Final Results

23 May 2013

Booker Group plc

Final Results of Booker Group plc

for the 52 weeks ended 29 March 2013

This announcement contains the final results of Booker Group plc ('Booker'), the UK's leading food wholesaler, for the 52 weeks ended 29 March 2013.

Financial Highlights (Makro not consolidated)

2012/13 was a 52 week reporting period, however 2011/12 was a 53 week reporting period. In order to make a comparison sales and profit are compared with the first 52 weeks of last year.

·; Total sales £4.0bn, +3.5%

·; Like-for-like sales +3.3%: non tobacco +4.5%, tobacco +1.3%

·; Operating profit (pre £3m exceptional charge related to Makro acquisition costs) +12% to £99.1m

·; Profit before tax +13% to £101.4m

·; Profit after tax +12% to £83.1m

·; Basic earnings per share up 0.16 pence to 4.93 pence, after equity dilution arising from the share element of the Makro consideration

·; Net cash of £77.2m (2012: £63.4m), after paying £15.8m in respect of the cash element of the Makro consideration

·; Proposed final dividend up 15% at 2.25 pence per share, making a total dividend for the year of 2.63 pence per share, up 15%

Operational Highlights

·; Customer satisfaction continued to improve and we increased sales by £135m

·; Sales to caterers +6.2% and sales to retailers +2.0%

·; Delivered sales up 9.5% to £1.15bn

·; Internet sales up 10.9% to £704m

·; Booker Direct, Ritter Courivaud and Classic are performing well and Chef Direct is becoming the new force in foodservice

·; Clearance from the Competition Commission was received on 19 April 2013. Makro and Booker are now coming together to improve choice, price and service for caterers, retailers and small business via the web, delivery and cash and carry

·; Our Indian business currently has four branches and continues to make progress with the opening of a further two in the year ahead

Outlook

The economy is expected to remain difficult in the year ahead and the food wholesale market remains very competitive. Nevertheless, we expect to continue to make progress in this challenging environment. The Group's trading in the first seven weeks of the current financial year is ahead of last year and we remain on course to meet our expectations for the year.

Charles Wilson, Chief Executive of Booker, said:

"Our plan to Focus, Drive and Broaden the business remains on track. Customer satisfaction continued to improve and we grew sales by over £135m. Most importantly we teamed up with Makro. Together Booker and Makro will become the UK's leading wholesaler to caterers, retailers and small businesses. We will provide our customers with improved choice, prices and service via the internet, delivery and cash and carry. We have a great team at Booker and Makro and together we will help our customers prosper in the year ahead."

For further information contact:

Tulchan Communications (PR Adviser to Booker Group plc)

020 7353 4200

Susanna Voyle

Rebecca Scott

A presentation for analysts will be held at 8.30am on Thursday 23 May 2013 at Investec's offices.

For further details please contact Sandra Cameron at Tulchan Communications on 020 7353 4200 or [email protected]

NOTES:

·; Sales are stated net of value added tax

·; Makro is a wholesaler supplying independent retailers and caterers, and small companies and offices, acquired in July 2012

·; Booker Wholesale supplies independent retailers and caterers via the internet, delivery and cash and carry

·; Booker India is a wholesaler in India operating from three sites in Mumbai and, via a joint venture, a site in Pune

·; We acquired Makro Holding Limited and two subsidiaries: Makro Properties Limited and Makro Self Service Wholesalers Limited, ('Makro') on 4 July 2012. We notified the transaction to the Office of Fair Trading ('OFT') who then referred the matter to the Competition Commission ('CC'). This review was incomplete at 29 March 2013 and we were required to hold the Makro business separate from the rest of Booker during the period. Accordingly the results of Makro are not reflected in these results and the consideration is accounted for as an investment. Full clearance of the transaction was received from the CC on 19 April 2013

BUsiness prOFile (EXCLUDING mAKRO)

In the UK, Booker has 172 cash and carry business centres and a national delivery network which includes the Ritter-Courivaud and Classic Drinks businesses acquired in October 2010.

Of our sales, £2.5bn is non-tobacco and £1.5bn is tobacco.

£2.8bn of our sales are collected from the cash and carry by the customer. £1.2bn is delivered to the customers' premises.

Substantial progress has been achieved.

¹ Includes approximately 12,000 customers of Booker India, 3,000 of Ritter-Courivaud and 3,000 of Classic Drinks

² 2012 was a 53 week statutory reporting period

chairman's Statement

I am pleased to report that Booker Group plc has delivered another good performance. In the 52 weeks to 29 March 2013 sales rose by 3.5% to £4.0bn and operating profit of £99.1m was up 12% as customer satisfaction continued to improve. The financial performance was good and the Group ended the financial year with net cash of £77.2m. The drive into the catering market is working, with sales to caterers up by 6.2%. Sales to retailers also rose by 2.0%.

The plans to 'Broaden' the business are going well. In the 52 weeks to 29 March 2013 Booker distributed £1.15bn of product to our customers' premises versus £1.05bn last year as we continue to expand our delivered service. We launched Chef Direct last year and are pleased to have been awarded a number of prestigious accounts. Internet sales were £704m compared to £635m in the previous year and Booker India is making good progress.

During the year we also acquired Makro. As the Competition Commission's clearance of the transaction was received on 19 April 2013, Makro has not been consolidated into these accounts. We are delighted to have the team from Makro join Booker Group and we are also pleased to have Metro AG as a strategic partner and major shareholder.

I should like to thank all our colleagues for their contribution to the success of the Group in the year just ended.

Basic earnings per share were 4.93 pence, up from 4.77 pence (52 weeks) last year, after a 9.99% equity dilution arising from the share element of the Makro consideration. Given the strong operational performance and cash flow of the business the Board recommends the payment of a final dividend of 2.25 pence per share (2012: 1.95 pence per share) which, together with the interim dividend, makes a total dividend for the year of 2.63 pence per share (2012: 2.28 pence per share). The final dividend is payable on 12 July 2013 to shareholders on the register on 14 June 2013.

Outlook

The economy is expected to remain difficult in the year ahead and the food wholesale market remains very competitive. Nevertheless, we expect to continue to make progress in this challenging environment. The Group's trading in the first seven weeks of the current financial year is ahead of last year and we remain on course to meet our expectations for the year.

Annual General Meeting

Our Annual General Meeting will be held on 10 July 2013. The notice of Annual General Meeting will be issued to shareholders in due course.

Richard Rose

Chairman

Chief Executive's Review

Since November 2005 Booker Group has been seeking to 'Focus, Drive and Broaden' the business. We continue to make good progress.

FOCUS (commenced November 2005)

Booker seeks to become the most efficient operator in our sector. Bryn Satherley and his team continue to improve business efficiency. We 'stop, simplify and standardise' work and invest most of the savings in customer service. Through tight cash management we have now increased net cash from £63.4m last year to £77.2m this year. This is after paying £15.8m as the cash consideration for the Makro deal.

DRIVE (commenced March 2006)

Booker Wholesale, our cash and carry business, served 486,000 customers this year up from 465,000 last year. Guy Farrant and the team continue to 'Drive' choice, price and service. Each year we survey 40,000 customers to identify where improvements can be made. Customer satisfaction improved again this year and our customer count has increased again, by 21,000 customers.

Choice Up

·; In 2007 we launched Euro Shopper as an entry price brand for independent retailers. It now has retail sales of £156m. The range has 83 products and retailers achieve a minimum of 30% margin

·; In 2010 we launched Farm Fresh. Sales in the year to 29 March 2013 were £55m. The quality and freshness of the produce is second to none and can be delivered to our customers within 48 hours of being harvested.

·; Chef's Larder is our own label brand for caterers. Sales were £207m, up 13% on the prior year. Progress has been made across the range

·; During the year the UK food industry was challenged by horsemeat in comminuted beef products. Over the past five years Booker has made good progress in tightening quality requirements and supply chain controls. None of our products were found to contain horse DNA. We will continue to improve quality and supply chain control in the years ahead

Prices Down

·; Ours is a very price competitive market. Every week we monitor prices versus competitors and during the year our price index remained competitive. In the year we "locked down" prices for caterers which has proved very effective in helping caterers plan their menu with confidence

Better Service

·; Stock availability further improved to be the best we have achieved

·; Our people are doing an excellent job. Our customers rate Booker people highly. Business Centre teams have been trained in PRIDE to help improve the Parking, Reception, Internal, Delivery and Exit experience

·; We have continued to expand and improve our delivery service

·; We have more specialist butchers and greengrocers within the business

Catering

·; Catering Sales grew by 6.2% to £1.4bn, as our choice, price and service continued to improve. Our catering development sales force continues to serve our existing customers and to introduce new customers to Booker

Premier

·; Premier, Booker's symbol group, grew by 11%. The estate grew to 2,802 stores. The retail development team has put a lot of work into compliance and building the sales and profits of existing Premier stores

BROADEN (commenced April 2007)

In the UK, Booker seeks to offer the best choice, price and service to caterers, retailers and small business. We also seek to become the suppliers' preferred route to market. We also want to sell new products and services and reach new customers. In India we seek to become the best supplier to Kirana stores. To achieve these objectives, we are 'Broadening' the business. 'Broaden' includes:

Makro

·; The most important change we have made to Broaden the Group is the acquisition of Makro. Makro serves 1 million small business customers, has great people, good locations and excellent products. Through Booker and Makro coming together we seek to become the UK's leading wholesaler to caterers, retailers and small businesses. We will offer our customers better choice, prices and service via the internet, delivery and cash and carry. The transaction was cleared by the Competition Commission on 19 April 2013 and as a result the Makro financials were not consolidated into the Group accounts for the year to 29 March 2013. The real merits of the transaction will appear in the next few years. We will combine the best ranges from Makro and Booker to improve overall choice. Through consolidating buying volumes we should improve prices for customers. Service will improve as we have increased capacity for delivery, and an integrated supply chain will improve availability. This should help the Group grow to an estimated £6bn of sales in the next few years. I am pleased that Steve Blan and the team at Makro are already settling into the Group. We paid for Makro through issuing 9.99% of our equity to Metro AG and a cash payment of £15.8m. We are delighted to have Metro AG as a strategic partner and major shareholder. We can see opportunities to source with Metro AG and to share expertise to the benefit of our UK business. The transaction has taken a year to complete and I am very grateful to all in Booker and Makro who have been patient during this process

Improving the cash and carry business centre experience

·; We have now converted 145 of our 172 business centres to the 'Extra' format. This features a lighter, brighter business centre environment and an improved choice, price and service. The conversion pays back in around a year and we plan to convert a further 5 business centres to 'Extra' in the year ahead. The lessons from Extra will be rolled to the rest of the business and to Makro

Harnessing the Internet

·; Sales at booker.co.uk were £704m, up from £635m last year and £15m in 2005. All these sales are delivered to our customers' premises. We have 255,000 customers registered on the website compared to 170,000 last year. Customers can view their account details, use an iPhone app and order products. We have also developed our first customer forum for Premier customers

Booker Direct/Ritter-Courivaud/Classic Drinks/Chef Direct

·; Mark Aylwin and his team are building our delivered wholesale business. Booker Direct has great customers including the prison service in England and Wales, Marks & Spencer and most of the cinema chains in the UK.

·; In 2010 we acquired Classic Drinks, an on-trade wholesaler supplying pubs and licensed customers mainly in the North West. We are in the process of rolling this expertise out on a national basis

·; In 2010 we acquired Ritter-Courivaud, a leading speciality food supplier to restaurants. Through combining the logistics expertise we have in Booker Direct, with the catering knowledge from Ritter-Courivaud and the Groups' buying scale, we launched Chef Direct in 2012. Chef Direct is based in Didcot and has won some important clients such as Aramark and Loch Fyne Restaurants

·; In the last year the Group delivered £1.15bn of product to retailers and caterers in the UK. Through using some of the space in the Makro business centres we will be able to increase our delivered business

Booker India

·; In September 2009 we opened our first business centre in Mumbai. We now have 12,000 customers and the customer reaction has been excellent. We have also launched 185 Happy Shopper symbol retailers which harness the lessons from Premier in the UK for the Kirana stores of Mumbai. In 2011 we opened our first joint venture business centre in Pune. Our partner in Pune is Satnam Arora, who has expertise which compliments our own. We now have 3 branches in Mumbai and one joint venture branch in Pune. We look forward to developing the Booker offer to become the best choice, price and service supplier to Kirana stores and caterers. We anticipate opening a further two branches in 2013/14

Sustainability

·; Booker was the first UK food wholesaler to be awarded the Carbon Trust Standard and the first to achieve certification. Booker are also The Grocer Gold "Green Wholesaler of the Year" 2012

·; Booker ranked higher than any major wholesaler or multiple retailer in the 2012 Government Carbon Reduction Commitment league table

·; 13,000 customers are now recycling with Booker through the packaging and used cooking oil recycling services. This helps our customers save money, increase recycling levels and support more sustainable communities throughout the UK

·; Overall Booker recycling volumes are up 42% against last year

·; We donated 126,000 meals to charity in the last quarter. A national roll out is underway for every branch to link up with local food charities

People

·; The progress at Booker has been achieved by our great team of people. We are committed to continuing to make Booker better and safer for colleagues. We are also developing talent. For example, there is a shortage of butchers in the trade, so we have partnered with the University of West London to develop a formal "butchery apprenticeship". 28 new butchers graduated this year and 42 signed up for the next scheme. We developed a similar scheme for greengrocers with 47 colleagues graduating this year and 85 signing up for the coming year

·; For the sixth year running, the performance of the business means our people have shared in our success through our bonus system. With this great team of people Booker will continue to make progress in the year ahead

·; We are delighted to have the team at Makro join the Group. Together we will build a company which improves choice, price and service for our customers

Our plan to Focus, Drive and Broaden the business remains on track. Customer satisfaction continued to improve and we grew sales by over £135m. Most importantly we teamed up with Makro. Together Booker and Makro will become the UK's leading wholesaler to caterers, retailers and small businesses. We will provide our customers with improved choice, prices and service via the internet, delivery and cash and carry. We have a great team at Booker and Makro and together we will help our customers prosper in the year ahead.

Charles Wilson

Chief Executive

group finance director's report

Financial Review

2012/13 was a 52 week reporting period, however 2011/12 was a 53 week reporting period. In order to make a comparison to last year, all reported income statement numbers in the Financial Review are compared with the first 52 weeks of last year.

The summary of results for the group is as follows:

Overall Group revenue increased by 3.5% to £4.0bn. Non tobacco like for like sales increased by 4.5% while like for like tobacco sales increased by 1.3%.

Operating margin increased by 0.18 percentage points to 2.48% (2012: 2.30%) increasing group operating profit by £10.5m to £99.1m. The improvement in margin was due to a favourable product mix and control of costs.

Exceptional stamp duty and deal fees of £3m were charged in relation to acquiring Makro.

The net finance credit of £5.3m (2012: £1.1m) comprised:

·; cost of borrowing of £0.5m (2012: £0.8m)

·; the amortisation of fees and discounting of provisions of £1.7m (2012: £4.3m)

·; a credit relating to the expected return on pension scheme assets less amortisation of liabilities of £7.5m (2012: £6.2m). IAS 19 (Revised) 'Employee Benefits' will be effective for the period commencing April 2013. Had the standard been applied in the year ended 29 March 2013, the £7.5m credit arising in 2012/13 would have been a charge of £0.6m and £1.2m would have been charged to administrative expenses

Profit before tax rose £11.7m to £101.4m (2012: £89.7m), an increase of 13.0%.

The underlying effective tax rate (being the tax charge as a percentage of profit before taxation and exceptional items) for the Group of 17.5% (2012: 17.5%) was below the standard rate of corporation tax in the UK, due principally to the utilisation of tax assets not recognised in prior years and utilisation of Makro's post acquisition tax losses. The Group has other unrecognised tax assets, including Makro tax losses, but the quantum and timing of utilisation is not certain. Utilisation of these tax assets could result in the effective tax rate remaining below 20% for the next three years, subject to the manner of integration of Makro into the wider Booker Group.

Profit after tax was £83.1m, an increase of £9.1m compared to 2012.

Basic earnings per share rose to 4.93p, up 3.4% from 4.77p in 2012, after a 9.99% equity dilution arising from the share element of the Makro consideration.

Dividend

The Board is recommending a final dividend of 2.25 pence per share (2012: 1.95 pence per share) payable (subject to shareholder approval at the Annual General Meeting, to be held on 10 July 2013) on 12 July 2013 to shareholders on the register at 14 June 2013. The shares will go ex-dividend on 12 June 2013.

The final dividend increases the total dividend for the year to 2.63 pence per share, up 15% on 2012 (2012: 2.28 pence per share).

Cash Flow

Management has continued to focus on cash generation resulting in a net improvement of £13.8m in the year to close with a net cash position of £77.2m at 29 March 2013. Earnings before interest, tax, depreciation and amortisation ('EBITDA') of £113.4m, funded the part cash consideration of £15.8m for the Makro business, capital expenditure of £14.1m (2012: £24.1m) and the payment of £37.0m of dividends (2012: £26.5m).

Pensions

The Booker Pension Scheme ('the Scheme') is a defined benefit scheme that was closed to new members in October 2001, and was closed to future accruals for existing members in August 2002. At 29 March 2013, the Scheme had an IAS 19 deficit of £6.8m (2012: £19.0m), comprising Scheme assets of £608.7m and estimated liabilities of £615.5m. The Group contributed £10.8m (2012: £8.4m) in the year of which £1.2m (2012: £1.2m) was in relation to the costs of administering the Scheme.

The 2010 Triennial valuation agreed with the pension fund Trustee reflects a Scheme Funding deficit of £67.6m at 31 March 2010 recovered through company contributions at the rate of £9.6m per annum from April 2011 to October 2016. The next Triennial valuation date is 31 March 2013, any variation in annual contributions from the previously agreed schedule being effective from April 2014.

Goodwill

The net book value of goodwill on the balance sheet is £436.4m (2012: £436.4m). The goodwill carrying value is more than supported by expected future cash flows discounted back to present day values at a pre-tax discount rate of 10.8% (2012: 10.8%).

Capital Structure

The Group finances its operations through a combination of bank borrowings, leases and retained profits and its capital base is structured to meet the ongoing requirements of the business. As at 29 March 2013, the Group had net cash of £77.2m (2012: £63.4m).

Borrowing Facilities

The Group entered into a five year facility on 28 July 2011 comprising an unsecured £120.0m revolving credit facility. The revolving credit facility is unsecured against the assets of the Group.

The Group's borrowings are subject to covenants set by the lenders using financial results prepared under UK GAAP. In the event of a failure to meet certain obligations, or if there is a covenant breach, the principal amounts due and any interest accrued are repayable on demand.

The financial covenants are Fixed Charge Cover, measured by the ratio of EBITDAR (earnings before interest, tax, depreciation, amortisation and rent) to interest plus rent (tested half yearly on a rolling basis) being greater than 1.5, and Leverage, measured by the ratio of net debt to EBITDA (earnings before interest, tax, depreciation and amortisation) (tested half yearly on a rolling basis) being less than 3.0.

The Group complied with its covenants throughout the year. At 29 March 2013, under UK GAAP, the Group achieved a Fixed Charge Cover of 3.4 and Leverage of nil, comfortably exceeding its covenant obligations.

In addition to these financial covenants the Group's borrowing agreements include general covenants and potential events of default. The Group has complied in all respects with the terms of its borrowing agreements at the date of this report.

Interest Rates

Funds drawn on the revolving credit facility bear floating interest rates linked to LIBOR plus a margin of 1.25%, where the ratio of net debt/ EBITDA is less than one. A commitment fee is payable at 0.5% of the unutilised facility.

The cost of borrowing during the year was £0.5m (2012: £0.8m).

Liquidity

At 29 March 2013, the Group held £77.2m in cash and cash equivalents. The Group also had in issue £5.5m of guarantees (2012: £4.3m) leaving undrawn facilities at 29 March 2013 of £114.5m.

The peak level of drawdown on the revolving credit facility on a cleared basis in the year to 29 March 2013 was £46.1m giving a minimum facility headroom in the year of £66.9m after taking into account the guarantees facility of £7m.

Risk Management

The Board is continually reviewing the risks to people, profits, assets, reputation and funding that the business faces. The year ended 29 March 2013 was challenging with the continued impact of the 'credit crisis' and periods of commodity price uncertainty. Despite these and other challenges the Group's risk management controls operated well.

The Acquisition of Makro

On 4 July 2012 Booker Group plc acquired Makro Holding Limited and two subsidiaries: Makro Self Service Wholesalers Limited and Makro Properties Limited (together 'Makro'). The terms of the transaction were that Makro was to be acquired cash free and debt free and that the acquired balance sheet reflected normalised working capital. The consideration paid comprised the issue of 156,621,525 new ordinary shares in Booker Group plc to Metro AG and £15.8m cash. In addition a further £4.9m was paid to reflect an above target cash and working capital position at 30 June 2012.

The transaction was subject to competition approval and, during this process, we were required to hold Makro separate from the rest of Booker in accordance with undertakings given to the competition authorities in the normal way. The competition review was still ongoing at 29 March 2013 and during this hold separate period, under accounting rules (IFRS 3 and IAS 27), Makro's results were required to be excluded from the Group's results. At 29 March 2013, therefore, the consideration paid for Makro was held as an investment in the Group's balance sheet. Full clearance of the transaction was received by the Competition Commission on 19 April 2013 and Makro will be consolidated from this date.

In the year ending March 2014, we expect the Group's operating profit to increase by circa £10m as a result of the acquisition. This is the aggregate of an estimated base operating loss of £16m for Makro and anticipated Group synergy benefits in the year of approximately £26m across the Group, estimated to comprise the following:

·; £6m of cost savings already actioned by Makro management

·; £3m to £4m of other cost savings, including some arising from supply chain

·; £1m to £2m from goods not for resale

·; £7m to £12m from cost of goods improvement

·; £2m to £5m from margin improvements on fresh products

·; £1m to £3m from rent and rates savings on branches

Although the synergy benefits relate mostly to the year as a whole, the majority will be realised in the second half of the financial year.

Booker is required to fair value Makro's assets and liabilities at the date of consolidation. Makro has 24 freehold and 6 long leasehold properties which have been independently valued in 2012 for Booker at £156m and for Makro at £144m on a vacant possession basis. The estimated fair value of Makro's assets and liabilities at the date of consolidation was approximately £158m, including properties of £144m (adopting Makro's valuation). Our provisional view, subject to further investigation, is that the fair value of Makro's acquired net assets at the date of consolidation will be greater than the fair value of consideration paid by circa £13m and this difference will be credited to the Group's income statement as an exceptional item in 2013/14. Any reorganisation costs, incurred in the year ending March 2014 and estimated to be up to £5m, will be charged as an exceptional item in 2013/14.

Jonathan Prentis

Group Finance Director

Disclaimer

This announcement may include oral and written "forward-looking statements" with respect to certain of Booker Group plc's ('Booker') plans and its current goals and expectations relating to its future financial condition, performance and results. These forward-looking statements sometimes contain words such as 'anticipate', 'target', 'expect', 'intend', 'plan', 'goal', 'believe', 'may', 'might', 'will', 'could' or other words of similar meaning. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to future events and circumstances which may be beyond Booker's control, including, among other things, UK domestic and global economic and business conditions, market-related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory authorities, the impact of competition, the possible effects of inflation or deflation, the impact of tax and other legislation and regulations in the jurisdictions in which Booker operates, as well as the other risks and uncertainties set forth in this announcement and our presentation of preliminary results for the 52 weeks ended 29 March 2013, released on 23 May 2013. As a result, Booker's actual future financial condition, performance and results may differ materially from those expressed or implied by the plans, goals and expectations set forth in any forward-looking statements, and persons receiving this announcement should not place reliance on forward-looking statements.

Booker expressly disclaims any obligation or undertaking (except as required by applicable law) to update the forward-looking statements made in this announcement or any other forward-looking statements it may make or to reflect any change in Booker's expectation with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. Forward-looking statements made in this announcement are current only as of the date on which such statements are made.

All oral or written forward-looking statements attributable to the Directors of Booker or persons acting on their behalf are qualified in their entirety by these cautionary statements.

None of the statements in this announcement are, nor are any intended to be, a profit forecast and none should be interpreted to mean that the profits or earnings per share of Booker in the current or any future financial period necessarily is or will be above or below the equivalent figure for any previous period.

Consolidated Income Statement

For the 52 weeks ended 29 March 2013

All of the Group's operations during the period shown above represent continuing operations.

Consolidated Statement of Comprehensive Income

For the 52 weeks ended 29 March 2013

Consolidated Balance Sheet

As at 29 March 2013

These financial statements were approved by the Board of Directors on 22 May 2013 and were signed on its behalf by:

Charles Wilson Jonathan Prentis

Director Director

Consolidated Cash Flow Statement

For the 52 weeks ended 29 March 2013

Reconciliation of net cash flow to movement in net cash in the period

Consolidated Statement of Changes in Equity

52 weeks ended 29 March 2013

53 weeks ended 30 March 2012

Notes to the Group Financial Statements

Overview

Booker Group plc is a public limited company incorporated in the United Kingdom (Registration number 05145685). The Company is domiciled in the United Kingdom and its registered address is Equity House, Irthlingborough Road, Wellingborough, Northamptonshire, NN8 1LT.

Status of financial information

The financial information set out herein does not constitute the Company's statutory accounts for the 52 weeks ended 29 March 2013 or the 53 weeks ended 30 March 2012 but is derived from those accounts. Statutory accounts for 2012 have been delivered to the Registrar of Companies, and those for 2013 will be delivered in due course. The auditors have reported on those accounts; their report was (i) unqualified, (ii) did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain statements under sections 498(2) or 498(3) of the Companies Act 2006.

Basis of accounting

In accordance with EU law (IAS Regulation EC 1606/2002), the group financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') adopted for use in the EU as at 29 March 2013 ('adopted IFRS'), International Financial Reporting Interpretations Committee ('IFRIC') interpretations and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The preliminary results consolidate those of the Company and its subsidiaries (together referred to as the 'Group').

Basis of consolidation

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

During the period, the Group acquired the entire share capital of Makro Holding Limited ('Makro') which has two subsidiaries: Makro Properties Limited and Makro Self Service Wholesalers Limited. The transaction was subject to Competition Commission approval and, whilst this process was in progress, the Group was required to hold Makro separate from the rest of Booker in accordance with undertakings given to the competition authorities in the normal way. As a result,the Group has neither control nor significant influence over Makro at the balance sheet date, and therefore it has not met the requirements for consolidation as set out in IFRS3 (revised) 'Business Combinations' and IAS27 'Consolidated and Separate Financial Statements'.

Accounting standards adopted in the period

The Group has adopted the following amendents and interpretations which do not have a material effect on the financial statements:

·; Amendments to IFRS 7 'Financial instruments: Disclosures'

·; Amendments to IAS 12 'Deferred Tax: Recoverability of Underlying Assets'

Basic earnings per share are calculated by dividing the profit after tax by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share is based on the weighted average number of ordinary shares in issue adjusted by dilutive outstanding share options and dilutive shares issuable under the Group's share plans.

The number of shares included in the diluted EPS in relation to the SAYE and the share option schemes has been calculated in accordance with IAS 33 'Earnings per Share'.

5. Dividends

Dividends charged to reserves

The Directors are proposing a final dividend of 2.25 pence per share, which will absorb £38.7m of equity (distributable reserves). Subject to shareholder approval at the AGM, to be held on 10 July 2013, the dividend will be paid on 12 July 2013 to shareholders on the register at 14 June 2013. The shares will go ex-dividend on 12 June 2013.

6. Property, plant and equipment

7. Retirement benefit liabilities

On 4 July 2012, the Group acquired Makro Holding Limited from Metro AG in exchange for 156,621,525 new ordinary shares and a cash consideration of £15.8m. Makro Holding Limited has two subsidiaries; Makro Properties Limited and Makro Self Service Wholesalers Limited.

The transaction was subject to Competition Commission approval and, whilst this process was in progress, the Group was required to hold Makro separate from the rest of Booker in accordance with undertakings given to the competition authorities in the normal way. As a result, the Group has neither control nor significant influence over Makro at the balance sheet date, and therefore it has not met the requirements for consolidation as set out in IFRS3 (revised) 'Business Combinations' and IAS27 'Consolidated and Separate Financial Statements'. In accordance with IAS39 'Financial Instruments: Recognition and Measurement', the investment will initially be held as an available for sale financial asset. Cash subsequently advanced from Makro is held within creditors.

The shares issued as consideration were valued at their fair value of £124.2m, at the date of completion. Fair value was determined by reference to the share price of Booker Group plc at the date of completion, taking into account a discount to reflect the restrictions preventing the shares from being sold for one year after the date of completion. In addition a further £4.9m was paid to reflect an above target cash and working capital position as at 30 June 2012. The investment is measured at fair value in accordance with IAS 39 as it is an available-for-sale financial asset. The fair value is considered to be unchanged since the date of completion and therefore there is no valuation gain or loss recognised in other comprehensive income.

The fair value of the financial asset subsequent to the date of completion is measured by reference to the performance of Makro compared to expectations and the underlying market value of the assets in the business, predominantly property.

During the period, the Group incurred £3.0m of fees in relation to the acquisition of Makro Holding Limited, and these have been classified as an exceptional charge. These costs do not give rise to a tax credit.

9. Post balance sheet events

Full clearance to the acquisition of Makro was received from the Competition Commission on 19 April 2013 and Makro will be consolidated from this date, being the date that control passes to the Group.

The net assets of the Makro balance sheet at 31 March 2013 were as follows:

Given the proximity of the consolidation date (being the date of 19 April 2013 when control was obtained) and the date of approval of the financial statements, it has not been possible to obtain a Makro balance sheet as at the acquisition date, although the balance sheet at 31 March 2013 is considered unlikely to be materially different from the balance sheet at acquisition. Further, it has also not been possible to undertake a full review of net assets for potential fair value adjustments, although the initial estimate of such adjustments indicates a potential increase to the book value of net assets as stated in Makro's balance sheet of £26m, principally in relation to property valuations and deferred tax.

The directors do not believe that the fair value of the consideration at acquisition will be materially different to the carrying value of the investment in Makro at the year end of £145m which would therefore, on this provisional basis, give rise to a provisional goodwill credit (or 'bargain purchase') of £13m, which would be credited to the income statement during the year ending 28 March 2014.

The anticipated goodwill credit mainly arises due to the recognition of a deferred tax asset in relation to surplus capital allowances in Makro. This asset is not recognised in Makro which is in line with their accounting policies. It can be recognised on acquisition as the surplus capital allowances will create future tax deductions which can be surrendered to the Group.