Half Yearly Report

16 October 2014

Booker Group plc

Interim Results

for the 24 weeks ended 12 September 2014

Booker Group is the UK's leading food wholesaler. This announcement contains the interim results of Booker Group plc ('Booker') for the 24 weeks ended 12 September 2014.

Financial Highlights

· Total sales £2.3bn, +1.9%

· Booker like-for-like sales (excluding Makro) up 2.4%. Non tobacco sales up 3.4% and tobacco sales up 0.6%

· Operating profit (pre £7.0m prior year exceptional credit related to Makro acquisition) +15% to £68.1m

· Profit before tax (pre exceptionals) £67.4m, +16%

· Profit after tax (post exceptionals) £55.3m, +3%

· Underlying earnings per share up 16% at 3.17 pence

· Basic earnings per share up 2% at 3.17 pence

· Net cash of £107.2m

· Interim dividend of 0.52 pence per share, up 16%

· As previously indicated, intended return of capital in July 2015

Operational Highlights

· Our plan to Focus, Drive and Broaden Booker Group continues to make progress

· Makro integration is on track

· Booker customer satisfaction improved during the period

· Internet sales up 12% to £413m in the half

· Plan to increase delivery capacity over the next two years by 80%

· Booker Direct, Ritter Courivaud, Classic and Chef Direct continue to make good progress

· Booker India is on track

Outlook

The Group's trading in the first four weeks of the current half year is ahead of the same period last year. We anticipate that the challenging consumer and market environment will persist through the coming year and the UK's food market remains very competitive.

Whilst there is increasing price competition in the UK grocery and discount sectors, we will continue to deliver our plans to offer our customers even better choice, prices and service. We are on track to deliver an outcome for the financial year in line with our plans and to make progress in this challenging environment.

Commenting on the results, Charles Wilson, Chief Executive of Booker, said:

"We have had a good half and our plan to Focus, Drive and Broaden the business remains on track. Despite the challenges in the UK grocery market we continue to provide our retail, catering and small business customers with improved choice, prices and service via the internet, delivery and cash and carry."

Notes:

- Makro was consolidated from 19 April 2013

- Sales are stated net of value added tax

- In the prior period a net £7.0m credit was taken to income statement relating to the acquisition of Makro. This was the amount by which the fair value of assets acquired exceeded the fair value of consideration paid for the group (£11.2m), less restructuring and integration costs charged in the period of £4.2m

Booker Group plc will announce its Quarter 3 Interim Management Statement for the 16 weeks to 2 January 2015 on 15 January 2015.

For further information contact:

Tulchan Communications (PR adviser to Booker Group plc)

020 7353 4200

Susanna Voyle

Will Smith

A presentation for analysts will be held at 08.30am on Thursday 16 October 2014 at Investec's offices

Webcast http://www.axisto-live.com/investis/clients/booker-group/presentations/541af55a0bdd9a0a4414864f/interim-results-2014

For further details please call Melanie Curtis at Tulchan Communications on 0207 353 4200.

Chairman's Statement

I am pleased to report on a good performance for the 24 weeks to 12 September 2014. The Booker plan to Focus, Drive and Broaden the business is working well. The team at Makro have settled into the Group and are making a real contribution.

Financial Results

Sales for the 24 week period were £2.3bn, an increase of 1.9%. Half year profit before tax (and prior year exceptional items) was £67.4m (2013: £58.1m), up 16.0%. Basic earnings per share increased to 3.17 pence (2013: 3.11 pence).

Focus

We are continuing to improve cash management and operational efficiency. During the half year we integrated the Booker and Makro systems and supply chain. The Group has a strong net cash position of £107.2m.

Drive

Booker is continuing to 'drive' sales by further improving choice, prices and service. Overall customer satisfaction improved during the period. Like-for-like non-tobacco sales (excluding Makro) showed an increase of 3.4%. The drive into the catering market is working with like-for-like sales to caterers having increased by 2.7% to £686m (2013: £668m). Like-for-like sales to retailers have increased by 2.6% to £1,265m (2013: £1,233m). Premier, our retail symbol group, continued to grow and now has 3,089 outlets (2013: 2,899 outlets). Sales to these customers grew by 14%. We plan to increase our delivery capacity by about 80% in the next two years through utilising the Makro space and upgrading the fleet. Booker was voted the UK's best Wholesaler in a survey of independent caterers conducted by him!, the retail research consultancy.

Broaden

Booker.co.uk sales grew to £413m, up 12% versus the same period last year.

We now have 15 Family Shopper "local discount stores". These are branded stores operated by independent retailers. We hope to grow this chain to circa 300 stores in the next three to four years.

Booker Direct, Ritter Courivaud and Chef Direct are performing as planned. We are now serving flagship accounts such as Loch Fyne Restaurants, Angus Steak House, Aramark and Wagamama.

Makro has also fitted into the Group. Booker is the UK's leading wholesaler to caterers, retailers and small businesses with a wide range of foods and non foods via the internet, delivery and cash and carry. Together we are improving choice, prices and service. We have now converted four of the 30 Makro business centres to the new format. These are performing well and a further four will be converted in the second half.

Our Indian business continues to make progress.

Through focusing, driving and broadening the Booker Group, we will continue to make progress.

Interim Dividend

Booker's strategy to drive and broaden its business is working. In a challenging environment we continue to make good progress with strong cash generation. As a result the Board has declared an interim dividend of 0.52 pence per share (2013: 0.45 pence) to be paid on 28 November 2014 to shareholders on the register at the close of business on 31 October 2014. The ex-dividend date will be 30 October 2014.

Intended return of capital

In July 2012 Booker Group plc issued £124m of shareholder equity to acquire Makro in the UK. Following the successful integration of Makro into the Group and a period of strong cash generation, the Board implemented a capital return to shareholders of 3.50 pence per ordinary share (equivalent to approximately £61m) in July 2014. As previously indicated, we intend to return a similar amount to shareholders in July 2015 and will provide an update on this at the 2015 Final Results announcement in May 2015, in light of circumstances prevailing at that time.

Outlook

The Group's trading in the first four weeks of the current half year is ahead of the same period last year. We anticipate that the challenging consumer and market environment will persist through the coming year and the UK's food market remains very competitive.

Whilst there is increasing price competition in the UK grocery and discount sectors, we will continue to deliver our plans to offer our customers even better choice, prices and service. We are on track to deliver an outcome for the financial year in line with our plans and to make progress in this challenging environment.

Richard Rose

Chairman

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 interim results for the 24 weeks ended 12 September 2014, released on 16 October 2014. 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.

 Condensed consolidated financial statements

Consolidated income statement

Consolidated statement of comprehensive income

Consolidated balance sheet

Consolidated statement of changes in equity

Consolidated cash flow statement

Reconciliation to net cash

Notes to the condensed financial statements

1. General information

Reporting entity

Booker Group plc (the 'Company') is a public limited company incorporated in the United Kingdom (Registration number 05145685). The Company's ordinary shares are traded on the London Stock Exchange. These condensed consolidated interim financial statements ('interim financial statements') as at and for the 24 weeks ended 12 September 2014 comprise the Company and its subsidiaries (together referred to as the 'Group'). The financial statements are presented in Sterling and rounded to the nearest hundred thousand.

Statement of compliance

These interim financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting', as adopted by the EU. As required by the Disclosure and Transparency Rules of the Financial Conduct Authority, these condensed set of financial statements have been prepared applying the accounting policies and presentation that were applied in the preparation of the Group's published consolidated financial statements for the 52 weeks ended 28 March 2014. They do not include all the information required for a complete set of IFRS financial statements.

However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual consolidated financial statements as at and for the period ended 28 March 2014.

These interim financial statements were approved by the Company's Board on 15 October 2014.

2. Basis of preparation

a) Going concern

The Directors consider that the risks noted in this Report are those known to the Directors at the date of such Report which the Directors consider to be material to the Group, but these do not necessarily comprise all risks to which the Group is exposed. In particular, the Group's performance could be adversely affected by poor economic conditions. Additional risks and uncertainties currently unknown to the Directors, or which the Directors currently believe are immaterial, may also have a material adverse effect on the business, financial condition or prospects of the Group.

In July 2011, the Group negotiated a new unsecured bank facility of £120m for a period of 5 years. The Group's forecasts and projections, taking reasonable account of possible changes in trading performance and considering the risks identified, show that the Group should be able to operate within the level of its bank facility.

After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Group financial statements.

b) Operating segments

IFRS 8 'Operating Segments' requires that segments should be reported on the same basis as the internal reporting information that is provided to the Chief Operating Decision Maker ('CODM'). The CODM has been identified as the CEO. In accordance with IFRS 8, the Group may aggregate operating segments into one reportable segment to the extent that the criteria for aggregation in IFRS 8 are met. These criteria include consideration of whether the operating segments have similar economic characteristics; similar nature of products and services; similar type or class of customers; similar methods used to distribute products or provide services; and similar regulatory environments.

The CODM receives turnover information analysed in a number of different ways (for example by customer and product types, by delivery channels and between Booker Wholesale, Booker Direct, Chef Direct, Classic Drinks, Ritter-Courivaud and Makro). However, none of these 'possible' segments have a unique management structure, products share the same supply chain and distribution channels, and there are a large amount of supplier rebates, expenses and assets/(liabilities) that are not specific. It is therefore not possible to analyse, and the CEO does not receive, information in respect of profitability or balance sheets in the same way in which turnover is analysed. Internal reports reviewed regularly by the CEO focus on the operations of the Group as a whole and report the results and financial position on an IFRS basis.

As a result, the Group has not disclosed discrete financial information about any of the 'possible segments', which in any event would meet the criteria for aggregation under IFRS 8, separately in these financial statements.

c) Use of judgements and estimates

The preparation of accounts in accordance with generally accepted accounting principles requires the Directors to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

These estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Some of these policies require a high level of judgement and the Directors believe that the most critical accounting policies and significant areas of judgement and estimation arise from the accounting for:

· IFRS 3 'Business Combinations'. The acquisition accounting in relation to Makro Holding Limited and its subsidiaries. The Directors are required to fair value both Makro's assets and liabilities and the consideration paid at the date of consolidation. This requires significant judgements to be made especially with regard to property valuations.

· IAS37 'Provisions, contingent liabilities and contingent assets'. The Group is party to a number of leases on properties that are no longer required for trading. Whilst every effort is made to profitably sub-let these properties, it is not always possible to do so. Where a lease is onerous to the Group, a provision is established for the difference between amounts contractually payable to the landlord and amounts contractually receivable from the tenant (if any) for the period up until the point it is judged that the lease will no longer be onerous. In addition, provisions exist for the expected future dilapidation cost on leasehold properties and the expected future costs of removing asbestos from leasehold properties. The Directors believe that their estimates, which are based upon the advice of an in-house property department who monitor the UK property market, are appropriate.

· IAS19 'Employee benefits'. Defined benefit schemes are accounted for in accordance with the advice of an independent qualified actuary but significant judgements are required in relation to the assumptions for future salary and pension increases, inflation, investment returns and mortality that underpin their valuations.

· IAS36 'Impairment of assets'. In testing for impairment of goodwill, the Directors have made certain assumptions concerning the future development of the business that are consistent with its annual budget and forecast into perpetuity. Should these assumptions regarding the discount rate or growth in the profitability be unfounded then it is possible that goodwill included in the balance sheet could be impaired. At 12 September 2014, the Directors do not consider that any reasonably likely changes in key assumptions would cause the carrying value of the goodwill to become impaired.

· IAS12 'Income Taxes'. In applying the Group's accounting policy in relation to deferred tax, as set out below, the Directors are required to make assumptions regarding the Group's ability to utilise historical tax assets following an assessment of the likely quantum and timing of future taxable profits. A deferred tax asset is recognised to the extent that the Directors are confident that the Group's future profits will utilise historical tax assets.

5. Tax

Tax of £12.1m on the profit before taxation for the 24 weeks ended 12 September 2014 is based on an effective rate of 18.0%, which has been calculated by reference to the projected charge for the full financial year. The rate for the 24 weeks ended 13 September 2013 and 52 weeks ended 28 March 2014 was 17.4% and 13.8% respectively.

A reduction in the UK corporation tax rate from 23% to 21% (effective from 1 April 2014) and a further reduction to 20% (effective from 1 April 2015) were substantively enacted on 2 July 2013. This will reduce the company's future current tax charge accordingly. The deferred tax asset at 12 September 2014 has been calculated based on the rates of 20% and 21% substantively enacted at the balance sheet date.

6. Earnings per share

Underlying earnings and earnings per share

It is the Directors' view that underlying earnings per share is a fairer reflection of the underlying results of the business.

7. Dividends

After the balance sheet date the Directors declared an interim dividend of 0.52p per share (£9.0m in total) payable on 28 November 2014 to shareholders on the register at the close of business on 31 October 2014. This dividend has not been provided for and therefore there is no difference between the dividends charged to reserves and dividends paid in the period.

8. Property, plant and equipment

The principal assumptions adopted for the valuation at 12 September 2014 are the same as those adopted at 28 March 2014, other than changes to the discount rate (from 4.45% to 4.05%) and RPI inflation (from 3.20% to 3.10%) which are in line with market indicators.

10. Return of Capital

On 21 July 2014 the Company issued 1,743,934,763 B shares that were redeemable by the shareholder.

On 22 July 2014 the Company redeemed 1,740,934,613 B shares for 3.5 pence per share (a total of £60.9m) and the shares were cancelled.

The 3,000,150 remaining B shares have been classified as a financial liability and are expected to be redeemed on 30 April 2015 for 3.5 pence per share. Following the redemption, such B shares will be cancelled.

11. Acquisitions

In accordance with IFRS 3 'Business Combinations', the hindsight adjustment period for the Makro acquisition ended on 19 April 2014. There have been no further changes to the fair value of the consideration or the net assets acquired.

12. Related party transactions 

The Group has a related party relationship with its subsidiaries and with its Directors. Transactions between group companies, which are related parties, have been eliminated on consolidation and are not disclosed in this note. There have been no material related party transactions with Directors.

Risks and uncertainties

The Group's business may be affected by a number of risks, trends, factors and uncertainties, not all of which are in our control. The specific principal risks, trends, factors and uncertainties (which could impact the Group's revenues, profits and reputation), and relevant mitigating factors, as currently identified by Booker's risk management process, have not changed since the year end and are expected to remain for the following six months. The list below sets out the most significant risks to the achievement of the Group's business goals. The list does not include all the risks that the Group faces and it does not list the risks in any order of priority.

• Competition

The industry is extremely competitive with the market being served by numerous competitors, ranging from national multiple retailers to regional independent wholesalers. The Group competes by closely monitoring the activities of competitors and ensuring it continues to improve the choice, price and service to its customers.

• Regulation

The Group operates in an environment governed by strict regulations to ensure the safety and protection of customers, shareholders, staff and other stakeholders and the operation of an open and competitive market. These regulations include food hygiene, health and safety, data protection, the rules of the London Stock Exchange and competition law. In all cases, the Board takes its responsibilities very seriously, and recognises that any breach of regulation could cause reputational and financial damage to the Group.

• Product quality and safety

The quality and safety of our products is of critical importance and any failure in this regard would affect the confidence of our customers in us. We work with our suppliers to ensure the integrity of the products supplied. Food hygiene practices are taken very seriously throughout the Group, and are monitored both through internal audit procedures and by external bodies such as environmental health departments. We have well prepared procedures for crisis management in order to act quickly when required. We are aware that if we fail or are perceived to have failed to deliver, to our customers' satisfaction, the expected standards of quality and safety in our products this has the potential to impact on their loyalty to us. This in turn could adversely impact on our market share and our financial results.

• Employee engagement and retention

The continued success of the Group relies heavily on the investment in the training and development of our employees. The Group's employment policies, remuneration and benefits packages are designed to be competitive, as well as providing colleagues with fulfilling career opportunities. The Group continually engages with colleagues across the business to ensure that we keep strengthening our team at every level.

• Supplier credit

Availability of supplier credit is essential for the Group's financial performance. If the providers of credit insurance withdraw or materially reduce the levels of cover they provide, this might affect the Group's ability to obtain products from those suppliers. The Group Finance Director regularly meets key credit insurers to ensure that they have an up to date view of the Group's financial position.

• Pensions

The Group operates a defined benefit scheme, where judgements are required to determine the assumptions for future salary and pension increases, discount rate, inflation, investment returns and member longevity. There is a risk of underestimating this liability. This risk is mitigated by: maintaining a relatively strong funding position over time, taking advice from independent qualified actuaries, agreeing appropriate investment policies with the Trustees and closely monitoring the funding position with the Trustees.

• Information technology (IT)

The Group is exposed to the risk that the IT systems upon which it relies fail. The Group has appropriate controls in place to mitigate the risk of systems failure, including systems back up procedures and disaster recovery plans, and also has appropriate virus protection and network security controls.

Responsibility statement of the Directors in respect of the half-yearly financial report

We confirm that to the best of our knowledge:

· the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU;

· the interim management report includes a fair review of the information required by:

a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first 24 weeks of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining 28 weeks of the year; and

b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first 24 weeks of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

By order of the Board

Charles Wilson Jonathan Prentis

Chief Executive Finance Director

15 October 2014

Independent review report to Booker Group plc

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the 24 weeks ended 12 September 2014 which comprises the consolidated income statement, consolidated statement of comprehensive income, consolidated balance sheet, consolidated statement of changes in equity, the consolidated cash flow statement and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA"). Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the 24 weeks ended 12 September 2014 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.

Nicola Quayle

For and on behalf of KPMG LLP

Chartered Accountants

St James' Square

Manchester

M2 6DS

15 October 2014