B&M European Value Retail S.A. Annual Report and Accounts 2023
B&M European Value Retail S.A. Annual Report and Accounts 2023
Annual Report and Accounts 2023
B&M European Value Retail S.A.
Our purpose
Delivering great value
to our customers so that
they return to our stores
time and time again
Strategic Report
Financial highlights 1
Company overview 2
Long-term strategy 3
Investment case 4
Business model 6
Chairman’s statement 8
Market overview 10
Feature – B&M France 12
Feature – Heron Foods 14
Chief Executive’s review 16
Financial review 20
Key performance indicators 24
Principal risks and uncertainties 26
Corporate social responsibility 34
TCFD 46
Stakeholders and Section 172 Statement 54
Corporate Governance
Chairman’s introduction 58
The Board of Directors of
B&M European Value Retail S.A. 59
Corporate Governance report 62
Audit & Risk Committee report 69
Nomination Committee report 74
Directors’ remuneration report 76
Directors’ report and business review FY23 92
Statement of Directors’ responsibilities 97
Financial Statements
Independent Auditor’s Report 98
Consolidated Statement of
Comprehensive Income 101
Consolidated Statement of Financial Position 102
Consolidated Statement of Changes
in Shareholders’ Equity 103
Consolidated Statement of Cash Flows 104
Notes to the Consolidated Financial Statements 105
Independent Auditor’s Report 144
Company profit and loss account 146
Company balance sheet 147
Notes to the annual accounts 148
Corporate Directory 158
Contents
Our values
Proud
Proud to treat every £1
as our own and provide
customers with great
value for money
Fairness
Proud to act fairly
and responsibly with
customers, colleagues
and suppliers
Trust
Proud to trust
honesty, loyalty
and hard work
Simplicity
Proud to keep our
business simple and
fun, and work at
B&M speed
1B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
4,983
4,673
3,813
2023
2022
2020
598
540
573
619
342
2023
2022
2020
436
525
252
2023
2022
2020
34.7
42.1
19.5
2023
2022
2020
866
598
533
2023
2022
2020
14.6
16.5
8.1
2023
2022
2020
Financial highlights
Adjusted EBITDA
1
£573m
(7.4)%
Group revenues
£4,983m
6.6%
Ordinary dividend per share
14.6p
(11.5)%
Profit before tax
£436m
(17.0)%
Diluted earnings per share
34.7p
(17.6)%
Cash generated from operations
£866m
44.8%
1. The Directors believe that our adjusted figures – as described in Note 1 – provide users of the accounts with measures of performance which are 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. See Note 3 of the financial statements for further details. Adjusted
EBITDA is a non-IFRS measure and therefore we provide a reconciliation from the statement of comprehensive income on page 117. Adjusted figures exclude the impact of IFRS 16.
2. 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 FY22. This 14-month approach has been adopted as it excludes the two-month halo
period which new stores experience following opening.
Resilient and disciplined performance
Operational highlights
UK LFL growth
In FY23, a relentless focus has been placed on
delivering growth through our existing store network.
Huge improvements have been seen in
store standards and increased availability
which has led to an improvement in like for like
2
sales
in the B&M UK business.
See Chief Executive Officer’s review
on page 16 for more information
Clear pathway
for long term
growthin France
The B&M brand has resonated well with theFrench
consumer. Total sales increased by 22.1% and a 9.6%
adjusted EBITDA
1
margin for theyear. Recent results
highlights the long termpotential.
See Feature on page 12
for more information
UK rollout story
There are two elements to our store opening
programme. Firstly, opening new stores remains
be a focus – our target of 950 store numbers would
represent c.35% more stores than today.
Secondly, our average net sales area increased
greater than the increase in net new stores in the year.
Larger format stores enable us to increase our
sales growth even further.
See Chief Executive Officer’s review
on page 16 for more information
Heron Foods
continues to deliver
FY23 was another year of growth in both revenue
and profit for Heron Foods. The convenience offering
selling leading branded grocery products at the lowest
possible price is proving an attractive proposition for
many new customers. Healthy adjusted EBITDA
1
marginof 6.1% in the year is market
leading in the grocery sector.
See Feature on page 14
for more information
B&M European Value Retail S.A. Annual Report and Accounts 20232
8.6%
9.7%
81.6%
3.5%
7.1%
89.4%
7.2%
5.2%
87.6%
Company overview
Our fascias
1. Includes the corporate segment.
2. 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 believe that our adjusted figures – as described in Note 1 of the financial statements – provide users of the accounts with measures of performance which are
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 users of the accounts with an additional metric to compare periods of account. The B&M UK adjusted EBITDA
shown above includes an adjusted loss of £1m in FY22 (FY22: profit of £1m) relating to the corporate segment as referred to in Note 2 of the financial statements. The corporate
segment also has a further £19m (FY22: £(12)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 117. Adjusted figures exclude the impact of IFRS 16.
Revenue by fascia
B&M UK £4,067m
B&M France £431m
Heron Foods £485m
Group £4,983m
Operating profit
B&M UK £479m
B&M France £19m
Heron Foods £38m
Group £536m
Adjusted EBITDA
3
by fascia
B&M UK £502m
B&M France £41m
Heron Foods £30m
Group £573m
We are the UK’s leading variety goods
value retailer, providing customers with
a limited assortment of the best-selling
items at bargain prices
Number of employees
1
33,156
Number of employees
2
989
France
Number of stores
707
Number of stores
114
Number of employees
5,339
Number of stores
319
UK
FY23 performance by fascia
3B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
Long-term strategy
Our four channels of growth will deliver long term profitable growth
See page 16
for more information
See Principal risks numbers
2 and 3 on pages 28 and 29
See page 16
for more information
See Principal risks numbers
3 and 9 on pages 29 and 32
See page 12
for more information
See Principal risks numbers
3 and 5 on pages 29 and 30
See page 14
for more information
See Principal risks numbers
1, 6 and 9 on pages 28, 30
and 32
Existing stores
B&M is the leading variety goods
value retailer in the UK with 707 stores.
Our existing stores offer considerable
scope for improving sales densities.
Like for like
1
(“LFL”) sales growth tends
to be highly profitable growth and will
be achieved through a relentless focus
on product, price and an excellence in
retail standards.
Store standards have improved due
to a concentrated focus on delivering
growth through our existing store
estate. Over 100 store visits per
week have been conducted by key
management which has led to major
improvements in one-year LFL sales
in H2 of 5.1%.
It is worth remembering that each
1% growth in LFL sales is equivalent to
the sales generated from 7 average
store openings. The focus is relentless.
New stores
950 stores is the minimum UK store
target that we have publicly stated. This
would equate to a minimum increase
of c.35% in store numbers, but the final
figure could be much higher. We know
the sales performance of new stores is
much stronger than an average store
due to them being larger in size and
therefore sales participation should
be greater than the 35% increase in
store numbers.
In addition, we place great emphasis
on refreshing and updating our existing
store estate. This can mean relocating
an older, legacy store to a new larger
format store – often with a garden
centre attached. This results in square
footage growth surpassing the
increase in the number of stores.
France
France has continued the transformative
journey that it has embarked on since
acquisition. FY23 has been the first year
that all the stores have operated under
the B&M banner and momentum is
building. The product mix has evolved
with a greater focus on grocery, home
and the phasing out of clothing. This
product realignment along with the
B&M branding of the stores has been
well received by the French consumers
with total sales increasing by 22.1%
in FY23.
There is no reason why France cannot
have a similar store count to the UK in
the future, considering that France has
a similar population to the UK and that
the French discount retail market is
less competitive than the UK – we see
France continuing to build sustainable
profit in the long term.
Heron
Heron Foods has been well placed this
year to deliver value and convenience
to customers looking to manage their
budgets during these difficult times.
Sales have increased 18.1% to £485m
generating an adjusted EBITDA
2
margin of 6.1% which is an excellent
result for a grocer.
Heron Foods has improved its ranges
to increase appeal to existing and new
customers. Through merchandising
more intensely, freezers have been
able to be removed from stores, Frozen
sales volumes have maintained while
adding increased sales in new areas,
making the space work harder.
The rollout story for Heron Foods can
continue with 319 stores currently, with
the sector market leader operating
well over 2,000 convenience stores –
the opportunity to scale the store
estate is potentially huge.
Group total
revenue growth
6.6%
B&M UK one-year LFL
1
revenue growth
0.7%
Increase in B&M UK
average sales area
3.6%
Heron Foods
revenue growth
18.1%
B&M France
revenue growth
22.1%
B&M France adjusted
EBITDA
2
margin
9.6%
Colleagues taken on full time
from Kickstart programme
1,946
New retail jobs created
in the UK & France
>1,250
Progress in FY23
Performance in FY23
1. One-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 14 months after it opened
compared with its revenue for the corresponding part of FY23.
2. The Directors believe that our adjusted figures – as described in Note 1 of the financial statements – provide users of the accounts with measures of performance which are 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 users of the accounts with an additional metric to compare periods of account. See Note 3 of the financial statements for further details.
Adjusted figures exclude the impact of IFRS 16.
1 2 3 4
Existing B&M
UK stores a core
driver of growth
New B&M
UK stores
France will
provide growth
for many years
to come
Heron Foods
offers growth
B&M European Value Retail S.A. Annual Report and Accounts 20234
Investment case
Delivering long-term
profitable growth
B&M is set for many years of compounding
earnings growth and cash returns for shareholders.
5B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
1. UK market share is calculated based on the reported revenues of B&M UK and Heron Foods compared to NIQ Scantrack, Total Store, Total Coverage inc. Discounters, 52 weeks
ending 31.12.22.
2. Geolytix location analytics, March 2023.
B&M is the UK’s largest discount variety store operator, with 707 B&M stores in the UK, 114 B&M
stores in France and 319 Heron Foods (“Heron”) discount convenience stores in the UK. In the UK,
B&M has c.2% market share
1
, and substantially less in France. Each of our formats has many years
growth ahead as the Group continues its profitable growth plans – with a relentless focus on price
and delivering positive gains to all our stakeholders.
There are four channels of growth:
Existing B&M UK stores:
Like for like growth is
highly profitable growth
Our existing stores offer considerable scope for improving sales densities. Each 1% like for like (“LFL”) sales growth
is equivalent to opening 7 new stores, but without any capex or increase in fixed costs. LFL growth therefore tends
to be highly profitable growth, which helps fund low prices (to drive further LFL sales), creates new jobs and
generates good returns to shareholders. There is nothing operationally to stop us growing our sales densities
substantially over the long term. This will be achieved by taking a bigger share of available expenditure in existing
catchment areas as our relentless focus on price, value and retail standards bears results.
New B&M UK stores:
square footage growth
outpaces our growth
in net new stores
We have previously said that there is a scope for a minimum of 950 B&M stores in the UK. This would represent
a minimum increase of c.35% in store numbers, but the final figure could be substantially more. With new stores
tending to be larger than the existing average store, the sales contribution from this c.35% increase should be
even greater. There remain significant areas of the UK where we are not represented in meaningful numbers
and where we would like to expand (e.g. the South Coast). Currently, 37% of the UK population currently lives
> 3 miles from a B&M store.
2
In conjunction with our new store openings, we will continue to refresh and update our existing store estate.
Where the opportunity arises, we will replace older, legacy stores that are at the end of their lease with newer,
larger stores, often with a small garden centre attached. This will result in square footage growth (a key driver
of sales) outpacing growth in store numbers. In FY23, our store numbers increased by c.1% but our total square
footage increased by c.3%, while our average size of store increased by c.4%.
France will provide growth
for many years to come
In terms of size and wealth, France has a similar population to the UK, where we are targeting at least 950 stores.
The UK estate sets a relevant benchmark for the potential scale of the French estate over the long term. As we
gently increase our store opening programme, France will provide many years of profitable growth.
We have transformed our French operation since acquisition, and all stores are now under the B&M fascia,
clothing has largely been replaced with Fast Moving Consumer Goods (“FMCG”) and we refined the home
category. Profitability is good, with a strong underlying profit margin. We will continue to evolve the offer as
we grow our FMCG business and like in the UK, there is no reason why our sales densities cannot continue
to improve over the longer term.
Heron Foods offers
growth and offers
other benefits to
the core business
Heron is our discount convenience store operation, based primarily in the North of England and the Midlands
in neighbourhood locations. Average size of our stores stands at 3,000 sq. ft which means they are classified
as convenience stores and can trade for more than six hours on a Sunday. Over the last 12 months, the offer
has been refined to include more ambient and fresh products, and this has resulted in a step change in
total sales and sales by broad category. Space for the enhanced ranges was created by merchandising the
traditional frozen food offer more intensely, which allowed us to remove freezers, reduce operating costs and
reduce the capital cost of new stores. By merchandising more intensely, we were able to maintain frozen sales
volumes while adding substantial sales in new areas.
Heron offers considerable long-term potential through the roll-out. Currently, the market leader in convenience
stores in the UK has over 2,000 outlets. There is no reason why Heron with its discount offer cannot rollout
across the UK, over the long-term.
B&M is committed to delivering long-term profitable growth through its four channels.
B&M has many opportunities and many years of growth ahead as it broadens its appeal and expands its store numbers in the UK and France.
In expanding its store numbers and in increasing its sales densities in existing stores, B&M will continue to deliver long-term profitable growth,
will generate cash and will return excess cash to shareholders. B&M remains a rollout story, and will deliver compounding earnings growth
and cash returns for shareholders.
6 B&M European Value Retail S.A. Annual Report and Accounts 2023
Business model
Our business model is underpinned by:
A disruptive, agile and low-cost business model
capable of responding to changing conditions
Seasonal
flex
Format
flexibility
Targeted
grocery
offering
SKU
discipline
Cost
efficiency
Compelling
non-grocery
offering
Disruptive
sourcing
process
Corporate
social
responsibility
See CSR report
on page 34
for more information
Risk
management
See Principal risks
on page 26
for more information
Financial
performance
See Financial review
on page 20
for more information
Stakeholder
outputs
Business
strengths
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.
7B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
Business strengths
Stakeholder outputs
Underpinned by our ESG strategy
• 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. B&M has six distribution centres
in total including the newest addition in Bedford in the South of England,
opened in FY20 providing a further one million sq. ft of warehouse
capacity to complement the existing B&M UK distribution centres. In
addition, Heron Foods and B&M France also have their own dedicated
distribution centres, 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 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 11th most loved retail
brand in the UK
1
. 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. Evidence of
the reputation building is that B&M were ranked in the top 15 of
companies with the best reputation with customers online in France
2
.
• 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.
• 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.
• 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 the current cost-of-living crisis showing no signs of easing
and the ongoing macroeconomic uncertainty, value for money is likely
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 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 several
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.
• 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 2023
2. Source: Partoo Survey ‘Companies with the best e-reputation’ 2023
8 B&M European Value Retail S.A. Annual Report and Accounts 2023
After two years in which
we faced the challenges
produced by COVID-19, it was
a reasonable expectation that
the world might settle down.
Clearly that has not been
the case. The political and
economic environment over
the last year has been both
unstable and challenging.
Inflation has been a key
issue for our customers,
staff and suppliers.
B&M has continued to perform well and
execute its strategy with relentless consistency.
We have given even greater focus to ensuring
that we offer our customers great value and
great products and that, throughout our
company, we have availability of these
products consistently day in, day out.
The transition from Simon Arora to Alex Russo
in the Chief Executive role has gone smoothly
and the business has not ‘missed a beat’.
Alex’s appointment has brought fresh insight
to how we can improve the quality of execution
in several areas of our operations and how we
can serve our customers even better.
Strategic progress
Our Group adjusted EBITDA
1
margin of 11.5%
has been sustained well ahead of pre-pandemic
levels. This is a key indicator of the robustness
of the B&M business model and the success
of our strategy. While we have continued to
expand our footprint in the UK and France,
high-quality execution in our existing estate
is the key focus of management.
Growth in store numbers in the UK has slowed
over the last two years due to the availability
of sites but we remain confident that there is
significant growth potential in the years ahead.
Critically the performance of the stores we are
opening is strong.
B&M France continues to develop and perform
well. Whilst new store growth in the near term
will be modest, the long-term potential is high.
Heron Foods, our convenience store offering,
delivered excellent sales growth and a healthy
EBITDA margin. The offering of top-quality
branded products across chilled, ambient
and particularly in frozen has resonated well
with customers during these difficult times.
We have continued to strengthen the overall
operational capability across the Group
with appointments to middle and senior
management together with on-going
investment in financial systems, IT and
supply chain.
In challenging times for
consumers, our proposition has
grown in relevance, taking in its
stride the transition from one
executive team to another.”
Peter Bamford
Chairman
Chairman’s statement
1. The Directors believe that our adjusted figures – as described in Note 1 of the financial statements – provide users of the accounts with measures of performance which are
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. See Note 3 of the financial statements for
further details. Adjusted figures exclude the impact of IFRS 16.
9B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
Chief Executive succession
Clearly the most significant development
during the year has been the change of Chief
Executive. Simon Arora stepped down from
the role on 26 September 2022 and Alex Russo
succeeded him, having been Chief Financial
Officer since November 2020. Simon retired
from the Board in April this year.
The remarkable growth and success of B&M
is testament to Simon’s vision and leadership.
He and his brother Bobby took over B&M in
2004 and together they have developed a
business with powerful customer proposition
and a simple, but robust, business model.
Simon’s vision, clarity of thought, integrity and
commercial instincts have been core to B&M’s
success. I have personally very much enjoyed
working with Simon over the last five years and,
on behalf of the Board, wish him well for
the future.
Simon and Alex have worked well together
to ensure a smooth transition. Alex is bringing
a different set of skills and new perspectives
but with continuity of our strategy and the
core business model.
Board and leadership development
The last year has been one of significant change
and transition on the Board. In addition to the
CEO change, as a consequence of Alex’s
promotion, we appointed a new Chief Financial
Officer. Mike Schmidt joined us in October and
became CFO on 1 November 2022. Within the
Non-Executive Directors we announced that
Ron McMillan (Senior Independent Director and
Chair of the Audit & Risk Committee) would be
retiring at the AGM in July 2023 and that Tiffany
Hall would become Senior Independent Director
with Oliver Tant joining the Board in November
2022 to become Chair of the Audit & Risk
Committee on Ron’s retirement. I am delighted
to welcome Mike and Oliver to the Board. Both
bring valuable new skills and experiences.
More recently Carolyn has decided not to stand
for re-election at the AGM in July this year for
personal reasons. I would like to thank her for
the excellent contribution she has made to our
Board over the last five years both generally as
Non-Executive Director and specifically in her
role with respect to workforce engagement.
In order to ensure continuity on the Board with
the number of changes in other roles, Ron
McMillan has agreed to continue the role of
Non-Executive Director for an additional year
until the AGM in 2024. Following this year’s
AGM Tiffany Hall will still assume the role of
Senior Independent Director and Oliver Tant will
become Chair of the Audit & Risk Committee.
As a consequence of these changes, in addition
to Simon Arora’s retirement and the succession
appointments announced earlier, the Board is
not fully compliant with the new Listing Rules
with respect to diversity. Simon’s retirement
means that we do not currently have a director
from an ethnic minority and the combination of
director changes means we will not meet the
requirement for 40% of the Board to be female
in the immediate future. We are planning to
appoint at least one Non-Executive Director and
ensure full compliance by the time Ron McMillan
steps down from the Board at the AGM in 2024
at the latest. Recruitment processes are
underway to address these issues.
The Board has continued to work well together
through this period of change. We completed our
last Board performance review in March 2022
and have concluded, given the number of
changes and new appointments, that we should
defer the next review until the autumn of 2023
when we will be able to gain a more meaningful
input, as to how the new Board is performing.
This will be an externally facilitated evaluation.
Within the management team, in addition to the
CEO and CFO changes, Alex has established a
strong working relationship with Bobby Arora
who continues to lead and drive forward the
core activity of sourcing and selection of B&M’s
product ranges. New appointments have been
made to the leadership positions in supply chain
and Investor Relations which have continued the
process of broadening and strengthening the
management team. In addition, many changes
have been made within the store, area and
regional management in order to ensure that
we have the necessary skills and approach to
deliver improved operational standards on a
consistent basis.
ESG
The Board recognises the importance of
continuing to implement the Group’s ESG
strategy and provide input on our ongoing
and planned future projects. We embrace the
part that we have to play in making positive,
long-term changes.
For further details about the achievements
and progress made in the year against critical
topics such as environment, people and
sustainable sourcing, please see page 34.
Our colleagues
Although I can only mention a limited number
of people in this commentary, B&M’s success is
enabled by the hard work and commitment of
every B&M colleague. The last year has been
challenging for many people. We know from
our staff engagement surveys that the B&M
team is exceptionally motivated and proud
of our company.
On behalf of the Board, I would like to thank
everyone who works at B&M for their hard work
and commitment in ensuring that our customers
have the best possible products and value for
money available to them every day.
Peter Bamford
Chairman
30 May 2023
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.
Proud
Proud to treat every £1
as our own and provide
customers with great
value for money
Fairness
Proud to act fairly
and responsibly with
customers, colleagues
and suppliers
Trust
Proud to trust honesty,
loyalty and hard work
Simplicity
Proud to keep
our business simple
and fun, and work
at B&M speed
10 B&M European Value Retail S.A. Annual Report and Accounts 2023
Market overview
Winning profitable
market share
General trends
As the UK adjusts to a “new normal” post-
COVID, many trends too have now normalised.
And the fundamental trends remain consistent:
people still want to visit shops, price remains
central to many shopping decisions and a
number of competing retailers remain under
pressure. B&M is well positioned to take
advantage of all these trends, and more as
the UK’s leading variety goods value retailer.
A return to stores
Consumers have returned to store shopping
in large numbers since lockdown restrictions
were lifted, and this is to the benefit of B&M.
In-store retailing remains the number one
choice for most consumers and in many cases it
remains the most convenient form of shopping.
For example, for groceries almost 90% of
purchases are conducted in stores – despite
home delivery having been an available
option for most consumers for over 25 years.
At the height of the pandemic, Grocery Home
Delivery (“GHD”) had a market share of 16%
according to Nielsen
1
. This has now fallen
to 11%, with a third of the GHD market share
returning to store based shopping
1
. B&M
operates in a number of markets where
sustainable and profitable online business
models remain unproven and this is to our
advantage, where we offer low prices without
suffering from margin dilution due to cross
subsidisation of online activities. Not all
consumers want to shop exclusively via home
shopping, or even at all. Many products and
categories are not suited to home delivery
models and these include groceries,
household products and other non-grocery
items – areas where B&M has a strong
reputation and price image.
Against this background, overall store numbers
across the retail industry are in decline, but
discount stores continue to expand, winning
market share from higher priced operators.
Compared to the start of the global financial
crisis, there are 2,000 more discount stores in
the UK, and this trend will continue. While many
headlines have been focussed on the growth
of online and home delivery companies, the
discount channel has remained in strong
growth and is set to continue to do so for the
foreseeable future – even after the current
cost-of-living crisis comes to an end.
Price and the
cost-of-living crisis
The cost-of-living crisis has brought price to
the forefront of headlines, but price has always
been at the forefront of consumers’ minds. This
is evidenced by the growth of B&M and other
discounters. Low prices have always been a
major determinant of shop choice for many
consumers – after all, why pay more for the
same product?
Even when we look at the growth of the online
channel in many categories, it has been driven
by low prices and low-cost operating models.
There are not many, if any, online retailers with
higher price points winning share from lower
priced bricks and mortar retailers. Convenience
and home delivery may have played a role in
the growth of many online operators, but it is
low prices and discounting that have been the
main driver. But not all categories are suitable
for home delivery models. If high delivery
prices, relative to the value of the product
are incurred, consumers will prefer to shop
in store for a lower overall price. This is a
situation and consumer trend that favours B&M.
With many items which we sell being low ticket
price items, expensive delivery options are
uneconomical. It is notable that the fastest
growing retailers in the UK with regard to store
numbers, tend not to have online operations.
The current cost-of-living crisis has
emphasised price even more and it is no
surprise to see discounters prospering. This
is done quite simply by meeting consumers’
needs for low prices. Furthermore, retailers like
B&M are playing an important role in society
by helping consumers through difficult times
by offering low prices on everyday essentials
and by making consumers’ purses and wallets
stretch further.
ESG
ESG topics are important considerations for
consumers, retailers and society generally.
A lot of attention understandably focuses
on the environment, but the social role is
also highly important, as is governance.
Consumers are conscious of the impacts of their
purchases on the environment, but in difficult
economic times, environmental concerns can
take a back seat to shorter-term issues.
When a family is faced with a decision such
as “heat or eat”, they will not pay a premium for
an environmentally friendly product. Therefore,
it is down to businesses and the Government
to ensure that environmentally friendly activity
is encouraged through well-judged
interventions and does not penalise the
consumer through forced higher prices.
At B&M our focus remains on offering the
lowest possible prices, which can only be
delivered through a constant focus on low
costs. In working to keep costs low, we also
help the environment. For example, in reducing
the miles driven by our delivery trucks with a
new Transport Management System, we lower
emissions, help lower congestion and offer
improved efficiency which is reflected in lower
prices. Commerciality and ESG considerations
are at their most powerful when they work
hand in hand and at B&M we will continue
to operate in this manner.
11B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
On the social side of things, it is easy to forget
the role retailers and suppliers play in keeping
costs low and making things affordable for the
consumer. Fewer consumers face the “heat or
eat” dilemma because of discounters like B&M,
and it is this role in helping consumers which
will help ensure discounters will keep winning
market share.
Competitive environment
The retail environment remains tough, with
subdued demand, high cost inflation and
a decline in real wages. At B&M, we remain
very well positioned to navigate through these
troubled waters and win further market share,
while delivering a profit to our shareholders,
career opportunities to our staff, low prices to
our customers and growth to our suppliers.
We face many competitors across many
channels, but through our everyday lowcost
operating model, through our scale and
through our relentless focus on delivering
low prices for our customers we believe we
are in a strong position to compete effectively
against all key competitors.
Supermarket industry
This industry is going through profound change.
Several competitors are highly leveraged, being
privately owned, while others also appear
financially constrained. Any weak players in
the supermarket industry will become market
share donors to more effective competitors.
Limited Assortment Discounters (“LADs”),
continue to win substantial market share in
the UK, our product range and offer remains
highly complementary to LADs and many of
our best performing stores are co-located
with these retailers.
1. NIQ Homescan FMCG, year to March 2023.
2. UK market share is calculated based on the reported revenues of B&M UK and Heron Foods, compared to NIQ Scantrack, Total Store, Total Coverage inc. Discounters, 52 weeks
ending 31.12.22.
950
B&M UK
stores target
c.2%
Share of UK store
based market
2
707
Number of
B&M UK stores
General merchandise retailers
There are a wide variety of these competitors,
ranging from department stores under strain to
category specialists, which have also suffered
many failures in recent years. As already
discussed, many of the successes have been
low priced operators and many of the failures
have been higher price, higher operating cost
models. The general trend amongst general
merchandise operators is the growth of
discounters and the decline of the non-discount
model, although there are some exceptions.
Discounters
B&M is the UK’s leading variety store discount
retailer, but there are other discounters.
Discounters still represent a relatively small part
of the overall retail market and there remain
very many growth opportunities. For example,
despite being the leading variety store
discounter in the UK, B&M has a market share
of only c.2%
2
. The discount sector can keep
growing at the expense of supermarkets and
general merchandise retailers without
cannibalising itself.
Overall, we expect discounters to take a
larger market share, to continue opening more
stores and to account for a bigger proportion
of a declining store base. Within this, B&M
will continue to expand, will continue to win
market share and will continue to deliver
profitable growth.
B&M European Value Retail S.A. Annual Report and Accounts 202312
B&M France: an evolved,
profitable business
Feature – B&M France
22.1%
Total revenue
growth in FY23
114
Stores in France
9.6%
Adjusted
EBITDA
1
margin
13B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
431
353
283
2023
2022
2020
41
32
2023
2022
2020
-3
France will provide growth for many years
Since acquisition the business has been transformed; its performance this year
has been outstanding with further opportunity for growth.
FY23 has been a year of strengthening
the B&M brand in the French market. It has
been the first full year with all our stores now
operating under the B&M fascia, and offering
the refined product range selection we believe
best suited for the French consumer. Since the
business was acquired by the B&M Group in
2018, there has been a clear focus on this
rebrand and realignment of the product mix
to a more “B&M” offering which has resulted
in the business having a profitable base from
which to build. In FY23, we made an EBITDA
margin of 9.6% compared to a loss-making
outturn just two years ago.
Recent results in France have been driven
in significant part by the performance of
categories that have been at the bedrock of the
UK business success. General Merchandise
categories such as home and seasonal (of
which gardening and Christmas are the most
prominent) and the introduction of FMCG
have played an important part in increasing
customer numbers and hence sales
performance. The evolution of product mix
has been a gradual process aiming at aligning
the French business model with what makes
the B&M brand so successful in the UK, while
adapting it to the local market – taking into
account, the buying preferences and tastes
of the French consumer.
Revenue
£431m
+22.1% in FY23
Adjusted EBITDA
1
£41m
9.6% of sales
B&M brand resonates
This product mix journey goes hand in hand
with the pursuit of improving the customer
experience in our stores where we aim at
being viewed as the best shopping experience
that customers can have in any of the discount
retailers in France. This encompasses the stores’
tidiness, the visual impact of our point of sale,
as well as 100% product availability on all our
ranges and an excellent customer service
from all of our colleagues. Our growth journey
in France is only just starting. Even with the
brand resonating strongly with customers as
evidenced by being voted “Best chain of 2023
in non-food discount”
2
and “Best chain of 2023
in home decoration”
2
in the current year we still
feel we have ample room to strengthen the
brand even further.
Stores
The increased B&M brand awareness in France
will be aided further by delivering against our
store rollout plan. Our current base of 114 stores
is small compared to the market potential in
France. The country has a similar size population
to the UK therefore making the B&M UK estate
a clear benchmark for our French ambitions.
However, each location needs to be able to
fulfil the strong requirements of site quality with
which the brand has successfully expanded
over the years. As such, the speed of expansion
will be dependent on the availability of the
quality of sites at any given time. We will open
10 new stores in the next financial year and
growth will continue to be controlled and we
reiterate that the quality of location will not be
compromised to accelerate our store growth.
Relentless focus
Our laser focus on price, product and
demonstrating the best in retail store execution
remains a real team effort, in order to achieve
our goal to be the best discount retailer in
France. This is indeed real teamwork; from our
buying teams through to colleagues at our
distribution centre and in stores, all elements
need to come together to deliver excellent
customer satisfaction.
We trust that the constant focus on the
fundamentals of our retail delivery coupled with
a tightly managed store expansion programme
are the two strong pillars that will enable the
business to generate sustainable profitable
growth in France for many years to come.
1. The Directors believe that our adjusted figures –
as described in Note 1 of the financial statements –
provide users of the accounts with measures of
performance which are 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 there-fore provides
the users of the accounts with an additional metric
to compare periods of account. See Note 3 of the
financial statements for further details. Adjusted
figures exclude the impact of IFRS 16.
2. Meilleure Chaine De Magasins De L’Annee – ‘Discount
non alimentaire’ & ‘Decoration & Idees cadeux’ 2023.
B&M European Value Retail S.A. Annual Report and Accounts 202314
Heron Foods: offers growth
and other benefits to the
core business
Feature – Heron Foods
18.1%
Total revenue
growth in FY23
319
Stores in
the UK
6.1%
Adjusted
EBITDA
1
margin
15B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
Heron Foods: convenient and competitive
Another hugely successful year; serving a record number of customers
Heron Foods (“Heron”) is a discount convenience
operator currently trading out of 319 stores
across the North of England and the Midlands.
We sell well-known branded groceries at a
competitive price point to suit the bargain loving
shopper. Our customers are assured of great
value for money in all our stores, and they
respond strongly, particularly in this cost-of-
living crisis. This can be seen by the number of
new and repeat customers shopping with us –
our like for like customer transaction numbers
have increased by 10.3% since FY22.
Our meal deals and huge clearance deals have
made a significant impact for our customers.
Our offering continues to progress and develop
further. We have now extended our core food
offering with chilled ready meals and an
increased Frozen range and we are constantly
evaluating our return on space within each
store to ensure the store is tailored to the
customer needs based on their demographic
and location.
Our clearance lines drive real value, and
we strive for those “cross-the-road” deals.
Highlighting these to our customers via social
media and ensuring that our customers
understand that our offers and deals change
daily, increases frequency of visit to stores and
can make us a destination.
Sales across all three main categories – Chilled,
Frozen and Ambient – have shown positive
growth with Ambient leading the way overall. In
the latter part of the year, frozen sales have seen
increased momentum. This has been driven by
the cost-of-living crisis as customers continue
to trade down into frozen products for meals
where they can save money by managing their
budgets and supporting reducing food waste.
Speed and agility
Heron has a unique track record in acquiring
high-quality products at low prices. Our great
communication and collaboration with our
suppliers allow us to be choice retailer to
acquire “stock at risk”. Our buying team have
continued to build on our strong relationships
with suppliers to evolve and drive our
proposition. Our agility allows us to continue to
drive great choice and availability for customers.
We can have products on the shelves in our
stores within just 24 hours of being received into
depot. Our improved ranges make Heron more
attractive to customers both existing and new.
Our Christmas meal deal was a market leader,
featuring in many of the tabloids as “Best Value”
for Christmas 2022 – helping drive footfall and
discretionary spend.
Stores
The introduction of our “Serious About
Standards” programme targeting better in-store
product availability, increased customer
service, compliance and housekeeping
standards has driven sales throughout the year.
Our average store size stands at 3,000 sq. ft
although in recent years we have been trying to
increase this. We have this year opened some
new “concept” stores with different signage and
graphics. Generally, with a smaller footprint, we
have reduced the frozen range where trading
dictates this will work and increased ambient
ranges, to offer the customer the convenience
choice they need for a particular location and
where availability of larger stores is difficult.
Rollouts so far have been encouraging and we
will continue to convert existing stores and open
new stores where we think this will create value.
Since acquisition the store estate has increased
by 26%. In FY24, we plan to open 20 new stores
plus a rolling programme of refits, extensions
and relocations where opportunities exist.
Environment
With the increase in energy costs seen
throughout the year we are constantly looking
at ways to improve efficiencies within the store
network and at our distribution centre in Hull.
We are reducing our energy consumption with
greater control over the operation of in-store
freezers, chillers and air conditioning systems
which will reduce costs but without affecting
the customer experience. We have also
replaced the control equipment on the
temperature-controlled parts of our distribution
centre to reduce consumption.
Our biggest capital project for the next financial
year is the design and installation of solar
panels for the roof of our distribution centre. This
will allow us to use all the electricity generated
by the panels which, given current energy price
levels, is key to reducing energy costs and
assists with us with one of our environmental
targets in finding better ways of operating in
a more environmentally sustainable way.
Proven business model
Since joining the B&M Group in August 2017,
we have improved our retail and operational
execution which has driven the financial
performance of the business. Through
increasing the range available in stores and
category realignment, including the introduction
of a range of dry groceries from B&M, we have
seen a large increase in customer numbers
overall. This is evidenced by our substantial
sales growth since acquisition; total sales for
the current financial year stand at £485m
compared to £274m in FY16. This excellent sales
performance demonstrates the success of our
proven business model where we focus not
only on selling at the lowest possible price but
maintaining the quality of our products. We
constantly deliver our customers the Big Brands
at the Low Prices they require. A key enabler in
our ability to sell at the lowest possible price is
diligent cost control – clearly illustrated by our
adjusted EBITDA
1
margin of 6.1% which is
market leading in the grocery sector.
Heron is well-placed to continue to deliver strong
results for the Group. Looking ahead, with some
of our larger competitors operating thousands
of convenience stores – the opportunity for
further growth for Heron is significant.
1. The Directors believe that our adjusted figures –
as described in Note 1 of the financial statements –
provide users of the accounts with measures of
performance which are 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. See Note 3 of the
financial statements for further details. Adjusted
figures exclude the impact of IFRS 16.
16 B&M European Value Retail S.A. Annual Report and Accounts 2023
Chief Executive’s review
FY23 has been a good and
significant year in the evolution
of B&M. There have been
planned management
changes, there have been
major economic headwinds
and there has been material
cost pressures to deal with.
But B&M UK has weathered the difficult
environment well and has delivered another
excellent year of financial performance with
an adjusted EBITDA margin
1
of 12.4%. We have
delivered strong sales growth and market
share gains, an EBITDA margin substantially
ahead of pre-pandemic levels, and strong
cash generation helped by a clean inventory
position. This reduction in inventories helped
facilitate an extra £200m (20.0p per share)
being returned to shareholders through a
special dividend in January this year, on top of
an interim dividend of 5.0p and a final ordinary
dividend of 9.6p. This is a very pleasing reward
for our shareholders and reflects growth of
the business, good cost control and strong
cash management.
A relentless focus on helping our customers
navigate the cost-of-living crisis has been key
to our success. Delivering strong results has
been made possible through the hard work of
our employees, and through a laser like focus
on price and value for money. In contrast to
some other businesses, we look to keep prices
as low as we can, while delivering profitable
growth and cash for our shareholders. At the
same time, we continue to expand our store
estate, upgrade the existing estate and to
make improvements in our offer, whether
through price investment or through improving
store standards. Profitable growth is at the core
of our strategic objectives, and to do that we
need to put consumer needs at the centre of
what we do.
The underlying strategy remains unchanged
with the focus on simplicity and low costs
across our four channels of growth, which
are improved sales in existing stores, the
expansion of our store estate in the UK,
expansion in France and continued growth
in Heron, our UK convenience store operation.
I will return to these four channels later.
The long-term outlook for B&M remains very
positive, with many years of profitable growth
ahead. In the UK, B&M has a small market
share
2
and even less in France. Market share
in both countries can be substantially higher
and as we execute our strategy, we will deliver
compounding earnings growth and cash
returns for shareholders.
The last 12 months
have been a year of
major transition for B&M.”
Alex Russo
Chief Executive Officer
17B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
Competitive position
To deliver on our long-term aims, we must
remain highly competitive in a rapidly
developing retail market. We must remain
relevant through price, edited range and
location, and these requirements drive our
strategy. We continue to be relentlessly focused
on price and compared to last year, our price
advantage over the mainstream supermarkets
is as strong as it was through consistency of
everyday low prices (“EDLP”).
Many consumer trends favour B&M, including
trading down, as does the changing structure
of grocery retailing. Currently, many consumers
are switching to the two German Limited
Assortment Discounters (“LADs”) which remain
heavily focused on own label. Our branded offer
is highly complementary to them. Independent
research shows that most LADs shoppers also
shop elsewhere
3
, and where we are co-
located, our stores tend to trade exceptionally
well. This is as true in France as it is in the UK.
In non-grocery our aggressive focus on price is
also working, with General Merchandise
performing very well. Price comparisons are
inevitably harder in this area due to a lack of
brands, differences in products and our
constantly evolving product mix but our price
positioning remains market leading. While
improving our price position, over the last several
years we have also improved our product
quality. Hence our value for money credentials
are substantially improved, as evidenced by
the increased number of monthly transactions
and by our retaining many of the customers
who tried us for the first time during lockdowns.
Strategic progress review
The macroeconomic outlook remains uncertain,
with the consumer challenged by high inflation,
rising interest rates and by declining real
incomes. Despite a tough backdrop, we remain
focused on delivering through our existing four
channels of growth in FY24.
1: Existing B&M UK stores:
A core driver of growth
In FY23 there was a sharp focus on delivering
growth through our existing stores. This led to
major improvements in store standards and
increased product availability, which in turn
led to improvements in like for like
4
(“LFL”) sales.
In the second half, driven by improvements
in store standards, B&M UK delivered 5.1%
LFL sales growth. This shows the power of
improving the offer in existing stores, while the
benefits of operational gearing are evidenced
in cash and profits.
Our stores have the capacity to keep growing
their sales for many years ahead. Due to
operational gearing and no extra capital, such
growth should be highly profitable, should
deliver incremental returns on investment and
should allow further reinvestment back into
lower prices to drive further profitable growth.
In contrast to some
other businesses, we
look to keep prices
as low as we can.”
18 B&M European Value Retail S.A. Annual Report and Accounts 2023
2: New B&M UK stores:
Square footage growth outpaces
our growth in net new stores
Total average net sales area (including garden
centres) increased by 3.6% in the last financial
year. This is greater than the increase in net
new stores (6 stores or a 0.9% increase) and
is driven by three factors: 1) new stores tend to
be bigger than existing store average, 2) new
stores are more likely to have a small garden
centre than existing stores and 3) replacement
stores are usually much larger than the stores
they replace.
Previously we have made it clear that the
950 target for store numbers is conservative
but even so, it represents c.35% more stores
than today, and with newer stores being on
average bigger than existing stores and having
higher total sales, the sales growth should be
even greater than this 35%.
The sales contribution from our gross new
store openings continues to be very healthy in
2023 and reinforces the strategy of replacing
older, smaller stores at the end of their leases
with new stores where there is a catchment
opportunity to do so.
We will accelerate our new store openings
back towards 40 stores per annum, with c.30
expected in FY24, but focus will always remain
on new stores generating a leading return on
investment. We will not compromise on our
investment targets, and we will not open
unprofitable stores just to meet a store opening
target. Sustainable profitable growth is at the
core of our business.
3: France will provide growth for many
years to come
France has undergone a major transformation,
with recent results highlighting the long-term
potential. All stores have been branded B&M,
clothing (which was a major part of the offer
when the business was acquired) has been
removed and the FMCG range is building.
The business was loss making just two years
ago but in FY23, France delivered 22.1% sales
growth and an adjusted EBITDA
1
(pre-IFRS 16)
margin of 9.6%. As the business continues to
evolve and benefit from the B&M supply chain
and infrastructure, there remains the prospect
of further growth in EBITDA margin.
New store growth will also deliver economies
of scale and operational gearing benefits. In
FY23 we opened 7 new stores in France. In
FY24 we plan to open another 10 new stores,
with a potential for an acceleration in openings
in future years. With just 114 stores currently, in
a country with a similar population to the UK,
France can sustain a strong opening
programme for the long term.
4: Heron Foods offers growth and
other benefits to the core business
Heron Foods has had an outstanding year,
delivering substantial sales growth and a
leading EBITDA margin in its area. It currently
operates 319 stores, but as a low-priced
convenience store operator there remains the
scope to open many more. The scale of the
opportunity may be judged by the fact that
the market leader in the UK operates over
2,000 convenience stores.
Heron Foods has undergone a strategic
repositioning over the last 18 months. The
number of freezer units in each store has been
reduced – but not the Frozen range. Instead,
products have been merchandised more
intensively freeing up extra space in store.
This extra space has allowed the chilled and
ambient ranges to be extended and this has
driven a step change in sales densities.
As well as being a strong business in its own
right, Heron brings other benefits to the Group.
It enhances our buying economies, provides
other economies of scale and is an invaluable
source of learning and knowledge, as is our
French operation.
Management Changes
As stated earlier, this year has seen some
major planned changes in the management
team. After 19 highly successful years, Simon
Arora stepped down as CEO and has now
exited the business. We thank Simon for his
outstanding contributions to B&M and to the
UK economy.
After two years as Chief Financial Officer,
I am delighted to have taken the role of
Chief Executive Officer. I have strengthened
the management team with a number of
key appointments, including:
• Mike Schmidt as CFO with 22 years
experience, following 9 years at DFS;
• Jon Parry as Supply Chain Director with
26 years experience, following 12 years
at Asda;
• Philippe Brasleret as Retail Stores Director
in France with 18 years experience,
following 9 years at Aldi France; and
• James Kew as Head of Retail Operations for
B&M UK with 16 years experience, following
5 years as Head of Productivity and Change
at B&M UK.
These represent a planned strengthening of
our management team and we will strengthen
our team further with new appointments in the
coming months.
Current trading and outlook
Our business has now normalised to a new,
sustainable and higher level of underlying
sales and margin compared to the pre-
pandemic year of FY20. We remain highly cash
generative and in the absence of acquisition
opportunities for batches of stores, we will look
to return excess cash to shareholders at the
appropriate time in line with our capital
allocation framework.
Against the ongoing cost-of-living crisis, we will
help our customers by remaining highly price
competitive and growing our business, through
existing and new stores in the UK and France.
As well as expecting further LFL growth in
existing stores, during FY24 we plan to open
c.30 new B&M stores in the UK, c.10 in France
and c.20 Heron Foods stores.
The business will maintain a high degree of
discipline on EDLP pricing, limited range
assortment and a low-cost operating model.
In the first 9 weeks of FY24, B&M UK LFL sales
have run at 8.3%, France and Heron continue
their trading momentum and we expect full
year Group adjusted EBITDA
1
(pre-IFRS 16) to
be higher than FY23.
Alex Russo
Chief Executive Officer
30 May 2023
Chief Executive’s review continued
1. The Directors believe that our adjusted figures – as described in Note 1 of the financial statements – provide users of the accounts with measures of performance which are
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. See Note 3 of the financial statements for
further details. Adjusted figures exclude the impact of IFRS 16.
2. UK market share is calculated based on the reported revenues of B&M UK and Heron Foods, compared to NIQ Scantrack, Total Store, Total Coverage inc. Discounters, 52 weeks
ending 31.12.22.
3. NIQ Homescan, year to March 2023.
4. 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 FY22. This 14-month approach has been adopted as it excludes the two-month halo period
which new stores experience following opening. Three-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 38 months after it opened compared with its revenue for the corresponding part of FY20.
19B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
20 B&M European Value Retail S.A. Annual Report and Accounts 2023
Financial review
Robust, disciplined
performance.”
Accounting period
The current accounting period represents the
52 weeks trading to 25 March 2023 (“FY23”)
and the comparative period represents the
52weeks to 26 March 2022 (“FY22”). The
upcoming accounting period represents
53weeks trading to 30 March 2024 (“FY24”).
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
This is the first year since the outbreak of
COVID-19 where trading patterns have
normalised. We believe FY23 can be viewed as
the Group’s new underlying revenue and profit
base level from which we grow from – with
Group adjusted EBITDA
1
(pre-IFRS 16) of £573m.
We now have the proven evidence there has
been a step change in performance of the
Group since the pandemic, where Group
adjusted EBITDA
1
(pre-IFRS 16) in FY20 was
£342m. Trading was exceptional during each
of FY21 and FY22, particularly during the
periods where non-essential retail was closed,
including some of the first quarter of FY22. Our
performance relative to pre-pandemic levels
evidences that we are retaining the new
customers won during the pandemic years.
Importantly though, the robust profit margins
and cash conversion characteristics of the
business remain unchanged.
Total Group revenue in FY23 was £4,983m
(FY22: £4,673m), representing a year-on-year
increase of 6.6%. On a constant currency
basis
2
, revenues increased by 6.5%. This has
been driven by positive like for like
4
(“LFL”) in all
businesses, which includes inflation and mix
effects, and by strong trading from new stores.
Group adjusted EBITDA
1
(pre-IFRS 16) decreased
to £573m (FY22: £619m) as we completed a full
year of undisturbed post-pandemic trading.
The continued Group revenue growth in the
year was moderated by the reduction in the
trading gross margin in B&M UK as described
below, that led to a £49m or 2.7% growth in
gross margin. Operating costs also increased
by £94m or 8.3%, reflecting the cost of serving
our increased revenues, opening new stores
and also cost inflation, including the effects of
the 6.6% increase to the UK national living
wage. On a statutory basis, profit before tax
declined to £436m from £525m, again
reflecting the normalisation of trading to a
post-pandemic period.
Group adjusted EBITDA
1
(pre-IFRS 16) margin
is now 11.5%, which is 253 bps higher than
pre-pandemic levels (FY20: 9.0%). This reflects
the structural change in our margin which the
business has undergone in the last three years,
with an evolution of our product range, greater
economies of scale, the benefits of operational
gearing from higher sales densities and other
operational learnings.
On a post-IFRS 16 basis, Group adjusted
EBITDA
1
was £796m (FY22: £828m) which
represented an adjusted EBITDA1 margin
of 16.0% (FY22: 17.7%).
An adjusted EBITDA
1
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 £19m this year
(FY22: £(12)m).
We closed the year with an unchanged
leverage with a pre-IFRS 16 net debt
8
to
adjusted EBITDA
1
leverage ratio of 1.3x
(FY22: 1.3x), following the payment of £347m
of ordinary and special dividends in the year.
This reflects the Group continuing its strong
track record for operating cash generation and
capital expenditure efficiency. Significantly,
operational efficiency in our stores and
logistics and our discipline in implementing
markdowns in garden categories contributed
to a £99m stock reduction, that underpinned
the total cash generated from operations
across the year of £866m (FY22: £598m).
Mike Schmidt
Chief Financial Officer
21B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
B&M UK
In the UK, total B&M fascia
3
revenue increased
by 4.0% to £4,067m (FY22: £3,909m), with
one-year LFL
4
revenue increasing by 0.7%. There
was a strong run rate in the second half of the
year with LFL sales growth of 5.1%, compared
to a first half LFL of (3.9)% and the business has
likewise entered the current year with strong
momentum. Our LFL customer transaction
numbers increased every month since June.
On a three-year basis, total revenue is 29.5%
higher than in FY20, with LFL revenue
4
13.3%
higher. This reflects the underlying growth of
the business during the pandemic and during
lockdowns and is indicative that many
customers won during lockdown have become
regular customers.
At category level, we believe the one-year
LFL performance has now broadly normalised
against the peak of the pandemic. Demand for
essential food and FMCG items has remained
high, with many customers seeking out leading
branded goods at the lowest possible price
during this cost-of-living crisis. General
Merchandise demand has also been resilient
and performing in line with our plans, with
seasonal categories such as Halloween,
Christmas, Easter and most recently the
Coronation all having a strong sell-through.
B&M’s trading gross margin
5
reduced by
148 bps across the full financial year, driven by
the reintroduction of usual markdown activity
including the previously disclosed markdowns
in the gardening category in H1. Consistent
with this, a marked improvement in the
year-on-year trend was seen in H2 relative
to H1 (H2 trading gross margin down 92 bps
versus FY22), due to strong sell through with
only planned markdown activity in general
merchandise categories, coupled with a
significant reduction in freight rates.
There were 21 gross new openings of which
5 were replacements for smaller legacy stores
and a further two relocations of FY23 closures
will occur early in FY24. The replacement stores
typically have 3x the total sales space of the
stores they replaced and deliver a higher store
contribution than the stores they replaced.
New stores, including replacements, are
cash generative in year one and typically
deliver a higher store contribution than the
Group’s average.
Constant currency revenue comparison
Constant currency
£/€m 2023 2022 % 2023 2022 %
France in € 499 415 499 414
Exchange rate 1.1581 1.1756 1.1581 1.1581
France in £ 431 353 431 358
B&M 4,067 3,909 4,067 3,909
Heron Foods 485 411 485 411
Total 4,983 4,673 6.6% 4,983 4,678 6.5%
Group profit before tax
£m 2023 2022
Revenue 4,983 4,673
Adjusted gross profit 1,801 1,752
% 36.1% 37.5%
Adjusted operating costs (1,228) (1,133)
Adjusted EBITDA
1
(pre-IFRS 16) 573 619
% 11.5% 13.2%
Depreciation & amortisation (76) (66)
Adjusted interest (38) (29)
Adjusted profit before tax
1
459 524
Adjusting items (19) 12
Adjusting interest & finance lease interest (0) (0)
Profit before tax (pre-IFRS 16) 440 536
Impact of IFRS 16 (4) (11)
Statutory profit before tax 436 525
Reconciliation of adjusting items
£m 2023 2022
Profit before Interest & Tax 535 613
Add back depreciation & amortisation 76 66
Remove depreciation & amortisation of finance leases (1) (1)
Add back IFRS 16 depreciation & amortisation 166 162
EBITDA (IFRS 16) 777 840
Fair value of ineffective derivatives 17 (13)
Foreign exchange on intercompany balances 0 1
Online trial 2 0
Adjusted EBITDA
1
796 828
B&M UK like for like revenue
4
reconciliation
£m 2023 2022
1-year
Change
Like for like revenue
4
4,444.0 4,413.0 0.7%
Bank holiday closure 0.0 11.0
Online trial 7.0 0.0
New stores after Mar 26 2022 90.0 0.0
New stores prior Mar 26 2022 163.0 52.0
Closed stores 1.0 41.0
Gross Segment Revenue 4,705.0 4,517.0
Value Added Tax/Commission Income (675.0) (653.0)
Wholesale revenues 37.0 45.0
Revenues B&M UK 4,067.0 3,909.0 4.0%
22 B&M European Value Retail S.A. Annual Report and Accounts 2023
In addition to revenue generated in-store,
wholesale revenue decreased to £37m (FY22:
£45m). Most of this represents sales made to
the associate Centz Retail Holdings Limited,
a chain of 54 variety goods stores in the
Republic of Ireland.
Operating costs, excluding depreciation and
amortisation, increased by 5.7% to £950m (FY22:
£899m) which represented 23.4% of revenues
(FY22: 23.0%). This was primarily because of an
increase in store costs driven by a strategic
decision to focus on store standards to drive LFL
sales, partially offset against foreign exchange
gains made due to our strong hedging position
against the underlying spot rate.
Adjusted EBITDA
1
(pre-IFRS 16) for the B&M UK
business decreased by (10.9)% to £502m (FY22:
£564m) and the adjusted EBITDA
1
margin
decreased by (207) bps to 12.4% (FY22: 14.4%).
However, both remain significantly above
historical levels. Statutory operating profit for
the year was £479m (FY22: £569m).
France
In France, revenues increased by 22.1% to £431m
(FY22: £353m), reflecting strong LFL performance
and new store openings delivering well. There
were 7 new stores opened in FY23 increasing
the average sales area of the total store estate
by 4.7% to 3.1m sq. ft. (FY22: 3.0m sq. ft.).
Adjusted EBITDA
1
(pre-IFRS 16) increased by £9m
to £41m (FY22: £32m), with an adjusted EBITDA
1
margin of 9.6% (FY22: 9.2%). The French business
continues to build a sustainable underlying
profit base and is primed to carry on delivering
against the strategic and financial objectives
set. Statutory operating profit for the year was
£19m (FY22: £11m).
Gross margin remained broadly stable with far
less emphasis placed on textiles and further
steps taken towards aligning its product mix
to that seen in B&M UK.
Operational consistency remained throughout
the year. Operating costs as a percentage of
sales improved by 1.2% to 34.9% (FY22: 36.1%).
Heron Foods
In the discount convenience chain, Heron Foods,
revenues increased by 18.1% to £485m (FY22:
£411m), reflecting a successful year and
continued growth.
There were 14 gross new stores openings and
six closures in FY23, with 3 of those closures
being relocations. As with the B&M business,
the store estate is carefully monitored and if an
opportunity arises to open a new higher quality
store in a new or existing area, the business will
look to capitalise. Total average sales area of the
store estate increased by 5.0% to 970k sq. ft.
(FY22: 920k sq. ft.).
Heron Foods adjusted EBITDA
1
(pre-IFRS 16)
increased to £30m (FY22: £23m), with an
adjusted EBITDA
1
margin of 6.1% of sales
(FY22: 5.5%), representing a successful result
for the year. Statutory operating profit for the
year was £38m (FY22: £30m).
Gross margin in Heron Foods remained resilient
against FY22 with a strong performance across
all categories – Chilled, Ambient and Frozen
– with the latter being a growth driver later in the
financial year as our customers look to avoid
food wastage during the cost-of-living crisis.
Operating costs remained well-controlled,
remaining broadly flat as a percentage of
revenues.
Depreciation and amortisation
Depreciation and amortisation expenses,
excluding the impact of IFRS 16, grew by 16.3%
to £76m (FY22: £66m), representing only 1.5%
of sales (FY22: 1.4%). The increase was largely
due to continued investment in new stores
across all fascias, with the Group growing
the store numbers by 1.9% in the year.
The additional depreciation and amortisation
charge relating to lease liabilities under IFRS 16
was £166m (FY22: £161m).
Finance expense
Net finance charges for the year, excluding IFRS
16, were £38m (FY22: £29m). This included bank
and high yield bond interest of £38m (FY22:
£27m) and amortised fees of £2m (FY22: £2m).
The interest charge relating to lease liabilities
under IFRS 16 was £61m (FY22: £59m).
Profit before tax
Statutory profit before tax was £436m (FY22:
£525m). An adjusted profit before tax
1
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 tax
1
(pre-IFRS 16) for the year
decreased to £459m (FY22: £524m).
The impact of IFRS 16 on the Group financial
statements was to decrease statutory profit
before tax by £4m.
Taxation
The tax charge in FY23 was £88m (FY22: £103m),
representing an effective tax rate of 20.1%. 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
25% in France, although the UK Corporation
Tax rate has now increased 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
£527m in FY23, including £210m 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 £317m 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 £348m (FY22:
£422m) and the statutory diluted earnings per
share was 34.7p (FY22: 42.1p).
Adjusted profit after tax
1
, which we consider
to be a better measure of performance for the
reasons outlined above, was £366m (FY22:
£417m), and the adjusted fully diluted earnings
per share
1
was 36.5p (FY22: 41.6p).
Investing activities
Group net capital expenditure
6
totalled £89m
this year (FY22: £85m). Investment included
£33m spent on 42 gross new stores across the
Group’s fascias (FY22: £34m on 54 stores) and
£16m on infrastructure projects to support the
continued growth of the business (FY22: £9m).
There was also investment of £40m on
maintenance works to ensure that our existing
store estate and warehouses are appropriately
maintained (FY22: £42m). There was also a net
expenditure of £(1)m relating to a small number
of freehold acquisitions and disposals (FY22:
net expenditure of £1m).
Net debt and cash flow
The Group continues to be highly cash
generative, with cash generated from
operations of £866m (FY22: £598m), helped
by the planned stock reduction of £99m.
The strong performance and cash generation
have enabled the Group to pay dividends
totalling £347m
7
in FY23. This includes a
£200m
7
special dividend paid in February 2023.
Net debt
8
(on a pre-IFRS 16 basis), decreased to
£724m (FY22: £790m). The net debt
8
to adjusted
EBITDA
1
leverage ratio was 1.3x (FY22: 1.3x), the
fourth year that we maintained it below 1.5x
and comfortably within our published 2.25x
leverage ceiling.
In March 2023, we entered into a new five-year
senior facilities agreement, with two one-year
extension options for a £225m senior term
loan facility and a £225m senior revolving
credit facility with a banking syndicate made
up of seven banks. This facility gives us
Financial review continued
23B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
significant additional maturity, can be upscaled
by up to £350m if required to support future
growth, and provides a streamlined bank
group that we look forward to working with
in the future.
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 5.0p
7
per
share in addition to a special dividend of 20.0p
7
per share. Subject to approval by shareholders
at the AGM on 25 July 2023, a final ordinary
dividend of 9.6p
7
per share is to be paid on
4 August 2023 to shareholders on the register
of the Company at the close of business on
30 June 2023. The ex-dividend date will be
29 June 2023.
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 rollout 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 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.
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 supply chain, competition, economic
environment, warehouse 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.
Mike Schmidt
Chief Financial Officer
30 May 2023
1. The Directors believe that our adjusted figures – as described in Note 1 of the financial statements – provide users of the accounts with measures of performance which are
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. See Note 3 of the financial statements for
further details. Adjusted figures exclude the impact of IFRS 16.
2. 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.
3. 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, an adjusted loss of £1m (FY22: profit of £1m).
4. 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 FY22. This 14-month approach has been adopted as it excludes the two-month halo period
which new stores experience following opening. Three-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 38 months after it opened compared with its revenue for the corresponding part of FY20.
5. Trading gross margin is considered to be a meaningful measure of profitability as it refers to the measure of gross margin used by management to commercially run the business.
It differs to the statutory definition for B&M, which declined 177 bps from 37.4% to 35.7%, due to technical accounting adjustments in relation to the allocation of gains and losses
from derivative accounting, storage costs and commercial income, with the derivative adjustments the main factor.
6. 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.
7. Dividends are stated as gross amounts before deduction of Luxembourg withholding tax, which is currently 15%.
8. Net debt comprises interest bearing loans and borrowings, and cash and cash equivalents. Net debt was £724m at the year end, reflecting £961m as the value of gross debt
netted against £237m of cash. See Notes 17, 20 and 27 of the financial statements for more details.
24 B&M European Value Retail S.A. Annual Report and Accounts 2023
6.6
(2.7)
16.5
2023
2022
2020
6.6
436
525
252
2023
2022
2020
13.3
0
0
3.3
2023 Three-year growth
2022
2020
(9.0)
0.7
36.5
41.6
20.3
2023
2022
2020
573
619
342
2023
2022
2020
866
598
533
2023
2022
2020
Cash generated from operations (£m)
£866m
Strategic link
1 2 3 4
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 FY23 was £866m,
an increase of 44.8% on the prior year driven by
planned inventory reductions of circa £100m and
inventory discipline.
Total Group revenue growth (%)
6.6%
Strategic link
1 2 3 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 revenues increased by 6.6% thanks to
strong LFLs in all businesses and by contributions
of new stores. Group revenues are 30.7% ahead
of FY20 levels.
Group profit before tax (£m)
£436m
Strategic link
1 2 3 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 FY23, our statutory profit before tax declined to
£436m, reflecting the normalisation of trading
conditions post-pandemic.
Adjusted diluted earnings per share
2
36.5p
Strategic link
1 2 3 4
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
A decrease on the prior year but significantly above
pre-pandemic levels of FY20.
B&M UK like for like
1
revenue growth (%)
0.7%
Strategic link
1
Description
By monitoring the ongoing like for like (“LFL”) 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 increased by 0.7% on a one-year
basis versus FY22. There was a strong run in the
second half of the year. On a three-year basis, total
revenue is 29.5% higher than in FY20, with LFL revenue
13.3% higher.
Group adjusted EBITDA
2
(£m)
£573m
Strategic link
1 2 3 4
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 normalised to £573m in FY23
but well ahead of pre-pandemic FY20 levels of £342m.
We believe FY23 can be viewed as the Group’s new
underlying revenue and profit base level from which
to grow from.
Financial
Growth delivered with discipline
Key performance indicators
25B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
21
28
53
2023
2022
2020
2.0
1.5
1.2
2023
2022
2020
11.5
13.2
9.0
2023
2022
2020
98
100
125
2023
2022
2020
261
91
125
2023
2022
2020
Non-financial
Capital expenditure (£m)
£98m
Strategic link
2 3 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 £33m on new stores across the Group,
£17m on infrastructure projects, £3m on the acquisition
of freehold stores and £45m on upgrading existing
stores.
Colleague Step-Up programme
261
Strategic link
1 2
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 FY23, a total of 261 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 ESG strategy.
Group adjusted EBITDA
2
margin (%)
11.5%
Strategic link
1 2 3 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 FY23 was 11.5%,
an increase of 253 bps on pre-pandemic levels. This
reflects the structural change in our margin which the
business has undergone in the last three years, with
an evolution of our product range, greater economies
of scale, the benefits of operational gearing from
higher sales densities and other operational learnings.
Group net new stores opened
21
Strategic link
2 3 4
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 FY23
were 21 in B&M UK, 14 in Heron Foods and 7 in France.
The net growth in our store estate, stated after
closures and relocations, was 6 for B&M in the UK,
8 for Heron Foods and 7 in France.
UK market share
3
(%)
c.2.0%
Strategic link
1 2 3 4
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 three-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.
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 FY22. This 14 month approach has been adopted
as it excludes the two month halo period which new
stores experience following opening. Three-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 38 months
after it opened compared with its revenue for the
corresponding part of FY20.
2. The Directors believe that our adjusted figures –
as described in Note 1 of the financial statements –
provide users of the accounts with measures of
performance which are 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. See Note 3 of the
financial statements for further details. Adjusted
figures exclude the impact of IFRS 16.
3. Market share estimates are based on management
estimates, having regard for external research on the
size of the relevant market in 2022. See page 11 for
further details.
Link to strategy key
1
Existing B&M UK stores
2
New B&M UK stores
3
France growth
4
Heron Foods growth
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 LFL revenue growth metric. However, due to
the impact of the pandemic and the exceptional nature of sales in the prior year, a three-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.
26 B&M European Value Retail S.A. Annual Report and Accounts 2023
B&M’s risk management framework
Appropriate management of business and external risks is an essential part of operating the
Group effectively and creating value for stakeholders over the long-term. In this section we
provide an overview of the Group’s approach to risk management alongside an assessment of
the Group’s principal risks and mitigating controls, highlighting any changes during the period.
The Board has overall responsibility for the
management of risk and the identification of
principal risks that may affect the Group’s
operations, financial performance or strategic
objectives. The Group’s risks and mitigations
are monitored and controlled by executive
management and then regularly reviewed as
part of the oversight of the system of internal
controls by the Audit & Risk Committee.
The Group’s Internal Audit function also
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.
The Group’s approach to reviewing risk
appetite is part of a bi-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 ensuring executive
management are mitigating and eliminating
risk exposure on a timely basis, in line with
Board expectations and for setting the Group’s
internal audit plan each year.
Assessment of risks
The Directors confirm that they have made
a robust assessment of the emerging and
principal risks and uncertainties facing the
Group, including those that would threaten
its business model, future performance,
or solvency. A summary outcome of that
assessment is set out in the heat map overleaf.
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
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.
Principal risks and uncertainties
Board
Overall responsibility for risk management
Audit & Risk Committee
Oversee risk management process
Executive Management
Manages specific risks and embeds risk
management throughout the Group
Internal Audit Team
Oversees and assists in
process implementation and
reports to Audit & Risk Committee
27B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
10
3
2
6
7
1
5
8
HighLow
Impact
HighLow
Likelihood
9
4
Key changes to principal
risk disclosures
We reported extensively in the FY22 Annual
Report on the Group’s initiatives to manage
the risks of Covid-19. With the direct impacts
of Covid reducing, we no longer include this
as a separate principal risk, but instead have
aligned any continuing economic and
operational impacts into our overall risk
management approach.
While we continue to see significant commodity
price and cost inflation, the Group’s progress
over the last 12 months in maintaining its gross
and operating profit margins through cost
reduction and retail price adjustment has led
us to merge this risk to be managed alongside
other economic risks.
Through the development of our systems,
processes and controls around our supply
chain risk, and the moderating and currently
more predictable external environment, we
have reduced our assessment of a significant
adverse event occurring from “Highly Likely”
to “Medium” likelihood. We have also reduced
our assessment of the potential impact of the
economic environment from “High” to
“Medium”, given the resilience of the retail
proposition demonstrated despite the
consumer headwinds faced last year, and also
given our value retail proposition that positions
us well to attract new customers.
Climate change and ESG continue to be
significant topics within our risk management
discussions. We, however, do not view the
subject matter as a distinct area that requires
separate executive management and focus,
Principal risks heat map
1
Supply chain
2
Competition
3
Economic environment
4
Regulation and compliance
5
International expansion
6
Warehouse infrastructure
7
IT systems, cyber security and business continuity
8
Key management reliance
9
Store expansion
10
Stock management
but instead believe that it is important that
our executive team embed ESG considerations
as part of routine business as usual activities.
We coordinate and facilitate all our activity
around ESG matters through our in-house
Sustainability Manager and also through
the support of specialist external consultants.
The risk of global conflict has also been
considered by the Directors. The war in
Ukraine has not had an impact on the Group’s
operations. The possibility of conflict between
China and Taiwan is growing, and this would
have impact on the sourcing and potentially
pricing of our general merchandise product
ranges. This is properly considered through our
supply chain principal risk, and the Group has
made a conscious decision to not compromise
its commercial ranging and to continue to source
products using currently optimal channels.
28 B&M European Value Retail S.A. Annual Report and Accounts 2023
Principal risks and uncertainties continued
1 Supply chain
Description and potential impact Strategic priority Change
Imported goods from China and other Far East countries represent a significant proportion of the Group’s general
Merchandise products, and we have material dependence on the continuing smooth flow of these supply sources.
With recent high levels of Covid-linked disruption reducing, we have moderated our assessment of the current
likelihood of impact.
Any lead time delays in the supply chain could result in lower sales and potential loss of margin through higher
markdowns. Disruption could arise from a wide range of hard-to-anticipate factors including war, civil unrest,
natural disasters, disease pandemics and ethical trading issues.
In particular, the Group notes the rising tensions between China and Taiwan. Any disruption to our sourcing channels
from China would require a material proportion of our general merchandise ranges to be switched to potentially less
efficient manufacturers in different regions.
1 2 3 4
Risk mitigations Key actions in 2022/23
• 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, we have explored alternative countries of sourcing,
and (subject to a general reliance on China based merchandise
manufacturers) 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.
• Our Import Supply Chain Management System is a multi-carrier option,
enabling us to utilise multiple shipping line options across all trade
lanes, where necessary.
• Stock cover in the B&M UK business on general merchandise imported
goods ensures levels of inventory are adequate to meet periods of
supplier delay.
• Continued review of supplier social compliance processes by our
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.
– Introduction of an enhanced forecasting system to predict the volume
of product sales and provide oversight of the flow of stock through
our system.
– Strengthened supplier performance and lead time reporting, ensuring
our approach is dynamic against supply chain distribution risk.
2 Competition
Description and 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.
1 2 3 4
Risk mitigations Key actions in 2022/23
• Continuous monitoring of competitor pricing, store formats and
product offering.
• Development of new product ranges within the product categories
to identify new market opportunities and target new customers.
• 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.
• Around half of the Group’s revenues in the period continues to come
from, typically essential, 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.
• The Group trialled an online home-delivery proposition during the
financial year allowing it to understand the technical, infrastructure
and customer service requirements necessary, as well as the economic
returns, from a full launch.
Increased risk
No change
Decreased risk
Link to strategy key Risk change key
1
Existing B&M UK stores
2
New B&M UK stores
3
France growth
4
Heron Foods growth
29B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
3 Economic environment
Description and potential impact Strategic priority Change
A reduction in consumer spending, as a result of either consumer confidence levels or prevailing macroeconomic
conditions, could impact upon revenue and profitability.
Inflation manifesting itself though increases in raw material, fuel and wage costs could adversely affect the
profitability of the business.
1 2 3 4
Risk mitigations Key actions in 2022/23
• We have an effective forecasting process that enables actions to be
undertaken reflecting economic conditions.
• We offer a range of products and price points for consumers which
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 and our pricing gap to key competitors.
• The Group has engaged extensively with suppliers on proposed price
changes. While maintaining a constructive and fair approach, we have
continued to ensure our stores are well stocked with the best-selling
products, at attractive prices relative to competitors.
• Management has continued to proactively respond to changing sales
patterns throughout the year, adapting product ranging and promotion
in stores, for example broadening our offering of energy-saving
products.
4 Regulation and compliance
Description and potential impact Strategic priority Change
The Group is subject to a range of regulatory and legislative requirements, including those relating to the
importation of goods, pricing, anti-bribery and corruption, anti-modern slavery, anti-tax avoidance and 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.
1 2 3 4
Risk mitigations Key actions in 2022/23
• The Group has a number of policies and codes, including a code of
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.
• We actively seek to identify and manage compliance with all applicable
new legislation and regulations which apply to us in Luxembourg, the UK
and France. Reports on new regulatory developments are provided by the
General Counsel and Management directly to the Board as well as its
Committees. 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 and all associated materials
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. 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.
• 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 continued reporting in line with the Task Force
on Climate-related Financial Disclosures, and has commenced
preparations for upcoming changes in UK and EU reporting legislation.
30 B&M European Value Retail S.A. Annual Report and Accounts 2023
Principal risks and uncertainties continued
Increased risk
No change
Decreased risk
Link to strategy key Risk change key
1
Existing B&M UK stores
2
New B&M UK stores
3
France growth
4
Heron Foods growth
5 International expansion
Description and potential impact Strategic priority Change
Developing our businesses in new market territories is important to the Group’s strategic plans. Expanding
into markets creates additional challenges and risks which could impact the overall performance of the Group,
its growth and profitability. 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 future growth opportunities.
3
Risk mitigations Key actions in 2022/23
• The Group has international retail experience on the Board.
• Continued reinforcement and development of the experienced senior
leadership teams in France in key operational areas.
• Given insight, relationships and sourcing scale, UK support is provided
for product range development and selection by local buying teams.
• The Group continues to invest in both the infrastructure and technology
of our French business.
• Given differences in local laws and regulations, external legal support,
with strong local relevant experience, is retained in place.
• We continued to strengthen the senior leadership team in France and
continued the involvement of management from the UK to transfer
operational knowledge to colleagues in France.
• We have continued to open additional stores, increasing the scale
and presence from which we operate.
• A Board visit was organised to the French business, including
presentations by the executive team, to ensure that Directors
understand first hand the trading environment and management
perspectives.
6 Warehouse infrastructure
Description and potential impact Strategic priority Change
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.
1 2 3 4
Risk mitigations Key actions in 2022/23
• 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 appropriate business interruption and increased
cost of working insurance in the event of a loss of a distribution centre.
• We have completed the rollout of the upgraded JDA Warehouse
Management System. We plan to complete the remaining sites in FY24.
• The vast majority of product SKUs 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 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 temporary stockholding and flexibility
for re-routing stock to other Distribution Centres at short notice.
• On-site generators have been installed at critical warehouse facilities,
to protect ongoing operations should power supplies ever be disrupted.
• Climate assessment conducted to identify risks, inter alia, to warehouse
infrastructure.
31B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
7 IT systems, cyber security and business continuity
Description and potential impact Strategic priority Change
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.
1 2 3 4
Risk mitigations Key actions in 2022/23
• 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.
IT security is monitored at Board level and includes third-party
penetration testing and up-to-date security software.
• The Group has a disaster recovery strategy and plan in place for all
of our key systems.
• Significant decisions for the business are made by the Group or
operational boards with robust IT controls and segregation of duties
enforced.
• IT cyber security and payment card industry (“PCI”) controls in relation
to processing card transactions are continually reviewed to ensure
updates in line with PCI 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 till network,
Group finance system, networks and segregation, data centre
improvements and migration of email to the cloud.
8 Key management reliance
Description and potential impact 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 overall
performance of the business.
1 2 3 4
Risk mitigations Key actions in 2022/23
• 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.
• 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 develop the senior management teams
of its businesses. This has included (i) the promotion of our proven CFO
to Chief Executive following the retirement of the previous CEO, (ii) the
appointment of an experienced CFO, (iii) the appointment of a new
Supply Chain Director, and (iv) the strengthening of the Retail team
by additional senior roles and breadth in the team.
32 B&M European Value Retail S.A. Annual Report and Accounts 2023
Principal risks and uncertainties continued
Increased risk
No change
Decreased risk
Link to strategy key Risk change key
1
Existing B&M UK stores
2
New B&M UK stores
3
France growth
4
Heron Foods growth
9 Store expansion
Description and 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.
2 3 4
Risk mitigations Key actions in 2022/23
• 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.
• The Group has continued to proactively screen the market for
new location opportunities and to also respond swiftly to enquiries.
The market is also monitored for opportunities arising from retailer
corporate actions (e.g. CVAs).
• The Group continues to review new store opening opportunities
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.
10 Stock management
Description and potential impact 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.
1 2 3 4
Risk mitigations Key actions in 2022/23
• The Group has a highly disciplined limited SKU count throughout our
product ranges and effective regular markdowns on slow moving
product lines.
• Our non-seasonal initial stock orders do not exceed circa 12 weeks of
forecast sales and action is undertaken after circa four 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.
• The Group has reviewed optimal stock holding balances, reducing the
year-end working capital balance by approximately £100m.
• Despite lower stock-holding levels and the disruption to supply chains in
the Far East and Asia the Group has maintained appropriate stock cover
throughout the year.
• The Group is introducing an enhanced predictive system to forecast
the volume of product sales and the flow of stock through our system.
33B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
Viability Statement
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 32 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 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 26 to 32 occurring in
the period;
• the likely degree and effectiveness of
possible mitigating actions in relation to the
principal risks;
• the Group’s debt facilities of £450m in
relation to the term loan and revolving credit
facility which matures in March 2028, 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 10% 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
28 March 2026.
34 B&M European Value Retail S.A. Annual Report and Accounts 2023
A year of good progress
in our approach to ESG
Corporate social responsibility
We have continued to make good progress in developing, and delivering against our clear ESG strategy this year. We believe that achieving
the relevant metrics and targets that align with our purpose of delivering great value to customers will underpin our continued success.
Progress at a glance
Objective FY23 Progress Target(s)
Environment
Reduce Scope 1 and 2 carbon emissions by 25% by 2030 FY23 Scope 1 & 2 carbon emissions
91,069 tCO
2
e. We have reduced our
Scope 2 emissions by 17% compared
to FY22.
LEDs: 614 B&M UK stores (87%)
BeMs: 610 B&M UK stores (86%)
25% reduction in Scope 1 & 2 by 2030
Install LED lighting in all B&M UK stores by FY27
Maintain BeMs penetration in B&M UK stores
Reduce Scope 3 emissions through working with our
suppliers
Engagement with top 30 suppliers
(41% of spend)
Engage with 67% of suppliers by spend to set
science based targets by FY27
Maintain a high level of packaging recycling and reduce
use of plastic packaging
Packaging recycled: UK 99.9%;
Group 99.8%
20,000kg reduction from redesign
of greeting card packaging
Maintain progress
Colleagues
Provide colleague development and promotion
opportunities through a range of training programmes
261 Step Up promotions Maintain >90 per annum
Maintain high levels of colleague engagement across
the Group
>70% Maintain >75%
Develop a diverse and inclusive workforce Female Board/Executive committee
reports – 40.3%
Maintain
Reward strong business performance through payment
of discretionary bonuses to Store, Distribution and
Support Centre Managers
Discretionary Golden Quarter bonus
awarded to high-performing leaders
Maintain
Communities
Committed to a store rollout target of at least 950 B&M
stores across the UK
707 B&M UK stores At least 950
Contribute to the regeneration of local communities
through the creation of new jobs
>1,250 new retail jobs in the UK
and France
n/a – linked to store openings
Support local and national charitable initiatives Various Maintain an ongoing programme
Supply Chain
Committed to ensuring ethical business practices
and the fair treatment of workers in our supply chain
No issues identified: compliance
assurance programme continues
Maintain
Pay all suppliers fairly and treat them with respect B&M UK trade creditor days of 21 Maintain <35 days
35B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report 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 how
we operate.
The Board is committed to the implementation
and monitoring of our ESG strategy. During the
year, the Board received updates on our ESG
strategy at each Board meeting, providing input
on our ongoing and planned future projects.
The Board and management team consider
ESG from a number of different perspectives.
This includes 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 work closely with specialist third party
consultants to help inform our thinking in certain
areas, including understanding the impact of
climate change and when developing our
Net-Zero roadmap. To align our Net-Zero
roadmap with the British Retail Consortium’s
Climate Action Roadmap, we aspire to achieve
Net-Zero Scope 1, 2 and 3 emissions by 2040.
Our ESG strategy is 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 three
years, but also ensuring these ambitions are
in keeping with the B&M business model.
We invested resources this year in
strengthening our Sustainability team,
recruiting a Sustainability Coordinator to
support the ongoing work of the Sustainability
Manager. In addition, our Sustainability
Manager – appointed in FY22 – works closely
with our specialist third party consultants to
develop knowledge of ongoing ESG
workstreams and identify areas for
improvement for FY24 and beyond.
In September 2022 we held training sessions
for members of our executive and operational
senior management across B&M UK, Heron
Foods and B&M France. Facilitated by our
third-party ESG specialist, the training sessions
covered climate change, TCFD and wider ESG
principles. The aim of these training sessions is
to build capacity and understanding to support
key internal stakeholders in their roles and
responsibilities relating to ESG. The executive
management team each had an ESG-related
target in their annual incentive plan objectives
for FY23.
We 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. The Board intends to retain an “at
one” approach to ESG governance, recognising
the importance of collective input as we work to
implement our developing strategy.
To demonstrate our commitment to operating
as a transparent, sustainable business, we
have published a standalone ESG report for
the second year in a row. This report contains
more detail about our strategy, progress
and achievements in FY23, and is designed
to be read alongside the corporate social
responsibility section of this Annual Report.
In relation to our governance and decision
making with regard to our stakeholders’
interests, see also the Stakeholders and
Section 172 report on page 54.
36 B&M European Value Retail S.A. Annual Report and Accounts 2023
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.
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 and Distribution
We have a total of 238 tractor units and the
entire transport fleet in the UK is fitted with
Euro 6 engines, which are the latest standards
for emission compliance. We have continued
to invest in double decker “wedge” trailers,
which increase trailer capacity and therefore
maximise transport volumes intensity per mile
travelled. We have also invested in energy-
efficient handling equipment including
lithium-ion picking and loading forklifts in our
warehouses. We are monitoring driver
performance across our B&M and Heron
Foods transport colleagues, rewarding fuel
efficient driving and thus reducing diesel
emissions. Training and education sessions
are held for our B&M HGV drivers to embed
behavioural changes amongst our colleagues,
reducing our transport emissions.
For more information on B&M’s transport and
distribution efforts, please see our standalone
ESG report.
Waste and 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.
We have proactively redesigned a number of
products to move away from plastic packaging
towards greater use of more environmentally
friendly cardboard. In FY23, we worked with our
suppliers to redesign our Greeting Cards, by
removing the outer plastic sleeve packaging,
resulting in an estimated reduction of 20,000kg
of plastic being sold each year. In addition, we
have dedicated waste management facilities
at our B&M warehousing locations in the UK.
Overall, the total level of packaging waste
recycled by the Group in FY23 was 99.8%,
Corporate social responsibility continued
37B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
through a combination of waste being sorted
through our own facilities and by specialist
third party contractors.
For more information on our waste and
recycling, please see our standalone ESG report.
Energy consumption
All new stores are now opened with energy
efficient light emitting diode (“LED”) lighting,
which use up to 70% less energy. Wherever
practical we are retrofitting LED lighting into
existing stores when carrying out
refurbishments. We 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. As of the end of
FY23, 614 of our B&M UK stores were installed
with LED lighting and all B&M France stores are
fitted with 100% LED lighting. We are currently
exploring the installation of LED lighting in our
distribution centres.
We have continued to rollout a Building Energy
Management System (“BeMS”) in all new, and
many existing B&M UK stores to help better
control and reduce their energy consumption,
through ensuring full equipment switch-offs at
close-down, and managing heating usage
effectively. We are also experimenting with
variable lighting levels during trading and
non-trading replenishment hours. We currently
have 610 UK B&M stores with BeMS fitted. The
installation of both LED lighting and BeMS will
be important as the business strives to achieve
our Scope 1 and 2 SBTi validated targets
relating to carbon emissions.
Our B&M France stores also reduce energy
consumption by optimising “free-cooling”, a
process of using external ambient temperature
to reject heat, rather than using energy intensive
refrigeration processes. For over 10 years, our
B&M France stores have also been deploying
BeMS across our estate portfolio, which allows
us to control, analyse and optimise the energy
needs of each of our stores.
We are continuously reviewing our estate to
identify potential energy reduction opportunities,
including onsite renewable power generation.
We are conducting feasibility assessments
across our businesses for the installation of
solar panels. Heron Foods is expected to
undertake the pilot project with plans for solar
panel installation on its largest distribution
warehouse in FY24. We will use this project to
inform decision making and share best practice
across the rest of the Group. We aim to conduct
site surveys across our estate to identify further
areas for potential energy saving opportunities.
Our ESG report provides more details regarding
our energy saving initiatives.
Greenhouse gas (“GHG”) emissions
In FY23 approximately 6% of our total carbon
footprint comes from our Scope 1 and 2
emissions. This year, 2.6% 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 another 3.6%.
Store numbers across the Group continue to
increase and we grew the total estate by 42
gross new 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 CO
2
per £1m of turnover.
At a Group level, our Scope 1 and 2 intensity
ratio has improved again in FY23. Specifically,
in the core B&M UK business, we have reduced
our intensity ratio by 20.3% since FY21.
We will continue to publish our Scope 1, 2 and 3
emissions annually to allow for year-on-year
comparison. In FY23 approximately 93.8% of our
total carbon footprint comes from our Scope 3
emissions. 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. In FY23, we
launched our first supplier engagement
questionnaire to begin collecting our suppliers
carbon emissions to improve the accuracy of
our Scope 3 emissions. We have developed an
engagement plan to widen the scope of our
questionnaire year-on-year to meet our target
of 67% of suppliers by spend by FY27. This year
we reached out to our top 30 suppliers, which
represent 41% of our suppliers based on spend.
>610
Stores with
BeMS installed
>250
Stores served
by Bedford DC
99.8%
Overall Group
packaging recycled
38 B&M European Value Retail S.A. Annual Report and Accounts 2023
Greenhouse gas and energy usage data (Scope 1 & 2)
Emissions Energy usage
FY23
1
Scope 1
TCO
2
e
Scope 2
TCO
2
e
Total
TCO
2
e
Intensity
Ratio
Scope 1
MWh
Scope 2
MWh
Total
MWh
B&M UK 43,965.34 28,472.03 72 ,4 37.38 17.97 198,968 147,234 346,201
Heron Foods 8,602.25 7,770.88 16,373.12 32.49 33,200 40,185 73,384
UK Subtotal 52,567.59 36,242.91 88,810.50 19.52 232,167 187,418 419,585
B&M France 674.73 1,583.77 2,258.49 3.95 2,926 38,647 41,573
Group Total 53,242.31 37,826.68 91,069.00 18.17 235,093 226,065 461,159
Emissions Energy usage
FY22
Scope 1
TCO
2
e
Scope 2
TCO
2
e
Total
TCO
2
e
Intensity
Ratio
Scope 1
MWh
Scope 2
MWh
Total
MWh
B&M UK 42,631 33,745 76,376 19.54 197,265 158,927 356,193
Heron Foods 8,060 9,985 18,045 43.90 33,660 47,024 80,684
UK Subtotal 50,691 43,730 94,421 21.86 230,925 205,952 436,877
B&M France 417 1,919 2,336 6.62 1,900 37,421 39,320
Group Total 51,108 45,649 96,757 20.71 232,825 243,373 476,198
1 FY23 relates to the period from April 2022 to March 2023 and FY22 relates to the period from April 2021 to March 2022.
Corporate social responsibility continued
Sustainability in practice at B&M
B&M has a culture of always striving to
improve operations and keep costs low.
We have a dedicated productivity and
change department that focus on specific
initiatives each year, whilst teams across
the business are constantly working closely
alongside each other to identify areas for
improvement.
One example of the ongoing initiatives to
reduce our carbon footprint and cost is found
in how our buying and warehouse teams
collaborate. Through ongoing feedback,
the buying teams can avoid certain types of
products that create operational challenges
associated with picking, packing and
transportation. Peculiarly shaped goods are
typically avoided as they take up too much
space and create inefficiencies through our
supply chain, whilst pack sizes are constantly
reviewed to improve operational efficiency
within the distribution function. We
undertake continuous product reviews
to reduce the cost of distribution, risk of
damage, and our carbon footprint. We will
discontinue or redesign products if we feel
the cost of distribution and therefore
environmental impact is too high.
B&M colleagues are also trained to
understand the impact of their work on
the environment and the steps they can
take to minimise this impact. For example,
warehouse operatives are trained to
understand how best to manage waste
effectively, use packing materials efficiently
to reduce waste and costs, and the
consequences of not using or disposing of
items correctly. In stores, our managers
receive targeted training as a part of their
induction to ensure all lights, heaters, and
other non-essential electrical appliances
on the premises are turned off when closing
a store. Store Managers engage with their
colleagues regarding these day-to-day ways
of working, and colleagues are encouraged
to report any faulty equipment, for example,
if a chiller has stopped working correctly and
unnecessary energy is being drawn.
39B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
Our policy and
commitment in
relation to our people
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 39,000 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 FY23 we created over 1,113 and 145 new
retail jobs in the UK and France respectively,
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.
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. We have continued our “Warehouse
to Wheels” initiative, offering training
opportunities for distribution centre colleagues
to become HGV drivers. Since the pandemic,
we have experienced significant waiting times
for HGV driving test appointments. Therefore,
in FY23, we supported one of our colleagues
in becoming a certified HGV examiner. This
has helped by increasing the number of B&M
colleagues with HGV driving licences, and
maintaining stock availability at our stores,
and serving our customers better.
See our standalone ESG report for further
details on learning and development
opportunities offered across the Group,
and in particular our step-up programme.
Colleagues
40 B&M European Value Retail S.A. Annual Report and Accounts 2023
Colleague engagement
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 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 have continued to build on the strength
of our colleague engagement survey this year,
increasing the frequency and running it twice
for B&M UK and Heron Foods employees.
In both surveys this year, the response rate
was over 70% across both businesses, and
there was year-on-year improvement across
all questions asked. We held a colleague
engagement survey for B&M France in May
2022, which we aim to improve each year.
As part of the colleague engagement surveys,
we invited feedback on areas where we could
make improvements. Suggestions included
improving colleague recognition and benefits,
making further enhancements to some of our
IT systems, improving communication and
increasing training specifically in B&M France.
As a result, the following outputs have already
been implemented by the senior management
team:
• introduced private medical and health care
for a broader group of colleagues;
• launched new induction and training
manuals in B&M France, sharing best
practice from our UK businesses;
• held over 200 listening group meetings
involving over 4,500 employees across
every area of the business;
• made upgrades to our till system and
hardware, new laptops have been provided
and better Wi-Fi introduced; and
• ensured colleagues can take their children
to their first day of school, by swapping
shifts with other colleagues.
During FY23, we initiated an educational
programme for our colleagues on B&M’s ESG
journey, targets and objectives. Our specialist
third party consultants facilitated a training
session with our senior people team around
our ESG and Net-Zero targets and initiatives.
These sessions aimed to help colleagues think
about sustainability within B&M through
managing our stores and business, aiding in
reducing our overall environmental impact at
B&M. We aim to roll these training sessions
out across the business.
Colleague wellbeing
This year we hired our first Health and
Wellbeing Business Partner who is responsible
for developing and implementing our Health
and Wellbeing Strategy. Heron Foods held a
wellbeing month in May 2022, holding various
activities for colleagues to raise awareness
and support their physical and mental health.
We provided colleagues with “double-discount”
weekends on General Merchandise products
on eight separate occasions across the year.
Recognising the cost-of-living pressures on
many of colleagues, and to recognise their
loyalty and hard work, for the first time in
Autumn 2022, we ran two “all-department”
double-discount days, giving colleagues
double their usual discount across
departments including FMCG categories.
Other colleague wellbeing initiatives have
also occurred in FY23, including advocating
Movember, and increasing colleague
awareness on Alzheimer’s, menopause and
international men’s health. This year we also
introduced 72 mental health first aiders as
well as mental health training to all store
managers. For more detail on how B&M
ensure the wellbeing of their employees,
see our standalone ESG report.
Colleague reward and recognition
We reward our store managers and
supervisors through an annual bonus scheme,
which we supplemented with a further Golden
Quarter bonus for the top quartile of store
managers. Our schemes are kept simple and
transparent, and designed to be stretching and
motivating, ensuring our stores deliver the best
possible shopping experience to customers.
We have an annual bonus scheme for
managers in our distribution centres who
lead various warehouse and transport teams.
Incentive schemes have been introduced across
B&M, to recognise those colleagues who go the
extra mile but aimed to boost colleague morale
and work ethic. For instance, B&M Warehouse
Operatives were provided with a ‘Peak Period
Pay Incentive’, in the form of an hourly bonus,
from August 2022 to January 2023.
Diversity and equality
In relation to diversity the B&M Board had a
33.3% female representation at the year-end,
with three out of the nine Board members at
year end being female, and one Director from
an ethnic background. Tiffany Hall will also be
appointed as Senior Independent Director
following this year’s AGM. However, as a result
of the Board changes described on page 9,
the Board will not be compliant with all listing
rule recommendations with respect to female
participation and ethnic diversity. Recruitment
1,946
Kickstart colleagues
retained in full time
employment
>1,250
Retail jobs created
in the UK & France
2x
Double discount
weekends for colleagues
extended to FMCG
categories
Corporate social responsibility continued
41B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
• 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.
33.3%
Female
representation
at Board level
at year end
Our Diversity Policy
inrelation to the
Boardand senior
management is:
processes are underway and these matters
will be addressed by the time of the AGM in
2024. Full details of the composition of B&M’s
Board are set out from pages 58 to 61.
At the end of FY23, female representation
across the senior management of the Group,
reporting either directly to the Board or the
Executive Committee, was 40.3% (FY22: 43.8%).
In relation to all employees of the Group, the
percentage of female colleagues was 55.6%,
(FY22: 57.8%).
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.
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 2022.
The mean hourly pay rate of B&M UK
colleagues was 8.4% 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 32.2%
lower than males and the median hourly rate
for females was 5.0% lower than males.
In relation to bonuses of B&M UK colleagues,
65.9% of females and 53.9% of males were
paid a bonus. The mean bonus pay for males
was 55.3% higher than females, and the
median bonus pay for males was 16.7% higher
than females. For Heron Foods, 58.1% of
females and 60.2% of males were paid a
bonus. The mean bonus pay for females was
76.2% lower than males and the median bonus
pay for females was 58.1% lower than males.
Colleagues of the Group in France and
Luxembourg are not included in this data.
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.
42 B&M European Value Retail S.A. Annual Report and Accounts 2023
Communities
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.
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. We have continued to invest in new stores
throughout FY23, 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 21, 14 and 7 gross
new B&M, Heron Foods and B&M France stores
respectively 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, generating
some publicity with the local media. 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. In FY23, we launched a
value range to support our local communities
when dealing with the impact of the cost-of-
living crisis. We worked with our suppliers to
bring high-quality items at a discounted price
for our customers. Following the positive
impact from our first phase in January 2023,
we launched our second phase of the initiative
in April 2023, introducing a new range of
discounted products to give value back to the
community.
We are 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. We
have welcomed over 3,000 colleagues under
the scheme so far, 1,946 of which we have
retained in full-time employment at B&M.
We have also supported the DFC in Northern
Ireland Jobstart scheme, where we offered 300
placements to those aged between 16 to 24 we
have retained 151 into permanent employment.
During the year we initiated a Welcome UK
project, supporting refugees into work in the
local communities. From our efforts we were
able to provide full time jobs for 50 refugees
from across Ukraine, Syria and Afghanistan.
For further examples of the positive impact we
have in our communities, see our standalone
ESG report.
Charitable initiatives
We were proud to have been a headline partner
for the “Mission Christmas” appeal once again
this year, which is an initiative run by the
Cash4Kids children’s charity. We helped to
raise over £9m for some 200,700 under-
privileged children in the UK at Christmas 2022.
Through our new all-colleague mobile App
introduced last year, we ran several
Corporate social responsibility continued
43B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
competitions during the Christmas period where
winners received £500 to donate to a charity of
their choice. In FY23, B&M raised money for
multiple other charities, such as Breast Cancer
UK, and colleagues at Heron Foods participated
in a number of charitable events to support the
local community throughout the year, including
raising money for Cash4Kids. For more
information on our charitable initiatives,
please see our standalone ESG report.
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 and 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, where the
training is carried out for each new colleague
with reviews (and refreshers as required)
also taking place during the next 12 weeks
thereafter. Refresher training occurs for 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.
In FY23 there were 121 reported accidents
(0.17 per store) reportable to the Health and
Safety Executive relating to the B&M business
in the UK (FY22: 102 reported accidents and
0.2 per store). This is in the context of over
262 million shopper visits over the course
of the year.
44 B&M European Value Retail S.A. Annual Report and Accounts 2023
Supply Chain
Our policy in relation
to Supply Chain
engagement is to:
• ensure ethical business
practices and the fair
treatment of workers in
our supply chain;
• utilise sustainable or
recycled materials when
designing own-brand
products wherever possible;
and
• pay all suppliers fairly and
treat them with respect.
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.
In FY23, we initiated an ESG engagement
process with our supply chain for the first time.
We launched an ESG supplier questionnaire,
reaching out to our top 30 suppliers, in order
to obtain information regarding their carbon
measurement processes and reduction efforts,
as well as wider ESG ambitions. This
programme forms part of our supplier
engagement target which has been validated
by the SBTi. More detail can be found on
page 52.
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
• whistleblowing, in relation to reporting of
any suspected wrong doing or malpractice.
Our policies and procedures are geared toward
what we think are effective, balanced and
reasonable processes. We strive to find practical
ways of improving the communication of and
adherence to our ethical business practices.
Corporate social responsibility continued
45B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
Anti-bribery and corruption
We have a zero tolerance approach to
anti-bribery and corruption. 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. 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 whistleblowing
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. 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 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.
Acopy 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.
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.
All overseas suppliers are required to provide
social compliance reports as a check on
compliance with local laws and regulations,
including labour practices.
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 a locally-based team and 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. In addition, members
of our buying teams, where practical, also visit
new suppliers as part of our verification
processes.
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.
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 supplemented by our own
programme of quality control inspections
performed by Multi-Lines at factory premises
prior to shipment.
46 B&M European Value Retail S.A. Annual Report and Accounts 2023
TCFD
Climate-related Financial Disclosures
Report 2023
B&M European Value Retail S.A. (“B&M”) is pleased
to publish its disclosure in line with the Task Force on
Climate-related Financial Disclosure (“TCFD”) framework.
TCFD is structured into 11 supporting disclosure
recommendations which span four key
themes: Governance, Strategy, Risk
Management and Metrics & Targets. In this
climate-related financial disclosure we have
reported in line with the requirements of Listing
Rule 9.8.6R and the 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. Supplementary
information can be found in our FY23 TCFD
Report on our website.
Governance
Board oversight
The B&M Board is responsible for overseeing
management’s response to climate-related
impacts. The Board ensures action plans are
embedded into the business strategy and
future financial planning to mitigate climate-
related risks and capitalise on climate-related
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).
The Board retains overall responsibility for
climate governance and actions undertaken,
which are integrated into our ESG strategy.
ESG, including climate change and associated
initiatives, is now a standing agenda item
at all six Board meetings a year, having been
discussed in detail at each Board meeting
in FY23.
Executive responsibility
To ensure direct senior support for delivering our
ESG strategy, the Board has delegated executive
responsibility to our CFO, Mike Schmidt.
Executive Directors remuneration has also been
linked to the Group’s achievement of metrics
relevant to our ESG strategy, including those
of climate-related matters. The Remuneration
Committee continuously reviews this structure,
considering industry best practice and the
current status of our evolving ESG strategy.
Management structure
The executive management team 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 September 2022 we held training sessions
for members of our executive and operational
senior management teams across B&M UK,
Heron Foods and B&M France. Facilitated by
our third-party ESG specialist, the training
sessions covered climate change, TCFD,
ESG and Net-Zero. The aim of these training
sessions is to build capacity and understanding
to support key internal stakeholders in their
roles and responsibilities relating to climate
change. The executive management team
each had an ESG-related target in their annual
incentive plan objectives for FY23.
Supported by wider senior management
teams, the Sustainability Manager works with
our third-party ESG specialists to review climate
issues annually and assess the potential
financial impact of climate-related risks and
opportunities over the short, medium and
long-term until 2050.
Monitoring risk
The Audit & Risk Committee, together with the
support of the Internal Audit department and
the CFO, is responsible for monitoring risks and
overseeing progress against goals and targets
for addressing climate-related issues.
Furthermore, climate change continues to
be considered at key events during the year,
including the Group’s annual strategy day in
March 2023 and when reviewing the principal
risks relevant to the Group. It was determined for
FY23 that climate change does not represent a
principal risk given the detailed risk assessment
performed by management this year.
Strategy
The TCFD framework helps us to understand
and manage the climate-related risks and
opportunities we face. Following its
recommendations, we used climate scenario
analysis to examine a range of possible future
global warming pathways and identify the
risks and opportunities impacting our business
over the short, medium and long term. Each
climate-related risk and opportunity was
modelled across all three climate scenarios
(below 2°C, 2-3°C and above 3°C).
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 following
scenarios and time horizons to understand our
vulnerability to the impacts of climate change
and how they vary over time:
47B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
Table 1: The Group’s defined climate scenarios and time horizons
Climate scenarios Time horizons
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.
Short-term
(up to 2025)
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 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.
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)
Details of the climate-related risks and opportunities deemed significant, along with the scenario and timeframe 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. Table 2: Significant transition risks facing
the Group.
Table 2: Significant transition risks facing the Group
Transition risk Scenario Timeline Classification Financial impact Mitigating action
Market – Increased cost of
energy and raw materials.
Climate change may disrupt
our energy and stock suppliers,
thereby increasing costs across
the Group. The operations and
productivity of our supply chain
may also be disrupted by
climate change which could
have an indirect impact on
B&M.
This risk could impact several
business areas, and although
we are not manufacturers,
we must still be aware of our
supplier input cost prices.
We see this risk unfolding
across all scenarios.
Variable
across all
scenarios
Short to
Medium-
term
B
Increased operating costs
We sell predominantly branded
products, which may increase in cost
due to climate change. 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.
While energy costs continue to rise,
these currently represent a relatively
minimal part of our overall direct cost
base, being less than 1% of Group sales.
We widened our climate
scenario analysis in FY23 to
consider the vulnerability of
our top 10 suppliers (by value)
and supply chain routes to
future climate change. We will
continue to work with our
suppliers to monitor the risk
climate change may pose to
the availability of products and
materials.
We have an ongoing energy
efficiency project being rolled
out across our estate to reduce
our energy usage, which will
likely mitigate the impact of
rising costs.
Capital investment made this
year includes £120,000 for
three high-power electricity
generators installed in January
2023 to mitigate the impact of
potentially more prevalent
power outages on our
distribution centres.
48 B&M European Value Retail S.A. Annual Report and Accounts 2023
Transition risk Scenario Timeline Classification Financial impact Mitigating action
Reputation –
Stakeholder concern
We know that our stakeholders
want to see us take proactive
climate action and failing to
meet their expectations could
harm our reputation both
internally and externally. This
risk could potentially arise with
any one of our stakeholders.
Variable
across all
scenarios
Short to
Medium-
term
B
Reduce capital availability
Failure to meet stakeholder expectations
and requests could result in a reduction
of capital availability. To reduce this risk,
the financial impact largely relates to an
increase in administrative costs to ensure
alignment with growing best guidance
in this space. The cost of external
specialists are negligible in the context of
Group profitability. We have a dedicated
budget for our Sustainability team which
is likely to increase in the future.
We have engaged a third party
to ensure B&M’s ESG strategy,
targets and key actions are
developed in line with best
guidance and internationally
recognised frameworks To
deliver against these, we have
invested the resources to
develop a growing
Sustainability team. We have
also considered stakeholder
feedback in the development
of our ESG strategy.
Technology – 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.
Below
2°C
Medium to
Long-term
B
Reduced value of assets and stock
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.
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.
Technology – 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.
Below
2°C and
2-3°C
Medium to
Long-term
B
Reduced gross margin for the business
An increased demand for lower
emission products may result in
increased inbound logistics costs.
Changes to the product mix also have
the potential to impact the gross margin
achieved by the Group; however, the
Group has a long history of responding
effectively and swiftly to changing
consumer tastes, while protecting
margins. Any change to the sales mix
is likely to take place gradually.
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.
Technology – 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.
We have set a target to reduce
our operational carbon
emissions by 25% by 2030
as well as an ambition to be
Net-Zero by 2040 for Scopes 1,
2 and 3. We have developed
our transition plan which
details the short, medium and
long-term key actions and
milestones required for the
Group to reach Net-Zero.
Below
2°C and
2-3°C
Short to
Long-term
A
Increased capital expenditures
The rollout of LED and Building Energy
Management System (“BeMS”) has
cost the business up to £15.6m to date.
To complete the project across the
remaining store estate and the
distribution centres has been estimated
to cost an additional £6.6m.
The capital investment required by these
initiatives already forms part of the
Group’s strategic planning projections.
We are evaluating the feasibility of
installing on-site renewable power
generation systems across our
businesses. Heron Foods is the furthest
along with this journey, with a budget of
£1m set aside for a solar project in FY24.
The energy efficiency and
generation projects ongoing
and planned will reduce
operating costs for the
business. The roll out of LED
lighting across our B&M
France stores have reduced
the businesses’ consumption
by 70%. We will hold site
surveys to evaluate energy-
saving opportunities and
schemes which will counteract
the upfront cost of installing
energy efficiency technology.
TCFD continued
Table 2: Significant transition risks facing the Group continued
49B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
Table 3: Significant physical risks facing the Group
Physical risk Scenario Timeline Classification Financial impact Mitigating action
Acute – 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. Our supplier may be
subject to events of flooding
and wildfires, which may
impact our operations through
shipping delays and increased
costs.
Above
3°C
Long-term
B
Increased operating costs
for the business
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, 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.
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. We have developed
a B&M Flood evacuation plan
to keep colleagues,
customers and visitors safe
during a major flood event.
Plans are monitored on a site
by site basis to reflect the risk
level, with regional H&S
support. Plans have been
shared with colleagues.
Chronic – Climate-related
issues such as water stress,
rising mean temperatures and
sea level rise 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.
Above
3°C
Long-term
B
Increased operating costs
for the business
As a result of rising mean temperatures,
we have seen an increase in business
disruptions from pests and rodents. In
FY23, pest management costs were over
£0.6m. Rising mean temperatures will
also result in increased energy usage,
leading to increased operating costs for
the business and associated operational
emissions.
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
c.6 years, offering good flexibility. The
comments above regarding business
interruption insurance also apply here.
Our dedicated in-house
maintenance and store
operations teams constantly
monitor events at individual
stores. We will conduct
annual scenario analysis
across all of our sites to
monitor our chronic physical
risks.
50 B&M European Value Retail S.A. Annual Report and Accounts 2023
Table 4: Significant opportunities facing the Group
Opportunity Scenario Timeline Classification Financial impact Managing action
Energy resources – Use of
lower emission sources of
energy
We have set a target to reduce
our operational carbon
emissions by 25% by 2030
as well as an ambition to be
Net-Zero by 2040 for Scopes 1,
2 and 3. We have developed
our transition plan which
details the short, medium and
long-term key actions and
milestones required for the
Group to reach Net-Zero.
Below
2°C
Medium to
Long-term
A
Reduced operating costs
and emissions
As we reduce our operational emissions
through the ongoing rollout of LED and
BeMS, we will reduce our energy usage
and therefore operational costs for the
business. With strong paybacks, the
financial impact of this rollout is a net
positive over the medium term.
On-site renewable energy generation has
also been identified as an opportunity to
reduce our costs, with a pilot project for
Heron Foods being planned for FY24.
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.
Resource efficiency – Use of
more efficient production
and distribution processes
Our continued growth in store
numbers provides
opportunities to maximise
transport volumes, improve our
fleet technology and ensure
efficient transport routes.
Below
2°C
Medium to
Long-term
A
Reduced operating costs
and emissions
We routinely review how we can reduce the
number of trips taken from our transport
fleet. When loading our trailers, we ensure
each one is packed as efficiently as
possible, reducing unnecessary journeys
when delivering from our warehouses to
stores. The opening of the Bedford
facility is calculated to have provided a
reduction of approximately 6 million
delivery miles travelled annually,
resulting in an estimated projected cost
saving of around £10m.
We are in the process of introducing a
new Transport Management System
which will improve route efficiency,
reducing both cost and associated
emissions.
Continue to identify future
opportunities to streamline
processes to make them
more efficient across the
businesses. Share best
practice from B&M UK with
Heron Foods and B&M France
in relation to our fleet
management.
TCFD continued
51B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
Risk management
The steps we have taken to identify, assess
and manage each climate-related issue have
been based on our existing risk management
process to ensure a consistent and efficient
assessment and categorisation.
Step 1 – Identifying the risks: In FY23,
we expanded our TCFD reporting process
to identify the climate-related risks and
opportunities across the Group, including
Heron Foods and B&M France for the first time.
In order to do so we conducted an internal
stakeholder engagement process to engage
with key senior management representing core
functions of our businesses including IT, retail,
supply chain and people. In FY23 we also
began identifying where climate-related risks
may impact our supply chain and critical
supplier routes. In FY23, we identified twelve
climate-related risks and two climate-related
opportunities.
Step 2 – Assessing the business impact:
We used climate scenario analysis to assess
the impact of both physical and transition
climate-related risks and opportunities on our
operations. The findings were presented in a
Climate-related Risk Management Workshop
which was attended by our CFO, Sustainability
Manager and wider senior management,
representing all core functions across our
three businesses in November 2022.
Step 3 – Classifying risks: Each climate-
related issue was classified using our rating
system to highlight the implications of a risk
occurring. Climate-related considerations
labelled with an A or B rating are deemed
significant. 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.
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. To ensure we are fully
prepared for climate change, we will continue
to embed annual climate scenario analyses
into our existing risk management framework
and financial planning processes to identify
future risks and ensure adequate mitigation.
Metrics and targets
Metrics
Reducing our emissions and the impact of our
operations on the environment is the Group’s
core focus for managing our climate-related
risks as it impacts every aspect of our
operations. In FY23, we have continued to
capture, analyse and document our Scopes 1,
2 and 3 emissions, which includes operational
emissions as well as those associated with our
wider value chain.
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, 11 were identified
as applicable to B&M’s business. As a result
of improving our data collection processes
around the packaging of products in FY23, we
have calculated our Category 12: End-of-life
Treatment of Sold Products emissions for the
first time. This year we also calculated the
emissions associated with Category 15:
Investments for the first time.
Each year we will strive to improve the accuracy
of our Scope 3 calculations. Moving forward we
will utilise our supplier engagement processes
gather more specific data regarding the goods
and services provided to us to improve the
accuracy of Category 1: Purchased Goods and
Services. We also aim to launch an employee
commuting survey next year to improve the
accuracy of Category 7: Employee Commuting.
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 Sustainability
Manager evaluates energy-saving
opportunities, monitors potential sustainable
product partnerships, reviews our supply chain
and works collaboratively with other colleagues
within the business. We have also engaged a
third-party ESG 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. 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.
Targets
Our FY23 Scope 1 and 2 emissions represent
6% of our total Group emissions, with our
FY23 Scope 3 emissions representing the
remaining 94%.
52 B&M European Value Retail S.A. Annual Report and Accounts 2023
TCFD continued
Table 5: Scope 1, 2 and 3 emissions:
Directors
FY23
Gross emissions
(tCO
2
e)
FY22
Gross emissions
(tCO
2
e)
FY21
Gross emissions
(tCO
2
e) Reduction target
Scope 1 53,242 51,108 49,210
25% reduction by 2030 (from FY21 baseline)
Scope 2 37,827 45,649 52,125
Scope 3 1,386,609 1,440,428* 1,644,098* Engage with >67% of suppliers (based on spend) by 2027
Total 1,47 7,678 1,537,185 1,745,433 Ambition to be Net-Zero by 2040
* We have restated the FY22 and FY21 Scope 3 emissions as we have included two additional categories that were previously not accounted for due to data limitations. These
categories are Category 12 – End-of-life treatment of sold products and Category 15 – Investments. For the FY23 footprint, we have improved our approach to Category 12 by collecting
more accurate product weight and material data, in particular for our electrical items. We will continue to improve the data we collect for this category throughout our FY24.
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
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 SBTi guidelines. Our Scope 1 and 2
reduction targets have been validated by the
SBTi. We are committed to achieving a 25%
reduction in Scope 1 and 2 emissions by 2030
(from a FY21 baseline), aligned with the SBTi
WB2C scenario.
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 short-term Scope 1 and 2
emissions 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 FY27.
Next steps
We aim to continuously develop our TCFD
disclosures by embedding further consideration
of climate-related risks and opportunities into
our business strategy and financial planning.
We will monitor current and emerging best
guidance to ensure we remain compliant with
requirements as a UK listed company operating
in this space.
The need for internal resources, time and
investment will continue to be reviewed by the
Board who will revisit the requirement for a
standalone ESG Committee on an annual basis.
We have developed a transition plan which
outlines our roadmap to Net-Zero, working
with key internal stakeholders who will take
ownership for decarbonising their focus areas.
Our transition plan details the necessary steps
we must take over the short, medium and
long-term, and we aim to update this plan
annually to reflect the actions implemented
across the business.
53B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
Table 6: Metrics used to assess our impact on the environment
Area Target Progress
Greenhouse gas emissions Reduce Scope 1 and 2 emissions by 25%
by 2030, as per the SBTi WB2C scenario.
Scope 3 supplier engagement target aims
to have 67% (by spend) of suppliers set their
own science-based target by 2027.
In FY23 our Scope 1 and 2 carbon reduction targets were validated
by the SBTi.
Since FY22, we have seen a small increase in our Scope 1 emissions,
due to the opening of new stores. However we will work on reducing
this figure moving forward. Our Scope 2 carbon emissions have
seen a significant decrease since FY22, demonstrating the success
of our energy-efficient measures.
Our Scope 3 emissions have also decreased since FY22, including
a reduction in our business travel emissions (Category 6), and our
purchased goods and services (Category 1).
We launched an ESG Supplier Engagement Programme. This year
we reached out to our top 30 suppliers, which represent 41% of our
suppliers based on spend.
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.
Energy usage from UK operations decreased in absolute terms,
despite opening 21 net new stores in the year.
Our newly appointed Sustainability Manager continues to oversee
technology installation to reduce energy consumption.
BEMS is now installed in 610 B&M UK stores to help better control
their energy consumption and drive further efficiencies. This is an
increase from 310 in FY22.
Installed LED lighting in 614 B&M UK stores and aim to roll this out
across the estate. This is an increase from 181 in FY22.
Investigating the feasibility for installing solar panels across our
estate, with a pilot project for Heron Foods planned for FY24.
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.
Minimised miles travelled and associated GHG emissions by
servicing c.250 stores from our Bedford distribution centre.
Training for HGV drivers was held throughout the year to implement
behavioural changes around how to drive efficiently. These sessions
also aim to ensure our drivers understand the environmental impact
of the sector and their role in reducing the effect.
54 B&M European Value Retail S.A. Annual Report and Accounts 2023
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 40.
Why we engage How we engage, measure and monitor Examples of actions in 2023 Examples of outcomes in 2023
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.
Monitoring our like for like (“LFL”) transaction volume and sales trends.
Holding in-store promotional themed events to measure customer
response and reaction to extra value propositions in different product
areas.
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.
The Company took decisive action in driving its store availability and
standards, to improve customer experience and to encourage repeat
visits (whilst also ensuring that shareholder’s cash is not tied up in
excess stock).
Weekly LFL customer transaction volumes have
consistently grown since the start of Q2-23.
The 3-year LFL suggests that the Company has
held on to a large number of the new customers
who discovered us in FY21.
See the Financial
review on page 20.
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.
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 business continued with listening groups in its Retail, Distribution
and Central Support operations and career opportunities and
personal development were a key theme. Our Step Up development
programmes continued offering career progression for colleagues
looking to apply for Retail Management, Distribution Centre Manager
and first time manager roles in our Support Centre. In addition, the
business has introduced specific listening groups to target colleagues
in ‘hard to reach’ areas and is using this detail to continue to develop
the People Strategy.
The Bi-annual Colleague Survey was completed this year by our
B&M UK and Heron Foods colleagues across all the main operating
functions of those businesses. In October 2022 we saw a slight
decrease in overall Colleague satisfaction score, however the scores
remained high with 91% of people completing the survey, 79% of
whom would recommend B&M as a place to work.
The score is 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 another B&M France colleague survey in
the year, broadening the number of respondents across the business.
This will continue into FY24.
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 introducing new pay rates for
Colleague’s regardless of age.
We responded to this by reviewing pay rates
across the business and increasing hourly rate
across Distribution and the Support functions.
We abolished the Under 18 rate pay in Retail,
increasing the supervisor rate of pay regardless
of age within Retail, a position which we will
continue to review on an annual basis.
See the Colleagues
section in the
Corporate Social
Responsibility
report on pages
39 to 41 and the
standalone ESG
Report.
55B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
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 consumers,
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 and employees.
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 2023 Examples of outcomes in 2023
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.
Monitoring our like for like (“LFL”) transaction volume and sales trends.
Holding in-store promotional themed events to measure customer
response and reaction to extra value propositions in different product
areas.
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.
The Company took decisive action in driving its store availability and
standards, to improve customer experience and to encourage repeat
visits (whilst also ensuring that shareholder’s cash is not tied up in
excess stock).
Weekly LFL customer transaction volumes have
consistently grown since the start of Q2-23.
The 3-year LFL suggests that the Company has
held on to a large number of the new customers
who discovered us in FY21.
See the Financial
review on page 20.
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.
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 business continued with listening groups in its Retail, Distribution
and Central Support operations and career opportunities and
personal development were a key theme. Our Step Up development
programmes continued offering career progression for colleagues
looking to apply for Retail Management, Distribution Centre Manager
and first time manager roles in our Support Centre. In addition, the
business has introduced specific listening groups to target colleagues
in ‘hard to reach’ areas and is using this detail to continue to develop
the People Strategy.
The Bi-annual Colleague Survey was completed this year by our
B&M UK and Heron Foods colleagues across all the main operating
functions of those businesses. In October 2022 we saw a slight
decrease in overall Colleague satisfaction score, however the scores
remained high with 91% of people completing the survey, 79% of
whom would recommend B&M as a place to work.
The score is 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 another B&M France colleague survey in
the year, broadening the number of respondents across the business.
This will continue into FY24.
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 introducing new pay rates for
Colleague’s regardless of age.
We responded to this by reviewing pay rates
across the business and increasing hourly rate
across Distribution and the Support functions.
We abolished the Under 18 rate pay in Retail,
increasing the supervisor rate of pay regardless
of age within Retail, a position which we will
continue to review on an annual basis.
See the Colleagues
section in the
Corporate Social
Responsibility
report on pages
39 to 41 and the
standalone ESG
Report.
Our
values
Our
vision
Our
purpose
+
=
56 B&M European Value Retail S.A. Annual Report and Accounts 2023
Why we engage How we engage, measure and monitor Examples of actions in 2023 Examples of outcomes in 2023
Links and more
information
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.
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 21 new B&M UK stores, seven
B&M France stores and 14 new Heron Foods
stores (including relocations) in the financial
year under review.
Within this number we opened five B&M UK
replacement stores, where older, smaller legacy
stores were replaced with newer B&M state of
the art stores, often with small garden centres.
Typically, replacement stores are at least twice
the size of the stores they replace and are an
important part of the growth strategy.
In the UK this year we created over 1,000 new
retail jobs across our B&M UK and Heron Foods
businesses. In addition, 140 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
Communities
section in the
Corporate Social
Responsibility
report on pages
42 and 43.
Suppl iers
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.
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.
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 Company has continued to outsource
the audit checking processes to Multi-Lines
International Company Limited (“Multi-Lines”)
in relation to the Group’s own direct/non-Multi-
Lines sourced suppliers. This has enabled the
Group to apply a consistent and established
methodology and utilise Multi-Lines expertise
and connections across Asia on our behalf.
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
workstreams.
See the Supply
Chain section of the
Corporate Social
Responsibility
report on pages
44 and 45.
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.
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.
In the post pandemic world, video conferencing and remote meetings
have become much more widespread and consequently it has been
possible to reach a larger number of investors, more regularly across
a wider geographical area. Regular investor briefings help with our
substantial number of overseas shareholders, including regular
updates with such shareholders in Australia and North America.
The Group extended its borrowing maturity profile through a bank
facility extension and in support of our overall leverage levels.
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, the opportunity to make
further returns to shareholders in addition to its ordinary dividend
policy.
The company declared a special dividend
of 20p per share in January 2023 which was
within the Group’s stated leverage ceiling
of 2.25x net debt to adjusted EBITDA.
See the Viability
Statement on
page 33 and
also the Financial
review on page 20.
Stakeholders and Section 172 Statement continued
57B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
Why we engage How we engage, measure and monitor Examples of actions in 2023 Examples of outcomes in 2023
Links and more
information
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.
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 21 new B&M UK stores, seven
B&M France stores and 14 new Heron Foods
stores (including relocations) in the financial
year under review.
Within this number we opened five B&M UK
replacement stores, where older, smaller legacy
stores were replaced with newer B&M state of
the art stores, often with small garden centres.
Typically, replacement stores are at least twice
the size of the stores they replace and are an
important part of the growth strategy.
In the UK this year we created over 1,000 new
retail jobs across our B&M UK and Heron Foods
businesses. In addition, 140 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
Communities
section in the
Corporate Social
Responsibility
report on pages
42 and 43.
Suppl iers
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.
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.
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 Company has continued to outsource
the audit checking processes to Multi-Lines
International Company Limited (“Multi-Lines”)
in relation to the Group’s own direct/non-Multi-
Lines sourced suppliers. This has enabled the
Group to apply a consistent and established
methodology and utilise Multi-Lines expertise
and connections across Asia on our behalf.
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
workstreams.
See the Supply
Chain section of the
Corporate Social
Responsibility
report on pages
44 and 45.
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.
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.
In the post pandemic world, video conferencing and remote meetings
have become much more widespread and consequently it has been
possible to reach a larger number of investors, more regularly across
a wider geographical area. Regular investor briefings help with our
substantial number of overseas shareholders, including regular
updates with such shareholders in Australia and North America.
The Group extended its borrowing maturity profile through a bank
facility extension and in support of our overall leverage levels.
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, the opportunity to make
further returns to shareholders in addition to its ordinary dividend
policy.
The company declared a special dividend
of 20p per share in January 2023 which was
within the Group’s stated leverage ceiling
of 2.25x net debt to adjusted EBITDA.
See the Viability
Statement on
page 33 and
also the Financial
review on page 20.
58 B&M European Value Retail S.A. Annual Report and Accounts 2023
Committed to the highest standards
of corporate governance
Corporate Governance report
Chairman’s introduction
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 pages 8 and 9, 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.
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 27 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
Group 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.
Committee membership:
NOM
59B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
The Board of Directors of B&M European Value Retail S.A.
Meet our Board
Mike Schmidt
Chief Financial Officer
Appointment: November 2022
Mike joined the B&M Group on 17 October 2022
and the Board as the Group’s Chief Financial Officer
on 1 November 2022.
Prior to joining B&M, Mike spent over eight years at
publicly listed home furniture retailer DFS Furniture
plc, where he was appointed Group Chief Financial
Officer in 2019. During his time at DFS, Mike
additionally held executive responsibility for
property, strategic development, legal & compliance,
and financial services activities, and was non-
executive Chair of DFS’s trading subsidiaries Dwell
and Sofa Workshop. Mike began his career in
corporate finance, and gained 13 years’ experience
of working for top tier investment banks including
Citi and UBS, across equity, debt and M&A advisory
for various large cap international corporations.
Mike has an MA in Economics and Management
from Cambridge University.
Committee membership:
Nil
Alex Russo
Chief Executive 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. On 26 September 2022,
Alex was appointed as Chief Executive Officer.
Alex has had a long senior career in retail, having
successfully held Executive Board positions in
leading international retailers including Asda
Walmart, Tesco plc, Kingfisher plc, and Boots 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,
Europe, America and Asia. His experience spans
listed multinational, PE and family owned
businesses.
Alex has also been a Non-Executive Director in
leading consumer goods businesses in the UK
and internationally.
Alex holds an MBA from the London Business School
with Distinction, and undergraduate 1st class
degrees in Engineering and Finance.
Committee membership:
Nil
Simon Arora
Executive Director
Appointment: December 2004
Simon was Chief Executive Officer of the B&M Group
from 1 December 2004 until the appointment of
Alex Russo to that role on 26 September 2022.
He has a background in consumer goods, corporate
finance and consulting. Simon was a co-founder
and Managing Director of the 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 Group plc and Barclays Bank plc. Simon was
a member of the Nomination Committee of B&M
until 19 January 2023.
Subsequent to the year end, Simon retired from the
Board on 21 April 2023.
Committee membership:
Nil
Committee membership key
A&R
Audit & Risk
REM
Remuneration
NOM
Nomination
Committee Chair
60 B&M European Value Retail S.A. Annual Report and Accounts 2023
The Board of Directors of B&M European Value Retail S.A. continued
Meet our Board continued
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
Chief Executive Officer 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.
On 15 September 2022, it was announced that
Tiffany would succeed Ron McMillan as Senior
Independent Director after the Annual General
Meeting of the Company in July 2023.
External appointments:
Tiffany is a Non-Executive Director of Symington
Family Estates SA.
Committee membership:
REM
NOM
Carolyn Bradley
Independent Non-Executive Director
Appointment: November 2018
Carolyn has an in-depth retail and consumer
business background. She worked for Tesco plc for
over 25 years until 2013. During that time, she held a
number of senior positions, including Chief Operating
Officer of Tesco.com and Commercial Director, for
Tesco Stores.
Carolyn has decided not to stand for re-election
at the Annual General Meeting to be held on
25 July 2023. As such, Carolyn will retire as a
Non-Executive Director of the Company at the
conclusion of the AGM.
External appointments:
Carolyn is Chair of The Works plc, the Senior
Independent Director and Remuneration Committee
Chair of SSP Group plc, a Non-Executive Director of
The Mentoring Foundation and Majid Al Futtain Retail
LLC and a Member on the Advisory Board of
Cambridge Judge Business School.
Committee membership:
A&R
REM
NOM
Carolyn is also the Designated Non-Executive
Director for Workforce Engagement.
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.
On 18 August 2022, the Company announced that
Ron would retire from the business at the Annual
General Meeting of the Company in July 2023, at
which time he would have completed 9 years’ service
in the role and would be replaced as Chairman of
the Audit & Risk Committee by Oliver Tant and as
Senior Independent Director of B&M, by Tiffany Hall.
Due to Carolyn Bradley’s retirement, Ron has agreed
to continue as a Non-Executive Director for an
additional year until the AGM in 2024.
External appointments:
Ron is the Chairman of N Brown Group plc and is the
Senior Independent Director and Audit Committee
Chairman of SCS plc.
Committee membership:
A&R
REM
NOM
61B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
Committee membership key
A&R
Audit & Risk
REM
Remuneration
NOM
Nomination
Committee Chair
Paula MacKenzie
Independent Non-Executive Director
Appointment: November 2021
Paula has a strong background in general
management and finance. Paula is Chief Executive
Officer of Pizza Express and previously held a number
of senior executive roles at Kentucky Fried Chicken
(Great Britain) Ltd, 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
Oliver Tant
Independent Non-Executive Director
Appointment: November 2022
Oliver has over 40 years’ experience as a finance
professional most recently as Chief Financial Officer
of Imperial Brands plc the FTSE 30 listed consumer
brands company and prior to that for 30 years at
KPMG. At Imperial Brands plc, Oliver held
responsibility for finance but also IT, Procurement,
Legal and Corporate Development. At KPMG he was
a Vice Chairman and during 20 years as a partner
he served a wide variety of listed and privately
owned clients and also ran KPMG’s UK Audit and
Global Financial Advisory Services businesses.
Oliver will become Chairman of the Audit & Risk
Committee after the Annual General Meeting in
July 2023.
External appointments:
Oliver is a Non-Executive Director and Chairman of
the Audit Committee at Redrow plc and a Financial
Consultant for Modulaire/Brookfield Asset
Management. Oliver will be stepping down from
his role at Modulaire on 31 May 2023.
Committee membership:
A&R
NOM
62 B&M European Value Retail S.A. Annual Report and Accounts 2023
Corporate Governance report continued
Code compliance
The Board is committed to high standards of
corporate governance. Except where referred
to on page 78, (workforce engagement on
executive pay) and the postponement of
the annual board effectiveness review as
described on pages 67 and 74, 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 weekly meetings
led by the CEO to review progress and
management activities of the Group.
Board and Committee attendance at scheduled meetings during FY23:
Directors
Board
6
Attended
Audit & Risk
Committee
4
Attended
Nomination
Committee
3
Attended
Remuneration
Committee
3
Attended
Peter Bamford – Chairman 6 – 3 –
Simon Arora
1
6 – 2 –
Alex Russo 6 4 – –
Ron McMillan 6 4 3 3
Tiffany Hall 6 – 3 3
Carolyn Bradley 6 4 3 3
Paula MacKenzie 6 4 3 3
Mike Schmidt (appointed 1 November 2022)
2
3 2 – –
Oliver Tant (appointed 1 November 2022)
3
3 2 3 –
Directors who retired from the Board during FY23 None
1. Simon Arora has a full attendance record up to his retirement from the Nomination Committee on 19 January 2023.
2. Mike Schmidt has a full attendance record during the period from his appointment to the Board on 1 November
2022 for the year under review.
3. Oliver Tant has a full attendance record during the period from his appointment to the Board on 1 November 2022
for the year under review.
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”).
• 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 advisors.
• 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.
• reviewing the Company’s overall
corporate governance and approving
the division of responsibilities of members
of the Board.
Approve Ensure
Review
Schedule of matters reserved to the Board
The following matters are reserved to the Board for its approval:
63B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
Audit & Risk
Committee
This Committee is made up of
four 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 and five 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 three 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, the Group’s General
Counsel and the first layer of
senior management of the
Group below the Board;
• 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.
How we govern
The Board and Committee structure of the Company is as follows:
Terms of Reference of each of the Committees are available on B&M’s website at
www.bandmretail.com
B&M’s Board
The Board of Directors of B&M as at the date of this report has eight members comprising the Chairman,
two Executive Directors and five Independent Non-Executive Directors.
See pages 58 to 61 for more information
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 weekly meetings
led by the CEO to review progress and management activities of the Group.
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.
See page 69 for a copy
of the Committee’s report
See page 74 for a copy
of the Committee’s report
See page 76 for a copy
of the Committee’s report
See page 40 on
Workforce Engagement
64 B&M European Value Retail S.A. Annual Report and Accounts 2023
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 63). The reports of
each of the Committees for the year under
review are set out on pages 69, 74 and 76.
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 certain meetings of the
Board and store tours with the Board during
the course of the year. The senior executive
team participates in the annual strategy day
of the Group.
The implementation of the Board-approved
strategy, policies and decisions is delegated
to the Executive Directors of the Company to
execute 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.
In addition to the regular scheduled meetings,
the Board and Committees have passed a series
of written resolutions during the year in relation
to the formal decisions taken by them. 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
meetings in the year under review 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 28 July 2022
and an Ordinary General Meeting on
31 October 2022.
Board composition
During the financial year 2022/23 the Group
announced the planned retirement of Simon
Arora from the business on 21 April 2022.
Simon ceased to be CEO on 26 September
2022 and remained as an Executive Director
until the end of his notice period on 21 April
2023. On 1 November 2022, Mike Schmidt
was appointed as CFO and Executive Director
and Oliver Tant was appointed as a further
Non-Executive Director.
The Board approved the appointment of Tiffany
Hall, an existing Independent Non-Executive
Director, to be the Senior Independent Director in
succession to Ron McMillan. It was determined
that she had the requisite skills and experience
to fulfil that role, having had a number of years’
experience on a variety of public company
boards as a non-executive director.
Carolyn Bradley has decided not to stand
for re-election at the AGM in July 2023. Ron
McMillan has agreed to continue the role of
Non-Executive Director for an additional year
until the AGM in 2024. Following this year’s
AGM Tiffany Hall will still assume the role of
Senior Independent Director and Oliver Tant will
become Chair of the Audit & Risk Committee.
The Board comprises the Chairman, two
Executive Directors, being the CEO and CFO,
and five 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 Oliver Tant
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. The Code recommends that
the Board identifies each non-executive
director it considers to be independent and
any circumstances which are likely to impair,
or could appear to impair a non-executive
director’s independence. By 29 May 2023,
Ron McMillan will have served on the Board
for more than nine years from the date of his
first appointment. The Board nonetheless
considers that Ron remains independent in
character and judgement. Ron and all the
Non-Executive Directors 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 2023,
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 76 to 91.
Diversity Policy
The Diversity Policy applied to the Board is
based upon the Listing Rules requirements
of LR 9.8 as amended in 2022. 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 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.
65B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
Balance of the Board
Chairman
Executive Directors
Independent Non-Executive Directors
Board diversity by gender
Male 62.5%
Female
37.5%
Non-Executive Directors’ tenure
Less than 3 years 40%
3+ years
60%
5
1
2
62.5%
37.5%
60%
40%
Details of the Company’s ethnic and gender
diversity in relation to the Board and executive
management of the Group are included in
the Corporate social responsibility report
on pages 40 and 41.
During the year under review the Company
had one member of the Board from an ethnic
minority background. For the first six months
of the year the position held by this Director
was the senior Board position of CEO and
subsequently Executive Director.
The Executive Committee of the first level of
senior management below the Board has one
ethnic minority member out of a total of six
members, being the Group Trading Director.
During the year under review the Company
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 for
the first seven months of the year was 42%.
With the appointment of two new male
Directors in November 2022 the percentage of
female Board members as at the year-end was
33%. With the retirement of one male Director
in April 2023, the Board will have 37.5% female
representation at the time of the 2023 AGM.
Carolyn Bradley has decided not to stand
for re-election at the AGM in July 2023. Ron
McMillan has agreed to continue the role of
Non-Executive Director for an additional year
until the AGM in 2024. As a consequence of
these changes, in addition to Simon Arora’s
retirement and the succession appointments
announced earlier, the Board is not fully
compliant with the new Listing Rules with respect
to diversity. Simon’s retirement means that we
do not currently have a Director from an ethnic
minority background and the combination of
Director changes means that we will not meet
the requirement for 40% of the Board to be
female in the immediate future. We are planning
to appoint at least one Non-Executive Director
and ensure full compliance by the time Ron
McMillan steps down from the Board at the AGM
in 2024 at the latest. Recruitment processes are
underway to address these issues.
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.
In FY23 the Company collected data in respect of
diversity from its new starters. Colleagues are
encouraged to give their ethnic origin, sexual
orientation, religion, any disability and gender
in accordance with government guidelines.
Data collection is performed on the basis of
self reporting by the individual concerned.
Conflict of interests
Simon and Bobby Arora own 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;
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’s key responsibilities:
Alex Russo, 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 at 30 May 2023
66 B&M European Value Retail S.A. Annual Report and Accounts 2023
Corporate Governance report continued
• 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 Simon Arora
did 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.
In FY23 there was 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 were either not
available or timings were not feasible. The
chartering of the plane by the Group was 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 had oversight on behalf of the Board
of the usage and costs, to ensure it complied
with the Board approved policy for business use
only and that costs did not exceed market rates.
These transactions were within the exemption
for small related party transactions under the
Listing Rules, being below 0.25% under the class
tests. Prior to the year end, the private jet owned
by the Arora family interests was sold and
consequently the process is no longer required.
In the financial year under review, the Board
reviewed the Related Party Transaction process
in the context of the retirement of Simon Arora.
All related party transactions will continue to
be reviewed by the Related Party Committee
in accordance with its terms of reference.
See pages 94 and 95 in relation to details of
related party transactions entered into in the
financial year 2023 and also as set out in note
26 on pages 144 and 145 of the financial
statements.
Audit & Risk Committee
In August 2022, the Group announced that Ron
McMillan (currently Senior Independent Director
and Chair of the Audit & Risk Committee) would
be retiring as a Chairman and that Oliver Tant
would succeed Ron as Chair of the Audit & Risk
Committee. Oliver has the requisite recent and
relevant financial experience for the role.
Details of Oliver’s experience is detailed in his
biography at page 61.
The Audit & Risk Committee consists of four
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, Paula MacKenzie and Oliver
Tant (subsequent to his appointment on
1 November 2022). 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 60 and 61.
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 63.
All meetings of the Committee are attended
by the CFO. The Chairman of the Board and
the CEO are also invited to attend. The Group’s
Internal Audit function, the Group Financial
Controller and the Luxembourg and UK audit
partners of the Group’s external auditors
also attend.
The Audit & Risk Committee Report on pages 69
to 73 sets out details of the role and activities of
the Committee in the last financial year.
Remuneration Committee
The Remuneration Committee consists of
three 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 63.
All meetings of the Committee are attended
by the Group People Director. The Chairman
of the Board and the CEO regularly attend
meetings of the Committee, 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
76 to 91 sets out details of the role and activities
of the Remuneration Committee in the last
financial year.
Nomination Committee
The Nomination Committee consists of six
Directors, being the Chairman of the Board
(who chairs the Nomination Committee), and
each of the five 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 until he stepped
down on 19 January 2023, Ron McMillan,
Tiffany Hall, Carolyn Bradley, Paula MacKenzie
and Oliver Tant (subsequent to his appointment
on 1 November 2022).
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 63.
The Nomination Committee Report on pages 74
and 75 sets out details of the role and activities
of the Committee in the last financial year.
67B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
Board and Committees
effectiveness review
A formal review of the effectiveness of the
Board and Committees was last conducted in
March 2022 and gave very positive feedback
which was reported on in last year’s Annual
Report and Accounts. Due to the number of
changes of directors and roles on the Board,
in particular the appointments of Alex Russo
and Mike Schmidt as CEO and CFO respectively
during the year, it was considered more
appropriate to allow a period of time for the
management team to establish itself before
conducting a review and the newly appointed
directors to attend sufficient Board and
Committee meetings to experience the proper
workings of the Board. The next review will be
external and will be carried out in Autumn 2023.
In normal years when no external review is
conducted, the Board pursues an internal
review process. As part of that process the
Chairman has 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 complete confidential
questionnaires in relation to the Board and
each of its three main standing Committees.
The process is co-ordinated by the Group’s
General Counsel who prepares a report on
the feedback provided by the Directors which
is then presented to the Board who discuss
the main themes and points arising from it.
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.
Approach to ESG governance
The Board held a number of discussions
throughout FY23 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, in accordance
with the Board’s 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.
The Board considered whether to create a
separate ESG Committee but decided to
continue to keep the review of the ESG strategy
at Board level.
Appointments, induction
and development
Where any new Director is appointed by
the Board, the Nomination Committee leads
the process and 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 Mike Schmidt as a new
Executive Director and Oliver Tant 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.
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
The Nomination Committee has recommended
that each of the Directors be re-elected to the
Board. This is except for Carolyn Bradley who
has notified the Company that she will not be
seeking re-election to the Board at the AGM
on 25 July 2023.
The Board and the Chairman consider that
all the members of the Board standing for
re-election at the AGM 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.
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, supported by
the Internal Audit function, 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.
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.
68 B&M European Value Retail S.A. Annual Report and Accounts 2023
Corporate Governance report continued
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 a bi-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: 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 of 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 2023 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 32.
Regulatory framework
Shares in the Company are dematerialised
and held through an EU member state central
securities depositary.
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.
Shareholder relations
The Board recognises that good
communication is key to maintaining
shareholder relations. The Company recently
appointed a senior IR professional to act
as the first point of contact with shareholders.
Meetings and calls are regularly held with
institutional investors and analysts in order
to provide the best quality information to
the market.
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.
Other disclosures
Where information is applicable under
Listing Rule 9.8.4R in relation to the Group,
the following matters can be found on pages
94 and 95 of this report:
a. Relationship Agreement; and
b. independence statement.
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 92 to 96.
Peter Bamford
Chairman
30 May 2023
69B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
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 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 33, in the principal risks and uncertainties
section of the Strategic Report.
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”).
Further information on the Committee’s
responsibilities and the manner in which
they have been discharged is set out below.
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 25 July 2023
to answer any questions you may have on
this report. At the conclusion of this meeting.
I will be retiring as Chairman of the Audit &
Risk Committee and handing over the
Chairmanship to Oliver Tant. Oliver joined
the Committee in November 2022.
I would like to thank my colleagues on the
Committee for their continued help and
support during the year.
Ron McMillan
Chairman of the Audit & Risk Committee
30 May 2023
70 B&M European Value Retail S.A. Annual Report and Accounts 2023
Audit & Risk Committee report continued
I shall be stepping down as Chairman of
the Committee at the AGM in July 2023 after
nine years’ service. My successor Oliver Tant
will 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.”
Committee composition
The Committee comprises four 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,
and we also benefit from Paula MacKenzie’s
and Oliver Tant’s former experiences as CFO’s.
All members are expected to understand
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 60 and 61, 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,
Paula MacKenzie and Oliver Tant from his
appointment on 1 November 2022. Details of
Committee meetings, Teams meetings and
attendances are set out on page 62 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, Mike
Schmidt, CFO, our Group Financial Controller
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 2022/23
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;
• consideration of significant areas of
accounting estimation or judgement;
• consideration of the significant risks
included in the Annual Report;
• consideration of fraud risks and the controls
in place to detect any occurrences;
• approval of the external auditors terms of
engagement, audit plan and fees;
• review of the effectiveness and
independence of the external auditors;
• 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;
• the relative of prominence of IFRS figures
and other financial metrics;
• accounting practices in relation to
warehouse dilapidations liabilities;
• goodwill impairment in relation to each
of the companies in the Group;
• hedge accounting;
• preparations for upcoming changes to
UK Corporate Governance legislation; and
• the process and controls around the rollout
of the new finance system.
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.
These APMs are described in Note 1 of the
financial statements and a reconciliation of the
APMs to the equivalent IFRS measures is
provided in note 3.
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.
71B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
The meetings and teams meetings at which the following matters were considered are set out below:
Sept
2022
Nov
2022
Jan
2023
May
2023
Internal Audit (“IA”)
IA annual evaluation •
IA work plans, reports and updates • • • •
External Audit
Audit reports on preliminary results and Annual Report FY23 •
Audit report on the Group’s interim results FY23 •
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 • •
Relative prominence of non-IFRS measures •
Accounting for property dilapidation costs •
Goodwill impairment testing • •
Preparations for upcoming changes to UK Corporate Governance legislation • •
The process and controls around the rollout of the new finance system • •
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 FY22 and FY23 • •
B&M Retail
Supply chain (Multi-Lines) •
IT cyber security follow-up •
Fixed assets and fixed asset registers •
Corporate policy compliance •
Health and safety – fire safety regulations (stores) •
Store Challenge 25 •
Procurement (goods not for resale) •
Colleague expense claims and Concur expense approval •
HR employee Right to Work •
End-to-end colleagues salary payment •
Distribution centres – waste management and recycling •
New store opening procedures •
Physical access controls (Support Centre, Vault and Qube distribution centres) •
Distribution centre – contractual maintenance •
Merchandising – obsolete stock •
Motor fleet insurance •
Risk register mitigations • •
Balance sheet controls •
Stock count attendance •
Heron Foods
Pension auto enrolment •
Working Time Regulations 1998 •
Corporate policy compliance •
B&M France
Corporate policy compliance •
Risk register creation •
Procurement (goods not for resale) •
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 FY23 are set out in the
principal risk section of this Annual Report
on page 31 including the benefits from
significant investment in new IT systems
during FY23.
72 B&M European Value Retail S.A. Annual Report and Accounts 2023
Audit & Risk Committee report continued
Regulation
The Group operates within a fast moving and
increasingly regulated marketplace 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.
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 pages 65 and 66 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. the risks and the impact they may have;
2. actions to mitigate risks;
3. risk scores to highlight the implications
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 32.
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 APMs obscured IFRS
measures.
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 & Risk Committee
has discussed and challenged the assumptions
implicit in the Group’s budgets and forecasts.
The Group’s Viability Statement is on page 33.
Fair, balanced and understandable
The Committee considered whether the 2023
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 2023 Annual Report and Accounts are fair,
balanced and understandable.
External auditors
KPMG Audit S.à r.l. (KPMG) were re-appointed
by shareholders at the Annual General Meeting
on 28 July 2022 as the Group’s independent
external auditors (réviseur d’entreprises agréé)
for the financial year ended 25 March 2023.
The partners responsible for the audit are
Thierry Ravasio, a partner in KPMG’s
Luxembourg office and Andrew Cawthray,
a partner in KPMG’s Birmingham 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;
73B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
2. in conjunction with the CFO and senior
members of the finance team, the Audit &
Risk 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 2022 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 2022 Transparency Report,
the Committee noted the firm’s commitment to
delivering the right standards of governance,
culture, 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 2022.
The Committee was encouraged that KPMG
had, following significant work on its Audit
Quality Transformation Plan, seen strong
improvements to audit quality inspection results
at both the overall and FTSE 350 level. Overall
scores for KPMG were in line with leading peers,
with the critical areas for improvement still
identified being around its banking audit activity
– which does not affect the Group’s business.
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 AGM on
25 July 2023. Given KPMG’s short tenure of
six 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 & Risk Committee asked
KPMG to look at specifically. KPMG’s report to
the Audit & Risk 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 & Risk 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 & Risk
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 £1,229,000 during the year in
relation to audit work and £20,000 in relation to
work associated with audit related assurance
services. Fees for other services provided by
KPMG were £98,000 which principally related
to other assurance services.
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 113 of
the Annual Report. These relate to investments
in associates and hedge accounting.
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 71.
In relation to each of the areas covered,
Internal Audit made recommendations for
improvements, all 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 will be evaluated as part of a broader
Board performance review to be conducted
externally and led by the Chairman of the
Board, as described on page 67.
Ron McMillan
Chairman of the Audit & Risk Committee
30 May 2023
74 B&M European Value Retail S.A. Annual Report and Accounts 2023
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 25 March 2023 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 until 19 January 2023
and each of the five Non-Executive Directors
being Ron McMillan, Tiffany Hall, Carolyn
Bradley, Paula MacKenzie and Oliver Tant
following his appointment on 1 November
2022. Since his appointment as CEO Alex Russo
has attended Committee meetings. Allison
Green, the Group People Director, attended
each of the Committee’s meetings during the
year. Details of Committee meetings, and
attendances are set out on page 62 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 63 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 will be evaluated in the autumn of 2023
as part of a broader Board performance review
to be conducted externally and led by the
Chairman of the Board. The review has been
deferred to allow consideration of a fuller period
of performance of the newly composed Board
following a year of very significant change to
the composition of the Board with the retirement
of Simon Arora and the appointments of a new
CEO, new CFO and new Non-Executive Director.
Deferring the review will also allow the new
Directors an appropriate length of time to
understand and input to the working of the
Board and its Committees.
Committee activities
During the year under review the main activities
of the Committee was primarily focused on
succession planning for the several key roles
on the Board. Diversity, wider executive team
development, retention and conflicts of interest
were also considered, each of which are
described in further detail below.
Board succession
As reported last year, Simon Arora announced
his intention to resign as CEO. The Committee
managed a process to appoint a successor
and Russell Reynolds Associates were
appointed to advise and assist the Committee.
Russell Reynolds is a signatory to the voluntary
code of conduct for executive search firms and
they had no other connection with the Group.
It was agreed that Alex Russo, then CFO, was
a strong internal candidate. A thorough
independent assessment of Alex 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 Officer and he took up the position
with effect from 26 September 2022.
The promotion of Alex Russo to CEO created a
vacancy in the position of CFO. The Company
carried out an extensive process with external
executive search consultants Sam Allen
Associates, to identify a successor CFO. Sam
Allen Associates is a signatory to the voluntary
code of conduct for executive search firms,
and they had no other connection with the
Group. Preliminary interviews were carried out
by SamAllen Associates to create a short list of
candidates to be considered by the Executive
Directors and the Nomination Committee. As a
result of process Mike Schmidt joined the Group
as CFO in October 2022 and was appointed
to the Board with effect from 1 November 2022.
Prior to joining B&M, Mike spent eight years
at publicly listed home furniture retailer
DFS Furniture plc, where he was appointed
Group CFO in 2019. During his time at DFS,
Mike has additionally held responsibility for
property, strategic development, legal and
compliance and financial services activities.
Mike has a background in corporate finance,
with 13 years’ experience of working for top tier
investment banks.
In the period under review, the Committee,
led by the Chairman, oversaw the process of
identifying and recommending the appointment
of a new Non-Executive Director to act as
successor to Ron McMillan as Audit & Risk
Committee Chair. The search was carried out by
Odgers Berndtson who carried out preliminary
interviews to create a short list of candidates,
including Oliver, to be considered by the
Nomination Committee. As a result of the
process Oliver Tant joined the Board on
1 November 2022 and will assume the role of
Chair of the Audit & Risk Committee following
the Annual General Meeting in July 2023. Oliver
has over 40 years’ experience as a finance
professional including CFO of Imperial Brands Plc
and prior to that for 30 years at KPMG. Currently
Oliver is a NED at Redrow plc where he chairs
the Audit Committee and is a consultant to
Modulaire, a Brookfield Asset Management
portfolio company. Oliver will be stepping down
from his role at Modulaire on 31 May 2023.
The Committee ensures that a comprehensive
induction process is carried out with all new
Directors on their appointment to the Board.
The details of the induction process carried out
with Oliver and Mike is set out on page 67.
75B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
In August 2022, the Group announced that Ron
McMillan (currently Senior Independent Director
and Chair of the Audit & Risk Committee) would
be retiring as a Director at the conclusion of the
Company’s AGM in July 2023 and that Oliver
Tant would succeed Ron as Chair of the Audit &
Risk Committee when he retired from the Board.
Oliver has the requisite recent and relevant
financial experience for the role. As also
announced in September 2022, Tiffany Hall
would succeed Ron as Senior Independent
Director. Tiffany has served on the Board for five
years and has been Chair of the Remuneration
Committee since 1 January 2020 and has a
wealth of public company board experience
including formerly Senior Independent Director
at Howden Joinery Group plc.
More recently Carolyn Bradley has decided not
to stand for re-election at the AGM in July this
year for personal reasons. In order to ensure
continuity on the Board with the number of
changes in other roles, Ron McMillan has
agreed to continue the role of Non-Executive
Director for an additional year until the AGM in
2024. Following this year’s AGM Tiffany Hall will
still assume the role of Senior Independent
Director and Oliver Tant will become Chair of the
Audit & Risk Committee.
Board diversity
Throughout the year, the Committee has
continued to develop its succession planning
in relation to both Executive and Non-Executive
roles. In particular, 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 pages 40 and
41, the Group’s recruitment processes and
Diversity Policy, recognise the value which
a diverse board brings to its business.
The Committee is aware that the Listing Rules
require 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 reporting financial
accounting periods starting from 1 April 2022.
The period under review in this report therefore
does not require reporting against the revised
Listing Rules requirement. However, the
Company has chosen to report voluntarily its
gender and ethnic diversity and restates its
Diversity Policy in light of the new rules.
For the first half of FY23 the Board met with Listing
Rules gender targets of at least 40% of females
or more appointed to the Board. However, in the
second half of FY23, succession planning for the
key roles of CFO and Chair of the Audit & Risk
Committee has led to the appointments of Mike
Schmidt and Oliver Tant. As a consequence, the
proportion of female Directors on the Board has
fallen below 40% to 37.5%.
As set out above, the Company announced in
September 2022 that the Board would appoint
Tiffany Hall to the position of Senior Independent
Director. This satisfies the target that at least
one of the senior Board positions, Chair, CEO,
CFO or Senior Independent Director should
be a woman.
Prior to Simon Arora’s retirement early in FY24,
the Board complied with ethnic diversity targets
of having at least one director with an ethnic
minority background on the Board. From its
initial public offering in 2014, the Company has
had continual ethnic minority representation
on its Board. The Committee has launched
Non-Executive Director recruitment processes
with Audeliss Limited and Russell Reynolds
Associates with the aim of meeting the Listing
Rules requirement of at least one member of
the Board being from an ethnic minority
background with the 40% gender target
required. It is expected that the Board will be
compliant with these requirements no later than
the AGM in 2024 when Ron McMillan retires.
Page 65 sets out numerical information
on the diversity of the Board and executive
management by gender and ethnicity.
Further details of the Group’s ethnic and
gender diversity policies are set out on
pages 64 and 65.
The percentage of female representation within
the senior management of the Group reporting
either directly to the Board or the Executive
Committee was 40.3% at the end of FY23.
The percentage of ethnic minority representation
within the senior management of the Group
reporting either directly to the Board or the
Executive Committee was 14.3% at the end
of FY23.
In FY23 the Company collected data in respect of
diversity from its new starters. Colleagues are
encouraged to give their ethnic origin, sexual
orientation, religion, any disability and gender
in accordance with government guidelines.
Data collection is performed on the basis of
self-reporting by the individual concerned.
Wider executive team
developments
Jon Parry joined B&M in August 2022 as UK
Supply Chain Director. Jon has over 15 years’
experience at Director level across Retail and
Supply Chain in both Strategic and Operational
roles. He has previously worked for Walmart
Inc, Asda Stores Ltd and the convenience food
chain Somerfield Stores Ltd.
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.
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.
Peter Bamford
Chairman of the Nomination Committee
30 May 2023
76 B&M European Value Retail S.A. Annual Report and Accounts 2023
Directors’ remuneration report
Dear Shareholder,
I am pleased to present the Company’s
Remuneration Report for 2022/23. This report
contains:
• The Company’s Annual Report on
Remuneration on pages 79 to 88, which
details the remuneration paid to the
Directors in the 2022/23 financial year, and
which is subject to a shareholder advisory
vote at our 2023 Annual General Meeting
(“AGM”).
• A summary of the key elements of the
Directors’ Remuneration Policy on pages 89
to 91, as approved at the 2021 AGM.
Performance and incentive
outcomes for 2022/23
The Group has continued to perform well and
execute its strategy with a relentless consistency
and discipline. Group revenues increased by
6.6% to £4,983m with growth across all three
businesses. Group adjusted EBITDA was
£573m (FY22: £619m) with a margin of 11.5%
– significantly ahead of pre-pandemic levels of
£342m. This year we have seen trading patterns
normalise post-pandemic and the Group now
has a new underlying profit base on which to
build for further future growth. These financials
are a key indicator of the robustness of the
B&M business model and the success of the
management team delivering on our strategy.
As a business, we have continued to strengthen
our overall operational performance across
the Group by driving investments in financial
systems, IT and supply chain. We have given
even greater focus to ensuring that we offer
our customers great value and great products
and that, throughout our Company, we have
availability of these products consistently day
in day out which is a key enabler for our
future growth.
The resulting Annual Incentive Plan (“AIP”)
out-turn was 56.9% for Simon Arora, 56.9%
for Alex Russo and 55.7% for Mike Schmidt, of
their respective maximums. Half of the bonus
achieved under the AIP in 2022/23 will be
deferred into shares for three years.
The 2020 LTIP three-year performance period
ended on 31 March 2023. The award was
subject to two equally-weighted performance
conditions being the adjusted earnings per
share and the relative total shareholder return
(“TSR”) performance of the Company against
FTSE 350 retailers. The TSR performance
resulted in a 100% out-turn for that measure.
The adjusted earnings per share was 36.5p
relative to a maximum target of 30p, 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 30 July 2025
following a two-year holding period. Simon
Arora was the only Executive Director serving
during 2022/23 to receive an award under the
2020 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.
Taking into account the above considerations,
the Committee has determined that the
formulaic outcomes are appropriate both in the
context of business performance and broader
employee considerations and therefore has not
exercised discretion.
Changes to Directors
As announced on 31 May 2022, Alex Russo
succeeded Simon Arora as the Group CEO,
stepping into the role on 26 September 2022. As
disclosed in last year’s Directors’ remuneration
report, his remuneration package comprises a
base salary of £800,000, slightly below the
outgoing CEO’s salary, and incentives for the
CEO role as approved by shareholders within
the Directors’ Remuneration Policy. The
Remuneration Committee took account of the
additional responsibilities and workload during
Alex Russo’s transition to the Chief Executive
Officer role. It was determined that a one-off
role-based allowance of £100,000 should be
paid to Alex to remunerate him fairly and
commensurate with his significant contribution
during this involved period of transition to
succeed Simon Arora, a long-standing and
accomplished Chief Executive Officer, as well
as running the finance team during this period.
This allowance is fixed and is not pensionable,
nor does it attract any bonus opportunity.
As announced on 15 September 2022,
SimonArora retired as the CEO effective from
26 September 2022 but remained as an
Executive Director until the end of his notice
period on 21 April 2023. Simon was not eligible
for an LTIP award during the year, and the
Committee determined to treat his unvested
incentives as set out on page 82. In addition,
the Committee determined that Simon would
be eligible for an annual bonus for 2022/23
in respect of the full year on the basis that he
actively worked throughout the financial year.
Annual statement by the Chair
of the Remuneration Committee
77B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
Mike Schmidt replaced Alex Russo as CFO on
17 October 2022, as announced on 5 July 2022.
He was subsequently appointed to the Board
of Directors on 1 November 2022. His package
comprises a base salary of £450,000 and
incentives as approved by shareholders within
the Directors’ Remuneration Policy, as well as
a one-off award of nil-cost options valued at
£250,000 in relation to remuneration forfeited
on joining B&M. This award is subject to
continuous employment and vests in equal
amounts on the first and second anniversary
of grant. In addition, Mike has been granted a
travel and overnight accommodation budget
for the first 12 months of employment following
his start date to assist with additional costs as
he transitions into his new role.
Shareholder engagement
The Remuneration Committee welcomes any
comments or questions from shareholders,
and believes that the remuneration packages
outlined for this year and for 2023/24 are fair
and reflective of the responsibility and
complexity of the roles.
Implementation of remuneration
policy for 2023/24
The Committee determined that salary
increases of 4% should be awarded to the
Executive Directors, in line with the wider
workforce, effective from 1 April 2023.
The resulting operation of policy for 2023/24
will be as follows:
Element Implementation for 2023/24
Base salary • Alex Russo (CEO): £832,000 (currently £800,000)
• Mike Schmidt (CFO): £468,000 (currently £450,000)
AIP • 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
LTIP • Award of 200% of salary for CEO and 175% of salary for CFO
• 50% based on adjusted EPS and 50% based on relative TSR vs FTSE 350 retailers
Pension • 3% of salary less employer’s National Insurance contributions (“NICs”)
Conclusion
I hope that you find the information in this
report helpful and informative, and that you
can support the decisions made this year
in relation to the implementation of our
remuneration policy for 2022/23 and how
we intend to operate our policy in 2023/24.
The Committee is keen to hear any feedback
on the information set out in this report. If any
questions or comments do arise then please
contact me, or alternatively I will be available
at the AGM to take any questions.
Tiffany Hall
Chair of the Remuneration Committee
30 May 2023
78 B&M European Value Retail S.A. Annual Report and Accounts 2023
Directors’ remuneration report continued
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 2022/23 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.
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 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
TSR assessed alongside stretching personal
objectives which recognise delivery against
defined goals. We will continue with this
approach for 2023/24 in line with the
approach for 2022/23;
• 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
2023/24 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 Directors’ Remuneration
Policy includes 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
TSR 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.
Luxembourg Law
The Luxembourg Law of 24 May 2011 on certain
rights of shareholders at general meetings
of listed companies (as amended by the law
of 1 August 2019) which adopts the EU
Shareholders’ Directive 2017/828 on directors’
remuneration requires that the remuneration
policy of the Company be put to shareholders
to vote at least once every four years. However,
in accordance with the Company’s voluntary
policy since the IPO of putting the remuneration
policy to shareholders for voting on every three
years, that practice will continue to be followed,
which will comply with the recent changes in
the 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.
79B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
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 28 July 2021.
This section of the report sets out how the Policy has been applied in the financial year 2022/23 and how the Policy will be applied in the financial
year 2023/24.
Where sections of the report have been subject to audit, they are marked accordingly.
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 2022/23.
Executive Directors Year
1
Salary
£
Benefits
2
£
Pension
3
£
Bonus
4
£
Long-term
incentives
5
£
Other
£
Total
£
Total
fixed pay
£
Total
variable pay
£
Simon Arora
8
(CEO) 2021/22 810,000 45,104 21,514 1,549,125 1,943,066 − 4,368,809 876,618 3,492,191
2022/23 834,300 51,276 21,928 830,261 1,731,169 − 3,468,934 907,504 2,561,430
Alex Russo
8
(former
CFO/CEO successor)
2021/22 475,000 43,503 12,522 556,640 − 150,000 1,237,665 531,025 706,640
2022/23 650,000 24,288 17,207 668,178 − 250,000
6
1,609,673 791,495 818,178
Mike Schmidt
9
(CFO successor)
2021/22 − − − − − − − − −
2022/23 199,038 27,458 5,190 163,984 – 250,000
7
645,670 231,686 413,984
1. The 2021/22 year is for the 52 weeks ended 26 March 2022 and the 2022/23 year is for the 52 weeks ended 25 March 2023.
2. Benefits include company car/car allowance cash equivalent as a benefit in kind, fuel and running costs, critical illness insurance, healthcare insurance and life assurance.
The amount for Mike Schmidt includes £19,806 in respect of travel and overnight accommodation to assist with additional costs as he transitions into his new role.
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 2022/23 being £415,131 for Simon Arora, £334,089 for Alex Russo and £81,992 for Mike Schmidt, are payable in shares
which are to be deferred for a period of three years from the date of grant.
5. The 2020/21 LTIP award granted to Simon Arora has completed its performance period and is included in the 2022/23 Long term incentives figure. It will vest on the expiry of the
holding period on 30 July 2025. The value is estimated based on a vesting of 100%, the three-month average share price to the year-end of £4.67 and the accrued dividends to
the year-end. Share price appreciation accounts for £10,204 of the value, with dividends forming the most significant contribution to the vesting outcome. The value of the 2019/20
LTIP award has been trued up from the estimate provided in last year’s report to reflect the value after three years from grant (at which point it is no longer subject to continued
service), based on a share price of £4.309 on 2 August 2022.
6. A final payment of £150,000 made to Alex Russo in respect of the 2022/23 portion of his buy-out award regarding remuneration forfeited on joining B&M. In addition, as set out
in the Chair’s statement, the amount includes a payment of £100,000, as a one-off role-based allowance to remunerate Alex Russo fairly and commensurate with his significant
contribution during this involved period of transition to succeed Simon Arora, as well as running the finance team during this period.
7. A one-off award of nil-cost options worth £250,000 was made to Mike Schmidt in relation to forfeiture of incentive compensation on joining B&M. The award vests in equal
amounts on the first and second anniversary of grant.
8. Simon Arora retired from his position as CEO on 26 September 2022, when former CFO, Alex Russo, took his position. Simon continues to serve the Board as an Executive Director
until the end of his notice period on 21 April 2023.
9. Mike Schmidt was appointed to the position of Chief Financial Officer on 17 October 2022 and was subsequently appointed to the Board on 1 November 2022.
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 £834,300 and £500,000 respectively, effective from 1 April 2022. Alex Russo received a salary of
£800,000 effective from his appointment as CEO on 26 September 2022. Mike Schmidt received a salary of £450,000, effective from his date of
appointment on 17 October 2022.
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 2022/23 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.
Annual Report
on Remuneration
80 B&M European Value Retail S.A. Annual Report and Accounts 2023
Directors’ remuneration report continued
AIP outcomes
Executive Directors’ bonus payments for 2022/23 are in line with the Policy and the terms of the AIP.
75% of the maximum AIP opportunity related to the achievement of financial targets for 2022/23. The targets were based on adjusted Group EBITDA
performance as follows:
Adjusted Group
EBITDA target*
% maximum
overall bonus
opportunity
Threshold £517.5m 18.75%
Target £575.0m 37.5%
Maximum £603.8m 75.0%
Actual £573.1m 36.9%
* 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.
In the light of the appointment of Alex Russo as CEO half way through the year, the changing economic circumstances and the resulting development
of strategy, the Committee determined that it was appropriate for the like for like (“LFL”) sales target to be measured in two half years. In the first half of
the year the target was not met, and in the second half of the year the maximum target was exceeded. As such, 50% of the LFL sales element was
awarded (representing 2.5% of the total annual bonus for Simon Arora and Alex Russo).
Simon Arora
Objectives Performance Overall outcome
1. Team: (40%)
– Progress the succession plan for the CFO appointment and deliver
smooth transition to new CEO, ensure successful on-boarding for
senior recruits and ensure transition plan for property.
Fully achieved with smooth transition to the new CEO
and successful onboarding of CFO, Supply Chain
Director and Property Director.
20 out of 25
2. LFL sales vs budget (20%) Partially achieved with the LFL sales target not met in the
first half of the year and exceeded in the second half.
3. Growth (20%)
– Review of growth and store format options to be presented to Board
and delivery of store openings.
Partially achieved – New openings and store expansions
were high-quality although the number was below
target. Robust growth plan presented to the Board.
4. Stakeholders (10%)
– Maintain a diverse and balanced investor base and ensure clear
communication of strategies.
– Deliver an effective programme of stakeholder engagement to
maintain strong external relationships.
Fully achieved with clear communication of strategy
to investor base and effective engagement with key
external stakeholders.
5. Ensure effective implementation of year 1 ESG strategy (10%) Fully achieved – Year 1 ESG strategy implemented with
all ESG work streams on track.
Alex Russo
Objectives Performance Overall outcome
1. Team (20%)
– Onboarding of new CFO and strengthening of team in France.
Fully achieved with successful onboarding of the CFO,
quality senior hires in France and creation of a high
performing executive team.
20 out of 25
2. IT: (15%)
– Delivery of an effective IT strategy, to include successful implementation
of new finance solution.
– Maintain cyber security and limit network or distribution centre
downtimes to a minimum.
Fully achieved with tangible enhancements to
IT operating resilience and new finance system
implementation on track.
3. France: (15%)
– EBITDA.
– Operational improvement.
– Accelerated growth plan.
Fully achieved due to strong EBITDA out-turn driven by
LFL and new store growth and increasing consistency
of operational performance.
4. LFL sales vs budget: (20%) Partially achieved – LFL target not met in first half of
year and exceed in the second half.
5. Growth (20%)
– Review of growth and store format options to be presented to Board
and delivery of store openings.
Partially achieved – Strong performance from new
openings and store expansions but number of openings
below targets. Clear store format agreed with Board.
6. Ensure effective implementation of year 1 ESG strategy (10%) Fully achieved – Year 1 ESG strategy implemented with
all ESG work streams on track.
81B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
Mike Schmidt
Objectives Performance Overall outcome
1. Financials (40%)
– Group EBITDA.
– Effective year-end statutory audit and Annual Report preparation
and financial planning.
Partially achieved – Group EBITDA delivered within
externally guided ranges, with financial operations
process on plan.
18.75 out of 25
2. Operational (30%)
– Preparation for successful finance IT implementation.
– Stock loss.
– Development of effective and focused ESG workstreams.
Partially achieved – Finance and ESG programmes
fully on track. Stock loss trends reflecting broader
retail environment.
3. Leadership team development (30%)
– Effective working relationship with senior management team.
– Effective execution of GCA Code Compliance Officer role.
– On-board new finance appointments.
Partially achieved – induction programme is fully
on-plan.
The table below sets out the resulting bonuses earned, including the amounts deferred into shares for a three-year period:
Executive Director
Bonus maximum as
% salary
Bonus earned
as % maximum
Bonus earned
£
1
Of which paid
in cash
£ (50%)
Of which deferred
in shares
£ (50%)
Simon Arora 200% (for period as CEO)
150% (for period as Executive Director)
56.9% 830,261 415,130 415,131
Alex Russo 200% (for period as CEO)
150% (for period as Executive Director)
56.9% 668,178 334,089 334,089
Mike Schmidt 150% 55.7% 163,984 81,992 81,992
1. For Mike Schmidt, amounts are pro-rata to reflect the proportion of the financial year served as CFO.
The Committee considered that overall performance had been strong during 2022/23 and that the AIP outcomes appropriately reflected individual
and business outcomes. No discretion was used in assessing the outcomes as set out above.
Long-term incentive outcome
The LTIP award granted to Simon Arora on 30 July 2020 had a combination of adjusted EPS and relative TSR conditions with equal weighting.
The performance period ended on 31 March 2023 and the outcomes are provided below.
Performance condition Weighting
Performance for
threshold vesting
(25%)
Performance for
maximum vesting
Actual
performance Vesting
Adjusted EPS 50% 25p 30p 36.5p 100%
Relative TSR vs FTSE 350 retailers
1
50% Median Upper quartile
Above 1st rank of
13 comparators
excluding B&M 100%
Total 100%
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.
The resulting awards due to vest are as follows:
Executive Director
Number of
awards granted
Number of awards
due to vest
due to meeting
performance
condition
Dividend shares
earned to year-end
Total shares
due to vest
Total value
£
1
Simon Arora 283,436 283,426 86,970 370,406 1,731,169
1. Based on the average share price of £4.67 during the three-month period to 31 March 2023.
The awards are due to vest following the expiry of the holding period on 30 July 2025.
82 B&M European Value Retail S.A. Annual Report and Accounts 2023
LTIP awards granted during the financial year – audited
LTIP awards in the form of nil-cost options were granted to Alex Russo and Mike Schmidt on 17 November 2022 as follows:
Executive Director Award size
Number of
awards granted
1
Face value
of awards
£
Alex Russo 200% 414,615 1,595,812
Mike Schmidt 175% 204,068 785,437
1. The number of awards granted was based on a share price of £3.8489, 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 2024/25, and the targets were determined in the following way:
• The adjusted EPS targets were set by the Committee at the beginning of 2022/23, based on management’s three-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 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 Weighting
Performance for
threshold vesting
(25%)
Performance for
maximum vesting
Adjusted EPS 50% 42p 50p
Relative TSR vs FTSE 350 retailers
1
50% Median Upper quartile
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.
The Remuneration Committee will assess the value of the 2022 LTIP at vesting and will ensure that the final out-turns reflect all relevant factors,
including consideration of any “windfall gains”.
Deferred bonus awards granted during the financial year – audited
A proportion of bonus earned by Executive Directors in respect of performance during 2021/22 was deferred into shares for a period of three years
on 8 June 2022 as follows:
Executive Director
Value of
deferred bonus
£
Number of
awards granted
1
Simon Arora £774,563 204,856
Alex Russo £278,320 73,610
1. The number of awards granted was based on a share price of £3.781, being the share price prior to the date of grant.
The awards are subject to continued service only.
Loss of office payments – audited
Simon Arora stepped down from his role as Executive Director and from the Board on 21 April 2023. As a retiree from the Board as a long-standing
CEO, the Remuneration Committee approved that Simon should retain his outstanding LTIP awards, and these would vest at their normal vesting
dates subject to performance and time pro-rating. The Committee determined that it was appropriate for the award granted in 2020 to vest without
time pro-rating given its performance period was complete as at the date that Simon stepped down.
Simon will be paid salary, pension and benefits for the period to 21 April 2023, but will not be eligible for any bonus in respect of 2023/24. He did not
receive any LTIP award in 2022, and will not receive any LTIP in 2023.
Payments to past Directors – audited
No payments for loss of office were made during 2022/23.
Directors’ remuneration report continued
83B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
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. Non-Executive Directors are paid an
annual fee only.
The fees paid for 2022/23 to the Chairman of the Board and each of the Non-Executive Directors were as follows:
Director
2022/23
Fee
£
2021/22
Fee
£
Peter Bamford 391,400 380,000
Tiffany Hall 82,915 80,500
Ron McMillan 101,970 99,000
Carolyn Bradley 70,040 68,000
Paula MacKenzie 64,890 24,823
Oliver Tant (appointed 1 November 2022) 26,979 –
The annual rates of fees paid during the year with effect from 1 April 2022 were as follows:
Role
Fee
£
Chairman of the Board 391,400
Non-Executive Director base fee 64,890
Additional fee for chairing Audit & Risk Committee 18,025
Additional fee for chairing Remuneration Committee 18,025
Additional fee for Senior Independent Director 19,055
Additional fee for Director responsible for Workforce Engagement 5,150
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 of 200% of base salary. Where an Executive Director does not meet the shareholding guideline, they are 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 Mike Schmidt joined during the year 2022/23 and are therefore working towards their shareholding
requirements.
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 2022/23 (or the date of their stepping down from the Board if earlier).
Director
Shares held
beneficially
1
Unvested
options with
performance
conditions
2
Unvested
options not
subject to
performance
3
Vested but
unexercised
awards
Peter Bamford 5,000 – – –
Simon Arora 69,880,828 702,062 1,226,830 53,302
Alex Russo – 609,684 97,235 –
Mike Schmidt 5,000 216,278 68,660 –
Ron McMillan 37,037 – – –
Tiffany Hall 3,050 – – –
Carolyn Bradley 12,192 – – –
Paula MacKenzie – – – –
Oliver Tant 5,000 – – –
1. Includes any shares held by connected persons or related parties.
2. LTIP awards in the form of nil cost options.
3. Deferred bonus awards, LTIP awards no longer subject to performance and buy-out awards in the form of nil cost options.
There have been no changes in the Directors’ interests in shares in the Company between the end of the 2022/23 financial year and the date of
this report.
84 B&M European Value Retail S.A. Annual Report and Accounts 2023
Performance graph and pay table
The chart below illustrates the Company’s 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)
350
300
250
200
150
100
50
0
26 March
2022
25 March
2023
27 March
2021
28 March
2020
30 March
2019
31 March
2018
25 March
2017
26 March
2016
28 March
2015
B&M European Value Retail
TSR – Value of a 100 unit investment made at
12 June 2014
FTSE 350 excluding Investment Trusts
12 June
2014
Remuneration of the CEO
The table below shows the remuneration of the CEO for each of the last eight financial years.
Total
remuneration
Bonus as a
% of max
LTIP as a
% of max
2015/16 – Simon Arora 601,638 0% n/a
2016/17 – Simon Arora 1,403,731 76.8% n/a
2017/18 – Simon Arora 1,376,482 68.6% n/a
2018/19 – Simon Arora 1,204,983 46.0% n/a
2019/20 – Simon Arora 1,213,194 42.6% n/a
2020/21 – Simon Arora 3,710,905 98.8% 89.5%
2021/22 – Simon Arora 4,368,809 95.6% 100%
2022/23 – Simon Arora (to 26 September 2022) 2,659,356 56.9% 100%
2022/23 – Alex Russo (from 26 September 2022) 875,677 56.9% n/a
Directors’ remuneration report continued
85B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
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 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 two in 2022/23.
The relevant data, as determined under the provisions of the Luxembourg remuneration reporting law, are as follows:
TSR performance
FY19 FY20 FY21 FY22 FY23
TSR (year-on-year) -2.6% -20.3% 123.7% 11.4% -9.2%
3-year TSR ranking
1
4th out of 17 9th out of 17 7th out of 15 2nd out of 14 2nd out of 15
Percentage change in total remuneration in the year stated compared with the prior financial year
2
FY19 FY20 FY21 FY22 FY23
Company only (excluding all of the other Group subsidiaries
in the UK and France) on full-time equivalent basis (average) 15.49% -16.38% -8.44% 2.73%
3
3.96%
Executive Directors:
Simon Arora -12.55% 0.68% 198.62% 39.03% -20.60%
Alex Russo n/a n/a n/a 128.01% 30.06%
Mike Schmidt n/a n/a n/a n/a –
4
Non-Executive Directors:
26.19% 3.00%Peter Bamford nil 11.66% -6.25%
Ron McMillan nil 21.65% 6.48% 9.19% 3.00%
Tiffany Hall n/a 5.17% 5.17% 8.53% 3.00%
Carolyn Bradley n/a nil 10.07% 6.52% 3.00%
Paula MacKenzie n/a n/a n/a n/a 3.00%
Oliver Tant n/a n/a n/a n/a –
4
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 2022/23
figures the companies used are Currys, Dunelm, Frasers Group, Greggs, Howden Joinery, JD Sports Fashion, Kingfisher, Marks & Spencer, Next, Ocado, Pets At Home,
Sainsbury J, Tesco and WH Smith.
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. The figure has been restated as part of this year’s calculations of changes in total remuneration.
4. Mike Schmidt and Oliver Tant were appointed to the Board during FY23.
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
26 March 2022 and 25 March 2023.
£’000 2021/22 2022/23 % change
Total pay for employees 570,320 629,969 10.5%
Distributions to shareholders
1
430,475 365,605 -15.1%
1. There have not been any buy-backs of shares during either year.
CEO pay ratio
In line with new UK reporting requirements which the Company has adopted on a voluntary basis, set out below are 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 Method
25th percentile
pay ratio
50th percentile
(median)
pay ratio
75th percentile
pay ratio
2019/20 Option A 72:1 72:1 69:1
2020/21 Option A 207:1 196:1 191:1
2021/22 Option A 270:1 270:1 257:1
2022/23 Option A 178:1 178:1 164:1
We have used Option A as this is the statistically most accurate method and the preferred approach of most institutional shareholders.
86 B&M European Value Retail S.A. Annual Report and Accounts 2023
Directors’ remuneration report continued
The total remuneration for the CEO for 2022/23 has been taken as the total remuneration for the respective periods during which Simon Arora and
Alex Russo were appointed to the CEO role during the year.
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:
25th percentile
50th percentile
(median) 75th percentile
Base salary £19,266 £19,266 £20,800
Total remuneration £19,844 £19,844 £21,554
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 a reduction in the ratios for 2022/23, which is driven primarily by lower bonus and LTIP outcomes. 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.
Malus and clawback
The AIP 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, Alex Russo and CFO, Mike Schmidt is terminable by either the Company or the relevant executive on 12 months’
notice. The service contracts are effective from 26 September 2022 in relation to the CEO and 17 October 2022 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 and Oliver Tant’s letters of
appointment are effective from 9 November 2021 and 1 November 2022 respectively, and the other Non-Executive Directors’ letters of appointment
are effective from 1 June 2021.
Fees for Chairman and Non-Executive Directors in 2023/24
The rates of fees for the Chairman and Non-Executive Directors were increased by 4% with effect from 1 April 2023 in line with the average all-
employee increase.
Role
Fee from
1 April
2022
£
Fee from
1 April
2023
£
Chairman of the Board 391,400 4 07,056
Non-Executive Director base fee 64,890 67,486
Additional fee for chairing Audit & Risk Committee 18,025 18,746
Additional fee for chairing Remuneration Committee 18,025 18,746
Additional fee for Senior Independent Director 19,055 19,817
Additional fee for Director responsible for Workforce Engagement 5,150 5,356
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.
87B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
Executive Directors remuneration for 2023/24
Base salary
As described in the Chair’s statement, the base salaries for the Executive Directors were reviewed during the year. The resulting rates of salary
are as follows:
Executive Director
Base salary
from 1 April
2022
£
Base salary
from date of
appointment
1
£
Base salary
from 1 April
2023
£
Simon Arora 834,300 – –
Alex Russo 500,000 800,000 832,000
Mike Schmidt – 450,000 468,000
1. For Alex Russo, this is from the date of his appointment as CEO on 26 September 2022 and for Mike Schmidt this is from the date of his appointment of CFO on 17 October 2022.
Benefits and pension
There are no planned changes to the provision of benefits for 2023/24.
Alex Russo and Mike Schmidt will 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, the maximum bonus opportunity for Alex Russo will be 200% salary. The maximum
bonus opportunity for Mike Schmidt will be 150% of base salary for 2023/24.
Under the awards for 2023/24, 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 three 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 Directors’ remuneration report.
LTIP
The Committee proposes that LTIP awards will be made to Executive Directors during 2023/24, subject to stretching financial performance conditions
over a three-year period, with vesting after the completion of a further two-year holding period.
As set out in the Directors’ Remuneration Policy, the 2023/24 award for Alex Russo will be 200% of salary while an award of 175% of salary will be
granted to Mike Schmidt.
• We have set this year’s Adjusted EPS targets taking into account management’s three-year plan and the latest analysts’ consensus forecasts
at the time of setting targets.
• 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 the targets for the awards are as follows:
Performance condition Weighting
Performance for
threshold vesting
(25%)
Performance for
maximum vesting
Adjusted EPS 50% 37.9p 43.9p
Relative TSR vs FTSE 350 retailers
1
50% Median Upper quartile
1. Consists of the constituents of the FTSE General Retailers Index and the FTSE Food and Drug Retailers Index.
88 B&M European Value Retail S.A. Annual Report and Accounts 2023
Directors’ remuneration report continued
Remuneration Committee composition and meetings in 2022/23
The members of the Committee during the year consisted solely of Independent Non-Executive Directors being Tiffany Hall (Committee Chair),
RonMcMillan and Carolyn Bradley.
The responsibilities of the Committee are set out in the Corporate Governance section of the Annual Report on page 63.
The Committee invites Peter Bamford as the Chairman of the Board and Alex Russo 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 and attendances during the year were as follows:
Director Role
Meetings
attended
Tiffany Hall Committee Chair 4 out of 4
Ron McMillan Committee Member 4 out of 4
Carolyn Bradley Committee Member 4 out of 4
Meeting Summary of activities
May 2022 • Approve AIP and LTIP outcomes for FY22.
• Approval of Directors’ remuneration report.
• Market benchmarking of Executive Directors’ remuneration.
• Approve metrics and targets for AIP and LTIP for FY23.
• Determine the appropriate remuneration package for the new CFO.
September 2022 • Review feedback on AGM voting outcomes.
• Approve granting of FY23 LTIP awards.
• Determine the appropriate remuneration package for the new CEO.
January 2023 • Update on wider workforce pay.
• Review of annual bonus and LTIP metrics for FY24.
March 2023 • Review provisional AIP outcomes for FY23.
• Determine salary increases for FY24 for Executive Directors.
• Review AIP and LTIP metrics for FY24.
• Review in-flight LTIP awards.
• Review of Committee terms of reference.
Shareholder voting
The resolution to approve the Directors’ Remuneration Policy at the 2021 AGM and resolution to approve the Annual Report on Remuneration at the
2022 AGM were passed as follows:
Resolution Votes for % for Votes against % against Total votes cast
% of shares
on register
Votes
withheld
To approve the Directors’
Remuneration Policy (2021) 659,985,530 81.46 150,159,930 18.54 810,145,460 80.95 191,067
To approve the Annual Report
on Remuneration (2022) 637,198,382 94.30 38,312,060 5.70 675,510,442 67.47 18,007,885
Advisors to the Committee
The advisors 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 £102,100 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 2023
89B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
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.
Base salary is typically paid four-weekly in cash.
Base salaries are reviewed annually with changes usually
taking effect from 1 April.
Benefits
To provide an
appropriate level
of contribution to
retirement
planning.
Provide market competitive benefits.
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.
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.
Pension
To provide an
appropriate level
of contribution to
retirement
planning.
Current CEO and CFO: 3% of salary
New recruits: 3% of salary
The pension contributions for the existing Executive
Directors are 3% of salary, aligned with the wider workforce
contribution rate.
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.
90 B&M European Value Retail S.A. Annual Report and Accounts 2023
Directors’ remuneration report continued
Element and purpose Policy and opportunity Operation and performance conditions
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 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 are reviewed annually by the
Committee in line with the Company’s strategy.
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 three years post-payment
and to the deferred share element for a period of three years
post-vesting.
Long-term
incentives
To incentivise the
delivery of strategic
objectives over the
longer term, the
Group operates the
Long-Term Incentive
Plan (“LTIP”).
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 are
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.
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.
In-employment
shareholding
requirement
To encourage share
ownership and
create alignment of
interests of
Executive Directors
and shareholders.
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.
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.
91B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
Element and purpose Policy and opportunity Operation and performance conditions
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 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.
Shares counting towards this requirement will not be released
during the period in which the post-employment shareholding
requirement applies, to support enforceability.
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.
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.
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.
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.
92 B&M European Value Retail S.A. Annual Report and Accounts 2023
As permitted under Luxembourg Law, the
Directors have elected to prepare a single
Management Report covering both the
Company and Group. The Strategic Report,
Corporate Governance report and Directors’
remuneration report on pages 1 to 57, 58 to
68 and 76 to 91 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 16;
• workforce engagement – page 40;
• viability statement – page 33;
• energy and carbon reporting – pages 46
to 53;
• directors’ service contracts and
appointment letters – page 86;
• directors’ share interests – page 83;
• conflicts of interest – page 65; and
• stakeholders and section 172 statement –
pages 54 to 57.
Company status
“Company”) is the parent 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 has it registered office in
listing on the London Stock Exchange.
Branches
The Group had no branches during the
reporting period.
Research and Development
The Company has no research and
development activities.
Principal activity
Business review
This report together with the Strategic Report on
pages 1 to 57, sets out the review of the Group’s
business during the financial year ended
25 March 2023, 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 25 March 2023 of GBP £348m is reported
in the consolidated statement of comprehensive
income on page 101.
The Board is recommending a final dividend of
9.6p per ordinary share, which together with the
interim dividend of 5.0p per ordinary share paid
in December 2022 (but not including the special
dividend of 20.0p per share paid in January
2023) is a total ordinary dividend for the year
of 14.6p, at the upper end of the dividend policy
of paying 30 to 40% of normalised post-IPO
earnings
1
.
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 34 to 45
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 40, 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.
Directors’ report
and business review
The Directors present their report (the “Management Report”)
under Luxembourg Law and DTR 4.1.5R, together with the
consolidated annual accounts and financial statements of
the Group and of the Company as at 25 and 31 March 2023
respectively for the accounting periods then ended.
Directors’ report and business review FY23
93B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
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.
Directors
The interests in shares and share awards made
to Directors of the Company as at 31 March 2023
are shown on page 83. On 21 April 2023, and
as announced previously by the Company,
Simon Arora who has been CEO of the Company
and Group since 2014 retired. There have been
no other changes to the Board of Directors of
the Company since the year end and up to the
date of this report.
In accordance with the articles of association
of the Company (the “Articles of Association”
or “Articles”), all the Directors will retire at the
Annual General Meeting (“AGM”) on 25 July
2023. All the retiring Directors, being eligible, will
stand for re-election as Directors at that meeting
except Carolyn Bradley who will then retire.
Directors’ indemnities
The Company’s Articles permit to indemnify
Directors in certain circumstances, as well
as to provide insurance for their benefit. The
Company has Directors’ and Officers’ 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 during the
financial year under review.
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 1
to the consolidated annual accounts on pages
105 to 114, which forms part of this report.
Share capital
The Company’s share capital and changes to
it in the financial year ended 31 March 2023, are
set out on page 95 below and under note 22 to
the consolidated annual accounts and financial
statements on page 136 which forms part of
this report.
In common with other Luxembourg registered
companies, the Articles allow the Board to
increase the issued share capital within the
limits of the authorised share capital, by the
issue of new shares including under certain
conditions, by limiting or cancelling pre-
emption rights of existing shareholders.
Under Luxembourg Company Law such an
authority can only be granted for a period of
up to five years. The authority for the Board to
increase the issued share capital within the
limits of the authorised share capital will expire
this year in July and an extraordinary general
meeting of the shareholders will be convened
this year, on 25 July 2023, immediately after
the AGM to renew this authority of the Board.
Subject to shareholders’ approval, the authority
of the Board will be renewed without any
changes being made to its conditions and
limits which are provided for under article 5.2
of the Articles.
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 25 July 2023 that
the Company may purchase, acquire or receive
its own shares. This resolution is 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 the issued share 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.
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 2023, 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):
Shareholder
Number of
ordinary
shares
% issued
share
Capital
The Capital Group Companies Inc. 94,785,937 9.46
Orbis Group 89,294,206 8.91
SSA Investments S.à r.l.* 69,880,828 6.98
Fidelity Management Research 67,646,667 6.75
* 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 2023
Change of control
The Company has a senior facilities agreement
(the “SFA”) in relation to a GBP £225m term loan
(which has been drawn in full) and a GBP
£225m 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 GBP £400m 3.625% senior
secured notes due 2025 and GBP £250m 4%
senior secured notes due 2028 of which all
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 HGVs
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 AGM to
be held on 25 July 2023, 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 are set out in the
Principal Risks and Uncertainties on pages 26
to 32, the Corporate Governance report on
pages 58 to 68 and the Directors’ remuneration
report on pages 76 to 91, each of which form
part of this report.
The Statement of Directors’ Responsibilities in
relation to the consolidated annual accounts
and financial statements of the Group and the
standalone annual accounts and financial
statements of the Company appears on
page 97, which forms part of this report.
Independent auditor
KPMG Audit S.à r.l. (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 their remuneration, will be proposed at the
AGM on 25 July 2023.
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 Investments”)
(together 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 and regulates the
ongoing relationship between the Company
and the Arora Family, since 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 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 2022/23, there had been
three conditional agreements to enter into
future new store leases in the UK to become
effective in subsequent financial years with
Arora Family related parties as landlords of
those stores.
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 62 store leases, representing
8.77% of a total number of 707 UK B&M stores
of the Group with all landlords, and 10.14% of
the overall rent roll of all UK B&M stores as at
the year end.
In the financial year under review, the balance
of 10.2 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
2021/2022 financial year was used. All of the
hours were used during the 2022/23 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 pages 65 and 66
of the Corporate Governance report.
Further details of related party transactions
are included also in note 26 to the consolidated
annual accounts and financial statements on
pages 140 to 142.
The Board confirms that during the financial
year 2022/23:
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
Directors report and business review continued
95B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
iii. so far as the Company is aware, the
procurement obligations in the Relationship
Agreement have been complied with by the
Arora Family 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
entered with associated companies of the
Group are set out in note 26 to the consolidated
annual accounts on pages 140 and 142 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 2023 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 2022/23 referred to above
together with any other such transactions
entered into after the financial year ending
on 31 March 2023 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 admitted
to trading on an EU Member State regulated
market and the Company is therefore outside
of the scope of Luxembourg Takeovers Law.
The Board of Directors, however, 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 2023 amounts to GBP £100,185,373.50
represented by 1,001,853,735 shares with a
nominal value of GBP £0.10 each.
As at the date of this report, all shares are in
dematerialised form.
In addition to the issued share capital, the
Company has also an authorised but unissued
share capital amounting to GBP
£297,036,848.70.
All shares issued by the Company entitle to
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 and 6.7.1.2
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 8.1
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 93.
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.
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.
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 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, and except
when voting rights are suspended, 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.
As provided for under article 6.5.5 of the Articles,
the voting rights attached to any shares which
had not been dematerialised by the Compulsory
Dematerialisation Date (as defined thereunder)
were to be automatically suspended. That
deadline was on 8 March 2023 and as at the
date of this report, 13,994 shares in aggregate
had not been dematerialised by their respective
owners and are now held in a securities
account open in the name of the Company.
The suspension of the voting rights will cease
when the owner provides the details of a
securities account where the shares can
be held in dematerialised form.
Besides, 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.
96 B&M European Value Retail S.A. Annual Report and Accounts 2023
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
respectively).
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-pre-emptive 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 published by the
Pre-emption Group of the Financial
Reporting Council;
c. to deal with treasury shares or fractional
entitlements on otherwise pre-emptive
issues of shares; and
d. in connection with employee 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. An extraordinary
general meeting of the shareholders of the
Company will be convened on 25 July 2023 to
deliberate upon and if thought fit approve the
amendment of the Company’s Articles to allow
for the issue for cash of up to five percent (5%)
of the issued share capital in any one year, and
a further five percent (5%) in connection with an
acquisition or specified capital investment both
in accordance with the guidelines of the
Pre-Emption Group of the Financial Reporting
Council for a period of 5 years.
The AGM of the shareholders of the Company
held on 28 July 2022 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 its issued share capital from time to
time, on such terms as the Board may decide
in accordance with the law.
This authorisation is generally renewed at
each AGM.
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.
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 £225m
term loan agreement and a £225m 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. in relation to the Senior Secured Notes
issued by the Company, 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;
c. the Group’s credit and loan facilities with
its banks and fleet finance agreements
for HGVs which contain customary
cancellation and repayment provisions
upon a change of control; and
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 pages 76 to 91.
Approved on behalf of the Board.
Alejandro Russo
Chief Executive Officer
30 May 2023
Michael Schmidt
Chief Financial Officer
Directors report and business review continued
97B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
Company law requires the Directors to prepare,
for each financial year, consolidated annual
accounts and financial statements at Group
level, and annual accounts and financial
statements of the Company, on a standalone
basis. Under that law they are required to
prepare the Group annual accounts and
financial statements in accordance with
International Financial Reporting Standards
(“IFRSs”) as adopted by the EU and applicable
law, and the Company’s annual accounts and
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 the
relevant period. In preparing each of the Group
and Company’s annual accounts and 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 the 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 Company or to cease
operation, or have no realistic alternative
but to do so.
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 comply with the
provisions of 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.
We confirm that, to the best of our knowledge:
• the consolidated annual accounts and
financial statements of B&M European
Value Retail S.A. (the “Company”) presented
in this Annual Report and established in
conformity with IFRSs 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
annual accounts and 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 on behalf of the Board.
Alejandro Russo
Chief Executive Officer
30 May 2023
Michael Schmidt
Chief Financial Officer
Statement of Directors’
responsibilities
The Directors are responsible for preparing the Annual Report
and the Group and Company annual accounts and financial
statements in accordance with applicable law and regulations.
Statement of Directors’ responsibilities
98 B&M European Value Retail S.A. Annual Report and Accounts 2023
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 25 March 2023, 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
25 March 2023 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 judgment, 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.
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 £4,983 million 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 dispatch.
Although revenue recognition is considered to be relatively
straightforward on a transactional level, the 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.
99B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
Accounting for foreign currency hedges
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 hedging reserve amounts to -£3 million and reported a
net change of fair value of £33 million per the Consolidated Statement
of Changes in Shareholders’ Equity.
Per the Financial Instruments policy in note 1 and Currency risk
management (note 25), the Group adopts hedge accounting for a high
proportion of its foreign currency inventory purchases. The recognition of
foreign exchange gains or losses on foreign currency forward contracts,
through either other comprehensive income or the income statement is
determined by its qualification as a hedging instrument and its
effectiveness testing.
Given that the total value of purchases that are hedged is significant,
and that hedge accounting is an inherently complex area of accounting,
particularly in times of volatile exchange rates, we have identified
accounting for foreign currency hedges as a key audit matter.
Our procedures over accounting for foreign currency hedges included,
but were not limited to:
• Obtaining a detailed understanding and evaluating the design
and implementation of key controls that the Group has surrounding
hedge accounting 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;
• Reviewing the Group’s hedging strategy;
• Involving our treasury specialists to assist us in our assessment
as to whether hedge accounting can be applied;
• Inspecting management’s hedge effectiveness testing;
• For a sample of foreign currency hedges:
− Assessing the related hedge accounting documentation
is appropriately prepared in accordance with IFRS 9;
− Vouching the details of the forward contract to third party
confirmation;
− For forward contracts that have matured: recalculating the gain
or loss realized on the forward contract.
− For forward contracts that have not yet matured: comparing
a sample of the year end derivative valuations to third party
confirmations, and utilizing our valuation specialists to derive
our own independent expectation of the period end derivative
valuation.
Inventory valuation
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 15,
the balance is £764 million at the year end.
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 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.
Our procedures over the valuation of inventory included, but were not
limited to:
• Obtaining a detailed understanding and evaluating the design
and 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 and also goods in transit container movements post
year end on a product category 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 hedge effectiveness in order to assess
whether the valuation has been appropriately adjusted.
100 B&M European Value Retail S.A. Annual Report and Accounts 2023
Independent Auditor’s Report continued
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.
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
judgment 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 is consistent with the consolidated financial statements and has been prepared in
accordance with applicable legal requirements.
Luxembourg, 30 May 2023 KPMG Audit S.à r.l.
Cabinet de révision agréé
Thierry Ravasio
Partner
101B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
Consolidated Statement of Comprehensive Income
Period ended Note
52 weeks ended
25 March 2023
£’m
52 weeks ended
26 March 2022
£’m
Revenue 2 4 ,9 8 3 4, 67 3
Cost of sales (3 ,1 8 2 ) (2 ,9 2 1 )
Gross profit 1,8 01 1, 752
Administrative expenses (1,265 ) (1 ,1 4 2 )
Operating profit 4 536 61 0
Share of (losses)/profits in associates 11 (1 ) 3
Profit on ordinary activities before net finance costs and tax 535 613
Finance costs on lease liabilities 5 (61 ) (59 )
Other finance costs 5 (40 ) (29 )
Finance income 5 2 0
Profit on ordinary activities before tax 436 52 5
Income tax expense 9 (88 ) (1 03 )
Profit for the period 2 348 422
Other comprehensive income for the period
Items which may be reclassified to profit and loss:
Exchange differences on retranslation of subsidiary and associate investments 5 (2 )
Fair value movement as recorded in the hedging reserve 28 20
Tax effect of other comprehensive income 9 5 (4 )
Total other comprehensive income 38 14
Total comprehensive income for the period 386 436
Earnings per share
Basic earnings per share attributable to ordinary equity holders (pence) 10 34.8 42.2
Diluted earnings per share attributable to ordinary equity holders (pence) 10 3 4.7 4 2.1
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 2023
Consolidated Statement of Financial Position
As at Note
25 March
2023
£’m
26 March
2022
£’m
Non-current assets
Goodwill 12 921 9 20
Intangible assets 12 120 120
Property, plant and equipment 13 380 363
Right-of-use assets 14 1,056 1,066
Investments in associates 11 8 8
Other receivables 16 6 7
Deferred tax asset 9 30 31
Current assets
Cash at bank and in hand 17 237 173
Inventories 15 76 4 863
Trade and other receivables 16 52 53
Income tax receivable 12 9
Other financial assets 19 1 25
Total assets 3, 587 3,6 38
Equity
Share capital 22 (100 ) (100 )
Share premium (2 ,47 8 ) (2,476 )
Retained earnings (104 ) (121 )
Hedging reserve 3 (13 )
Legal reserve (10 ) (10 )
Merger reserve 1,979 1,9 7 9
Foreign exchange reserve (10 ) (5 )
(720 ) (74 6 )
Non-current liabilities
Interest bearing loans and borrowings 20 (873 ) (95 0 )
Lease liabilities 14 (1 ,12 4 ) (1,1 4 0 )
Deferred tax liabilities 9 (43 ) (43 )
Provisions 21 (3 ) (4 )
(2 ,04 3 ) (2 ,1 37 )
Current liabilities
Interest bearing loans and borrowings 20 (81 ) (6 )
Trade and other payables 18 (5 41 ) (564 )
Lease liabilities 14 (17 7 ) (1 70 )
Other financial liabilities 19 (13 ) (0 )
Income tax payable (6 ) (4 )
Provisions 21 (6 ) (11 )
(824 ) (75 5 )
Total liabilities (2 , 8 67 ) (2,892 )
Total equity and liabilities (3, 587 ) (3,638 )
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 2023 and signed on their behalf by:
Alejandro Russo
Chief Executive Officer
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Consolidated Statement of Changes in Shareholders’ Equity
Share
capital
£’m
Share
premium
£’m
Retained
earnings
£’m
Hedging
reserve
£’m
Legal
reserve
£’m
Merger
reserve
£’m
Foreign
exchange
reserve
£’m
Total
equity
£’m
Balance at 27 March 2021 100 2,4 75 1 28 (8 ) 10 (1,9 79 ) 7 733
Ordinary dividends declared – – (180 ) – – – – (180 )
Special dividends declared – – (250 ) – – – – (250 )
Effect of share options 0 1 1 – – – – 2
Total transactions with owners 0 1 (429 ) – – – – (4 28 )
Profit for the period – – 422 – – – – 422
Other comprehensive income – – – 16 – – (2 ) 14
Total comprehensive income
for the period – – 422 16 – – (2 ) 436
Hedging gains & losses reclassified
asinventory – – – 5 – – – 5
Balance at 26 March 2022 100 2, 4 76 121 13 10 (1,9 79 ) 5 74 6
Allocation to legal reserve – – (0 ) – 0 – – –
Ordinary dividends declared – – (165 ) – – – – (165 )
Special dividends declared – – (201 ) – – – – (201 )
Effect of share options 0 2 1 – – – – 3
Total transactions with owners 0 2 (365 ) – – – – (363 )
Profit for the period – – 34 8 – – – – 348
Other comprehensive income – – – 33 – – 5 38
Total comprehensive income for the
period – – 34 8 33 – – 5 38 6
Hedging gains & losses reclassified
asinventory – – – (49 ) – – – (49 )
Balance at 25 March 2023 100 2 ,478 104 (3 ) 10 (1,979 ) 10 720
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 2023
Consolidated Statement of Cash Flows
Period ended Note
52 weeks ended
25 March 2023
£’m
52 weeks ended
26 March 2022
£’m
Cash flows from operating activities
Cash generated from operations 23 866 598
Income tax paid (84 ) (1 07 )
Net cash flows from operating activities 782 491
Cash flows from investing activities
Purchase of property, plant and equipment 13 (93 ) (96 )
Purchase of intangible assets 12 (5 ) (4 )
Proceeds from sale of property, plant and equipment 9 15
Finance income received 2 0
Net cash flows from investing activities (87 ) (85 )
Cash flows from financing activities
Receipt of newly issued corporate bonds 20 – 250
Repayment of Heron facilities 20 (3 ) (4 )
Repayment of government backed loan in France 20 – (22 )
Net receipt of other French facilities 20 0 1
Repayment of the principal in relation to lease liabilities 14 (168 ) (159 )
Payment of interest in relation to lease liabilities 14 (61 ) (59 )
Fees on refinancing 20 – (3 )
Other finance costs paid 5 (36 ) (24 )
Dividends paid to owners of the parent 29 (366 ) (430 )
Net cash flows from financing activities (634 ) (45 0 )
Effects of exchange rate changes on cash and cash equivalents 3 (1 )
Net increase/(decrease) in cash and cash equivalents 64 (45 )
Cash and cash equivalents at the beginning of the period 173 218
Cash and cash equivalents at the end of the period 237 173
Cash and cash equivalents comprise:
Cash at bank and in hand 17 237 173
The accompanying accounting policies and notes form an integral part of these consolidated financial statements.
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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 2023,
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 2023 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 judgment, 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.
145B&M European Value Retail S.A. Annual Report and Accounts 2023
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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
judgment 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 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 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 2023 KPMG Audit S.à r.l.
Cabinet de révision agréé
Thierry Ravasio
146 B&M European Value Retail S.A. Annual Report and Accounts 2023
Company profit and loss account
for the financial year ended 31 March 2023
Notes
31 March
2023
£
31 March
2022
£
Raw materials, consumables and other external expenses: 8
Other external expenses (1,426,926) (3,660,768)
Staff costs: 9
Wages and salaries (115,963) (102,273)
Social security costs:
Relating to pensions (7,864) (7,470)
Other social security costs (5,666) (4,248)
Other operating expenses 10 (838,903) (969,095)
Income from participating interests: 11
Derived from affiliated undertakings 360,000,000 420,000,000
Other interest receivable and similar income: 12
Derived from affiliated undertakings 24,767,246 18,394,763
Other interest and similar income 488,309 345,359
Interest payable and similar expenses: 13
Other interest and similar expenses (25,097,950) (18,251,003)
Tax on profit or loss 14 – 2,541
Profit or loss after taxation 357,762,282 415,747,806
Other taxes not included in the previous caption 14 (4,233) (4,073)
Profit or loss for the financial year 357,758,049 415,743,733
The accompanying notes form part of these financial statements.
147B&M European Value Retail S.A. Annual Report and Accounts 2023
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Notes
31 March
2023
£
31 March
2022
£
Fixed assets
Financial assets: 3
Shares in affiliated undertakings 2,624,999,999 2,624,999,999
Other loans 5,467 5,467
2,625,005,467 2,625,005,467
Current assets
Debtors:
Amounts owed by affiliated undertakings becoming due and payable within one year 4 753,267,506 760,370,073
Other debtors becoming due and payable within one year 5 252,037 216,238
753,519,542 760,586,311
Cash at bank and in hand 55,224 110,965
Total assets 3,378,580,233 3,385,702,743
Equity 6
Subscribed capital 100,185,374 100,122,684
Share premium account 2,473,832,360 2,473,832,360
Reserves:
Legal reserve 10,040,000 10,010,000
Profit or loss for the financial year 357,758,049 415,743,733
Profit or loss brought forward 23,613,103 23,471,198
Interim dividends (250,463,434) (300,368,051)
2,714,965,452 2,722,811,923
Creditors 7
Debenture loans:
Non-convertible loans becoming due and payable within one year 6,520,833 6,520,833
Non-convertible loans becoming due and payable after more than one year 650,000,000 650,000,000
Trade creditors becoming due and payable within one year 606,215 134,918
Amounts owed to affiliated undertakings becoming due and payable within one year 6,448,923 6,100,386
Other creditors:
Tax authorities 6,751 11,409
Other creditors becoming due and payable within one year 32,059 123,274
663,614,781 662,890,820
Total equity and liabilities 3,378,580,233 3,385,702,743
The accompanying notes form part of these financial statements.
Company balance sheet
as at 31 March 2023
148 B&M European Value Retail S.A. Annual Report and Accounts 2023
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.
The Company is registered with the Luxembourg Trade and Companies Register under number B 187.275 and having its registered office at
68-70, boulevard de la Petrusse, L-2320 Luxembourg. 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 Articles of association of the Company were amended during the financial year ending 31 March 2022 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 and allowing the Board to allocate shares
and shares options for free to employees and Directors of the Group. Those shares are issued under the various schemes in place, including the
Restricted Stock Awards Plan and Long Term Incentive Plan (LTIP) and are paid for free out of available reserves of the Company.
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.
The Company announced on 22 April 2022 that Simon Arora would retire as Chief Executive Officer, after over 17 years leading the business, within
a period of 12 months from that date, this has subsequently occurred with his retirement on 21 April 2023. On 15 September 2022, the Company
announced that Alejandro Russo would become Chief Executive Officer with effect from 26 September 2022, and Michael Stefan Schmidt who joined
the Board on 1 November 2022 became the Chief Financial Officer.
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.
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.
Notes to the annual accounts
for the financial year ended 31 March 2023
149B&M European Value Retail S.A. Annual Report and Accounts 2023
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2 Summary of significant accounting policies and valuation methods continued
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
orthe 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
“Otherdebtors”, 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.
150 B&M European Value Retail S.A. Annual Report and Accounts 2023
3 Financial assets
The undertaking in which the Company holds interests is as follows:
Undertaking’s name Registered office Percentage of holding
Net equity
as at
31 March 2023
£
Net result for
the financial
year ended
31 March 2023
£
Net book value
as at
31 March 2023
£
B&M EVR 1
1
Luxembourg 100% 646,884,429 360,004,902 2,624,999,999
1 B&M EVR 1 refers to B&M European Value Retail 1 S.à r.l.
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 27 October 2022 an interim dividend of GBP 50 million was declared and distributed by B&M EVR 1 to the Company.
On 5 January 2023 an interim dividend of GBP 200 million was declared and distributed by B&M EVR 1 to the Company.
On 13 March 2023 an interim dividend of GBP 110 million was declared and distributed by B&M EVR 1 to the Company.
4 Amount owed by affiliated undertakings
March 2023
£
March 2022
£
Becoming due and payable within one year:
B&M European Value Retail Holdco 4 Ltd. (“B&M Holdco 4”) 748,681,673 737,864,994
Accrued income in relation to intercompany UK audit fees 375,000 465,000
Accrued income in relation to intercompany loan agreements (interest receivable) 4,210,833 22,040,079
Total 753,267,506 760,370,073
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
March 2023
£
March 2022
£
Becoming due and payable within one year:
Prepaid VAT 39,717 –
Prepaid income and net wealth taxes 1,952 5,176
Other advances 210,367 211,062
Total 252,037 216,238
Notes to the annual accounts continued
151B&M European Value Retail S.A. Annual Report and Accounts 2023
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6 Capital and reserves
Subscribed capital and share premium account
As at 31 March 2023, the issued share capital of the Company is set at GBP 100,185,373.50 divided into 1,001,853,735 ordinary shares with a nominal
value of GBP 0.10 each and the unissued but authorised share capital is set at GBP 297,036,848.70 represented by 2,970,368,487 ordinary shares.
The Company’s share capital is represented by only one class of (ordinary) shares all in dematerialised form.
In December 2020, the shareholders of the Company approved the compulsory conversion of all the shares which were then in registered form into
dematerialised form. The deadline for the compulsory dematerialisation of the shares was on 8 March 2023 and all the shares not converted by that
deadline (13,994 shares in aggregate) are now held in an account in the name of the Company. The rights attached to those shares are suspended
and for the time of that suspension, the shares will not be taken into account to for quorum and majority at general meetings.
During the financial year, share options reported under the annual accounts in previous years as ‘off balance sheet commitments’ have been
exercised by employees and directors of the Group; 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, 626,899 new ordinary shares of 10 pence. The Articles have been updated accordingly.
Movements for the period on the reserves and profit/loss captions are as follows:
Share premium
and similar
premiums
£
Legal
reserve
£
Profit or loss
brought forward
£
Profit for the
financial period
£
Interim
dividends
£
Total
£
As at the beginning of the financial year 2,473,832,360 10,010,000 23,471,198 415,743,733 (300,368,051) 2,622,689,240
Allocation of prior period’s result – – 415,743,733 (415,743,733) – –
Allocation of legal reserve – 30,000 (30,000) – – –
Proceeds from share options – – (62,690) – – (62,690)
Allocation of dividends – – (300,368,051) – 300,368,051 –
Final dividend (August 2022) – – (115,141,086) – – (115,141,086)
Interim dividend (December 2022) – – – – (50,092,687) (50,092,687)
Special dividend (February 2023) – – – – (200,370,747) (200,370,747)
Profit for the financial year – – – 357,758,049 – 357,758,049
As at the end of the financial year 2,473,832,360 10,040,000 23,613,103 357,758,049 (250,463,434) 2,614,780,079
On 30 June 2022 the Board of Directors unanimously approved the distribution of a final dividend of 11.5 pence per ordinary share, being a total
aggregate distribution of GBP 115,141,086.14 paid by the Company on 5 August 2022.
On 9 November 2022 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 50,092,686.75 paid by the Company on 16 December 2022.
On 5 January 2023 the Board of Directors unanimously approved the distribution of a special dividend of 20.0 pence per ordinary share, being
a total aggregate distribution of GBP 200,370,747.00 paid by the Company on 3 February 2023.
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, which is not available for distributions to shareholders, a minimum of 5% of its annual net profit. This allocation ceased
to be mandatory when and for so long as this reserve equals 10% of the subscribed share capital.
Consequently, no allocation will be proposed to the AGM approving those financial statements.
7 Creditors
Amounts due and payable for the accounts shown under “Debenture loans” are as follows:
Within one year
£
After one year
and within
fiveyears
£
After more than
five years
£
March 2023
£
March 2022
£
Debenture Loans
Non-convertible loans – Bonds interest 6,520,833 – – 6,520,833 6,520,833
Non-convertible loans – Bonds principal – 400,000,000 250,000,000 650,000,000 650,000,000
6,520,833 400,000,000 250,000,000 656,520,833 656,520,833
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.
152 B&M European Value Retail S.A. Annual Report and Accounts 2023
7 Creditors continued
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 is paid semi-annually in arrears on 15 May and 15 November of each year. The 2021 Notes are listed for trading on the
Euro MTF Market of the Luxembourg Stock Exchange.
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 15 November 2024, the Company is 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 15 November 2024, the Company 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 Company 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% 2020 Notes.
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:
Within one year
£
After one year
and within
fiveyears
£
After more than
five years
£
March 2023
£
March 2022
£
Trade creditors
Suppliers 509,388 – – 509,388 25,980
Suppliers – Invoices not yet received (Note 7.1) 96,827 – – 96,827 108,938
606,215 – – 606,215 134,918
Amounts owed to affiliated undertakings B&M EVR 2
(Note 7.2) 6,448,923 – – 6,448,923 6,100,386
Other creditors
Tax authorities:
Net wealth tax
4,233 – – 4,233 8,176
Other taxes
2,517 – – 2,517 3,233
6,751 – – 6,751 11,409
Dividends payable – – – – –
Other creditors 32,059 – – 32,059 123,274
Total 7,093,948 – – 7,093,948 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.
Notes to the annual accounts continued
153B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
8 Other external expenses
March 2023
£
March 2022
£
Advisory and consultancy fees 331,776 –
Fees relating to redemption and issue of bond debt – 2,627,204
Stock exchange fees 188,643 201,650
Accounting and administrative fees 144,482 153,232
Marketing, communication and travel expenses 167,4 32 148,124
Government regulatory fees 132,899 129,194
Audit fees 94,518 89,427
Rentals 48,322 46,162
Staff recruitment expenses 298,691 39,967
Repairs and maintenance 7,669 7,207
Others 12,494 218,601
Total 1,426,926 3,660,768
The audit fees shown above are parent-only fees. Audit fees paid to members of the KPMG network are disclosed in the consolidated financial statements.
9 Staff costs
As at 31 March 2023, the Company employed one part time employee and one full time employee (2022: one part time and one full time).
10 Other operating expenses
March 2023
£
March 2022
£
Director fees 677,118 690,827
Non-deductible VAT 161,785 278,269
Total 838,903 969,095
11 Income from participating interests
March 2023
£
March 2022
£
Derived from affiliated undertakings:
Dividend income (Note 11.1) 360,000,000 420,000,000
Total 360,000,000 420,000,000
Note 11.1 Dividend income relates to dividends distributed by B&M EVR 1.
12 Other interest receivable and similar income
March 2023
£
March 2022
£
Derived from affiliated undertakings (Note 12.1):
Interest recharge 24,767,246 18,394,763
24,767,246 18,394,763
Other interest and similar income:
Realised foreign exchange gain 488,309 345,359
488,309 345,359
Total 25,255,554 18,740,122
Note 12.1 The Company and its UK and Luxembourg affiliates are bound by the terms of a Management Services Agreement (“MSA”). Included in the
provisions of this MSA is 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 at least quarterly basis.
154 B&M European Value Retail S.A. Annual Report and Accounts 2023
13 Interest payable and similar expenses
March 2023
£
March 2022
£
Other interest and similar expenses:
Interest expense on bonds payable (Note 7) 24,250,000 18,000,000
Realised foreign exchange loss 847,950 251,003
Total 25,097,950 18,251,003
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 2017, split into three; (i) LTIP 2017A (ii) LTIP 2017B1 (iii) LTIP 2017B2
2. The B&M European Value Retail S.A. Long Term Incentive Plan 2018, split into two; (i) LTIP 2018A (ii) LTIP 2018B2
3. 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
4. The B&M European Value Retail S.A. Long Term Incentive Plan 2020, split into two; (i) LTIP 2020A (ii) LTIP 2020B1
5. The B&M European Value Retail S.A. Long Term Incentive Plan 2021, split into two; (i) LTIP 2021A (ii) LTIP 2021B1
6. The B&M European Value Retail S.A. Long Term Incentive Plan 2022, split into three; (i) LTIP 2022A (ii) LTIP 2022B1 (iii) LTIP 2022B2
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)
10. The B&M European Value Retail S.A. Deferred Benefit Share Plan 2022 (DBSP22)
11. The B&M European Value Retail S.A. Buy-Out awards 2022, split into two; (i) BO22A (ii) BO22B
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 2017A, LTIP 2018A, LTIP 2019A, LTIP 2020A, LTIP 2021A and LTIP 2022A 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.
Notes to the annual accounts continued
155B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
15 Off balance sheet commitments and contingencies continued
The options were valued using a Monte Carlo method. All LTIP options have a nil exercise price.
Scheme/Tranche Date of grant Date of vesting
Fair value of
option £
Number of
options
outstanding at
31 March 2022
Number of
options granted/
(forfeited or
lapsed)
in the year
Number of
options exercised
in the year
Number of
options
outstanding at
31 March 2023
LTIP 2017A / EPS 7 Aug 2017 7 Aug 2020 3.51 18,071 – (18,071) –
LTIP 2017A / TSR 7 Aug 2017 7 Aug 2020 2.72 27,557 – (27,557) –
LTIP 2018A / EPS 22 Aug 2018 22 Aug 2021 4.09 280,368 17,084 – 297,452
LTIP 2018A / TSR 22 Aug 2018 22 Aug 2021 2.40 202,465 27,856 – 230,321
LTIP 2019A / EPS 2 Aug 2019 2 Aug 2022 3.61 279,393.5 13,794.5 – 293,188
LTIP 2019A / TSR 2 Aug 2019 2 Aug 2022 2.51 279,393.5 13,794.5 – 293,188
LTIP 2020A / EPS 30 Jul 2020 30 Jul 2023 4.64 169,361 15,763 – 185,124
LTIP 2020A / TSR 30 Jul 2020 30 Jul 2023 4.09 169,361 15,763 – 185,124
LTIP 2021A / EPS 3 Aug 2021 3 Aug 2024 5.60 229,660.5 21,376.5 – 251,037
LTIP 2021A / TSR 3 Aug 2021 3 Aug 2024 3.54 229,660.5 21,376.5 – 251,037
LTIP 2022A / EPS 17 Nov 2022 17 Nov 2025 3.86 – 327,851 – 327,851
LTIP 2022A / TSR 17 Nov 2022 17 Nov 2025 1.24 – 327,851 – 327,851
LTIP 2017B1 7 Aug 2017 7 Aug 2020 3.61 53,576 – (53,576) –
LTIP 2017B2 14 Aug 2017 14 Aug 2020 3.60 13,379 – (13,379) –
LTIP 2018B2 23 Jan 2018 23 Jan 2021 4.06 38,289 – (38,289) –
LTIP 2019B1 2 Aug 2019 2 Aug 2022 3.48 391,522 8,086 (399,608) –
LTIP 2019B2 18 Sept 2019 18 Sept 2022 3.73 3,403 107 (3,510) –
LTIP 2020B1 30 Jul 2020 30 Jul 2023 4.63 297,103 5,236 – 302,339
LTIP 2021B1 3 Aug 2021 3 Aug 2024 5.60 271,020 (13,882) – 257,138
LTIP 2022B1 3 Aug 2022 3 Aug 2025 4.37 – 408,264 – 408,264
LTIP 2022B2 15 Dec 2022 15 Dec 2025 4.12 – 3,809 – 3,809
LTIP 2017A, LTIP 2017B1, LTIP 2017B2, LTIP 2018B2, LTIP 2019B1 and LTIP 2019B2 have all been fully exercised.
LTIP 2018A and LTIP 2019A have vested and are in a two year holding period.
None of the outstanding options are available for immediate exercise as at 31 March 2023.
Assumptions
The fair valuing exercise uses several assumptions, including those given in the table below.
Scheme / Tranche Risk-free rate
Expected life
(years) Volatility Dividend yield
LTIP 2017A / EPS 0.52% 5 32% 1%
LTIP 2017A / TSR 0.52% 5 32% 1%
LTIP 2018A / EPS 0.97% 5 29% N/A
LTIP 2018A / TSR 0.97% 5 29% N/A
LTIP 2019A / EPS 0.37% 5 31% N/A
LTIP 2019A / TSR 0.37% 5 31% N/A
LTIP 2020A / EPS -0.11% 5 48% N/A
LTIP 2020A / TSR -0.11% 5 48% N/A
LTIP 2021A / EPS 0.23% 5 37% N/A
LTIP 2021A / TSR 0.23% 5 37% N/A
LTIP 2022A / EPS 3.16% 5 31% N/A
LTIP 2022A / TSR 3.16% 5 31% N/A
LTIP 2017B1 0.25% 3 32% 1%
LTIP 2017B2 0.25% 3 32% 1%
LTIP 2018B1 0.25% 3 32% 1%
LTIP 2018B 0.25% 3 30% N/A
LTIP 2019B1 0.47% 3 30% N/A
LTIP 2019B2 0.47% 3 30% N/A
LTIP 2020B1 -0.12% 3 39% N/A
LTIP 2021B1 0.12% 3 42% N/A
LTIP 2022B1 1.75% 3 32% N/A
LTIP 2022B2 1.75% 3 32% N/A
156 B&M European Value Retail S.A. Annual Report and Accounts 2023
15 Off balance sheet commitments and contingencies continued
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.
All DBSP options have a nil exercise price.
Scheme/Tranche Date of grant Date of vesting
Fair value of
option £
Number of
options
outstanding at
31 March 2022
Number of
options granted/
(forfeited or
lapsed) in the
year
Number of
options exercised
in the year
Number of
options
outstanding at
31 March 2023
DBSP 2019 4 Jun 2019 4 Jun 2022 N/A 72,909 – (72,909) –
DBSP 2020 17 Jun 2020 17 Jun 2023 N/A 54,591 5,082 – 59,673
DBSP 2021 4 Jul 2021 4 Jul 2024 N/A 89,550 8,335 – 97,885
DBSP 2022 8 Jun 2022 8 Jun 2025 N/A – 304,382 – 304,382
Buy-Out Awards
The Buy-Out Awards relate to schemes awarded to Executive Directors relating to the buy-out of share schemes which previously were held with
their prior employer. Two such schemes were awarded in the period, with both time limited; BO22A vesting in November 2023 and BO22B vesting
in November 2024.
These schemes are valued at a value agreed by the remuneration committee upon their award. This scheme also attracts the additional dividend
related grants as detailed above for the post 2018 LTIP schemes.
All Buy-Out Awards have a nil exercise price
Scheme / Tranche Date of grant Date of vesting
Fair value of
option £
Number of
options
outstanding at
31 March 2022
Number of
options granted/
(forfeited or
lapsed) in the
year
Number of
options exercised
in the year
Number of
options
outstanding at
31 March 2023
Buy-Out 2022 A 16 Nov 2022 16 Nov 2023 N/A – 34,330 – 34,330
Buy-Out 2022 B 16 Nov 2022 16 Nov 2024 N/A – 34,330 – 34,330
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 2023 and including any shares acquired by the Company in the
future and related assets, are 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 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:
March 2023
£
March 2022
£
Director fees paid to the Non-Executive Directors of the Group 747,042 686,113
747,042 686,113
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.
Notes to the annual accounts continued
157B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
17 Subsequent events
After the year end date, Simon Arora, and Executive Director of the Company, resigned on 21 April 2023. Simon was the ex-CEO of the Company and
his retirement had already been announced on 22 April 2022.
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 2023 and signed on its behalf by:
Alejandro Russo Michael Stefan Schmidt
Chief Executive Officer Chief Financial Officer
158 B&M European Value Retail S.A. Annual Report and Accounts 2023
Registered Office & Company Number
B&M European Value Retail S.A.
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.
Auditor
KPMG Audit S.à r.l.
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
BNP PARIBAS
10 Harewood Avenue
London NW1 6AA
Tel: 020 7595 2000
www.bnpparibas.com
Principal Bankers
Barclays Bank PLC
Corporate Directory
159B&M European Value Retail S.A. Annual Report and Accounts 2023
Strategic Report Corporate Governance Financial Statements
160 B&M European Value Retail S.A. Annual Report and Accounts 2023
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B&M European Value Retail S.A. Annual Report and Accounts 2023
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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