Mccoll's Regulatory News (MCLS)

McColl's Retail Group plc

Preliminary audited results for the

52 week period ended 29 November 2015

1 March 2016 - McColl's Retail Group plc ('McColl's', 'the group') today announces its preliminary results for the 52 week period ended 29 November 2015. 

Financial highlights

· Total revenue up 3.1%1 to £932.2m (2014: £922.4m), adjusting for the 53rd week in 2014.

· Full Year Like-for-Like ("LFL")2 sales down 1.9%:

o Premium convenience and food and wine slightly down by 0.6%.

o Standard convenience and newsagents down by 4.0%.

· Operating profit increased to £23.6m (2014: £22.0m).

· Underlying operating profit3 £24.0m (2014: £24.1m), adjusting for the 53rd week in 2014.

· Adjusted EBITDA4 increased to £37.7m (2014: £37.3m), up 3.1% adjusting for the 53rd week in 2014.

· Profit before tax increased to £21.1m (2014: £12.6m).

· Proposed final dividend of 6.8p per share making a total of 10.2p per share (2014: 8.5p).

· Net debt £31.6m (2014: £37.4m), approximately 0.8 times Adjusted EBITDA4.

Operational and strategic highlights

· Convenience store expansion strategy delivered in line with plan for the year:

o On track to achieve target of 1,000 convenience stores by the end of 2016.

o 60 new convenience stores acquired and 45 food and wine conversions completed, taking the total number of convenience stores to 893.

o Food to go offer enhanced in 148 stores and first Subway franchise now open.

o Alcohol introduced to 100 newsagents.

· Disposal of 100 newsagents announced as part of ongoing strategy to develop convenience business.

· Existing £85m revolving credit facility extended to August 2020 on beneficial terms.

James Lancaster, chief executive, said:-

"I am pleased to announce financial results in line with expectations for 2015. In a challenging market we have grown sales and improved profits, at the same time we continue to deliver on our strategy of evolving our store portfolio. This year will see us reach 1,000 convenience stores, 50% more than we operated just four years ago. Additionally, we will extend and expand the range of products and services we provide to neighbourhoods across the country, at the most convenient times. McColl's is a business which can continue to grow and deliver for customers, colleagues and shareholders."

Current trading and developments

Total LFL sales were down by 1.8% in the 13 week period ended 28 February 2016, in line with the previous quarter. Within this our premium convenience and converted food and wine stores continued to show stronger performance being down by 1.1%, whereas our newsagents and standard convenience stores were down by 3.1%. LFL sales in our 2014/2015 conversions and acquisitions (that have traded for 12 months) were ahead 0.4%, an endorsement of our development programme. Total revenue for the quarter continued to grow strongly, increasing by 2.7%. In the first quarter we reached the important milestone of 900 convenience stores, with the opening of our Kemnay store in Aberdeenshire. Although store development activity tends to be quieter over the Christmas trading period we completed 12 convenience store acquisitions, 7 food and wine conversions and reached a closing store base of 1,360 including 911 convenience stores.

1 Total revenue adjusted to remove the impact of the 53rd week in the period to 30 November 2014.

2 Like-for-like revenue reflect sales from stores that have traded throughout the current and prior financial periods, and sales include VAT but exclude sales of fuel, lottery and mobile phone top-up, adjusted to remove the impact of the 53rd week in the period to 29 November 2015.

3 Underlying operating profit is operating profit before exceptional items & property gains and losses.

4 Adjusted EBITDA is EBITDA before property gains and losses and exceptional items.

A copy of this announcement will be available online from 7.00am at www.mccolls.co.uk/investor/financial-performance.

Enquiries

Please visit www.mccolls.co.uk or for further information, please contact:

Certain statements made in this announcement are forward-looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual events or results to differ materially from any expected future events or results referred to in these forward-looking statements. They appear in a number of places throughout this announcement and include statements regarding our intentions, beliefs or current expectations and those of our officers, directors and employees concerning, amongst other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the business we operate. Unless otherwise required by applicable law, regulation or accounting standard, we do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

Interim chairman's statement

I am pleased to report another strong year, driven on by our desire to bring ever greater convenience to the UK's neighbourhoods.

Performing well

In 2015, our first full year as a public company, we continued to grow. Total sales increased by 3.1% and adjusted EBITDA also grew by 3.1% (both adjusted for the 53rd week in 2014).

Further details of the trading performance are included in the financial review given below. 

Making the most of our listing

We have continued to capitalise on our listing on the London Stock Exchange's main market in 2014. As planned, we have used funds to fuel and accelerate our performance in neighbourhood convenience, raising our profile and strengthening our brand by opening 60 new convenience stores in the year.

Development of our board and governance

In October 2015 John Coleman stepped down as non-executive chairman in order to focus on new opportunities and I was appointed interim chairman. We would like to thank John for his hard work and everything he has done for McColl's during a time of great change and progress for the business.

In November 2015 we announced that, as stated at the time of the IPO, James Lancaster would step down as chief executive. We are currently looking to find his replacement. Once the new chief executive is identified, James will be appointed as non-executive chairman, until the AGM in 2017.

With a new chief executive and James as non-executive chairman we will have a strong succession. Building on the great growth and transformation achieved under the leadership of James and his experienced team, we will continue to take the business forward for future success.

As a listed company committed to delivering long-term shareholder value, we operate to high standards of corporate governance. This is implemented through our audit, remuneration and nomination committees and supported by our non-executive directors, myself included.

To support the ongoing growth of the business and in line with best practice, we are also seeking to appoint a further independent non-executive director, who will also serve on all three committees.

Making a great difference

I'd like to thank each and every one of our 18,956 colleagues for their outstanding contribution to the sustained success of our business. As a customer-focused retail business we are dedicated to providing a great friendly service in local neighbourhood stores and our colleagues are the ones who make this happen.

Delivering dividend growth

The business continues to generate strong cash returns which we use to fund capital investment and a stated aim of progressive dividend payments to shareholders. The board is recommending a final dividend of 6.8 pence per share, making a total dividend for the period of 10.2 pence. This dividend will be paid on 31 May 2016, to shareholders on the register at the close of business on 29 April 2016, subject to approval at the forthcoming annual general meeting.

Looking forward

I believe we are on an exciting path at McColl's. A path that is seeing us strengthen our position as a leading UK neighbourhood convenience store business. The market remains competitive and fast-changing but we are confident that our position and chosen direction will continue to stand us in good stead. Looking forward, we will press on with our growth plans as we make the most of bringing convenience to the UK's neighbourhoods.

Sharon Brown

Interim chairman and non-executive director

Chief executive's review

For us, 2015 was a year of continuing to focus on executing our strategy to maintain and enhance our position as a leading UK neighbourhood convenience business.

Meeting expectations

In terms of the numbers, we delivered in line with expectations, continuing to grow and improve on 2014. Total revenue, adjusted for the 53rd week in 2014, increased by 3.1%. Like-for-like sales decreased by 1.9% overall. Like-for-like sales in premium convenience and food and wine decreased by just 0.6% - a strong performance in a challenging market and another confirmation of our strategic focus on neighbourhood convenience. Like-for-like sales in standard convenience and newsagents decreased by 4.0%.

We increased adjusted earnings before interest, tax, depreciation, amortisation and property gains and losses and exceptional items to £37.7m up by 3.1%, adjusted for the 53rd week in 2014. Operating profit before exceptional items decreased by £1.2m to £24.3m (2014: £25.5m), however adjusting for the 53rd week and property gains and losses, underlying performance remained broadly flat.

Through continued cash generation, we reduced net debt by £5.8m. At the same time, we increased net capital expenditure to £22.7m compared to £19.3m in 2014.

We also took the opportunity in August 2015 to refinance our £85m revolving credit facility and £15m accordion facility on improved terms. We reduced interest costs and extended the period to August 2020 to give us even better medium-term funding security, which will help us execute our strategy with confidence.

Expanding the number and nature of our stores

We are well on our way to achieving our target of 1,000 convenience stores by the end of 2016. We acquired 60 new convenience stores and converted 45 newsagents to our food and wine format, bringing our total number of convenience stores to 893. With this 1,000 convenience-stores target well within our reach, it's natural for our business to look to the next stage in our evolution. This will see us shifting our attention increasingly towards not only growing the number of convenience stores we have but also expanding the range of products and services we offer in our stores. In 2015 for example, we put a targeted range of alcohol into 100 of our newsagents - a revenue-enhancing step with a high return on a small investment.

Evolving our stores

The way we are evolving our network of stores - to give our customers every kind of convenience they need on their doorstep - fits in well with the broader changes going on in the market. The buzz phrase is omni-channel shopping, where people are increasingly shopping in many different places and topping up more frequently, in person and online, rather than the old way of doing one bulk shop from one big store once a fortnight or so. This trend, as well as demographic changes, favours our focus on neighbourhood convenience. We want to be the store for everyone living within half a mile or so of our shop front - the one they can come to for the things they need, and have the opportunity to work in too, if they like.

Bringing convenience and food-to-go together

In particular, we are moving on from a typical convenience store to one where the lines are blurred between convenience and food-to-go. We want to bring the two together in a new way for the UK's neighbourhoods. So of course we will continue to offer our customers milk, baked beans, newspapers and other everyday items, but we will also provide a great range of take away food and drinks throughout the day - from morning coffees to late night hot snacks.

Increasing our food-to-go offer

Coffee and sausage rolls in the morning, sandwiches and fruit pots at lunchtime, hot snacks and ready meals in the evening, fresh bread throughout the day are all available in our convenience stores - if you want food-to-go in your neighbourhood, we're there for you. This was a big focus for us in 2015. We now have a dedicated head of our food-to-go business, supported by trained teams and individuals across our stores. So we are putting a lot of effort behind the all-important people side of driving food-to-go sales. We are also investing in the necessary equipment. Through 2015, we rolled out 33 large format food-to-go modules across our stores and 115 smaller modules which represents a big step forward for the group.

We are getting good growth from our food-to-go business - sales have significantly increased throughout the year - and we will continue to make this a key focus of our business into the future.

Partnering with Subway

We also opened a Subway franchise in one of our stores and as part of our strategy, we are running the franchise ourselves, enabling us to integrate it fully in the store and make the most of the enhanced food-to-go offer that this popular brand brings. One particularly welcome advantage of partnering with Subway is that it helps to bring into our stores a younger group of customers. The launch of this addition to our food-to-go offer has been a great success and we plan to introduce more Subway franchises across our network.

Providing much-loved post office services

We acquired 72 new post offices in 2015 and now have 520 in our stores. We are the UK's No.1 post office operator - running more than the Post Office itself. Our modernisation programme continued, with a further 23 existing post offices being converted to the new format. Around 90% of our post offices have now been modernised. We always like to have a strong reason to be in a neighbourhood - to be more than just a great local shop. Often that means being the post office too; moreover one which stays open as long as our stores do - so you can pop in late at night to post a package while topping up your shopping.

Offering a great range of neighbourhood services and opportunities

Post offices are just one example of our commitment to offering our customers an ever-greater range of neighbourhood services. We deliver newspapers to around 130,000 homes, for example. No other business makes as many paper deliveries, or creates as many opportunities for young people to earn some well-deserved pocket money. Moreover, with our commitment to offering local people great career opportunities, that first job delivering papers can turn into a part-time or permanent position in-store and onwards and upwards to management.

Alongside paper deliveries, we provide many other neighbourhood services such as lottery tickets, bill payment, cash machines and internet collection and return points - all just a short walk from where our customers live.

Continuing our loyalty scheme

Our dedicated Plus card loyalty scheme is proving to be a very successful way to thank our customers for shopping with us and strengthening our bond with them. To date we have nearly 450,000 loyalty card customers who now regularly use their card in store to access the great offers available to them.

Anticipating and responding

The market continues to be very competitive, with pressures for all players - from food price deflation to rising costs such as the increase in the National Minimum Wage and introduction of the Living Wage. But as a long established retail business with a very experienced leadership team we are used to anticipating and actively managing the challenges as well as seeing and capitalising on the opportunities - this is part of what makes retail so interesting and inspiring.

Generating additional value from selling 100 newsagents

Although convenience is our focus, we have carried on continuously reviewing our portfolio of newsagents. As well as converting a further 45 newsagents to convenience stores, we also announced in October 2015 that after reviewing our portfolio we had decided to sell 100 newsagents (subsequently 3 have been withdrawn from sale). This sale will generate additional funds to reinvest in acquiring and enhancing convenience stores. This is an ongoing part of our neighbourhood convenience strategy.

Controlling costs

We kept a sharp eye on costs across the business and took a number of steps to control costs and improve efficiency. This included reducing headcount at our head office. We have industry-leading levels of stock loss. We also continually monitor all our running costs, achieving ongoing improvements in energy efficiency across our stores for example.

Streamlining our regional management

In 2015 we streamlined our regional management, so that we now have regional managers responsible for both the convenience stores and newsagents in their region. This was a natural change as the number of our convenience stores grows and the number of newsagents decreases progressively. It has helped us increase both efficiency and control.

Managing our trading times

As part of our ongoing efficiency drive, we have been managing our store trading times to make sure we stay open for the optimum number of hours in each individual location. This store-by-store management is an example of our commitment to actively manage the business to achieve best results.

Looking ahead

As we look ahead to 2016 and beyond, for us it's essentially about continuing to execute our strategy with ever greater intensity and success. More focus on neighbourhood convenience. More growth in our stores as we close in on our 1,000-stores target. More expansion and enhancement of the products and services we offer to our local and loyal customers. More chilled, fresh and food-to-go options. More close cost control. More great jobs for our current and future colleagues. More positive impact on the neighbourhoods we live and work in. In short, more McColl's, as we continue to strive and excel at bringing the very best convenience stores to the UK's neighbourhoods.

Having led the business for over 40 years, I have seen it change and develop a long way from its earliest days to the strong and successful company it is today. As I prepare to step down as chief executive and take up the role as non-executive chairman, I am proud to say McColl's is in great shape and has an exciting future. I look forward to the company I know and love forging ahead in bringing ever-greater convenience to the UK's neighbourhoods.

James Lancaster

Chief executive

Financial review

In 2015 we delivered our fifth consecutive year of sales and adjusted EBITDA growth, capitalising on our convenience focussed strategy to generate returns for our shareholders.

Revenue

I am pleased to report that our full year revenue grew to £932.2m (2014: £922.4m), an increase of 3.1% having adjusted for the impact of the 53rd week in the prior period. This performance, supported by our acquisition and conversion programme, was achieved in spite of continuing strong headwinds in the retail sector, in particular within food. Full year like-for-like ("LFL") sales were down by 1.9%, however, in the final quarters of the year we delivered an improving LFL trend. Additionally, our premium convenience and food and wine stores, the prioritised focus of our recent investment, were only slightly down by 0.6% LFL.

Gross profit

Gross profit margins improved year on year by 20 basis points, from 24.2% in 2014 to 24.4% in 2015. This increase reflects the more profitable mix of sales in convenience, as these stores become an increasing proportion of our portfolio. This improvement is set against a backdrop of competition in the sector and price deflation across a number of staple categories. Total gross profit grew to £227.5m (2014: £222.8m), an increase of 4.1%, adjusting for the 53rd week.

Operating profit

Operating profit increased by £1.6m, from £22.0m in 2014 to £23.6m in 2015. Operating profit before exceptional items decreased by £1.2m to £24.3m (2014: £25.5m), however adjusting for the 53rd week and property gains and losses, underlying performance remained broadly flat. Although profit improvement was achieved through growing total revenues and improving gross margin, administrative expenses, before exceptional costs, increased as a percentage of revenue to 24.4% (2014: 24.2%). Whilst costs continue to be tightly managed across all business areas, the increase reflects the higher cost structure in convenience stores.

Other operating income before exceptional income reduced from £25.7m in 2014 to £23.6m in 2015, reflecting the additional weeks trading in 2014 and £0.7m lower profit on asset disposals.

Exceptional costs in the period were £0.6m, which related to a first half programme of restructuring, undertaken in order to reduce future administrative overheads.

Net finance costs

As previously reported, we were able to substantially reduce our finance costs following our IPO in February 2014. In 2015 we saw a full year of these benefits, with net finance costs reducing to £2.5m (2014: £6.2m). During the course of 2015 we also entered into an improved working capital facility, improving the margin paid by at least 50 basis points.

Profit before tax

Profit on ordinary activities before taxation increased to £21.1m (2014: £12.6m), reflecting the significant exceptional costs incurred in 2014 and reduced finance costs. Excluding exceptional items, profit before tax increased by £2.5m or 12.9% year on year.

Taxation

The tax charge for the period increased to £5.0m (2014: £2.7m), representing an effective tax rate of 23.7% (2014: 21.6%) compared to the statutory rate for the period of 20.3%. This included a £0.7m deferred tax adjustment in respect of prior periods, without which the effective tax rate is 20.4%.

Earnings per share

Basic earnings per share increased to 15.4 pence (2014: 10.2 pence). Adjusted earnings per share, stated before exceptional items and the prior year deferred tax adjustment, increased to 16.5 pence (2014: 15.6 pence).

Dividends

I am pleased to confirm that the board has recommended a final dividend of 6.8 pence per share (2014: 6.8p), in line with our dividend policy. The total dividend for the period will therefore be 10.2 pence per share (2014: 8.5p).

Balance sheet

Following another year of profitable growth, total shareholders' funds at the end of the period increased by £8.8m to £126.0m (2014: £117.2m).

The book value of goodwill and other intangibles, property, plant and equipment increased by £8.1m to £210.3m (2014: £202.2m), driven by our programme of capital investment.

Current assets at the end of the period increased to £99.9m (2014: £87.3m). This was principally due to increased stockholding as sales grew and mix changed, alongside increased cash balances and the reclassification of 97 newsagents as assets held for sale. The cash generated from the disposal of these newsagents will be used to further invest in new stores to support our growth in convenience.

Our current liabilities increased to £135.8m (2014: £116.9m), reflecting higher trade and other payables, due to the impact of the 53rd week in 2014 reducing the prior year end position.

Non-current liabilities reduced to £58.3m (2014: £61.9m), as we continued to reduce our borrowings and improve our gearing post IPO.

Pensions

We continue to operate two defined benefit pension schemes, both of which are closed to future accrual. The combined surplus in the two schemes improved by £4.8m to £6.1m (2014: £1.3m combined surplus).

Following the latest actuarial valuation of the schemes in 2013, agreement was reached with the trustees as to the future contribution level, which was set at £1.5m per annum, increasing annually by inflation. The next actuarial review is due in 2016.

Cash flow and net debt

We continued to generate strong operational cash flows. Net cash provided by operating activities for the period increased by over 25% to £43.5m (2014: £34.6m). This improvement was driven by increased pre-tax profits and a net cash inflow from working capital.

Adjusted EBITDA increased by £0.4m to £37.7m (2014: £37.3m).

There was a working capital inflow in the period of £10.5m (2014: £2.3m outflow), as we reversed the impacts of the 53rd week in the prior year. This meant that the prior period included additional cash outflows, for example, 13 monthly payroll payments. The combined impact of these effects on working capital in the prior year was an outflow of £11.7m.

Net capital expenditure increased by £3.4m to £22.7m (2014: £19.3m). This reflects our continued programme of investment, predominantly relating to acquisitions and store developments. In the period we added 60 premium convenience stores, completed 45 food and wine conversions and delivered approximately 150 store food to go upgrades.

Net finance expense of £2.5m was £1.7m lower than the prior year, due to the lower cost capital structure post IPO.

The interim and final dividends paid in the period totalled £10.7m.

Net debt at the end of the period improved to £31.6m (2014: £37.4m), representing 0.8 times adjusted EBITDA.

Debt refinancing

During the period, the group entered into an improved £85.0m working capital facility. This improved facility not only extended the term, which now runs through until August 2020, but it also saw a reduction in the cost of borrowing by at least 50 basis points. At the end of the period drawings against this facility were £44.5m (2014: £46.0m).

Summary

Overall, I remain confident that we are in a strong financial position and have sufficient funding in place to deliver our strategy to profitably grow our convenience business. We have a strong track record of growing sales and profits and will continue to work hard to maintain this progression.

Jonathan Miller

Chief financial officer

Principal risks

We are committed to good corporate governance. To this end, we follow a sound risk management process closely aligned to our strategy. 

Responsibility statement

The responsibility statement has been prepared in connection with the company's full annual report for the period ended 29 November 2015. Certain parts of the annual report are not included in this announcement, as described in note 1.

We confirm that to the best of our knowledge:

· the financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole;

· the strategic report includes a fair review of the development and performance of the business and the position of the company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and

· the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the company's performance, business model and strategy.

By order of the board

Jonathan Miller

1 March 2016

Consolidated income statement

52 week period ended 29 November 2015

Consolidated statement of comprehensive income

52 week period ended 29 November 2015

Consolidated balance sheet

29 November 2015

Consolidated statement of changes in equity

52 week period ended 29 November 2015

Consolidated cash flow statement

52 week period ended 29 November 2015

1. Basis of preparation

McColl's Retail Group plc (the "company") is a company incorporated in the United Kingdom under the Companies Act. The address of the company's registered office is McColl's Retail Group, McColl's House, Ashwells Road, Brentwood, Essex CM15 9ST. The principal activity of the company and its subsidiaries (collectively, the "group") is the provision of convenience and newsagent services in the UK.

The group financial statements for 2015 consolidate the financial statements of McColl's Retail Group plc and all its subsidiary undertakings drawn up to 29 November 2015. The group's accounting period covers the 52 weeks ended 29 November 2015. The comparative period covered the 53 weeks ended 30 November 2014. Acquisitions are accounted for under the acquisition method of accounting.

The group financial statements have been prepared based on the company's financial statements which are prepared in accordance with International Financial Reporting Standards as adopted for use in the EU on the going concern basis and in accordance with IFRS and IFRS Interpretations Committee ('IFRIC') interpretations, as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reported under IFRS. The consolidated financial information is presented in sterling, the group's functional currency, and has been rounded to the nearest thousand (£'000).

The financial information set out above does not constitute the company's statutory accounts for the years ended 29 November 2015 or 30 November 2014, but is derived from those accounts. Statutory accounts for 2014 have been delivered to the Registrar of Companies and those for 2015 will be delivered following the company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) Companies Act 2006.

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to publish full financial statements that comply with IFRSs in March 2016.

The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

Going concern

In making their going concern assessment the directors have considered the group's business activities, its financial position, the market in which it operates and the factors likely to affect its future development.

The directors have reviewed the group's forecasts, taking into account a range of sensitivities, and how they impact headroom against its bank facilities, and its ability to meet its capital investment and operational needs.

In August 2015, the company announced it had signed an amended £85.0m revolving credit facility plus a £15.0m accordion option expiring in August 2020. The group has net current liabilities of £35.8m at the period end. The directors have additionally considered this position to determine if it presents any going concern issues. The group is profitable and cash generative and is supported by the revolving credit facility. As at 29 November 2015 £44.5m was drawn against the facility, and therefore there is sufficient headroom to meet the group's debts as they fall due.

The directors believe the group is in a strong financial position due to its profitable operations and strong cash generation and that the group has adequate resources to continue in operation for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

Adoption of new and revised standards

In the current financial period, the group has applied for the first time IFRS 2 'Share-based Payment' and IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations'. 

New standards in issue but not yet effective

A complete list of standards that are in issue but not yet effective is included with our full accounting policies in an appendix to the Annual Report.

With the exception of IFRS 16, which is under review, the directors anticipate that the adoption of these standards and interpretations in future periods will have no significant impact of the group's financial statements when the relevant standards come into effect.

2. Segmental analysis and revenue

In accordance with IFRS8 'Operating segments' an operating segment is defined as a business activity whose operating results are reviewed by the chief operating decision maker and for which discrete information is available. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker, as required by IFRS8. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the board of directors. The principal activities of the group are currently managed as one segment. Consequently all activities relate to this segment, being the operation of convenience and newsagent stores in the UK.

An analysis of the group's revenue is as follows (all continuing operations):

3. Exceptional items

Due to their significance or one-off nature, certain items have been classified as exceptional as follows:-

1 Redundancy and restructuring costs

During the 52 weeks ended 29 November 2015 one-off employee related costs associated with the field operations and head office re-structure totalled £625,000.

2 Costs associated with IPO

During the 53 weeks ended 30 November 2014 one-off IPO costs of £4,539,000 were incurred of which £1,823,000 was charged to the income statement and £2,716,000 was charged to the share premium account as being directly related to the issue of new shares.

3 Share-based payments

During the 53 weeks ended 30 November 2014 share-based payments totalling £5,532,000 were made by way of an allocation of shares to employees prior to the IPO for nil consideration.

4 Property related costs

During the 53 weeks ended 30 November 2014 a provision of £2,440,000 was made for the onerous lease relating to the group's former head office. The provision was made to recognise an expected shortfall in rental income compared with rent payable and other property related costs.

5 Post office income

During the 53 weeks ended 30 November 2014 the group received £6,743,000 income from the Post Office in relation to an agreement to convert 191 of the group's existing post offices to a new local format. The group incurred costs of £392,000 associated with the conversions.

6 Unamortised financing costs included in finance expense in 2014

On 4 March 2014 the group completed an early debt refinancing which resulted in the write-off of £3,166,000 of unamortised financing costs. 

7 Tax effect of exceptional items

The tax effect of the exceptional items is a credit of £127,000 (2014: credit £1,288,000).

4. Adjusted EBITDA

5. Net finance costs

6. Taxation

The tax charge for the period can be reconciled to accounting profit as follows:

Included within the adjustments in respect of prior periods is a one off historic adjustment for deferred tax of £712k. Excluding the one off adjustment the effective tax rate is 20.4%.

Changes in tax rates and factors affecting the future tax charge

In July 2015, the UK Government announced its intention to reduce the corporation tax rate to 19% with effect from 1 April 2017 and 18% with effect from 1 April 2020. These changes were substantively enacted at the balance sheet date and therefore have been reflected in the deferred tax provisions.

7. Dividends

The board has recommended a final dividend of 6.8 pence per share (2014: 6.8p), totalling £7,120,000 (2014: £7,120,000), subject to shareholder approval at the annual general meeting to be held on 19 April 2016. The final dividend will be paid on 31 May 2016 to those shareholders on the register at the close of business on 29 April 2016. The payment of this dividend will not have any tax consequences for the group. The interim dividend, declared and paid, was 3.4 pence per share (2014: 1.7p), totalling £3,560,000 (2014: £1,780,000).

8. Earnings per share

9. Intangible assets

10. Business combinations

During the period, the group made 60 acquisitions, none of which was individually considered material to the group. The cash consideration for these acquisitions and the assets acquired are summarised as follows:

11. Borrowings

Details of loans and credit facilities are as follows:

The long term loans are secured by a fixed charge over the group's head office property together with a floating charge over the company's assets.

On 15 August 2015 the Group completed and signed an amended £85m revolving credit facility and a £15m accordion facility for the group. This facility amends the group's existing £85m plus £15m accordion facilities which were due to expire in July 2018. The new facility will be in place until August 2020 at margins of 1.5% above LIBOR. The current facility drawn as at 29 November 2015 is £44,500,000.

Details of loans and hire purchase obligations repayable within two to five years are as follows:

12. Net debt

13. Authorised, issued and fully paid share capital

Voting rights

The ordinary shares rank equally for voting purposes. On a show of hands each shareholder has one vote and on a poll each shareholder has one vote per ordinary share held. Each ordinary share ranks equally for any dividend declared. Each ordinary share ranks equally for any distributions made on a winding up of the group. Each ordinary share ranks equally in the right to receive a relative proportion of shares in the event of a capitalisation of reserves.

14. Notes to the cash flow statement

Analysis of net debt

15. Related party transactions

Only the directors and senior managers are deemed to be key management personnel. It is the board which has responsibility for planning, directing and controlling the activities of the group. All transactions are on an arm's length basis and no period end balances have arisen as a result of these transactions.

Remuneration of key management personnel

The remuneration of the directors, who are the key management personnel of the group, is set out below in aggregate for each of the categories specified in IAS24 related party disclosures.

There were no material transactions or balances between the group and its key management personnel or members of their close family.

Disclosure of Home Member State

For the purposes of the Transparency Directive, the Home Member State of McColls Retail Group plc is the United Kingdom.