B&M European Value Retail S.A.

Good to go, James. Good morning, everyone. Thank you for coming. I think we have a big audience also on audio. And we'll be taking questions via Dave, basically on the call as well. We're going to be very short today. I want to give us much time. as we come to questions. So hopefully the whole presentation is going to be 20, 25 minutes, and then we go straight into Q&A. First of all, I want to make a few introductions. You're going to see more of this every time we meet. So if you remember in our half one results, you met Gareth Bilton, who is the B&M UK Retail Director. He's not here. You're going to see him again in half one. And you met Tony Dobbs, who runs Heron Foods. So I'm going to quickly introduce you briefly, Ian Pratt, UK Property Director, Anthony Giron, Franz MD, John Parry, UK Logistics Director, Mike Schmidt, I think we all know Mike. We have James Holderton and Peter Warhouse and Dave in the room, you know, and not least importantly, you have Bobby Arora sitting on the side. Is this the first time you've... Yeah, first, maybe last, but I don't know. I think that... Last time he came was on IPO, and I want to say two things about Bobby. I think it's a given that he's an extraordinary trading director. But more importantly, he's incredibly good fun to work with. And I mean that generally not because he's here. I think he keeps me on my toes, and I certainly keep him on his toes. So thank you for coming, Bobby. And try not to catch him at the end with tricky questions, please, OK? I'll keep it short and sharp. First slide. Let's concentrate on three key numbers. You've already seen this at the RNS, and then I'll go straight to the bullet point. Total revenue growth for the group, 6.6% for the year. EBITDA, 573 million at the top end of the half of the range I guided. Operating cash, 866 million for the year. Don't underestimate how clean the stock is to deliver 896 million. We have a clean stock position. Now I'll come back to margin in the next 10 months. We concentrate on the last two bullet points. Very pleased with BNM UK, the first nine weeks, plus 8.3% LFL. highly driven by customer count and transaction numbers. You can assume that at least half of that LFL are customers on the till. And I'll keep coming back to standards and transaction numbers. Every month since June last summer, LFL transactions at BNM UK are positive and healthy. That number, at least half of that LFL are till receipts, customer numbers, and that means trade down into us. FY24 EBITDA is going to go up. Before you ask me a question on a 52, 53 or 54 week basis. FY24 EBITDA is going to go up. I'll come back in a bit of detail how and why. Not least importantly, 347 million pounds of shareholder returns, including the special dividend that we announced a few months back. I think you already know this chart. If you look at the orange, that bar is going to grow. And I'm very confident the way we've started the season that you can assume FY23, we're totally normalized We're back to compounding profitable growth with discipline across the three businesses, France, BNM UK, and Heron. LFL matters to me immensely. I'll speak on store standards and why it's so important in terms of driving profitable growth. Pipeline is improving. Ian is going to present you what we're doing. I'm very confident that actually the opening plan is taking in the right direction. Franz, you're going to hear from Anthony. And Heron, I will close with one slide, performing incredibly well. OK? Mike, to you.

Thank you, Alex. OK. Let's start on slide eight with an overview of our financial figures. If you look over the last three years, the group's made very significant strides that you can see on the slide. Revenues have now reached £5 billion, so that's a very substantial 30% increase compared to the 2020 financial year. We've achieved £573 million of adjusted EBITDA, which is a remarkable 67% increase. compared to the pre-pandemic period. And as we exit 2023, critically, we see that 2023 year as a clean baseline from which we're going to grow earnings. It is worth noting the comparison versus FY22. Adjusted EBITDA and also adjusted profit before tax are lower than the 2022 comparative. but that's due to the non-comparability of that 2022 year that benefited from lockdown period. But even when making that comparison year on year, I particularly note that we have seen growth in trading profit in the second half of the year, year on year. The positive momentum that we're building is evident across all three segments, BNM, UK, BNM France, and Heron. And as Alex has mentioned, that trend has very much carried over into the first quarter of the 2024 financial year. So let's dive into the figures in more detail. Slide nine, focusing on group revenue. We've achieved a group compound annual growth rate of 9.3% over the past three years. The growth has been very much driven across all three segments of the business. Critically, the UK. which just due to relative scale is absolutely core to the group, delivered 9% three-year CAGR, but there is a truly exceptional performance also to note from BNM France and the three-year CAGR that you can see there that just gives the evidence as to how well the BNM proposition is resonating in a new market. Across the group, the progress has been underpinned by the healthy mix of transaction volume growth, basket value growth, and expansion of our selling space that we intend to continue. And our development, therefore, is very much driven by the sustainable acquisition of new customers. So moving on to slide 10, looking at the underlying drivers of UK growth in a bit more detail. on the right-hand side of the slide, evidencing the point I was making previously. You can see the growth is being driven by the impact of the new space that we've delivered but also the like-for-like sales performance. On the left-hand side, you can see the increasing momentum in the UK business, particularly as we look at the first quarter of this year and the 8.3% like-for-like trading growth we delivered over the first nine weeks. And so that momentum, that progress is clearly building in the business. Moving on to group gross margin. Splitting it down between the halves. As previously mentioned, we talked about back in November, the first half of the financial year, we did see a significant impact from increased clearance activities in garden categories. However, our second half margin performance, which was a decline year on year of 92 basis points, very much aligned with our internal plans and incorporated a normal level of clearance activities and a balanced category mix. So within our categories, we've achieved healthy trading margins in the second half, strong performance in general merchandise in particular, helped in part by reduced freight rates. And this positive trend has very much carried over into the first nine weeks of this new financial year. We're on track, we're confident that we're going to conclude the garden season with solid trading margins and a clean stock position. France and Heron have also demonstrated resilient gross margin performance as part of this mix overall. Turning to slide 12, EBITDA. We feel it's appropriate to look at the performance over a three-year period, considering the effects of COVID lockdowns on the two intervening financial years. Each of our three group businesses made significant strides forward. We're confident that BNM UK's margin is well underpinned at 12.4%. It's consistent with historical levels, and within our 12 to 13% through the cycle guidance range, despite inflationary cost pressures that we're managing. France has made remarkable progress in recent years. We anticipate further gains as sales densities progress. And Heron's EBITDA margin, we feel, compares favourably to any other sector peers you would choose. And we're going to balance price competitiveness in setting our targeted margins. Slide 13 shows the operating cost base of each segment. France, again, has been the standout performer, showing the impact of driving the sales densities and scale of that business. But actually across the group, as with all retailers, inflation has, of course, posed a challenge to our cost base, affecting wages in particular, energy costs and supplier prices. The impact of this has been very much managed in minute detail in the business. You can't operate the EDLP, the value retail model, that we do without backing that up with very low costs, and we drill that into the teams every day. We are and we have been driving productivity to mitigate inflation's impact, and overall, as we look forwards, we see the shape of our P&L remaining consistent despite inflationary pressure. And our forward commitment to key cost lines across the operating cost structure mean that as we look at the next 12 months, we've got confidence in that outcome, that we're going to keep that shape of the P&L consistent. Looking at last year, the increase in costs largely reflects reinvestment in our businesses, actually, particularly in B&M UK, where we've targeted spending to improve store and distribution standards that we believe is underpinning the like-for-like growth that you can see coming through. So lastly, let's just conclude with a focus on the cash and the balance sheet on slide 14. We generated operating cash of 550 million pounds before the effects of IFRS 16 during the year. This is driven by our inherently cash generative model, the favorable working capital inflow that we saw underpinned by the movement in our stock position and the clean stock position we exited the year with. And then thirdly, of course, the disciplined capital investment that we will always maintain. As we look ahead, working capital requirements will remain consistent with revenue growth and our capital expenditure approach is going to remain unchanged and going to carry on being disciplined. We've strengthened our long-term capital structure by extending bank facilities at effectively unchanged rates. So they now sit there with a potential maturity of 2030, assuming we exercise our two one-year extension options. And our financial profile is now, financial debt profile is now split across 2025 to 2028 and 2030. And so this all gives us confidence that as we grow our profits next year and beyond, we'll continue to generate excess cashflow that we will deploy through our capital allocation policy. But this year that's meant that we've declared a final dividend of 9.6 pence, resulting in total ordinary dividends across the year of 147 million pounds, which is equivalent to 40% of our earnings in line with our policy. Additionally, we're of course pleased to reward shareholders with another special dividend announced back in January of 200 million pounds. And as we move forward, we very much remain committed to returning excess cash to shareholders at the appropriate times. So finally, let me sum up what I see as the key takeaways from a financial perspective. Firstly, last year's numbers serve as the baseline. They reflect the increased scale of the group that we now have, the strong margins and the excellent cash generation. We've entered this year strongly. We've traded well over the first nine weeks. We're on track to trade out of the garden season, the current garden seasons, with solid margins and a clean stock position. And finally, as we look ahead, we expect the financial shape of our business to remain consistent. And as we deliver revenue growth, we're very much confident of driving substantial value for shareholders. So I'm now going to hand back to Alex and the team to delve into some of the operating activities.

Grocery and non-grocery. Keep it very simple, guys. Availability is world class. I'm doing myself not less than 25 shops a week. That's excluding the competition. I see it, these guys see it, Bobby sees them. Entrepreneurial business in the detail without any bureaucracy. Groceries performing very well. Price position rock solid. Not an inch of degrading price position against any competitor. And I would say FMCG availability on the shelves is probably the best the business has had in the last five years. I put my neck on the line on that. General merchandise performing incredibly well. You saw Q3 statement. You can imply that from the first nine weeks. Home, DIY, garden. General merchandise is performing very, very strongly. Margin is very, very good. And availability, again, is world-class. Bobby and I were in Hong Kong months and a half ago. Phenomenal setup. on multi-lines. Teams engaged. Incredibly professional office. The buyers back into the factories post-COVID. Mainline momentum. The product is looking fantastic. It's on the shelves and the price is rock solid. That's all what I'm going to say. If you ask any of the team what excites me, it's the shop. Bobby gets excited on the product and the price. I love the shops. That's where I spend most of my time. And I think we would have not had the Q3 golden quarter performance or this momentum without the systematic improvement we have on store standards, shop by shop, one by one, manager by manager. Let me be clear, that doesn't change my cost to sales It's self-funding. Get the right manager, get the stock on the shelf, the sales come. I personally prefer to spend my time in the shops than talking to these guys in the head office. And they probably enjoy it as well. This is the way we're going to do business every single day. I do 25 shops a week. The senior team above retail teams, we do 200 shops a week unannounced. That's just BNM UK. That excludes France, excludes Heron. If you add those two businesses, we're probably doing 300 shops. The MD, myself, Gareth Bilton. 10 out of 10. That's not a doctor picture. That's what I mean by availability. Stock on the shelf 24-7. John Parry, you have two and a half minutes.