on events or circumstances that may or may not occur in the future. All forward-looking statements in this announcement reflect the Company's present view with respect to future events as at the date of this announcement. Forward-looking statements are not guarantees of future performance and actual results in future periods may and often do differ materially from those expressed in forward-looking statements. Except where required by law or the Listing Rules of the UK Listing Authority, the Company undertakes no obligation to release publicly the results of any revisions to any forward-looking statements in this announcement that may occur due to any change in its expectations or to reflect any events or circumstances arising after the date of this announcement.

Notes to editors

B&M European Value Retail S.A. is a variety retailer with 479 stores in the UK operating under the "B&M" brand and 54 stores in Germany primarily operating under the "Jawoll" brand as at 31 October 2015. It was admitted to the FTSE 250 index in June 2015.

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

OVERVIEW

During the first half of the financial year B&M has made further strong progress in implementing its strategy for growth whilst continuing to deliver pleasing improvements in sales, profit and cash generation. 

We have made substantial progress in three key areas:

· accelerating our UK store opening programme, which has more than doubled compared to the same period last year, benefiting from particularly favourable conditions currently in the retail property market; 

· commencement of new store expansion in our German business, Jawoll, with successful trials of the new store format; and 

· substantial investment made in supply chain infrastructure and in other central functions in both the UK and in Germany to support the next stage of our expansion.

New store openings represent a significant majority of the Group's revenue and earnings growth and

we opened 47 net new stores in the UK during the first half of this financial year, being a record pace of opening, bringing the total UK stores to 472. This compares with 20 net new openings in the first half of the last financial year and puts us on track to deliver 80 net new stores during the current financial year. The pipeline for next year, for which we have previously guided expectations to around 50 net new stores, is already looking strong.

The current supply of new store opportunities is plentiful, widely spread in terms of geography, averages larger unit sizes than has been the case in recent years, and importantly, it also offers the prospect of continuing attractive returns on investment. The current retail property market conditions are due to portfolio downsizing by some traditional national retailers and also an improved retail property development pipeline.

The strength of our unique model, both with customers and financially, and the scope B&M has for expanding the store network across the UK puts us in a strong position to benefit from these conditions and this is the reason why we have chosen this year to accelerate our new store programme. Our ambition is to have at least 850 stores in the UK and we remain on track to achieve this. As anticipated our expansion in some existing areas has had a deliberate effect on the LFL estate, but the returns on investment from those stores and in new regions remain favourable and the opportunity for B&M continues to be significant. We are pleased with the performance of the stores we have opened during the first half of this financial year.

We are pleased with early progress with Jawoll, our German business, as we apply key elements of the B&M model to its supply chain and format, as it prepares for a faster rate of new store openings in a large market which is under-served by general merchandise discount retailers. Integration with B&M's sourcing model has continued to increase across the Jawoll categories. Jawoll's trial new format stores, which are closer to the B&M format in terms of size and assortment, have performed in line with our expectations and this has encouraged us to roll out more new store openings. We opened two new stores in the first half and a further three are planned during the second half of this financial year, then taking the total number to 55.

We continue to invest by planning ahead to support our future growth plans. During the first half of this financial year we brought substantial new supply chain capacity on stream with our new distribution centres in Runcorn, which opened in June, and Middlewich, which was commissioned in September. They have added 800,000 square feet of UK warehouse space. Our new extension to the Jawoll warehouse of circa 46,000 square feet is on schedule to be completed by April 2016, enabling the business to expand more rapidly in the future.

With this pace of growth and investment, it is pleasing to be able to report results which again demonstrate the strength and potential of the B&M model. Despite making substantial capital and revenue investment in our rate of expansion and in infrastructure to support future growth, sales, profit and cash generation have all made good progress. Store investment returns also remain very positive.

The accelerated scale of growth and investment has had some challenging short-term consequences operationally. Our UK new store programme has been larger in recent months than we had originally planned for, and, given the introduction of the two large new distribution centres during the period, we have experienced below-normal service levels to stores as we approach peak trading. This will have a short-term impact on overheads and in-store product availability.

Our teams have performed brilliantly during this period of record growth, not just in delivering many more new stores and commissioning additional new distribution centres, but also in continuing to sharpen our competitiveness, improve our ranges and serve our customers well. I wish to thank them for their continued hard work and dedication.

Financial Performance

Group revenues for the 26 weeks ended 26 September 2015 grew by 25.8% to £930.3m and by 26.8% on a constant currency basis. In the UK revenues grew by 26.5% to £861.7m, (FY2015 H1: £681.0m) largely driven by the successful execution of our new store opening program, with a net 47 new stores opened in the first half of the year and the annualisation of the net 52 new stores opened in FY2015. Like-for-Like revenues were +1.2% against a broadly flat market and price deflation in some core grocery categories. Like-for-Like revenues at the end of the half year, in the absence of cannibalisation, would have been +2.5%.

Our gross margin percentage declined by 20 basis points to 34.5%. The UK and German businesses were impacted by unfavourable US dollar rates against Sterling and the Euro respectively, although this was mitigated in part by a favourable sales mix.

Costs continue to be carefully controlled across the Group; operating costs excluding depreciation increased to £234.0m, an increase of 27.5% versus last year, largely due to the increases in store numbers, although there has been phased increases in central costs to support the store growth and the additional costs incurred on the opening of the additional warehousing capacity.

The Adjusted EBITDA for the period was £86.6m, an increase of 18.6% with the UK business growing by 19.8% whilst the growth in Germany was 7.1%, in part as a result of the translational impact of the Euro/Sterling rate, with the underlying business performing in line with management expectations.

The Group's adjusted EBITDA margin percentage was 55bps lower than last year, impacted by the weaker gross margin and the infrastructure investments made during the period.

Finance costs were £11.1m, which compares to £58.2m in FY2015, largely reflecting the change in the capital structure of the business following the IPO in June 2014.

The capex investment made in the store opening programme and in the additional warehouse capacity has resulted in a significant increase in capital expenditure to £32.1m compared to £12.4m in FY2015. The increased number of store openings has also resulted in an increase in the working capital outflow of £12.6m compared with the same period last year. Despite these investments though the Group has continued to reduce leverage with net debt to adjusted EBITDA reduced from 2.8 times at the end of September 2014 to 2.2 times at the end of September 2015, reflecting the speed of new store paybacks.

In the coming months, the Group will consider the most appropriate and efficient capital structure in the context of its growth strategy and cash generation profile.

Dividend

In line with the upper end of our dividend policy of paying 30-40% of normalised earnings, an interim dividend of 1.6p (gross) per Ordinary Share will be paid on 15 January 2016 to shareholders on the register at 4 December 2015, being an increase of 77.8% to the interim dividend paid at the half year in FY15. The dividend payment will be subject to a Luxembourg withholding tax of 15%.

Shareholders and Depository Interest holders can obtain further information on the methods of receiving their dividends on our website www.bandmretail.com or by visiting the website of our Registrar, Capita Asset Services at www.capitashareportal.com

Strategic Development

Our Group Strategy remains consistent with that set out in our 2015 annual report.

1. Expand our geographic coverage in the UK

B&M still remains a largely regional retailer. We believe the UK has the potential for at least 850 stores. At the end of the half year we had 472 stores, having opened 47 net new stores in the 26 week period, a record number of openings. We remain on track to open 80 net new stores in the financial year. The new store openings have been across all parts of the UK, including regions where we had limited or no presence to date. The offer continues to be well received by customers in these new markets and store payback periods remain attractive. The UK retail property market conditions remain favourable to support our new store opening programme with traditional national retailers continuing to "rightsize" their estates, lease expiries presenting opportunities and also the increased importance of new build developments. The new store pipeline remains strong.

2. Deliver exceptional value to our shoppers

We continue to offer our customers excellent value for money across a range of grocery and general merchandise products and our buying teams continue to enhance our product ranges to ensure that we are selling what the customer wants to buy. We place great emphasis on direct sourcing from the manufacturer wherever possible.

3. Develop our International business

We wish to replicate our variety retailing model in appropriate markets outside of the UK. We believe that a significant opportunity exists for growth through a disciplined approach to European expansion.

We continue to make progress within our German business, Jawoll, and we will have opened 6 further stores this calendar year across a variety of store sizes and locations, increasing the number of stores to 55. The customer reaction to these stores has been positive.

Progress has been made with the introduction of further products from our Far East supply chain including ranges of toys and Christmas decorations.

Investments are being made in people including both the strengthening of the buying teams and the new store acquisition teams, alongside investment in the physical infrastructure. The €4.5m warehouse expansion is due to be completed by April 2016, ahead of further new store openings.

4. Investment in Infrastructure and People

The Group recognises the need to continue to invest in its physical infrastructure to support its growth plans. In the first half of the financial year we successfully commissioned two new distribution facilities, introducing another 800,000 square feet of warehousing capacity.

The rate of store growth and new warehousing capacity has required us to continue to invest in operational management and personnel across a range of functions to ensure that we continue to deliver growth.

Principal Risks and Uncertainties

There are a number of risks and uncertainties which could have a material negative impact on the Group's performance over the remainder of the current financial year. These could cause our actual results to materially differ from historical or expected results. The Board does not believe that these risks and uncertainties are materially different to those published in the annual report for the year ended 28 March 2015.

These risks comprise high levels of competition, the broader economic environment and market conditions, disruption to key IT systems and business continuity, failure to comply with laws and regulations, credit risk and liquidity, fluctuations in commodity prices, disruption in supply chain, failure of stock management controls, failure to maintain and invest in key infrastructure, key management reliance, availability of suitable new stores, inherent risks in international expansion and ineffective implementation of warehouse management system.

Detailed explanations of these risks are set out on pages 18 and 19 of the Annual Report 2015 which is available at www.bandmretail.com

Outlook

We are pleased with the quality and the performance of the new stores we are opening, including in regions where we had no previous presence. Retail property market conditions in the UK continue to be favourable and we remain confident of achieving our target of opening 80 stores in the current year, as well as continuing to build a strong forward pipeline. ‎Our new stores are demonstrating the strength of our appeal across a wide range of catchment types and are enhancing B&M's brand recognition in the UK as we widen our geographic coverage.

The two new UK distribution centres are now operational and provide capacity to support further growth. Their introduction, allied to the greater than budgeted store opening level, has brought some short term operational challenges and hence an effect on Like-for-Like sales performance in the build up to our peak trading period, but the overall earnings growth and return on investment remains strong. The unusually mild temperatures have led to a slow start for cold weather and seasonal ranges but we are well prepared for Christmas trading. We are confident both in the full year outlook and in the longer term potential for our unique retail model as we continue the roll out of our store estates in the UK and Germany.

Simon Arora

Chief Executive

17 November 2015

Unaudited Consolidated statement of Comprehensive Income

All operations are classified as continuing and new acquisitions as disclosed above. The accompanying accounting policies and notes form an integral part of these financial statements.

Unaudited Consolidated statement of Financial Position

The accompanying accounting policies and notes form an integral part of this financial information. The condensed financial statements were approved by the Board of Directors and authorised for issue on 13 November 2015 and signed on their behalf by:

S. Arora, Director.

Unaudited Consolidated statement of Changes in Shareholders' Equity

Unaudited Consolidated statement of Cash Flows

Notes to the financial information

1 General Information and Basis of Preparation

The results for the first half of the financial year have not been audited and are prepared on the basis of the accounting policies set out in the Group's last set of consolidated accounts released by the ultimate controlling party, B&M European Value Retail S.A., a company listed on the London Stock Exchange and incorporated in Luxembourg.

The financial information has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority (DTR) and with International Accounting Standard (IAS) 34 - "Interim Financial Reporting" as endorsed by the European Union.

The Group's trade is general retail, with trading taking place in the UK and Germany.

The principal accounting policies have remained unchanged from the prior financial information for B&M European Value Retail S.A. for the period to 28 March 2015.

Luxembourg companies are required to allocate a minimum of 5% of their annual net income to a Legal Reserve, until this reserve is equal to 10% of their subscribed capital. This reserve may not be distributed.

The financial statements for B&M European Value Retail S.A. for the period to 28 March 2015 have been reported on by the Group auditor and delivered to the Luxembourg Registrar of Companies. The audit report was unqualified.

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

This consolidated financial information does not constitute statutory financial statements.

Reconstruction, refinancing and listing of the Group

B&M European Value Retail S.A. (the "company") was incorporated on 19 May 2014 and acquired the entire issued share capital of the previous Group parent, B&M European Value Retail 1 S.à r.l. on 17 June 2014. On this same date the company was listed on the London Stock Exchange.

Full details of the reconstruction and subsequent listing can be found in the financial statements issued by the company for the period to 28 March 2015.

Basis of Consolidation

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

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

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

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

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

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

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

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

· Rights arising from other contractual arrangements

· The Group's voting rights and potential voting rights

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

Going concern

The Group has in place significant financing facilities which are due for renewal in 2019 and 2020, and operations which are cash generative. The directors have considered this and the company's current forecasts, and determined that it is appropriate to continue to use the going concern basis for production of these financial statements.

Critical judgments and key sources of estimation uncertainty

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

Impairment of non-financial assets

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

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

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

Investments in Associates

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

· Power over the investee.

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

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

Although 50% owned, Multi-Lines have their own independent management who operate without direct oversight of Group management on a day to day basis. 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.

Intangible brand assets

Due to acquisitions in prior years the Group carries intangible brand assets with indefinite lives.

The indefinite life is considered to remain appropriate because of several factors, chief amongst which was that the growth potential of the B&M and Jawoll businesses, which are considered by management to be long-term phenomenon.

Put/call options on Jawoll non-controlling interest

The purchase agreement for Jawoll in April 2014 included call and put options over the shares not purchased by the Group, representing 20% of Jawoll. The options are arranged such that it is considered likely that either the call or put option will be taken at the exercise date in 2019.

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

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

Standards and interpretations not yet applied by the Group

New and amended standards and interpretations adopted by the Group;

· IFRIC 21, "Levies", sets out the accounting for an obligation to pay a levy if that liability is within the scope of IAS 37, "Provisions". The interpretation addresses what the obligating event is that gives rise to pay a levy and when a liability should be recognised. The adoption of IFRIC 21 does not have a significant impact for the Group.

· Annual improvements 2011-2013. The amendments include changes from the 2011-13 cycle of the annual improvements project that affects four standards: IFRS 1, "First time adoption", IFRS 3 "Business combination", IFRS 13, "Fair value measurement" and IAS 40, "Investment property". The application of these amendments had no significant impact for the Group.

· Annual improvements 2010-2012. These amendments include changes from the 2010-12 cycle of the annual improvements project, that affect several standards: IFRS 2, "Share-based payment",

· IFRS 3, "Business Combinations", IFRS 8, "Operating segments", IFRS 13, "Fair value measurement", IAS 16, "Property, plant and equipment", IAS 38, "Intangible assets", IAS 37, "Provisions, contingent liabilities and contingent assets", and IAS 39, "Financial instruments - Recognition and measurement". The application of these amendments had no significant impact for the Group.

· IAS 19 revised, "Defined Benefit Plans: Employee Contributions" - effective for annual periods beginning on or after 1 July 2014. The application of this amendment had no impact for the Group.

Standards and amendments to existing standards that are not yet effective and have not been early adopted by the Group:

The following new standards and amendments have been published but are not effective for the Group's accounting period beginning on 1 April 2015. All these standards and amendments have not yet been endorsed by the European Union.

· "Disclosure Initiative (Amendments to IAS 1)" - effective from 1 January 2016 to encourage companies to apply professional judgement in determining the information to disclose in their financial statements36;

· Amendments to IAS 16, "Property, plant and equipment" and IAS 38, "Intangible assets" on depreciation and amortisation - effective from 1 January 2016. IASB has clarified that the use of revenue-based methods to calculate the depreciation of an asset is not appropriate because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset. The IASB has also clarified that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. However, past the headline is a rebuttable presumption, and revenue-based amortisation is permitted when it can be demonstrated that revenue and the consumption of the economic benefits of the intangible asset are highly correlated;

· Amendment to IAS 27, "Separate financial statements", on equity method on separate financial statements - effective from 1 January 2016;

· Amendment to IFRS 10, "Consolidated financial statements", IFRS 12 "Disclosure of interests in other entities" and IAS 28, "Associates and joint ventures" on sale or contribution of assets and on investment entities applying the consolidation exception - effective from 1 January 2016;

· Amendment to IFRS 11, "Joint arrangements" on acquisition of an interest in a joint operation - effective from 1 January 2016;

· Annual improvements 2012-2014 - effective from 1 January 2016

· IFRS 9, "Financial instruments" - effective from 1 January 2018. The IASB has published the complete version of IFRS 9 which replaces IAS 39. This final version includes requirements on the classification and measurement of financial assets and liabilities; it also includes an expected credit losses model that replaces the incurred loss impairment model used today and redefine the guidance regarding the hedge accounting;

· IFRS 14, "Regulatory deferral accounts" - effective from 1 January 2016;

· IFRS 15, "Revenue from contracts with customers" applies to all contracts with customers except those that are financial instruments, leases or insurance contracts and introduces a five-step process that the Group will have to follow. The new Standard goes beyond just "commercial effect", "fair value" and "risk and rewards" and will also result in a significant increase in the volume of disclosures related to revenue. IFRS 15 will be applicable for reporting periods beginning on or after 1 January 2018.

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 Group's financing (including finance costs and finance income) and income taxes are managed on a group basis, though the standard rate of tax has been applied to the segmental results to aid comparison. 

3 Reconciliation of EBITDA to the statement of comprehensive income

EBITDA and adjusted EBITDA are non-IFRS measures and therefore we provide a reconciliation to the statement of comprehensive income below.

The adjusting items that are used in the calculation of adjusted EBITDA have been specified in greater detail (as those items adjusting administrative costs) in note 4.

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.

4 Adjusted profit and loss statement

The following table shows the detailed listing of adjusting items:

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, the expired management LTIP bonus scheme, and the estimated tax effect of these items.

5 Earnings/(loss) per share

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

Diluted earnings/(loss) 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. The employee share option scheme is considered to be dilutive.

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

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

6 TaxationThe taxation charge for the interim period has been calculated on the basis of the corporation tax rate for the full year of 20% (UK) and 30% (Germany) and then adjusted for allowances and non-deductibles in line with the prior year.

7 Intangible assets

An impairment review was carried out over the Goodwill and Brand assets at 28 March 2015. Details of these reviews are included in the Group statutory accounts. A full review will also take place at the next year end date of 27 March 2016.

8 Property, plant and equipment