B&M European Value Retail SA Interim Results Presentation 26 weeks to 27 th September 2014
FY15 H1 Group Highlights GROUP HIGHLIGHTS • Group revenues have increased by 29.7% to £739.8m • UK like-for-like revenues +4.8% • Gross Margin improved by 80 basis points to 34.7% • Group adjusted EBITDA increased by 34.0% to £73.0m • 20 net new stores opened in the period, our 400th UK store was opened in October 2014 • Strong pipeline of further new stores and on track for at least 50 net new openings this financial year • Integration of Jawoll Germany proceeding to plan • Interim dividend of 0.9p per share to be paid on 16 January 2015 Ref: 750493 2
Paul McDonald Chief Financial Officer Ref: 750493 3
Summary EBIT £ millions, H1 2014A H1 2015A % 393 – (UK) Number of Stores 357 49 – (Germany) Revenues 570.5 739.8 +29.7% Gross Profit 193.2 256.4 +32.7% % 33.9% 34.7% 80bps UK Operating Costs (138.8) (168.2) +21.2% Germany Operating Costs - (15.2) Adjusted EBITDA 54.5 73.0 +34.0% % 9.5% 9.9% 32bps Depreciation (4.5) (7.2) +61.7% Exceptionals (8.2) (24.0) +194.2% EBIT 41.8 41.8 - Ref: 750493 4
Group Revenue Bridge £ millions, H1 REVENUE 2014A-2015A KEY HIGHLIGHTS • 20 net new stores opened in UK, 393 UK stores trading at period end 740 59 27 15 68 • Prior year openings trading in line with 570 expectations • H1 LFL revenues +4.8% against tough comparable of +7.6% last year • £58.8m of revenue from Jawoll Germany for the 5 months of ownership H1 2014 Full Year Net New LFL Germany H1 2015 Effect of FY14 Stores Openings Ref: 750493 5
Strong EBITDA Growth £ millions, H1 ADJUSTED EBITDA BRIDGE 2014A-2015A UK 9.7% 9.5% Margin % Group 9.9% Margin % 7 73 5 2 9 (4) 54 H1 2014 Full Year Effect of Net New Stores LFL Central Costs Germany H1 2015 FY14 Openings Ref: 750493 6
Strong LFL Performance UK QUARTERLY LFL SALES GROWTH H1 +7.6% H1 +4.8% 8.7% 7.9% 7.3% 7.0% 6.2% 6.0% 6.0% 4.9% 4.7% 3.7% Jun- Sep- Dec- Mar- Jun- Sep- Mar- Jun- Sep- Dec- 2012 2012 2012 2013 2013 2013 2014 2014 2014 2013 Ref: 750493 7
Gross Margin Trend GROSS MARGIN (%) KEY HIGHLIGHTS 34.7% 34.0% 33.9% • 80 bps improvement in gross margin to 34.7% • UK margins have improved by 54 bps driven by: • Strong sell-through of Gardening and Outdoor • Better buying and hence less markdown needed in non-grocery generally • Impact of Jawoll Germany acquisition has improved the overall group margin by 26 bps • Our strategy going forward is to re-invest in price to prioritise growth over further gross margin expansion. 2014 H1 2014 A 2015 H1 Ref: 750493 8
Operating Costs £ millions, KEY HIGHLIGHTS H1 2014A H1 2015A • Rent 26.4 32.2 UK Operating costs have been carefully managed in line of which Store Rent 24.4 29.1 with revenue growth Store Wages 52.8 63.4 • Other Store Costs 30.8 37.8 Other Store Costs reflects on-going investments in training Transport & Warehouse 20.1 23.2 • Some efficiency improvements in transport and warehouse Central Costs 8.8 11.5 cost have been achieved Total UK 138.8 168.2 • Germany - 15.2 Central costs have increased as a % of sales % of UK Revenue • Cost of new warehouse capacity Rent 4.6% 4.7% of which Store Rent 4.3% 4.3% • Investments in head office teams Store Wages 9.3% 9.3% Other Store Costs 5.4% 5.6% • Costs of operating as a public company Transport & Warehouse 3.5% 3.4% Central Costs 1.5% 1.7% Total UK % 24.3% 24.7% Germany % - 25.9% Ref: 750493 9
Exceptional Items £ millions, KEY HIGHLIGHTS H1 2014A H1 2015A • Costs associated with the IPO and the group restructuring IPO Costs / Restructuring Fees 3.0 21.3 Jawoll Acquisition Fees - 0.8 • Costs incurred on the acquisition of Jawoll Fair Value Movements 3.4 0.2 Pre-Opening Costs 2.2 2.0 • Fair value movements on FX and inter-company loans Other (0.5) (0.3) Total 8.2 24.0 • New Stores’ pre -opening costs • Other mainly comprises one-off income from property disposals Ref: 750493 10
Interest Expenses £ millions, KEY HIGHLIGHTS H1 2014A H1 2015A • Interest and FRS4 fees relating to the bank debt Interest 15.6 11.9 FRS4 Fees 2.5 1.2 • Fees Write Off of £28.8m relates to the previous debt Fees Write Off - 28.8 facilities and is a non-cash item Preferred Equity Certificates 33.2 15.9 • Non-cash interest on the Preferred Equity Certificates Fair Value (1.3) 0.4 relating to the previous capital structure Total 50.0 58.2 Ref: 750493 11
Strong Cash Flow Conversion £ millions, OPERATING CASH FLOW CASH FLOW STATEMENT % Conversion 9% 41% H1, £m 2014A 2015A Adjusted EBITDA 54.5 73.0 30 Change in Working Capital (37.0) (31.0) New Store Capex (8.0) (6.5) 5 Infrastructure Capex (2.1) (2.1) Maintenance Capex (2.4) (3.9) H1 2014 H1 2015 Capex (12.5) (12.4) Operating Cash Flow 4.9 29.6 Operating Cash flow significantly Cash Exceptionals (13.6) (24.0) improved due to EBITDA growth Tax (7.4) (2.1) and tight working capital discipline Jawoll net of cash acquired - (54.4) Operating and Investing Cash Flow (16.1) (50.9) Ref: 750493 Note: Cash Conversion is defined as Operating Cash Flow as a percentage of Adjusted EBITDA. The cash exceptionals relate 12 to IPO / restructuring fees / financing fees, Jawoll acquisition fees, pre-opening costs, other.
Simon Arora Chief Executive Officer Ref: 750493 13
Our Market SPECIALIST RETAILERS £127bn ¹ Our focus is on the £127bn specialty retail segment £6bn ¹ £157bn ¹ GENERAL MERCHANDISE DISCOUNTERS FOOD RETAILERS Ref: 750493 1 Source: Euromonitor; refers to 2013 UK store-based retail value sales (RSP) excluding sales tax. 14
Unique, Disruptive Business Model The B&M Flywheel Compelling Targeted grocery higher ticket offering non-grocery offer Disruptive Cost sourcing efficiency process 5,500 SKU Format discipline flexibility Seasonal flex Ref: 750493 15
Huge White Space Opportunity 4,379 RETAIL CATCHMENTS SCREENED Proximity to Existing B&M Store Transport / Factory Outlet Future UK store estate: Population c. 850 Density Population Affluence Competitive Intensity High Rent STORES PER 100,000 POPULATION C .450 ADDITIONAL CATCHMENTS COULD SUPPORT A B&M STORE 1.5 to 2.0 1.0 to 1.5 0.5 to 1.0 0 to 0.5 Ref: 750493 16 Source: Management information, ONS, store count as at 13 March 2014, OC&C March 2014.
Store Rollout Update HIGHLIGHTS H1 OPENINGS • 20 net new stores opened in H1 against a target of 40 stores for the full year • New stores are performing in line with internal expectations with no material regional differences emerging • Now expect to open at least 50 net new stores this financial year • FY2015 store roll-out benefitted from opportunistic openings that became available. • We now revise our FY2016 forecast openings up from our previous target of 40 to at least 45 store openings Ref: 750493 17
International Expansion KEY HIGHLIGHTS CURRENT FOOTPRINT – GERMANY • Acquisition closed on 30 April 2014, so 5 months trading • Trading ahead of prior year and pleased with what we have found • Management retain 20% and incentivised to drive future financial performance to 2018 • Jawoll has invested in buying teams and I.T. systems Soltau • Jawoll buyers now ordering inventory from B&M supplier Head base; initial stock deliveries arriving in Q4 and response Office will be gauged by Q1 of FY2016 Ref: 750493 18
Investing Ahead of Growth Distribution and Maintenance Capital Expenditure • New 500,000 sq ft DC opened on time and on budget in Feb-14 and is operating efficiently in first trading peak • Invested £3.9m in maintenance capex and store refresh (2014: £2.4m) I.T. Infrastructure • An infrastructure refresh is on-going which will provide a resilient and future proof platform • Time and attendance software successfully rolled out across the store estate • Refreshing our store communications infrastructure People • Strengthening of the senior leadership team, appointment of Karen Hubbard as UK COO in October 2014 • Further investments in store manager and colleague training, including a step up programme for managerial positions Ref: 750493 19
Summary KEY HIGHLIGHTS • Strong profitable growth with revenues up by 29.7% and adjusted EBITDA by +34.0% • New store opening programme ahead of expectations • Good pipeline of stores for next financial year, new target of at least 45 new stores for the UK • Strengthened management team and continued investment in central functions and infrastructure • Progress from leveraging sourcing synergy from successful Jawoll Germany acquisition • Strong operating cash flow • Confident of achieving full year expectations Ref: 750493 20
Strategy for Growth Pillars of Future Growth 1 Like-for-Like Growth Flexible and Disciplined Store Roll- 2 out 3 International Expansion Underpinned by a Well Invested Infrastructure Ref: 750493 21
Appendix 22 22
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