B&M Regulatory News (BME)

18 November 2014

B&M European Value Retail S.A.

Interim Results Announcement

STRONG H1 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 interim results for the 26 weeks to 27 September 2014.

HIGHLIGHTS

● Group revenues have increased by 29.7% to £739.8m

● UK like-for-like revenues +4.8%

● Gross Margin improved by 80 basis points to 34.7%

● Group adjusted EBITDA increased by 34.0% to £73.0m

● 20 net new stores opened in the period, our 400th UK store was opened in October 2014

● Strong pipeline of further new stores, and on track for at least 50 net new openings this financial year

● Integration of Jawoll Germany proceeding to plan

● Interim dividend of 0.9p per share to be paid on 16 January 2015

Sir Terry Leahy, Chairman, said,

"B&M has delivered good momentum in sales, profits and cash generation during the first half whilst at the same time pushing on with rapid store rollout and investing in new infrastructure and team capability to support this long-term growth. The business is well-positioned as the leading limited assortment general merchandise discounter in a growth sector which offers scope for it to at least double in size in the UK alone over the next few years - and we are making good progress towards that objective."

Simon Arora, Chief Executive, said,

"I am delighted to report that our maiden first half results are in line with expectations for both our UK and our German retail businesses. Our unique variety retailing model continues to appeal to shoppers, who are drawn by our broad spread of products and exceptional value for money. We remain very pleased with our new store programme, which is delivering healthy earnings growth and exceptional returns on capital. This financial year we plan to create 2,500 new jobs in the UK. We remain confident that we can increase our store base from 400 stores to our stated goal of 850 stores in the UK."

Financial Results (unaudited)

*Excludes one-off costs relating to the IPO and restructuring, acquisition fees associated with the Jawoll acquisition, pre-IPO shareholder monitoring fees, new store pre-opening costs, non-cash fair value mark to market movements in treasury instruments and foreign exchange movements.

Analyst Meeting & Webcast

An Analyst Meeting in relation to the Interim Results will be held on Tuesday 18 November at 08:30 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: +44 (0) 20 3059 5861

US: +1 855 442 0876 

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

The Maitland Consultancy Limited

Neil Bennett

Brian Hudspith

bmstores-maitland@maitland.co.uk

Notes to editors

B&M European Value Retail S.A. is a variety retailer with 400 stores in the UK operating under the "B&M" brand and 49 stores in Germany primarily operating under the "Jawoll" brand as at 31 October 2014.

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

B&M has made strong trading and strategic progress over the first half of the financial year, in line with our expectations at the time of our IPO.

Our UK business has delivered total revenue growth of +19.4%. This trading performance is a reflection of the continued structural shift in the UK to value-led retailing and the competitive strength within our limited assortment model. The above growth is also testament to the hard work and efforts of all our colleagues across the Group.

Our UK revenue growth was delivered through both new store openings and like-for-like sales. During the period, we opened 20 net new stores in the UK. We now expect to open at least 50 net new stores this financial year. Our pipeline for 2015-16 is also encouraging, demonstrating the high availability of sites and the attractiveness of our covenant to landlords.

Our UK like-for-like sales in H1 were strong, with +4.8% growth. This solid like-for-like performance was achieved despite the strong comparable of +7.6% in 2013 and warm weather conditions in September this year when we launched our autumnal product ranges. In addition to revenue growth, our buying and store teams have delivered improved gross margins, which are up by 80 basis points on the prior year. This strong gross margin performance is attributable to increased buying power as we grow and good sell-through in our key non-grocery categories.

The period also marked our entry into the German retail market through our acquisition of Jawoll, an important milestone in our long-term goal of becoming a pan-European variety goods retailer. Since its acquisition, Jawoll has traded well and is trading slightly ahead of expectations. It is making good progress on accessing and benefitting from the supplier base of the broader Group. It has invested in both its IT systems and its buying team, the benefits of which should be seen in 2015.

The B&M Group is a highly cash generative business, allowing us to fund our growth plans from our own cash flow and also to strengthen our balance sheet. We have maintained a tight control of our working capital through to the current period end.

Financial Performance

Total revenues during the 26 week period to 27 September 2014 were £739.8m, an increase of 29.7% on the prior 26 week period to 28 September 2013. This included £58.8m of revenues of Jawoll Germany from the 5 months of its ownership by the Group.

Our Group gross margin percentage improved by 80 basis points to 34.7%. The increase in gross margin was attributable to a successful summer season with less markdown activity and better sell-through on non-grocery categories, as well as the modest impact of higher gross margins in our Jawoll subsidiary. Given our emphasis on maintaining our price leadership to drive growth, we plan to re-invest in price any future gross margin expansion.

Costs were kept under careful control, whilst allowing strategic investment in our central functions. We have been re-investing some of our revenue growth and gross margin expansion into central costs in order to expand our capability to grow the business over the coming years. Operating costs including depreciation increased by 33.1% (£47.4m) with the majority of the increase relating to new store space in the UK and Jawoll operating costs (£16.5m). Additionally, to support our growth we have continued to invest in our warehousing capacity and further improve our buying and HR functions.

Adjusted EBITDA for the period increased to £73.0m, up from £54.5m in the prior year and inclusive of £7.0m contribution by Jawoll Germany.

Following the capital restructuring of the Group prior to the IPO and the subsequent refinancing, the first half results reflect a very different capital structure and as such year on year comparisons of finance costs, and hence profit before and after tax are not meaningful.

Finance costs were £58.2m, this comprises £28.8m of previously unamortised fees relating to the March 2013 refinancing, £15.9m of non-cash interest on the preferred equity certificates that was subsequently converted to equity, £0.4m mark to market value of interest rate hedges, with the remaining £13.1m relating to bank interest and the amortisation of fees incurred.

The Group continues to be strongly cash generative and cash generated from operations was £37.7m (last year £3.9m). The Group's capital expenditure in the 26 weeks to September 2014 was £12.5m, driven by our new store opening programme and investments in upgrading our IT infrastructure.

Dividend

An interim dividend of 0.9p (gross) per Ordinary Share will be paid on 16 January 2015 to shareholders on the register at 5 December 2014. 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 IPO Prospectus.

1. Expand our geographic coverage in the UK

We believe the UK has the potential for approximately 850 B&M stores over the long term and remain very pleased with our new store opening programme. We ended the half year with 393 stores trading, having opened 20 stores over the 26 weeks. We expect to open at least 50 net new stores this financial year.

The UK retail property market remains highly favourable to support our store opening programme. Some of the national retailers are rightsizing their estates whilst the improved economic confidence generally is facilitating design and build pre-letting opportunities with developers on newly constructed space.

2. Deliver exceptional value to our shoppers.

We offer our shoppers extremely attractive prices across our broad range of products. This leaves us well-placed given the structural shift within the UK retail market to value-led retailing.

Within our grocery areas, our emphasis is on leading brands at Every Day Low Prices. Within our non-grocery departments we have further developed our own label expertise and maintain our focus on direct sourcing. Our limited assortment discounting model allows us to have a high proportion of goods sourced direct from the Far East, the benefits of which we pass on to our shoppers. Where possible we will seek to reinvest gross margin in pricing to ensure exceptional value for our customers.

3. Develop our International business

We wish to replicate our variety retailing model in appropriate markets outside the UK. The first half saw the acquisition of an 80% majority stake in Jawoll, a variety goods retailer based in North-West Germany. Jawoll has 49 stores and since joining the Group it has performed slightly ahead of management's expectations. We aim to focus on the German market ahead of any other European expansion opportunities for the immediate future.

Since its acquisition, Jawoll has enjoyed a strong summer trading season. Jawoll has also started to source from Far East suppliers of the Group and has invested in its EPOS systems in order to align it more closely with the UK business.

Goods sourced from B&M's Far East suppliers will start to arrive at Jawoll in the New Year.4. Investment in Infrastructure and People

The Group recognises the need to invest in its physical infrastructure to maintain its growth plans. The period under review saw the successful commissioning of a new 500,000 ft² distribution facility in Speke, Liverpool. These premises were made fully operational on time, within budget and without any disruption to trading. The facility is performing well.

Key upgrades were also made to our IT networks and systems. Work is ongoing in this respect through the second half of the financial year.

The Group will continue to invest some of its revenue growth and margin gains into delivering the capacity and capabilities to support our ambitious long-term growth plans. We also recognise the need to invest in our store estate. Our UK business invested £3.9m of maintenance capex, most of which relates to our stores.

The Board is keen to maintain investment in our senior management teams, store colleague training and development, as well as enhancing our recruitment processes. At a senior management level, our UK business was strengthened on 1st October 2014 by the appointment of Karen Hubbard as Chief Operating Officer for the UK division. Across key central functions such as Human Resources, Buying, and Operations we have continued to increase headcount to improve the sustainability of our growth. We are also progressing our plans to procure a distribution centre in the South of England to support our store expansion strategy.

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 set out in our IPO Prospectus of June 2014.

Outlook

The Group delivered a robust performance in the first half of the current financial year which was firmly in line with its expectations. We have clear plans in place to continue our growth in our key UK and German markets.

We are delighted to report that our 400th UK store opened in October 2014, a modest milestone towards our goal of approximately 850 stores in the UK. On behalf of the Board, I would like to thank all our colleagues for their hard work and passion that is manifested in the Group's growth and strong financial performance.

The retail environment in both the UK and German markets remains highly competitive. However, our disruptive business model, and the value for money we offer our shoppers, gives the Board confidence that B&M can continue its successful track record of growth.

Our next scheduled update on trading will be the release of an Interim Management Statement on 23 January 2015.

Simon Arora

Chief Executive

18 November 2014

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 Changes in Shareholders' Equity

Unaudited Consolidated statement of Financial Position

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 UK Parent (B&M European Value Retail Holdco 1 Limited (H1)) for the period to 29 March 2014.

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 principal accounting policies have remained unchanged from the prior financial information for H1 for the period to 29 March 2014 except as disclosed below.

The financial statements for H1 for the period to 29 March 2014 have been reported on by the Group auditor and delivered to the Registrar of Companies. The audit report was unqualified and did not contain a statement under s498(2) or s498(3) of the Companies Act 2006.

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.

Basis of consolidation

On 19 May 2014, B&M European Value Retail S.A. (the "Company") was incorporated. On 17 June 2014 the Company acquired the entire issued share capital of B&M European Value Retail 1 S.a.r.l Group (the "Business") via a share for share exchange with the shareholders of the Business. Following the share for share exchange, the Company became the ultimate legal parent of the Group. B&M European Value Retail 1 S.a.r.l. is the parent company of H1 referred to above.

The share for share transaction is deemed outside the scope of IFRS 3 (revised 2008) and as such is not considered a business combination as prior to the transaction the Company was not considered a business under the definition of IFRS 3 Appendix A and the application guidance in IFRS 3 B7-B12 due to the Company being essentially a shell company that had no processes or capability for outputs (IFRS 3 B7).

The share for share transaction has been accounted for as a group reconstruction (following the principles of merger accounting). As such comparative information has been presented on a pro-forma basis as though the Group had been in existence throughout the current and prior periods.

Accordingly;

· The assets and liabilities of the Business and its subsidiaries are recognised in the financial information at the pre-combination carrying amounts, without restatement to fair value.

· The retained losses and other equity balances recognised in the financial information reflect the retained losses and other equity balances of the business recorded before the share for share exchange.

· The equity structure, however, reflects the equity structure of the Company, including those balances which arose due to the equity instruments issued under the share for share exchange.

· The resulting difference has been recognised as a component of equity, being the merger accounting reserve.

· Because, immediately prior to the reconstruction, the equity balances in the Business were held as debt, this debt has remained within the restated balance sheet as a liability and has been reclassed upon redemption which occurred as part of the share for share exchange. The net effect of this is a decrease in the Merger reserve on the date of the reconstruction.

Critical judgments and key sources of estimation uncertainty

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.

Equity instruments classified as debt

The Group previously classified share capital, preference shares and preferred equity certificates as debt rather than equity due to these instruments each carrying the right to a specific fixed return and being redeemable at par.

Recognition of intangible assets on acquisition

On acquisition of SBR Group in March 2013, a brand intangible asset was identified with indefinite life. This was the only identifiable asset recognised that was considered to be likely to have a value above a set materiality threshold. The indefinite life was considered appropriate because of several factors, chief amongst which was that the growth potential of the B&M business was considered by management to be a long-term phenomenon.

Admission and share issue costs

Transaction costs have been expensed through the P&L immediately. See notes 3, 6 and 7.

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.

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 short and long term forecasts and determined that it is appropriate to continue to use the going concern basis for production of these interim financial statements.

Standards and interpretations not yet applied by the Group

The standards and interpretations that are issued but not yet effective up to the date of issuance of the Group's interim financial statements are disclosed below. The Group intends to adopt these standards, if applicable, when they become effective.

· IFRS 9 Financial Instruments (IASB effective date 1 January 2018)1

· IFRS 14 Regulatory Deferral Accounts (effective 1 January 2016)1

· IFRS 15 Revenue from Contracts with Customers (effective 1 January 2017)1

· IFRIC Interpretation 21 Levies (IASB effective 1 January 2014)2

· Amendments to IFRS 11 : Accounting for Acquisitions of Interests in Joint Operations (IASB effective date 1 January 2016)1

· Clarification of Acceptable Methods of Depreciation and Amortisation - Amendments to IAS 16 and IAS 38 (IASB effective date 1 January 2016)1

· Annual Improvements to IFRSs 2010-2012 Cycle (effective 1 July 2014)1

· Annual Improvements to IFRSs 2011-2013 Cycle (effective 1 July 2014)1

· Annual Improvements to IFRSs 2012-2014 Cycle (effective 1 January 2016)1

· Amendments to IAS 27 : Equity Method in Separate Financial Statements (effective 1 January 2016)1

· Sale of Contribution of Assets between an Investor and its Associate or Joint Venture - Amendments to IFRS 10 and IAS 28 (effective 1 January 2016)1

1 Not adopted by the EU as at 27 September 2014.

2 EU Mandatory effective date is financial years starting on or after 17 June 2014.

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 three operating segments, being the UK Home Stores, UK Bargain Stores and the German retail segment (since acquisition of Jawoll on April 30th 2014). The UK Home and Bargain segments have been aggregated into the UK Retail reportable segment below.

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. 

3 Reconciliation of Loss to EBITDA and Adjusted operating profit

4 Loss per share

Basic 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.

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

Diluted 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.

There are no dilutive potential ordinary shares for the periods ended 29 March 2014 and 28 September 2013. There was a share option scheme put in place in August 2014 which has a dilutive effect on the 27 September 2014 figures.

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

5 TaxationThe taxation charge for the interim period has been calculated on the basis of the corporation tax rate for the full year of 21% (UK) and 30% (Germany) and then adjusted for allowances and non-deductibles in line with the prior year

6 Acquisition

On 30 April 2014 the Group completed the acquisition of B&M European Value Retail Germany GmbH (Jawoll; formerly J.A. Woll-Handels GmbH) a discount retailer incorporated within Germany.

The acquisition has been accounted for via the acquisition method of accounting.

The Group purchased 80% of the share capital for a cash consideration of €80,182k, funded by the Group's existing banking facilities.The purchase agreement also included call and put options over the remaining 20% exercisable in 2019. Per the discussion in note 1, the risks and rewards of the exercise price remain with the non-controlling interest, and therefore the non-controlling interest is recognised below. The put/call options have then been recognised on acquisition as a liability based upon the discounted estimated price of the options, with the corresponding debit recognised in the put/call option reserve.

The valuation of the put/call option on the purchase date was £13,855k.

The fair values of the identifiable assets and liabilities of Jawoll on the date of the acquisition were :

None of the receivables recognised were considered irrecoverable at the acquisition date.

Fees of £842k were incurred during the acquisition. These have been expensed through the profit and loss in the period.

The goodwill largely relates to the growth potential of the business with smaller elements representing the workforce and current location of the stores. None of the elements which make up goodwill can, or are not material enough to, be recognised as a separate intangible asset.

The effect the acquisition has had on the P&L can be seen in the segmental note (note 2) as the Germany Retail segment comprises the whole of Jawoll. Had the company been bought at the start of the year it would have contributed an estimated extra €17.9m to revenue and €2.7m to operating profit (figures under German GAAP).

7 Restructuring, Refinancing and IPO

On 17 June 2014 the Group listed on the UK Stock Exchange via an IPO which valued the company at £2.7bn and raised £75million cash less fees for the Group itself.

A refinancing took place at the same time, with terms agreed on new banking facilities until June 2019 and June 2020. The refinancing incurred £7.0m of fees, which are being amortised over the length of the term. £28.8m of previously unamortised fees, relating to the refinancing that took place in March 2013, were written off to profit and loss.

Immediately prior to the listing the Group restructured by incorporating B&M EVR S.A., a new company based in Luxembourg, and performing a Group reconstruction such that this company became head of the group.

The key steps and effects of the restructuring and IPO on the Group accounts were;

1. B&M European Value Retail S.A. was incorporated with 972.2 million ordinary shares of 10p each.

2. These were exchanged for the preferred equity certificates, preference shares and ordinary share capital of B&M European Value Retail 1 S.a.r.l. - the previous Group parent.

3. The Group reconstruction resulted in the group's share capital, preferred equity certificates and preference share balances being replaced by the £97.2m share capital, and £2,527.8m of share premium - being the technical valuation of the contribution in kind made by the prior owners via their instruments held in B&M EVR 1 S.a.r.l.

4. This resulted in the recognition of a merger reserve of £1,979.1m.

5. No cash was exchanged as part of the above steps.

6. A further 27.8million ordinary shares of 10p each were released as part of the IPO. These were sold at £2.70 each, leading to the receipt of £75million and the recognition of £72.2m of share premium.

Fees recognised for the restructuring and IPO total £20.3m and have been expensed to P&L in the period.

8 Property, plant, equipment and intangible assets

9 Share Capital

Note that prior to the restructuring that took place in June 2014, the share capital of the group parent was classified as debt along with the associated share premium (see note 10).

B&M European Value Retail S.A.

Ordinary Shares

Each ordinary share ranks pari passu with each other ordinary share and each share carries one vote. The Group parent is authorised to release up to a maximum of 2,972,222,222 ordinary shares.

B&M European Value Retail 1 S.à r.l.

Preference Shares

Preference shares rank ahead of ordinary shares in terms of distributions. Each preference share carries one vote. The preference shares were classified as debt on the balance sheet.

A, B and C Ordinary Shares

Each class of share ranked pari passu with each other class and each share carried one vote. Each class of share was separated into 5 equal subclasses (A1-A5, B1-B5, C1-C5). Each ordinary share was entitled to a fixed dividend of between 0.05% and 0.25%.

Preferred Equity Certificates

In 2013 and 2014 the company had issued preferred equity certificates with a nominal value of £556,050k made up of 55,604,952,750 12% certificates of 1p each. These certificates were mandatorily redeemed in March 2062, or on event of a listing (amongst other events). The preferred equity certificates ranked pari passu with each other, and ahead of all ordinary and preference shares in terms of distribution. They do not carry voting rights. The preferred equity certificates were classified as debt on the balance sheet.

10 Financial liabilities - borrowings

All borrowings are held in Sterling. Prior to the June 2014 restructuring, the ordinary shares and preference shares were classified as debt on the balance sheet.

11 Reconciliation of loss before tax to cash generated from operations

12 Related party transactions

The Group has had material related party transactions with the following parties over the period;

Multi-Lines, a supplier, has been an associate of the Group since purchase in March 2013.

Clayton, Dubilier & Rice, current shareholders and part-owners of the pre-reconstructed business, provided financial and management consultancy services in respect of the pre-IPO funding structure. These fees have now ceased.

The following table shows the effect of the transactions on the profit and loss.

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 nets against a GRNI balance of £17.9m at 27 September 2014 (£11.9m at 28 September 2013, £28.3m at 29 March 2014).

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.

Under the pre-IPO financing structure, the owners of the business held interest bearing preferred equity certificates as detailed below.

On purchase of Jawoll, the group acquired a €7.0m liability to Stern Vertriebs GmbH. Stern Vertriebs were previously part of the Jawoll group and are fully owned by a director of Jawoll. This liability has been paid up in full.

13 Directors

The directors that served during the period were:

Name Date Appointed

Sir T Leahy (Chairman) 19 May 2014

S Arora (CEO) 19 May 2014

P McDonald (CFO) 19 May 2014

T Hübner 29 May 2014

R McMillan 29 May 2014

K Guion 29 May 2014

H Brouwer 29 May 2014

D Novak 19 May 2014

Statement of Directors' Responsibilities

The Directors confirm that these condensed interim financial statements have been prepared in accordance with International Accounting Standard 34, 'Interim financial reporting', as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R, namely:

(a) an indication of important events that have occurred during the first 26 weeks and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining 26 weeks of the financial year; and

(b) material related-party transactions in the first 26 weeks and any material changes in the related-party transactions described in the last annual report of B&M European Value Retail Holdco 1 Ltd.

By order of the Board

Simon Arora Paul McDonald

Chief Executive Chief Financial Officer

18 November 2014 18 November 2014

Independent Review Report to B&M European Value Retail S.A.

Introduction

We have reviewed the accompanying interim financial information of B&M European Value Retail S.A. at 27 September 2014, which comprises the condensed consolidated statement of financial position, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of other comprehensive income, the condensed consolidated statement of cash flows, the condensed consolidated statement of changes in equity and the selected explanatory notes for the 26 week period then ended. Management is responsible for the preparation and fair presentation of this interim financial information in accordance with International Financial Reporting Standard as adopted by the European Union and with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority. The interim financial information has been prepared in accordance with International Accounting Standard 34, ''Interim Financial Reporting,'' as adopted by the European Union.

Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Luxembourg, 18 November 2014

Hugues WANGEN

Réviseur d'Entreprises Agréé

Grant Thornton Lux Audit S.A.