Interim Results

18 October 2012

Booker Group plc

Interim results

for the 24 weeks ended 14 September 2012

This announcement contains the interim results of Booker Group plc ('Booker') for the 24 weeks ended 14 September 2012.

We acquired Makro Holding Limited and two subsidiaries; Makro Properties Limited and Makro Self Service Wholesalers Limited, ('Makro') on 4 July 2012. We have notified the transaction to the Office of Fair Trading ('OFT') and the competition review process is ongoing. Until this review is complete, we are required to hold the Makro business separate from the rest of Booker and the results of Makro are, therefore, not reflected in these results but are treated as an investment.

Financial Highlights (Makro not consolidated)

·; Total sales £1.9 bn, +3.3%

·; Like-for-like sales were +3.1%:

- non-tobacco +3.8%

- tobacco +1.8%

• Like-for-like sales to caterers were +4.7% and to retailers +2.2%

• Operating profit (pre £3m exceptional charge related to Makro acquisition costs) +12.4% to £51.6m (2011: £45.9m)

• Profit before tax (post exceptional charge) +13.3% to £51.0m (2011: £45.0m)

• Profit after tax (post exceptional charge) +13.0% to £40.8m (2011: £36.1m)

• Basic earnings per share (post exceptional charge) +6.4% to 2.50p (2011: 2.35p)

• Net cash £69.8m (2011: £58.7m), after spending £15.8m on the cash element of the Makro consideration

• Interim dividend per share up 15.2% to 0.38 pence (2011: 0.33 pence)

• Subject to obtaining competition clearance, we expect Makro to reduce Group operating profit in 2012/13 by £nil to £10m, and increase operating profit in 2013/14 by circa £10m

Operating Highlights

·; Customer satisfaction has improved which has driven like-for-like sales

·; Conversion of another 3 branches into the 'Extra' format, taking the total number of 'Extra' branches to 145

·; Internet sales +10.7% to £332m (2011: £300m)

·; Booker Direct, Ritter Courivaud and Classic are performing well

·; Chef Direct is becoming the new force in foodservice

·; Following competition clearance, Booker and Makro will seek to become the UK's leading wholesaler to caterers, retailers and small companies

·; Our 3 branches in India are on track and we expect to open 2 more branches in the second half

Outlook

Group turnover in the second half to date (excluding Makro) is ahead of the same period last year. Working capital levels and costs are in line with plan. Overall, Booker Group plc continues to trade in line with management expectations.

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

"Our plan to Focus, Drive and Broaden Booker Group is on track. We improved choice, price and service for our customers, which increased sales by 3.3%. Booker Direct, Ritter Courivaud and Classic are performing well and Chef Direct has got off to a great start and the increase in the interim dividend is evidence of the Board's confidence in the outlook for Booker. Subject to competition clearance Booker and Makro will be able to improve choice, prices and service for caterers, retailers and small businesses in the UK. Once integrated, Makro will prove a good addition to the Booker Group."

Note:

- Sales are stated net of value added tax

- Comparators for like-for-like sales have been adjusted to take into account 53 weeks in the prior year

- We acquired Makro Holding Limited and two subsidiaries; Makro Properties Limited and Makro Self Service Wholesalers Limited, ('Makro') on 4 July 2012. We have notified the transaction to the Office of Fair Trading ('OFT') and the competition review process is ongoing. Until this review is complete, we are required to hold the Makro business separate from the rest of Booker and the results of Makro are, therefore, not reflected in these results, pursuant to undertakings given to the OFT in the normal way. Under accounting rules (IFRS 3), Makro will initially be held as an investment in Booker Group plc's balance sheet and will only be consolidated into its financial statements once competition clearance is obtained

Booker Group plc will announce its Quarter 3 Interim Management Statement for the 16 weeks to 4 January 2013 on 17 January 2013.

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 08.30am on Thursday 18 October 2012 at Investec's offices. For further details please call Lindsay Duff at Tulchan Communications on 0207 353 4200.

Chairman's Statement

I am pleased to report on a good performance for the 24 weeks to 14 September 2012. The Booker plan to Focus, Drive and Broaden the business is working well. We are currently going through the process with the competition authorities to obtain clearance for the acquisition of Makro and until this is complete we will hold Makro separate. However, I would like to welcome all the team from Makro to the Booker Group.

Financial Results (excluding Makro)

Sales for the 24 week period were £1.9bn, an increase of 3.3%. Half year profit before tax was £51.0m (2011: £45.0m), up 13.3%. Basic earnings per share increased by 6.4% to 2.50 pence (2011: 2.35 pence). Net cash improved to £69.8m (2011: £58.7m).

Focus

We are continuing to improve cash conversion and operational efficiency. As a result, net cash improved to £69.8m, after spending £15.8m on the cash element of the Makro consideration.

Drive

Booker is continuing to 'drive' sales by further improving choice, prices and service. Like-for-like non-tobacco sales showed an increase of 3.8%. The drive into the catering market is working well with like-for-like sales to caterers having increased by 4.7% to £655m (2011: £626m). Like-for-like sales to retailers have increased by 2.2% to £1,247m (2011: £1,220m). Fresh departments performed particularly well with fruit and vegetable sales up 19%. Premier, our retail symbol group, continued to grow and now has 2,724 outlets (2011: 2,639 outlets) and achieved 9% growth. Our prices have remained competitive and stock availability has been good. Our own brands continue to perform well with Euroshopper growing at 17%. Booker was voted the UK's best Wholesaler in a survey of independent retailers and caterers conducted by him!, the retail research consultancy. We were also awarded 'Wholesaler of the Year' by The Grocer magazine.

Broaden

The plans to 'broaden' the business are going well. We converted a further 3 branches to the 'Extra' format since we last reported. We now have 145 Extras, which offer a broader range and better environment for customers.

Booker.co.uk sales grew to £332m, up 10.7% versus the same period last year.

Booker Direct, Ritter Courivaud and Classic all performed well. Chef Direct has got off to a great start following the launch of this business in January 2012. By June, we had fitted out our Didcot distribution centre to be a state of the art foodservice hub. This was completed on time and on budget. We are now serving flagship accounts like Loch Fyne Restaurants, Angus Steak House and Aramark.

In India our three branches are performing in line with expectations and we are on track to open a further two branches in the second half in line with our plans.

We completed the acquisition of Makro on 4 July 2012. We are still waiting for clearance of the transaction by the competition authorities and until this is achieved we are required to hold the business separate, in accordance with undertakings provided to the OFT in the normal way. Makro has some great people, customers, products and locations. Our intention is that Booker will stay a "trade only" business and Makro will continue to serve the trade and small companies. Together we are seeking to become the UK's leading wholesaler to caterers, retailers and small and medium sized enterprises with a wide range of foods and non foods via the internet, delivery and cash and carry. Subject to clearance from the competition authorities, Booker and Makro will:

● Improve choice for caterers, retailers and small businesses by offering the best of Booker and Makro ranges. For example, Booker can help Makro improve meat, soft drinks and premium catering ranges via Ritter and Makro can help Booker improve fish, frozen and non food ranges

● Improve prices for caterers, retailers and small business through trade pricing, obtaining buying benefits and optimising the use of the Booker and Makro private labels

● Improve service for caterers, retailers and small business with better availability via central distribution and new services such as recycling, internet etc.

● Increase capacity for delivery

Subject to competition clearance, we anticipate that a trade-only Booker Wholesale concession would work in around half of the Makro branches. We would also fit a large delivery centre into all the Makro business centres. This should give the Booker Group capacity to grow to being a £6 billion turnover business, employing the strengths of Booker Wholesale, Makro, Classic Drinks, Ritter Courivaud, Booker Direct and Chef Direct.

Subject to competition clearance, we anticipate that approximately £26m of synergies can be secured in 2013/14. This should help restore Makro to profitability and will help improve choice, price and service for our customers. We also believe that the strategic partnership with Metro AG will help improve Booker Group's sourcing capabilities. Through focusing, driving and broadening the Booker Group, we will continue to make progress.

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 0.38 pence per share (2011: 0.33 pence) to be paid on 30 November 2012 to shareholders on the register at the close of business on 2 November 2012. The ex-dividend date will be 31 October 2012.

Outlook

Group turnover in the second half to date (excluding Makro) is ahead of the same period last year. Working capital levels and costs are in line with plan. Overall, Booker Group plc continues to trade in line with management expectations.

Richard Rose

Chairman

The Acquisition of Makro

On 4 July 2012 Booker Group plc acquired Makro Holdings Limited and two subsidiaries; Makro Self Service Wholesalers Limited and Makro Properties Limited ('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 £5.2m was paid to reflect a targeted cash and working capital position at 30 June 2012.

The transaction is subject to OFT approval and, whilst this process is in progress, we are required to hold Makro separate from the rest of Booker in accordance with undertakings given to the OFT in the normal way. We are expecting the OFT to issue its decision towards the end of October or in early November 2012. If the matter is referred to the Competition Commission, its review would take approximately six months and we will be required to continue to hold Makro separate during this period.

We estimate that Makro's like-for-like sales for the year ended December 2012 will be down by 9.1% to around £715m and that the operating loss of the Makro business, before any fair value adjustments or synergy benefits, will be of the order of £18m. We estimate that, as a consequence of fair valuing Makro's assets, the annual depreciation charge will reduce by circa £7m to approximately £8m per annum. Assuming that we are able to take control of Makro from 1 January 2013, and we consolidate Makro's results from that date, we expect a trading loss to be incurred by Makro of approximately £10m in the three months to March 2013. This quarter is Makro's most unprofitable quarter due to low sales and, in particular, low sales of non food. It is anticipated that this loss will be partially offset by circa £4m of synergy benefits (part of those listed below) giving an expected outturn of a loss of circa £6m in the period. As we are uncertain as to the precise date of consolidation, we expect Makro to have an adverse impact on the Group's operating profit to March 2013 of the order of £nil to £10m.

Looking to 2013/14 it is expected that, subject to competition clearance, synergy benefits will arise of approximately £26m in 2013/14 in the enlarged Group which are 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 costs of goods improvements

- £2m to £5m from margin improvements on fresh products

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

In the year ending March 2014, we expect the Group's operating profit to increase by circa £10m as a result of the acquisiton. 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.

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 at £156m on a vacant possession basis and at £200m assuming Booker's covenant. The fair value of Makro's other fixed assets at the date of completion was approximately £30m. It is expected 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. This difference will be credited to profit and loss account as an exceptional item at the date of consolidation.

Makro has unrecognised tax losses. It is currently estimated that the impact of acquiring Makro will be to reduce the Group's effective rate of tax by 1-2% points over the next three years, subject to the manner of integration of the business and agreement with HMRC.

Disclaimers

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 14 September 2012, released on 18 October 2012. 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

Basis of preparation

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.

The condensed consolidated interim financial statements of the Company as at and for the 24 weeks ended 14 September 2012 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.

The comparative figures for the period ended 30 March 2012 are not the statutory accounts for that financial year. Those accounts were prepared in accordance with IFRSs as adopted by the EU, have been reported on by the auditors and delivered to the Registrar of Companies. Copies are available upon request from the Company's registered office at Equity House, Irthlingborough Road, Wellingborough, Northamptonshire, NN8 1LT or from the website www.booker.co.uk. The report of the auditors was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.

As required by the Disclosure and Transparency Rules of the Financial Services Authority, this condensed set of accounts has been prepared applying the accounting policies and presentation that were applied in the preparation of the company's published consolidated accounts for the period ended 30 March 2012 other than as noted below and except for the Group's tax measurement basis (see note 3).

There have been nonew standards, amendments to standards or interpretations issued by the International Accounting Standards Board that became effective during the period, that would impact on the Group's financial statements.

Acquisition of Makro Holding Limited ('Makro')

During the period, the Group acquired Makro (see note 7 for more details). The transaction has been notified to the Office of Fair Trading ("OFT") and their competition review process is ongoing. Until this review is complete, the Makro business is required to be kept separate, pursuant to undertakings given to the OFT in relation to the ongoing management of the business. It has been deemed that the Group has neither control nor significant influence over Makro 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 to Makro is shown within debtors. Makro will be consolidated into the Group's financial statements once competition clearance has been obtained and the Group has control.

Statement of compliance

These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting'. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the period ended 30 March 2012. These condensed consolidated interim financial statements were approved by the Board of Directors on 17 October 2012.

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 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 and Company financial statements.

Use of assumptions 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 and the Audit Committee believe that the most critical accounting policies and significant areas of judgement and estimation arise from the accounting for:

·; 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.

·; 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. 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.

·; 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. 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.

·; IAS27 'Consolidated and Separate Financial Statements'. In accounting for the acquisition of Makro, the Directors have taken certain judgements in relation to the requirements of, and undertakings given to the OFT, particularly in consideration of whether the Group has control of Makro and can therefore consolidate it into the Group's results for the period. The Directors do not consider that they have control at 14 September 2012, nor do they exert 'significant influence'. Therefore the acquisition of shares of Makro has been accounted for as an investment until control is deemed to have passed to the Group.

Operating segments

IFRS 8 "Operating Segments" requires that the segments should be reported on the same basis as the internal reporting information that is provided to the chief operating decision maker. The chief operating decision maker has been identified as the CEO. Internal reports reviewed regularly by the CEO focus on the operations of the Group as a whole and, whilst turnover is reported by customer and product type, it is not possible to analyse profitability and balance sheets in this way. Products flow through the same distribution channels and there are a large amount of expenses and assets/ (liabilities) that are not specific. None of these possible segments have a unique management structure responsible for getting the product from the supplier to the customer. The Directors therefore present the financial statements as a single reportable segment, being wholesaling and associated activities.

Seasonality

The Group's operations are mainly unaffected by seasonal factors. In 2011/12, the 24 weeks to 9 September 2011 accounted for 46.9% of the annual turnover (2010/11: 47.3%). It should be noted that, in line with internal management reporting, the first half consists of 24 weeks whilst the second half usually consists of 28 weeks. However, in the prior year, the second half consisted of 29 weeks.

During the prior period, £1.3m of the previous refinancing bank fees were amortised along with the entire new facility arrangement fees of £1.1m.

3. Tax

Tax on the profit before taxation and exceptional items for the 24 weeks ended 14 September 2012 is based on an effective rate of 18.9%, which has been calculated by reference to the projected charge for the full financial year. No tax credit arises on the exceptional charge incurred in the 24 weeks ended 14 September 2012. The rate for the 24 weeks ended 9 September 2011 and 53 weeks ended 30 March 2012 was 19.8% and 17.5% respectively.

The 2012 Budget on 21 March 2012 announced that the UK corporation tax will reduce to 22% by 2014. Reductions in the rate from 26% to 24% (effective from 1 April 2012) and 23% (effective from 1 April 2013) were substantively enacted on 26 March 2012 and 3 July 2012 respectively.

The new rate of UK corporation tax has been taken into account in the assessment of the effective rate of tax described above and the measurement of deferred tax assets and liabilities. This will reduce the company's future current tax charge accordingly. The deferred tax asset at 14 September 2012 has been calculated based on the rate of 23% substantively enacted at the balance sheet date.

It has not yet been possible to quantify the full anticipated effect of the announced further 1% rate reduction, although this will further reduce the company's future current tax charge and reduce the company's deferred tax assets accordingly.

5. Dividends

After the balance sheet date the Directors declared an interim dividend of 0.38p per share (£6.5m in total) payable on 30 November 2012 to shareholders on the register at the close of business on 2 November 2012. 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.

6. Property, plant and equipment

7. Other investments

On 4 July 2012, the Group acquired Makro Holding Limited in exchange for 156,621,525 new ordinary shares and a cash consideration of £15.8m. 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 £5.2m was paid to reflect a targeted cash and working capital position as at 30 June 2012. Makro Holding Limited has two subsidiaries; Makro Properties Limited and Makro Self Service Wholesalers Limited.

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

The principal assumptions adopted for the valuation at 14 September 2012 are the same as those adopted at 30 March 2012, other than changes to the discount rate (from 4.8% to 4.3%) and RPI inflation (from 3.1% to 2.7%) which are in line with market indicators.

9. Share capital 

On 4 July 2012, the Group issued 156,621,525 new ordinary shares in acquiring Makro UK. During the period, the Group issued 1,242,981 new ordinary shares to satisfy options exercised by employees.

10. 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.

• Economic environment

The economy is expected to remain difficult in the year ahead with potential tax rises and the public reducing their levels of discretionary spend. Customers will seek to obtain 'best' value from products and the Group aims to provide a wide range of products that meet this requirement.

• 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. Any reduction in the availability of supplier credit could adversely impact the Group. The Group regularly meet key credit insurers to ensure that they have an up to date view of the Group's financial position.

• Financial and treasury

The Group's financial results may be subject to volatility arising from movements in commodity prices, foreign currencies, interest rates and the availability of sources of funding.

• 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.

• Acquisition of Makro

The Group is awaiting the outcome of the OFT review of the acquisition of Makro, before it is able to obtain control of the companies which have been acquired. Until this review is complete, the Makro business is required to be kept separate, pursuant to undertakings given to the OFT in relation to the ongoing management of the business. The outcome of the OFT's review might be that the transaction is cleared (possibly subject to undertakings) or that the matter may be referred to the Competition Commission for a detailed review requiring an extension of the 'hold separate' period.

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

17 October 2012

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 14 September 2012 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 Services Authority ("the UK FSA"). 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 FSA.

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 14 September 2012 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA.

Nicola Quayle

For and on behalf of KPMG Audit Plc

Chartered Accountants

St James Square

Manchester

M2 6DS

17 October 2012