B&M European Value Retail S.A.

Good morning, everyone. Thank you for coming. And good morning, U.S. I know you are early in different cities, East and West Coast, so thank you for joining us. We have a full lineup today. You know Mike, Gareth has presented in the past, John Parry, Anthony Giron, MD in France. What I'm going to do today is keep it very short for myself so you get to hear the team on basically how the business is set up for the year ahead and thereafter. And with a bit of luck, guys, if we can keep it sharp, we can give a good half an hour for Q&A so we can get into the detail. I take the RNS as a given. So I will just make a couple of points on each slide. So you've seen the numbers. Looking back at FY24, for me, there are two highlights in here. We're a financially conservative business. We're not a business that believes in high gearing. We're a disciplined, conservative financial business. And actually having a leverage ratio just under 1.2x for me is absolutely the right shape in the business. So I'm happy with that result. What's underneath that, if you look at the detail, Broadly speaking, we have put 500 million pounds year on year on net sales. And total stock holding has barely moved year on year. From memory, I think it's increased year on year 11 million pounds, which is nothing. So we've put 500, half a billion pounds on net revenues, with broadly stock holding flat. And that's on the back. of last financial year, where the stock holding was also flat pounds. What does that tell me as a CEO? The supply chain is incredibly robust and efficient. We don't have to take any unnecessary risks. The quality of those earnings, given the quality of the stock, is in excellent shape. look forward the quality of your stock is always your margin tomorrow so it gives us a very good momentum heading into new year with having razor sharp stock but the best availability the business has had on show since i've been in the business since 2020. okay go back four years we have delivered 1.8 billion pound check to shareholders cumulatively over four years. This is a disciplined business that is all around sustainable, profitable growth, which is cash generating back to the shareholder. So those are for me the two highlights of FY24. You've seen this chart before. The blue line is interesting. But you've heard me before, I'm not in the business of driving market share. I'm in the business of driving sales growth, which are profitable and sustainable. So I always look at the orange line. Pre-pandemic 3-4-2, EBITDA, last financial year 6-9. And what the team is set up to do in the years ahead is to maintain that level of profitability sustainably year after year. Not too quickly, not too slow, sustainably. And that profitability which is best in class certainly in the UK and in Europe outside of apparel gives me the confidence that the business is actually maintaining a high degree of operational and commercial discipline. When I look at that chart, actually I never look at the history. I visualize that chart 10 years from now in my head. And that's actually how the business thinks about it. So when I look in 10 years from now, yeah, the blue line will have its upward trajectory, but what matters to me is the consistency of the orange line. And that's an important point that will continue to come repeatedly, which is around the discipline of how we grow and what underpins that profitable growth. Quite boring slide, you've seen it before. Three planks, BNM UK, Heron, France. The three businesses doing well. We're going to keep driving the existing asset base profitably with high discipline, serving customers in the way we do, EDLP, EDLC. And we're going to grow space confidently but with discipline. Not too slow, not too fast. I'll come back to some of the details. Mike, all yours.

Thanks, Alex. Morning, everybody. So, before I step into the numbers, it's worth reiterating what we see as being absolutely critical in the business from a financial perspective. Four areas. disciplined in driving profitable, sustainable growth. Alex has just said it. For us, that means the growth is volume-led, not inflation, and it's coming from like-for-likes and it's coming from new stores. We see that long-term potential as being very significant. We see the opportunity in all our markets as being large. But attached to that growth focus is the relentless control of our operating costs, so that we keep our customer value proposition as sharp as ever, and we retain our high profit margins. And you'll see that as we come on to our 2024 numbers. Secondly, we've got cash discipline. We're keeping our stock buys tight, exiting each season clean, and we're maintaining our capital light investment base as well. Thirdly, we're going to operate with a robust balance sheet. Given the large value creation opportunity from the operating strategy, We intend to keep long-dated debt maturities in place, and we're retaining our financial flexibility. And finally, but critically, bringing those three points together, that will mean that we will grow our cash generation and our cash returns to shareholders in line with our capital allocation policy. So moving straight on to an overview of the P&L. It's a straightforward and strong picture. Revenue up 10.1%, all three businesses growing strongly, excluding the extra 53rd week, revenue growth still remains strong at 7.8%. Adjusted EBITDA, as we previously guided, it's confirmed at 629 million, which is growth of 9.7% in the year and means our profit margins have been maintained. And our cash generation has meant that our leverage ratios have fallen to beneath 1.2 times. So moving into the detail revenues, first page shows total growth. As I'll come back to, I think that's the primary growth metric for our group. BNM UK, total growth of 8.5%, balanced between 3.7% contribution from like-for-likes and 2.6% contribution from new stores with the balance of the numbers coming from the extra week of trading across the year. We opened 47 new B&M UK stores across the whole financial year, which increased average space in the estate by 700,000 square feet. The sales densities the new space is delivering are strong. The fact that space has grown by around 5% compared to the 2.6% sales growth contribution of that new space purely reflects the timing of the openings, and that's giving us momentum as we go into the 2025 financial year. Phantom Heron, revenue growth again speaks for themselves. Both have high single-digit like-likes underpinning those total revenue growths as well. But finally, importantly, customer transaction numbers we always talk about. They're once again positive for each of the three businesses across the whole year. So breaking down our UK performance by quarter, you can see why the performance is best judged over longer time periods given calendar effects, prior year comparatives, at impacts on short-term numbers. More importantly here, though, we saw growth in both FMCG and general merchandise in the UK, with sales participation between the two categories remaining firmly in balance. Also to note, you can see that sales benefit from the new stores increasing quarter by quarter, and it actually represented over half of the total growth, excluding timing effects in the fourth quarter. The gross margin, couple of points. Firstly, second half margin, higher than the first, as is seasonally usual with the benefit of golden quarter. Secondly, UK trading margin across the year, up 46 bits. Importantly, you need to note that the value proposition for our customers is unchanged year on year. The improvement comes from discipline in our stock buys leading to a clean sell-through with only planned markdowns in the year. So that's a particularly noticeable effect if you looked at the first half performance year on year, and that's where the improvement has been driven. On adjusted EBITDAs, I will just focus on margins generated. UK, up from 12.4% to 12.6%, driven by the gross profit margins, but also control of operating costs. Particularly important to note is that despite facing a 9.7% increase in the UK minimum wage and also more than a doubling in the number of UK store openings, meaning we are experiencing higher pre-opening costs, we've been able to drive that improvement in margins. France, underlying margins up 60 basis points to 9.1%. I say underlying, we're excluding in the prior year one-off government post-COVID support. And I think that shows the good progress we're making in the year. It's another step towards the French profit margins reaching double digits. Heron, 6.4%, once again, sector leading. Group margins, as a reported total, are flat, primarily due to the one-off French income and also the increase in the corporate segment costs. Underlying operating costs on the next slide. As per our plan entering the year, the significant work on productivity, our everyday low-cost discipline, has meant that our operating costs, the percentage of the revenues, has reduced for each fascia, and it has also reduced for the group, despite the 9.7% UK minimum wage rise. As we look forward at 2025, the operating cost challenge isn't changing. Again, we're facing a large increase, 9.8% increase in UK minimum wages, also 6.7% increase in UK property rate charges. Our approach, however, is going to remain exactly the same as last year, using productivity, volume growth that we're delivering, as well as year-on-year favourable hedged currency rates and stock imports to offset any cost increases. We continue to stand behind our guidance, BNM UK margins being delivered in a range of 12% to 13%. and the same continuation of the guidance of France and Heron. So, slide 15. You heard me earlier emphasising the importance of total volume growth as being critical in our story. This slide works to explain why that is our focus. First point to say is that we've got structurally sustainable high profit margins in the UK of 12% to 13%. underpinned by the sales density and our everyday low-cost approach. Secondly, as you can see from the illustrative chart, we're relatively indifferent as to whether that growth comes from new stores or from like-the-likes. Either form of growth, like-the-likes or new stores, is meaningfully accretive to that overall operating profit margin, given our discipline on store fixed costs, and furthermore, As our profit margins are high, the proportionate difference between like-for-likes and new stores is small. And thirdly, of course, this means that our business revenue growth is now diversified very clearly across three elements. It's market size growth, it's market share growth, and it's finally acquisition of new space as well. So changing topics. Moving on to cash generation on slide 16. We've returned this year to a normal seasonal trading cash flow pattern, very similar to what we saw pre-pandemic. As we reported previously, in the first half, we saw a modest working capital outflow as we built up stock to trade the golden quarter. That has fully reversed through to the end of the 52nd week. We're clearly reporting on a 53-week basis, so there's a small £8 million outflow for the financial year as a whole due to a much greater tax payment being made than the £8 million in the 53rd week. Previously at financial years, that would have been in week one. With the calendar effect, it's now appearing in week 53, and that's just prompting that small change that you see there. Our CapEx approach has been disciplined, focused on new stores that drive proven returns alongside spending on appropriate maintenance. A £25 million increase in total CapEx compared to a £26 million increase in new store spend shows the discipline to our investment profile. And with that discipline, you see once again our cash generation has been outstanding, leading to a post-tax, post-financing cost, pre-cash flow of £382 million. So we're therefore proposing a 9.6 pence per share final dividend with the total dividend for the full financial year of 14.7 pence. Once again, it's calculated at the upper end of our 30 to 40% post-tax adjusted profit number. And so to conclude with a reminder of the bigger picture. Since IPO, we've consistently grown revenues we've grown cash profits, we've grown our profit margin, and that has driven our operating cash generation. We're doing this through the discipline of the operating model and the strategy, and our long-term approach and ambition on this is not going to change, simply put. So I'm going to hand back to Alex and the team to talk about our operations and strategy in more detail. Thank you.

The fear is that Mike makes it sound it's easy. It's not easy, guys. It's a lot of hard work in there. I'll be very sharp in here before I hand it over to Gareth. Very pleased with Wilco opening program. I don't have the exact number, but if you assume Q4 last year and Q1 this year with another four weeks to go, 52, 53 openings, guys? Guys, we've opened 52 shops or so. We're half open. in excess of 50 shops over two quarters. High quality, accretive, high availability, excellent teams. That's not easy. So it's a testament of the work that Ian Pratt, property director, he's sitting at the back. You will hear more from Ian in November, and the retail team have done. That's a hell of a momentum, the business I had in the opening program, and we haven't compromised a single site. You know we went for 51 shops at Wilco, not 70, not 100. Every single list really negotiated and opening actually in good shape. Plan is well underpinned. Front end, nothing else to say. Harrow on the left-hand side is an ex-Wilco. Monk's Cross on the right-hand side. Standard. There is no difference. They are great shops. Don't make assumptions one is bigger, one is lower. They are absolutely indistinguishable. They are high-quality assets. They are highly accretive businesses and they are all performing well. A couple of messages before getting into operations. If I look at the last 12 months, what is the best customer impact positive we've had in the business? Availability on shelf has been second to none. I have walked guys at least through 200 to 250 competitors over the last 12 months myself when I see our shops. We don't do gaps on shelves. It's all around having high availability, 10,000 SKUs, FMCG and general emerge, 24, 7, 365. Gareth and I and John and supply chain obsessed about it. That is the number one element that underpins the offer to our customer. EDLP is a given. We don't do gimmicks. EDLC is a given. This is actually how we serve customers. Come in and we're going to please you always with full shelves. On the right-hand side, we've dialed the price point aggressively on general merchandise, performing very well. Simply is performing very nicely across several subcategories. And what I'm going to say is that over the next few weeks, we're going to dial up our posture of aggressiveness on general merchandise. to continue to take market share. Posture of aggressiveness means the right stock, the right price point, no margin dilution because we are buying well, but the posture of the business is going to be even more aggressive and confident on the general merchandise because we are taking share in this business and its volume. Prices have come down. They are very aggressive and they will continue to come down as we continue to pass the right savings in the right SKU in the right subcategory. So when we take stock in November, remember what I'm saying, our posture in general merchandise is going to be even more aggressive to build on the volume we have delivered positive in FY20 call. Supply chain, you heard me, sorry. Availability is rock solid. It's what we call the triangle. It's buying. It's shops. It's logistics. And we continue to hammer that every single day in every shop. Gareth, I'm going to pass it to you. Short and sharp on operations. Why don't you tell the guys, when you join the business, how many shops in B&M have? Seven. So these guys have seen 700 times. 43 shops in his tenure. Go ahead. I've talked to you through the retail approach before. So rather than talking through the slides, I thought I'd just talk around the way we do it rather than what's on the slide. So the first thing to point out is my team has a relentless focus on customer standards and on retail standards. And the way we get about it is very simple. It's high visibility from the senior retail team. And it sounds really obvious, but as a senior retail team, we spend our life in shops. We don't spend our life in strategy meetings, taking time out. We spend our life in shops seeing what the customer sees. That is really important. So our store managers see us in the trenches working with them. We also give our store managers license to trade, and what that means as an output of that is we sweat our space really hard. We trade every part of the floor, and we let them trade through as hard as they can, and we get the best return possible from our stores. And to do that, we have to keep it simple. Alex mentioned it before. We absolutely focus on the core part of the business. That's our focus. uh obsessiveness around driving sales and keeping consistent standards the retail distribution buying collaboration triangle alex referred to and john will refer to it is is key to making sure that our focus on core and availability so that we can keep our shelves full and keep our last simple is absolutely fundamental to the the dna the way we run the business and then To finish up, I think there's three things that I would want to leave you with from the retail team outlook. Firstly is, despite the fact that we've raised our expectations hugely from what our stores have delivered over the past two months, we have a really healthy culture. And no one should be under any illusion that running a shop well is hard work. It's 24-7, it's 365, and you have to be absolutely obsessive about everything that everybody does. Despite our raised expectations, an interesting number is our retail labour turnover is 600 bits better now than it was two years ago because people generally take more pride in the shop and the environment that they operate in. The other point I'd leave you with is consistency. Consistency across the shop and consistency across the stage, whether you're in Penzance or whether you're in Wick. And the reason we get that is because our store managers and our stores seem to work for the right reasons and deliver for the customer. They work hard for each other. They work hard for the customer. And interestingly, I give an update to my colleagues at senior level two or three times a week, and the only update I ever give on what is the customer lens, what does the customer see, and what are the two or three loose ends that we all need to tighten up to make sure that customer journey is where we want it to be. And then lastly, I just wanted to talk about the continuous sustainable improvement that we've made. The first time I spoke to you, two years ago, I think our studio and I talked about seven out of 10. Very quickly, we moved to seven and a half out of 10. And now the benchmark is eight out of 10 and nothing less is acceptable. So they are the key pillars that we pin our delivery on and our obsession about standards. And I'll be around if you want to talk to me after. I'm going to hand over to John.