B&M European Value Retail S.A. Annual Report and Accounts 2023 ## B&M European Value Retail S.A. ## Annual Report and Accounts 2023 B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Our purpose ## Delivering great value ## to our customers so that ## they return to our stores ## time and time again ## Our values ## Simplicity Trust Fairness Proud | Proud to keep our | | Proud to trust | | Proud to act fairly | | Proud to treat every £1 | | | --- | --- | --- | --- | --- | --- | --- | --- | | business simple and | | honesty, loyalty | and responsibly with | | | as our own and provide | | | fun, and work at | | and hard work | customers, colleagues | | | customers with great | | | | B&M speed | | | | and suppliers | | value for money | ## Contents | Strategic Report | Corporate Governance | Financial Statements | | --- | --- | --- | | Financial highlights 1 | Chairman’s introduction 58 | Independent Auditor’s Report 98 | | Company overview 2 | The Board of Directors of | Consolidated Statement of | | | B&M European Value Retail S.A. 59 | Comprehensive Income 101 | Long-term strategy 3 Corporate Governance report 62 Consolidated Statement of Financial Position 102 Investment case 4 Audit & Risk Committee report 69 Consolidated Statement of Changes Business model 6 in Shareholders’ Equity 103 Nomination Committee report 74 Chairman’s statement 8 Consolidated Statement of Cash Flows 104 Directors’ remuneration report 76 Market overview 10 Notes to the Consolidated Financial Statements 105 Directors’ report and business review FY23 92 Feature – B&M France 12 Independent Auditor’s Report 144 Statement of Directors’ responsibilities 97 Feature – Heron Foods 14 Company profit and loss account 146 Chief Executive’s review 16 Company balance sheet 147 Financial review 20 Notes to the annual accounts 148 Key performance indicators 24 Corporate Directory 158 Principal risks and uncertainties 26 Corporate social responsibility 34 TCFD 46 Stakeholders and Section 172 Statement 54 Strategic Report Corporate Governance Financial Statements ## Financial highlights ### Resilient and disciplined performance Group revenues Profit before tax Cash generated from operations | £4,983m | | | | £436m | | | | £866m | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 6.6% | | | | (17.0)% | | | | 44.8% | | | | | 2023 | | | 4,983 | 2023 | | 436 | | 2023 | | | 866 | | 2022 | 598 | | 4,673 | 2022 | | | 525 | 2022 | | 598 | | | 2020 | 540 | 3,813 | | 2020 | 252 | | | 2020 | 533 | | | 1 Adjusted EBITDA Diluted earnings per share Ordinary dividend per share | £573m | | | 34.7p | | | 14.6p | | | --- | --- | --- | --- | --- | --- | --- | --- | | (7.4)% | | | (17.6)% | | | (11.5)% | | | 2023 | 573 | | 2023 | 34.7 | | 2023 | 14.6 | | 2022 | | 619 | 2022 | | 42.1 | 2022 | | 16.5 2020 342 2020 19.5 2020 8.1 ## Operational highlights ## Clear pathway ## UK LFL growth ## for long term In FY23, a relentless focus has been placed on delivering growth through our existing store network. ## growthin France Huge improvements have been seen in store standards and increased availability The B&M brand has resonated well with theFrench 2 which has led to an improvement in like for like sales consumer. Total sales increased by 22.1% and a 9.6% 1 in the B&M UK business. adjusted EBITDA margin for theyear. Recent results highlights the long termpotential. See Chief Executive Officer’s review on page 16 for more information See Feature on page 12 for more information ## UK rollout story Heron Foods There are two elements to our store opening ## continues to deliver programme. Firstly, opening new stores remains be a focus – our target of 950 store numbers would FY23 was another year of growth in both revenue represent c.35% more stores than today. and profit for Heron Foods. The convenience offering selling leading branded grocery products at the lowest Secondly, our average net sales area increased possible price is proving an attractive proposition for greater than the increase in net new stores in the year. 1 many new customers. Healthy adjusted EBITDA Larger format stores enable us to increase our marginof 6.1% in the year is market sales growth even further. leading in the grocery sector. See Chief Executive Officer’s review See Feature on page 14 on page 16 for more information for more information 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. 1B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Company overview ## We are the UK’s leading variety goods ## value retailer, providing customers with ## a limited assortment of the best-selling ## items at bargain prices ## Our fascias | UK | | France | | | --- | --- | --- | --- | | | 1 | | 2 | | Number of employees | | Number of employees | | | 33,156 | | 989 | | | Number of stores | | Number of stores | | | 707 | | 114 | | Number of employees ## 5,339 Number of stores ## 319 ## FY23 performance by fascia 5.2% 7.1% 9.7% 7.2% 3.5% 8.6% 81.6% 87.6% 89.4% 3 | Revenue by fascia | | Adjusted EBITDA | | by fascia | Operating profit | | | --- | --- | --- | --- | --- | --- | --- | | | B&M UK £4,067m | | B&M UK £502m | | | B&M UK £479m | | | B&M France £431m | | B&M France £41m | | | B&M France £19m | | | Heron Foods £485m | | Heron Foods £30m | | | Heron Foods £38m | | Group £4,983m | | Group £573m | | | Group £536m | | 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. B&M European Value Retail S.A. Annual Report and Accounts 20232 Strategic Report Corporate Governance Financial Statements ## Long-term strategy ## Our four channels of growth will deliver long term profitable growth 1 2 3 4 ## France will ## Existing B&M ## New B&M provide growth Heron Foods ## UK stores a core ## UK stores for many years offers growth ## driver of growth ## to come ## Progress in FY23 | Existing stores | New stores | France | Heron | | --- | --- | --- | --- | | B&M is the leading variety goods | 950 stores is the minimum UK store | France has continued the transformative | Heron Foods has been well placed this | | value retailer in the UK with 707 stores. | target that we have publicly stated. This | journey that it has embarked on since | year to deliver value and convenience | | Our existing stores offer considerable | would equate to a minimum increase | acquisition. FY23 has been the first year | to customers looking to manage their | | scope for improving sales densities. | of c.35% in store numbers, but the final | that all the stores have operated under | budgets during these difficult times. | 1 Like for like (“LFL”) sales growth tends figure could be much higher. We know the B&M banner and momentum is Sales have increased 18.1% to £485m 2 | to be highly profitable growth and will | the sales performance of new stores is | building. The product mix has evolved | generating an adjusted EBITDA | | --- | --- | --- | --- | | be achieved through a relentless focus | much stronger than an average store | with a greater focus on grocery, home | margin of 6.1% which is an excellent | | on product, price and an excellence in | due to them being larger in size and | and the phasing out of clothing. This | result for a grocer. | | retail standards. | therefore sales participation should | product realignment along with the | | | | be greater than the 35% increase in | B&M branding of the stores has been | Heron Foods has improved its ranges | | Store standards have improved due | store numbers. | well received by the French consumers | to increase appeal to existing and new | | to a concentrated focus on delivering | | with total sales increasing by 22.1% | customers. Through merchandising | | growth through our existing store | In addition, we place great emphasis | in FY23. | more intensely, freezers have been | | estate. Over 100 store visits per | on refreshing and updating our existing | | able to be removed from stores, Frozen | | week have been conducted by key | store estate. This can mean relocating | There is no reason why France cannot | sales volumes have maintained while | | management which has led to major | an older, legacy store to a new larger | have a similar store count to the UK in | adding increased sales in new areas, | | improvements in one-year LFL sales | format store – often with a garden | the future, considering that France has | making the space work harder. | | in H2 of 5.1%. | centre attached. This results in square | a similar population to the UK and that | | | | footage growth surpassing the | the French discount retail market is | The rollout story for Heron Foods can | | It is worth remembering that each | increase in the number of stores. | less competitive than the UK – we see | continue with 319 stores currently, with | | 1% growth in LFL sales is equivalent to | | France continuing to build sustainable | the sector market leader operating | | the sales generated from 7 average | | profit in the long term. | well over 2,000 convenience stores – | | store openings. The focus is relentless. | | | the opportunity to scale the store | estate is potentially huge. See page 16 See page 16 See page 12 See page 14 for more information for more information for more information for more information ## Performance in FY23 Group total Increase in B&M UK B&M France Colleagues taken on full time revenue growth average sales area revenue growth from Kickstart programme ## 6.6% 3.6% 22.1% 1,946 1 B&M UK one-year LFL Heron Foods B&M France adjusted New retail jobs created 2 revenue growth revenue growth EBITDA margin in the UK & France ## 0.7% 18.1% 9.6% >1,250 See Principal risks numbers See Principal risks numbers See Principal risks numbers See Principal risks numbers 2 and 3 on pages 28 and 29 3 and 9 on pages 29 and 32 3 and 5 on pages 29 and 30 1, 6 and 9 on pages 28, 30 and 32 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. 3B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Investment case ## Delivering long-term ## profitable growth ## B&M is set for many years of compounding ## earnings growth and cash returns for shareholders. B&M European Value Retail S.A. Annual Report and Accounts 20234 Strategic Report Corporate Governance Financial Statements ### 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, 1 ### B&M has c.2% market share , 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: 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 ### Like for like growth is to be highly profitable growth, which helps fund low prices (to drive further LFL sales), creates new jobs and ### highly profitable growth 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: 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 ### square footage growth tending to be larger than the existing average store, the sales contribution from this c.35% increase should be ### outpaces our growth even greater. There remain significant areas of the UK where we are not represented in meaningful numbers ### in net new stores and where we would like to expand (e.g. the South Coast). Currently, 37% of the UK population currently lives 2 > 3 miles from a B&M store. 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 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 ### for many years to come 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 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 ### growth and offers as convenience stores and can trade for more than six hours on a Sunday. Over the last 12 months, the offer ### other benefits to has been refined to include more ambient and fresh products, and this has resulted in a step change in ### the core business 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. 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. 5B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Business model ## A disruptive, agile and low-cost business model ## capable of responding to changing conditions ### 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. ### Targeted ### SKU ### grocery ### discipline ### offering ## Business Compelling Disruptive ## Cost Stakeholder ### non-grocery sourcing ## strengths ### efficiency ## outputs ### offering process ### Format Seasonal ### flexibility flex ## Our business model is underpinned by: ### Corporate | | social | | | Risk | | Financial | | --- | --- | --- | --- | --- | --- | --- | | responsibility | | management | | | performance | | | See CSR report | | See Principal risks | | | See Financial review | | | | on page 34 | | on page 26 | | | on page 20 | | for more information | | for more information | | | for more information | | 6 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements ## Business strengths ### • Scale & convenience • Skilled colleagues Our network of over 1,100 stores across the UK and France are found Developing products and ranges to provide great value whilst being in convenient locations in modern retail parks, popular town centres fresh and on-trend takes skill, experience and discipline. We have and on high streets. They are located in places close to where people colleagues with many years of experience in their respective product live and work, making them easily accessible for customers. markets, many of whom have worked previously as buyers and merchandisers with category specialist competitors. By working ### • Well invested infrastructure collaboratively across different teams and with an entrepreneurial flair We have a modern and scalable infrastructure to support the in keeping with the B&M culture, we are able to provide customers with operations and growth of the business. B&M has six distribution centres the products they want at value prices all year round. 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 • Strong supplier relationships capacity to complement the existing B&M UK distribution centres. In Maintaining our competitive value-led price model is also about addition, Heron Foods and B&M France also have their own dedicated developing strong long-term supplier relationships, who we regard distribution centres, meaning the Group is well positioned to continue very much as partners. Many of our suppliers have grown alongside our store rollout programme across all fascias and territories. us over several years, and they value our simple, transparent pricing and efficient way of working. With our focus on only stocking the best ### • Strong brand reputation selling products, and constant newness an important feature of the The B&M and Heron Foods names are established brands in the UK, proposition, this creates opportunities to welcome new suppliers in having a strong reputation for delivering consistently great value on the to our business. 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 • Governance & risk management 1 brand in the UK . In France, there is growing awareness of the B&M Our corporate governance and risk management approach is brand and the customer response to recent product changes has been geared toward ensuring we have effective and robust structures and very positive. With discount shopping continuing to become more processes in place. Our Non-Executive Directors have many years of socially accepted, there are opportunities to attract new customers whilst experience in retail and consumer product businesses. They provide retaining the loyalty of existing customers in the years ahead. Evidence of constructive challenge to our management team to help ensure we the reputation building is that B&M were ranked in the top 15 of operate our businesses and manage risk appropriately and in the 2 companies with the best reputation with customers online in France . interests of all stakeholders. ## Stakeholder outputs ### • Value to customers • Suppliers as partners Our purpose is about delivering great value to customers so they The continued growth of B&M also benefits our suppliers. We have keep returning to our stores time and time again. Helping customers to long-standing trading relationships with a number of the leading spend less on the things they buy regularly for their homes and families household brands across food and FMCG. We also have several all year round is what our business model is designed to constantly exclusive brands and other branded General Merchandise product deliver. Given the current cost-of-living crisis showing no signs of easing ranges. We are proud to partner with these brand names for the and the ongoing macroeconomic uncertainty, value for money is likely mutual success of our respective businesses. We are always interested become increasingly important for many consumers in the years in adding new brands to our ranges, and our continued growth gives ahead, making the B&M proposition highly relevant. potential for suppliers to grow alongside us, further strengthening these relationships. ### • Colleague progression ### Our colleagues are crucial to the ongoing success of the business, • Investment in communities be that in our central support teams, those working in our logistics Our store opening programmes target areas where we are network, or store colleagues providing great customer service every under-represented or not represented at all, using our flexible store day. In keeping with our values, we take pride in being an innovative formats to suit the relevant locality. Each time we open a new store, and exciting place for colleagues to work, grow and develop to their we create new jobs in the local community whilst at the same time full potential. Our continued growth creates new job opportunities in providing convenient access to our value-for-money offer. In doing the communities where we trade, and there are always progression so, we are proud to contribute to the revitalisation of communities opportunities for colleagues throughout the business to build where other retailers may have retrenched. long-term, successful careers. ### • 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 1. Source: BrandVue ‘Most Loved Retail Brands’ Report 2023 to provide continued growth and attractive returns to investors. 2. Source: Partoo Survey ‘Companies with the best e-reputation’ 2023 ## Underpinned by our ESG strategy 7B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Chairman’s statement ## In challenging times for ## consumers, our proposition has ## grown in relevance, taking in its ## stride the transition from one ## executive team to another.” ### After two years in which Strategic progress 1 Our Group adjusted EBITDA margin of 11.5% ### we faced the challenges has been sustained well ahead of pre-pandemic ### produced by COVID-19, it was levels. This is a key indicator of the robustness of the B&M business model and the success ### a reasonable expectation that of our strategy. While we have continued to ### the world might settle down. expand our footprint in the UK and France, ### Clearly that has not been high-quality execution in our existing estate is the key focus of management. ### the case. The political and ### economic environment over Growth in store numbers in the UK has slowed over the last two years due to the availability ### the last year has been both of sites but we remain confident that there is ### unstable and challenging. significant growth potential in the years ahead. ### Inflation has been a key Critically the performance of the stores we are opening is strong. ### issue for our customers, ### Peter Bamford staff and suppliers. B&M France continues to develop and perform Chairman well. Whilst new store growth in the near term B&M has continued to perform well and will be modest, the long-term potential is high. execute its strategy with relentless consistency. We have given even greater focus to ensuring Heron Foods, our convenience store offering, that we offer our customers great value and delivered excellent sales growth and a healthy great products and that, throughout our EBITDA margin. The offering of top-quality company, we have availability of these branded products across chilled, ambient products consistently day in, day out. and particularly in frozen has resonated well with customers during these difficult times. The transition from Simon Arora to Alex Russo in the Chief Executive role has gone smoothly We have continued to strengthen the overall and the business has not ‘missed a beat’. operational capability across the Group Alex’s appointment has brought fresh insight with appointments to middle and senior to how we can improve the quality of execution management together with on-going in several areas of our operations and how we investment in financial systems, IT and can serve our customers even better. supply chain. 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. 8 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements | Chief Executive succession | More recently Carolyn has decided not to stand | core activity of sourcing and selection of B&M’s | | --- | --- | --- | | Clearly the most significant development | for re-election at the AGM in July this year for | product ranges. New appointments have been | | during the year has been the change of Chief | personal reasons. I would like to thank her for | made to the leadership positions in supply chain | | Executive. Simon Arora stepped down from | the excellent contribution she has made to our | and Investor Relations which have continued the | | the role on 26 September 2022 and Alex Russo | Board over the last five years both generally as | process of broadening and strengthening the | | succeeded him, having been Chief Financial | Non-Executive Director and specifically in her | management team. In addition, many changes | | Officer since November 2020. Simon retired | role with respect to workforce engagement. | have been made within the store, area and | | from the Board in April this year. | In order to ensure continuity on the Board with | regional management in order to ensure that | | | the number of changes in other roles, Ron | we have the necessary skills and approach to | | The remarkable growth and success of B&M | McMillan has agreed to continue the role of | deliver improved operational standards on a | | is testament to Simon’s vision and leadership. | Non-Executive Director for an additional year | consistent basis. | | He and his brother Bobby took over B&M in | until the AGM in 2024. Following this year’s | | | 2004 and together they have developed a | AGM Tiffany Hall will still assume the role of | ESG | | business with powerful customer proposition | Senior Independent Director and Oliver Tant will | The Board recognises the importance of | | and a simple, but robust, business model. | become Chair of the Audit & Risk Committee. | continuing to implement the Group’s ESG | | Simon’s vision, clarity of thought, integrity and | | strategy and provide input on our ongoing | | commercial instincts have been core to B&M’s | As a consequence of these changes, in addition | and planned future projects. We embrace the | | success. I have personally very much enjoyed | to Simon Arora’s retirement and the succession | part that we have to play in making positive, | | working with Simon over the last five years and, | appointments announced earlier, the Board is | long-term changes. | | on behalf of the Board, wish him well for | not fully compliant with the new Listing Rules | | | the future. | with respect to diversity. Simon’s retirement | For further details about the achievements | | | means that we do not currently have a director | and progress made in the year against critical | | Simon and Alex have worked well together | from an ethnic minority and the combination of | topics such as environment, people and | | to ensure a smooth transition. Alex is bringing | director changes means we will not meet the | sustainable sourcing, please see page 34. | | a different set of skills and new perspectives | requirement for 40% of the Board to be female | | | but with continuity of our strategy and the | in the immediate future. We are planning to | | ### Our colleagues core business model. appoint at least one Non-Executive Director and Although I can only mention a limited number ensure full compliance by the time Ron McMillan of people in this commentary, B&M’s success is steps down from the Board at the AGM in 2024 ### Board and leadership development enabled by the hard work and commitment of at the latest. Recruitment processes are The last year has been one of significant change every B&M colleague. The last year has been underway to address these issues. and transition on the Board. In addition to the challenging for many people. We know from CEO change, as a consequence of Alex’s our staff engagement surveys that the B&M The Board has continued to work well together promotion, we appointed a new Chief Financial team is exceptionally motivated and proud through this period of change. We completed our Officer. Mike Schmidt joined us in October and of our company. last Board performance review in March 2022 became CFO on 1 November 2022. Within the and have concluded, given the number of Non-Executive Directors we announced that On behalf of the Board, I would like to thank changes and new appointments, that we should Ron McMillan (Senior Independent Director and everyone who works at B&M for their hard work defer the next review until the autumn of 2023 Chair of the Audit & Risk Committee) would be and commitment in ensuring that our customers when we will be able to gain a more meaningful retiring at the AGM in July 2023 and that Tiffany have the best possible products and value for input, as to how the new Board is performing. Hall would become Senior Independent Director money available to them every day. This will be an externally facilitated evaluation. with Oliver Tant joining the Board in November 2022 to become Chair of the Audit & Risk Within the management team, in addition to the ### Committee on Ron’s retirement. I am delighted Peter Bamford CEO and CFO changes, Alex has established a to welcome Mike and Oliver to the Board. Both Chairman strong working relationship with Bobby Arora bring valuable new skills and experiences. 30 May 2023 who continues to lead and drive forward the ## Purpose, culture & values The vision, purpose and culture of our business is underpinned by our values of simplicity, trust, fairness and taking pride in everything we do. | | Simplicity | | Trust | | Fairness | | | Proud | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Proud to keep | Proud to trust honesty, | | Proud to act fairly | | Proud to treat every £1 | | | | our business simple | | loyalty and hard work | | and responsibly with | | as our own and provide | | | | and fun, and work | | | | customers, colleagues | | customers with great | | | | | at B&M speed | | | | and suppliers | | value for money | | 9B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Market overview ## Winning profitable ## market share Against this background, overall store numbers The current cost-of-living crisis has ## General trends across the retail industry are in decline, but emphasised price even more and it is no As the UK adjusts to a “new normal” post- discount stores continue to expand, winning surprise to see discounters prospering. This COVID, many trends too have now normalised. market share from higher priced operators. is done quite simply by meeting consumers’ And the fundamental trends remain consistent: Compared to the start of the global financial needs for low prices. Furthermore, retailers like people still want to visit shops, price remains crisis, there are 2,000 more discount stores in B&M are playing an important role in society central to many shopping decisions and a the UK, and this trend will continue. While many by helping consumers through difficult times number of competing retailers remain under headlines have been focussed on the growth by offering low prices on everyday essentials pressure. B&M is well positioned to take of online and home delivery companies, the and by making consumers’ purses and wallets advantage of all these trends, and more as discount channel has remained in strong stretch further. the UK’s leading variety goods value retailer. growth and is set to continue to do so for the foreseeable future – even after the current ## ESG ## A return to stores cost-of-living crisis comes to an end. ESG topics are important considerations for Consumers have returned to store shopping consumers, retailers and society generally. in large numbers since lockdown restrictions ## Price and the A lot of attention understandably focuses were lifted, and this is to the benefit of B&M. on the environment, but the social role is ## In-store retailing remains the number one cost-of-living crisis also highly important, as is governance. choice for most consumers and in many cases it The cost-of-living crisis has brought price to remains the most convenient form of shopping. the forefront of headlines, but price has always Consumers are conscious of the impacts of their For example, for groceries almost 90% of been at the forefront of consumers’ minds. This purchases on the environment, but in difficult purchases are conducted in stores – despite is evidenced by the growth of B&M and other economic times, environmental concerns can home delivery having been an available discounters. Low prices have always been a take a back seat to shorter-term issues. option for most consumers for over 25 years. major determinant of shop choice for many When a family is faced with a decision such consumers – after all, why pay more for the as “heat or eat”, they will not pay a premium for At the height of the pandemic, Grocery Home same product? an environmentally friendly product. Therefore, Delivery (“GHD”) had a market share of 16% 1 it is down to businesses and the Government according to Nielsen . This has now fallen Even when we look at the growth of the online to ensure that environmentally friendly activity | to 11%, with a third of the GHD market share | | channel in many categories, it has been driven | | | --- | --- | --- | --- | | | 1 | | is encouraged through well-judged | | returning to store based shopping | . B&M | by low prices and low-cost operating models. | | interventions and does not penalise the operates in a number of markets where There are not many, if any, online retailers with consumer through forced higher prices. sustainable and profitable online business higher price points winning share from lower models remain unproven and this is to our priced bricks and mortar retailers. Convenience At B&M our focus remains on offering the advantage, where we offer low prices without and home delivery may have played a role in lowest possible prices, which can only be suffering from margin dilution due to cross the growth of many online operators, but it is delivered through a constant focus on low subsidisation of online activities. Not all low prices and discounting that have been the costs. In working to keep costs low, we also consumers want to shop exclusively via home main driver. But not all categories are suitable help the environment. For example, in reducing shopping, or even at all. Many products and for home delivery models. If high delivery the miles driven by our delivery trucks with a categories are not suited to home delivery prices, relative to the value of the product new Transport Management System, we lower models and these include groceries, are incurred, consumers will prefer to shop emissions, help lower congestion and offer household products and other non-grocery in store for a lower overall price. This is a improved efficiency which is reflected in lower items – areas where B&M has a strong situation and consumer trend that favours B&M. prices. Commerciality and ESG considerations reputation and price image. With many items which we sell being low ticket are at their most powerful when they work price items, expensive delivery options are hand in hand and at B&M we will continue uneconomical. It is notable that the fastest to operate in this manner. growing retailers in the UK with regard to store numbers, tend not to have online operations. 10 B&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 General merchandise retailers the role retailers and suppliers play in keeping There are a wide variety of these competitors, costs low and making things affordable for the ranging from department stores under strain to consumer. Fewer consumers face the “heat or category specialists, which have also suffered eat” dilemma because of discounters like B&M, many failures in recent years. As already ## 707 and it is this role in helping consumers which discussed, many of the successes have been ### will help ensure discounters will keep winning Number of low priced operators and many of the failures ### market share. B&M UK stores have been higher price, higher operating cost models. The general trend amongst general merchandise operators is the growth of ## Competitive environment discounters and the decline of the non-discount The retail environment remains tough, with model, although there are some exceptions. subdued demand, high cost inflation and a decline in real wages. At B&M, we remain ### very well positioned to navigate through these Discounters troubled waters and win further market share, B&M is the UK’s leading variety store discount while delivering a profit to our shareholders, retailer, but there are other discounters. ## 950 career opportunities to our staff, low prices to Discounters still represent a relatively small part ### B&M UK our customers and growth to our suppliers. of the overall retail market and there remain ### stores target very many growth opportunities. For example, We face many competitors across many despite being the leading variety store channels, but through our everyday lowcost discounter in the UK, B&M has a market share 2 | operating model, through our scale and | of only c.2% | . The discount sector can keep | | --- | --- | --- | | through our relentless focus on delivering | growing at the expense of supermarkets and | | | low prices for our customers we believe we | general merchandise retailers without | | | are in a strong position to compete effectively | cannibalising itself. | | against all key competitors. Overall, we expect discounters to take a ## c.2% larger market share, to continue opening more ### Supermarket industry ### Share of UK store stores and to account for a bigger proportion This industry is going through profound change. 2 ### based market of a declining store base. Within this, B&M Several competitors are highly leveraged, being will continue to expand, will continue to win privately owned, while others also appear market share and will continue to deliver financially constrained. Any weak players in profitable growth. 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. 11B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Feature – B&M France ## B&M France: an evolved, ## profitable business ## 114 ### Stores in France ## 22.1% ### Total revenue ### growth in FY23 ## 9.6% ### Adjusted 1 ### EBITDA margin B&M European Value Retail S.A. Annual Report and Accounts 202312 Strategic Report Corporate Governance Financial Statements ## 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. ### 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 2 in non-food discount” and “Best chain of 2023 2 in home decoration” in the current year we still feel we have ample room to strengthen the brand even further. | Revenue | | | FY23 has been a year of strengthening | Stores | | --- | --- | --- | --- | --- | | | | | the B&M brand in the French market. It has | The increased B&M brand awareness in France | | | | | been the first full year with all our stores now | will be aided further by delivering against our | | £431m | | | operating under the B&M fascia, and offering | store rollout plan. Our current base of 114 stores | | | | | the refined product range selection we believe | is small compared to the market potential in | | +22.1% in FY23 | | | best suited for the French consumer. Since the | France. The country has a similar size population | | | | | business was acquired by the B&M Group in | to the UK therefore making the B&M UK estate | | | | | 2018, there has been a clear focus on this | a clear benchmark for our French ambitions. | | 2023 | | 431 | | | | | | | rebrand and realignment of the product mix | However, each location needs to be able to | | 2022 | 353 | | to a more “B&M” offering which has resulted | | fulfil the strong requirements of site quality with | | | in the business having a profitable base from | which the brand has successfully expanded | | --- | --- | --- | --- | | 2020 | 283 | | | | | | which to build. In FY23, we made an EBITDA | over the years. As such, the speed of expansion | | | | margin of 9.6% compared to a loss-making | will be dependent on the availability of the | | | | outturn just two years ago. | quality of sites at any given time. We will open | 1 Adjusted EBITDA 10 new stores in the next financial year and Recent results in France have been driven growth will continue to be controlled and we in significant part by the performance of reiterate that the quality of location will not be ## £41m categories that have been at the bedrock of the compromised to accelerate our store growth. UK business success. General Merchandise ## 9.6% of sales categories such as home and seasonal (of ### Relentless focus which gardening and Christmas are the most Our laser focus on price, product and 2023 41 prominent) and the introduction of FMCG demonstrating the best in retail store execution have played an important part in increasing 2022 32 remains a real team effort, in order to achieve customer numbers and hence sales our goal to be the best discount retailer in -3 2020 performance. The evolution of product mix France. This is indeed real teamwork; from our has been a gradual process aiming at aligning buying teams through to colleagues at our 1. The Directors believe that our adjusted figures – the French business model with what makes distribution centre and in stores, all elements as described in Note 1 of the financial statements – the B&M brand so successful in the UK, while provide users of the accounts with measures of need to come together to deliver excellent adapting it to the local market – taking into performance which are appropriate to the retail customer satisfaction. industry and presented by peers and competitors. account, the buying preferences and tastes Adjusted values are considered to be appropriate to of the French consumer. We trust that the constant focus on the exclude unusual, non-trading and/or non-recurring fundamentals of our retail delivery coupled with impacts on performance which there-fore provides a tightly managed store expansion programme the users of the accounts with an additional metric to compare periods of account. See Note 3 of the are the two strong pillars that will enable the financial statements for further details. Adjusted business to generate sustainable profitable figures exclude the impact of IFRS 16. growth in France for many years to come. 2. Meilleure Chaine De Magasins De L’Annee – ‘Discount non alimentaire’ & ‘Decoration & Idees cadeux’ 2023. 13B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Feature – Heron Foods ## Heron Foods: offers growth ## and other benefits to the ## core business ## 319 ### Stores in ### the UK ## 18.1% ### Total revenue ### growth in FY23 ## 6.1% ### Adjusted 1 ### EBITDA margin B&M European Value Retail S.A. Annual Report and Accounts 202314 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 | Speed and agility | Environment | | --- | --- | --- | | operator currently trading out of 319 stores | Heron has a unique track record in acquiring | With the increase in energy costs seen | | across the North of England and the Midlands. | high-quality products at low prices. Our great | throughout the year we are constantly looking | | We sell well-known branded groceries at a | communication and collaboration with our | at ways to improve efficiencies within the store | | competitive price point to suit the bargain loving | suppliers allow us to be choice retailer to | network and at our distribution centre in Hull. | | shopper. Our customers are assured of great | acquire “stock at risk”. Our buying team have | We are reducing our energy consumption with | | value for money in all our stores, and they | continued to build on our strong relationships | greater control over the operation of in-store | | respond strongly, particularly in this cost-of- | with suppliers to evolve and drive our | freezers, chillers and air conditioning systems | | living crisis. This can be seen by the number of | proposition. Our agility allows us to continue to | which will reduce costs but without affecting | | new and repeat customers shopping with us – | drive great choice and availability for customers. | the customer experience. We have also | | our like for like customer transaction numbers | We can have products on the shelves in our | replaced the control equipment on the | | have increased by 10.3% since FY22. | stores within just 24 hours of being received into | temperature-controlled parts of our distribution | | | depot. Our improved ranges make Heron more | centre to reduce consumption. | | Our meal deals and huge clearance deals have | attractive to customers both existing and new. | | | made a significant impact for our customers. | | Our biggest capital project for the next financial | | Our offering continues to progress and develop | Our Christmas meal deal was a market leader, | year is the design and installation of solar | | further. We have now extended our core food | featuring in many of the tabloids as “Best Value” | panels for the roof of our distribution centre. This | | offering with chilled ready meals and an | for Christmas 2022 – helping drive footfall and | will allow us to use all the electricity generated | | increased Frozen range and we are constantly | discretionary spend. | by the panels which, given current energy price | | evaluating our return on space within each | | levels, is key to reducing energy costs and | | store to ensure the store is tailored to the | | assists with us with one of our environmental | ### Stores customer needs based on their demographic targets in finding better ways of operating in The introduction of our “Serious About and location. a more environmentally sustainable way. Standards” programme targeting better in-store product availability, increased customer Our clearance lines drive real value, and ### service, compliance and housekeeping Proven business model we strive for those “cross-the-road” deals. standards has driven sales throughout the year. Since joining the B&M Group in August 2017, Highlighting these to our customers via social we have improved our retail and operational media and ensuring that our customers Our average store size stands at 3,000 sq. ft execution which has driven the financial understand that our offers and deals change although in recent years we have been trying to performance of the business. Through daily, increases frequency of visit to stores and increase this. We have this year opened some increasing the range available in stores and can make us a destination. new “concept” stores with different signage and category realignment, including the introduction graphics. Generally, with a smaller footprint, we of a range of dry groceries from B&M, we have Sales across all three main categories – Chilled, have reduced the frozen range where trading seen a large increase in customer numbers Frozen and Ambient – have shown positive dictates this will work and increased ambient overall. This is evidenced by our substantial growth with Ambient leading the way overall. In ranges, to offer the customer the convenience sales growth since acquisition; total sales for the latter part of the year, frozen sales have seen choice they need for a particular location and the current financial year stand at £485m increased momentum. This has been driven by where availability of larger stores is difficult. compared to £274m in FY16. This excellent sales the cost-of-living crisis as customers continue Rollouts so far have been encouraging and we performance demonstrates the success of our to trade down into frozen products for meals will continue to convert existing stores and open proven business model where we focus not where they can save money by managing their new stores where we think this will create value. only on selling at the lowest possible price but budgets and supporting reducing food waste. maintaining the quality of our products. We Since acquisition the store estate has increased constantly deliver our customers the Big Brands by 26%. In FY24, we plan to open 20 new stores at the Low Prices they require. A key enabler in plus a rolling programme of refits, extensions our ability to sell at the lowest possible price is and relocations where opportunities exist. diligent cost control – clearly illustrated by our 1 adjusted EBITDA margin of 6.1% which is market leading in the grocery sector. 1. The Directors believe that our adjusted figures – Heron is well-placed to continue to deliver strong as described in Note 1 of the financial statements – results for the Group. Looking ahead, with some provide users of the accounts with measures of performance which are appropriate to the retail of our larger competitors operating thousands industry and presented by peers and competitors. of convenience stores – the opportunity for Adjusted values are considered to be appropriate to further growth for Heron is significant. 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. 15B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Chief Executive’s review ## The last 12 months ## have been a year of ## major transition for B&M.” been made possible through the hard work of ### FY23 has been a good and our employees, and through a laser like focus ### significant year in the evolution on price and value for money. In contrast to ### of B&M. There have been some other businesses, we look to keep prices as low as we can, while delivering profitable ### planned management growth and cash for our shareholders. At the ### changes, there have been same time, we continue to expand our store estate, upgrade the existing estate and to ### major economic headwinds make improvements in our offer, whether ### and there has been material through price investment or through improving ### cost pressures to deal with. store standards. Profitable growth is at the core of our strategic objectives, and to do that we But B&M UK has weathered the difficult need to put consumer needs at the centre of environment well and has delivered another what we do. excellent year of financial performance with | | | 1 | The underlying strategy remains unchanged | | --- | --- | --- | --- | | | an adjusted EBITDA margin | of 12.4%. We have | | | | delivered strong sales growth and market | | with the focus on simplicity and low costs | | Alex Russo | share gains, an EBITDA margin substantially | | across our four channels of growth, which | | Chief Executive Officer | ahead of pre-pandemic levels, and strong | | are improved sales in existing stores, the | | | cash generation helped by a clean inventory | | expansion of our store estate in the UK, | | | position. This reduction in inventories helped | | expansion in France and continued growth | | | facilitate an extra £200m (20.0p per share) | | in Heron, our UK convenience store operation. | | | being returned to shareholders through a | | I will return to these four channels later. | special dividend in January this year, on top of an interim dividend of 5.0p and a final ordinary The long-term outlook for B&M remains very dividend of 9.6p. This is a very pleasing reward positive, with many years of profitable growth for our shareholders and reflects growth of ahead. In the UK, B&M has a small market 2 the business, good cost control and strong share and even less in France. Market share cash management. in both countries can be substantially higher and as we execute our strategy, we will deliver A relentless focus on helping our customers compounding earnings growth and cash navigate the cost-of-living crisis has been key returns for shareholders. to our success. Delivering strong results has 16 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements ## In contrast to some ## other businesses, we ## look to keep prices ## as low as we can.” ### Competitive position In non-grocery our aggressive focus on price is 1: Existing B&M UK stores: To deliver on our long-term aims, we must also working, with General Merchandise A core driver of growth remain highly competitive in a rapidly performing very well. Price comparisons are In FY23 there was a sharp focus on delivering developing retail market. We must remain inevitably harder in this area due to a lack of growth through our existing stores. This led to relevant through price, edited range and brands, differences in products and our major improvements in store standards and location, and these requirements drive our constantly evolving product mix but our price increased product availability, which in turn | strategy. We continue to be relentlessly focused | positioning remains market leading. While | | 4 | | --- | --- | --- | --- | | | | led to improvements in like for like | (“LFL”) sales. | | on price and compared to last year, our price | improving our price position, over the last several | | | In the second half, driven by improvements advantage over the mainstream supermarkets years we have also improved our product in store standards, B&M UK delivered 5.1% is as strong as it was through consistency of quality. Hence our value for money credentials LFL sales growth. This shows the power of everyday low prices (“EDLP”). are substantially improved, as evidenced by improving the offer in existing stores, while the the increased number of monthly transactions benefits of operational gearing are evidenced Many consumer trends favour B&M, including and by our retaining many of the customers in cash and profits. trading down, as does the changing structure who tried us for the first time during lockdowns. of grocery retailing. Currently, many consumers Our stores have the capacity to keep growing ### are switching to the two German Limited Strategic progress review their sales for many years ahead. Due to Assortment Discounters (“LADs”) which remain The macroeconomic outlook remains uncertain, operational gearing and no extra capital, such heavily focused on own label. Our branded offer with the consumer challenged by high inflation, growth should be highly profitable, should is highly complementary to them. Independent rising interest rates and by declining real deliver incremental returns on investment and research shows that most LADs shoppers also incomes. Despite a tough backdrop, we remain should allow further reinvestment back into 3 shop elsewhere , and where we are co- focused on delivering through our existing four lower prices to drive further profitable growth. located, our stores tend to trade exceptionally channels of growth in FY24. well. This is as true in France as it is in the UK. 17B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Chief Executive’s review continued 2: New B&M UK stores: New store growth will also deliver economies • Mike Schmidt as CFO with 22 years of scale and operational gearing benefits. In experience, following 9 years at DFS; Square footage growth outpaces FY23 we opened 7 new stores in France. In • Jon Parry as Supply Chain Director with our growth in net new stores FY24 we plan to open another 10 new stores, 26 years experience, following 12 years Total average net sales area (including garden with a potential for an acceleration in openings at Asda; centres) increased by 3.6% in the last financial in future years. With just 114 stores currently, in • Philippe Brasleret as Retail Stores Director year. This is greater than the increase in net a country with a similar population to the UK, in France with 18 years experience, new stores (6 stores or a 0.9% increase) and France can sustain a strong opening following 9 years at Aldi France; and is driven by three factors: 1) new stores tend to programme for the long term. • James Kew as Head of Retail Operations for be bigger than existing store average, 2) new B&M UK with 16 years experience, following stores are more likely to have a small garden 4: Heron Foods offers growth and 5 years as Head of Productivity and Change centre than existing stores and 3) replacement at B&M UK. stores are usually much larger than the stores other benefits to the core business they replace. Heron Foods has had an outstanding year, These represent a planned strengthening of delivering substantial sales growth and a our management team and we will strengthen Previously we have made it clear that the leading EBITDA margin in its area. It currently our team further with new appointments in the 950 target for store numbers is conservative operates 319 stores, but as a low-priced coming months. | but even so, it represents c.35% more stores | convenience store operator there remains the | | | --- | --- | --- | | than today, and with newer stores being on | scope to open many more. The scale of the | | | | opportunity may be judged by the fact that | Current trading and outlook | average bigger than existing stores and having the market leader in the UK operates over Our business has now normalised to a new, higher total sales, the sales growth should be 2,000 convenience stores. sustainable and higher level of underlying even greater than this 35%. sales and margin compared to the pre- Heron Foods has undergone a strategic pandemic year of FY20. We remain highly cash The sales contribution from our gross new repositioning over the last 18 months. The generative and in the absence of acquisition store openings continues to be very healthy in number of freezer units in each store has been opportunities for batches of stores, we will look 2023 and reinforces the strategy of replacing reduced – but not the Frozen range. Instead, to return excess cash to shareholders at the older, smaller stores at the end of their leases products have been merchandised more appropriate time in line with our capital with new stores where there is a catchment intensively freeing up extra space in store. allocation framework. opportunity to do so. This extra space has allowed the chilled and ambient ranges to be extended and this has Against the ongoing cost-of-living crisis, we will We will accelerate our new store openings driven a step change in sales densities. help our customers by remaining highly price back towards 40 stores per annum, with c.30 competitive and growing our business, through expected in FY24, but focus will always remain As well as being a strong business in its own existing and new stores in the UK and France. on new stores generating a leading return on right, Heron brings other benefits to the Group. As well as expecting further LFL growth in investment. We will not compromise on our It enhances our buying economies, provides existing stores, during FY24 we plan to open investment targets, and we will not open other economies of scale and is an invaluable c.30 new B&M stores in the UK, c.10 in France unprofitable stores just to meet a store opening source of learning and knowledge, as is our and c.20 Heron Foods stores. target. Sustainable profitable growth is at the core of our business. French operation. The business will maintain a high degree of discipline on EDLP pricing, limited range ### 3: France will provide growth for many Management Changes assortment and a low-cost operating model. As stated earlier, this year has seen some years to come major planned changes in the management France has undergone a major transformation, In the first 9 weeks of FY24, B&M UK LFL sales team. After 19 highly successful years, Simon with recent results highlighting the long-term have run at 8.3%, France and Heron continue Arora stepped down as CEO and has now potential. All stores have been branded B&M, their trading momentum and we expect full exited the business. We thank Simon for his clothing (which was a major part of the offer 1 year Group adjusted EBITDA (pre-IFRS 16) to outstanding contributions to B&M and to the when the business was acquired) has been be higher than FY23. UK economy. removed and the FMCG range is building. The business was loss making just two years After two years as Chief Financial Officer, ago but in FY23, France delivered 22.1% sales ### Alex Russo 1 I am delighted to have taken the role of growth and an adjusted EBITDA (pre-IFRS 16) Chief Executive Officer Chief Executive Officer. I have strengthened margin of 9.6%. As the business continues to 30 May 2023 the management team with a number of evolve and benefit from the B&M supply chain key appointments, including: and infrastructure, there remains the prospect of further growth in EBITDA margin. 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. 18 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements 19B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Financial review ## Robust, disciplined ## performance.” | Accounting period | The continued Group revenue growth in the | | --- | --- | | The current accounting period represents the | year was moderated by the reduction in the | | 52 weeks trading to 25 March 2023 (“FY23”) | trading gross margin in B&M UK as described | | and the comparative period represents the | below, that led to a £49m or 2.7% growth in | | 52weeks to 26 March 2022 (“FY22”). The | gross margin. Operating costs also increased | | upcoming accounting period represents | by £94m or 8.3%, reflecting the cost of serving | | 53weeks trading to 30 March 2024 (“FY24”). | our increased revenues, opening new stores | and also cost inflation, including the effects of | The Group financial statements have been | the 6.6% increase to the UK national living | | --- | --- | | prepared in accordance with IFRS and are | wage. On a statutory basis, profit before tax | | reported as such. Underlying figures presented | declined to £436m from £525m, again | | before the impact of IFRS 16 continue to be | reflecting the normalisation of trading to a | | reported where they are relevant to | post-pandemic period. | understanding the performance of the Group 1 and to aid comparability with previous years. Group adjusted EBITDA (pre-IFRS 16) margin is now 11.5%, which is 253 bps higher than pre-pandemic levels (FY20: 9.0%). This reflects ### Financial performance ### Mike Schmidt the structural change in our margin which the Group Chief Financial Officer business has undergone in the last three years, This is the first year since the outbreak of with an evolution of our product range, greater COVID-19 where trading patterns have economies of scale, the benefits of operational normalised. We believe FY23 can be viewed as gearing from higher sales densities and other the Group’s new underlying revenue and profit operational learnings. base level from which we grow from – with 1 Group adjusted EBITDA (pre-IFRS 16) of £573m. On a post-IFRS 16 basis, Group adjusted We now have the proven evidence there has 1 EBITDA was £796m (FY22: £828m) which been a step change in performance of the represented an adjusted EBITDA1 margin Group since the pandemic, where Group of 16.0% (FY22: 17.7%). 1 | adjusted EBITDA | (pre-IFRS 16) in FY20 was | | | | --- | --- | --- | --- | | £342m. Trading was exceptional during each | | | 1 | | | | An adjusted EBITDA | is reported to allow | of FY21 and FY22, particularly during the investors to better understand the underlying periods where non-essential retail was closed, performance of the business. The adjusting including some of the first quarter of FY22. Our items are detailed in note 3 of the financial performance relative to pre-pandemic levels statements and totalled £19m this year evidences that we are retaining the new (FY22: £(12)m). customers won during the pandemic years. Importantly though, the robust profit margins We closed the year with an unchanged | and cash conversion characteristics of the | | | 8 | | --- | --- | --- | --- | | | leverage with a pre-IFRS 16 net debt | | to | | business remain unchanged. | | 1 | | | | adjusted EBITDA | leverage ratio of 1.3x | | (FY22: 1.3x), following the payment of £347m Total Group revenue in FY23 was £4,983m of ordinary and special dividends in the year. (FY22: £4,673m), representing a year-on-year This reflects the Group continuing its strong increase of 6.6%. On a constant currency track record for operating cash generation and 2 basis , revenues increased by 6.5%. This has capital expenditure efficiency. Significantly, 4 been driven by positive like for like (“LFL”) in all operational efficiency in our stores and businesses, which includes inflation and mix logistics and our discipline in implementing effects, and by strong trading from new stores. markdowns in garden categories contributed to a £99m stock reduction, that underpinned 1 Group adjusted EBITDA (pre-IFRS 16) decreased the total cash generated from operations to £573m (FY22: £619m) as we completed a full across the year of £866m (FY22: £598m). year of undisturbed post-pandemic trading. 20 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements ### B&M UK Constant currency revenue comparison 3 In the UK, total B&M fascia revenue increased Constant currency by 4.0% to £4,067m (FY22: £3,909m), with | | 4 | £/€m 2023 2022 % 2023 2022 % | | --- | --- | --- | | one-year LFL | revenue increasing by 0.7%. There | | | was a strong run rate in the second half of the | | France in € 499 415 499 414 | Exchange rate 1.1581 1.1756 1.1581 1.1581 year with LFL sales growth of 5.1%, compared France in £ 431 353 431 358 to a first half LFL of (3.9)% and the business has B&M 4,067 3,909 4,067 3,909 likewise entered the current year with strong Heron Foods 485 411 485 411 momentum. Our LFL customer transaction numbers increased every month since June. Total 4,983 4,673 6.6% 4,983 4,678 6.5% On a three-year basis, total revenue is 29.5% ### Group profit before tax 4 higher than in FY20, with LFL revenue 13.3% higher. This reflects the underlying growth of £m 2023 2022 the business during the pandemic and during Revenue 4,983 4,673 lockdowns and is indicative that many Adjusted gross profit 1,801 1,752 customers won during lockdown have become % 36.1% 37.5% regular customers. Adjusted operating costs (1,228) (1,133) 1 Adjusted EBITDA (pre-IFRS 16) 573 619 At category level, we believe the one-year % 11.5% 13.2% | LFL performance has now broadly normalised | Depreciation & amortisation (76) (66) | | | | --- | --- | --- | --- | | against the peak of the pandemic. Demand for | Adjusted interest (38) (29) | | | | essential food and FMCG items has remained | | 1 | | | | Adjusted profit before tax | | 459 524 | high, with many customers seeking out leading Adjusting items (19) 12 branded goods at the lowest possible price Adjusting interest & finance lease interest (0) (0) during this cost-of-living crisis. General Profit before tax (pre-IFRS 16) 440 536 Merchandise demand has also been resilient Impact of IFRS 16 (4) (11) and performing in line with our plans, with seasonal categories such as Halloween, Statutory profit before tax 436 525 Christmas, Easter and most recently the Coronation all having a strong sell-through. ### Reconciliation of adjusting items | | 5 | £m 2023 2022 | | | | --- | --- | --- | --- | --- | | B&M’s trading gross margin | reduced by | | | | | 148 bps across the full financial year, driven by | | Profit before Interest & Tax 535 613 | | | | the reintroduction of usual markdown activity | | Add back depreciation & amortisation 76 66 | | | | including the previously disclosed markdowns | | Remove depreciation & amortisation of finance leases (1) (1) | | | | in the gardening category in H1. Consistent | | Add back IFRS 16 depreciation & amortisation 166 162 | | | | with this, a marked improvement in the | | EBITDA (IFRS 16) 777 840 | | | | year-on-year trend was seen in H2 relative | | Fair value of ineffective derivatives 17 (13) | | | | to H1 (H2 trading gross margin down 92 bps | | Foreign exchange on intercompany balances 0 1 | | | | versus FY22), due to strong sell through with | | Online trial 2 0 | | | | only planned markdown activity in general | | | 1 | | | | | Adjusted EBITDA | | 796 828 | merchandise categories, coupled with a significant reduction in freight rates. 4 ### B&M UK like for like revenue reconciliation There were 21 gross new openings of which 1-year 5 were replacements for smaller legacy stores £m 2023 2022 Change and a further two relocations of FY23 closures 4 Like for like revenue 4,444.0 4,413.0 0.7% will occur early in FY24. The replacement stores Bank holiday closure 0.0 11.0 typically have 3x the total sales space of the Online trial 7.0 0.0 stores they replaced and deliver a higher store New stores after Mar 26 2022 90.0 0.0 contribution than the stores they replaced. New stores prior Mar 26 2022 163.0 52.0 Closed stores 1.0 41.0 New stores, including replacements, are Gross Segment Revenue 4,705.0 4,517.0 cash generative in year one and typically Value Added Tax/Commission Income (675.0) (653.0) deliver a higher store contribution than the Wholesale revenues 37.0 45.0 Group’s average. Revenues B&M UK 4,067.0 3,909.0 4.0% 21B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Financial review continued 1 In addition to revenue generated in-store, Heron Foods adjusted EBITDA (pre-IFRS 16) As a Group, we are committed to paying the wholesale revenue decreased to £37m (FY22: increased to £30m (FY22: £23m), with an right tax in the territories in which we operate. 1 | £45m). Most of this represents sales made to | adjusted EBITDA | margin of 6.1% of sales | The B&M UK business paid taxes totalling | | --- | --- | --- | --- | | the associate Centz Retail Holdings Limited, | (FY22: 5.5%), representing a successful result | | £527m in FY23, including £210m relating to | | a chain of 54 variety goods stores in the | for the year. Statutory operating profit for the | | those taxes borne directly by the Company | | Republic of Ireland. | year was £38m (FY22: £30m). | | such as corporation tax, customs duties, | business rates, employer’s national insurance | Operating costs, excluding depreciation and | Gross margin in Heron Foods remained resilient | contributions and stamp duty and land taxes. | | --- | --- | --- | | amortisation, increased by 5.7% to £950m (FY22: | against FY22 with a strong performance across | The balance of £317m are taxes we collect from | | £899m) which represented 23.4% of revenues | all categories – Chilled, Ambient and Frozen | customers and employees on behalf of the UK | | (FY22: 23.0%). This was primarily because of an | – with the latter being a growth driver later in the | Exchequer, which includes value added tax, | | increase in store costs driven by a strategic | financial year as our customers look to avoid | pay as you earn and employee national | | decision to focus on store standards to drive LFL | food wastage during the cost-of-living crisis. | insurance contributions. | sales, partially offset against foreign exchange ### gains made due to our strong hedging position Operating costs remained well-controlled, Profit after tax and earnings against the underlying spot rate. remaining broadly flat as a percentage of ### per share revenues. Statutory profit after tax was £348m (FY22: 1 Adjusted EBITDA (pre-IFRS 16) for the B&M UK £422m) and the statutory diluted earnings per ### business decreased by (10.9)% to £502m (FY22: Depreciation and amortisation share was 34.7p (FY22: 42.1p). 1 | £564m) and the adjusted EBITDA | margin | Depreciation and amortisation expenses, | | | | --- | --- | --- | --- | --- | | decreased by (207) bps to 12.4% (FY22: 14.4%). | | excluding the impact of IFRS 16, grew by 16.3% | | 1 | | | | | Adjusted profit after tax | , which we consider | | However, both remain significantly above | | to £76m (FY22: £66m), representing only 1.5% | | | to be a better measure of performance for the historical levels. Statutory operating profit for of sales (FY22: 1.4%). The increase was largely reasons outlined above, was £366m (FY22: the year was £479m (FY22: £569m). due to continued investment in new stores £417m), and the adjusted fully diluted earnings | | across all fascias, with the Group growing | | 1 | | --- | --- | --- | --- | | | | per share | was 36.5p (FY22: 41.6p). | | France | the store numbers by 1.9% in the year. | | | In France, revenues increased by 22.1% to £431m ### Investing activities | (FY22: £353m), reflecting strong LFL performance | The additional depreciation and amortisation | | 6 | | --- | --- | --- | --- | | | | Group net capital expenditure | totalled £89m | | and new store openings delivering well. There | charge relating to lease liabilities under IFRS 16 | | | this year (FY22: £85m). Investment included were 7 new stores opened in FY23 increasing was £166m (FY22: £161m). £33m spent on 42 gross new stores across the the average sales area of the total store estate Group’s fascias (FY22: £34m on 54 stores) and ### by 4.7% to 3.1m sq. ft. (FY22: 3.0m sq. ft.). Finance expense £16m on infrastructure projects to support the Net finance charges for the year, excluding IFRS continued growth of the business (FY22: £9m). 1 Adjusted EBITDA (pre-IFRS 16) increased by £9m 16, were £38m (FY22: £29m). This included bank There was also investment of £40m on 1 to £41m (FY22: £32m), with an adjusted EBITDA and high yield bond interest of £38m (FY22: maintenance works to ensure that our existing margin of 9.6% (FY22: 9.2%). The French business £27m) and amortised fees of £2m (FY22: £2m). store estate and warehouses are appropriately continues to build a sustainable underlying maintained (FY22: £42m). There was also a net profit base and is primed to carry on delivering The interest charge relating to lease liabilities expenditure of £(1)m relating to a small number against the strategic and financial objectives under IFRS 16 was £61m (FY22: £59m). of freehold acquisitions and disposals (FY22: set. Statutory operating profit for the year was net expenditure of £1m). £19m (FY22: £11m). ### Profit before tax | | Statutory profit before tax was £436m (FY22: | | Net debt and cash flow | | --- | --- | --- | --- | | Gross margin remained broadly stable with far | | 1 | | | | £525m). An adjusted profit before tax | is also | The Group continues to be highly cash | less emphasis placed on textiles and further reported to allow investors to better understand generative, with cash generated from steps taken towards aligning its product mix the operating performance of the business (see operations of £866m (FY22: £598m), helped to that seen in B&M UK. note 3 of the financial statements). Adjusted by the planned stock reduction of £99m. 1 profit before tax (pre-IFRS 16) for the year Operational consistency remained throughout decreased to £459m (FY22: £524m). The strong performance and cash generation the year. Operating costs as a percentage of have enabled the Group to pay dividends sales improved by 1.2% to 34.9% (FY22: 36.1%). | | The impact of IFRS 16 on the Group financial | | | 7 | | | --- | --- | --- | --- | --- | --- | | | | totalling £347m | | in FY23. This includes a | | | | statements was to decrease statutory profit | | 7 | | | | | | £200m | special dividend paid in February 2023. | | | | Heron Foods | before tax by £4m. | | | | | | In the discount convenience chain, Heron Foods, | | | 8 | | | | | | Net debt | (on a pre-IFRS 16 basis), decreased to | | | | revenues increased by 18.1% to £485m (FY22: | | | | | 8 | | | Taxation | £724m (FY22: £790m). The net debt | | | to adjusted | | £411m), reflecting a successful year and | | | 1 | | | | | The tax charge in FY23 was £88m (FY22: £103m), | EBITDA | leverage ratio was 1.3x (FY22: 1.3x), the | | | continued growth. representing an effective tax rate of 20.1%. We fourth year that we maintained it below 1.5x expect the tax rate going forward to reflect the and comfortably within our published 2.25x There were 14 gross new stores openings and blended rate of taxes in the countries in which leverage ceiling. six closures in FY23, with 3 of those closures we operate. This is currently 19% in the UK and being relocations. As with the B&M business, 25% in France, although the UK Corporation In March 2023, we entered into a new five-year the store estate is carefully monitored and if an Tax rate has now increased to 25% from senior facilities agreement, with two one-year opportunity arises to open a new higher quality FY24 onwards. extension options for a £225m senior term store in a new or existing area, the business will loan facility and a £225m senior revolving look to capitalise. Total average sales area of the credit facility with a banking syndicate made store estate increased by 5.0% to 970k sq. ft. up of seven banks. This facility gives us (FY22: 920k sq. ft.). 22 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements | significant additional maturity, can be upscaled | | | The Group is strongly cash generative and its | | Notwithstanding the current macroeconomic | | --- | --- | --- | --- | --- | --- | | by up to £350m if required to support future | | | policy is to allocate cash surpluses in the | | uncertainties, the Group has continued to | | growth, and provides a streamlined bank | | | following order of priority: | | be highly cash generative and is in a strong | | group that we look forward to working with | | | 1. the rollout of new stores with a strong | | position to maintain its ordinary dividend | | in the future. | | | | payback profile; | policy. The principal risks of the Group are set | | | | | 2. ordinary dividend to shareholders; | | out in its Annual Report, in particular those | | The Board adopted a long-term capital | | | 3. mergers & acquisition opportunities; and | | relating to supply chain, competition, economic | | allocation policy in 2016 to provide a framework | | | 4. returns of surplus cash to shareholders. | | environment, warehouse infrastructure and | | to help investors understand how the Group | | | | | international expansion. These are relevant to | | will continue to balance the funding | | | The above list is a summary of the main items | | the ability of the Group to maintain its ordinary | | requirements of a growth business like B&M | | | but is not exhaustive as other factors may arise | | dividend policy in the future. The Group | | with the desire to return surplus capital to | | | from time to time which require investment to | | however maintains strategies to mitigate those | | shareholders. The Board will continue to | | | support the long-term growth objectives of the | | risks and the Board believes the Group has a | | evaluate opportunities to invest and support | | | Group. | | robust and resilient business model through | | the growth of the business along with the | | | | | the combination of having a value-led product | | scope for any incremental return of capital to | | | The parent company of the Group is an | | assortment which to a large extent comprises | | shareholders in the context of that framework. | | | investment holding company which does not | | essential goods and also competes across a | | | | | carry on retail commercial trading operations. | | very broad section of the retail markets in our | | Dividends | | | Its distributable reserves are derived from | | chosen locations. | | During the year, the Company declared and | | | intra-group dividends originating from its | | | | | 7 | | subsidiaries. The parent company is a | | | | paid an interim ordinary dividend of 5.0p | per | | | | | | | | 7 | Luxembourg registered company, and as such, | | Mike Schmidt | share in addition to a special dividend of 20.0p the Board is permitted to have recourse to the Chief Financial Officer per share. Subject to approval by shareholders company’s share premium account as a 30 May 2023 at the AGM on 25 July 2023, a final ordinary | | 7 | distributable reserve. It remains the Group’s | | --- | --- | --- | | dividend of 9.6p | per share is to be paid on | | | 4 August 2023 to shareholders on the register | | policy for dividend purposes to have recourse | | of the Company at the close of business on | | to distributable profits from within the Group, | | 30 June 2023. The ex-dividend date will be | | and accordingly, ahead of interim dividends, | | 29 June 2023. | | and also ahead of the year-end in relation to | final dividends. The Board reviews the levels | The Group has a dividend policy which targets | of dividend cover in the parent company to | | --- | --- | | an ordinary dividend pay-out ratio of between | maintain sufficient levels of distributable profits | | 30 to 40% of net income on a normalised tax | in the parent company for each of those | | basis. The Group generally aims to pay the | dividends. There are over £500m of | | interim and final dividends for each financial | distributable reserves in the principal trading | | year in proportions of approximately one-third | subsidiary of the Group, B&M Retail Limited, | | and two-thirds of the total annual ordinary | and there are no dividend blocks between | | dividend respectively. | it and the Company. | 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. 23B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Key performance indicators ## Growth delivered with discipline ## Financial 1 2 Total Group revenue growth (%) B&M UK like for like revenue growth (%) Group adjusted EBITDA (£m) ## 6.6% 0.7% £573m | | 2023 | 6.6 | 6.6 | | | 2023 Three-year growth | | 0.7 | 13.3 | 2023 | | 573 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | (2.7) | 2022 | | | | (9.0) | | 0 | 2022 | | 2022 | | | 619 | | | 2020 | | | 16.5 | | 2020 | 0 | 3.3 | | 2020 | 342 | | | | Strategic link | | | | | Strategic link | | | | | Strategic link | | | | | 1 2 3 4 | | | | | 1 | | | | | 1 2 3 4 | | | | | Description | | | | | Description | | | | | Description | | | | | We aim to deliver sustainable growth in our chosen | | | | | By monitoring the ongoing like for like (“LFL”) trading | | | | | In addition to growing revenues and opening | | | | | markets of the UK and France. Total revenue growth | | | | | performance at both store and product level, we are | | | | | new stores, we have a clear focus on ensuring that | | | | | is an essential part of achieving that objective, being | | | | | able to track our progress and take appropriate action | | | | | growth remains profitable. We measure profitability | | | | | a direct output of our new store rollout programme | | | | | where necessary. | | | | | by our adjusted EBITDA performance, stated on a | | | | | and the ongoing performance of our product ranges | | | | | | | | | | pre-IFRS16 basis. | | | | across the Group. Performance Like for like revenues increased by 0.7% on a one-year Performance Performance basis versus FY22. There was a strong run in the Group adjusted EBITDA normalised to £573m in FY23 Total Group revenues increased by 6.6% thanks to second half of the year. On a three-year basis, total but well ahead of pre-pandemic FY20 levels of £342m. strong LFLs in all businesses and by contributions revenue is 29.5% higher than in FY20, with LFL revenue We believe FY23 can be viewed as the Group’s new of new stores. Group revenues are 30.7% ahead 13.3% higher. underlying revenue and profit base level from which of FY20 levels. to grow from. 2 Group profit before tax (£m) Adjusted diluted earnings per share Cash generated from operations (£m) ## £436m 36.5p £866m | 2023 | | 436 | | 2023 | | 36.5 | | 2023 | | | 866 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 2022 | | | 525 | 2022 | | | 41.6 | 2022 | | 598 | | | 2020 | 252 | | | 2020 | 20.3 | | | 2020 | 533 | | | | Strategic link | | | | Strategic link | | | | Strategic link | | | | | 1 2 3 4 | | | | 1 2 3 4 | | | | 1 2 3 4 | | | | | Description | | | | Description | | | | Description | | | | | In addition to adjusted EBITDA, we recognise | | | | It is important to investors that we grow our earnings | | | | The Group is highly cash generative, capable of | | | | | the importance of our statutory profit, including | | | | per share as well as our adjusted EBITDA. This measure | | | | delivering high returns from a relatively low capital | | | | | depreciation, amortisation and interest charges. | | | | is stated after depreciation, interest and tax charges. | | | | intensity. By monitoring the cash generated from | | | | | As such, we also use profit before tax as a | | | | | | | | operations, we are able to actively manage our | | | | | performance indicator. | | | | | | | | working capital needs whilst investing in the | | | | Performance business in line with our capital allocation policy. A decrease on the prior year but significantly above Performance pre-pandemic levels of FY20. In FY23, our statutory profit before tax declined to Performance £436m, reflecting the normalisation of trading Cash generated from operations in FY23 was £866m, conditions post-pandemic. an increase of 44.8% on the prior year driven by planned inventory reductions of circa £100m and inventory discipline. 24 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements Link to strategy key 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, 1 Existing B&M UK stores 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, 2 New B&M UK stores and so aids comparability with peers and competitors. 3 France growth Previously, the B&M UK business has only reported a one-year LFL revenue growth metric. However, due to 4 Heron Foods growth 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. 2 1. One-year like for like revenues relate to the B&M UK Group adjusted EBITDA margin (%) Capital expenditure (£m) 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 ## 11.5% £98m 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 2023 11.5 2023 98 stores experience following opening. Three-year like for like revenues also relate to the B&M UK estate 2022 13.2 2022 100 only, and includes each store’s revenue for that part of the current period that falls at least 38 months 2020 9.0 2020 125 after it opened compared with its revenue for the corresponding part of FY20. Strategic link Strategic link 2. The Directors believe that our adjusted figures – as described in Note 1 of the financial statements – 1 2 3 4 2 3 4 provide users of the accounts with measures of performance which are appropriate to the retail Description Description industry and presented by peers and competitors. To ensure we are not diluting our profit margins as we Ongoing investment in new stores is one of our Adjusted values are considered to be appropriate to expand our business, in addition to the overall value strategic pillars, whilst we also invest in carefully exclude unusual, non-trading and/or non-recurring of the adjusted EBITDA, we also measure this as a selected infrastructure projects that we believe will impacts on performance which therefore provides percentage of total revenues. support the organic growth of the Group. We therefore the user of the accounts with an additional metric monitor capital expenditure to ensure we are investing appropriately in the needs of the business. to compare periods of account. See Note 3 of the Performance financial statements for further details. Adjusted Group adjusted EBITDA margin in FY23 was 11.5%, figures exclude the impact of IFRS 16. an increase of 253 bps on pre-pandemic levels. This Performance 3. Market share estimates are based on management reflects the structural change in our margin which the Gross investment in capital expenditure this year estimates, having regard for external research on the business has undergone in the last three years, with included £33m on new stores across the Group, size of the relevant market in 2022. See page 11 for an evolution of our product range, greater economies £17m on infrastructure projects, £3m on the acquisition further details. of scale, the benefits of operational gearing from of freehold stores and £45m on upgrading existing higher sales densities and other operational learnings. stores. ## Non-financial 3 Group net new stores opened UK market share (%) Colleague Step-Up programme ## 21 c.2.0% 261 | 2023 | 21 | | | 2023 | | | 2.0 | 2023 | | | 261 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 2022 | | 28 | | 2022 | | 1.5 | | 2022 | 91 | | | | 2020 | | | 53 | 2020 | 1.2 | | | 2020 | | 125 | | | Strategic link | | | | Strategic link | | | | Strategic link | | | | | 2 3 4 | | | | 1 2 3 4 | | | | 1 2 | | | | | Description | | | | Description | | | | Description | | | | | Our new store opening programme remains at the | | | | Our market share of store-based retail sales in the UK | | | | Developing and promoting our colleagues is important | | | | | heart of our growth strategy, and this applies across | | | | is relatively low, both in total and in each individual | | | | for retention and progression. Our in-house Step-Up | | | | | all fascias and territories. | | | | product category that we sell. This means we have a | | | | programme provides training to store colleagues and | | | | | | | | | considerable opportunity to increase our market share | | | | helps them to progress to managerial positions within | | | | | | | | | through continued growth in the years ahead. | | | | B&M. | | | | Performance Gross new store openings across each fascia in FY23 were 21 in B&M UK, 14 in Heron Foods and 7 in France. Performance Performance The net growth in our store estate, stated after In the core B&M UK business, the three-year like for like In FY23, a total of 261 existing colleagues were closures and relocations, was 6 for B&M in the UK, revenue performance would suggest that we have promoted to Store Manager or Deputy Store Manager 8 for Heron Foods and 7 in France. retained the loyalty of many of the new customers roles in the B&M UK business under our Step-Up from FY21, providing a strong platform for future market programme. This ongoing investment in colleagues share gains. remains integral to the Group’s success, and forms a key part of our ESG strategy. 25B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Principal risks and uncertainties ## 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 identified by the Board. As part of that process, Principal risks table management of risk and the identification of the Group’s appetite for risk is defined with The table below describes (i) the main risk principal risks that may affect the Group’s reference to the expectations of the Board for exposures identified by the Board in relation to operations, financial performance or strategic both commercial opportunity and internal our Group businesses, (ii) the mitigating factors objectives. The Group’s risks and mitigations control. It is then used for ensuring executive which relate to how the Group manages each are monitored and controlled by executive management are mitigating and eliminating of the risk exposures, and (iii) the linkage management and then regularly reviewed as risk exposure on a timely basis, in line with between the business strategy and the part of the oversight of the system of internal Board expectations and for setting the Group’s relevant risk exposures. The Group controls by the Audit & Risk Committee. internal audit plan each year. summarises (where relevant) key actions arising in the year in relation to how the Group ### The Group’s Internal Audit function also Assessment of risks has addressed certain aspects of these risks. assesses the ongoing business risks of the The Directors confirm that they have made The Group has also indicated where there Group. It reports on the effectiveness of internal a robust assessment of the emerging and were any changes in the profile of any of the control procedures to the Audit & Risk principal risks and uncertainties facing the risks, which reflects the Board’s view of the Committee. In assessing risk, it considers the Group, including those that would threaten current trend in relation to those risks. Group’s risk mitigating actions and provides its business model, future performance, recommendations to management to improve or solvency. A summary outcome of that The risks set out in the table are not exhaustive business processes and limit their exposure assessment is set out in the heat map overleaf. but represent the main risks to the Group in to risk. relation to the period under review. The heat map indicates the Board’s view of the The Group’s approach to reviewing risk likely degree of impact of each risk after taking appetite is part of a bi-annual risk into account the risk mitigations referred to in management cycle, which is used to drive and the principal risks table below. inform actions in relation to the principal risks ### Board ### Overall responsibility for risk management ### Internal Audit Team ### Audit & Risk Committee Oversees and assists in ### Oversee risk management process process implementation and ### reports to Audit & Risk Committee ### Executive Management ### Manages specific risks and embeds risk ### management throughout the Group 26 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements ### Key changes to principal Through the development of our systems, but instead believe that it is important that processes and controls around our supply our executive team embed ESG considerations ### risk disclosures chain risk, and the moderating and currently as part of routine business as usual activities. We reported extensively in the FY22 Annual more predictable external environment, we We coordinate and facilitate all our activity Report on the Group’s initiatives to manage have reduced our assessment of a significant around ESG matters through our in-house the risks of Covid-19. With the direct impacts adverse event occurring from “Highly Likely” Sustainability Manager and also through of Covid reducing, we no longer include this to “Medium” likelihood. We have also reduced the support of specialist external consultants. as a separate principal risk, but instead have our assessment of the potential impact of the aligned any continuing economic and economic environment from “High” to The risk of global conflict has also been operational impacts into our overall risk “Medium”, given the resilience of the retail considered by the Directors. The war in management approach. proposition demonstrated despite the Ukraine has not had an impact on the Group’s consumer headwinds faced last year, and also operations. The possibility of conflict between While we continue to see significant commodity given our value retail proposition that positions China and Taiwan is growing, and this would price and cost inflation, the Group’s progress us well to attract new customers. have impact on the sourcing and potentially over the last 12 months in maintaining its gross pricing of our general merchandise product and operating profit margins through cost Climate change and ESG continue to be ranges. This is properly considered through our reduction and retail price adjustment has led significant topics within our risk management supply chain principal risk, and the Group has us to merge this risk to be managed alongside discussions. We, however, do not view the made a conscious decision to not compromise other economic risks. subject matter as a distinct area that requires its commercial ranging and to continue to source separate executive management and focus, products using currently optimal channels. ### Principal risks heat map 1 Supply chain HighLow | 2 Competition | | | | | --- | --- | --- | --- | | 3 Economic environment | | | | | 4 Regulation and compliance | | | | | | | 7 | 1 | | 5 International expansion | 4 | | | 6 6 Warehouse infrastructure 7 IT systems, cyber security and business continuity 8 3 8 Key management reliance Impact | 9 Store expansion | | | | | | --- | --- | --- | --- | --- | | | 10 | | | 2 | | 10 Stock management | | | | | | | | 5 | 9 | | Likelihood HighLow 27B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Principal risks and uncertainties continued Link to strategy key Risk change key | 1 | Existing B&M UK stores | Increased risk | | --- | --- | --- | | 2 | New B&M UK stores | No change | | 3 | France growth | Decreased risk | | 4 | Heron Foods growth | | ### 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 1 2 3 4 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. Risk mitigations Key actions in 2022/23 • The Group has an experienced buying team which is responsible for • Stock cover in the B&M UK business on general merchandise imported maintaining an efficient and effective supply chain. goods ensures levels of inventory are adequate to meet periods of supplier delay. • A range of alternative supply sources are maintained across the product categories, we have explored alternative countries of sourcing, • Continued review of supplier social compliance processes by our and (subject to a general reliance on China based merchandise Sustainability Manager to monitor transparency in the supply chain. manufacturers) we are not over-reliant on any one single supplier. • Working with suppliers and freight forwarders to forecast and remain • The Group has anti-bribery & corruption and modern slavery & human vigilant in relation to challenges regarding the transportation of goods. trafficking policies in place in relation to its supply chain. – Introduction of an enhanced forecasting system to predict the volume • A combination of individual buyers and sourcing agent employees of product sales and provide oversight of the flow of stock through conduct supplier factory visits where this is possible given local our system. Covid restrictions. – Strengthened supplier performance and lead time reporting, ensuring • Our Import Supply Chain Management System is a multi-carrier option, our approach is dynamic against supply chain distribution risk. enabling us to utilise multiple shipping line options across all trade lanes, where necessary. ### 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 1 2 3 4 Group’s profitability, share price and limit growth opportunities. Risk mitigations Key actions in 2022/23 • Continuous monitoring of competitor pricing, store formats and • The Group has continued to maintain its strict SKU count discipline within product offering. product ranges, which enables it to react quickly to ever changing consumer tastes, trends and buying habits. • Development of new product ranges within the product categories to identify new market opportunities and target new customers. • 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. 28 B&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 1 2 3 4 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. Risk mitigations Key actions in 2022/23 • We have an effective forecasting process that enables actions to be • The Group has engaged extensively with suppliers on proposed price undertaken reflecting economic conditions. changes. While maintaining a constructive and fair approach, we have continued to ensure our stores are well stocked with the best-selling • We offer a range of products and price points for consumers which products, at attractive prices relative to competitors. allows them to trade up and down. • Management has continued to proactively respond to changing sales • We maintain a low cost business model that allows us to maintain our patterns throughout the year, adapting product ranging and promotion selling prices as low as possible and our pricing gap to key competitors. 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 1 2 3 4 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. Risk mitigations Key actions in 2022/23 • The Group has a number of policies and codes, including a code of • Mandatory training for all management and support centre colleagues conduct which incorporates an anti-bribery & corruption policy, which using an e-learning portal has continued throughout the year. outlines the mandatory requirements we apply to our business. Our • Our Groceries Code Compliance Officer and Group Internal Audit codes and policies are communicated to staff along with our employee team have actively engaged during the year with the Groceries Code handbook which is made available to everyone joining the business. Adjudicator (“GCA”) in relation to our action plans and follow-up work • We actively seek to identify and manage compliance with all applicable during the year. new legislation and regulations which apply to us in Luxembourg, the UK • The Group has continued reporting in line with the Task Force and France. Reports on new regulatory developments are provided by the on Climate-related Financial Disclosures, and has commenced General Counsel and Management directly to the Board as well as its preparations for upcoming changes in UK and EU reporting legislation. 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. 29B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Principal risks and uncertainties continued Link to strategy key Risk change key | 1 | Existing B&M UK stores | Increased risk | | --- | --- | --- | | 2 | New B&M UK stores | No change | | 3 | France growth | Decreased risk | | 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 3 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. Risk mitigations Key actions in 2022/23 • The Group has international retail experience on the Board. • We continued to strengthen the senior leadership team in France and continued the involvement of management from the UK to transfer • Continued reinforcement and development of the experienced senior operational knowledge to colleagues in France. leadership teams in France in key operational areas. • We have continued to open additional stores, increasing the scale • Given insight, relationships and sourcing scale, UK support is provided and presence from which we operate. for product range development and selection by local buying teams. • A Board visit was organised to the French business, including • The Group continues to invest in both the infrastructure and technology presentations by the executive team, to ensure that Directors of our French business. understand first hand the trading environment and management • Given differences in local laws and regulations, external legal support, perspectives. with strong local relevant experience, is retained in place. ### 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 1 2 3 4 infrastructure as the business continues to grow its store portfolio, could materially impact short/medium-term trading and the profitability of the business. Risk mitigations Key actions in 2022/23 • Forward plans have been implemented for additional warehousing • We have completed the rollout of the upgraded JDA Warehouse capacity to support our new store opening programme. The Group in the Management System. We plan to complete the remaining sites in FY24. UK has seven separate distribution centres, plus a further two in France. • The vast majority of product SKUs now have dual locations within our • The Group maintains appropriate business interruption and increased UK Distribution Centre estate, so in the short term if a Distribution Centre cost of working insurance in the event of a loss of 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. 30 B&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 1 2 3 4 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. Risk mitigations Key actions in 2022/23 • All critical business systems have third party maintenance contracts in • IT cyber security and payment card industry (“PCI”) controls in relation place and those systems are industry standard retail business systems. to processing card transactions are continually reviewed to ensure updates in line with PCI standards. • IT investments and budgets are reviewed and approved at Board level. IT security is monitored at Board level and includes third-party • The B&M fascia business has implemented an Endpoint Security penetration testing and up-to-date security software. Platform and Advanced Malware Protection to improve cyber security. We continue to investigate ways to improve our cyber protection, • The Group has a disaster recovery strategy and plan in place for all especially from ransomware, using the Protect, Recover and Ensure of our key systems. Business Continuity model. • Significant decisions for the business are made by the Group or • A 3 year phased programme of improvements and upgrades to operational boards with robust IT controls and segregation of duties IT systems and infrastructure commenced in FY22 with approval of enforced. 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 1 2 3 4 operational teams. There is a risk that a lack of succession planning for senior colleagues could impact the overall performance of the business. Risk mitigations Key actions in 2022/23 • Key senior and operational management are appropriately incentivised • Succession planning has been regularly reviewed by the Nomination through bonus and share option arrangements to retain talent. Committee throughout the year ensuring succession plans for key senior management through to executive positions. • The composition of the executive team is kept under constant review to ensure that it has the necessary resources and skills to deliver the • The Group has continued to develop the senior management teams Group’s plans. 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 • The Nomination Committee has developed succession plans for the appointment of an experienced CFO, (iii) the appointment of a new Board of Directors and key senior operational management resourcing Supply Chain Director, and (iv) the strengthening of the Retail team positions. It also reviewed the wider senior management resourcing by additional senior roles and breadth in the team. needs of the Group. 31B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Principal risks and uncertainties continued Link to strategy key Risk change key | 1 | Existing B&M UK stores | Increased risk | | --- | --- | --- | | 2 | New B&M UK stores | No change | | 3 | France growth | Decreased risk | | 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 2 3 4 suitable locations in areas targeted for new stores could impact upon store expansion plans and reduce the rate of growth in the business. Risk mitigations Key actions in 2022/23 • Our CEO actively monitors the availability of retail space with the • The Group has continued to proactively screen the market for support of internal and external property acquisition consultants. new location opportunities and to also respond swiftly to enquiries. The market is also monitored for opportunities arising from retailer • The flexibility of the trading format allows us to take advantage of corporate actions (e.g. CVAs). a range of store sizes and locations. • The Group continues to review new store opening opportunities • Each new store opening is approved by the CEO ensuring that in current store locations, to replace older generation stores with property risks are minimised and that lease lengths are appropriate. better quality sites and premises, and via acquisition of adjacent • Where new locations may impact on existing locations, the space to expand stores and optimise performance. cannibalisation effects are estimated and then monitored and measured to ensure that there is an overall benefit to the Group. ### 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. 1 2 3 4 Lack of product availability or over-stocking could impact working capital and cash flows. Risk mitigations Key actions in 2022/23 • The Group has a highly disciplined limited SKU count throughout our • The Group has reviewed optimal stock holding balances, reducing the product ranges and effective regular markdowns on slow moving year-end working capital balance by approximately £100m. product lines. • Despite lower stock-holding levels and the disruption to supply chains in • Our non-seasonal initial stock orders do not exceed circa 12 weeks of the Far East and Asia the Group has maintained appropriate stock cover forecast sales and action is undertaken after circa four weeks of trading throughout the year. to either repeat the order, refresh the product design or discontinue • The Group is introducing an enhanced predictive system to forecast the product line. the volume of product sales and the flow of stock through our system. • 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. 32 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements | Viability Statement | The stress testing undertaken included the | Each of the above scenarios exceed the | | --- | --- | --- | | In accordance with the UK Corporate | flexing of a number of key assumptions within | impacts of principal risks which the Group has | | Governance Code, the Directors have assessed | the three year plan, namely future revenue | encountered in its trading experience to date. | | the viability of the Group. This assessment has | growth, including both like for like revenues | Based on the assessment, stress testing and | | been based upon the Group’s three-year | and revenues from the new store openings, | mitigating actions referred to above, the | | strategic plan (the “plan”) and has taken into | gross margins, operating costs, the impact | Directors confirm they have a reasonable | | account the current position of the Group, the | of interest rates, and working capital | expectation that the Group will be able to | | principal risks and uncertainties as detailed | management, which may be impacted by | continue in operation and meet its liabilities | | on pages 26 to 32 of the strategic report | one or more of the principal risks to the Group. | as they fall due over the next three years to | | and the Group’s prospects. | | 28 March 2026. | A number of other severe but plausible | We set out our strategic plan on a three-year | scenarios were considered by the Board. | | | --- | --- | --- | | cycle, which is common practice in the retail | They included: | | | sector. We believe this is appropriate as we | • a decline of 10% of like for like annual sales | | | operate in a competitive retail environment | | in the Group’s main UK trading business, | | and need to be able to react to changes in | | B&M UK, as a result of competition | | retail markets and consumer trends. Given | | increasing and B&M returning to a | | the fast moving nature of the retail industry | | pre-pandemic level of sales; | | and macro-economic environment the Board | • a significant decline in the gross margin of | | | believe that forecasting beyond a three-year | | the Group’s main UK trading business due | | period is an unproductive exercise, and this is | | to higher costs of imported goods arising | | consistent with the approach of many of our | | from commodity price increases, increases | | analysts. | | in import duties and adverse currency | exchange movements; and In making their assessment the Directors • a range of other severe scenarios which considered: could have a material impact on the • the Group’s current balance sheet, its strong Group’s main UK trading business, track record of generating operational cash including for example, a major fire at one flows and returns to shareholders and of its distribution centres, cyber threats stress testing of the key trading and significant cost inflation. assumptions within the Group’s plan; | • the potential impact on the Group’s | | The Board considered the mitigating steps | | | --- | --- | --- | --- | | | business model, future trading expectations | which they would take to protect the Group | | | | and liquidity of one or more of the principal | in the event of any of those scenarios arising, | | | | risks set out on pages 26 to 32 occurring in | and determined that the following measures | | | | the period; | would be necessary to protect its cash flow | | | • the likely degree and effectiveness of | | and liquidity: | | | | possible mitigating actions in relation to the | • the temporary suspension of dividend | | | | principal risks; | | payments; | | • the Group’s debt facilities of £450m in | | • limiting capital expenditure to essential | | | | relation to the term loan and revolving credit | | maintenance only; and | | | facility which matures in March 2028, the | • suspension of new store opening | | | | high yield bonds of £400m which matures | | programmes. | in July 2025 and the high yield bonds of £250m which matures in November 2028. 33B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Corporate social responsibility ## A year of good progress ## in our approach to ESG 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 25% reduction in Scope 1 & 2 by 2030 91,069 tCO e. We have reduced our 2 Install LED lighting in all B&M UK stores by FY27 Scope 2 emissions by 17% compared to FY22. Maintain BeMs penetration in B&M UK stores LEDs: 614 B&M UK stores (87%) BeMs: 610 B&M UK stores (86%) | Reduce Scope 3 emissions through working with our | Engagement with top 30 suppliers | Engage with 67% of suppliers by spend to set | | --- | --- | --- | | suppliers | (41% of spend) | science based targets by FY27 | | Maintain a high level of packaging recycling and reduce | Packaging recycled: UK 99.9%; | Maintain progress | | use of plastic packaging | Group 99.8% | | 20,000kg reduction from redesign of greeting card packaging Colleagues Provide colleague development and promotion 261 Step Up promotions Maintain >90 per annum opportunities through a range of training programmes Maintain high levels of colleague engagement across >70% Maintain >75% the Group Develop a diverse and inclusive workforce Female Board/Executive committee Maintain reports – 40.3% Reward strong business performance through payment Discretionary Golden Quarter bonus Maintain of discretionary bonuses to Store, Distribution and awarded to high-performing leaders Support Centre Managers Communities Committed to a store rollout target of at least 950 B&M 707 B&M UK stores At least 950 stores across the UK Contribute to the regeneration of local communities >1,250 new retail jobs in the UK n/a – linked to store openings through the creation of new jobs and France Support local and national charitable initiatives Various Maintain an ongoing programme Supply Chain Committed to ensuring ethical business practices No issues identified: compliance Maintain and the fair treatment of workers in our supply chain assurance programme continues Pay all suppliers fairly and treat them with respect B&M UK trade creditor days of 21 Maintain <35 days 34 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements climate change and when developing our third-party ESG specialist, the training sessions Net-Zero roadmap. To align our Net-Zero covered climate change, TCFD and wider ESG ## Our approach to ESG | | roadmap with the British Retail Consortium’s | principles. The aim of these training sessions is | | --- | --- | --- | | is to: | Climate Action Roadmap, we aspire to achieve | to build capacity and understanding to support | | | Net-Zero Scope 1, 2 and 3 emissions by 2040. | key internal stakeholders in their roles and | responsibilities relating to ESG. The executive | • deliver our growth strategy | | Our ESG strategy is based around the | management team each had an ESG-related | | --- | --- | --- | --- | | | for the benefit of all our | four pillars of Environment, Colleagues, | target in their annual incentive plan objectives | | | | Communities and Supply Chain. We believe | for FY23. | ### stakeholders; that the ESG strategy we have developed is ### • build our business in a appropriate for a business such as B&M, being We acknowledge that our approach will need ### sustainable way; and a variety goods value retailer focused on long to evolve with the business over time. In that ### • apply our values of term sustainable growth. We have sought to regard, the Board remains committed to ### simplicity, trust, fairness strike a balance between being sufficiently monitoring progress against our ESG strategy, ambitious, reflecting the step change in and to making further developments when ### and being proud, in how performance of the Group over the past three appropriate. The Board intends to retain an “at ### we operate. years, but also ensuring these ambitions are one” approach to ESG governance, recognising in keeping with the B&M business model. the importance of collective input as we work to implement our developing strategy. | The Board is committed to the implementation | We invested resources this year in | | | --- | --- | --- | | and monitoring of our ESG strategy. During the | strengthening our Sustainability team, | To demonstrate our commitment to operating | | year, the Board received updates on our ESG | recruiting a Sustainability Coordinator to | as a transparent, sustainable business, we | | strategy at each Board meeting, providing input | support the ongoing work of the Sustainability | have published a standalone ESG report for | | on our ongoing and planned future projects. | Manager. In addition, our Sustainability | the second year in a row. This report contains | | | Manager – appointed in FY22 – works closely | more detail about our strategy, progress | | The Board and management team consider | with our specialist third party consultants to | and achievements in FY23, and is designed | | ESG from a number of different perspectives. | develop knowledge of ongoing ESG | to be read alongside the corporate social | | This includes evaluating peer and competitor | workstreams and identify areas for | responsibility section of this Annual Report. | | strategies, views expressed by equity and debt | improvement for FY24 and beyond. | | | market participants, ESG rating agencies and | | In relation to our governance and decision | | also what is generally considered best practice. | In September 2022 we held training sessions | making with regard to our stakeholders’ | | We work closely with specialist third party | for members of our executive and operational | interests, see also the Stakeholders and | | consultants to help inform our thinking in certain | senior management across B&M UK, Heron | Section 172 report on page 54. | | areas, including understanding the impact of | Foods and B&M France. Facilitated by our | | 35B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Corporate social responsibility continued ## Environment ### Environmental sustainability warehouses. We are monitoring driver The nature of our business model, being the performance across our B&M and Heron ## Our environmental sourcing and retailing of a limited assortment Foods transport colleagues, rewarding fuel ## policy is to: of products, does not in itself involve significant efficient driving and thus reducing diesel environmental risks to the sustainability of our emissions. Training and education sessions business. There are however environmental are held for our B&M HGV drivers to embed ### • grow our business whilst impacts from our business operations which, behavioural changes amongst our colleagues, ### operating sustainably in as opposed to being risks, are outputs which reducing our transport emissions. ### the communities we serve; we are committed to managing responsibly. We constantly strive to either reduce the For more information on B&M’s transport and ### • operate and maintain a intensity levels of our consumption and find distribution efforts, please see our standalone ### modern, clean and efficient better ways of operating in a more ESG report. ### infrastructure in relation to environmentally sustainable way. ### stores, distribution centres Waste and recycling ### and transport fleet for the For the purposes of this Annual Report, The main source of waste in our operations we have outlined below the impacts of our results from packaging. Where possible we ### benefit of all of our environmental policy, and how we have collaborate with our suppliers to minimise ### customers and colleagues applied it during this year. Additional product packaging only to what is necessary ### in the UK and France; and information regarding the progress we have for its safe carriage. This reduces costs, weight ### • continuously look for made this year regarding our long-term and wastage of excess packaging. ### opportunities to reduce or environmental sustainability can be found in our standalone ESG report. We have proactively redesigned a number of ### minimise our environmental products to move away from plastic packaging ### footprint where we can, ### Transport and Distribution towards greater use of more environmentally ### particularly in areas of scale | | We have a total of 238 tractor units and the | friendly cardboard. In FY23, we worked with our | | --- | --- | --- | | in our operations where | entire transport fleet in the UK is fitted with | suppliers to redesign our Greeting Cards, by | | we can make an impact. | Euro 6 engines, which are the latest standards | removing the outer plastic sleeve packaging, | | | for emission compliance. We have continued | resulting in an estimated reduction of 20,000kg | | | to invest in double decker “wedge” trailers, | of plastic being sold each year. In addition, we | | | which increase trailer capacity and therefore | have dedicated waste management facilities | | | maximise transport volumes intensity per mile | at our B&M warehousing locations in the UK. | travelled. We have also invested in energy- efficient handling equipment including Overall, the total level of packaging waste lithium-ion picking and loading forklifts in our recycled by the Group in FY23 was 99.8%, 36 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements | through a combination of waste being sorted | We are continuously reviewing our estate to | calculated based upon the quantity of | | | --- | --- | --- | --- | | through our own facilities and by specialist | identify potential energy reduction opportunities, | purchased electricity used to power our sites. | | | third party contractors. | including onsite renewable power generation. | Our Scope 2 emissions have been calculated | | | | We are conducting feasibility assessments | using a location-based approach, as per the | | | For more information on our waste and | across our businesses for the installation of | requirements of the Streamlined Energy and | | | recycling, please see our standalone ESG report. | solar panels. Heron Foods is expected to | Carbon Reporting (“SECR”) disclosure. This | | | | undertake the pilot project with plans for solar | method calculates emissions associated with | | | Energy consumption | panel installation on its largest distribution | our electricity consumption by using the | | | All new stores are now opened with energy | warehouse in FY24. We will use this project to | average emissions intensity of the electricity | | | efficient light emitting diode (“LED”) lighting, | inform decision making and share best practice | grid in the country where the electricity is | | | which use up to 70% less energy. Wherever | across the rest of the Group. We aim to conduct | consumed and does not account for contract | | | practical we are retrofitting LED lighting into | site surveys across our estate to identify further | or supplier-specific factors. | | | existing stores when carrying out | areas for potential energy saving opportunities. | | | | refurbishments. We have LED and motion- | Our ESG report provides more details regarding | We express our emission intensity ratio with | | | activated lighting installed in our main B&M | our energy saving initiatives. | respect to tonnes of CO | per £1m of turnover. | 2 | distribution centre locations, as well as our | | At a Group level, our Scope 1 and 2 intensity | | --- | --- | --- | | Heron Foods distribution centre, to reduce | Greenhouse gas (“GHG”) emissions | ratio has improved again in FY23. Specifically, | | unnecessary electricity usage. As of the end of | In FY23 approximately 6% of our total carbon | in the core B&M UK business, we have reduced | | FY23, 614 of our B&M UK stores were installed | footprint comes from our Scope 1 and 2 | our intensity ratio by 20.3% since FY21. | | with LED lighting and all B&M France stores are | emissions. This year, 2.6% of our carbon | | | fitted with 100% LED lighting. We are currently | footprint in relation to B&M UK operations | We will continue to publish our Scope 1, 2 and 3 | | exploring the installation of LED lighting in our | resulted from electricity usage in our stores, | emissions annually to allow for year-on-year | | distribution centres. | warehouses and support centre. Emissions | comparison. In FY23 approximately 93.8% of our | | | from the use of gas and diesel used by our | total carbon footprint comes from our Scope 3 | | We have continued to rollout a Building Energy | transport fleet accounts another 3.6%. | emissions. Further details relating to our carbon | | Management System (“BeMS”) in all new, and | | footprint, including the methodology applied in | | many existing B&M UK stores to help better | Store numbers across the Group continue to | calculating it, can be found in our ESG report. | | control and reduce their energy consumption, | increase and we grew the total estate by 42 | | | through ensuring full equipment switch-offs at | gross new stores. Despite this growth in store | The Group has committed to working | | close-down, and managing heating usage | numbers, the absolute value of Group GHG | collaboratively with its suppliers and partners | | effectively. We are also experimenting with | emissions decreased compared to the prior | over the coming years to help reduce our | | variable lighting levels during trading and | year. This represents the positive impact that | Scope 3 emissions, and has an ambition to | | non-trading replenishment hours. We currently | energy saving initiatives such as those outlined | align with the British Retail Consortium target | | have 610 UK B&M stores with BeMS fitted. The | above are having on our carbon footprint. | of achieving Net-Zero by 2040. In FY23, we | | installation of both LED lighting and BeMS will | | launched our first supplier engagement | | be important as the business strives to achieve | Scope 1 and 2 greenhouse gas emissions | questionnaire to begin collecting our suppliers | | our Scope 1 and 2 SBTi validated targets | have been calculated according to the 2019 | carbon emissions to improve the accuracy of | | relating to carbon emissions. | UK Government environmental reporting | our Scope 3 emissions. We have developed an | | | guidance. To report according to this guidance, | engagement plan to widen the scope of our | | Our B&M France stores also reduce energy | methodologies outlined in the Greenhouse | questionnaire year-on-year to meet our target | | consumption by optimising “free-cooling”, a | Gas Protocol Corporate Standard have been | of 67% of suppliers by spend by FY27. This year | | process of using external ambient temperature | followed to calculate our emissions. | we reached out to our top 30 suppliers, which | | to reject heat, rather than using energy intensive | | represent 41% of our suppliers based on spend. | | refrigeration processes. For over 10 years, our | Scope 1 GHG emissions and energy use have | | | B&M France stores have also been deploying | been calculated based upon the quantities of | | | BeMS across our estate portfolio, which allows | fuel purchased for our transport fleet and gas | | | us to control, analyse and optimise the energy | consumed when heating business premises. | | | needs of each of our stores. | Scope 2 GHG emissions and energy use are | | | >250 | 99.8% | >610 | | --- | --- | --- | | Stores served | Overall Group | Stores with | | by Bedford DC | packaging recycled | BeMS installed | 37B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Corporate social responsibility continued ### Greenhouse gas and energy usage data (Scope 1 & 2) Emissions Energy usage | | | Scope 1 | | Scope 2 | | Total | | Intensity | | Scope 1 | Scope 2 | Total | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | FY23 | 1 | TCO | e | TCO | e | TCO | e | | Ratio | MWh | MWh | MWh | | | | | 2 | | 2 | | 2 | | | | | | 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 Scope 1 Scope 2 Total Intensity Scope 1 Scope 2 Total FY22 TCO 2 e TCO 2 e TCO 2 e Ratio MWh MWh 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. ### Sustainability in practice at B&M B&M has a culture of always striving to typically avoided as they take up too much understand how best to manage waste improve operations and keep costs low. space and create inefficiencies through our effectively, use packing materials efficiently We have a dedicated productivity and supply chain, whilst pack sizes are constantly to reduce waste and costs, and the change department that focus on specific reviewed to improve operational efficiency consequences of not using or disposing of initiatives each year, whilst teams across within the distribution function. We items correctly. In stores, our managers the business are constantly working closely undertake continuous product reviews receive targeted training as a part of their alongside each other to identify areas for to reduce the cost of distribution, risk of induction to ensure all lights, heaters, and improvement. damage, and our carbon footprint. We will other non-essential electrical appliances discontinue or redesign products if we feel on the premises are turned off when closing One example of the ongoing initiatives to the cost of distribution and therefore a store. Store Managers engage with their reduce our carbon footprint and cost is found environmental impact is too high. colleagues regarding these day-to-day ways in how our buying and warehouse teams of working, and colleagues are encouraged collaborate. Through ongoing feedback, B&M colleagues are also trained to to report any faulty equipment, for example, the buying teams can avoid certain types of understand the impact of their work on if a chiller has stopped working correctly and products that create operational challenges the environment and the steps they can unnecessary energy is being drawn. associated with picking, packing and take to minimise this impact. For example, transportation. Peculiarly shaped goods are warehouse operatives are trained to 38 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements ## Colleagues ### As well as our overall policy above, we also Colleague progression have a number of detailed supplementary By providing development opportunities for ## Our policy and policies relating to our terms and conditions home grown talent wherever possible, we ## commitment in of employment and workplace matters. These believe that the business benefits over the policies are designed to ensure that we provide longer term as our culture and values are ## relation to our people appropriate safeguards and practices for the maintained and reinforced through the benefit of all colleagues throughout our continuity of ‘B&M people’ growing with ## is to: business, and to ensure compliance with the business. relevant legislation. ### • provide equality of This commitment is perhaps best illustrated Through these policies, we are able to support through our ‘Step-Up’ career development ### opportunity in relation to the ongoing growth of the business. The Group programme. This well-established programme ### recruitment and promotion; employs over 39,000 people across our three provides store colleagues with an opportunity ### • provide modern, safe and businesses, in roles covering stores, distribution to demonstrate their talent and grow within the ### clean working environments and support centres. Attracting new and business. We have continued our “Warehouse ### at our stores, distribution retaining existing colleagues as our operations to Wheels” initiative, offering training expand remains crucial to the continued opportunities for distribution centre colleagues ### centres and in our transport success of the Group and so we retain a strong to become HGV drivers. Since the pandemic, ### operations; and focus on colleague development, wellbeing we have experienced significant waiting times ### • ensure that all colleagues | | and reward. | for HGV driving test appointments. Therefore, | | --- | --- | --- | | are treated with dignity | | in FY23, we supported one of our colleagues | | and respect. | In FY23 we created over 1,113 and 145 new | in becoming a certified HGV examiner. This | | | retail jobs in the UK and France respectively, | has helped by increasing the number of B&M | | See page 40 for more information | driven largely by our store rollout programme. | colleagues with HGV driving licences, and | | on diversity and equality | In so doing, we continue to make a positive | maintaining stock availability at our stores, | | | contribution to local communities by offering | and serving our customers better. | job opportunities at a time when some other store-based retailers have been taking steps See our standalone ESG report for further to rationalise their workforce or have closed details on learning and development entirely. opportunities offered across the Group, and in particular our step-up programme. 39B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Corporate social responsibility continued | Colleague engagement | • held over 200 listening group meetings | | Other colleague wellbeing initiatives have | | --- | --- | --- | --- | | Carolyn Bradley is the Group’s Designated | | involving over 4,500 employees across | also occurred in FY23, including advocating | | Non-Executive Director for Workforce | | every area of the business; | Movember, and increasing colleague | | Engagement. Carolyn oversees the | • made upgrades to our till system and | | awareness on Alzheimer’s, menopause and | | effectiveness of our workforce engagement | | hardware, new laptops have been provided | international men’s health. This year we also | | initiatives, and reports to the Board on the | | and better Wi-Fi introduced; and | introduced 72 mental health first aiders as | | outputs during the course of the financial year. | • ensured colleagues can take their children | | well as mental health training to all store | | | | to their first day of school, by swapping | managers. For more detail on how B&M | | There is a standing agenda item at two Board | | shifts with other colleagues. | ensure the wellbeing of their employees, | | meetings each year for the Board to consider | | | see our standalone ESG report. | | reports from the Workforce Engagement | During FY23, we initiated an educational | | | | Director. This enables the Board to monitor | programme for our colleagues on B&M’s ESG | | Colleague reward and recognition | | progress, consider feedback and discuss | journey, targets and objectives. Our specialist | | We reward our store managers and | | outputs and actions with the executive | third party consultants facilitated a training | | supervisors through an annual bonus scheme, | | management team. This is also supplemented | session with our senior people team around | | which we supplemented with a further Golden | | by reports provided each year on colleague | our ESG and Net-Zero targets and initiatives. | | Quarter bonus for the top quartile of store | | engagement and pay by the Group People | These sessions aimed to help colleagues think | | managers. Our schemes are kept simple and | | Director to the Remuneration Committee. | about sustainability within B&M through | | transparent, and designed to be stretching and | | | managing our stores and business, aiding in | | motivating, ensuring our stores deliver the best | | We have continued to build on the strength | reducing our overall environmental impact at | | possible shopping experience to customers. | | of our colleague engagement survey this year, | B&M. We aim to roll these training sessions | | We have an annual bonus scheme for | | increasing the frequency and running it twice | out across the business. | | managers in our distribution centres who | | for B&M UK and Heron Foods employees. | | | lead various warehouse and transport teams. | | In both surveys this year, the response rate | Colleague wellbeing | | | | was over 70% across both businesses, and | This year we hired our first Health and | | Incentive schemes have been introduced across | | there was year-on-year improvement across | Wellbeing Business Partner who is responsible | | B&M, to recognise those colleagues who go the | | all questions asked. We held a colleague | for developing and implementing our Health | | extra mile but aimed to boost colleague morale | | engagement survey for B&M France in May | and Wellbeing Strategy. Heron Foods held a | | and work ethic. For instance, B&M Warehouse | | 2022, which we aim to improve each year. | wellbeing month in May 2022, holding various | | Operatives were provided with a ‘Peak Period | | | activities for colleagues to raise awareness | | Pay Incentive’, in the form of an hourly bonus, | | As part of the colleague engagement surveys, | and support their physical and mental health. | | from August 2022 to January 2023. | we invited feedback on areas where we could make improvements. Suggestions included We provided colleagues with “double-discount” ### Diversity and equality improving colleague recognition and benefits, weekends on General Merchandise products In relation to diversity the B&M Board had a making further enhancements to some of our on eight separate occasions across the year. 33.3% female representation at the year-end, IT systems, improving communication and Recognising the cost-of-living pressures on with three out of the nine Board members at increasing training specifically in B&M France. many of colleagues, and to recognise their year end being female, and one Director from As a result, the following outputs have already loyalty and hard work, for the first time in an ethnic background. Tiffany Hall will also be been implemented by the senior management Autumn 2022, we ran two “all-department” appointed as Senior Independent Director team: double-discount days, giving colleagues following this year’s AGM. However, as a result • introduced private medical and health care double their usual discount across of the Board changes described on page 9, for a broader group of colleagues; departments including FMCG categories. the Board will not be compliant with all listing • launched new induction and training rule recommendations with respect to female manuals in B&M France, sharing best participation and ethnic diversity. Recruitment practice from our UK businesses; | >1,250 | | | 2x | | 1,946 | | --- | --- | --- | --- | --- | --- | | Retail jobs created | | Double discount | | Kickstart colleagues | | | in the UK & France | weekends for colleagues | | | retained in full time | | | | | extended to FMCG | | | employment | ### categories 40 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements ## Our Diversity Policy ## inrelation to the ## Boardand senior ## management is: ### • to ensure that the Company ### maintains the necessary ### skills, experience and ### independence of character ### and judgement of its Board ### members and senior ### management team, for the ### Group to be managed ### effectively for its long-term ### success; ### • while making appointments ### based on merit so the best ### candidates are appointed, ### the Company recognises the ### value which a diverse Board ### and senior management ### team brings to the business ### and it embraces diversity in ### relation to gender, race, age, ### educational and professional | processes are underway and these matters | The mean hourly pay rate of B&M UK | | | | --- | --- | --- | --- | | will be addressed by the time of the AGM in | colleagues was 8.4% lower for females than | | backgrounds; and | | 2024. Full details of the composition of B&M’s | for males. The median hourly rate was the | • together with the above | | | Board are set out from pages 58 to 61. | same for females and males. For Heron Foods, | | | ### criteria, the Company also the mean hourly rate for females was 32.2% ### recognises that diversity in At the end of FY23, female representation lower than males and the median hourly rate ### relation to international | across the senior management of the Group, | for females was 5.0% lower than males. | | | --- | --- | --- | | reporting either directly to the Board or the | | experience, recent senior | | Executive Committee, was 40.3% (FY22: 43.8%). | In relation to bonuses of B&M UK colleagues, | management roles within | | In relation to all employees of the Group, the | 65.9% of females and 53.9% of males were | | ### retail and/or supply chain percentage of female colleagues was 55.6%, paid a bonus. The mean bonus pay for males ### sectors, and previous (FY22: 57.8%). was 55.3% higher than females, and the ### experience regarding median bonus pay for males was 16.7% higher | Our equal opportunities policies in relation to | than females. For Heron Foods, 58.1% of | membership and | | --- | --- | --- | | our workforce are also designed to recognise | females and 60.2% of males were paid a | chairmanship of Board | | and actively encourage the benefit of having | bonus. The mean bonus pay for females was | | ### committees are also a diverse workforce across our business which 76.2% lower than males and the median bonus ### relevant factors. is inclusive of all types of diversity as well as pay for females was 58.1% lower than males. gender. We look to ensure that all colleagues are treated fairly and with respect, and that no Colleagues of the Group in France and employee is discriminated against on grounds Luxembourg are not included in this data. of gender, race, colour, religion, disability or Full details of the reports are available on sexual orientation. our websites at www.bandmretail.com and www.heronfoods.com and on gender-pay- ## Gender pay gap reporting gap.service.gov.uk. 33.3% In accordance with the Equality Act (Gender ### Female Pay Gap Information) Regulations, we have ### representation published our data online in relation to each ### at Board level of our B&M UK and Heron Foods businesses ### as at 5 April 2022. at year end 41B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Corporate social responsibility continued ## Communities In the communities we serve, we provide discounted products to give value back to the shoppers with great prices, create local jobs community. ## Our policy in each time we open a new store, and help to ## relation to social sustain those areas where people live and We are proud of our participation in the work. We have continued to invest in new stores Government’s “Kickstart” programme, which ## and community throughout FY23, looking to extend the reach of aims to help long-term unemployed people get our value for money proposition to areas where back into work in their local communities. We ## engagement is to: | | we are under-represented or not represented | have welcomed over 3,000 colleagues under | | --- | --- | --- | | | at all. We opened a total of 21, 14 and 7 gross | the scheme so far, 1,946 of which we have | | • continue to make | new B&M, Heron Foods and B&M France stores | retained in full-time employment at B&M. | respectively this year. ### investments in new stores We have also supported the DFC in Northern ### and new jobs in local When we open a new store, we try to find a Ireland Jobstart scheme, where we offered 300 ### communities where we | | hero from the local community known for their | placements to those aged between 16 to 24 we | | --- | --- | --- | | are under-represented | charitable work to perform the ribbon-cutting | have retained 151 into permanent employment. | | or not represented at all; | ceremony on the opening day, generating | | | | some publicity with the local media. We actively | During the year we initiated a Welcome UK | ### • provide value for money encourage our store managers to maintain project, supporting refugees into work in the ### to our customers; relationships with the local hero going forward, local communities. From our efforts we were ### • build long standing | | and to support the good work they do in their | able to provide full time jobs for 50 refugees | | --- | --- | --- | | relationships with our | community. | from across Ukraine, Syria and Afghanistan. | | suppliers; and | | For further examples of the positive impact we | | | We expect our store expansion programme | have in our communities, see our standalone | ### • promote ethical trading to continue in the years ahead, and we remain ESG report. ### policies and practices within committed to our rollout target of at least 950 ### our supply chains. | B&M stores in the UK. In FY23, we launched a | Charitable initiatives | | --- | --- | | value range to support our local communities | We were proud to have been a headline partner | | when dealing with the impact of the cost-of- | for the “Mission Christmas” appeal once again | | living crisis. We worked with our suppliers to | this year, which is an initiative run by the | | bring high-quality items at a discounted price | Cash4Kids children’s charity. We helped to | | for our customers. Following the positive | raise over £9m for some 200,700 under- | | impact from our first phase in January 2023, | privileged children in the UK at Christmas 2022. | | we launched our second phase of the initiative | Through our new all-colleague mobile App | | in April 2023, introducing a new range of | introduced last year, we ran several | 42 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements | competitions during the Christmas period where | safety trends in the business on a bi-monthly | with reviews (and refreshers as required) | | --- | --- | --- | | winners received £500 to donate to a charity of | basis, including reports on the number of | also taking place during the next 12 weeks | | their choice. In FY23, B&M raised money for | accidents and those which are required to be | thereafter. Refresher training occurs for store | | multiple other charities, such as Breast Cancer | reported to the Health and Safety Executive. | management colleagues. Over the course of | | UK, and colleagues at Heron Foods participated | We have a dedicated health and safety team of | the last 5 years, over 5,000 store colleagues | | in a number of charitable events to support the | qualified professionals who are responsible for | have been trained as a responsible person, | | local community throughout the year, including | ensuring that we comply with current statutory | demonstrating our commitment to the safety | | raising money for Cash4Kids. For more | requirements, and that our health and safety | of colleagues. | | information on our charitable initiatives, | policies are communicated to all our colleagues. | | | please see our standalone ESG report. | Our approach to Health and safety is one of | In FY23 there were 121 reported accidents | | | education and continuous improvement. | (0.17 per store) reportable to the Health and | | Health and safety | | Safety Executive relating to the B&M business | | The Board has overall responsibility for ensuring | Our store management teams are trained as | in the UK (FY22: 102 reported accidents and | | that we maintain high standards of health and | responsible persons under our health and | 0.2 per store). This is in the context of over | | safety across the Group. The Board and the | safety policy for stores. There is a continuous | 262 million shopper visits over the course | | executive management team monitor key | programme of training new recruits, where the | of the year. | | performance indicators in relation to health and | training is carried out for each new colleague | | 43B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Corporate social responsibility continued ## Supply Chain ### We aim to foster long standing relationships Ethical trading and with our suppliers, who we regard as business ## Our policy in relation our supply chain partners in terms of our relationships and We regard our supply chain as a key ## to Supply Chain dealings with them. Many of our suppliers differentiator, with our disruptive sourcing have worked with B&M for a number of years, process an essential feature of the B&M ## engagement is to: and have therefore been able to share in our business model. We are equally driven by growth and success during that time. They the need to ensure our supply chain partners value the simple, transparent pricing model ### • ensure ethical business remain transparent, fair in their business that we adopt, minimising the use of rebates dealings and robust in their welfare policies ### practices and the fair and retrospective discounts. for their colleagues. ### treatment of workers in ### our supply chain; In FY23, we initiated an ESG engagement We recognise the need to ensure that the process with our supply chain for the first time. ### • utilise sustainable or products we sell are safe and fit for purpose for We launched an ESG supplier questionnaire, ### recycled materials when our customers. As such, we have a number of reaching out to our top 30 suppliers, in order formal policies in place relating to our dealings ### designing own-brand to obtain information regarding their carbon with suppliers, to ensure they comply with local ### products wherever possible; measurement processes and reduction efforts, laws and regulations and our own policy ### and as well as wider ESG ambitions. This standards. These include: programme forms part of our supplier ### • pay all suppliers fairly and • anti-bribery and corruption; engagement target which has been validated ### treat them with respect. • supplier workplaces, covering anti-slavery by the SBTi. More detail can be found on and respect for human rights, which all page 52. 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. 44 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements ### Anti-bribery and corruption The Group outsources the vetting and We have a zero tolerance approach to reviewing of those reports to a specialist team anti-bribery and corruption. Colleagues at our sourcing agent in Hong Kong, Multi- in each of our businesses are aware of Lines International Company Ltd (“Multi-Lines”), the importance of reporting any offers of who have a locally-based team and well- inducements by third parties immediately established processes and expertise in to the appropriate executive management performing such procedures. The Multi-Lines team director. team carries out this service both in relation to suppliers sourced by them in their capacity Each year an annual review is undertaken of as sourcing agent for the Group, but also in our buying teams in the UK and France. For the relation to those suppliers sourced directly by year under review, this due diligence process buying teams in the UK. In addition, members disclosed no instances of any such activity of our buying teams, where practical, also visit having taken place or having been suspected new suppliers as part of our verification in our business. processes. B&M UK, Heron Foods and B&M France all Further improvements to existing processes have clearly communicated whistleblowing between the UK buying teams and our procedures and processes in place. In the year partners in Multi-Lines were identified by under review, no reports were made in any of Group Internal Audit this year, and have our three businesses of any instances of subsequently been put in place. Looking suspected bribery or corruption in relation to ahead, we expect more recommendations to employees with suppliers or other third parties. 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 ### Anti-modern slavery to facilitate even greater knowledge sharing We have a zero-tolerance policy on slavery, and effective communication. forced labour and human trafficking of any kind in relation to our business and our supply ### chains. In the last year, all three businesses Quality assurance have continued to communicate our Workplace In relation to General Merchandise products Policy on the welfare rights of workers to their which are manufactured for the Group, we existing and new suppliers. The standard have a well-established process of pre- and terms and conditions of purchase used with post-production sample testing and approvals. all suppliers make it a condition that they This is supported by our quality assurance adhere to these Workplace Policy standards. team and external testing houses of our own or suppliers, being global certification In the year under review, no reports have been providers. It is supplemented by our own made to the Group of any instances of actual programme of quality control inspections or suspected modern slavery or human rights performed by Multi-Lines at factory premises abuses relating to human trafficking or other prior to shipment. kinds of forced labour in our supply chain. Acopy of our Anti-Slavery Statement and Workplace Policy is available on our websites at www.bmstores.co.uk, www.bandmretail. com and at www.heronfoods.com. ### 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. 45B&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 | Executive responsibility | Monitoring risk | | --- | --- | --- | | recommendations which span four key | To ensure direct senior support for delivering our | The Audit & Risk Committee, together with the | | themes: Governance, Strategy, Risk | ESG strategy, the Board has delegated executive | support of the Internal Audit department and | | Management and Metrics & Targets. In this | responsibility to our CFO, Mike Schmidt. | the CFO, is responsible for monitoring risks and | | climate-related financial disclosure we have | Executive Directors remuneration has also been | overseeing progress against goals and targets | | reported in line with the requirements of Listing | linked to the Group’s achievement of metrics | for addressing climate-related issues. | | Rule 9.8.6R and the TCFD supporting | relevant to our ESG strategy, including those | | | recommendations. | of climate-related matters. The Remuneration | Furthermore, climate change continues to | | | Committee continuously reviews this structure, | be considered at key events during the year, | | These core themes and recommendations | considering industry best practice and the | including the Group’s annual strategy day in | | inform the classification of climate-related risks | current status of our evolving ESG strategy. | March 2023 and when reviewing the principal | | and opportunities into two major categories; | | risks relevant to the Group. It was determined for | | transition and physical. The transition risks | | FY23 that climate change does not represent a | Management structure are associated with the decarbonisation of the principal risk given the detailed risk assessment The executive management team is global economy, and physical risks are those performed by management this year. responsible for identifying and evaluating associated with acute and chronic impacts new and emerging climate-related risks and of the changing climate. Supplementary ### assigning mitigating actions. The potential Strategy information can be found in our FY23 TCFD impact and likelihood of climate-related issues The TCFD framework helps us to understand Report on our website. | | are assessed, and significant areas for concern | and manage the climate-related risks and | | --- | --- | --- | | | are reported to the Board on an ongoing basis. | opportunities we face. Following its | | Governance | | recommendations, we used climate scenario | | Board oversight | In September 2022 we held training sessions | analysis to examine a range of possible future | | The B&M Board is responsible for overseeing | for members of our executive and operational | global warming pathways and identify the | | management’s response to climate-related | senior management teams across B&M UK, | risks and opportunities impacting our business | | impacts. The Board ensures action plans are | Heron Foods and B&M France. Facilitated by | over the short, medium and long term. Each | | embedded into the business strategy and | our third-party ESG specialist, the training | climate-related risk and opportunity was | | future financial planning to mitigate climate- | sessions covered climate change, TCFD, | modelled across all three climate scenarios | | related risks and capitalise on climate-related | ESG and Net-Zero. The aim of these training | (below 2°C, 2-3°C and above 3°C). | | opportunities. The Board considers the threat | sessions is to build capacity and understanding | | | of climate change and has been actively | to support key internal stakeholders in their | Our climate scenarios were modelled using | | involved in taking steps to address its potential | roles and responsibilities relating to climate | data from the Intergovernmental Panel on | | impact through assigning day to day | change. The executive management team | Climate Change’s (IPCC) Representative | | responsibilities to the executive directors, | each had an ESG-related target in their annual | Concentration Pathways, the International | | setting a Net-Zero ambition and signing up | incentive plan objectives for FY23. | Energy Agency’s World Energy Model and | | to the Science-Based Targets Initiative (SBTi). | | other existing models. We used the following | | | Supported by wider senior management | scenarios and time horizons to understand our | | The Board retains overall responsibility for | teams, the Sustainability Manager works with | vulnerability to the impacts of climate change | | climate governance and actions undertaken, | our third-party ESG specialists to review climate | and how they vary over time: | | which are integrated into our ESG strategy. | issues annually and assess the potential | | | ESG, including climate change and associated | financial impact of climate-related risks and | | | initiatives, is now a standing agenda item | opportunities over the short, medium and | | | at all six Board meetings a year, having been | long-term until 2050. | | discussed in detail at each Board meeting in FY23. 46 B&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 Short-term greenhouse gas emissions. Innovation, coordination and strong climate leadership lead to an alignment with the (up to 2025) Paris Agreements’ ambition to avoid dangerous climate change by limiting global warming to well below 2°C of warming above pre-industrial levels. These changes generate high levels of transition risks but limited physical risks. Between 2-3°C – Commitments and pledges are made in this scenario, similar to ones seen during COP26, Medium-term such as the declaration on Forests and Land Use which 141 countries, including Brazil and China, sign. However, not (2025-2035) 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. Above 3°C – Alternate geopolitical issues and a lack of interest mean minimal action on climate change is taken Long-term for the next few decades. No sector is decarbonised, and fossil fuels remain the dominant energy source allowing (2035-2050) greenhouse gas emissions to rise unchecked. Businesses face limited short- and medium-term transition risks but the most severe physical impacts possible. 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 Variable Short to Increased operating costs We widened our climate B energy and raw materials. across all Medium- scenario analysis in FY23 to We sell predominantly branded scenarios term consider the vulnerability of Climate change may disrupt products, which may increase in cost our top 10 suppliers (by value) our energy and stock suppliers, due to climate change. We buy in large and supply chain routes to thereby increasing costs across volumes and are well-positioned to future climate change. We will the Group. The operations and ensure we remain competitive in the continue to work with our productivity of our supply chain market. There is also scope to pass suppliers to monitor the risk may also be disrupted by through input cost inflation through climate change may pose to climate change which could increasing selling prices, the availability of products and have an indirect impact on notwithstanding the need to maintain materials. B&M. our value for money proposition. We have an ongoing energy This risk could impact several While energy costs continue to rise, efficiency project being rolled business areas, and although these currently represent a relatively out across our estate to reduce we are not manufacturers, minimal part of our overall direct cost our energy usage, which will we must still be aware of our base, being less than 1% of Group sales. likely mitigate the impact of supplier input cost prices. rising costs. We see this risk unfolding across all scenarios. 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. 47B&M European Value Retail S.A. Annual Report and Accounts 2023 ## TCFD continued ### Table 2: Significant transition risks facing the Group continued Transition risk Scenario Timeline Classification Financial impact Mitigating action Reputation – Variable Short to Reduce capital availability We have engaged a third party B Stakeholder concern across all Medium- to ensure B&M’s ESG strategy, Failure to meet stakeholder expectations scenarios term targets and key actions are We know that our stakeholders and requests could result in a reduction developed in line with best want to see us take proactive of capital availability. To reduce this risk, guidance and internationally climate action and failing to the financial impact largely relates to an recognised frameworks To meet their expectations could increase in administrative costs to ensure deliver against these, we have harm our reputation both alignment with growing best guidance invested the resources to internally and externally. This in this space. The cost of external develop a growing risk could potentially arise with specialists are negligible in the context of Sustainability team. We have any one of our stakeholders. Group profitability. We have a dedicated also considered stakeholder budget for our Sustainability team which feedback in the development is likely to increase in the future. of our ESG strategy. Technology – Substituting Below Medium to Reduced value of assets and stock At B&M, we have a high rate B existing products and services 2°C Long-term of stock turn and tightly control If there is a significant shift in demand to lower emission options the level of stock cover to towards lower emission products, such ensure the risk of stock Shifting to more efficient changes are likely to occur gradually write-off is minimised. technology and sustainable over time, and therefore we will have products may require a the opportunity to sell through existing write-off or the retirement of stock without the need to write off the existing assets at a high impact carrying value. 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. Technology – Cost to transition Below Medium to Reduced gross margin for the business We already partner with many B to lower emission products 2°C and Long-term leading brand names and are An increased demand for lower 2-3°C proud to showcase their More sustainable products are emission products may result in sustainable products in our likely to come onto the market increased inbound logistics costs. stores, and we hope to do over the coming years. The Changes to the product mix also have more of this moving forward. changing customer demand the potential to impact the gross margin In addition, we have a broad means we need to be aware achieved by the Group; however, the and agile supplier base who of the potential cost of Group has a long history of responding can manufacture own transitioning to lower emission effectively and swiftly to changing branded products on our products. However, we expect consumer tastes, while protecting behalf. such changes to gradually margins. Any change to the sales mix occur over time, allowing us is likely to take place gradually. to evaluate our response. Technology – Cost to transition Below Short to Increased capital expenditures The energy efficiency and A to lower emission technology 2°C and Long-term generation projects ongoing The rollout of LED and Building Energy 2-3°C and planned will reduce Our aim to reduce our emission Management System (“BeMS”) has operating costs for the intensity means we need to be cost the business up to £15.6m to date. business. The roll out of LED aware of the cost of transitioning To complete the project across the lighting across our B&M to lower emission technology. remaining store estate and the France stores have reduced We have set a target to reduce distribution centres has been estimated the businesses’ consumption our operational carbon to cost an additional £6.6m. by 70%. We will hold site emissions by 25% by 2030 The capital investment required by these surveys to evaluate energy- as well as an ambition to be initiatives already forms part of the saving opportunities and Net-Zero by 2040 for Scopes 1, Group’s strategic planning projections. schemes which will counteract 2 and 3. We have developed We are evaluating the feasibility of the upfront cost of installing our transition plan which installing on-site renewable power energy efficiency technology. details the short, medium and generation systems across our long-term key actions and businesses. Heron Foods is the furthest milestones required for the along with this journey, with a budget of Group to reach Net-Zero. £1m set aside for a solar project in FY24. 48 B&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 Above Long-term Increased operating costs Carry-out specific flood risk B are event-driven such as the 3°C for the business assessments for our risk of increased severity of distribution centres and We have comprehensive business flooding. Extreme weather can continually monitor flood risk interruption and property damage damage property and assets, at sites for long-term impact. insurance coverage. The average B&M UK which could cause significant Conduct annual scenario store sales equate to c.£6m. compared operational impacts if our main analysis. We have developed to total Group revenue of c.£4.7bn, the distribution centres (“DC”) in a B&M Flood evacuation plan financial impact of damage to an Bedford and Liverpool are to keep colleagues, individual store is relatively insignificant. compromised. However, the customers and visitors safe likelihood of extreme weather Our total insurance cover relating to during a major flood event. events at our DCs across the business interruption would provide Plans are monitored on a site UK and France is modelled to enough headroom to source alternative by site basis to reflect the risk be low. Our supplier may be warehousing space, replenish destroyed level, with regional H&S subject to events of flooding stock and be reimbursed for potential lost support. Plans have been and wildfires, which may sales if a DC became unusable. Having shared with colleagues. impact our operations through multiple warehouses also avoids having shipping delays and increased a “single point of failure” since most costs. SKUs are held in more than one location. Chronic – Climate-related Above Long-term Increased operating costs Our dedicated in-house B issues such as water stress, 3°C for the business maintenance and store rising mean temperatures and operations teams constantly As a result of rising mean temperatures, sea level rise often manifest monitor events at individual we have seen an increase in business over time. Long term shifts in stores. We will conduct disruptions from pests and rodents. In climate trends may lead to annual scenario analysis FY23, pest management costs were over increased insurance premiums across all of our sites to £0.6m. Rising mean temperatures will and the potential for reduced monitor our chronic physical also result in increased energy usage, availability of insurance on risks. leading to increased operating costs for assets in high-risk locations. 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. 49B&M European Value Retail S.A. Annual Report and Accounts 2023 ## TCFD continued ### Table 4: Significant opportunities facing the Group Opportunity Scenario Timeline Classification Financial impact Managing action Energy resources – Use of Below Medium to Reduced operating costs Consider more energy-saving A lower emission sources of 2°C Long-term and emissions initiatives. We will continue to energy engage third-party specialists As we reduce our operational emissions to monitor the most cost- We have set a target to reduce through the ongoing rollout of LED and effective options on the our operational carbon BeMS, we will reduce our energy usage market for transitioning our emissions by 25% by 2030 and therefore operational costs for the technology. | as well as an ambition to be | business. With strong paybacks, the | | --- | --- | | Net-Zero by 2040 for Scopes 1, | financial impact of this rollout is a net | | 2 and 3. We have developed | positive over the medium term. | our transition plan which On-site renewable energy generation has details the short, medium and also been identified as an opportunity to long-term key actions and reduce our costs, with a pilot project for milestones required for the Heron Foods being planned for FY24. Group to reach Net-Zero. Resource efficiency – Use of Below Medium to Reduced operating costs Continue to identify future A more efficient production 2°C Long-term and emissions opportunities to streamline and distribution processes processes to make them We routinely review how we can reduce the more efficient across the Our continued growth in store number of trips taken from our transport businesses. Share best numbers provides fleet. When loading our trailers, we ensure practice from B&M UK with opportunities to maximise each one is packed as efficiently as Heron Foods and B&M France transport volumes, improve our possible, reducing unnecessary journeys in relation to our fleet fleet technology and ensure when delivering from our warehouses to management. efficient transport routes. 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. 50 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements | Risk management | Step 4 – Addressing the risk: Our analysis | Each year we will strive to improve the accuracy | | --- | --- | --- | | The steps we have taken to identify, assess | shows that the likelihood of climate-related | of our Scope 3 calculations. Moving forward we | | and manage each climate-related issue have | risks impacting our overall operations in a | will utilise our supplier engagement processes | | been based on our existing risk management | significant manner is low. Despite this, | gather more specific data regarding the goods | | process to ensure a consistent and efficient | adequate mitigating actions have been | and services provided to us to improve the | | assessment and categorisation. | initiated to develop greater strategic resilience. | accuracy of Category 1: Purchased Goods and | | | The potential risk management options were | Services. We also aim to launch an employee | | Step 1 – Identifying the risks: In FY23, | appraised, and a risk management response | commuting survey next year to improve the | | we expanded our TCFD reporting process | was determined for each climate-related issue. | accuracy of Category 7: Employee Commuting. | to identify the climate-related risks and | opportunities across the Group, including | Step 5 – Monitor risk: We have embedded a | Consumption data is collected across the | | --- | --- | --- | | Heron Foods and B&M France for the first time. | climate change perspective into the ongoing | B&M estate to measure our energy usage | | In order to do so we conducted an internal | assessment of our internal corporate risk | and initiatives are underway to reduce it. We | | stakeholder engagement process to engage | register and will continue to review our risk | monitor miles travelled, vehicles in our fleet, | | with key senior management representing core | management process. To ensure we are fully | driving styles and routes to measure the | | functions of our businesses including IT, retail, | prepared for climate change, we will continue | emissions and environmental impact of our | | supply chain and people. In FY23 we also | to embed annual climate scenario analyses | transport & distribution fleet. The Sustainability | | began identifying where climate-related risks | into our existing risk management framework | Manager evaluates energy-saving | | may impact our supply chain and critical | and financial planning processes to identify | opportunities, monitors potential sustainable | | supplier routes. In FY23, we identified twelve | future risks and ensure adequate mitigation. | product partnerships, reviews our supply chain | | climate-related risks and two climate-related | | and works collaboratively with other colleagues | | opportunities. | Metrics and targets | within the business. We have also engaged a | third-party ESG specialist to advise us on our Metrics Step 2 – Assessing the business impact: sustainability reporting and initiatives to reduce Reducing our emissions and the impact of our We used climate scenario analysis to assess the environmental impact and related operations on the environment is the Group’s the impact of both physical and transition emissions of our products and technology. core focus for managing our climate-related climate-related risks and opportunities on our The initiatives we intend to roll out will help risks as it impacts every aspect of our operations. The findings were presented in a reduce the carbon emissions relating to our operations. In FY23, we have continued to Climate-related Risk Management Workshop supply chain, transport fleet, energy usage, capture, analyse and document our Scopes 1, which was attended by our CFO, Sustainability and products. We will measure this reduction 2 and 3 emissions, which includes operational Manager and wider senior management, annually and by communicating our progress, emissions as well as those associated with our representing all core functions across our we intend to satisfy any stakeholder concerns wider value chain. three businesses in November 2022. regarding our exposure to climate-related risks. Our Scope 3 emissions have been calculated Step 3 – Classifying risks: Each climate- Targets consistent with the Greenhouse Gas Protocol related issue was classified using our rating Our FY23 Scope 1 and 2 emissions represent (GHG Protocol) Corporate Value Chain (Scope 3). system to highlight the implications of a risk 6% of our total Group emissions, with our Of the 15 Scope 3 categories, 11 were identified occurring. Climate-related considerations FY23 Scope 3 emissions representing the as applicable to B&M’s business. As a result labelled with an A or B rating are deemed remaining 94%. of improving our data collection processes significant. A C & D classification states that the around the packaging of products in FY23, we risk is tolerable but should continue to be have calculated our Category 12: End-of-life reviewed and monitored. We used our existing Treatment of Sold Products emissions for the classification process to give each climate- first time. This year we also calculated the related issue a likelihood and impact rating, emissions associated with Category 15: which were then combined to provide an Investments for the first time. inherent risk classification. 51B&M European Value Retail S.A. Annual Report and Accounts 2023 ## TCFD continued ### Table 5: Scope 1, 2 and 3 emissions: | | | FY23 | | FY22 | | FY21 | | --- | --- | --- | --- | --- | --- | --- | | | Gross emissions | | Gross emissions | | Gross emissions | | | Directors | | (tCO 2 e) | | (tCO 2 e) | | (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 | We are aware that the SBTi is updating its | Next steps | | --- | --- | --- | | Climate Action Roadmap, we aspire to achieve | minimum criteria to a 1.5°C scenario and intend | We aim to continuously develop our TCFD | | Net-Zero Scope 1, 2 and 3 emissions by 2040. | to update our targets in five years as required by | disclosures by embedding further consideration | | This pathway is more ambitious than the | the SBTi. We have set short-term Scope 1 and 2 | of climate-related risks and opportunities into | | SBTi 1.5°C and well-below 2°C (“WB2C”) | emissions reduction pathways, which follow | our business strategy and financial planning. | | scenarios and will require significant effort | a WB2C scenario up to 2027 and then a 1.5°C | We will monitor current and emerging best | | to decarbonise our value chain. Our focus | scenario from 2027 to 2030. Our short-term | guidance to ensure we remain compliant with | | will be on collaboration with our supply chain | Scope 3 target is based on engagement with | requirements as a UK listed company operating | | to decarbonise our goods and services as far | our suppliers; as per the SBTi guidelines, we aim | in this space. | | as possible. | to have 67% of our suppliers (based on spend) | | | | set science-based targets by FY27. | The need for internal resources, time and | | In the short term, we plan to reduce our | | investment will continue to be reviewed by the | | operational (Scope 1 and 2) emissions on an | | Board who will revisit the requirement for a | | absolute basis and engage with our suppliers, | | standalone ESG Committee on an annual basis. | | as per SBTi guidelines. Our Scope 1 and 2 | | We have developed a transition plan which | | reduction targets have been validated by the | | outlines our roadmap to Net-Zero, working | | SBTi. We are committed to achieving a 25% | | with key internal stakeholders who will take | | reduction in Scope 1 and 2 emissions by 2030 | | ownership for decarbonising their focus areas. | | (from a FY21 baseline), aligned with the SBTi | | Our transition plan details the necessary steps | | WB2C scenario. | | 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. 52 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Regional 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 23% by 2030, as per the SBT/ WEC 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 SBT. 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 47% of our suppliers based on spend. | | **Energy usage** | Improve the energy efficiency of B&M UK operations by rolling out B&M 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. B&M 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. | B&M European Value Retail S.A. Annual Report and Accounts 2023 53 ## 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 | Stakeholders | discussion by the Board and its decision making. | | --- | --- | --- | | company and is not subject to the Companies | Achieving our vision and fulfilling our purpose | This includes a range of activities from regular | | Act 2006 or to the Companies (Miscellaneous | (as set out opposite) means that evaluating and | management reports through to other forms of | | Reporting) Regulations 2018 (the “Regulations”). | considering the interests of our stakeholders in | direct engagement by members of the Board. | | It is however subject to the UK Corporate | our decision making are key to the Group’s | | | Governance Code 2018 (the “Code”). The Board | success. The Group’s key stakeholders include its | We describe below how we have engaged | | considers the Regulations to be reflective of | customers, colleagues, suppliers, the people and | with the particular key stakeholder groups | | best practice. Accordingly, it has followed that | communities where it trades and its investors. | and considered their interests in the last year. | | practice where practical, while maintaining its | | We have also provided further details of our | | status as a Luxembourg registered company. | The Board uses a number of mechanisms | engagement with colleagues in our Corporate | | | through which it is able to determine and | social responsibility report in the section on | | | appraise the interests of stakeholders to inform | Workforce Engagement on page 40. | Links and more ### Why we engage How we engage, measure and monitor Examples of actions in 2023 Examples of outcomes in 2023 information Providing great value to our customers is our Monitoring our like for like (“LFL”) transaction volume and sales trends. The Board reviews LFL sales data every month in the Group’s Weekly LFL customer transaction volumes have See the Financial ### Customers core purpose as a business. We monitor and management account reports. This is analysed across each business consistently grown since the start of Q2-23. review on page 20. respond to our customers preferences and Holding in-store promotional themed events to measure customer fascia, the Grocery and General Merchandise product split and for | needs to ensure we maintain a compelling | response and reaction to extra value propositions in different product | each main product line within those categories. | The 3-year LFL suggests that the Company has | | --- | --- | --- | --- | | product offering and price proposition at | areas. | | held on to a large number of the new customers | | our stores. | | The Company took decisive action in driving its store availability and | who discovered us in FY21. | standards, to improve customer experience and to encourage repeat visits (whilst also ensuring that shareholder’s cash is not tied up in excess stock). Engagement with our colleagues is key to Regular engagement programmes including colleague listening The business continued with listening groups in its Retail, Distribution From our feedback with colleagues through our See the Colleagues ### Colleagues understanding how the business can support groups, apprentice listening groups, new store and distribution centre and Central Support operations and career opportunities and various engagement processes we identify key section in the Corporate Social them in carrying out their roles effectively, colleague surveys and bi-annual business updates from personal development were a key theme. Our Step Up development themes of “What You Said” by colleagues and Responsibility make improvements in our business and management. programmes continued offering career progression for colleagues responses to those by the business in relation report on pages recognise and reward exceptional looking to apply for Retail Management, Distribution Centre Manager to “What We Did”. Key themes from feedback 39 to 41 and the performance. Twice yearly colleague surveys for Retail, Distribution and Central and first time manager roles in our Support Centre. In addition, the included introducing new pay rates for standalone ESG Report. Support colleagues in the UK and annual colleague survey in France. business has introduced specific listening groups to target colleagues Colleague’s regardless of age. in ‘hard to reach’ areas and is using this detail to continue to develop Development days and structured career progression programmes the People Strategy. We responded to this by reviewing pay rates including promotion paths to Store Manager and Area Manager roles. across the business and increasing hourly rate The Bi-annual Colleague Survey was completed this year by our across Distribution and the Support functions. Twice yearly updates to the Board on colleague engagement by B&M UK and Heron Foods colleagues across all the main operating We abolished the Under 18 rate pay in Retail, Carolyn Bradley, one of our Non-Executive Directors, as the Designated functions of those businesses. In October 2022 we saw a slight increasing the supervisor rate of pay regardless Director for Workforce Engagement. decrease in overall Colleague satisfaction score, however the scores of age within Retail, a position which we will remained high with 91% of people completing the survey, 79% of continue to review on an annual basis. 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. 54 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements ### Our Our Our ## + = ### vision purpose values | To grow our B&M UK business to at least | To deliver great value to our consumers, | Simplicity, trust, fairness and being proud of what | | --- | --- | --- | | 950 stores, and to successfully deploy our | so that they keep returning to our stores time | we offer to customers are at the heart of our | | direct sourcing limited assortment business | and time again, in order to generate growth in | business as we strive all year round to deliver | | model in France so that we can maximise | our like for like sales, profits and cash and long | the lowest prices we can for the best-selling | | the potential of that business. | term value to our investors and employees. | 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. Links and more ### Why we engage How we engage, measure and monitor Examples of actions in 2023 Examples of outcomes in 2023 information Providing great value to our customers is our Monitoring our like for like (“LFL”) transaction volume and sales trends. The Board reviews LFL sales data every month in the Group’s Weekly LFL customer transaction volumes have See the Financial ### Customers core purpose as a business. We monitor and management account reports. This is analysed across each business consistently grown since the start of Q2-23. review on page 20. respond to our customers preferences and Holding in-store promotional themed events to measure customer fascia, the Grocery and General Merchandise product split and for | needs to ensure we maintain a compelling | response and reaction to extra value propositions in different product | each main product line within those categories. | The 3-year LFL suggests that the Company has | | --- | --- | --- | --- | | product offering and price proposition at | areas. | | held on to a large number of the new customers | | our stores. | | The Company took decisive action in driving its store availability and | who discovered us in FY21. | standards, to improve customer experience and to encourage repeat visits (whilst also ensuring that shareholder’s cash is not tied up in excess stock). Engagement with our colleagues is key to Regular engagement programmes including colleague listening The business continued with listening groups in its Retail, Distribution From our feedback with colleagues through our See the Colleagues ### Colleagues understanding how the business can support groups, apprentice listening groups, new store and distribution centre and Central Support operations and career opportunities and various engagement processes we identify key section in the Corporate Social them in carrying out their roles effectively, colleague surveys and bi-annual business updates from personal development were a key theme. Our Step Up development themes of “What You Said” by colleagues and Responsibility make improvements in our business and management. programmes continued offering career progression for colleagues responses to those by the business in relation report on pages recognise and reward exceptional looking to apply for Retail Management, Distribution Centre Manager to “What We Did”. Key themes from feedback 39 to 41 and the performance. Twice yearly colleague surveys for Retail, Distribution and Central and first time manager roles in our Support Centre. In addition, the included introducing new pay rates for standalone ESG Report. Support colleagues in the UK and annual colleague survey in France. business has introduced specific listening groups to target colleagues Colleague’s regardless of age. in ‘hard to reach’ areas and is using this detail to continue to develop Development days and structured career progression programmes the People Strategy. We responded to this by reviewing pay rates including promotion paths to Store Manager and Area Manager roles. across the business and increasing hourly rate The Bi-annual Colleague Survey was completed this year by our across Distribution and the Support functions. Twice yearly updates to the Board on colleague engagement by B&M UK and Heron Foods colleagues across all the main operating We abolished the Under 18 rate pay in Retail, Carolyn Bradley, one of our Non-Executive Directors, as the Designated functions of those businesses. In October 2022 we saw a slight increasing the supervisor rate of pay regardless Director for Workforce Engagement. decrease in overall Colleague satisfaction score, however the scores of age within Retail, a position which we will remained high with 91% of people completing the survey, 79% of continue to review on an annual basis. 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. 55B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Stakeholders and Section 172 Statement continued Links and more ### Why we engage How we engage, measure and monitor Examples of actions in 2023 Examples of outcomes in 2023 information The relationships we have with the Evaluating real estate opportunities for opening new stores The Board continued to support the new store openings programme We opened 21 new B&M UK stores, seven See the ### Communities communities where we operate our stores in catchments where we are either under-represented or not of its B&M and Heron Foods businesses in the UK. That also includes B&M France stores and 14 new Heron Foods Communities section in the and distribution centres are key to the represented at all. This provides jobs and access to our value-led the relocation of stores in existing areas where better real estate stores (including relocations) in the financial Corporate Social sustainable development and growth of our proposition to more communities every time we open new stores. opportunities exist, and capital and maintenance expenditure on year under review. Responsibility business. We want to serve customers locally stores ear-marked for refurbishment within the existing estate. report on pages with what they want and at bargain prices. Providing support for the community at local and national levels where Within this number we opened five B&M UK 42 and 43. We also want to support the communities we can contribute to society more generally. Each time we open a new The opening of new stores and relocations of stores (often to larger replacement stores, where older, smaller legacy where we operate by providing jobs and store in the UK we try to find a local hero to perform the ribbon-cutting premises) create new jobs and promotion opportunities at those stores were replaced with newer B&M state of career opportunities locally. ceremony to promote the good work they do in the community. We stores and also in our distribution centres, while our business the art stores, often with small garden centres. also encourage our store managers to maintain those relationships continues to grow. Typically, replacement stores are at least twice in the future and give continued support to those activities. 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. We regard our suppliers as key business There is regular engagement with the Group’s suppliers led by the There has been a continuous rolling programme of ensuring suppliers The Company has continued to outsource See the Supply ### Suppl iers partners. Many of them have worked with us Group’s Trading Director, Grocery Controller, senior members of the meet appropriate levels of external audit social compliance checks. the audit checking processes to Multi-Lines Chain section of the Corporate Social for a number of years. We like to build long Group’s buying and merchandising teams and our Hong Kong based This is important to the welfare of the employees of our suppliers, and International Company Limited (“Multi-Lines”) Responsibility term relationships with suppliers to support sourcing agents. This includes a range of supplier visits, meetings the maintenance of their ongoing trading relationships with our Group. in relation to the Group’s own direct/non-Multi- report on pages our business. Our continued growth gives our and presentations, factory visits and trade fair meetings in China, Lines sourced suppliers. This has enabled the 44 and 45. suppliers the potential to grow with us, which the UK and the EU with both existing and new suppliers. As referred above, the B&M and Heron Foods UK businesses Group to apply a consistent and established also further strengthens those relationships. have continued with their new store openings and existing store methodology and utilise Multi-Lines expertise refurbishment programmes during the year. This is important to our and connections across Asia on our behalf. main building services contractors, many of whom have worked on stores with us for several years. The B&M UK business has continued to use its main store fit-out contractors where available to carry out new store opening and existing store estate refurbishment works during the year. That has provided them with a level of ongoing workstreams. Our investors include shareholders, The management team have roadshow presentations and one-to-one In the post pandemic world, video conferencing and remote meetings The company declared a special dividend See the Viability ### Investors bondholders and banks. They have a meetings with investor groups each year on the announcements of have become much more widespread and consequently it has been of 20p per share in January 2023 which was Statement on page 33 and direct financial interest in the performance our half-year and full-year results. Presentations and conference possible to reach a larger number of investors, more regularly across within the Group’s stated leverage ceiling also the Financial of our business and our continued success. calls with question and answer sessions are also held on the a wider geographical area. Regular investor briefings help with our of 2.25x net debt to adjusted EBITDA. review on page 20. announcement of the Q1 and Q3 trading updates announcements. substantial number of overseas shareholders, including regular updates with such shareholders in Australia and North America. One-to-one conference calls and meetings are also held during the year with both existing and potential new institutional investors. The Group extended its borrowing maturity profile through a bank facility extension and in support of our overall leverage levels. The Board reviews investor relations reports and market updates as a standing agenda item at each of its meetings throughout the year. The Group continued to generate strong results against pre-pandemic It also has an investor relations agenda item with its corporate brokers levels in the financial year under review. The Board considered within at its strategy day meetings each year. the context of its capital allocation policy, the opportunity to make further returns to shareholders in addition to its ordinary dividend policy. 56 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements Links and more ### Why we engage How we engage, measure and monitor Examples of actions in 2023 Examples of outcomes in 2023 information The relationships we have with the Evaluating real estate opportunities for opening new stores The Board continued to support the new store openings programme We opened 21 new B&M UK stores, seven See the ### Communities communities where we operate our stores in catchments where we are either under-represented or not of its B&M and Heron Foods businesses in the UK. That also includes B&M France stores and 14 new Heron Foods Communities section in the and distribution centres are key to the represented at all. This provides jobs and access to our value-led the relocation of stores in existing areas where better real estate stores (including relocations) in the financial Corporate Social sustainable development and growth of our proposition to more communities every time we open new stores. opportunities exist, and capital and maintenance expenditure on year under review. Responsibility business. We want to serve customers locally stores ear-marked for refurbishment within the existing estate. report on pages with what they want and at bargain prices. Providing support for the community at local and national levels where Within this number we opened five B&M UK 42 and 43. We also want to support the communities we can contribute to society more generally. Each time we open a new The opening of new stores and relocations of stores (often to larger replacement stores, where older, smaller legacy where we operate by providing jobs and store in the UK we try to find a local hero to perform the ribbon-cutting premises) create new jobs and promotion opportunities at those stores were replaced with newer B&M state of career opportunities locally. ceremony to promote the good work they do in the community. We stores and also in our distribution centres, while our business the art stores, often with small garden centres. also encourage our store managers to maintain those relationships continues to grow. Typically, replacement stores are at least twice in the future and give continued support to those activities. 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. We regard our suppliers as key business There is regular engagement with the Group’s suppliers led by the There has been a continuous rolling programme of ensuring suppliers The Company has continued to outsource See the Supply ### Suppl iers partners. Many of them have worked with us Group’s Trading Director, Grocery Controller, senior members of the meet appropriate levels of external audit social compliance checks. the audit checking processes to Multi-Lines Chain section of the Corporate Social for a number of years. We like to build long Group’s buying and merchandising teams and our Hong Kong based This is important to the welfare of the employees of our suppliers, and International Company Limited (“Multi-Lines”) Responsibility term relationships with suppliers to support sourcing agents. This includes a range of supplier visits, meetings the maintenance of their ongoing trading relationships with our Group. in relation to the Group’s own direct/non-Multi- report on pages our business. Our continued growth gives our and presentations, factory visits and trade fair meetings in China, Lines sourced suppliers. This has enabled the 44 and 45. suppliers the potential to grow with us, which the UK and the EU with both existing and new suppliers. As referred above, the B&M and Heron Foods UK businesses Group to apply a consistent and established also further strengthens those relationships. have continued with their new store openings and existing store methodology and utilise Multi-Lines expertise refurbishment programmes during the year. This is important to our and connections across Asia on our behalf. main building services contractors, many of whom have worked on stores with us for several years. The B&M UK business has continued to use its main store fit-out contractors where available to carry out new store opening and existing store estate refurbishment works during the year. That has provided them with a level of ongoing workstreams. Our investors include shareholders, The management team have roadshow presentations and one-to-one In the post pandemic world, video conferencing and remote meetings The company declared a special dividend See the Viability ### Investors bondholders and banks. They have a meetings with investor groups each year on the announcements of have become much more widespread and consequently it has been of 20p per share in January 2023 which was Statement on page 33 and direct financial interest in the performance our half-year and full-year results. Presentations and conference possible to reach a larger number of investors, more regularly across within the Group’s stated leverage ceiling also the Financial of our business and our continued success. calls with question and answer sessions are also held on the a wider geographical area. Regular investor briefings help with our of 2.25x net debt to adjusted EBITDA. review on page 20. announcement of the Q1 and Q3 trading updates announcements. substantial number of overseas shareholders, including regular updates with such shareholders in Australia and North America. One-to-one conference calls and meetings are also held during the year with both existing and potential new institutional investors. The Group extended its borrowing maturity profile through a bank facility extension and in support of our overall leverage levels. The Board reviews investor relations reports and market updates as a standing agenda item at each of its meetings throughout the year. The Group continued to generate strong results against pre-pandemic It also has an investor relations agenda item with its corporate brokers levels in the financial year under review. The Board considered within at its strategy day meetings each year. the context of its capital allocation policy, the opportunity to make further returns to shareholders in addition to its ordinary dividend policy. 57B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Corporate Governance report ## Chairman’s introduction ## Committed to the highest standards ## of corporate governance ### 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 58 B&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 Committee membership key A&R Audit & Risk REM Remuneration NOM Nomination Committee Chair | Alex Russo | Mike Schmidt | Simon Arora | | --- | --- | --- | | Chief Executive Officer | Chief Financial Officer | Executive Director | | Appointment: November 2020 | Appointment: November 2022 | Appointment: December 2004 | | Alex joined the B&M Group on 5 October 2020 | Mike joined the B&M Group on 17 October 2022 | Simon was Chief Executive Officer of the B&M Group | | and the Board as the Group’s Chief Financial Officer | and the Board as the Group’s Chief Financial Officer | from 1 December 2004 until the appointment of | | on 16 November 2020. On 26 September 2022, | on 1 November 2022. | Alex Russo to that role on 26 September 2022. | | Alex was appointed as Chief Executive Officer. | | He has a background in consumer goods, corporate | Prior to joining B&M, Mike spent over eight years at finance and consulting. Simon was a co-founder Alex has had a long senior career in retail, having publicly listed home furniture retailer DFS Furniture and Managing Director of the wholesale homeware successfully held Executive Board positions in plc, where he was appointed Group Chief Financial business, Orient Sourcing Services, before acquiring leading international retailers including Asda Officer in 2019. During his time at DFS, Mike B&M jointly with his family. Prior to the acquisition of Walmart, Tesco plc, Kingfisher plc, and Boots plc. additionally held executive responsibility for B&M, Simon held various positions with McKinsey & He served as Chief Financial Officer, Senior Vice property, strategic development, legal & compliance, Co., 3i Group plc and Barclays Bank plc. Simon was President, at Walmart’s Asda business between and financial services activities, and was non- a member of the Nomination Committee of B&M 2014 and 2018. Prior to joining Asda, he was Tesco’s executive Chair of DFS’s trading subsidiaries Dwell until 19 January 2023. Chief Financial Officer of South Korea, its largest and Sofa Workshop. Mike began his career in international subsidiary. Prior to that, he was corporate finance, and gained 13 years’ experience Subsequent to the year end, Simon retired from the | Tesco’s Commercial Financial Director for its UK | of working for top tier investment banks including | Board on 21 April 2023. | | --- | --- | --- | | business. His broad retail career covers the UK, | Citi and UBS, across equity, debt and M&A advisory | | | Europe, America and Asia. His experience spans | for various large cap international corporations. | | | listed multinational, PE and family owned | Mike has an MA in Economics and Management | Committee membership: | | businesses. | from Cambridge University. | Nil | Alex has also been a Non-Executive Director in leading consumer goods businesses in the UK Committee membership: and internationally. Nil Alex holds an MBA from the London Business School with Distinction, and undergraduate 1st class degrees in Engineering and Finance. Committee membership: Nil 59B&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 | Ron McMillan | Tiffany Hall | Carolyn Bradley | | --- | --- | --- | | Senior Independent Non-Executive Director | Independent Non-Executive Director and | Independent Non-Executive Director | | and Chairman of the Audit & Risk Committee | Chair of the Remuneration Committee | | | Appointment: May 2014 | Appointment: September 2018 | Appointment: November 2018 | | Until 2013 Ron worked in PwC’s assurance business | Tiffany’s experience is in marketing, sales | Carolyn has an in-depth retail and consumer | | for 38 years and has deep knowledge and | and customer services. She previously served as | business background. She worked for Tesco plc for | | experience in relation to auditing, financial reporting, | Chief Executive Officer of BUPA Home Healthcare, | over 25 years until 2013. During that time, she held a | | regulatory issues and governance. He was the | Marketing Director at BUPA, Head of Marketing | number of senior positions, including Chief Operating | | Global Finance Partner and Northern Regional | at British Airways and also Chair of Airmiles and | Officer of Tesco.com and Commercial Director, for | | Chairman of PwC in the UK and Deputy Chairman | BA Holidays. Prior to that, she held various other | Tesco Stores. | | of PwC in the Middle East and acted as the audit | senior positions at British Airways including | | Carolyn has decided not to stand for re-election engagement leader to a number of major listed Head of UK Sales and Marketing. at the Annual General Meeting to be held on companies. | | On 15 September 2022, it was announced that | 25 July 2023. As such, Carolyn will retire as a | | --- | --- | --- | | On 18 August 2022, the Company announced that | Tiffany would succeed Ron McMillan as Senior | Non-Executive Director of the Company at the | | Ron would retire from the business at the Annual | Independent Director after the Annual General | conclusion of the AGM. | | General Meeting of the Company in July 2023, at | Meeting of the Company in July 2023. | | which time he would have completed 9 years’ service External appointments: in the role and would be replaced as Chairman of External appointments: Carolyn is Chair of The Works plc, the Senior the Audit & Risk Committee by Oliver Tant and as Tiffany is a Non-Executive Director of Symington Independent Director and Remuneration Committee Senior Independent Director of B&M, by Tiffany Hall. Family Estates SA. Chair of SSP Group plc, a Non-Executive Director of Due to Carolyn Bradley’s retirement, Ron has agreed The Mentoring Foundation and Majid Al Futtain Retail to continue as a Non-Executive Director for an LLC and a Member on the Advisory Board of Committee membership: additional year until the AGM in 2024. Cambridge Judge Business School. REM NOM External appointments: Committee membership: Ron is the Chairman of N Brown Group plc and is the Senior Independent Director and Audit Committee A&R REM NOM Chairman of SCS plc. Committee membership: Carolyn is also the Designated Non-Executive Director for Workforce Engagement. A&R REM NOM 60 B&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 Oliver Tant Independent Non-Executive Director Independent Non-Executive Director Appointment: November 2021 Appointment: November 2022 Paula has a strong background in general Oliver has over 40 years’ experience as a finance management and finance. Paula is Chief Executive professional most recently as Chief Financial Officer Officer of Pizza Express and previously held a number of Imperial Brands plc the FTSE 30 listed consumer of senior executive roles at Kentucky Fried Chicken brands company and prior to that for 30 years at (Great Britain) Ltd, including Managing Director and KPMG. At Imperial Brands plc, Oliver held Chief Financial Officer of KFC UK&I. 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 External appointments: he served a wide variety of listed and privately Paula is an Advisory Board member for Pennies, owned clients and also ran KPMG’s UK Audit and the micro-donation charity. Global Financial Advisory Services businesses. Oliver will become Chairman of the Audit & Risk Committee membership: Committee after the Annual General Meeting in July 2023. A&R NOM 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 61B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Corporate Governance report continued ### This report sets out the main Schedule of matters reserved to the Board The following matters are reserved to the Board for its approval: ### elements of the Company’s ### Approve Ensure ### corporate governance ### structure and how it complies ### with the UK Corporate • approving the long-term strategy and • ensuring a satisfactory dialogue with objectives of the Group and reviewing shareholders based on the mutual ### Governance Code. It also the Group’s performance and understanding of objectives; ### includes information required management controls; • ensuring the maintenance of a sound • approving any changes to the capital system of internal controls and risk ### by the Listing Rules and the structure of the Group; management. ### UK FCA Disclosure and • approving the financial reporting, budgets, dividend policy and any ### Transparency Rules (“DTRs”). significant changes in accounting policies and practices of the Group; • approving any major capital projects ### Code compliance of the Group; Review The Board is committed to high standards of • approving the structure, size and composition of the Board and corporate governance. Except where referred remuneration of the Non-Executive to on page 78, (workforce engagement on Directors; • reviewing the Company’s overall executive pay) and the postponement of • approving and supervising any material corporate governance and approving the annual board effectiveness review as litigation, insurance levels of the Group the division of responsibilities of members described on pages 67 and 74, the Company and the appointment of the Group’s of the Board. has complied throughout the year under professional advisors. 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 Board and Committee attendance at scheduled meetings during FY23: Council’s website at www.frc.org.uk. | | | Audit & Risk | | Nomination | | Remuneration | | | --- | --- | --- | --- | --- | --- | --- | --- | | Board | | Committee | | Committee | | Committee | | | | 6 | | 4 | | 3 | | 3 | ### Management responsibilities Directors Attended Attended Attended Attended The Executive Directors of the Group and of its | three main businesses are responsible for the | Peter Bamford – Chairman 6 – 3 – | | | | --- | --- | --- | --- | | day to day operational and strategic matters in | | 1 | | | | Simon Arora | | 6 – 2 – | relation to each of the businesses of the Group, which includes B&M UK, Heron Foods and Alex Russo 6 4 – – B&M France. Members of the broader senior Ron McMillan 6 4 3 3 executive team hold regular weekly meetings Tiffany Hall 6 – 3 3 led by the CEO to review progress and management activities of the Group. Carolyn Bradley 6 4 3 3 Paula MacKenzie 6 4 3 3 2 Mike Schmidt (appointed 1 November 2022) 3 2 – – 3 Oliver Tant (appointed 1 November 2022) 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. 62 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements ### How we govern The Board and Committee structure of the Company is as follows: ### B&M’s Board The Board of Directors of B&M as at the date of this report has eight members comprising the Chairman, two Executive Directors and five Independent Non-Executive Directors. See pages 58 to 61 for more information ### Audit & Risk Nomination Remuneration Workforce ### Committee Committee Committee Engagement NED This Committee is made up of This Committee is made up of the This Committee is made Carolyn Bradley is the Designated four Independent Non-Executive Chairman and five Independent up of three Independent Non-Executive Director for Directors Non-Executive Directors Non-Executive Directors Workforce Engagement The main responsibilities of the The main responsibilities of the The main responsibilities of the The main responsibilities of Committee are: Committee are: Committee are: this role are the governance • reviewing and monitoring the • reviewing the structure, size, • setting the policy for the Group and oversight of the following integrity of the financial diversity and composition of the on executive remuneration; matters: statements and price sensitive Board, including the balance of • to consider with the Board • determining the level of financial releases of the Executive and Non-Executive the mechanisms required remuneration of the Chairman, Company; Directors; from time to time by the Group the Executive Directors of the in relation to Workforce • monitoring the quality, • putting in place plans for the Company, the Group’s General Engagement to enable the effectiveness and independence orderly succession of Counsel and the first layer of Board to be appropriately of the external auditors and appointments to the Board and to senior management of the appraised on colleague approving their appointment senior management; Group below the Board; engagement; fees; • identifying and nominating • preparing an annual Directors’ • to co-ordinate such direct • monitoring the independence candidates, for approval by the remuneration report for engagement between the and activities of the Internal Board, to fill Board vacancies as approval by shareholders Non-Executive Directors and Audit function; and when they arise; at the Annual General Meeting the workforce as is considered • assisting the Board with the risk • ensuring, in conjunction with the of the Company; appropriate; management strategy, policies Chairman of the Company, that • designing share schemes for • to ensure the workforce and current risk exposures; new Directors receive a full, formal approval by the Board for engagement mechanisms • reviewing the adequacy and and tailored induction; and employees and approving which are approved by the effectiveness of the Group’s • keeping under review the awards to Executive Directors Board are put in place and internal financial controls and leadership and senior and certain other senior are effective; control and risk management management needs of the Group management of the Group; and • to report on the outputs from systems; and including Executive and • reviewing pay and conditions those mechanisms to the • maintaining effective oversight Non-Executive Directors and the across the Group’s wider Board at least twice a year, of compliance by our UK wider senior management team, workforce. and make any businesses with the Groceries with a view to ensuring the recommendations arising Supply Code of Practice. continued ability of the Group from those reports to the to compete effectively in the Board; and marketplace. • the holder of this office is also supported by members of the senior executive team of the Group who are responsible for See page 69 for a copy See page 74 for a copy See page 76 for a copy the day to day implementation of the Committee’s report of the Committee’s report of the Committee’s report of the Workforce Engagement mechanisms by the Group. Terms of Reference of each of the Committees are available on B&M’s website at See page 40 on www.bandmretail.com Workforce Engagement ### Executive Management The Executive Directors of the Group and of its three main businesses are responsible for the day to day operational and strategic matters in relation to each of the businesses of the Group, which includes B&M UK, B&M France and Heron Foods. Members of the broader senior executive team hold regular weekly meetings led by the CEO to review progress and management activities of the Group. 63B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Corporate Governance report continued | Board responsibilities | Board composition | Independence is determined by ensuring | | --- | --- | --- | | The Board is collectively responsible for the | During the financial year 2022/23 the Group | that the Non-Executive Directors do not have | | strategy and long-term success of the Group, | announced the planned retirement of Simon | any material business relationships or | | and for ensuring there is an effective system | Arora from the business on 21 April 2022. | arrangements (apart from their fees for acting | | of internal controls within the Group for the | Simon ceased to be CEO on 26 September | as Non-Executive Directors) with the Group or | | assessment and management of key risks. | 2022 and remained as an Executive Director | its Directors, which in the opinion of the Board | | | until the end of his notice period on 21 April | could affect their independent judgement. | | The Board has delegated certain | 2023. On 1 November 2022, Mike Schmidt | | | responsibilities to three main Committees | was appointed as CFO and Executive Director | Simon Arora, Bobby Arora and Robin Arora | | to assist in discharging its duties and the | and Oliver Tant was appointed as a further | and SSA Investments S.à r.l. (“SSA Investments”) | | implementation of matters approved by it | Non-Executive Director. | (together “Arora Family”) entered into a | | (see the table on page 63). The reports of | | relationship agreement with the Company | | each of the Committees for the year under | The Board approved the appointment of Tiffany | (the “Relationship Agreement”) which came | | review are set out on pages 69, 74 and 76. | Hall, an existing Independent Non-Executive | into effect on the admission of the Company’s | | | Director, to be the Senior Independent Director in | shares to trading on the London Stock Exchange | | A presentation of each of the B&M UK, Heron | succession to Ron McMillan. It was determined | in June 2014 and which continues to remain in | | Foods and B&M France businesses and their | that she had the requisite skills and experience | force. At the year ended 31 March 2023, | | up to date trading performance is provided by | to fulfil that role, having had a number of years’ | SSA Investments (together with Praxis Nominees | | the CEO at each Board meeting, together with | experience on a variety of public company | Limited as its nominee) held 6.98% of the total | | comprehensive financial reports and analyses | boards as a non-executive director. | issued shares in the Company. | presented by the CFO. During those months that | fall outside the regular cycle of Board meetings, | Carolyn Bradley has decided not to stand | The Board believes that the terms of the | | --- | --- | --- | | the CEO and CFO also provide reports and | for re-election at the AGM in July 2023. Ron | Relationship Agreement will continue to ensure | | management accounts packs updating the | McMillan has agreed to continue the role of | that the Company and other members of the | | Board on the current trading performance of | Non-Executive Director for an additional year | Group are capable of carrying on their business | | each of the Group’s businesses. | until the AGM in 2024. Following this year’s | independently of the Arora Family and that | | | AGM Tiffany Hall will still assume the role of | transactions and relationships between them | | Members of the broader senior management | Senior Independent Director and Oliver Tant will | and the Group are at arm’s length on normal | | teams of B&M UK, Heron Foods and B&M | become Chair of the Audit & Risk Committee. | commercial terms. | France participate at certain meetings of the | Board and store tours with the Board during | The Board comprises the Chairman, two | All Directors have service agreements or | | --- | --- | --- | | the course of the year. The senior executive | Executive Directors, being the CEO and CFO, | letters of appointment in place and the details | | team participates in the annual strategy day | and five Independent Non-Executive Directors. | of the terms of them are set out in the Directors’ | | of the Group. | | remuneration report on pages 76 to 91. | The Code recommends that at least half of | The implementation of the Board-approved | the Board, excluding the Chairman, should | Diversity Policy | | --- | --- | --- | | strategy, policies and decisions is delegated | comprise Independent Non-Executive | The Diversity Policy applied to the Board is | | to the Executive Directors of the Company to | Directors. The Company met this requirement | based upon the Listing Rules requirements | | execute them in relation to the day to day | during the whole of the year under review, with | of LR 9.8 as amended in 2022. The overall | | operational management of the Group’s | each of Ron McMillan, Tiffany Hall, Carolyn | objective of the Company’s Diversity Policy is to | | main businesses. The Executive Directors | Bradley, Paula MacKenzie and Oliver Tant | ensure that the Company has a well-balanced | | are also supported by senior management | being Independent Non-Executive Directors. | Board at all times in terms of the necessary | | teams in each of the B&M UK, Heron Foods | Following the year-end this requirement | skills, experience and independence of | | and B&M France businesses of the Group. The | continued to be met. | character and judgement of its members, | | leadership teams of those businesses regularly | | for the Group to be managed effectively | | have business update and trading review | Each of the Independent Non-Executive | for its long-term success. | | meetings with the Group CEO and CFO. | Directors who served during the year under | | | | review was and continues to be considered | Appointments to the Board are based on merit | | In addition to the regular scheduled meetings, | by the Board to be independent in character | so that the best candidates are appointed, but | | the Board and Committees have passed a series | and judgement. The Code recommends that | within that the Company recognises the value | | of written resolutions during the year in relation | the Board identifies each non-executive | which a diverse Board brings to the business | | to the formal decisions taken by them. Meetings | director it considers to be independent and | and it embraces diversity in relation to gender, | | between the Non-Executive Directors and | any circumstances which are likely to impair, | race, age, educational and professional | | Chairman have taken place and the Non-Executive | or could appear to impair a non-executive | backgrounds. The Board is well placed to | | Directors have met without the Chairman | director’s independence. By 29 May 2023, | meet the Listing Rules requirement in relation | | being present. | Ron McMillan will have served on the Board | to diversity. Along with that criteria, diversity | | | for more than nine years from the date of his | in relation to international experience (in | | The Chairman has also had one-to-one | first appointment. The Board nonetheless | particular in relation to the Group’s chosen | | meetings in the year under review with each | considers that Ron remains independent in | markets), recent senior management or | | of the Independent Non-Executive Directors. | character and judgement. Ron and all the | professional experience in retail and/or supply | | | Non-Executive Directors are free from | chain sectors and functional experiences in | | The Company held two general meetings of | relationships or circumstances which may | relation to membership and chairmanship of | | shareholders in the year under review, being | affect, or could appear to affect, their | board committees are also relevant criteria | | the Annual General Meeting on 28 July 2022 | judgement as Directors. | of the Company. | and an Ordinary General Meeting on 31 October 2022. 64 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements ### Board composition at 30 May 2023 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. 1 Chairman Chairman’s key responsibilities: 2 Peter Bamford, as the Chairman of the Board, is responsible for leading the Board Executive Directors 5 and ensuring its effectiveness, setting its agenda and high standards of corporate Independent Non-Executive Directors governance. The Chairman facilitates the contribution of the Non-Executive Directors and constructive relations between them and the Executive Directors. Board diversity by gender Chief Executive’s key responsibilities: Alex Russo, as the Group CEO, is responsible for the day-to-day management of Male 62.5% the Group and implementation of strategy approved by the Board and other 37.5% Board decisions. His role is supported by the Group CFO and the senior executive Female 37.5% 62.5% management teams in each of the Group’s businesses. Non-Executive Directors’ tenure Less than 3 years 40% 40% 3+ years 60% 60% | Details of the Company’s ethnic and gender | these changes, in addition to Simon Arora’s | Simon Arora, Bobby Arora, Ropley Properties | | --- | --- | --- | | diversity in relation to the Board and executive | retirement and the succession appointments | Ltd and Triple Jersey Ltd are all landlords of | | management of the Group are included in | announced earlier, the Board is not fully | certain properties leased by the Group. | | the Corporate social responsibility report | compliant with the new Listing Rules with respect | Ropley Properties Ltd and Triple Jersey Ltd | | on pages 40 and 41. | to diversity. Simon’s retirement means that we | are owned by Arora family trusts. | do not currently have a Director from an ethnic | During the year under review the Company | minority background and the combination of | Except as referred to above there are no | | --- | --- | --- | | had one member of the Board from an ethnic | Director changes means that we will not meet | potential conflicts of interest between any | | minority background. For the first six months | the requirement for 40% of the Board to be | of the Directors or senior management with | | of the year the position held by this Director | female in the immediate future. We are planning | the Group and their private interests. | | was the senior Board position of CEO and | to appoint at least one Non-Executive Director | | | subsequently Executive Director. | and ensure full compliance by the time Ron | There is an established process of the Board | | | McMillan steps down from the Board at the AGM | for regularly reviewing actual or potential | | The Executive Committee of the first level of | in 2024 at the latest. Recruitment processes are | conflicts of interest. In particular, there is | | senior management below the Board has one | underway to address these issues. | a process for reviewing property lease | | ethnic minority member out of a total of six | | transactions proposed to be entered into by | | members, being the Group Trading Director. | The Executive Committee of the first level of | related parties of Directors with any entities | | | senior management below the Board has one | in the Group, including the provision of | | During the year under review the Company | female member out of a total of six members, | professional advice and consideration of it by | Balance of the Board | had three female Board members. One of the | being the Group People Director. | a Related Party Transactions Committee of the | | | --- | --- | --- | --- | | female Board members also chairs one of the | | Board (which includes the Chairman of the | | | three main standing Committees of the Board. | In FY23 the Company collected data in respect of | Board, Chairman of the Audit & Risk Committee | | | The percentage of female Board members for | diversity from its new starters. Colleagues are | and the General Counsel of the Group) and | | | the first seven months of the year was 42%. | encouraged to give their ethnic origin, sexual | also by the Company’s Sponsor in providing its | | | With the appointment of two new male | orientation, religion, any disability and gender | opinion on the application of the Listing Rules | | | Directors in November 2022 the percentage of | in accordance with government guidelines. | and the applicability and appropriateness of | | | female Board members as at the year-end was | Data collection is performed on the basis of | any exemptions in respect of any transactions | | | 33%. With the retirement of one male Director | self reporting by the individual concerned. | in the ordinary course of business. Each of the | | | in April 2023, the Board will have 37.5% female | | transactions are also reported to general | | | representation at the time of the 2023 AGM. | Conflict of interests | meetings of shareholders in accordance | | | | Simon and Bobby Arora own shares in SSA | with Luxembourg Company Law. The above | | | Carolyn Bradley has decided not to stand | Investments S.à r.l., which (together with Praxis | processes include: | | | for re-election at the AGM in July 2023. Ron | Nominees Limited as its nominee) holds 6.98% | • reports by the property estates team of | | | McMillan has agreed to continue the role of | of the ordinary share capital and voting rights | | B&M on the relevant subject store’s | | Non-Executive Director for an additional year | in the Company either directly or indirectly as | | suitability and location and details of the | | until the AGM in 2024. As a consequence of | the beneficial owner. | | principal terms of the proposed lease; | 65B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Corporate Governance report continued | • reports from the external Property | | These transactions were within the exemption | Remuneration Committee | | --- | --- | --- | --- | | | Consultants of B&M who are retained to | for small related party transactions under the | The Remuneration Committee consists of | | | advise on new store acquisitions, store | Listing Rules, being below 0.25% under the class | three Independent Non-Executive Directors. | | | suitability and location strategy; | tests. Prior to the year end, the private jet owned | The members of the Remuneration Committee | | • reports from external independent Property | | by the Arora family interests was sold and | during the year under review were Tiffany Hall | | | Consultants on the principal commercial | consequently the process is no longer required. | (Chair), Ron McMillan and Carolyn Bradley. | terms of the proposed lease and site | | location of the proposed new store; | In the financial year under review, the Board | The terms of reference of the Remuneration | | --- | --- | --- | --- | | • each of the Chairman and General Counsel, | | reviewed the Related Party Transaction process | Committee are available on the Group’s | | | and also independently of them, the | in the context of the retirement of Simon Arora. | corporate website (as referred to above) and | | | Company’s Sponsor, discuss where | All related party transactions will continue to | are also summarised in the table on page 63. | | | necessary, the reports of the external | be reviewed by the Related Party Committee | | | | independent Property Consultants with | in accordance with its terms of reference. | All meetings of the Committee are attended | | | them as part of the process of the review by | | by the Group People Director. The Chairman | | | the Related Party Transactions Committee | See pages 94 and 95 in relation to details of | of the Board and the CEO regularly attend | | | of the Board; | related party transactions entered into in the | meetings of the Committee, at the invitation | | • the Company’s Sponsor provides a written | | financial year 2023 and also as set out in note | of the Chair of the Committee. The Committee | | | opinion to the Company in advance of the | 26 on pages 144 and 145 of the financial | also retained PricewaterhouseCoopers LLP | | | Related Party Transactions Committee’s | statements. | as external advisors who attended and | | | consideration of the relevant proposed | | participated at all meetings at the request | | | transactions; | Audit & Risk Committee | of the Chair of the Committee. | | • copies of all the reports referred to above | | In August 2022, the Group announced that Ron | | | | and the Sponsor’s Opinion are reviewed by | McMillan (currently Senior Independent Director | The Directors’ remuneration report on pages | | | the Related Party Transactions Committee | and Chair of the Audit & Risk Committee) would | 76 to 91 sets out details of the role and activities | | | on behalf of the Board, and, in its updates | be retiring as a Chairman and that Oliver Tant | of the Remuneration Committee in the last | | | to the Board the Committee provides copies | would succeed Ron as Chair of the Audit & Risk | financial year. | | | of all the above reports and opinions to the | Committee. Oliver has the requisite recent and | | | | Board; and | relevant financial experience for the role. | | ### Nomination Committee • the Related Party Transactions Committee Details of Oliver’s experience is detailed in his The Nomination Committee consists of six of the Board considers the appropriateness biography at page 61. Directors, being the Chairman of the Board of the relevant transactions independently (who chairs the Nomination Committee), and of Arora family interests, and Simon Arora The Audit & Risk Committee consists of four each of the five Independent Non-Executive did not participate in those deliberations. Independent Non-Executive Directors and the Directors of the Company. The members of the Chairman of the Committee has recent and Nomination Committee during the year under The same process above applies to the relevant financial experience. review were Peter Bamford (Chairman of the purchase of freehold store premises by the Committee), Simon Arora until he stepped Group from those related parties. The members of the Committee during the down on 19 January 2023, Ron McMillan, year under review were Ron McMillan (Chair), Tiffany Hall, Carolyn Bradley, Paula MacKenzie In addition to the above processes, the Carolyn Bradley, Paula MacKenzie and Oliver and Oliver Tant (subsequent to his appointment Chairman of the Audit & Risk Committee Tant (subsequent to his appointment on on 1 November 2022). monitors on behalf of the Board a rolling report 1 November 2022). The Committee as a whole produced to the Related Party Transactions has competence relevant to the retail sector. See The duties of the Nomination Committee as Committee, the Board and the Sponsor, further the biographies of each of the members delegated to it by the Board are contained which is updated throughout the year, on the of the Committee on pages 60 and 61. in the terms of reference available on the number of related party leases and rents as a Company’s corporate website (as referred to proportion of the overall property estate and The duties of the Committee as delegated above) and are also summarised in the table rents of the Group. by the Board are contained in the terms of on page 63. reference available on the Group’s corporate In FY23 there was a Board approved policy in website (as referred to above) and are also The Nomination Committee Report on pages 74 relation to the use and chartering by the Group summarised in the table on page 63. and 75 sets out details of the role and activities of a private jet owned by Arora family interests of the Committee in the last financial year. for business travel by executives and other All meetings of the Committee are attended colleagues, in instances where commercial by the CFO. The Chairman of the Board and operator direct flight schedules were either not the CEO are also invited to attend. The Group’s available or timings were not feasible. The Internal Audit function, the Group Financial chartering of the plane by the Group was with Controller and the Luxembourg and UK audit the third party operator and CAA licence holder partners of the Group’s external auditors (not with Arora family interests as the owner also attend. of the plane). The Related Party Transactions Committee had oversight on behalf of the Board The Audit & Risk Committee Report on pages 69 of the usage and costs, to ensure it complied to 73 sets out details of the role and activities of with the Board approved policy for business use the Committee in the last financial year. only and that costs did not exceed market rates. 66 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements | Board and Committees | Appointments, induction | Re-election of Directors | | --- | --- | --- | | effectiveness review | and development | The Nomination Committee has recommended | | A formal review of the effectiveness of the | Where any new Director is appointed by | that each of the Directors be re-elected to the | | Board and Committees was last conducted in | the Board, the Nomination Committee leads | Board. This is except for Carolyn Bradley who | | March 2022 and gave very positive feedback | the process and evaluates the balance of skills, | has notified the Company that she will not be | | which was reported on in last year’s Annual | experience, independence, and knowledge | seeking re-election to the Board at the AGM | | Report and Accounts. Due to the number of | and diversity on the Board. In light of that | on 25 July 2023. | | changes of directors and roles on the Board, | process, it approves a description of the role | | | in particular the appointments of Alex Russo | and capabilities required and identifies | The Board and the Chairman consider that | | and Mike Schmidt as CEO and CFO respectively | candidates for the Board to consider using | all the members of the Board standing for | | during the year, it was considered more | external search consultants. | re-election at the AGM continue to be effective | | appropriate to allow a period of time for the | | and demonstrate commitment to their roles, | | management team to establish itself before | All new Directors receive a full, formal and | and are able to devote sufficient time to their | | conducting a review and the newly appointed | tailored induction programme and briefing | Board and Committee appointments, | | directors to attend sufficient Board and | with members of senior management. They | responsibilities and duties. | | Committee meetings to experience the proper | are also required to meet major shareholders | | | workings of the Board. The next review will be | where requested. | Risk management and | | external and will be carried out in Autumn 2023. | | internal control | | | A manual of documents is available for new | The Board has overall responsibility for | | In normal years when no external review is | Directors containing information about the | ensuring that the Group maintains a strong | | conducted, the Board pursues an internal | Group, Directors’ duties and liabilities under | system of internal control. | | review process. As part of that process the | Luxembourg Company Law and obligations | | | Chairman has discussions with Executive | under the Listing Rules, DTRs and the EU and | The system of internal control, supported by | | Directors on a one-to-one basis, the Non- | UK Market Abuse Regulations, together with | the Internal Audit function, is designed to | | Executive Directors on a one-to-one basis and | governance policies and the UK Corporate | identify, manage and evaluate, rather than | | together as a group to discuss matters relating | Governance Code. | eliminate, the risk of failing to achieve business | | to the Board, its balance and monitoring of the | | objectives. It can therefore provide reasonable | | exercise of powers of the Executive Directors. | The induction of Mike Schmidt as a new | but not absolute assurance against material | | The Directors complete confidential | Executive Director and Oliver Tant as a new | misstatement, loss or failure to meet objectives | | questionnaires in relation to the Board and | Non-Executive Director took place this year | of the business, due to the inherent limitations | | each of its three main standing Committees. | with a series of structured meetings with the | of any such system. | | The process is co-ordinated by the Group’s | Executive Directors and other members of the | | | General Counsel who prepares a report on | broader senior management team of B&M. | The Board carried out a review of the key risks | | the feedback provided by the Directors which | | to the Group’s businesses at its annual strategy | | is then presented to the Board who discuss | The Directors update their knowledge and | day conference in the year under review. The | | the main themes and points arising from it. | familiarity with the businesses of the Group | Board is satisfied that those risks and relevant | | | throughout each year with a mix of central | mitigating actions are acceptable for a | | In relation to other Code matters regarding the | operations and store tours of B&M UK, | business of the type, size and complexity as | | effectiveness of the Board and its members, | Heron Foods and B&M France stores along | that operated by the Group. | | where Directors have external appointments, | with members of the senior management of | | | the Committee and the Board are satisfied that | each of those businesses, and also senior | | | they do not impact on the time the Director | management briefings and presentations in | | | needs to devote to the Company. | relation to each of the B&M UK, Heron Foods | | and B&M France businesses. ### Approach to ESG governance | The Board held a number of discussions | The Nomination Committee considers the | | --- | --- | | throughout FY23 as the management team | training and development needs of the | | developed their proposed ESG strategy and | Executive Directors. The Directors also receive | | progressed with a number of different | regular updates at Board and Committee | | workstreams. Significant progress was made | meetings on law, regulatory and governance | | as a result of this ongoing focus, in accordance | matters and future developments from the | | with the Board’s ESG strategy. The Board is also | Group’s General Counsel. | committed to keeping ESG as a standing agenda item for the coming year as it looks There is a procedure for Directors to have to maintain momentum in this area. access to independent professional advice, at the Company’s expense, in relation to their The Board considered whether to create a duties should they require it at any time. separate ESG Committee but decided to continue to keep the review of the ESG strategy at Board level. 67B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Corporate Governance report continued | The key elements of the Group’s system of | Regulatory framework | Other disclosures | | --- | --- | --- | | internal controls are as follows: | Shares in the Company are dematerialised | Where information is applicable under | | | and held through an EU member state central | Listing Rule 9.8.4R in relation to the Group, | | Financial reporting: monthly management | securities depositary. | the following matters can be found on pages | | accounts are provided to the members of | | 94 and 95 of this report: | | the Board that contain current financial and | The Articles of Association of the Company | a. Relationship Agreement; and | | operational reports. Reporting includes an | require continued adherence to the UK City | b. independence statement. | | analysis of actual versus budgeted | Code on Takeovers and Mergers (the “City | | | performance and overviews of reasons for | Code”) and the Luxembourg law of 19 May | Disclosures under DTR 7.2.6R with regard to | | significant differences in outcomes. The annual | 2006 on takeovers which contain squeeze-out | share capital are set out in the sections headed | | budget is reviewed and approved by the Board. | and sell-out rights of minority shareholders. | “Share capital”, “Shareholders” and “Section (a) | | The Company reports half yearly and publishes | | Share capital structure”, in the Directors’ report | | trading updates in line with market practice; | | and business review on pages 92 to 96. | ### Shareholder relations The Board recognises that good Risk management: the creation and communication is key to maintaining ### maintenance of a risk register, which is Peter Bamford shareholder relations. The Company recently continuously updated and monitored, with Chairman appointed a senior IR professional to act full reviews occurring on a bi-annual basis, 30 May 2023 as the first point of contact with shareholders. facilitated by the Internal Audit function of the Meetings and calls are regularly held with Group. Each risk identified on the risk register institutional investors and analysts in order is allocated an owner, at least at the level of to provide the best quality information to a senior manager within the business, and the market. the action required, or acceptance of the risk is also recorded. The risk registers are provided The formal reporting of our full year results to the Audit & Risk Committee and the will be a combination of webcasts, in-person Committee reports key risks and mitigating presentations, one-to-one virtual meetings actions to the Board for monitoring as and conference calls. The Board members, appropriate; including the Chairman, the Senior Independent Director and each of the other Monitoring of controls: the Audit & Risk Non-Executive Directors, are available to meet Committee receive regular reports from the with major shareholders where they wish to Internal Audit function as well as those from raise issues outside of the above environments. the external auditors. There are formal policies and procedures in place to ensure the integrity The Company will also communicate with its and accuracy of the accounting records of the shareholders through the Annual General Group and to safeguard its assets; Meeting, at which an account of the progress of our businesses over the past year will be Staff policies: there are formal policies of the given with the opportunity for shareholders to Group in place in relation to anti-bribery and raise any questions. corruption, anti-slavery and whistle-blowing policies in relation to reporting of any The Company holds conference calls and suspected wrongdoing or malpractice. Those one-to-one virtual meetings where practical policies are reviewed and updated by the in accordance with market practice generally Group as required from time to time. during the course of each financial year with bondholders. The Board and the Audit & Risk Committee have carried out a review of the effectiveness The Company’s corporate website at www. of the system of internal controls during the bandmretail.com is regularly updated with our year ended 31 March 2023 and for the period releases to the market and other information up to the date of approving the Annual Report and includes a copy of this Annual Report and and Financial Statements. Financial Statements. Information on the key risks and uncertainties of the Group are set out on pages 26 to 32. 68 B&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, The Committee has continued to monitor related party transactions and has monitored During the year, the Audit & Risk Committee the Group’s compliance with the Groceries has continued to carry out a key role within the Supply Code of Practice (the “Groceries Code”). Group’s governance framework, supporting the Board in risk management, internal control Further information on the Committee’s and financial reporting. responsibilities and the manner in which they have been discharged is set out below. The Committee exercises oversight of the Group’s financial policies and reporting. Going forward, I shall ensure that the It monitors the integrity of the financial Committee continues to acknowledge and statements and reviews and considers embrace its role of protecting the interests significant financial and accounting estimates of shareholders as regards the integrity of and judgements. The Committee satisfies itself published financial information and the that the disclosures in the financial statements effectiveness of audit. about these estimates and judgements are appropriate and obtains from the external The Committee continues to monitor auditor an independent view of the key the outcome of the consultations on the disclosure issues and financial statement risks. Government’s proposals to restore trust In relation to risks and controls, the Committee in audit and corporate governance. ensures that these have been identified and that appropriate responsibilities and I am available to speak with shareholders accountabilities have been set. at any time and will also be available at the Annual General Meeting on 25 July 2023 A key responsibility of the Committee is to to answer any questions you may have on review the scope of work undertaken by the this report. At the conclusion of this meeting. internal and external auditors and to consider I will be retiring as Chairman of the Audit & their effectiveness. Risk Committee and handing over the Chairmanship to Oliver Tant. Oliver joined The Committee has also considered the the Committee in November 2022. narrative in the Strategic Report and believes that sufficient information has been provided I would like to thank my colleagues on the to give shareholders a fair, balanced and Committee for their continued help and understandable account of the Group’s support during the year. business. ### During the year, the Committee again oversaw Ron McMillan the process used by the Board to assess the Chairman of the Audit & Risk Committee 30 May 2023 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. 69B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Audit & Risk Committee report continued • consideration of regulatory news service announcements by the Company; • consideration of significant areas of accounting estimation or judgement; ## I shall be stepping down as Chairman of • consideration of the significant risks included in the Annual Report; ## the Committee at the AGM in July 2023 after • consideration of fraud risks and the controls in place to detect any occurrences; ## nine years’ service. My successor Oliver Tant • approval of the external auditors terms of engagement, audit plan and fees; ## will ensure that the Committee continues • review of the effectiveness and ## to acknowledge and embrace its role of independence of the external auditors; • review of the going concern and viability ## protecting the interests of shareholders as statements; • approval of the internal audit plan; and ## regards the integrity of published financial • reports of the UK businesses of the Group regarding compliance with the Groceries ## information and the effectiveness of audit.” Code and the annual compliance report to be filed with regulatory bodies. | Committee composition | Responsibilities | | | | | --- | --- | --- | --- | --- | | The Committee comprises four members, each | The responsibilities of the Audit & Risk Committee, | | Accounting matters | | | of whom is an independent Non-Executive | as delegated by the Board, are set out in its terms | | The Committee considered the following | | | Director of the Company. Two members | of reference which are available on the Group’s | | accounting matters during the year: | | | constitutes a quorum. The Committee must | corporate website. They include the following: | | • the methodology and assumptions applied | | | include one financially qualified member with | • reviewing the integrity of the financial | | | by the Group to the value of inventory; | | recent and relevant financial experience. The | | statements, price sensitive financial releases | • the relative of prominence of IFRS figures | | | Committee Chairman fulfils that requirement, | | of the Group and the significant financial | | and other financial metrics; | | and we also benefit from Paula MacKenzie’s | | judgements and estimates relating thereto; | • accounting practices in relation to | | | and Oliver Tant’s former experiences as CFO’s. | • monitoring the scope of work, quality, | | | warehouse dilapidations liabilities; | | All members are expected to understand | | effectiveness and independence of the | • goodwill impairment in relation to each | | | financial reporting, the Group’s internal control | | external auditors and approving their | | of the companies in the Group; | | environment, relevant corporate legislation, | | appointment, reappointment and fees; | • hedge accounting; | | | the roles and functions of internal and external | • monitoring and reviewing the independence | | • preparations for upcoming changes to | | | audit and the regulatory framework of the | | and activities of the Internal Audit function; | | UK Corporate Governance legislation; and | | business. As reflected in the biographical | • assisting the Board with the development | | • the process and controls around the rollout | | | summaries on pages 60 and 61, all members | | and execution of a risk management | | of the new finance system. | | of the Committee have significant experience | | strategy, risk policies and current risk | | | | of working in or with companies in the retail | | exposures, including the maintenance of the | The Group’s performance measures continue to | | | and consumer goods sectors and, as such, | | Group’s risk register; | include some measures which are not defined | | | the Audit Committee as a whole has | • keeping under review the adequacy and | | or specified under IFRS. The Audit Committee | | | competence relevant to the retail sector. | | effectiveness of the Group’s internal financial | has considered presentation of these additional | | | | | controls and internal control and risk | measures in the context of the Guidance issued | | | The members of the Committee during the | | management systems; | by the European Securities and Markets | | | year were Ron McMillan, Carolyn Bradley, | • making recommendations to the Board in | | Authority (ESMA) and the Financial Reporting | | | Paula MacKenzie and Oliver Tant from his | | relation to the appointment of the external | Council (FRC) in relation to the use of Alternative | | | appointment on 1 November 2022. Details of | | auditor; and | Performance Measures (“APMs”), challenge | | | Committee meetings, Teams meetings and | • maintaining effective oversight of | | from the external auditor, and the requirement | | | attendances are set out on page 62 of the | | compliance by our UK businesses with the | that such measures provide meaningful insight | | | Corporate Governance report. The timing of | | Groceries Code. | for shareholders into the results and financial | | | Committee meetings is set to accommodate | | | position of the Group and that the APMs support | | | the dates of release of financial information | | | understanding of the financial statements. | | ### Committee activities in 2022/23 and the approval of the scope and reviews of These APMs are described in Note 1 of the In discharging its oversight of the matters outputs from work programmes executed by financial statements and a reconciliation of the referred to in the introductory letter to this report the internal and external auditors. In addition APMs to the equivalent IFRS measures is and as set out below, the Committee was to scheduled meetings, the Chairman of the provided in note 3. assisted by management, the Group’s General Committee has had many discussions with Counsel and the internal and external auditors. the CFO and the internal and external auditors In considering the accounting matters referred during the course of the year. to above the Committee had regard to papers ### The recurring work of the and reports prepared by the Group’s finance ### Committee department and the external auditors and the Although not members of the Committee, Mike The Committee considered the following explanations and disclosures made in the Schmidt, CFO, our Group Financial Controller matters during the year: Group’s financial statements. The Committee and representatives from the internal and • consideration of the Annual Report and also considered the significance of these external auditors attended Committee financial statements of the Group; accounting matters in the context of the Group’s meetings. The Chairman of the Board and the • consideration of the interim results report financial statements and their impact on the CEO have also attended Committee meetings and non-statutory financial statements of Group’s statement of comprehensive income upon the invitation of the Committee Chairman. the Group for the half year; and the statement of financial position. 70 B&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 Nov Jan May 2022 2022 2023 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 | IT systems, cyber security and business | significant investment in new IT systems | | --- | --- | --- | | The success of the business relies on the | continuity are acknowledged as being | during FY23. | | development and operation of IT systems | significant risks and the risk mitigations | | | which are efficient and effective. In addition, | and key actions in FY23 are set out in the | | | the integrity and security of the IT systems | principal risk section of this Annual Report | | | are vital from a commercial standpoint. | on page 31 including the benefits from | | 71B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Audit & Risk Committee report continued | Regulation | 1. the risks and the impact they may have; | | Going concern and financial viability | | --- | --- | --- | --- | | The Group operates within a fast moving and | 2. actions to mitigate risks; | | The Committee reviewed the appropriateness of | | increasingly regulated marketplace and is | 3. risk scores to highlight the implications | | adopting the going concern basis of accounting | | challenged by regulatory requirements across | | of occurrence; | in preparing the financial statements and | | the board, including those controlling bribery | 4. ownership of risks; and | | assessed whether the business was viable in | | and corruption, the importation of goods, data | 5. target dates for actions to mitigate risks. | | accordance with the UK Corporate Governance | | protection and health and safety. This creates | | | Code 2018. The assessment included a review | | risk to the organisation as non-compliance can | A description of the principal risks is set out | | of the principal risks including emerging risks | | lead to financial penalties and reputational | on pages 26 to 32. | | facing the Group, their financial impact, how | | damage in respect of customers, employees, | | | they are managed, the availability of finance | | suppliers and stakeholders. | The Board has confirmed that it has carried out | | and the appropriate period for assessment. The | | | a robust assessment of the principal risks facing | | Committee also ensured that the assumptions | | The Board reviewed the Group’s compliance | the Group, including emerging risks and those | | underpinning forecasts were stress tested. | | procedures and the application of policies relating | which threaten its business model, future | | | | to fraud, anti-money laundering and anti-bribery. | performance, solvency or liquidity. | | Going concern has in the past year again been | an area of particular focus for management and | As a standing agenda item at each of its | The Board considers that the processes | the auditors and the Audit & Risk Committee | | --- | --- | --- | | meetings, the Committee considered and | undertaken by the Committee are appropriately | has discussed and challenged the assumptions | | reviewed B&M and Heron Foods’ compliance | robust and effective and in compliance with the | implicit in the Group’s budgets and forecasts. | | with the Groceries Code. After the year-end the | guidelines issued by the Financial Reporting | | | Committee also reviewed the annual compliance | Council. During the year, the Board has not been | The Group’s Viability Statement is on page 33. | | report of B&M and Heron Foods in relation | advised by the Committee nor has it identified | | | to the Groceries Code and approved it for | itself, any failings, frauds, or weaknesses in | | ### Fair, balanced and understandable submission to the regulatory bodies in internal control which it has determined to be The Committee considered whether the 2023 accordance with The Groceries (Supply Chain material in the context of the financial statements. Annual Report is fair, balanced and Practices) Market Investigation Order 2009. understandable and whether it provides the The Committee continues to believe that necessary information to shareholders to assess appropriate controls are in place throughout ### Related party transactions the Group’s position, performance, business the Group, that the Group has a well-defined There is an established process for the model and strategy. The Committee considered organisational structure with clear lines of consideration and review of related party store management’s assessment of items included responsibility and a comprehensive financial lease and freehold acquisition transactions in the financial statements and the prominence reporting system. The Committee also believes of the Group with Arora Family. Details of that given to them. The Committee and subsequently that the Company complies with the FRC process are set out on pages 65 and 66 of the the Board were satisfied that, taken as a whole, guidance on Risk Management, Internal Control Corporate Governance report above. the 2023 Annual Report and Accounts are fair, and related Financial Business Reporting. balanced and understandable. The Committee reviews and monitors for the Furthermore, the Internal Audit function has ### Board the overall total number of related party External auditors carried out an assessment of the effectiveness store leases and rents of the Group with those KPMG Audit S.à r.l. (KPMG) were re-appointed of actions taken by management to mitigate related parties during the course of the year, by shareholders at the Annual General Meeting significant risks and this has been reviewed with a view to assessing any potentially on 28 July 2022 as the Group’s independent by the Committee. | material increases in the proportion of those | | external auditors (réviseur d’entreprises agréé) | | --- | --- | --- | | store leases or rents compared with the overall | | for the financial year ended 25 March 2023. | | store estate and rent roll. | Reviewing the draft interim and | | The partners responsible for the audit are ### annual reports Thierry Ravasio, a partner in KPMG’s ### Internal control and risk The Committee considered in particular the Luxembourg office and Andrew Cawthray, following: a partner in KPMG’s Birmingham office. ### management • the accounting principles, policies and The Board has overall responsibility for ensuring practices adopted and the adequacy of ### that the Group maintains a sound system of Audit independence related disclosures in the reports; internal control. There are inherent limitations The Committee sought and was provided with • the significant accounting issues, estimates in any system of internal control and no system assurance from the Audit Engagement and judgements of management in relation can provide absolute assurance against material partners that they and all members of KPMG’s to financial reporting; misstatements, loss or failure. Equally, no system staff engaged in the audit had confirmed that • whether any significant adjustments were can guarantee elimination of the risk of failure to they and their dependents were independent required as a result of the audit; meet the objectives of the business. Against that and that KPMG as a firm was independent. • compliance with statutory tax obligations background, the Committee has helped the and the Group’s tax policy; ### Board develop and maintain an approach to risk Audit quality • whether the information set out in the management which incorporates risk appetite, The Committee assessed the quality of KPMG’s Strategic Report was balanced, the framework within which risk is managed audit in a number of ways: comprehensive, clear and concise and and the responsibilities and procedures 1. the Committee met with the senior members covered both positive and negative aspects pertaining to the application of the policy. of the KPMG audit team on three occasions of performance; and during the year and discussed the planning, • whether the use of APMs obscured IFRS The Group is proactive in ensuring that execution and reporting of audit work and measures. corporate and operational risks are identified findings. All senior members of the KPMG and managed. A corporate risk register is team contributed to these meetings; maintained which details: 72 B&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 | | The Committee considered in detail KPMG’s | Internal audit | | --- | --- | --- | --- | | | members of the finance team, the Audit & | audit planning documentation and satisfied | The Group Internal Audit function has a direct | | | Risk Committee discussed and assessed | itself that the audit work to be carried out by | reporting line to the Committee and they were | | | KPMG’s approach to the execution of and | KPMG covered all significant aspects of the | represented at all Committee teams meetings | | | reporting of their audit and related findings; | Annual Report and Accounts. There were no | discussions throughout the year. During the year, | | | and | areas which the Audit & Risk Committee asked | the Group Internal Audit team undertook a | | 3. the Committee considered the matters set | | KPMG to look at specifically. KPMG’s report to | programme of work which was discussed with | | | out in KPMG’s 2022 Transparency Report, | the Audit & Risk Committee at the conclusion | and agreed by both management and the | | | dealing with audit quality monitoring and | of the audit confirmed that the audit had | Committee, and which was designed to address | | | remediation. It considered the results of | been carried out as set out in the planning | both risk management and areas of potential | | | internal and external engagement reviews | documentation and the Audit & Risk Committee | financial loss. The Group Internal Audit function | | | and the steps being taken by KPMG to | considered the findings of KPMG as reflected | also has established procedures within the | | | address findings. Within KPMG, audit | in their audit opinion and their year-end report | business to ensure that new risks are identified, | | | quality is monitored at a global level and at | to the Board. KPMG’s audit opinion sets out | evaluated and managed and that any necessary | | | an engagement level with all engagement | the key matters that, in their professional | changes are made to the risk register. | | | partners being reviewed at least once in a | judgement, were of most significance in their | | | | three year cycle. | audit. These are consistent with the key matters | During the year, the Committee received | | | | considered and agreed with the Audit & Risk | reports from the Internal Audit function as set | | In reviewing KPMG’s 2022 Transparency Report, | | Committee when the audit was planned. | out on page 71. | | the Committee noted the firm’s commitment to | | KPMG’s opinion describes how these matters | | | delivering the right standards of governance, | | were addressed in the audit and the scope | In relation to each of the areas covered, | | culture, quality and risk management. The | | and nature of their work reflects the | Internal Audit made recommendations for | | Committee also discussed with KPMG the | | thoroughness of their approach and the | improvements, all of which were agreed by | | results of the FRC Audit Quality Inspection of | | degree of scepticism applied. | management and either have been or are | | the UK firm, which were published in July 2022. | | | being implemented. Where areas requiring | | | | Non-audit work | improvement have been identified, the | | The Committee was encouraged that KPMG | | The Board’s policy in relation to the auditors | Committee has satisfied itself that processes | | had, following significant work on its Audit | | undertaking non-audit services is that they are | are in place to ensure that the necessary action | | Quality Transformation Plan, seen strong | | subject to tender processes with the allocation | is taken and that progress is monitored. | | improvements to audit quality inspection results | | of work being done on the basis of competence, | | | at both the overall and FTSE 350 level. Overall | | cost effectiveness, regulatory requirements, | The Committee has evaluated the performance | | scores for KPMG were in line with leading peers, | | potential conflicts of interests and knowledge of | of Internal Audit and has concluded that it | | with the critical areas for improvement still | | the Group’s business. Fees for new audit work | provides constructive challenge to management | | identified being around its banking audit activity | | must be approved by the Committee in advance. | and demonstrates a constructive and | | – which does not affect the Group’s business. | | | commercial view of the business. | KPMG were paid £1,229,000 during the year in In relation to the Group’s audit, the Committee relation to audit work and £20,000 in relation to ### Committee performance has reviewed the performance of KPMG with work associated with audit related assurance The performance of the Committee during the input from management, the Group’s finance services. Fees for other services provided by year will be evaluated as part of a broader and Internal Audit functions and the General KPMG were £98,000 which principally related Board performance review to be conducted Counsel. The conclusions reached were that to other assurance services. externally and led by the Chairman of the KPMG has continued to perform the external Board, as described on page 67. audit in a very professional and efficient The Committee is mindful of the attitude manner and it is, therefore, the Committee’s investors have to the auditors performing recommendation that the reappointment of non-audit services. The Committee monitors ### Ron McMillan KPMG be put to shareholders at the AGM on the appointment of the auditors for non-audit Chairman of the Audit & Risk Committee 25 July 2023. Given KPMG’s short tenure of services with a view to ensuring that non-audit 30 May 2023 six years, the Board has no present plans services do not compromise the objectivity and to consider an audit tender process. independence of the auditors. The Committee will continue to ensure that fees for non-audit The Committee reviewed the reports prepared services will not exceed 70% of aggregate by KPMG on key audit findings as well as the audit fees measured over a three-year period. recommendations made by KPMG to improve processes and controls together with ### Critical Judgements management’s responses to those Critical judgements and key sources of recommendations. Management has estimation uncertainty are set out on page 113 of committed to making appropriate changes the Annual Report. These relate to investments in controls in the areas highlighted by KPMG. in associates and hedge accounting. 73B&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. also available on the Company’s website at Associates, to identify a successor CFO. Sam www.bandmretail.com Allen Associates is a signatory to the voluntary code of conduct for executive search firms, | The effectiveness of the Committee during the | and they had no other connection with the | | --- | --- | | year will be evaluated in the autumn of 2023 | Group. Preliminary interviews were carried out | | as part of a broader Board performance review | by SamAllen Associates to create a short list of | | to be conducted externally and led by the | candidates to be considered by the Executive | | Chairman of the Board. The review has been | Directors and the Nomination Committee. As a | | deferred to allow consideration of a fuller period | result of process Mike Schmidt joined the Group | | of performance of the newly composed Board | as CFO in October 2022 and was appointed | | following a year of very significant change to | to the Board with effect from 1 November 2022. | | the composition of the Board with the retirement | Prior to joining B&M, Mike spent eight years | | of Simon Arora and the appointments of a new | at publicly listed home furniture retailer | | CEO, new CFO and new Non-Executive Director. | DFS Furniture plc, where he was appointed | | Deferring the review will also allow the new | Group CFO in 2019. During his time at DFS, | | Directors an appropriate length of time to | Mike has additionally held responsibility for | | understand and input to the working of the | property, strategic development, legal and | | Board and its Committees. | compliance and financial services activities. | Mike has a background in corporate finance, ### Committee activities with 13 years’ experience of working for top tier During the year under review the main activities investment banks. of the Committee was primarily focused on ### Dear Shareholder, succession planning for the several key roles In the period under review, the Committee, on the Board. Diversity, wider executive team led by the Chairman, oversaw the process of The Nomination Committee’s report for the development, retention and conflicts of interest identifying and recommending the appointment year ended 25 March 2023 is set out below. were also considered, each of which are of a new Non-Executive Director to act as described in further detail below. successor to Ron McMillan as Audit & Risk ### Committee composition, Committee Chair. The search was carried out by ### responsibilities and effectiveness Odgers Berndtson who carried out preliminary ### Board succession The members of the Committee during the interviews to create a short list of candidates, As reported last year, Simon Arora announced year were Peter Bamford (Chairman of the including Oliver, to be considered by the his intention to resign as CEO. The Committee Committee), Simon Arora until 19 January 2023 Nomination Committee. As a result of the managed a process to appoint a successor and each of the five Non-Executive Directors process Oliver Tant joined the Board on and Russell Reynolds Associates were being Ron McMillan, Tiffany Hall, Carolyn 1 November 2022 and will assume the role of appointed to advise and assist the Committee. Bradley, Paula MacKenzie and Oliver Tant Chair of the Audit & Risk Committee following Russell Reynolds is a signatory to the voluntary following his appointment on 1 November the Annual General Meeting in July 2023. Oliver code of conduct for executive search firms and 2022. Since his appointment as CEO Alex Russo has over 40 years’ experience as a finance they had no other connection with the Group. has attended Committee meetings. Allison professional including CFO of Imperial Brands Plc It was agreed that Alex Russo, then CFO, was Green, the Group People Director, attended and prior to that for 30 years at KPMG. Currently a strong internal candidate. A thorough each of the Committee’s meetings during the Oliver is a NED at Redrow plc where he chairs independent assessment of Alex was carried year. Details of Committee meetings, and the Audit Committee and is a consultant to out alongside a review of potential external attendances are set out on page 62 of the Modulaire, a Brookfield Asset Management candidates. Following this process, the Corporate Governance report. portfolio company. Oliver will be stepping down Committee recommended to the Board that from his role at Modulaire on 31 May 2023. Alex Russo should be appointed as Chief The Committee has responsibility for reviewing Executive Officer and he took up the position the structure, size and composition of the Board, The Committee ensures that a comprehensive with effect from 26 September 2022. including the skills, knowledge, experience and induction process is carried out with all new diversity of the Board. Further details of the other Directors on their appointment to the Board. The promotion of Alex Russo to CEO created a main responsibilities of the Committee are set The details of the induction process carried out vacancy in the position of CFO. The Company out on page 63 of the Corporate Governance with Oliver and Mike is set out on page 67. carried out an extensive process with external report. The Committee’s terms of reference are executive search consultants Sam Allen 74 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategy Report Corporate Governance Regional Statement In August 2022, the Group announced that Ron McMillan is unerrily Senior Independent Director and Chair of the Audit & Risk Committee) would be retiring as a Director of the conclusion of the Company's AGM in July 2023 and that Oliver Tait 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 Tait 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 CEO and Chair of the Audit & Risk Committee has led to the appointments of Mike Schmid and Oliver Tait. 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 Audettes 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, Avda Stores Ltd and the convenience food chain Somefield 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 B&M European Value Retail S.A. Annual Report and Accounts 2023 75 ## Directors’ remuneration report ## Annual statement by the Chair ## of the Remuneration Committee ### Performance and incentive The Committee has discretion to adjust the level of vesting. It considered that the formulaic ### outcomes for 2022/23 out-turns under both the AIP and LTIP were The Group has continued to perform well and appropriate due to the excellent leadership execute its strategy with a relentless consistency and successful execution of the strategy of and discipline. Group revenues increased by the business over the periods to which those 6.6% to £4,983m with growth across all three awards relate. businesses. Group adjusted EBITDA was £573m (FY22: £619m) with a margin of 11.5% Taking into account the above considerations, – significantly ahead of pre-pandemic levels of the Committee has determined that the £342m. This year we have seen trading patterns formulaic outcomes are appropriate both in the normalise post-pandemic and the Group now context of business performance and broader has a new underlying profit base on which to employee considerations and therefore has not build for further future growth. These financials exercised discretion. are a key indicator of the robustness of the B&M business model and the success of the ### management team delivering on our strategy. Changes to Directors As announced on 31 May 2022, Alex Russo | As a business, we have continued to strengthen | succeeded Simon Arora as the Group CEO, | | --- | --- | | our overall operational performance across | stepping into the role on 26 September 2022. As | | the Group by driving investments in financial | disclosed in last year’s Directors’ remuneration | | systems, IT and supply chain. We have given | report, his remuneration package comprises a | | even greater focus to ensuring that we offer | base salary of £800,000, slightly below the | ### Dear Shareholder, our customers great value and great products outgoing CEO’s salary, and incentives for the and that, throughout our Company, we have CEO role as approved by shareholders within I am pleased to present the Company’s availability of these products consistently day the Directors’ Remuneration Policy. The Remuneration Report for 2022/23. This report in day out which is a key enabler for our Remuneration Committee took account of the contains: future growth. additional responsibilities and workload during • The Company’s Annual Report on Alex Russo’s transition to the Chief Executive Remuneration on pages 79 to 88, which The resulting Annual Incentive Plan (“AIP”) Officer role. It was determined that a one-off details the remuneration paid to the out-turn was 56.9% for Simon Arora, 56.9% role-based allowance of £100,000 should be Directors in the 2022/23 financial year, and for Alex Russo and 55.7% for Mike Schmidt, of paid to Alex to remunerate him fairly and which is subject to a shareholder advisory their respective maximums. Half of the bonus commensurate with his significant contribution vote at our 2023 Annual General Meeting achieved under the AIP in 2022/23 will be during this involved period of transition to (“AGM”). deferred into shares for three years. succeed Simon Arora, a long-standing and • A summary of the key elements of the accomplished Chief Executive Officer, as well Directors’ Remuneration Policy on pages 89 The 2020 LTIP three-year performance period as running the finance team during this period. to 91, as approved at the 2021 AGM. ended on 31 March 2023. The award was This allowance is fixed and is not pensionable, subject to two equally-weighted performance nor does it attract any bonus opportunity. conditions being the adjusted earnings per | share and the relative total shareholder return | As announced on 15 September 2022, | | --- | --- | | (“TSR”) performance of the Company against | SimonArora retired as the CEO effective from | | FTSE 350 retailers. The TSR performance | 26 September 2022 but remained as an | | resulted in a 100% out-turn for that measure. | Executive Director until the end of his notice | | The adjusted earnings per share was 36.5p | period on 21 April 2023. Simon was not eligible | | relative to a maximum target of 30p, which | for an LTIP award during the year, and the | | gave a 100% vesting level under that measure | Committee determined to treat his unvested | | and an overall vesting level of 100% of the | incentives as set out on page 82. In addition, | | award. The award is due to vest on 30 July 2025 | the Committee determined that Simon would | | following a two-year holding period. Simon | be eligible for an annual bonus for 2022/23 | | Arora was the only Executive Director serving | in respect of the full year on the basis that he | | during 2022/23 to receive an award under the | actively worked throughout the financial year. | 2020 LTIP. 76 B&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 The resulting operation of policy for 2023/24 17 October 2022, as announced on 5 July 2022. will be as follows: He was subsequently appointed to the Board Element Implementation for 2023/24 of Directors on 1 November 2022. His package comprises a base salary of £450,000 and Base salary • Alex Russo (CEO): £832,000 (currently £800,000) incentives as approved by shareholders within • Mike Schmidt (CFO): £468,000 (currently £450,000) the Directors’ Remuneration Policy, as well as AIP • Maximum opportunity of 200% of salary for CEO and 150% of salary for CFO a one-off award of nil-cost options valued at • 75% based on adjusted EBITDA and 25% based on personal objectives £250,000 in relation to remuneration forfeited • 50% of any bonus earned will be deferred in shares for three years on joining B&M. This award is subject to LTIP • Award of 200% of salary for CEO and 175% of salary for CFO continuous employment and vests in equal • 50% based on adjusted EPS and 50% based on relative TSR vs FTSE 350 retailers amounts on the first and second anniversary of grant. In addition, Mike has been granted a Pension • 3% of salary less employer’s National Insurance contributions (“NICs”) travel and overnight accommodation budget for the first 12 months of employment following ### Conclusion his start date to assist with additional costs as I hope that you find the information in this he transitions into his new role. report helpful and informative, and that you can support the decisions made this year ### Shareholder engagement in relation to the implementation of our The Remuneration Committee welcomes any remuneration policy for 2022/23 and how comments or questions from shareholders, we intend to operate our policy in 2023/24. and believes that the remuneration packages outlined for this year and for 2023/24 are fair The Committee is keen to hear any feedback and reflective of the responsibility and on the information set out in this report. If any complexity of the roles. questions or comments do arise then please contact me, or alternatively I will be available ### Implementation of remuneration at the AGM to take any questions. ### policy for 2023/24 The Committee determined that salary | increases of 4% should be awarded to the | Tiffany Hall | | --- | --- | | Executive Directors, in line with the wider | Chair of the Remuneration Committee | | workforce, effective from 1 April 2023. | 30 May 2023 | 77B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Directors’ remuneration report continued | Role of the Remuneration | Corporate Governance Code | | Luxembourg Law | | --- | --- | --- | --- | | Committee | The Committee is conscious of the Code’s | | The Luxembourg Law of 24 May 2011 on certain | | The Committee has responsibility for | references to remuneration arrangements | | rights of shareholders at general meetings | | determining the Company’s policy on | being clear, simple, predictable, proportionate | | of listed companies (as amended by the law | | remuneration of the Executive Directors and the | and to take adequate account of risk while | | of 1 August 2019) which adopts the EU | | Chairman, the first layer of senior management | being aligned to culture. These factors have | | Shareholders’ Directive 2017/828 on directors’ | | of the Group below the Board and the Group’s | been considered and are felt to be satisfied | | remuneration requires that the remuneration | | General Counsel. Its terms of reference were | through: | | policy of the Company be put to shareholders | | reviewed during 2022/23 and a number of | • Clarity – the Company’s remuneration | | to vote at least once every four years. However, | | minor amendments and clarifications were | | policy and implementation of policy are | in accordance with the Company’s voluntary | | made. | | clearly disclosed each year in this report. | policy since the IPO of putting the remuneration | | | | The Committee proactively engages with | policy to shareholders for voting on every three | | The Committee does not consult directly with | | shareholders and their representative | years, that practice will continue to be followed, | | employees when reviewing levels of Executive | | bodies as part of the triennial policy | which will comply with the recent changes in | | Directors’ remuneration but it takes account of | | renewal process and is available to | the Luxembourg Law. | | pay policies for the broader salaried workforce | | discuss matters at any other time; | | | when undertaking annual salary reviews for | • Simplicity – the Company operates a | | The Annual Remuneration Report has been | | the Executive Directors, as well as reviewing | | simple pay model which typically pays at | prepared to comply with the reporting | | policy and practices for employees when | | no more than median while encouraging | requirements of the Luxembourg law on | | determining remuneration policy for | | superior performance, and only rewarding | directors’ remuneration referred to above. | | Executive Directors. | | sustained success achieved in a manner | The Company, as a Luxembourg registered | | | | consistent with the Board’s overall | company, is not subject to the regulations | | The Committee’s terms of reference are | | objectives to deliver superior returns for our | adopted in the UK in 2013 (and as amended) | | available on the Company’s website at | | shareholders. This is set by the operation of | for the reporting of executive remuneration. | | www.bandmretail.com. | | a mix of absolute profit targets and relative | However, in addition to the Luxembourg law | | | | TSR assessed alongside stretching personal | reporting requirements, the Committee | | | | objectives which recognise delivery against | considers the UK regulations to also be | | | | defined goals. We will continue with this | reflective of best practice and helpful to | | | | approach for 2023/24 in line with the | shareholders to maintain consistency with the | | | | approach for 2022/23; | Company’s reporting in previous years while | | | • Risk – the overall policy offers reward at no | | also complying with the requirements of the | | | | more than a median level and is subject to | Luxembourg law. The report has therefore | | | | the operation of suitably stretching targets, | been prepared by the Company to follow the | | | | which is consistent with our business model | practice (as in the case in previous years) of | | | | as a value retailer. We have again set | also voluntarily adopting the UK reporting | | | | stretching targets for variable pay in | regime where practical and while maintaining | | | | 2023/24 in the context of the business plan. | the Company’s status as a Luxembourg | | | | Payments of variable pay are subject to the | registered company. | 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. 78 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements ## Annual Report ## on Remuneration ### Implementation of remuneration policy The Committee has operated the remuneration policy in accordance with the Directors’ Remuneration Policy (the “Policy”) which was approved by shareholders at the Company’s AGM on 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. | | | | | | | | | | | Long-term | | | | | | | Total | | Total | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Salary | | Benefits | 2 | Pension | 3 | Bonus | 4 | incentives | 5 | Other | | Total | | fixed pay | | variable pay | | | | Executive Directors Year | 1 | | £ | | £ | | £ | | £ | | £ | | £ | | £ | | £ | | | £ | 8 Simon Arora (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 8 Alex Russo (former 2021/22 475,000 43,503 12,522 556,640 − 150,000 1,237,665 531,025 706,640 6 CFO/CEO successor) 2022/23 650,000 24,288 17,207 668,178 − 250,000 1,609,673 791,495 818,178 9 Mike Schmidt 2021/22 − − − − − − − − − 7 (CFO successor) 2022/23 199,038 27,458 5,190 163,984 – 250,000 645,670 231,686 413,984 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. 79B&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: % maximum Adjusted Group overall bonus EBITDA target* 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%) Fully achieved with smooth transition to the new CEO 20 out of 25 – Progress the succession plan for the CFO appointment and deliver and successful onboarding of CFO, Supply Chain smooth transition to new CEO, ensure successful on-boarding for Director and Property Director. senior recruits and ensure transition plan for property. 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%) Partially achieved – New openings and store expansions – Review of growth and store format options to be presented to Board were high-quality although the number was below and delivery of store openings. target. Robust growth plan presented to the Board. 4. Stakeholders (10%) Fully achieved with clear communication of strategy – Maintain a diverse and balanced investor base and ensure clear to investor base and effective engagement with key communication of strategies. external stakeholders. – Deliver an effective programme of stakeholder engagement to maintain strong external relationships. 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%) Fully achieved with successful onboarding of the CFO, 20 out of 25 – Onboarding of new CFO and strengthening of team in France. quality senior hires in France and creation of a high performing executive team. | 2. IT: (15%) | | Fully achieved with tangible enhancements to | | --- | --- | --- | | | – Delivery of an effective IT strategy, to include successful implementation | IT operating resilience and new finance system | | | of new finance solution. | implementation on track. | – Maintain cyber security and limit network or distribution centre downtimes to a minimum. | 3. France: (15%) | | Fully achieved due to strong EBITDA out-turn driven by | | --- | --- | --- | | | – EBITDA. | LFL and new store growth and increasing consistency | | | – Operational improvement. | of operational performance. | – Accelerated growth plan. 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%) Partially achieved – Strong performance from new – Review of growth and store format options to be presented to Board openings and store expansions but number of openings and delivery of store 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. 80 B&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%) | | Partially achieved – Group EBITDA delivered within | 18.75 out of 25 | | --- | --- | --- | --- | | | – Group EBITDA. | externally guided ranges, with financial operations | | | | – Effective year-end statutory audit and Annual Report preparation | process on plan. | | and financial planning. 2. Operational (30%) Partially achieved – Finance and ESG programmes – Preparation for successful finance IT implementation. fully on track. Stock loss trends reflecting broader – Stock loss. retail environment. – Development of effective and focused ESG workstreams. 3. Leadership team development (30%) Partially achieved – induction programme is fully – Effective working relationship with senior management team. on-plan. – Effective execution of GCA Code Compliance Officer role. – On-board new finance appointments. The table below sets out the resulting bonuses earned, including the amounts deferred into shares for a three-year period: | | | | | | | | Of which paid | | Of which deferred | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Bonus maximum as | | Bonus earned | | Bonus earned | | | in cash | | in shares | | Executive Director | | % salary | as % maximum | | | £ 1 | | £ (50%) | | £ (50%) | | Simon Arora 200% (for period as CEO) | | | | 56.9% 830,261 415,130 415,131 | | | | | | | 150% (for period as Executive Director) Alex Russo 200% (for period as CEO) 56.9% 668,178 334,089 334,089 150% (for period as Executive Director) 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 for threshold vesting Performance for Actual Performance condition Weighting (25%) maximum vesting performance Vesting Adjusted EPS 50% 25p 30p 36.5p 100% Above 1st rank of 13 comparators 1 Relative TSR vs FTSE 350 retailers 50% Median Upper quartile 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: Number of awards due to vest due to meeting Number of performance Dividend shares Total shares Total value Executive Director awards granted condition earned to year-end due to vest £ 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. 81B&M European Value Retail S.A. Annual Report and Accounts 2023 Directors' remuneration report continued # 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 | Face value of awards £ | | --- | --- | --- | --- | | Alex Russo | 200% | 414,615 | 1,595,812 | | Mike Schmidt | 175% | 204,068 | 783,437 | 1 The number of awards granted was based on a share price of £3.84 M, 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 of 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/westing (20%) | Performance for maximum vesting | | --- | --- | --- | --- | | Adjusted EPS | 50% | 42p | 30p | | 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 | | --- | --- | --- | | 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. 82 B&W European Value Relief 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: | | 2022/23 | | 2021/22 | | | --- | --- | --- | --- | --- | | | | Fee | | Fee | | Director | | £ | | £ | 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: Fee Role £ 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). | | | | | Unvested | | | Unvested | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | options with | | | | options not | | Vested but | | | Shares held | | performance | | | | subject to | | unexercised | | Director | beneficially | 1 | | conditions | 2 | performance | | 3 | 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. 83B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Directors’ remuneration report continued ### 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) 300 250 200 12 June 2014 150 100 50 0 | 12 June | 28 March | 26 March | 25 March | | 31 March | 30 March | | 28 March | 27 March | | 26 March | 25 March | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 2014 | 2015 | 2016 | | 2017 | 2018 | | 2019 | 2020 | | 2021 | 2022 | 2023 | | | | B&M European Value Retail | | | | | FTSE 350 excluding Investment Trusts | | | | | | ### Remuneration of the CEO The table below shows the remuneration of the CEO for each of the last eight financial years. Total Bonus as a LTIP as a remuneration % of max % 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% 350 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 TSR – Value of a 100 unit investment made at 84 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategy Report Corporate Governance Financial Statements ## Change in remuneration of the Directors Lowest-brought key expenses on 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 finance) on full-time equivalent basis (average) | 15.49% | -16.38% | -8.44% | 2.73%^{1} | 3.96% | | Executive Directors: | | | | | | | Simon Arano | -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: | | | | | | | Peter Bamford | nil | 11.66% | -6.25% | 26.19% | 3.00% | | Ron McMillan | nil | 21.63% | 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% | 6.32% | 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 6 a spot to spot absolute measurement for the Company over the financial year and 16 a relative spot to spot measurement over three years compared with the current TSR comparator group (FTSE 100 retail sector and food retailers and wholesalers) subsector as of the beginning of the financial year. For the 2022/23 figures the companies: Leahane Curran, Dunedin, Prosser Group, Greggs, Howden January, JD Sports Fashion, Kingfisher, Works & Spencer, Next, Orado, Pelt-Aff Home, Salmbury, Trecco and Wirt 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. (asking and departing employees and Directors have been grooved-up to a 15-month equivalent) 3 The figure has been updated as part of the year's calculations of changes in total remuneration. 4 Mike Schmidt and Oliver Tant were appointed to the Board during FY22. ## 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. | (USD) | 2022/23 | 2023/23 | % change | | --- | --- | --- | --- | | Total pay for employees | 570,320 | 629,969 | 10.5% | | Distributions to shareholders^{1} | 430,475 | 365,605 | -15.7% | 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. B&W European Value Retail S.A. Annual Report and Accounts 2023 85 ## 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: 50th percentile 25th 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. | | Fee from | | | Fee from | | | | --- | --- | --- | --- | --- | --- | --- | | | | 1 April | | | 1 April | | | | | 2022 | | | 2023 | | | Role | | | £ | | | £ | 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. 86 B&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: | | Base salary | | | Base salary | | Base salary | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | from 1 April | | | from date of | | from 1 April | | | | | | 2022 | | appointment | 1 | | 2023 | | | Executive Director | | | £ | | £ | | | £ | 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 for threshold vesting Performance for Performance condition Weighting (25%) maximum vesting Adjusted EPS 50% 37.9p 43.9p 1 Relative TSR vs FTSE 350 retailers 50% Median Upper quartile 1. Consists of the constituents of the FTSE General Retailers Index and the FTSE Food and Drug Retailers Index. 87B&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), Ron McMillan 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 | - Lipdate 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 (2023) | 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 88 B&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 Base salaries are reviewed annually. Changes typically take Base salary is typically paid four-weekly in cash. effect from the beginning of the relevant financial year. | This is the basic pay | | Base salaries are reviewed annually with changes usually | | --- | --- | --- | | and reflects the | On reviews, consideration is given by the Committee to a | taking effect from 1 April. | | individual’s role, | range of factors including the Group’s overall performance, | | | responsibility and | market conditions and individual performance of executives | | | contribution to the | and the level of salary increase given to employees across | | | Group. | the Group. | | Base salaries are targeted at market levels, with reference to companies with a comparable market capitalisation. Annual salary increases will not exceed the general level of increase awarded to other salaried staff, save for a change in the roles or responsibilities of an Executive Director or when there are changes to the size and complexity of the business. Benefits Provide market competitive benefits. Executives are entitled to a car allowance or a company car, car insurance and other running costs and fuel for business use, To provide an The Group may periodically review benefits available to death in service life assurance, permanent disability and critical appropriate level employees. Executives will generally be eligible to receive illness insurance and any other Group-wide benefits including of contribution to those benefits on similar terms to other senior employees. a 10% B&M stores discount card. retirement The cost of benefits paid to an Executive in any one year planning. Business travel and associated hospitality are provided in the is capped at £75,000, but this may be exceeded in normal course of business and authorised by the Committee exceptional circumstances if the cost of a benefit were on a standing basis. to increase significantly. In addition, where the Committee considers it appropriate to do so, additional relocation expenses for a limited period and/or tax equalisation payments may be paid. Pension Current CEO and CFO: 3% of salary Executives may take pension benefits as contributions to defined contribution personal pension plans, or elect to receive cash in To provide an New recruits: 3% of salary lieu of all or part of that benefit (this is not taken into account as appropriate level The pension contributions for the existing Executive salary for calculating bonus, LTIP or other benefit awards). of contribution to Directors are 3% of salary, aligned with the wider workforce retirement If the individual elects to receive any part of their pension contribution rate. planning. contribution benefit as a cash allowance instead, employers’ NICs are deducted from that element. 89B&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 The maximum annual bonus is 200% of base salary for the The performance measures are reviewed annually by the CEO and 150% of base salary for other Executive Directors. Committee in line with the Company’s strategy. To incentivise and | reward individuals | The threshold bonus will be no higher than 25% of the | The performance measures applied may be financial (with at | | --- | --- | --- | | for the delivery of | maximum. The target bonus is 50% of maximum. | least a 75% weighting on such measures) and/or operational | | annual | | and corporate, divisional and/or individual. | Bonuses are paid up to one-half in cash and at least performance one-half in shares with the share element normally The Committee has discretion to make adjustments to targets. contingent on employment for a further three years. Such performance targets during any performance period to deferred shares will be credited on vesting with dividends reflect any events arising which were unforeseen when the paid during the vesting period. 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 Awards of shares with maximum face value on grant for Awards may be made annually of nil cost options based on incentives the CEO of 200% of base salary and for other Executive performance conditions. Directors of 175% of base salary each year under the LTIP, To incentivise the The Committee may set three-year performance conditions save for exceptional circumstances such as recruitment delivery of strategic based on financial and/or operational and corporate, divisional where the grant may be in excess of this. objectives over the and/or individual criteria as it considers appropriate. longer term, the Clawback and malus provisions apply to awards made The Committee has discretion to make adjustments to targets Group operates the under the LTIP. during any performance period in case of any events arising Long-Term Incentive LTIP awards from the date of the 2021 AGM onward are which were unforeseen when the performance conditions were Plan (“LTIP”). subject to a two-year holding period post the end of the originally set by the Committee. performance period. No more than 25% of an award can be earned for threshold Participants’ awards attract dividend rights from grant to performance. the end of the holding period. In-employment Executive Directors are expected to retain at least 50% of The required level of shareholding is 200% of the base salary of shareholding all shares which vest under the deferred bonus and LTIP the relevant executive. requirement (or any other plans which may be adopted in the future) on Executive Directors are expected to maintain their minimum a net of tax basis until they hold shares of a specified value. To encourage share shareholding levels once they have obtained those ownership and Shares subject to these guidelines and any unvested share shareholding levels. The Committee will review shareholdings create alignment of awards may not be hedged or used as security for loans. annually against the policy and as share awards mature. interests of The Committee reserves the right to alter the shareholding Executive Directors guidelines during the period of the policy but without making and shareholders. the guidelines any less onerous overall. 90 B&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 Shares must be held for two years post-employment at Shares counting towards this requirement will not be released shareholding 100% of the in-employment shareholding requirement (or during the period in which the post-employment shareholding requirement actual shareholding on departure if lower). requirement applies, to support enforceability. Shares completing their performance period during this Acceptance of the post-employment shareholding requirement two-year period will remain subject to the two-year holding will be a condition of participation in all share awards granted period. after the 2020 AGM and will be included in the grant documentation for awards. 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. All-employee Executive Directors can participate in the all-employee Under the rules of the SIP employees can purchase a maximum share plans share incentive plan (“SIP”) on the same terms as other of £1,800 worth of shares per annum from their pre-tax and employees of B&M in the UK. pre-National Insurance salary through a UK resident SIP Trust. To encourage share | ownership by | The rules also permit an award of free shares worth up to | | --- | --- | | employees and | £3,600 per year and for purchased shares to be matched on | | participate in the | up to a 2:1 basis although these elements have not been | | long-term success | operated to date. | of the Group, the Group operates an all-employee share incentive plan for B&M UK employees which was adopted prior to Admission. 91B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Directors’ report and business review FY23 ## 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. | As permitted under Luxembourg Law, the | Research and Development | Corporate social responsibility | | --- | --- | --- | | Directors have elected to prepare a single | The Company has no research and | Our CSR activity is set out in the Corporate | | Management Report covering both the | development activities. | social responsibility report on pages 34 to 45 | | Company and Group. The Strategic Report, | | and in the standalone ESG report. | Corporate Governance report and Directors’ ### Principal activity remuneration report on pages 1 to 57, 58 to ### The principal activity of the Group is variety Employee engagement 68 and 76 to 91 respectively form part of this retailing in the UK and France. The Company ### and involvement report and are incorporated into this Directors’ has a corporate office in Luxembourg. The Group is committed to employee report by reference. Also, the following involvement, consultation and participation. information, in particular within those reports ### Business review At key points throughout the year colleagues can be found as follows: This report together with the Strategic Report on are kept informed about the performance and • future developments in the business – pages 1 to 57, sets out the review of the Group’s strategy of the Group through internal business page 16; business during the financial year ended update meetings, conference calls, company • workforce engagement – page 40; 25 March 2023, including factors likely to affect newsletters and notice boards and CEO email • viability statement – page 33; the future development and performance of the bulletins. They include information on the • energy and carbon reporting – pages 46 business and a description of the principal risks financial and trading performance of the Group. to 53; and uncertainties the Group faces, and the Further details of workforce engagement, • directors’ service contracts and Strategic Report is incorporated by reference in feedback and actions during the year are also appointment letters – page 86; this report. set out on page 40, which is incorporated in • directors’ share interests – page 83; this report by reference. • conflicts of interest – page 65; and ### Results and dividend • stakeholders and section 172 statement – The Group’s profit after tax for the financial year B&M has a share incentive plan which is open pages 54 to 57. ended 25 March 2023 of GBP £348m is reported to all B&M UK employees after 12 months in the consolidated statement of comprehensive service. Certain employees in the Group are ### Company status income on page 101. also eligible to participate in other share B&M European Value Retail S.A. (the incentive schemes of the Company. “Company”) is the parent company of the The Board is recommending a final dividend of Group. It was incorporated on 19 May 2014 ### 9.6p per ordinary share, which together with the Equal opportunities as a public limited liability company (Société interim dividend of 5.0p per ordinary share paid The Group is an equal opportunity employer. Anonyme) under the laws of the Grand-Duchy in December 2022 (but not including the special It is the Group’s policy not to discriminate on the of Luxembourg and it has it registered office in dividend of 20.0p per share paid in January basis of gender, race, colour, religion, disability Luxembourg. The Company has a premium 2023) is a total ordinary dividend for the year or sexual orientation, in its recruitment, training listing on the London Stock Exchange. of 14.6p, at the upper end of the dividend policy and promotion programmes. of paying 30 to 40% of normalised post-IPO ### Branches 1 earnings . The Group had no branches during the reporting period. ### 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. 92 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements | Disabled persons | Financial instruments | each AGM. No shares of the Company have | | --- | --- | --- | | The Group seeks to ensure that disabled | Details of the Group’s objectives and policies on | been repurchased and no contract to | | people, whether applying for a vacancy | financial risk management, and of the financial | repurchase shares has been entered into at any | | or already in employment, receive equal | instruments currently in use, are set out in note 1 | time since the incorporation of the Company. | | opportunities in respect of job vacancies | to the consolidated annual accounts on pages | | | which they are able to fulfil. They are not | 105 to 114, which forms part of this report. | Each ordinary share entitles the holder to vote | | discriminated against on the grounds of | | at general meetings of the Company in person | | their disability and are given full and fair | | or by proxy. Unless otherwise provided by | ### Share capital consideration of applications, continuing Luxembourg Company Law or the Articles, all The Company’s share capital and changes to training while employed and equal opportunity decisions by an annual or ordinary it in the financial year ended 31 March 2023, are for career development and promotion. Where shareholders’ meeting are taken by a simple set out on page 95 below and under note 22 to an existing colleague suffers a disability it is majority of votes cast regardless of the the consolidated annual accounts and financial our policy to retain them in the workforce proportion of the issued share capital statements on page 136 which forms part of where that is practicable. represented by shareholders in attendance at this report. the meeting. The notice of the AGM specifies deadlines for exercising voting rights and ### Directors In common with other Luxembourg registered appointing a proxy to vote. The interests in shares and share awards made companies, the Articles allow the Board to to Directors of the Company as at 31 March 2023 increase the issued share capital within the Holders of ordinary shares may receive a are shown on page 83. On 21 April 2023, and limits of the authorised share capital, by the dividend and on liquidation may share in the as announced previously by the Company, issue of new shares including under certain assets of the Company. Simon Arora who has been CEO of the Company conditions, by limiting or cancelling pre- and Group since 2014 retired. There have been emption rights of existing shareholders. Subject to meeting certain thresholds, holders no other changes to the Board of Directors of of ordinary shares may requisition a general the Company since the year end and up to the Under Luxembourg Company Law such an meeting of the Company or the proposal of date of this report. authority can only be granted for a period of resolutions at general meetings. The rights up to five years. The authority for the Board to (including full details relating to voting), In accordance with the articles of association increase the issued share capital within the obligations and any restrictions on transfers of the Company (the “Articles of Association” limits of the authorised share capital will expire relating to the Company’s ordinary shares, as or “Articles”), all the Directors will retire at the this year in July and an extraordinary general well as the powers of the Directors, are set out Annual General Meeting (“AGM”) on 25 July meeting of the shareholders will be convened in the Articles of Association. 2023. All the retiring Directors, being eligible, will this year, on 25 July 2023, immediately after stand for re-election as Directors at that meeting the AGM to renew this authority of the Board. The Company is not aware of any agreements except Carolyn Bradley who will then retire. Subject to shareholders’ approval, the authority between shareholders that restrict the transfer of the Board will be renewed without any of shares or voting rights attached to the shares. | Directors’ indemnities | changes being made to its conditions and | | | --- | --- | --- | | The Company’s Articles permit to indemnify | limits which are provided for under article 5.2 | | | | of the Articles. | Amendment to the Articles | Directors in certain circumstances, as well ### as to provide insurance for their benefit. The of Association Company has Directors’ and Officers’ insurance The Directors intend to comply with the The Articles of Association of the Company in place in respect of all the Directors. The Pre-Emption Group’s Statement of Principles, in may only be amended at an extraordinary insurance does not provide cover where a relation to any issue of shares of the Company general meeting of shareholders where at Director has acted fraudulently or dishonestly. to the extent practical as a Luxembourg least one half of the issued share capital is registered company. represented (or if that condition is not satisfied at a second meeting regardless of the ### Political donations The Board intends to seek an authorisation of proportion of the issued share capital No political donations were made during the shareholders at the AGM on 25 July 2023 that represented at that meeting) and when financial year under review. the Company may purchase, acquire or receive adopted by a resolution passed by at least its own shares. This resolution is requested at 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): Number of % issued ordinary share Shareholder shares 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. 93B&M European Value Retail S.A. Annual Report and Accounts 2023 Directors report and business review continued # Change of control The Company has a senior facilities agreement (the "SFA") in relation to a GBP £223m term loan which has been drawn in full and a GBP £223m 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 (as not less than 10 business days' notice to the Company). The Company has GBP £400m 3.6235 senior secured notes due 2025 and GBP £350m 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 10% 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 HOVs contain customary cancellation and repayment provisions upon a change of control. Employee share incentive schemes also have customary change of control provisions triggering sealing and exercise on performance conditions being met or on the discretion of the Company being waived. # Annual General Meeting Notices concerning 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 Rules 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.b.r.l. (a) the independent auditor ("revenue of enterprises capital") 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', 'max', '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.b.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 shareholders" and "associates" 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 of 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 2020/2022 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 94 B&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 | | Section (a) – Share capital structure | Section (f) – Voting rights | | --- | --- | --- | --- | | | procurement obligations in the Relationship | B&M European Value Retail S.A. has issued | Each share issued and outstanding in B&M | | | Agreement have been complied with by the | one class of shares which is admitted to | European Value Retail S.A. represents one | | | Arora Family and its associates; | trading on the London Stock Exchange. No | vote. The Articles do not provide for any | | | | other shares have been issued by the | voting restrictions. | | and that the Company has acted independently | | Company. Its issued share capital as at | | | of the Arora Family and their associates. | | 31 March 2023 amounts to GBP £100,185,373.50 | In accordance with the Articles shareholders | | | | represented by 1,001,853,735 shares with a | may be represented and proxies shall be | | The Board confirms that this statement is | | nominal value of GBP £0.10 each. | received by the Company a certain time before | | supported by each of the independent | | | the date of the relevant general meeting. | | Directors of the Company and there have been | | As at the date of this report, all shares are in | The Board of Directors may determine such | | no instances where any of them declined to | | dematerialised form. | other conditions that must be fulfilled by | | support this statement. | | | shareholders in person or by proxy. Additional | | | | In addition to the issued share capital, the | provisions may apply under Luxembourg Law. | | Details of other related party transactions | | Company has also an authorised but unissued | Thus, Luxembourg legislation requires | | entered with associated companies of the | | share capital amounting to GBP | shareholders to register their intention to | | Group are set out in note 26 to the consolidated | | £297,036,848.70. | participate in general meetings at least 14 days | | annual accounts on pages 140 and 142 which | | | before the date of the meeting (the “Record | | forms part of this report. | | All shares issued by the Company entitle to | Date”). In accordance with the same legislation | | | | equal rights as set out in the Articles. | and article 24.6.11 of the Articles, and except | | Those transactions relate to the following | | | when voting rights are suspended, the right | | matters: | | | of a shareholder to participate in a general | Section (b) – Transfer restrictions i. product sourcing and supplies to the Group meeting and to exercise the voting rights All the shares are freely transferable subject from Multi-Lines International Company attached to its shares and the number of voting to the conditions set out in article 6.7 and 6.7.1.2 Limited (“Multi-Lines”); and rights it may exercise are determined by of the Articles. ii. wholesale supplies of products by the reference to the number of shares held by such Group to Centz Retail Holdings Limited. shareholder as at midnight on the Record Date. Section (c) – Major shareholdings Details of shareholders holding more than In accordance with article 13.10 of the Articles As provided for under article 6.5.5 of the Articles, five percent (5%) of the issued share capital of Association of the Company, a report will the voting rights attached to any shares which of the Company as notified to B&M European be made at the 2023 AGM of transactions with had not been dematerialised by the Compulsory Value Retail S.A. in accordance with article 8.1 the Company or its subsidiary undertakings in Dematerialisation Date (as defined thereunder) of the Articles which reproduces the relevant which any Directors may have had an interest, were to be automatically suspended. That provisions of the Luxembourg Law on including each of the related party transactions deadline was on 8 March 2023 and as at the Transparency requirements for issuers of with Directors (or in which they may have date of this report, 13,994 shares in aggregate securities dated 11 January 2011 as amended directly or indirectly had an interest) and all had not been dematerialised by their respective (“Luxembourg Transparency Law”) are set out other related party transactions (including owners and are now held in a securities on page 93. those with associated companies) entered into account open in the name of the Company. in the financial year 2022/23 referred to above The suspension of the voting rights will cease Section (d) – Special control rights together with any other such transactions when the owner provides the details of a All the issued and outstanding shares of the entered into after the financial year ending securities account where the shares can Company have equal voting rights and there on 31 March 2023 up to the date of the AGM, be held in dematerialised form. are no special control rights attached to its similarly to all other previous AGM’s of the shares. Company. Besides, in accordance with article 8.1.5 of the Articles which adopts article 28 of the Section (e) – Control system on employee Luxembourg Transparency Law, as long as ### Article 11 report | The following disclosures are made voluntarily | share scheme | the notice of crossing a major shareholding | | --- | --- | --- | | on the basis of article 11 of the Luxembourg Law | B&M European Value Retail S.A. is not aware | in the Company has not been notified to the | | on Takeovers of 19 May 2006 as amended | of any matters regarding section (e) of article 11 | Company in the manner prescribed, the | | (“Luxembourg Takeovers Law”) and form part | of the Luxembourg Takeovers Law. | exercise of the voting rights relating to those | | of this Directors’ report. | | shares which exceed the threshold that | should have been notified is suspended. | Following the UK’s exit from the EU, the shares | The suspension of the voting rights is lifted | | --- | --- | | of B&M European Value Retail S.A. (the | when the shareholder makes the notification | | “Company”) being listed solely on the London | provided for under article 8.1.1 of the Articles. | Stock Exchange market are no longer admitted to trading on an EU Member State regulated Section (g) – Shareholders’ agreements market and the Company is therefore outside with transfer restrictions of the scope of Luxembourg Takeovers Law. B&M European Value Retail S.A. has no information about any agreements between The Board of Directors, however, deems it shareholders which may result in restrictions however best practice for a Luxembourg on the transfer of securities or voting rights. incorporated company and in the best interest of shareholders to continue to provide those disclosures within the Directors’ report. 95B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Directors report and business review continued ### 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 à 3 respectively). The Articles are published under the Investors section on the Company's website at www.bandmretall.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 on 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 10% 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 HOVs 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 96 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements ## Statement of Directors’ responsibilities ## 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. | Company law requires the Directors to prepare, | | • use the going concern basis of accounting | | We confirm that, to the best of our knowledge: | | | --- | --- | --- | --- | --- | --- | | for each financial year, consolidated annual | | | unless they either intend to liquidate the | • the consolidated annual accounts and | | | accounts and financial statements at Group | | | Group or the Company or to cease | | financial statements of B&M European | | level, and annual accounts and financial | | | operation, or have no realistic alternative | | Value Retail S.A. (the “Company”) presented | | statements of the Company, on a standalone | | | but to do so. | | in this Annual Report and established in | | basis. Under that law they are required to | | | | | conformity with IFRSs as adopted in the | | prepare the Group annual accounts and | | The Directors are responsible for keeping | | | European Union give a true and fair view | | financial statements in accordance with | | adequate accounting records that are sufficient | | | of the assets, liabilities, financial position, | | International Financial Reporting Standards | | to show and explain the parent Company’s | | | cash flows and profits of the Company | | (“IFRSs”) as adopted by the EU and applicable | | transactions and disclose with reasonable | | | and the undertakings included within | | law, and the Company’s annual accounts and | | accuracy at any time the financial position of | | | the consolidation taken as a whole; | | financial statements in accordance with | | the parent Company and enable them to | | • the annual accounts of the Company | | | Luxembourg legal and regulatory requirements | | ensure that its financial statements comply with | | | presented in this Annual Report and | | regarding the preparation of annual accounts | | company law. They are responsible for such | | | established in conformity with the | | (“Lux GAAP”). In addition, the Group financial | | internal control as they determine is necessary | | | Luxembourg legal and regulatory | | statements are required, under the UK | | to enable the preparation of financial | | | requirements relating to the preparation | | Disclosure Guidance and Transparency Rules, | | statements that are free from material | | | of annual accounts give a true and fair view | | to be prepared in accordance with | | misstatement, whether due to fraud or error, | | | of the assets, liabilities, financial position | | International Financial Reporting Standards | | and have general responsibility for taking such | | | and profits of the Company; and | | adopted pursuant to Regulation (EC) No | | steps as are reasonably open to them to | | • the Strategic Report includes a fair review | | | 1606/2002 as it applies in the European Union | | safeguard the assets of the Group and to | | | of the development and performance of | | (“IFRSs as adopted by the EU”). | | prevent and detect fraud and other | | | the business and position of the Company | | | | irregularities. | | | and the undertakings included within the | | Under company law the Directors must not | | | | | consolidation taken as a whole, together | | approve the financial statements unless they | | Under applicable law and regulations, the | | | with a description of the principal risks and | | are satisfied that they give a true and fair view | | Directors are also responsible for preparing a | | | uncertainties it faces. | | of the state of affairs of the Group and | | Strategic Report, Directors’ Report, Directors’ | | | | | Company and of their profit or loss for the | | remuneration report and Corporate | | We consider this Annual Report (including the | | | relevant period. In preparing each of the Group | | Governance Statement that comply with the | | annual accounts and financial statements), | | | and Company’s annual accounts and financial | | provisions of that law and those regulations. | | taken as a whole, is fair, balanced and | | | statements, the Directors are required to: | | | | understandable and provides the information | | | • select suitable accounting policies and then | | The Directors are responsible for the | | necessary for shareholders to assess the | | | | apply them consistently; | maintenance and integrity of the corporate and | | Group’s position, performance, business | | | • make judgements and estimates that are | | financial information included on the | | model and strategy. | | | | reasonable and prudent; | Company’s website. The financial statements | | | | | • present the financial statements and | | are published on the Company’s website. | | Approved on behalf of the Board. | | policies in a manner that provides relevant, reliable, comparable and understandable Legislation in Luxembourg governing the ### information; preparation and dissemination of financial Alejandro Russo Michael Schmidt Chief Executive Officer Chief Financial Officer • state whether they have been prepared statements may differ from legislation in other 30 May 2023 in accordance with IFRSs as adopted by jurisdictions. 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 97B&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 Our procedures over Revenue recognition included, but were not limited to: Statement of Comprehensive Income and Note 2 and is mainly derived • Obtaining a detailed understanding and evaluating the design and from the sale of goods to customers. implementation of key controls that the Group has surrounding Revenue recognition by inquiries with the relevant process owners Retail revenue is recognised at the initial point of sale of goods to and performing a walkthrough of the process which includes customers. Wholesale revenue is recognised at the point on dispatch. observing the control and inspecting supporting evidence for the various controls; Although revenue recognition is considered to be relatively • Reconciling cash and receipts from the credit card provider which straightforward on a transactional level, the large volume of transactions, are related to revenue from sales made in stores and investigating together with the significance of the balance relative to other captions in outliers identified in this process; the Consolidated Statement of Comprehensive Income, has led us to • Assessing revenue trends throughout the period and investigating identify it as a key audit matter. 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. 98 B&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 Our procedures over accounting for foreign currency hedges included, net change of fair value of £33 million per the Consolidated Statement but were not limited to: of Changes in Shareholders’ Equity. • Obtaining a detailed understanding and evaluating the design and implementation of key controls that the Group has surrounding Per the Financial Instruments policy in note 1 and Currency risk hedge accounting by inquiries with the relevant process owners and management (note 25), the Group adopts hedge accounting for a high performing a walkthrough of the process which includes observing proportion of its foreign currency inventory purchases. The recognition of the control and inspecting supporting evidence for the various foreign exchange gains or losses on foreign currency forward contracts, controls; through either other comprehensive income or the income statement is • Reviewing the Group’s hedging strategy; determined by its qualification as a hedging instrument and its • Involving our treasury specialists to assist us in our assessment effectiveness testing. as to whether hedge accounting can be applied; • Inspecting management’s hedge effectiveness testing; Given that the total value of purchases that are hedged is significant, • For a sample of foreign currency hedges: and that hedge accounting is an inherently complex area of accounting, − Assessing the related hedge accounting documentation particularly in times of volatile exchange rates, we have identified is appropriately prepared in accordance with IFRS 9; accounting for foreign currency hedges as a key audit matter. − 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. Our procedures over the valuation of inventory included, but were not As per the Consolidated Statement of Financial Position and Note 15, limited to: the balance is £764 million at the year end. • Obtaining a detailed understanding and evaluating the design and implementation of key controls that the Group has surrounding Per the Inventory accounting policy in Note 1, inventories are valued at inventory valuation by inquiries with the relevant process owners and the lower of cost or net realisable value. Changing consumer preferences, performing a walkthrough of the process which includes observing spending patterns and the seasonality of sales all impact the level of the control and inspecting supporting evidence for the various inventory held and the rate of inventory turnover. controls; • Evaluating the appropriateness of management’s judgements and Per the Financial Instruments policy in Note 1, the Group adopts hedge assumptions applied in arriving at the value of inventory by: accounting for a high proportion of its foreign currency inventory purchases. − Assessing the value of a sample of inventory lines to confirm In order to apply hedge accounting it is necessary to demonstrate hedge whether it is measured at lower of cost or net realisable value, effectiveness which requires, amongst other things, matching the hedging through comparison to sales receipts and latest purchase invoice; instrument to the hedged item and ensuring that the appropriate exchange − Understanding the inventory provisioning policy with specific rate is applied to each hedged item included in the inventory balance. consideration to net realisable value and slow-moving stock; − Testing the accuracy of the net realisable value inventory provision We focused on the valuation of inventory because of the judgements by performing a recalculation of and testing a sample of the and estimates required by management when assessing the level of the underlying inputs of the provision calculation to supporting provision required in relation to the net realisable value inventory provision, documentation; and the risk of error inherent in the process of adjusting inventory to the − Analysing the period-end stock value against total sales during appropriate hedged rate. 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. 99B&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 100 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements ## Consolidated Statement of Comprehensive Income | | 52 weeks ended | | 52 weeks ended | | | --- | --- | --- | --- | --- | | | 25 March 2023 | | 26 March 2022 | | | Period ended Note | | £’m | | £’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. 101B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Consolidated Statement of Financial Position | | 25 March | | 26 March | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | As at Note | | £’m | | £’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 2,5 21 2 , 515 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 1,0 66 1 ,1 23 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 102 B&M European Value Retail S.A. Annual Report and Accounts 2023 Thalaya Report Appendix Documents Financial Statements ## Consolidated Statement of Changes in Shareholders' Equity | | Share capital €'m | Share premium €'m | Retained earnings €'m | Hedging reserve €'m | Legal reserve €'m | Margin reserve €'m | Foreign exchange reserve €'m | Total equity €'m | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Balance at 27 March 2021 | 100 | 2,475 | 128 | 18 | 10 | (1,979) | 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) | – | – | – | – | (428) | | 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 as inventory | – | – | – | 5 | – | – | – | 5 | | Balance at 26 March 2022 | 100 | 2,476 | 121 | 13 | 10 | (1,979) | 5 | 746 | | **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 | (363) | – | – | – | – | (363) | | **Profit for the period** | – | – | 348 | – | – | – | – | 348 | | **Other comprehensive income** | – | – | – | 33 | – | – | 5 | 38 | | **Total comprehensive income for the period** | – | – | 348 | 33 | – | – | 5 | 386 | | **Hedging gains & losses reclassified as inventory** | – | – | – | (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. S&H European Value Retail 1.4. Annual Report and Accounts 2023 103 ## Consolidated Statement of Cash Flows | | 52 weeks ended | | 52 weeks ended | | | --- | --- | --- | --- | --- | | | 25 March 2023 | | 26 March 2022 | | | Period ended Note | | £’m | | £’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 17 237 173 237 173 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 Trading Report Corporate Overview Financial Statements # Notes to the Consolidated Financial Statements ## 1 General information and basis of preparation The consolidated financial statements have been prepared in accordance with EU IFRS. The Group's trade is general retail, with continuing trading taking place in the UK and France. The Group has been listed on the London Stock Exchange since June 2014. The consolidated financial statements have been prepared under the historical cost convention as modified by the revaluation of financial assets and financial liabilities at fair value through profit or loss. The measurement basis and principal accounting policies of the Group are set out below and have been applied consistently throughout the consolidated financial statements. The consolidated financial statements are presented in pounds sterling and all values are rounded to the nearest million (£'m), except when otherwise indicated. The consolidated financial statements cover the 52 week period from 27 March 2022 to 25 March 2023 which is a different period to the parent company standalone accounts (from 1 April 2022 to 31 March 2023). This exception is permitted under article 1712-12 of the Luxembourg company law of 10 August 1971, as amended, because the Directors believe that: - the consolidated financial statements are more informative when they cover the same period as used by the main operating entity, B&M Retail Ltd; and - it would be unduly onerous to rephrase the year end in that subsidiary to match that of the parent company. The year end for B&M Retail Ltd, in any year, will not be more than six days prior to the parent company year end. The next accounting period for the Group will be a 53 week period, from 26 March 2023 to 30 March 2024. B&M European Value Retail S.A. (the "Company") is at the head of the Group and there is no consolidation that takes place above the level of this company. The principal accounting policies of the Group are set out below. ### Basis of consolidation The Group financial statements consolidate the financial statements of the Company and its subsidiary undertakings, together with the Group's share of the net assets and results of associated undertakings, for the period from 27 March 2022 to 25 March 2023. Acquisitions of subsidiaries are dealt with by the acquisition method of accounting. The results of companies acquired are included in the consolidated statement of comprehensive income from the acquisition date. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has: - power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee), - exposure, or rights, to variable returns from its involvement with the investee, and - the ability to use its power over the investee to affect its returns. When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: - the contractual arrangements with the other vote holders of the investee, - rights arising from other contractual arrangements, and - the Group's voting rights and potential voting rights. The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary, excluding the situations as outlined in the basis of preparation. ### Going concern As a value retailer, the Group is well placed to withstand volatility within the economic environment. The Group's forecasts and projections, taking into account reasonably possible changes in trading performance, show that the Group will trade within its current banking facilities. After making enquiries, including preparing cash flow forecasts for at least 12 months from the date of approval of these financial statements, the Directors are confident that the Group has adequate resources to continue its successful growth. This assessment considered various levels of trading including a severe but plausible downside like for like scenario and the Group also has recourse to several mitigations to improve liquidity. In March 2023, the Group committed to fully re-financing its existing term loan and RCF facilities, totalling £455m, for a new £225m term loan and a £225m RCF maturing in March 2028, with two one-year extension options. On 3 April 2023, the Group completed the funds flow in relation to this extension of its term facility bank loan. The Group has also maintained its £400m bond maturing in July 2025 and its £250m bond maturing in November 2028. B&M European Value Retail S.A. Annual Report and Accounts 2023 105 ## Notes to the Consolidated Financial Statements continued ### 1 General information and basis of preparation continued 106 B&M European Value Retail S.A. Annual Report and Accounts 2023 There have been no post balance sheet changes to liquidity and the current inflationary pressures do not have a material impact on this assessment as the Group is well placed to absorb or pass on these costs given our position as a low-cost retailer. Consequently, the Directors are confident that the Group and Company will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis. Note also that viability and going concern statements have been made in the ‘Principal risks and uncertainties’ section of this annual report. Revenue Under IFRS 15 Revenue is recognised when all the following criteria are met; • the parties to the contract have approved the contract; • the Group can identify each parties rights regarding the goods to be transferred; • the Group can identify the payment terms; • the contract has commercial substance; and • it is probable that the Group will collect the consideration we are entitled to in respect to the goods to be transferred. In the vast majority of cases the Group’s sales are made through stores and the control of goods is immediately transferred at the same time as the consideration is received via our tills. Therefore, revenue is recognised at this point. The Group sells a small quantity of gift vouchers for use in the future and, as such, a small amount of deferred revenue is recognised. At the period end the value held on the balance sheet was <£1m (2022: <£1m). The Group operates a small wholesale function which recognises revenue when goods are delivered and an invoice is raised. The revenue is considered collectable as the Group’s wholesale customers are usually related parties to the Group (such as our associates) or are subject to credit checks before trade takes place. See note 2 for the split of wholesale sales to store sales. Revenue is the total amount receivable by the Group for goods supplied, in the ordinary course of business, excluding VAT and trade discounts, and after deducting returns and relevant vouchers and offers. Administrative expenses Administrative expenses include all running costs of the business, except those relating to inventory (which are expensed through cost of sales), tax, interest and other comprehensive income. Transport and warehouse costs are included in this caption. Elements which are unusual and significant, such as material restructuring costs, may be separated as a line item. Goodwill Goodwill is initially measured at cost, being the excess of the fair value of consideration transferred over the fair value of the net identifiable assets acquired and liabilities assumed at the date of acquisition. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to the relevant cash-generating units (CGU’s) that are expected to benefit from the combination. The cash-generating units are individual stores and the groups of cash-generating units are the store portfolios in each operational segment. Goodwill is tested for impairment at least once per year and specifically at any time where there is any indication that it may be impaired. Internally generated goodwill is not recognised as an asset. Segment reporting Operating segments are reported in a manner consistent with internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the Executive Directors of the Group. The Executive Directors are responsible for assessing the performance of the business for the purpose of making decisions about resources to be allocated. Alternative performance measures The Group reports a selection of alternative performance measures (APM’s) as detailed below and in note 3, as the Directors believe that these measures provide additional information that is useful to the users of our accounts. The alternative performance measures we report in these accounts are: • Earnings before interest, tax, depreciation and amortisation (EBITDA) • Adjusted EBITDA • Adjusted Profit • Adjusted Earnings per share (EPS) Both IFRS 16 and pre-IFRS 16 versions of these alternative performance measures have been calculated and presented in order to aide comparability with the figures presented in previous years. Strategic Report Corporate Governance Financial Statements ### 1 General information and basis of preparation continued 107B&M European Value Retail S.A. Annual Report and Accounts 2023 Interest, tax, depreciation and amortisation are as defined statutorily whilst the items we adjust for are those we consider not to be reflective of the underlying performance of the business as detailed in note 3. These adjustments include the fair value impact of derivatives yet to mature, that have not been designated as part of a hedge accounting relationship, and foreign exchange on intercompany balances, which do not relate to underlying trading, and costs incurred in relation to significant projects, which are non-recurring and do not relate to underlying trading. Underlying performance has been determined so as to align with how the Group financial performance is monitored on an ongoing basis by management. In particular, this reflects certain adjustments being made to consider an adjusted EBITDA (pre-IFRS 16) measure of performance. Adjusted finance costs reflect the ongoing charges associated with our debt structure and exclude one-off effects of refinancing. The directors believe that our adjusted APMs, and specifically, EBITDA provides users of the account with a measure of performance which is appropriate to the retail industry and presented by peers and competitors. Adjusted values are considered to be appropriate to exclude unusual, non-trading and/or non-recurring impacts on performance which therefore provides the user of the accounts with an additional metric to compare periods of account. The alternative performance measures used are not measures of performance or liquidity under IFRS and should not be considered in isolation or as a substitute for measures of profit, or as an indicator of the Group’s operating performance or cash flows from operating activities as determined in accordance with IFRS. Brands Brands acquired by the business are amortised if the corresponding agreement is specifically time limited, or if the fair valuation exercise (carried out for brands acquired via business combinations) identifies a fair lifespan for the brand. This amortisation is charged to administrative expenses. Otherwise, brands are considered to have an indefinite life on the basis that they form part of the cash generating units within the Group which will continue in operation indefinitely, with no foreseeable limit to the period over which they are expected to generate net cash inflows. Where brands are considered to have an indefinite life they are reviewed at least annually for impairment or whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is impaired accordingly with the impairment charged to administration expenses. Intangible assets Intangible assets acquired separately, including computer software, are measured on initial recognition at cost comprising the purchase price and any directly attributable costs of preparing the asset for use. Following initial recognition, assets are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation begins when an asset is available for use and is calculated on a straight line basis to allocate the cost of the asset over its estimated useful life as follows: Computer software acquired – 3 or 4 years Amortisation method, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. Property, plant and equipment Property, plant and equipment is carried at cost less accumulated depreciation and accumulated impairment losses. Cost comprises purchase price and directly attributable costs. Unless significant or incurred as part of a refit programme, subsequent expenditure will usually be treated as repairs or maintenance and expensed to the statement of comprehensive income. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. Depreciation Freehold land is not depreciated. For all other property, plant and equipment, depreciation is calculated on a straight line basis to allocate cost, less residual value of the assets, over their estimated useful lives as follows: Leasehold buildings – Life of lease (max 50 years) Freehold buildings – 2% – 4% straight line Plant, fixtures and equipment – 10% – 33% straight line Motor vehicles – 12.5% – 33% straight line Residual values and useful lives are reviewed annually and adjusted prospectively, if appropriate. ## Notes to the Consolidated Financial Statements continued ### 1 General information and basis of preparation continued 108 B&M European Value Retail S.A. Annual Report and Accounts 2023 An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of comprehensive income when the asset is derecognised. Leases The Group applies the leasing standard, IFRS 16, to all contracts identified as leases at their inception, unless they are considered a short-term lease (with a term less than a year) or where the asset is of a low underlying value (<£5k). Assets which may fall into these categorisations include printers, vending machines and security cameras, and the lease expense is within administrative expenses. The Group has lease contracts in relation to property, equipment, fixtures & fittings and vehicles. A contract is classified as a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. When a lease contract is recognised, the business assesses the term for which we are reasonably certain to hold that lease, and the minimum lease payments over that term are discounted to give the initial lease liability. The initial right-of-use asset is then recognised at the same value, adjusted for incentives or payments made on the day that the lease was acquired. Any variable lease costs are expensed to administrative costs when incurred. The date that the lease is brought into the accounts is the date from which the lease has been effectively agreed by both parties as evidenced by the Group’s ability to use that property. The right-of-use asset is subsequently depreciated on a straight-line basis over the term of that lease, or useful life (whichever is shorter) with the charge being made to administrative costs. The lease liability attracts interest which is charged to finance costs, and is measured at amortised cost using the effective interest method. Right-of-use assets may be impaired if, for instance, a lease becomes onerous. Impairment costs are charged to administrative costs. Lease modifications are recorded where there is a change in the expected cashflows associated with a lease, such as through a rent review. When a lease modification occurs the lease liability is recalculated and an equivalent adjustment is made to the right-of-use asset, unless that asset would be reduced below zero, in which case the excess is expensed in administrative costs. The recalculation is carried out with an unchanged discount unless the change has affected management’s assessment of the term of the lease. If there is a significant event, such as the lease reaching its expiry date, the likely exercise of a previously unrecognised break clause, or the signing of an extension lease, the lease term is re-assessed by management as to how long we can reasonably certain to stay in that property, and a new lease agreement or modification (if the change is made before the expiry date) is recognised for the re-assessed term, with a recalculated discount rate. Lease modifications are also recorded where there is a change in the expected cashflows associated with the lease, such as through a rent review. Unless the change affects the term, the discount rate is not recalculated. A lease modification results in a recalculation of the lease liability with a corresponding adjustment made to the right-of-use asset. The discount rate used is individual to each lease. Where a lease contract includes an implicit interest rate, that rate is used. In the majority of leases this is not the case and the discount rate is taken to be the incremental borrowing rate as related to that specific asset. This is a calculation based upon the external market rate of borrowing for the Group, as well as several factors specific to the asset to be discounted. The Group separates lease payments between lease and non-lease components (such as service charges on property) at the point at which the lease is recognised. Non-lease components are charged through administrative expenses. Sale and leaseback transactions The Group recognises a sale and leaseback transaction when the Group sells an asset that has been previously recognised in property, plant and equipment, and subsequently leases it back as part of the same or a linked transaction. Management use the provisions of IFRS 15 to assess if a sale has taken place, and the provisions of IFRS 16 to recognise the resulting lease, with the liability and discount rate calculated in line with our lease policy and the asset subject to an adjustment based upon the net book value of the disposed asset, the opening lease liability, the consideration received and the fair value of the asset on the date it was sold. Resulting gains or losses are recognised in administrative expenses. Onerous leases A lease is considered onerous when the economic benefits of occupying the leased properties are less than the obligations payable under the lease. When a lease is classified as onerous, the right-of-use asset associated with the lease is impaired to £nil value and non-rental costs that are likely to accrue before the end of the contract are provided against. Strategic Report Corporate Governance Financial Statements ### 1 General information and basis of preparation continued 109B&M European Value Retail S.A. Annual Report and Accounts 2023 Investments in associates Associates are those entities over which the Group has significant influence, but which are neither subsidiaries nor interests in joint ventures. Investments in associates are recognised initially at cost and subsequently accounted for using the equity method. However, any goodwill or fair value adjustment attributable to the Group’s share of associates is included in the amount recognised as investment in associates. All subsequent changes to the share of interest in the equity of the associate are recognised in the Group’s carrying amount of the investment, including a reduction in the carrying amount equal to any dividend received. Changes resulting from the profit or loss generated by the associate are reported in “share of profits of associates” in the consolidated statement of comprehensive income and therefore affect net results of the Group. These changes include subsequent depreciation, amortisation and impairment of the fair value adjustments of assets and liabilities. Items that have been recognised directly in the associate’s other comprehensive income are recognised in the consolidated other comprehensive income of the Group. However, when the Group’s share of losses in an associate equals or exceeds its interest in the associate the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. If the associate subsequently reports profits, the investor resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported in the consolidated financial statements of associates have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. Impairment of non-financial assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required (for goodwill or indefinite life assets), the Group estimates the asset’s recoverable amount. The Group bases its impairment calculation on detailed budgets and forecasts which are prepared separately for each of the Group’s cash generating units (CGU’s) to which the individual assets are allocated. These budgets and forecast calculations are prepared in December and usually cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to the projected future cash flows after the fifth year. The Group’s three-year plan is usually approved in March. If due to the passage of time there are significant differences in the key assumptions between the forecast and plan, or if management consider that the forecast has a more sensitive level of headroom, then the impairment test will be additionally sensitised to the plan assumptions. Indications of impairment might include (for goodwill and the brand assets, for instance) a significant decrease in the like for like sales of established stores, sustained negative publicity or a drop off in visits to our website and social media accounts. An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs to sell and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. Impairment losses of continuing operations are recognised in the statement of comprehensive income in those expense categories consistent with the function of the impaired asset. For assets excluding goodwill and acquired brands with indefinite lives, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of comprehensive income, except for impairment of goodwill which is not reversed. Inventories Inventories are stated at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items, using the weighted average method. Stock purchased in foreign currency is booked in at the hedge rate applicable to that stock (if effectively hedged) or the underlying foreign currency rate on the date that the item is brought into stock. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs to sell. Transport, warehouse and distribution costs are not included in inventory. ## Notes to the Consolidated Financial Statements continued ### 1 General information and basis of preparation continued 110 B&M European Value Retail S.A. Annual Report and Accounts 2023 The Group receives supplier rebates which are included in the cost of inventory balance (and which therefore ultimately flow through to cost of sales). These rebates are recognised on an accruals basis according to actual sales levels achieved at the end of each period. Share options The Group operates several equity settled share option schemes. The schemes have been accounted for under the provisions of IFRS 2 and, accordingly, have been fair valued on their inception date using appropriate methodology (the Black Scholes and Monte Carlo models). A cost is recorded through the statement of comprehensive income in respect of the number of options outstanding and the fair value of those options. A corresponding credit is made to the retained earnings reserve and the effect of this can be seen in the statement of changes in equity. See note 8 for more details. Taxation Current income tax Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date, in the countries where the Group operates and generates taxable income. Tax is recognised in the statement of comprehensive income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity. Deferred tax Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differences, except: • When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. • In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is highly probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except: • When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. • In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Financial instruments The Group uses derivative financial instruments such as forward currency contracts to reduce its foreign currency risk, commodity price risk and interest rate risk. Derivative financial instruments are recognised at fair value. The fair value is derived using an internal model and supported by valuations by third party financial institutions. Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a highly probable forecast transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in other comprehensive income and accumulated in the hedging reserve. Any ineffective portion of the hedge is recognised immediately in the statement of comprehensive income. Effectiveness of the derivatives subject to hedge accounting is assessed prospectively at inception of the derivative, and at each reporting period end date prior to maturity. Where a hedge of a forecast transaction subsequently results in the recognition of a non-financial asset, such as an item of inventory, the associated gains and losses are recognised in the initial cost of that asset. When a hedging instrument expires or is sold, terminated or exercised, or the entity revokes designation of the hedge relationship but the hedged forecast transaction is still expected to occur, the cumulative gain or loss at that point remains in equity and is recognised in accordance with the above policy when the transaction occurs. If the hedged transaction is no longer expected to take place, the cumulative unrealised gain or loss recognised in equity is reclassified in the statement of other comprehensive income immediately. Strategic Report Corporate Governance Financial Statements ### 1 General information and basis of preparation continued 111B&M European Value Retail S.A. Annual Report and Accounts 2023 Financial assets Under IFRS 9, on initial recognition, a financial asset is classified as measured at amortised cost, fair value through profit or loss or fair value though other comprehensive income. A financial asset is measured at amortised cost using the effective interest rate if it meets both of the following conditions: it is held within a business model whose objective is to hold assets to collect contractual cash flows; and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Under IFRS 9 trade receivables, without a significant financing component, are classified and held at amortised cost, being initially measured at the transaction price and subsequently measured at amortised cost less any impairment loss. IFRS 9 includes an ‘expected loss’ model (‘ECL’) for recognising impairment of financial assets held at amortised cost. The Group has elected to measure loss allowances for trade receivables at an amount equal to lifetime ECLs. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive). When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit losses, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Group’s historical experience and informed credit assessment and including forward-looking information. The Group performs the calculation of expected credit losses separately for each customer group. The balances involved are immaterial for further disclosure. Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income comprise derivative financial instruments entered into by the Group that are designated as hedging instruments in hedge relationships as defined by IFRS 9. Financial assets at fair value through other comprehensive income are carried in the statement of financial position at fair value with changes in fair value recognised in other comprehensive income. Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with changes in fair value recognised in profit and loss. Derecognition A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when the rights to receive cash flows from the asset have expired and the entity has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full and either (a) the entity has transferred substantially all the risks and rewards of the asset, or (b) the entity has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. Impairment of financial assets The Group assesses at each reporting date, on a forward-looking basis the ECLs associated with our financial assets carried at amortised cost. Financial liabilities Initial recognition and measurement Financial liabilities within the scope of IFRS 9 are classified as financial liabilities at fair value through profit or loss or other financial liabilities. The entity determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value. Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial derivatives held for trading. Financial liabilities are classified as held-for-trading if they are acquired for the purpose of selling in the near term. This category includes derivative financial instruments entered into by the Group. Gains or losses on liabilities held-for-trading are recognised in profit and loss. Other financial liabilities After initial recognition, interest bearing loans and borrowings, trade and other payables and other liabilities are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the statement of comprehensive income when the liabilities are derecognised as well as through the effective interest rate method (EIR) amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs. Derecognition A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Fair value of financial instruments The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to mark-to-market valuations obtained from the relevant bank (bid price for long positions and ask price for short positions), without any deduction for transaction costs. ## Notes to the Consolidated Financial Statements continued ### 1 General information and basis of preparation continued 112 B&M European Value Retail S.A. Annual Report and Accounts 2023 Refinancing Where bank borrowings are refinanced, the Group assesses whether the transaction results in new facilities or a modification of the previous facilities. Where the transaction results in a modification of the facilities, the Group assesses whether that modification is substantial by reference both to whether the present value of the cash flows of the new facilities is more than 10% different to the present value of the cash flows of the previous facilities and by reference to any qualitative differences between the old and new agreements. Where a modification is substantial, the Group derecognises the original liability and recognises a new liability for the modified facilities with any transaction costs expensed to the income statement. Where the modification is non-substantial, the Group amends the carrying amount of the liability to reflect the updated cash flows and amends the effective interest rate from the modification date. Cash and cash equivalents Cash and cash equivalents comprise of cash at bank and in hand, less bank overdrafts to the extent the Group have the right to offset and settle these balances net. Equity Equity comprises the following: • “Share capital” represents the nominal value of equity shares; • “Share premium” represents the excess of the consideration made for the shares, over and above the nominal valuation of those shares; • “Retained earnings reserve” represents retained profits; • “Hedging reserve” representing the fair value of the derivatives held by the Group at the period end that are accounted for under hedge accounting and that represent effective hedges; • “Legal reserve” representing the statutory reserve required by Luxembourg law as an apportionment of profit within each Luxembourg company (up to 10% of the standalone share capital); • “Merger reserve” representing the reserve created during the reorganisation of the Group in 2014; and • “Foreign exchange reserve” represents the cumulative differences arising in retranslation of the subsidiaries and associate’s results. Foreign currency translation These consolidated financial statements are presented in pounds sterling. The following Group companies have a functional currency of pounds sterling: • B&M European Value Retail S.A. • B&M European Value Retail 1 S.à r.l. (Lux Holdco) • B&M European Value Retail Holdco 1 Ltd (UK Holdco 1) • B&M European Value Retail Holdco 2 Ltd (UK Holdco 2) • B&M European Value Retail Holdco 3 Ltd (UK Holdco 3) • B&M European Value Retail Holdco 4 Ltd (UK Holdco 4) • EV Retail Ltd • B&M Retail Ltd • Opus Homewares Ltd • Retail Industry Apprenticeships Ltd – (Dissolved on 17 January 2023) • Heron Food Group Ltd • Heron Foods Ltd • Cooltrader Ltd • Heron Properties (Hull) Ltd • Centz N.I. Limited The following Group companies have a functional currency of the Euro: • B&M European Value Retail 2 S.à r.l. (SBR Europe) • B&M France SAS • B&M European Value Retail Germany GmbH (Germany Holdco) The Group companies whose functional currency is the Euro have been consolidated into the Group via retranslation of their results in line with IAS 21 ‘Effects of Changes in Foreign Exchange Rates’. The assets and liabilities are translated into pounds sterling at the period end exchange rate. The revenues and expenses are translated into pounds sterling at the average monthly exchange rate during the period. Any resulting foreign exchange difference is cumulatively recorded in the foreign exchange reserve with the annual effect being charged/credited to other comprehensive income. Transactions entered into by the company in a currency other than the currency of the primary economic environment in which it operates (the “functional currency”) are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the balance sheet date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in profit or loss. Pension costs The Group operates a defined contribution scheme and contributions are charged to profit or loss in the period in which they are incurred. Strategic Report Corporate Governance Financial Statements ### 1 General information and basis of preparation continued 113B&M European Value Retail S.A. Annual Report and Accounts 2023 Provisions Provisions are recognised when a present obligation (legal or constructive) exists as a result of a past event and where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the amount can be reliably estimated. Provisions are discounted where the time value of money is considered to be material. The property provision also contains expected dilapidation costs, which covers expected dilapidation costs for any lease considered onerous, any related to stores recently closed, any stores which are planned or at risk of closure and those stores occupied but not under contract. At the period end, 105 stores were provided against (2022: 99). We do not provide against stores which are under contract and not considered at risk of closure (comprising the majority of the estate) as management consider that such a provision would be minimal as a result of regular store maintenance and limited fixed fit out costs. We also provide against the terminal dilapidation expense on our major distribution centres (DC’s), which is built up over the term of the leases held over those DC’s. Critical judgements and key sources of estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the financial information was prepared. However, existing circumstances and assumptions about future developments may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur. Critical judgments Investments in associates Multi-lines International Company Ltd (Multi-lines), which is 50% owned by the Group, has been judged by management to be an associate rather than a subsidiary or a joint venture. Under IFRS 10 control is determined by: • Power over the investee. • Exposure, or rights, to variable returns from its involvement with the investee. • The ability to use its power over the investee to affect the amount of the investor’s returns. Although 50% owned, B&M Group does not have voting rights or substantive rights. Therefore, the level of power over the business is considered to be more in keeping with that of an associate than a joint-venture and, therefore, it has been treated as such within these consolidated financial statements. Hedge accounting The Group hedge accounts for stock purchases made in US Dollars. There is significant management judgment involved in forecasting the level of dollar purchases to be made within the period that the forward hedge has been bought for. Management takes a cautious view that no more than 80% of the operational hedging in place can be subject to hedge accounting, due to forecast uncertainties, and assesses every forward hedge taken out, on inception, if that figure should be reduced further by considering general purchasing trends, and discussion of specific purchasing decisions. Estimation uncertainty There are no areas of estimation uncertainty where management consider that there is a significant risk of a material adjustment to the carrying amounts of assets and liabilities within the next financial year. ## Notes to the Consolidated Financial Statements continued ### 1 General information and basis of preparation continued 114 B&M European Value Retail S.A. Annual Report and Accounts 2023 Standards and Interpretations not yet applied by the Group The following amendments to accounting standards and interpretations, issued by the International Accounting Standards Board (IASB), have not yet been applied by the Group in the period. None of these are expected to have a significant impact on the Group’s consolidated results or financial position: IASB effective for annual periods beginning on or after 1 January 2023 Standard Summary of changes EU Endorsement status Amendments to IAS 8 Accounting Estimates Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, make a distinction between how an entity should present and disclose different types of accounting changes in its financial statements. Changes in accounting policies must be applied retrospectively while changes in accounting estimates are accounted for prospectively. Endorsed on 2 March 2022. Effective from 1 January 2023. Amendments to IAS 1 and IFRS Practice Statement 2 The amendment requires an entity to disclose its material accounting policy information instead of its significant accounting policies. A policy can be material by nature even if the related amounts are immaterial. Endorsed on 2 March 2022. Effective from 1 January 2023. IASB effective for annual periods beginning on or after 1 January 2024 Standard Summary of changes EU Endorsement status Amendments to IAS 1 Presentation of Financial Statements The amendment requires an entity to have the right to defer settlement of the liability for at least 12 months after the reporting date in order to classify a liability as non-current. This right may be subject to a company complying with conditions (covenants) specified in a loan arrangement. Not yet endorsed Amendments to IFRS 16 Lease Liability in a Sale and Leaseback The amendment requires a seller-lessee to subsequently measure such leaseback liabilities in a way that does not recognise any amount of gain or loss that relates to the right of use it retains. The new requirements do not prevent a seller-lessee from recognising in profit or loss any gain or loss relating to the partial or full termination of a lease. The amendments do not depend on an index or rate. Not yet endorsed Tinkaya Report Corporate Statements Financial Statements ## 2 Segmental information IFRS 8 ("Operating segments") requires the Group's segments to be identified on the basis of internal reports about the components of the Group that are regularly reviewed by the chief operating decision maker to assess performance and allocate resources across each reporting segment. The chief operating decision maker has been identified as the executive directors who monitor the operating results of the retail segments for the purpose of making decisions about resource allocation and performance assessment. For management purposes, the Group is organised into three operating segments, comprising the three separately operated businesses within the Group, UK B&M, UK Heron and France B&M. Items that fall into the corporate category, which is not a separate segment but is presented to reconcile the balances to those presented in the main statements, include those related to the Luxembourg or associate entities, Group financing, corporate transactions, any tax adjustments and items we consider to be adjusting (see note 3). The average Euro rate for translation purposes was €1.1581 /£ during the year, with the period end rate being €1.1360 /£ (2022- €1.1756 /£ and €1.2009/£ respectively). | 52 week period to 25 March 2023 | UK B&M £'m | UK Heron £'m | France B&M £'m | Corporate £'m | Total £'m | | --- | --- | --- | --- | --- | --- | | Revenue | 4,067 | 485 | 431 | - | 4,983 | | EBITDA (note 3) | 680 | 41 | 76 | (20) | 777 | | EBITDA (pre-IFRS 16) (note 3) | 503 | 30 | 41 | (20) | 554 | | Depreciation and amortisation | (183) | (22) | (38) | - | (242) | | Net finance expense | (45) | (3) | (11) | (40) | (99) | | Income tax charge/credit | (87) | (3) | (6) | 8 | (88) | | Segment profit/(loss) | 366 | 13 | 20 | (51) | 348 | | Total assets | 2,856 | 295 | 385 | 51 | 3,587 | | Total liabilities | (1,443) | (19) | (277) | (1,038) | (2,867) | | Capital expenditure* | (77) | (1) | (10) | - | (98) | | 52 week period to 26 March 2022 | UK B&M £'m | UK Heron £'m | France B&M £'m | Corporate £'m | Total £'m | | --- | --- | --- | --- | --- | --- | | Revenue | 3,909 | 411 | 353 | - | 4,673 | | EBITDA (note 3) | 729 | 34 | 64 | 13 | 840 | | EBITDA (pre-IFRS 16) (note 3) | 565 | 23 | 32 | 13 | 631 | | Depreciation and amortisation | (170) | (23) | (34) | - | (227) | | Net finance expense | (48) | (2) | (11) | (27) | (88) | | Income tax charge | (96) | (1) | (5) | (5) | (103) | | Segment profit/(loss) | 415 | 8 | 14 | (15) | 422 | | Total assets | 2,952 | 281 | 331 | 74 | 3,638 | | Total liabilities | (1,513) | (117) | (251) | (1,011) | (2,892) | | Capital expenditure* | (80) | (9) | (11) | - | (100) | * Capital expenditure includes both tangible and intangible capital | Revenue is disaggregated geographically as follows | | | | --- | --- | --- | | | 52 weeks ended 25 March 2023 £'m | 52 weeks ended 26 March 2022 £'m | | Period to | | | | Revenue due from UK operations | 4,552 | 4,320 | | Revenue due from French operations | 431 | 353 | | Overall revenue | 4,983 | 4,673 | | Non-current assets (excluding deferred tax and financial instruments) are disaggregated geographically as follows | | | | --- | --- | --- | | | 25 March 2023 £'m | 26 March 2022 £'m | | As at | | | | UK operations | 2,240 | 2,252 | | French operations | 243 | 224 | | Luxembourg operations | 8 | 8 | | Overall | 2,491 | 2,484 | B&M European Value Retail S.A. Annual Report and Accounts 2023 115 Notes to the Consolidated Financial Statements continued # **2 Segmental information continued** The Group operates a small wholesale operation, with the relevant disaggregation of revenue as follows: | | 12 weeks ended 25 March 2023 £'m | 12 weeks ended 26 March 2022 £'m | | --- | --- | --- | | Revenue due to sales made in stores | 4,940 | 4,628 | | Revenue due to wholesale activities | 37 | 45 | | Revenue due to online activities | 6 | - | | Overall revenue | 4,983 | 4,673 | # **3 Reconciliation of non-IFRS measures from the statement of comprehensive income** The Group reports a selection of alternative performance measures as detailed below. The Directors believe that these measures provide additional information that is useful to the users of the accounts. EBITDA, adjusted EBITDA and adjusted profit are all non-IFRS measures and therefore a reconciliation from the statement of comprehensive income is set out below: | | 12 weeks ended 25 March 2023 £'m | 12 weeks ended 26 March 2022 £'m | | --- | --- | --- | | Profit on ordinary activities before interest and tax | 535 | 615 | | Add back depreciation and amortisation | 242 | 227 | | **EBITDA** | **777** | **840** | | Revenue the fair value impact of derivatives yet to mature | 17 | (13) | | Online project costs | 2 | - | | Foreign exchange on intercompany balances | 0 | 1 | | **Adjusted EBITDA** | **796** | **828** | | Depreciation and amortisation | (242) | (227) | | Interest costs related to lease liabilities (see note 5) | (61) | (59) | | Net other finance costs (see note 5) | (38) | (29) | | **Adjusted profit before tax** | **455** | **513** | | Adjusted tax | (91) | (101) | | **Adjusted profit for the period** | **364** | **412** | Adjusted EBITDA (pre-IFRS 16) and adjusted profit (pre-IFRS 16) are also non-IFRS measures and are reconciled as follows: | | 12 weeks ended 25 March 2023 £'m | 12 weeks ended 26 March 2022 £'m | | --- | --- | --- | | EBITDA (above) | 777 | 840 | | Remove effects of IFRS 16 on EBITDA | (223) | (209) | | **EBITDA (pre-IFRS 16)** | **554** | **631** | | Adjusting items (above) | 19 | (12) | | **Adjusted EBITDA (pre-IFRS 16)** | **573** | **619** | | Pre-IFRS 16 depreciation and amortisation | (76) | (66) | | Net other finance costs | (38) | (29) | | **Adjusted profit before tax (pre-IFRS 16)** | **459** | **524** | | Adjusted tax | (93) | (107) | | **Adjusted profit (pre-IFRS 16) for the period** | **366** | **417** | The effects of IFRS 16 on EBITDA caption reflects the difference between IAS 17 and IFRS 16 accounting and largely consists of the additional rent expense the Group would have incurred under the IAS 17 standard. Adjusting items are the effects of derivatives, one-off refinancing fees, foreign exchange on the translation of intercompany balances and the effects of revaluing or unwinding balances related to the acquisition of subsidiaries. Significant project costs or gains or losses arising from unusual circumstances or transactions may also be included if incurred, as they have been in the current year, recognising the loss incurred from the online trading that, which had ceased by the year end date. 116 B&W European Value Relief S.A. Annual Report and Accounts 2023 Tinkaya Report Accounts Overseas Physical Newsweek # 3 Reconciliation of non-IFRS measures from the statement of comprehensive income continued The following table reconciles the statutory figures to the adjusted and adjusted (pre-IFRS 16) figures in the statutory P&L format on a line by line basis. | 52 week period to 25 March 2023 | Statutory figures £'m | Adjusting items £'m | Adjusted figures £'m | Impact of IFRS 16 £'m | Adjusted (pre-IFRS 16) £'m | | --- | --- | --- | --- | --- | --- | | Revenue | 4,983 | - | 4,983 | - | 4,983 | | Cost of sales | (3,182) | - | (3,182) | - | (3,182) | | Gross profit | 1,801 | - | 1,801 | - | 1,801 | | Depreciation and amortisation | (242) | - | (242) | 166 | (76) | | Other administrative expenses | (1,023) | 19 | (1,004) | (223) | (1,227) | | Operating profit | 536 | 19 | 555 | (57) | 498 | | Share of losses in associates | (1) | - | (1) | - | (1) | | Profit before interest and tax | 535 | 19 | 554 | (57) | 497 | | Finance costs relating to right-of-use assets | (61) | - | (61) | 61 | - | | Other finance costs | (40) | - | (40) | - | (40) | | Finance income | 2 | - | 2 | - | 2 | | Profit before tax | 436 | 19 | 455 | 4 | 459 | | Income tax expense | (88) | (3) | (91) | (2) | (93) | | Profit for the period | 348 | 16 | 364 | 2 | 366 | | 52 week period to 26 March 2022 | Statutory figures £'m | Adjusting items £'m | Adjusted figures £'m | Impact of IFRS 16 £'m | Adjusted (pre-IFRS 16) £'m | | Revenue | 4,673 | - | 4,673 | - | 4,673 | | Cost of sales | (2,921) | - | (2,921) | - | (2,921) | | Gross profit | 1,752 | - | 1,752 | - | 1,752 | | Depreciation and amortisation | (227) | - | (227) | 161 | (66) | | Other administrative expenses | (915) | (12) | (927) | (209) | (1,136) | | Operating profit | 610 | (12) | 598 | (48) | 550 | | Share of profits in associates | 3 | - | 3 | - | 3 | | Profit before interest and tax | 613 | (12) | 601 | (48) | 553 | | Finance costs relating to right-of-use assets | (59) | - | (59) | 59 | - | | Other finance costs | (29) | - | (29) | - | (29) | | Finance income | 0 | - | 0 | - | 0 | | Profit before tax | 525 | (12) | 513 | 11 | 524 | | Income tax expense | (103) | 2 | (101) | 16 | (107) | | Profit for the period | 422 | (10) | 412 | 5 | 417 | Adjusted tax represents the tax charge per the statement of comprehensive income as adjusted only for the effects of the adjusting items detailed above. B&M European Value Retail S.A. Annual Report and Accounts 2023 117 Notes to the Consolidated Financial Statements continued # **3 Reconciliation of non-IFRS measures from the statement of comprehensive income continued** The segmental split in EBITDA and Adjusted EBITDA reconciles as follows: | | UK B&M €'m | UK Huron €'m | France B&M €'m | Corporate €'m | Total €'m | | --- | --- | --- | --- | --- | --- | | **52 week period to 25 March 2023** | | | | | | | Profit before interest and tax | 498 | 19 | 38 | (20) | 535 | | Add back depreciation and amortisation | 182 | 22 | 38 | - | 242 | | **EBITDA** | **680** | **41** | **76** | **(20)** | **777** | | Adjusting items detailed above | - | - | - | 19 | 19 | | **Adjusted EBITDA** | **680** | **41** | **76** | **(1)** | **796** | | | UK B&M €'m | UK Huron €'m | France B&M €'m | Corporate €'m | Total €'m | | **52 week period to 26 March 2022** | | | | | | | Profit before interest and tax | 559 | 11 | 30 | 13 | 615 | | Add back depreciation and amortisation | 170 | 23 | 34 | - | 227 | | **EBITDA** | **729** | **34** | **64** | **13** | **840** | | Adjusting items detailed above | - | - | - | (12) | (12) | | **Adjusted EBITDA** | **729** | **34** | **64** | **1** | **828** | Adjusted EBITDA and related measures are net measures of performance or liquidity under IFRS and should not be considered in isolation or as a substitute for measures of profit, or as an indicator of the Group's operating performance or cash flows from operating activities as determined in accordance with IFRS. # **4 Operating profit** The following items have been charged in arriving at operating profit: | | 52 weeks ended 25 March 2023 €'m | 52 weeks ended 26 March 2022 €'m | | --- | --- | --- | | Period ended | | | | Auditors' remuneration | 1 | 1 | | Payments to auditors in respect of non-audit services: | | | | Other assurance services | 0 | 0 | | Cost of inventories recognised as an expense (included in cost of sales) | 3,182 | 2,921 | | Depreciation of owned property, plant and equipment | 71 | 62 | | Amortisation (included within administration costs) | 4 | 2 | | Depreciation of right-of-use assets | 167 | 163 | | Impairment of right-of-use assets | 2 | 2 | | Operating lease rentals | 5 | 2 | | Profit/loss on sale of property, plant and equipment | (1) | 1 | | Gain on sale and leasebacks | (1) | (1) | | Gain on foreign exchange | (10) | (6) | # **5 Finance costs and finance income** Finance costs include all interest related income and expenses. The following amounts have been included in the continuing profit line for each reporting period presented: | | 52 weeks to 25 March 2023 €'m | 52 weeks to 26 March 2022 €'m | | --- | --- | --- | | Period ended | | | | Interest on debt and borrowings | (38) | (27) | | Ongoing amortisation of finance fees | (2) | (2) | | **Total other finance expense** | **(40)** | **(29)** | | Finance costs on lease liabilities | (61) | (59) | | **Total finance expense** | **(101)** | **(88)** | 118 B&M European Value Relief S.A. Annual Report and Accounts 2023 Tinkaya Report Corporate Governance Financial Statements ## 5 Finance costs and finance income continued The finance expense reconciles to the statement of cash flows as follows: | | 52 weeks to 25 March 2022 £'m | 52 weeks to 26 March 2022 £'m | | --- | --- | --- | | Period ended | | | | **Cash** | | | | Finance costs paid in relation to debt and borrowings | 36 | 24 | | Finance costs paid in relation to lease liabilities | 61 | 59 | | Fees paid in relation to refinancing | – | 3 | | Finance costs paid | 97 | 86 | | **Non-cash** | | | | Movement of accruals in relation to debt and borrowings | 2 | 3 | | Capitalisation of paid fees in relation to new facilities | – | (3) | | Ongoing amortisation of finance fees | 2 | 2 | | **Total finance expense** | **101** | **88** | There are no adjusting items relating to finance expenses. | | 52 weeks to 25 March 2022 £'m | 52 weeks to 26 March 2022 £'m | | --- | --- | --- | | Period ended | | | | Interest income on loans and bank accounts | 2 | 0 | | **Total finance income** | **2** | **0** | There are no adjusting items related to finance income. | | 52 weeks to 25 March 2022 £'m | 52 weeks to 26 March 2022 £'m | | --- | --- | --- | | Period ended | | | | Total other finance expense | (40) | (21) | | Total other finance income | 2 | 0 | | **Total net other finance costs** | **(38)** | **(21)** | ## 6 Employee remuneration Expense recognised for employee benefits is analysed below: | | 52 weeks to 25 March 2022 £'m | 52 weeks to 26 March 2022 £'m | | --- | --- | --- | | Period ended | | | | Wages and salaries | 583 | 530 | | Social security costs | 39 | 32 | | Share based payment expense | 3 | 2 | | Pensions – defined contribution plans | 9 | 8 | | **Total remuneration** | **634** | **572** | There are £'m of defined contribution pension liabilities owed by the Group at the period end (2022: £'m). B&M finance operates a scheme where they must provide a certain amount per employee to pay upon their retirement date. The accrual on this scheme at the period end was £'m (2022: £'m). | | 52 weeks to 25 March 2022 £'m | 52 weeks to 26 March 2022 £'m | | --- | --- | --- | | Period ended | | | | Sales staff | 42,299 | 39,804 | | Administration | 1,206 | 1,070 | | **Total staff** | **43,505** | **40,874** | B&M European Value Retail S.A. Annual Report and Accounts 2023 119 Notes to the Consolidated Financial Statements continued # 7 Key management remuneration Key management personnel and Directors' remuneration includes the following: | | 52 weeks to 25 March 2023 £'m | 52 weeks to 26 March 2022 £'m | | --- | --- | --- | | Period ended | | | | Directors' remuneration: | | | | Short term employee benefits | 4 | 4 | | Benefits accrued under the share option scheme | 1 | 1 | | Pension | 0 | 0 | | Total | 5 | 5 | | Key management expense (includes Directors' remuneration): | | | | Short term employee benefits | 9 | 9 | | Benefits accrued under the share option scheme | 2 | 1 | | Pension | 0 | 0 | | Total | 11 | 10 | | Amounts in respect of the highest paid director emoluments: | | | | Short term employee benefits | 2 | 2 | | Benefits accrued under the share option scheme | 1 | 1 | | Pension | 0 | 0 | | Total | 3 | 3 | The emoluments disclosed above are of the Directors and key management personnel who have served as a director within any of the continuing Group companies. # 8 Share Options The Group operates three equity settled share option schemes which split down to various tranches. Details of these schemes follow. # 1) Long-Term Incentive Plan (LTIP) Awards The LTIP was adopted by the board on 29 May 2014. No grant under this scheme can be made more than 10 years after this date. # Eligibility Employees and Executive Directors of the Group are eligible for the LTIP and the awards are made at the discretion of the remuneration committee. # Limits & pricing A fixed number of options are offered to each participant, with the pricing set at £nil. The options offered to each individual cannot exceed a total value of 100% (200% under exceptional circumstances) of the participants base salary where the value is measured as the market value of the shares on grant multiplied by the number of options awarded, with the whole scheme limited to 10% of the share capital in issue. # Dividend credits All participants in any LTIP awards granted after 1 April 2018 are entitled to a dividend credit, where the national dividend they would have received on the maximum number of shares available under their award is converted into new share options and added to the award based upon the share price on the date of the dividend. These additional awards have been reflected in the tables below. # Vesting & exercise The share options are subject to a set of conditions measured over a three-year performance period as follows: LTIP Executive ('X') awards - 50% of the awards are subject to a TSR performance condition, where the Group's TSR over the performance period is compared with a comparator group. The awards vest on a sliding scale where the full 50% is awarded if the Group falls in the upper quartile, 12.5% vests if the Group falls exactly at the median, and 0% below that. - 50% of the awards are subject to a Diluted EPS performance target. The awards vest on a sliding scale based upon the earnings per share as follows: | Award | EPS on at | 50% paid at | 12.5% paid at | | --- | --- | --- | --- | | LTIP 2016A | March–19 | 22.5p | 17.5p | | LTIP 2017A | March–20 | 24.0p | 19.0p | | LTIP 2018A | March–21 | 28.0p | 23.0p | | LTIP 2019A | March–22 | 33.0p | 27.0p | | LTIP 2020A | March–23 | 30.0p | 25.0p | | LTIP 2021A | March–24 | 45.0p | 37.0p | | LTIP 2022A | March–25 | 50.0p | 42.0p | 120 S&H European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements ### 8 Share Options continued 121B&M European Value Retail S.A. Annual Report and Accounts 2023 Below the 12.5% boundary, no options vest. Diluted EPS is considered to be on frozen GAAP and so does not include the effects of IFRS 16. • The performance period is the three years ending the period end specified in the EPS table above. • Once the performance period concludes, the calculated number of share options remaining are then subject to a two-year holding period. • The share options vest at the conclusion of the holding period. LTIP Restricted (“B”) awards • Group EBITDA must be positive in each year of the LTIP. • The awards also have an employee performance condition attached. Vested awards can be exercised up to the tenth anniversary of grant. Tranches There have been several awards of the LTIP, with the details as follows. Note that the LTIP Executive awards have been split into the element subject to the TSR (50%) and the element subject to the EPS (50%) since these were valued separately. The TSR awards market condition has been included in the fair value calculation for those awards, all non-market conditions have not been included. Expected volatility has been calculated based upon the historic share price volatility of the Group and those of comparable companies. The key information used in the valuation of these tranches is as follows: Scheme Date of grant Original options granted Fair value of each option Risk free rate Expected life (years) Volatility 2016A-TSR 18 Aug 16 122,385.5 164p 0.09% 5 26% 2016A-EPS 18 Aug 16 122,385.5 254p 0.09% 5 26% 2017A-TSR 7 Aug 17 40,610 272p 0.52% 5 32% 2017A-EPS 7 Aug 17 40,610 351p 0.52% 5 32% 2018A-TSR 22 Aug 18 226,672.5 240p 0.97% 5 29% 2018A-EPS 22 Aug 18 226,672.5 409p 0.97% 5 29% 2019A-TSR 22 Aug 19 275,640.5 251p 0.37% 5 31% 2019A-EPS 22 Aug 19 275,640.5 361p 0.37% 5 31% 2020A-TSR 30 Jul 20 141,718 409p –0.11% 5 48% 2020A-EPS 30 Jul 20 141,718 464p –0.11% 5 48% 2021A-TSR 3 Aug 21 218,861 354p 0.23% 5 37% 2021A-EPS 3 Aug 21 218,861 560p 0.23% 5 37% 2022A-TSR 17 Nov 22 309,342 124p 3.16% 5 31% 2022A-EPS 17 Nov 22 309,342 386p 3.16% 5 31% 2017/B1 7 Aug 17 287,963 361p 0.25% 3 32% 2017/B2 14 Aug 17 101,654 360p 0.25% 3 32% 2018/B1 23 Jan 18 19,264 400p 0.25% 3 32% 2018/B2 20 Aug 18 236,697 406p 0.25% 3 30% 2019/B1 20 Aug 19 369,061 348p 0.47% 3 30% 2019/B2 18 Sep 19 2,678 373p 0.47% 3 30% 2020/B1 30 Jul 20 303,092 463p –0.12% 3 39% 2021/B1 3 Aug 21 281,950 560p 0.12% 3 42% 2022/B1 3 Aug 22 396,877 437p 1.75% 3 32% 2022/B2 15 Dec 22 3,641 412p 1.75% 3 32% Notes to the Consolidated Financial Statements continued 8 Share Options continued | Scheme | Options at 26 Mar 23 | Granted | Dividend credit | Forfeited | Exercised | Options at 25 Mar 23 | | --- | --- | --- | --- | --- | --- | --- | | 2017A-TSR | 27,557* | - | - | - | (27,557) | - | | 2017A-EPS | 18,071* | - | - | - | (18,071) | - | | 2018A-TSR | 202,465* | - | 19,613 | 8,243† | - | 230,327* | | 2018A-EPS | 280,368* | - | 25,327 | (8,243)† | - | 297,452* | | 2019A-TSR | 279,393.5 | - | 24,963 | (11,168.5) | - | 293,188* | | 2019A-EPS | 279,393.5 | - | 24,963 | (11,168.5) | - | 293,188* | | 2020A-TSR | 169,361 | - | 15,763 | - | - | 185,124 | | 2020A-EPS | 169,361 | - | 15,763 | - | - | 185,124 | | 2021A-TSR | 229,660.5 | - | 21,376.5 | - | - | 251,037 | | 2021A-EPS | 229,660.5 | - | 21,376.5 | - | - | 251,037 | | 2022A-TSR | - | 309,342 | 18,509 | - | - | 327,851 | | 2022A-EPS | - | 309,342 | 18,509 | - | - | 327,851 | | 2017/B1 | 53,576 | - | - | - | (53,576) | - | | 2017/B2 | 13,379 | - | - | - | (13,379) | - | | 2018/B2 | 38,289 | - | - | - | (38,289) | - | | 2019/B1 | 391,522 | - | 10,023 | (1,937) | (399,608) | - | | 2019/B2 | 3,403 | - | 107 | - | (3,510) | - | | 2020/B1 | 297,105 | - | 24,247 | (19,011) | - | 302,339 | | 2021/B1 | 271,020 | - | 22,204 | (36,086) | - | 257,138 | | 2022/B1 | - | 396,877 | 23,532 | (12,145) | - | 408,264 | | 2022/B2 | - | 3,641 | 168 | - | - | 3,809 | | Scheme | Options at 27 Mar 21 | Granted | Dividend credit | Forfeited | Exercised | Options at 26 Mar 22 | | --- | --- | --- | --- | --- | --- | --- | | 2016A-TSR | 122,383.5* | - | - | - | (122,383.5) | - | | 2016A-EPS | 70,982.5* | - | - | - | (70,982.5) | - | | 2017A-TSR | 27,557* | - | - | - | - | 27,557* | | 2017A-EPS | 18,071* | - | - | - | - | 18,071* | | 2018A-TSR | 262,012 | - | 14,692 | (74,239) | - | 202,465* | | 2018A-EPS | 262,012 | - | 18,356 | - | - | 280,368* | | 2019A-TSR | 259,633 | - | 19,760.5 | - | - | 279,393.5 | | 2019A-EPS | 259,633 | - | 19,760.5 | - | - | 279,393.5 | | 2020A-TSR | 157,438.5 | - | 11,922.5 | - | - | 169,361 | | 2020A-EPS | 157,438.5 | - | 11,922.5 | - | - | 169,361 | | 2021A-TSR | - | 218,861 | 10,799.5 | - | - | 229,660.5 | | 2021A-EPS | - | 218,861 | 10,799.5 | - | - | 229,660.5 | | 2017/B1 | 73,667 | - | - | - | (20,091) | 53,576 | | 2017/B2 | 13,379 | - | - | - | - | 13,379 | | 2018/B2 | 234,739 | - | 4,876 | (7,657) | (193,689) | 38,289 | | 2019/B1 | 395,455 | - | 27,849 | (31,782) | - | 391,522 | | 2019/B2 | 3,363 | - | 240 | - | - | 3,403 | | 2020/B1 | 300,724 | - | 22,073 | (25,694) | - | 297,103 | | 2021/B1 | - | 281,950 | 13,600 | (24,530) | - | 271,020 | * These share options have vested and are in a two-year holding period. † There was a relationship between the EPS and TSR awards after the final analysis of the performance conditions of this scheme. The overall shares options vesting on the scheme does not change, only the split between TSR and EPS. ## 2) Deferred Bonus Share Plan (DBSP) Awards The Deferred Bonus Share Plan differs from the LTIP awards in that there are no vesting conditions. The scheme has been set up in order to allocate a specified proportion of the Executive Director's annual bonus into the prior share options which are then placed in holding for three years. As there are no vesting conditions, these awards have been valued at the amount of the bonus to be converted into share options under the scheme. There are annual awards of the scheme. The 2023 award will be made after this set of statutory accounts have been published and will therefore be reported in the next annual report. 122 B&W European Value Relief S.A. Annual Report and Accounts 2023 Trading Report Corporate Overview Financial Statements # 8 Share Options continued | Scheme | Options at 26 Mar 23 | Gravated | Dividend credit | Forfeited | Exercised | Options at 25 Mar 23 | | --- | --- | --- | --- | --- | --- | --- | | 2019 Bonus allocation | 72,909 | - | - | - | (72,909) | - | | 2020 Bonus allocation | 54,391 | - | 5,082 | - | - | 59,673 | | 2021 Bonus allocation | 89,550 | - | 8,335 | - | - | 97,885 | | 2022 Bonus allocation | - | 278,466 | 25,916 | - | - | 304,382 | | Scheme | Options at 27 Mar 23 | Gravated | Dividend credit | Forfeited | Exercised | Options at 26 Mar 22 | | 2019 Bonus allocation | 67,920 | - | 4,989 | - | - | 72,909 | | 2020 Bonus allocation | 50,748 | - | 3,843 | - | - | 54,391 | | 2021 Bonus allocation | - | 85,340 | 4,210 | - | - | 89,550 | The fair values of the presented schemes are £1.1m (2022), £0.5m (2021), £0.2m (2020) and £0.2m (2019). # 3) Specific LTIP Awards The remuneration committee are able to award specific share schemes under the LTIP framework, where considered appropriate. There are two such schemes at the year end, both relating to the buy-out of executive share option schemes held prior to appointment with the business. Both schemes have no vesting conditions but are time limited with details given below. | Scheme | Options at 26 Mar 23 | Gravated | Dividend credit | Forfeited | Exercised | Options at 25 Mar 23 | | --- | --- | --- | --- | --- | --- | --- | | Buy-out Nov-23 | - | 32,392 | 1,938 | - | - | 34,330 | | Buy-out Nov-24 | - | 32,392 | 1,938 | - | - | 34,330 | The fair values of the presented schemes are both £0.1m. The summary period end position is as follows. | Period ended | 23 March 2023 | 26 March 2022 | | --- | --- | --- | | Share options outstanding at the start of the year | 3,170,633 | 2,736,978 | | Share options granted during the year including via dividend credit | 1,692,706 | 1,004,705 | | Share options forfeited or lapsed during the year | (91,517) | (563,902) | | Share options exercised in the year | (626,899) | (407,168) | | Share options outstanding at the end of the year | 4,144,323 | 3,170,633 | | Of which: | | | | Share options that are not vested | 2,499,574 | 2,319,878 | | Share options that are in holding | 1,644,749 | 745,311 | | Share options that are vested and eligible for exercise | - | 105,284 | All exercised options are satisfied by the issue of new share capital. The weighted average share price on exercise was £3.59 (2022), £5.64. All outstanding options have a £nil (2022). £nil exercise price and the weighted average remaining contractual life is 2.1 years (2022), 2.0 years. In the year, £3m has been charged to the consolidated statement of comprehensive income in respect to the share option schemes (2022), £2m. At the end of the year the outstanding share options had a carrying value of £6m (2022), £5m. E&A European Value Retail S.A. Annual Report and Accounts 2023 123 Notes to the Consolidated Financial Statements continued # **9 Taxation** The relationship between the expected tax expense based on the standard rate of corporation tax in the UK of 19% (2022: 19%) and the tax expense actually recognised in the statement of comprehensive income can be reconciled as follows: | | 52 weeks to 25 March 2023 €'m | 52 weeks to 26 March 2022 €'m | | --- | --- | --- | | Period ended: | | | | Current tax expense | 84 | 90 | | Deferred tax charge | 4 | (3) | | Total tax expense recorded in profit and loss | 88 | 103 | | Deferred tax (credit) charge in other comprehensive income | (5) | 4 | | Total tax charge recorded in other comprehensive income | (5) | 4 | | Result for the year before tax | 436 | 525 | | Expected tax charge at the standard tax rate | 83 | 100 | | Effect of: | | | | Expenses not deductible for tax purposes | 3 | 4 | | Income not taxable | (2) | (4) | | Lease accounting | (1) | (0) | | Foreign operations taxed at local rates | 2 | 2 | | Changes in the rate of corporation tax | 1 | 2 | | Adjustment in respect of prior years | 2 | (2) | | Hold over gains on fixed assets | 0 | 1 | | Other | 0 | (0) | | Actual tax expense | 88 | 103 | The caption 'Changes in the rate of corporation tax' includes the differences arising due to the change in the future corporation tax rate to 25% from April 2023. # **Deferred taxation** | | 25 March 2023 €'m | 26 March 2022 €'m | | --- | --- | --- | | Statement of financial position | | | | Accumulated tax depreciation | (11) | (6) | | Relating to intangible brand assets | (27) | (28) | | Fair valuing of assets and liabilities (asset) | 3 | 0 | | Fair valuing of assets and liabilities (liability) | (1) | (6) | | Temporary differences relating to the tax accounting for leases | 24 | 24 | | Movement in provision | 0 | 1 | | Relating to share options | 3 | 3 | | Hold over gains on fixed assets | (4) | (3) | | Leases carried forward | – | 3 | | Other temporary differences | 0 | 0 | | Net deferred tax liability | (13) | (12) | | Analysed as: | | | | Deferred tax asset | 30 | 31 | | Deferred tax liability | (43) | (43) | 124 M&M European Value Relief S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements # **9 Taxation continued** | | 52 weeks to 25 March 2023 £'m | 52 weeks to 26 March 2022 £'m | | --- | --- | --- | | Statement of comprehensive income | | | | Accelerated tax depreciation | (5) | (4) | | Relating to intangible brand assets | 1 | (6) | | Fair valuing of assets and liabilities | 8 | (7) | | Temporary differences relating to the tax accounting for leases | 0 | 5 | | Movement in provision | (0) | (1) | | Relating to share options | (0) | 1 | | Held over gains on fixed assets | (0) | (2) | | Brought forward losses | (3) | (3) | | Other temporary differences | (0) | 0 | | Net deferred tax charge | 1 | (17) | | Analysed as: | | | | Total deferred tax charge in profit or loss | (4) | (13) | | Total deferred tax credit (charge) in other comprehensive income | 5 | (4) | There were no unrecognised deferred tax assets within the Group of the period end (2022: same). The Group offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority. # **10 Earnings per share** Basic earnings per share amounts are calculated by dividing the net profit or loss for the financial period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding at each period end. Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during each year plus the weighted average number of ordinary shares that would be issued on conversion of any dilutive potential ordinary shares into ordinary shares. Adjusted land adjusted (pre-IFRS 16) basic and diluted earnings per share are calculated in the same way as above, except using adjusted profit attributable to ordinary equity holders of the parent, as defined in note 3. There are share option schemes in place (see note 8) which have a dilutive effect on both periods presented. The following reflects the income and share data used in the earnings per share computations: | | 25 March 2023 £'m | 26 March 2022 £'m | | --- | --- | --- | | Period ended | | | | Profit for the period attributable to owners of the parent | 348 | 422 | | Adjusted profit for the period attributable to owners of the parent | 364 | 412 | | Adjusted (pre-IFRS 16) profit for the period attributable to owners of the parent | 366 | 417 | | | Thousands | Thousands | | Weighted average number of ordinary shares for basic earnings per share | 1,001,393 | 1,001,061 | | Dilutive effect of employee share options | 1,730 | 1,893 | | Weighted average number of ordinary shares adjusted for the effect of dilution | 1,003,323 | 1,002,954 | | | Pence | Pence | | Basic earnings per share | 34.8 | 42.2 | | Diluted earnings per share | 34.7 | 42.1 | | Adjusted basic earnings per share | 36.3 | 41.2 | | Adjusted diluted earnings per share | 36.2 | 41.1 | | Adjusted (pre-IFRS 16) basic earnings per share | 36.5 | 41.6 | | Adjusted (pre-IFRS 16) diluted earnings per share | 36.5 | 41.6 | S&H European Value Retail S.A. Annual Report and Accounts 2023 125 Notes to the Consolidated Financial Statements continued # **11 Investments in associates** | | 23 March 2023 €'m | 26 March 2022 €'m | | --- | --- | --- | | **Net book value** | | | | Carrying value at the start of the period | 8 | 4 | | Share of losses/profits in associates since the prior year valuation exercise | (1) | 3 | | Effect of foreign exchange on translation | 1 | 1 | | Carrying value at the end of the period | 8 | 6 | The Group has a 22.5% holding in Centz Retail Holdings Limited, "Centz", a company incorporated in Ireland. The principal activity of the company is retail sales and their registered address is 5 Old Dublin Road, Millorgan, Co. Dublin. The Group has a 30% interest in Multi-lines International Company Ltd, "Multi-Lines", a company incorporated in Hong Kong. The principal activity of the company is the purchase and sale of goods and their registered address is 617, Hope Sea Industrial Centre, No. 26 Lam Hing Street, Kowloon Bay, Hong Kong. None of the entities have discontinued operations or other comprehensive income, except that on consolidation both entities have a foreign exchange translation difference. | | 23 March 2023 €'m | 26 March 2022 €'m | | --- | --- | --- | | **Profit and loss** | | | | **Multi-lines** | | | | Non-current assets | 14 | 15 | | Current assets | 69 | 94 | | Non-current liabilities | - | - | | Current liabilities | (78) | (99) | | Net assets | 8 | 10 | | Revenue | 252 | 324 | | Loss/profit | (3) | 3 | | **Period ended** | **23 March 2023 €'m** | **26 March 2022 €'m** | | **Centz** | | | | Non-current assets | 16 | 16 | | Current assets | 24 | 20 | | Non-current liabilities | (10) | (8) | | Current liabilities | (13) | (15) | | Net assets | 17 | 13 | | Revenue | 71 | 78 | | Profit | 3 | 3 | The figures for both associates show 12 months to December 2022 (prior year, 12 months to December 2021), being the period used in the valuation of the associate. 126 M&N European Value Relief S.A. Annual Report and Accounts 2023 Tinkaya Report Corporate Governance Financial Statements # **12 Intangible assets** | | Goodwill £'m | Software £'m | Brands £'m | Other £'m | Total £'m | | --- | --- | --- | --- | --- | --- | | **Cost or valuation** | | | | | | | At 27 March 2021 | 921 | 11 | 115 | 1 | 1,048 | | Additions | – | 3 | 1 | – | 4 | | Disposals | – | – | – | – | – | | Effect of retranslation | (1) | (3) | (1) | (3) | (1) | | **At 26 March 2022** | **920** | **14** | **116** | **1** | **1,051** | | Additions | – | 3 | 2 | – | 5 | | Disposals | – | (7) | (4) | – | (11) | | Effect of retranslation | 1 | 0 | 0 | 0 | 1 | | **At 25 March 2023** | **921** | **10** | **114** | **1** | **1,046** | | **Accumulated amortisation/impairment** | | | | | | | At 27 March 2021 | – | 8 | 1 | – | 9 | | Charge for the year | – | 2 | 0 | – | 2 | | Disposals | – | – | – | – | – | | Effect of retranslation | – | (3) | (1) | – | (3) | | **At 26 March 2022** | **–** | **10** | **1** | **–** | **11** | | Charge for the year | – | 1 | 3 | – | 4 | | Disposals | – | (6) | (4) | – | (10) | | Effect of retranslation | – | 0 | 0 | – | 0 | | **At 25 March 2023** | **–** | **5** | **0** | **–** | **5** | | **Net book value at 25 March 2023** | **921** | **5** | **114** | **1** | **1,041** | | Net book value at 26 March 2022 | 920 | 4 | 115 | 1 | 1,040 | At the period end, no software was being developed that is not yet in use (2022: samet, and the Group was not committed to the purchase of any intangible assets (2022: committed to £2m of trademarks). # **Impairment review of intangible assets held with indefinite life** The Group holds the following assets with indefinite life: | Segment | 25 March 2023 Goodwill £'m | 25 March 2023 Brand £'m | 26 March 2022 Goodwill £'m | 26 March 2022 Brand £'m | | --- | --- | --- | --- | --- | | UK B&M | 807 | 99 | 807 | 98 | | UK Heron | 88 | 14 | 88 | 14 | | France B&M | 26 | – | 25 | – | Not all items in the brand classification have an indefinite life as same are time limited. The brand intangible assets that have been identified as having an indefinite life are designated as such as management believe that these assets will hold their value for an indefinite period of time. Specifically, the B&M and Heron brands represent leading brands in their sectors with significant histories and growth prospects. The B&M France goodwill is held in Euros, with an underlying balance of £30m (2022: £30m). In each case the goodwill and brand assets have been allocated to one group of CGU's, being the store estate within the specific segment to which those assets relate. The Group performs impairment tests at each period end. The impairment test involves assessing the net present value (NPV) of the expected cash flows in relation to the stores within each CGU according to a number of assumptions to calculate the value-in-use (VIL) for the group of CGU's. The key assumptions in assessing the value in use as at 25 March 2023 were: # **The Group's discount rate** This was calculated using an internal CAPM model which includes external estimates of the risk-free-rate, cost of debt, equity beta and market risk premium. It is adjusted for which country the segment is in, how large the segment is and includes an alpha rate estimate made by management. Discount rates have increased during the year, largely due to an increase in the risk-free-rate. # **The inflation rate for expenses** This is based upon the consumer price index for the relevant country, as well as official reports from the appropriate central bank. B&M European Value Retail S.A. Annual Report and Accounts 2023 127 ## Notes to the Consolidated Financial Statements continued ### 12 Intangible assets continued 128 B&M European Value Retail S.A. Annual Report and Accounts 2023 Like for like sales growth This is an estimate made by management which encompasses the historical sales trends of the entity and management’s assessment of how each segment will perform in the context of the current economic environment. Gross margin The standing assumption made by management is that forecast gross margin will be similar to that experienced in the prior year, and the result is subsequently sensitised to the gross margin input to demonstrate the robustness of the projection against this assumption. Terminal growth rate An estimate made by management based upon the expected position of the business at the end of the five-year forecast period, in the context of the macro growth level of the economic environment in which that segment operates. The assumptions were as follows: As at 25 March 2023 26 March 2022 Discount rate (B&M) 12.7% 10.8% Discount rate (Heron) 14.7% 13.7% Discount rate (B&M France) 14.7% 12.9% Inflation rate for costs (B&M & Heron) 8.0%/1.0%* 3.5% Inflation rate for costs (B&M France) 6.0%/4.0%/2.0%* 1.5% Like for like sales growth (B&M) 2.0% 3.5% Like for like sales growth (Heron) 5.0%/2.0%* 4.0% Like for like sales growth (B&M France) 7.0%/2.0%* 4.5% Gross Margin (all) ±0bps N/A Terminal growth rate (B&M) 0.5% 0.5% Terminal growth rate (Heron) 1.0% 1.2% Terminal growth rate (B&M France) 1.2% 1.2% * The first figure reflects the assumptions in year one (and year two for French inflation) which are higher due to the current economic environment. These assumptions are reflected for five years in the CGU forecasts and beyond this a perpetuity calculation is performed using the assumptions made regarding terminal growth rates. In each case, the results of the impairment tests on the continuing operations identified that the VIU was in excess of the carrying value of assets within each group of CGU’s at the period end dates. The headroom with the base case assumptions in B&M was £3,380m, Heron £83m and B&M France €248m (2022: £4,833m, £43m and €349m respectively). No indicators of impairment were noted in the segments and the impairment tests were sensitised with reference to the key assumptions for reasonable possible scenarios. These scenarios specifically included; • A drop off in sales or gross margin, modelling flat long term like for like sales and terminal growth rates. • Sales prices failing to keep pace with inflation such that the local inflation rates increase 50bps without a corresponding increase in like for like sales. • A deterioration of the credit environment, leading to a significantly increased cost of capital of 20%. Trading Report Corporate Overview Financial Statements ## 12 Intangible assets continued To further quantify the sensitivity, the below tables demonstrate the point at which each impairment test would first fall for changes in each of the key assumptions, when applied to all years, except any specific year one or two assumptions noted above, whilst assuming each other key assumption is held level(e.g. for inflation-sensitivity, the U1 was not adjusted). | | 25 March 2023 | 26 March 2023 | | --- | --- | --- | | **B&M** | | | | Discount rate | 53.9% | 61.7% | | Inflation rate for expenses | 12.8% | 14.1% | | Like for like sales | (5.4)% | (7.3)% | | Gross margin | (234)%ps | N/A | | Terminal growth rate | Net sensitive | Net sensitive | | **B&M France** | | | | Discount rate | 72.0% | 55.7% | | Inflation rate for expenses | 8.0% | 6.9% | | Like for like sales | (3.0)% | (0.5)% | | Gross margin | (102)%ps | N/A | | Terminal growth rate | Net sensitive | Net sensitive | | **Heron** | | | | Discount rate | 22.4% | 17.1% | | Inflation rate for expenses | 3.9% | 4.7% | | Like for like sales | (0.5)% | 3.0% | | Gross margin | (56)%ps | N/A | | Terminal growth rate | (17.6)% | (5.0)% | In the prior year, Heron's result demonstrated a lower level of headroom when compared to the other two segments, but the Directors considered that the assumptions made were reasonably prudent and that it was unlikely that a situation will arise where an impairment would be required in that segment. This has been borne out by the actual results outstripping the projection which has resulted in a higher level of headroom for this year's test. ## 13 Property, plant and equipment | | Land and buildings £'m | Water vehicles £'m | Plant, fixtures and equipment £'m | Total £'m | | --- | --- | --- | --- | --- | | **Cost or valuation** | | | | | | At 27 March 2021 | 100 | 20 | 436 | 556 | | Additions | 18 | 2 | 76 | 96 | | Disposals | (8) | 3 | (5) | (10) | | Effect of retranslation | – | (0) | (1) | (1) | | **At 26 March 2022** | **110** | **25** | **506** | **641** | | Additions | 7 | 6 | 80 | 93 | | Disposals | (18) | (5) | (47) | (70) | | Effect of retranslation | – | 0 | 3 | 3 | | **At 25 March 2023** | **99** | **26** | **542** | **667** | | **Accumulated depreciation and impairment charges** | | | | | | At 27 March 2021 | 23 | 9 | 188 | 220 | | Charge for the period | 5 | 3 | 54 | 62 | | Disposals | (0) | 1 | (4) | (3) | | Effect of retranslation | – | – | (1) | (1) | | **At 26 March 2022** | **28** | **13** | **237** | **278** | | Charge for the period | 4 | 5 | 62 | 71 | | Disposals | (15) | (2) | (46) | (63) | | Effect of retranslation | – | 0 | 1 | 1 | | **At 25 March 2023** | **17** | **16** | **254** | **287** | | **Net book value at 25 March 2023** | **82** | **10** | **288** | **380** | | Net book value at 26 March 2022 | 82 | 12 | 269 | 363 | Under the terms of the loan and notes facilities in place at 25 March 2023, fixed and floating charges were held over £82m of the net book value of land and buildings, £10m of the net book value of motor vehicles and £257m of the net book value of the plant, fixtures and equipment (2022: £82m, £12m and £242m respectively). At the period end £3m of assets were under construction (2022: <£3m). B&M European Value Retail S.A. Annual Report and Accounts 2023 129 Notes to the Consolidated Financial Statements continued ### 13 Property, plant and equipment continued Included within land and buildings is land with a cost of £6m (2022: £3m) which is not depreciated. #### Capital commitments There were £7m of contractual capital commitments not provided within the Group financial statements as at 25 March 2023 (2022: £5m). ### 14 Right-of-use assets | | Land and buildings £'m | Water vehicles £'m | Plant, fixtures and equipment £'m | Total £'m | | --- | --- | --- | --- | --- | | Net book value | | | | | | As at 27 March 2021 | 1,050 | 15 | 6 | 1,071 | | Additions | 160 | 0 | 2 | 162 | | Modifications | 23 | - | - | 23 | | Disposals | (18) | (1) | (0) | (19) | | Impairment | (2) | - | - | (2) | | Depreciation | (154) | (6) | (3) | (163) | | Foreign exchange | (6) | - | - | (6) | | As at 26 March 2022 | 1,053 | 8 | 5 | 1,066 | | Additions | 130 | 2 | 3 | 135 | | Modifications | 32 | - | - | 32 | | Disposals | (18) | (0) | (0) | (18) | | Impairment | (2) | - | - | (2) | | Depreciation | (160) | (4) | (3) | (167) | | Foreign exchange | 9 | 0 | 1 | 10 | | As at 25 March 2023 | 1,044 | 6 | 6 | 1,056 | The vast majority of the Group's leases are in relation to the property comprising the store and warehouse network for the business. The other leases recognised are trucks, trailers, company cars, manual handling equipment and various fixtures and fittings. The leases are separately negotiated, and no sub-group is considered to be individually significant nor to contain individually significant terms. The Group recognises a lease term appropriate to the business expectation of the term of use for the asset which usually assumes that all extension clauses are taken, and break clauses are not, unless the business considers there is a good reason to recognise otherwise. At the period end, there was one property with a significant unrecognised extension clause for which the Group has full autonomy over exercising in 2040. On the date of recognition of the relevant right-of-use asset, in March 2020, the extension period liability had a net present value of £50m. There are no material covenants imposed by our right-of-use leases. In the year the Group expensed £3m (2022: £2m) in relation to low value leases and <£1m (2022: <£1m) in relation to short term leases for which the Group applied the practical expedient under IFRS 16. The Group expensed <£1m (2022: <£1m) in relation to variable lease payments. The agreements are on-going and future payments are expected to be in-line with these expensed recently. The Group received £2m (2022: £2m) in relation to subletting right-of-use assets. The impairments noted in the table above are recorded when the carrying value of a right-of-use asset exceeds the value in use of that asset. These arise when we set a store before the related lease has come to an end, or as the outcome of our annual store impairment review. All impairments are in relation to store leases. No impairments have been reversed in the presented periods. The segmental splits of the impairments were B&M <£1m, Heron £1m, B&M France <£1m (2022: B&M <£1m, Heron £1m, B&M France <£1m). The current and future cashflows for the right-of-use assets are: | | 25 March 2022 £'m | 26 March 2023 £'m | | --- | --- | --- | | This year | 229 | 218 | | Within 1 year | 229 | 219 | | Between 1 and 2 years | 217 | 210 | | Between 2 and 3 years | 200 | 194 | | Between 3 and 4 years | 184 | 177 | | Between 4 and 5 years | 166 | 160 | | Between 5 and 10 years | 486 | 478 | | More than 10 years | 141 | 167 | | Total | 1,623 | 1,605 | 130 B&M European Value Relief S.A. Annual Report and Accounts 2023 Tinkaya Report Corporate Governance Financial Statements # **14 Right-of-use assets continued** The change in lease liability reconciles to the figures presented in the consolidated statement of cashflows as follows: | | 23 March 2023 €'m | 26 March 2022 €'m | | --- | --- | --- | | Lease liabilities brought forward | 1,310 | 1,302 | | **Cash** | | | | Repayment of the principal in relation to right-of-use assets | (168) | (159) | | Payment of interest in relation to right-of-use assets | (61) | (59) | | **Non-cash** | | | | Interest charge | 61 | 59 | | Effects on lease liability relating to lease additions, modifications and disposals | 150 | 172 | | Effects of foreign exchange | 9 | (5) | | **Total cash movement in the year** | **(229)** | **(218)** | | **Total non-cash movement in the year** | **220** | **226** | | **Movement in the year** | **(9)** | **8** | | **Lease liabilities carried forward** | **1,301** | **1,310** | | Of which current | 177 | 170 | | Of which non-current | 1,124 | 1,140 | # **Discount rates** Where, as in most cases, a discount rate implicit to the lease is not available, discount rates are calculated for each lease with reference to the underlying cost of borrowing available to the business and several other factors specific to the asset. We have calculated the weighted average discount rates and sensitivity to a 50bps change in the discount rate to the interest charge as follows: | | 23 March 2023 | 26 March 2022 | | --- | --- | --- | | **Weighted average discount rate** | | | | Property | 4.7% | 4.5% | | Equipment | 4.2% | 3.2% | | All right-of-use assets | 4.7% | 4.5% | | | **€'m** | **€'m** | | Effect on finance costs with a change of 50bps to the discount rate | | | | Property | 6 | 7 | | Equipment | 0 | 0 | | All right-of-use assets | 6 | 7 | # **Sale and Leaseback** During the year the business has undertaken two sale and leasebacks (2022: two). | The details of the transactions were as follows: | 23 March 2023 €'m | 26 March 2022 €'m | | --- | --- | --- | | Consideration received | 4 | 14 | | Net book value of the assets disposed | (3) | (7) | | Costs of sale when specifically recognised | (0) | – | | Profit per pre-IFRS 16 accounting standards | 1 | 7 | | Opening adjustment to the right-of-use asset | (0) | (6) | | Profit recognised in the statement of comprehensive income | 1 | 1 | | Initial right-of-use asset recognised | 1 | 6 | | Initial lease liability recognised | (2) | (11) | The pre-IFRS 16 profit is higher because the provisions of IFRS 16 require that a portion of the profit relating to the sale and leaseback is instead recognised as a reduction in the opening right-of-use asset, and therefore the benefit is released over the term of the contract. B&M European Value Retail S.A. Annual Report and Accounts 2023 131 Notes to the Consolidated Financial Statements continued # **15 Inventories** | | 25 March 2023 €m | 26 March 2022 €m | | --- | --- | --- | | As of | | | | Goods for resale | 764 | 863 | Included in the amount above was a net release of £3m related to inventory provisions (2022: £14m net release). In the period to 25 March 2023, £3,182m (2022: £2,921m) was recognised as an expense for inventories, and £26m of supplier rebates were received (2022: £21m). # **16 Trade and other receivables** | | 25 March 2023 €m | 26 March 2022 €m | | --- | --- | --- | | **Non-current** | | | | Other receivables | 6 | 7 | | **Total non-current receivables** | **6** | **7** | | **Current** | | | | Trade receivables | 9 | 6 | | Deposits on account | 2 | 13 | | Provision for impairment | (2) | (2) | | Net trade receivables to non-related parties | 9 | 17 | | Prepayments | 26 | 20 | | Related party receivables | 2 | 3 | | Other tax | 5 | 3 | | Other receivables | 10 | 10 | | **Total current receivables** | **52** | **53** | Trade receivables are stated initially at their fair value and then at amortised cost as reduced by appropriate allowances for estimated irrecoverable amounts. The carrying amount is determined by the directors to be a reasonable approximation of fair value. There are no individually non-related significant balances held at the current period end. See note 26 in respect of balances held with related parties. The following table sets out an analysis of provisions for impairment of trade and other receivables: | | 25 March 2023 €m | 26 March 2022 €m | | --- | --- | --- | | Period ended | | | | Provision for impairment at the start of the period | (2) | (2) | | Impairment during the period | (0) | (2) | | Utilised/released during the period | 0 | 0 | | Effect of foreign exchange | (0) | 0 | | Balance at the period end | (2) | (2) | Trade receivables are non-interest-bearing and are generally on terms of 30 days or less. The following table sets out a maturity analysis of trade receivables, including those which are current: | | 25 March 2023 €m | 26 March 2022 €m | | --- | --- | --- | | As of | | | | Current | 6 | 2 | | 1-30 days past due | 1 | 1 | | 31-90 days past due | 0 | 2 | | Over 90 days past due | 2 | 1 | | Balance at the period end | 9 | 6 | # **17 Cash and cash equivalents** | | 25 March 2023 €m | 26 March 2022 €m | | --- | --- | --- | | As of | | | | Cash at bank and in hand | 237 | 173 | | Cash and cash equivalents | 237 | 173 | As at the period end the Group had available £142m of undrawn committed borrowing facilities (2022: £142m). 132 B&W European Value Relief S.A. Annual Report and Accounts 2023 Tinkaya Report Accounts Documents Financial Statements ## 18 Trade and other payables | As at | 23 March 2023 €m | 26 March 2022 €m | | --- | --- | --- | | **Current** | | | | Trade payables | 371 | 388 | | Other tax and social security payments | 80 | 62 | | Accruals and deferred income | 63 | 75 | | Related party trade payables | 11 | 37 | | Other payables | 16 | 12 | | **Total current payables** | **541** | **564** | Trade payables are generally on 30 day terms and are not interest bearing. The carrying value of trade payables approximates to their fair value. For further details on the related party trade payables, see note 26. The Group had supply chain financing facilities in place during the year. The facilities are operated by major banking partners with high credit ratings and are limited to $50m total exposure of any one time. The exposure at the period end was $nil (2022: $25m), the average balance over the year was $13m (2022: $19m). The purpose of the arrangement is to enable our participating suppliers, at their discretion, to draw down against their receivables from the Group prior to their usual due date. From the Group's perspective, the invoices subject to these schemes are treated in the same way as those not subject to these schemes. That is that they are approved under our usual processes (and cannot be drawn down against until they have been approved) and paid on the usual due date, which is in line with the payment terms of our other international suppliers. We do not benefit from the margin charged by the banks for any early draw down, and the banks do not benefit from additional security when compared to the security originally enjoyed by the supplier. There is no impact on potential liquidity risk as the cash flow timings and amounts are unchanged for those invoices in the schemes against those not in these schemes. There would be no impact on the Group if the facilities became unavailable and there are no fees or charges payable by the Group in regard to these arrangements. As these invoices continue to be part of the normal operating cycle of the Group, the schemes do not change the recognition of the invoices subject to them, so they continue to be recognised as trade payables, with the associated cash flows presented within operating cash flows and without affecting the calculation of Group net debt. ## 19 Other financial assets and liabilities ### Other financial assets | As at | 23 March 2023 €m | 26 March 2022 €m | | --- | --- | --- | | **Current financial assets at fair value through profit and loss:** | | | | Foreign exchange forward contracts | 1 | 9 | | **Current financial assets at fair value through other comprehensive income:** | | | | Foreign exchange forward contracts | 0 | 16 | | Total current other financial assets | 1 | 25 | | Total other financial assets | 1 | 25 | Financial assets through profit or loss reflect the fair value of those derivatives that are not designated as hedge relationships but are nevertheless intended to reduce the level of risk for expected sales and purchases. ### Other financial liabilities | As at | 23 March 2023 €m | 26 March 2022 €m | | --- | --- | --- | | **Current financial liabilities at fair value through profit and loss:** | | | | Foreign exchange forward contracts | 8 | 0 | | **Current financial liabilities at fair value through other comprehensive income:** | | | | Foreign exchange forward contracts | 5 | – | | Total current other financial liabilities | 13 | 0 | | Total other financial liabilities | 13 | 0 | S&N European Value Retail S.A. Annual Report and Accounts 2023 133 Notes to the Consolidated Financial Statements continued # 19 Other financial assets and liabilities continued The other financial liabilities through profit or loss reflect the fair value of those foreign exchange forward contracts that are not designated as hedge relationships but are nevertheless intended to reduce the level of risk for expected sales and purchases. # Fair value hierarchy The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: - Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities - Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly. - Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data. As at the reporting dates, the Group held the following financial instruments carried at fair value on the balance sheet: | | Total €m | Level 1 €m | Level 2 €m | Level 3 €m | | --- | --- | --- | --- | --- | | **25 March 2023** | | | | | | **Foreign exchange contracts** | **(12)** | **-** | **(12)** | **-** | | 26 March 2022 | | | | | | Foreign exchange contracts | 25 | - | 25 | - | The financial instruments have been valued by the issuing bank, using a mark to market method. The bank has used various inputs to compute the valuations, which include inter alia the relevant maturity date and strike rates, the current exchange rate, fuel prices and relevant interbank floating interest rate levels. # 20 Financial liabilities – borrowings | As at | 25 March 2023 €m | 26 March 2022 €m | | --- | --- | --- | | **Current** | | | | Term facility bank loan | 78 | - | | B&M France loan facilities | 3 | 3 | | Heron loan facilities | - | 3 | | **Total** | **81** | **6** | | **Non-current** | | | | High yield bond notes | 646 | 646 | | Term facility bank loan | 219 | 219 | | B&M France loan facilities | 8 | 7 | | **Total** | **873** | **950** | # Extension of senior loan facilities On 3 April 2023, the Group completed an extension of its term facility bank loan. The transaction was committed on 21 March 2023 and therefore took place from an accounting perspective before the year end date. The previous £300m term facility was drawn down in July 2020 with £4m of fees capitalised into the balance at that time. The agreement included a revolving facility of £155m and was due to mature in April 2025. This has been extended with new facilities totalling £450m due to mature in April 2028. These comprise a term loan of £225m and a revolving facility of £225m and the agreement also includes the availability of two 1-year extension terms, subject to mutual consent with the banking syndicate. An assessment has been made by management with the conclusion that the transaction represents an extension and not a significant modification. This is as the terms are substantially the same under the new agreement with the only differences that Heron is now included as a Guarantor and that the information requirements, covenant calculations and leverage boundaries have been updated to reflect the implementation of IFRS 16 such that the new levels are materially equivalent to the pre-IFRS 16 levels previously used. The discounted committed cash payments due under the new agreement are also not materially different to those prior to the extension. As such, the remaining £2m of unamortised capitalised fees have remained on the balance sheet and will be amortised over the extended term. There are £4m of fees associated with the extension which have also been capitalised into the loan balance. None of these fees were paid prior to the year-end date, whilst a portion of these fees are payable to the banking partners on the funds flow date. As the extension was committed pre-year end the pre-existing £300m term loan has been split into a £225m non-current liability and a £75m current liability for disclosure. This is since the £225m is to be rolled into the newly extended term facility directly whilst the £75m is repayable. The funds flow completed successfully on April 3, shortly after the year end date. 134 B&M European Value Retail S.A. Annual Report and Accounts 2023 Trading Report Corporate Governance Financial Statements ## 20 Financial liabilities – borrowings continued ### Other borrowings The carrying values given above include fees incurred on refinancing which are to be amortised over the terms of those facilities. More details of these are given below. The Group holds two tranches of high yield bonds which are each held at amortised cost. The two tranches of bonds were issued in July 2020 and November 2021, respectively, with £4m and £3m of fees capitalised at inception. A number of these bonds have been purchased by related parties, see note 26. All other loans are carried at their gross cash amount. The maturities, which only relate to the position as at 25 March 2023, and gross cash amounts of these facilities are included in the table below: | | Interest rate % | Maturity | 25 March 2023 £'m | 26 March 2022 £'m | | --- | --- | --- | --- | --- | | Revolving facility loan | 1.75% + SONIA | N/A | – | – | | Term facility bank loan A | 2.00% + SONIA | Apr-23 | 75 | – | | Term facility bank loan A | 2.00% + SONIA | Apr-28 | 225 | 300 | | High yield bond notes (2020) | 3.625% | Jul-25 | 400 | 400 | | High yield bond notes (2021) | 4.00% | Nov-28 | 250 | 250 | | Heron loan facilities – Mellon | N/A | N/A | – | 3 | | B&M France – BNP Paribas | 0.75-3.50% | Jul-23 to Feb-28 | 3 | 1 | | B&M France – Caisse d'Epargne | 0.75-2.60% | Aug-23 to Nov-29 | 2 | 1 | | B&M France – CIC | 0.71-0.75% | Sept-24 to Jan-27 | 2 | 5 | | B&M France – Crédit Agricole | 0.39-0.87% | Aug-23 to Jan-28 | 1 | 1 | | B&M France – Crédit Lyonnais | 0.68-0.74% | Nov-24 to Mar-27 | 3 | 4 | | B&M France – Société Générale | 0.63% | Jun-25 | 0 | 0 | | Total | | | 961 | 961 | The term facility bank loans and the high yield bond notes have carrying values which include transaction fees allocated on inception. All B&M France facilities have gross values in euros, and the values above have been translated at the period end rates of €1.1360/E (2022: €1.2009/E). The movement in the loan liabilities during the year breaks down as follows: | | 25 March 2023 £'m | 26 March 2022 £'m | | --- | --- | --- | | As at | | | | Borrowings brought forward | 956 | 730 | | Cash | | | | Issue of new corporate bonds | – | 250 | | Repayment of B&M France loan guaranteed by the French government | – | (22) | | Repayment of Heron loan facilities | (2) | (4) | | Receipt of other B&M France loan facilities | 0 | 1 | | Capitalised fees on refinancing | – | (3) | | Non-cash | | | | Foreign exchange on loan balances | 0 | 2 | | Refinancing fees accrued | (1) | – | | Ongoing amortisation of fees capitalised on refinancing | 2 | 2 | | Total cash movement in the year | (3) | 222 | | Total non-cash movement in the year | 1 | 4 | | Movement in the year | (2) | 226 | | Borrowings carried forward | 954 | 956 | | Of which current | 81 | 6 | | Of which non-current | 873 | 950 | B&M European Value Retail S.A. Annual Report and Accounts 2023 135 Notes to the Consolidated Financial Statements continued # **21 Provisions** | | Property provisions €'m | Other €'m | Total €'m | | --- | --- | --- | --- | | At 27 March 2021 | 9 | 4 | 13 | | Provided in the period | 5 | 2 | 7 | | Utilised during the period | (1) | (2) | (3) | | Released during the period | (2) | (0) | (2) | | **At 26 March 2022** | **11** | **4** | **15** | | Provided in the period | 1 | 2 | 3 | | Utilised during the period | (1) | (2) | (3) | | Released during the period | (6) | (0) | (6) | | **At 25 March 2023** | **5** | **4** | **9** | | **Current liabilities 2023** | **2** | **4** | **6** | | **Non-current liabilities 2023** | **3** | **0** | **3** | | Current liabilities 2022 | 7 | 4 | 11 | | Non-current liabilities 2022 | 4 | – | 4 | The property provision relates to the expected future costs on specific leasehold properties. This is inclusive of onerous leases and dilapidations on these properties. The timing in relation to utilisation is dependent upon the individual lease terms. The other provisions principally relate to disputes concerning insured liability claims. A prudent amount has been set aside for each claim as per legal advice received by the Group. These claims are individually non-significant and average 1% per claim (1% in 2022). # **22 Share capital** | | Shares | €'m | | --- | --- | --- | | **Allotted, called up and fully paid** | | | | *B&M European Value-Retail S.A. ordinary shares of 10p each* | | | | As at 27 March 2021 | 1,000,819,688 | 100 | | Release of shares related to employee share options | 407,148 | 0 | | **As at 26 March 2022** | **1,001,226,836** | **100** | | Release of shares related to employee share options | 626,899 | 0 | | **As at 25 March 2023** | **1,001,853,735** | **100** | # **Ordinary shares** Each ordinary share ranks pari passu with each other ordinary share and each share carries one vote. The Group parent is authorised to issue up to an additional 2,970,368,487 ordinary shares. # **23 Cash generated from operations** | | 52 weeks ended 25 March 2023 €'m | 52 weeks ended 26 March 2022 €'m | | --- | --- | --- | | Period ended | | | | Profit before tax | 436 | 525 | | Adjustments for: | | | | Net interest expense | 99 | 88 | | Depreciation on property, plant and equipment | 71 | 62 | | Depreciation on right-of-use assets | 167 | 163 | | Impairment of right-of-use assets | 2 | 2 | | Amortisation of intangible assets | 4 | 2 | | Gain on sale and leaseback | (1) | (1) | | (Gain)/loss on disposal of property, plant and equipment | (1) | 1 | | Share option expense | 3 | 2 | | Change in inventories | 103 | (260) | | Change in trade and other receivables | 1 | (12) | | Change in trade and other payables | (30) | 40 | | Change in provisions | (6) | 2 | | Share of loss/(profit) from associates | 1 | (3) | | Loss/(profit) resulting from fair value of financial derivatives | 17 | (13) | | **Cash generated from operations** | **866** | **598** | 136 B&M European Value-Retail S.A. Annual Report and Accounts 2023 Tinkaya Report Suspents Documents Financial Statements ## 24 Group information and ultimate parent undertaking The financial results of the Group include the following entities | Company name | Country | Date of incorporation | Percent held within the Group | Principal activity | | --- | --- | --- | --- | --- | | B&M European Value Retail S.A. | Luxembourg | May 2014 | Parent | Holding company | | B&M European Value Retail 1 S.b.r.l. | Luxembourg | November 2012 | 100% | Holding company | | B&M European Value Retail Holdco 1 Ltd | UK | December 2012 | 100% | Holding company | | B&M European Value Retail Holdco 2 Ltd | UK | December 2012 | 100% | Holding company | | B&M European Value Retail Holdco 3 Ltd | UK | November 2012 | 100% | Holding company | | B&M European Value Retail Holdco 4 Ltd | UK | November 2012 | 100% | Holding company | | B&M European Value Retail 2 S.b.r.l. | Luxembourg | September 2012 | 100% | Holding company | | EV Retail Limited | UK | September 1996 | 100% | Holding company | | B&M Retail Limited | UK | March 1978 | 100% | General retail | | Opus-Homewares Limited | UK | April 2003 | 100% | Property management | | Heron Food Group Ltd | UK | August 2002 | 100% | Holding company | | Heron Foods Ltd | UK | October 1978 | 100% | Convenience retail | | Cooltrader Ltd | UK | September 2012 | 100% | Diamant | | Heron Properties IHufil Ltd | UK | February 2003 | 100% | Diamant | | B&M European Value Retail Germany GmbH | Germany | November 2013 | 100% | Ex-holding company | | B&M France SAS | France | November 1977 | 100% | General retail | | Centz N.I. Limited | UK | January 2021 | 100% | Property management | During the year, on 17 January 2023, Retail Industry Apprenticeships Ltd was dissolved and ceased to be a member of the group. ### Registered Offices - The Luxembourg entities are all registered at 68-70 boulevard de la Pâtuse, L-2320 Luxembourg - Centz N.I. Limited are registered at Murray House, 4 Murray Street, Belfast, United Kingdom, BT1 6DN. - The other UK entities are all registered at The Vault, Dakota Drive, Estuary Commerce Park, Speke, Liverpool, L24 8RJ. - B&M European Value Retail Germany GmbH are registered at Am Harnberg 6, 29614, Soltau. - B&M France are registered at 8 Rue du Bois Joli, 63800 Courton d'Auvergne. ### Associates The Group has a 50% interest in Multi-lines International Company Limited, a company incorporated in Hong Kong, and a 22.5% interest in Centz Retail Holdings Limited, a company incorporated in the Republic of Ireland. The share of profit/loss from the associates is included in the statement of comprehensive income, see note 11. ### Ultimate parent undertaking The Directors of the Group consider the parent and the ultimate controlling related party of this Group to be B&M European Value Retail S.A., registered in Luxembourg. ## 25 Financial risk management The Group uses various financial instruments, including bank loans, related party loans, finance company loans, cash, equity investment, derivatives and various items, such as trade receivables and trade payables that arise directly from its operations. The main risks arising from the Group's financial instruments are market risk, currency risk, cash flow interest rate risk, credit risk and liquidity risk. The Directors review and agree policies for managing each of these risks and they are summarised below: The existence of these financial instruments exposes the Group to a number of financial risks, which are described in more detail below. In order to manage the Group's exposure to those risks, in particular the Group's exposure to currency risk, the Group enters into forward foreign currency contracts. No transactions in derivatives are undertaken of a speculative nature. ### Market risk Market risk encompasses three types of risk, being currency risk, fair value interest rate risk and commodity price risk. Commodity price risk is not considered material to the business as the Group is able to pass on pricing changes to its customers. The Group's policies for managing fair value interest rate risk are considered along with those for managing cash flow interest rate risk and are set out in the subsection entitled 'Interest rate risk' below. ### Currency risk The Group is exposed to translation and transaction foreign exchange risk arising from exchange rate fluctuations on its purchases from overseas suppliers. In relation to translation risk, this is not considered material to the business as amounts owed in foreign currency are short term of up to 30 days and are of a relatively modest nature. Transaction exposures, including those associated with forecast transactions, are hedged when known, principally using forward currency contracts. B&M European Value Retail S.A. Annual Report and Accounts 2023 137 Notes to the Consolidated Financial Statements continued ## 25 Financial risk management continued All of the Group's sales are in customers in the UK and France and there is no currency exposure in this respect. A proportion of the Group's purchases are priced in US Dollars and the Group generally uses forward currency contracts to minimise the risk associated with that exposure. ### Approach to hedge accounting As part of the Group's response to currency risk the currency forwards taken out are intended to prudently cover the majority of our stock purchases forecast for that period. However, the Group only hedge accounts for that part of the forward contract that we are reasonably certain will be spent in the forecast period, allowing for potential volatility. Therefore, management always consider the likely volatility for a period and assign a percentage to each tranche of forwards purchased, usually in the range 50-80%, and never more than 80%. Effectiveness of the hedged forward is then assessed against the Group hedge ratio, which has been set by management at 80% as a reasonable guide to the certainty level we expect the hedged portions of our forwards to at least achieve. If they fail, or are expected to fail, to meet this ratio of effectiveness then they are treated as non-hedged items, and immediately expensed through administrative expenses in Profit and Loss. Ineffectiveness can be caused by exceptional volatility in the market, by the timing of product availability, or the desire to manage short term company cash flows, for instance, when a large amount of cash is required at relatively short notice. Where a hedged derivative matures efficiently, the fair value is transferred to inventory and subsequently to cost of sales when that item is sold. If the Group did not hedge account, then the difference is that the gain or loss in other comprehensive income would be presented in profit or loss and the assets and liabilities presented under the classification fair value through other comprehensive income would be at fair value through profit or loss. In the period, the Group has had $634m of hedged derivatives mature (2022: $516m). The difference to profit before tax if none of our forwards had been hedge accounted during the year would have been a loss of £7m (2022: £30m gain) and a pre-tax loss in other comprehensive income of £28m (2022: £20m loss). The net effective hedging gain transferred to the cost of inventories in the year was £49m (2022: net loss of £3m). At the period end, the amount of outstanding US Dollar contracts covered by hedge accounting was $641m (2022: $487m), which mature over the next 15 months (2022: 9 months). The change in fair value of the hedging instruments used as the basis for recognising hedge ineffectiveness was £2m (2022: £1m), achieved effectiveness was 97% (2022: 100%). ### Foreign currency sensitivity The following table demonstrates the sensitivity to a reasonably possible change in US Dollar period end exchange rates with all other variables held constant. The impact on the Group's profit before tax and other comprehensive income (net of tax) is largely due to changes in the fair value of our foreign exchange derivatives and revaluation of creditors and deposits held on account with our US Dollar suppliers. | As of | Change in USD rate | 25 March 2023 £'m | 26 March 2022 £'m | | --- | --- | --- | --- | | Effect on profit before tax | +2.5% | (11) | (4) | | | -2.5% | 12 | 5 | | Effect on other comprehensive income | +2.5% | (13) | (9) | | | -2.5% | 13 | 10 | Profit before tax and other comprehensive income are not sensitive to the effects of a reasonably possible change in the Euro period end exchange rates. These calculations have been performed by taking the period end translation rate used in the accounts and applying the changes noted above. The balance sheet valuations are then directly calculated. The valuation of the foreign exchange derivatives were projected based upon the spot rate changing and all other variables being held equal. ### Interest rate risk Interest rate risk is the risk of variability of the Group cash flows due to changes in the interest rate. The Group is exposed to changes in interest rates as a portion of the Group's bank borrowings are subject to a floating rate based on SOF&A (previously UBOF until December 2021). The Group's interest rate risk arises mainly from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. The Group's exposure to interest rate fluctuations is not considered to be material, however the Group has in the past used interest rate swaps to minimise the impact. If floating interest rates had been 50 basis points higher/lower throughout the year with all other variables held constant, the effect upon calculated pre-tax profit for the year would have been | As of | Basis point increase/decrease | 25 March 2023 £'m | 26 March 2022 £'m | | --- | --- | --- | --- | | Effect on profit before tax | +50 | (1) | (1) | | | -50 | 1 | 1 | 138 B&W European Value Retail S.A. Annual Report and Accounts 2023 Trading Report Corporate Overview Financial Statements ## 25 Financial risk management continued This sensitivity has been calculated by changing the interest rate for each interest payment and accrual made by the Group over the period, by the amount specified in the table above, and then calculating the difference that would have been required. ### Credit risk Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group's principal financial assets are cash, derivatives and trade receivables. The credit risks associated with cash and derivatives are limited as the main counterparties are banks with high credit ratings (A long term and A-1 short term (Standard & Poor) or better, (2022: A, A-1 or better) respectively). The principal credit risk arises therefore from the Group's trade receivables. Credit risk is further limited by the fact that the vast majority of sales transactions are made through the store registers, direct from the customer at the point of purchase, leading to a low trade receivables balance. In order to manage credit risk, the directors set limits for customers based on a combination of payment history and third-party credit references. Credit limits are reviewed by the credit controller on a regular basis in conjunction with debt ageing and collection history. Provisions against bad debts are made where appropriate. ### Liquidity risk Any impact on available cash and therefore the liquidity of the Group could have a material effect on the business as a result. The Group's borrowings are subject to semi-annual banking covenants against which the Group has had significant headroom to date with no anticipated issues based upon forecast's made. Short term flexibility is achieved via the Group's rolling credit facility. The following table shows the liquidity risk maturity of financial liabilities grouping based on their remaining period at the balance sheet date. The amounts disclosed are the contractual undiscounted cash flows. | | Within 1 year £'m | Between 1 and 2 years £'m | Between 2 and 5 years £'m | More than 5 years £'m | Total £'m | | --- | --- | --- | --- | --- | --- | | **25 March 2023** | | | | | | | Interest bearing loans | 117 | 40 | 480 | 489 | 1,126 | | Lease liabilities | 229 | 217 | 550 | 627 | 1,623 | | Trade payables | 382 | – | – | – | 382 | | **26 March 2022** | | | | | | | Interest bearing loans | 48 | 44 | 794 | 290 | 1,176 | | Lease liabilities | 219 | 210 | 531 | 645 | 1,605 | | Trade payables | 415 | – | – | – | 415 | ### Fair value The fair value of the financial assets and liabilities of the Group are not materially different from their carrying value. Refer to the table below. These all represent financial assets and liabilities measured at amortised cost except where stated as measured at fair value through the profit and loss or fair value through other comprehensive income. | | 25 March 2023 £'m | 26 March 2022 £'m | | --- | --- | --- | | **As at** | | | | **Financial assets** | | | | **Fair value through profit and loss** | | | | Forward foreign exchange contracts | 1 | 9 | | **Fair value through other comprehensive income** | | | | Forward foreign exchange contracts | 0 | 16 | | **Loans and receivables** | | | | Cash and cash equivalents | 237 | 173 | | Trade receivables | 11 | 20 | | Other receivables | 10 | 10 | E&M European Value Retail S.A. Annual Report and Accounts 2023 139 Notes to the Consolidated Financial Statements continued # 25 Financial risk management continued | As of | 25 March 2023 €'m | 26 March 2022 €'m | | --- | --- | --- | | Financial liabilities | | | | Fair value through profit and loss | | | | Forward foreign exchange contracts | 8 | 0 | | Fair value through other comprehensive income | | | | Forward foreign exchange contracts | 5 | - | | Amortised cost | | | | Lease liabilities | 1,301 | 1,310 | | Interest-bearing loans and borrowings | 954 | 956 | | Trade payables | 382 | 415 | | Other payables | 16 | 12 | # 26 Related party transactions The Group has transacted with the following related parties over the periods Multi-lines International Company Limited, a supplier, and Centz Retail Holdings, a customer, are associates of the Group. Rapley Properties Ltd, Triple Jersey Ltd, TJI, UK Ltd, Rani Investments, Fulland Investments Limited, Golden Honest International Investments Limited, Hammond Investments Limited, Joint Sino Investments Limited and Ocean Sense Investments Limited, all landlords of properties occupied by the Group, and Rani 1 Holdings Limited, Rani 2 Holdings Limited and SSA Investments, bondholders and beneficial owners of equipment hired to the Group, are directly or indirectly owned by director Simon Arora, his family, or his family trusts together, the Arora related parties. Simon Arora is also directly a bondholder of the business. There were significant related party transactions in the period, with SSA Investments purchasing a total of £43m of our 4.00% corporate bonds and £13m of our 3.625% corporate bonds in June 2022, and Simon Arora purchasing £33m of our 3.625% corporate bonds over December 2022 and January 2023. The overall related bond position is summarised in the table below with all related party bondholders being Arora related parties. | | 12 weeks ended 22 March 2023 €'m | 12 weeks ended 26 March 2022 €'m | | --- | --- | --- | | Simon Arora (3.625%, 2025 bonds) | 35 | - | | SSA Investments (3.625%, 2025 bonds) | 13 | - | | SSA Investments (4.000%, 2028 bonds) | 99 | 56 | | Rani 1 Investments (3.625%, 2025 bonds) | 50 | 50 | | Rani 2 Investments (3.625%, 2025 bonds) | 50 | 50 | | Total | 247 | 156 | The expense incurred during the year, and the accrual at the end of the year are shown in the table below: | | Expense to 26 March 2022 €'m | Accrual on 26 March 2023 €'m | Expense to 26 March 2022 €'m | Accrual on 26 March 2022 €'m | | --- | --- | --- | --- | --- | | Simon Arora | 0.3 | 0.3 | - | - | | SSA Investments | 4.0 | 1.6 | 1.3 | 0.8 | | Rani 1 Investments | 1.8 | 0.4 | 1.8 | 0.4 | | Rani 2 Investments | 1.8 | 0.4 | 1.8 | 0.4 | | Total | 7.9 | 2.7 | 5.1 | 1.6 | 140 S&H European Value Relief S.A. Annual Report and Accounts 2023 Trading Report Accounts Statements Financial Statements # **26 Related party transactions continued** The following tables set out the total amount of trading transactions with related parties included in the statement of comprehensive income: | | 25 March 2023 €'m | 26 March 2022 €'m | | --- | --- | --- | | Period ended: | | | | **Sales to associates of the Group** | | | | Cents Retail Holdings Limited | 34 | 44 | | **Total sales to related parties** | **34** | **44** | | Period ended: | | | | | 25 March 2023 €'m | 26 March 2022 €'m | | **Purchases from associates of the Group** | | | | Multi-lines International Company Ltd | 193.7 | 279.4 | | **Purchases from parties related to key management personnel** | | | | Fulland Investments Limited | 0.2 | 0.2 | | Golden Honest International Investments Limited | 0.2 | 0.2 | | Hammond Investments Limited | 0.2 | 0.2 | | Joint Sino Investments Limited | 0.2 | 0.2 | | Ocean Sense Investments Limited | 0.2 | 0.2 | | SSA Investments | 0.1 | 0.0 | | **Total purchases from related parties** | **194.8** | **280.4** | The IFRS 16 lease figures in relation to these related parties, which are all related to key management personnel, are as follows: | | Depreciation charge €'m | Interest charge €'m | Total charge €'m | Right-of-use asset €'m | Lease liability €'m | Net liability €'m | | --- | --- | --- | --- | --- | --- | --- | | **Period ended 25 March 2023** | | | | | | | | Rani Investments | 0 | 0 | 0 | 1 | (1) | (0) | | Ropley Properties | 2 | 1 | 3 | 8 | (11) | (3) | | TJ, UK Limited | 1 | 0 | 1 | 10 | (12) | (2) | | Triple Jersey Limited | 8 | 3 | 11 | 46 | (57) | (11) | | **Total** | **11** | **4** | **15** | **65** | **(81)** | **(16)** | | Period ended 26 March 2022 | | | | | | | | Rani Investments | 0 | 0 | 0 | 1 | (1) | (0) | | Ropley Properties | 1 | 1 | 2 | 8 | (11) | (3) | | TJ, UK Limited | 1 | 1 | 2 | 11 | (13) | (2) | | Triple Jersey Limited | 9 | 3 | 12 | 54 | (67) | (13) | | **Total** | **11** | **5** | **16** | **74** | **(92)** | **(18)** | There were no new leases entered into by the Group during the current period with the Arora related parties (2022: one new). The total expense on this lease in the prior period was <€'m. There were 3 conditionally exchanged leases with Arora related parties in the current period with a long stop completion date (2022: none). B&M European Value Retail S.A. Annual Report and Accounts 2023 141 Notes to the Consolidated Financial Statements continued # **26 Related party transactions continued** The following tables set out the total amount of trading balances with related parties outstanding at the period end: | | 25 March 2023 €'m | 26 March 2022 €'m | | --- | --- | --- | | As at | | | | **Trade receivables from associates of the Group** | | | | Centz Retail Holdings Ltd | 2 | 3 | | **Total related party trade receivables** | **2** | **3** | | As at | | | | **Trade payables to associates of the Group** | | | | Multi-Ines International Company Ltd | 7 | 23 | | **Trade payables to companies owned by key management personnel** | | | | Bank Investments | 0 | - | | Ripley Properties Ltd | 1 | 0 | | TX UK Limited | 1 | - | | Triple Jersey Ltd | 2 | 2 | | **Total related party trade payables** | **11** | **27** | Outstanding trade balances at the balance sheet dates are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party trade receivables or payables. The balance with Multi-Ines International Company Ltd includes $nil (2022: $21m) held within a supply chain facility. See note 18 for more details. The business has not recorded any impairment of trade receivables relating to amounts owed by related parties as at 25 March 2023 (2022: no impairment). This assessment is undertaken each year through examining the financial position of the related party and the market in which the related party operates. The future lease commitments on the Arora related party properties are: | | 25 March 2023 €'m | 26 March 2022 €'m | | --- | --- | --- | | As at | | | | Not later than one year | 14 | 13 | | Later than one year and not later than two years | 13 | 14 | | Later than two years and not later than five years | 35 | 36 | | Later than five years | 35 | 47 | | **Total** | **97** | **112** | See note 11 for further information on the Group's associates. For further details on the transactions with key management personnel, see note 7 and the remuneration report. # **27 Capital management** For the purpose of the Group's capital management, capital includes issued capital and all other equity reserves attributable to the equity holders of the parent. The primary objective of the Group's capital management is to maximise the shareholder value. In order to achieve this overall objective, the Group's capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current or prior period. The Group manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Group uses the following definition of net debt: External interest-bearing loans and borrowings less cash and short-term deposits. 142 S&W European Value Retail S.A. Annual Report and Accounts 2023 Strategy Report Sustainable Documents Financial Statements ## 27 Capital management continued The interest-bearing loans figure used is the gross amount of cash borrowed at that time, as opposed to the carrying value under the amortised cost method. | As at | 25 March 2023 €m | 26 March 2022 €m | | --- | --- | --- | | Interest-bearing loans and borrowings (note 28) | 961 | 963 | | Less: Cash and short-term deposits (note 17) | (237) | (173) | | Net debt | 724 | 790 | ## 28 Past balance sheet events On 3 April 2023, the Group completed the funds flow with respect to the extension of their bank facilities for a further five years. See note 20 for further details. ## 29 Dividends A Special dividend of 20.0 pence per share (£200.4m), was declared in January 2023 and has been paid. An interim dividend of 5.0 pence per share (£50.1m) was declared in November 2022 and has been paid. A final dividend of 9.6 pence per share (£96.2m), giving a full year dividend of 14.6 pence per share (£146.3m), is proposed. Relating to the prior year, A Special dividend of 25.0 pence per share (£250.3m), was declared in December 2021 and has been paid. An interim dividend of 5.0 pence per share (£50.1m) was declared in November 2021 and has been paid. A final dividend of 11.5 pence per share (£93.1m), giving a full year dividend of 16.5 pence per share (£165.2m), was declared in July 2022 and has been paid in the current year. ## 30 Contingent liabilities and guarantees As at 25 March 2023, B&M European Value Retail S.A., B&M European Value Retail 1.5 à r.l., B&M European Value Retail 2.5 à r.l., B&M European Value Retail Holdco 1 Ltd, B&M European Value Retail Holdco 2 Ltd, B&M European Value Retail Holdco 3 Ltd, B&M European Value Retail Holdco 4 Ltd, EV Retail Ltd, B&M Retail Ltd, Heron Food Group Ltd and Heron Foods Ltd are all guarantors to both the loan and notes agreements which are formally held within B&M European Value Retail S.A. The amounts outstanding as of the period end were £300m for the loans, with the balance held in B&M European Value Retail Holdco 4 Ltd, and £650m for the notes, with the balance held in B&M European Value Retail S.A. As at 26 March 2022, B&M European Value Retail S.A., B&M European Value Retail 1.5 à r.l., B&M European Value Retail 2.5 à r.l., B&M European Value Retail Holdco 1 Ltd, B&M European Value Retail Holdco 2 Ltd, B&M European Value Retail Holdco 3 Ltd, B&M European Value Retail Holdco 4 Ltd, EV Retail Ltd and B&M Retail Ltd were all guarantors to both the loan and notes agreements which are formally held within B&M European Value Retail S.A. The amounts outstanding as of the period end were £300m for the loans, with the balance held in B&M European Value Retail Holdco 4 Ltd, and £650m for the notes, with the balance held in B&M European Value Retail S.A. As at 26 March 2022, Heron Food Group Limited and Heron Foods Ltd were guarantors to the loans which were formally held within Heron Foods Ltd. These loans were repaid during the year, with no amounts outstanding as at 25 March 2023 (2022: £3m), with the balance held in Heron Foods Ltd. ## 31 Directors The directors that served during the period were Peter Bamford (Chairman) A Russo (CEO), from 26 September 2022, previously CFO S Ariza (CEO to 26 September 2022) M Schmidt (CFO, appointed 1 November 2022) R McMillan T Hall C Bradley P MacKenzie O Tani (appointed 1 November 2022) Simon Ariza has retired from the Group on 21 April 2023. All directors served for the whole period except were indicated above. B&M European Value Retail S.A. Annual Report and Accounts 2023 143 ## 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. 144 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements ### 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 145B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Company profit and loss account ### for the financial year ended 31 March 2023 | | 31 March | | | 31 March | | | | --- | --- | --- | --- | --- | --- | --- | | | | 2023 | | | 2022 | | | Notes | | | £ | | | £ | 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. 146 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements ## Company balance sheet ### as at 31 March 2023 | | 31 March | | | 31 March | | | | --- | --- | --- | --- | --- | --- | --- | | | | 2023 | | | 2022 | | | Notes | | | £ | | | £ | 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. 147B&M European Value Retail S.A. Annual Report and Accounts 2023 # Notes to the annual accounts for the financial year ended 31 March 2023 ## 1 General Information B&W 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 187275 and having its registered office at 68-70, boulevard de la Petresse, 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. These shares are issued under the various schemes in place, including the Restricted Stock Awards Plan and Long Term Incentive Plan (LTP) 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 it any securities and rights through participation, contribution, underwriting, firm purchase or option, negotiation or in any other way, or of its 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 undertakings 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. 148 B&W European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements ### 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 orthe value determined on the basis of the exchange rates effective at the balance sheet date. The realised and unrealised exchange losses are recorded in the profit and loss account. The exchange gains are recorded in the profit and loss account at the moment of their realisation. Provisions Provisions are intended to cover losses or debts, the nature of which is clearly defined and which, at the date of the balance sheet are either likely to be incurred or certain to be incurred but uncertain as to their amount or as to the date at which they will arise. Provisions may also be created to cover charges which originate in the financial year under review or in a previous financial year, the nature of which is clearly defined and which at the date of the balance sheet are either likely to be incurred or certain to be incurred but uncertain as to their amount or the date at which they will arise. Provision for taxation Provisions for taxation corresponding to the tax liability estimated by the Company for the financial years for which the tax return has not yet been filed are recorded under the caption “Tax authorities”. The advance payments are shown in the assets of the balance sheet under the caption “Otherdebtors”, if applicable. Creditors Creditors are stated at their reimbursement value. Where the amount repayable on account is greater than the amount received, the difference is shown in the profit and loss account when the debt is issued. Dividends Dividends receivable are recognised when the Company’s right to receive the dividend has been established. This is considered to be on the date that the dividend is agreed by the Board of a subsidiary or when the dividend is to be received from any other investee. Dividends payable are recognised when the Company’s obligation to pay the dividend is established. This is considered to be for interim dividends on the date that the dividend is approved by the Board and for final dividends on the date that the dividend has been approved by shareholders. Issuance costs Bond issuance costs are expensed through the profit and loss account at the time that they are incurred. This is considered to be the date on which the relevant issuance is legally performed. 149B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Notes to the annual accounts continued ### 3 Financial assets The undertaking in which the Company holds interests is as follows: Net result for | | | Net equity | | | the financial | | Net book value | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | as at | | year ended | | | as at | | | | 31 March 2023 | | | | 31 March 2023 | | 31 March 2023 | | | | Undertaking’s name Registered office Percentage of holding | | | | £ | | £ | | | £ | 1 B&M EVR 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 252,037 216,238 150 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements ### 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 Legal Profit or loss Profit for the Interim premiums reserve brought forward financial period 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: After one year | | | and within | | After more than | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Within one year | | fiveyears | | | 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. 151B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Notes to the annual accounts continued ### 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: After one year | | | and within | | After more than | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Within one year | | fiveyears | | | 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. 152 B&M European Value Retail S.A. Annual Report and Accounts 2023 Tinkaya Report Accounts Overseas 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 | 164,482 | 153,232 | | Marketing, communication and travel expenses | 167,432 | 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** | **1,436,926** | **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 ESR 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 of 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. B&M European Value Retail S.A. Annual Report and Accounts 2023 153 Notes to the annual accounts continued # 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 | 251,000 | | **Total** | **25,097,950** | **18,251,000** | # 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 it share option plans and is 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 (DBSF19) 8. The B&M European Value Retail S.A. Deferred Benefit Share Plan 2020 (DBSF20) 9. The B&M European Value Retail S.A. Deferred Benefit Share Plan 2021 (DBSF21) 10. The B&M European Value Retail S.A. Deferred Benefit Share Plan 2022 (DBSF22) 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 "TFR" 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. 154 B&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. Number of | | | | | Number of | | options granted/ | | | | | | Number of | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | options | | (forfeited or | | | Number of | | | options | | | Fair value of | | outstanding at | | | | | lapsed) | options exercised | | outstanding at | | | | Scheme/Tranche Date of grant Date of vesting | | option £ | 31 March 2022 | | | | in the year | | | in the year | 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. Expected life Scheme / Tranche Risk-free rate (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 155B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Notes to the annual accounts continued ### 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. Number of | | | | | Number of | | options granted/ | | | | | | Number of | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | options | | (forfeited or | | | Number of | | | options | | | Fair value of | | outstanding at | | | | lapsed) in the | | options exercised | | outstanding at | | | | Scheme/Tranche Date of grant Date of vesting | | option £ | 31 March 2022 | | | | | year | | in the year | 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 Number of | | | | | Number of | | options granted/ | | | | | | Number of | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | options | | (forfeited or | | | Number of | | | options | | | Fair value of | | outstanding at | | | | lapsed) in the | | options exercised | | outstanding at | | | | Scheme / Tranche Date of grant Date of vesting | | option £ | 31 March 2022 | | | | | year | | in the year | 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. 156 B&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 157B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Corporate Directory | Registered Office & Company Number | Auditor | | --- | --- | | B&M European Value Retail S.A. | KPMG Audit S.à r.l. | | 68-70, Boulevard de la Pétrusse | 39, Avenue John F. Kennedy | | L-2320 Luxembourg | L-1855 Luxembourg | | Grand-Duchy of Luxembourg | Tel: +352 22 51 51 1 | | R.C.S. Luxembourg: B 187275 | www.kpmg.com/lu | Tel: +352 246 130 208 www.bandmretail.com Joint Brokers BofA Securities | Registrars | 2 King Edward Street | | --- | --- | | Banque Internationale à Luxembourg S.A. | London EC1A 1HQ | | 69, Route d’Esch | Tel: +44 (0)20 7628 1000 | | L-2953 Luxembourg | www.baml.com | Tel: +352 4590 5000 www.bil.com BNP PARIBAS 10 Harewood Avenue | Central Securities Depositary | London NW1 6AA | | --- | --- | | LuxCSD S.A. | Tel: 020 7595 2000 | | 42, Avenue J-F Kennedy | www.bnpparibas.com | L-1855 Luxembourg Grand-Duché de Luxembourg Principal Bankers www.luxcsd.com Barclays Bank PLC Listing The ordinary shares of B&M European Value Retail S.A. are listed with a premium listing on the London Stock Exchange. 158 B&M European Value Retail S.A. Annual Report and Accounts 2023 Strategic Report Corporate Governance Financial Statements 159B&M European Value Retail S.A. Annual Report and Accounts 2023 160 B&M European Value Retail S.A. Annual Report and Accounts 2023 The outer cover of this report has been laminated with a biodegradable film. Around 20 months after composting, FSC DETAILS TBC an additive within the film will initiate the process of oxidation. B&M European Value Retail S.A. Annual Report and Accounts 2023 ## Big brands ## Big savings 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 ©2023. All rights reserved. B&M and the B&M logo are registered trademarks.