Interim Results

12 October 2017

Booker Group plc

Interim Results

for the 24 weeks ended 8 September 2017

Booker Group is the UK's leading food wholesaler. This announcement contains the interim results of Booker Group plc ('Booker' or the 'Group') for the 24 weeks ended 8 September 2017.

Financial Highlights

· Total sales £2.6bn, +2.5%, non tobacco up +7.5% and tobacco down 9.0% due to changes in legislation

· Like-for-like sales +2.7%, non tobacco like-for-like sales up 7.7%, and tobacco like-for-like sales down 8.7%

· Operating profit £89.1m, +9%

· Profit before tax £88.0m, +9%

· Profit after tax £74.7m, +10%

· Basic earnings per share up 9% at 4.19 pence

· Net cash of £165.1m

· Interim dividend of 0.69 pence per share, up 10%

Operational Highlights

· Our plans to Focus, Drive and Broaden Booker Group continue to make progress

· Customer satisfaction was strong as we continue to drive choice, price and service for our customers

· We made good progress on the catering and retail sides of the business with like for like sales to caterers +8.1% and retailers +0.6%

· Premier, Family Shopper, Londis and Budgens had a good half

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

· Internet sales up 11% to £560m

Merger Update

On 27 January we announced the planned merger with Tesco PLC to form the UK's leading food business. This combination should improve choice, quality, prices and service for the UK consumer. It should also help the Booker catering, retail and small business customer prosper in a challenging market. Our proposed merger with Tesco is undergoing an in-depth 'Phase 2' investigation by the Competition and Markets Authority (CMA). Provisional findings are expected to be made public by the CMA by the end of this month, ahead of a final report by the end of the year. It is expected that the merger will complete in early 2018, subject to, amongst other things, the necessary shareholder approvals. During this process Booker will continue to ensure it is "Business as Usual". We are excited by the opportunities the merger will create for consumers, our customers, suppliers, colleagues and shareholders.

Outlook

The Group's non tobacco revenue in the first four weeks of the current half year is ahead of last year.

As a result of the proposed merger with Tesco, we are in an offer period as defined in the Takeover Code. We will not be making forward looking statements for the duration of the offer period.

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

"Booker Group continues to make good progress with like-for-like non tobacco sales up 7.7%. Our plans to Focus, Drive and Broaden Booker Group are on track. The competition review of the planned merger with Tesco is progressing. We continue to help our retail, catering and small business customers prosper through improving our choice, prices and service."

Booker Group plc will announce its Quarter 3 Trading Update for the 16 weeks to 29 December 2017 on 11 January 2018.

For further information contact:

Tulchan Communications (PR adviser to Booker Group plc)

020 7353 4200

Susanna Voyle

Jess Reid

A presentation for analysts will be held at 08.30am on Thursday 12 October 2017 at Investec's offices

Webcast http://www.investis-live.com/booker-group/59ad1e0e5c04721000517940/sdfq

For further details please call Chantel Baldry at Tulchan Communications on 0207 353 4200.

NOTES:

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

· Booker Direct serves national retail chains

· Chef Direct serves national catering customers

· Ritter-Courivaud is a speciality foods supplier to the UK's leading restaurants

· Premier, Family Shopper, Budgens and Londis are Booker symbol groups serving independently owned retail stores

· Booker India is a wholesaler in India operating from four sites in Mumbai, one in Surat and, via a joint venture, with one site in Pune

· Sales are stated net of value added tax

· Sales at Budgens and Londis were £0.3bn (2017: £0.3bn).

· Like-for-like sales is a measure of change in sales from UK operations from prior year to current year. No adjustments to sales are made when individual customers are gained or lost. If a Business Centre is closed, for the twelve months following the closure date the sales of the Business Centre are removed from the prior year comparative. If sales are transferred to a replacement Business Centre in the same vicinity no such adjustment is made. If a Business Centre is opened where none previously existed, all sales for the first twelve months will be excluded. Where a business is acquired, sales are excluded until the anniversary of the acquisition

· 'Internet sales' are sales made to customers of the Group (excluding sales to customers of Budgens and Londis) where the order is taken via Booker.co.uk.

Chairman's Statement

I am pleased to report on a good performance for the 24 weeks to 8 September 2017. The Booker plans to Focus, Drive and Broaden the business are working well. Both the catering and retail sides of the business had a good half.

Financial Results

Sales for the 24 week period were £2.6bn, an increase of 2.5% with like-for-like non tobacco sales up 7.7% and tobacco sales down 8.7%. Tobacco sales continued to be depressed by changes in legislation. Half year profit before tax was £88.0m (2016: £81.0m), up 8.6%. Basic earnings per share increased 9.4% to 4.19 pence (2016: 3.83 pence).

Focus

We continue to improve cash management and operational efficiency. Having generated strong cash flow in the half year, the Group has a net cash position of £165.1m.

Drive

Booker continues to 'drive' sales by further improving choice, prices and service. Overall customer satisfaction was strong. Like-for-like non-tobacco sales showed an increase of 7.7%.

The drive into the catering market is working with like-for-like sales to caterers having increased by 8.1%. Customer satisfaction was 89.2%. Our Food and Drink guide will help strengthen our choice, price and service messages in the second half.

Like-for-like sales to retailers have increased by 0.6%. Non tobacco sales to retailers were up 8.4%, but tobacco declined primarily due to changes in tobacco legislation. Premier, our retail symbol group, continued to grow and now has 3,394 outlets (2016: 3,358 outlets). The integration of Londis and Budgens is going well. The cost of the businesses was £40m. In the two years since acquisition, we have generated £48m of cash from Londis and Budgens. In addition we have expanded Family Shopper to 61 "local discount stores".

Booker was voted the UK's best wholesaler by The Grocer. We have achieved this for 7 of the past 8 years.

Broaden

Booker.co.uk sales grew to £560m, up 11% versus the same period last year.

Booker Direct, Ritter Courivaud, Chef Direct, Classic and our Indian business continue to make progress.

Interim Dividend

Booker's strategy to drive and broaden its business is working in a challenging environment. The Board has declared an interim dividend of 0.69 pence per share (2016: 0.63 pence) to be paid on 24 November 2017 to shareholders on the register at the close of business on 27 October 2017. The ex-dividend date will be 26 October 2017.

Merger Update

On 27 January we announced the planned merger with Tesco PLC to form the UK's leading food business. This combination should improve choice, quality, prices and service for the UK consumer. It should also help the Booker catering, retail and small business customer prosper in a challenging market. Our proposed merger with Tesco is undergoing an in-depth 'Phase 2' investigation by the Competition and Markets Authority (CMA). Provisional findings are expected to be made public by the CMA by the end of this month, ahead of a final report by the end of the year. It is expected that the merger will complete in early 2018, subject to, amongst other things, the necessary shareholder approvals. During this process Booker will continue to ensure it is "Business as Usual". We are excited by the opportunities the merger will create for consumers, our customers, suppliers, colleagues and shareholders.

Outlook

The Group's non tobacco revenue in the first four weeks of the current half year is ahead of last year.

As a result of the proposed merger with Tesco, we are in an offer period as defined in the Takeover Code. We will not be making forward looking statements for the duration of the offer period.

Chairman

This announcement may include "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 8 September 2017, released on 12 October 2017. 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 cash flow statement

Reconciliation to net cash

Consolidated statement of changes in equity

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 8 September 2017 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 that were applied in the preparation of the Group's published consolidated financial statements for the 52 weeks ended 24 March 2017. They do not include all the information required for a complete set of IFRS financial statements and should be read in conjunction with the consolidated financial statements of the Group as at and for the 52 weeks ended 24 March 2017.

These interim financial statements were approved by the Company's Board on 11 October 2017.

Risks and uncertainties

The Board has considered the principal risks and uncertainties for the remaining 29 weeks of the financial year and determined that the risks and uncertainties presented in the 2017 Annual Reports still remain.

Going concern

The Directors' assessment of the Group's ability to continue as a going concern is based on cash flow forecasts for the Group, covering a period of at least 12 months from the date of approval of these interim financial statements, and the committed borrowing and debt facilities of the Group. In August 2015, the Group negotiated an unsecured bank facility of £120m for a period of 5 years.

These forecasts include consideration of future trading performance, working capital requirements and the principal risks facing the Group. Having reconsidered the principal risks, the Directors consider it appropriate to adopt the going concern basis of accounting in preparing the interim financial statements.

Accounting policies

The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied in the Group's published consolidated financial statements for the period ended 24 March 2017 except for the application of relevant new standards.

A number of new standards and amendments to existing standards are effective for the financial period ending 30 March 2018. None of these have had any impact and accordingly the 24 March 2017 and 9 September 2016 comparatives have not been restated. A number of amendments to standards and interpretations have been issued during the period, which are either not yet endorsed, or are endorsed but not yet effective, and accordingly the Group has not yet adopted them.

Judgements and estimates

In preparing the condensed consolidated interim financial statements, management are required to make accounting judgements, assumptions and estimates. The judgements, assumptions and estimation methods are consistent with those disclosed in the published consolidated financial statements for the period ended 24 March 2017.

Seasonality

The Group's operations are mainly unaffected by seasonal factors. It should be noted that, in line with internal management reporting, the interim period consists of 24 weeks whilst the second period consists of 29 weeks (FY 2017: 28 weeks).

2. Finance income and expense

3. Tax

Tax of £13.3m on the profit before taxation for the 24 weeks ended 8 September 2017 is based on an effective rate of 15.1%, which has been calculated by reference to the projected effective tax rate for the full financial year. The rate for the 24 weeks ended 9 September 2016 and 52 weeks ended 24 March 2017 was 16.3% and 11.6% respectively.

Reductions in the UK corporation tax rate from 19% to 18% (effective from 1 April 2020) was substantively enacted on 26 October 2015, and an additional reduction to 17% (effective from 1 April 2020) was substantively enacted on 6 September 2016. The deferred tax asset at 8 September 2017 has been calculated based on these rates.

4. Earnings per share

5. Dividends

6. Property, plant and equipment

7. Retirement benefit liabilities

The principal assumptions adopted for the valuation at 8 September 2017 are the same as those adopted at 24 March 2017, other than changes to the discount rate (from 2.70% to 2.45%) and RPI inflation (from 3.20% to 3.15%) which are in line with market conditions.

8. Provisions

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 IAS34 '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 29 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

11 October 2017

Independent review report to Booker Group plc

Conclusion

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 8 September 2017 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.

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 8 September 2017 is not prepared, in all material respects, in accordance with IAS34 'Interim Financial Reporting' as adopted by the EU and the Disclosure Guidance and Transparency Rules ('the DTR') of the UK's Financial Conduct Authority ('the UK FCA').

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. 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.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) 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.

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 directors are responsible for preparing the condensed set of financial statements included in this half-yearly financial report in accordance with IAS34 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.

The purpose of our review work and to whom we owe our responsibilities

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 DTR of 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.

Stuart Burdass

For and on behalf of KPMG LLP

Chartered Accountants

1 St Peter's Square

Manchester

M2 3AE

11 October 2017