Conviviality Retail Regulatory News (CVR)

FULL YEAR RESULTS

Conviviality Retail Plc, ("Conviviality", the "Company", or the "Group"), a wholesale and retail supplier of beers, wines, spirits, tobacco, grocery and confectionery, announces its Full Year results for the 52 week period ended 26 April 2015.

Financial highlights

· Revenue increased 2.4% to £364.1 million (2014: £355.7 million)

· EBITDA1 (excluding exceptional items and share based payment charges) increased 3.5% to £12.9 million (2014: £12.4 million)

· Group profit before tax and exceptional items increased by 4.4% to £9.7 million (2014: £9.3 million)

· Like for like sales decreased by 1.7%

· Underlying retail sales2 per store were up by 0.5% year on year

· Gross profit margin increased to 10.2% (2014: 9.2%)

· Profit after tax (pre exceptional items) increased 8.9% to £7.8m (2014: £7.2m)

· Diluted earnings per share (pre exceptional items) down 3.4% to 11.2 pence (2014: 11.6 pence)

· Debt free with net cash balance at period end of £1.2 million

· Proposed final dividend up 5% to 6.3p (2014: 6.0p) bringing the total for the year to 8.3p per share (2014: 8.0p)

Operational highlights

· 21 existing Franchisees opened additional stores, 35 new Franchisees joined the Group

· Store estate increased stores by 29 (4.9%) to 624

· Franchisees' average profitability increased by 0.8%

· Improved store standards with Gold standard stores up 291% to 305 (2014: 78)

· 441 stores benefited from the new updated Bargain Booze fascia

· 10 Wine Rack stores have been franchised across four franchisees

· Improved our wine capability and credibility with wine participation up 7.0%

· Acquired 31 Rhythm and Booze stores and 37 GT News stores of which 42 subsequently franchised

· Crewe warehouse transformed and transport function brought in house

· Successful launch of the mobile App generating over 30,000 downloads

· Successful pilot of Click and Collect across 66 stores

· Completed board changes

Diana Hunter, Chief Executive Officer of Conviviality, said:

"This is a strong set of results reflecting the hard work of our employees, franchisees and suppliers. Franchisees will remain at the heart of our business, as we continue to work together to blend the entrepreneurial skill of the Franchisee with the branding, ranging and wholesale expertise of Conviviality. Looking forward we will continue to help more of our Franchisees grow their existing business while also working to attract new Franchisees to the Group. The Board looks to the future with confidence."

There will be a presentation for analysts at 9.30am today, details of which can be obtained from FTI Consulting.

13 July 2015

1EBITDA excluding exceptional items and share based payment charges is calculated as profit before tax of £8,986,000 (2014: £4,825,000), adding back net interest of £52,000 (2014: £700,000), depreciation of £1,887,000 (2014: £1,753,000), amortisation of £125,000 (2014: £28,000), exceptional items of £731,000 (2014: £4,481,000) and share based payment charges of £1,073,000 (2014: £638,000). 

2The statutory revenue of Conviviality Retail is the aggregate of wholesale sales and sales by corporately owned stores to consumers. Underlying retail sales represent the total sales to consumers by Franchisees and corporately owned stores that traded throughout the period. This is an important indicator of business performance.

CHAIRMAN'S STATEMENT

This has been a year of growth for the Group and the results clearly demonstrate the delivery of our strategy set out in 2013 as we continue to develop the business and drive growth.

Our acquisitions of Rhythm & Booze in May 2014 and GT News in February 2015 have strengthened our position and enabled growth in new areas. Our ambition to increase our presence in Scotland has resulted in a trial with Scotmid to franchise stores.

The significant changes to the Group over the last two years mean that we are now in a position to drive sustainable growth across the business, deliver value to our shareholders and Franchisees and continue to provide an exceptional service and experience for our customers.

As a Company we are passionate about our business and brand, with our values being driven from the ground up: passion, adaptability, team work, excellence and professionalism. We run recognition schemes throughout the year to celebrate employees who demonstrate these values. We work with a number of charities with a focus on community-based projects as we believe we are an important supplier and employer in the local community. During the year, we supported charities, including Beanstalk, Cheshire & Shropshire Immediate Care and Funky Choir.

We are pleased to announce that the Board is proposing a 5% increase in the final dividend to 6.3 pence per share, making a full year dividend of 8.3 pence per share. (2014: 8.0 pence per share)

During the year we welcomed two new Board members, Andrew Humphreys as Chief Financial Officer in June 2014 and Amanda Jones as Chief Operating Officer in October 2014, completing the recruitment of our Executive team. Post the period end, we appointed Ian Jones as a Non-Executive Director; he brings with him extensive retail and operational experience to complement the Board.

On behalf of the Board, I would like to thank all of our new and existing Franchise partners and our employees for their continued passion and commitment to our Group.

David Adams

Chairman

13 July 2015

CHIEF EXECUTIVE OFFICER'S STATEMENT

Introduction

It has been my privilege to lead this business since February 2013. Our people, our Franchisees and our suppliers have worked together with a common aim and belief that we can make a real difference in our local communities through a relentless focus on meeting our consumer needs while providing a unique customer experience. Our 389 Franchisees are local people, employing local people, and are passionate about their customers and the communities in which they trade. By operating at the heart of their communities they play a key role in re-energising their locality; their stores are exciting and energising places to shop and their employees serve with care, consideration and great responsibility.

Overview

An important aspect of our business model is flexibility, protecting our earnings through periods of significant change in our organisation and a competitive external environment. This year has seen our strategy of revitalising our brands, Bargain Booze, Select Convenience and Wine Rack, alongside infrastructure investment, gaining traction with customers and Franchisees.

Results

We have continued to deliver against our objectives set out at flotation in July 2013 and are pleased to report profits slightly ahead of expectations, during a year where we have delivered significant change across our business. Our EBITDA has remained resilient in spite of the later phasing of our store openings than planned and an earlier Easter. Revenue has improved this year by 2.4% versus a fall of 4.3% in the prior year and gross margin improved to 10.2% (2014: 9.2%). Profit before tax and exceptional items increased 4.4% to £9.7m. The Group remains debt free with net cash of £1.2m at the year end.

Franchisees

We have been investing in our relationship with the Franchisees and our focus on driving the success of our Franchisees has seen more than 20 existing Franchisees open new stores in the year. The number of stores owned by multiple Franchisees has increased by 22%. It is pleasing that four of our existing Franchisees have added Wine Rack stores to their portfolio. For the last two years we have embarked on a major restructuring of our Franchisee base; this programme has now come to an end, arresting the number of closures, and we are successfully rebuilding the new store pipeline to fuel growth from a stronger base.

Our store numbers have increased to 624 representing a 4.9% increase on the prior year. Our offer to potential new Franchisees is increasingly compelling, enabling them to compete effectively and generate solid profits. Our core model is predicated by Franchisee loyalty and a commitment to upholding the values of our brands. This, combined with the high standards that we set, helps deliver our differentiated "local customer experience".

We now have some of the highest levels of loyalty in the sector with our franchisees buying 94.3% of all goods sold from Conviviality (2014: 93.3%).

Central to our plans is a motivated and equitably rewarded Franchise base with our Franchisees valuing their involvement in the success of the Group. Importantly not only has Conviviality returned a strong financial performance but so have our Franchisees. This is key to the continuation of our success. All of our Franchisees have seen the potential to improve their profits by over £14,000 per year, compared to two years ago, through a consistent improvement in retail margin and the benefits of our award-winning Franchisee share scheme. We actively reward Franchisee loyalty and compliance and the Franchise share scheme enables Franchisees to be awarded up to 3,500 shares per store for achieving annual standards targets. This year 1.4 million nil cost share options have been allocated under the Franchisee Incentive Plan and almost £900,000 has been awarded through the overrider scheme to our Franchisees.

Over the last 12 months we have welcomed 35 new Franchisees to the Group who we are working closely with to ensure their success within the Group. We have built a unique diversity of sites satisfying different customer needs and providing a comprehensive offer close to our target customers, underpinned by the flexibility of our portfolio of fascias. This flexibility has made us attractive to larger Franchisees who wish to operate a number of fascias, making it easier for us to acquire and rebrand acquired parcels of diverse stores.

Franchisees joining the Group have been attracted by our unique Franchisee benefits, but importantly they see the value of being part of a collaborative and forward thinking group. Following the acquisition of GT News in February 2015, we were pleased to welcome Jonathan James, the former chairman of the Association of Convenience Stores and a well-respected entrepreneur within the convenience sector, to our Group. Jonathan has entered into a ten year franchise agreement taking control of 36 stores from the acquisition. Jonathan's key reason for joining us was, and I quote "Conviviality is truly championing local off-licence led convenience on the high street; it's this unique strategy that makes it stand out from the crowd".

Expanding our geographical coverage is one of our substantial growth opportunities and this year we have analysed the optimal locations for growth across the UK. Our postcode analysis identified priority areas of the North East, Yorkshire, the South West and Scotland. We expect that a combination of current and new Franchisees, in particular North East Convenience Stores, will address the growth potential in the North East. Our acquisition in May last year of 31 Rhythm & Booze stores enabled growth in Yorkshire and the recent acquisition of 37 GT News stores strengthens this position and builds our presence in the East Midlands. Our ambition to grow in Scotland is being pursued via a trial with Scotmid to franchise stores. This trial is showing positive early signs. The first store opened in Stevenston, followed by Annan in June and further stores will be opened during July.

Our Brands

To support our Franchisees further and to help them to attract and retain more customers we have modernised our brands, becoming more connected with their customers through our use of social media and digital marketing. We have the highest number of active Facebook fans in our sector at 68,000 and we actively use social media to communicate offers and promotions. In April 2015 we piloted our Click and Collect service and rolled this out to our Franchisees, a unique offering for any franchise business. One of the early trial Franchisees said of Click and Collect "the service was really slick to use and a huge leap forward".

We continue to strengthen our brands, we have updated our image to a modern and fresh design, and an important part of the plan has been the roll out of our new fascia. This programme is nearing completion with 441 stores rebranded showing a 1.3% sales differential pre and post-change. The most important aspect of this programme is that Franchisees and their customers have been pleased with the new design.

To build our digital strategy we launched our "As if it wasn't cheap enough" app in December 2014; this has already been downloaded over 30,000 times and we have had 50,000 redemptions. These developments are highly innovative in the convenience sector and I am excited about our plans for further progress in the year ahead.

Products

We have strengthened our position as a destination off licence through the excellent collaboration between our buying team and our suppliers. More than 70 new suppliers are working with the Group and over 280 new products have been introduced in the year. We now have an unrivalled range of ales with over 70 premium bottled ales and over 20 craft ales in our range. Our spirits range continues to improve and we are focused on the growing trend for premium and flavoured spirits. Our Master of Wine, Susan Mcraith, alongside our wine buyers has continued to strengthen our wine category with sales increasing 10% year on year. This year we have been recognised for the hard work of our buying team, winning "Drinks Buying Team of the Year" at the Drinks Awards 2015.

Our pricing policy is to be everyday low promotionally priced. On average across our off-licence range we have been consistently 12% cheaper than our competitors in spite of the heavy discounting in the market. Value and consistent pricing are important to our customers and they appreciate the transparency of our pricing strategy, which in turn increases customer loyalty.

Operational efficiencies

We have made significant investments this year to become more efficient and to ensure that we are ready for future growth. We have modernised our warehouse infrastructure, re-racking and re-lamping our entire Crewe warehouse operation, without any disruption to trade, to ensure the flow of the warehouse is as efficient as possible with the ability to flex for growth. We have also undertaken maintenance works and refurbishments to our corporate stores, ensuring they are attractive for transfer to Franchisees. As a result our capital expenditure is above the prior year, driving defined benefits back into our operation.

On 29 March 2015 we transferred the full transport operation of 160 drivers and team members from our third party provider CVL under the full control of Conviviality. It is our expectation that we will see positive benefits operationally and in the service levels provided to our Franchisees.

Looking ahead to the new financial year we are helping our Franchisees maximise their sales and margin by ensuring they have the right space and range to meet their target customer needs; this programme of space optimisation is expected to complete by the end of FY 15/16.

People

Developing our management capability and our employer brand has been a key part of our strategy.

In June 2014 we welcomed Andrew Humphreys to our Board as Chief Financial Officer and in October 2014 we completed the Executive team with the appointment of Amanda Jones as Chief Operating Officer. We are continuing to build our marketing function and recently appointed Carol Savage as Chief Customer Officer. Carol's newly created role is to further build recognition of our brands and develop even closer connections with our customers. Carol has extensive brand and digital experience over a 20 year career working with brands including Exodus and Sara Lee.

Our focus on our people has resulted in much closer engagement levels, regular feedback and involvement in decisions made through weekly communication throughout all levels of our business. We have commissioned annual engagement surveys and listening groups, and our most recent engagement survey had a 95% completion rate for our Head Office employees and 100% for Warehouse employees.

I am also pleased to see that our work to improve inclusion is showing positive progress. 18 months ago our employee base lacked any real diversity with minority race/country of origin at only 2%; this is now at 10% of our workforce.

Our business has a male to female ratio of 59%:41%. This is skewed by our warehouse operations, which, due to the size and weight of products, appeals more to male workers. By removing the warehouse staff the ratio changes to 56% female and 44% male. One of the most successful diversity achievements is within the senior management team, well balanced with 48% women and 52% men. In contrast, two years ago, this was 72% male to 28% female. The balance has changed largely organically reflecting the Executive board structure with more female role models and roles held by women throughout the organisation making a valuable contribution within the leadership structure.

Our Values set the tone for the entire organisation and give us our principles of how we need to work together. I was certain that we didn't want our values to be manufactured by the senior team in isolation as we wanted them to reflect what our people, throughout the organisation, felt were important to them. This meant valuing our heritage but recognising that the business needed to move forward. Over 350 colleagues inputted to this process to create our company values and behaviours:

Passion: Using our passion and enthusiasm to embrace every challenge that comes our way and having fun whilst we do it.

Adaptable: Being flexible to the needs of the business.

Teamwork: Working as one team to achieve a common goal, supporting our Franchisees and each other.

Excellence: Making a difference by delivering and going the extra mile.

Professional: Acting with honesty and integrity, showing respect for others to build trusting, professional working relationships.

While we continue to drive significant change and raise every bar to uphold our professional standards, we believe our speed and agility are paramount and set us apart in the market.

Outlook

During the year ahead we plan to further leverage our wholesale capability into new markets. As wholesaler to our Franchisees we have built strong relationships with our suppliers and understand the dynamics of this market. We have decided to optimise these core skills to create opportunities in new channels such as corporate accounts. By operating a delivered wholesale model we can serve a diversity of customers and build our wines and spirits volumes further. These higher volumes offer complementary sources of trade which further strengthen our core business.

It is clear that, as we strengthen our brands and professionalise our business model, becoming a Franchisee of Conviviality Retail is an increasingly compelling option, with the ability to generate a good return on investment through our simple to execute formats. We offer a comprehensive franchise solution that is sector leading, providing back office support, POS systems, pricing, promotion packages and marketing together with dedicated teams working with Franchisees ensuring regular contact with all levels of the business. It is our expectation that we will attract an increasing number of potential Franchisees interested in serving their local communities with our differentiated customer experience, benefiting from the good financial returns our model can generate.

The significant change we have driven over the last two years leaves us in a strong position to now drive growth into the business.

Diana Hunter

Chief Executive Officer

13 July 2015

FINANCIAL REVIEW

Overview

Group profit before tax and exceptional items increased by £0.4m to £9.7m (2014: £9.3m) as sales growth of 2.4% increased EBITDA to £12.9m (2014: £12.4m). Exceptional items reduced to £0.7m (2014: £4.5m) and Group profit before tax is 86% above last year at £9.0m (2014: £4.8m). Fully diluted earnings per share increased 77% to 10.1 pence (2014: 5.7 pence) and the Group remains debt free with year end net cash of £1.2m.

Revenue

Revenue increased by 2.4% to £364.1m (2014: £355.7m) as the average number of stores increased 0.4% to 608.2 (2014: 605.7) and revenue per store grew 1.9% to £599,000 (2014: £587,000).

During the year the number of stores increased from 595 to 624 due to the acquisitions of Rhythm & Booze (31 stores) and GT News Limited (37 stores), 24 new Franchise stores and 63 store closures as the store rationalisation program completed. During the year, 49 company owned stores have been franchised increasing the number of franchise stores to 571 (2014: 566) and helping improve the number of stores per Franchisee to 1.5 (2014: 1.4), leaving 53 owned stores.

Retail Sales (Retail Sales are the total sales to consumers from both franchised and company owned stores and is stated inclusive of VAT) were in line with last year at £506.3m (2014: £506.7m) due to a 0.4% increase in the average number of stores offset by a 0.5% reduction in Retail Sales per Store primarily driven by lower Retail Sales per Store from the acquisitions of Rhythm & Booze and GT News. Retail Sales from Bargain Booze stores that traded throughout 2014/15 were 0.5% higher than from the stores that traded throughout 2013/14 as the quality of the estate improved.

Franchisee loyalty increased with Conviviality supplying 94.3% (2014: 93.3%) of goods sold by Franchisees and helping revenue per franchise store grow 0.4%. The average number of company owned stores increased to 56.7 (2014: 17.2) and revenue per company owned store grew 5.9%.

The combination of stronger Franchisee loyalty, a great proportion of sales generated by company owned stores and improved performance in company owned stores drove revenue per store up £12,000.

EBITDA

EBITDA increased 3.5% to £12.9m (2014: £12.4m) as the impact of 2.4% sales growth and a 1.0% point improvement in gross margin was partly offset by an increase in operating costs.

Gross margin improved to 10.2% (2014: 9.2%) primarily due to an increase in the number of company owned stores where Conviviality retains both the wholesale and retail margins. Gross margin on sales to Franchisees increased 0.14% points due to a reduction in bad debt as Franchisees financial stability improved.

Operating costs (excluding exceptional items, depreciation, amortisation and share-based payment charges) increased by £3.8m from £20.3m to £24.1m primarily due to the number of company owned stores increasing from 29 to 53.

Acquisitions

In the first quarter Conviviality acquired 31 stores from Rhythm & Booze for a consideration of £1.9m. The Group invested £0.7m to refit the stores, six have been converted to Wine Racks and six have been franchised (four Wine Rack; two Bargain Booze). Retail Sales per store have increased 36% since acquisition generating revenue of £16.1m in 14/15. The stores generated EBITDA of £0.7m since acquisition providing a 25% return on investment.

In February 2015 Conviviality acquired GT News Limited, a convenience store business with 37 stores in Yorkshire and the East Midlands, for a consideration of £6.0m plus a normalised working capital payment of £0.4m. On 1 April 2015, 36 of these stores were franchised to Jonathan James, a highly experienced and well known convenience retailer. GT News generated revenues of £9.2m since acquisition.

Profit before Tax

Group profit before tax increased by £4.2m as EBITDA increased £0.4m, finance costs and exceptional items reduced by an aggregate of £4.4m following the IPO in July 2013, share based payment charges increased £0.4m and depreciation and amortisation were £0.2m above last year as the Group invested more in its stores.

Exceptional items of £0.7m in the period included the final costs of the board restructuring and the costs of acquiring GT News.

The increase in share-based payment charges is primarily due to the award of nil cost options over 1.4 million shares to Franchisees for achieving the required store standards in the period. These options will vest in September 2017 if the Franchisee store is still trading under a Conviviality fascia.

Tax

The tax charge on profit before tax and exceptional items is 19.5% due to adjustments in respect of the prior periods taxation.

Tax on exceptional items includes a tax charge of £0.2m relating to share options vested at IPO.

Earnings per Share

Profit after tax increased 100% to £7.0m (2014: £3.5m) and the basic weighted average number of shares increased 14% driving a 75% increase in basic earnings per share to 10.7 pence (2014: 6.1 pence). Fully diluted EPS increased 77% to 10.1 pence (2014: 5.7 pence).

Profit after tax before exceptional items increased 8.9% to £7.8m (2014: £7.2m). On a fully diluted basis earnings before exceptional items per share declined 3.4% to 11.2 pence (2014: 11.6 pence) due to the diluted weighted average number of shares increasing 12% to 69.7m (2014: 62.1 m) primarily due to the issue of 33.2m shares at IPO on 31 July 2013 and 2.5m nil cost share options awarded to Franchisees under the Franchisee Incentive Plan.

Cash

The Group remains debt free with net cash at 26 April 2015 of £1.2m (2014: £10.0m). Net cash generated from operating activities increased 64% to £9.8m (2014: £6.0m) and was offset by net capital expenditure of £4.7m, acquisitions of £8.6m and dividends of £5.3m.

Dividend

A final dividend of 6.3 pence per share is proposed today for shareholders on the register on 11 September 2015 payable on 9 October 2015 post the Annual General Meeting. This increases the total dividend for 2014/15 to 8.3 pence per share. (2014: 8.0 pence per share)

Andrew Humphreys

Chief Financial Officer

13 July 2015

CONSOLIDATED INCOME STATEMENT

For the 52 weeks ended 26 April 2015

The results for the financial period are derived from continuing operations.

All of the profit for the financial period and total comprehensive income are attributable to the owners of the parent.

There were no elements of other comprehensive income for any of the financial periods above other than those included in the consolidated income statements and therefore no statement of comprehensive income has been presented.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 26 April 2015

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the 52 weeks ended 26 April 2015

CONSOLIDATED STATEMENT OF CASH FLOWS

For the 52 weeks ended 26 April 2015

NOTES TO THE PRELIMINARY RESULTS

1. General Information

This preliminary financial information does not constitute statutory accounts for the Group for the financial periods ended 26 April 2015 and 27 April 2014, but has been derived from those accounts. Statutory accounts for the financial period ended 26 April 2015 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts and their reports were unqualified and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

The financial information included in this announcement has been computed in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union, however, this announcement in itself does not contain sufficient information to comply with IFRS. The accounting policies used in preparation of this preliminary announcement are consistent with those in the full financial statements which have yet to be published, and are extracted in note 2 below.

The principal activity of Conviviality Retail Plc (the "Company") and its subsidiaries (together, the "Group" or "Conviviality Retail") is that of wholesale and retail supply of beers, wines, spirits, tobacco, grocery and confectionery.

The Company is incorporated and domiciled in the United Kingdom. The address of its registered office is: Weston Road, Crewe, Cheshire CW1 6BP. The registered number of the Company is 5592636.

The financial information presented is for the 52 week periods ended 26 April 2015 and 27 April 2014. The consolidated financial information is presented in sterling, which is also the functional currency of the parent company, and has been rounded to the nearest thousand (£000).

2. Accounting Policies

The principal accounting policies applied in the preparation of the consolidated financial information are set out below. These policies have been consistently applied to all periods presented, unless otherwise stated.

Basis of preparation

The Consolidated Financial Statements for the 52 weeks ended 26 April 2015 have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS") and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The consolidated financial information has been prepared on a going concern basis and under the historical cost convention.

The Directors have prepared cash flow forecasts for the period until April 2018. Based on these, the Directors confirm that there are sufficient cash reserves to fund the business for the period under review, and believe that the Group is well placed to manage its business risk successfully. For this reason they continue to adopt the going concern basis in preparing the financial statements.

Basis of consolidation

The financial information comprises a consolidation of the financial information of Conviviality Retail Plc and all its subsidiaries. The financial period ends of all Group entities are coterminous.

Subsidiaries are all entities to which the Group is exposed, or has rights to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated except to the extent they provide evidence of impairment of the asset transferred.

The Group operates an employee benefit trust ('EBT') and a franchisee incentive trust ('FIT') for the purposes of acquiring shares to fund share awards made to employees and franchisees respectively. The assets and liabilities of these trusts have been included in the consolidated financial information. The cost of purchasing own shares held by the EBT and FIT are accounted for in other reserves.

Accounting Policies (continued)

Business combinations

The acquisition of subsidiaries and businesses are accounted for using the acquisition method. The cost of acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued.

Identifiable assets acquired and liabilities and contingent liabilities assumed are recognised at the fair values at the acquisition date.

The excess of the consideration transferred over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill.

Acquisition costs are charged to exceptional items.

Critical accounting estimates and assumptions

The preparation of financial information in conformity with IFRSs requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual events ultimately may differ from those estimates.

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes certain estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial information are considered to relate to:

(a) Carrying value of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units ('CGU') to which goodwill has been allocated. The value in use calculation requires management to estimate the future cash flows expected to arise from the CGU and a suitable discount rate in order to calculate present value. The estimation of the timing and value of underlying projected cash flows and selection of appropriate discount rates involves management judgment. Subsequent changes to these estimates or judgments may impact the carrying value of the goodwill, which at 26 April 2015 was £42,870,000 (note 11).

(b) Impairment of trade receivables

The assessments undertaken in recognising provisions and contingencies have been made in accordance with IAS 39. A provision for the impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all outstanding amounts in full due to the receivables being classified as 'bad' or there are indications that the collection is 'doubtful'. The amount of any loss is recognised in the income statement within cost of sales. Subsequent recoveries of amounts previously written off are credited against cost of sales in the income statement. The gross amount of trade receivables at 26 April 2015 is £30,207,000 and the associated provision is £1,385,000 (note 15).

(c) Share options

The estimation of share-based payment costs requires the selection of an appropriate valuation model (Black-Scholes pricing model), consideration as to the inputs necessary for the valuation model chosen, and the estimation of the number of awards that will ultimately vest. The key assumptions are on expected life of share options, volatility of share price, the risk free yield to maturity and expected dividend yield. The total charge for equity and cash settled share based payments for the financial year was £1,079,000 (note 27).

Accounting Policies (continued)

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker (CODM). The CODM, who is responsible for allocating resources and assessing performance of operating segments, has been identified as the Executive Directors.

Foreign currency translation

(a) Functional and presentation currency

Items included in the financial information of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial information is presented in Sterling, which is the Company's and subsidiaries' functional and presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated at the exchange ruling at that date. Foreign exchange gains and losses arising on translation are recognised in the income statement for the period.

Revenue

Revenue is in respect of wholesale and retail distribution in the UK, and is recognised when the significant risks and benefits of ownership of the product has been transferred to the buyer. Revenue is the total amount receivable by the Group for goods supplied, excluding VAT and trade discounts.

Wholesale revenue to franchisees is recognised on delivery of the product to the franchisee.

Retail revenue generated by own stores is recognised at the point of sale to the buyer.

Supplier income

Supplier incentives, rebates and discounts, collectively known as 'supplier income', are recognised on an accruals basis as they are earned for each relevant supplier contract. The accrued value at the reporting date is included in accrued income.

The most common types of supplier income which the Group receives are:

· Retrospective discounts typically based on an agreed sum per item sold on promotion for a period

· Fixed amounts agreed with suppliers to support specific promotions

· Supplier rebates typically based on sales targets on an annual calendar year basis

Cost of sales

Cost of sales represent the cost to the Group of the product sold. It consists of all external costs incurred in procuring goods for resale and delivering them to the distribution warehouses, as well as any adjustments to inventory and any bad debt expense.

Operating costs and income

Operating costs consists of distribution costs, administrative expenses, head office costs, and the costs associated with running corporately owned stores.

Fees for the provision of continuing services to franchisees (e.g. IT support, marketing, training etc.) are recognised as operating income as the services are rendered. Initial fees are recognised as operating income when performance of all the initial services and other obligations required of the franchisor have been substantially accomplished.

Accounting Policies (continued)

Property, plant and equipment

Items of property, plant and equipment are stated at historic purchase cost less accumulated depreciation and any provision for impairment. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset into working condition for its intended use.

As no infinite useful life for land can be determined, no depreciation is provided on land. Depreciation is recognised on a straight-line basis to write down the cost less estimated residual value of buildings, plant and equipment and motor vehicles. The following useful lives are applied:

Leasehold buildings shorter of lease term and 50 years

Plant and equipment 3 to 10 years

Motor vehicle 3 years

The assets' residual values and useful lives are reviewed and adjusted if appropriate at each reporting date.

Intangible assets

(a) Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary or businesses at the date of acquisition. Goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that the carrying value may be impaired, and is carried at cost less accumulated impairment losses.

Goodwill is allocated to CGUs for the purpose of impairment testing. A CGU is identified at the lowest aggregation of assets that generate largely independent cash inflows, and that which is looked at by management for monitoring and managing the business. The Group's three CGUs, are Bargain Booze, Wine Rack and GT News (Holdings).

If the recoverable amount of the CGU is less than the carrying amount, an impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rate on the basis of the carrying amount of each asset in the unit. Any impairment is recognised immediately in the income statement and is not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill arising on acquisitions before the date of transition to IFRS has been retained at the previous UK GAAP amounts subject to being tested for impairment at that date.

(b) Other intangible assets

Brand names: Brand names acquired in a business combination that quality for separate recognition are recognised as intangible assets at their fair values.

Internally developed software: Expenditure on the research phase of projects to develop new customised software for IT and telecommunication systems is recognised as an expense as incurred. Costs that are directly attributable to a project's development phase are recognised as intangible assets, provided they meet the following criteria:

· the development cost can be measured reliably;

· the project is technically feasible and viable;

· the Group intends to and has sufficient resources to complete the project;

· the Group has the ability to use or sell the software; and

· the software will generate probably future economic benefits.

Intangible assets are carried at cost less accumulated amortisation and any impairment losses. Intangible assets arising on acquisition of subsidiaries or businesses are recognised separately from goodwill if the fair value of these assets can be identified separately and measured reliably.

Accounting Policies (continued)

Amortisation is calculated on a straight-line basis over the estimated useful life of the intangible asset. The useful life of the Group's intangible asset is 20 years for brands and 5 years for other intangibles which are predominately software, with a residual value of £Nil.

Impairment reviews are carried out if events or changes in circumstances indicate that the carrying value of an asset may be impaired. An impairment loss is recognised in the income statement when the asset's carrying value exceeds its recoverable amount. Its recoverable amount is the higher of an asset's fair value less costs to sell and value in use. Impairment losses are not reversed.

Assets held for sale

Non-current assets are classified as held for sale if the carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable, management is committed to a sale plan, the asset is available for immediate sale in its present condition and the sale is expected to be completed within one year from the date of classification. These assets are measured at the lower of carrying value and fair value less costs to sell.

Inventory

Inventory comprises goods held for resale which are valued at the lower of cost and net realisable value. Cost is calculated using the first in, first out method. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. Provision is made for slow moving and obsolete stock if required.

Trade and other receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all outstanding amounts in full due to the receivables being classified as 'bad' or there are indications that collection is 'doubtful'.

The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the income statement within operating costs. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against operating costs in the income statement.

Other receivables are non-interest bearing and are recognised initially at fair value and subsequently at amortised cost.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term highly liquid investments maturing within 3 months or less from the date of acquisition that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

Trade and other payables

Trade payables are obligations to pay for goods and services which have been acquired in the commercial operations of the Group. Trade payables are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Dividends

Interim dividends on ordinary shares are recognised in equity in the period in which they are paid. Final dividends on ordinary shares are recognised when they have been approved by the shareholders at the Annual General Meeting.

Leases

Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards of ownership to the Group. All other leases are classified as operating leases.

Accounting Policies (continued)

Operating leases

Assets leased under operating leases are not recorded on the statement of financial position. Rental payments are charged directly to the income statement on a straight line basis over the lease term. Any lease incentives, primarily up-front cash payments or rent-free periods, are capitalised and spread over the period of the lease term.

EBT

The assets and liabilities of the Employee Benefit Trust (EBT) have been included in the Group accounts. The assets of the EBT are held separately from those of the company. In accordance with the principles of UITF Abstract 38, any assets held by the EBT cease to be recognised on the consolidated statement of financial position when the assets vest unconditionally in identified beneficiaries.

Finance cost and administrative expenses of the EBT are recorded in the company's profit and loss account where material; gains and losses on the purchase, sales, issue or cancellation of the company's own shares are recorded as movements on reserves. Neither the purchase nor sale of own shares leads to a gain or loss being recognised in the Group consolidated statement of comprehensive income.

Investments in the company's own shares held by the EBT are presented as a deduction from reserves and any dividend income received by the EBT is deducted from the aggregate of dividends paid and proposed. The number of such shares held by the EBT is deducted from the number of shares in issue when calculating earnings per share.

Taxation

The tax expense for the period comprises of current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised directly in other comprehensive income or in equity. In this case, the tax is recognised directly in other comprehensive income or in equity.

(a) Current taxation

Current tax is the expected tax payable on the taxable income for the period, using tax rates and laws enacted or substantively enacted by the reporting date. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

(b) Deferred taxation

Deferred tax is recognised using the statement of financial position liability method, on temporary differences arising between the tax base of assets and liabilities and their carrying amount in the historical financial information. Deferred tax is calculated at the tax rates and laws that have been enacted or substantively enacted by reporting date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date.

Deferred tax assets and liabilities are offset against each other when there is a legally enforceable right to set off current assets against current liabilities and it is the intention to settle these on a net basis.

Pension costs

The Group operates a stakeholder defined contribution pension scheme. The total expense recognised in the income statement represents contributions payable to the fund by the Group as specified in the rules of the scheme.

Accounting Policies (continued)

Exceptional items

The Group treats as exceptional items those possessing a high degree of abnormality which arise from events or transactions that fall outside the ordinary activities of the Group and which are not expected to recur.

The Directors apply judgment in assessing the particular items, which by virtue of their scale and nature, should be classified as exceptional items. The Directors consider that separate disclosure of these items is relevant to an understanding of the Groups' financial performance.

Share based payments

The Group issues equity and cash settled share-based payments to certain employees and Franchisees. Equity settled share based payments are measured at fair value, excluding the effect of non-market based vesting conditions, at the date of grant. The fair value determined at the grant date, is expensed on a straight line basis over the vesting period, based on the Group's estimate of the shares that will eventually vest and adjusted for the effect of non-market based vesting conditions.

Fair value is measured using a Black-Scholes pricing model. The expected useful life used in the models has been adjusted, based on management's best estimate, for the effects of exercise restrictions and behavioural considerations. For cash settled share based payments, a liability equal to the portion of the goods or services received is recognised at the current fair value determined at each reporting date. NI is accrued periodically in line with the share based payment charge.

Equity

Equity comprises the following:

· 'Share capital' represents the nominal value of equity shares;

· 'Share premium' represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue;

· 'Share based payment reserve' represents the IFRS 2 "Share-based payment" charge for the year;

· 'Other reserves' incorporates movement in the Group's EBT and FIT;

· 'Retained earnings' represents cumulative retained earnings.

New standards and interpretations

At the date of authorisation of the financial information, the following standards and interpretations were in issue but not yet effective, and have not been early adopted by the Group:

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

· IFRS 15 Revenue from Contracts with Customers (effective 1 January 2017) 2

· IFRIC Interpretation 21 Levies (IASB effective 1 January 2014) 3

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

1 Not adopted by the EU (as at 16 June 2015)

2 Not adopted by the EU (as at 16 June 2015). IASB is proposing to defer the effective date of IFRS 15 to 1 January 2018

3 EU mandatory effective date is financial years starting on or after 17 June 2014

The adoption of these standards and interpretations is not expected to have a material impact on the Group in the period they are applied.

3. Segment Information

The Group's activities consist of the wholesale and retail distribution of beers, wines, spirits, tobacco, grocery and confectionery within the United Kingdom. The Executive Directors of the Board are considered to be the chief operating decision maker (CODM). The business is managed as one entity, and activities are not split into any further regional or product subdivisions in the internal management reporting, as any such split would not provide the Group's management with meaningful information. Consequently, all activities relate to this one segment.

Segment Information (continued)

The CODM manages the business using EBITDA pre-exceptional and share based payment costs. The table below provides a reconciliation from this figure, to the reported profit before tax in the consolidated income statement:

No individual customer accounts for 10% or more of the Group's revenue in either 2015 or 2014.

4. Operating Profit

(a) Operating profit is arrived at after charging

(b) Exceptional costs

The exceptional costs which are recognised within operating costs, are analysed below:

The costs associated with the IPO for the 52 weeks ended 27 April 2014 consisted of the fair value of the executive share options vesting on IPO (£1,936,000), NIC payable on these options (£462,000), the fair value of the warrant issued to Zeus as described in the AIM admission document dated 18 July 2013 (£397,000), costs associated with IPO that were not met by the previous shareholders (£720,000) and a one-off gain on sale of shares held by the EBT of £429,000.

Costs associated with acquisitions include £237,000 incurred in respect of the purchase of GT News (Holdings) Limited and £20,000 of additional costs in respect of the trade and assets purchase of 31 stores from R N B Stores Limited. Further details of these transactions are included in note 28.

Costs associated with acquisitions in 2014 include £178,000 incurred in respect of the purchase of L.C.L. Enterprises Limited (Wine Rack) and £166,000 in respect of the trade and assets purchase of 31 stores from R N B Stores Limited.

Other non-recurring events and projects of £474,000 (2014: £439,000) relate to professional and consultancy charges arising from one-off transactional activity (£19,000), and restructuring and reorganisation costs (£455,000) following an exercise to create efficiencies and streamline processes.

Operating Profit (continued)

 (c) Auditor remuneration

During the period the Group obtained the following services from the Company's auditor:

5. Employee Costs

(a) Employee benefits expense

The average monthly number of people (including Executive Directors) employed by the Group during the period was:

(b) Directors' remuneration

The remuneration of the Directors comprise:

6. Finance Income and Expense

Exceptional finance expenses in 2014 included one off charges arising on early resettlement of borrowings as part of the IPO.

7. Income Tax Expense

Tax on exceptional items includes a tax charge of £165,000 relating to share options vested at IPO.

The tax charge differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows:

Factors that may affect future tax charges

During the 52 weeks ended 26 April 2015, as a result of the change in the UK main corporation tax rate from 21% to 20% (2014: 23% to 21%) that was substantively enacted on 2 July 2013 and that is effective from 1 April 2014, the relevant deferred tax balances have been re-measured.

8. Earnings Per Ordinary Share

As at 27 April 2014 66,713,020 ordinary shares were in issue. During the year, an additional 227,363 ordinary shares were issued giving 66,940,383 shares in issue as at 26 April 2015 (note 21).

Basic and diluted earnings per share are calculated by dividing the profit for the period attributable to equity holders by the weighted average number of shares.

The difference between the basic and diluted average number of shares represents the dilutive effect of share options and warrants in existence. The weighted average number of shares can be reconciled to the weighted average number of shares including dilutive shares as follows:

Adjusted earnings per share

Although not presented on the face of the Income statement, the adjusted earnings per share, profit after tax, but before exceptional items, is calculated below:

Adjusted basic and diluted earnings per share are calculated by dividing the profit after tax but before exceptional items by the weighted average number of shares, which is the same as disclosed in the table above.

9. Dividends

Amounts recognised as distributions to ordinary shareholders in the period comprise:

The 2015 final proposed dividend of £4,217,000 (6.3 pence per share) has not been accrued as it had not been approved by the period end. Sufficient dividends will be distributed within the Group subsequent to year end to ensure sufficient reserves are in place to pay the final proposed dividend. Relevant accounts will be filed at Companies House to support this.

10. Property, Plant and Equipment

The net book value of assets held under finance leases as at 26 April 2015 is £8,000 (2014: £Nil).

11. Goodwill

Goodwill acquired in a business combination is allocated, at acquisition, to the CGUs that are expected to benefit from that business combination or are established as a result of the business combination. The carrying amount of goodwill has been allocated as follows:

Goodwill has an indefinite useful life and is subject to annual impairment testing. The recoverable amounts of the CGUs are determined from value-in-use calculations. The value in use is the present value of the pre-tax cash flow projections. The key assumptions used in determining value in use are growth rates and the discount rate.

For each CGU, cash flow projections are based on the most recent financial budgets approved by management for one year. Subsequent cash flows are extrapolated using an estimated annual growth rate of 2% for a further nine years and terminal growth rates of 0% are then applied to perpetuity. These rates are below the average growth rate for the industry. The rate used to discount the projected cash flows, being a pre-tax risk-adjusted discount rate, is 7.6%. This has been calculated using the Group's weighted average cost of capital. Risk factors are similar in each of the Group's CGUs. All assumptions apply to all CGU's.

The result of this review was that no impairment is required in respect of the carrying values of the goodwill. The Group has conducted a sensitivity analysis on the impairment test of each CGU's carrying value including reducing sales levels and increasing the discount rate. At 26 April 2015, no reasonably expected change in the key assumptions would give rise to an impairment charge for either CGU, and the assumptions accordingly, are not sensitive.

12. Intangible Assets

Acquired brands are initially recognised at their fair value on acquisition and amortised over 20 years.

Other intangible assets are predominantly software costs which are initially recognised at their cost on acquisition and amortised over 5 years.

13. Assets Held for Sale

Assets held for sale at 27 April 2014, related to a number of corporately owned stores which were being actively marketed to potential franchisees. The assets were subsequently disposed of arising in a £40,000 gain to the Group.

14. Inventories

No security has been granted over inventories. The Group operates a bonded warehouse and as such the majority of the licensed stock held is under bond and valued excluding duty. The duty payable when sold will be £6,545,000 (2014: £5,766,000).

The cost of inventories recognised as an expense and included in cost of sales amounts to £327,093,000 (2014: £322,968,000).

15. Trade and Other Receivables

The difference between the carrying value and fair value of all receivables is not considered to be material. As of 26 April 2015, trade receivables of £809,000 (2014: £808,000) were past due but not impaired. These relate to customers and Franchisees for which there is no recent history of default. All of the past due but not impaired receivables have been outstanding for less than six months.

Movements on the Group provision for impairment of trade receivables are as follows:

Provisions are estimated based upon past default experience and management's assessment of the current economic environment. The creation and release of receivables is charged/(credited) to cost of sales in the income statement. Trade receivables consist of a large number of Franchisees for whom there is no significant history of default. The credit risk of the Franchisees is assessed by taking account of their financial positions, past experiences and other relevant factors. Individual Franchisee credit limits are imposed based on these factors. The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables mentioned above. In the event of a default in payment by a franchisee, the Group may recover unpaid inventory held in the franchisee's store.

16. Cash and Cash Equivalents

 17. Trade and Other Payables

Trade and other payables comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is 36 days (2014: 35 days). The Directors consider that the carrying amount of trade and other payables approximates to their fair value.

The Group entered into a receivables finance facility agreement dated 18 July 2013. Under this agreement the Group can sell any debts owed to Bargain Booze Limited by its customers who have purchased goods or services from Bargain Booze Limited. The maximum facility available is 80% of the allowable trade receivables up to £17,000,000. At 26 April 2015, the amount drawn down under this facility was £Nil (2014: £Nil).

The discount margin for the funding of debts is 1.45%. There is a non-utilisation fee of 0.2% of the available facility payable during the minimum period of the facility, being 36 months from the date of the agreement.

The Group has also put in place bank-issued guarantees for the benefit of certain suppliers amounting to £12,500,000 at 26 April 2015 (2014: £13,500,000). The arrangement fee was 0.75% of the facility limit and commission is payable on the maximum liability under each guarantee issued at the rate of 1% per annum.

All amounts outstanding under the facilities are secured by debentures over certain assets of the Group.

18. Borrowings

The Group has 3 cars and tills under finance leases as at 26 April 2015, these were acquired during the year through the acquisition of GT News (Holdings) Limited. The obligations under finance leases are secured on the assets to which they relate.

19. Financial Risk Management and Financial Instruments

The Group's activities expose it to a variety of financial risks. The main financial risks faced by the Group relate to the risk of default by counter-parties to financial transactions and the availability of funds to meet business needs. These risks are managed as described below.

The Group's risk management is coordinated at its headquarters, in close cooperation with the board of Directors, and focuses on actively securing the Group's short to medium-term cash flows by minimising the exposure to financial risks.

The Group does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Group is exposed are described below.

(a) Credit risk

The Group's principal assets subject to credit risk are cash deposits, cash and trade receivables. The credit risk associated with cash is limited. The principal credit risk arises from non-recovery of trade receivables. In order to manage credit risk, the franchise agreement states collection by direct debit, and credit limits are set for customers based on a combination of payment history and third party credit references. Credit limits are reviewed by the credit controller on a regular basis in conjunction with debt ageing and collection history.

(b) Market risk

The Group finances its operations through a mixture of retained profits, ordinary shares, and an invoice discounting facility. At 26 April 2015, the drawdown on the invoice discounting facility was £Nil.

 (c) Interest rate risk

The Group has no significant interest rate risk. The interest rate exposure of financial assets and liabilities of the Group is shown below.

Financial Risk Management and Financial Instruments (continued)

(d) Foreign exchange risk

The Group is exposed to a negligible element of foreign exchange risk, with only a limited number of supplies from abroad and all sales made in the UK.

(e) Liquidity risk

The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash safely and profitably. The Group monitors its cash resources through short, medium and long-term cash forecasting, against available facilities. Short-term flexibility is achieved by the use of an invoice discounting facility, the details of which are set out in the table above. The maturity of borrowings is set out in note 18.

Capital risk management

The Group manages its capital to ensure that the Group will be able to continue as a going concern while maximising the return to shareholders through optimising the debt and equity balance. The capital structure of the Group consists of cash and cash equivalents and equity attributable to equity holders of the Company comprising issued capital, reserves and retained earnings as disclosed in the consolidated statement of changes in equity. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group's capital is not restricted. Management may seek additional external borrowings to fund the future investment and growth of the Group.

In addition the Group has entered into a receivables finance facility agreement under which the maximum facility available is 80% of the allowable trade receivables up to £17,000,000. The Group draws down on this facility from time to time as required to support short term working capital movements. The amount drawn down at 26 April 2015 is £Nil (2014: £Nil).

The Group has a progressive dividend policy which aims to increase the value of ordinary dividends over time, taking into account the results of the past year and the outlook.

Borrowings and cash

The carrying values of cash and short-term borrowings approximate to their fair values because of the short-term maturity of these instruments.

Fair values of financial assets and financial liabilities

The carrying values of all the Group's financial assets and financial liabilities approximate to their fair values because of the short-term maturity of these instruments.

The fair value of trade receivables and payables is considered to be equal to the carrying values of these items due to their short-term nature. All other financial assets and liabilities are carried at amortised cost. Cash is held with counterparties with a credit rating of A and BBB+.

20. Deferred Taxation Asset

The recoverability of the deferred tax asset is dependent on future taxable profits in excess of those arising from the reversal of deferred tax liabilities. The deferred tax asset has been recognised to the extent that it is considered to be recoverable based on forecasts for future periods. At 26 April 2015, the value of the unrecognised deferred tax asset is £Nil (2014: £Nil).

Deferred tax assets and deferred tax liabilities are presented net in the statement of financial position as the Group has the legal right to settle current tax amounts on a net basis and the deferred tax amounts are levied by the same taxing authority on the same Group of entities that intend to realise the asset and settle the liability at the same time.

21. Share Capital

On 8 July 2013, each A ordinary share and each B ordinary share was sub-divided into 36.77614821 £0.0002 ordinary shares, (rounded up in respect of each shareholder's aggregate holding). On the same date, a further 33,163,902 £0.0002 ordinary shares were issued for £1 each resulting in a total of 66,700,000 £0.0002 ordinary shares.

On 8 July 2013, each A ordinary share and each B ordinary share was sub-divided into 13.22385179 £0.0002 deferred shares (rounded down in respect of each shareholder's aggregate holding). On the same date, a further 205,000,000 £0.0002 deferred shares were issued at par, funded from the Company's un-distributable reserves, resulting in a total of 217,058,802 £0.002 deferred shares.

Holders of deferred shares do not have any right to receive notice of any general meeting or to attend, speak or vote at any general meeting of the Company. No dividend shall arise on deferred shares save for a cumulative fixed rate dividend of 0.000001% per annum of the nominal value of the deferred shares. On a return of capital on a winding up, holders of deferred shares shall receive only an amount equal to each deferred share's nominal value after all other shares have received £1,000,000 and deferred shares shall have no other rights to participate in the assets or profits of the Company. The Company may redeem or purchase all or any of the deferred shares for an aggregate sum equal to the accrued, but unpaid dividend due on such shares and any Director may execute any transfer of such deferred shares on behalf of the holders of such deferred shares.

Details of dividends paid in respect of these shares in the 52 weeks to 26 April 2015 are disclosed in note 9.

The Company entered into additional block listing arrangements with AIM in respect of the notification to AIM of allotments of 30,000 new ordinary shares of £0.0002 each in the capital of the Company to satisfy the requirement to allot matching shares at the time of purchase of partnership shares for the Bargain Booze Share Incentive Plan (note 27). In this regard, 19,797 shares were issued during the year.

In addition, 207,566 free shares were issued to employees under the Bargain Booze Share Incentive Plan (note 27) during the 52 weeks to 26 April 2015.

22. Other Reserves

Included within the Group operations is Bargain Booze Employee Benefit Trust (the EBT). The EBT purchases shares to fund the share option schemes. At 26 April 2015, the Trust held 954,755 ordinary shares (2014: 2,116,279 ordinary shares) with a cost of £26,000 (2014: £58,000). The market value of these shares as at 26 April 2015 is 143.50 pence per share (2014: 166.00 pence per share). Of these shares, 896,809 are under option as at 26 April 2015 (2014: 2,006,983).

During the 52 weeks ended 26 April 2015 the Trust sold 1,161,524 shares with a cost of £32,000 to satisfy the exercise of share options.

23. Cash Generated From Operations

The operating cash flows include an exceptional outflow of £474,000 in the 52 weeks ended 26 April 2015 (2014: £439,000) which relates to professional and consultancy charges arising from transactional activity and other one-off projects. There is a further £720,000 of one-off exceptional costs incurred on IPO included within operating cash flows for the 52 weeks ended 27 April 2014.

24. Commitments Under Operating Leases

At the reporting date the Group had the following future aggregate minimum lease payments under non-cancellable operating leases:

There are no significant obligations or incentives attached to any of the Group's lease agreements.

25. Capital Commitments

At 26 April 2015, amounts contracted for but not provided in the consolidated financial statements for the acquisition of property, plant and equipment amounted to £96,000 (2014: £519,000).

26. Pension Commitments

The company operates a stakeholder pension scheme. Following the introduction of auto-enrolment in respect of employee participation in pension schemes, the Group commenced making contributions to employee pension schemes from 1 June 2014.

Contributions recognised as an employee benefit expense for the 52 week period ended 26 April 2015 were £54,000 (2014: £Nil). Pension contributions accrued and therefore not yet paid over to the pension provider as at 26 April 2015 were £62,000 (2014: £Nil).

27. Share Based Payments

The Group makes equity settled share awards to senior executives, employees and Franchisees under three different share option plans. An accrual has been made for national insurance due on exercise of share options and treated as a cash settled share based payment. In addition an equity settled share based payment charge has been recognised in respect of a share warrant granted to Zeus Capital which vested on successful admission to AIM. Further details of the three plans are provided below. The amounts recognised in respect of these schemes is as follows: