Mccoll's Regulatory News (MCLS)

This announcement replaces the announcement issued under RNS number 4029V on 23 July 2018. The Interim Results statement has been amended to include the independent auditor's report.

All other details remain unchanged. The full text of the correct announcement is set out below.

23 July 2018 - convenience retailer McColl's Retail Group plc ("McColl's" or "the Group") today announces its Interim Results for the 26 week period ended 27 May 2018.

CONTINUED STRATEGIC PROGRESS DESPITE SIGNIFICANT H1 HEADWINDS

SUPPLY ARRANGEMENTS IN FINAL STAGES OF TRANSITION

Financial highlights:

· Total revenue up 19.2% to £601.7m (2017: £504.8m) driven by the successful 2017 acquisition of c.300 convenience stores

· Like-for-like (LFL) sales1 down 2.7% in H1 with availability impacted by supply chain disruption following the failure of Palmer & Harvey (P&H)

· Gross margin 25.0% (2017: 25.4%), also affected by the disruption including the temporary impacts on supply terms

· Adjusted EBITDA2 slightly down at £16.0m (2017: £16.5m)

· Profit before tax £2.3m (2017: £4.5m), following £3.5m of downward adjusting items3 (2017: £2.3m) and £2.4m of property profits (2017: £0.0m)

· Basic earnings per share 1.3p (2017: 2.8p); Adjusted earnings per share4 which includes the benefit of property profits5 were 4.7p (2017: 5.0p)

· Net debt £112.6m (2017: £110.8m), ahead of expectations due to strong cash performance, particularly an improvement in working capital

· Interim dividend per share maintained at 3.4p (2017: 3.4p)

Operational and strategic highlights:

· Implemented interim distribution solution following P&H administration, and completed the transition of over 1,000 stores to Morrisons supply, ahead of schedule

· Relaunched the Safeway brand at McColl's, with c.400 supermarket quality fresh, chilled and ambient lines, driving an increase in 'own brand' participation, which is up around five percentage points year-on-year in Morrisons supplied stores

· Good progress towards our strategic target for grocery6 to be our largest sales category, now representing 33% of sales (2017: 29%)

· Continued to invest in the estate through our refresh programme, with 27 fully refitted stores opened in H1 bringing our total to 54, with average sales uplifts exceeding 5%

· Acquired three new convenience stores in H1, with a strong pipeline for H2, whilst continuing to optimise the estate through the closure/disposal of under-performing stores

Jonathan Miller, Chief Executive, said:

"I am incredibly proud of our team and the extraordinary efforts they have shown in dealing with one of the most challenging six months the business has ever faced. During the first half we experienced unprecedented supply chain disruption following the collapse of P&H last November. This temporary upheaval has inevitably impacted sales and margin performance in the c.700 stores that were formerly supplied by P&H, and has also had knock-on effects on the rest of the estate.

"However, the switch to Morrisons supply in the 1,300 stores intended for this year has been accelerated, and will now be completed in early August, ahead of schedule. At the same time we have relaunched the Safeway brand at McColl's, providing our customers with a more competitive and higher quality food offer. We will therefore have a progressively stronger and simpler operational position with a more compelling offer as we move through the second half and into 2019.

"We will also continue to improve the quality of our estate, through more store refreshes and acquisitions, and to invest in our customer proposition in what remains a competitive environment. As the convenience sector continues to grow, we remain confident that our clear strategy will allow us to make further progress and deliver sustainable returns for shareholders."

Current trading update and outlook

In the early part of H2 we have seen an improvement in sales performance as we begin to emerge from the worst period of supply chain disruption and we have also benefitted from a period of better weather. Total LFL sales for the seven week period ending 15 July 2018 were down 0.8%.

We look forward to completing the transition of 1,300 stores to Morrisons supply shortly, which will allow us to refocus on day-to-day operations, including improving availability and rebuilding trade in those stores most affected by the disruption.

In light of the challenges we have faced in H1, and planned H2 recovery, we now expect the 2018 full year adjusted EBITDA to be at a similar level to the prior year. Looking further ahead, to 2019 and beyond, it will remain important to manage intense cost pressures in the business, whilst also investing in the customer offer to maintain our competitive position.

The business uses a number of non-statutory measures (for example, LFL, adjusted EBITDA and adjusted EPS) because management believe that these - placed with equal prominence alongside other statutory measures - help to better explain the underlying performance of the business and its key dynamics. These are kept under continuous review and are defined and used consistently, or explained otherwise.

1 Like-for-like sales reflect sales from stores that have traded throughout the current and prior financial periods, and sales include VAT but exclude sales of fuel, lottery, mobile phone top up and travel tickets.

2 Adjusted EBITDA (defined in note 6) is stated before adjusting items and property gains and losses.

3 Current year adjusting items relate to the costs associated with the administration of P&H, the store closure programme and a health & safety fine (see note 5).

4 Adjusted earnings per share is stated before adjusting items. Details of the calculation of earnings per share can be found in note 9.

5 Excluding property profits, adjusted earnings per share were 3.0p (2017: 5.0p).

6 Grocery sales include beers, wines and spirits. For a full definition of grocery sales see glossary of terms.

Results presentation

A copy of this announcement is available at http://www.mccollsplc.co.uk/investor .

A meeting for analysts will be held today at 9.30am at Numis Securities, London Stock Exchange, 10 Paternoster Square, London EC4M 7LS. Access will be by invitation only. All presentation materials will be available on our website.

Enquiries

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

McColl's Retail Group plc Media enquiries:

Jonathan Miller, Chief Executive Headland

Simon Fuller, Chief Financial Officer Lucy Legh, Rob Walker, Ewa Lewszyk

Naomi Kissman, Head of Investor Relations +44 (0)20 3805 4822

+44 (0)1277 372916

Notes to editors

McColl's is a leading neighbourhood retailer, with an estate of around 1,600 managed convenience stores and newsagents. We operate McColl's branded convenience stores as well as newsagents branded Martin's across the UK, except in Scotland where we operate under our heritage brand, RS McColl. Our dedicated colleagues serve over five million customers every week, and we are the largest operator of Post Offices in the UK, with c.600 in-store counters/branches.

Chief Executive's Statement

In the first half of the year our sales grew almost 20% to over £600m as we continued to benefit from the major acquisition in 2017.

However, we have faced significant trading headwinds in the first half of the year as we have dealt with unprecedented supply chain disruption, as well as a prolonged period of relatively poor weather and a continuing competitive backdrop.

Managing unprecedented supply chain disruption

On the second day of our financial year we received the news that P&H, supplier of tobacco, ambient groceries and fresh food to c.700 of our newsagents and smaller convenience stores, was entering into administration with deliveries ceasing immediately. We worked quickly to establish an interim supply solution for these stores, drawing on the support of our long-standing wholesale supplier Nisa, and our new, long-term partner Morrisons.

Within days, with Morrisons' support, we were able to fully re-establish tobacco supply. Within a week we were also able to extend our relationship with Nisa. Their support included direct wholesale delivery to a small number of additional stores, as well as supplying increased volumes of ambient groceries to support a hub and spoke solution for the remaining stores. In addition we put in place a further direct to store supply solution for fresh and frozen lines.

We already had plans in place to transition c.1,300 stores to Morrisons wholesale supply over the course of 2018, starting with our larger, Nisa supplied stores. However, we immediately began to explore opportunities to rework our rollout programme and accelerate the transition of stores formerly supplied by P&H.

We experienced further disruption in March when Fresh to Store, which was part of our interim supply chain solution, entered into administration, requiring us to set up an additional hub and spoke operation to supply chilled food to a large number of stores.

The team has shown enormous resolve and resilience during this challenging time. Our operations colleagues have worked in all weathers, including during periods of heavy snowfall earlier in the year to ensure that we maintained supply to affected stores. The disruption was felt most keenly in those stores formerly supplied by P&H but there was also a knock-on impact in other stores, particularly those that have served as hubs, and more broadly as our field management teams focused their attention on managing the disruption.

I'm delighted that our transition to Morrisons supply is now largely complete, well ahead of schedule. Within a few weeks all 1,300 stores that we had planned to transition by the end of the year will be supplied by Morrisons for both fresh and ambient products1, and we are very grateful for their fantastic support. The accelerated rollout was a great achievement by both the McColl's and Morrisons teams, enabling us to move through the second half of the year with a progressively stronger, simpler and more secure supply chain which will allow us to fully focus on our strategic and customer plans. As we progress through the second half of the year, delivering a strong performance in core shopping trip measures such as availability will be key to restoring customer confidence in affected stores.

Sales held back by relatively poor weather and planned range rationalisation

Whilst dealing with the disruption brought about by the collapse of a major supplier, the extreme weather events driven by the 'Beast from the East' presented a further challenge, as did a prolonged period of poorer weather compared to a warm spring last year.

The stores we acquired from the Co-op during 2017 continue to perform in line with our original business case. However, as we have progressed our plans to improve their profitability, by applying the McColl's model and removing unprofitable sales through range rationalisation they have begun, as anticipated, to make a negative contribution to LFL sales. We expect this to continue into the second half as we annualise the integration of all the acquired stores. However, we remain confident that there is a significant opportunity to grow sales in the future, particularly when these stores transition to Morrisons supply and benefit from the higher quality and competitiveness of the Safeway range.

[1] The c.300 stores we acquired from the Co-op are under a separate contract with Nisa until 2020.

Strategic objectives

Despite the challenges we have faced in the first half of the year we have continued to make progress with our strategy, which is focused on enhancing our offer and capturing growth in the convenience channel. As previously described, there are three key elements to our strategy:

· Growing convenience offer;

· Increased neighbourhood presence; and

· Excellent customer service.

Growing convenience offer

Safeway range driving higher own brand participation

We have taken a significant step forward in growing our convenience offer having relaunched the Safeway brand at McColl's. The initial range of around 400 products is now available exclusively in over 1,000 McColl's stores and is receiving good feedback.

We have spoken to hundreds of customers, using both exit interviews and in-depth focus groups. Our research has shown that the Safeway brand has strong credentials and that our customers are pleased to be able to access supermarket quality products in their neighbourhood store. The chilled and fresh products, most of which are manufactured in Morrisons' own factories, are particularly popular, with freshness and Britishness being two attributes that resonate strongly with our core customers.

Whilst it's early days, we are seeing a higher 'own brand' participation year-on-year in stores that have the Safeway range, as customers are seeing an opportunity to trade into good value, high quality own brand products. This is particularly evident in some key grocery lines where we have been able to either provide a more competitive price point e.g. free range eggs (sales up 48% and volume up 100%), a new alternative to the brand leader e.g. microwave rice, or a higher quality own brand product e.g. minced beef (sales up 68%). Whilst this may introduce a level of short-term price deflation in certain categories, it provides McColl's with a more sustainable long-term value proposition.

In recent weeks, as we near the end of the rollout programme, we have begun to increase the marketing activity, and have started to trial some new initiatives, to support Safeway, including dedicated promotional fixtures and tasting events.

With the transition largely complete, in the second half of the year we will focus on establishing Safeway with McColl's customers as well as exploring opportunities to develop the range.

Further progress towards our strategic target for grocery to be our largest sales category

Grocery sales were up 37% in the first half of the year and now represent 33% of total sales compared to 29% in H1 2017, driven by the stores we acquired last year. We expect to make further progress towards our target for grocery to be our biggest sales category as the Safeway range becomes more established over the months ahead.

Whilst grocery sales have grown strongly, the robustness of our tobacco supply chain has supported a strong performance in what remains our largest category. We have maintained excellent availability and have also benefitted, in value terms, from manufacturer price increases and duty rises.

Food-to-go remains a focus for us and a category where we see significant opportunity. Our sales were up 33% in the first half of the year as we've continued to expand our offer. We opened two new Subway partnerships in the first half of the year, a key element of our food-to-go strategy. Just last month we also opened our first 'Fresh Forward' Subway in Buxton, our 21st concession. This new concept includes Subway's latest design features and highlights the freshness and quality of the ingredients.

Investment in Project Refresh continues to improve our existing estate

We have made good progress with our refresh programme that began at the end of 2016. In the first half of the year we completed 27 stores in addition to the 27 already trading, bringing our total to 54 and over 10% of our current planned programme. These now have a more modern, cleaner look and feel, with more refrigeration for fresh food and more space dedicated to new and growing categories including food-to-go. They are very popular with local customers and are trading well, delivering good sales uplifts across the store and particularly in chilled food and fresh produce.

We plan to complete a further 50+ refreshes in the second half of the year. We are now also testing a refresh-lite concept, developing a less capital-intensive model utilising some of the best elements of the full refresh concept, but appropriate for some of our stores that require less extensive changes.

Increased neighbourhood presence

Having resumed our single-store acquisition programme towards the end of last year, we have acquired a further three convenience stores in the first half of the year. We plan to acquire 10+ more in the second half. There remains a large number of attractive opportunities, and we expect to continue our acquisition programme in 2019.

At the same time we have continued to review our portfolio, to ensure that it is fit for the future, closing or disposing of stores that we don't believe will deliver long-term sustainable returns. In the first half of the year we closed or disposed of 32 stores, the majority of which were poorer performing newsagents and small convenience stores that were part of the closure programme announced in late 2017. With lower footfall and therefore reduced opportunity to drive additional sales in these stores, we do not believe they will make a positive contribution to the Group in the long term.

Increasing our neighbourhood presence is also about strengthening our brand and connecting with the communities we serve. The appointment of our first ever Customer Director, Tim Fairs, in January, was an important step in helping us do that. In his first few months in the business Tim has led a number of new initiatives, including a "price cuts" campaign to improve our competitive position and a Safeway Max trial that showcases the new range in a variety of ways, such as dedicated promotional space in store, taste testing events and leaflet drops. He has also developed a strong customer plan for the months ahead that will support broader engagement with customers and the communities we serve.

Our refresh programme is also presenting a good opportunity for us to strengthen our links with local communities. On each opening day we invite customers to come and visit their new, improved store hosting a family fun day with goodie bags and face painting. We also make charitable donations to support local community projects or groups for every refreshed store.

Excellent customer service

Providing excellent customer service remains a strategic priority and we're delighted that once again, the annual him! convenience tracking programme, which interviews over 20,000 customers of UK convenience stores, has shown that McColl's is rated very highly for colleague friendliness and helpfulness, and also shows an improved performance against all of the metrics that are important to our customers. Our new customer plan will enable us to further improve the shopping experience at McColl's.

Our market-leading, profitable services proposition is attracting more customers and we continue to grow and develop our offer. We opened 21 new Post Offices in the first half of the year, firmly cementing our position as the largest operator of this valuable service in the UK. Many of these have opened in stores we acquired last year where we continue to explore opportunities to bring the best of McColl's services proposition. We are also trialling self-service units in a small number of our Post Offices. These units are designed to be simple and easy for customers to use to post letters, pay bills and top-up their mobile phones.

Parcel collection and returns also continue to grow rapidly. We now have 675 Collect+ points and 185 Amazon lockers, as parcel collection becomes an increasingly popular element of our neighbourhood convenience offer.

Looking ahead

The grocery and wholesale sectors have continued to evolve, and convenience remains an attractive channel as the demand for smaller and more frequent shops continues to grow. Recently published IGD forecasts show that total convenience sales are expected to increase by around 18% over the next five years.

Despite the significant one-off challenges we have experienced in the first half of the year, as we've dealt with the fallout from a major supplier failure, we have made continued strategic progress. We remain convinced our strategy is the right one to deliver long-term sustainable returns.

We have entered the second half of the year with a strengthened supply chain and a higher quality and more competitive offer, and we can refocus on day-to-day operations, including improving availability and rebuilding trade in those stores most affected by the disruption. With a strong customer plan, centred on Safeway, the continuation of our major refresh programme and more acquisitions planned in the months ahead, we are confident that we will begin to see increased momentum as we move through the second half of the year and into 2019.

Financial review

The Group has delivered a robust financial performance for the 26 week period ended 27 May 2018, despite unprecedented supply chain disruption and significant trading headwinds.

Strong revenue growth, but LFL impacted by supply chain disruption and poorer weather

Total revenue increased by 19.2% to £601.7m (2017: £504.8m) driven by the c.300 stores we acquired in 2017. Within this, food categories such as chilled and fresh produce were up 48% and 45% respectively.

LFL sales were down 3.1% in the second quarter, giving a total LFL decrease of 2.7% for the 26 weeks to 27 May 2018. LFL sales were impacted throughout the first half of the year by the collapse of P&H, wholesale supplier for c.700 of our newsagents and smaller convenience stores. These stores were most directly impacted, but the rest of the estate also felt the effects, as a network of larger stores were set up as hubs to supply stores with no direct distribution, and our field teams prioritised managing the disruption.

Poorer weather provided a further headwind, both in the form of heavy snowfall in the winter months and lower temperatures in Spring. The latter resulted in a significant drag on LFL sales in Q2 as we lapped strong year-on-year comparatives following a prolonged period of warm weather last year. Two year LFL sales were down 1.7% in Q2, an improvement on Q1 where they were down 3.5%.

In addition, the c.300 stores we acquired during the course of 2017 have begun to annualise and make a negative contribution to LFL sales performance. This follows the planned removal of unprofitable sales resulting from over-ranging in some categories. Whilst this impact on LFL sales will continue in the short term it will support more profitable growth in the future as we set out in our original business case.

LFL sales in recently acquired or converted stores (excluding the major acquisition) continued to be positive and were up by 0.6% for the year to date.

Gross margin growth held back by temporary supply arrangements and strong tobacco sales

In the first half of the year gross margin decreased to 25.0%, (2017: 25.4%), following the supply chain disruption. This was partly driven by the temporary impacts on trading terms as we put in place an interim solution.

Excluding these short term impacts, gross margin was slightly up, with growth tempered by strong tobacco sales (which are lower margin) as this part of our supply chain was most robust following the collapse of P&H.

We expect gross margin to continue to progress over time as a result of an increasingly favourable mix and improved supply terms, partly offset by investment in price to improve our competitive position.

In terms of overall value, total gross profit increased by 17.0% to £150.1m (2017: £128.3m).

Operating profit

Operating profit after adjusting items decreased to £6.4m (2017: £7.7m).

Operating profit before adjusting items increased by £1.0m to £9.9m, supported by annualisation of the major acquisition and £2.4m of property profits (2017: £0.0m) following the sale and leaseback of a further 11 freehold stores. There remains significant appetite for sale and leaseback deals from a number of interested parties and, as we said earlier in the year, this programme will continue to realise cash to reinvest in the business.

Adjusting items of c.£3.5m comprised £1.4m relating to the supply chain disruption, including the cost of implementing an interim supply solution (£0.7m of which relates to a more expensive short-term distribution model for tobacco), £1.5m relating to the store closure programme announced last year and £0.6m relating to a health & safety fine (see note 5). In addition, it is noted that we are one of a number of companies that is in ongoing discussions with HMRC relating to a review of National Living Wage and working hours. This may lead to a further adjustment in the full year, the impacts of which cannot be reliably quantified at present.

Whilst administrative expenses grew 18.2% year-on-year, driven by the major acquisition in 2017 and annual wage inflation, as a percentage of sales they fell slightly from 26.0% to 25.8%, as the larger business benefitted from fixed cost economies of scale.

Adjusted EBITDA down slightly

Adjusted EBITDA decreased slightly to £16.0m (2017: £16.5m), held back by weaker sales and a slightly reduced margin principally as a result of the impacts of the supply chain disruption which have not been included in adjusting items.

Net finance costs impacted by higher level of borrowings following the major acquisition

Net finance costs increased to £4.0m (2017: £3.2m), as a result of increased borrowings following the major acquisition last year.

Profit before tax impacted by adjusting items

Profit before tax for the period was £2.3m (2017: £4.5m), a fall of £2.2m, reflecting a higher level of adjusting items following the supply chain disruption and increased finance expense, partly offset by £2.4m of property profits (2017: £0.0m).

Taxation

The tax charge for the period was £0.9m (2017: £1.3m), representing a rate of 36.4% (2017: 28.3%). The comparable effective tax rate in 2018 excluding the impact of non-deductible adjusting items was 21.4%. The difference between the current statutory rate of 19.0% and the effective tax rate excluding the impact of non-deductible adjusting items of 2.4% in the period is due principally to the depreciation of assets not qualifying for tax relief.

Adjusted earnings per share slightly down, but supported by property profits

Basic earnings per share were 1.3p (2017: 2.8p). Adjusted earnings per share, stated before adjusting items, were broadly flat at 4.7p (2017: 5.0p). Excluding property profits, adjusted earnings per share were 3.0p (2017: 5.0p).

Dividend

Based on the continued strong cash generation of the Group, the Board has declared an interim dividend of 3.4 pence per share (2017: 3.4 pence). The interim dividend will be paid on 7 September 2018 to those shareholders on the register at the close of business on 10 August 2018.

Balance sheet and net debt

Shareholders' funds at the end of the period were £147.1m (2017: £133.5m).

The book value of goodwill and other intangibles, property, plant and equipment increased by £38.3m to £350.8m (2017: £312.5m), reflecting the increased scale of the Group following the major acquisition.

Net debt at the end of the period was £112.6m (2017: £110.8m) (see note 11). This is better than initial management expectations as a result of a strong performance on working capital, largely driven by improved supplier terms as the business has both grown and accelerated the change to a new wholesale supplier.

The combined accounting surplus (based on corporate bond yields) on the two defined benefit pension schemes operated by the Group improved to £10.5m (2017: £4.0m), as a result of a strong return on assets.

In June 2017 we completed the triennial actuarial review of our pension schemes. The review concluded that the combined deficit of our two pension schemes on an actuarial basis was broadly similar to that at the previous valuation. Therefore only a minor incremental cash contribution will be made in the current review period.

Cash flow and capital expenditure

Net cash provided by operating activities increased to £37.7m (2017: £34.0m), predominantly driven by improvements to working capital due to improved supplier terms, and benefits from a positive stock to trade payables working capital cycle. We also benefitted from a reduced number of stock days reflecting changes in the mix of our sales, as we grew our fresh and chilled offer.

Gross capital expenditure was £10.0m. Net capital expenditure, including property proceeds from the sale and leaseback of 11 freehold properties, reduced to £4.0m (2017: £96.9m) in the period, reflecting a lower, stable capital expenditure level following the major acquisition last year.

Continued strategic focus and investment will drive sustainable profit growth

Whilst the financial performance of the business has been significantly impacted by H1 headwinds, the right building blocks have been put in place to drive a higher margin, food-based convenience store business in the longer term. This will require continued focus and targeted investment, but will ultimately ensure that ongoing cost pressures such as the living wage can be mitigated.

Cautionary statement

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.

McColl's Retail Group plc

Statement of Directors' responsibilities

26 week period ended 27 May 2018

Responsibility statement

We confirm that to the best of our knowledge:

(a) The condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';

(b) The interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months of the year); and

(c) The interim management report includes a fair review of the information required by DTR.4.2.8R (disclosure of related parties' transactions and changes therein).

By order of the Board,

Chief Executive

Jonathan Miller

Chief Financial Officer

Simon Fuller

Date: 22 July 2018

McColl's Retail Group plc

Consolidated income statement

for the 26 week period ended 27 May 2018

The above results were derived from continuing operations.

McColl's Retail Group plc

Consolidated statement of comprehensive income

for the 26 week period ended 27 May 2018

McColl's Retail Group plc

Consolidated statement of financial position

as at 27 May 2018

McColl's Retail Group plc

Consolidated statement of financial position (continued)

as at 27 May 2018

These condensed financial statements of McColl's Retail Group plc registered number 08783477 were approved and authorised for issue by the Board on 22 July 2018 and signed on its behalf by:

Simon Fuller

Director

McColl's Retail Group plc

Consolidated statement of changes in equity

for the 26 week period ended 27 May 2018

McColl's Retail Group plc

Consolidated statement of cash flows

for the 26 week period ended 27 May 2018

McColl's Retail Group plc

Consolidated statement of cash flows (continued)

for the 26 week period ended 27 May 2018

McColl's Retail Group plc

Notes to the financial statements

for the 26 week period ended 27 May 2018

The Group is a public company limited by share capital, incorporated and domiciled in United Kingdom.

The address of its registered office is:

McColl's Retail Group plc

McColl's House

Ashwells Road

Brentwood

Essex

CM15 9ST

United Kingdom

Principal activity

The Group engages in one principal area of activity, as an operator of convenience and newsagent stores.

Basis of preparation

The interim financial statements for the 26 week period ended 27 May 2018 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34, 'Interim Financial Reporting' as adopted by the European Union. They have been prepared in accordance with the recognition and measurement criteria of IFRS. They do not include all the information required for full annual financial statements to comply with IFRS, and should be read in conjunction with the consolidated financial statements of the Group as at and for the period ended 26 November 2017 as applied in the Group's Annual Report and Accounts 2017 (the "Annual Report 2017").The accounting policies applied by the Group in these consolidated results are the same as those applied by the Group in its Annual Report 2017 for the period ended 26 November 2017.The Annual Report 2017 is available at:https://www.mccollsplc.co.uk/investors/The financial information for the period ended 27 May 2018 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The Group has filed statutory accounts for the period ended 26 November 2017. The Auditor has reported on these accounts; their report was unqualified, did not include a reference to any matters to which the Auditor drew attention by way of emphasis of matter and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

McColl's Retail Group plc

Notes to the financial statements

for the 26 week period ended 27 May 2018

Basis of measurement

The consolidated financial information has been prepared on a historical cost basis, except for the net defined benefit pension asset or liability (refer to individual accounting policy for details).

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.

The Group has net current liabilities of £46,762,000 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 alongside a term loan. The current facility drawn as at 27 May 2018 is £150,000,000 against the combined 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 condensed financial statements.

Changes in accounting policy

New standards, interpretations and amendments not yet effective

The following newly issued but not yet effective standards, interpretations and amendments, which have not been applied in these financial statements, will or may have an effect on the Group financial statements in future:

IFRS 15 'Revenue from Contracts with Customers'

IFRS 15 is effective for periods beginning on or after 1 January 2018. The standard establishes a principles based approach for revenue recognition and is based on the concept of recognising revenue for obligations only when they are satisfied and the control of goods or services is transferred. It applies to all contracts with customers, except those in the scope of other standards. It replaces the separate models for goods, services and construction contracts under the current accounting standards. The Directors believe that the adoption of IFRS 15 will not have a material impact on its consolidated results.

IFRS 16 'Leases'

IFRS 16 represents a significant change in the accounting and reporting of leases for lessees as it provides a single lessee accounting model, and as such, requires lessees to recognise assets and liabilities for all leases unless the underlying asset has a low value or the lease term is 12 months or less. Accounting requirements for lessors are substantially unchanged from IAS 17. The Group has carried out preliminary work to assess the accounting impacts of the change. From work performed to date, it is expected that implementation of the new standard will have a substantial impact on the consolidated results of the Group. The Group continues to assess the full impact of IFRS 16, however, the impact will depend on the facts and circumstances at the time of adoption and upon transition choices adopted. It is therefore not yet practicable to provide a reliable estimate.

McColl's Retail Group plc

Notes to the financial statements

for the 26 week period ended 27 May 2018

IFRS 9 'Financial Instruments'

IFRS 9 replaces IAS 39. The standard is effective from 1 January 2018 and introduces: new requirements for the classification and measurement of financial assets and financial liabilities; a new model based on expected credit losses for recognising provisions; and provides for simplified hedge accounting by aligning hedge accounting more closely with an entity's risk management methodology. An assessment has been carried out and the Directors believe that the adoption of IFRS 9 will not have a material impact on its consolidated results.

In addition to the above new standards or amendments, there are additional new standards and amendments which will not be applicable to the Group and as such have not been listed.

None of the other standards, interpretations and amendments which are effective for periods beginning after 27 November 2017 and which have not been adopted early, are expected to have a material effect on the financial statements.

Revenue recognition

Revenue represents the amounts receivable for goods and services sold through retail outlets in the period which fall within the Group's principal activities, stated net of value added tax. Revenue is shown net of returns. Revenue is recognised when the significant risks and rewards of goods and services have been passed to the buyer and can be measured reliably.Commission from the sale of lottery tickets, travel tickets, electronic phone top-ups and franchise income is recognised net within revenue, when transactions deriving commissions are completed, as the Group acts as an agent.Revenue is derived entirely from the United Kingdom.

Cost of sales

Cost of sales consists of all direct costs to the point of sale including warehouse and transportation costs. Supplier incentives, rebates and discounts are recognised as a credit to cost of sales in the period in which the stock to which the discounts apply is sold. The accrued value at the reporting date is included in prepayments and accrued income.

Adjusting items

Adjusting items relate to costs or incomes that derive from events or transactions that do not fall within the normal activities of the Group, and are excluded from the Group's adjusted profit before tax measure due to their size and nature in order to better reflect management's view of the performance of the Group. The adjusted profit before tax measure (profit before adjusting items) is not a recognised profit measure under IFRS and may not be directly comparable with adjusted profit measures used by other companies. Details of adjusting items are set out in note 5.

Other operating income

Post Office, rental income and ATM commissions are recognised in the consolidated income statement when the services to which they relate are earned.

McColl's Retail Group plc

Notes to the financial statements

for the 26 week period ended 27 May 2018

Tax

The tax expense for the period comprises current tax. Tax is recognised in profit or loss, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.

Current tax is provided at amounts expected to be paid using the tax rates and laws that have been enacted or substantively enacted at the balance sheet date. Current tax is charged or credited to the income statement, except when it relates to items charged to equity or other comprehensive income, in which case the current tax is also dealt with in equity or other comprehensive income respectively.

Deferred tax is accounted for on the basis of temporary differences arising from differences between the tax base and accounting base of assets and liabilities.

Deferred tax is recognised for all temporary differences, except to the extent where a deferred tax liability arises from the initial recognition of goodwill or from the initial recognition of an asset or a liability in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable profit. It is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.Deferred tax assets are recognised only to the extent that the Directors consider that, on the basis of all available evidence, it is probable that there will be suitable future taxable profits from which the future reversal of the underlying differences can be deducted.Deferred tax is charged or credited to the income statement, except when it relates to items charged or credited directly to equity or other comprehensive income, in which case the deferred tax is also dealt with in equity or other comprehensive income respectively.

Business combinations

On acquisition, the assets, liabilities and contingent liabilities are measured at their fair values at the date of acquisition.

Any excess of the cost of acquisition over the fair value of the identifiable net assets acquired, including separately identifiable assets, is recognised as goodwill. Any discount on acquisition, i.e. where the cost of acquisition is below the fair values of the identifiable net assets acquired, is credited to the income statement in the period of acquisition.

Gains and losses on disposal of any fixed assets are determined by comparing proceeds with the asset's carrying amount and are recognised within operating profit.

Non-current assets held for sale

Non-current assets are classified as assets held for sale only if available for immediate sale in their present condition, a sale is highly probable and expected to be completed within one period from the date of classification. Such assets are measured at the lower of the carrying amount and fair value less costs to sell and are not depreciated or amortised.

Goodwill

Goodwill represents the excess of the fair value of the consideration of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is recognised as an asset on the Group's balance sheet in the year in which it arises. Goodwill is not amortised but is tested for impairment at least annually and is stated at cost less any provision for impairment. Any impairment is recognised in the income statement and is not reversed in a subsequent period.

McColl's Retail Group plc

Notes to the financial statements

for the 26 week period ended 27 May 2018

Borrowings

All borrowings are initially recorded at the amount of proceeds received, net of transaction costs. Borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the income statement over the period of the relevant borrowing.Interest expense is recognised on the basis of the effective interest method and is included in finance costs.Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Defined benefit pension obligation

The Group operates two defined benefit pension schemes in addition to several defined contribution schemes, which require contributions to be made to separately administered funds.Defined benefit scheme surpluses and deficits are measured at:-The fair value of plan assets at the reporting date; less-Scheme liabilities calculated using the projected unit credit method discounted to its present value using yields available on high quality corporate bonds that have maturity dates approximating to the terms of the liabilities; plus-Unrecognised past service costs; less-The effect of minimum funding requirements agreed with scheme trustees.A surplus is recognised where the Group has an unconditional right to the economic benefits in the form of future contribution reductions or refunds.Any difference between the interest income on scheme assets and that actually achieved on assets, and any changes in the liabilities over the year due to changes in assumptions or experience within the scheme, are recognised in other comprehensive income in the period in which they arise.Costs are recognised separately as operating and finance costs in the income statement. Operating costs comprise the current service cost, any income or expense on settlements or curtailments and past service costs where the benefits have vested.Past service costs are recognised directly in income unless the changes to the pension scheme are conditional on the employees remaining in service for a specified period of time. In this case, the past service costs are amortised on a straight line basis over the vesting period.Finance items comprise the interest on the net defined benefit asset or liability.

McColl's Retail Group plc

Notes to the financial statements

for the 26 week period ended 27 May 2018

Share based payments

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest, with a corresponding increase in equity. Where applicable at the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in the income statement.

In the application of the Group's accounting policies, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

Critical Accounting Judgements

Critical judgements, apart from those involving estimations, that are applied in the preparation of the consolidated financial statements are discussed below.

Sources of estimation uncertainty

Estimates and underlying assumptions are reviewed on an ongoing basis. Sources of estimation and uncertainty are discussed below.

Goodwill impairment

The Group is required to test, on an annual basis, whether goodwill has suffered any impairment based on the recoverable amount of its cash generating units (CGUs). The recoverable amount of the CGU is determined from value in use calculations with a discounted cash flow model used to calculate this amount.

The key assumptions for the value in use calculation include the discount rate and long-term growth rates. The value in use calculations use forecast cash flows taking into account actual performance for 2017. Cash flows beyond this period are extrapolated using a long-term growth rate of nil and discounted with a weighted average cost of capital (WACC) of 8.89% (2016: 12.05%). The change in WACC is driven by a change in capital structure, with both an increase in debt and share price. The use of this method requires the estimation of future cash flows and the determination of a pre-tax discount rate in order to calculate the present value of the cash flows.

McColl's Retail Group plc

Notes to the financial statements

for the 26 week period ended 27 May 2018

In accordance with IFRS 8 '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. 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.

The analysis of the Group's revenue for the period from continuing operations is as follows:

Other operating income includes income from the operation of sub-post offices, rental income and commission earned from ATMs.

McColl's Retail Group plc

Notes to the financial statements

for the 26 week period ended 27 May 2018

a. Co-op acquisition and integration costs

On 13 July 2016 management entered into an agreement to purchase 298 convenience stores from the Co-op, for an aggregate consideration of £117m. The acquisition was approved by the Competition and Markets Authority on 20 December 2016. The acquisition was integrated during 2017 by Martin McColl Limited, a wholly-owned subsidiary of the Group. The adjusting costs relate to legal fees, sponsor fees, implementation costs and finance costs. All 298 stores were successfully transitioned by 13 July 2017.

b. Unprofitable store closure programme

Management have undertaken an ongoing review of poor performing stores and have made the decision to close stores which are not economically viable to continue trading. The majority of these stores are either near lease expiry or lease break date. The closure programme consists of stores which have either closed in 2017 or will close in 2018 and 2019. Management have adjusted onerous lease provisions, impairment, and other costs in relation to the closures. Any other closures cost which cannot be reliably estimated at present, will also be adjusting in 2018 and 2019. Management have classified these as adjusting due to the one-off nature of the closure programme.

c. Supplier administration costs

The administration of P&H, our primary supplier to c.700 newsagents and small convenience stores, on 28 November 2017 created stock availability issues in store. To address this stock availability and to minimise disruption we entered into a short-term contract with Nisa, a short-term contract with Fresh to Store, brought forward the commencement of the Morrison's contract, and introduced a new supply chain solution for tobacco, via Clipper Logistics. As such, the Group incurred additional one-off costs, which are not reflective of ongoing costs and therefore management have classified these as adjusting items.

McColl's Retail Group plc

Notes to the financial statements

for the 26 week period ended 27 May 2018

d. Fines

On 22 December 2017 the Group was found guilty of a health and safety breach relating to contractor works at a store and subsequently a fine was issued to the Group. This was disclosed as a contingent liability in the Annual Report 2017. The fine for the incident is fully paid. Management classify this an adjusting item due to the non-recurring nature.

In order to provide shareholders with a measure of the underlying performance of the business and to allow a more understandable assessment of its position, the Group makes adjustments to profit before tax. These adjustments are one-off in nature, not in line with our normal course of business, material by size or nature and are considered to be distortive of the true adjusted performance of the business. Adjusting items relate to costs or incomes that derive from events or transactions that are excluded from the Group's adjusted profit before tax measure due to their size or nature in order to better reflect management's view of the performance of the Group. For example, EBITDA is adjusted for property related items as these are not in line with our principal activity as an operator of convenience and newsagent stores. The Group also adjusts for share-based payments as a non-cash item. The adjusted profit before tax measure (profit before adjusting items) is not a recognised profit measure under IFRS and may not be directly comparable with adjusted profit measures used by other companies. Details of adjusting items are set out in note 5.

The tax charge for the 26 week period was £850,000 (2017: £1,278,000) representing a rate of 36.4% (2017: 28.3%). The comparable effective tax rate in 2018 excluding the impact of non-deductible adjusting items was 21.4% (2017: 21.8%). The difference between the current statutory rate of 19.0% and the effective tax rate excluding the impact of non-deductible adjusting items of 2.4% in the period is due principally to the depreciation of assets not qualifying for tax relief.

McColl's Retail Group plc

Notes to the financial statements

for the 26 week period ended 27 May 2018

The Board has declared an interim dividend of 3.4 pence per share (2017: 3.4 pence). The interim dividend will be paid on 7 September 2018 to those shareholders on the register at the close of business on 10 August 2018. The payment of this dividend will not have any tax consequences for the Group. The final dividend for 2017, paid on 1 June 2018, was 6.9 pence per share (2016: 6.8 pence).

Basic and diluted earnings per share are calculated by dividing the profit for the period attributable to shareholders 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 diluted weighted average number of ordinary shares is calculated as follows:

McColl's Retail Group plc

Notes to the financial statements

for the 26 week period ended 27 May 2018

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

The Group has an amortising £92,500,000 term loan and £100,000,000 revolving facility with a £50,000,000 accordion. The current facility drawn as at 27 May 2018 is £150,000,000 (2017: £154,500,000).

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

McColl's Retail Group plc

Notes to the financial statements

for the 26 week period ended 27 May 2018

Analysis of net debt

Only the Directors are deemed to be key management personnel. All transactions between Directors and the Group are on an arm's length basis and no period end balances have arisen as a result of these transactions.

Salaries and other short term employee benefits for the Directors for period ending 27 May 2018 totalled £692,000.

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

13 Contingent liabilities

There are a number of contingent liabilities that arise in the normal course of business, which if realised, are not expected to result in a material liability to the Group. The Group recognises provisions for liabilities when it is more likely than not that a settlement will be required and the value of such a payment can be reliably estimated.

At 27 May 2018, the Group has the following contingent liabilities:

During the period, HMRC commenced investigations relating to National Minimum Wage payments, which will likely result in a fine. As at the date of signing the financial statements the Directors cannot quantify the value.

Principal risks and uncertainties

The Directors do not consider the principal risks and uncertainties to have significantly changed since the publication of the Annual Report for the period ended 26 November 2017. A detailed explanation of the risks summarised below, and how the Group seeks to mitigate these risks, can be found on pages 44 to 47 of the 2017 Annual Report.

Business strategy

If the Board either adopts the wrong strategy or does not implement it effectively the aims of the business, its performance and reputation may suffer.

Supply chain

We rely on a small number of key distributors and may be adversely affected by changes in supplier dynamics and interruptions in supply.

Supply chain transition

During 2018, we are transitioning the wholesale arrangements for the majority of the estate to a new supplier. As with any significant project, there is a risk that it will not be delivered to plan.

Competition

We operate in a highly competitive market, which is continually changing and has been subject to consolidation. Failure to maintain market share could have an adverse effect on our core business and deflate sales and profitability.

Customer offer

Customer shopping habits are influenced by a wide range of factors. If we do not respond to their changing needs they are more likely to shop with a competitor and our reputation could suffer, resulting in falling revenues.

Economy

All our revenue is generated in the UK. Any deterioration in the UK economy, for example as a consequence of Brexit, could affect consumer spending and cost of goods, which in turn would impact our sales and profitability.

Financial and treasury

The main financial risks are the availability of short- and long-term funding to meet business needs, fluctuations in interest rates, movements in energy prices and other post-Brexit impacts.

Information technology

We depend on the reliability and capability of key information systems and technology. A major failure, a breach, or prolonged performance issues with store or head office systems could have an adverse impact on the business and its reputation.

Operational cost base

We have a relatively high cost base, consisting primarily of salary, property rental and energy costs. Increases in these costs without a corresponding increase in revenues could adversely impact our profitability.

Regulation

We operate in an environment governed by strict regulations to ensure the safety and protection of customers, colleagues, shareholders and other stakeholders. Regulations include alcohol licensing, employment, health & safety, data protection and the rules of the Stock Exchange. Failure to comply with relevant laws and regulations could result in sanctions and reputational damage.

Glossary of Terms

Introduction

In the reporting of financial information, the Directors have adopted various Alternative Performance Measures (APMs) of financial performance, position or cash flows other than those defined or specified under International Financial Reporting Standards (IFRS).

These measures are not defined by IFRS and therefore may not be directly comparable with other companies' APMs, including those in the Group's industry.

APMs should be considered in addition to IFRS measures and are not intended to be a substitute for IFRS measurements.

Purpose

The Directors believe that these APMs provide additional useful information on the underlying performance and position of McColl's.

APMs are also used to enhance the comparability of information between reporting periods by adjusting for non-recurring or uncontrollable factors which affect IFRS measures, to aid the user in understanding McColl's performance.

Consequently, APMs are used by the Directors and management for performance analysis, planning, reporting and incentive-setting purposes and have remained consistent with prior year.

The key APMs that the Group has focused on this period are as follows:

Like-for-like sales (LFL): This is a widely used indicator of a retailer's current trading performance and is a measure of growth in sales from stores that have been open for at least a year.

Sales from stores that have traded throughout the whole of the current and prior periods, and including VAT but excluding sales of fuel, lottery, mobile top-up, gift cards and travel tickets.

Adjusted EBITDA excluding property-related items: This profit measure shows the Groups Earnings Before Interest, Tax, Depreciation and Amortisation adjusted for both Property gains and losses and adjusting items.

Property gains and losses: are incomes and costs that arise from events and transactions in relation to the Group's property and not from the principal activity of the Group, i.e. that of an operator of convenience and newsagent stores.

Adjusting items: relate to costs or incomes that derive from events or transactions that do not fall within the normal activities of the Group but which, individually or, if of a similar type, in aggregate, are excluded from the Group's adjusted profit measures due to their size or nature in order to reflect management's view of the performance of the Group.

Adjusted Operating Profit: Operating Profit before the impact of adjusting items as explained above.

Adjusted Earnings per share: Earnings per share before the impact of adjusting items.

Other

Capital expenditure (Capex): The additions to property, plant and equipment and intangible assets.

Grocery sales: This includes ambient, fresh, frozen and household groceries, and food-to-go, but excludes impulse categories (including confectionery, crisps and snacks, soft drinks and ice cream), general merchandise, news and magazines, and services.

Quarter: The "first quarter" refers to the thirteen week period from 27 November 2017 to 25 February 2018, and "second quarter" refers to the thirteen week period from 26 February 2018 to 27 May 2018.

Profits/(losses) arising on property-related items: This relates to the Group's property activities including; gains and losses on disposal of property assets, sale and lease back of freehold interests; costs resulting from changes in the Group's store portfolio, including pre-opening and post-closure costs; and income/(charges) associated with impairment of non-trading property and related onerous contracts. These items are disclosed separately to clearly identify the impact of these items versus the other operating expenses related to the core retail operations of the business. They can be one-time in nature and can have a disproportionate impact on profit between reporting periods.

INDEPENDENT REVIEW REPORT TO McCOLL'S RETAIL GROUP PLC

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​ We have been engaged by the Group to review the condensed set of financial statements in the half-yearly financial report for the 26 week period ended 27 May 2018 which comprises the income statement, the balance sheet, the statement of changes in equity, the cash flow statement and related notes 1 to 15. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

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​ This report is made solely to the Group in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Group those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Group, for our review work, for this report, or for the conclusions we have formed.

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​ Directors' responsibilities

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​ The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

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​ As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the European Union.

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Our responsibility

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​ Our responsibility is to express to the Group a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

​ Scope of review

​  

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

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​ Conclusion

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​ Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the 26 week period ended 27 May 2018 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

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​ Deloitte LLP

​ Statutory Auditor

​ London, United Kingdom

​ 22/07/2018