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The UK’s leading variety
goods value retailer
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Our Purpose
Delivering great value
to our customers so that
they keep returning to our
stores time and time again
Our values
Simplicity
Proud to keep our
business simple and fun,
and work at B&M speed
Trust
Proud to trust
honesty, loyalty
and hard work
Fairness
Proud to act fairly and
responsibly with customers,
colleagues and suppliers
Proud
Proud to treat every £1 as our
own and provide customers
with great value for money
Contents
Corporate Governance
Chairman’s introduction
The Board of Directors of
B&M European Value Retail S.A.
Corporate governance report
Audit & Risk Committee report
Nomination Committee report
Directors’ remuneration report
Directors’ report and business review FY22
Statement of Directors’ responsibilities FY22
60
62
64
71
77
79
93
98
Financial Statements
Independent Auditor’s Report
Consolidated Statement of
Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes
in Shareholders’ Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Independent Auditor’s Report
Company Profit and Loss Account
Company Balance Sheet
Notes to the Annual Accounts
Corporate Directory
99
102
103
104
105
106
148
150
151
152
161
Strategic Report
Financial highlights
Company overview
Long term strategy
Investment case
Business model
Chairman’s statement
Market overview
Feature – product sourcing
Feature – customers
Chief Executive Officer’s review
Financial review
Key performance indicators
Principal risks and uncertainties
Corporate social responsibility
1
2
3
4
6
8
10
12
14
16
20
24
26
36
Task Force on Climate-related Financial Disclosures 48
Stakeholders and Section 172 statement
56
Financial highlights
Excellent operational execution consolidates two-year growth in sales and profit.
Group revenues
Profit before tax
Cash generated from operations
£4,673m
(2.7)%
£525m
(0.1)%
£598m
(36.7)%
4,673
4,801
2022
2021
2020
3,813
252
525
525
2022
2021
2020
598
540
944
Adjusted EBITDA1
£619m
(1.2)%
Diluted earnings per share
Ordinary dividend per share
42.1p
(1.4)%
16.5p
(4.6)%
619
626
2022
2021
2020
19.5
342
42.1
42.7
2022
2021
2020
8.1
16.5
17.3
2022
2021
2020
2022
2021
2020
Operational highlights
Retention of new customers
Excellent progress in France
Resilient supply chain
In FY22, the B&M UK business
retained many of the new
customers who discovered
the brand during the prior year.
With two-year like-for-like sales
growth of 13.0% compared to
FY20, sales densities remain
significantly higher than pre-
pandemic levels.
Our French business made
significant progress in FY22,
with all stores now under the
B&M fascia, a strong customer
response to new product ranges
and a 9.2% adjusted EBITDA1
margin for the year.
The B&M business model
of directly sourcing a limited
assortment within each product
range proved highly resilient to
the global supply chain disruption
in FY22. This helped the business
to deliver highly successful
seasonal ranges in Gardening
and Christmas.
See Feature on page 14
for more information
See Chief Executive Officer’s review
on page 16 for more information
See Feature on page 12
for more information
1. The Directors consider adjusted figures to be more reflective of the underlying business performance of the Group and believe that this measure provides additional useful information
for investors on the Group’s performance. Underlying performance has been determined so as to align with how the Group financial performance is monitored on an ongoing basis
by management. In particular, this reflects certain adjustments being made to consider an adjusted EBITDA measure of performance. Adjusted EBITDA is a non-IFRS measure and
therefore we provide a reconciliation from the statement of comprehensive income on page 21.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
1
Strategic Report Corporate GovernanceFinancial Statements Company overview
We are the UK’s leading variety goods
value retailer, providing customers with
a limited assortment of the best-selling
items at bargain prices
Our fascias
UK
France
Number of employees1
Number of employees2
Number of employees
32,827
Number of stores
701
8.8%
7.5%
544
Number of stores
107
4,930
Number of stores
311
FY22 performance by fascia
3.7%
5.2%
83.7%
91.1%
Revenue by fascia
Adjusted EBITDA3 by fascia
B&M UK
B&M France
Heron Foods
Group
£3,909m
£353m
£411m
£4,673m
B&M UK
B&M France
Heron Foods
Group
£564m
£32m
£23m
£619m
1.
2.
Includes the corporate segment.
Includes colleagues at the French support centre, and those working in stores operated directly by the Group. Those colleagues working in stores operated under the
Mandated Manager model are employed directly by the Manager of each store, and are therefore not employees of the Group and so excluded from the number above.
3. The Directors consider adjusted figures to be more reflective of the underlying business performance of the Group and believe that this measure provides additional useful information
for investors on the Group’s performance as described in Note 1. The B&M UK adjusted EBITDA shown above includes an adjusted profit of £1m in FY22 (FY21: loss of £(2)m) relating to
the corporate segment as referred to in Note 2 of the financial statements. The corporate segment also has a further £13m (FY21: £(3)m) of adjusting items which are excluded from the
definition of adjusted EBITDA. For further detail, see Note 3 of the financial statements and the reconciliation on page 21.
2
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Long term strategy
Our four strategic pillars aim to deliver sustainable growth
1
Deliver
great value
to our customers
2
Invest in
new stores
3
4
Develop our
international
business
Invest in our
people and
infrastructure
Progress in FY22
Our business model of sourcing a limited
range of the best-selling products at
everyday low prices has continued to
prove a compelling proposition for
customers. In the core B&M UK
business, the two-year like-for-like sales
performance compared to pre-
pandemic levels of FY20 suggests that
we have been successful in retaining
a large number of the new customers
who discovered B&M during FY21.
The pandemic has continued to influence
consumer spending patterns, with ranges
such as Homewares and Furniture
remaining strong. Seasonal categories
such as Gardening and Christmas were
also particularly successful and saw
very strong levels of sell-through.
The B&M UK business opened 34 gross
new stores and ended the financial year
with a total of 701 stores. We continue
to target larger premises in convenient
out of town retail parks, ideally with
space for a garden centre, and also
take the opportunity to relocate older
existing stores to a more attractive
location in the same catchment area
where possible.
In Heron Foods, we opened 16 gross
new convenience stores. In France,
although the priority has been to
re-brand the existing estate from the
legacy “Babou” fascia, we also opened
4 gross new stores during the year.
FY22 was a year of significant progress
in France as we look to create a
platform for further growth. Evolution
of the product range has seen a further
reduction in Clothing and increase in
General Merchandise, with a very
encouraging response from the
French consumer.
The fascia re-branding programme
is also complete, with all stores
now branded “B&M”, and this has
complemented a change in the
internal layout of the stores to help
deliver a better customer experience.
These strategic changes, together with
a clear focus on improved operational
execution, helped to deliver a strong
financial performance in FY22.
We made targeted investments in
Transport & Distribution colleague pay
rates this year, to ensure we remain
competitive in a tight supply market.
Developing our colleagues remains an
integral part of the Group’s success, for
example through the well-established
“Step Up” programme for store
managers and a new “Warehouse
to Wheels” initiative aimed at training
new HGV drivers.
The rolling programme of upgrading
our existing store estate continued,
and there has been investment in IT
infrastructure to underpin the ongoing
growth of the Group.
See page 15
for more information
See page 18
for more information
See page 18
for more information
See page 19
for more information
Performance in FY22
Group total revenue growth
B&M UK gross new stores
B&M France revenue growth
Kickstart programme intake
(2.7)%
34
14.2%
3,000
B&M UK two-year LFL1
revenue growth
Heron Foods
gross new stores
B&M France adjusted
EBITDA2 margin
New retail jobs created
in the UK
13.0%
16
9.2%
>650
See Principal risks numbers
2 and 3 on pages 28 and 29
See Principal risks numbers
1 and 11 on pages 27 and 34
See Principal risks numbers
1, 3 and 6 on pages 27, 29
and 31
See Principal risks numbers
1 and 3 on pages 27 and 29
Looking ahead
The rising cost of living is likely to place
additional strain on household budgets
and make value for money even more
important when consumers are
deciding where to shop.
We will retain our relentless focus on
providing the right products at disruptive
prices, whilst remaining well-attuned to
changing customer preferences.
We expect to open approximately
40 gross new B&M UK stores in FY23,
and remain committed to our long term
target of at least 950. However, this
rollout potential is looking increasingly
conservative given recent performance.
In Heron Foods, we expect to open
approximately 15 gross new stores, with
a similarly paced rollout in future years.
The progress of the French business
in FY22 has given us the confidence
to begin a store rollout programme.
The pace of this rollout will be very
considered, with approximately 6
new stores added in FY23. We are also
exploring what a company-operated
store model could look like, with further
trials of this format planned for FY23
alongside the existing mandated
manager model.
By opening new stores, we continue
to have a positive impact on local
communities through job creation.
We will continue supporting colleague
development to help attract and retain
colleagues across the Group.
The existing Transport & Distribution
infrastructure remains well-invested
with no large scale capital expenditure
required in the near term.
1. Two-year like-for-like revenues relate to the B&M UK estate only, and includes each store’s revenue for that part of the current period that falls at least 26 months after it opened
compared with its revenue for the corresponding part of FY20.
2. The Directors consider adjusted figures to be more reflective of the underlying business performance of the Group and believe that this measure provides additional useful information
for investors on the Group’s performance. EBITDA, adjusted EBITDA and Adjusted Profit are non-IFRS measures and therefore we provide a reconciliation from the statement of
comprehensive income. See the reconciliation of adjusted measures to statutory measures on page 21 for further details. EBITDA represents profit on ordinary activities before net
finance costs, taxation, depreciation and amortisation.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
3
Strategic Report Corporate GovernanceFinancial Statements Investment case
Well positioned
for sustainable
long term growth
The B&M Group is a variety goods
value retailer with attractive
investment characteristics.
4
B&M European Value Retail S.A.
Annual Report and Accounts 2022
1. Favourable market positioning
The B&M Group has 701 B&M variety goods stores and
311 Heron Foods value convenience stores located across
the UK, plus a further 107 variety goods stores in France.
Our stores are typically located in convenient locations that
are easily accessible by customers.
We have a modest c1.5% share of a very large UK market in
relation to the range of products we sell, but have continued
to perform strongly across our chosen categories in both
Grocery and General Merchandise. In particular, our
two-year like-for-like performance versus pre-pandemic
levels of FY20 suggests that we have retained much of the
market share gains made during the Covid-19 pandemic.
By providing customers with everyday great value on the
products they want, we believe they will keep returning to
our stores. The structural shift towards value retailing in the
UK, and the potential for this to become increasingly relevant
given current macroeconomic inflationary pressures, means
that we remain well positioned to grow sustainably over the
long term.
3. Attractive financial returns
The Group has a track record of consistently growing
revenues through new store rollout and like-for-like1 sales
growth. In FY22, the core B&M UK business has maintained
sales and profit significantly above pre-pandemic levels of
FY20, with sales up 13.0% on a two-year basis and adjusted
EBITDA 2 up some 80.8% over that time.
New store openings continue to produce strong returns.
With a short capital investment payback period and profit
contribution that typically exceeds the company average,
the ongoing rollout programme is accretive to Group
adjusted EBITDA 2 margins.
We have a clear capital allocation policy, with an ordinary
dividend pay-out ratio of 30–40% of post-tax earnings and
a leverage ceiling of 2.25x 3. The Group has remained very
cash generative, enabling it to make additional cash returns
to shareholders in recent years. A special dividend payment
of 25.0p per share was made in FY22, following 45.0p of
special dividends paid in FY21. Over the period since IPO in
June 2014 to March 2022 the Group has generated a total
shareholder return of over 197%.
See Market overview on page 10
for more information
See Financial Review on page 20
for more information
2. Disruptive, agile and
low-cost business model
The B&M business model is based around only offering a
limited assortment of products, sourcing directly from brands
and manufacturers, and keeping our operations simple to
maintain a low cost base. This discipline allows us to pass
savings on to customers through our value pricing.
4. Significant growth potential
Our target of at least 950 B&M stores in the UK means that
we have a substantial runway for further expansion from
our current base of 701 stores. This long term target looks
increasingly conservative given the increase in sales densities
over the past two financial years, plus potential space
opportunities in the future created by other retailers exiting
the market or downsizing their bricks and mortar store estates.
Our stores provide a range of best selling products across
a number of Grocery and General Merchandise categories,
with a constant stream of new items every week encouraging
a “treasure hunt” shopping experience which customers
find attractive.
As the appeal of B&M continues to broaden, there is potential
to increase sales densities in our existing estate further by
cementing our position as a destination retailer for General
Merchandise alongside our core value credentials in Grocery.
The combination of value, convenience and variety is a
distinctive proposition which resonates well with customers
who either need or just enjoy a bargain, and often leads to
impulse purchases. By offering great products at great prices
in both everyday and seasonal categories, this keeps
customers returning to our stores throughout the year.
Elsewhere in the UK, Heron Foods provides a platform for
growth in the value convenience sector whilst in France,
we have made excellent progress in developing the B&M
proposition during FY22 and are increasingly confident
that we can realise the significant potential which exists
in that market.
See Business model on page 6
for more information
See CEO’s review on page 16
for more information
1.
Like-for-like revenues relate to the B&M UK estate only (excluding wholesale revenues) and include each store’s revenue for that part of the current
period that falls at least 14 months after it opened compared with its revenue for the corresponding part of FY21. This 14 month approach has been
adopted as it excludes the two month halo period which new stores experience following opening.
2. The Directors consider adjusted figures to be more reflective of the underlying business performance of the Group and believe that this measure
provides additional useful information for investors on the Group’s performance. EBITDA, adjusted EBITDA and Adjusted Profit are non-IFRS measures
and therefore we provide a reconciliation from the statement of comprehensive income. See the reconciliation of adjusted measures to statutory
measures on page 21 for further details. EBITDA represents profit on ordinary activities before net finance costs, taxation, depreciation and amortisation.
3. Group net debt to adjusted EBITDA is stated on a pre-IFRS 16 basis.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
5
Strategic Report Corporate GovernanceFinancial Statements Business model
A disruptive, agile and low-cost
business model capable of
responding to changing conditions
Business strengths
Stakeholder outputs
Our business model is to
directly source a targeted
range of food, FMCG and General
Merchandise products at the best
prices we can, enabling us to sell
them to customers at value prices.
Our limited assortment of best-selling
products enables us to constantly
introduce new products and react
quickly to what’s on trend and
changes in demand patterns.
Cost
efficiency
Format
flexibility
Seasonal
flex
SKU
discipline
Targeted
grocery
offering
Compelling
non-grocery
offering
Disruptive
sourcing
process
Our business model is underpinned by:
Corporate social responsibility
Risk management
Financial performance
See CSR report on page 36
for more information
See Principal risks on page 26
for more information
See Financial review on page 20
for more information
6
B&M European Value Retail S.A.
Annual Report and Accounts 2022
• Scale & convenience
Our network of over 1,100 stores across the
UK and France are found in convenient
locations in modern retail parks, popular
town centres and on high streets. They are
located in places close to where people
live and work, making them easily
accessible for customers.
• Well invested infrastructure
We have a modern and scalable
infrastructure to support the operations
and growth of the business. In January
2020 we opened an additional Distribution
Centre in Bedford in the South of England,
providing a further 1 million sq ft of
warehouse capacity to complement the
existing B&M UK warehouses. In addition,
Heron Foods and B&M France also have
their own dedicated warehouses,
meaning the Group is well positioned to
continue our store rollout programme
across all fascias and territories.
• Strong brand reputation
The B&M and Heron Foods names are
established brands in the UK, having a
strong reputation for delivering consistently
• Value to customers
Our purpose is about delivering great value
to customers so they keep returning to our
stores time and time again. Helping
customers to spend less on the things they
buy regularly for their homes and families
all year round is what our business model
is designed to constantly deliver. Given
ongoing macroeconomic uncertainties
and as society gradually recovers from the
Covid-19 pandemic, value for money is likely
to become increasingly important for many
consumers in the years ahead, making
the B&M proposition highly relevant.
• Colleague progression
Our colleagues are crucial to the ongoing
success of the business, be that in our
central support teams, those working in
our logistics network, or store colleagues
providing great customer service every day.
In keeping with our values, we take pride in
being an innovative and exciting place for
Business strengths
great value on the products people
regularly buy for their homes and families.
In a recent external customer survey, B&M
was rated as the 9th most loved retail
brand in the UK1. In France, there is
growing awareness of the B&M brand
and the customer response to recent
product changes has been very positive.
With discount shopping continuing to
become more socially accepted, there are
opportunities to attract new customers
whilst retaining the loyalty of existing
customers in the years ahead.
• Skilled colleagues
Developing products and ranges to provide
great value whilst being fresh and on-trend
takes skill, experience and discipline.
We have colleagues with many years of
experience in their respective product
markets, many of whom have worked
previously as buyers and merchandisers
with category specialist competitors. By
working collaboratively across different
teams and with an entrepreneurial flair in
keeping with the B&M culture, we are able
to provide customers with the products they
want at value prices all year round.
Stakeholder outputs
colleagues to work, grow and develop to
their full potential. Our continued growth
creates new job opportunities in the
communities where we trade, and there
are always progression opportunities for
colleagues throughout the business to
build long-term, successful careers.
• Suppliers as partners
The continued growth of B&M also benefits
our suppliers. We have long-standing
trading relationships with a number of the
leading household brands across food and
FMCG. We also have a number of exclusive
brands and other branded General
Merchandise product ranges. We are
proud to partner with these brand names
for the mutual success of our respective
businesses. We are always interested in
adding new brands to our ranges, and
our continued growth gives potential for
suppliers to grow alongside us, further
strengthening these relationships.
• Strong supplier relationships
Maintaining our competitive value-led
price model is also about developing
strong long-term supplier relationships,
who we regard very much as partners.
Many of our suppliers have grown
alongside us over several years, and they
value our simple, transparent pricing and
efficient way of working. With our focus
on only stocking the best selling products,
and constant newness an important
feature of the proposition, this creates
opportunities to welcome new suppliers
in to our business.
• Governance & risk management
Our corporate governance and risk
management approach is geared toward
ensuring we have effective and robust
structures and processes in place. Our
Non-Executive Directors have many years
of experience in retail and consumer
product businesses. They provide
constructive challenge to our management
team to help ensure we operate our
businesses and manage risk appropriately
and in the interests of all stakeholders.
• Investment in communities
Our store opening programmes target
areas where we are under-represented
or not represented at all, using our flexible
store formats to suit the relevant locality.
Each time we open a new store, we create
new jobs in the local community whilst
at the same time providing convenient
access to our value-for-money offer.
In doing so, we are proud to contribute to
the revitalisation of communities where
other retailers may have retrenched.
• Returns for investors
Our characteristics of low capital-intensity
and high-returning cash generative
growth is a relatively rare and powerful
combination in bricks and mortar retailing.
These characteristics contribute to the
sustainability of our business model,
which enhances our ability to provide
continued growth and attractive returns
to investors.
1. Source: BrandVue ‘Most Loved Retail Brands’ Report 2022.
Underpinned by our ESG strategy
B&M European Value Retail S.A.
Annual Report and Accounts 2022
7
Strategic Report Corporate GovernanceFinancial Statements Chairman’s statement
All-round progress and
excellent execution in
another unusual year
Peter Bamford
Chairman
A year ago I used words such as ‘exceptional’ and ‘extraordinary’ to describe the year which had
just ended. At that time the vaccination programme was in full flow and many Covid restrictions
were being lifted. We thought that life was returning to normal, but that was not the case and
we are again reporting on a very unusual year with the pandemic and its after effects, together
with other world events also continuing to impact on our customers, suppliers, and colleagues.
B&M has delivered another very strong financial
performance. The underlying strength of our
customer proposition – great products and
prices at convenient store locations – has
been consistently delivered by our robust
supply chain. Although certain categories have
continued to benefit from the side effects of
lockdown measures (such as Homewares and
Seasonal), the category performance has been
broadly based across most departments. Sell
through rates on our seasonal ranges have
been exceptional and this has boosted gross
8
B&M European Value Retail S.A.
Annual Report and Accounts 2022
margin performance due to low markdowns.
Whilst, as expected, like-for-like sales and Group
profit have seen a slight decline versus FY21,
they have show major growth compared to
pre-pandemic levels of FY20.
Once again, our people in every part of B&M
have responded magnificently to the continually
changing restrictions and challenges so that our
customers have received the best value and
service throughout the period.
The outlook remains very uncertain. The pattern
of consumer spending and behaviour post-
pandemic is yet to become clear, while world
events are having wide implications on the
availability and cost of key commodities. For the
first time in decades we face rising inflation which
may have a variety of implications. However,
B&M’s business model and proposition are
robust and well-positioned. Our customers are
facing rising prices and we will continue to do
our best to provide exceptional value.
“Once again, our people in every part
of B&M have responded magnificently
to the continually changing restrictions
and challenges.”
Strategic progress
In the UK we have continued to open new
stores successfully and we continue to see the
opportunity for at least 950 stores. For a variety
of reasons the roll-out has slowed somewhat,
but the performance of the newly opened stores
continues to be strong, with stores opened
over the past three financial years typically
contributing a higher profit margin than the
estate average. The optimum B&M format
of a c20,000 sq ft store with a garden centre
continues to deliver the strongest returns of
all, providing a blueprint for future expansion.
In France we have generated EBITDA of £32m
and our confidence that the B&M proposition
can be successful continues to grow. We are
now developing a plan for accelerating the
roll-out of new stores from FY24 onwards.
We have continued to strengthen the overall
operational capability across the Group with a
number of appointments to middle and senior
management and on-going investments in
financial systems, IT and Supply Chain.
Environmental, Social and
Governance (‘ESG’)
The Board has also agreed our Environmental,
Social and Governance strategy which is outlined
on page 36 of this report, and discussed in
more detail in our inaugural standalone report.
This includes the appointment of the company’s
first Sustainability Manager and commitment to
targets which comply with the Science Based
Targets Initiative, as well as reporting under
the Task Force on Climate-related Financial
Disclosures for the first time.
Board Changes and Development
Our Board has continued to develop over
the last year. Paula MacKenzie joined as a
Non-Executive Director in November following
the retirement of Giles Petit in July. Paula brings
the additional perspective and experience of
having been a recent leader of a large scale
service business through her role as Managing
Director of Kentucky Fried Chicken (Great Britain)
Ltd. In addition, following his appointment as
Chief Financial Officer, Alex Russo has brought
a new dimension to that role as well as taking
on additional responsibilities with the Group.
The Board has adapted well to the limitations
resulting from the pandemic and has remained
effective over the last two years without the
opportunity to have many physical meetings.
Our Annual Board Evaluation has given a
very positive review of how the Board and its
committees operate. While several areas for
further discussion and focus were highlighted,
no major items of concern were identified.
additional workloads on an on-going basis.
In recognition of these considerable efforts,
we rewarded over 24,000 UK store and
distribution colleagues with an extra weeks
pay in January 2022.
Finally, I would like to thank all B&M’s
stakeholders for their engagement and support.
We note the publication by the Financial Conduct
Authority of rules to require reporting of the
representation of women and ethnic minorities on
their boards, to allow investors to see the diversity
of their senior leadership teams. The company
is well placed to meet those requirements.
Subsequent to the year end, we have announced
that Simon Arora intends to retire from his role as
Chief Executive Officer in April 2023. I would like
to thank Simon for his leadership over the past
seventeen years. The remarkable growth of the
business from its humble beginnings to where
it is today reflects his exceptional passion,
determination and ability. Over the last 3 years
the management team has been strengthened
significantly and the Group will continue to
deliver its successful growth strategy and great
value for its customers.
We have subsequently announced that Alex
Russo, currently Chief Financial Officer, will
succeed Simon as Chief Executive. Following an
intensive process of assessment and external
benchmarking during late April and May we
concluded that Alex is the best person to lead
B&M in the next phase of its development. In his
20 months as CFO Alex has brought new skills
to the CFO role as well as added value more
broadly with his commercial insight and
operational management capability. He also
has a deep understanding of the B&M model
and the company’s unique model. The exact
timing of the handover process will be
confirmed in due course. I will miss working with
Simon when he steps down but I am also very
much looking forward to working more closely
with Alex.
Our Colleagues
As I commented above, everyone at B&M has
contributed to the success of the last two years.
Continually changing Covid restrictions and
work practices, shifting customer behaviour,
and a variety of pressures on supply chains
all demanded flexibility, rapid responses and
Peter Bamford
Chairman
30 May 2022
Purpose, culture & values
The vision, purpose and culture of our business
is underpinned by our values of simplicity, trust,
fairness and taking pride in everything we do.
Simplicity
Proud to keep our
business simple and fun,
and work at B&M speed
Trust
Proud to trust
honesty, loyalty
and hard work
Fairness
Proud to act fairly and
responsibly with customers,
colleagues and suppliers
Proud
Proud to treat every £1 as our
own and provide customers
with great value for money
B&M European Value Retail S.A.
Annual Report and Accounts 2022
9
Strategic Report Corporate GovernanceFinancial Statements Market overview
Taking share in a large
and diverse store-based
retail market
General trends
Market position
Territories and store estates
The structural shift towards value retailing over
the last decade is an established feature of
the market for both Grocery and General
Merchandise goods in the UK and in France.
We believe this pattern of consumer behaviour
will continue for the foreseeable future, driven
initially by increasing awareness and social
acceptance of discount shopping. As retailers,
consumers and economies all emerge from
the lasting effects of the pandemic, it is likely that
the value retail market will become increasingly
attractive to shoppers at a time when there
are a number of macroeconomic inflationary
pressures facing most consumers.
Whether people need to save money or just
enjoy a bargain, the B&M model is designed to
meet those requirements through its carefully
selected ranges, value for money prices and
convenient store locations. This is particularly
true of stores located in out of town retail parks,
which are increasingly being regarded as
“destination” visits in their own right and where
overall footfall patterns have proved to be more
robust during the pandemic.
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At B&M, our purpose is to provide great value
for money across a wide range of Grocery and
General Merchandise products so that customers
return to our stores time and time again. As such,
we aim to take a small amount of market share
in each of the categories in which we operate.
We constantly monitor our price position versus
competitors to ensure that we are always offering
customers a compelling proposition.
By focusing only on the best selling products and
adjusting ranges to meet changing demands, we
offer customers the products they want at the best
possible prices all year round. With a relentless
approach to providing everyday low prices, and
very limited promotional activity, customers trust
our value for money credentials each time they
visit a store.
In spanning many different categories, customers
are able to shop a broad range of products in
one store visit. Although customers are typically
looking for specific purchases, be that everyday
essentials or seasonal products, they will often
also make impulse purchases as they browse
around a store. This “treasure hunting” behaviour
is encouraged by introducing around 100 new
products to our stores every week, creating a
fun and exciting shopping experience.
The B&M brand is becoming increasingly well
known and loved. In a recent external customer
survey, we were ranked the 9th most loved retail
brand in the UK1.
United Kingdom
The UK retail market in which the B&M and
Heron Foods businesses operate is very large,
with total store-based retail sales, covering both
Grocery and General Merchandise, of c.£295
billion in 20212. Even though we have attracted
and retained a number of new customers over
the past two years, our share of this market
remains small at c.1.5%3, meaning there is still
a significant opportunity for further growth
across our chosen product categories.
We believe that an estate of at least 950
B&M fascia stores in the UK is achievable,
based on analysis carried out by an external
consultancy in 2017. This target would
appear to be increasingly conservative given
performance in FY22, where despite a return
to more normalised trading conditions, we
delivered significantly higher sales densities
in our stores versus pre-pandemic levels.
With a current estate of 701 B&M stores in the
UK, there remains a long runway for further
space expansion ahead of us, particularly
in the south of England where we are
currently under-penetrated.
Convenience food stores represent an important
sub-sector of the UK retail market, worth c.£180
billion in 20212. Through Heron Foods, we are
able to take advantage of this opportunity by
providing consumers with easy local access to
chilled, frozen and ambient food items at value
prices. It has an attractive value proposition in
a market which has been primarily dominated
by the premium pricing models of other
larger convenience store chains, with stores
conveniently located in neighbourhoods,
high streets and town centres close to where
customers live.
Heron Foods has the potential to become
significantly larger over the longer term as
we continue to roll out new stores both within
and beyond the north of England heartland
where most are currently located.
Corporate Governance
Financial Statements
Number of B&M UK stores
B&M UK two-year LFL4 revenue growth
701
+13.0%
B&M UK stores target
Share of UK store based market3
950
c1.5%
France
The French retail market is the second largest
in continental Europe, and shares a number
of similar characteristics to that of the UK.
The market has attractive dynamics including
the overall market size, the popularity of the
discount channel and healthy operating
margins achieved by several of the
incumbent operators.
FY22 has been a year of considerable progress
in the French business. In particular, ongoing
refinement of the product mix has delivered
strong results, having reduced exposure to
Clothing and Apparel whilst enhancing General
Merchandise ranges such as Homewares.
We also completed the fascia re-branding
programme as planned, with all 107 stores
in France now under the “B&M” banner.
Customer response to these changes has been
extremely positive, with both financial and
non-financial indicators suggesting that the
B&M proposition can be successful in France.
Given both the size of the French market and
the small market share which we currently
have, there is a significant long term opportunity
for the B&M store estate in France to become
multiple times larger than it is today. Such
expansion opportunity exists nationwide, and
we aim to achieve it through careful organic
growth over the coming years.
Competitive landscape
Competitive advantages
As a variety goods retailer, B&M has a wide
range of competitors:
Supermarkets
The mainstream UK grocers offering a complete
selection of Grocery and FMCG products, with
the largest stores also having a range of
General Merchandise items.
Convenience stores
A sub-sector of the UK Grocery market aimed
at providing mostly food products to consumers,
covering the full spectrum of price positions from
value up to premium.
Category specialists
A large number of competitors in specific
categories such as DIY, Gardening, Furniture,
Homewares, Electricals and Petcare, often
representing a more premium price positioning.
Variety goods discounters
Retailers similar to B&M who sell a wide
selection of Grocery and General Merchandise
products at value prices.
The B&M customer proposition has an
emphasis on household brands. We stock a
targeted range of branded Grocery products,
many of which are sourced directly from global
food and FMCG suppliers, and also offer
branded products within certain General
Merchandise categories where those names
are an important customer requirement.
In addition to our branded offering, we also
carefully curate ranges of own label products
in specific categories such as Homewares,
Furniture and seasonal products. By leveraging
our direct relationships with manufacturers in
Asia, we are able to design and bring to market
a wide selection of on-trend products quickly
and cost effectively.
B&M’s business model underpins our purpose
of delivering great value to customers, and
delivers the following competitive advantages:
SKU discipline
We maintain a strict approach to our limited
assortment model, only offering the best selling
products in any given category. This keeps our
operations simple and agile, meaning we can
respond quickly to changes in demand and
customer trends.
Direct sourcing model
By sourcing direct from producers and
manufacturers, we operate a short supply
chain and are able to adapt quickly to changing
circumstances, such as the global supply chain
disruption seen in FY22. This complements
our limited assortment model, making us
an attractive partner for suppliers looking
for growth.
Entrepreneurial culture
Simplicity, cost discipline and speed of decision
making are all features of the business that
help us to respond decisively to changes in
our operating environment and continue being
successful. Such culture has been an important
factor behind our ability to navigate the
challenges brought on by the pandemic
over the past two years.
1. Source: BrandVue ‘Most Loved Retail Brands’ Report 2022.
2. Figures are based on external market research on the size of the relevant market in 2021. Market share is calculated by reference to UK revenues in FY22, whilst the market size
estimate will include spend on categories where B&M and Heron Foods do not participate, but is presented here for illustrative purposes.
3. UK market share is calculated based on the reported revenues of B&M UK and Heron Foods.
4. Two-year like-for-like (“LFL”) revenues relate to the B&M UK estate only, and includes each store’s revenue for FY22 that falls at least 26 months after it opened compared with
its revenue for FY20. Refer to footnote 3 of the Financial Review on page 23 for further details.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
11
Strategic Report Feature – product sourcing
Overcoming supply chain
challenges to deliver our
best-ever Golden Quarter
“The business responded at speed to the well documented
supply chain challenges throughout FY22, with our
business model proving highly resilient.”
Simon Arora, CEO
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A challenging year for retailers
The disruption seen in global supply chains throughout large parts of 2021 impacted all retailers,
particularly those such as ourselves who import large volumes of product from Asia.
We were not immune to these challenges, but
the business responded well to ensure that our
stores remained stocked with the right products,
in the right quantities and at the right time.
In doing so, we demonstrated a number of
strengths and proved that the B&M business
model is extremely adaptable and capable
of reacting at speed.
Direct sourcing model
By working directly with our suppliers, rather
than through wholesalers or distributors, we are
able to maintain a short and responsive supply
chain. We regularly engage with our people
on the ground in Asia, helping us to find out
first-hand and quickly when local conditions are
changing, for example with regards to shipping
bottlenecks and production capacity constraints.
Strong supplier relationships
We regard all of our suppliers as partners, be
that the large household brands or our supplier
base in Asia who manufacture our private label
General Merchandise goods, most of whom we
have grown alongside for a number of years. In
addition to our product suppliers, we also have
a long-standing relationship with our shipping
line who transport large volumes of
containerised stock for us each year. When
conditions become more challenging, these
strong relationships come to the fore and act as
an important differentiator versus competitors.
Speed & simplicity
Complementing features of the business
model such as those above is the culture of
our business. The combination of skilled and
empowered buying teams alongside speed of
decision making means that we can respond
rapidly and effectively when needed. This allows
B&M to turn a challenge into an opportunity,
maximising sales potential and accelerating
our growth.
Putting it all together:
Christmas 2021
Notwithstanding the additional challenges
posed by the Omicron wave of Covid-19 in the
winter of 2021, the B&M business had already
taken decisive action with regards to ensuring
our seasonal stock arrived in the UK in time for
our “Golden Quarter” trading period of October
to December.
By leveraging all of these business strengths, we
pro-actively took receipt of our Christmas ranges
earlier than usual in 2021. This meant we were
very well positioned to offer customers great
products at great prices, as our shelves were
fully stocked early in the quarter at a time when
many competitors who had not been quite so
responsive were experiencing poor availability.
Having designed a wide selection of on-trend
seasonal products, we delivered our best-ever
Christmas decorations sales performance. This
built on the success of our Gardening ranges
earlier in the year, and so is likely to have further
cemented our position as a destination visit
for seasonal products in the minds of our
customers, increasing their propensity to
return to B&M in the future. This provides an
opportunity to further grow our market share
over the coming years.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
13
Strategic Report Corporate GovernanceFinancial Statements Feature – customers
The B&M customer
proposition remains
highly relevant in such
challenging times
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Annual Report and Accounts 2022
Strong customer engagement,
both online and offline
In FY22, colleagues in the B&M UK business
served over 252 million customer baskets
across 701 stores. Such popularity represents
the ongoing relevance of bricks and mortar
retailing, despite the impact of the pandemic
on shopping behaviour and the ongoing shift
to online.
Although our website has not historically been
transactional, we also enjoyed over 84 million
website sessions over the course of last year.
We have a very strong presence across social
media platforms, in particular Instagram
where we have over 1.4 million followers
and where ‘influencers’ often independently
promote products available to buy at B&M
without any involvement by us. This number
of followers compares very favourably with
much larger retailers.
Great products at great prices
B&M remains all about the products that
we sell and the prices we sell them at. By
regularly refreshing our ranges, particularly
in General Merchandise categories, we create
a ‘treasure hunting’ shopping experience
that customers enjoy.
This may mean customers buy something they
have previously seen on our website, or often
represents an impulse purchase made in the
store where they are unable to resist the great
value for money on offer.
Retention of new customers
During the height of the pandemic in FY21,
the B&M UK business saw a number of new
customers discover the brand. By continuing
to offer excellent value for money, we have
been able to retain the loyalty of many of those
shoppers in FY22. Approximately 78%1 of the
new customers identified during FY21 returned
to shop with us again in the period to the end
of March 2022.
Those customers who have demonstrated
the greatest propensity to visit repeatedly are
those from low and middle-income families.
This should underpin the attractiveness of
our value-for-money proposition given this
demographic are most likely to be impacted
by the rising cost of living.
An award winning proposition
The combination of strong customer
engagement and a product range that is
highly attractive and represents great value
for money has led to a number of external
recognitions over the past year.
These include being ranked the 9th most
loved retail brand in the UK2 and being
voted “Multiple Toy Retailer of the Year”
at the Toy Industry Awards.
Our successes also extended to the French
business where, despite the B&M brand
being less than 12 months old, it won the
“Best Store for Home Decoration & Gifts”
in the annual online survey for the
“Best Store Chain in France”.
The average of new customer cohorts identified by Barclaycard in June 2020 and March 2021.
1.
2. Source: BrandVue ‘Most Loved Retail Brands’ Report, March 2022.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
15
Strategic Report Corporate GovernanceFinancial Statements Chief Executive Officer’s review
Becoming an even
better retailer
In France, the B&M brand has been well
received, the financial performance is much
improved and the business is unrecognisable
to the one we acquired in 2018 in terms of
customer proposition. For Heron Foods, what
began as a more challenging period in FY22
ended with strong momentum and we continue
to regard that business as being a good
strategic fit, albeit of relatively modest size
in the context of the overall Group.
The strength and resilience of our business
model continues to be a key differentiator and
has enabled us to continue offering compelling
value for money to customers. In particular, our
robust supply chains, simple operations and
speed of decision making have all helped the
Group respond decisively and effectively in FY22.
This is perhaps best illustrated by the two-year
like-for-like1 sales growth of 13.0% in the core
B&M UK business, which was relatively
consistent throughout large parts of the year
despite changing external conditions and
global supply chain disruption.
The 701 B&M UK stores are mostly located
in Out of Town retail parks, making them
somewhat insulated from the structural footfall
decline in town centres and secondary malls.
Moreover, given recent successes in key
seasonal categories such as Gardening and
Christmas, it would appear that our larger B&M
Homestores are increasingly regarded as a
‘destination’ visit for many customers. This is
important, since it helps to reinforce customer
loyalty and affection towards the B&M brand.
Looking ahead, it remains difficult to accurately
predict the net impact a number of different
factors could have on the business. These
include, but are not limited to, the impact of
rising inflation on product cost prices and
consumer spending, plus the extent of further
normalisation in customer behaviour as we
emerge from the pandemic.
Our discounted food and FMCG products should
appeal to lower-income households who are
likely to be disproportionally affected by the
rising cost of living, and may also benefit from
increased demand as a result of new customers
switching to B&M as they look for greater value
for money.
In General Merchandise, which has seen
consecutive years of very strong growth both in
terms of sales and margin, we accept that the
outlook is more uncertain. That said, the range of
categories we offer are at affordable price points
and the semi-essential nature of many of these
products all provide reasons to believe we will
continue to perform well within the overall market.
Given the positioning of the B&M UK business
together with the attractive growth prospects in
France, we can look to the future with a sense of
cautious optimism and a clear focus on providing
customers with great value for money and, as a
consequence, gain further market share.
Financial performance
Due to the highly elevated sales comparatives
due to prolonged periods of lockdown in FY21,
the most meaningful measure of performance for
the core B&M UK business this year has been
the two-year like-for-like 1 (“LFL”) growth versus
the pre-pandemic levels of FY20. On that basis,
growth of 13.0% means that store sales densities
remain significantly higher than before the
pandemic and suggests we have retained the
loyalty of many new customers acquired last year.
Most product categories delivered double-digit LFL
growth over that two-year period, with notable
strength seen in General Merchandise ranges
where the business ensured good stock availability
and was able to meet strong customer demand.
Due to this relative out-performance in General
Merchandise, B&M UK gross margin benefited
from another small step up this year. Strong
execution from the buying teams and a limited
requirement for markdown activity given the
good level of sell-through on Seasonal
categories contributed to gross margin
expanding 52 bps year-on-year.
Diligent cost control enabled much of the operating
leverage delivered last year to be retained, resulting
in a strong adjusted EBITDA 2 margin of 14.4% on a
pre-IFRS 16 basis. Whilst this represented a marginal
decrease of (6) bps from the 14.5% delivered last
year, it remains significantly above the EBITDA
margin from FY20. In Heron Foods, LFL sales
performance steadily improved throughout the year
as the comparatives from FY21 eased. As such, the
EBITDA result was similar to last year and profit
margin was broadly maintained, representing
a robust outcome for FY22 as a whole.
Simon Arora
Chief Executive Officer
Over the past two years B&M
has, like all businesses, had to
adapt to a rapidly changing
world. I am very proud of the
way in which we have
responded to those ongoing
challenges and continued
delivering against our purpose;
to provide customers with great
value for money so that they
keep returning to our stores.
At the same time, we have maintained a very
strong financial performance with both sales
and profit being significantly ahead of
pre-pandemic levels.
Reflecting on a remarkable period of growth for
the Group, I am convinced that our experiences
have made us an even better retailer than we
were prior to the pandemic. In that time the
core B&M UK business has acquired, and
most importantly retained, a number of new
customers, and this provides an exciting
platform from which to continue taking market
share across a number of product categories.
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B&M European Value Retail S.A.
Annual Report and Accounts 2022
In France, the business exceeded expectations in
FY22. The local management team have made
considerable progress over the past two years,
implementing important strategic changes whilst
at the same time navigating various impacts
from the pandemic. An outturn of £32m
adjusted EBITDA 2 at a margin of 9.2% was a
very pleasing result and is affirmation that the
B&M proposition can be successful in France.
Overall, although Group adjusted EBITDA2
declined very slightly year-on-year, results for FY22
demonstrate a sustained step up in profitability
compared to pre-pandemic levels. Alongside
this, the Group remained highly cash generative
and has continued to use this cash effectively in
line with its capital allocation framework.
Current trading and outlook
Given the impact of the pandemic at the start
of both FY21 and FY22, assessing current trading
is challenging with both the one-year and
two-year like-for-like1 comparisons significantly
complicated by restrictions in place during both
comparative periods. The B&M UK LFL sales
performance over the first 8 weeks of FY23
has been (13.2)% and (11.5)% versus FY22 and
FY21 respectively.
During this current period we consider a
three-year measure to be helpful in gauging
the underlying sales performance of the business.
Compared to pre-pandemic levels of 2019, the
three-year LFL performance since the start of the
new financial year was +7.7% in April 2022, with
an improvement to +10.9% in the first 3 weeks of
May 2022. Trading patterns are expected to
remain unpredictable in the year ahead. In
particular, the elasticity between volume and price
on General Merchandise is difficult to predict, as is
the demand at individual category level.
With respect to gross margin, the past two
years have seen very limited end of season
markdown activity on Seasonal categories,
due to the high rate of sell-through. Looking into
FY23, some level of markdowns are expected to
return and there may be an adverse impact
from category mix as customers shift spending
away from more discretionary higher margin
General Merchandise categories in favour of
Food and FMCG products. As a result of this
gross margin dilution, B&M UK adjusted EBITDA 2
margin is expected to step back between 70 to
130 bps but to remain structurally higher than
pre-pandemic levels.
Elsewhere in the Group there is a positive
outlook for Heron Foods, where inflation in
food prices and a return to normal footfall levels
should be supportive of revenues. In France,
further development of the customer proposition
as the brand becomes better known should also
help deliver continued strong LFL sales growth
and further growth in EBITDA following last
year’s pleasing performance.
B&M UK two-year LFL1
revenue growth
+13.0%
Group adjusted EBITDA2
two-year growth
+80.8%
Operating costs remain tightly controlled across
the Group with freight costs competitively
positioned for the year ahead and a flexible and
low-cost store labour model. Fuel and energy
costs collectively represented less than 1.0% of
FY22 revenues.
In terms of store growth, the Group will remain
disciplined when choosing new sites to ensure
returns are maximised, with the quality of new
locations just as important as quantity. The
Group currently expects gross new store
openings across each business in FY23 to be
approximately 40 for B&M UK, 15 for Heron
Foods and 6 in France.
Given the uncertain macroeconomic outlook,
it is difficult to predict the net impact of a number of
factors such as customer down-trading, category
mix shift and the impact of inflation on sales
volumes. However, the Group remains well
positioned to continue offering great value-for-
money across a wide range of categories. In the
core B&M UK business, price competitiveness
remains very strong. On a basket of c.550 Food
and FMCG items, the Group’s latest internal price
comparison suggests B&M is about 15% cheaper
on average than mainstream supermarket
competitors. Furthermore, 93% of all products sold
at B&M are less than £20, making it less exposed
to any sharp reductions in spending on higher
ticket items.
Notwithstanding the many and varied
uncertainties and headwinds which are likely
to impact on our trading performance during
FY23, at this early stage in the year Group
adjusted EBITDA 2 is expected to be in the range
of £550m to £600m, significantly ahead of the
FY20 pre-pandemic level of £342m.
Despite the unpredictable nature of the year
ahead, the strategic priorities of the Group
remain unchanged. Continued strong execution
will underpin efforts to further consolidate the
sales and profit growth delivered over the past
two years through retention of customer spend
and maintaining the increase in sales densities
as much as possible.
Longer term, the growth prospects both in the
UK and in France are highly attractive. The
Group is committed to a rollout target of at least
950 B&M UK stores and continued geographic
expansion of the Heron Foods convenience
store chain. In France, with strong foundations
now in place and the ongoing development
of operational competencies, the pace of
organic growth is expected to step up from
FY24 onwards.
Strategic development
The Group executed its plans well throughout
FY22. Despite a challenging and unpredictable
macroeconomic backdrop, the B&M business
model proved very capable of responding to
changing conditions and enabled strong progress
to be made against its long term strategy.
1. Delivering great value to our customers
B&M’s purpose is to deliver great value to
customers so that they keep returning to our stores
time and time again. This purpose is as compelling
now as it has ever been, given the inflationary
pressures currently being felt by consumers.
The B&M price competitiveness is driven by
a relentless focus on buying large volumes
of a limited assortment of best-selling
items, sourcing these products direct from
manufacturers and keeping costs low. Not only
does this approach allow the business to pass
cost savings on to customers, but it also keeps
operations simple, agile and responsive.
Retaining the loyalty of customers who
discovered B&M during FY21 was a key
objective over the past year. The best way to
achieve this was to ensure the business had
good availability of the right products at the best
possible prices, be that the leading household
brand names or our private label ranges across
General Merchandise categories.
Given the two-year like-for-like 1 sales growth of
13.0% in FY22, it would appear that many new
customers from last year have found the B&M
proposition compelling and continued to visit
stores. This is also validated when looking at the
cohorts of new customers previously identified in
FY21. Based on Barclaycard transaction analysis
from the month of acquisition in FY21 to the end of
FY22, 78% of those new shoppers have visited
B&M again since their initial visit. Moreover, the
demographic profile of customers who have
demonstrated the greatest propensity to return is
that of a low to middle income family, underpinning
the attractiveness of the B&M value for money
proposition to a customer type that represents a
significant part of the total UK population.
The ‘treasure hunt’ remains an essential part of
the customer appeal, and this is true whether
shoppers need a bargain or just enjoy one. It’s
also likely to be a reason why the B&M brand is
increasingly well loved. According to a national
survey of over 96,000 consumers published
by BrandVue in March 2022, B&M was ranked
the UK’s 9th most loved retail brand overall,
and placed 3rd within the Home category.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
17
Strategic Report Corporate GovernanceFinancial Statements Chief Executive Officer’s review continued
It also revealed that affinity was particularly
strong amongst younger generations such as
‘Gen Z’ and ‘Millennials’, providing reason to be
optimistic regarding long term prospects given
the potential for these customers to be loyal
B&M shoppers for their families for many years
to come. Success in categories such as Toys,
where B&M was awarded “Multiple Toy Retailer
of the Year” at the Toy Industry Awards this year,
further illustrates the appeal of a bricks and
mortar discounter such as B&M.
At category level, sales performance was
relatively broad based throughout FY22.
Certain General Merchandise ranges proved
particularly popular, with key seasonal ranges
such as Gardening and Christmas delivering
record performances. Strong sell-through also
delivered a gross margin benefit due to end
of season markdown activity being limited.
These seasonal categories are important for
long term customer retention since they
reinforce B&Ms position as a destination visit
for such items year after year and in a category
where our model is at its most disruptive.
Success in these Seasonal categories was
made possible due to the decisive action taken
in response to global supply chain disruption,
where the business ensured strong on-shelf
availability by taking receipt of stock earlier
than normal. This approach has also been
adopted in relation to Spring/Summer 2022
Seasonal stock, and is likely to continue until
disruption subsides.
Given the rising cost of living and the extent to
which it will likely impact certain demographics
more than others, the B&M proposition of
making everyday items affordable should
continue to resonate strongly with customers.
2. Investing in new stores
In the core B&M UK fascia 34 gross new stores
were opened during FY22, of which 2 were
relocated stores and a further 12 stores were
closed. The closures generally represent early
generation stores coming to the end of leases and
where a larger, modern store had already been
opened in the same catchment in a previous
financial year. In total there was a net increase of
20 stores, growing the B&M UK portfolio to 701.
New store openings continue to be accretive to
Group profitability with recent cohorts typically
outperforming the company average, and that
includes when re-locating an existing store.
Importantly, although relocations and closures
do not contribute to the net increase in store
numbers year-on-year, they do provide an uplift
to overall estate profitability both in terms of
absolute profit and profit margin.
The B&M UK business expects to open
approximately 40 gross new stores in FY23
and the recently lifted moratorium on tenant
evictions should support the current pipeline
of opportunities. It is possible that incremental
18
B&M European Value Retail S.A.
Annual Report and Accounts 2022
opportunities to add space could arise should
the retail industry see capacity withdrawal as
a consequence of the current cost of living
pressures. However, the business remains
very selective when appraising a potential new
site so as not to risk diluting profit margins, as
evidenced by the above-average contribution
margin of recent years’ cohorts as noted above.
Longer term, there remains a long runway of
growth in the UK, with the potential for at least
950 B&M fascia stores in total. Based on the
current estate of 701 stores, an estimated 38%
of the UK population still live over 3 miles from
a B&M store. As such, given the increased sales
densities and broadening demographic appeal of
B&M over the past two years, this long term target
increasingly looks like a conservative estimate.
The discount convenience store business, Heron
Foods, opened a total of 16 gross new stores
and closed 11 stores during the year, growing
the estate to 311 stores. The closures included
5 relocations where there was an opportunity to
move to a more attractive site within the same
local catchment area. The remaining 6 closures
represented stores that previously traded under
the ‘Cooltrader’ brand that were inherited when
acquiring the Heron Foods business but were
in sub-optimal or unprofitable locations.
Heron Foods stores are only c.3,000 sq ft on
average, serve a very localised customer base
and extend over a smaller geographic footprint
compared to the B&M fascia. As such, due to the
nature of locations required and the practicalities
of distributing chilled and frozen food, the rate of
growth will always be slower. There should be
around 15 gross new store openings again in
FY23, with a similarly paced rollout in future years.
In France the focus in FY22 has been on re-branding
the existing estate rather than opening new stores,
and all stores are now branded B&M. That said, the
business was able to open 3 opportunistic new stores,
taking the estate to 107 stores as of the year-end.
3. Developing our international business
FY22 has been a year of excellent progress in
France, both financially and operationally.
The two-year LFL sales growth was +21% for the
full year, demonstrating the success of store
layout and product changes made during that
time. The adjusted EBITDA2 outturn of £32m and
profit margin of 9.2% represents a very strong
result, particularly in the context of France
being loss-making as recently as FY20. Such
performance provides a firm foundation from
which to grow organically in FY23 and beyond.
With the fascia re-branding programme
complete and Clothing & Footwear representing
only c.12% of the sales mix in FY22, these two
strategic priorities have been executed well by the
French management team. There will be ongoing
refinements in FY23 to the product mix, for
example, growing the range of FMCG to help drive
footfall, but the priority for the year ahead is very
much on further improving overall store standards,
consistency and operational competencies.
As part of that focus, there will be further trials of
a company operated model in France, with any
new store openings in FY23 falling under this
structure rather than the mandated manager
model inherited when acquiring the French
business. This will look to replicate the store
operating model of B&M in the UK, where all
colleagues are employed directly and B&M has
complete control over the store’s operations.
To assist with these changes, experienced
members of the UK store operations team
are currently on secondment in France.
Such has been the progress this year, there is a
strong conviction that the B&M proposition can
be successful in France. In particular, the Board
now has the confidence to begin a steady rollout
of new stores. This will be undertaken slowly
initially, with approximately 6 new stores in FY23,
but is expected to increase in outer years.
Given both the plans for FY23 outlined above
and the long term growth potential in France,
no other international geographies are
currently being evaluated so as to not risk
management distraction.
4. Investing in our people
and infrastructure
Developing colleagues remains crucial to
the Group’s ongoing success and forms an
important part of the new ESG strategy approved
by the Board this year. The well-established
“Step Up” training programme saw 91
colleagues promoted into store management
roles this year, whilst a new “Warehouse to
Wheels” initiative aimed at offering training
opportunities for warehouse colleagues to
become HGV drivers was also developed.
Through the new store opening programme,
over 650 new retail jobs were created in the UK.
B&M also supported almost 3,000 colleagues
under the Government’s “Kickstart” programme
which aims to help long-term unemployed
people get back into work in their local
communities, and a further 144 colleagues
were enrolled onto various apprenticeships.
The B&M website has not historically been
transactional, instead acting as a footfall driver
into stores and a channel through which to
engage with an online community of customers.
All that remains true. However, at the time of
writing an online home delivery service will
shortly be launched on a limited range of items.
This trial will ultimately extend across c.1,000
SKUs representing in part bulkier or higher ticket
General Merchandise items which customers
cannot always easily transport home from
stores themselves or products that do not
require disproportionate mail order packaging.
Given the disruptive B&M price position, the
business believes this could prove an attractive
proposition for customers. However, it remains
open minded as to the long term potential of the
trial, and a ‘test and learn’ approach will be
adopted over the coming months as customer
response is closely monitored.
The existing network of five main B&M UK
Distribution Centres remains adequate to
service current sales volumes and as such no
large-scale capital investment in additional
capacity is anticipated in the near term. Over
the medium term, the Group’s infrastructure
requirements will depend on the rate and
geographical spread of new store openings
alongside ongoing development of the supply
chain. The Group does not have plans for capital
intensive development projects and prefers to
lease any such additional capacity in line with
its capital light model.
The transport operation is also operated
in-house, remains well invested and scalable.
The main area of investment in FY22 was with
regards to IT infrastructure and applications,
where various projects were carefully selected
to underpin the continued growth of the Group.
Environmental, Social & Governance
The Group recognises the growing importance
of Environmental, Social & Governance (“ESG”)
actions and reporting to all stakeholders and
has made significant progress in developing its
approach over the past 12 months. Following
extensive consideration, the Board formally
approved its first ESG strategy this year.
In developing this strategy, the Group has
sought to strike a balance between being
sufficiently ambitious, reflecting the step
change in performance over the past two
years, but also ensuring these ambitions are
appropriate for a business such as B&M, being
a variety goods value retailer focused on long
term sustainable growth.
The strategy has been built around four pillars
designed to help make the business stronger
and more resilient whilst underpinning the
Group’s purpose of delivering great value to
customers. These pillars, and relevant highlights
from FY22, are as follows:
Environment
• Reduced the Groups carbon intensity for
Scope 1 and 2 emissions, with the FY22
ratio over 50% lower than 5 years ago; and
• Committed to a science-based target of
reducing Scope 1 & 2 carbon emissions by
25% by 2030, and a supplier engagement
target for Scope 3 carbon emissions.
Colleagues
• Acknowledged the dedication and hard
work of over 24,000 colleagues by awarding
an extra week’s wages in January 2022; and
• Continued development of own talent
through the “Step-Up” programme,
promoting 91 colleagues to B&M Deputy
and Store Manager positions.
The numbers so easily trip off the tongue. From
a purchase price of £525,000 in December
2004 to becoming a constituent of the FTSE100
index in September 2020. From 21 shops
in the North of England to now over 1,100
stores across the UK and France. From having
500 colleagues to now a family of 38,000
wonderful people.
Communities
• Extended the reach of the B&M value for
money proposition to new communities by
opening 54 gross new stores across the
Group; and
• Created over 650 new retail jobs in the UK,
in addition to almost 3,000 placements
under the governments “Kickstart” scheme
and 144 colleagues enrolled on various
apprenticeship programmes.
Supply Chain
• Ongoing investment in ethical trading
audit procedures, with no instances of
non-compliance identified; and
• Continued to treat all suppliers fairly, with
average payment terms of only 16 days for
B&M UK, and worked collaboratively in
supporting various sustainability initiatives.
To complement the launch of the ESG strategy,
a standalone ESG report will be published for the
first time this year and will provide further detail,
including relevant metrics, targets and initiatives.
In addition, a new Sustainability Manager role
was created in FY22, with the role being filled by
an internal candidate, clearly aligning with the
“Colleague” pillar of the strategy.
The Board is pleased with the progress made
with regards to the ESG strategy in FY22, but also
acknowledges that it will need to evolve over
time. In that regard, progress will be overseen
collectively as a full Board rather than by
delegating to any sub-committee.
On a personal note
The Group has announced Alex Russo as
my successor as CEO. While the change will not
take place just yet, this is my valedictory Chief
Executive annual review, so I apologise for
the indulgence of a penning a few personal words.
My decision to step down as CEO during the
next year evoked similar feelings to when my
wife and I became ‘empty nesters’ when our
two daughters recently left home for college or
to pursue a career. There is a touch of sadness
but the overwhelming emotion is one of pride.
However, none of these numbers capture the
real essence of it.
What has made this journey so incredibly
rewarding is the hard work, ambition and loyalty
of my colleagues who all share a willingness to
work hard. This work ethic operates at all levels
and we celebrate it.
We also have ambition. We desperately want to
win and our culture of trust allows us to do so.
We trust each other to be honest and open. If
something goes wrong, we don’t hide from it or
‘play the blame game’. Instead we learn from
that mistake and make sure it isn’t repeated.
Finally, we reward loyalty and commitment.
We promote from within, it’s our home-grown
entrepreneurial culture, coupled with an ability
to operate ‘at B&M speed’, that gives us an
edge over the competition.
These values didn’t come about by me dreaming
them up, seated at my desk. They evolved
organically, through the actions every day, seven
days a week, of the many thousands of loyal
colleagues who have built B&M into what it is
today. My role has been simply to create the
environment in which these wonderfully talented
and hard-working retailers could thrive.
I wish Alex every success in preserving and
building upon these values when he takes
over the role. If we stay true to them, B&M has
a prosperous future for many decades to come.
Like for my daughters, I view that future with
a quiet optimism. I will be working hard in my
remaining period as CEO to ensure the transition
is smooth and that Alex is successful.
Finally, I would like to thank all our stakeholders
for your support and engagement over the
wonderful last 17 years. I am very grateful and
look forward to thanking as many of you as
possible in person over the coming months.
Simon Arora
Chief Executive Officer
30 May 2022
1. One-year like-for-like revenues relate to the B&M UK estate only (excluding wholesale revenues) and include each store’s revenue for that part of the current period that falls at least
14 months after it opened compared with its revenue for the corresponding part of FY21. This 14 month approach has been adopted as it excludes the two month halo period which
new stores experience following opening. Two-year like-for-like revenues also relate to the B&M UK estate only, and includes each store’s revenue for that part of the current period that
falls at least 26 months after it opened compared with its revenue for the corresponding part of FY20.
2. The Directors consider adjusted figures to be more reflective of the underlying business performance of the Group and believe that this measure provides additional useful information
for investors on the Group’s performance. Further details can be found in Note 3 of the financial statements. Adjusted figures exclude the impact of IFRS 16.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
19
Strategic Report Corporate GovernanceFinancial Statements Financial review
A year of
strong execution
Alex Russo
Chief Financial Officer
The Group responded well to changing conditions throughout FY22
to deliver a strong financial performance.
Accounting period
The current accounting period represents the
52 weeks trading to 26 March 2022 (“FY22”) and
the comparative period represents the 52 weeks
to 27 March 2021 (“FY21”).
The Group financial statements have been
prepared in accordance with IFRS and are
reported as such. Underlying figures presented
before the impact of IFRS 16 continue to
be reported where they are relevant to
understanding the performance of the Group
and to aid comparability with previous years.
Financial performance
Group
Total Group revenue in FY22 was £4,673m
(FY21: £4,801m), representing a year-on-year
decrease of (2.7)%. On a constant currency
basis1, revenues decreased by (2.4)%.
Group adjusted gross margin4 was 37.5%
(FY21: 36.7%), an increase of 77 bps driven by
performance in the core B&M UK business.
Group adjusted operating costs4, excluding
depreciation and amortisation, remained
broadly flat year-on-year at £1,133m (FY21:
£1,137m). Depreciation and amortisation
(excluding the impact of IFRS 16 and adjusting
items) increased 5.4% to £66m (FY21: £62m),
largely due to ongoing investment in new stores
across all fascias.
Group adjusted EBITDA4, stated on a pre-IFRS 16
basis, decreased slightly by (1.2)% to £619m
(FY21: £626m) reflecting the exceptional nature
of the prior year but nonetheless representing
a strong outcome for FY22, being 80.8% higher
than FY20. Group adjusted EBITDA4 margin
increased slightly year-on-year due to the
accretive contribution from France, and when
compared to pre-pandemic levels of FY20 has
expanded 427 bps over that two-year period.
20
B&M European Value Retail S.A.
Annual Report and Accounts 2022
On a post-IFRS 16 basis, Group adjusted EBITDA4
was £828m (FY21: £834m) which represented an
adjusted EBITDA4 margin of 17.7% (FY21: 17.4%).
An adjusted EBITDA4 is reported to allow
investors to better understand the underlying
performance of the business. The adjusting items
are detailed in Note 3 of the financial statements,
and totalled £12m this year (FY21: £(3)m).
B&M UK
In the UK, total B&M revenues decreased by
(4.1)% to £3,909m (FY21: £4,078m), with the
annualisation of revenues from the 43 gross
new store openings in FY21 and contribution
from the 34 gross new store openings this
year offsetting some but not all of the one-year
like-for-like3 (“LFL”) revenue decline of (9.0)%.
On a two-year basis versus pre-pandemic
levels of FY20, which is considered to be a
more meaningful measure of performance this
year, LFL revenues were 13.0% higher this year.
This represents a significant increase in store
sales densities, with the business having been
successful in retaining the loyalty of many
customers who discovered B&M during the
prior year. Although the two-year LFL in the final
quarter of the financial year was lower than the
run rate during the first three quarters, this was
expected due to the impact of the panic buying
of essential products in March 2020 at the start
of the pandemic.
At category level, the two-year LFL performance
has been broad based. Demand for essential
food and FMCG items has remained steady,
whilst certain General Merchandise ranges
have performed particularly well and provided
a small year-on-year gross margin benefit.
The average transaction value remains relatively
modest at c.£18 due to the nature of the product
ranges sold by B&M.
There were 34 gross new store openings and
14 closures in FY22, with 2 of those closures
being relocations. New store openings continue
to deliver strong returns on investment, with no
maturity period required and recent cohorts
typically delivering a higher store contribution
margin than the company average, meaning
the rollout programme remains supportive of
profit margins.
In addition to revenue generated in-store,
wholesale revenue remained relatively
consistent at £45m (FY21: £47m). Most of this
represents sales made to the associate Centz
Retail Holdings Limited, a chain of 45 variety
goods stores in the Republic of Ireland.
Constant currency revenue comparison
£/€m
France in €
Exchange rate
France in £
B&M UK
Heron Foods
Total
Constant Currency
2022
415
1.1756
353
3,909
411
4,673
2021
%
346
1.1203
309
4,078
415
4,801
(2.7)%
2022
415
1.1756
353
3,909
411
4,673
%
2021
346
1.1756
295
4,078
415
4,787
(2.4)%
Group profit before tax
£m
Revenue
Adjusted Gross Profit
%
Adjusted Operating Costs
Adjusted EBITDA4 (pre-IFRS 16)
%
Depreciation & Amortisation
Adjusted Interest
Adjusted profit before tax4
Adjusting Items
Adjusting Interest & Finance Lease Interest
Profit Before Tax (pre-IFRS 16)
Impact of IFRS 16
Statutory Profit Before Tax
2022
2021
1-year
change
2020
2-year
change
22.5%
3,813
35.9%
1,289
33.8% 369 bps
19.7%
(947)
80.8%
342
9.0% 427 bps
4,673
1,752
37.5%
(1,133)
619
13.2%
(66)
(29)
524
12
–
536
(11)
525
4,801
1,763
36.7%
(1,137)
626
13.0%
(62)
(24)
540
(3)
(5)
532
(7)
525
(2.7)%
(0.6)%
77 bps
(0.3)%
(1.2)%
20 bps
5.4%
21.9%
(3.0)%
n/a
n/a
0.8%
(68.3)%
(0.1)%
Reconciliation of adjusting items
£m
Profit Before Interest & Tax
Add back depreciation and amortisation
Remove depreciation and amortisation of finance leases
Add back IFRS 16 depreciation and amortisation
EBITDA4 (IFRS 16)
Fair value effect of ineffective derivatives
Foreign exchange on intercompany balances
French stock provision
Adjusted EBITDA4
B&M UK like-for-like revenue 3 reconciliation
£m
Like-for-like revenue
New stores opened after 27 March 2021
New stores prior to 27 March 2021
Closed stores
Gross Segment Revenue
Value Added Tax/Commission Income
Wholesale revenues
Revenues of B&M UK Segment
2021
615
62
(4)
157
830
7
3
(7)
834
1-year
change
(9.0)%
2022
613
66
(1)
162
840
(13)
1
–
828
2021
4,558
–
71
68
4,698
(667)
47
2022
4,150
101
265
1
4,517
(653)
45
3,909
4,078
(4.1)%
£m
2022
2020
Like-for-like revenue
New stores opened after 28 March 2020
New stores prior to 28 March 2020
Closed stores
Gross Segment Revenue
Value Added Tax/Commission Income
Wholesale revenues
Revenues of B&M UK Segment
3,875
416
160
5
4,456
(592)
45
3,909
3,429
–
24
107
3,560
(448)
28
3,140
24.5%
2-year
change
13.0%
B&M European Value Retail S.A.
Annual Report and Accounts 2022
21
Strategic Report Corporate GovernanceFinancial Statements Financial review continued
B&M UK gross margin expanded slightly by
52 bps to 37.4% (FY21: 36.9%) and was relatively
consistent across both H1 and H2, such was
the performance of the Spring/Summer and
Christmas seasonal ranges respectively.
In particular, the gross margin outturn for
FY22 reflects the impact of inflation in freight
rates from the start of 2022, which has been
manageable. The business continues to enjoy
a long-standing relationship with its shipping
partner used for transporting General
Merchandise goods out of Asia, and believes
itself to be relatively well positioned versus
competitors in this regard.
Adjusted operating costs4, excluding
depreciation and amortisation, decreased
by (1.6)% to £899m (FY21: £914m). These costs
represented 23.0% of revenues (FY21: 22.4%), a
small increase of 58 bps due to the LFL revenue
decline on a one-year basis. However, when
comparing this to FY20 (when operating costs
were 23.4% of revenues), there has been an
improvement of 40 bps over that two-year
period driven by the operating leverage
achieved on significantly higher sales densities.
In terms of store related costs, colleague
wages and salaries as a proportion of sales
have remained flat year-on-year at c.9%, while
rental costs have also been stable and very
competitively positioned. Variable transport
and distribution costs increased marginally
as a percentage of revenues due to targeted
investment in HGV driver wages early in the year.
Energy costs related to utilities represent less than
1% of store revenues and continue to be tightly
managed, supported by the ongoing rollout of
energy reduction initiatives such as LED lighting
and a Building Energy Management System.
Adjusted EBITDA4 for the B&M UK business
decreased by (4.5)% to £564m (FY21: £591m)
and the adjusted EBITDA4 margin decreased
slightly by (6) bps to 14.4% (FY21: 14.5%). However,
both remain significantly above historical levels.
Heron Foods
In the discount convenience chain, Heron Foods,
revenues fell slightly to £411m (FY21: £415m).
This reflects the impact of annualising against
the highly elevated comparatives from last year
when the business benefitted from lockdown
induced shopping behaviour, particularly with
regards to Frozen food. The revenue contributed
by the annualisation of new stores broadly offset
a year-on-year LFL decline, although this steadily
improved throughout FY22 and was positive in
the final quarter.
Gross margin in Heron Foods remained broadly
flat versus FY21 despite the supply environment
for Frozen and Chilled food proving somewhat
challenging over the past 12 months.
Operating costs remained well controlled,
increasing marginally as a percentage of
revenues to 26.1% (FY21: 25.5%) due to
investment in store wages.
Heron Foods adjusted EBITDA4 decreased to
£23m (FY21: £25m) and the adjusted EBITDA4
margin declined by (43) bps to 5.5% (FY21: 5.9%),
representing a satisfactory result for the year.
France
In the French business, revenues increased
by 14.2% to £353m (FY21: £309m), reflecting
the strong progress made in FY22. Performance
in categories such as Homewares, Indoor
Furniture and Giftwares was particularly strong,
having been given greater prominence in
store due to the re-merchandising which
has taken place alongside the fascia
re-branding programme.
Gross margin improved again year-on-year,
driven by further planned rationalisation of
Clothing and an increase in the sales
participation from higher margin General
Merchandise categories.
Given the focus on improving operational
consistency across the French estate this year,
there was an improvement of 190 bps in
operating costs as a percentage of sales to
36.1% (FY21: 38.0%).
Adjusted EBITDA4 increased significantly to
£32m (FY21: £11m), with an adjusted EBITDA4
margin of 9.2% (FY21: 3.6%). This represents a
considerable turnaround for the business and
should provide a strong platform for future
growth in France.
Depreciation and amortisation
Depreciation and amortisation expenses,
excluding the impact of IFRS 16, grew by 5.4% to
£66m (FY21: £62m), representing only 1.4% of
sales (FY21: 1.3%). The increase was largely due
to continued investment in new stores across all
fascias, with the Group growing the store estate
by 2.6% in the year.
The additional depreciation and amortisation
charge relating to lease liabilities under IFRS 16
was £161m (FY21: £153m).
Finance expense
Adjusted net finance charges4 for the year,
excluding IFRS 16, were £29m (FY21: £24m).
This included bank and high yield bond interest
of £27m (FY21: £22m) and amortised fees of
£2m (FY21: £2m). The higher interest charge
relates to the issue of a new £250m High Yield
Bond in November 2021.
The interest charge relating to lease liabilities
under IFRS 16 was £59m (FY21: £61m).
Profit before tax
Statutory profit before tax was £525m
(FY21: £525m). An adjusted profit before tax4
is also reported to allow investors to better
understand the operating performance of the
business (see Note 3 of the financial statements).
Adjusted profit before tax4 for the year
decreased slightly to £524m (FY21: £540m).
The impact of IFRS 16 on the Group financial
statements was to decrease statutory profit
before tax by £11m.
Taxation
The tax charge in FY22 was £103m (FY21: £97m),
representing an effective tax rate of 19.6%. We
expect the tax rate going forward to reflect the
blended rate of taxes in the countries in which
we operate. This is currently 19% in the UK and
27.5% in France, although the UK Corporation
Tax rate is scheduled to increase to 25% from
FY24 onwards.
As a Group, we are committed to paying the
right tax in the territories in which we operate.
The B&M UK business paid taxes totalling
£517m in FY22, including £245m relating
to those taxes borne directly by the company
such as corporation tax, customs duties,
business rates, employer’s national insurance
contributions and stamp duty and land taxes.
The balance of £272m are taxes we collect
from customers and employees on behalf of
the UK Exchequer, which includes Value Added
Tax, Pay As You Earn and employee national
insurance contributions.
Profit after tax and earnings
per share
Statutory profit after tax was £422m (FY21:
£428m) and the statutory diluted earnings
per share was 42.1p (FY21: 42.7p).
Adjusted profit after tax4, which we consider
to be a better measure of performance for
the reasons outlined above, was £417m
(FY21: £435m), and the adjusted fully diluted
earnings per share4 was 41.6p (FY21: 43.4p).
Investing activities
Group net capital expenditure7 totalled £85m
this year (FY21: £81m). Investment included
£34m spent on 54 gross new stores across the
Groups fascia’s (FY21: £43m on 65 stores) and
£8m on infrastructure projects to support the
continued growth of the business (FY21: £8m).
There was also investment of £42m on
maintenance works to ensure that our existing
store estate and warehouses are appropriately
invested (FY21: £22m), with the year-on-year
increase largely driven by the fascia re-branding
programme in France. There was also a net
expenditure of £1m relating to a small number
of freehold acquisitions and disposals (FY21:
net expenditure of £8m).
22
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Net debt and cash flow
The Group continues to be highly cash
generative, with cash generated from
operations of £598m (FY21: £944m). This is
lower than the prior year, largely due to
investment in working capital with regards to
Spring/Summer seasonal stock. Such stock
has been deliberately receipted earlier than
normal to ensure strong availability. It is also
being sold through more evenly across the
season compared to the highly elevated
demand seen in March and April 2021, which
impacted the normal working capital cycle and
created an inflow at the FY21 year-end.
The strong performance and cash generation
have enabled the Group to pay dividends
totalling £430m6 in FY22. This includes a
£250m6 special dividend paid in January 2022.
Net debt5 (on a pre-IFRS 16 basis), increased
to £790m (FY21: £519m). The net debt5 to
adjusted EBITDA4 leverage ratio was 1.3x
(FY21: 0.8x), comfortably within our 2.25x
leverage ceiling.
B&M periodically explores opportunities to
repay, prepay, repurchase, refinance or extend
its existing indebtedness prior to the scheduled
maturity of such indebtedness, and/or amend
its terms with the requisite consent of lenders as
part of B&M’s continuing efforts to manage its
capital structure. B&M and/or its Group may
also incur additional indebtedness to the
extent permitted by the covenants of existing
indebtedness or with the requisite consent
of lenders, including in connection with the
Group’s evaluation of strategic expansion
and acquisition opportunities.
In accordance with this framework, the Group
issued an additional £250m High Yield Bond
in November 2021 which matures in November
2028. The French business also repaid the
remaining balance of €25m relating to the
French Government-backed loan facility scheme
that was initially made available in FY21 due to
the disruption caused by Covid-19. See Note 20
of the financial statements for further details.
The Board adopted a long-term capital
allocation policy in 2016 to provide a framework
to help investors understand how the Group will
continue to balance the funding requirements
of a growth business like B&M with the desire
to return surplus capital to shareholders.
The Board will continue to evaluate opportunities
to invest and support the growth of the business
along with the scope for any incremental return
of capital to shareholders in the context of
that framework.
Dividends
During the year, the Company declared and
paid an interim ordinary dividend of 5.0p6 per
share in addition to a special dividend of 25.0p6
per share. Subject to approval by shareholders
at the AGM on 28 July 2022, a final ordinary
dividend of 11.5p6 per share is to be paid on
5 August 2022 to shareholders on the register
of the Company at the close of business on
1 July 2022. The ex-dividend date will be
30 June 2022.
The Group has a dividend policy which targets
an ordinary dividend pay-out ratio of between
30 to 40% of net income on a normalised tax
basis. The Group generally aims to pay the
interim and final dividends for each financial
year in proportions of approximately one-third
and two-thirds of the total annual ordinary
dividend respectively.
The Group is strongly cash generative and
its policy is to allocate cash surpluses in the
following order of priority:
1.
the roll-out of new stores with a strong
payback profile;
2. ordinary dividend to shareholders;
3. mergers & acquisition opportunities; and
4. returns of surplus cash to shareholders.
The parent company of the Group is an
investment holding company which does not
carry on retail commercial trading operations.
Its distributable reserves are derived from
intra-group dividends originating from its
subsidiaries. The parent company is a
Luxembourg registered company, and as
such, the Board is permitted to have recourse
to the company’s share premium account as
a distributable reserve. It remains the Group’s
policy for dividend purposes to have recourse
to distributable profits from within the Group,
and accordingly, ahead of interim dividends,
and also ahead of the year-end in relation to
final dividends, the Board reviews the levels
of dividend cover in the parent company to
maintain sufficient levels of distributable profits
in the parent company for each of those
dividends. There are over £500m of distributable
reserves in the principal trading subsidiary of
the Group, B&M Retail Limited, and there are no
dividend blocks between it and the Company.
Notwithstanding the current macroeconomic
uncertainties, the Group has continued to be
highly cash generative and is in a strong
position to maintain its ordinary dividend policy.
The principal risks of the Group are set out in
its Annual Report, in particular those relating to
Covid-19, supply chain, competition, economic
environment, commodity prices, infrastructure
and international expansion. These are relevant
to the ability of the Group to maintain its ordinary
dividend policy in the future. The Group however
maintains strategies to mitigate those risks and
the Board believes the Group has a robust
and resilient business model through the
combination of having a value-led product
assortment which to a large extent comprises
essential goods and also competes across a
very broad section of the retail markets in our
chosen locations.
The above list is a summary of the main items,
but is not exhaustive as other factors may arise
from time to time which require investment to
support the long-term growth objectives of
the Group.
Alex Russo
Chief Financial Officer
30 May 2022
1. Constant currency comparison involves restating the prior year Euro revenues using the same exchange rate as that used to translate the current year Euro revenues.
2. References in this announcement to the B&M UK business includes the B&M fascia stores in the UK except for the ‘B&M Express’ fascia stores. References in this announcement to
the Heron Foods business includes both the Heron Foods fascia and B&M Express fascia convenience stores in the UK. When reporting adjusted EBITDA, B&M UK also includes the
corporate segment as referred to in Note 2 of the financial statements, and includes an adjusted profit of £1m (FY21: loss of £(2)m).
3. One-year like-for-like revenues relate to the B&M UK estate only (excluding wholesale revenues) and include each store’s revenue for that part of the current period that falls at least
14 months after it opened compared with its revenue for the corresponding part of FY21. This 14 month approach has been adopted as it excludes the two month halo period which
new stores experience following opening. Two-year like-for-like revenues also relate to the B&M UK estate only, and includes each store’s revenue for that part of the current period
that falls at least 26 months after it opened compared with its revenue for the corresponding part of FY20.
4. The Directors consider adjusted figures to be more reflective of the underlying business performance of the Group and believe that this measure provides additional useful information
for investors on the Group’s performance. Further details can be found in Note 3 of the financial statements. Adjusted figures exclude the impact of IFRS16.
5. Net debt comprises interest bearing loans and borrowings, overdrafts and cash and cash equivalents. Net debt was £790m at the year end, reflecting £963m as the carrying value
of gross debt netted against £173m of cash. See notes 17, 20 and 27 of the financial statements for more details.
6. Dividends are stated as gross amounts before deduction of Luxembourg withholding tax, which is currently 15%.
7. Net capital expenditure includes the purchase of property, plant and equipment, intangible assets and proceeds from the sale of any of those items. These exclude IFRS 16 lease liabilities.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
23
Strategic Report Corporate GovernanceFinancial Statements Key performance indicators
Strong performance consolidates
exceptional growth from FY21
Financial
Total Group revenue growth (%)
B&M UK like-for-like revenue growth (%)1
Group adjusted EBITDA (£m)2
(2.7)%
(9.0)%
£619m
(2.7)
2022
Two-year growth
22.5
(9.0)
2022
13.0 Two-year growth
2022
2021
2020
16.5
25.9
2021
2020
3.3
23.8
2021
2020
342
619
626
Strategic link
2
3
1
4
Strategic link
2
3
1
4
Strategic link
2
3
1
4
Description
We aim to deliver sustainable growth in our chosen
markets of the UK and France. Total revenue growth is
an essential part of achieving that objective, being a
direct output of our new store rollout programme and
the ongoing performance of our product ranges across
the Group.
Performance
Total Group revenue decreased slightly by (2.7)%
year-on-year. Given the exceptional nature of the prior
year, the two-year growth rate is a better indication
of overall performance. On this basis, total Group
revenues increased by 22.5%.
Description
By monitoring the ongoing like-for-like trading
performance at both store and product level, we are
able to track our progress and take appropriate action
where necessary.
Performance
Like-for-like revenues decreased by (9.0)% on a
one-year basis versus FY21. However, on a two-year
basis versus pre-pandemic levels of FY20, which we
consider to be more meaningful this year given the
highly elevated comparative from FY21, they grew by
13.0%. This strong two-year performance was relatively
consistent throughout FY22, and was broad based
across both Grocery and General Merchandise.
Description
In addition to growing revenues and opening
new stores, we have a clear focus on ensuring that
growth remains profitable. We measure profitability
by our adjusted EBITDA performance, stated on a
pre-IFRS16 basis.
Performance
Group adjusted EBITDA decreased slightly to £619m
in FY22. Despite this slight year-on-year decrease,
we consider it a very strong performance given the
exceptional nature of last year, having remained
significantly above pre-pandemic levels of profitability.
Group profit before tax (£m)
Adjusted diluted earnings per share2
Cash generated from operations (£m)
£525m
41.6p
£598m
2022
2021
2020
252
525
525
2022
2021
2020
20.3
41.6
43.4
2022
2021
2020
598
539
944
Strategic link
2
3
1
4
Strategic link
2
3
1
4
Strategic link
2
3
1
4
Description
In addition to adjusted EBITDA, we recognise
the importance of our statutory profit, including
depreciation, amortisation and interest charges.
As such, we also use profit before tax as a
performance indicator.
Performance
In FY22, our statutory profit before tax remained flat
year-on-year at £525m.
Description
It is important to investors that we grow our earnings
per share as well as our adjusted EBITDA. This measure
is stated after depreciation, interest and tax charges.
Performance
Adjusted diluted earnings per share was 41.6p in FY22,
a slight decrease on the prior year but significantly
above pre-pandemic levels of FY20.
Description
The Group is highly cash generative, capable of
delivering high returns from a relatively low capital
intensity. By monitoring the cash generated from
operations, we are able to actively manage our
working capital needs whilst investing in the business
in line with our capital allocation policy.
Performance
Cash generated from operations in FY22 was £598m,
a decrease of (36.7)% on the prior year driven by the
slight reduction in adjusted EBITDA and investment in
working capital to support continued growth into FY23.
24
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Throughout this Annual Report we make reference to both a one-year and two-year like-for-like revenue
growth, as defined in footnote 1 below. These KPIs are monitored by the Directors on a daily basis throughout
the year, and as such are considered useful to understand the underlying performance of the Group.
Like-for-like revenue growth is a well-understood and commonly used measure of performance across
the retail industry, and so aids comparability with peers and competitors.
Previously, the B&M UK business has only reported a one-year like-for-like revenue growth metric. However,
due to the impact of the pandemic and the exceptional nature of sales in the prior year, a two-year
like-for-like performance compared to pre-pandemic levels of FY20 has also been monitored and disclosed
this year in order to provide a more meaningful assessment. This approach is consistent with disclosures
made by other retailers.
Link to strategy key
1
Delivering great value to our customers
2
3
4
Investing in new stores
Developing our international business
Investing in people and infrastructure
Group adjusted EBITDA margin (%)2
Group net new stores opened
Non-financial
13.2%
2022
2021
2020
13.2
13.0
2022
2021
2020
9.0
28
28
Strategic link
2
3
1
4
Strategic link
2
3
1
4
UK market share3 (%)
c.1.5%
41
53
2022
2021
2020
c1.5
c1.5
c1.2
Strategic link
2
3
1
4
Description
To ensure we are not diluting our profit margins as we
expand our business, in addition to the overall value
of the adjusted EBITDA we also measure this as a
percentage of total revenues.
Performance
Group adjusted EBITDA margin in FY22 was 13.2%,
an increase of 20 bps on the prior year and remains
significantly above pre-pandemic levels. In particular,
the core B&M UK business delivered a very strong
margin performance, whilst France saw a significant
year-on-year improvement.
Description
Our new store opening programme remains at the
heart of our growth strategy, and this applies across
all fascias and territories.
Performance
Gross new store openings across each fascia in FY22
were 34 in B&M UK, 16 in Heron Foods and 4 in France.
The net growth in our store estate, stated after closures
and relocations, was 20 for B&M in the UK, 5 for Heron
Foods and 3 in France. As such, the Group increased
its overall store count by 2.6% to 1,119 stores.
Description
Our market share of store-based retail sales in the UK
is relatively low, both in total and in each individual
product category that we sell. This means we have
a considerable opportunity to increase our market
share through continued growth in the years ahead.
Performance
In the core B&M UK business, the two-year like-for-like
revenue performance would suggest that we have
retained the loyalty of many of the new customers from
FY21, providing a strong platform for future market
share gains.
Capital expenditure (£m)
Colleague Step-Up programme
£100m
2022
2021
2020
100
88
2022
2021
2020
125
91
91
124
125
Strategic link
2
3
1
4
Strategic link
2
3
1
4
Description
Ongoing investment in new stores is one of our
strategic pillars, whilst we also invest in carefully
selected infrastructure projects that we believe will
support the organic growth of the Group. We therefore
monitor capital expenditure to ensure we are investing
appropriately in the needs of the business.
Performance
Gross investment in capital expenditure this year
included £34m on new stores across the Group,
£8m on infrastructure projects, £15m on the
acquisition of freehold stores and £42m on
upgrading existing stores.
Description
Developing and promoting our colleagues is important
for retention and progression. Our in-house Step-Up
programme provides training to store colleagues
and helps them to progress to managerial positions
within B&M.
Performance
In FY22, a total of 91 existing colleagues were
promoted to Store Manager or Deputy Store Manager
roles in the B&M UK business under our Step-Up
programme. This ongoing investment in colleagues
remains integral to the Group’s success, and forms
a key part of our new ESG strategy.
1. One-year like-for-like revenues relate to the B&M UK
estate only (excluding wholesale revenues) and include
each store’s revenue for that part of the current period
that falls at least 14 months after it opened compared
with its revenue for the corresponding part of FY21.
This 14 month approach has been adopted as it
excludes the two month halo period which new stores
experience following opening. Two-year like-for-like
revenues also relate to the B&M UK estate only, and
includes each store’s revenue for that part of the current
period that falls at least 26 months after it opened
compared with its revenue for the corresponding part
of FY20.
2. The Directors consider adjusted figures to be more
reflective of the underlying business performance
of the Group and believe that this measure provides
additional useful information for investors on the
Group’s performance. EBITDA, adjusted EBITDA and
Adjusted Profit are non-IFRS measures and therefore
we provide a reconciliation from the statement of
comprehensive income. See the reconciliation of
adjusted measures to statutory measures on page 21
for further details. EBITDA represents profit on ordinary
activities before net finance costs, taxation,
depreciation and amortisation.
3. Market share estimates are based on management
estimates, having regard for external research on the
size of the relevant market in 2021. See page 11 for
further details.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
25
Strategic Report Corporate GovernanceFinancial Statements
Principal risks and uncertainties
B&M’s risk management framework
The following principal risks and uncertainties could have an impact on our
business model and strategy. Mitigating steps aimed at managing and reducing
those impacts are being employed by the Group as summarised below.
The Group’s risks and mitigations are reviewed
as part of the oversight of the system of internal
controls by the Audit & Risk Committee. They
are reported on to the Board, which takes
overall responsibility for the risk management
of the Group.
The Group’s Internal Audit function assesses
the ongoing business risks of the Group.
It reports on the effectiveness of internal
control procedures to the Audit & Risk
Committee. In assessing risk, it considers the
Group’s risk mitigating actions and provides
recommendations to management to
improve business processes and limit their
exposure to risk.
are to be implemented. That evaluation of risk
and controls is carried out in the context of how
those risks could impact the overall objectives
of the Group.
The implementation of processes and controls
in relation to the management of risk is
delegated by the Board to the executive and
operational senior management of the UK
and French businesses.
Group Internal Audit reports to the Audit & Risk
Committee at each of its meetings during
the year on the progress of management’s
implementation of recommended actions
to mitigate risks.
Principal risks heat map
Principal risks
Covid-19 continues to remain a principal risk
but its overall impact to B&M has reduced
with the lifting of government restrictions and
widespread vaccination programmes in the
UK and France. Economic environment risks
have been impacted by a cost of living crisis;
supply chain risk affected by supply disruption
in Asia; and commodity price increases due to
inflationary pressure. This means that some of
these risks have increased in likelihood and/or
impact. The global increase in malware and
ransomware means that the likelihood of cyber
security risks has increased. Other principal risks
have either reduced or remained stable.
None of the principal risks included in the
2020/21 financial year have been removed
and no new ones have been added.
9
4
2
The Group’s approach to reviewing risk appetite
is part of an annual risk management cycle,
which is used to drive and inform actions in
relation to the principal risks identified by the
Board. As part of that process, the Group’s
appetite for risk is defined with reference to the
expectations of the Board for both commercial
opportunity and internal control. It is then
used for setting the Group’s internal audit
plan each year.
Risk management evaluation
The Group’s executive management are
responsible for identifying and evaluating new
and emerging risks and mitigating actions.
The Audit & Risk Committee, together with the
support of the Group’s Internal Audit department
and the Group’s General Counsel, is responsible
for monitoring risks and mitigating actions and
reporting any matters of concern to the Board.
The Board is responsible for overseeing risk
management of the Group. It considers the
recommendations made by the Audit & Risk
Committee and determines the framework of
the type of controls and mitigating steps which
26
B&M European Value Retail S.A.
Annual Report and Accounts 2022
h
g
H
i
t
c
a
p
m
I
w
o
L
Low
7
12
6
8
3
5
10
11
1
Likelihood
High
1
Covid-19
2 Supply chain
3 Competition
4 Economic environment
5 Regulation and compliance
9 Commodity prices/cost
6 International expansion
7 Warehouse infrastructure
8 IT systems, cyber security
and business continuity
inflation
10 Key management reliance
11 Store expansion
12 Stock management
Link to strategy key
Risk change key
A Delivering great value to our customers
B Investing in new stores
C Developing our international business
D Investing in people and infrastructure
Increased risk
No change
Decreased risk
Assessment of risks
An assessment is made by the Board of the
likelihood or probability of a risk occurring and
the impact of the risk after taking account of
mitigating factors and controls. The assessment
of that is set out in the heat map opposite.
The heat map indicates the Board’s view of the
likely degree of impact of each risk after taking
into account the risk mitigations referred to in the
principal risks table below.
Principal risks table
The table below describes (i) the main risk
exposures identified by the Board in relation
to our Group businesses, (ii) the mitigating
factors which relate to how the Group manages
each of the risk exposures, and (iii) the linkage
between the business strategy and the relevant
risk exposures. The group also summarises
(where relevant) key actions arising in the year in
relation to how the Group has addressed certain
aspects of these risks. The Group has also
indicated where there were any changes in
the profile of any of the risks, which reflects
the Board’s view of the current trend in relation
to those risks.
The risks set out in the table are not exhaustive
but represent the main risks to the Group in
relation to the period under review.
Climate change
Climate change was considered at the Group’s
annual strategy day in March 2022. It was
determined, at that time, that climate change
does not represent a principal risk given
the detailed risk assessment performed by
management this year and how the outcome of
that assessment compares to the principal risks
already identified. However, this assessment will
be reviewed at least annually by management
and the Board.
We have embedded a climate change
perspective into the ongoing assessment of
our internal corporate risk register and will
continue to review our risk management
process. Our climate risk impact framework
will be continuously updated and monitored,
with full reviews occurring on an ongoing basis,
facilitated by the Group Internal Audit function.
1 Covid-19
Description & potential impact
Prolonged social restrictions due to the coronavirus or any reoccurrence of government restrictions in the
UK, France or China could impact consumer demand, supply chains, the ability of colleagues to work
and our stores continuing to operate at expected levels of profitability. It could also affect the timing of
new store openings in relation to completion of works by contractors.
Strategic Priority
Change
A B C D
Risk Mitigations
• The categories of goods which the B&M UK and Heron
Foods businesses sell are essential goods within the UK
Government guidelines.
• Maintaining sufficient liquidity for our ongoing operations.
• Maintaining (i) flexibility in our distribution network and with suppliers
to cope with additional demand in relation to FMCG items, and (ii)
controls of orders of lines where demand has slowed to protect
against over-stocking in certain categories.
Key Actions in 2021/22
• The plans put in place by the B&M UK business in order to protect
our supply chain (as referred to below under the key actions in relation
to Supply Chain risk) have continued to protect the business from any
material disruption to supplies, costs or prices, with those risks having
been managed and offset by stock cover held in the UK of c.12 weeks
cover for general merchandise goods.
• Government policy in France in relation to Covid restrictions differed to
the UK approach, and our French business remained responsive to
the changing requirements during the early part of the financial year.
• The Group’s approach to flexible working arrangements supported
colleagues in relation to working hours and homeworking
arrangements throughout the year.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
27
Strategic Report Corporate GovernanceFinancial Statements Principal risks and uncertainties continued
2 Supply chain
Description & potential impact
Imported goods from China represent a significant proportion of the Group’s general merchandise
products. Lead time delays in the supply chain could result in lower sales and potential loss of margin
through higher markdowns. Disruption to the supply chain arising from civil unrest, natural disasters,
diseases and pandemics, ethical trading issues or quality standards failures could impact our trading
performance and brand reputation.
Strategic Priority
Change
A
Risk Mitigations
• The Group has an experienced buying team which is responsible
for maintaining an efficient and effective supply chain.
• A range of alternative supply sources are maintained across
the product categories and we are not over-reliant on any one
single supplier.
• The Group has anti-bribery & corruption and modern slavery &
human trafficking policies in place in relation to its supply chain.
• A combination of individual buyers and sourcing agent employees
conduct supplier factory visits where this is possible given local
Covid restrictions.
Key Actions in 2021/22
• Stock cover in the B&M UK business of over 12 weeks on general
merchandise imported goods ensures levels of inventory are
adequate to meet periods of supplier delay.
•
Internal review of supplier social compliance process and
appointment of Sustainability Manager to monitor transparency
in the supply chain.
• Working with suppliers and freight forwarders to forecast
and remain vigilant in relation to challenges regarding the
transportation of goods.
28
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Link to strategy key
Risk change key
A Delivering great value to our customers
B Investing in new stores
C Developing our international business
D Investing in people and infrastructure
Increased risk
No change
Decreased risk
3 Competition
Description & potential impact
Strategic Priority
Change
The Group operates in highly competitive retail markets in the UK and France which could materially
impact the Group’s profitability, share price and limit growth opportunities.
A C D
Risk Mitigations
• Continuous monitoring of competitor pricing and product offering.
• Development of new product ranges within the product categories
to identify new market opportunities and target new customers.
Key Actions in 2021/22
• The Group has continued to maintain its strict SKU count discipline
within product ranges, which enables it to react quickly to ever
changing consumer tastes, trends and buying habits.
• The Group commissioned a customer insight survey to measure
our strengths and weaknesses against our competitors, to provide
management with indicators of where the Group can improve our
competitive edge relative to our peer group and other discount
retailers. This allows the Group to track progress against each
of the indicators and outputs from those surveys.
• Around half of the Group’s revenues in the period continues to come
from food and FMCG goods. This has allowed the Group to remain
insulated from any down turn in consumer spending and resilient
against our competitors whilst continuing to meet our customers’ needs.
4
Economic environment
Description & potential impact
A reduction in consumer confidence could impact upon customer spending, and subsequently
revenue and profitability, as a result of the prevailing macroeconomic conditions in the markets
in which we operate.
Strategic Priority
Change
A B C D
Risk Mitigations
• We offer a range of products and price points for consumers which
Key Actions in 2021/22
• The Group has continued to ensure that we remain focused on
allows them to trade up and down.
• We maintain a low cost business model that allows us to maintain
our selling prices as low as possible.
• We have an effective forecasting process that enables actions to be
undertaken reflecting economic conditions.
only stocking the top best-selling lines across our ranges. We have
continued to work hard to ensure our stores remained well stocked
with the best-selling products on a daily basis.
• Management has continued to proactively respond to changing
sales patterns throughout the year noting that customers still make
discretionary purchases albeit relatively low in value. The business
was able to respond to this demand as very few products offered
are high value items, with the majority being priced below £50.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
29
Strategic Report Corporate GovernanceFinancial Statements Principal risks and uncertainties continued
5 Regulation and compliance
Description & potential impact
The Group is subject to a range of regulatory and legislative requirements, including those relating to the
importation of goods, anti-bribery and corruption, anti-modern slavery, anti-tax avoidance & evasion,
health & safety, employment law, general data protection regulation (“GDPR”), control of pollution
and contamination to the environment, the Listing Rules, Transparency laws and regulations and the
Groceries Supply Code of Practice (the “Groceries Code”). The impact of failure to comply with laws
and regulations could lead to financial penalties and significant reputational damage.
Strategic Priority
Change
C D
Risk Mitigations
• The Group has a number of policies and codes, including a code of
Key Actions in 2021/22
• Mandatory training for all management and support centre
colleagues using an e-learning portal has continued throughout
the year.
• Our Groceries Code Compliance Officer and Group Internal Audit
team have actively engaged during the year with the Groceries Code
Adjudicator (“GCA”) in relation to our action plans and follow-up work
during the year.
• The Group has implemented reporting in line with the Task Force
on Climate-related Financial Disclosures.
conduct which incorporates an anti-bribery & corruption policy, which
outlines the mandatory requirements we apply to our business. Our
codes and policies are communicated to staff along with our employee
handbook which is made available to everyone joining the business.
• Management are responsible for liaising with the Group’s General
Counsel (and external advisors where required) to ensure that we
identify and manage compliance with all applicable new legislation
and regulations which apply to us in Luxembourg, the UK and France.
Changes in legal and regulatory matters are monitored closely on a
regular basis by the Group’s General Counsel, who provides reports
on new regulatory developments directly to the Board as well as its
Committees and Executive Management. The Internal Audit function
of the Group includes assurance testing and auditing of the Group’s
implementation of new areas of regulatory compliance.
• We have a whistle-blowing procedure and policy which allows
colleagues to confidentially report any concerns or inappropriate
behaviour within our business.
•
In relation to anti-modern slavery and other standards relating to human
rights within our supply chain, the Buying teams are charged with
ensuring that every supplier is required to adhere to our Workplace
Policy standards.
• The Company has a Group-wide GDPR policy. Our privacy policies,
processes in relation to data subject rights requests, privacy notices
given to all our colleagues, and privacy notices for users of our websites
and subscribers to our online mailing lists are reviewed to ensure they
are GDPR compliant.
• Our Groceries Code compliance programme includes guidance and
training for colleagues, monitoring of compliance, reporting of potential
non-compliance issues, dispute resolution procedures and a Code
Compliance Officer who oversees compliance and the resolution of code
related issues with suppliers in the event of escalation being necessary
or required by a supplier. Oversight of our compliance with the Grocery
Code is carried out by management and reviewed by the Audit & Risk
Committee as a standing agenda item at each of the meetings of that
committee throughout each year.
30
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Link to strategy key
Risk change key
A Delivering great value to our customers
B Investing in new stores
C Developing our international business
D Investing in people and infrastructure
Increased risk
No change
Decreased risk
6
International expansion
Description & potential impact
Developing our businesses in new market territories is important to the Group’s strategic plans.
Expanding into new markets creates additional challenges and risks which could impact the
overall performance of the Group, its growth and profitability.
Strategic Priority
Change
C
Key Actions in 2021/22
• We continued to strengthen the senior leadership team in France
with the new appointment of a Supply Chain Director (France) and
secondment of management from the UK to transfer operational
knowledge to colleagues in France.
• We completed the fascia rebrand of all stores in France which has
delivered a strong improvement in financial performance.
Risk Mitigations
• The Group has international retail experience on the Board.
• The Group will continue to support the development of the
experienced senior leadership teams in France in key
operational areas.
• The Group assesses markets in which the business operates or might
expand into, to ensure they are appropriate for value retailing and
that product ranges are developed and selected by local buying
teams along with access to leverage from the Group’s supply chain.
• The Group continues to invest in both the infrastructure and
technology of our French business.
7 Warehouse infrastructure
Description & potential impact
The loss of one of our distribution centres or failure to maintain and invest in our warehousing and
transport infrastructure as the business continues to grow its store portfolio, could materially impact
short/medium term trading and the profitability of the business.
Strategic Priority
Change
B D
Risk Mitigations
• Forward plans have been implemented for additional warehousing
capacity to support our new store opening programme. The Group
in the UK has seven separate distribution centres, plus a further two
in France.
• The Group maintains adequate business interruption and
increased cost of working insurance in the event of a loss
of a distribution centre.
Key Actions in 2021/22
• We have commenced the roll out of the upgraded JDA Warehouse
Management System. We plan to complete the remaining sites
in FY23.
• The vast majority of product SKU’s now have dual locations within
our UK Distribution Centre estate, so in the short term if a Distribution
Centre was out of operation our stores could continue to be serviced
with the full range of product SKU’s by the rest of the Distribution
Centres without significant replenishment delays.
• B&M’s UK business has access to container storage yards in the north
and the south of England, allowing greater flexibility for re-routing
stock to other Distribution Centres at short notice if a Distribution
Centre was carrying a surplus or was out of operation.
• The Board annually reviews its short and medium term distribution
infrastructure requirements.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
31
Strategic Report Corporate GovernanceFinancial Statements Principal risks and uncertainties continued
8
IT systems, cyber security and business continuity
Description & potential impact
The Group is reliant upon key IT systems, and disruption to such systems would adversely affect business
operations including those at the distribution centres and stores. The potential impact of a failure to
protect and maintain our data and systems could lead to significant business disruption, reputational
damage and in the case of a loss of personal data, potential prosecution. This also applies to any failure
to protect the Group’s IT systems and data from viruses, cyber invasive threats, corruption or sabotage.
Strategic Priority
Change
D
Risk Mitigations
• All critical business systems have third party maintenance
contracts in place and those systems are industry standard
retail business systems.
•
IT investments and budgets are reviewed and approved
at Board level.
• The Group has a disaster recovery strategy and plan in place
for all of our key systems.
• The Group has an ongoing Payment Card Industry
compliance strategy.
•
IT security is monitored at Board level and includes penetration
testing and up-to-date security software.
• Significant decisions for the business are made by the Group
or operational boards with segregation of duties enforced on
key business processes, such as the payables process, and a
robust IT control environment is in place.
Key Actions in 2021/22
•
IT cyber security and PCI controls in relation to processing card
transactions are continually reviewed to ensure updates in line
with payment card industry standards.
• The B&M fascia business has implemented an Endpoint Security
Platform and Advanced Malware Protection to improve cyber security.
We continue to investigate ways to improve our cyber protection
especially from ransomware using the Protect, Recover and Ensure
Business Continuity model.
• A 3 year phased programme of improvements and upgrades to IT
systems and infrastructure commenced in FY22 with approval of the
Board. This programme includes improvements to the Group Finance
system, networks and segregation, data centre improvements and
migration of email to the cloud.
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Annual Report and Accounts 2022
Link to strategy key
Risk change key
A Delivering great value to our customers
B Investing in new stores
C Developing our international business
D Investing in people and infrastructure
Increased risk
No change
Decreased risk
9 Commodity prices/cost inflation
Description & potential impact
Strategic Priority
Change
Escalation of costs within the supply chain arising from factors such as increases in raw material and
wage costs could adversely affect the profitability of the business. Additionally, increased fuel and
energy costs could impact upon distribution, logistics and store overheads.
A
Risk Mitigations
• Freight rates, energy and currency are forward purchased to
mitigate against volatility and to allow the business to plan
and maintain margins.
• Wage increases are offset where possible by
productivity improvements.
• Forecasts and projections produced by the business include the
expected impact of the national living wage and therefore the
Board’s strategic planning takes account of that.
10 Key management reliance
Description & potential impact
Key Actions in 2021/22
• The Group has freight rate agreements in place with freight
forwarders with set prices at least 12 months ahead.
• A Building Energy Management System controls energy consumption
at stores more effectively and roll out of LED lighting across all stores
is helping to mitigate rising energy costs.
Strategic Priority
Change
The Group is reliant on the high quality and ethos of the executive team as well as strong management
and operational teams. There is a risk that a lack of succession planning for senior colleagues could
impact the performance overall of the business.
D
Risk Mitigations
• Key senior and operational management are appropriately
incentivised through bonus and share option arrangements
to retain talent.
• The composition of the executive team is kept under constant review
to ensure that it has the necessary resources and skills to deliver the
Group’s plans.
• The Nomination Committee has developed succession plans for
the Board of Directors and key senior operational management
resourcing positions. It also reviewed the wider senior management
resourcing needs of the Group.
Key Actions in 2021/22
• Succession planning has been regularly reviewed by the Nomination
Committee throughout the year ensuring succession plans for key
senior management through to executive positions.
• The Group has continued to strengthen the senior management
teams of its businesses. This has included (i) the appointment of a
new General Counsel following the retirement of the previous General
Counsel early this year, and (ii) the appointment of a new Supply Chain
Director (France) to enhance the French Leadership team.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
33
Strategic Report Corporate GovernanceFinancial Statements Principal risks and uncertainties continued
Link to strategy key
Risk change key
A Delivering great value to our customers
B Investing in new stores
C Developing our international business
D Investing in people and infrastructure
Increased risk
No change
Decreased risk
11 Store expansion
Description & potential impact
Strategic Priority
Change
The ability to identify suitably profitable new store locations is key to delivering our growth plans. Failure
to identify suitable locations in areas targeted for new stores could impact upon store expansion plans
and reduce the rate of growth in the business.
B
Risk Mitigations
• Our CEO actively monitors the availability of retail space with the
support of internal and external property acquisition consultants.
• The flexibility of the trading format allows us to take advantage of
a range of store sizes and locations.
• Each new store opening is approved by the CEO ensuring that
property risks are minimised and that lease lengths are appropriate.
• Where new locations may impact on existing locations, the
cannibalisation effects are estimated and then monitored and
measured to ensure that there is an overall benefit to the Group.
12 Stock management
Description & potential impact
Key Actions in 2021/22
• The B&M UK business continues to take steps where new store
opening opportunities exist in current store locations, to replace
older generation stores with better quality sites and premises
and via acquisition of adjacent space to expand stores and
optimise performance.
Strategic Priority
Change
Ineffective controls over the management of stock could impact the achievement of our gross margin
objectives. Lack of product availability or over-stocking could impact working capital and cash flows.
A
Risk Mitigations
• The Group has a highly disciplined limited SKU count throughout
our product ranges and effective regular markdowns on slow
moving product lines.
Key Actions in 2021/22
• Despite the disruption to supply chains in the Far East and Asia the
Group has aimed to maintain at least three months of stock cover
throughout the year.
• Our non-seasonal initial stock orders do not exceed circa 12 weeks of
forecast sales and action is undertaken after circa 4 weeks of trading
to either repeat the order, refresh the product design or discontinue
the product line.
• Consistent levels of stock cover by product category are maintained
through regular reviews of the open-to-buy process, supported by
the disciplined SKU count.
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Annual Report and Accounts 2022
Viability Statement for accounts
In accordance with the UK Corporate
Governance Code, the Directors have assessed
the viability of the Group. This assessment
has been based upon the Group’s three-year
strategic plan (the “plan”) and has taken into
account the current position of the Group, the
principal risks and uncertainties as detailed
on pages 26 to 34 of the strategic report and
the Group’s prospects.
We set out our strategic plan on a three year
cycle, which is common practice in the retail
sector. We believe this is appropriate as we
operate in a competitive retail environment
and need to be able to react to changes in
retail markets and consumer trends. Given the
fast moving nature of the retail industry and
macro-economic environment the board believe
that forecasting beyond a three year period
is an unproductive exercise, and note that this
is consistent with the approach of many of
our analysts.
In making their assessment the Directors
considered:
•
the Group’s current balance sheet, its strong
track record of generating operational cash
flows and returns to shareholders and stress
testing of the key trading assumptions within
the Group’s plan;
the potential impact on the Group’s business
model, future trading expectations and
liquidity of one or more of the principal
risks set out on pages 27 to 34 occurring
in the period;
the likely degree and effectiveness of
possible mitigating actions in relation to
the principal risks; and
•
•
•
the Group’s debt facilities of £455m in
relation to the term loan and revolving credit
facility which matures in April 2025, and the
high yield bonds of £400m which matures
in July 2025 and the high yield bonds of
£250m which matures in November 2028.
The stress testing undertaken included the
flexing of a number of key assumptions within
the three year plan, namely future revenue
growth, including both like-for-like revenues
and revenues from the new store openings,
gross margins, operating costs, the impact of
interest rates and working capital management,
which may be impacted by one or more of the
principal risks to the Group.
A number of other severe but plausible
scenarios were considered by the Board.
They included:
• a decline of 9% of like-for-like annual sales
in the Group’s main UK trading business,
B&M UK, as a result of competition
increasing and B&M returning to a
pre-pandemic level of sales;
• a significant decline in the gross margin
of the Group’s main UK trading business due
to higher costs of imported goods arising
from commodity price increases, increases
in import duties and adverse currency
exchange movements; and
• a range of other severe scenarios which
could have a material impact on the Group’s
main UK trading business, including
for example, a major fire at one of its
distribution centres, cyber threats and
significant cost inflation.
The Board considered the mitigating steps
which they would take to protect the Group
in the event of any of those scenarios arising,
and determined that the following measures
would be necessary to protect its cash flow
and liquidity:
•
the temporary suspension of dividend
payments;
limiting capital expenditure to essential
maintenance only; and
•
• suspension of new store opening
programmes.
Each of the above scenarios exceed the
impacts of principal risks which the Group
has encountered in its trading experience to
date. Based on the assessment, stress testing
and mitigating actions referred to above,
the Directors confirm they have a reasonable
expectation that the Group will be able to
continue in operation and meet its liabilities
as they fall due over the next three years to
29 March 2025.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
35
Strategic Report Corporate GovernanceFinancial Statements Corporate social responsibility
A year of significant progress
in our approach to ESG
We have made significant progress in developing a clear ESG
strategy this year, with relevant metrics and targets that align
with our purpose of delivering great value to customers
and will underpin our continued success.
Delivering value to customers
Environment
• Reduce scope 1 & 2 carbon emissions
by 25% by 2030
• Adopt a supplier engagement target
for scope 3 carbon emissions
• Reduce use of plastic packaging in
the supply chain
• Maintain a high level of
packaging recycling
See page 45 for more information
Communities
• Committed to a store rollout target
of at least 950 B&M stores in the UK
• Contribute to the regeneration of local
communities through the creation
of new jobs
• Support local and national
charitable initiatives
See page 41 for more information
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B&M European Value Retail S.A.
Annual Report and Accounts 2022
Colleagues
• Provide colleague development and
promotion opportunities through a range
of training programmes
• Maintain high levels of colleague
engagement across the Group
• Develop a diverse and inclusive workforce
• Reward strong business performance through
payment of discretionary bonuses to store,
distribution and support centre managers
See page 38 for more information
Supply Chain
• Commitment to ethical business practises
and the fair treatment of workers in our
supply chain
• Utilise sustainable or recycled materials
when designing own-brand products
wherever possible
• Pay all suppliers fairly and treat them
with respect
See page 42 for more information
Corporate Governance
Financial Statements
Our approach to ESG is to:
• deliver our growth strategy
for the benefit of all our
stakeholders;
• build our business in a
sustainable way; and
• apply our values of
simplicity, trust, fairness
and being proud, in the
way we operate.
Last year the Board committed to developing our
approach to ESG during FY22, in recognition of
its growing importance to all stakeholders. Over
the past 12 months, there has been frequent
consultation with the Board as management
have refined our ESG strategy.
The Board and management team considered
ESG from a number of different perspectives.
This included evaluating peer and competitor
strategies, views expressed by equity and debt
market participants, ESG rating agencies and
also what is generally considered best practice.
We engaged specialist third party consultants
to help inform our thinking in certain areas, for
example when determining what appropriate
long term science-based carbon reduction
targets may be.
Following this extensive appraisal, our first ESG
strategy was formally approved by the Board this
year and has been based around the four pillars
of Environment, Colleagues, Communities and
Supply Chain. We believe that the ESG strategy
we have developed is appropriate for a business
such as B&M, being a variety goods value retailer
focused on long term sustainable growth. We
have sought to strike a balance between being
sufficiently ambitious, reflecting the step change
in performance of the Group over the past two
years, but also ensuring these ambitions are in
keeping with the B&M business model.
Underscoring our commitment to this new
ESG strategy, we have also appointed our first
Sustainability Manager this year who, together
with the executive management team, will be
responsible for overseeing progress against a
number of initiatives over the coming years. This
appointment was made internally, representing
a career development opportunity for an
existing colleague within the business, and thus
aligning to one of our stated objectives under
the “Colleagues” pillar of our strategy.
We also acknowledge that our approach will
need to evolve with the business over time. In
that regard, the Board remains committed to
monitoring progress against our ESG strategy,
and to making further developments when
appropriate. For the year ahead, the Board
intends to retain an “at one” approach to ESG
governance, recognising the importance of
collective input as we begin to implement our
new strategy.
To complement the launch of our ESG strategy,
we have also published a standalone ESG
report for the first time this year. This report
contains more detail about our strategy,
progress and achievements in FY22, and
is designed to be read alongside the
corporate social responsibility section of
this Annual Report.
Alongside our approach to ESG, we have existing
policies with regards to our dealings with people,
our social responsibilities and in relation to our
environmental outputs. For the purposes of our
FY22 annual reporting, below we set out these
policies, how we have applied them, and the
outputs from them over the past year.
In relation to our governance and decision
making with regard to our stakeholders’
interests, see also the Stakeholders and
Section 172 report on page 56.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
37
Strategic Report Corporate GovernanceFinancial Statements Corporate social responsibility continued
People
Our policy and
commitment in relation
to our colleagues is to:
• provide equality of
opportunity in relation to
recruitment and promotion;
• provide modern, safe and
clean working environments
at our stores, distribution
centres and in our transport
operations; and
• ensure that all colleagues
are treated with dignity
and respect.
See page 40 for more information
on diversity and equality
As well as our overall policy above, we also
have a number of detailed supplementary
policies relating to our terms and conditions of
employment and workplace matters. These
policies are designed to ensure that we provide
appropriate safeguards and practices for the
benefit of all colleagues throughout our business,
and to ensure compliance with relevant legislation.
Through these policies, we are able to support
the ongoing growth of the business. The Group
employs over 38,000 people across our three
businesses, in roles covering stores, distribution
and support centres. Attracting new and retaining
existing colleagues as our operations expand
remains crucial to the continued success of
the Group and so we retain a strong focus on
colleague development, wellbeing and reward.
In FY22 we created over 650 new retail jobs
in the UK, driven largely by our store rollout
programme. In so doing, we continue to make
a positive contribution to local communities by
offering job opportunities at a time when some
other store-based retailers have been taking
steps to rationalise their workforce or have
closed entirely, particularly following the impact
of the Covid-19 pandemic on the retail industry.
Colleague progression
By providing development opportunities for home
grown talent wherever possible, we believe that
the business benefits over the longer term as our
culture and values are maintained and reinforced
through the continuity of ‘B&M people’ growing
with the business.
This commitment is perhaps best illustrated
through our Step-Up career development
programme. This well-established programme
provides store colleagues with an opportunity to
demonstrate their talent and grow within the
business. In FY22, 91 existing colleagues were
promoted to either store manager or deputy
manager positions in B&M UK stores (FY21: 124).
We are proud of the fact that over 80% of these
appointments were internal promotions from
within the business. As part of our values of
fairness and trust, any colleagues who enters
but does not succeed the first time can enter
the programme again in future years whenever
they want to.
This year, in response to the well documented
challenges surrounding the availability of lorry
drivers, we also developed a new “Warehouse
to Wheels” initiative aimed at offering training
opportunities for warehouse colleagues to
become HGV drivers. This helped the business
38
B&M European Value Retail S.A.
Annual Report and Accounts 2022
to respond quickly and ensured that we did
not experience any significant disruption in
our distribution network or in terms of stock
availability at stores.
In our standalone ESG report, we talk in
more detail about the various learning and
development opportunities that we offer
colleagues across the Group.
Colleague engagement
One of our Non-Executive Directors, Carolyn
Bradley, is the Group’s Designated Non-
Executive Director for Workforce Engagement.
Carolyn oversees the effectiveness of our
workforce engagement initiatives, and reports
to the Board on the outputs from them during
the course of the financial year.
There is a standing agenda item at two Board
meetings each year for the Board to consider
reports from the Workforce Engagement
Director. This enables the Board to monitor
progress, consider feedback and discuss
outputs and actions with the executive
management team. This is also supplemented
by reports provided each year on colleague
engagement and pay by the Group People
Director to the Remuneration Committee.
We made further changes to our colleague
engagement survey this year, making it more
streamlined and running it twice (in July 2021
and March 2022) rather than once as in
previous years. Doing so has enabled us to
stay even closer to our colleagues, and will
help us identify areas of improvement even
quicker in the future. In both surveys this year,
the response rate was over 90%, and there was
year-on-year improvement across all questions
asked. Furthermore, many of the ratings
improved between the first and second survey,
reflecting the success of the department level
action plans that were implemented during the
intervening period.
Given our focus on promoting and retaining
home grown talent as noted above, these
ratings are important as they are a strong
indicator of the type of culture which exists
across our business. Considering the significant
step up in the performance of the Group over
the past two years and the ways in which
colleagues have had to adapt, such satisfaction
scores are particularly pleasing.
As part of the colleague engagement survey, we
also invited feedback on areas where we could
make improvements for colleagues. The main
themes from that feedback this year included
improving colleague benefits and recognition,
making further enhancements to some of our IT
systems and helping the store teams to more
accurately forecast their colleague rotas. As a
result, the following outputs have already been
implemented by the senior management team:
rolled out a new colleague App used to
•
communicate a daily “digest” update, share
important updates with colleagues, and
increase engagement; and
• once again this year, we acknowledged
the considerable efforts of over 24,000 store
and distribution colleagues by awarding a
discretionary bonus of an additional week’s
pay in January 2022.
The senior management team of the B&M UK
business also have a number of other
established workforce engagement
mechanisms. They are designed to keep
colleagues informed of the trading performance
and factors affecting the business, whilst also
enabling colleagues to ask questions directly of
senior management in relation to the business
and its strategic plans. As Covid-related
restrictions were gradually eased during the
year, we were able to use a mixture of virtual
and physical meetings.
Colleague reward & recognition
We reward our store managers and supervisors
through an annual bonus scheme. This scheme
is kept simple and transparent, with just four
metrics which are designed to be stretching
and motivating for the store teams. These
metrics are fully aligned to ensuring our stores
deliver the best possible shopping experience
to customers.
Each year, we also operate a number of
incentives to motivate and reward our store
teams. These are generally centred around
key in-store events such as Easter, Halloween
and Christmas, and culminate in a “Store of
the Year” award where the entire store team
is recognised.
We also have an annual bonus scheme for
managers in our distribution centres who lead
various warehouse and transport teams. This is
supplemented through a programme of awards
and recognition relating to the performance
of individual colleagues, which increases
engagement and encourages a culture of
continuous improvement.
B&M has a share incentive plan which is open
to all B&M UK employees after 12 months
service, providing them with the opportunity
to participate in the future success of the
business as a shareholder. Restricted Stock
share option awards are also made to a
number of management colleagues on an
annual basis. This is a broad based pool
of management and includes a number of
heads of department from across the central
support teams.
The Group had a successful year in FY22,
overcoming a number of challenges and
uncertainties faced by the retail industry to
deliver another set of strong financial and
operational results.
The recognition payment noted above delivered
against the commitment we made last year
to award discretionary workforce bonuses
when the Group achieves a certain level of
performance. This is something we remain
committed to, forming part of the “Colleague”
pillar of our new ESG strategy (see page 36).
Colleagues paid a discretionary bonus
“Step Up” promotions
Retail jobs created in the UK
>24,000
91
>650
B&M European Value Retail S.A.
Annual Report and Accounts 2022
39
Strategic Report Corporate GovernanceFinancial Statements Corporate social responsibility continued
Diversity and equality
In relation to gender diversity, following the
appointment of Paula MacKenzie to the Board
in November 2021, the Board had 43% female
representation at the year-end, with three out of
the seven Board members now being female.
Full details of the composition of B&M’s Board
are set out on pages 62 and 63.
At the end of FY22, female representation across
the senior management of the Group, reporting
either directly to the Board or the Executive
Committee, was 43.8% (FY21: 42.3%). In relation
to all employees of the Group, the percentage
of female colleagues was 57.8% (FY21: 58.2%).
The Company already complies with the Parker
Review recommendations in respect of ethnic
diversity and Board representation.
Our equal opportunities policies in relation to
our workforce are also designed to recognise
and actively encourage the benefit of having
a diverse workforce across our business which
is inclusive of all types of diversity as well as
gender. We look to ensure that all colleagues
are treated fairly and with respect, and that no
employee is discriminated against on grounds
of gender, race, colour, religion, disability or
sexual orientation. Our overall aim is to ensure
that B&M is recognised as a responsible
employer providing all colleagues with a
great place to work.
Gender pay gap reporting
In accordance with the Equality Act (Gender Pay
Gap Information) Regulations, we have published
our data online in relation to each of our B&M UK
and Heron Foods businesses as at 5 April 2021.
The mean hourly pay rate of B&M UK colleagues
was 7.5% lower for females than for males. The
median hourly rate was the same for females
and males. For Heron Foods, the mean hourly
rate for females was 19.9% lower than males
and the median hourly rate for females was
5.5% lower than males.
In relation to bonuses of B&M UK colleagues,
6.4% of females and 18.9% of males were paid
a bonus. The mean bonus pay for males was
6.5% lower than females, and the median
bonus pay for males was 54.0% lower than
females. For Heron Foods, 74.8% of females and
78.1% of males were paid a bonus. The mean
bonus pay for females was 65.6% lower than
males and the median bonus pay for females
was 38.6% lower than males.
Full details of the reports are available on
our websites at www.bandmretail.com
and www.heronfoods.com and on
gender-pay-gap.service.gov.uk.
Colleagues of the Group in France and
Luxembourg are not included in this data.
Our Diversity Policy in
relation to the Board and
senior management is:
• to ensure that the Company
maintains the necessary
skills, experience and
independence of character
and judgement of its Board
members and senior
management team, for
the Group to be managed
effectively for its long-term
success;
• while making appointments
based on merit so the best
candidates are appointed,
the Company recognises the
value which a diverse Board
and senior management
team brings to the business
and it embraces diversity in
relation to gender, race, age,
educational and professional
backgrounds; and
• together with the above
criteria, the Company also
recognises that diversity
in relation to international
experience, recent senior
management roles within
retail and/or supply chain
sectors, and previous
experience regarding
membership and
chairmanship of Board
committees are also
relevant factors.
Female representation
at Board level
43%
40
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Corporate Governance
Financial Statements
Social
Our policy in relation to
social and community
engagement is to:
• continue to make
investments in new stores
and new jobs in local
communities where we
are under-represented
or not represented at all;
• provide value for money
to our customers;
• build long standing
relationships with our
suppliers; and
• promote ethical trading
policies and practices
within our supply chains.
Communities
In the communities we serve, we provide
shoppers with great prices, create local jobs
each time we open a new store, and help to
sustain those areas where people live and work.
In doing so, we have an important role to play
as a positive presence in local areas, towns and
neighbourhoods by providing people with the
goods they need at prices which help limited
spending budgets go that bit further.
We have continued to invest in new stores throughout
FY22, looking to extend the reach of our value
for money proposition to areas where we are
under-represented or not represented at all. We
opened a total of 34 gross new B&M stores and
16 gross new Heron Foods stores in the UK this year.
When we open a new store, we try to find a
hero from the local community known for their
charitable work to perform the ribbon-cutting
ceremony on the opening day. By generating
some publicity with the local media, this is one
small way in which we can help to promote and
support the good work that they do for their
communities. We actively encourage our store
managers to maintain relationships with the
local hero going forward, and to support the
good work they do in their community.
We expect our store expansion programme to
continue in the years ahead, and we remain
committed to our rollout target of at least 950 B&M
stores in the UK. There are still many areas in the
UK where we have not penetrated local markets,
particularly in the South of England, with the main
constraint being the availability of real estate of the
size and type we require. However, given our
strong track record and performance of recent
store openings, we remain confident that every
time we open a new store it will be a success.
Through our rollout programme, we are
proud to contribute to the revitalization and
sustainability of communities across the UK,
with each new opening representing a long
term commitment to the local area. By creating
new jobs, we are proud to welcome new
colleagues to the business and have a positive
impact in communities where alternative job
opportunities may otherwise be limited.
We are also proud of our participation in the
Government’s “Kickstart” programme, which
aims to help long-term unemployed people get
back into work in their local communities, and
we have welcomed 3,000 colleagues under the
scheme so far. We have also enrolled a further
144 colleagues on to various apprenticeships
over the past year.
For further examples of the positive impact we
have in our communities, see our standalone
ESG report.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
41
Strategic Report Corporate GovernanceFinancial Statements Corporate social responsibility continued
Quality, convenience & value
Both the B&M and Heron Foods brands are
known by their customers for providing the
products they want at bargain prices. Such
value for money is likely to become increasingly
important for many people as we emerge from
the social and economic impacts of the Covid-19
pandemic, particularly given the rising cost of
living and the knock-on impact that will have on
household budgets.
We are proud to play a part in supporting the
communities where we trade by making our
value for money offer as convenient as possible
for customers. At our B&M stores, by offering
both Grocery and General Merchandise goods
all under one roof we are able to provide
customers with a one-stop-shop for a range of
daily essentials and products for their homes.
At our Heron Foods stores we offer a range of
frozen, chilled and ambient food to serve the
needs of customers on a very localised basis.
In France, our customer appeal continues to
strengthen as awareness of the B&M brand
grows following the completion of the fascia
re-branding programme this year. This is
particularly true in the key category of
Homewares, where we are regarded as
providing an attractive range of products
and very competitive prices.
Charitable initiatives
We were proud to be a headline partner for
the “Mission Christmas” appeal once again this
year, which is an initiative run by the Cash4Kids
children’s charity. It provided £13.8m of gifts and
vouchers to some 288,000 under-privileged or
poorly children in the UK at Christmas 2022. Most
of our stores acted as collection points for the
initiative, in what was our sixth consecutive year
of participation on a national level.
Through our new all-colleague mobile App
introduced this year, we ran two competitions
during the Christmas period where winners
received £500 to donate to a charity of their
choice. In addition to benefiting the chosen local
charities, this also generated a lot of engagement
amongst the store colleague community during
our busy Golden Quarter trading season.
At our Heron Foods business, colleagues
participated in a number of charitable events
to support the local community throughout
the year. These included raising money for
Hull4Heroes, the Yorkshire Wildlife Trust and
the St. Andrews Dock Fishing Heritage Group.
Customers
Helping household budgets go further
Our purpose is to deliver great value to
customers so that they keep returning to our
stores time and time again. By making everyday
42
B&M European Value Retail S.A.
Annual Report and Accounts 2022
essentials affordable, we are able to help
household budgets go that little bit further.
This purpose has been particularly relevant
during the Covid-19 pandemic, and is likely to
remain so for the foreseeable future with large
sections of the population being concerned about
their personal finances given the rising cost of
living. We are committed to serving the needs
of our customers through the stores we operate
in our chosen markets of the UK and France.
Customer proposition
We believe that by providing customers with a
limited assortment of the best selling products
across a range of product categories, all at value
prices, we are able to give customers what they
want all year round. Through our relentless focus on
price and newness, we are able to retain the loyalty
of existing customers, and also attract new
customers. Shopping at B&M also does not require
any compromise on quality since we sell many of
the household brand names which customers
recognise, and they enjoy the opportunity to
purchase them at bargain prices in our stores.
We constantly refresh our product offer by
introducing up to 100 new products a week
throughout the year, predominantly in our General
Merchandise ranges. This encourages customers
to visit the store again and again to see what is
new. In FY22, we saw a particularly strong
performance in Seasonal categories such
as Gardening and Christmas. This indicates
that B&M is increasingly being regarded as a
“destination” visit for these types of products,
which further strengthens customer loyalty.
We take pride in providing the high quality
customer experience which shoppers expect
from any retailer. We invest in our stores to
present them in a clean and tidy format, with
new store fit-outs and refurbishments including
investments in LED lighting and refreshed floor
coverings. This also has environmental benefits
by helping to reduce our carbon emissions, whilst
at the same time providing a modern, clean
environment for customers and our colleagues.
Retaining the loyalty of new customers
During FY21, we saw a number of new
customers discover B&M in the UK for the first
time. Such has been the consistency of the
two-year like-for-like performance throughout
FY22, we believe that we have been successful
in retaining the loyalty of many of these
customers, with sales densities 13.0% higher
than pre-pandemic levels of FY20. Although
the outlook for consumer spending remains
uncertain, with Covid restrictions having eased
but inflation impacting the retail sector in a
number of ways, we remain optimistic that the
B&M proposition of great value across a range
of best-selling items will continue to resonate
strongly with customers in the years ahead.
Health and safety
The Board has overall responsibility for ensuring
that we maintain high standards of health and
safety across the Group. The Board and the
executive management team monitor key
performance indicators in relation to health and
safety trends in the business on a bi-monthly
basis, including reports on the number of
accidents and those which are required to be
reported to the Health and Safety Executive.
We have a dedicated health and safety team of
qualified professionals who are responsible for
ensuring that we comply with current statutory
requirements, and that our health and safety
policies are communicated to all our colleagues.
Our approach to Health & Safety is one of
education and continuous improvement.
Our store management teams are trained as
responsible persons under our health and
safety policy for stores. There is a continuous
programme of training new recruits, as well as
refresher training for existing store management
colleagues. Over the course of the last 5 years,
over 5,000 store colleagues have been trained
as a responsible person, demonstrating our
commitment to the safety of colleagues.
The health and safety policy for our stores is also
supplemented by documented risk assessments
and clearly articulated procedures for colleagues to
follow, with pictograms to make them user friendly
and help overcome language or learning barriers.
As part of their induction, every store based
colleague receives training from a member of the
store management team on health and safety,
manual handling, fire safety, how to mitigate
against risks and hazards and procedures for
the safe use of store equipment. The training is
carried out for each new colleague with reviews
(and refreshers as required) also taking place
during the next 12 weeks thereafter.
In FY22 there were 102 reported accidents
(0.2 per store) reportable to the Health & Safety
Executive relating to the B&M business in the UK
(FY21: 125 reported accidents and 0.2 per store).
This is in the context of 2.52 million shopper
visits over the course of the year.
Suppliers
We aim to foster long standing relationships
with our suppliers, who we regard as business
partners in terms of our relationships and
dealings with them. Many of our suppliers have
worked with B&M for a number of years, and
have therefore been able to share in our growth
and success during that time. They value the
simple, transparent pricing model that we adopt,
minimising the use of rebates and retrospective
discounts. We work collaboratively with all our
suppliers to ensure we are always offering our
customers the best products at the best prices.
The Groceries Supply Code of Practice (the “Groceries Code”) and The Groceries (Supply Chain Practices)
Market Investigation Order 2009 (the “Order”)
The Groceries Code and the Order regulate
certain aspects of the relationships of
B&M and Heron Foods in the UK with their
suppliers of grocery products. The aim of
the Groceries Code is to establish and embed
the overarching principles of fairness and
lawfulness within retailer – supplier
relationships at all times.
Retailer compliance with the Groceries Code
is overseen by the Groceries Code Adjudicator,
with whom we engaged constructively and
positively regarding key areas of interest
this year.
B&M and Heron Foods became designated
retailers under the Order, and thereby subject
to the Groceries Code, on 01 November 2018.
In the UK, B&M and Heron Foods have
established compliance procedures under
the Groceries Code. Those businesses have
complied with the Groceries Code throughout
the year under review.
In relation to the annual compliance report
of B&M and Heron Foods for the year to
26 March 2022, there were no formal disputes
under the Groceries Code. There were also
no Groceries Code related issues raised by
suppliers with B&M or Heron Foods of any
potential non-compliance with the Groceries
Code. The report was submitted to the Audit &
Risk Committee members in May 2022 and it
was approved by them for submitting to the
Competition and Markets Authority and the
Grocery Code Adjudicator.
B&M and Heron Foods have maintained
ongoing training programmes with regards to
the Groceries Code, with this training provided
by external consultants annually. There is a
new joiner guidance document and training
packs for new colleagues joining the buying
teams in each of those businesses. Buying
colleagues who deal with grocery suppliers
are required to declare any complaints
received under the Groceries Code to the
Buying Office Manager, who in turn would
notify the Code Compliance Officer. During
the year under review, there were no such
complaints received.
See principal risk number 5 on page 30
for more information
B&M European Value Retail S.A.
Annual Report and Accounts 2022
43
Strategic Report Corporate GovernanceFinancial Statements Corporate social responsibility continued
We use a standard set of terms and conditions
when making purchases from suppliers.
Provided the goods meet relevant quality and
safety standards, we will pay the supplier within
the agreed payment terms. Our import suppliers
are generally paid in advance of the goods
arriving into the UK, which further strengthens the
relationship with these suppliers and underlines
our commitment to treating suppliers fairly.
Ethical trading and our supply chain
We regard our supply chain as a key
differentiator, with our disruptive sourcing
process an essential feature of the B&M
business model. We are equally driven by
the need to ensure our supply chain partners
remain transparent, fair in their business
dealings and robust in their welfare policies
for their colleagues.
We recognise the need to ensure that the
products we sell are safe and fit for purpose for
our customers. As such, we have a number of
formal policies in place relating to our dealings
with suppliers, to ensure they comply with local
laws and regulations and our own policy
standards. These include:
• anti-bribery and corruption;
• supplier workplaces, covering anti-slavery
and respect for human rights, which all
suppliers are required to adhere to; and
• whistle-blowing, in relation to reporting of
any suspected wrong doing or malpractice.
Our policies and procedures are geared toward
what we think are balanced, reasonable and
effective processes. We strive to find practical
ways of improving the communication of and
adherence to our ethical business practices.
Anti-bribery and corruption
In relation to anti-bribery and corruption, our
policy is one of zero tolerance. Colleagues in each
of our businesses are aware of the importance
of reporting any offers of inducements by third
parties immediately to the appropriate executive
management team director.
Each year an annual review is undertaken
of our buying teams in the UK and France.
This requires written reports to be completed
of any suspected or actual incident of bribery
or corruption between any third party and the
business. For the year under review, this due
diligence process disclosed no instances of any
such activity having taken place or having been
suspected in our business.
B&M UK, Heron Foods and B&M France all
have clearly communicated whistle-blowing
procedures and processes in place. In the year
under review, no reports were made in any of
our three businesses of any instances of
suspected bribery or corruption in relation to
employees with suppliers or other third parties.
Anti-modern Slavery
We have a zero-tolerance policy on slavery,
forced labour and human trafficking of any kind
in relation to our business and our supply chains.
We support the promotion of ethical business
practices and policies to protect workers from any
kind of abuse or exploitation. In the last year, all
three businesses have continued to communicate
our Workplace Policy on the welfare rights of
workers to their existing and new suppliers. The
standard terms and conditions of purchase used
with all suppliers make it a condition that they
adhere to these Workplace Policy standards.
In the event of any suspected failure by a supplier
to comply with our Workplace Policy, we would
investigate the circumstances of it with them. If,
as a result of such an investigation, we identified
a breach of our policy we would review what
appropriate remedial action we would require
the supplier to undertake and also determine,
on a case by case basis, whether our trading
relationship with that supplier should be
monitored, suspended or terminated.
In the year under review, no reports have been
made to the Group of any instances of actual
or suspected modern slavery or human rights
abuses relating to human trafficking or other
kinds of forced labour in our supply chain.
A copy of our Anti-Slavery Statement and
Workplace Policy is available on our websites at
www.bmstores.co.uk, www.bandmretail.com
and at www.heronfoods.com.
The Group outsources the vetting and reviewing
of those reports to a specialist team at our
sourcing agent in Hong Kong, Multi-lines
International Company Ltd (“Multi-lines”), who
have well-established processes and expertise
in performing such procedures. The Multi-lines
team carries out this service both in relation to
suppliers sourced by them in their capacity as
sourcing agent for the Group, but also in relation
to those suppliers sourced directly by buying
teams in the UK.
As part of the vetting and verification processes
performed by Multi-lines, they are required to
obtain social compliance audit reports prepared
by external specialists. Those external specialists
would generally be internationally recognised
inspection, verification and certification
companies. On a rolling basis before the
expiration of any existing social compliance
audit report, the Multi-lines team timetables and
obtains new audit reports as part of its ongoing
verification processes of approved suppliers.
By outsourcing the social compliance auditing
of directly-sourced suppliers to Multi-lines, we
ensure that there is a consistent and robust
standard applied across our supply chain when
evaluating ethical trading practices, regardless
of the origin of the relationship with us. It is also
carried out independently from our UK and
France buying teams, as a further safeguard
against the integrity of the sourcing processes
which we have in place.
In addition to the above checks, members of our
buying teams, where practical, also visit new
suppliers as part of our verification processes.
Approach to risk management
and due diligence
In relation to the Group’s assessment of risk,
for leading household brand name suppliers
we operate on the basis of reasonable reliance
being placed on those suppliers having their
own comprehensive procedures and policies in
place. For all other suppliers, in particular those
supplying general merchandise goods from
overseas, the Group has alternative forms of
checks and verification processes in place.
Further improvements to existing processes
between the UK buying teams and our partners
in Multi-lines were identified by Group Internal
Audit this year, and have subsequently been
put in place. Looking ahead, we expect more
recommendations to be made as a result
of work planned for our new Sustainability
Manager, and a Multi-lines colleague has also
been seconded to the UK to facilitate even
greater knowledge sharing and effective
communication.
The vast majority of general merchandise
products which are imported into the UK and
France are sourced from China, and are mainly
machine manufactured goods as opposed to
being labour intensive handmade goods. All
overseas suppliers are required to provide
social compliance reports as a check on
compliance with local laws and regulations,
including labour practices.
Quality assurance
In relation to general merchandise products
which are manufactured for the Group, we
have a well established process of pre- and
post-production sample testing and approvals.
This is supported by our quality assurance team
and external testing houses of our own or
suppliers, being global certification providers.
It is also supplemented by our own programme
of quality control inspections performed by
Multi-lines at factory premises prior to shipment.
44
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Corporate Governance
Financial Statements
Environment
Our Environmental
policy is to:
• grow our business whilst
operating sustainably in
the communities we serve;
• operate and maintain a
modern, clean and efficient
infrastructure in relation to
stores, distribution centres
and transport fleet for
the benefit of all of our
customers and colleagues
in the UK and France; and
• continuously look for
opportunities to reduce or
minimise our environmental
footprint where we can,
particularly in areas of scale
in our operations where we
can make an impact.
Environmental sustainability
The nature of our business model, being the
sourcing and retailing of a limited assortment
of products, does not in itself involve significant
environmental risks to the sustainability of our
business. There are however environmental
impacts from our business operations which,
as opposed to being risks, are outputs which
we are committed to managing responsibly.
We constantly strive to either reduce the intensity
levels of our consumption and find better ways
of operating in a more environmentally
sustainable way.
This year, we have reported under the
requirements of the Task-force for Climate
related Financial Disclosure (“TCFD”) for the
first time. In preparing for this disclosure, the
business has spent considerable time across
both Board and day-to-day management level
assessing the risk and opportunities presented
by climate change. This has included engaging
with third party experts to help inform our
thinking and identify factors we need to be
aware of, both now and in the future.
Overall, we have determined that the risk posed
by climate change to the Group is low. However,
we remain cognisant of the need to continue
monitoring this in the future, and are committed
to reviewing this at least annually. Our TCFD
disclosures can be found on pages 48 to 55,
and further details are available in the
standalone report.
For the purposes of this Annual Report, we have
outlined below the impacts of our environmental
policy, and how we have applied it during this
year. Additional information regarding the
progress we have made this year regarding
our long term environmental sustainability can
be found in our standalone ESG report.
Transport & Distribution
The opening of our 1 million sq ft distribution
centre in Bedford in January 2020 represented
an important investment, not only in terms of
facilitating further store expansion but also with
regard to doing so in a more efficient and
environmentally friendly way.
The Bedford facility helps us to minimise the
number of miles travelled to service stores in the
South of England, whilst also reducing overall
fuel consumption and emissions from our HGV
transport fleet in real terms. As we continue to
open new stores in the South, we estimate that
once at maximum capacity the annual benefit of
the Bedford facility will represent approximately
6 million fewer delivery miles travelled
compared to those travelled previously when
making deliveries from our Distribution Centres
in the North West of England.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
45
Strategic Report Corporate GovernanceFinancial Statements
Corporate social responsibility continued
We have a total of 252 tractor units and the
entire transport fleet in the UK is fitted with Euro
6 engines, which have the lowest emission rate
possible. We have also continued to invest in
double decker “wedge” trailers, which increase
trailer capacity and therefore maximise
transport volumes whilst minimising distribution
mileage travelled. We have around 170 of these
trailers, and the resulting increase in pallet fill
per trailer means fewer store deliveries are
required on a like-for-like basis.
We also have an increased focus on monitoring
driver performance across our B&M and Heron
Foods transport colleagues, rewarding fuel
efficient driving and thus reducing diesel
emissions. This year, we have introduced a new
system that allows us to track metrics such as
braking intensity and miles-per-gallon, which
has provided greater visibility over driver
performance and helped to identify areas
for improvement.
Other sustainability initiatives at our distribution
centres include using lithium Ion picking and
loading trucks, which are more energy efficient
than the previous generation of pallet handling
equipment. At our Heron Foods distribution centre
we also have electric charge points for fridges
and freezers, eliminating the need to run diesel
engines and also reducing noise pollution.
Waste & recycling
The main source of waste in our operations
results from packaging. Where possible we
collaborate with our suppliers to minimise
product packaging only to what is necessary
for its safe carriage. This reduces costs, weight
and wastage of excess packaging.
Over the past year, we have driven an increased
focus on the general merchandise products
that we typically source from Asia. We have
pro-actively re-designed a number of products,
particularly in categories such as Christmas
decorations, to move away from plastic
packaging towards greater use of more
environmentally friendly cardboard. In the year
ahead, we will maintain a focus on reducing
plastic packaging further as we look to deliver
against one of our ESG commitments and also
mitigate the impact of the UK’s plastic packaging
tax which becomes effective from FY23.
We have dedicated waste management
facilities at our B&M warehousing locations
in the UK. This allows us to collect waste
cardboard, plastic, metal and wood from our
stores and backhaul it to our distribution centres
for sorting in readiness for recycling. By utilising
the empty space on our trailers following a store
delivery in this way, it is an efficient use of our
transport fleet.
This year 99.9% of our packaging waste in the
UK was recycled, through a combination of
waste being sorted through our own facilities
and by specialist third party contractors.
Overall, the total level of packaging waste
recycled by the Group in FY22 was 99.8%.
Carrier bags
We have continued to see an overall reduction
of carrier bag usage following the 5p carrier
bag levy which was introduced in England
and Wales in October 2015.
We donate the proceeds from the carry bag
levy to a number of good causes. In FY22,
we donated a total of £388,000 to a variety
of UK charities and good causes.
Energy consumption
All new stores are now opened with energy
efficient LED lighting. In addition, wherever
practical we are retrofitting LED lighting into
existing stores when carrying out refurbishments.
We also have LED and motion-activated lighting
installed in our main B&M distribution centre
locations, as well as our Heron Foods distribution
centre, to reduce unnecessary electricity usage.
Following initial trials in FY21, we have continued
to rollout a Building Energy Management System
(“BeMS”) in B&M UK stores to help better control
their energy consumption and drive further
efficiencies. This system is now installed in
all new store openings, whilst we are also
adopting a phased approach to retrofitting it
into existing stores. At the year-end, over 40%
of all stores were installed with our BeMS.
The annualised benefit of installing both LED
lighting and BeMS can represent a significant
reduction in terms of energy usage, and ongoing
rollout will be important as the business strives to
achieve our Scope 1 and 2 science-based targets
relating to carbon emissions which we have
committed to this year.
Our ESG report provides more details regarding
our energy saving initiatives, including a
case study.
Stores served by Bedford DC
Overall Group packaging recycled
Stores with BeMS installed
>250
99.8%
>40%
46
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Greenhouse gas (“GHG”) emissions
This year, 44% of our carbon footprint in relation
to B&M UK operations resulted from electricity
usage in our stores, warehouses and support
centre. Emissions from the use of gas and
diesel used by our transport fleet accounts
for the other 56%.
Store numbers across the Group continue
to increase and we grew the total estate by
28 stores. Despite this growth in store numbers,
the absolute value of Group GHG emissions
decreased compared to the prior year. This
represents the positive impact that energy
saving initiatives such as those outlined
above are having on our carbon footprint.
Scope 1 and 2 greenhouse gas emissions have
been calculated according to the 2019 UK
Government environmental reporting guidance.
To report according to this guidance,
methodologies outlined in the Greenhouse
Gas Protocol Corporate Standard have been
followed to calculate our emissions.
Scope 1 GHG emissions and energy use have
been calculated based upon the quantities of
fuel purchased for our transport fleet and gas
consumed when heating business premises.
Scope 2 GHG emissions and energy use are
calculated based upon the quantity of
purchased electricity used to power our sites.
Our Scope 2 emissions have been calculated
using a location-based approach, as per the
requirements of the Streamlined Energy and
Carbon Reporting (“SECR”) disclosure. This method
calculates emissions associated with our electricity
consumption by using the average emissions
intensity of the electricity grid in the country
where the electricity is consumed and does not
account for contract or supplier-specific factors.
We express our emission intensity ratio with
respect to tonnes of CO2 per £1m of turnover.
At a Group level, our Scope 1 and 2 intensity
ratio has improved again in FY22. Specifically,
in the core B&M UK business, we have reduced
our intensity ratio by more than 50% over the
past five years, despite growing the store estate
by over 30% in that time.
Following the detailed work performed this year,
we are disclosing our Scope 3 carbon emissions
for the first time. As shown below, approximately
93.5% of our total carbon footprint comes from
up or downstream activities. Further details
relating to our carbon footprint, including the
methodology applied in calculating it, can be
found in our ESG report.
The Group has committed to working
collaboratively with its suppliers and partners
over the coming years to help reduce our Scope
3 emissions, and has an ambition to align with
the British Retail Consortium target of achieving
Net Zero by 2040. We intend to develop plans
further in FY23, supported by our new
Sustainability Manager and continued input
from specialist consultants, and build a credible
pathway towards achieving this ambition.
Greenhouse gas and energy usage data (Scope 1 & 2)
FY22 Group carbon footprint
3.4% 3.1%
Key
Scope 1
Scope 2
Scope 3
93.5%
Environmental sustainability
at a glance
• committed to a science-based target
of reducing Scope 1 & 2 carbon
emissions by 25% by 2030;
• committed to a supplier engagement
target for Scope 3 emissions;
• minimised miles travelled and
associated GHG emissions by
servicing c.250 stores from our
Bedford distribution centre;
total packaging waste recycled by
the Group in FY22 was 99.8%;
• ongoing programme of energy
efficient LED lighting and BeMS
installation into new and
existing stores; and
•
• GHG intensity ratio for Scope 1 and 2
emissions in the B&M UK business
reduced by over 50% over the past
5 years.
FY22
B&M UK
Heron Foods
UK Subtotal
France
Group Total
FY21*
B&M UK
Heron Foods
UK Subtotal
France
Group Total
Emissions
Energy usage
Scope 1
TCO2e
42,631
8,060
50,691
417
51,108
Scope 1
TCO2e
41,923
7,172
49,095
114
49,210
Scope 2
TCO2e
33,745
9,985
43,730
1,919
45,649
Emissions
Scope 2
TCO2e
39,696
11,203
50,898
1,226
52,125
Total
TCO2e
76,376
18,045
94,421
2,336
96,757
Total
TCO2e
81,619
18,375
99,994
1,341
101,334
Intensity
Ratio
19.54
43.90
21.86
6.62
20.71
Intensity
Ratio
20.01
44.30
22.26
4.34
21.10
Scope 1
MWh
197,265
33,660
230,925
1,900
232,825
Scope 1
MWh
192,802
29,821
222,623
497
223,120
Scope 2
MWh
158,927
47,024
205,952
37,421
243,373
Energy usage
Scope 2
MWh
170,265
48,051
218,316
31,486
249,802
Total
MWh
356,193
80,684
436,877
39,320
476,198
Total
MWh
363,067
77,872
440,939
31,983
472,922
Note: FY22 relates to the period from April 2021 to March 2022 and FY21 relates to the period from April 2020 to March 2021.
*
Prior year figures have been restated to reflect a re-classification between Scope 1 and Scope 2 emissions and energy usage in light of better data becoming available and to reflect
a location-based methodology.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
47
Strategic Report Corporate GovernanceFinancial Statements
Task Force on Climate-related Financial Disclosures
Climate-related Financial Disclosure
Report 2022
In line with the Task Force on Climate-related Financial Disclosures (‘TCFD’)
framework, we are pleased to publish this disclosure consistent with
the TCFD recommendations for the first time.
TCFD is structured into four themes: Governance,
Strategy, Risk Management and Metrics &
Targets, and the 11 supporting disclosure
recommendations. In this climate-related
financial disclosure we have complied with
the requirements of Listing Rule 9.8.6R and
all 11 TCFD supporting recommendations.
These core themes and recommendations
inform the classification of climate-related risks
and opportunities into two major categories;
transition and physical. The transition risks are
associated with the decarbonisation of the
global economy, and physical risks are those
associated with acute and chronic impacts of
the changing climate. We will continue to
monitor TCFD as it develops over the coming
years and respond accordingly where
necessary. In this regard, the B&M business
model and operating structure allow us to
be highly responsive and implement
changes quickly.
Overview
The threat of climate change to businesses
is mounting, and action is needed. As
documented on page 10 of this Annual Report,
we have a growing presence in the retail
market, and the actions we take can impact
the sector. By selling a variety of products,
many of which are sourced from Asia, we are
responsible for 1,491,137 tCO2e total carbon
emissions and acknowledge that these
emissions contribute to the impacts of climate
change. To reduce the emissions across our
operations, we have set a target to reduce
Scope 1 and 2 emissions by 25% by 2030. We
have also set a Scope 3 supplier engagement
target that aims to have 67% of our suppliers
(by spend) set science-based targets by 2027.
We use the Metrics and Targets outlined on
page 55 to monitor and track progress toward
reducing our emissions.
To understand how climate change impacts
B&M, we use the TCFD reporting framework.
Climate-related impacts could potentially put
our financial planning and business strategy at
risk. To assess the severity of climate change on
our business, we modelled the financial impact
of each climate-related risk identified in our risk
assessment. We drew upon knowledge from
our finance department and those colleagues
within the business who best understand our
operations. Understanding the financial impact
climate change may have on our business is
helpful for our stakeholders to make informed
decisions. Overall, we have determined that the
risk posed by climate change to the Group is
low. Despite this, we strive to continue reducing
our impact on the climate, as detailed below.
Governance
Board oversight
The B&M Board is responsible for overseeing
management’s response to climate-related
impacts and ensuring action plans are embedded
into the business strategy and future financial
planning to mitigate climate-related risks and
capitalise on opportunities. The Board considers
the threat of climate change and has been
actively involved in taking steps to address its
potential impact through assigning day to day
responsibilities to the executive directors, setting
a Net-Zero ambition and signing up to the
Science-Based Targets Initiative (SBTi). For the year
ahead, the Board retains overall responsibility for
climate governance and action as this is integrated
into our new ESG strategy. ESG as a whole,
including climate change, is now a standing
agenda item at all six Board meetings a year,
having been discussed at every Board meeting
since September in FY22.
The Board is actively involved in key decision
making at B&M and considers climate-related
issues when doing so. This year, key milestones
have been achieved, as illustrated by our newly
stated ambition to be Net-Zero by 2040 to align
with the British Retail Consortium’s Climate
Action Roadmap. We will validate our SBTi
targets in June 2022 and intend to set Scope 1
and 2 absolute reduction targets in line with a
well-below 2°C warming scenario; this equates
to a 25% reduction by 2030 (compared to a 2020
baseline). We are aware that as of July 2022, only
1.5°C aligned targets will be accepted by the
SBTi and plan to review our targets in five years
to align with the latest criteria.
Management structure
The Board delegates the implementation
of processes and controls concerning the
management of climate-related risks to the
executive and operational senior management
of the UK and French businesses. The executive
management is responsible for identifying and
evaluating new and emerging climate-related
risks and assigning mitigating actions. The
potential impact and likelihood of climate-
related issues are assessed, and significant
areas for concern are reported to the Board
on an ongoing basis. In FY22, we appointed
our first Sustainability Manager, who reports to
the CEO and is responsible for overseeing our
day-to-day progress concerning climate action.
The Sustainability Manager works across the
business, interacting with a number of
departments through our flat management
structure. Together with the General Counsel,
Group Internal Audit, Investor Relations and
Finance teams, the Sustainability Manager will
work with third-party experts to review climate
issues annually and assess the potential
financial impact of climate-related risks over
the short, medium and long-term until 2050
as outlined on page 50. This structure helps to
ensure quick and decisive action across our
operations, and we have adopted the same
approach for managing climate-related risks
and opportunities. As opposed to holding
routine formal meetings, we encourage
constant communication and collaboration
across all levels of management.
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Monitoring risk
The Audit & Risk committee, together with the
support of the Group Internal Audit department
and the Group’s General Counsel, is responsible
for monitoring risks and overseeing progress
against goals and targets for addressing
climate-related issues. In the risk management
section on page 53, we identified ten transition
risks, two overarching physical risks and one
opportunity. The Group already has an
established strategic and more detailed
corporate risk register. Instead of adding
climate change as a standalone risk, we will
consider all corporate risks through a climate
lens. The Group Internal Audit team, alongside
our Sustainability Manager, monitors our
identified climate-related risks and opportunities
on an ongoing basis to consider how each
issue impacts strategic risks already identified.
This approach was taken since climate change
has been identified as representing a low risk
overall; therefore, it is a case of keeping it under
consideration as we evaluate the ongoing
changes to risk.
Furthermore, climate change was considered at
the Group’s annual strategy day in March 2022
when reviewing the principal risks relevant to
the Group. It was determined, at this time, that
climate change does not represent a principal
risk given the detailed risk assessment
performed by management this year and how
the outcome of that assessment compares to
the principal risks already identified. However,
this assessment will be reviewed at least
annually by management and the Board.
Figure 1: The B&M governance structure for climate-related risks and opportunities.
The B&M Group Board
Chairman, 2 Executive Directors and 4 Independent Non-Executive Directors
The Board retains overall responsibility for oversight of all ESG-related topics, including climate change.
The Group’s General Counsel attends all Board meetings.
Executive Management
Executive Directors of the Group support the Board’s climate-related ambitions. They are supported on an ongoing
basis by various senior management team members who meet periodically to discuss and review relevant topics.
In particular, ESG is a standing agenda item at all Board meetings, and climate-related topics form a specific part
of our ESG strategy.
Sustainability Manager
Reports to the CEO. With support from relevant central functions within the business, the Sustainability Manager
works with third-party experts to review climate issues.
Driving Strong Shareholder Returns
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Strategic Report Corporate GovernanceFinancial Statements Task Force on Climate-related Financial Disclosures continued
Strategy
At B&M, we have a part to play to reduce the
impact of our operations on the environment.
The TCFD framework helps us understand
and manage the climate-related risks
and opportunities we face. Following its
recommendations, we used climate scenarios
to examine a range of possible future global
warming pathways to identify the physical risks
and opportunities over the short, medium, and
long term. In total, we identified ten potential
transition risks, two overarching physical risks
and one opportunity. The scenario analysis then
highlighted five transition risks, two physical
risks, and one opportunity that could significantly
impact the business over these time horizons.
Each climate-related consideration was modelled
across all three of these scenarios. The scenario
in which the risk or opportunity is anticipated to
have the highest potential impact is displayed in
Tables 2,3 and 4, alongside its classification.
Step 3 of the risk management process details
how we determine materiality through our risk
classification process. The steps we have taken
to identify and manage each climate-related
issue have been based on our existing risk
management process to ensure a consistent
and efficient assessment and categorisation.
Climate-related considerations labelled with
an A or B rating are deemed significant.
A consideration classified as “A” represents an
immediate risk, and a risk management plan
is required. Alternatively, a “B” classification
indicates that action and contingency plans
should be considered. Basing our approach
upon our existing process of identifying risks
and opportunities enabled us to build an
internal climate-risk impact framework. This
internal framework will be continually updated
in line with business growth and will look to
incorporate new and emerging risks as we
expand our analysis.
We engaged a third-party specialist to run
climate scenario analysis with our defined
climate scenarios and time horizons (Table 1)
across the Group’s operations in line with the
identified transition and physical risks. The
findings were presented in a Climate-related
Risk Management Workshop in February 2022
to the Executive Directors, General Counsel,
Head of Investor Relations and Sustainability
Manager. Furthermore, each climate-related
consideration has been considered regarding
its possible impact on the Group’s financial
planning. In 2022 we will build upon our existing
process and further develop our financial
climate risk assessment and look to address
how financial impact modelling impacts specific
areas of our operations.
Our climate scenarios were modelled using
data from the Intergovernmental Panel on
Climate Change’s (IPCC) Representative
Concentration Pathways, the International
Energy Agency’s World Energy Model and
other existing models. We used the scenarios
and time horizons in Table 1 to understand our
vulnerability to the impacts of climate change
and how they vary over time.
The climate modelling considered the transition
risks facing B&M at a Group Level and the
physical risks at a site level across the UK
and France. The physical risks were then
amalgamated into overarching physical risk
categories at the Group level to help understand
their material impact. The physical effects of
climate change can significantly change our
world. In addition, we recognise that policy
is crucial in transitioning to a low carbon
economy when considering potential future
risks and opportunities.
Wider industry and national commitments such
as the British Retail Consortiums (BRC) Net-Zero
by 2040 and the UK’s Net-Zero by 2050 will be
essential to lower global emission levels. We
have set an ambition to align with the BRC to
reduce potential transition risks to our business
and the physical impacts that manifest over
time. To address the impacts of climate change,
investment has already been made. For instance,
the Group has an ongoing programme of
installing Building Energy Management Systems
and LED lighting across the B&M estate to
reduce our Scope 1 and 2 emissions.
Longer-term, the Group is committed to
continuing its growth strategy. There is a long
runway of growth for the UK B&M fascia,
with a long-term target of at least 950 stores.
The rollout of Heron Foods stores will also
continue, and there remains significant growth
potential in France, given the progress made
in FY22. The Group is, however, committed
to achieving these growth ambitions in an
environmentally friendly way and is increasingly
mindful of climate-related considerations when
making important strategic decisions.
Table 1: The Group’s defined Climate Scenarios and Time horizons.
Climate Scenarios
Below 2 °C – This scenario envisions a collaborative approach from governments and businesses to reduce greenhouse
gas emissions. Innovation, coordination and strong climate leadership lead to an alignment with the Paris Agreements’
ambition to avoid dangerous climate change by limiting global warming to well below 2 °C of warming above pre-industrial
levels. These changes generate high levels of transition risks but limited physical risks.
Between 2-3 °C – Commitments and pledges are made in this scenario, similar to ones seen during COP26, such as
the declaration on Forests and Land Use which had 141 countries, including Brazil and China, sign. However, not enough
action is taken, and the introduced policies fail to spark the unanimous transition to a low carbon economy. Uncoordinated
government action means this scenario is associated with the highest level of transition risks and increased severity of
physical risks compared to the Below 2 °C scenario.
Time Horizons
Short-term
(2020-2025)
Medium-term
(2025-2035)
Above 3 °C – Alternate geopolitical issues and a lack of interest mean minimal action on climate change is taken for the
next few decades. No sector is decarbonised, and fossil fuels remain the dominant energy source allowing greenhouse
gas emissions to rise unchecked. Businesses face limited short- and medium-term transition risks but the most severe
physical impacts possible.
Long-term
(2035-2050)
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Table 2: Material Transitional Risks posed to the Group’s operations.
Transition Risk
Scenario Timeline Classification Mitigating Action
Financial Impact
Variable
across all
scenarios
Short and
Medium-
term
(2020-2035)
Below 2°C Medium-
term
(2025-2035)
Below 2°C Medium-
term
(2025-2035)
Below 2°C Medium-
term
(2025-2035)
A
A
A
B
Stakeholder Concern – We know that
our stakeholders want to see us take
proactive climate action, and failing
to meet their expectations could harm
our external and internal reputation.
Due to this risk potentially arising
with any one of our stakeholders,
a medium likelihood and impact
label is provided.
Cost to transition to lower emission
products – More sustainable products
are likely to come onto the market
over the coming years. The changing
customer demand means we need
to be aware of the potential cost
of transitioning to lower emission
products. However, we expect such
changes to gradually occur over time,
allowing us to evaluate our response.
The risk is labelled as a medium
impact with a high likelihood.
Cost to transition to lower emission
technology – Our aim to reduce our
emission intensity means we need to
be aware of the cost of transitioning to
lower emission technology. However,
we expect such changes to gradually
occur over time, allowing us to
evaluate our response. The risk is
labelled as a medium impact with
a high likelihood.
Substituting existing products and
services to lower emission options
– Shifting to more efficient technology
and sustainable products may require
a write-off or the retirement of existing
assets at a high impact on businesses
and increased capital investments
over time. As the company grows,
we will look to gradually introduce
more energy-saving schemes and
forecast a low likelihood of any
sudden asset retirement.
Engaged a third party
to ensure B&M publish
and comply with all
relevant climate-related
reporting requirements
and have appointed
a new Sustainability
Manager position.
We already partner
with many leading
brand names and are
proud to showcase their
sustainable products
in our stores, and we
hope to do more of
this moving forward.
In addition, we have
a broad and agile
supplier base who
can manufacture own
branded products
on our behalf.
We plan to evaluate
more energy-saving
opportunities and
schemes to counteract
this cost, alongside
existing stores’ ongoing
refurbishment and
maintenance.
At B&M, we have a high
rate of stock turn and
tightly control the level
of stock cover to ensure
the risk of stock write-off
is minimised.
The financial impact largely relates
to increased administrative costs
to ensure ongoing compliance.
The cost of external specialists is
negligible in the context of Group
profitability. The Sustainability
Manager role has been filled by
expanding an existing colleague’s
role rather than recruiting an
additional colleague.
Changes to the product mix have
the potential to impact the gross
margin achieved by the Group;
however, this could be both a
positive or a negative impact
depending on the margin profile
of any new product compared to
the existing assortment. Any change
to the sales mix is likely to take place
gradually.
The ongoing rollout of LED and
BEMS is expected to cost the
business. The capital investment
required by these initiatives already
forms part of the Group’s strategic
planning projections. Further
technological advancements are
likely to occur slowly and should
become more cost-effective
over time.
If there is a significant shift in
demand towards lower emission
products, such changes are likely
to occur gradually over time,
and therefore we will have the
opportunity to sell through existing
stock without the need to write off
the carrying value.
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Strategic Report Corporate GovernanceFinancial Statements Task Force on Climate-related Financial Disclosures continued
Table 2: Material Transitional Risks posed to the Group’s operations continued.
Transition Risk
Scenario Timeline Classification Mitigating Action
Financial Impact
Variable
across all
Scenarios
Short and
Medium-
term
(2020-2035)
B
We anticipate the need
to continually review
our supply chain routes,
suppliers and energy-
saving opportunities.
Increased cost of raw materials –
Climate change may disrupt our
energy and stock suppliers, increasing
costs. This risk could impact several
business areas, and although we
are not manufacturers, we must
still be aware of our supplier input
cost prices. Given the supply chain
disruption seen in FY22, we assign
a high likelihood of this risk occurring
with a medium impact on B&M due
to our agile supply chain and strong
supplier relationships.
In terms of raw materials, we sell
predominantly branded products
that we buy in large volumes and
are well-positioned to ensure we
remain competitive in the market.
There is also scope to pass through
input cost inflation through
increasing selling prices,
notwithstanding the need to
maintain our value for money
proposition. In terms of energy costs,
these represent a relatively minimal
part of our overall cost base, being
less than 1% of Group sales.
Table 3: Material Physical Risks posed to the Group’s operations.
Physical Risk
Scenario Timeline Classification Mitigating Action
Financial Impact
Acute weather events are event-
driven such as the risk of increased
severity of flooding. Extreme weather
can damage property and assets,
which could cause significant
operational impacts if our main
Distribution Centres (DC) in Bedford
and Liverpool are compromised.
However, the likelihood of extreme
weather events at our DCs across the
UK and France is modelled to be low.
Above 3°C
Long term
2035-2050
B
Carry-out specific flood
risk assessments for our
Distribution Centres and
continually monitor flood
risk at sites for long-term
impact. Conduct annual
scenario analysis.
Above 3°C
Long term
2035-2050
B
Chronic (sea level rise), climate-
related issues often manifest over
time. Long term shifts in climate trends
may lead to increased insurance
premiums and the potential for
reduced availability of insurance
on assets in high-risk locations.
We categorise this risk as a medium
impact and likelihood.
Our dedicated in-house
maintenance and store
operations teams
constantly monitor
events at individual
stores. Conduct annual
scenario analysis.
We have comprehensive business
interruption and property damage
insurance coverage. The average
B&M UK store sales equate to
c£6m compared to total Group
revenue of c£4.7bn, therefore
the financial impact of damage
to an individual store is relatively
insignificant. Our total insurance
cover relating to business
interruption would provide enough
headroom to source alternative
warehousing space, replenish
destroyed stock and be reimbursed
for potential lost sales if a DC
became unusable. Having multiple
warehouses also avoids having
a “single point of failure” since most
SKUs are held in more than
one location.
If long term risk factors such as
those identified here started to
cause recurring problems at stores,
we would look to relocate to an
alternative location within the
same locality. This is one of the
reasons why our store estate is
predominantly leased. The average
unexpired lease term of the estate
is c6 years, offering good flexibility.
The comments above regarding
business interruption insurance
also apply here.
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Table 4: Material Opportunities posed to the Group’s operations.
Opportunity
Scenario Timeline Classification Mitigating Action
Financial Impact
Below 2°C Medium-
term
(2025-2035)
A
Cost to transition to lower emission
technology – Our aim to reduce our
emission intensity means we need
to be aware of the potential cost
of transitioning to lower-emission
technology for energy efficiency gains.
Although this is an initial risk to the
business, we see it as an opportunity
over the medium term.
Consider more
energy-saving initiatives.
We will continue to
engage third-party
specialists to monitor
the most cost-effective
options on the market
for transitioning
our technology.
The ongoing rollout of LED and
BEMS continues to deliver strong
returns on investment and energy
efficiency savings, with a payback
period of <3 years for both
initiatives. As such, the financial
impact of this rollout is a net
positive over the medium term.
Risk Management
Our Audit & Risk Committee has helped the Board
develop an approach to risk management that
incorporates risk appetite, the framework within
which risk is managed and the responsibilities
and procedures pertaining to the risk or
opportunity. The identification and management
of climate-related risks were informed by this
existing risk management framework,
developed over time internally at B&M.
Step 2 – Assessing the business impact:
We ran financial impact modelling on each
climate-related risk and opportunity identified,
drawing upon expertise from across the
business functions and overseen by Finance.
We aim to deliver long-term sustainable growth
and therefore consider the business’s long-term
viability in terms of climate-related issues,
including our store growth plans, our net-zero
ambitions and broader ESG strategy.
Step 1 – Identifying the risks: Initially, we ran
Climate-related Risk Management Workshops
with Group Internal Audit and the Sustainability
Manager, alongside our CEO and CFO, and
identified ten potential transition risks, two
overarching physical risks and one opportunity.
We intend to repeat this workshop each year
moving forwards. We evaluated each risk and
opportunity using our climate scenario analysis
to determine the potential impact, likelihood,
and risk classification. We decided on which
scenarios to use based on the TCFD’s reporting
framework and available climate data. The
three scenarios were chosen as they are
consistent with global projections. The below
2°C aligns with UK ambitions, our 2-3°C
scenario is where current global pledges fall,
and our above 3°C allows us to plan for the
most severe impact on the Group.
Step 3 – Classifying risks: Each climate-related
issue was classified using our rating system to
highlight the implications of a risk occurring. Our
risk classification process ranks risks as either
an A, B, or C&D. Risks ranked as either an A or B
are defined as material and included in tables
2,3 and 4. A site classified as “A” represents an
immediate risk, and a risk management plan
is required. Alternatively, a “B” classified site
indicates that action and contingency plans
should be considered. Finally, a C&D
classification states that the risk is tolerable but
should continue to be reviewed and monitored.
We used our existing classification process to
give each climate-related issue a likelihood and
impact rating, which were then combined to
provide an inherent risk classification.
Step 4 – Addressing the risk: Our analysis
shows that the likelihood of climate-related
risks impacting our overall operations in a
significant manner is low. Despite this, adequate
mitigating actions have been initiated to develop
greater strategic resilience. The potential risk
management options were appraised, and
a risk management response was determined
for each climate-related issue. We do not
underestimate that residual risks from climate
change will always remain after we address
them. Control actions can be implemented to
prevent, reduce or mitigate risk.
Step 5 – Monitor risk: We have embedded a
climate change perspective into the ongoing
assessment of our internal corporate risk
register and will continue to review our risk
management process. Our climate risk impact
framework will be continuously updated and
monitored, with full reviews occurring on an
ongoing basis throughout the year, facilitated
by the Group Internal Audit function. To ensure
we are fully prepared for climate change, we
will embed annual climate scenario analyses
into our existing risk management framework
and financial planning processes to identify
future risks and ensure adequate mitigation.
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Metrics & Targets
Metrics
We measure our climate impact using metrics
that include greenhouse gas emissions, energy
usage and transport & distribution efficiency.
We have been calculating our Scope 1 and 2
greenhouse gas emissions since FY15 and
specifically under the UK Streamlined Energy &
Carbon Reporting (SECR) since 2018. Our SECR
report summary can be found on page 45.
We are committed to reducing our emissions
footprint and the impact of our operations on the
environment. To do so, we first must measure
and understand our impact. We are pleased to
have expanded our greenhouse gas footprint
calculation to include Scope 3 emissions for the
first time this year. Scope 3 emissions have been
calculated for our FY21 (April 2020 – March 2021)
and FY22 (April 2021 – March 2022) operations.
Our Scope 3 emissions have been calculated
consistent with the Greenhouse Gas Protocol
(GHG Protocol) Corporate Value Chain (Scope 3).
Of the 15 Scope 3 categories, 10 were identified
as applicable to B&M’s business. Of these
applicable categories, only Category 12:
End-of-life Treatment of Sold Products was
not quantified due to a lack of data regarding
the packaging of products. Data regarding
packaging is being collected throughout 2022,
and we intend to include this in the FY23
Scope 3 calculations. For the nine other
applicable categories, these continue to be
calculated on an annual basis. Each year
we will strive to improve the accuracy of our
Scope 3 calculations, for example, by engaging
with suppliers to gather more specific data
regarding goods and services provided to us
and conducting employee surveys to gather
specific data on commuting patterns.
A fundamental balancing act at B&M is
delivering our growth strategy through our store
opening programme whilst at the same time
looking to mitigate our environmental footprint
and reduce emissions. By understanding the
emissions associated with our value chain,
we are better equipped to set realistic targets
and identify areas for reduction.
Reducing our emissions is the Group’s core
focus for managing our climate-related risks
as it impacts every aspect of our operations.
Consumption data is collected across the B&M
estate to measure our energy usage and
initiatives are underway to reduce it. We monitor
miles travelled, vehicles in our fleet, driving
styles and routes to measure the emissions
and environmental impact of our transport &
distribution fleet.
The key climate-related risks identified in Table 2
are transition risks in our Below 2°C scenario
that can potentially impact our stakeholder’s
concerns, products and existing technology.
To help manage these risks, we appointed a
new Sustainability Manager position to evaluate
more energy-saving opportunities, monitor
potential sustainable product partnerships,
review our supply chain and work
collaboratively with other colleagues within the
business. The targets in Tables 5 and 6 show
how we will track our progress. We have also
engaged a third-party specialist to advise us
on our sustainability reporting and initiatives to
reduce the environmental impact and related
emissions of our products and technology. The
initiatives we intend to roll out will help reduce
the carbon emissions relating to our supply
chain, transport fleet, energy usage, and
products. Our carbon emission reduction targets
enable us to address the climate-related risks
referred to in Tables 2 and 3. We will measure
this reduction annually, and by communicating
our progress, we intend to satisfy any
stakeholder concerns regarding our exposure to
climate-related risks.
Physical risks have been identified in our Above
3°C scenario, most importantly flooding and
sea-level rise impacts. The Group will measure
this risk through flood risk assessments at our
Distribution Centres and ongoing monitoring at
an individual site level by the store maintenance
and property teams.
Targets
Our Scope 1 and 2 emissions represent 6.5%
of our total group emissions, with our Scope 3
emissions representing the remaining 93.5%. To
align with the British Retail Consortium’s Climate
Action Roadmap, we aspire to achieve net-zero
Scope 1, 2 and 3 emissions by 2040. This
pathway is more ambitious than the Science-
Based Targets Initiative’s (SBTi) 1.5°C and well-
below 2°C (WB2C) scenarios and will require
significant effort to decarbonise our value chain.
Our focus will be on collaboration with our
supply chain to decarbonise our goods and
services as far as possible.
In the short term, we plan to reduce our
operational (Scope 1 and 2) emissions on an
absolute basis and engage with our suppliers,
as per SBT guidelines. Our SBTs are due to be
validated by the SBTi in June 2022. We plan on
committing to achieving a 25% reduction in Scope
1 and 2 emissions by 2030 (from a 2020 baseline),
aligned with the SBTi WB2C scenario. As of July
2022, we are aware that the SBTi is updating its
minimum criteria to a 1.5°C scenario and intend to
update our targets in five years as required by the
SBTi. We have set a short-term Scope 1 and 2
emission reduction pathways, which follow a
WB2C scenario up to 2027 and then a 1.5°C
scenario from 2027 to 2030. Our short-term
Scope 3 target is based on engagement with
our suppliers; as per the SBTi guidelines, we aim
to have 67% of our suppliers (based on spend)
set science-based targets by 2027.
Table 5: Scope 1, 2 and 3 Emissions.
Emissions Scope
Scope 1
Scope 2 (location based)
Scope 3 (2021)
Total
Gross Emissions
(tCO2e)
Percentage of
Total Emissions
51,108
45,649
1,394,380
1,491,137
3.4%
3.1%
93.5%
100.0%
Reduction
Target
25% reduction by 2030
Engage with >67% of suppliers by 2027
Ambition to be Net Zero by 2040
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Table 6: Targets used to assess our impact on the environment.
Area
Target
Progress
Greenhouse
Gas Emissions
Reduce Scope 1 & 2 emissions by 25% by 2030, as per the SBTi
well-below 2°C scenario.
Scope 3 supplier engagement target aims to have 67%
(by spend) of suppliers set their own science-based target
by 2027.
Energy Usage
Improve the energy efficiency of B&M UK operations by rolling
out BEMS across 80% of the estate by FY27 and LED lighting
across 100% of the estate by FY27.
Transport and
Distribution
Improve the efficiency of our transport and distribution service.
Continually update our distribution fleet and proactively
manage routes to reduce associated emissions.
In 2022, we introduced robust data collection processes
and calculated our Scope 3 emissions for the first time,
reporting on our full Scope 1, 2 and 3 greenhouse
gas inventory.
Greenhouse gas emissions from UK operations decreased
in absolute terms, despite opening 28 net new stores in
the year.
In 2022 we committed to setting science-based targets
through the Science-Based Targets Initiative. These are
due to be validated in June 2022.
Energy usage from UK operations decreased in absolute
terms, despite opening 28 net new stores in the year.
We created a Sustainability Manager role to
oversee technology installation further to reduce
energy consumption.
Building Energy Management System (“BEMS”) is now
installed in 310 B&M UK stores to help better control their
energy consumption and drive further efficiencies.
Installed LED lighting in 181 stores and we aim to roll this
out across the whole estate.
Minimised miles travelled and associated GHG
emissions by servicing c.250 stores from our Bedford
distribution centre.
Ongoing training is aimed at HGV drivers to ensure they
understand the environmental impact of the sector and
their role in reducing the effect.
Next steps
We aim to develop our TCFD disclosure for the
year ahead by widening our climate scenario
analysis to include potential impacts on our key
supply chain routes. In addition, we aim to embed
further consideration of climate-related risks and
opportunities into our financial planning.
Introducing a linkage between the remuneration
of executive directors and the achievement of
metrics relevant to our new ESG strategy will
continue to be considered by the Remuneration
Committee. When determining their approach,
the Committee will have regard for industry
best practices and the current status of our
evolving ESG strategy. For FY23, the executive
management team will have an ESG-related
target in their annual incentive plan objectives.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
55
Strategic Report Corporate GovernanceFinancial Statements Stakeholders and Section 172 statement
Our stakeholders’ interests
This report describes how the Directors have had regard to the interests of
stakeholders and other matters referred to in section 172(1) (a) to (f) of the
Companies Act 2006 in relation to their decision making.
The Company is a Luxembourg registered
company and is not subject to the Companies
Act 2006 or to the Companies (Miscellaneous
Reporting) Regulations 2018 (the “Regulations”).
It is however subject to the UK Corporate
Governance Code 2018 (the “Code”). The Board
considers the Regulations to be reflective of
best practice. Accordingly, it has followed that
practice where practical, while maintaining its
status as a Luxembourg registered company.
Stakeholders
Achieving our vision and fulfilling our purpose
(as set out opposite) means that evaluating and
considering the interests of our stakeholders
in our decision making are key to the Group’s
success. The Group’s key stakeholders include its
customers, colleagues, suppliers, the people and
communities where it trades and its investors.
The Board uses a number of mechanisms
through which it is able to determine and
appraise the interests of stakeholders to inform
discussion by the Board and its decision-making.
This includes a range of activities from regular
management reports through to other forms of
direct engagement by members of the Board.
We describe below how we have engaged
with the particular key stakeholder groups
and considered their interests in the last year.
We have also provided further details of our
engagement with colleagues in our Corporate
Social Responsibility Report in the section on
Workforce Engagement on page 39.
Why we engage
How we engage, measure and monitor
Examples of actions in 2022
Examples of outcomes in 2022
Links and more information
Customers
Providing great value to our customers is our
core purpose as a business. We monitor and
respond to our customers preferences and
needs to ensure we maintain a compelling
product offering and price proposition at
our stores.
Colleagues
Engagement with our colleagues is key to
understanding how the business can support
them in carrying out their roles effectively, make
improvements in our business and recognise
and reward exceptional performance.
Monitoring our like-for-like (“LFL”) sales trends.
Commissioning third party customer exit data and card provider
customer transaction analysis to monitor customer demand,
preferences and requirements.
Holding in-store promotional themed events to measure customer
response and reaction to extra value propositions in different
product areas.
Regular engagement programmes including colleague listening groups,
apprentice listening groups, new store and distribution centre colleague
surveys and bi-annual business updates from management.
Twice yearly colleague surveys for Retail, Distribution and Central
Support colleagues in the UK and annual colleague survey in France.
Development days and structured career progression programmes
including promotion paths to Store Manager and Area Manager roles.
Twice yearly updates to the Board on colleague engagement by Carolyn
Bradley, one of our Non-Executive Directors, as the Designated Director
for Workforce Engagement.
The Board reviews LFL sales data every month in the
Throughout the pandemic our buying teams reprioritised
Group’s management account reports. This is analysed
orders with suppliers and we reorganised labour and picking
across each business fascia, the Grocery and General
in our distribution centres to make sure our stores were
Merchandise product split and for each main product line
replenished with those stocks which were in high demand
within those categories.
regularly to keep serving the needs of our customers.
See the Customer
Feature on pages
14 to 15.
The Company took decisive action in overcoming supply
The 2-year LFL suggests that the Company has held on to a
chain issues to ensure the availability of stock in its stores.
large number of the new customers who discovered us in FY21.
The business continued with listening groups in its Retail,
From our feedback with colleagues through our various
Distribution and Central Support operations and career
engagement processes we identify key themes of “What You
progression training for colleagues looking to apply for
Said” by colleagues and responses to those by the business in
Retail Management, Distribution Centre manager and
relation to “What We Did”. Key themes from feedback included
first time manager roles in our Support Centre.
better communication, improving benefits and recognition and
enhancing IT systems. Examples of outcomes from that process
The Bi-annual Employee Survey “Your Say” was
this year included:
completed this year by our B&M UK and Heron Foods
•
roll out of a new colleague app used to increase
colleagues across all the main operating functions of
engagement and share important updates;
those businesses. We continued to see year-on-year
• enhancements to IT systems and infrastructure; and
improvement to colleague satisfaction ratings measured
•
recognition of 24,000 store and distribution colleagues
against five key questions: (i) what is expected at work;
by awarding a discretionary additional week’s pay in
(ii) if colleagues have all information, knowledge, skills
January 2022.
See the
Colleagues
section in the
Corporate Social
Responsibility
report on pages
38 to 40 and
the standalone
ESG Report.
and resources to do their jobs well; (iii) if colleagues would
recommend B&M as a good place to work; (iv) are they
happy to work at B&M; and (v) if managers have spoken
about development in the last 12 months. In addition,
we carried out our first B&M France colleague survey in
the year.
56
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Our
vision
+
Our
purpose
=
Our
values
To grow our B&M UK business
to at least 950 stores, and to
successfully deploy our direct
sourcing limited assortment
business model in France so
that we can maximise the
potential of that business.
To deliver great value to our
customers, so that they keep
returning to our stores time and
time again, in order to generate
growth in our like-for-like sales,
profits and cash and long term
value to our investors.
Simplicity, trust, fairness and being proud of what we offer to
customers are at the heart of our business as we strive all year round
to deliver the lowest prices we can for the best-selling products which
our customers need or want.
We are proud to operate in many different communities and areas,
providing access to our variety goods offering locally, helping
household budgets go that little bit further and creating new jobs
every time we open a new store.
Why we engage
How we engage, measure and monitor
Examples of actions in 2022
Examples of outcomes in 2022
Links and more information
Customers
Providing great value to our customers is our
Monitoring our like-for-like (“LFL”) sales trends.
core purpose as a business. We monitor and
respond to our customers preferences and
Commissioning third party customer exit data and card provider
needs to ensure we maintain a compelling
customer transaction analysis to monitor customer demand,
product offering and price proposition at
preferences and requirements.
our stores.
Holding in-store promotional themed events to measure customer
response and reaction to extra value propositions in different
product areas.
Colleagues
Engagement with our colleagues is key to
Regular engagement programmes including colleague listening groups,
understanding how the business can support
apprentice listening groups, new store and distribution centre colleague
them in carrying out their roles effectively, make
surveys and bi-annual business updates from management.
improvements in our business and recognise
and reward exceptional performance.
Twice yearly colleague surveys for Retail, Distribution and Central
Support colleagues in the UK and annual colleague survey in France.
Development days and structured career progression programmes
including promotion paths to Store Manager and Area Manager roles.
Twice yearly updates to the Board on colleague engagement by Carolyn
Bradley, one of our Non-Executive Directors, as the Designated Director
for Workforce Engagement.
The Board reviews LFL sales data every month in the
Group’s management account reports. This is analysed
across each business fascia, the Grocery and General
Merchandise product split and for each main product line
within those categories.
Throughout the pandemic our buying teams reprioritised
orders with suppliers and we reorganised labour and picking
in our distribution centres to make sure our stores were
replenished with those stocks which were in high demand
regularly to keep serving the needs of our customers.
See the Customer
Feature on pages
14 to 15.
The Company took decisive action in overcoming supply
chain issues to ensure the availability of stock in its stores.
The 2-year LFL suggests that the Company has held on to a
large number of the new customers who discovered us in FY21.
The business continued with listening groups in its Retail,
Distribution and Central Support operations and career
progression training for colleagues looking to apply for
Retail Management, Distribution Centre manager and
first time manager roles in our Support Centre.
The Bi-annual Employee Survey “Your Say” was
completed this year by our B&M UK and Heron Foods
colleagues across all the main operating functions of
those businesses. We continued to see year-on-year
improvement to colleague satisfaction ratings measured
against five key questions: (i) what is expected at work;
(ii) if colleagues have all information, knowledge, skills
and resources to do their jobs well; (iii) if colleagues would
recommend B&M as a good place to work; (iv) are they
happy to work at B&M; and (v) if managers have spoken
about development in the last 12 months. In addition,
we carried out our first B&M France colleague survey in
the year.
From our feedback with colleagues through our various
engagement processes we identify key themes of “What You
Said” by colleagues and responses to those by the business in
relation to “What We Did”. Key themes from feedback included
better communication, improving benefits and recognition and
enhancing IT systems. Examples of outcomes from that process
this year included:
•
roll out of a new colleague app used to increase
engagement and share important updates;
• enhancements to IT systems and infrastructure; and
•
recognition of 24,000 store and distribution colleagues
by awarding a discretionary additional week’s pay in
January 2022.
See the
Colleagues
section in the
Corporate Social
Responsibility
report on pages
38 to 40 and
the standalone
ESG Report.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
57
Strategic Report Corporate GovernanceFinancial Statements
Stakeholders and Section 172 statement continued
Why we engage
How we engage, measure and monitor
Examples of actions in 2022
Examples of outcomes in 2022
Links and more information
The Board continued to support the new store openings
We opened 34 new B&M UK stores and 16 new Heron Foods
programme of its B&M and Heron Foods businesses
stores (including relocations) in the financial year under review,
in the UK. That also includes the relocation of stores in
notwithstanding the challenges to the construction and
existing areas where better real estate opportunities exist,
contracting sector during the pandemic.
and capital and maintenance expenditure on stores
ear-marked for refurbishment within the existing estate.
In the UK this year we created over 650 new retail jobs across
The opening of new stores and relocations of stores
475 jobs have been created in stores, distribution centres
(often to larger premises) create new jobs and promotion
and central support functions in France.
opportunities at those stores and also in our distribution
centres, while our business continues to grow.
With the rising cost of living, our value-for-money proposition
our B&M UK and Heron Foods businesses. In addition,
plays an important role in helping a large number of customers
afford their everyday essentials.
See the Social
section in the
Corporate Social
Responsibility
Report on pages
41 to 42.
There has been a continuous rolling programme of
The Company has continued to outsource the audit checking
ensuring suppliers meet appropriate levels of external
processes to Multi Lines International Ltd (‘MTL’) in relation to
audit social compliance checks. This is important to
the Group’s own direct/non-MTL sourced suppliers. This has
the welfare of the employees of our suppliers, and the
enabled the Group to apply a consistent and established
maintenance of their ongoing trading relationships
methodology and utilise MTL’s expertise and connections
with our Group.
across Asia on our behalf.
See the Suppliers
section of the
Corporate Social
Responsibility
Report on pages
42 to 44.
As referred above, the B&M and Heron Foods UK
The B&M UK business has continued to use its main store
businesses have continued with their new store openings
fit-out contractors where available to carry out new store
and existing store refurbishment programmes during
opening and existing store estate refurbishment works during
the year. This is important to our main building services
the year. That has provided them with a level of ongoing
contractors, many of whom have worked on stores with
work-streams.
us for several years.
The Board reviewed its financing structure during the year
As a result the Group successfully completed a new
with regard to diversifying the Group’s maturity profile and
£250 million seven-year 4.00% bond issue in November 2021
in support of our overall leverage levels.
to complement our existing £400 million bond facility and
£300 million term loan which both mature in 2025.
The Group continued to generate strong results against
pre-pandemic levels in the financial year under review.
The company declared a special dividend of 25p per share in
The Board considered within the context of its capital
December 2021 which was within the Group’s stated leverage
allocation policy and its debt leverage ceiling policy,
ceiling of 2.25x net debt to adjusted EBITDA.
See the Viability
Statement on
page 75 and
also the Financial
review on page
20.
the opportunity to make further returns to shareholders
in addition to its ordinary dividend policy.
Communities
The relationships we have with the communities
where we operate our stores and distribution
centres are key to the sustainable development
and growth of our business. We want to serve
customers locally with what they want and at
bargain prices. We also want to support the
communities where we operate by providing
jobs and career opportunities locally.
Evaluating real estate opportunities for opening new stores in
catchments where we are either under-represented or not represented
at all. This provides jobs and access to our value-led proposition to more
communities every time we open new stores.
Providing support for the community at local and national levels where
we can contribute to society more generally. Each time we open a new
store in the UK we try to find a local hero to perform the ribbon-cutting
ceremony to promote the good work they do in the community. We also
encourage our store managers to maintain those relationships in the
future and give continued support to those activities.
Suppliers
We regard our suppliers as key business
partners. Many of them have worked with us
for a number of years. We like to build long
term relationships with suppliers to support
our business. Our continued growth gives our
suppliers the potential to grow with us, which
also further strengthens those relationships.
There is regular engagement with the Group’s suppliers led by the
Group’s Trading Director, Grocery Controller, senior members of the
Group’s buying and merchandising teams and our Hong Kong based
sourcing agents. This includes a range of supplier visits, meetings and
presentations, factory visits and trade fair meetings in China, the UK and
the EU with both existing and new suppliers. During the pandemic the
ability to hold physical meetings has been curtailed and in place of that
virtual meetings and conference calls have taken place instead.
Investors
Our investors include shareholders,
bondholders and banks. They have a direct
financial interest in the performance of our
business and our continued success.
The management team have roadshow presentations and one-to-one
meetings with investor groups each year on the announcements of our
half-year and full-year results. Presentations and conference calls with
question and answer sessions are also held on the announcement of
the Q1 and Q3 trading updates announcements.
One-to-one conference calls and meetings are also held during the year
with both existing and potential new institutional investors.
In all but a handful of cases, the pandemic has prevented management
from holding physical meetings with investors, but in place of that
webcasts, virtual meetings and conference calls have been held during
the year.
The Board reviews investor relations reports and market updates as
a standing agenda item at each of its meetings throughout the year.
It also has an investor relations agenda item with its corporate brokers
at its strategy day meetings each year.
58
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Why we engage
How we engage, measure and monitor
Examples of actions in 2022
Examples of outcomes in 2022
Links and more information
Communities
The relationships we have with the communities
Evaluating real estate opportunities for opening new stores in
where we operate our stores and distribution
catchments where we are either under-represented or not represented
centres are key to the sustainable development
at all. This provides jobs and access to our value-led proposition to more
and growth of our business. We want to serve
communities every time we open new stores.
customers locally with what they want and at
bargain prices. We also want to support the
Providing support for the community at local and national levels where
communities where we operate by providing
we can contribute to society more generally. Each time we open a new
jobs and career opportunities locally.
store in the UK we try to find a local hero to perform the ribbon-cutting
ceremony to promote the good work they do in the community. We also
encourage our store managers to maintain those relationships in the
future and give continued support to those activities.
Suppliers
We regard our suppliers as key business
There is regular engagement with the Group’s suppliers led by the
partners. Many of them have worked with us
Group’s Trading Director, Grocery Controller, senior members of the
for a number of years. We like to build long
Group’s buying and merchandising teams and our Hong Kong based
term relationships with suppliers to support
sourcing agents. This includes a range of supplier visits, meetings and
our business. Our continued growth gives our
presentations, factory visits and trade fair meetings in China, the UK and
suppliers the potential to grow with us, which
the EU with both existing and new suppliers. During the pandemic the
also further strengthens those relationships.
ability to hold physical meetings has been curtailed and in place of that
virtual meetings and conference calls have taken place instead.
The Board continued to support the new store openings
programme of its B&M and Heron Foods businesses
in the UK. That also includes the relocation of stores in
existing areas where better real estate opportunities exist,
and capital and maintenance expenditure on stores
ear-marked for refurbishment within the existing estate.
The opening of new stores and relocations of stores
(often to larger premises) create new jobs and promotion
opportunities at those stores and also in our distribution
centres, while our business continues to grow.
We opened 34 new B&M UK stores and 16 new Heron Foods
stores (including relocations) in the financial year under review,
notwithstanding the challenges to the construction and
contracting sector during the pandemic.
In the UK this year we created over 650 new retail jobs across
our B&M UK and Heron Foods businesses. In addition,
475 jobs have been created in stores, distribution centres
and central support functions in France.
With the rising cost of living, our value-for-money proposition
plays an important role in helping a large number of customers
afford their everyday essentials.
See the Social
section in the
Corporate Social
Responsibility
Report on pages
41 to 42.
There has been a continuous rolling programme of
ensuring suppliers meet appropriate levels of external
audit social compliance checks. This is important to
the welfare of the employees of our suppliers, and the
maintenance of their ongoing trading relationships
with our Group.
The Company has continued to outsource the audit checking
processes to Multi Lines International Ltd (‘MTL’) in relation to
the Group’s own direct/non-MTL sourced suppliers. This has
enabled the Group to apply a consistent and established
methodology and utilise MTL’s expertise and connections
across Asia on our behalf.
See the Suppliers
section of the
Corporate Social
Responsibility
Report on pages
42 to 44.
As referred above, the B&M and Heron Foods UK
businesses have continued with their new store openings
and existing store refurbishment programmes during
the year. This is important to our main building services
contractors, many of whom have worked on stores with
us for several years.
The B&M UK business has continued to use its main store
fit-out contractors where available to carry out new store
opening and existing store estate refurbishment works during
the year. That has provided them with a level of ongoing
work-streams.
Investors
Our investors include shareholders,
The management team have roadshow presentations and one-to-one
bondholders and banks. They have a direct
meetings with investor groups each year on the announcements of our
financial interest in the performance of our
half-year and full-year results. Presentations and conference calls with
business and our continued success.
question and answer sessions are also held on the announcement of
The Board reviewed its financing structure during the year
with regard to diversifying the Group’s maturity profile and
in support of our overall leverage levels.
As a result the Group successfully completed a new
£250 million seven-year 4.00% bond issue in November 2021
to complement our existing £400 million bond facility and
£300 million term loan which both mature in 2025.
The Group continued to generate strong results against
pre-pandemic levels in the financial year under review.
The Board considered within the context of its capital
allocation policy and its debt leverage ceiling policy,
the opportunity to make further returns to shareholders
in addition to its ordinary dividend policy.
The company declared a special dividend of 25p per share in
December 2021 which was within the Group’s stated leverage
ceiling of 2.25x net debt to adjusted EBITDA.
See the Viability
Statement on
page 75 and
also the Financial
review on page
20.
the Q1 and Q3 trading updates announcements.
One-to-one conference calls and meetings are also held during the year
with both existing and potential new institutional investors.
In all but a handful of cases, the pandemic has prevented management
from holding physical meetings with investors, but in place of that
webcasts, virtual meetings and conference calls have been held during
the year.
The Board reviews investor relations reports and market updates as
a standing agenda item at each of its meetings throughout the year.
It also has an investor relations agenda item with its corporate brokers
at its strategy day meetings each year.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
59
Strategic Report Corporate GovernanceFinancial Statements
Corporate governance report
Chairman’s introduction
Committed to the highest standards
of corporate governance
Peter Bamford
Chairman
A strong foundation of corporate governance
supports our growing Group.
Dear Shareholder,
This report sets out the main elements of the
Company’s corporate governance structure
and how it complies with the UK Corporate
Governance Code. It also includes information
required by the Listing Rules and the UK FCA
Disclosure and Transparency Rules (“DTRs”).
We have applied our values and consider the
interests of all stakeholders in developing our
governance framework and in our ongoing
decision-making. In my Chairman’s Statement
on page 6 I have highlighted a number of
topics which indicate how our approach to
governance has continued to evolve with the
growth of our company and constantly
developing framework of reporting
requirements. I would particularly like to
draw attention to the ESG Strategy which is
documented in this Report as well as in our
standalone ESG Report. We believe that a strong
foundation of corporate governance provides
the necessary foundation for the continued
growth and success of B&M.
60
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Case study: the Board’s approach
to ESG governance
Our strategy has always supported important ESG initiatives such as extending the reach of
our value for money proposition, creating new jobs and minimising our environmental impact.
FY21
FY22
Last year, we acknowledged the growing importance of ESG actions and reporting
as we began to consider how best to continue delivering our growth strategy in
a sustainable way.
In particular, we recognised the need to adopt a more formalised approach to ESG
and committed to making further developments in FY22, including the setting
of appropriate targets.
We made considerable progress with regards to ESG in FY22, where the Board oversaw
the steps taken by Management in developing a clear ESG strategy for the Group.
The Executive Directors appointed an internal project lead and extensively considered
what an appropriate strategy for the could look like. Their thinking was presented at
Board meetings throughout the year, providing opportunity for Board members to
provide constructive challenge and feedback at regular intervals.
As the strategy took shape, the Board also considered input from external subject
matter specialists and supported the appointment of the Group’s first Sustainability
Manager role. This candidate was pro-actively identified from within the business
as someone who understood the B&M culture, and reports directly into the CEO.
These efforts culminated in the Board formally approving an ESG strategy as part
of the Annual Strategy Day in March 2022.
FY23 and
beyond
The Board is pleased with the progress made over the past 12 months. Equally, we
acknowledge that the Board’s approach will need to evolve with the business over time.
In that regard, the Board remains committed to monitoring progress against our
ESG strategy, and to making further developments when appropriate.
Furthermore, the Board intends to retain an “at one” approach to ESG governance for
the year ahead, recognising the importance of collective input as we begin to
implement our new strategy. This will ensure that the Board retains overall responsibility
for ESG, rather than delegating to any sub-committee.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
61
Strategic Report Corporate GovernanceFinancial Statements The Board of Directors of B&M European Value Retail S.A.
Meet our Board
Peter Bamford
Non-Executive Chairman of the
Board and Chairman of the
Nomination Committee
Appointment: March 2018
Peter joined the Board of B&M as
Non-Executive Chairman on 1 March
2018. He has extensive experience,
in both Executive and Non-Executive
roles, of the retail sector and high
growth international businesses and
brands. He is also a seasoned PLC
Director and Chairman having served
on PLC boards for over 26 years in a
variety of roles. In his non-executive
career this has included Chairman of
Superdry plc, Deputy Chairman and
Senior Independent Director of Spire
Healthcare plc and Non-Executive
Director at Rentokil-Initial plc. In his
executive career he was a Director of
Vodafone Group Plc from 1998 to 2006
where he held senior executive roles,
including Chief Marketing Officer and
Chief Executive of Vodafone NEMEA
region. Prior to that he held a number
of board and senior executive
positions with leading retailers
including WH Smith, Tesco and
Kingfisher. Peter is also the Chairman
of the Nomination Committee of B&M.
Committee membership:
NOM
Simon Arora
Chief Executive Officer
Appointment: December 2004
Simon has been Chief Executive
Officer of the B&M Group since
1 December 2004. He has a
background in consumer goods,
corporate finance and consulting.
Simon was a co-founder and
Managing Director of wholesale
homeware business, Orient Sourcing
Services, before acquiring B&M jointly
with his family. Prior to the acquisition
of B&M, Simon held various positions
with McKinsey & Co., 3i and Barclays
Bank. Simon is also a member of the
Nomination Committee of B&M.
Subsequent to the year-end, the
Company has announced that Simon
intends to retire from the business.
Committee membership:
NOM
Tiffany Hall
Independent Non-Executive
Director and Chair of the
Remuneration Committee
Appointment: September 2018
Tiffany’s experience is in marketing,
sales and customer services. She
previously served as CEO of BUPA
Home Healthcare, Marketing Director
at BUPA, Head of Marketing at British
Airways and also Chair of Airmiles and
BA Holidays. Prior to that, she held
various other senior positions at British
Airways including Head of UK Sales
and Marketing. Tiffany is the Chair of
the Remuneration Committee and a
member of the Nomination Committee
of B&M.
External appointments
She is a Non-Executive Director of
The British Standards Institution and
Symington Family Estates.
Committee membership:
REM
NOM
Carolyn Bradley
Independent Non-Executive
Director
Appointment: November 2018
Carolyn has an experienced retail
and consumer business background.
She worked for Tesco for over 25 years
until 2013. During that time she held a
number of senior positions, including
Chief Operating Officer of Tesco.com,
Commercial Director for Tesco Stores,
Tesco Marketing Director (UK) and
Group Brand Director. Carolyn is
a member of the Audit & Risk,
Remuneration and Nomination
Committees of B&M.
External appointments
She is Chair of The Works plc, the
Senior Independent Director of SSP
Group plc, a Non-Executive Director
of The Mentoring Foundation and
Majid Al Futtain Retail LLC, and a
Trustee of Cancer Research UK.
Committee membership:
A&R
REM
NOM
Carolyn is also the Designated
Non-Executive Director for
Workforce Engagement.
62
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Committee membership key
A&R Audit & Risk
REM Remuneration
NOM Nomination
Committee Chair
Outgoing members
Gilles Petit
Non-Executive Director
Retirement: July 2021
Gilles served as a Non-Executive
Director from May 2019. He retired
from the Board on 29 July 2021.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
63
Paula MacKenzie
Independent Non-Executive
Director
Appointment: November 2021
Paula has a strong background in
general management and finance.
Paula has recently been appointed as
CEO of PizzaExpress and previously
held a number of senior executive
roles at Kentucky Fried Chicken (Great
Britain) Ltd (“KFC UK&I”), including
Managing Director and Chief Financial
Officer of KFC UK&I.
External appointments
Paula is an Advisory Board member for
Pennies, the micro-donation charity.
Committee membership:
A&R
NOM
Ron McMillan
Senior Independent Non-Executive
Director and Chairman of the
Audit & Risk Committee
Appointment: May 2014
Until 2013 Ron worked in PwC’s
assurance business for 38 years
and has deep knowledge and
experience in relation to auditing,
financial reporting, regulatory
issues and governance. He was the
Global Finance Partner and Northern
Regional Chairman of PwC in the UK
and Deputy Chairman of PwC in the
Middle East and acted as the audit
engagement leader to a number of
major listed companies. Ron is the
Senior Independent Director of B&M.
He also chairs the Audit & Risk
Committee and is a member of the
Remuneration and Nomination
Committees of B&M.
External appointments
He is the Chairman of N Brown Group
PLC, the Senior Independent Director
and Audit Committee Chairman of
SCS PLC and Chairman of the Audit
Committee of HomeServe plc.
Committee membership:
A&R
REM
NOM
Alex Russo
Chief Financial Officer
Appointment: November 2020
Alex joined the B&M Group on
5 October 2020 and the Board as
the Group’s Chief Financial Officer on
16 November 2020. Alex has had a
long senior career in retail, having
successfully held Executive Board
positions in leading international
retailers including Asda, Tesco plc,
and Kingfisher plc. He served as Chief
Financial Officer, Senior Vice President,
at Walmart’s Asda business between
2014 and 2018. Prior to joining Asda,
he was Tesco’s Chief Financial Officer
of South Korea, its largest international
subsidiary. Prior to that, he was
Tesco’s Commercial Financial Director
for its UK business. His broad retail
career covers the UK, European and
Asian markets.
Alex has also been a Non-Executive
Director in leading consumer
goods businesses in the UK
and internationally.
Alex earned an MBA postgraduate
degree with Distinction at the London
Business School in 1999, following
Engineering and Finance BSc degrees
with a First.
Committee membership:
–
Strategic Report Corporate GovernanceFinancial Statements
Corporate governance report
Committed to the highest
standards of corporate governance
This report sets out the main elements of the Company’s corporate governance structure and
how it complies with the UK Corporate Governance Code. It also includes information required
by the Listing Rules and the UK FCA Disclosure and Transparency Rules (“DTRs”).
Schedule of matters reserved to the Board
The following matters are reserved to the Board for its approval:
Approve
Ensure
• ensuring a satisfactory dialogue with
shareholders based on the mutual
understanding of objectives;
• ensuring the maintenance of a
sound system of internal controls
and risk management.
Review
•
reviewing the Company’s overall
corporate governance and approving
the division of responsibilities of
members of the Board.
• approving the long-term strategy and
objectives of the Group and reviewing
the Group’s performance and
management controls;
• approving any changes to the capital
structure of the Group;
• approving the financial reporting,
budgets, dividend policy and any
significant changes in accounting
policies and practices of the Group;
• approving any major capital projects
of the Group;
• approving the structure, size
and composition of the Board
and remuneration of the
Non-Executive Directors;
• approving and supervising any material
litigation, insurance levels of the Group
and the appointment of the Group’s
professional advisers.
Code compliance
The Board is committed to high standards of
corporate governance. Except where referred
to on page 80, the Company has complied
throughout the year under review with the
provisions of the UK Corporate Governance
Code published in July 2018 (the “Code”) and
the DTRs. A copy of the Code is available on
the UK Financial Reporting Council’s website
at www.frc.org.uk.
Management responsibilities
The Executive Directors of the Group and of its
three main businesses are responsible for the
day to day operational and strategic matters in
relation to each of the businesses of the Group,
which includes B&M UK, Heron Foods and
B&M France. Members of the broader senior
executive team hold regular monthly meetings
led by the CEO to review progress and
management activities of the Group.
Board and Committee attendance at scheduled video conferences and meetings during FY22:
Directors
Peter Bamford – Chairman
Simon Arora
Alex Russo
Ron McMillan
Tiffany Hall
Carolyn Bradley
Paula MacKenzie (appointed 9 November 2021)1
Directors who retired from the Board during FY21
Giles Petit (retired 29 July 2021)2
Board
6
Attended
Audit & Risk
Committee
4
Attended
Nomination
Committee
3
Attended
Remuneration
Committee
3
Attended
6
6
6
6
6
6
2
2
–
–
4
4
–
4
1
1
3
3
–
3
3
3
2
2
–
–
–
3
3
3
–
–
1. Paula MacKenzie has a full attendance record during the period from her appointment to the Board on 9 November 2021 for the year under review.
2. Giles Petit had a full attendance record up to his retirement from the Board on 29 July 2021 for the year under review.
64
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Annual Report and Accounts 2022
How we govern
The Board and Committee structure of the Company is as follows:
B&M’s Board
The Board of Directors of B&M as at the date of this report has 7 members comprising the Chairman,
2 Executive Directors and 4 Independent Non-Executive Directors.
See pages 62 and 63 for more information
Audit & Risk
Committee
This committee is made
up of 3 Independent
Non-Executive Directors
The main responsibilities of the
Committee are:
•
reviewing and monitoring
the integrity of the financial
statements and price
sensitive financial releases
of the Company;
• monitoring the quality,
effectiveness and independence
of the external auditors and
approving their appointment fees;
• monitoring the independence
and activities of the Internal
Audit function;
•
• assisting the Board with the risk
management strategy, policies
and current risk exposures;
reviewing the adequacy and
effectiveness of the Group’s
internal financial controls and
control and risk management
systems; and
• maintaining effective oversight
of compliance by our UK
businesses with the Groceries
Supply Code of Practice.
Nomination
Committee
This committee is made up of the
Chairman, CEO and 4 Independent
Non-Executive Directors
The main responsibilities of the
Committee are:
•
reviewing the structure, size,
diversity and composition of
the Board, including the balance
of Executive and Non-Executive
Directors;
• putting in place plans for the
•
orderly succession of
appointments to the Board
and to senior management;
identifying and nominating
candidates, for approval by the
Board, to fill Board vacancies
as and when they arise;
• ensuring, in conjunction with the
Chairman of the Company, that
new Directors receive a full,
formal and tailored induction; and
• keeping under review the
leadership and senior
management needs of the Group
including executive and
Non-Executive Directors and the
wider senior management team,
with a view to ensuring the
continued ability of the Group
to compete effectively in
the marketplace.
Remuneration
Committee
This committee is made
up of 3 Independent
Non-Executive Directors
The main responsibilities of the
Committee are:
• setting the policy for the Group
on executive remuneration;
• determining the level of
remuneration of the Chairman,
the Executive Directors of the
Company and the first layer of
senior management of the Group
below the Board and the Group’s
General Counsel;
• preparing an annual Directors’
Remuneration Report for approval
by shareholders at the Annual
General Meeting of the Company;
• designing share schemes for
approval by the Board for
employees and approving
awards to Executive Directors
and certain other senior
management of the Group; and
reviewing pay and conditions
across the Group’s wider
workforce.
•
See page 71 for a copy
of the Committee’s report
See page 77 for a copy
of the Committee’s report
See page 79 for a copy
of the Committee’s report
Workforce
Engagement NED
Carolyn Bradley is the
Designated Non-Executive
Director for Workforce
Engagement
The main responsibilities of
this role are the governance
and oversight of the following
matters:
•
to consider with the Board
the mechanisms required
from time to time by the
Group in relation to
Workforce Engagement
to enable the Board to be
appropriately appraised on
colleague engagement;
to co-ordinate such direct
engagement between the
Non-Executive Directors
and the workforce as is
considered appropriate;
to ensure the Workforce
Engagement mechanisms
which are approved by the
Board are put in place and
are effective;
to report on the outputs
from those mechanisms
to the Board at least twice
a year, and make any
recommendations arising
from those reports to the
Board; and
the holder of this office is
also supported by members
of the senior executive
team of the Group who are
responsible for the day to
day implementation of the
Workforce Engagement
mechanisms by the Group.
•
•
•
•
Terms of Reference of each of the Committees are available on B&M’s website at
www.bandmretail.com
See page 39 on
Workforce Engagement
Executive Management
The Executive Directors of the Group and of its three main businesses are responsible for the day to day
operational and strategic matters in relation to each of the businesses of the Group, which includes B&M UK,
B&M France and Heron Foods. Members of the broader senior executive team hold regular monthly
meetings led by the CEO to review progress and management activities of the Group.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
65
Strategic Report Corporate GovernanceFinancial Statements Corporate governance report continued
Board responsibilities
The Board is collectively responsible for the
strategy and long-term success of the Group,
and for ensuring there is an effective system
of internal controls within the Group for the
assessment and management of key risks.
The Board has delegated certain responsibilities
to three main Committees to assist in
discharging its duties and the implementation
of matters approved by it (see the table on page
65). The reports of each of the Committees for
the year under review are set out on pages 71,
77 and 79.
A presentation of each of the B&M UK, Heron
Foods and B&M France businesses and their
up to date trading performance is provided by
the CEO at each Board meeting, together with
comprehensive financial reports and analyses
presented by the CFO. During those months that
fall outside the regular cycle of Board meetings,
the CEO and CFO also provide reports and
management accounts packs updating the
Board on the current trading performance of
each of the Group’s businesses.
Members of the broader senior management
teams of B&M UK, Heron Foods and B&M
France participate at meetings of the Board
and store tours with the Board during the course
of the year, and attend the annual strategy
day of the Group and strategy sessions of the
Board held during the course of the year on the
relevant business fascias. During the pandemic
there were only a few opportunities for physical
meetings and store tours due to restrictions on
travel and social distancing. However the Board
has now resumed its usual programme of
meetings and store tours.
The implementation of the Board approved
strategy, policies and decisions is delegated
to the Executive Directors of the Company
to adopt them in relation to the day to day
operational management of the Group’s main
businesses. The Executive Directors are also
supported by senior management teams in
each of the B&M UK, Heron Foods and B&M
France businesses of the Group. The leadership
teams of those businesses regularly have
business update and trading review meetings
with the Group CEO and CFO. A number of
additional ad hoc video conferences were
also held on particular matters between the
regular scheduled programme above.
In addition to the regular scheduled meetings
and video conference discussions, the Board
and Committees have passed a series of written
resolutions during the year in relation to the
formal decisions taken by them.
Video conference discussions and meetings
between the Non-Executive Directors and
Chairman have taken place and the Non-
Executive Directors have met without the
Chairman being present.
The Chairman has also had one-to-one
discussions with each of the Independent
Non-Executive Directors.
The Company held two general meetings of
shareholders in the year under review, being the
Annual General Meeting on 29 July 2021 and an
Ordinary General Meeting on 9 November 2021.
Board composition
Giles Petit retired as a Non-Executive Director
on 29 July 2021. In November 2021, Paula
MacKenzie was appointed as a Non-
Executive Director.
The Board comprises the Chairman, 2 Executive
Directors, being the CEO and CFO, and 4
Independent Non-Executive Directors.
The Code recommends that at least half of
the Board, excluding the Chairman, should
comprise Independent Non-Executive Directors.
The Company met this requirement during the
whole of the year under review, with each of
Ron McMillan, Tiffany Hall, Carolyn Bradley,
Paula MacKenzie and Gilles Petit (prior to his
resignation on 29 July 2021) being Independent
Non-Executive Directors. Following the year-end
this requirement continued to be met.
Each of the Independent Non-Executive
Directors who served during the year under
review was and continues to be considered
by the Board to be independent in character
and judgement and are free from relationships
or circumstances which may affect, or could
appear to affect their judgement as Directors.
Independence is determined by ensuring that
the Non-Executive Directors do not have any
material business relationships or arrangements
(apart from their fees for acting as Non-Executive
Directors) with the Group or its Directors, which
in the opinion of the Board could affect their
independent judgement.
Simon Arora, Bobby Arora and Robin Arora
and SSA Investments S.à.r.l. (“SSA Investments”)
(together “Arora Family”) entered into a
relationship agreement with the Company
(the “Relationship Agreement”) which came
into effect on the admission of the Company’s
shares to trading on the London Stock Exchange
in June 2014 and which continues to remain
in force. At the year ended 31 March 2022,
SSA Investments (together with Praxis Nominees
Limited as its nominee) held 6.98% of the total
issued shares in the Company.
The Board believes that the terms of the
Relationship Agreement will continue to ensure
that the Company and other members of the
Group are capable of carrying on their business
independently of the Arora Family and that
transactions and relationships between them
and the Group are at arm’s length on normal
commercial terms.
All Directors have service agreements or letters
of appointment in place and the details of the
terms of them are set out in the Directors’
Remuneration Report on pages 79 to 92.
Diversity policy
The overall objective of the Company’s Diversity
Policy is to ensure that the Company has a
well-balanced Board at all times in terms of the
necessary skills, experience and independence
of character and judgement of its members, for
the Group to be managed effectively for its
long-term success.
Appointments to the Board are based on merit
so that the best candidates are appointed, but
within that the Company recognises the value
which a diverse Board brings to the business and
it embraces diversity in relation to gender, race,
age, educational and professional backgrounds.
The Board is well placed to meet the new
Listing Rules requirement in relation to diversity.
Along with that criteria, diversity in relation to
international experience (in particular in relation
to the Group’s chosen markets), recent senior
management or professional experience in retail
and/or supply chain sectors and functional
experiences in relation to membership and
chairmanship of board committees are also
relevant criteria of the Company.
Details of the Company’s gender diversity in
relation to the management of the Group are
included in the Corporate Social Responsibility
Report on page 36. During the first seven
months of the year under review the Company
had two female Board members and for the
final five months had three female Board
members. One of the female Board members
also chairs one of the three main standing
Committees of the Board. The percentage of
female Board members as at the year-end
was 42.9%. Accordingly, the Board will have
at least 33% female representation by the time
of the 2022 AGM.
The Executive Committee of the first level of
senior management below the Board has one
female member out of a total of six members,
being the Group People Director.
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Annual Report and Accounts 2022
Division of responsibilities
There is a clear division of the roles and responsibilities between the Chairman
and the CEO and no individual has unrestricted powers of decision-making.
Chairman’s key responsibilities:
Peter Bamford, as the Chairman of the Board, is responsible for leading the Board
and ensuring its effectiveness, setting its agenda and high standards of corporate
governance. The Chairman facilitates the contribution of the Non-Executive Directors
and constructive relations between them and the Executive Directors.
Chief Executive key responsibilities:
Simon Arora, as the Group CEO, is responsible for the day-to-day management
of the Group and implementation of strategy approved by the Board and other
Board decisions. His role is supported by the Group CFO and the senior executive
management teams in each of the Group’s businesses.
Board composition
1
Balance of the Board
Chairman
2
Executive Directors
Independent Non-executive Directors
Board diversity by gender
Male
Female
57.1%
42.9%
57.1%
20%
Non-executive Directors’ tenure
Less than 3 years
3+ years
20%
80%
4
42.9%
80%
Conflict of interests
Simon, Bobby and Robin Arora own all the
shares in SSA Investments S.à.r.l., which
(together with Praxis Nominees Limited as its
nominee) holds 6.98% of the ordinary share
capital and voting rights in the Company either
directly or indirectly as the beneficial owner.
Simon Arora, Bobby Arora, Ropley Properties Ltd
and Triple Jersey Ltd are all landlords of certain
properties leased by the Group. Ropley
Properties Ltd and Triple Jersey Ltd are owned
by Arora family trusts.
Except as referred to above there are no
potential conflicts of interest between any of
the Directors or senior management with the
Group and their private interests.
There is an established process of the Board for
regularly reviewing actual or potential conflicts
of interest. In particular, there is a process for
reviewing property lease transactions proposed
to be entered into by related parties of Directors
with any entities in the Group, including
the provision of professional advice and
consideration of it by a Related Party
Transactions Committee of the Board (which
includes the Chairman of the Board, Chairman
of the Audit & Risk Committee and the General
Counsel of the Group) and also by the
Company’s Sponsor in providing its opinion
on the application of the Listing Rules and the
applicability and appropriateness of any
exemptions in respect of any transactions in
the ordinary course of business. Each of the
transactions are also reported to general
meetings of shareholders in accordance with
Luxembourg Company Law. The above
processes include:
•
reports by the Property Estates team of B&M
on the relevant subject store’s suitability and
location and details of the principal terms of
the proposed lease;
reports from the external Property
Consultants of B&M who are retained to
advise on new store acquisitions, store
suitability and location strategy;
reports from external independent Property
Consultants on the principal commercial
terms of the proposed lease and site location
of the proposed new store;
•
•
• each of the Chairman and General
Counsel, and also independently of them,
the Company’s Sponsor, discuss where
necessary, the reports of the external
independent Property Consultants with
them as part of the process of the review
by the Related Party Transactions Committee
of the Board;
the Company’s Sponsor provides a written
opinion to the Company in advance of the
Related Party Transactions Committee’s
consideration of the relevant proposed
transactions;
•
• copies of all the reports referred to above
and the Sponsor’s Opinion are reviewed by
the Related Party Transactions Committee on
behalf of the Board, and, in its updates to the
Board the Committee provides copies of all
the above reports and opinions to the Board;
and
the Related Party Transactions Committee
of the Board considers the appropriateness
of the relevant transactions independently
of Arora family interests, and the CEO,
Simon Arora, does not participate in
those deliberations.
•
The same process above applies to the
purchase of freehold store premises by
the Group from those related parties.
In addition to the above processes, the
Chairman of the Audit & Risk Committee
monitors on behalf of the Board a rolling report
produced to the Related Party Transactions
Committee, the Board and the Sponsor,
which is updated throughout the year, on
the number of related party leases and
rents as a proportion of the overall property
estate and rents of the Group.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
67
Strategic Report Corporate GovernanceFinancial Statements
Corporate governance report continued
There is a Board approved policy in relation to
the use and chartering by the Group of a private
jet owned by Arora family interests for business
travel by executives and other colleagues, in
instances where commercial operator direct
flight schedules are either not available or
timings are not feasible. The chartering of
the plane by the Group is with the third party
operator and CAA licence holder (not with
Arora family interests as the owner of the plane).
The Related Party Transactions Committee has
oversight on behalf of the Board of the usage
and costs, to ensure it complies with the Board
approved policy for business use only and
that costs do not exceed market rates. These
transactions are within the exemption for small
related party transactions under the Listing
Rules, being below 0.25% under the class tests.
See pages 94 and 95 in relation to details of
related party transactions entered into in the
financial year 2021/22 and also as set out in
note 26 on pages 144 and 145 of the financial
statements.
Audit & Risk Committee
The Audit & Risk Committee consists of 3
Independent Non-Executive Directors and the
Chairman of the Committee has recent and
relevant financial experience.
The members of the Committee during
the year under review were Ron McMillan
(Chair), Carolyn Bradley, Gilles Petit (prior to
his resignation on 29 July 2021) and Paula
MacKenzie (subsequent to her appointment on
9 November 2021). The Committee as a whole
has competence relevant to the retail sector. See
further the biographies of each of the members
of the Committee on pages 62 and 63 above.
The duties of the Committee as delegated by the
Board are contained in the terms of reference
available on the Group’s corporate website (as
referred to above) and are also summarised in
the table on page 65 above.
All meetings of the Committee are attended by
the CFO and the Group’s General Counsel. The
Chairman of the Board and the CEO are also
invited to attend. The Group’s Internal Audit
function and the Luxembourg and UK audit
partners of the Group’s external auditors
also attend.
The Audit & Risk Committee Report on pages 71
to 76 sets out details of the role and activities
of the Committee in the last financial year.
Remuneration Committee
The Remuneration Committee consists of 3
Independent Non-Executive Directors. The
members of the Remuneration Committee
during the year under review were Tiffany Hall
(Chair), Ron McMillan and Carolyn Bradley.
The terms of reference of the Remuneration
Committee are available on the Group’s
corporate website (as referred to above)
and are also summarised in the table on
page 65 above.
All meetings of the Committee are attended
by the Group’s General Counsel and also the
Chairman of the Board and the CEO regularly
attend meetings of the Committee, in each
case at the invitation of the Chair of the
Committee. The Committee also retained
PricewaterhouseCoopers LLP as external
advisors who attended and participated at
all meetings at the request of the Chair of
the Committee.
The Directors’ Remuneration Report on pages 79
to 92 sets out details of the role and activities
of the Remuneration Committee in the last
financial year.
Nomination Committee
The Nomination Committee consists of 6
Directors, being the Chairman of the Board
(who chairs the Nomination Committee), the CEO
and each of the 4 Independent Non-Executive
Directors of the Company. The members of the
Nomination Committee during the year under
review were Peter Bamford (Chairman of the
Committee), Simon Arora (CEO), Ron McMillan,
Tiffany Hall, Carolyn Bradley and Gilles Petit
(prior to his resignation on 29 July 2021) and
Paula MacKenzie (subsequent to her
appointment on 9 November 2021)
All meetings of the Committee are also attended
by the Group’s General Counsel, at the invitation
of the Chairman of the Committee.
The duties of the Nomination Committee as
delegated to it by the Board are contained in the
terms of reference available on the Company’s
corporate website (as referred to above) and are
also summarised in the table on page 65 above.
The Nomination Committee Report on
pages 77 to 78 sets out details of the role
and activities of the Committee in the last
financial year.
Board and Committees
effectiveness review
Board and Committee effectiveness reviews
were conducted in the year under review.
As part of that process the Chairman had
discussions with Executive Directors on a
one-to-one basis, the Non-Executive Directors
on a one-to-one basis and together as a group
to discuss matters relating to the Board, its
balance and monitoring of the exercise of
powers of the Executive Directors.
The Directors completed confidential
questionnaires in relation to the Board and
each of its three main standing Committees.
The process was co-ordinated by the Group’s
General Counsel and he prepared a report on
the feedback provided by the Directors which
was then presented to the Board who discussed
the main themes and points arising from it.
The Board and its Committees were seen to
be wholly effective. In particular, the Board
composition, agenda planning, and candour
of discussions were highly rated. The time
devoted to ESG over the last year was especially
noted, as was the response of Board and
management team to the challenges of COVID
19. The most recent strategy review process was
also felt to have been extremely effective.
There were no areas identified requiring
significant change but the return to physical
meetings following the lifting of COVID
restrictions was welcomed, and there was
alignment on the need to continue to focus
on growth strategy options, ESG, succession
planning, diversity, and building the breadth
and depth of the management team. The risk
review and management process was seen
positively but some further discussions were
required around risk appetite. The Board and
Committee agendas will reflect these points of
focus over the current year and various actions
are included in other sections of this report.
In relation to other Code matters regarding the
effectiveness of the Board and its members,
where Directors have external appointments,
the Committee and the Board are satisfied that
they do not impact on the time the Director
needs to devote to the Company.
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Annual Report and Accounts 2022
Approach to ESG governance
The Board held a number of discussions
throughout FY22 as the management team
developed their proposed ESG strategy
and progressed with a number of different
workstreams. Significant progress was made as
a result of this ongoing focus, resulting in the
Board approving an ESG strategy. The Board is
also committed to keeping ESG as a standing
agenda item for the coming year as it looks to
maintain momentum in this area. For further
details, refer to the case study on page 61.
Appointments, induction
and development
Where any new Director is appointed by
the Board, the Nomination Committee leads
the process, evaluates the balance of skills,
experience, independence, and knowledge
and diversity on the Board. In light of that
process, it approves a description of the
role and capabilities required and identifies
candidates for the Board to consider using
external search consultants.
All new Directors receive a full, formal and
tailored induction programme and briefing
with members of senior management. They
are also required to meet major shareholders
where requested.
A manual of documents is available for new
Directors containing information about the
Group, Directors’ duties and liabilities under
Luxembourg Company Law and obligations
under the Listing Rules, DTRs and the EU and
UK Market Abuse Regulations, together with
governance policies and the UK Corporate
Governance Code.
The induction of Paula MacKenzie as a new
Non-Executive Director took place this year
with a series of structured meetings with the
Executive Directors and other members of the
broader senior management team of B&M.
The Directors update their knowledge and
familiarity with the businesses of the Group
throughout each year with a mix of central
operations and store tours of B&M UK, Heron
Foods and B&M France stores along with
members of the senior management of each of
those businesses, and also senior management
briefings and presentations in relation to each
of the B&M UK, Heron Foods and B&M France
businesses. There were few opportunities for
physical meetings and only one store tour
during the last year due to restrictions on travel
and social distancing during the pandemic.
The Board has resumed its usual programme
of meetings and store tours.
The Nomination Committee considers the
training and development needs of the Executive
Directors. The Directors also receive regular
updates at Board and Committee meetings
on law, regulatory and governance matters
and future developments from the Group’s
General Counsel.
There is a procedure for Directors to have
access to independent professional advice,
at the Company’s expense, in relation to their
duties should they require it at any time.
Re-election of Directors
Following the Board review and evaluation
exercise carried out in the financial year 2021/22
as referred to above, the Nomination Committee
has recommended that each of the Directors be
re-elected to the Board.
The Board and the Chairman consider that
all the members of the Board continue to be
effective and demonstrate commitment to their
roles, and are able to devote sufficient time
to their Board and Committee appointments,
responsibilities and duties. Accordingly, each of
the Directors seek re-election at the Company’s
Annual General Meeting on 28 July 2022.
Risk management
and internal control
The Board has overall responsibility for ensuring
that the Group maintains a strong system of
internal control.
The system of internal control is designed to
identify, manage and evaluate, rather than
eliminate, the risk of failing to achieve business
objectives. It can therefore provide reasonable
but not absolute assurance against material
misstatement, loss or failure to meet objectives
of the business, due to the inherent limitations
of any such system.
An internal audit function was established by
the Group over 6 years ago, following a review
of the monitoring and reporting systems of the
Group by the Audit & Risk Committee.
The Board carried out a review of the key risks
to the Group’s businesses at its annual strategy
day conference in the year under review. The
Board is satisfied that those risks and relevant
mitigating actions are acceptable for a business
of the type, size and complexity as that operated
by the Group.
The key elements of the Group’s system of
internal controls are as follows:
Financial reporting: monthly management
accounts are provided to the members of
the Board that contain current financial and
operational reports. Reporting includes an
analysis of actual versus budgeted performance
and overviews of reasons for significant
differences in outcomes. The annual budget
is reviewed and approved by the Board. The
Company reports half yearly and publishes
trading updates in line with market practice;
Risk management: the creation and
maintenance of a risk register, which is
continuously updated and monitored, with full
reviews occurring on at least an annual basis,
facilitated by the Internal Audit function of the
Group. Each risk identified on the risk register
is allocated an owner, at least at the level of a
senior manager within the business, and the
action required, or acceptance of the risk is also
recorded. The risk registers are provided to the
Audit & Risk Committee and the Committee
reports key risks and mitigating actions to the
Board for monitoring as appropriate;
Monitoring of controls: following the
establishment of the Internal Audit function, the
Audit & Risk Committee receive regular reports
from the Internal Audit function as well as those
from the external auditors. There are formal
policies and procedures in place to ensure the
integrity and accuracy of the accounting records
of the Group and to safeguard its assets;
Staff policies: there are formal policies in the
Group in place in relation to anti-bribery and
corruption, anti-slavery and whistle-blowing
policies in relation to reporting of any suspected
wrongdoing or malpractice. Those policies are
reviewed and updated by the Group as required
from time to time.
The Board and the Audit & Risk Committee
have carried out a review of the effectiveness of
the system of internal controls during the year
ended 31 March 2022 and for the period up to
the date of approving the Annual Report and
Financial Statements.
Information on the key risks and uncertainties of
the Group are set out on pages 26 to 35.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
69
Strategic Report Corporate GovernanceFinancial Statements Corporate governance report continued
Regulatory framework
following Brexit
Shares in the Company are dematerialised
and held through an EU member state central
securities depositary.
Other disclosures
Where information is applicable under
Listing Rule 9.8.4R in relation to the Group,
the following matters can be found on the
following pages of this report:
a. arrangements under which the B&M
The Articles of Association of the Company
require continued adherence to the UK City
Code on Takeovers and Mergers (the “City
Code”) and the Luxembourg law of 19 May 2006
on takeovers which contain squeeze-out and
sell-out rights of minority shareholders.
European Value Retail S.A. Employee Share
Ownership Trust has waived or agreed to
waive dividends or future dividends –
page 94;
b. relationship agreement and independence
statement – pages 95 and 96.
Disclosures under DTR 7.2.6R with regard to
share capital are set out in the sections headed
“Share capital”, “Shareholders” and “Section (a)
Share capital structure”, in the Directors’ report
and business review on pages 93 to 97 below.
Peter Bamford
Chairman
30 May 2022
Shareholder relations
Meetings and calls are regularly held with
institutional investors and analysts in order
to provide the best quality information to the
market. Due to the pandemic that has been
restricted to virtual meetings and calls this year,
but we have maintained a regular dialogue
through those means throughout the year
with our investors.
The formal reporting of our full year results
will be a combination of webcasts, in-person
presentations, one-to-one virtual meetings
and conference calls. The Board members,
including the Chairman, the Senior Independent
Director and each of the other Non-Executive
Directors, are available to meet with major
shareholders where they wish to raise issues
outside of the above environments.
The Company will also communicate with its
shareholders through the Annual General
Meeting, at which an account of the progress
of our businesses over the past year will be
given with the opportunity for shareholders
to raise any questions.
The Company holds conference calls and
one-to-one virtual meetings where practical
in accordance with market practice generally
during the course of each financial year
with bondholders.
The Company’s corporate website at
www.bandmretail.com is regularly updated with
our releases to the market and other information
and includes a copy of this Annual Report and
Financial Statements.
70
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Audit & Risk Committee report
The Committee has oversight of the external financial
reporting of the Group, risk management and mitigation,
the internal control framework and the effectiveness of
internal and external audit.
Dear Shareholder,
During the year, the Audit & Risk Committee
has continued to carry out a key role within
the Group’s governance framework, supporting
the Board in risk management, internal control
and financial reporting.
The Committee exercises oversight of the Group’s
financial policies and reporting. It monitors the
integrity of the financial statements and reviews
and considers significant financial and accounting
estimates and judgements. The Committee
satisfies itself that the disclosures in the
financial statements about these estimates
and judgements are appropriate and obtains
from the external auditor an independent
view of the key disclosure issues and financial
statement risks. In relation to risks and controls,
the Committee ensures that these have been
identified and that appropriate responsibilities
and accountabilities have been set.
A key responsibility of the Committee is to review
the scope of work undertaken by the internal
and external auditors and to consider their
effectiveness. The Company has continued
to strengthen its Internal Audit function during
the year with the appointment of an additional
group internal auditor reporting to the Head
of Internal Audit.
The Committee has also considered
the narrative in the Strategic Report and
believes that sufficient information has
been provided to give shareholders a fair,
balanced and understandable account
of the Group’s business.
During the year, the Committee again oversaw
the process used by the Board to assess the
viability of the Group, the stress testing of key
trading assumptions and the preparation of the
Viability Statement, which is set out on page 35,
in the principal risks and uncertainties section of
the Strategic Report.
The Committee considered the development
of climate-related reporting to ensure that the
Group was ready to report in line with the Task
Force on Climate Related Financial Disclosures
(“TCFD”).
Going forward, I shall ensure that the Committee
continues to acknowledge and embrace its role
of protecting the interests of shareholders as
regards the integrity of published financial
information and the effectiveness of audit.
The Committee continues to monitor
the outcome of the consultations on the
Government’s proposals to restore trust in
audit and corporate governance.
I am available to speak with shareholders
at any time and will also be available at the
Annual General Meeting on 28 July 2022
to answer any questions you may have on
this report.
I would like to thank my colleagues on the
Committee for their continued help and
support during the year.
The Committee has continued to monitor related
party transactions and has monitored the
Group’s compliance with the Groceries Supply
Code of Practice (the “Groceries Code”).
Ron McMillan
Chairman of the Audit & Risk Committee
30 May 2022
Further information on the Committee’s
responsibilities and the manner in which
they have been discharged is set out below.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
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Strategic Report Corporate GovernanceFinancial Statements Audit & Risk Committee report continued
• consideration of significant areas of
accounting estimation or judgement;
• consideration of the significant risks included
in the Annual Report;
• approval of the external auditors terms
of engagement, audit plan and fees;
review of the going concern and
viability statements;
•
• approval of the internal audit plan; and
•
reports of the UK businesses of the Group
regarding compliance with the Groceries
Code and the annual compliance report to
be filed with regulatory bodies.
Accounting matters
The Committee considered the following
accounting matters during the year:
•
the methodology and assumptions applied
by the Group to the value of inventory;
• accounting practices in relation to property
dilapidations liabilities;
• goodwill impairment in relation to each
of the companies in the Group;
• hedge accounting;
•
•
the accounting for supplier rebates;
the accounting for IT costs.
The Group’s performance measures continue to
include some measures which are not defined
or specified under IFRS. The Audit Committee
has considered presentation of these additional
measures in the context of the Guidance issued
by the European Securities and Markets
Authority (ESMA) and the Financial Reporting
Council (FRC) in relation to the use of Alternative
Performance Measures (“APMs”), challenge
from the external auditor, and the requirement
that such measures provide meaningful insight
for shareholders into the results and financial
position of the Group and that the APMs support
understanding of the financial statements. A
reconciliation of the APMs to the equivalent IFRS
measures is provided in note 3 of the accounts.
In considering the accounting matters referred
to above the Committee had regard to papers
and reports prepared by the Group’s Finance
Department and the external auditors and the
explanations and disclosures made in the
Group’s financial statements. The Committee
also considered the significance of these
accounting matters in the context of the Group’s
financial statements and their impact on the
Group’s statement of comprehensive income
and the statement of financial position.
Committee composition
The Committee comprises three members,
each of whom is an independent Non-Executive
Director of the Company. Two members
constitutes a quorum. The Committee must
include one financially qualified member with
recent and relevant financial experience. The
Committee Chairman fulfils that requirement.
All members are expected to have an
understanding of financial reporting, the
Group’s internal control environment, relevant
corporate legislation, the roles and functions of
internal and external audit and the regulatory
framework of the business. As reflected in the
biographical summaries on pages 62 and 63,
all members of the Committee have significant
experience of working in or with companies in
the retail and consumer goods sectors and,
as such, the Audit Committee as a whole has
competence relevant to the retail sector.
The members of the Committee during the
year were Ron McMillan, Carolyn Bradley,
Gilles Petit, prior to his retirement on 29 July
2021, and Paula MacKenzie from her
appointment on 9 November 2021. Details of
Committee meetings, Teams meetings and
attendances are set out on page 64 of the
Corporate Governance report. The timing of
Committee meetings is set to accommodate the
dates of release of financial information and the
approval of the scope and reviews of outputs
from work programmes executed by the internal
and external auditors. In addition to scheduled
meetings, the Chairman of the Committee has
had many discussions with the CFO and the
internal and external auditors during the course
of the year.
Although not members of the Committee, Alex
Russo, CFO and Paul Owen, Group General
Counsel, prior to his retirement on 31 January
2022 and Patrick Rawnsley from 1 February
2022 onwards and representatives from
the internal and external auditors attended
Committee meetings. The Chairman of the
Board and the CEO have also attended
Committee meetings upon the invitation
of the Committee Chairman.
Responsibilities
The responsibilities of the Audit & Risk
Committee, as delegated by the Board, are set
out in its terms of reference which are available
on the Group’s corporate website. They include
the following:
•
reviewing the integrity of the financial
statements, price sensitive financial releases
of the Group and the significant financial
judgements and estimates relating thereto;
• monitoring the scope of work, quality,
effectiveness and independence of the
external auditors and approving their
appointment, reappointment and fees;
• monitoring and reviewing the independence
and activities of the internal audit function;
• assisting the Board with the development
and execution of a risk management
strategy, risk policies and current risk
exposures, including the maintenance
of the Group’s risk register;
• keeping under review the adequacy and
effectiveness of the Group’s internal financial
controls and internal control and risk
management systems;
• making recommendations to the Board in
relation to the appointment of the external
auditor; and
• maintaining effective oversight of
compliance by our UK businesses
with the Groceries Code.
Committee activities in 2021/22
In discharging its oversight of the matters
referred to in the introductory letter to this report
and as set out below, the Committee was
assisted by management, the Group’s General
Counsel and the internal and external auditors.
The recurring work of the
Committee
The Committee considered the following matters
during the year:
• consideration of the Annual Report and
financial statements of the Group;
• consideration of the interim results report
and non-statutory financial statements of
the Group for the half year;
• consideration of regulatory news service
announcements by the Company
“ I shall ensure that the Committee
continues to acknowledge and embrace
its role of protecting the interests of
shareholders as regards the integrity
of published financial information and
the effectiveness of audit.”
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Annual Report and Accounts 2022
The meetings and teams meetings at which the following matters were considered are set out below:
Sept
2021
Nov
2021
Internal Audit (“IA”)
IA annual evaluation
IA work plans, reports and updates
External Audit
Audit reports on preliminary results and annual report FY22
Audit report on the Group’s interim results FY22
External audit plan and strategy
External auditor’s effectiveness/independence/and quality of audit
Non-audit services provided by the external auditor
Accounting matters
The methodology applied to inventory valuation
Adopting accounting for hedging instruments and policy
Accounting in relation to supplier rebates
Adoption of IFRS 16
Accounting in relation to Covid-19 business rates relief
Accounting for property dilapidation costs
Review of goodwill impairment testing in relation to B&M France
Other matters
Review of the Corporate Risk Register and risks included in the Annual Report
Review of related party transactions (flights)
Quarterly reviews of related party transactions (associated companies)
Year-end final review of related party transactions (store leases)
Consideration of post-Brexit implications for financial reporting
Review of Groceries Code compliance and complaints
Review of going concern and viability for FY21 and FY22
Review of Social Compliance audit processes relating to suppliers
Warehouse Management system (JDA)
GDPR – Digital Ecommerce
Corporate Policy Compliance
Working Time Regulations 1998
Risk Register Mitigations
New Direct Supplier Set Up process
Company Car Fleet Fuel Cards
UK SOx Readiness
Treasury Management
Pension Auto Enrolment
Pension Auto Enrolment Follow-up
IT Systems & Business Continuity Follow-up
IT Cyber Security Follow-up
IT Third Party Managed Services
Supplier Related Income
Homesavers Ordering and Invoicing
Colleague Discount
Cash Use in Stores
Customer In-Store Deliveries
Distribution Centre Loading/Dispatching
Store Service Charge
Grocery Code Visit Readiness Workshop
Heron Foods – New Site Identification and Justification
Heron Foods – Profit Protection
Heron Foods – Supplier Related Income
Heron Foods – Corporate Policy Compliance
B&M France – Distribution Centre Replenishment
B&M France – Profit Protection
B&M France – Corporate Policy Compliance
Review of TCFD Requirements
Review of Environmental, Social and Governance (ESG)
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B&M European Value Retail S.A.
Annual Report and Accounts 2022
73
Strategic Report Corporate GovernanceFinancial Statements Audit & Risk Committee report continued
The Board has confirmed that it has carried out
a robust assessment of the principal risks facing
the Group, including emerging risks and those
which threaten its business model, future
performance, solvency or liquidity.
The Board considers that the processes
undertaken by the Committee are appropriately
robust and effective and in compliance with the
guidelines issued by the Financial Reporting
Council. During the year, the Board has not
been advised by the Committee nor has
it identified itself, any failings, frauds, or
weaknesses in internal control which it has
determined to be material in the context
of the financial statements.
The Committee continues to believe that
appropriate controls are in place throughout
the Group, that the Group has a well-defined
organisational structure with clear lines of
responsibility and a comprehensive financial
reporting system. The Committee also believes
that the Company complies with the FRC
guidance on Risk Management, Internal Control
and related Financial Business Reporting.
Furthermore, the Internal Audit function has
carried out an assessment of the effectiveness
of actions taken by management to mitigate
significant risks and this has been reviewed
by the Committee.
Reviewing the draft interim
and annual reports
The Committee considered in particular the
following:
•
the accounting principles, policies and
practices adopted and the adequacy of
related disclosures in the reports;
the significant accounting issues, estimates
and judgements of management in relation
to financial reporting;
•
• whether any significant adjustments were
required as a result of the audit;
• compliance with statutory tax obligations
and the Group’s tax policy;
• whether the information set out in the
Strategic Report was balanced,
comprehensive, clear and concise and
covered both positive and negative aspects
of performance; and
• whether the use of “alternative performance
measures” obscured IFRS measures.
IT systems and business continuity
The success of the business relies on the
development and operation of IT systems
which are efficient and effective. In addition,
the integrity and security of the IT systems are
vital from a commercial standpoint.
IT systems, cyber security and business
continuity are acknowledged as being
significant risks and the risk mitigations and
key actions in FY22 are set out in the principal
risk section of this Annual Report on page 26
including the benefits from significant investment
in new IT systems during FY22.
Regulation
The Group operates within a fast moving and
increasingly regulated market place and is
challenged by regulatory requirements across
the board, including those controlling bribery
and corruption, the importation of goods, data
protection and health and safety. This creates
risk to the organisation as non-compliance can
lead to financial penalties and reputational
damage in respect of customers, employees,
suppliers and stakeholders.
The Board reviewed the Group’s compliance
procedures and the application of policies
relating to fraud, anti-money laundering and
anti-bribery.
As a standing agenda item at each of its
meetings, the Committee considered and
reviewed B&M and Heron Foods’ compliance
with the Groceries Code. After the year-end
the Committee also reviewed the annual
compliance report of B&M and Heron Foods
in relation to the Groceries Code and approved
it for submission to the regulatory bodies in
accordance with The Groceries (Supply Chain
Practices) Market Investigation Order 2009.
In the year under review the Group received
a Request for Information from the Financial
Reporting Council (FRC) in respect to our
provision for dilapidation costs. Subsequent
to our reply to the letter, which was reviewed
and approved by the Audit Committee, the FRC
confirmed that the matter had been brought
to a satisfactory conclusion.
Related party transactions
There is an established process for the
consideration and review of related party store
lease and freehold acquisition transactions
of the Group with Arora Family. Details of that
process are set out on page 95 of the Corporate
Governance Report above.
The Committee reviews and monitors for the
Board the overall total number of related party
store leases and rents of the Group with those
related parties during the course of the year,
with a view to assessing any potentially material
increases in the proportion of those store leases
or rents compared with the overall store estate
and rent roll.
Internal control and
risk management
The Board has overall responsibility for ensuring
that the Group maintains a sound system of
internal control. There are inherent limitations
in any system of internal control and no system
can provide absolute assurance against
material misstatements, loss or failure. Equally,
no system can guarantee elimination of the risk
of failure to meet the objectives of the business.
Against that background, the Committee
has helped the Board develop and maintain
an approach to risk management which
incorporates risk appetite, the framework within
which risk is managed and the responsibilities
and procedures pertaining to the application
of the policy.
The Group is proactive in ensuring that
corporate and operational risks are identified
and managed. A corporate risk register is
maintained which details:
1.
2. actions to mitigate risks;
3. risk scores to highlight the implications
the risks and the impact they may have;
of occurrence;
4. ownership of risks; and
5. target dates for actions to mitigate risks.
A description of the principal risks is set out on
pages 26 to 35.
74
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Going concern and financial viability
The Committee reviewed the appropriateness of
adopting the going concern basis of accounting
in preparing the financial statements and
assessed whether the business was viable in
accordance with the UK Corporate Governance
Code 2018. The assessment included a review
of the principal risks including emerging risks
facing the Group, their financial impact, how
they are managed, the availability of finance
and the appropriate period for assessment. The
Committee also ensured that the assumptions
underpinning forecasts were stress tested.
Going concern has in the past year again been
an area of particular focus for management and
the auditors and the Audit Committee has
discussed and challenged the assumptions
implicit in the Group’s budgets and forecasts.
The Group’s viability statement is on page 35.
Fair, balanced and understandable
The Committee considered whether the
2022 Annual Report is fair, balanced and
understandable and whether it provides the
necessary information to shareholders to assess
the Group’s position, performance, business
model and strategy. The Committee considered
management’s assessment of items included
in the financial statements and the prominence
given to them. The Committee and subsequently
the Board were satisfied that, taken as a whole,
the 2022 Annual Report and Accounts are fair,
balanced and understandable.
External auditors
KPMG Luxembourg Société Anonyme (KPMG)
were re-appointed by shareholders at the
Annual General Meeting on 29 July 2021 as the
Group’s independent external auditors (réviseur
d’entreprises agréé) for the financial year ended
26 March 2022. The partners responsible for the
audit are Thierry Ravasio, a partner in KPMG’s
Luxembourg office and Tony Sykes, a partner
in KPMG’s London office.
Audit independence
The Committee sought and was provided with
assurance from the Audit Engagement partners
that they and all members of KPMG’s staff
engaged in the audit had confirmed that they
and their dependents were independent and
that KPMG as a firm was independent.
Audit quality
The Committee assessed the quality of KPMG’s
audit in a number of ways:
1.
the Committee met with the senior members
of the KPMG audit team on three occasions
during the year and discussed the planning,
execution and reporting of audit work and
findings. All senior members of the KPMG
team contributed to these meetings;
2. in conjunction with the CFO and senior
members of the finance team, the Audit
Committee discussed and assessed KPMG’s
approach to the execution of and reporting
of their audit and related findings; and
3. the Committee considered the matters set
out in KPMG’s 2021 Transparency Report,
dealing with audit quality monitoring and
remediation. It considered the results of
internal and external engagement reviews
and the steps being taken by KPMG to
address findings. Within KPMG, audit quality
is monitored at a global level and at an
engagement level with all engagement
partners being reviewed at least once in
a three year cycle.
In reviewing KPMG’s 2021 Transparency Report,
the Committee noted the firm’s commitment to
quality and risk management. The Committee
also discussed with KPMG the results of the FRC
Audit Quality Inspection of the UK firm, which
were published in July 2021
The Committee noted that KPMG had taken
steps to address the key findings of the 2021 FRC
report by continuing with and extending the
initiatives within its three year Audit Quality
Transformation Plan. Whilst there has been
considerable focus on audit quality, the FRC
concluded that there remains some areas
where improvements need to be made.
In relation to the Group’s audit, the Committee
has reviewed the performance of KPMG with
input from management, the Group’s finance and
Internal Audit functions and the General Counsel.
The conclusions reached were that KPMG has
continued to perform the external audit in a
very professional and efficient manner and it is,
therefore, the Committee’s recommendation
that the reappointment of KPMG be put to
shareholders at the Annual General Meeting
on 28 July 2022. Given KPMG’s short tenure of
five years, the Board has no present plans to
consider an audit tender process.
The Committee reviewed the reports prepared
by KPMG on key audit findings as well as
the recommendations made by KPMG to
improve processes and controls together
with management’s responses to those
recommendations. Management has
committed to making appropriate changes in
controls in the areas highlighted by KPMG.
The Committee considered in detail KPMG’s
audit planning documentation and satisfied
itself that the audit work to be carried out by
KPMG covered all significant aspects of the
Annual Report and Accounts. There were no
areas which the Audit Committee asked KPMG
to look at specifically. KPMG’s report to the
Audit Committee at the conclusion of the audit
confirmed that the audit had been carried out
as set out in the planning documentation and
the Audit Committee considered the findings
of KPMG as reflected in their audit opinion
and their year-end report to the Board. KPMG’s
audit opinion sets out the key matters that, in
their professional judgement, were of most
significance in their audit. These are consistent
with the key matters considered and agreed
with the Audit Committee when the audit was
planned. KPMG’s opinion describes how these
matters were addressed in the audit and the
scope and nature of their work reflects the
thoroughness of their approach and the degree
of scepticism applied.
Non-audit work
The Board’s policy in relation to the auditors
undertaking non-audit services is that they are
subject to tender processes with the allocation
of work being done on the basis of competence,
cost effectiveness, regulatory requirements,
potential conflicts of interests and knowledge
of the Group’s business. Fees for new audit
work must be approved by the Committee
in advance.
KPMG were paid £981,000 during the year in
relation to audit work and £113,800 in relation
to work associated with audit related assurance
services. Fees for other services provided by
KPMG were £99,800 which principally related
to other assurance services.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
75
Strategic Report Corporate GovernanceFinancial Statements Audit & Risk Committee report continued
The Committee is mindful of the attitude
investors have to the auditors performing
non-audit services. The Committee monitors
the appointment of the auditors for non-audit
services with a view to ensuring that non-audit
services do not compromise the objectivity and
independence of the auditors. The Committee
will continue to ensure that fees for non-audit
services will not exceed 70% of aggregate audit
fees measured over a three year period.
Critical Judgements
Critical judgements and key sources
of estimation uncertainty are set out on
page 114 of the Annual Report. These relate to
investments in associates, hedge accounting,
goodwill impairment, lease discount rates and
lease terms.
Investments in associates
Multi-lines International Ltd is 50% owned by the
Group but is treated as an associate because
of the level of influence exercised by the Group,
which is considered to be more in keeping with
that of an associate than a joint-venture.
Hedge accounting
Significant judgement is involved in forecasting
the level of US dollar purchases to be made
within the period that a forward hedge has been
bought for. The Group takes a prudent view that
no more than 80% of the operational hedging in
place can be subject to hedge accounting.
Dilapidations
In the year under review the Group received
a Request for Information from the Financial
Reporting Council (FRC) in respect to our
provision for dilapidation costs. The FRC
confirmed that the matter had been brought
to a satisfactory conclusion with the summary
of findings as follows:
“We asked the company for further information
about provisions for dilapidation costs and, in
particular, whether provisions were recognised
for stores under contract and not at risk of
closure. The company explained that it had
considered the requirement for a provision for
ongoing stores but confirmed that it had judged
that such a provision would be immaterial.
We were satisfied with the company’s
explanation, and its undertaking to
enhance its future disclosures.”
The FRC’s review is limited in that it does
not benefit from detailed knowledge of our
business or an understanding of the underlying
transactions entered into. The FRC provides no
assurance that our report and accounts are
correct in all material respects and the FRC’s
role is not to verify the information provided
but to consider compliance with reporting
requirements. The FRC accepts no liability for
reliance on the letters by the company or any
third party, including but not limited to, investors
and shareholders.
Internal audit
The Group Internal Audit function has a direct
reporting line to the Committee and they were
represented at all Committee teams meetings
discussions throughout the year. During the
year, the Group Internal Audit team undertook
a programme of work which was discussed
with and agreed by both management and
the Committee, and which was designed to
address both risk management and areas of
potential financial loss. The Group Internal
Audit function also has established procedures
within the business to ensure that new risks
are identified, evaluated and managed and
that any necessary changes are made to the
risk register.
During the year, the Committee received reports
from the Internal Audit function as set out on
page 73.
In relation to each of the areas covered,
Internal Audit made recommendations for
improvements, the vast majority of which
were agreed by management and either have
been or are being implemented. Where areas
requiring improvement have been identified,
the Committee has satisfied itself that processes
are in place to ensure that the necessary action
is taken and that progress is monitored.
The Committee has evaluated the performance
of internal audit and has concluded that it
provides constructive challenge to management
and demonstrates a constructive and
commercial view of the business.
Committee performance
The performance of the Committee during the
year was evaluated as part of a broader Board
performance review conducted internally and
led by the Chairman of the Board as described
on page 68 above. The overall conclusion of the
review was that the Audit & Risk Committee
remains effective in discharging its functions
and reporting to the Board.
Ron McMillan
Chairman of the Audit & Risk Committee
30 May 2022
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Nomination Committee report
The Nomination Committee has responsibility for regularly
reviewing the structure, size and composition, and diversity
of the Board. It also reviews the leadership and senior
management needs of the Group, with the aim of ensuring
the continued ability of the Group to compete effectively
in the marketplace.
Dear Shareholder,
The Nomination Committee’s report for the year
ended 26 March 2022 is set out below.
Committee composition,
responsibilities and effectiveness
The members of the Committee during the
year were Peter Bamford (Chairman of the
Committee), Simon Arora (CEO) and each of
the four Non-Executive Directors being Ron
McMillan, Tiffany Hall, Carolyn Bradley, Gilles
Petit, prior to his resignation on 29 July 2021 and
Paula MacKenzie following her appointment on
9 November 2021. Although not members of the
Committee, Allison Green, the Group People
Director and Paul Owen, the Group’s General
Counsel, prior to his retirement in January 2022
and then Patrick Rawnsley, his successor in the
role, attended each of the Committee’s meetings
and video conference discussions during the
year. Details of Committee meetings, video
conferences and attendances are set out on
page 64 of the Corporate Governance Report.
The Committee has responsibility for reviewing
the structure, size and composition of the Board,
including the skills, knowledge, experience and
diversity of the Board. Further details of the other
main responsibilities of the Committee are set
out on page 65 of the Corporate Governance
Report. The Committee’s terms of reference are
also available on the Company’s website at
www.bandmretail.com
The effectiveness of the Committee during the
year was evaluated as part of a broader Board
performance review conducted internally and
led by the Chairman of the Board as described
on page 68 above. The overall conclusion
of the review was that the Committee remains
effective in discharging its functions and
reporting to the Board.
Committee activities
During the year under review the main activities
of the Committee included succession planning,
diversity, wider executive team development,
retention and conflicts of interest, each of which
are now described in further detail below.
Board succession
As reported last year, Gilles Petit decided not to
seek reelection as a Non-Executive Director of
the Company at the Annual General Meeting
on 29 July 2021. The Committee, led by the
Chairman, oversaw the process of identifying
and recommending the appointment of a new
Non-Executive Director, and Paula MacKenzie
joined the Board in that capacity on 9 November
2021. The search was overseen by the
Committee and carried out by Russell Reynolds
Associates who are a signatory to the voluntary
code of conduct for executive search firms, and
they had no other connection with the Group.
Russell Reynolds carried out preliminary
interviews to create a short list of candidates to
be considered by the Nomination Committee.
Paula has a strong background in general
management and finance, having held a number
of senior executive roles during the last 11 years
with Kentucky Fried Chicken (Great Britain) Ltd
(“KFC UK&I”) including Managing Director and
Chief Financial Officer of KFC UK&I. Paula has
recently been appointed as CEO of PizzaExpress.
The Committee ensures that a comprehensive
induction process is carried out with new
Directors on their appointment to the Board. The
details of the induction process carried out with
Paula are set out on page 69 above.
Throughout the year, the Committee has
continued to develop its succession planning in
relation to both Executive and Non-Executive roles.
Board diversity
The Committee has continued to review the
Group’s diversity in relation to the Board and
at other levels of senior management in the
business. As referred to on page 66, the Group’s
recruitment processes and Diversity Policy,
recognise the value which a diverse board
brings to its business.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
77
Strategic Report Corporate GovernanceFinancial Statements Nomination Committee report continued
In consequence of the resignation of Gilles Petit
and the appointment of Paula MacKenzie, the
Company reaches the Hampton Alexander
target of at least 33% female representation
on its Board.
The Board complies with the Parker Review
ethnic diversity target of having at least one
director with an ethnic minority background
on the Board.
Further details of the Group’s gender diversity
policy are set out on page 40 above. The
percentage of female representation within
the senior management of the Group reporting
either directly to the Board or the Executive
Committee was 43.8% at the end of FY22.
The Committee is aware of the recent
publication by the Financial Conduct Authority
of rules requiring UK listed companies to report
information and disclose against targets on the
representation of women and ethnic minorities
on their boards, with the intention of making it
easier for investors to see the diversity of their
senior leadership teams. The rules apply to
premium listed companies for financial
accounting periods starting from 1 April 2022
and so will be reported on by the Company in
its FY23 reporting. The Company will restate its
diversity policy in light of the new rules.
Wider executive team
developments
The Committee and the CEO originally agreed a
plan in FY19 for the strengthening of the senior
management team, as the business of the
Group continues to grow at a significant rate.
In this context, Gareth Bilton has been promoted
from within the talent pool of the business to
the key role of Stores Director and member of
the Executive Committee of the Group. The
Committee was involved in agreeing the
specification for the role.
Other senior recruitments have been made
or are planned in relation to other areas of
strategic and operational importance as the
Group continues to grow in the UK and France.
The Committee receives reports from the
CEO and Group People Director in relation to
progress with planned recruitments to the
broader executive team as a regular agenda
item of the Committee’s business.
Retention of Senior Management
Senior executives are appropriately incentivised
through bonus and share option arrangements,
and in the period, the Remuneration Committee
approved the extension of such schemes to
include senior executives in France. To support
the work of the Nomination Committee, a
review of key management notice periods was
undertaken to ensure consistent terms across
roles, with notice periods being extended where
necessary to retain talent.
Conflict of interests
The Committee requires any proposed appointee
to the Board to disclose any other business
interests that may result in a conflict of interest
and be required to report any future business
interests that could result in a conflict of interest.
The Committee carried out that process on
behalf of the Board in considering any conflicts
of interest of Non-Executive Directors where
they disclosed their intention to take up other
additional external appointments during the
year. The Committee is assisted by the Group’s
General Counsel who maintains a register of
external appointments of the Company’s Board
members and sectors within which companies
they are appointed to operate.
CEO Succession Announcement
Subsequent to the year-end, the Company
has announced that Simon Arora, currently
CEO intends to retire from the business. During
late April and May the Committee managed
a process to appoint a successor. Russell
Reynolds Associates were appointed to
advise and assist the Committee. A thorough
independent assessment of the internal
candidate was carried out alongside a review
of potential external candidates. Following this
process the Committee recommended to the
Board that Alex Russo should be appointed
as Chief Executive to succeed Simon.
The Company has already commenced
a process with external executive search
consultants to identify a successor for
Alex Russo as CFO and will announce that
successor in due course.
Peter Bamford
Chairman of the Nomination Committee
30 May 2022
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Annual Report and Accounts 2022
Directors’ remuneration report
Annual statement by the Chair
of the Remuneration Committee
We aim to incentivise superior performance and align
remuneration outcomes for Executive Directors with success in
the delivery of the Board’s strategy and long term sustainable
value for shareholders and wider stakeholders.
Dear Shareholder,
I am pleased to present the Company’s
Remuneration Report for 2021/22. This
report contains:
• The Company’s Annual Report on
Remuneration on pages 79 to 92, which
details the remuneration paid to the Directors
in the 2021/22 financial year, and which is
subject to a shareholder advisory vote at
our 2022 AGM.
• A summary of the key elements of the
Directors’ Remuneration Policy on pages 91
to 92, as approved at the 2021 AGM.
Performance and incentive
outcomes for 2021/22
The Group’s performance continues to be very
strong in 2021/22. Although group revenues
declined slightly by (2.7)% to £4.7bn, and
adjusted EBITDA declined slightly by (1.2)% to
£619m, these results represent a significant
growth compared to pre-pandemic levels with
sales up 13% on a two-year basis and adjusted
EBITDA up 80.8%. With a focus on simplicity, cost
discipline and speed of decision making, Simon
Arora and his management team navigated the
challenges of the pandemic and supply chain
issues very effectively, continuing to provide
B&M customers with great products and prices.
Excellent progress was also made in France last
year both financially and operationally.
The Annual Incentive Plan (“AIP”) out-turn was
95.6% for Simon Arora and 93.8% for Alex Russo
of their respective maximums, which reflected the
outstanding financial results and the Committee’s
assessment against objectives set this year for
them. Half of the bonus achieved under the AIP in
2021/22 will be deferred into shares for 3 years.
The 2019 LTIP has reached the end of the relevant
three year performance period. This was subject
to two equally-weighted performance conditions
being the adjusted earnings per share and the
relative TSR performance of the Company against
FTSE 350 retailers, each being measured over a
3 year performance period to 26 March 2022.
The TSR performance resulted in a 100% out-turn
for that measure. The adjusted earnings per
share was 41.6p relative to a maximum target of
33p, which gave a 100% vesting level under that
measure and an overall vesting level of 100% of
the award. The award is due to vest on 2 August
2024 following a two year holding period. Simon
Arora is the only current Director who received
an award under the 2019 LTIP.
The Committee has discretion to adjust the level
of vesting. It considered that the formulaic
out-turns under both the AIP and LTIP were
appropriate due to the excellent leadership
and successful execution of the strategy of the
business over the periods to which those awards
relate. The outcomes have therefore been
approved without the exercise of any discretion.
During the year, our colleagues across the
business responded extremely well to the
continuing challenges of Covid-19. Our policy
is to give our workforce the opportunity to share
in the Company’s success with cash bonuses
being paid where internal targets for the
business are met or exceeded. As a result of the
strong performance of the business during the
year, we paid eligible colleagues an additional
week’s pay in January 2022. We will continue
to enable our workforce to share in the success
of the business in this way in future years to the
extent that performance warrants it.
It should be noted that setting the AIP and LTIP
targets this year was particularly challenging
given the exceptional growth in 2020/21 and
the difficulty in predicting the impact of the
easing of lockdown restrictions on trading
patterns. The AIP and LTIP targets were set
taking into account the management plan
and analysts’ consensus forecasts at the time
of setting the targets at the start of the year.
The LTIP range was stretched given the high
degree of uncertainty faced by the business with
a performance significantly above plan required
to achieve maximum payout.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
79
Strategic Report Corporate GovernanceFinancial Statements Directors’ remuneration report continued
Shareholder engagement
We note that the vote in favour of the resolution to approve the Directors’ Remuneration Report at the 2021 AGM fell just below the 80% level. Prior to the
AGM, we undertook a detailed and extensive consultation with shareholders regarding remuneration for 2021/22 onwards to gain an understanding
of their views. Following the AGM, we wrote to 28 shareholders as part of an ongoing constructive dialogue, and the responses that we received were
mostly positive. The Committee is keen to understand the views of shareholders, and believes that the changes to the CEO’s remuneration at the last
Policy review were fair and balanced in the context of the business and external market.
Implementation of remuneration policy for 2022/23
To recognise his strong performance since he was appointed and the increased responsibility of his role as a result of taking on leadership of Heron
Foods and the French operations of the business, Alex Russo will receive a salary increase of 5.3% effective from 1 April 2022. He will also be eligible
to participate in the AIP up to the policy maximum of 150% of salary for 2022/23, increased from 125% of salary for 2021/22 to reflect his enlarged role.
Simon Arora will receive a 3% salary increase in line with the average all-employee increase.
As announced, Alex Russo will succeed Simon Arora as CEO in due course. The Committee has determined that Alex’s remuneration will comprise
a salary of £800,000 and incentives in line with the Directors’ Remuneration Policy.
The resulting operation of policy for 2022/23 will be as follows:
Element
Implementation for 2022/23
Base salary
• Simon Arora (CEO): £834,300 (currently £810,000)
• Alex Russo: £500,000 (currently £475,000) as CFO, rising to £800,000 on appointment as CEO
AIP
LTIP
• Maximum opportunity of 200% of salary for CEO and 150% of salary for CFO
• 75% based on Adjusted EBITDA and 25% based on personal objectives
• 50% of any bonus earned will be deferred in shares for three years
• Award of 200% of salary for Alex Russo on appointment as CEO
• 50% based on Adjusted EPS and 50% based on Relative TSR vs FTSE 350 retailers
Pension
• 3% of salary less Employer’s NIC
Role of the Remuneration Committee
The Committee has responsibility for determining the Company’s policy on remuneration of the Executive Directors and the Chairman, the first layer of
senior management of the Group below the Board and the Group’s General Counsel. Its terms of reference were reviewed during 2021/22 and a
number of minor amendments and clarifications were made.
The Committee does not consult directly with employees when reviewing levels of Executive Directors’ remuneration but it takes account of pay policies
for the broader salaried workforce when undertaking annual salary reviews for the Executive Directors, as well as reviewing policy and practices for
employees when determining remuneration policy for Executive Directors.
The Committee’s terms of reference are available on the Company’s website at www.bandmretail.com
Conclusion
I hope that you can support the decisions we have made this year in relation to the implementation of our remuneration policy for 2021/22 and how we
intend to operate our policy for 2022/23.
We remain committed to an open and transparent dialogue with our shareholders and welcome any feedback which shareholders may have in relation
to this report. I will also be available at the AGM to take any questions in relation to this report.
Tiffany Hall
Chair of the Remuneration Committee
30 May 2022
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Annual Report and Accounts 2022
Corporate Governance Code
The Committee is conscious of the Code’s references to remuneration arrangements being clear, simple, predictable, proportionate and to take
adequate account of risk while being aligned to culture. These factors have been considered and are felt to be satisfied through:
• Clarity – the Company’s remuneration policy and implementation of policy are clearly disclosed each year in this report. The Committee proactively
engages with shareholders and their representative bodies as part of the triennial policy renewal process (as it did ahead of and post the 2021 AGM)
and is available to discuss matters at any other time;
• Simplicity – the Company operates a simple pay model which typically pays at no more than median while encouraging superior performance, and
only rewarding sustained success achieved in a manner consistent with the Board’s overall objectives to deliver superior returns for our shareholders.
This is set by the operation of a mix of absolute profit targets and relative total shareholder return assessed alongside stretching personal objectives
which recognise delivery against defined goals. We will continue with this approach for 2022/23 in line with the approach for 2021/22;
• Risk – the overall policy offers reward at no more than a median level and is subject to the operation of suitably stretching targets, which is consistent
with our business model as a value retailer. We have again set stretching targets for variable pay in 2022/23 in the context of the business plan.
Payments of variable pay are subject to the Committee being satisfied that the outcome is appropriate, and all our variable pay plans include the
ability to operate malus and clawback where necessary;
• Predictability – the policy included a scenario chart showing potential pay levels on various assumptions and all awards are subject to maximum
grant levels as set out in the policy;
• Proportionality – the out-turn in respect of variable pay is clearly set out in this report and payments are contingent on the strategic pillars of EBITDA,
EPS, relative total shareholder return and personal objectives pre-set by the Board. As indicated under Risk above, the out-turn can be reduced as
appropriate; and
• Alignment to culture – the variable pay plans are consistent with our focus on performance and incentivisation down to store and deputy store
manager levels.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
81
Strategic Report Corporate GovernanceFinancial Statements Directors’ remuneration report continued
Annual Report on Remuneration
Implementation of Remuneration Policy
The Committee has operated the remuneration policy in accordance with the Directors’ Remuneration Policy (the “Policy”) which was approved
by shareholders at the Company’s AGM on 29 July 2021.
This section of the report sets out how the Policy has been applied in the financial year 2021/22 and how the policy will be applied in the
financial year 2022/23.
Where sections of the report have been subject to audit, they are marked accordingly.
Luxembourg law
The Annual Remuneration Report has been prepared to comply with the reporting requirements of the Luxembourg law on directors’ remuneration
referred to above. The Company, as a Luxembourg registered company, is not subject to the regulations adopted in the UK in 2013 (and as amended)
for the reporting of executive remuneration. However, in addition to the Luxembourg law reporting requirements, the Committee considers the UK
regulations to also be reflective of best practice and helpful to shareholders to maintain consistency with the Company’s reporting in previous years
while also complying with the requirements of the Luxembourg law. The report has therefore been prepared by the Company to follow the practice
(as in the case in previous years) of also voluntarily adopting the UK reporting regime where practical and while maintaining the Company’s status
as a Luxembourg registered company.
Single figure table of total remuneration of Executive Directors – audited
The audited table below shows the aggregate remuneration of the Executive Directors of the Company during the financial year 2021/22.
Executive Directors
Simon Arora (CEO)
Alex Russo (CFO)
Year1
2020/21
2021/22
2020/21
2021/22
Salary
£
654,741
810,000
173,558
475,000
Benefits2
£
45,095
45,104
28,227
43,503
Pension3
£
115,227
21,514
4,575
12,522
Bonus4
£
Long term
incentives5
£
972,770
1,968,072
1,549,125 2,610,896
–
–
186,462
556,640
Other6
£
Total
£
–
3,710,905
– 5,036,639
150,000
542,822
150,000 1,237,665
Total
fixed pay
£
Total
variable pay
£
815,063
876,618
206,360
531,025
2,940,842
4,160,021
336,462
706,640
The 2020/21 year is for the 52 weeks ended 27 March 2021 and the 2021/22 year is for the 52 weeks ended 26 March 2022.
1.
2. Benefits include company car/car allowance cash equivalent as a benefit in kind, fuel and running costs, critical illness insurance and life assurance for each Executive Director,
and for Alex Russo only, permanent healthcare insurance. The amount for Alex Russo includes £13,245 in respect of assistance with travel and living costs over the period to
September 2021, at which point this benefit ceased.
3. Pensions include auto-enrolment pension employer contributions and a cash equivalent allowance to pension contribution entitlement less employers’ NICs.
4. 50% of the annual bonuses of the Executive Directors for 2021/22 being £774,563 for Simon Arora and £278,320 for Alex Russo, are payable in shares which are to be deferred for
a period of three years from the date of grant.
5. The 2019/20 LTIP award granted to Simon Arora has completed its performance period and is included in the 2021/22 LTIP figure. It will vest on the expiry of the holding period on
2 August 2024. The value is estimated based on a vesting of 100%, the three-month average share price to the year end of £5.790 and the accrued dividends to the year end. Share
price appreciation accounts for £793,187 of the value. The value of the 2018/19 LTIP award has been trued up from the estimate provided in last year’s report to reflect the value after
3 years from grant (at which point it is no longer subject to continued service), based on a share price of £5.686 on 20 August 2021.
6. Payment for 2021/22 made to Alex Russo in respect of 2021/22 portion of his buyout award regarding remuneration forfeited on joining B&M. A final payment of £150,000 is due in
respect of 2022/23, subject to satisfactory performance.
The remuneration of the Executive Directors is paid by B&M Retail Limited, other than their long-term incentives. The reported figures include
all such amounts.
Base salaries
Simon Arora and Alex Russo received salaries of £810,000 and £475,000 respectively, effective from 1 April 2021.
Pension
The pension amounts paid in the year represent amounts contributed to pension plans and cash supplements, adjusted for the cost of employers’ NICs
to the extent that provision is made as a cash supplement.
The pension benefits of the Executive Directors for 2021/22 were paid as salary supplements and were 3% of base salary (less Employer’s NICs),
which is in line with the pension provision for UK salaried employees of the Group.
For any new Executive Directors their pension benefits would be capped at the same percentage of base salary applied generally to UK salaried
employees of the Group.
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Annual Report and Accounts 2022
AIP outcomes
Executive Directors bonus payments for 2021/22 are in line with the remuneration policy and the terms of the Annual Incentive Plan (“AIP”).
75% of the maximum AIP opportunity related to the achievement of financial targets for 2021/22. The targets were based on adjusted Group EBITDA
performance as follows:
Threshold
Target
Max
Actual
Adjusted Group
EBITDA target*
% maximum
overall
Bonus opportunity
£452.2m
£502.4m
£527.5m
£618.8m
18.75%
37.5%
75%
75%
*
There is a straight-line payout for achievement between threshold, target and maximum levels.
The remaining 25% of the AIP related to personal objectives. These objectives focused on a number of key performance indicators ranging from
strategic, operational and investor relations matters. The Committee assessed each objective against those criteria as explained below.
Simon Arora
Objectives
Coach and develop Executive Committee capability,
including development of succession plan and
new appointments.
Deliver strategic and operational progress in France.
Performance
This was fully achieved with the recruitment of new roles into the
Executive Committee and the development of the senior team.
Overall outcome
20.63 out of 25
B&M re-branding completed in France and achieved outperformance
above budget – fully achieved.
Growth in like-for-like sales relative to target.
Partially achieved, as a result of strong performance on price.
Development of ESG plan.
ESG plan with targets and enhanced reporting developed and signed off
by Board – fully achieved.
Management of investor relations.
Fully achieved with clear communication of strategy to investor base,
with minimal change to shareholder register.
Development of online capability.
Partially achieved with a transactional website being developed during
2021/22 ready for external launch in early 2022/23.
Alex Russo
Objectives
Development of IT strategy.
Strengthening team.
Shrinkage vs revenue.
Regulatory and compliance.
Grocery trading terms.
Performance
Partially achieved, with development of strategy in the UK but with
some implementation issues and with more work to be done in France.
Overall outcome
18.75 out of 25
Partially achieved with development of the UK team in terms of succession.
Fully achieved as shrinkage was below the stretch target of 0.9% of revenue.
Fully achieved with no issues identified.
Partially achieved through leading collaboration and support for buyers to
deliver improved working capital and commercial terms with suppliers.
Financial controls and compliance.
Partially achieved through improvement of internal financial systems,
controls and compliance, with some work still to do in France.
The table below sets out the resulting bonuses earned, including the amounts deferred into shares for a three year period:
Executive Director
Simon Arora
Alex Russo
Bonus maximum
as % salary
Bonus earned
as % maximum
Bonus earned £
Of which paid
in cash (50%)
Of which deferred
in shares (50%)
200%
125%
95.63%
93.75%
1,549,125
556,640
774,562
278,320
774,563
278,320
The Committee considered that overall performance had been very strong during 2021/22 and that the AIP outcomes appropriately reflected individual
and business outcomes. No discretion was used in assessing the outcomes as set out above.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
83
Strategic Report Corporate GovernanceFinancial Statements
Directors’ remuneration report continued
Long term incentive outcome
The LTIP award granted to Simon Arora on 2 August 2019 had a combination of EPS and Relative TSR conditions with equal weighting. The performance
period ended on 26 March 2022 and the outcomes are provided below.
Performance condition
Adjusted EPS
Performance
for threshold vesting
(25%)
Performance for
maximum vesting
27p
33p
Weighting
50%
Relative TSR vs FTSE 350 retailers
50%
Median
Upper quartile
Actual performance
41.6p
Between 2nd
and 3rd within
17 comparators
Vesting
100%
100%
100%
Total
The resulting awards due to vest are as follows:
Executive Director
Simon Arora
Number of awards
due to vest
due to meeting
performance
condition
Dividend shares
earned to year end
Number of awards
granted
354,735
354,735
96,197
Total shares
due to vest
450,932
Total value £1
2,610,896
1. Based on the average share price of £5.790 during the three month period to 26 March 2022.
The awards are due to vest following the expiry of the holding period on 2 August 2024.
LTIP awards granted during the financial year – audited
LTIP awards in the form of nil-cost options were granted to Simon Arora and Alex Russo on 3 August 2021 as follows:
Executive Director
Simon Arora
Alex Russo
Award size
200%
175%
Number of
awards granted1
289,285
148,437
Face value of
awards £
1,620,000
831,250
1.
The number of awards granted was based on a share price of £5.60, being the share price prior to the date of grant.
Awards vest after five years from grant following the expiry of a two year holding period. Dividends accrue in respect of the awards over the period from
grant to vesting.
The performance conditions are measured over the three year period to the end of 2023/24, and the targets were determined in the following way:
• The Adjusted EPS targets were set by the Committee at the beginning of 2021/22, based on the management 3 year plan. The LTIP targets were set
taking into account the management plan and analysts’ consensus forecasts at the time of setting the targets at the start of the year. The range has
been stretched given the high degree of uncertainty currently faced by the business with a performance significantly above plan required to achieve
maximum payout.
• The relative TSR condition follows a market-standard approach, with no vesting below median performance and with maximum vesting for upper
quartile performance or above. This approach is consistent with the approach used for previous awards.
The resulting performance conditions and targets are as follows:
Performance condition
Adjusted EPS
Relative TSR vs FTSE 350 retailers1
Performance
for threshold vesting
(25%)
Performance for
maximum vesting
37p
Median
45p
Upper quartile
Weighting
50%
50%
1. Consists of the constituents of the FTSE General Retailers Index and the FTSE Food and Drug Retailers Index with some limited exclusions due to business fit.
A one month average applies prior to the beginning and at the end of the performance period for the TSR condition.
Straight line vesting occurs between threshold and maximum levels of performance.
84
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Annual Report and Accounts 2022
Deferred bonus awards granted during the financial year – audited
A proportion of bonus earned by Executive Directors in respect of performance during 2020/21 was deferred into shares for a period of three years on
14 July 2021 as follows:
Executive Director
Simon Arora
Alex Russo2
1.
2.
The number of awards granted was based on a share price of £5.61, being the share price prior to the date of grant.
Includes some awards in respect of service prior to becoming a Director.
The awards are subject to continued service only.
Loss of office payments – audited
No payments for loss of office were made during 2021/22.
Value of
deferred bonus £
Number of
awards granted1
324,256
82,076
57,779
14,625
Payments to past Directors – audited
As disclosed in last year’s Directors’ Remuneration Report, Paul McDonald’s 2019 LTIP award was subject to performance conditions to the end of
2021/22. The award is due to vest at 100% of maximum as a result of achievement against these performance conditions, resulting in 67,275
awards being due to vest after time pro-rating. An additional 18,243 dividend shares had been earned as at the end of 2021/22.
Remuneration of the Chairman and Non-Executive Directors – audited
The fees of the Chairman are set by the Remuneration Committee. The fees of each of the Non-Executive Directors are set by the Board and take account
of Chairmanship of Board Committees and the time and responsibility of the roles of each of them.
The fees paid for 2021/22 to the Chairman of the Board and each of the Non-Executive Directors were as follows:
Director
Peter Bamford
Ron McMillan
Tiffany Hall
Carolyn Bradley2
Gilles Petit (stepped down on 29 July 2021)
Paula MacKenzie (appointed 9 November 2021)
2021/22
Fee £
380,000
99,000
80,500
68,000
20,543
24,823
2021/22
Benefits £1
20,972
–
–
–
–
–
2021/22
Total £
400,972
99,000
80,500
68,000
20,543
24,823
2020/21
Fee £
300,000
90,671
74,171
63,840
59,668
–
2020/21
Benefits £1
17,750
–
–
–
–
–
2020/21
Total £
317,750
90,671
74,171
63,840
59,668
–
1.
The benefits for the Chairman relate to reimbursement of an additional social security fund levy payable on his fees in Luxembourg (grossed-up) for which credit cannot be claimed
against UK income tax. The figure for 2020/21 has been restated to reflect the actual amounts paid and the 2021/22 figure is an estimate subject to restatement in next year’s
Remuneration Report.
2. Carolyn Bradley’s fee for 2020/21 has been updated to reflect fees paid in respect of the year.
The Non-Executive Directors are not eligible to receive any variable pay and therefore the totals provided above reflect total fixed remuneration.
The annual rates of fees paid during the year with effect from 1 April 2021 were as follows:
Role
Chairman of the Board
Non-Executive Director base fee
Additional fee for chairing Audit Committee
Additional fee for chairing Remuneration Committee
Additional fee for Senior Independent Director
Additional fee for Director responsible for Workforce Engagement
Fee £
380,000
63,000
17,500
17,500
18,500
5,000
B&M European Value Retail S.A.
Annual Report and Accounts 2022
85
Strategic Report Corporate GovernanceFinancial Statements Directors’ remuneration report continued
Directors’ shareholding and share interests – audited
Under the remuneration policy which operated during the year, the shareholding guideline for Executive Directors is for a shareholding to be built up
and maintained at 200% of base salary. Where an Executive Director does not meet the shareholding guideline, they were expected to retain all shares
which vest under the LTIP (or any other share plans in the future) after allowing for tax. They are required to retain shares following their departure from
the Group through the retention of LTIP awards subject to any holding period and, depending on the circumstances of departure, any deferred bonuses
or other LTIP awards.
The Committee reviews share ownership levels annually. The shareholding guideline requirement is exceeded by Simon Arora, while Alex Russo joined
the Board during the year 2020/21 and is therefore working towards his shareholding requirement.
The table below sets out the number of shares held or potentially held by Directors (including their connected persons or related parties where relevant)
as at the financial year ended 2021/22 (or the date of their stepping down from the Board if earlier).
Director
Peter Bamford
Simon Arora
Alex Russo
Ron McMillan
Tiffany Hall
Carolyn Bradley
Gilles Petit (stepped down on 29 July 2021)
Paula MacKenzie
Includes any shares held by connected persons or related parties.
1.
2. Nil cost options.
Shares held
beneficially1
5,000
69,880,828
–
37,037
3,050
12,192
2,440
0
Unvested
options with
performance
conditions2
–
1,023,653
148,437
–
–
–
–
–
Unvested
options not
subject to
performance
–
498,068
14,625
–
–
–
–
–
Vested but
unexercised
awards
–
–
–
–
–
–
–
–
There have been no changes in the Directors’ interests in shares in the Company between the end of the 2021/22 financial year and the date of
this report.
Performance graph and pay table
The chart below illustrates the Company’s Total Shareholder Return (“TSR”) performance against the performance of the FTSE 350 Index (excluding
Investment Trusts) of which the Company is a constituent, from 12 June 2014 (the date on which the Company’s shares were first conditionally traded).
Total Shareholder Return (Rebased)
Source: Datastream (Thomson Reuters)
t
a
e
d
a
m
t
n
e
m
t
s
e
v
n
i
t
i
n
u
0
0
1
a
f
l
o
e
u
a
V
–
R
S
T
4
1
0
2
e
n
u
J
2
1
350
300
250
200
150
100
50
0
12 June
2014
28 March
2015
26 March
2016
25 March
2017
31 March
2018
30 March
2019
28 March
2020
27 March
2021
26 March
2022
B&M European Value Retail
FTSE 350 excluding Investment Trusts
86
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Annual Report and Accounts 2022
Remuneration of the CEO
The table below shows the remuneration of the CEO for each of the last eight financial years.
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
2020/21
2021/22
Total
remuneration
166,606
601,638
1,403,731
1,376,482
1,204,983
1,213,194
3,710,905
5,036,639
Bonus as a
% of max
LTIP as a
% of max
n/a
0%
76.8%
68.6%
46.0%
42.6%
98.8%
95.6%
n/a
n/a
n/a
n/a
n/a
n/a
89.5%
100%
Change in Remuneration of the Directors
Luxembourg law imposes an obligation relating to the reporting of changes in total remuneration of the Company’s employees (but not its subsidiaries),
the total shareholder return (“TSR”) and total remuneration of each of the individual directors of the Company. As the law only refers to the Company’s
employees and not those in other companies in the Group, consequently the changes reported for employees are restricted to a nominal number of
staff, being just 2 in 2021/22.
The relevant data, as determined under the provisions of the Luxembourg remuneration reporting law, are as follows:
Total Shareholder Return (year-on-year)
3-year Total Shareholder Return ranking
Total shareholder return performance1
FY18
FY19
FY20
FY21
FY22
33.0%
4th out of 17
-2.6%
4th out of 17
-20.3%
9th out of 17
123.7%
7th out of 15
11.4%
2nd out of 14
Company only (excluding all of the other Group
subsidiaries in the UK and France) on full-time
equivalent basis (average)
Executive Directors:
Simon Arora (CEO)
Alex Russo (CFO)
Non-Executive Directors:
Peter Bamford
Ron McMillan
Tiffany Hall
Carolyn Bradley
Gilles Petit (stepped down 29 July 2021)
Paula MacKenzie
Percentage change in total remuneration in the year stated compared with the prior financial year2
FY17
FY18
FY19
FY20
FY21
FY22
9.42%
26.90%
15.49%
-16.38%
-8.44%
8.50%
133.32%
n/a
n/a
nil
n/a
n/a
n/a
n/a
-1.94%
n/a
n/a
6.06%
n/a
n/a
n/a
n/a
-12.55%
n/a
nil
nil
n/a
n/a
n/a
n/a
0.68%
n/a
11.66%
21.65%
5.17%
nil
n/a
n/a
198.62%
n/a
-6.25%
6.48%
5.17%
10.07%
2.88%
n/a
39.03%
128.01%
26.19%
9.19%
8.53%
6.52%
-65.57%
–3
1.
The TSR figures are based on (i) a spot to spot absolute measurement for the Company over the financial year and (ii) a relative spot to spot measurement over three years compared
with the current TSR comparator group (FTSE 350 retail sector and food retailers and wholesalers subsector as at the beginning of the financial year). For the 2021/22 figures the
companies used are Currys, Dunelm, Greggs, Howden Joinery, JD Sports Fashion, Kingfisher, Marks & Spencer, Next, Ocado, Pets At Home, Sainsbury J, Tesco and WH Smith.
Morrison (WM) was excluded due to its delisting during the year. The available TSR data from IPO in June 2014 to March 2017 has been used for 2017 (i.e. not a full three years).
2. The pay of each director has been calculated using the single figure totals. The average pay of staff is calculated on a full-time equivalent basis for each year (excluding overtime hours)
and compares the average for each year with that for the prior year. Joining and departing employees and directors have been grossed-up to a 12-month equivalent.
3. Paula MacKenzie was appointed to the Board during the year.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
87
Strategic Report Corporate GovernanceFinancial Statements Directors’ remuneration report continued
Relative importance of the spend on pay
The table below shows the movement in spend on pay for all employees compared with distributions to shareholders for the financial years ended
27 March 2021 and 26 March 2022.
£’000
Total pay for employees
Distributions to shareholders1
1.
There have not been any buy-backs of shares during either year.
2020/21
552,213
697,484
2021/22
570,320
430,475
% change
+3.3%
-38.3%
CEO Pay ratio
The table below shows ratios which compare the total remuneration of the CEO (as included in the single total figure of remuneration table) to the
remuneration of the 25th, 50th and 75th percentile of the Group’s UK employees. The disclosure will build up over time to cover a rolling 10-year period.
Year
2019/20
2020/21
2021/22
25th percentile
pay ratio
50th percentile
(median)
pay ratio
75th percentile
pay ratio
72:1
191:1
270:1
72:1
196:1
270:1
69:1
207:1
257:1
Method
Option A
Option A
Option A
We have used Option A as this is the statistically most accurate method and the preferred approach of most institutional shareholders.
The base salary and total remuneration received during the financial year by the indicative employees on a full-time equivalent basis used in the above
analysis are set out below:
£’000
Base salary
Total remuneration
25th percentile
18,069
18,612
50th percentile
(median)
18,069
18,612
75th percentile
19,013
19,583
The ratios disclosed above are affected by the following factors of our UK workforce. Over 98% of this population work in our retail stores and
warehouses where, in line with the retail sector more generally, rates of pay are lower than those for management grades and those employees based
at our head offices in more technical roles. The three employees used in the calculations are warehouse and retail sales colleagues and consequently
the ratios for each are not significantly different. In addition, while warehouse and retail sales colleagues are eligible to participate in Group-wide share
plans and annual opportunities to share in success and recognise outperformance, the CEO’s higher bonus and LTIP opportunities are comparable with
those which reflect the nature and complexity of his role as well as the remuneration levels in retail businesses of similar size. In this context, the
Committee is satisfied that the ratios are appropriate and fair.
There has been an increase in the ratios for 2021/22, which is driven primarily by the particularly strong performance during 2021/22. It is to be
expected that the ratio will vary from year to year, primarily as the CEO’s package consists of a much higher level of variable pay that is dependent
on performance, whereas the warehouse and retail sales colleagues’ remuneration is predominantly fixed in nature, which is normal practice for
these roles.
The Company has taken the following actions for the workforce during the year to recognise their additional work during 2021/22 and going forward:
in January 2022 we gave our B&M UK & Heron Foods colleagues an extra week’s pay as a bonus for their hard work and commitment during the
•
year; and
• our workforce in the B&M UK business will also have the opportunity going forward to share in the Company’s success on an annual basis with cash
bonuses being paid where internal targets for the business are met or exceeded.
Malus and clawback
The Annual Incentive Plan and LTIP rules include provision for clawback (and malus during any holding period under the LTIP) within a three year period
following payment or vesting if the Committee concludes that there has been material misstatement of financial results, or there are circumstances
which would have warranted summary dismissal of the participant, or there are circumstances having an impact on the reputation of the Company
or the Group which justify clawback being operated, or where the Committee discovers information from which it concludes that a bonus or award
was paid or vested to a greater extent than it should have been.
In addition, all variable pay plans include discretion to reduce the indicative formulaic out-turn in appropriate cases.
Service contracts
The service contract for the CEO is terminable by either the Company or the CEO on twelve months’ notice and the service contract for the CFO by either
party on six months’ notice. The service contracts are dated 29 May 2014 in relation to the CEO and 3 March 2020 in relation to the CFO. Both contracts
are rolling contracts with no fixed termination date.
All the Non-Executive Directors have letters of appointment with the Company for three years subject to three months’ notice of termination by either side
and at any time and subject to annual re-appointment as a Director by the shareholders. Paula MacKenzie’s letter of appointment is dated 9 November
2021 and the other Non-Executive Directors’ letters of appointment are dated 1 June 2021.
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Annual Report and Accounts 2022
Fees for Chairman and Non-Executive Directors in 2022/23
The rates of fees for the Chairman and Non-Executive Directors were increased by 3% with effect from 1 April 2022 in line with the average
all-employee increase.
Role
Chairman of the Board
Non-Executive Director base fee
Additional fee for chairing Audit Committee
Additional fee for chairing Remuneration Committee
Additional fee for Senior Independent Director
Additional fee for Director responsible for Workforce Engagement
Fee from
1 April 2021 £
Fee from
1 April 2022
380,000
63,000
17,500
17,500
18,500
5,000
391,400
64,890
18,025
18,025
19,055
5,150
All fees are subject to the aggregate fee cap for Directors in the Articles of Association of the Company, which is currently at £1,000,000 per annum.
The Committee has responsibility for determining fees paid to the Chairman of the Board.
The Chairman and the Non-Executive Directors are entitled to reimbursement of all expenses reasonably incurred by them in the performance of their
duties. The Chairman and the Non-Executive Directors do not participate in any bonus or share plans of the Company.
All the Non-Executive Directors of the Company have letters of appointment with the Company for three years subject to three months’ notice of
termination by either side at any time and subject to annual re-appointment as a Director by the shareholders. The appointment letters provide that
no other compensation is payable on termination. The Non-Executive Directors’ appointment letters are dated 1 June 2021, with the exception of
Paula MacKenzie’s appointment letter which is dated 9 November 2021.
Executive Directors remuneration for 2022/23
Base salary
The base salaries for the Executive Directors were reviewed during the year. The resulting rates of salary are as follows:
Executive Director
Simon Arora
Alex Russo
Alex Russo’s salary will increase to £800,000 on appointment as CEO.
Benefits and pension
There are no planned changes to the provision of benefits for 2022/23.
Base salary from
1 April 2021
£
Base salary from
1 April 2022
£
810,000
475,000
834,300
500,000
Simon Arora and Alex Russo will continue to receive pension provision equal to 3% of salary, less Employer’s NIC (to the extent that it is paid as a
salary supplement).
Annual bonus
As set out in the summary of the Directors’ Remuneration Policy in this report, the maximum bonus opportunity will be 200% of salary for the CEO and
150% of salary for the CFO.
Under the awards for 2022/23, 75% of the maximum bonus opportunity is again based on the achievement of an Adjusted EBITDA target and 25% on
achievement of personal objectives. In relation to each award, one-half of any bonus achieved will be deferred into shares for 3 years. The awards will
also be subject to malus and claw-back provisions.
The Committee does not disclose Adjusted EBITDA or personal targets in advance as they are commercially sensitive. Suitable disclosure of the targets
together with details of achievement against them will again be included in next year’s remuneration report.
LTIP
The Committee proposes that an LTIP award of 200% of salary will be made to Alex Russo on his appointment as CEO, subject to stretching financial
performance conditions over a three year period, with vesting after the completion of a further two year holding period.
• We have set this year’s Adjusted EPS targets taking into account the Management 3 Year Plan and the latest analysts’ consensus forecasts at the time
of setting targets. The range has been stretched given the high degree of uncertainty currently faced by the business with significant performance
above plan required to achieve maximum payout.
• The relative TSR condition follows a market-standard approach, with no vesting below median performance and with maximum vesting for upper
quartile performance or above. This approach is consistent with the approach used for previous awards.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
89
Strategic Report Corporate GovernanceFinancial Statements Directors’ remuneration report continued
The resulting performance conditions and the targets for the awards are as follows:
Performance condition
Adjusted EPS
Relative TSR vs a bespoke group of FTSE 350 retailers
Performance for
threshold vesting
(25%)
Performance for
maximum vesting
42p
50p
Median Upper quartile
Weighting
50%
50%
Remuneration Committee composition and meetings in 2021/22
The members of the Committee during the year consisted solely of independent Non-Executive Directors being Tiffany Hall (Committee Chair),
Ron McMillan, and Carolyn Bradley.
The responsibilities of the Committee are set out in the Corporate Governance section of the Annual Report on page 65.
The Committee is assisted by Patrick Rawnsley as General Counsel of the Group, who is invited to attend Committee meetings. The Committee invites
Peter Bamford as the Chairman of the Board and Simon Arora as the CEO, as and when the Committee considers it appropriate, to attend meetings and
assist the Committee in its deliberations. No person is present during any deliberations relating to their own remuneration or is involved in determining
their own remuneration.
Details of Committee meetings (one of which was held as a video conference) and attendances during the year were as follows:
Director
Tiffany Hall
Ron McMillan
Carolyn Bradley
Role
Committee Chair
Committee Member
Committee Member
Meetings
attended
4 out of 4
4 out of 4
4 out of 4
The members of the Remuneration Committee performed an internal questionnaire on the effectiveness of the Committee this year. The results, which
appear on page 68 of the Corporate Governance section, were that the Committee was viewed to be functioning effectively.
Shareholder voting
The resolutions to approve the Directors’ Remuneration Policy and the Annual Report on Remuneration at the 2021 AGM were passed as follows:
Resolution
To approve the Directors’
Remuneration Policy (2021)
To approve the Annual Report
on Remuneration (2021)
Votes for
% for
Votes against
% against
Total votes cast
659,985,530
81.46
150,159,930
18.54
810,145,460
625,507,615
77.20
184,637,845
22.80
810,145,460
% of shares
on register
80.95
80.95
Votes
withheld
191,067
191,067
Advisors to the Committee
The adviser to the Committee during the year were PricewaterhouseCoopers LLP (“PwC”). From time to time the Group engages PwC to provide valuation,
taxation and related advice on specific matters. The Committee will continue to monitor such engagements in order to be satisfied that they do not affect
PwC’s independence as an adviser to the Committee.
PwC are members of the Remuneration Consultants Group and subscribe to its Code of Conduct which requires that its advice must be objective
and impartial.
PwC’s total fees in respect of advice to the Remuneration Committee were £129,350 excluding VAT.
Fees were determined partially under a fixed fee agreement to provide a core set of services, with additional items being determined on a time
and materials basis.
This report has been approved by the Board of Directors of the Company and signed on behalf of the Board by:
Tiffany Hall
Chair of the Remuneration Committee
30 May 2022
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Annual Report and Accounts 2022
Policy table (from the Directors’ Remuneration Policy approved at the 2021 AGM)
The table below describes the elements of remuneration paid to the Executive Directors:
Element and purpose
Policy and opportunity
Operation and performance conditions
Base salary
This is the basic pay
and reflects the
individual’s role,
responsibility and
contribution to the
Group.
Base salaries are reviewed annually. Changes typically take
effect from the beginning of the relevant financial year.
On reviews, consideration is given by the Committee to a
range of factors including the Group’s overall performance,
market conditions and individual performance of executives
and the level of salary increase given to employees across
the Group.
Base salaries are targeted at market levels, with reference to
companies with a comparable market capitalisation.
Annual salary increases will not exceed the general level of
increase awarded to other salaried staff, save for a change
in the roles or responsibilities of an Executive Director or
when there are changes to the size and complexity of
the business.
Benefits
Provide market competitive benefits.
To provide benefits
which are valued
by the individual
and assist them
in carrying out
their duties.
The Group may periodically review benefits available to
employees. Executives will generally be eligible to receive
those benefits on similar terms to other senior employees.
The cost of benefits paid to an Executive in any one year
is capped at £75,000, but this may be exceeded in
exceptional circumstances if the cost of a benefit were
to increase significantly.
In addition, where the Committee considers it appropriate
to do so, additional relocation expenses for a limited period
and/or tax equalisation payments may be paid.
Pension
Current CEO and CFO: 3% of salary
To provide an
appropriate level
of contribution to
retirement planning.
New recruits: 3% of salary
The pension contributions for the existing Executive Directors
are 3% of salary, aligned with the wider workforce
contribution rate.
Base salary is typically paid 4 weekly in cash.
Base salaries are reviewed annually with changes usually
taking effect from 1 April.
Executives are entitled to a car allowance or a company car,
car insurance and other running costs and fuel for business
use, death in service life assurance, permanent disability and
critical illness insurance and any other Group wide benefits
including a 10% B&M stores discount card.
Business travel and associated hospitality are provided in the
normal course of business and authorised by the Committee
on a standing basis.
Executives may take pension benefits as contributions to
defined contribution personal pension plans, or elect to
receive cash in lieu of all or part of that benefit (this is not
taken into account as salary for calculating bonus, LTIP or
other benefit awards).
If the individual elects to receive any part of their pension
contribution benefit as a cash allowance instead, employers’
NICs are deducted from that element.
Annual bonus
To incentivise and
reward individuals for
the delivery of annual
performance targets.
The maximum annual bonus is 200% of base salary for the
CEO and 150% of base salary for other Executive Directors.
The performance measures are reviewed annually by the
Committee in line with the Company’s strategy.
The threshold bonus will be no higher than 25% of the
maximum. The target bonus is 50% of maximum.
Bonuses are paid up to one-half in cash and at least one-half
in shares with the share element normally contingent on
employment for a further three years. Such deferred shares
will be credited on vesting with dividends paid during the
vesting period.
The performance measures applied may be financial (with at
least a 75% weighting on such measures) and/or operational
and corporate, divisional and/or individual.
The Committee has discretion to make adjustments to
performance targets during any performance period to
reflect any events arising which were unforeseen when the
performance conditions were originally set by the Committee.
The Committee has discretion to adjust the outcomes of the
annual bonus upwards or downwards (including to nil) to
reflect any fact or circumstance which the Committee
considers to be relevant. Any adjustments will be disclosed
in the relevant Annual Report on Remuneration.
Clawback provisions apply to the cash element of bonus
under the annual bonus plan for a period of 3 years post
payment and to the deferred share element for a period of
3 years post vesting.
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91
Strategic Report Corporate GovernanceFinancial Statements Directors’ remuneration report continued
Element and purpose
Policy and opportunity
Operation and performance conditions
Awards of shares with maximum face value on grant for the
CEO of 200% of base salary and for other Executive Directors
of 175% of base salary each year under the LTIP, save for
exceptional circumstances such as recruitment where the
grant may be in excess of this.
Clawback and malus provisions apply to awards made
under the LTIP.
LTIP awards from the date of the 2021 AGM onward will be
subject to a two-year holding period post the end of the
performance period.
Participants’ awards attract dividend rights from grant to the
end of the holding period.
Executive Directors are expected to retain at least 50% of all
shares which vest under the deferred bonus and LTIP (or any
other plans which may be adopted in the future) on a net of
tax basis until they hold shares of a specified value.
Shares subject to these guidelines and any unvested share
awards may not be hedged or used as security for loans.
Long-term incentives
To incentivise the
delivery of strategic
objectives over the
longer term, the
Group operates the
Long-Term Incentive
Plan (“LTIP”).
In-employment
shareholding
requirement
To encourage share
ownership and
create alignment of
interests of Executive
Directors and
shareholders.
Awards may be made annually of nil cost options based on
performance conditions.
The Committee may set three year performance conditions
based on financial and/or operational and corporate,
divisional and/or individual criteria as it considers appropriate.
The Committee has discretion to make adjustments to targets
during any performance period in case of any events arising
which were unforeseen when the performance conditions
were originally set by the Committee.
No more than 25% of an award can be earned for threshold
performance.
The required level of shareholding is 200% of the base salary
of the relevant executive.
Executive Directors are expected to maintain their minimum
shareholding levels once they have obtained those
shareholding levels. The Committee will review shareholdings
annually against the policy and as share awards mature.
The Committee reserves the right to alter the shareholding
guidelines during the period of the policy but without making
the guidelines any less onerous overall.
Post-employment
shareholding
requirement
Shares must be held for two years post-employment at 100%
of the in-employment shareholding requirement (or actual
shareholding on departure if lower).
Shares counting towards this requirement will not be released
during the period in which the post-employment shareholding
requirement applies, to support enforceability.
Shares completing their performance period during this
two year period will remain subject to the two year
holding period.
Only shares relating to awards which are granted after the
date of the 2021 AGM will be included for the purposes of
this requirement. Shares purchased by the Executive Director
(including those from all employee share plans), will not
be included.
Executive Directors can participate in the all-employee share
incentive plan (“SIP”) on the same terms as other employees
of B&M in the UK.
Acceptance of the post-employment shareholding
requirement will be a condition of participation in all share
awards granted after the 2020 AGM and will be included in
the grant documentation for awards.
Under the rules of the SIP employees can purchase a
maximum of £1,800 worth of shares per annum from their
pre-tax and pre-national insurance salary through a UK
resident SIP Trust.
The rules also permit an award of free shares worth up to
£3,600 per year and for purchased shares to be matched
on up to a 2:1 basis although these elements have not been
operated to date.
All-employee
share plans
To encourage share
ownership by
employees and
participate in the
long-term success
of the Group, the
Group operates an
all-employee share
incentive plan for
B&M UK employees
which was adopted
prior to Admission.
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Annual Report and Accounts 2022
Directors report and business review FY22
Directors’ report and business review
The Directors present their report (the “Management Report”) under
Luxembourg Law and DTR4.1.5R, together with the consolidated
financial statements and annual accounts of the Group and of the Company
as at 26 and 31 March 2022 respectively for the accounting periods then ended.
As permitted under Luxembourg Law, the
Directors have elected to prepare a single
Management Report covering both the Group
and the Company. The Strategic Report,
Corporate Governance Report and Directors’
Remuneration Report on pages 1 to 59, 60 to 78
and 79 to 92 respectively form part of this report
and are incorporated into this Directors’ report
by reference. Also, the following information in
particular within those reports can be found as
follows:
•
future developments in the business –
page 3;
• workforce engagement – page 39;
• viability statement – page 35;
• energy and carbon reporting – pages 46
and 47;
• directors’ service contracts and appointment
letters – page 88;
• directors’ share interests – page 86;
• conflicts of interest – page 67; and
• stakeholders and section 172 statement –
pages 56 to 59.
Company status
B&M European Value Retail S.A. (the “Company”)
is the holding company of the Group. It was
incorporated on 19 May 2014 as a public limited
liability company (Société Anonyme) under
the laws of the Grand-Duchy of Luxembourg
and it is domiciled in Luxembourg. The
Company has a premium listing on the
London Stock Exchange.
Branches
The Group had no registered external branches
during the reporting period.
Principal activity
The principal activity of the Group is variety
retailing in the UK and France. The Company
has a corporate office in Luxembourg.
Business review
This report together with the Strategic Report
on pages 1 to 59, sets out the review of
the Group’s business during the financial year
ended 26 March 2022, including factors likely to
affect the future development and performance
of the business and a description of the principal
risks and uncertainties the Group faces, and the
Strategic Report is incorporated by reference in
this report.
Results and dividend
The Group’s profit after tax for the financial
year ended 26 March 2022 of GBP £422m
is reported in the consolidated statement of
comprehensive income on page 102.
The Board is recommending a final dividend of
11.5p per ordinary share, which together with
the interim dividend of 5.0p per ordinary share
paid in December 2021 (but not including the
special dividend of 25.0p per share paid in
January 2022) is a total ordinary dividend for the
year of 16.5p which reflects the upper end of the
dividend policy of paying 30–40% of normalised
post-IPO earnings¹.
Post balance sheet events
There have been no post balance sheet events
that either require adjustment to the financial
statements or are important in the
understanding of the Group’s current position.
Corporate social responsibility
Our CSR activity is set out in the Corporate Social
Responsibility Report on pages 36 to 47 and in
the standalone ESG report.
Employee engagement
and involvement
The Group is committed to employee
involvement, consultation and participation.
At key points throughout the year colleagues
are kept informed about the performance and
strategy of the Group through internal business
update meetings, conference calls, company
newsletters and notice boards and CEO email
bulletins. They include information on the
financial and trading performance of the Group.
Further details of workforce engagement,
feedback and actions during the year are also
set out on page 39 above, which is incorporated
in this report by reference.
B&M has a share incentive plan which is open
to all B&M UK employees after 12 months
service. Certain employees in the Group are
also eligible to participate in other share
incentive schemes of the Company.
Equal opportunities
The Group is an equal opportunity employer.
It is the Group’s policy not to discriminate on the
basis of gender, race, colour, religion, disability
or sexual orientation, in its recruitment, training
and promotion programmes.
Disabled persons
The Group seeks to ensure that disabled people,
whether applying for a vacancy or already in
employment, receive equal opportunities in
respect of job vacancies which they are able to
fulfil. They are not discriminated against on the
grounds of their disability and are given full and
fair consideration of applications, continuing
training while employed and equal opportunity
for career development and promotion. Where
an existing colleague suffers a disability it is our
policy to retain them in the workforce where that
is practicable.
1. Dividends are stated as gross amounts before deduction of Luxembourg withholding tax which is currently 15%.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
93
Strategic Report Corporate GovernanceFinancial Statements Directors report and business review FY22 continued
Directors
The Directors of the Company as at 31 March
2022 and their interests in shares and share
awards made to them under share incentive
schemes in the Company are shown on pages
84 to 86. There have been no changes to the
Board of the Company between 31 March 2022
and the date of this report.
In accordance with the Articles of Association
of the Company, all the Directors will retire
at the Annual General Meeting (“AGM”) on
28 July 2022. All the retiring Directors, being
eligible, will stand for re-election as Directors
at that meeting.
Directors’ indemnities
The Company’s Articles of Association permit
the Company to indemnify its Directors in certain
circumstances, as well as to provide insurance
for the benefit of its Directors. The Company has
Director’s and Officer’s insurance in place in
respect of all the Directors. The insurance does
not provide cover where a Director has acted
fraudulently or dishonestly.
Political donations
No political donations were made in the
financial year.
Financial instruments
Details of the Group’s objectives and policies on
financial risk management, and of the financial
instruments currently in use, are set out in note
25 to the consolidated financial accounts
on pages 141 to 143 which forms part of
this report.
Share capital
The Company’s share capital and changes to
it in the financial year, are set out on page 96
below and in note 22 to the consolidated
financial statements on page 140 which forms
part of this report.
In common with other Luxembourg registered
companies, the Directors have authority to allot
ordinary shares in the Company and to disapply
pre-emption rights under certain limits and
conditions as permitted under the Articles of
Association of the Company. The Directors
intend to comply with the Pre-Emption Group’s
Statement of Principles, in relation to any issue
of shares of the Company to the extent practical
as a Luxembourg registered company.
The Board intends to seek an authorisation of
shareholders at the AGM on 28 July 2022 that
the Company, purchase, acquire or receive B&M
European Value Retail S.A.’s own shares. This
resolution will usually be requested at each
AGM. No shares of the Company have been
repurchased and no contract to repurchase
shares has been entered into at any time since
the incorporation of the Company.
Each ordinary share entitles the holder to
vote at general meetings of the Company
in person or by proxy. Unless otherwise
provided by Luxembourg Company Law or
the Articles, all decisions by an annual or
ordinary shareholders’ meeting are taken
by a simple majority of votes cast regardless
of the proportion of capital represented by
shareholders in attendance at the meeting.
The notice of the AGM specifies deadlines for
exercising voting rights and appointing a
proxy to vote.
Holders of ordinary shares may receive a
dividend and on liquidation may share in
the assets of the Company.
Subject to meeting certain thresholds, holders
of ordinary shares may requisition a general
meeting of the Company or the proposal of
resolutions at general meetings. The rights
(including full details relating to voting),
obligations and any restrictions on transfers
relating to the Company’s ordinary shares, as
well as the powers of the Directors, are set out
in the Articles of Association.
The Company is not aware of any agreements
between shareholders that restrict the transfer of
shares or voting rights attached to the shares.
Employee share ownership trust
The Company established the B&M European
Value Retail S.A. Employee Share Ownership
Trust with Link Trustees (Jersey) Limited (formerly
Capita Trustees Limited) as the trustee in Jersey
on 14 October 2014 (the “ESOT”) to facilitate the
holding of shares in the Company by employees
and Executive Directors. The trustee of the trust
has waived its right to receive dividends on the
Company’s shares which it holds from time to
time. Where the Company directs at any time
that the trustee may vote in relation to any
unallocated shares held by it, the trustee has
power in its absolute discretion to vote or not to
vote in such manner it thinks fit. During the year
under review no shares were used from the
ESOT to satisfy vested awards made under a
share scheme of the Company. As at 31 March
2022 and since that date up to the date of this
report, the ESOT did not hold any shares in the
Company. With effect from 22 April 2021 the
Company and the trustees have terminated the
ESOT trust.
Amendment to the Articles
of Association
The Articles of Association of the Company may
only be amended at an extraordinary general
meeting of shareholders where at least one
half of the issued share capital is represented
(or if that condition is not satisfied at a second
meeting regardless of the proportion of the
issued share capital represented at that
meeting) and when adopted by a resolution
passed by at least two-thirds of the votes cast.
Shareholders
As at 30 May 2022, the following shareholders have notified the Company of their interest in 5% or more of the Company’s issued ordinary shares
(including interests in shares held through financial instruments):
No of ordinary
shares
% share
Capital
100,953,820
69,880,828
50,437,064
10.08
6.99
5.04
Shareholder
The Capital Group Companies Inc.
SSA Investments S.àr.l.*
Wellington Management Group LLP
* Includes 8,055,494 shares held by Praxis Nominees Limited on its account.
94
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Change of control
The Company has a senior facilities agreement
(the “SFA”) in relation to a £300m term loan
(which has been drawn in full) and a £155m
revolving credit facility. The SFA provides that
on a change of control of the Company,
each lender has the right to require early
repayment of their loans and to cancel all
their commitments under the SFA on not less
than 10 Business Days’ notice to the Company.
The Company has £400m 3.625% senior
secured notes due 2025, of which all £400m
remain outstanding. On a change of control of
the Company, each bondholder has the option
to require the Company to repurchase all or part
of the notes of such holder at a purchase price
of 101% of the principal amount plus accrued
interest up to the date of repurchase.
The Group’s credit and loan facilities with its
banks and fleet finance agreements for HGV’s
contain customary cancellation and repayment
provisions upon a change of control.
Employee share incentive schemes also
have customary change of control provisions
triggering vesting and exercise on performance
conditions being met or (in the discretion of the
Company) being waived.
Annual General Meeting
Notices convening the Company’s Annual
General Meeting (“AGM”) to be held on 28 July
2022, will be issued to shareholders. In addition
to the ordinary business of the AGM, the
Directors are seeking certain other approvals
and authorities, details of which are set out in
the notice of the AGM.
Corporate governance
The compliance by the Company with the
UK Corporate Governance Code and the
requirements of article 68ter of the Luxembourg
Law on the Trade and Companies Register and
Annual Accounts of companies of 19 December
2002, as subsequently amended, are set out in
the Principal Risks and Uncertainties on pages
26 to 35, the Corporate Governance report
on pages 60 to 78 and the Directors’
Remuneration Report on pages 79 to 92,
each of which form part of this report.
The Statement of Directors’ Responsibilities in
relation to the consolidated financial statements
and annual accounts of the Group and the
unconsolidated financial statements and annual
accounts of the Company appears on page 98,
which forms part of this report.
Independent auditor
KPMG Luxembourg, Société Cooperative is the
independent auditor (“réviseur d’entreprises
agréé”) of the Company. Their reappointment
as the Company’s auditor, together with the
authority for the Directors to fix the auditor’s
remuneration, will be proposed at the AGM
on 28 July 2022 as set out in the notice.
Information on forward-looking
statements
The Annual Report and financial statements
include forward-looking statements that reflect
the Company’s or, as appropriate, the Directors’
current views with respect to, among other
things the intentions, beliefs and current
expectations of the Company or the Directors
concerning, amongst other things, the results
of operations, the financial condition, prospects,
growth, strategies and dividend policy of the
Company and the industry in which it operates.
Statements that include the words “expects”,
“intends”, “plans”, “believes”, “projects”,
“forecasts”, “predicts”, “assumes”, “anticipates”,
“will”, “targets”, “aims”, “may”, “should”,
“shall”, “would”, “could”, “continue”, “risk”
and similar statements of a future or
forward-looking nature can be used to
identify forward-looking statements.
All forward-looking statements involve risks and
uncertainties because they relate to events and
depend on circumstances that may or may not
occur in the future. Undue reliance should not
be placed on such forward-looking statements
because they involve known and unknown risks
and uncertainties.
Independence compliance
statement
Simon Arora, Bobby Arora, Robin Arora and SSA
Investments S.à.r.l. (“SSA Holdco”) (the “Arora
Family”) entered into a relationship agreement
with the Company at the time of and with effect
from the admission of the Company to trading
on the London Stock Exchange in June 2014
(“Admission”) and which continues to remain
in force, which regulates the ongoing
relationship between the Company and
the Arora Family, following Admission (the
“Relationship Agreement”).
The principal purpose of the Relationship
Agreement is to ensure that the Company and
its subsidiaries are capable of carrying on their
business independently of the Arora Family
(and their associates), and that transactions and
relationships between the Group and the Arora
Family (and their associates) are at arm’s length
and on normal commercial terms.
For the purpose of this section of the Annual
Report, the terms “controlling shareholder(s)”
and “associate(s)” have the same meanings
as in the UK Listing Rules.
The Relationship Agreement contains
undertakings that the Arora Family and together
with their associates, will:
a. conduct all transactions and relationships
with the Company at arm’s length and on
normal commercial terms;
b. not take any action that would have the
effect of preventing the Company from
complying with its obligations under the
Listing Rules; and
c. not propose or procure the proposal of a
shareholder resolution which is intended
or appears to be intended to circumvent
the proper application of the Listing Rules,
(together the “Independence Provisions”).
The Relationship Agreement will continue for
so long as the Arora Family together with their
associates hold 5% or more of the issued
ordinary shares of the Company.
In the financial year 2021/22, one lease of
a store was entered into by the Group in the
UK with Arora Family related parties including
their associates as landlords of that new store,
representing 2.9% of the total number of 34
gross B&M new store openings of the Group
in the UK in that period.
The total number of leases of UK stores and
rents of the Group with Arora Family related
parties as at the end of the period under review
were 63 store leases, representing 9.0% of
a total number of 701 UK B&M stores of the
Group with all landlords, and 10.4% of the
overall rent roll of all UK B&M stores as at the
year end.
In the financial year 2021/22 the Group also
acquired two freehold store premises from
Arora Family related parties. Both of those
store premises are currently occupied by other
retailers. As B&M carries on a trading business,
it will be entitled to exercise rights under the law
as the landlord to take possession of those
premises for its own use when the existing
leases with the current tenants expire in
approximately four years’ time (or earlier if the
tenants agree to vacate sooner), without the
current tenants being entitled to apply to the
court for new leases. In the meantime, B&M as
the landlord of those stores receives the benefit
of the commercial rents being paid under the
existing leases from the tenants.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
95
Strategic Report Corporate GovernanceFinancial Statements Directors report and business review FY22 continued
In the financial year under review, the balance
of 7.4 unused hours of flights purchased by
the Group from the third party operator of the
private jet owned by Arora family interests for
business travel by executives and colleagues
which had been carried forward from the
2020/2021 financial year was used up and
a new block of 15 hours similarly purchased.
Out of that 12.2 hours were used prior to the
end of the financial year, leaving a balance of
10.2 unused hours which have been carried
forward to the 2022/23 financial year.
A summary of the corporate governance and
Listing Rules processes and assessments
undertaken by the Group and the Board
together with reports of advisors and the opinion
of the Sponsor, in relation to related party
leases, is included on page 95 of the Corporate
Governance Report.
Further details of related party transactions
are included also in note 26 of the Financial
Statements on pages 144 and 146.
The Board confirms that during the financial year
2021/22:
i.
the Company has complied with the
Independence Provisions included in
the Relationship Agreement;
ii. so far as the Company is aware, the
Independence Provisions included in the
Relationship Agreement have been complied
with by the controlling shareholder and its
associates; and
iii. so far as the Company is aware, the
procurement obligations in the Relationship
Agreement have been complied with by the
controlling shareholder and its associates;
and that the Company has acted independently
of the Arora Family (and their associates).
The Board confirms that this statement is
supported by each of the independent
Directors of the Company and there have
been no instances where any of them
declined to support this statement.
Details of other related party transactions with
associated companies of the Group are set
out in note 26 to the consolidated financial
accounts on pages 144 and 146 which forms
part of this report.
Those transactions relate to the following matters:
i. product sourcing and supplies to the Group
from Multi-lines International Company
Limited (“Multi-lines”); and
ii. wholesale supplies of products by the
Group to Centz Retail Holdings Limited.
In accordance with Article 13.10 of the Articles
of Association of the Company a report will be
made at the 2022 AGM of transactions with
the Company or its subsidiary undertakings in
which any Directors may have had an interest,
including each of the related party transactions
with Directors (or in which they may have directly
or indirectly had an interest) and all other
related party transactions (including those
with associated companies) entered into in
the financial year 2021/22 referred to above
together with any other such transactions
entered into after the financial year end on
31 March 2022 up to the date of the AGM,
similarly to all other previous AGM’s of
the Company.
Article 11 report
The following disclosures are made voluntarily
on the basis of article 11 of the Luxembourg Law
on Takeovers of 19 May 2006 as amended
(“Luxembourg Takeovers Law”) and form part
of this Directors’ Report.
Following the UK’s exit from the EU, the shares
of B&M European Value Retail S.A. (the
“Company”) being listed solely on the London
Stock Exchange market are no longer listed on
an EU Member State regulated market and the
Company is therefore outside of the scope of
Luxembourg Takeovers Law.
The Board of Directors deems it however best
practice for a Luxembourg incorporated
company and in the best interest of
shareholders to continue to provide those
disclosures within the Directors’ report.
Section (a) – Share capital structure
B&M European Value Retail S.A. has issued one
class of shares which is admitted to trading on
the London Stock Exchange. No other shares
have been issued by the Company. Its issued
share capital as at 31 March 2022 amounts
to GBP £100,122,683.60 represented by
1,001,226,836 shares with a nominal value
of GBP £0.10 each.
Out of the total number of shares in issue,
1,001,139,249 are in dematerialised form and
as at the date of this report, any and all new
shares issued by the Company shall be issued
in dematerialised form in accordance with
the provisions of article 6.1.2 of the Articles of
Association of the Company (the “Articles”).
In addition to the issued share capital,
the Company has also an authorised but
unissued share capital amounting to GBP
£297,099,538.60.
All shares issued by the Company have equal
rights as set out in the Articles.
Section (b) – Transfer restrictions
All the shares are freely transferable subject to
the conditions set out in article 6.7 of the Articles.
Section (c) – Major shareholdings
Details of shareholders holding more than
five percent (5%) of the issued share capital
of the Company as notified to B&M European
Value Retail S.A. in accordance with article 8
of the Articles which reproduces the relevant
provisions of the Luxembourg Law on
Transparency requirements for issuers of
securities dated 11 January 2011 as amended
(“Luxembourg Transparency Law”) are set out
on page 94.
Section (d) – Special control rights
All the issued and outstanding shares of the
Company have equal voting rights and there are
no special control rights attached to its shares,
except that B&M European Value Retail S.A. can
direct that shares held in the ESOT be applied by
the trustee to satisfy the vesting of outstanding
awards under its Long Term Incentive Plan or
any other employee share schemes established
by the Group.
Section (e) – Control system on
employee share scheme
B&M European Value Retail S.A. is not aware
of any matters regarding section (e) of article 11
of the Luxembourg Takeovers Law, save where
referred to in (d) above.
Section (f) – Voting rights
Each share issued and outstanding in B&M
European Value Retail S.A. represents one
vote. The Articles do not provide for any
voting restrictions.
In accordance with the Articles shareholders
may be represented and proxies shall be
received by the Company a certain time before
the date of the relevant general meeting. The
Board of Directors may determine such other
conditions that must be fulfilled by shareholders
in person or by proxy. Additional provisions
may apply under Luxembourg Law. Thus,
Luxembourg legislation requires shareholders to
register their intention to participate in general
meetings at least fourteen (14) days before the
date of the meeting (the “Record Date”). In
accordance with the same legislation and article
24.6.11 of the Articles, the right of a shareholder
to participate in a general meeting and to
exercise the voting rights attached to its shares
and the number of voting rights it may exercise
are determined by reference to the number of
shares held by such shareholder as at midnight
on the Record Date.
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B&M European Value Retail S.A.
Annual Report and Accounts 2022
In accordance with article 8.1.5 of the Articles
which adopts article 28 of the Luxembourg
Transparency Law, as long as the notice of
crossing a major shareholding in the Company
has not been notified to the Company in the
manner prescribed, the exercise of the voting
rights relating to those shares which exceed
the threshold that should have been notified is
suspended. The suspension of the voting rights
is lifted when the shareholder makes the
notification provided for under article 8.1.1
of the Articles.
Section (g) – Shareholders’ agreements
with transfer restrictions
B&M European Value Retail S.A. has no
information about any agreements between
shareholders which may result in restrictions
on the transfer of securities or voting rights.
Section (h) – Appointment of Board
members, amendment of Articles
of Association
The appointment and replacement of Board
members and the amendment of the Articles
are governed by Luxembourg Law, mainly
the law on Commercial Companies dated
10 August 1915 as amended (“Luxembourg Law
on Commercial Companies”), and the Articles
(in particular article 10 and article 24.6.3).
The Articles are published under the Investors
section on the Company’s website at
www.bandmretail.com.
They may only be amended (i) by decision of an
extraordinary general meeting of shareholders
with at least half the issued share capital of the
Company present or represented (and if that
condition is not satisfied, a second extraordinary
general meeting convened with the same
agenda regardless of the proportion of the
issued share capital represented) and (ii) when
changes proposed are approved by a majority
of two-thirds of the votes cast.
Section (i) – Powers of the
Board of Directors
The Board of Directors is vested with the
broadest powers to take any action necessary
or useful to realise the purposes of the Company
with the exception of the powers reserved to
the general meeting of shareholders by the
Luxembourg law on Commercial Companies
and by the Articles.
In common with the articles of association
of other Luxembourg public limited liability
companies, article 5.2 of the Articles gives
authority to the Board of Directors to issue
shares on a non-preemptive basis under
certain conditions.
The Articles authorise the Board of Directors to
dis-apply pre-emption rights:
a. for the issue for cash of shares representing
up to five percent (5%) of the issued share
capital of the Company in any one year;
b. for the issue for cash of shares representing
up to a further five per cent (5%) of the issued
share capital to deal with financing (or
refinancing provided that the authority given
is to be used within six (6) months as from
the original transaction) an acquisition or
other investment of a kind contemplated by
the Statement of Principles on Dis-applying
Pre-emption Rights most recently published
by the Pre-emption Group of the Financial
Reporting Council;
to deal with fractional entitlements on
otherwise pre-emptive issues of shares; and
c.
d. in connection with employees share
option schemes.
The Board as a matter of policy and to the extent
practicable for a Luxembourg company, intends
to follow the guidelines provided for under the
Statement of Principles.
The authority given in article 5.2 of the Articles
will expire on 29 July 2023.
The AGM of shareholders held on 29 July 2021
also authorised the Board to, in the name and
on behalf of the Company, purchase, acquire or
receive the Company’s own shares representing
up to ten percent (10%) of the issued share
capital from time to time of B&M European
Value Retail S.A. on such terms as the Board
may decide in accordance with the law.
No shares of the Company have been
purchased by the Company and no share
buyback contract has been entered into at any
time since the incorporation of the Company
and up to the date of this report.
The above authorisations are usually requested
and renewed at each AGM and the Board will
ask for the renewal of such authorisations at the
AGM of the shareholders on 28 July 2022.
Section (j) – Significant agreements
or essential business contracts
The Board of Directors is not aware of any
significant agreements to which B&M European
Value Retail S.A. is a party and which take effect,
alter or terminate upon a change of control of the
Company following a takeover bid other than:
a. the Company has Senior Facilities Agreements
(«SFA») in relation to a £300m term loan
agreement and a £155m revolving credit
facility. The SFA provides that on a change of
control of the Company, each lender has the
right to require early repayment of their loans
and to cancel all their commitments under
the SFA on not less than ten (10) business
days’ notice to the Company;
b. the Group successfully completed a
new £250m 7-year 4.00% bond issue in
November 2021 to complement our existing
£400m bond facility and £300m term loan
which both mature in 2025. On a change of
control of the Company, each bondholder
has the option to require the Company to
repurchase all or part of the notes held by
such bondholder at a purchase price of 101%
of the principal amount plus interest accrued
up to the date of the repurchase;
the Group’s credit and loan facilities with its
banks and fleet finance agreements for
HGV’s which contain customary cancellation
and repayment provisions upon a change of
control and;
c.
d. employee share incentives schemes in
relation to shares in the Company include
customary change of control provisions
triggering vesting and exercise on
performance conditions being met or (in the
discretion of the Company), being waived.
Section (k) – Agreements with
Directors and employees
No agreements exist between B&M European
Value Retail S.A. and its Directors or employees
which provide for compensation if Directors or
employees resign or are made redundant without
valid reason, or if their employment ceases
because of a takeover bid other than as disclosed
in the Directors’ Remuneration Report on page 79.
Approved on behalf of the Board.
Simon Arora
Chief Executive Officer
30 May 2022
Alex Russo
Chief Financial Officer
B&M European Value Retail S.A.
Annual Report and Accounts 2022
97
Strategic Report Corporate GovernanceFinancial Statements Statement of Directors’ responsibilities FY22
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual Report and the Group and Company
financial statements in accordance with applicable law and regulations.
•
We confirm that to the best of our knowledge:
the consolidated financial statements of
•
B&M European Value Retail S.A. (“Company”)
presented in this Annual Report and
established in conformity with International
Financial Reporting Standards as adopted in
the European Union give a true and fair view
of the assets, liabilities, financial position,
cash flows and profits of the Company and
the undertakings included within the
consolidation taken as a whole;
the annual accounts of the Company
presented in this Annual Report and
established in conformity with the
Luxembourg legal and regulatory
requirements relating to the preparation
of annual accounts give a true and fair view
of the assets, liabilities, financial position and
profits of the Company; and
the Strategic Report includes a fair review
of the development and performance of
the business and position of the Company
and the undertakings included within the
consolidation taken as a whole, together
with a description of the principal risks and
uncertainties it faces.
•
We consider this Annual Report (including the
financial statements), taken as a whole, is fair,
balanced and understandable and provides
the information necessary for shareholders to
assess the Group’s position, performance,
business model and strategy.
Approved by order of the Board.
Simon Arora
Chief Executive Officer
30 May 2022
Alex Russo
Chief Financial Officer
The Directors are responsible for keeping
adequate accounting records that are sufficient
to show and explain the parent Company’s
transactions and disclose with reasonable
accuracy at any time the financial position of the
parent Company and enable them to ensure
that its financial statements comply with
company law. They are responsible for such
internal control as they determine is necessary
to enable the preparation of financial statements
that are free from material misstatement,
whether due to fraud or error, and have general
responsibility for taking such steps as are
reasonably open to them to safeguard the
assets of the Group and to prevent and detect
fraud and other irregularities.
Under applicable law and regulations, the
directors are also responsible for preparing
a Strategic Report, Directors’ Report, Directors’
Remuneration Report and Corporate
Governance Statement that complies with
that law and those regulations.
The Directors are responsible for the
maintenance and integrity of the corporate and
financial information included on the Company’s
website. The financial statements are published
on the Company’s website.
Legislation in Luxembourg governing the
preparation and dissemination of financial
statements may differ from legislation in
other jurisdictions.
Company law requires the Directors to prepare
Group and Company financial statements
for each financial year. Under that law they
are required to prepare the Group financial
statements in accordance with International
Financial Reporting Standards (“IFRSs”) as
adopted by the EU and applicable law and have
prepared the Company financial statements in
accordance with Luxembourg legal and
regulatory requirements regarding the
preparation of annual accounts (“Lux GAAP”).
In addition, the Group financial statements
are required under the UK Disclosure Guidance
and Transparency Rules to be prepared in
accordance with International Financial
Reporting Standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the
European Union (“IFRSs as adopted by the EU”).
Under company law the Directors must not
approve the financial statements unless they are
satisfied that they give a true and fair view of the
state of affairs of the Group and Company and
of their profit or loss for that period. In preparing
each of the Group and Company financial
statements, the Directors are required to:
• select suitable accounting policies and then
apply them consistently;
• make judgements and estimates that are
reasonable and prudent;
• present the financial statements and policies
in a manner that provides relevant, reliable,
comparable and understandable
information;
• state whether they have been prepared in
accordance with IFRSs as adopted by the EU;
• assess the Group and parent Company’s
ability to continue as a going concern,
disclosing, as applicable, matters related to
going concern; and
• use the going concern basis of accounting
unless they either intend to liquidate the
Group or the parent Company or to cease
operation, or have no realistic alternative
but to do so.
98
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Independent Auditor’s Report
To the Shareholders of
B&M European Value Retail S.A.
68-70, boulevard de la Pétrusse L-2320 Luxembourg Luxembourg
Report of the Réviseur d’Entreprises agree
Report on the audit of the consolidated financial statements
Opinion
We have audited the consolidated financial statements of B&M European Value Retail S.A. and its subsidiaries (the “Group”), which comprise the
consolidated statement of financial position as at 26 March 2022, and the consolidated statement of comprehensive income, consolidated statement
of changes in equity and consolidated statement of cash flows for the 52 week period then ended, and notes to the consolidated financial statements,
including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at
26 March 2022 and of its consolidated financial performance and its consolidated cash flows for the 52 week period then ended in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European Union.
Basis for opinion
We conducted our audit in accordance with the Law of 23 July 2016 on the audit profession (“Law of 23 July 2016”) and with International Standards on
Auditing (“ISAs”) as adopted for Luxembourg by the Commission de Surveillance du Secteur Financier (“CSSF”). Our responsibilities under the Law of
23 July 2016 and ISAs as adopted for Luxembourg by the CSSF are further described in the « Responsibilities of “réviseur d’entreprises agréé” for the audit
of the consolidated financial statements » section of our report. We are also independent of the Group in accordance with the International Code of Ethics
for Professional Accountants, including International Independence Standards, issued by the International Ethics Standards Board for Accountants (“IESBA
Code”) as adopted for Luxembourg by the CSSF together with the ethical requirements that are relevant to our audit of the consolidated financial
statements, and have fulfilled our other ethical responsibilities under those ethical requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements
of the current period. These matters were addressed in the context of the audit of the consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Risk of error in Revenue recognition
Why the matter was considered to be one of the most significant in our
audit of the consolidated financial statements of the current period
How the matter was addressed in our audit
The Group’s Revenue amounts to £4.7 billion as per the Consolidated
Statement of Comprehensive Income and Note 2 and is mainly derived
from the sale of goods to customers.
Retail revenue is recognised at the initial point of sale of goods to customers.
Wholesale revenue is recognised at the point on despatch.
Although revenue recognition is considered to be relatively straightforward
on a transactional level, the high volume of transactions makes it more
susceptible to error.
As a result of this large volume of transactions, together with the
significance of the balance relative to other captions in the Consolidated
Statement of Comprehensive Income, has led us to identify it as a key
audit matter.
Our procedures over Revenue recognition included, but were not limited to:
• Obtaining a detailed understanding and evaluating the design and
implementation of key controls that the Group has surrounding Revenue
recognition by inquiries with the relevant process owners and
performing a walkthrough of the process which includes observing the
control and inspecting supporting evidence for the various controls;
• Reconciling cash and receipts from the credit card provider which are
related to revenue from sales made in stores and investigating outliers
identified in this process;
• Assessing revenue trends throughout the period and investigating any
unusual variances;
• Analysing sales by store for the days pre- and post-period-end to assess
whether sales were recorded in the correct period;
• Analysing post period-end returns and credit notes to agree that sales
have been recognised in the correct period and to determine if a returns
provision is required;
• Sampled wholesale revenue in the period and agreed to supporting
documentation to ensure that the revenue was correct to be recognised;
and
• Analysed wholesale revenue recognised around the period end and
agreed a sample back to delivery documentation to ensure revenue
was recognised in the correct period.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
99
Strategic Report Corporate GovernanceFinancial Statements Independent Auditor’s Report continued
Valuation of Inventory
Why the matter was considered to be one of the most significant in our
audit of the consolidated financial statements of the current period
How the matter was addressed in our audit
The Group has significant levels of inventory due to its retail operations.
As per the Consolidated Statement of Financial Position and Note 16,
the balance is £863 million at the year end.
Our procedures over the valuation of inventory included, but were not
limited to:
• Obtaining a detailed understanding and evaluating the design and
Per the Inventory accounting policy in Note 1, inventories are valued at the
lower of cost or net realisable value. Changing consumer preferences,
spending patterns and the seasonality of sales all impact the level of
inventory held and the rate of inventory turnover.
Per the Financial Instruments policy in Note 1, the Group adopts hedge
accounting for a high proportion of its foreign currency inventory purchases.
In order to apply hedge accounting it is necessary to demonstrate hedge
effectiveness which requires, amongst other things, matching the hedging
instrument to the hedged item and ensuring that the appropriate exchange
rate is applied to each hedged item included in the inventory balance.
We focused on the valuation of inventory because of the significant
judgements and estimates required by management when assessing the
level of the provision required in relation to the net realisable value inventory
provision, and the risk of error inherent in the process of adjusting inventory
to the appropriate hedged rate.
implementation of key controls that the Group has surrounding inventory
valuation by inquiries with the relevant process owners and performing
a walkthrough of the process which includes observing the control and
inspecting supporting evidence for the various controls;
• Evaluating the appropriateness of management’s judgements and
assumptions applied in arriving at the value of inventory by:
− Assessing the value of a sample of inventory lines to confirm whether
it is measured at lower of cost or net realisable value, through
comparison to sales receipts and latest purchase invoice;
− Understanding the inventory provisioning policy with specific
consideration to net realisable value and slow-moving stock;
− Testing the accuracy of the net realisable value inventory provision by
performing a recalculation of and testing a sample of the underlying
inputs of the provision calculation to supporting documentation;
− Analysing the period-end stock value against total sales during the
period on a line by line basis to assess whether there are any
indicators that items may be overstocked and using this as a basis to
consider the adequacy of the slow-moving stock provision;
− Inspecting and corroborating the Group’s hedging strategy, and
reviewing the documentation in place for derivatives, including
assessing whether it is in accordance with IFRS 9;
− Reviewing management’s calculations to adjust the valuation of
inventories based on hedged effectiveness in order to assess
whether the valuation has been appropriately adjusted
Other information
The Board of Directors is responsible for the other information. The other information comprises the information stated in the consolidated report
including the consolidated management report but does not include the consolidated financial statements and our report of the “réviseur d’entreprises
agréé” thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report this fact. We have nothing to report in this regard.
Responsibilities of the Board of Directors and Those Charged with Governance for the consolidated
financial statements
The Board of Directors is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRSs as
adopted by the European Union, and for such internal control as the Board of Directors determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends
to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
100
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Responsibilities of the réviseur d’entreprises agréé for the audit of the consolidated financial statements
The objectives of our audit are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue a report of the “réviseur d’entreprises agréé” that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Law of 23 July 2016 and with ISAs as adopted for
Luxembourg by the CSSF will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
As part of an audit in accordance with the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform
audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the
Board of Directors.
• Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report of the “réviseur d’entreprises agréé” to the
related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our report of the “réviseur d’entreprises agréé”. However, future events or conditions may cause the
Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the
consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities and business activities within the Group to express an
opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain
solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence,
and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable,
actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the
consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our report unless law
or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits
of such communication.
Report on other legal and regulatory requirements
The consolidated management report on pages 92 to 96 of the annual report is consistent with the consolidated financial statements and has been
prepared in accordance with applicable legal requirements.
Luxembourg, 30 May 2022
KPMG Luxembourg
Société anonyme
Cabinet de révision agréé
Thierry Ravasio
Partner
B&M European Value Retail S.A.
Annual Report and Accounts 2022
101
Strategic Report Corporate GovernanceFinancial Statements
Consolidated Statement of Comprehensive Income
Period ended
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Share of profits in associates
Profit on ordinary activities before net finance costs and tax
Finance costs on lease liabilities
Other finance costs
Finance income
Profit on ordinary activities before tax
Income tax expense
Profit for the period
Other comprehensive income for the period
Items which may be reclassified to profit and loss:
Exchange differences on retranslation of subsidiary and associate investments
Fair value movement as recorded in the hedging reserve
Tax effect of other comprehensive income
Total other comprehensive income
Total comprehensive income for the period
Earnings per share
Basic earnings per share attributable to ordinary equity holders (pence)
Diluted earnings per share attributable to ordinary equity holders (pence)
52 weeks ended
26 March 2022
£’m
Restated*
52 weeks ended
27 March 2021
£’m
4,673
(2,921)
1,752
(1,142)
610
3
613
(59)
(29)
0
525
(103)
422
(2)
20
(4)
14
436
42.2
42.1
4,801
(3,031)
1,770
(1,157)
613
2
615
(61)
(29)
0
525
(97)
428
(1)
(26)
5
(22)
406
42.8
42.7
Note
2
4
11
5
5
5
9
2
9
10
10
* Other comprehensive income has been restated in 2021 to remove the effect of the hedging gains and losses transferred to inventories. These are recorded directly in the consolidated
statement of changes in equity. See Note 1.
All profit and other comprehensive income is attributable to the owners of the parent.
The accompanying accounting policies and notes form an integral part of these consolidated financial statements.
102
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Consolidated Statement of Financial Position
As at
Assets
Non-current
Goodwill
Intangible assets
Property, plant and equipment
Right of use assets
Investments in associates
Other receivables
Deferred tax asset
Current assets
Cash at bank and in hand
Inventories
Trade and other receivables
Income tax receivable
Other financial assets
Total assets
Equity
Share capital
Share premium
Retained earnings
Hedging reserve
Legal reserve
Merger reserve
Foreign exchange reserve
Non-current liabilities
Interest bearing loans and borrowings
Lease liabilities
Deferred tax liabilities
Provisions
Current liabilities
Interest bearing loans and borrowings
Trade and other payables
Lease liabilities
Other financial liabilities
Income tax payable
Provisions
Total liabilities
Total equity and liabilities
26 March
2022
£’m
27 March
2021
£’m
Note
12
12
13
14
11
16
9
17
15
16
19
22
20
14
9
21
20
18
14
19
21
920
120
363
1,066
8
7
31
2,515
173
863
53
9
25
1,123
3,638
(100)
(2,476)
(121)
(13)
(10)
1,979
(5)
(746)
(950)
(1,140)
(43)
(4)
(2,137)
(6)
(564)
(170)
(0)
(4)
(11)
(755)
(2,892)
(3,638)
921
118
336
1,071
4
7
32
2,489
218
605
42
–
4
869
3,358
(100)
(2,475)
(128)
8
(10)
1,979
(7)
(733)
(723)
(1,139)
(27)
(5)
(1,894)
(7)
(524)
(163)
(16)
(13)
(8)
(731)
(2,625)
(3,358)
The accompanying accounting policies and notes form an integral part of these consolidated financial statements. This consolidated statement of
financial position was approved by the Board of Directors and authorised for issue on 30 May 2022 and signed on their behalf by:
Simon Arora
Chief Executive Officer
B&M European Value Retail S.A.
Annual Report and Accounts 2022
103
Strategic Report Corporate GovernanceFinancial Statements Consolidated Statement of Changes in Shareholders’ Equity
Balance at 28 March 2020
Ordinary dividends declared
Special dividends declared
Effect of share options
Total transactions with owners
Profit for the period
Other comprehensive income (restated*)
Total comprehensive income for the period
Hedging gains & losses reclassified
as inventory (restated*)
Balance at 27 March 2021
Ordinary dividends declared
Special dividends declared
Effect of share options
Total transactions with owners
Profit for the period
Other comprehensive income
Total comprehensive income for the period
Hedging gains & losses reclassified
as inventory
Share
capital
£’m
Share
premium
£’m
100
2,474
Retained
earnings
£’m
245
Hedging
reserve
£’m
9
–
–
–
–
–
(22)
(22)
5
(8)
–
–
–
–
–
16
16
5
13
Legal
reserve
£’m
10
Merger
reserve
£’m
(1,979)
–
–
–
–
–
–
–
–
10
–
–
–
–
–
–
–
–
10
–
–
–
–
–
–
–
–
(1,979)
–
–
–
–
–
–
–
–
(1,979)
Foreign
exchange
reserve
£’m
8
–
–
–
–
–
(1)
(1)
–
7
–
–
–
–
–
(2)
(2)
–
5
Total
equity
£’m
867
(97)
(450)
2
(545)
428
(22)
406
5
733
(180)
(250)
2
(428)
422
14
436
5
746
(97)
(450)
1
(546)
428
1
429
–
128
(180)
(250)
1
(429)
422
–
422
–
121
–
–
0
0
–
–
–
–
–
–
1
1
–
–
–
–
100
2,475
–
–
0
0
–
–
–
–
–
–
1
1
–
–
–
–
Balance at 26 March 2022
100
2,476
* Other comprehensive income, total comprehensive income and hedging gains & losses reclassified as inventory have been restated in 2021 to remove the effect of the hedging gains
and losses transferred to inventories. These are recorded directly in the consolidated statement of changes in equity. See Note 1.
The accompanying accounting policies and notes form an integral part of these consolidated financial statements.
104
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Consolidated Statement of Cash Flows
Period ended
Cash flows from operating activities
Cash generated from operations
Income tax paid
Net cash flows from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Business disposal net of cash disposed
Disposal of interest in associated company
Proceeds from sale of property, plant and equipment
Finance income received
Dividends received from associates
Net cash flows from investing activities
Cash flows from financing activities
Receipt of newly issued corporate bonds
Repayment of previously issued corporate bonds
Receipt of term loan facilities
Repayment of term loan facilities
Repayment of acquisition loan facility
Net repayment of Group revolving bank loans
Net repayment of Heron facilities
Net (repayment)/receipt of government backed loan in France
Net receipt/(repayment) of other French facilities
Repayment of the principal in relation to lease liabilities
Payment of interest in relation to lease liabilities
Fees on refinancing
Other finance costs paid
Receipt from exercise of employee share options
Dividends paid to owners of the parent
Net cash flows from financing activities
Effects of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
Cash and cash equivalents comprises:
Cash at bank and in hand
Overdrafts
Note
23
13
12
11
11
20
20
20
20
20
20
20
20
20
14
14
20
8
29
17
52 weeks ended
26 March
2022
£’m
52 weeks ended
27 March
2021
£’m
598
(107)
491
(96)
(4)
–
–
15
0
–
(85)
250
–
–
–
–
–
(4)
(22)
1
(159)
(59)
(3)
(24)
–
(430)
(450)
(1)
(45)
218
173
173
–
173
944
(117)
827
(87)
(1)
9
0
7
0
2
(70)
400
(250)
300
(300)
(82)
(120)
(5)
23
(1)
(141)
(61)
(11)
(24)
0
(697)
(969)
3
(209)
427
218
218
–
218
The accompanying accounting policies and notes form an integral part of these consolidated financial statements.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
105
Strategic Report Corporate GovernanceFinancial Statements Notes to the Consolidated Financial Statements
1 General information and basis of preparation
The consolidated financial statements have been prepared in accordance with EU IFRS.
The Group’s trade is general retail, with continuing trading taking place in the UK and France. The Group has been listed on the London Stock Exchange
since June 2014.
The consolidated financial statements have been prepared under the historical cost convention as modified by the revaluation of financial assets and
financial liabilities at fair value through profit or loss. The measurement basis and principal accounting policies of the Group are set out below and have
been applied consistently throughout the consolidated financial statements.
The consolidated financial statements are presented in pounds sterling and all values are rounded to the nearest million (£’m), except when otherwise
indicated. This is the first period where the Group has rounded to the nearest million (previously rounding to the nearest thousand). In transitioning the
prior year accounts, usual rounding practices have been adhered to.
The consolidated financial statements cover the 52 week period from 28 March 2021 to 26 March 2022 which is a different period to the parent
company standalone accounts (from 1 April 2021 to 31 March 2022). This exception is permitted under article 1712-12 of the Luxembourg company law of
10 August 1915, as amended, because the Directors believe that;
•
•
the consolidated financial statements are more informative when they cover the same period as used by the main operating entity, B&M Retail Ltd; and
it would be unduly onerous to rephase the year end in that subsidiary to match that of the parent company.
The year end for B&M Retail Ltd, in any year, will not be more than six days prior to the parent company year end.
B&M European Value Retail S.A. (the “Company”) is at the head of the Group and there is no consolidation that takes place above the level of
this company.
The principal accounting policies of the Group are set out below.
Restatement of other comprehensive income
The Group has restated the other comprehensive income caption of ‘fair value movement as recorded in the hedging reserve’ to exclude the amount
moved to inventories on the maturation of effective hedges as required by IFRS 9 ‘Financial Instruments’.
This has resulted in a decrease of £5m in other and total comprehensive income for the prior year. The corresponding credit to the hedging reserve is
presented in the consolidated statement of changes in equity.
There was no effect on the profit for the period, earnings per share, consolidated statement of financial position or consolidated statement of cash flows.
Basis of consolidation
The Group financial statements consolidate the financial statements of the Company and its subsidiary undertakings, together with the Group’s share of
the net assets and results of associated undertakings, for the period from 28 March 2021 to 26 March 2022. Acquisitions of subsidiaries are dealt with by
the acquisition method of accounting. The results of companies acquired are included in the consolidated statement of comprehensive income from the
acquisition date.
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those
returns through its power over the investee.
Specifically, the Group controls an investee if and only if the Group has:
• power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee),
• exposure, or rights, to variable returns from its involvement with the investee, and,
•
the ability to use its power over the investee to affect its returns.
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in
assessing whether it has power over an investee, including:
•
•
•
the contractual arrangements with the other vote holders of the investee,
rights arising from other contractual arrangements, and,
the Group’s voting rights and potential voting rights.
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three
elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control
of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of
comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary, excluding the situations as
outlined in the basis of preparation.
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Going concern
As a value retailer, the Group is well placed to withstand volatility within the economic environment. The Group’s forecasts and projections, taking into
account reasonably possible changes in trading performance, show that the Group will trade within its current banking facilities.
After making enquiries, including preparing cash flow forecasts for at least 12 months from the date of approval of these financial statements,
the Directors are confident that the Group has adequate resources to continue its successful growth.
This assessment considered various scenarios including an extreme reduction in like for like sales, gross margin deterioration, disruption to our
distribution network and cyber threats. The Group also has recourse to several mitigations to improve liquidity, including our £155m revolving credit
facility, which had £142m available at the year end date.
There have been no post balance sheet changes to liquidity and the current inflationary pressures do not have a material impact on this assessment
as the Group is well placed to absorb or pass on these costs given our position as a low cost retailer.
Consequently, the Directors are confident that the Group and Company will have sufficient funds to continue to meet its liabilities as they fall due for at
least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis.
Note also that viability and going concern statements have been made in the ‘Principal risks and uncertainties’ section of this annual report.
Revenue
Under IFRS 15 Revenue is recognised when all the following criteria are met;
•
•
•
•
•
the parties to the contract have approved the contract;
the Group can identify each parties rights regarding the goods to be transferred;
the Group can identify the payment terms;
the contract has commercial substance;
it is probable that the Group will collect the consideration we are entitled to in respect to the goods to be transferred.
In the vast majority of cases the Group’s sales are made through stores and the control of goods is immediately transferred at the same time as the
consideration is received via our tills. Therefore, revenue is recognised at this point.
The Group sells a small quantity of gift vouchers for use in the future and, as such, a small amount of deferred revenue is recognised. At the period end
the value held on the balance sheet was £0.5m (2021: £0.3m).
The Group operates a small wholesale function which recognises revenue when goods are delivered and an invoice is raised. The revenue is considered
collectable as the Group’s wholesale customers are usually related parties to the Group (such as our associates) or are subject to credit checks before
trade takes place. See Note 2 for the split of wholesale sales to store sales.
Revenue is the total amount receivable by the Group for goods supplied, in the ordinary course of business, excluding VAT and trade discounts, and after
deducting returns and relevant vouchers and offers.
Administrative expenses
Administrative expenses include all running costs of the business, except those relating to inventory (which are expensed through cost of sales), tax,
interest and other comprehensive income. Transport and warehouse costs are included in this caption.
Elements which are unusual and significant, such as material restructuring costs, may be separated as a line item.
Goodwill
Goodwill is initially measured at cost, being the excess of the fair value of consideration transferred over the fair value of the net identifiable assets
acquired and liabilities assumed at the date of acquisition.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill
acquired in a business combination is, from the acquisition date, allocated to the relevant cash-generating units (CGUs) that are expected to benefit
from the combination. The cash-generating units are individual stores and the groups of cash-generating units are the store portfolios in each
operational segment.
Goodwill is tested for impairment at least once per year and specifically at any time where there is any indication that it may be impaired. Internally
generated goodwill is not recognised as an asset.
Segment reporting
Operating segments are reported in a manner consistent with internal reporting provided to the chief operating decision maker. The chief operating
decision maker has been identified as the executive directors of the Group. The executive directors are responsible for assessing the performance of
the business for the purpose of making decisions about resources to be allocated.
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Alternative performance measures
The Group reports a selection of alternative performance measures (APMs) as detailed below and in Note 3, as the Directors believe that these measures
provide additional information that is useful to the users of our accounts.
The alternative performance measures we report in these accounts are:
• Earnings before interest, tax, depreciation and amortisation (EBITDA)
• Adjusted EBITDA
• Adjusted Profit
• Adjusted Earnings per share
Both IFRS 16 and non-IFRS 16 versions of these alternative performance measures have been calculated and presented in order to aide comparability
with the figures presented in previous years.
Interest, tax, depreciation and amortisation are as defined statutorily whilst the items we adjust for are those we consider not to be reflective of the
underlying performance of the business as detailed in Note 3. These adjustments include the effect of ineffective derivatives and foreign exchange on
intercompany balances, which do not relate to underlying trading, and costs incurred in relation to acquisitions, which are non-recurring and do not
relate to underlying trading.
Underlying performance has been determined so as to align with how the Group financial performance is monitored on an ongoing basis by
management. In particular, this reflects certain adjustments being made to consider an adjusted EBITDA measure of performance.
Adjusted finance costs reflect the ongoing charges associated with our debt structure and exclude one off effects of refinancing.
The directors believe that our adjusted APMs, and specifically, EBITDA provides users of the account with a measure of performance which is appropriate
to the retail industry and presented by peers and competitors. Adjusted values are considered to be appropriate to exclude unusual, non-trading and/or
non-recurring impacts on performance which therefore provides the user of the accounts with an additional metric to compare periods of account.
The alternative performance measures used are not measures of performance or liquidity under IFRS and should not be considered in isolation or as
a substitute for measures of profit, or as an indicator of the Group’s operating performance or cash flows from operating activities as determined in
accordance with IFRS.
Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration
transferred, measured at the acquisition date fair value, which may include contingent consideration at net present value. Acquisition-related costs are
expensed depending on their nature with costs of raising finance amortised over the term of the relevant element of finance provided and the remainder
expensed when incurred.
Assets and liabilities are recognised at their acquisition date fair value, with the difference between the consideration and the net assets recognised as
goodwill on the statement of financial position or as a gain in administrative expenses.
Brands
Brands acquired by the business are amortised if the corresponding agreement is specifically time limited, or if the fair valuation exercise (carried out for
brands acquired via business combinations) identifies a fair lifespan for the brand. This amortisation is charged to administrative expenses.
Otherwise, brands are considered to have an indefinite life on the basis that they form part of the cash generating units within the Group which will
continue in operation indefinitely, with no foreseeable limit to the period over which they are expected to generate net cash inflows.
Where brands are considered to have an indefinite life they are reviewed at least annually for impairment or whenever events or changes in
circumstances indicate that their carrying amount may not be recoverable.
Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is impaired
accordingly with the impairment charged to administration expenses.
Intangible assets
Intangible assets acquired separately, including computer software, are measured on initial recognition at cost comprising the purchase price and any
directly attributable costs of preparing the asset for use.
Following initial recognition, assets are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation begins when
an asset is available for use and is calculated on a straight line basis to allocate the cost of the asset over its estimated useful life as follows:
Computer software acquired – 3 or 4 years
Amortisation method, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
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Property, plant and equipment
Property, plant and equipment is carried at cost less accumulated depreciation and accumulated impairment losses.
Cost comprises purchase price and directly attributable costs. Unless significant or incurred as part of a refit programme, subsequent expenditure will
usually be treated as repairs or maintenance and expensed to the statement of comprehensive income.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the
replaced part is derecognised.
Depreciation
Freehold land is not depreciated. For all other property, plant and equipment, depreciation is calculated on a straight line basis to allocate cost,
less residual value of the assets, over their estimated useful lives as follows:
Leasehold buildings
Freehold buildings
Plant, fixtures and equipment
Motor vehicles
–
–
–
–
Life of lease (max 50 years)
2% – 4% straight line
10% – 33% straight line
12.5% – 33% straight line
Residual values and useful lives are reviewed annually and adjusted prospectively, if appropriate.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the
asset) is included in the statement of comprehensive income when the asset is derecognised.
Leases
The Group applies the leasing standard, IFRS 16, to all contracts identified as leases at their inception, unless they are considered a short-term lease
(with a term less than a year) or where the asset is of a low underlying value (under £5k). Assets which may fall into this categorisations include printers,
vending machines and security cameras, and the lease expense is within administrative expenses.
The Group has lease contracts in relation to property, equipment, fixtures & fittings and vehicles. A contract is classified as a lease if it conveys the right
to control the use of an identified asset for a period of time in exchange for consideration.
When a lease contract is recognised, the business assesses the term for which we are reasonably certain to hold that lease, and the minimum lease
payments over that term are discounted to give the initial lease liability. The initial right-of-use asset is then recognised at the same value, adjusted for
incentives or payments made on the day that the lease was acquired. Any variable lease costs are expensed to administrative costs when incurred.
The date that the lease is brought into the accounts is the date from which the lease has been effectively agreed by both parties as evidenced by the
Group’s ability to use that property.
The right-of-use asset is subsequently depreciated on a straight-line basis over the term of that lease, or useful life (whichever is shorter) with the charge
being made to administrative costs. The lease liability attracts interest which is charged to finance costs, and is measured at amortised cost using the
effective interest method.
Right-of-use assets may be impaired if, for instance, a lease becomes onerous. Impairment costs are charged to administrative costs.
Lease modifications are recorded where there is a change in the expected cashflows associated with a lease, such as through a rent review. When a
lease modification occurs the lease liability is recalculated and an equivalent adjustment is made to the right of use asset, unless that asset would be
reduced below zero, in which case the excess is expensed in administrative costs. The recalculation is carried out with an unchanged discount unless
the change has affected management’s assessment of the term of the lease.
If there is a significant event, such as the lease reaching its expiry date, the likely exercise of a previously unrecognised break clause, or the signing of
an extension lease, the lease term is re-assessed by management as to how long we can reasonably certain to stay in that property, and a new lease
agreement or modification (if the change is made before the expiry date) is recognised for the re-assessed term, with a recalculated discount rate.
Lease modifications are also recorded where there is a change in the expected cashflows associated with the lease, such as through a rent review.
Unless the change affects the term, the discount rate is not recalculated. A lease modification results in a recalculation of the lease liability with a
corresponding adjustment made to the right of use asset.
The discount rate used is individual to each lease. Where a lease contract includes an implicit interest rate, that rate is used. In the majority of leases this
is not the case and the discount rate is taken to be the incremental borrowing rate as related to that specific asset. This is a calculation based upon the
external market rate of borrowing for the Group, as well as several factors specific to the asset to be discounted.
The Group separates lease payments between lease and non-lease components (such as service charges on property) at the point at which the lease is
recognised. Non-lease components are charged through administrative expenses.
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Sale and leaseback transactions
The Group recognises a sale and leaseback transaction when the Group sells an asset that has been previously recognised in property, plant and
equipment, and subsequently leases it back as part of the same or a linked transaction.
Management use the provisions of IFRS 15 to assess if a sale has taken place, and the provisions of IFRS 16 to recognise the resulting lease, with the
liability and discount rate calculated in line with our lease policy and the asset subject to an adjustment based upon the net book value of the disposed
asset, the opening lease liability, the consideration received and the fair value of the asset on the date it was sold.
Resulting gains or losses are recognised in administrative expenses.
Onerous leases
A lease is considered onerous when the economic benefits of occupying the leased properties are less than the obligations payable under the lease.
When a lease is classified as onerous, the right-of-use asset associated with the lease is impaired to £nil value and non-rental costs that are likely to
accrue before the end of the contract are provided against.
Investments in associates
Associates are those entities over which the Group has significant influence but which are neither subsidiaries nor interests in joint ventures. Investments
in associates are recognised initially at cost and subsequently accounted for using the equity method. However, any goodwill or fair value adjustment
attributable to the Group’s share of associates is included in the amount recognised as investment in associates.
All subsequent changes to the share of interest in the equity of the associate are recognised in the Group’s carrying amount of the investment, including
a reduction in the carrying amount equal to any dividend received. Changes resulting from the profit or loss generated by the associate are reported in
“share of profits in associates” in the consolidated statement of comprehensive income and therefore affect net results of the Group. These changes
include subsequent depreciation, amortisation and impairment of the fair value adjustments of assets and liabilities.
Items that have been recognised directly in the associate’s other comprehensive income are recognised in the consolidated other comprehensive
income of the Group. However, when the Group’s share of losses in an associate equals or exceeds its interest in the associate the Group does not
recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. If the associate subsequently reports profits,
the investor resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised
losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported in the consolidated
financial statements of associates have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.
Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual
impairment testing for an asset is required (for goodwill or indefinite life assets), the Group estimates the asset’s recoverable amount.
The Group bases its impairment calculation on detailed budgets and forecasts which are prepared separately for each of the Group’s cash generating
units (CGU’s) to which the individual assets are allocated. These budgets and forecast calculations are prepared in December and usually cover a period
of five years. For longer periods, a long-term growth rate is calculated and applied to the projected future cash flows after the fifth year. The Group’s three
year plan is usually approved in March. If due to the passage of time there are significant differences in the key assumptions between the forecast and
plan, or if management consider that the forecast has a more sensitive level of headroom, then the impairment test will be additionally sensitised to the
plan assumptions.
Indications of impairment might include (for goodwill and the brand assets, for instance) a significant decrease in the like for like sales of established
stores, sustained negative publicity or a drop off in visits to our website and social media accounts.
An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs to sell and its value in use. It is determined for an individual asset,
unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount
of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset or CGU.
Impairment losses of continuing operations, are recognised in the statement of comprehensive income in those expense categories consistent with the
function of the impaired asset.
For assets excluding goodwill and acquired brands with indefinite lives, an assessment is made at each reporting date as to whether there is any
indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates
the asset’s or CGU’s recoverable amount.
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A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable
amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable
amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset
in prior years. Such reversal is recognised in the statement of comprehensive income, except for impairment of goodwill which is not reversed.
Inventories
Inventories are stated at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items, using the weighted
average method.
Stock purchased in foreign currency is booked in at the hedge rate applicable to that stock (if effectively hedged) or the underlying foreign currency rate
on the date that the item is brought into stock.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs to sell. Transport, warehouse and distribution
costs are not included in inventory.
The Group receives supplier rebates which are included in the cost of inventory balance (and which therefore ultimately flow through to cost of sales).
These rebates are recognised on an accruals basis according to actual sales levels achieved at the end of each period.
Share options
The Group operates several equity settled share option schemes.
The schemes have been accounted for under the provisions of IFRS 2 and, accordingly, have been fair valued on their inception date using appropriate
methodology (the Black Scholes and Monte Carlo models).
A cost is recorded through the statement of comprehensive income in respect of the number of options outstanding and the fair value of those options.
A corresponding credit is made to the retained earnings reserve and the effect of this can be seen in the statement of changes in equity. See Note 8 for
more details.
Taxation
Current income tax
Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date, in the
countries where the Group operates and generates taxable income. Tax is recognised in the statement of comprehensive income, except to the extent
that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive
income or directly in equity.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts
for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differences, except:
• When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination
•
and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, when the timing of
the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that
it is highly probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits
and unused tax losses can be utilised, except:
• When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction
•
that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax
assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will
be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each
reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled,
based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
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Financial instruments
The Group uses derivative financial instruments such as forward currency contracts, fuel swaps and interest rate swaps to reduce its foreign currency
risk, commodity price risk and interest rate risk. Derivative financial instruments are recognised at fair value. The fair value is derived using an internal
model and supported by valuations by third party financial institutions.
Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a highly probable forecast
transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in other comprehensive income and accumulated in
the hedging reserve. Any ineffective portion of the hedge is recognised immediately in the statement of comprehensive income. Effectiveness of the derivatives
subject to hedge accounting is assessed prospectively at inception of the derivative, and at each reporting period end date prior to maturity.
Where a hedge of a forecast transaction subsequently results in the recognition of a non-financial asset, such as an item of inventory, the associated
gains and losses are recognised in the initial cost of that asset.
When a hedging instrument expires or is sold, terminated or exercised, or the entity revokes designation of the hedge relationship but the hedged
forecast transaction is still expected to occur, the cumulative gain or loss at that point remains in equity and is recognised in accordance with the above
policy when the transaction occurs. If the hedged transaction is no longer expected to take place, the cumulative unrealised gain or loss recognised in
equity is reclassified in the statement of other comprehensive income immediately.
Financial assets
Under IFRS 9, on initial recognition, a financial asset is classified as measured at amortised cost, fair value through profit or loss or fair value through
other comprehensive income.
A financial asset is measured at amortised cost using the effective interest rate if it meets both of the following conditions: it is held within a business model
whose objective is to hold assets to collect contractual cash flows; and its contractual terms give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding. Under IFRS 9 trade receivables, without a significant financing component, are classified and
held at amortised cost, being initially measured at the transaction price and subsequently measured at amortised cost less any impairment loss.
IFRS 9 includes an ‘expected loss’ model (‘ECL’) for recognising impairment of financial assets held at amortised cost. The Group has elected to measure
loss allowances for trade receivables at an amount equal to lifetime ECLs. Credit losses are measured as the present value of all cash shortfalls (i.e. the
difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive).
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit
losses, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both
quantitative and qualitative information and analysis based on the Group’s historical experience and informed credit assessment and including
forward-looking information. The Group performs the calculation of expected credit losses separately for each customer group. The balances involved
are immaterial for further disclosure.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income comprise derivative financial instruments entered into by the Group that are
designated as hedging instruments in hedge relationships as defined by IFRS 9. Financial assets at fair value through other comprehensive income are
carried in the statement of financial position at fair value with changes in fair value recognised in other comprehensive income.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include derivative financial instruments entered into by the Group that are not designated as hedging
instruments in hedge relationships as defined by IFRS 9. Financial assets at fair value through profit or loss are carried in the statement of financial
position at fair value with changes in fair value recognised in profit and loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when the rights to receive
cash flows from the asset have expired and the entity has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay
the received cash flows in full and either (a) the entity has transferred substantially all the risks and rewards of the asset, or (b) the entity has neither
transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Impairment of financial assets
The Group assesses at each reporting date, on a forward looking basis the ECLs associated with our financial assets carried at amortised cost.
Financial liabilities
Initial recognition and measurement
Financial liabilities within the scope of IFRS 9 are classified as financial liabilities at fair value through profit or loss or other financial liabilities. The entity
determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial derivatives held for trading. Financial liabilities are classified as held-for-trading if
they are acquired for the purpose of selling in the near term. This category includes derivative financial instruments entered into by the Group. Gains or
losses on liabilities held-for-trading are recognised in profit and loss.
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Other financial liabilities
After initial recognition, interest bearing loans and borrowings, trade and other payables and other liabilities are subsequently measured at amortised
cost using the effective interest rate method. Gains and losses are recognised in the statement of comprehensive income when the liabilities are
derecognised as well as through the effective interest rate method (EIR) amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR.
The EIR amortisation is included in finance costs.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
Fair value of financial instruments
The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to mark-to-market valuations
obtained from the relevant bank (bid price for long positions and ask price for short positions), without any deduction for transaction costs.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, less bank overdrafts to the extent the group has the right to offset and settle these
balances net.
Equity
Equity comprises the following:
•
•
•
“Share capital” represents the nominal value of equity shares;
“Share premium” represents the excess of the consideration made for the shares, over and above the nominal valuation of those shares;
“Legal reserve” representing the statutory reserve required by Luxembourg law as an apportionment of profit within each Luxembourg company (up
to 10% of the standalone share capital);
“Hedging reserve” representing the fair value of the derivatives held by the Group at the period end that are accounted for under hedge accounting
and that represent effective hedges;
“Merger reserve” representing the reserve created during the reorganisation of the Group in 2014;
“Retained earnings reserve” represents retained profits;
“Foreign exchange reserve” represents the cumulative differences arising in retranslation of the subsidiaries and associates results.
•
•
•
•
Foreign currency translation
These consolidated financial statements are presented in pounds sterling.
The following Group companies have a functional currency of pounds sterling:
• B&M European Value Retail S.A.
• B&M European Value Retail 1 S.à r.l. (Lux Holdco)
• B&M European Value Retail Holdco 1 Ltd (UK Holdco 1)
• B&M European Value Retail Holdco 2 Ltd (UK Holdco 2)
• B&M European Value Retail Holdco 3 Ltd (UK Holdco 3)
• B&M European Value Retail Holdco 4 Ltd (UK Holdco 4)
• EV Retail Ltd
• B&M Retail Ltd
• Opus Homewares Ltd
• Retail Industry Apprenticeships Ltd
• Heron Food Group Ltd
• Heron Foods Ltd
• Cooltrader Ltd
• Heron Properties (Hull) Ltd
• Centz N.I. Limited
The following Group companies have a functional currency of the Euro:
• B&M European Value Retail 2 S.à r.l. (SBR Europe)
• B&M France SAS
• B&M European Value Retail Germany GmbH (Germany Holdco)
The Group companies whose functional currency is the Euro have been consolidated into the Group via retranslation of their results in line with IAS 21
Effects of Changes in Foreign Exchange Rates. The assets and liabilities are translated into pounds sterling at the period end exchange rate. The
revenues and expenses are translated into pounds sterling at the average monthly exchange rate during the period. Any resulting foreign exchange
difference is cumulatively recorded in the foreign exchange reserve with the annual effect being charged/credited to other comprehensive income.
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Transactions entered into by the company in a currency other than the currency of the primary economic environment in which it operates (the “functional
currency”) are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling
at the balance sheet date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in
profit or loss.
Pension costs
The Group operates a defined contribution scheme and contributions are charged to profit or loss in the period in which they are incurred.
Provisions
Provisions are recognised when a present obligation (legal or constructive) exists as a result of a past event and where it is probable that an outflow of
resources embodying economic benefits will be required to settle the obligation and the amount can be reliably estimated. Provisions are discounted
where the time value of money is considered to be material.
The property provision also contains expected dilapidation costs, which covers expected dilapidation costs for any lease considered onerous, any
related to stores recently closed, any stores which are planned or at risk of closure and those stores occupied but not under contract. At the period end
99 stores were provided against (2021: 87).
We do not provide against stores which are under contract and not considered at risk of closure (comprising the majority of the estate) as management
consider that such a provision would be minimal as a result of regular store maintenance and limited fixed fit out costs.
We also provide against the terminal dilapidation expense on our major warehouses, which is built up over the term of the leases held over
those warehouses.
Critical judgements and key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its
assumptions and estimates on parameters available when the financial information was prepared. However, existing circumstances and assumptions
about future developments may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in
the assumptions when they occur.
Critical judgements
Investments in associates
Multi-lines International Company Ltd (Multi-lines), which is 50% owned by the Group, has been judged by management to be an associate rather than
a subsidiary or a joint venture.
Under IFRS 10 control is determined by:
• Power over the investee.
• Exposure, or rights, to variable returns from its involvement with the investee.
• The ability to use its power over the investee to affect the amount of the investor’s returns.
Although 50% owned, B&M Group does not have voting rights or substantive rights. Therefore, the level of power over the business is considered to be
more in keeping with that of an associate than a joint-venture and, therefore, it has been treated as such within these consolidated financial statements.
Hedge accounting
The Group hedge accounts for stock purchases made in US Dollars.
There is significant management judgement involved in forecasting the level of dollar purchases to be made within the period that the forward hedge
has been bought for.
Management takes a prudent view that no more than 80% of the operational hedging in place can be subject to hedge accounting, due to forecast
uncertainties, and assesses every forward hedge taken out, on inception, if that figure should be reduced further by considering general purchasing
trends, and discussion of specific purchasing decisions.
Estimation uncertainty
There are no areas of estimation uncertainty where management consider that there is a significant risk of a material adjustment to the carrying
amounts of assets and liabilities within the next financial year.
114
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Annual Report and Accounts 2022
Standards and Interpretations not yet applied by the Group
The following amendments to accounting standards and interpretations, issued by the International Accounting Standards Board (IASB), have
not yet been applied by the Group in the period. None of these are expected to have a significant impact on the Group’s consolidated results
or financial position:
IASB effective for annual periods beginning on or after 1 January 2022
Standard
Summary of changes
UK Endorsement status
EU Endorsement status
Amendments to IFRS 3 Business combinations
Amendments to IAS 37 Provisions, Contingent
Liabilities and Contingent Assets
Annual improvements – cycle 2018-2020
The amendments updated a reference in IFRS 3 to
the Conceptual Framework for Financial Reporting
without changing the requirements for business
combination accounting.
The amendments specify which costs an entity
includes in determining the cost of fulfilling a contract
for the purpose of assessing whether the contract is
onerous.
This cycle of improvements contains amendments
to the following standards:
• IFRS 9 Financial Instruments: clarifies the fees
to be included in the ‘10 per cent’ test for
derecognition of financial liabilities.
• Illustrative Examples accompanying IFRS 16
Leases: to remove the illustration of payments
from the lessor relating to leasehold
improvements.
Not yet endorsed
Not yet endorsed
Not yet endorsed
Endorsed (2 July 2021).
EU effective date
1 January 2022.
Endorsed (2 July 2021).
EU effective date
1 January 2022.
Endorsed (2 July 2021).
EU effective date
1 January 2022.
IASB effective for annual periods beginning on or after 1 January 2023
Standard
Summary of changes
UK Endorsement status
EU Endorsement status
Amendments to IAS 8 Accounting Estimates
Amendments to IAS 1 and IFRS 2
Amendments to IAS 8 Accounting Policies, Changes
in Accounting Estimates and Errors, make a
distinction between how an entity should present
and disclose different types of accounting changes
in its financial statements. Changes in accounting
policies must be applied retrospectively while
changes in accounting estimates are accounted
for prospectively.
The amendment requires an entity to disclose its
material accounting policy information instead of
its significant accounting policies. A policy can be
material by nature even if the related amounts
are immaterial.
Not yet endorsed
Not yet endorsed
Not yet endorsed
Endorsed (3 March
2022).
EU effective date
1 January 2023.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
115
Strategic Report Corporate GovernanceFinancial Statements Notes to the Consolidated Financial Statements continued
2 Segmental information
IFRS 8 (“Operating segments”) requires the Group’s segments to be identified on the basis of internal reports about the components of the Group that
are regularly reviewed by the chief operating decision maker to assess performance and allocate resources across each reporting segment.
The chief operating decision maker has been identified as the executive directors who monitor the operating results of the retail segments for the
purpose of making decisions about resource allocation and performance assessment.
For management purposes, the Group is organised into three operating segments, comprising the three separately operated businesses within the
Group; UK B&M, UK Heron and France B&M.
Items that fall into the corporate category, which is not a separate segment but is presented to reconcile the balances to those presented in the main
statements, include those related to the Luxembourg or associate entities, Group financing, corporate transactions, any tax adjustments and items
we consider to be adjusting (see Note 3).
The average Euro rate for translation purposes was €1.1756/£ during the year, with the period end rate being €1.2009/£ (2021: €1.1203/£
and €1.1691/£ respectively).
52 week period to 26 March 2022
Revenue
EBITDA (Note 3)
EBITDA (IFRS 16) (Note 3)
Depreciation and amortisation
Net finance expense
Income tax expense
Segment profit/(loss)
Total assets
Total liabilities
Capital expenditure*
52 week period to 27 March 2021
Revenue
EBITDA (Note 3)
EBITDA (IFRS 16) (Note 3)
Depreciation and amortisation
Net finance expense
Income tax (expense)/credit
Segment profit/(loss)
Total assets
Total liabilities
Capital expenditure*
* Capital expenditure includes both tangible and intangible capital.
UK
B&M
£’m
3,909
563
729
(170)
(48)
(96)
415
2,952
(1,513)
(80)
UK
B&M
£’m
4,077
592
759
(162)
(48)
(106)
443
2,687
(1,477)
(65)
UK
Heron
£’m
411
23
34
(23)
(2)
(1)
8
281
(117)
(9)
UK
Heron
£’m
415
25
35
(20)
(3)
(2)
10
282
(117)
(13)
France
B&M
£’m
353
32
64
(34)
(11)
(5)
14
331
(251)
(11)
France
B&M
£’m
309
11
42
(34)
(13)
1
(4)
348
(240)
(10)
Corporate
£’m
–
13
13
–
(27)
(1)
(15)
74
(1,011)
–
Corporate
£’m
–
(5)
(5)
–
(26)
10
(21)
41
(791)
–
Total
£’m
4,673
631
840
(227)
(88)
(103)
422
3,638
(2,892)
(100)
Total
£’m
4,801
623
831
(216)
(90)
(97)
428
3,358
(2,625)
(88)
116
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Revenue is disaggregated geographically as follows:
Period to
Revenue due from UK operations
Revenue due from French operations
Overall revenue
Non-current assets (excluding deferred tax and financial instruments) are disaggregated geographically as follows:
As at
UK operations
French operations
Luxembourg operations
Overall
The Group operates a small wholesale operation, with the relevant disaggregation of revenue as follows:
Period to
Revenue due to sales made in stores
Revenue due to wholesale activities
Overall revenue
52 weeks ended
26 March
2022
£’m
52 weeks ended
27 March
2021
£’m
4,320
353
4,673
26 March
2022
£’m
2,252
224
8
2,484
4,492
309
4,801
27 March
2021
£’m
2,227
225
5
2,457
52 weeks ended
26 March
2022
£’m
52 weeks ended
27 March
2021
£’m
4,628
45
4,673
4,754
47
4,801
3 Reconciliation of non-IFRS measures from the statement of comprehensive income
The Group reports a selection of alternative performance measures as detailed below. The Directors believe that these measures provide additional
information that is useful to the users of the accounts.
EBITDA, Adjusted EBITDA and Adjusted Profit are non-IFRS measures and therefore reconciliations from the statement of comprehensive income are
set out below.
Period to
Profit on ordinary activities before interest and tax
Add back depreciation and amortisation
EBITDA (IFRS 16)
Exclude effects of IFRS 16 on administrative costs
EBITDA
Reverse the fair value effect of ineffective derivatives
Foreign exchange on intercompany balances
Release of exceptional French stock provision
Adjusted EBITDA
Pre-IFRS 16 depreciation and amortisation
Net adjusted finance costs (see Note 5)
Adjusted profit before tax
Adjusted tax
Adjusted profit for the period
Attributable to owners of the parent
52 weeks ended
26 March
2022
£’m
52 weeks ended
27 March
2021
£’m
613
227
840
(209)
631
(13)
1
–
619
(66)
(29)
524
(107)
417
417
615
216
831
(208)
623
7
3
(7)
626
(62)
(24)
540
(105)
435
435
B&M European Value Retail S.A.
Annual Report and Accounts 2022
117
Strategic Report Corporate GovernanceFinancial Statements Notes to the Consolidated Financial Statements continued
3 Reconciliation of non-IFRS measures from the statement of comprehensive income continued
The effects of IFRS 16 on administrative costs caption reflects the difference between IAS 17 and IFRS 16 accounting and largely consists of the additional
rent expense the Group would have incurred under the IAS 17 standard.
Adjusted EBITDA (IFRS 16) and Adjusted Profit (IFRS 16) are calculated as follows. These are the statements of adjusted profit that includes the effects of IFRS 16.
Period to
Adjusted EBITDA (above)
Include other effects of IFRS 16 on EBITDA
Adjusted EBITDA (IFRS 16)
Depreciation and amortisation
Interest costs related to lease liabilities (Note 5)
Net adjusted other finance costs
Adjusted profit before tax (IFRS 16)
Adjusted tax
Adjusted profit for the period (IFRS 16)
52 weeks ended
26 March
2022
£’m
52 weeks ended
27 March
2021
£’m
619
209
828
(227)
(59)
(29)
513
(101)
412
626
208
834
(216)
(61)
(24)
533
(106)
427
Adjusting items are the effects of derivatives, one off refinancing fees, foreign exchange on the translation of intercompany balances and the effects
of revaluing or unwinding balances related to the acquisition of subsidiaries.
Significant project costs or gains or losses arising from unusual circumstances or transactions may also be included if incurred.
The exceptional French stock provision was recognised in 2019/20 when the first French lockdown was put into place resulting in the closure of the
French store estate with significant uncertainty regarding when stores would be able to reopen. Ultimately the stock provision was largely released
during 2020/21, as the stock was sold through once the stores were reopened and this release was treated as adjusting to match the treatment
when recognising the provision. No new adjusting items have been recognised in respect of the pandemic in either of the presented years.
The following table reconciles the statutory figures to the adjusted (IFRS 16) and adjusted figures in the statutory P&L format on a line by line basis.
52 week period to 26 March 2022
Revenue
Cost of sales
Gross profit
Depreciation and amortisation
Other administrative expenses
Operating profit
Share of profits in associates
Profit before interest and tax
Finance costs relating to right of use assets
Other finance costs
Finance income
Profit before tax
Income tax expense
Profit for the period
Statutory
figures
£’m
4,673
(2,921)
1,752
(227)
(915)
610
3
613
(59)
(29)
0
525
(103)
422
Adjusting
items
£’m
–
–
–
–
(12)
(12)
–
(12)
–
–
–
(12)
2
(10)
Adjusted
(IFRS 16)
£’m
4,673
(2,921)
1,752
(227)
(927)
598
3
601
(59)
(29)
0
513
(101)
412
Impact of
IFRS 16
£’m
–
–
–
161
(209)
(48)
–
(48)
59
–
–
11
(6)
5
Adjusted
figures
£’m
4,673
(2,921)
1,752
(66)
(1,136)
550
3
553
–
(29)
0
524
(107)
417
118
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Annual Report and Accounts 2022
52 week period to 27 March 2021
Revenue
Cost of sales
Gross profit
Depreciation and amortisation
Other administrative expenses
Operating profit
Share of profits in associates
Profit before interest and tax
Finance costs relating to right of use assets
Other finance costs
Finance income
Profit before tax
Income tax expense
Profit for the period
Statutory
figures
£’m
4,801
(3,031)
1,770
(216)
(941)
613
2
615
(61)
(29)
0
525
(97)
428
Adjusting
items
£’m
–
(7)
(7)
–
10
3
–
3
–
5
–
8
(9)
(1)
Adjusted
(IFRS 16)
£’m
4,801
(3,038)
1,763
(216)
(931)
616
2
618
(61)
(24)
0
533
(106)
427
Impact of
IFRS 16
£’m
–
–
–
154
(208)
(54)
–
(54)
61
–
–
7
1
8
Adjusted
figures
£’m
4,801
(3,038)
1,763
(62)
(1,139)
562
2
564
–
(24)
0
540
(105)
435
Adjusted tax represents the tax charge per the statement of comprehensive income as adjusted only for the effects of the adjusting items detailed above
and the one off deferred tax gain on recognition of the deferred tax asset in France in the prior year.
The segmental split in EBITDA (IFRS 16) and Adjusted EBITDA (IFRS 16) reconciles as follows:
52 week period to 26 March 2022
Profit before interest and tax
Add back depreciation and amortisation
EBITDA (IFRS 16)
Adjusting items detailed above
Adjusted EBITDA (IFRS 16)
52 week period to 27 March 2021
Profit/(loss) before interest and tax
Add back depreciation and amortisation
EBITDA
Adjusting items detailed above
Adjusted EBITDA (IFRS 16)
UK
B&M
£’m
559
170
729
–
729
UK
B&M
£’m
597
162
759
–
759
UK
Heron
£’m
11
23
34
–
34
UK
Heron
£’m
15
20
35
–
35
France
B&M
£’m
30
34
64
–
64
France
B&M
£’m
8
34
42
–
42
Corporate
£’m
13
–
13
(12)
1
Corporate
£’m
(5)
–
(5)
3
(2)
Total
£’m
613
227
840
(12)
828
Total
£’m
615
216
831
3
834
Adjusted EBITDA and related measures are not measures of performance or liquidity under IFRS and should not be considered in isolation or as a substitute
for measures of profit, or as an indicator of the Group’s operating performance or cash flows from operating activities as determined in accordance with IFRS.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
119
Strategic Report Corporate GovernanceFinancial Statements Notes to the Consolidated Financial Statements continued
4 Operating profit
The following items have been charged in arriving at operating profit:
Period ended
Auditor’s remuneration
Payments to auditors in respect of non-audit services:
Taxation advisory services
Other assurance services
Other professional services
Cost of inventories recognised as an expense (included in cost of sales)
Depreciation of owned property, plant and equipment
Amortisation (included within administration costs)
Depreciation of right of use assets
Impairment of right of use assets
Operating lease rentals
Loss on sale of property, plant and equipment
(Gain)/loss on sale and leaseback
(Gain)/loss on foreign exchange
52 weeks ended
26 March
2022
£’m
52 weeks ended
27 March
2021
£’m
1
–
0
–
2,921
62
2
163
2
2
1
(1)
(9)
1
–
0
–
3,031
57
3
156
5
(1)
1
0
9
5 Finance costs and finance income
Finance costs include all interest related income and expenses. The following amounts have been included in the continuing profit line for each reporting
period presented:
52 weeks to
26 March
2022
£’m
52 weeks to
27 March
2021
£’m
(27)
(2)
(29)
–
–
(29)
(59)
(88)
(22)
(2)
(24)
(3)
(2)
(29)
(61)
(90)
52 weeks to
26 March
2022
£’m
52 weeks to
27 March
2021
£’m
24
59
3
86
3
(3)
–
2
88
23
61
11
95
(1)
(8)
2
2
90
Period ended
Interest on debt and borrowings
Ongoing amortisation of finance fees
Total adjusted finance expense
Non-capitalised fees incurred on refinancing
Release of remaining unamortised fees on previous facilities
Total other finance expense
Finance costs on lease liabilities
Total finance expense
The finance expense reconciles to the statement of cash flows as follows:
Period ended
Cash
Finance costs paid in relation to debt and borrowings
Finance costs paid in relation to lease liabilities
Fees paid in relation to refinancing
Finance costs paid
Non cash
Movement of accruals in relation to debt and borrowings
Capitalisation of amortised fees in relation to new facilities
Release of capitalised fees held in relation to previous facilities
Ongoing amortisation of finance fees
Total finance expense
120
B&M European Value Retail S.A.
Annual Report and Accounts 2022
5 Finance costs and finance income
Period ended
Interest income on loans and bank accounts
Total finance income
There are no adjusting items related to financial income.
Total net adjusted finance costs are therefore:
Period ended
Total adjusted finance expense
Total adjusted finance income
Total net adjusted finance costs
6 Employee remuneration
Expense recognised for employee benefits is analysed below:
Period ended
Wages and salaries
Social security costs
Share based payment expense
Pensions – defined contribution plans
52 weeks to
26 March
2022
£’m
52 weeks to
27 March
2021
£’m
0
0
0
0
52 weeks to
26 March
2022
£’m
52 weeks to
27 March
2021
£’m
(29)
0
(29)
(24)
0
(24)
52 weeks to
26 March
2022
£’m
52 weeks to
27 March
2021
£’m
530
32
2
8
572
515
30
2
7
554
There are £1m of defined contribution pension liabilities owed by the Group at the period end (2021: £1m).
B&M France operates a scheme where they must provide a certain amount per employee to pay upon their retirement date. The accrual on this scheme
at the period end was £2m (2021: £2m).
The average monthly number of persons employed by the Group during the period was:
Period ended
Sales staff
Administration
52 weeks to
26 March
2022
39,804
1,070
40,874
52 weeks to
27 March
2021
37,981
854
38,835
B&M European Value Retail S.A.
Annual Report and Accounts 2022
121
Strategic Report Corporate GovernanceFinancial Statements Notes to the Consolidated Financial Statements continued
7 Key management remuneration
Key management personnel and Directors’ remuneration includes the following:
Period ended
Directors’ remuneration:
Short term employee benefits
Benefits accrued under the share option scheme
Pension
Key management expense (includes Directors’ remuneration):
Short term employee benefits
Benefits accrued under the share option scheme
Pension
Amounts in respect of the highest paid director emoluments:
Short term employee benefits
Benefits accrued under the share option scheme
Pension
52 weeks to
26 March
2022
£’m
52 weeks to
27 March
2021
£’m
4
1
0
5
9
1
0
10
2
1
0
3
3
1
0
4
8
1
0
9
2
1
0
3
The emoluments disclosed above are of the directors and key management personnel who have served as a director within any of the continuing
Group companies.
8 Share Options
The Group operates three equity settled share option schemes which split down to various tranches. Details of these schemes follow.
1) The Company Share Option Plan (CSOP) scheme
The CSOP scheme was adopted by the Group as a Schedule 4 CSOP Scheme on 29 March 2014. No grant under this scheme can be made more than
10 years after this date.
No awards have been issued under this scheme since August 2016 with the final 11,049 options exercised in the prior year. No options were held at
either period end date.
2) Long-Term Incentive Plan (LTIP) Awards
The LTIP was adopted by the board on 29 May 2014. No grant under this scheme can be made more than 10 years after this date.
Eligibility
Employees and executive directors of the Group are eligible for the LTIP and the awards are made at the discretion of the remuneration committee.
Limits & Pricing
A fixed number of options are offered to each participant, with the pricing set at £nil. The options offered to each individual cannot exceed a total value
of 100% (200% under exceptional circumstances) of the participants base salary where the value is measured as the market value of the shares on grant
multiplied by the number of options awarded, with the whole scheme limited to 10% of the share capital in issue.
Dividend Credits
All participants in any LTIP awards granted after 1 April 2018 are entitled to a dividend credit where the notional dividend they would have received on the
maximum number of shares available under their award is converted into new share options and added to the award based upon the share price on
the date of the dividend. These additional awards have been reflected in the tables below.
122
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Vesting & Exercise
The share options are subject to a set of conditions measured over a three year performance period as follows:
LTIP Executive (“A”) awards
• 50% of the awards are subject to a TSR performance condition, where the Group’s TSR over the performance period is compared with a comparator
group. The awards vest on a sliding scale where the full 50% is awarded if the Group falls in the upper quartile, 12.5% vests if the Group falls exactly
at the median, and 0% below that.
• 50% of the awards are subject to a Diluted EPS performance target. The awards vest on a sliding scale based upon the Earnings per share as follows:
Award
LTIP 2016A
LTIP 2017A
LTIP 2018A
LTIP 2019A
LTIP 2020A
LTIP 2021A
EPS as at
March-19
March-20
March-21
March-22
March-23
March-24
50%
paid at
22.5p
24.0p
28.0p
33.0p
30.0p
45.0p
12.5%
paid at
17.5p
19.0p
23.0p
27.0p
25.0p
37.0p
Below the 12.5% boundary, no options vest. Diluted EPS is considered to be on frozen GAAP and so does not include the effects of IFRS 16.
• The performance period is the three years ending the period end specified in the EPS table above.
• Once the performance period concludes, the calculated number of share options remaining are then subject to a two year holding period.
• The share options vest at the conclusion of the holding period.
LTIP Restricted (“B”) awards
• Group EBITDA must be positive in each year of the LTIP.
• The awards also have an employee performance condition attached.
Vested awards can be exercised up to the tenth anniversary of grant.
Tranches
There have been several awards of the LTIP, with the details as follows.
Note that the LTIP Executive awards have been split into the element subject to the TSR (50%) and the element subject to the EPS (50%) since these were
valued separately.
The TSR awards market condition has been included in the fair value calculation for those awards, all non-market conditions have not been included.
Expected volatility has been calculated based upon the historic share price volatility of the Group and those of comparable companies.
The key information used in the valuation of these tranches is as follows:
Scheme
2016A-TSR
2016A-EPS
2017A-TSR
2017A-EPS
2018A-TSR
2018A-EPS
2019A-TSR
2019A-EPS
2020A-TSR
2020A-EPS
2021A-TSR
2021A-EPS
2017/B1
2017/B2
2018/B1
2018/B2
2019/B1
2019/B2
2020/B1
2021/B1
Date of grant
Original options
granted
Fair value of each
option
Risk free rate
Expected life
(years)
Volatility
18 Aug 16
18 Aug 16
7 Aug 17
7 Aug 17
22 Aug 18
22 Aug 18
22 Aug 19
22 Aug 19
30 Jul 20
30 Jul 20
3 Aug 21
3 Aug 21
7 Aug 17
14 Aug 17
23 Jan 18
20 Aug 18
20 Aug 19
18 Sep 19
30 Jul 20
3 Aug 21
122,385.5
122,385.5
40,610
40,610
226,672.5
226,672.5
275,640.5
275,640.5
141,718
141,718
218,861
218,861
287,963
101,654
19,264
236,697
369,061
2,678
303,092
281,950
164p
254p
272p
351p
240p
409p
251p
361p
409p
464p
354p
560p
361p
360p
400p
406p
348p
373p
463p
560p
0.09%
0.09%
0.52%
0.52%
0.97%
0.97%
0.37%
0.37%
-0.11%
-0.11%
0.23%
0.23%
0.25%
0.25%
0.25%
0.25%
0.47%
0.47%
-0.12%
0.12%
5
5
5
5
5
5
5
5
5
5
5
5
3
3
3
3
3
3
3
3
26%
26%
32%
32%
29%
29%
31%
31%
48%
48%
37%
37%
32%
32%
32%
30%
30%
30%
39%
42%
B&M European Value Retail S.A.
Annual Report and Accounts 2022
123
Strategic Report Corporate GovernanceFinancial Statements Notes to the Consolidated Financial Statements continued
8 Share Options continued
Scheme
2016A-TSR
2016A-EPS
2017A-TSR
2017A-EPS
2018A-TSR
2018A-EPS
2019A-TSR
2019A-EPS
2020A-TSR
2020A-EPS
2021A-TSR
2021A-EPS
2017/B1
2017/B2
2018/B2
2019/B1
2019/B2
2020/B1
2021/B1
Scheme
2015A-TSR
2015A-EPS
2016A-TSR
2016A-EPS
2017A-TSR
2017A-EPS
2018A-TSR
2018A-EPS
2019A-TSR
2019A-EPS
2020A-TSR
2020A-EPS
2017/B1
2017/B2
2018/B1
2018/B2
2019/B1
2019/B2
2020/B1
Options at
27 Mar 21
122,385.5*
70,982.5*
27,557*
18,071*
262,012
262,012
259,633
259,633
157,438.5
157,438.5
–
–
73,667
13,379
234,759
395,455
3,163
300,724
–
Options at
28 Mar 20
40,616*
31,477*
122,385.5*
70,982.5*
40,610
40,610
244,718.5
244,718.5
271,922.5
271,922.5
–
–
263,855
93,629
16,856
245,397
392,521
2,847
–
Granted
Dividend credit
Forfeited
Exercised
–
–
–
–
–
–
–
–
–
–
218,861
218,861
–
–
–
–
–
–
281,950
–
–
–
–
14,692
18,356
19,760.5
19,760.5
11,922.5
11,922.5
10,799.5
10,799.5
–
–
4,876
27,849
240
22,073
13,600
Granted
Dividend credit
–
–
–
–
–
–
–
–
–
–
141,718
141,718
–
–
–
–
–
–
303,092
–
–
–
–
–
–
27,333.5
27,333.5
28,588.5
28,588.5
15,720.5
15,720.5
–
–
–
25,167
40,805
316
32,366
–
–
–
–
(74,239)
–
–
–
–
–
–
–
–
–
(7,657)
(31,782)
–
(25,694)
(24,530)
Forfeited
–
–
–
–
(13,053)
(22,539)
(10,040)
(10,040)
(40,878)
(40,878)
–
–
(115,188)
(16,050)
(2,408)
(35,805)
(37,871)
–
(34,734)
(122,385.5)
(70,982.5)
–
–
–
–
–
–
–
–
–
–
(20,091)
–
(193,689)
–
–
–
–
Exercised
(40,616)
(31,477)
–
–
–
–
–
–
–
–
–
–
(75,000)
(64,200)
(14,448)
–
–
–
–
Options at
26 Mar 22
–
–
27,557*
18,071*
202,465*
280,368*
279,393.5
279,393.5
169,361
169,361
229,660.5
229,660.5
53,576
13,379
38,289
391,522
3,403
297,103
271,020
Options at
27 Mar 21
–
–
122,385.5*
70,982.5*
27,557*
18,071*
262,012
262,012
259,633
259,633
157,438.5
157,438.5
73,667
13,379
–
234,759
395,455
3,163
300,724
*
These share options have vested and are in a two year holding period.
124
B&M European Value Retail S.A.
Annual Report and Accounts 2022
3) Deferred Bonus Share Plan (DBSP) Awards
The Deferred Bonus Share Plan differs from the other awards in that there are no vesting conditions.
The scheme has been set up in order to allocate a specified proportion of the executive director’s annual bonus into £nil price share options which are
then placed in holding for three years.
As there are no vesting conditions, these awards have been valued at the amount of the bonus to be converted into share options under the scheme.
There are annual awards of the scheme. The 2022 award will be made after this set of statutory accounts has been published, and will therefore be
reported in the next annual report.
Scheme
2019 Bonus allocation
2020 Bonus allocation
2021 Bonus allocation
Scheme
2019 Bonus allocation
2020 Bonus allocation
Options at
27 Mar 21
67,920
50,748
–
Options at
28 Mar 20
61,008
–
Granted
Dividend credit
Forfeited
Exercised
–
–
85,340
4,989
3,843
4,210
–
–
–
–
–
–
Granted
Dividend credit
Forfeited
Exercised
–
45,682
6,912
5,066
–
–
–
–
Options at
26 Mar 22
72,909
54,591
89,550
Options at
27 Mar 21
67,920
50,748
The fair values of the presented schemes are £479k (2021), £175k (2020) and £217k (2019).
The summary period end position is as follows:
Period ended
Share options outstanding at the start of the year
Share options granted during the year (including via dividend credit)
Share options forfeited or lapsed during the year
Share options exercised in the year
Share options outstanding at the end of the year
Of which;
Share options that are not vested
Share options that are in holding
Share options that are vested and eligible for exercise
26 March
2022
2,736,978
1,004,705
(163,902)
(407,148)
27 March
2021
2,467,125
886,127
(379,484)
(236,790)
3,170,633
2,736,978
2,319,878
745,511
105,244
2,292,268
357,664
87,046
All exercised options are satisfied by the issue of new share capital. The weighted average share price on exercise was £5.64 (2021: £5.09).
All outstanding options have a £nil (2021: £nil) exercise price and the weighted average remaining contractual life is 2.0 years (2021: 2.2 years).
In the year, £2m has been charged to the consolidated statement of comprehensive income in respect to the share option schemes (2021: £2m).
At the end of the year the outstanding share options had a carrying value of £5m (2021: £4m).
B&M European Value Retail S.A.
Annual Report and Accounts 2022
125
Strategic Report Corporate GovernanceFinancial Statements Notes to the Consolidated Financial Statements continued
9 Taxation
The relationship between the expected tax expense based on the standard rate of corporation tax in the UK of 19% (2021: 19%) and the tax expense
actually recognised in the statement of comprehensive income can be reconciled as follows:
Period ended
Current tax expense
Deferred tax charge/(credit)
Total tax expense recorded in profit and loss
Deferred tax charge/(credit) in other comprehensive income
Total tax charge/(credit) recorded in other comprehensive income
Result for the year before tax
Expected tax charge at the standard tax rate
Effect of:
Expenses not deductible for tax purposes
Income not taxable
Lease accounting
Foreign operations taxed at local rates
Changes in the rate of corporation tax
Adjustment in respect of prior years
Hold over gains on fixed assets
Other
Actual tax expense
52 weeks to
26 March
2022
£’m
52 weeks to
27 March
2021
£’m
90
13
103
4
4
525
100
4
(4)
(0)
2
2
(2)
1
(0)
103
104
(7)
97
(5)
(5)
525
100
4
(2)
0
0
1
(7)
1
(0)
97
‘Changes in the rate of corporation tax’ includes the differences arising due to the change in the future corporation tax rate to 25% from April 2023.
26 March
2022
£’m
27 March
2021
£’m
(6)
(28)
0
(6)
24
1
3
(3)
3
0
(12)
31
(43)
(2)
(22)
3
(2)
19
2
2
(1)
6
0
5
32
(27)
Deferred taxation
Statement of financial position
Accelerated tax depreciation
Relating to intangible brand assets
Fair valuing of assets and liabilities (asset)
Fair valuing of assets and liabilities (liability)
Temporary differences relating to the tax accounting for leases
Movement in provision
Relating to share options
Held over gains on fixed assets
Losses carried forward
Other temporary differences
Net deferred tax (liability)/asset
Analysed as;
Deferred tax asset
Deferred tax liability
126
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Statement of comprehensive income
Accelerated tax depreciation
Relating to intangible brand assets
Fair valuing of assets and liabilities
Temporary differences relating to the tax accounting for leases
Movement in provision
Relating to share options
Held over gains on fixed assets
Brought forward losses
Other temporary differences
Net deferred tax (charge)/credit
Analysed as;
Total deferred tax (charge)/credit in profit or loss
Total deferred tax (charge)/credit in other comprehensive income
52 weeks to
26 March
2022
£’m
52 weeks to
27 March
2021
£’m
(4)
(6)
(7)
5
(1)
1
(2)
(3)
0
(17)
(13)
(4)
1
(1)
5
(1)
1
1
(1)
7
0
12
7
5
During the prior period, the Group recognised £7m of brought forward losses as a deferred tax asset due to making the assessment that these losses
are realisable against future profits of the French business. In the above tax reconciliation the recognition of these losses is included in the caption
‘Adjustment in respect of prior years’.
There were no unrecognised deferred tax assets in relation to losses carried forward within the Group at the period end (2021: same).
The Group offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the
deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.
10 Earnings per share
Basic earnings per share amounts are calculated by dividing the net profit or loss for the financial period attributable to ordinary equity holders of the
parent by the weighted average number of ordinary shares outstanding at each period end.
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average
number of ordinary shares outstanding during each year plus the weighted average number of ordinary shares that would be issued on conversion of
any dilutive potential ordinary shares into ordinary shares.
Adjusted (and adjusted (IFRS 16)) basic and diluted earnings per share are calculated in the same way as above, except using adjusted profit attributable
to ordinary equity holders of the parent, as defined in Note 3.
There are share option schemes in place (see Note 8) which have a dilutive effect on both periods presented. The following reflects the income and share
data used in the earnings per share computations:
Period ended
Profit for the period attributable to owners of the parent
Adjusted profit for the period attributable to owners of the parent
Adjusted (IFRS 16) profit for the period attributable to owners of the parent
Weighted average number of ordinary shares for basic earnings per share
Dilutive effect of employee share options
Weighted average number of ordinary shares adjusted for the effect of dilution
Basic earnings per share
Diluted earnings per share
Adjusted basic earnings per share
Adjusted diluted earnings per share
Adjusted IFRS 16 basic earnings per share
Adjusted IFRS 16 diluted earnings per share
26 March
2022
£’m
422
417
412
27 March
2021
£’m
428
435
427
Thousands
Thousands
1,001,061
1,893
1,002,954
1,000,695
1,382
1,002,077
Pence
42.2
42.1
41.6
41.6
41.2
41.1
Pence
42.8
42.7
43.4
43.4
42.7
42.6
B&M European Value Retail S.A.
Annual Report and Accounts 2022
127
Strategic Report Corporate GovernanceFinancial Statements Notes to the Consolidated Financial Statements continued
11 Investments in associates
Period ended
Net book value
Carrying value at the start of the period
Disposal of holding in Home Focus Group Ltd
Dividends received
Share of profits in associates since the prior year valuation exercise
Effect of foreign exchange on translation
Carrying value at the end of the period
26 March
2022
£’m
27 March
2021
£’m
4
–
–
3
1
8
5
0
(2)
2
(1)
4
The Group has a 22.5% holding in Centz Retail Holdings Limited, “Centz”, a company incorporated in Ireland. The principal activity of the company is
retail sales and their registered address is 5 Old Dublin Road, Stillorgan, Co. Dublin.
The Group has a 50% interest in Multi-lines International Company Ltd, “Multi-Lines”, a company incorporated in Hong Kong. The principal activity of the
company is the purchase and sale of goods and their registered address is 8/F, Hope Sea Industrial Centre, No. 26 Lam Hing Street, Kowloon Bay, Hong Kong.
The Group previously held 20% of the ordinary share capital of Home Focus Group Ltd, a company incorporated in Republic of Ireland and whose
principal activity was retail sales with a registered address of Boole House, Beech Hill Office Campus, Beech Hill Road, Clonskeagh, Dublin 4. This
holding was sold in December 2020 for €350k. Home Focus Group is immaterial for further disclosure.
None of the entities have discontinued operations or other comprehensive income, except that on consolidation both entities have a foreign exchange
translation difference.
Period ended
Multi-lines
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Revenue
Profit
Period ended
Centz
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Revenue
Profit
26 March
2022
£’m
27 March
2021
£’m
15
94
–
(99)
10
324
3
5
74
–
(72)
7
240
2
26 March
2022
£’m
27 March
2021
£’m
16
20
(8)
(15)
13
78
5
11
25
(10)
(19)
7
61
3
The figures for both associates show 12 months to December 2021 (prior year: 12 months to December 2020), being the period used in the valuation of
the associate.
128
B&M European Value Retail S.A.
Annual Report and Accounts 2022
12 Intangible assets
Cost or valuation
At 28 March 2020
Additions
Disposals
Effect of retranslation
At 27 March 2021
Additions
Disposals
Effect of retranslation
At 26 March 2022
Accumulated amortisation/impairment
At 28 March 2020
Charge for the year
Disposals
Effect of retranslation
At 27 March 2021
Charge for the year
Disposals
Effect of retranslation
At 26 March 2022
Net book value at 26 March 2022
Net book value at 27 March 2021
Goodwill
£’m
Software
£’m
Brands
£’m
Other
£’m
922
–
–
(1)
921
–
–
(1)
920
–
–
–
–
–
–
–
–
–
920
921
10
1
–
(0)
11
3
–
(0)
14
6
2
–
(0)
8
2
–
(0)
10
4
3
115
–
–
(0)
115
1
–
(0)
116
1
1
–
(1)
1
0
–
(0)
1
115
114
1
–
–
(0)
1
–
–
(0)
1
–
–
–
–
–
–
–
–
–
1
1
Total
£’m
1,048
1
–
(1)
1,048
4
–
(1)
1,051
7
3
–
(1)
9
2
–
(0)
11
1,040
1,039
At the period end, no software was being developed that is not yet in use (2021: £1m), and the Group was committed to the purchase of trademarks
worth £2m (2021: £nil).
Impairment review of intangible assets held with indefinite life
The Group holds the following assets with indefinite life:
Segment
UK B&M
UK Heron
France B&M
26 March
2022
Goodwill
£’m
807
88
25
26 March
2022
Brand
£’m
98
14
–
27 March
2021
Goodwill
£’m
807
88
26
27 March
2021
Brand
£’m
96
14
–
Not all items in the brand classification have an indefinite life as some are time limited. The brand intangible assets that have been identified as having
an indefinite life are designated as such as management believe that these assets will hold their value for an indefinite period of time. Specifically the
B&M and Heron brands represent leading brands in their sectors with significant histories and growth prospects.
The B&M France goodwill is held in Euros, with an underlying balance of €30m (2021: €30m).
In each case the goodwill and brand assets have been allocated to one group of CGUs, being the store estate within the specific segment to which those
assets relate.
The Group performs impairment tests at each period end. The impairment test involves assessing the net present value (NPV) of the expected cash flows
in relation to the stores within each CGU according to a number of assumptions to calculate the value in use (VIU) for the group of CGUs.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
129
Strategic Report Corporate GovernanceFinancial Statements Notes to the Consolidated Financial Statements continued
12 Intangible assets continued
The impairment test methodology has been refined in the year. The prior year sensitivities and headroom have been restated to reflect the refined
methodology. The impact on the prior year headroom was B&M -£181m, Heron +£12m, France +€32m, with all three entities headroom remaining
significant. The adjustment has therefore had no material impact. The refined methodology had a small impact on the disclosed discount rates.
The key assumptions in assessing the value in use as at 26 March 2022 were;
The Group’s discount rate
This was calculated using an internal CAPM model which includes external estimates of the risk-free-rate, cost of debt, equity beta and market risk
premium. It is adjusted for which country the segment is in, how large the segment is and includes an alpha rate estimate made by management.
The inflation rate for expenses
This is based upon the consumer price index for the relevant country, as well as official reports from the appropriate central bank.
The like for like sales growth
This is an estimate made by management which encompasses the historical sales trends of the entity and management’s assessment of how each
segment will perform in the context of the current economic environment.
A terminal growth rate
An estimate made by management based upon the expected position of the business at the end of the five year forecast period, in the context of the
macro growth level of the economic environment in which that segment operates.
The assumptions were as follows:
As at
Discount rate (B&M)
Discount rate (Heron)
Discount rate (B&M France)
Inflation rate for costs (B&M & Heron)
Inflation rate for costs (B&M France)
Like for like sales growth (B&M)
Like for like sales growth (Heron)
Like for like sales growth (B&M France)
Terminal growth rate (B&M)
Terminal growth rate (Heron)
Terminal growth rate (B&M France)
26 March
2022
27 March
2021
10.8%
13.7%
12.9%
3.5%
1.5%
3.5%
4.0%
4.5%
0.5%
1.2%
1.2%
12.1%
12.6%
13.6%
1.2%
0.0%
2.0%
2.0%
2.0%
0.5%
1.2%
0.0%
These assumptions are reflected for five years in the CGU forecasts and beyond this a perpetuity calculation is performed using the assumptions made
regarding terminal growth rates.
The B&M Retail impairment model assumptions were moderated in year one of the forecast due to the significant Covid impact on trade from January to
April 2021 within the base year, reducing both the like-for-like sales growth and the costs that feed through to the final contribution figures.
In each case, the results of the impairment tests on the continuing operations identified that the VIU was in excess of the carrying value of assets within
each group of CGUs at the period end dates. The headroom with the base case assumptions in B&M was £4,833m, Heron £43m and B&M France
€349m (2021: £3,261m, £154m and €201m respectively).
Heron’s result demonstrated a lower level of headroom when compared to the other two segments, but the directors consider that the assumptions
made are reasonably prudent and that it is unlikely that a situation will arise where an impairment would be required in that segment.
Such a situation would include like for like sales falling 50bps below inflation for each year in the projection, or nil LFL’s in year 1, both of which would lead
to an impairment of significantly under £10m. It should be noted that the impairment test does not include the projected new store openings in the
segment which are accretive to the forecast results, nor the impact of management actions to be taken. We further sensitised the assumptions to the
most recent board approved plan, making appropriate adjustments to exclude new stores, which resulted in a projected headroom of £33m.
No other indicators of impairment were noted in the segments and the impairment tests were sensitised with reference to the key assumptions for
reasonable possible scenarios.
These scenarios specifically included;
• A drop off in sales or gross margin, modelling flat long term like for like sales and terminal growth rates.
• Sales prices failing to keep pace with inflation such that the local inflation rates increase 50bps without a corresponding increase in like for like sales.
• A deterioration of the credit environment, leading to a significantly increased cost of capital of 15%.
Further scenarios were also considered as part of our viability testing, including the potential for further lockdowns, the loss of a warehouse due to a fire
and any impact on our supply chain with respect to international relations.
130
B&M European Value Retail S.A.
Annual Report and Accounts 2022
None of the sensitised or viability scenarios indicated that an impairment would result in any of our segments, except as noted above for Heron.
To further quantify the sensitivity, the below tables demonstrate the point at which each impairment test would first fail for changes in each of the key
assumptions, when applied to all years, whilst assuming each other key assumption is held level (e.g. for inflation sensitivity, the LFL was not adjusted):
B&M
Discount rate
Inflation rate for expenses
Like for like sales
Terminal growth rate
B&M France
Discount rate
Inflation rate for expenses
Like for like sales
Terminal growth rate
Heron
Discount rate
Inflation rate for expenses
Like for like sales
Terminal growth rate
13 Property, plant and equipment
Cost or valuation
At 28 March 2020
Additions
Disposals
Effect of retranslation
At 27 March 2021
Additions
Disposals
Effect of retranslation
At 26 March 2022
Accumulated depreciation and impairment charges
At 28 March 2020
Charge for the period
Disposals
Effect of retranslation
At 27 March 2021
Charge for the period
Disposals
Effect of retranslation
At 26 March 2022
Net book value at 26 March 2022
Net book value at 27 March 2021
26 March
2022
27 March
2021
61.7%
14.1%
(7.3)%
Not sensitive
55.1%
6.9%
(0.5)%
Not sensitive
17.1%
4.7%
3.0%
(5.0)%
60.0%
13.5%
(8.8)%
Not sensitive
49.5%
4.2%
(1.8)%
Not sensitive
23.9%
4.9%
(2.4)%
(30.2)%
Land and
buildings
£’m
Motor vehicles
£’m
Plant,
fixtures and
equipment
£’m
86
18
(4)
–
100
18
(8)
–
110
19
4
(0)
–
23
5
(0)
–
28
82
77
16
5
(1)
–
20
2
3
(0)
25
6
4
(1)
–
9
3
1
–
13
12
11
380
64
(6)
(2)
436
76
(5)
(1)
506
146
49
(6)
(1)
188
54
(4)
(1)
237
269
248
Total
£’m
482
87
(11)
(2)
556
96
(10)
(1)
641
171
57
(7)
(1)
220
62
(3)
(1)
278
363
336
Under the terms of the loan and notes facilities in place at 26 March 2022, fixed and floating charges were held over £82m of the net book value of land and buildings, £12m
of the net book value of motor vehicles and £242m of the net book value of the plant, fixtures and equipment. (2021: £77m, £11m, £223m respectively).
At the period end <£1m of assets were under construction (2021: <£1m).
Included within land and buildings is land with a cost of £6m (2021: £6m) which is not depreciated.
Capital commitments
There were £5m of contractual capital commitments not provided within the Group financial statements as at 26 March 2022 (2021: £12m).
B&M European Value Retail S.A.
Annual Report and Accounts 2022
131
Strategic Report Corporate GovernanceFinancial Statements Notes to the Consolidated Financial Statements continued
14 Right of use assets
Net book value
As at 28 March 2020
Additions
Modifications
Disposals
Impairment
Depreciation
Foreign exchange
As at 27 March 2021
Additions
Modifications
Disposals
Impairment
Depreciation
Foreign exchange
As at 26 March 2022
Land and
buildings
£’m
Motor vehicles
£’m
Plant,
fixtures and
equipment
£’m
1,061
153
7
(13)
(5)
(146)
(7)
1,050
160
23
(18)
(2)
(154)
(6)
1,053
18
3
0
(0)
–
(6)
(0)
15
0
–
(1)
–
(6)
–
8
7
3
–
(0)
–
(4)
(0)
6
2
–
(0)
–
(3)
–
5
Total
£’m
1,086
159
7
(13)
(5)
(156)
(7)
1,071
162
23
(19)
(2)
(163)
(6)
1,066
The vast majority of the Group’s leases are in relation to the property comprising the store and warehouse network for the business. The other leases
recognised are trucks, trailers, company cars, manual handling equipment and various fixtures and fittings. The leases are separately negotiated and
no subgroup is considered to be individually significant nor to contain individually significant terms.
The Group recognises a lease term appropriate to the business expectation of the term of use for the asset which usually assumes that all extension
clauses are taken, and break clauses are not, unless the business considers there is a good reason to recognise otherwise.
At the period end there was one property with a significant unrecognised extension clause for which the Group has full autonomy over exercising in
2040. On the date of recognition of the relevant right of use asset, in March 2020, the extension period liability had a net present value of £30m.
There are no material covenants imposed by our right-of-use leases.
In the year the Group expensed £2m (2021: £2m) in relation to low value leases and <£1m (2021: <£1m) in relation to short term leases for which the
Group applied the practical expedient under IFRS 16.
The Group has expensed <£1m (2021: <£1m) in relation to variable lease payments. The agreements are on-going and future payments are expected
to be in-line with those expensed recently.
The Group received £2m (2021: £3m) in relation to subletting right-of-use assets.
The impairments noted in the table above are recorded when the carrying value of a right of use asset exceeds the value in use of that asset. These arise
when we exit a store before the related lease has come to an end, or as the outcome of our annual store impairment review. All impairments are in
relation to store leases. No impairments have been reversed in the presented periods.
The segmental splits of the impairments were B&M <£1m, Heron £1m, B&M France <£1m (2021: B&M £4m, Heron £1m, B&M France <£1m).
The current and future cashflows for the right-of-use assets are:
This year
Within 1 year
Between 1 and 2 years
Between 2 and 3 years
Between 3 and 4 years
Between 4 and 5 years
Between 5 and 10 years
More than 10 years
Total
132
B&M European Value Retail S.A.
Annual Report and Accounts 2022
26 March
2022
£’m
27 March
2021
£’m
218
219
210
194
177
160
478
167
1,605
202
213
205
190
174
156
514
159
1,611
The change in lease liability reconciles to the figures presented in the consolidated statement of cashflows as follows:
Lease liabilities brought forward
Cash
Repayment of the principal in relation to right of use assets
Payment of interest in relation to right of use assets
Non-cash
Interest charge
Effects on lease liability relating to lease additions, modifications and disposals
Effects of foreign exchange
Total cash movement in the year
Total non-cash movement in the year
Movement in the year
Lease liabilities carried forward
Of which current
Of which non-current
26 March
2022
£’m
1,302
27 March
2021
£’m
1,295
(159)
(59)
59
172
(5)
(218)
226
8
1,310
170
1,140
(141)
(61)
61
156
(8)
(202)
209
7
1,302
163
1,139
Discount rates
Where, as in most cases, a discount rate implicit to the lease is not available, discount rates are calculated for each lease with reference to the
underlying cost of borrowing available to the business and several other factors specific to the asset.
The selection of discount rates is therefore a management judgement, see Note 1. As this is a significant management judgement we have calculated
the weighted average discount rates and sensitivity to a 50bps change in the discount rate to the interest charge as follows:
Weighted average discount rate
Property
Equipment
All right of use assets
Effect on finance costs with a change of 50bps to the discount rate
Property
Equipment
All right of use assets
26 March
2022
27 March
2021
4.5%
3.2%
4.5%
£’m
7
0
7
4.7%
3.3%
4.7%
£’m
6
0
6
B&M European Value Retail S.A.
Annual Report and Accounts 2022
133
Strategic Report Corporate GovernanceFinancial Statements Notes to the Consolidated Financial Statements continued
14 Right of use assets continued
Sale and Leaseback
During the year the business has undertaken two sale and leasebacks (2021: one).
The details of the transactions were as follows:
Consideration received
Net book value of the assets disposed
Costs of sale when specifically recognised
Profit per pre-IFRS 16 accounting standards
Opening adjustment to the right of use asset
Profit/(loss) recognised in the statement of comprehensive income
Initial right of use asset recognised
Initial lease liability recognised
26 March
2022
£’m
27 March
2021
£’m
14
(7)
–
7
(6)
1
6
(11)
6
(3)
–
3
(3)
(0)
3
(6)
The pre-IFRS 16 profit is higher because the provisions of IFRS 16 require that a portion of the profit relating to the sale and leaseback is instead
recognised as a reduction in the opening right of use asset, and therefore the benefit is released over the term of the contract.
15 Inventories
As at
Goods for resale
26 March
2022
£’m
863
27 March
2021
£’m
605
Included in the amount above was a net release of £14m related to inventory provisions (2021: £4m net charge). In the period to 26 March 2022
£2,921m (2021: £3,031m) was recognised as an expense for inventories. In the year, £21m of supplier rebates were received (2021: £22m).
16 Trade and other receivables
Non-current
Other receivables
Current
Trade receivables
Deposits on account
Provision for impairment
Net trade receivables to non-related parties
Prepayments
Related party receivables
Other tax
Other receivables
26 March
2022
£’m
27 March
2021
£’m
7
7
6
13
(2)
17
20
3
3
10
53
7
7
4
2
(0)
6
14
8
8
6
42
Trade receivables are stated initially at their fair value and then at amortised cost as reduced by appropriate allowances for estimated irrecoverable
amounts. The carrying amount is determined by the directors to be a reasonable approximation of fair value.
134
B&M European Value Retail S.A.
Annual Report and Accounts 2022
There are no individually non-related significant balances held at the current period end. See Note 26 in respect of balances held with related parties.
The following table sets out an analysis of provisions for impairment of trade and other receivables:
Period ended
Provision for impairment at the start of the period
Impairment during the period
Utilised/released during the period
Effect of foreign exchange
Balance at the period end
Trade receivables are non-interest bearing and are generally on terms of 30 days or less.
The following table sets out a maturity analysis of trade receivables, including those which are past due but not impaired:
As at
Neither past due nor impaired
Past due less than one month
Past due between one and three months
Past due for longer than three months
Balance at the period end
17 Cash and cash equivalents
As at
Cash at bank and in hand
Overdrafts
Cash and cash equivalents
As at the period end the Group had available £142m of undrawn committed borrowing facilities (2021: £142m).
18 Trade and other payables
As at
Current
Trade payables
Other tax and social security payments
Accruals and deferred income
Related party trade payables
Other payables
26 March
2022
£’m
27 March
2021
£’m
(0.4)
(1.6)
0.3
0.0
(1.7)
(0.2)
(0.2)
0.0
0.0
(0.4)
26 March
2022
£’m
27 March
2021
£’m
2
1
2
1
6
26 March
2022
£’m
173
–
173
2
0
1
1
4
27 March
2021
£’m
218
–
218
26 March
2022
£’m
27 March
2021
£’m
388
62
75
27
12
564
343
66
100
9
6
524
Trade payables are generally on 30 day terms and are not interest bearing. The carrying value of trade payables approximates to their fair value. For
further details on the related party trade payables, see Note 26.
During the period the Group implemented a supply chain financing facility. The facility is operated by a major banking partner with high credit ratings
and is limited to $50m total exposure at any one time.
The exposure at the period end was $21m relating to one supplier, the average balance since inception has been $19m.
The purpose of the arrangement is to enable our participating suppliers, at their discretion, to draw down against their receivables from the Group prior
to their usual due date.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
135
Strategic Report Corporate GovernanceFinancial Statements Notes to the Consolidated Financial Statements continued
18 Trade and other payables continued
From the Group’s perspective, the invoices subject to the scheme are treated in the same way as those not subject to the scheme. That is that they are
approved under our usual processes (and cannot be drawn down against until they have been approved) and paid on the usual due date, which is in
line with the payment terms of our other international suppliers. We do not benefit from the margin charged by the bank for any early draw down, and
the bank does not benefit from additional security when compared to the security originally enjoyed by the supplier. There is no impact on potential
liquidity risk as the cash flow timings and amounts are unchanged for those invoices in the scheme against those not in the scheme.
There would be no impact on the Group if the facility became unavailable and there are no fees or charges payable by the Group in regards
to this arrangement.
As these invoices continue to be part of the normal operating cycle of the Group, the scheme does not change the recognition of the invoices subject to
the scheme, so they continue to be recognised as trade payables, with the associated cash flows presented within operating cash flows and without
affecting the calculation of Group net debt.
19 Other financial assets and liabilities
Other financial assets
As at
Current financial assets at fair value through profit and loss:
Foreign exchange forward contracts
Current financial assets at fair value through other comprehensive income:
Foreign exchange forward contracts
Total current other financial assets
Total other financial assets
26 March
2022
£’m
27 March
2021
£’m
9
16
25
25
3
1
4
4
Financial assets through profit or loss reflect the fair value of those derivatives that are not designated as hedge relationships but are nevertheless
intended to reduce the level of risk for expected sales and purchases.
Other financial liabilities
As at
Current financial liabilities at fair value through profit and loss:
Foreign exchange forward contracts
Current financial liabilities at fair value through other comprehensive income:
Foreign exchange forward contracts
Total current other financial liabilities
Total other financial liabilities
26 March
2022
£’m
27 March
2021
£’m
0
–
0
0
6
10
16
16
The other financial liabilities through profit or loss reflect the fair value of those foreign exchange forward contracts that are not designated as hedge
relationships but are nevertheless intended to reduce the level of risk for expected sales and purchases.
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
• Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
• Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.
• Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.
As at the reporting dates, the Group held the following financial instruments carried at fair value on the balance sheet:
26 March 2022
Foreign exchange contracts
27 March 2021
Foreign exchange contracts
Total
£’m
25
(12)
Level 1
£’m
Level 2
£’m
Level 3
£’m
–
–
25
(12)
–
–
The financial instruments have been valued by the issuing bank, using a mark to market method. The bank has used various inputs to compute the
valuations and these include inter alia the relevant maturity date and strike rates, the current exchange rate, fuel prices and relevant interbank floating
interest rate levels.
136
B&M European Value Retail S.A.
Annual Report and Accounts 2022
20 Financial liabilities – borrowings
As at
Current
B&M France loan facilities
Heron loan facilities
Non-current
High yield bond notes
Term facility bank loan
B&M France government backed facilities
Other B&M France loan facilities
Heron loan facilities
26 March
2022
£’m
27 March
2021
£’m
3
3
6
646
297
–
7
–
950
3
4
7
397
296
22
5
3
723
The carrying values given above include fees incurred on the refinancing which are to be amortised over the terms of those facilities. More details of
these are given below.
Bond issue
On 24 November 2021 the Group issued £250m of high yield bond notes. The maturity date of these notes is November 2028 and they have an interest
rate of 4.00%. £56m of the bonds were purchased by a related party, see Note 26 for further details.
Fees incurred totalled £3m and these were capitalised. The carrying value of these bonds includes these fees which are amortised over the term of
the bonds.
Prior year refinancing
In the prior year, on 13 July 2020, the Group refinanced their main facilities by repaying the previously existing £250m high yield bond notes, the £300m
term loan and the €92m acquisition facility, and drawing down a new main facility of £300m and issuing £400m of high yield bonds. The maturity dates
on the facilities are April 2025 and July 2025 respectively.
The previously held £150m revolving loan facility was also replaced by a £155m revolving loan facility which was not drawn on the date of
the refinancing.
£100m of the high yield bonds issued were purchased by a related party. See Note 26 for further details.
The following fees were expensed through other finance costs in relation to the loans and bonds which were repaid.
Remaining unamortised fees associated with the repaid term loan
Remaining unamortised fees associated with the repaid acquisition loan
Remaining unamortised fees associated with the repaid high yield bonds
Early repayment charge associated with the corporate bonds
Breakage fees
Total fees expensed through other finance costs
£’m
1
0
1
3
0
5
The following fees were incurred on refinancing and have been capitalised within the debt balance, to be amortised over the term of the debt to which
it relates.
Capitalised fees relating to the term loan facility
Capitalised fees relating to the high yield bonds
Total fees capitalised within the debt balances
£’m
4
4
8
The figure on the cashflow of £10.8m includes the above £8.1m capitalised fees, £2.6m early repayment/breakage charges and £0.1m of fees
associated with an earlier extension of the acquisition facility.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
137
Strategic Report Corporate GovernanceFinancial Statements Notes to the Consolidated Financial Statements continued
20 Financial liabilities – borrowings continued
French government backed loan
In the prior year, in April 2020, the French government mandated that our B&M France stores were required to close as part of their response to the
Covid-19 pandemic. As a mitigation they introduced government backed loans to assist the company’s affected by this measure. As a precaution and
due to the uncertainty over the progression of the virus and the impact on trade, the Group’s French entity took a €51m loan under this scheme.
The loan had an initial maturity of 1 year, which was interest free but attracted a guarantor’s fee of 0.5%.
The loan was refinanced in February 2021 such that €25.5m was repaid with the remainder retained in order to cover continuing uncertainty over further
measures in relation to the pandemic. The extension period was until April 2022, attracted a guarantor’s fee of 1.0% and an additional average interest
rate margin of 0.2%. The loan was fully repaid in November 2021.
The loan was only for use in the French business, in respect to their working capital cash flows, and as such the cash balance remains in that entity
and did not impact the Group refinancing or bond decisions taken in the presented periods.
Other loans
The B&M France and Heron loan facilities are carried at their gross cash amount. The B&M France loan facilities are held with various counterparties
and at various margins and maturities, further details are included in the maturity table below.
The maturities of the loan facilities are as follows:
Revolving facility loan
Term facility bank loan A
High yield bond notes (2020)
High yield bond notes (2021)
Heron loan facilities – Melton
Heron loan facilities – Term
B&M France – Government Guaranteed
B&M France – BNP Paribas
B&M France – Caisse d’Épargne
B&M France – CIC
B&M France – Crédit Agricole
B&M France – Crédit Lyonnais
B&M France – Société Générale
Interest rate
%
Maturity
N/A
1.75% + SONIA
Apr-25
2.00% + SONIA
Jul-25
3.625%
Nov-28
4.00%
Jul-22
3.58%
N/A
2.50%
N/A
1.10-1.34%
0.75-0.76% Jul 23–Sep 24
0.75-1.51% Aug 22-Oct 24
0.71-1.20% Nov 22-Jan 27
0.39-0.81% Aug 23-Jan 28
0.68-0.74% Nov 24-Mar 27
Jun-23
0.63%
26 March
2022
£’m
27 March
2021
£’m
–
300
400
250
3
–
–
1
1
3
1
4
0
963
–
300
400
–
3
3
22
1
2
2
2
1
1
737
The acquisition facility, term loans A and the high yield bond notes have carrying values which include transaction fees allocated on inception.
The acquisition facility and all B&M France facilities have gross values in euros, and the values above have been translated at the period end rates
of €1.2009/£ (2021: €1.1691/£).
138
B&M European Value Retail S.A.
Annual Report and Accounts 2022
The movement in the loan liabilities during the year breaks down as follows:
As at
Borrowings brought forward
Cash
Repayment of revolving loan facilities
Repayment of term facility
Repayment of corporate bonds
Draw down of new term facility
Issue of new corporate bonds
Repayment of acquisition facility
Repayment of Heron loan facilities
(Repayment)/receipt of B&M France loan guaranteed by the French government
Receipt/(repayment) of other B&M France loan facilities
Capitalised fees on refinancing
Non-cash
Foreign exchange on loan balances
Refinancing fees directly expensed
Ongoing amortisation of fees capitalised on refinancing
One-off fee amortisation on refinancing
Total cash movement in the year
Total non-cash movement in the year
Movement in the year
Borrowings carried forward
Of which current
Of which non-current
21 Provisions
At 28 March 2020
Provided in the period
Utilised during the period
Released during the period
At 27 March 2021
Provided in the period
Utilised during the period
Released during the period
At 26 March 2022
Current liabilities 2022
Non-current liabilities 2022
Current liabilities 2021
Non-current liabilities 2021
26 March
2022
£’m
730
27 March
2021
£’m
772
–
–
–
–
250
–
(4)
(22)
1
(3)
2
–
2
–
222
4
226
956
6
950
(120)
(300)
(250)
300
400
(82)
(5)
23
(1)
(11)
(3)
3
2
2
(46)
4
(42)
730
7
723
Property provisions
£’m
Other
£’m
Total
£’m
2
8
(1)
(0)
9
5
(1)
(2)
11
7
4
4
5
5
4
(3)
(2)
4
2
(2)
(0)
4
4
–
4
–
7
12
(4)
(2)
13
7
(3)
(2)
15
11
4
8
5
The property provision relates to the expected future costs on specific leasehold properties. This is inclusive of onerous leases and dilapidations on these
properties. The timing in relation to utilisation is dependent upon the individual lease terms.
The other provisions principally relate to disputes concerning insured liability claims. A prudent amount has been set aside for each claim as per legal
advice received by the Group. These claims are individually non-significant and average £9k per claim (£11k in 2021).
B&M European Value Retail S.A.
Annual Report and Accounts 2022
139
Strategic Report Corporate GovernanceFinancial Statements Notes to the Consolidated Financial Statements continued
22 Share capital
Allotted, called up and fully paid
B&M European Value Retail S.A. ordinary shares of 10p each
As at 28 March 2020
Release of shares related to employee share options
As at 27 March 2021
Release of shares related to employee share options
As at 26 March 2022
Shares
£’m
1,000,582,898
236,790
1,000,819,688
407,148
1,001,226,836
100
0
100
0
100
Ordinary shares
Each ordinary share ranks pari passu with each other ordinary share and each share carries one vote. The Group parent is authorised to issue up to an
additional 2,970,995,386 ordinary shares.
23 Cash generated from operations
Period ended
Profit before tax
Adjustments for:
Net interest expense
Depreciation on property, plant and equipment
Depreciation on right of use assets
Impairment of right of use assets
Amortisation of intangible assets
(Gain)/loss on sale and leaseback
Loss on disposal of property, plant and equipment
Loss on share options
Change in inventories
Change in trade and other receivables
Change in trade and other payables
Change in provisions
Share of profit from associates
(Profit)/loss resulting from fair value of financial derivatives
Cash generated from operations
52 weeks ended
26 March
2022
£’m
52 weeks ended
27 March
2021
£’m
525
88
62
163
2
2
(1)
1
2
(260)
(12)
40
2
(3)
(13)
598
525
90
57
156
5
3
0
1
2
(20)
9
105
6
(2)
7
944
24 Group information and ultimate parent undertaking
The financial results of the Group include the following entities.
Company name
Country
Date of incorporation
Percent held within the Group
Principal activity
B&M European Value Retail S.A.
B&M European Value Retail 1 S.à r.l.
B&M European Value Retail Holdco 1 Ltd
B&M European Value Retail Holdco 2 Ltd
B&M European Value Retail Holdco 3 Ltd
B&M European Value Retail Holdco 4 Ltd
B&M European Value Retail 2 S.à r.l.
EV Retail Limited
B&M Retail Limited
Opus Homewares Limited
Retail Industry Apprenticeships Ltd
Heron Food Group Ltd
Heron Foods Ltd
Cooltrader Ltd
Heron Properties (Hull) Ltd
B&M European Value Retail Germany GmbH
B&M France SAS
Centz N.I. Limited
Luxembourg
Luxembourg
UK
UK
UK
UK
Luxembourg
UK
UK
UK
UK
UK
UK
UK
UK
Germany
France
UK
May 2014
November 2012
December 2012
December 2012
November 2012
November 2012
September 2012
September 1996
March 1978
April 2003
June 2017
August 2002
October 1978
September 2012
February 2003
November 2013
November 1977
January 2021
Parent
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Holding company
Holding company
Holding company
Holding company
Holding company
Holding company
Holding company
Holding company
General retail
Dormant
Employment services
Holding company
Convenience retail
Dormant
Dormant
Ex-holding company
General retail
Property management
140
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Registered Offices
• The Luxembourg entities are all registered at 68-70 boulevard de la Pétrusse, L-2320 Luxembourg.
• The UK entities are all registered at The Vault, Dakota Drive, Estuary Commerce Park, Speke, Liverpool, L24 8RJ.
• B&M European Value Retail Germany GmbH is registered at Am Hornberg 6, 29614, Soltau.
• B&M France is registered at 8 rue du Bois Joli, 63800 Cournon d’Auvergne.
SAS Babou were renamed as B&M France SAS during the year, BRP SAS were also merged into this entity.
Associates
The Group has a 50% interest in Multi-lines International Company Limited, a company incorporated in Hong Kong, and a 22.5% interest in Centz Retail
Holdings Limited, a company incorporated in the Republic of Ireland. The share of profit/loss from the associates is included in the statement of
comprehensive income, see Note 11.
The Group previously held a 20% interest in Home Focus Group Limited, a company incorporated in the Republic of Ireland. This interest was disposed of
in full in December 2020 for €350k.
Ultimate parent undertaking
The directors of the Group consider the parent and the ultimate controlling related party of this Group to be B&M European Value Retail SA, registered
in Luxembourg.
25 Financial risk management
The Group uses various financial instruments, including bank loans, related party loans, finance company loans, cash, equity investment, derivatives and
various items, such as trade receivables and trade payables that arise directly from its operations.
The main risks arising from the Group’s financial instruments are market risk, currency risk, cash flow interest rate risk, credit risk and liquidity risk. The
directors review and agree policies for managing each of these risks and they are summarised below.
The existence of these financial instruments exposes the Group to a number of financial risks, which are described in more detail below. In order to
manage the Group’s exposure to those risks, in particular the Group’s exposure to currency risk, the Group enters into forward foreign currency contracts.
No transactions in derivatives are undertaken of a speculative nature.
Market risk
Market risk encompasses three types of risk, being currency risk, fair value interest rate risk and commodity price risk. Commodity price risk is not
considered material to the business as the Group is able to pass on pricing changes to its customers.
Despite the impact of price risk not being considered material, the Group has previously engaged in swap contracts over the cost of fuel in order to
minimise the impact of any volatility. None of these contracts were outstanding at either period end date.
The Group’s policies for managing fair value interest rate risk are considered along with those for managing cash flow interest rate risk and are set out in
the subsection entitled ‘interest rate risk’ below.
Currency risk
The Group is exposed to translation and transaction foreign exchange risk arising from exchange rate fluctuation on its purchases from
overseas suppliers.
In relation to translation risk, this is not considered material to the business as amounts owed in foreign currency are short term of up to 30 days and are
of a relatively modest nature. Transaction exposures, including those associated with forecast transactions, are hedged when known, principally using
forward currency contracts.
All of the Group’s sales are to customers in the UK and France and there is no currency exposure in this respect. A proportion of the Group’s purchases
are priced in US Dollars and the Group generally uses forward currency contracts to minimise the risk associated with that exposure.
Approach to hedge accounting
As part of the Group’s response to currency risk the currency forwards taken out are intended to prudently cover the majority of our stock purchases
forecast for that period. However, the Group only hedge accounts for that part of the forward contract that we are reasonably certain will be spent in the
forecast period, allowing for potential volatility. Therefore, management always consider the likely volatility for a period and assign a percentage to each
tranche of forwards purchased, usually in the range 50-80%, and never more than 80%.
Effectiveness of the hedged forward is then assessed against the Group hedge ratio, which has been set by management at 80% as a reasonable guide
to the certainty level we expect the hedged portions of our forwards to at least achieve. If they fail, or are expected to fail, to meet this ratio of
effectiveness then they are treated as non-hedged items, and immediately expensed through Profit and Loss.
Ineffectiveness can be caused by exceptional volatility in the market, by the timing of product availability, or the desire to manage short term company
cash flows, for instance, when a large amount of cash is required at relatively short notice.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
141
Strategic Report Corporate GovernanceFinancial Statements Notes to the Consolidated Financial Statements continued
25 Financial risk management continued
If the Group did not hedge account then the difference is that the gain or loss in other comprehensive income would be presented in profit or loss and
the assets and liabilities presented under the classification fair value through other comprehensive income would be at fair value through profit or loss.
The difference to profit before tax if none of our forwards had been hedge accounted during the year would have been a gain of £30m (2021: £22m
loss) and a pre-tax loss in other comprehensive income of £27m (2021: £20m gain).
The net effective hedging loss transferred to the cost of inventories in the year was £5m (2021: net loss of £5m). At the period end the amount of
outstanding US Dollar contracts covered by hedge accounting was $487m (2021: $474m). The change in fair value of the hedging instruments used as
the basis for recognising hedge ineffectiveness was £nil (2021: £nil).
Foreign currency sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in US Dollar period end exchange rates with all other variables held
constant. The impact on the Group’s profit before tax and other comprehensive income (net of tax) is largely due to changes in the fair value of our
foreign exchange derivatives and revaluation of creditors and deposits held on account with our US Dollar suppliers.
As at
Effect on profit before tax
Effect on other comprehensive income
Change in USD
rate
26 March
2022
£’m
27 March
2021
£’m
+2.5%
-2.5%
+2.5%
-2.5%
(4)
5
(9)
10
(5)
6
(8)
9
Profit before tax and other comprehensive income are not sensitive to the effects of a reasonably possible change in the Euro period end
exchange rates.
These calculations have been performed by taking the period end translation rate used on the accounts and applying the change noted above.
The balance sheet valuations are then directly calculated. The valuation of the foreign exchange derivatives are projected based upon the spot rate
changing and all other variables being held equal.
Interest rate risk
Interest rate risk is the risk of variability of the Group cash flows due to changes in the interest rate. The Group is exposed to changes in interest rates as
the Group’s bank borrowings are subject to a floating rate based on LIBOR until December 2021 and SONIA since that date.
The Group’s interest rate risk arises mainly from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate
risk. The Group’s exposure to interest rate fluctuations is not considered to be material, however the Group has in the past used interest rate swaps to
minimise the impact.
If floating interest rates had been 50 basis points higher/lower throughout the year with all other variables held constant, the effect upon calculated
pre-tax profit for the year would have been:
As at
Effect on profit before tax
Basis point
increase/decrease
+50
-50
26 March
2022
£’m
(1)
1
27 March
2021
£’m
(1)
1
This sensitivity has been calculated by changing the interest rate for each interest payment and accrual made by the Group over the period, by the
amount specified in the table above, and then calculating the difference that would have been required.
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The
Group’s principal financial assets are cash, derivatives and trade receivables. The credit risks associated with cash and derivatives are limited as the
main counterparties are banks with high credit ratings (A long term and A-1 short term (Standard & Poor) or better, (2021: A, A-1 (or better) respectively).
The principal credit risk arises therefore from the Group’s trade receivables.
Credit risk is further limited by the fact that the vast majority of sales transactions are made through the store registers, direct from the customer at the
point of purchase, leading to a low trade receivables balance.
In order to manage credit risk, the directors set limits for customers based on a combination of payment history and third party credit references.
Credit limits are reviewed by the credit controller on a regular basis in conjunction with debt ageing and collection history. Provisions against bad
debts are made where appropriate.
142
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Liquidity risk
Any impact on available cash and therefore the liquidity of the Group could have a material effect on the business as a result.
The Group’s borrowings are subject to quarterly banking covenants against which the Group has had significant headroom to date with no anticipated
issues based upon forecasts made. Short term flexibility is achieved via the Group’s rolling credit facility. The following table shows the liquidity risk
maturity of financial liabilities grouping based on their remaining period at the balance sheet date. The amounts disclosed are the contractual
undiscounted cash flows:
26 March 2022
Interest bearing loans
Lease liabilities
Trade payables
27 March 2021
Interest bearing loans
Lease liabilities
Trade payables
Within 1 year
£’m
Between
1 and 2 years
£’m
Between
2 and 5 years
£’m
More than
5 years
£’m
48
219
415
28
213
352
44
210
–
48
205
–
794
531
–
754
520
–
290
645
–
0
673
–
Total
£’m
1,176
1,605
415
830
1,611
352
Fair value
The fair value of the financial assets and liabilities of the group are not materially different from their carrying value. Refer to the table below. These all
represent financial assets and liabilities measured at amortised cost except where stated as measured at fair value through the profit and loss or fair
value through other comprehensive income.
As at
Financial assets
Fair value through profit and loss
Forward foreign exchange contracts
Fair value through other comprehensive income
Forward foreign exchange contracts
Loans and receivables
Cash and cash equivalents
Trade receivables
Other receivables
As at
Financial liabilities
Fair value through profit and loss
Forward foreign exchange contracts
Fair value through other comprehensive income
Forward foreign exchange contracts
Amortised cost
Overdraft
Lease liabilities
Interest-bearing loans and borrowings
Trade payables
Other payables
26 March
2022
£’m
27 March
2021
£’m
9
16
173
20
10
3
1
218
14
6
26 March
2022
£’m
27 March
2021
£’m
0
–
–
1,310
956
415
12
6
10
–
1,302
730
352
6
B&M European Value Retail S.A.
Annual Report and Accounts 2022
143
Strategic Report Corporate GovernanceFinancial Statements Notes to the Consolidated Financial Statements continued
26 Related party transactions
The Group has transacted with the following related parties over the periods:
Multi-lines International Company Limited, a supplier, and Home Focus Group and Centz Retail Holdings, both customers, are or were associates of
the Group.
Ropley Properties Ltd, Triple Jersey Ltd, TJL UK Ltd, Rani Investments, Fulland Investments Limited, Golden Honest International Investments Limited,
Hammond Investments Limited, Joint Sino Investments Limited, Ocean Sense Investments Limited and Multi Lines International (Properties) Ltd, all
landlords of properties occupied by the Group, and Rani 1 Holdings Limited, Rani 2 Holdings Limited and SSA Investments, bondholders and beneficial
owners of equipment hired to the Group, are directly or indirectly owned by director Simon Arora, his family, or his family trusts (together, the Arora
related parties).
There was a significant related party transaction in the period as SSA Investments participated in the Corporate Bonds issued by the Group in November
2021 by purchasing £56m of the 4.00% bonds with an eight year maturity. In the prior year they also participated in the Corporate Bonds issued by the
Group in July 2020 by purchasing £100m of these 3.625% bonds with a five year maturity. In December 2020 and February 2021, the 3.625% bonds
were transferred to Rani 2 Holdings Limited (£50m) and Rani 1 Holdings Limited (£50m), also related parties, respectively.
£4m of interest expense was incurred on these bonds during the year with £2m accrued at the period end (2021: £3m, £1m respectively). Further details
on these bonds are given in Note 20.
The following table sets out the total amount of trading transactions with related parties included in the statement of comprehensive income, including
the P&L impact of any leases:
Period ended
Sales to associates of the Group
Centz Retail Holdings Limited
Home Focus Group Limited
Total sales to related parties
Period ended
Purchases from associates of the Group
Multi-lines International Company Ltd
Purchases from parties related to key management personnel
Fulland Investments Limited
Golden Honest International Investments Limited
Hammond Investments Limited
Joint Sino Investments Limited
Ocean Sense Investments Limited
SSA Investments
Total purchases from related parties
26 March
2022
£’m
27 March
2021
£’m
44
–
44
45
1
46
26 March
2022
£’m
27 March
2021
£’m
279.4
230.4
0.2
0.2
0.2
0.2
0.2
0.0
0.1
0.0
0.1
0.1
0.1
0.2
280.4
231.0
144
B&M European Value Retail S.A.
Annual Report and Accounts 2022
The IFRS 16 Lease figures in relation to these related parties, which are all related to key management personnel, are as follows:
Period ended 26 March 2022
Rani Investments
Ropley Properties
TJL UK Limited
Triple Jersey Limited
Period ended 27 March 2021
Rani Investments
Ropley Properties
TJL UK Limited
Triple Jersey Limited
Depreciation
charge
£’m
Interest
charge
£’m
Total charge
£’m
Right of use
asset
£’m
Lease liability
£’m
0
1
1
9
11
0
1
1
3
5
0
2
2
12
16
1
8
11
54
74
(1)
(11)
(13)
(67)
(92)
Depreciation
charge
£’m
Interest
charge
£’m
Total charge
£’m
Right of use
asset
£’m
Lease liability
£’m
0
2
1
9
12
0
1
0
4
5
0
3
1
13
17
1
9
12
64
86
(1)
(13)
(14)
(78)
(106)
Net
Liability
£’m
(0)
(3)
(2)
(13)
(18)
Net
liability
£’m
(0)
(4)
(2)
(14)
(20)
Included in the current year figures above is one new lease entered into by Group companies during the current period with the Arora related parties
(2021: two new). The total expense on this lease in the period was <£1m (2021: <£1m). There were no conditionally exchanged leases with Arora related
parties in the current period with a long stop completion date (2021: none).
The following table sets out the total amount of trading balances with related parties outstanding at the period end.
As at
Trade receivables from associates of the Group
Centz Retail Holdings Ltd
Total related party trade receivables
As at
Trade payables to associates of the Group
Multi-lines International Company Ltd
Trade payables to companies owned by key management personnel
Ropley Properties Ltd
Triple Jersey Ltd
Total related party trade payables
26 March
2022
£’m
27 March
2021
£’m
3
3
8
8
26 March
2022
£’m
27 March
2021
£’m
25
0
2
27
8
0
1
9
Outstanding trade balances at the balance sheet dates are unsecured and interest free and settlement occurs in cash. There have been no guarantees
provided or received for any related party trade receivables or payables.
The balance with Multi-lines International Company Ltd includes $21m (2021: $nil) held within a supply chain facility. See Note 18 for more details.
The business has not recorded any impairment of trade receivables relating to amounts owed by related parties at 26 March 2022 (2021: no
impairment). This assessment is undertaken each year through examining the financial position of the related party and the market in which
the related party operates.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
145
Strategic Report Corporate GovernanceFinancial Statements Notes to the Consolidated Financial Statements continued
26 Related party transactions continued
The future lease commitments on the Arora related party properties are:
As at
Not later than one year
Later than one year and not later than two years
Later than two years and not later than five years
Later than five years
26 March
2022
£’m
27 March
2021
£’m
15
14
36
47
112
16
16
40
59
131
See Note 11 for further information on the Group’s associates.
For further details on the transactions with key management personnel, see Note 7 and the remuneration report.
27 Capital management
For the purpose of the Group’s capital management, capital includes issued capital and all other equity reserves attributable to the equity holders
of the parent. The primary objective of the Group’s capital management is to maximise the shareholder value.
In order to achieve this overall objective, the Group’s capital management, amongst other things, aims to ensure that it meets financial covenants
attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would
permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and
borrowing in the current or prior period.
The Group manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial
covenants.
To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue
new shares.
The Group uses the following definition of net debt:
External interest bearing loans and borrowings less cash and short-term deposits.
The interest bearing loans figure used is the gross amount of cash borrowed at that time, as opposed to the carrying value under the amortised
cost method.
As at
Interest bearing loans and borrowings (Note 20)
Less: Cash and short term deposits – overdrafts (Note 17)
Net debt
28 Post balance sheet events
There have been no material events between the balance sheet date and the date of issue of these accounts.
26 March
2022
£’m
963
(173)
790
27 March
2021
£’m
737
(218)
519
146
B&M European Value Retail S.A.
Annual Report and Accounts 2022
29 Dividends
A Special dividend of 25.0 pence per share (£250.3m), was declared in December 2021 and has been paid.
An interim dividend of 5.0 pence per share (£50.1m) was declared in November 2021 and has been paid.
A final dividend of 11.5 pence per share (£115.1m), giving a full year dividend of 16.5 pence per share (£165.2m), is proposed.
Relating to the prior year;
Special dividends of 20.0 pence per share (£200.1m), 25.0 pence per share (£250.2m) and 15.0 pence per share (£150.1m) were declared in January
2021, November 2020 and March 2020 respectively. All were paid in the prior year.
An interim dividend of 4.3 pence per share (£43.0m) was declared in November 2020 and has been paid in the prior year.
A final dividend of 13.0 pence per share (£130.1m), giving a full year dividend of 17.3 pence per share (£173.1m) was declared in July 2021 and has been
paid in the current year.
30 Contingent liabilities and guarantees
As at 27 March 2021 and 26 March 2022, B&M European Value Retail S.A., B&M European Value Retail 1 S.à r.l., B&M European Value Retail 2 S.à r.l.,
B&M European Value Retail Holdco 1 Ltd, B&M European Value Retail Holdco 2 Ltd, B&M European Value Retail Holdco 3 Ltd, B&M European Value Retail
Holdco 4 Ltd, EV Retail Ltd and B&M Retail Ltd are all guarantors to both the loan and notes agreements which are formally held within B&M European
Value Retail SA. The amounts outstanding as at the period end were £300m for the loans (2021: £300m), with the balance held in B&M European Value
Retail Holdco 4 Ltd, and £650m (2021: £400m) for the notes, with the balance held in B&M European Value Retail S.A.
As at 27 March 2021 and 26 March 2022, Heron Food Group Limited and Heron Foods Ltd are guarantors to the loans which are formally held within
Heron Foods Ltd. The amount outstanding at the year-end was £3m (2021: £6m) with the balance held in Heron Foods Ltd.
31 Directors
The directors that served during the period were:
Peter Bamford (Chairman)
Simon Arora (CEO)
Alex Russo (CFO)
Ron McMillan
Tiffany Hall
Carolyn Bradley
Paula MacKenzie (Appointed 9 November 2021)
Gilles Petit (Resigned 29 July 2021)
On 22 April 2022, Simon Arora announced his intention to retire from his position as CEO in twelve months’ time.
All directors served for the whole period except where indicated above.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
147
Strategic Report Corporate GovernanceFinancial Statements Independent Auditor’s Report
To the Shareholders of
B&M European Value Retail S.A.
68-70, boulevard de la Pétrusse L-2320 Luxembourg Luxembourg
Report of the Réviseur d’Entreprises agree
Report on the audit of the annual accounts
Opinion
We have audited the annual accounts of B&M European Value Retail S.A. (the “Company”), which comprise the balance sheet as at 31 March 2022,
and the profit and loss account for the year then ended, and notes to the annual accounts, including a summary of significant accounting policies.
In our opinion, the accompanying annual accounts give a true and fair view of the financial position of the Company as at 31 March 2022 and of the
results of its operations for the year then ended in accordance with Luxembourg legal and regulatory requirements relating to the preparation and
presentation of the annual accounts.
Basis for opinion
We conducted our audit in accordance with the Law of 23 July 2016 on the audit profession (“Law of 23 July 2016”) and with International Standards on
Auditing (“ISAs”) as adopted for Luxembourg by the Commission de Surveillance du Secteur Financier (“CSSF”). Our responsibilities under the Law of
23 July 2016 and ISAs as adopted for Luxembourg by the CSSF are further described in the « Responsibilities of “réviseur d’entreprises agréé” for the
audit of the annual accounts » section of our report. We are also independent of the Company in accordance with the International Code of Ethics for
Professional Accountants, including International Independence Standards, issued by the International Ethics Standards Board for Accountants (“IESBA
Code”) as adopted for Luxembourg by the CSSF together with the ethical requirements that are relevant to our audit of the annual accounts, and have
fulfilled our other ethical responsibilities under those ethical requirements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the annual accounts of the current
period. These matters were addressed in the context of the audit of the annual accounts as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
We have determined that there are no key audit matters to communicate in our report.
Other information
The Board of Directors is responsible for the other information. The other information comprises the information stated in the annual report including
the management report but does not include the annual accounts and our report of the “réviseur d’entreprises agréé” thereon.
Our opinion on the annual accounts does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the annual accounts, our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the annual accounts or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report this fact.
We have nothing to report in this regard.
Responsibilities of the Board of Directors and Those Charged with Governance for the annual accounts
The Board of Directors is responsible for the preparation and fair presentation of the annual accounts in accordance with Luxembourg legal and
regulatory requirements relating to the preparation and presentation of the annual accounts, and for such internal control as the Board of Directors
determines is necessary to enable the preparation of annual accounts that are free from material misstatement, whether due to fraud or error.
In preparing the annual accounts, the Board of Directors is responsible for assessing the Company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate
the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
148
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Responsibilities of the réviseur d’entreprises agréé for the audit of the annual accounts
The objectives of our audit are to obtain reasonable assurance about whether the annual accounts as a whole are free from material misstatement,
whether due to fraud or error, and to issue a report of the “réviseur d’entreprises agréé” that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with the Law of 23 July 2016 and with ISAs as adopted for
Luxembourg by the CSSF will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
these annual accounts.
As part of an audit in accordance with the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the annual accounts, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the
Board of Directors.
• Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report of the “réviseur d’entreprises agréé” to the
related disclosures in the annual accounts or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our report of the “réviseur d’entreprises agréé”. However, future events or conditions may cause the Company
to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the annual accounts, including the disclosures, and whether the annual accounts
represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence,
and to communicate to them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable,
actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the
annual accounts of the current period and are therefore the key audit matters. We describe these matters in our report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our
report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
The management report on pages 92 to 96 of the annual report is consistent with the annual accounts and has been prepared in accordance with
applicable legal requirements.
Luxembourg, 30 May 2022
KPMG Luxembourg
Société anonyme
Cabinet de révision agréé
Thierry Ravasio
Partner
B&M European Value Retail S.A.
Annual Report and Accounts 2022
149
Strategic Report Corporate GovernanceFinancial Statements
Company Profit and Loss Account
For the financial year ended 31 March 2022
Raw materials and consumables and other external expenses
Other external expenses
Staff costs
Wages and salaries
Social security costs
relating to pensions
other social security costs
Other operating expenses
Income from participating interests
Derived from affiliated undertakings
Other interest receivable and similar income
Derived from affiliated undertakings
Other interest and similar income
Interest payable and similar expenses
Other interest and similar expenses
Tax on profit or loss
Profit or loss after taxation
Other taxes not included in the previous caption
Profit or loss for the financial year
31 March
2022
£
31 March
2021
£
Notes
8
9
10
11
12
13
14
14
(3,660,768)
(4,852,505)
(102,273)
(248,586)
(7,470)
(4,248)
(969,095)
(12,812)
(8,042)
(1,470,968)
420,000,000
633,300,000
18,394,763
345,359
17,596,604
1,300,441
(18,251,003)
2,541
(16,847,735)
–
415,747,806
(4,073)
628,756,396
(2,134)
415,743,733
628,754,262
150
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Company Balance Sheet
As at 31 March, 2022
Fixed assets
Financial assets
Shares in affiliated undertakings
Other loans
Current assets
Debtors
Amounts owed by affiliated undertakings
becoming due and payable within one year
Other debtors
becoming due and payable within one year
Cash at bank and in hand
Total assets
Equity
Subscribed capital
Share premium account
Reserves
Legal reserve
Profit or loss for the financial year
Profit or loss brought forward
Interim dividends
Creditors
Debenture loans
Non-convertible loans
becoming due and payable within one year
becoming due and payable after more than one year
Trade creditors
becoming due and payable within one year
Amounts owed to affiliated undertakings
becoming due and payable within one year
Other creditors
Tax authorities
Other creditors becoming due and payable within one year
Total equity and liabilities
Notes
31 March
2022
£
31 March
2021
£
3
4
5
6
7
2,624,999,999
5,467
2,624,999,999
5,467
2,625,005,467
2,625,005,467
760,370,073
521,637,888
216,238
325,200
760,586,311
521,963,089
110,965
140,585
3,385,702,743
3,147,109,140
100,122,684
2,473,832,360
100,081,969
2,473,832,360
10,010,000
415,743,733
23,471,198
(300,368,051)
10,010,000
628,754,262
18,225,651
(493,361,441)
2,722,811,923
2,737,542,801
6,520,833
650,000,000
3,020,833
400,000,000
134,918
92,602
6,100,386
6,266,338
11,409
123,274
9,284
177,282
662,890,820
409,566,339
3,385,702,743
3,147,109,140
B&M European Value Retail S.A.
Annual Report and Accounts 2022
151
Strategic Report Corporate GovernanceFinancial Statements Notes to the Annual Accounts
For the financial year ended 31 March 2022
1 General Information
B&M European Value Retail S.A., hereinafter the "Company", was incorporated on 19 May 2014 as a "société anonyme" for an unlimited period. The
Company is organised under the laws of the Grand-Duchy of Luxembourg, in particular the law of 10 August 1915 on commercial companies, as amended.
An extraordinary general meeting of the shareholders of the Company was held on 3 December 2020 to amend the articles of association of the
Company (the "Articles") and provide for the compulsory conversion all the ordinary registered shares representing the share capital of the Company
into dematerialised shares. The board of directors of the Company (the “Board of Directors”), acting on the basis of article 7 of the law of 6 April 1993 on
dematerialised securities has appointed LuxCSD 42 avenue JF Kennedy, L-1855 Luxembourg as settlement organisation with effect as from 10 December
2020 and all the dematerialised shares are held in a single issuance account held with LuxCSD with interests in those shares ultimately being credited to
Euroclear UK & Ireland Limited (or its nominee) as the depository for the benefit of the holders of Crest Depository Interests in respect of those shares.
The Company’s shares being listed on the premium listing segment of the London Stock Exchange, the Articles were also amended in order to maintain,
as far as practicable, the regulatory and legal provisions applicable to the Company in relation to Takeover Rules and Transparency Disclosures
Requirements after Brexit.
The Articles of association of the Company were amended during the previous financial year further to the issue of new shares by the Board of Directors,
acting on the basis of Article 5.2 of the Articles setting an authorised share capital. The new shares were issued to employees and former Chief Financial
Officer of the Group in the frame of the Company’s Restricted Stock Awards Plan and Long Term Incentive Plan.
The Company is registered with the Luxembourg Trade and Companies Register under number B 187.275 and its registered office is established in
Luxembourg City. As per a resolution taken on 2 June 2021 the Board of Directors decided to change the registered address of the Company from 9,
allée Scheffer, L-2520 Luxembourg to 68-70 boulevard de la Pétrusse, L-2320 Luxembourg with effect as from 31 May 2021. The financial year starts on
1 April each year and ends on 31 March the following year. The Company also prepares consolidated financial statements.
The Company’s purpose is to acquire and hold interests, directly or indirectly, in any form whatsoever, in other Luxembourg or foreign entities, by way
of, among others, subscription or acquisition of (i) any securities and rights through participation, contribution, underwriting, firm purchase or option,
negotiation or in any other way, or of (ii) debt instruments in any form whatsoever, and to administrate, develop and manage such holding of interests.
The Company may in particular enter into transactions to borrow money in any form or to obtain any form of credit and raise funds through, including,
but not limited to, the issue of shares, bonds, notes, promissory notes, certificates and other debt instruments or debt securities, convertible or not, or
the use of financial derivatives. The Company may also enter into any guarantee, pledge or any other form of security agreement.
2 Summary of significant accounting policies and valuation methods
Basis of preparation
These annual accounts have been prepared in accordance with Luxembourg legal and regulatory requirements under the historical cost convention.
Accounting policies and valuation rules are, besides the ones laid down by the law of 19 December 2002, as subsequently amended (the "Law"),
determined and applied by the Board of Directors.
These accounts have been prepared on a going concern basis.
The preparation of annual accounts requires the use of certain critical accounting estimates. It also requires Management to exercise its judgement in
the process of applying the accounting policies. Changes in assumptions may have a significant impact on the annual accounts in the period in which
the assumptions changed. Management believes that the underlying assumptions are appropriate and that the annual accounts therefore present the
financial position and results fairly.
The Company makes estimates and assumptions that affect the reported amounts of assets and liabilities in the next financial year. Estimates and
judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are
believed to be reasonable.
Significant accounting policies and valuation methods
The main accounting policies and valuation rules applied by the Company are the following.
Financial assets
Shares in affiliated undertaking are valued at purchase price including the expenses incidental thereto.
In the case of durable depreciation in value according to the opinion of the Board of Directors, value adjustments are made in respect of financial assets,
so that they are valued at the lower figure to be attributed to them as at the balance sheet date. These value adjustments are not continued if the
reasons for which they were made have ceased to apply.
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Annual Report and Accounts 2022
Debtors
Debtors are valued at their nominal value. They are subject to value adjustments where their recovery is compromised. These value adjustments are
not continued if the reasons for which the value adjustments were made have ceased to apply.
Foreign currency translation
The Company maintains its accounting records in Great Britain Pounds sterling (GBP) and the balance sheet and the profit and loss accounts are
expressed in this currency.
Transactions expressed in currencies other than GBP are translated into GBP at the exchange rate effective at the time of the transaction (the "historical
exchange rate").
Long term non-monetary assets expressed in currencies other than GBP are translated into GBP at the exchange rate effective at the time of the
transaction. At the balance sheet date, these assets remain converted using the historical exchange rate.
Cash at bank is translated at the exchange rate effective at the balance sheet date. Exchange losses and gains are recorded in the profit and loss
account of the relevant financial year.
Other assets and liabilities are translated separately respectively at the lower or at the higher of the value converted at the historical exchange rate or the
value determined on the basis of the exchange rates effective at the balance sheet date. The realised and unrealised exchange losses are recorded in
the profit and loss account. The exchange gains are recorded in the profit and loss account at the moment of their realisation.
Provisions
Provisions are intended to cover losses or debts, the nature of which is clearly defined and which, at the date of the balance sheet are either likely to be
incurred or certain to be incurred but uncertain as to their amount or as to the date at which they will arise.
Provisions may also be created to cover charges which originate in the financial year under review or in a previous financial year, the nature of which is
clearly defined and which at the date of the balance sheet are either likely to be incurred or certain to be incurred but uncertain as to their amount or the
date at which they will arise.
Provision for taxation
Provisions for taxation corresponding to the tax liability estimated by the Company for the financial years for which the tax return has not yet been filed
are recorded under the caption "Tax authorities". The advance payments are shown in the assets of the balance sheet under the caption "Other debtors",
if applicable.
Creditors
Creditors are stated at their reimbursement value. Where the amount repayable on account is greater than the amount received, the difference is shown
in the profit and loss account when the debt is issued.
Dividends
Dividends receivable are recognised when the company’s right to receive the dividend has been established. This is considered to be on the date that
the dividend is agreed by the board of a subsidiary or when the dividend is to be received from any other investee.
Dividends payable are recognised when the company’s obligation to pay the dividend is established. This is considered to be for interim dividends on
the date that the dividend is approved by the board and for final dividends on the date that the dividend has been approved by shareholders.
Issuance costs
Bond issuance costs are expensed through the profit and loss account at the time that they are incurred. This is considered to be the date on which
the relevant issuance is legally performed.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
153
Strategic Report Corporate GovernanceFinancial Statements Notes to the Annual Accounts continued
For the financial year ended 31 March 2022
3 Financial assets
The undertaking in which the Company holds interests is as follows:
Undertaking’s name
B&M EVR 1*
*
B&M EVR 1 refers to B&M European Value Retail 1 S.à.r.l.
Net equity
as at
31 March 2022
£
Net result
for the financial
year ended
31 March 2022
£
Net book value
as at
31 March 2022
£
Percentage
of holding
100% 646,879,528
420,001,391 2,624,999,999
Registered office
Luxembourg
As at the balance sheet date, the Board of Directors assessed the valuation of the underlying operations and concluded that no value adjustment is
deemed necessary on the investment.
The annual accounts of B&M EVR 1 have yet to be closed by its Managers and as such the amounts are unaudited.
On 2 November 2021 an interim dividend of GBP 40 million was declared and distributed by B&M EVR 1 to the Company.
On 8 December 2021 an interim dividend of GBP 250 million was declared and distributed by B&M EVR 1 to the Company.
On 17 March 2022 an interim dividend of GBP 130 million was declared and distributed by B&M EVR 1 to the Company.
4 Amount owed by affiliated undertakings
Becoming due and payable within one year:
B&M European Value Retail Holdco 4 Ltd. ("B&M Holdco 4")
Accrued income in relation to intercompany UK audit fees
Accrued income in relation to intercompany loan agreements (interest receivable)
Total
March
2022
£
March
2021
£
737,864,994
465,000
22,040,079
518,464,555
–
3,173,333
760,370,073
521,637,888
The amounts owed by B&M Holdco 4 are interest bearing (Note 12) and payable on demand. Where interest is calculated it has been done on an arm’s
length basis.
5 Other debtors
becoming due and payable within one year:
Prepaid VAT
Prepaid income and net wealth taxes
Other advances
Total
March
2022
£
March
2021
£
–
5,176
211,062
216,238
38,250
1,057
285,893
325,200
6 Capital and reserves
Subscribed capital and share premium account
As at 31 March 2022, the issued share capital of the Company is set at GBP 100,122,683.60 divided into 1,001,226,836 ordinary shares with a nominal
value of GBP 0.10 each and the unissued but authorised share capital is set at GBP 297,099,538.60. The Company’s share capital is represented by only
one class of (ordinary) shares.
During the financial year, share options reported under the annual accounts in previous years as off balance sheet commitments have been exercised
and the Board of Directors acting on the basis of article 5.2 of the Articles and within the frame of the authorised share capital clause, issued in
aggregate, 407,148 new ordinary shares of 10 pence each in relation to share options exercised by employees and directors of the Group. The Articles
have been updated accordingly.
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B&M European Value Retail S.A.
Annual Report and Accounts 2022
Movements for the period on the reserves and profit/loss captions are as follows:
As at the beginning of the financial year
Allocation of prior period’s result
Allocation of legal reserve
Proceeds from share options
Allocation of dividends
Final dividend (June 2021)
Interim dividend (November 2021)
Special dividend (December 2021)
Profit for the financial year
Share Premium
and similar
premiums
£
2,473,832,360
–
–
–
–
–
Legal
reserve
£
Profit or loss
brought forward
£
10,010,000
–
–
–
–
–
18,225,651
628,754,262
–
(40,715)
(493,361,441)
(130,106,559)
Profit for the
financial period
£
628,754,262
(628,754,262)
–
–
–
–
–
–
–
–
–
–
–
415,743,733
Interim
dividends
£
Total
£
(493,361,441) 2,637,460,832
–
–
(40,715)
–
(130,106,559)
(50,061,342)
(250,306,709)
415,743,733
–
–
–
493,361,441
–
(50,061,342)
(250,306,709)
–
As at the end of the financial year
2,473,832,360
10,010,000
23,471,198
415,743,733
(300,368,051) 2,622,689,240
On 2 June 2021 the Board of Directors unanimously approved the distribution of a final dividend of 13.0 pence per ordinary share, being a total
aggregate distribution of GBP 130,106,559.44 paid by the Company on 6 August 2021.
On 10 November 2021 the Board of Directors unanimously approved the distribution of an interim dividend of 5.0 pence per ordinary share, being a total
aggregate distribution of GBP 50,061,341.80 paid by the Company on 17 December 2021.
On 8 December 2021 the Board of Directors unanimously approved the distribution of a special dividend of 25.0 pence per ordinary share, being a total
aggregate distribution of GBP 250,306,709.00 paid by the Company on 14 January 2022.
Legal reserve
In accordance with article 710-23 of the Luxembourg law on commercial companies dated 10 August 1915, as amended, the Company is required to
allocate to a legal reserve a minimum of 5% of its annual net profit until this reserve equals 10% of the subscribed share capital. This reserve may not
be distributed. As a result there will follow an allocation to the legal reserve at the closure of these accounts.
7 Creditors
Amounts due and payable for the accounts shown under "Debenture loans" are as follows:
Debenture Loans
Non-convertible loans – Bonds interest
Non-convertible loans – Bonds principal
Within one year
£
After one year
and within
five years
£
After more than
five years
£
March 2022
£
March 2021
£
6,520,833
–
–
650,000,000
6,520,833
650,000,000
–
–
–
6,520,833
650,000,000
3,020,833
400,000,000
656,520,833
403,020,833
On 13 July 2020, the Company issued GBP 400,000,000 3.625% Senior Secured Notes (the "2020 Notes") which are due on 15 July 2025. Interest on the
2020 Notes is paid semi-annually in arrears on 15 January and 15 July each year, commencing on 15 January 2021. The 2020 Notes are listed for trading
on the Euro MTF Market of the Luxembourg Stock Exchange. The Euro MTF Market of the Luxembourg Stock Exchange is not a regulated market pursuant
to the provisions of Directive 2014/65/EU on markets in financial instruments. The Euro MTF Market falls within the scope of Regulation (EU) 596/2014 on
market abuse and the related Directive 2014/57/EU on criminal sanctions for market abuse.
The Company may redeem the 2020 Notes in whole or in part at any time on or after 15 July 2022, in each case, at the redemption prices set out in the
Offering Circular.
Prior to 15 July 2022, the Issuer will be entitled to redeem, at its option, all or a portion of the 2020 Notes at a redemption price equal to 100% of the
principal amount of the 2020 Notes, plus accrued and unpaid interest and additional amounts, if any, to the redemption date, plus a “make-whole”
premium, as described in this Offering Circular.
Prior to 15 July 2022, the Issuer may, at its option, and on one or more occasions, also redeem up to 40% of the original aggregate principal amount
of the 2020 Notes with the net proceeds from certain equity offerings. Additionally, the Issuer may redeem the 2020 Notes in whole, but not in part,
at a price equal to their principal amount plus accrued and unpaid interest and additional amounts, if any, upon the occurrence of certain changes in
applicable tax law. Upon the occurrence of certain events constituting a change of control, the Issuer may be required to repurchase all or any portion of
the 2020 Notes at 101% of the principal amount thereof, plus accrued and unpaid interest and additional amounts, if any, to the date of such repurchase.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
155
Strategic Report Corporate GovernanceFinancial Statements Notes to the Annual Accounts continued
For the financial year ended 31 March 2022
7 Creditors continued
On 13 July 2020, the Company redeemed the previously issued GBP 250,000,000 4.125% Senior Secured Notes (the “Former Notes”) which were due on
1 February 2022. An early redemption fee of £2,577,500 was incurred and paid at that date.
On 24 November 2021, the Company issued GBP 250,000,000 4.000% Senior Secured Notes (the “2021 Notes”) which are due on 15 November 2028.
Interest on the 2021 Notes will be paid semi-annually in arrears on May 15 and November 15 of each year, commencing on May 15, 2022. The 2021
Notes are listed for trading on the Euro MTF Market of the Luxembourg Stock Exchange. The Euro MTF Market of the Luxembourg Stock Exchange is not
a regulated market pursuant to the provisions of Directive 2014/65/EU on markets in financial instruments. The Euro MTF Market falls within the scope
of Regulation (EU) 596/2014 on market abuse and the related Directive 2014/57/EU on criminal sanctions for market abuse.
The Company may redeem the 2021 Notes in whole or in part at any time on or after 15 November 2024, in each case, at the redemption prices set out
in the Offering Circular.
Prior to November 15, 2024, the Issuer will be entitled to redeem, at its option, all or a portion of the Notes at a redemption price equal to 100% of the
principal amount of the 2021 Notes, plus accrued and unpaid interest and additional amounts, if any, to the redemption date, plus a “make-whole”
premium, as described in this Offering Circular.
Prior to November 15, 2024, the Issuer may, at its option, and on one or more occasions, also redeem up to 40% of the original aggregate principal
amount of the 2021 Notes with the net proceeds from certain equity offerings. Additionally, the Issuer may redeem the Notes in whole, but not in part,
at a price equal to their principal amount plus accrued and unpaid interest and additional amounts, if any, upon the occurrence of certain changes in
applicable tax law. Upon the occurrence of certain events constituting a change of control, the Issuer may be required to repurchase all or any portion of
the 2021 Notes at 101% of the principal amount thereof, plus accrued and unpaid interest and additional amounts, if any, to the date of such repurchase.
The £250 million 2021 Notes will rank pari passu in right of payment with the Company’s obligations in respect of its existing senior credit facilities and
its existing £400 million 3.625% senior secured notes due 2025.
Both Notes are senior obligations of the Company, guaranteed on a senior basis by its various affiliated companies.
Other amounts due and payable for the accounts shown under “Creditors” are as follows:
Trade creditors
Suppliers
Suppliers – Invoices not yet received (Note 7.1)
Within one year
£
25,980
108,938
134,918
Amounts owed to affiliated undertakings B&M EVR 2 (Note 7.2)
6,100,386
Other creditors
Tax authorities
Corporate income tax
Net wealth tax
Other taxes
Dividend payable
Other creditors
Total
–
8,176
3,233
11,409
–
123,274
6,369,987
Note 7.1 The balance of suppliers’ invoices not yet received relates mostly to audit fees.
Note 7.2 Dividend payments in GBP received by the Company on behalf of B&M EVR 2.
After one year
and within
five years
£
After more than
five years
£
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
March 2022
£
March 2021
£
25,980
108,938
134,918
13,808
78,794
92,602
6,100,386
6,266,338
–
8,176
3,233
11,409
–
123,274
2,541
4,103
2,640
9,284
–
177,282
6,369,987
6,545,506
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B&M European Value Retail S.A.
Annual Report and Accounts 2022
8 Other external expenses
Advisory and consultancy fees
Fees relating to redemption and issue of bond debt
Marketing, communication and travel expenses
Staff recruitment expenses
Accounting and administrative fees
Audit fees
Government regulatory fees
Stock exchange fees
Rentals
Repairs and maintenance
Others
Total
March 2022
£
–
2,627,204
148,124
39,967
153,232
89,427
129,194
201,650
46,162
7,207
218,601
March 2021
£
254,522
3,502,988
115,975
19,983
181,006
92,173
112,581
164,003
46,978
8,520
353,775
3,660,768
4,852,505
9 Staff costs
As at 31 March 2022, the Company employed one part time employee and one full time employee. (2021: one part time and 1 full time)
10 Other operating expenses
Director fees
Non-deductible VAT
Others
Total
11 Income from participating interests
Derived from affiliated undertakings:
Dividend income (Note 11.1)
Total
Note 11.1 Dividend income relates to dividends distributed by B&M EVR 1.
12 Other interest receivable and similar income
Derived from affiliated undertakings (Note 12.1)
Interest recharge
Other income
Other interest and similar income
Realised foreign exchange gain
Other income
Total
March 2022
£
690,827
278,269
–
969,095
March 2021
£
612,508
825,501
32,959
1,470,968
March 2022
£
March 2021
£
420,000,000
633,300,000
420,000,000
633,300,000
March 2022
£
March 2021
£
18,394,763
–
14,090,771
3,505,833
18,394,763
17,596,604
345,359
–
345,359
1,300,441
–
1,300,441
18,740,122
18,897,045
Note 12.1 The Company and its UK and Luxembourg affiliates have entered into a Management Services Agreement ("MSA"). Included in the provisions
of this MSA was the right for the Company to charge or be charged with interest on any intercompany balances held with affiliates outside of Luxembourg
("Interest recharge"). The basis for the interest recharge is the outstanding balance per management accounts at the start and end of each month, and the
marginal external rate of borrowing available to the Group as reviewed by management on a quarterly basis.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
157
Strategic Report Corporate GovernanceFinancial Statements Notes to the Annual Accounts continued
For the financial year ended 31 March 2022
13 Interest payable and similar expenses
Other interest and similar expenses:
Interest expense on bonds payable (Note 7)
Realised foreign exchange loss
Others
Total
March 2022
£
March 2021
£
18,000,000
251,003
–
13,301,910
968,325
2,577,500
18,251,003
16,847,735
14 Taxation
The Company is subject to the general tax regulation applicable to all Luxembourg commercial companies.
15 Off balance sheet commitments and contingencies
As at the balance sheet date, the Company has financial commitments relating to i) share option plans and ii) pledge agreements. The nature and the
commercial objective of the operations not disclosed on the balance sheet can be described as follows:
Note 15.1 Share option plans
The Company operates the following open share option plans. The details of which are as follows:
(1) The B&M European Value Retail S.A. Long Term Incentive Plan 2016 (LTIP 2016).
(2) The B&M European Value Retail S.A. Long Term Incentive Plan 2017, split into three; (i) LTIP 2017A (ii) LTIP 2017B1 (iii) LTIP 2017B2
(3) The B&M European Value Retail S.A. Long Term Incentive Plan 2018, split into two; (i) LTIP 2018A (ii) LTIP 2018B
(4) The B&M European Value Retail S.A. Long Term Incentive Plan 2019, split into three; (i) LTIP 2019A (ii) LTIP 2019B1 (iii) LTIP 2019B2
(5) The B&M European Value Retail S.A. Long Term Incentive Plan 2020, split into two; (i) LTIP 2020A (ii) LTIP 2020B1
(6) The B&M European Value Retail S.A. Long Term Incentive Plan 2021, split into two; (i) LTIP 2021A (ii) LTIP 2021B
(7) The B&M European Value Retail S.A. Deferred Benefit Share Plan 2019 (DBSP19)
(8) The B&M European Value Retail S.A. Deferred Benefit Share Plan 2020 (DBSP20)
(9) The B&M European Value Retail S.A. Deferred Benefit Share Plan 2021 (DBSP21)
LTIPs
These awards are ordinary shares subject to a mixture of market based and non-market based performance conditions. They vest after a period of
three years.
LTIP 2016, LTIP 2017A, LTIP 2018A, LTIP 2019A, LTIP 2020A and LTIP 2021A have been separated into two tranches based upon the conditions required for
vesting, as the two tranches were calculated to have separately identifiable and different fair values. The tranches are labelled "TSR" and "EPS" as the
relevant key performance conditions are based upon total shareholder return and earnings per share. These LTIP schemes all have a holding period
of two years after the shares have vested. The other LTIP schemes do not have this feature.
The LTIP 2018 schemes and all subsequent schemes awarded have additional options granted to holders for each dividend paid by the company whilst
the options are held. These dividend grants are equivalent to the amount of new shares they could have bought with the dividend that would have been
due to them had they held the actual shares.
The options were valued using a Monte Carlo method.
All LTIP options have a nil exercise price.
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B&M European Value Retail S.A.
Annual Report and Accounts 2022
Scheme/Tranche
LTIP 2016/EPS
LTIP 2016/TSR
LTIP 2017A/EPS
LTIP 2017A/TSR
LTIP 2018A/EPS
LTIP 2018A/TSR
LTIP 2019A/EPS
LTIP 2019A/TSR
LTIP 2020A/EPS
LTIP 2020A/TSR
LTIP 2021A/EPS
LTIP 2021A/TSR
LTIP 2017B1
LTIP 2017B2
LTIP 2018B2
LTIP 2019B1
LTIP 2019B2
LTIP 2020B1
LTIP 2021B1
Date of
grant
Date of
vesting
Fair value
of option
£
Number of options
outstanding at
31 March 2021
Number of options
granted/(forfeited
or lapsed) in the
year
Number of options
exercised in the
year
Number
of options
outstanding at
31 March 2022
18 Aug 2016
18 Aug 2016
7 Aug 2017
7 Aug 2017
22 Aug 2018
22 Aug 2018
2 Aug 2019
2 Aug 2019
30 Jul 2020
30 Jul 2020
3 Aug 2021
3 Aug 2021
7 Aug 2017
14 Aug 2017
23 Jan 2018
2 Aug 2019
18 Sept 2019
30 Jul 2020
3 Aug 2021
18 Aug 2019
18 Aug 2019
7 Aug 2020
7 Aug 2020
22 Aug 2021
22 Aug 2021
2 Aug 2022
2 Aug 2022
30 Jul 2023
30 Jul 2023
3 Aug 2024
3 Aug 2024
7 Aug 2020
14 Aug 2020
23 Jan 2021
2 Aug 2022
18 Sept 2022
30 Jul 2023
3 Aug 2024
2.54
1.64
3.51
2.72
4.09
2.40
3.61
2.51
4.64
4.09
5.60
3.54
3.61
3.60
4.06
3.48
3.73
4.63
5.60
70,982.5
122,385.5
18,071
27,557
262,012
262,012
259,633
259,633
157,438.5
157,438.5
–
–
73,667
13,379
234,759
395,455
3,163
300,724
–
–
–
–
–
18,356
(59,547)
19,760.5
19,760.5
11,922.5
11,922.5
229,660.5
229,660.5
–
–
(2,781)
(3,933)
240
(3,621)
271,020
(70,982.5)
(122,385.5)
–
–
–
–
–
–
–
–
–
–
(20,091)
–
(193,689)
–
–
–
–
–
–
18,071
27,557
280,368
202,465
279,393.5
279,393.5
169,361
169,361
229,660.5
229,660.5
53,576
13,379
38,289
391,522
3,403
297,103
271,020
LTIP 2016/EPS, LTIP 2016/TSR and LTIP 2018B1 have been fully exercised.
LTIP 2017A and LTIP 2018A have vested and are in a two year holding period.
LTIP 2017B1, 2017B2 and LTIP 2018B2 have vested and are available to exercise.
Assumptions
The fair valuing exercise uses several assumptions, including those given in the table below.
Scheme/Tranche
LTIP 2016/EPS
LTIP 2016/TSR
LTIP 2017A/EPS
LTIP 2017A/TSR
LTIP 2018A/EPS
LTIP 2018A/TSR
LTIP 2019A/EPS
LTIP 2019A/TSR
LTIP 2020A/EPS
LTIP 2020A/TSR
LTIP 2021A/EPS
LTIP 2021A/TSR
LTIP 2017B1
LTIP 2017B2
LTIP 2018B1
LTIP 2018B
LTIP 2019B1
LTIP 2019B2
LTIP 2020B1
LTIP 2021B1
Risk-free
rate
Expected life
(years)
Volatility
Dividend
yield
0.09%
0.09%
0.52%
0.52%
0.97%
0.97%
0.37%
0.37%
-0.11%
-0.11%
0.23%
0.23%
0.25%
0.25%
0.25%
0.25%
0.47%
0.47%
-0.12%
0.12%
5
5
5
5
5
5
5
5
5
5
5
5
3
3
3
3
3
3
3
3
26%
26%
32%
32%
29%
29%
31%
31%
48%
48%
37%
37%
32%
32%
32%
30%
30%
30%
39%
42%
2%
2%
1%
1%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
1%
1%
1%
N/A
N/A
N/A
N/A
N/A
DBSP
The Defined Benefit Share Plan (DBSP) is a holding scheme where a portion of the executive directors annual bonus is deferred into a share option
holding scheme where the options are held for three years before they can be exercised.
As such these are valued at the portion of the bonus which has been deferred. This scheme also attracts the additional dividend related grants as
detailed above for the post 2018 LTIP schemes.
B&M European Value Retail S.A.
Annual Report and Accounts 2022
159
Strategic Report Corporate GovernanceFinancial Statements Notes to the Annual Accounts continued
For the financial year ended 31 March 2022
15 Off balance sheet commitments and contingencies continued
All DBSP options have a nil exercise price.
Scheme/Tranche
DBSP 2019
DBSP 2020
DBSP 2021
Date of
grant
Date of
vesting
4 Jun 2019
30 Jun 2020
14 Jul 2021
4 Jun 2022
30 Jun 2023
14 Jul 2024
Fair value
of option
£
Number of options
outstanding at
31 March 2021
Number of options
granted/(forfeited
or lapsed)
in the year
Number of options
exercised
in the year
Number of
options
outstanding at
31 March 2022
N/A
N/A
N/A
67,920
50,748
–
4,989
3,843
89,550
–
–
–
72,909
54,591
89,550
In accordance with Luxembourg GAAP, as long as the option holders have not exercised their rights, the related amounts are reported as off balance
sheet commitments.
Note 15.2 Pledge agreements
Pursuant to a share pledge agreement dated (and effective as of) 14 July 2020, all shares and related assets owned from time to time in B&M EVR 1
by the Company and, in particular, the 198,916,673 shares owned as of 31 March 2021 and including any shares acquired by the Company in the future
and related assets, have been pledged in favour of Deutsche Bank AG, London Branch, as security agent, acting for itself and as security agent for and
on behalf of the Secured Parties, in relation of the issuance of the Bonds (Note 7).
16 Directors Emoluments
Director fees payable to the independent non-executive directors of the Company are paid in GBP on a quarterly basis (by reference to the civil year)
and subject to withholding tax in Luxembourg at the rate of 20%.
The contractual emoluments granted to the members of the administrative managerial and supervisory bodies in that capacity are as follows:
Director fees paid to the non-executive directors of the Group
March 2022
£
686,113
686,113
March 2021
£
602,392
602,392
There were no obligations arising or entered into in respect of retirement pensions for former members of those bodies for the financial year.
There were no advances or loans granted during the financial year to the members of those bodies.
There are no pension obligations to members of those bodies.
There are no guarantees or direct substitutes granted or given of the members of those bodies
The executive directors are remunerated through other Group companies.
17 Subsequent events
No other matters or circumstances of importance other than those already described in the present notes to the accounts have arisen since the end of
the financial year which could have significantly affected or might significantly affect the operations of the Company, the results of those operations or
the affairs of the Company.
The financial statements were approved by the Board of Directors and authorised for issue on 30 May 2022 and signed on its behalf by:
Simon Arora
Chief Executive Officer
Alejandro Russo
Chief Financial Officer
160
B&M European Value Retail S.A.
Annual Report and Accounts 2022
Corporate Directory
Auditor
KPMG Luxembourg Société Coopérative
39, Avenue John F. Kennedy
L-1855 Luxembourg
Tel: +352 22 51 51 1
www.kpmg.com/lu
Joint Brokers
BofA Securities
2 King Edward Street
London EC1A 1HQ
Tel: +44 (0)20 7628 1000
www.baml.com
Numis Securities
10 Paternoster Square
London EC4M 7LT
Tel: +44 (0)270 7260 1000
www.numis.com
Principal Bankers
Barclays Bank PLC
Registered Office & Company Number
B&M European Value Retail S.A.
68-70, Boulevard de la Pétrusse
L-2320 Luxembourg
Grand-Duchy of Luxembourg
R.C.S. Luxembourg: B 187275
Tel: +352 246 130 208
www.bandmretail.com
Registrars
Banque Internationale à Luxembourg S.A.
69, Route d’Esch
L-2953 Luxembourg
Tel: +352 4590 5000
www.bil.com
Central Securities Depositary
LuxCSD S.A.
42, Avenue J-F Kennedy
L-1855 Luxembourg
Grand-Duché de Luxembourg
www.luxcsd.com
Listing
The ordinary shares of B&M European Value
Retail S.A. are listed with a premium listing on
the London Stock Exchange.
WLT DETAILS TBC
The outer cover of this report has been laminated with a
biodegradable film.
Around 20 months after composting,
FSC DETAILS TBC
an additive within the film will initiate
the process of oxidation.
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©2022. All rights reserved. B&M and the
B&M logo are registered trademarks.
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B&M European Value Retail S.A.
68–70, Boulevard de la Pétrusse
L-2320 Luxembourg
Grand-Duchy of Luxembourg
R.C.S. Luxembourg: B 187275
www.bandmretail.com